EXHIBIT 99.3(e)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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JEROME RAMOS, on behalf of himself and :
all others similarly situated, :
: Civil Action No.
Plaintiff, : 15941NC
:
- against - : CLASS ACTION
: COMPLAINT
ROBERT L. JOHNSON, PETER R. BARTON, :
JOHN C. MALONE, DENZEL WASHINGTON, :
DELANO E. LEWIS, SHEILA CRUMP :
JOHNSON, HERBERT P. WILKINS, SR., BET :
HOLDINGS, INC. and LIBERTY MEDIA :
CORP., :
;
Defendants. :
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Plaintiff, by and through his attorneys, alleges the
following upon information and belief, except as to paragraph 2
which is alleged upon personal knowledge:
The Parties
1. Plaintiff brings this action as a class action on
behalf of himself and all other stockholders of BET Holdings,
Inc. ("BET" or the "Company") who are similarly situated, to void
and enjoin defendants' efforts to deprive the Company's minority
shareholders of their equity interest in BET at a grossly unfair
and inadequate price and to usurp the benefits of the Company's
growth and future prospects for defendants' own benefit.
2. Plaintiff Jerome Ramos is and has at all relevant
times owned shares of BET Class A common stock.
3. Defendant Robert L. Johnson ("Johnson") is the
founder of Black Entertainment Television, Inc., the Company's
primary operating subsidiary. Johnson is and has been at all
relevant times Chairman and Chief Executive Officer of BET and,
from 1991 until March 1996, also served as BET's President.
Johnson is also a director of defendant Liberty Media.
4. By virtue of his position as Chairman, Chief
Executive Officer and a controlling shareholder of BET, Johnson
is in a fiduciary relationship with plaintiff and other public
stockholders of BET, and owes plaintiff and other members of the
Class (defined below) the highest obligations of good faith,
candor, loyalty and fair dealing.
5. As of October 28, 1996, Johnson owned approximately
2,224,475 shares, or 21.8%, of BET's outstanding Class A stock,
and 4,820,000 shares, or 100%, of BET's outstanding Class C
stock, giving him approximately 65.7% of the voting power of all
classes of BET stock.
6. Defendant Liberty Media is a subsidiary of
Tele-Communications, Inc. ("TCI"). Through its subsidiaries and
affiliates, Liberty Media operates cable television systems and
provides satellite delivered programming services to various
video distribution media. As of October 28, 1996, TCI was the
beneficial owner of approximately 1,831,600 shares, or 18.1% of
BET's Class A stock, and 1,831,600 shares, or 100%, of BET's
Class B stock, giving it 26.3% of the voting power of all classes
of BET stock. The record holder of TCI's shares is LMCBET, Inc.,
a wholly owned subsidiary of defendant Liberty Media.
7. Defendant Peter R. Barton ("Barton") is and has
been at all relevant times a director of BET. Barton is also
President and a director of defendant Liberty Media.
8. Defendant John C. Malone ("Malone") is and has been
at all relevant times a director of BET. Malone is also Chairman
and a director of defendant Liberty Media.
9. Defendant Sheila Crump Johnson is and has been at
all relevant times a director of BET. Sheila Crump Johnson is the
wife of defendant Johnson.
10. Defendants Herbert P. Wilkins, Sr. ("Wilkins"),
Denzel Washington ("Washington"), and Delano E. Lewis ("Lewis")
are and have been at all relevant times directors of BET.
11. Defendant BET is a Delaware corporation with its
principal executive offices located at One BET Plaza, 1900 W
Place, N.E., Washington, D.C.
12. BET owns and operates two principal business
segments--cable television programming and magazine publishing.
The Company's cable television programming operations are
conducted by its entertainment group which includes Black
Entertainment Television Network ("BET Cable Network"). Its
publishing operations are conducted through its publishing group
which publishes Emerge Magazine.
13. BET has three classes of common stock
outstanding - Class A, Class B and Class C.
14. Except as to the election of directors, and as
otherwise required by Delaware law, all three classes of stock
vote together as a single class, with Class A holders entitled to
one vote per share and holders of Class B and Class C stock
entitled to ten votes per share.
