SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 16)
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Wallace Computer Services, Inc.
(Name of Subject Company)
Moore Corporation Limited
and
FRDK, Inc.
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS
(Title of Class of Securities)
932270101
(CUSIP Number of Class of Securities)
JOSEPH M. DUANE, ESQ.
FRDK, Inc.
1 FIRST CANADIAN PLACE
TORONTO, ONTARIO, CANADA M5X 1G5
(416) 364-2600
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Bidder)
-------------------
COPY TO:
DENNIS J. FRIEDMAN, ESQ.
DAVID M. WILF, ESQ.
DAVID M. SCHWARTZBAUM, ESQ.
CHADBOURNE & PARKE LLP
30 ROCKEFELLER PLAZA
NEW YORK, NY 10112
(212) 408-5100
<PAGE>
FRDK, Inc. and Moore Corporation Limited hereby amend and
supplement their Tender Offer Statement on Schedule 14D-1 (as amended, the
"Statement"), originally filed on August 2, 1995, as amended by Amendments No.
1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 with respect to their offer
to purchase all outstanding shares of Common Stock, par value $1.00 per share,
of Wallace Computer Services, Inc., a Delaware corporation (together with the
associated preferred stock purchase rights), as set forth in this Amendment No.
16. Capitalized terms not defined herein shall have the meanings assigned
thereto in the Statement.
ITEM 10. ADDITIONAL INFORMATION.
Pursuant to an Order, dated October 19, 1995, the
Delaware Court (i) granted leave for Moore and the Purchaser
to amend and supplement their complaint in the Moore Action in
connection with the revised Offer; and (ii) deemed the amended
and supplemental complaint (the "Amended and Supplemental
Complaint") filed as of October 19, 1995.
Pursuant to the Amended and Supplemental Complaint,
Moore and the Purchaser seek injunctive and/or declaratory
relief to prevent (a) the application of the Company's
anti-takeover devices and other defensive measures to the
revised tender offer, proposed merger and proxy solicitation,
in violation of fiduciary duties owed to the Company's
stockholders; and (b) the Company from otherwise impeding the
Purchaser's revised tender offer, proposed merger and proxy
solicitation, which comply with all applicable laws and other
obligations. On October 12, 1995, the Purchaser increased the
Offer Price from $56 per Share to $60 per Share, net to the
seller in cash.
A copy of the Amended and Supplemental Complaint is
attached hereto as Exhibit (g)(15) and is incorporated herein
by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(g)(15) Amended and Supplemental Complaint of Moore
Corporation Limited and FRDK, Inc. v. Wallace
Computer Services, Inc., Robert J. Cronin, Theodore
Dimitriou, Fred F. Canning, William N. Lane, III,
Neele E. Stearns, Jr., R. Darrell Ewers, Richard F.
Doyle and William E. Olsen, filed in the United
States District Court for the District of Delaware
on October 19, 1995.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: October 23, 1995
FRDK, Inc.
By: /s/ Joseph M. Duane
Name: Joseph M. Duane
Title: President
MOORE CORPORATION LIMITED
By: /s/ Joseph M. Duane
Name: Joseph M. Duane
Title: Vice President and
General Counsel
<PAGE>
EXHIBIT INDEX
(g)(15) Amended and Supplemental Complaint of Moore
Corporation Limited and FRDK, Inc. v. Wallace
Computer Services, Inc., Robert J. Cronin, Theodore
Dimitriou, Fred F. Canning, William N. Lane, III,
Neele E. Stearns, Jr., R. Darrell Ewers, Richard F.
Doyle and William E. Olsen, filed in the United
States District Court for the District of Delaware
on October 19, 1995.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MOORE CORPORATION LIMITED and FRDK,
INC.,
Plaintiffs, C.A. No. 95-472 (MMS)
-against- AMENDED AND
SUPPLEMENTAL
WALLACE COMPUTER SERVICES, INC., ROBERT COMPLAINT
J. CRONIN, THEODORE DIMITRIOU, FRED F.
CANNING, WILLIAM N. LANE, III, NEELE E. October 19, 1995
STEARNS, JR., R. DARRELL EWERS, RICHARD
F. DOYLE and WILLIAM E. OLSEN,
Defendants.
