SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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NETRO CORPORATION
(Name of Registrant as Specified in its Charter)
C. ROBERT COATES
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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3) Filing Party: C. Robert Coates
4) Date Filed: May 20, 2002
(These materials are intended to be released to one or more shareholders,
inconjunction with the previously supplied Definitive Proxy Statement
currently on file, on or about April 05, 2002)
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FIRST CAUSE OF ACTION
(Against Defendants Baruch, Merens, Lange, Tischer, Minar
and Von Lehman For Breach of Fiduciary Duty)
34. Plaintiff incorporates by reference and realleges each allegation set
forth above as though set forth at length herein.
35. At all relevant times, defendants Baruch, Merens, Lange, Tischer,
Minar, and Von Lehman (the "Director Defendants") were members of the
RNA Board of Directors. As such, each of the Director Defendants are
fiduciaries of RNA and all its shareholders, and owe to them the duty
to conduct the business of RNA loyally, faithfully, carefully,
diligently and prudently. Each of the Director Defendants voted in
favor of the Settlement between RNA and ACLARA described in paragraph
25, above.
36. Each of the Director Defendants suffered from disabling conflicts of
interest which prevented them from acting in the best interests of RNA
and its shareholders when voting to approve the Settlement of
potential claims between ACLARA and RNA, including the following: (i)
defendant Baruch's conflict of interest arising from his dual role as
Chairman of the Board of both ACLARA and RNA, as well as the conflict
of interest arising from his unlawful conduct in connection with
ACLARA's Redemption of it's Series A Preferred Stock from RNA, as
detailed in paragraph 18, above,; (ii) defendant Meren's conflict of
interest arising from his ownership of control of a substantial equity
stake in ACLARA, through his position as an employee and agent of Dow,
as detailed in paragraph 5, above; (iii) the conflict of interest
suffered by defendants Lange, Tischer and Minar arising from their
positions as representatives of Rodenstock on the RNA Board, and (iv)
the conflict of interest suffered by defendant Von Lehman based upon
his potential liability to RNA for approving the Redemption without
properly discharging his fiduciary duty of care in considering this
transaction.
37. Each of the Director Defendants, in their respective roles as
directors of RNA, participated in the acts of mismanagement and self-
dealing alleged herein, by settling the ACLARA claim for tens of
millions of dollars less than the value of that claim, and have
therefore misused corporate assets. In so doing, the Director
Defendants breached their duty of care, loyalty and accountability to
the shareholders of RNA by acting out of self- interest, and failing
to act as an ordinary prudent person would have acted in a like
position.
38. As a result of the Director Defendants' wrongful conduct and wrongful
actions, RNA has suffered considerable damage to the value of its
assets.
39. By reason of the foregoing, each of the Director Defendants has
breached his fiduciary duty to care and loyalty to RNA and its
shareholders.
40. RNA and its shareholders have been injured by reason of the Director
Defendants' breach of their fiduciary duties to the RNA. Plaintiff, as
a shareholder and representative of RNA, seeks damages and other
relief for RNA as hereinafter set forth.
SECOND CAUSE OF ACTION
(Against The Director Defendants For Corporate Waste)
41. Plaintiff incorporates by reference and realleges each allegation set
forth above as though set forth at length herein. Each of the Director
Defendants owes and owed to RNA the obligation to protect RNA's assets
from loss or waste.
42. As specified above, each of the Director Defendants knew or should
have known that RNA possessed significant, viable legal claims against
defendants ACLARA, Baruch and Merens arising form the Redemption, as
set forth in paragraph 19, above. The Director Defendants also knew or
should have known that the recoverable damages from this claim
exceeded $100 million. By agreeing to settle these claims with ACLARA
for $1.75 million, without even commencing litigation, the Director
Defendant caused RNA to lose a substantial asset for grossly
inadequate consideration, which constitutes corporate waste.
43. By reason of the foregoing, RNA has sustained and will continue to
sustain serious damages and irreparable injury, for which relief is
sought herein.
44. The plaintiff and RNA are therefore entitled to judgment against the
Director Defendants as specified below.
THIRD CAUSE OF ACTION
(Mandatory Injunctive Relief Against The Director Defendants)
45. Plaintiff incorporates by reference and realleges each allegation set
forth above as though set forth at length herein.
46. As described herein, RNA's Settlement with ACLARA arising from the
Redemption constitutes corporate waste.
47. As further described herein, the RNA Board of Directors act of
approving the Settlement constitutes a breach of those directors' duty
of loyalty to RNA. As such, the Settlement with ACLARA is an ultra
vires act. For these reasons, the RNA Board of Directors action of
settling RNA's claim against ACLARA is void.