15. The individual defendants identified in 3, 7-10
above are hereinafter referred to as the "Individual Defendants."
16. As directors of BET, the Individual Defendants are
in a fiduciary relationship with plaintiff and the other public
stockholders of BET and owe to plaintiff and other members of the
class the highest obligations of good faith, fair dealing,
loyalty and full disclosure.
CLASS ACTION ALLEGATIONS
17. Plaintiff brings this action on behalf of himself
and as a class action, pursuant to Rule 23 of the Rules of the
Court of Chancery, on behalf of all public stockholders of BET,
and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully
described herein (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation, or
other entity related to or affiliated with any of the defendants.
18. This action is properly maintainable as a class
action.
19. The Class is so numerous that joinder of all
members is impracticable. As of October 28, 1996, there were
approximately 10.1 million shares of BET Class A common stock and
outstanding, collectively held by more than 610 stockholders of
record. BET's shares are actively traded on the New York Stock
Exchange. Members of the Class are scattered throughout the
United States.
20. There are questions of law and fact which are
common to the Class and which predominate over questions
affecting any individual Class member.
21. A class action is superior to other methods for
the fair and efficient adjudication of the claims herein asserted
and no unusual difficulties are likely to be encountered in the
management of this class action. The likelihood of individual
class members prosecuting separate claims is remote.
22. Plaintiff is committed to the prosecution of this
action and has retained competent counsel experienced in
litigation of this nature. Plaintiff's claims are typical of the
claims of other members of the Class and plaintiff has the same
interests as the other members of the Class. Accordingly,
plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
23. Plaintiff does not anticipate any difficulty in
the management of this litigation as a class action.
BACKGROUND AND CLAIM FOR RELIEF
24. On or about September 11,1997, BET announced that
it had received an offer from its founder, Chairman and Chief
Executive Officer, defendant Johnson and defendant Liberty Media.
Pursuant to the terms of the proposal, Johnson and Liberty Media
would purchase all of the remaining shares of BET common stock
they do not already own at a price of $48 per share (the
"Proposal").
25. Currently, Johnson and Liberty Media collectively
control more than a majority of BET's outstanding voting power
26. As stated above, defendant Johnson currently owns
approximately 2,224,475 Class A common shares, and 4,820,000 or
100% of BET's outstanding Class C common stock representing 21.8%
of the Company's total outstanding common stock and holding
roughly 65.7% of the voting power of the Company.
27. As stated above, defendant Liberty Media currently
owns approximately 1,831,600 Class A common shares, representing
18.1% of the Company's total outstanding common stock and
1,831,600 shares or 100% of BET's Class B common stock, and
holding roughly 26.3% of the voting power of the Company.
28. Johnson and Liberty Media's Proposal is timed to
take advantage of the Company's new-found financial success. On
June 11, 1997, BET reported earnings per share of $.36 for the
third quarter of its fiscal year ended July 31, 1996, an increase
of 20 percent. For the nine months ended April 30, 1997, earnings
per share were $1.09, compared with earnings per share of $.89
for the nine months ended April 20, 1996, an increase of 22
percent. Commenting on the quarterly results, defendant Johnson
stated:
We are pleased with the outstanding operating
results reported by our core business the BET
Cable Network. During the quarter, BET
continued to prove its compelling appeal as
it attracted 2.2 million new subscribers,
including subscribers to Direct TV, which
ensures BET's financial success continues to
provide us with the means necessary to pursue
our strategy of expanding our cable
programming presence and pursuing brand
extension opportunities in businesses that
are compatible with our primary business of
providing entertainment, merchandise, and
leisure time activities to the black consumer
marketplace. During the past quarter we
achieved a number of successes as we executed
this strategy. As BET on Jazz celebrated its
first anniversary, it extended its presence
overseas as it opened a European sales office
in connection with its pursuit of
international subscribership. In February
1997, together with our partner Encore Media
Corporation, we launched our fourth cable
channel, BET Movies/Starz!3, a mini-pay
channel featuring black film artists. BET
Soundstage, our entertainment-themed
restaurant that we opened in January 1997,
continued to enjoy favorable reviews and
overwhelming patronage. Based in part on the
success of this restaurant, we recently
entered into an agreement with Walt Disney
World to open a BET Soundstage Club at
Pleasure Island, marking the first of several
planned expansions of the BET Soundstage
concept. While the start-up costs associated
with pursuing our growth strategy moderate
current earnings, we continue to remain
confident that these investments position the
company for future earnings growth and
increased shareholder value.