Plaintiffs, Moore Corporation Limited ("Moore") and FRDK, Inc.
("FRDK"), by their attorneys, as and for their amended and supplemental
complaint herein, allege upon knowledge with respect to themselves and their own
acts, and upon information and belief as to all other matters, as follows:
NATURE OF THE ACTION
1. Plaintiffs bring this action for injunctive and/or declaratory
relief:
(a) to prevent the application of defendant Wallace Computer
Services, Inc.'s ("Wallace") anti-takeover devices and other defensive
measures to FRDK's tender offer, proposed merger and proxy solicitation, in
violation of fiduciary duties owed to Wallace's stockholders; and
(b) to prevent Wallace from otherwise impeding FRDK's tender
offer, proposed merger and proxy solicitation, which comply with all
applicable laws and other obligations.
2. On July 30, 1995, FRDK announced its intention to commence an
all-cash tender offer for all outstanding shares of common stock of Wallace, at
a price of $56 per share, as to which a Tender Offer Statement on Form 14D-1 was
filed with the United States Securities and Exchange Commission on or about
August 2, 1995 ("FRDK's Form 14D-1"), which statement has been amended and
supplemented since that time, including on October 12, 1995 when the offering
price for the tender offer was changed to $60 (collectively, the "Offer"). The
Offer is conditioned on a number of matters, the most important of which being
the removal or inapplicability of certain of Wallace's anti-takeover devices.
Moore intends, as soon as practicable following consummation of the Offer, to
have Wallace merge with FRDK, or another Moore subsidiary (the "Proposed
Merger"). At the same time as it announced the Offer, FRDK announced its
intention to commence a proxy solicitation to nominate three individuals to
serve as directors of Wallace and to take certain other actions to facilitate
consummation of the Offer and Proposed Merger (the "Proxy Solicitation").
3. The Offer is non-coercive and fair to Wallace's stockholders. The
Offer represents a substantial premium over the market price for Wallace shares
prior to announcement of the Offer. The Offer, Proposed Merger and Proxy
Solicitation do not pose any threat to the interests of Wallace's stockholders
or to Wallace's corporate policy and effectiveness and should be approved.
4. Wallace has available to it a variety of defensive measures,
including a so-called "Poison Pill" (as referred to in paragraphs 28-30 below),
the Delaware Business Combination Statute, 8 Del. C. Sec. 203 ("Section 203"),
and prohibitions against certain business combinations set forth in Article
Ninth of Wallace's Restated Certificate of Incorporation ("Article Ninth"),
which are designed to limit the ability of Wallace's stockholders' to consider,
accept or approve any tender offer unless Wallace's Board of Directors agrees.
5. Wallace's Board of Directors has expressed its opposition to being
acquired by Moore and has demonstrated an intent to use defensive measures to
block the Offer and Proposed Merger. Since Moore initially approached Wallace
concerning a potential business combination, Wallace's Board of Directors has
taken specific steps to create additional obstacles to any merger, and has taken
steps to block the Proxy Solicitation.
6. Given the nature of the Offer and its substantial value to
Wallace's stockholders, the Wallace Board of Directors should not be allowed to
deprive the stockholders of the opportunity to decide upon the merits of the
Offer for themselves. Use of anti-takeover devices or other defensive measures
by Wallace's Board of Directors to obstruct the Offer, Proposed Merger or Proxy
Solicitation represents an unreasonable response, in violation of the Board of
Directors' fiduciary duties owed to Wallace's stockholders, and will cause
plaintiffs and Wallace's stockholders irreparable injury.
<PAGE>
THE PARTIES
7. Plaintiff Moore is an Ontario corporation with its principal place
of business in Toronto, Ontario. Moore is in the business of delivering
information handling products and services that are both paper-based and
electronic-based in order to create efficiency and competitiveness for its
customers. Its revenues from consolidated operations in 1994 exceeded $2.4
billion. Moore owns common stock of Wallace.
8. Plaintiff FRDK is a New York corporation with its principal place
of business in Toronto, Ontario. It is a wholly-owned subsidiary of Moore and
was incorporated for the purpose of making the Offer and Proxy Solicitation and
acquiring all the stock of Wallace. FRDK owns common stock of Wallace.