48. Further, as described herein, the Redemption itself resulted from the
failure of ACLARA, along with defendants Baruch and Merens, to
disclose material facts concerning this transaction, including the
following: (i) Baruch had purchased shares of ACLARA stock at a
significantly higher price two months prior to the Redemption; (ii)
ACLARA was negotiating a private placement of its stock at a
significantly higher price at the time of the Redemption; and (iii)
ACLARA was planning to commence an IPO of its stock at a significantly
higher price at the time of the Redemption. Had these materials facts
been disclosed, the RNA Board would not have approved the Redemption.
49. RNA has suffered, and will continue to suffer, irreparable injury as a
result of the Settlement and RNA's failure to pursue its legal
remedies arising from the Redemption. Accordingly, mandatory
injunctive relief compelling the Director Defendants to rescind the
Settlement and the Redemption is appropriate.
FOURTH CAUSE OF ACTION
(Against Defendant Rodenstock For Breach of Fiduciary Duty)
50. Plaintiff incorporates by reference and realleges each allegation set
forth above as though set forth at length herein.
51. As the majority, controlling shareholder of RNA, with the power to
appoint three members of the RNA Board of Directors, Rodenstock is a
fiduciary of the minority shareholders of RNA, and owes them fiduciary
duties of care, loyalty and good faith in exercising its control or
influence over the business and affairs of RNA.
52. By instructing its representatives on the RNA Board to vote in favor
of the Settlement of potential claims with ACLARA, and voting its own
shares in favor of this Settlement, Rodenstock acted in its own self-
interest, and to the detriment of RNA and its minority shareholders.
As detailed in paragraph 26, above, Rodenstock acted in this unlawful
manner for the purpose of avoiding liability for its agents' improper
conduct in failing to exercise due care in connection with the
Redemption of the Series A Preferred Stock at a price far below its
fair value.
53. By reason of the foregoing, Rodenstock breached its fiduciary duties
to RNA and its minority shareholders. RAN and its minority
shareholders have been injured by reason of Rodenstock's breach of its
fiduciary duties.
FIFTH CAUSE OF ACTION
(Against Defendant ACLARA For Abiding and Abetting
Breach of Fiduciary Duty)
54. Plaintiff incorporates by reference and realleges each allegation set
forth above as though set forth at length herein.
55. As set forth above, each of the RNA Defendants breached their
fiduciary duties to RNA and its shareholders by agreeing to the
improper Settlement of claims with ACLARA in exchange for grossly
inadequate consideration. ACLARA, through the direct participation of
its Chairman, defendant Baruch, knowingly participated in and assisted
the breaches of fiduciary duty committed by the RNA Defendants, as
detailed herein. Without ACLARA's direct participation and
substantial assistance, defendants would have been unable to commit
these fiduciary breaches, and consummate a Settlement that constitutes
a waste of corporate assets.
56. ACLARA's substantial assistance in the unlawful conduct complained of
herein was knowing, intentional, and provided for the purpose of
shielding itself from liability for its own misconduct in connection
with the Redemption of its shares from RNA.
57. As a result of ACLARA's wrongful conduct and wrongful actions, RNA has
suffered considerable damage to the value of its assets.
PRAYERS FOR RELIEF
Wherefore, plaintiff on behalf of RNA, prays for judgment against
defendants, and each of them jointly and severally as follows:
A. Determining that this suit is a proper derivative action and
certifying plaintiff as an appropriate representative of
Rodenstock North America, Inc. for this action pursuant to
Section 800 of the California Corporations Code;
B. Determining and awarding RNA damages for defendants' breaches
of fiduciary duty and waste of corporate assets;
C. Determining and awarding RNA the damages sustained as a result
of the violations set forth above from each defendant, jointly
and severally, together with interest thereon;
D. Awarding plaintiff the costs and disbursements of this action,
including reasonable fees and costs to plaintiff's attorneys
and experts; Determining RNA's Settlement with ACLARA to be an
ultra vires, act and therefore null and void;
E. Issuing a mandatory injunction compelling the current RNA
Director Defendants to seek a rescission of the Settlement and
the Redemption; and Granting such other and further relief as
the Court deems just and proper.
Jury Demand
Plaintiff demands a trial by jury of all issues so triable.
Dated: April 26, 2001
BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
/s/ Alan Schulman
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ALAN SCHULMAN
WOLFRAM WORMS
12730 High Bluff Drive, Suite 100
San Diego, CA 92130
Tel: (858)793-0070
Fax: (858) 793-0323
Attorneys for Plaintiff
I, Yehochai Schneider, a duly authorized representative of S&A Biotech
Investments, LLC, hereby declare:
On behalf of S&A Biotech Investments, LLC, the plaintiff in the
captioned matter, I have read the foregoing Shareholders' Verified Derivative
Complaint and know its contents. I am informed and believe and, on the ground,
allege that the matters stated therein are true and correct.
I declare under penalty of perjury that the foregoing is true and
correct.
Executed this 10th day of April, 2001, in Los Angeles, California.
/s/ Yehochai Schneider
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Yehochai Schneider