29. The Company's improving financial results have not
yet been fully reflected in the trading price of BET's stock.
Defendants Johnson and Liberty Media have thus breached their
fiduciary duties by failing to offer a fair price for the
Company's shares.
30. According to a September 12, 1997 article in The
Wall Street Journal, defendant Johnson believes the Company is
undervalued by Wall Street and he hopes to increase future
returns for himself and TCI by eliminating public stockholders.
31. On or about September 16, 1997, BET announced that
its Board of Directors had appointed a one-member committee
consisting of defendant Lewis to evaluate the proposal.
32. Defendants Johnson and Liberty Media, who control
over 50% of the vote, as a practical matter, could effectively
force the Company to accept this grossly inadequate offer even in
the face of opposition by the Company's public stockholders.
Thus, a vote of the majority of the minority stockholders is
crucial to shareholder democracy.
33. Although an independent committee has been formed,
it constitutes a sham; defendant Lewis has been handpicked by
Johnson and Liberty Media and has been assured that Johnson will
maintain the status quo.
34. The Individual Defendants suffer from disabling
conflicts of interest in that their desire to remain entrenched
in their positions at BET are in conflict with their obligation
to maximize shareholder value.
35. Defendants' fiduciary obligations require them to:
(a) undertake an appropriate evaluation of anv
bona fide offers, and take appropriate steps to solicit all
potential bids for the Company or its assets, consider strategic
alternatives and otherwise maximize shareholder value;
(b) act independently, including appointing a
disinterested committee and requiring a vote of a majority of the
minority stockholders so that the interests of BET's public
stockholders are protected; and
(c) adequately ensure that no conflicts of
interest exist between defendants' own interests and their
fiduciary obligations to the public stockholders of BET.
36. By virtue of the acts and conduct alleged herein,
defendants Johnson and Liberty Media and the remaining Individual
Defendants, are not complying with their fiduciary duties and are
carrying out a preconceived plan and scheme to entrench
themselves in office and to protect and advance their personal
interests at the expense of BET.
37. As a result of the foregoing, the Individual
Defendants have breached and/or aided and abetted breaches of
fiduciary duties owed to BET and its stockholders.
38. Unless enjoined by this Court, defendants will
breach their fiduciary duties owed to plaintiff and the other
members of the Class and may benefit themselves in their
corporate offices, all to the irreparable harm of the Class, as
aforesaid.
39. Plaintiff and the other members of the Class have
no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out
their fiduciary duties to plaintiff and the other members of the
Class;
(c) ordering defendants, jointly and severally, to
account to plaintiff and the other members of the Class for all
damages suffered and to be suffered by them as a result of the
acts and transactions alleged herein;
(d) declaring that the Individual Defendants and each
of them have violated their fiduciary duties to the Class and/or
aided and abetted such breach;
(e) awarding plaintiff the costs and disbursements of
the action, including a reasonable allowance for plaintiff's
attorney's fees and experts' fees; and
(f) granting such other and further relief as this
Court may deem to be just and proper.
Dated: September 17, 1997
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
BY:______________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
Telephone: (302) 656-4433
Facsimile: (302) 658-7567
Attorneys for Plaintiff
Of Counsel:
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
Telephone: (212) 907-0700
Facsimile: (212) 818-0477
HANZMAN CRIDEN KORGE
& CHAYKIN, P.A.
First Union Financial Center
Suite 2100
200 South Biscayne Boulevard
Miami, Florida 33131
Telephone: (305) 579-1222
Facsimile: (305) 579-1229