9. Defendant Wallace is a Delaware corporation with its principal
place of business in Illinois. According to its July 18, 1995 Form 8-K, Wallace
is engaged predominantly in the computer services and supply industry. Wallace
provides its customers with a full line of products and services including
business forms, commercial and promotional graphics printing, computer labels,
machine ribbons, computer hardware and software, computer accessories, office
products and electronic forms.
10. Defendant Robert J. Cronin ("Cronin") is a citizen of Illinois.
Since 1992, he has been President and Chief Executive Officer of Wallace. Since
November 1992, Cronin has been a member of the Board of Directors of Wallace.
11. Defendant Theodore Dimitriou is a citizen of Illinois. Since
November 1972, he has been a member of the Board of Directors of Wallace.
12. Defendant Fred F. Canning is a citizen of Illinois. Since January
1984, he has been a member of the Board of Directors of Wallace.
13. Defendant William N. Lane, III is a citizen of Illinois. Since
January 1990, he has been a member of the Board of Directors of Wallace.
14. Defendant Neele E. Stearns, Jr. is a citizen of Illinois. Since
January 1990, he has been a member of the Board of Directors of Wallace.
15. Defendant R. Darrell Ewers is a citizen of Illinois. Since January
1993, he has been a member of the Board of Directors of Wallace.
16. Defendant Richard F. Doyle is a citizen of Illinois. Since October
1971, he has been a member of the Board of Directors of Wallace.
17. Defendant William E. Olsen is a citizen of Illinois. Since June
1979, he has been a member of the Board of Directors of Wallace.
JURISDICTION AND VENUE
18. This Court has jurisdiction of the subject matter of this action
pursuant to 28 U.S.C. ss. 1332 in that it is a dispute among citizens of
different states and a foreign state and the matter in controversy exceeds the
sum of $50,000, exclusive of interest and costs.
19. Venue is proper in this district pursuant to 28 U.S.C. ss. 1391(a)
and (c).
THE OFFER, PROPOSED MERGER AND PROXY SOLICITATION
20. On July 30, 1995, FRDK announced its intention to commence a
tender offer for all outstanding shares of Wallace common stock (together with
the associated preferred stock purchase rights that were issued in connection
with Wallace's Poison Pill), then at the price of $56 per share (and associated
right) net to the seller in cash, making the value of the proposed transaction
approximately $1.3 billion. The terms of the Offer are more particularly set
forth in FRDK's Form 14D-1 (which was filed on or about August 2, 1995, and as
amended and supplemented thereafter). The Offer is conditioned upon, among other
things, (a) the valid tender of a majority of all outstanding shares of
Wallace's common stock on a fully-diluted basis on the date of purchase; (b) the
redemption, invalidation or inapplicability of the preferred stock purchase
rights under Wallace's Poison Pill; (c) the approval of the acquisition of
shares pursuant to the Offer and the Proposed Merger under Section 203 or the
inapplicability of such Section to the Offer and Proposed Merger; and (d) the
Proposed Merger having been approved pursuant to Article Ninth of Wallace's
Restated Certificate of Incorporation or the inapplicability of such Article to
the Offer and Proposed Merger. On October 12, 1995, the Offer price was raised
to $60 per share.
21. Moore intends, as soon as practicable following consummation of
the Offer, to propose and seek to have Wallace consummate a merger or similar
business combination with FRDK or another direct or indirect wholly-owned
subsidiary of Moore. The purpose of the Proposed Merger is to acquire all shares
not tendered and purchased pursuant to the Offer or otherwise. Pursuant to the
Proposed Merger, each such share (other than those held by stockholders who
perfect appraisal rights relative to same) would be converted into the right to
receive an amount in cash equal to the price per share paid pursuant to the
Offer.
22. On August 28, 1995 and October 5, 1995, FRDK delivered written
notices to Wallace (the "Notice") of its intention to nominate at Wallace's 1995
Annual Meeting of Stockholders, which Wallace now has scheduled for December 8,
1995 ("1995 Annual Meeting"), three individuals to serve as directors of Wallace
(the "Nominees"). In the Notice, FRDK further indicated its current intent to
introduce business at the 1995 Annual Meeting for the purpose of, among other
things, (i) removing all of the other present members of Wallace's Board of
Directors, (ii) amending Wallace's Amended and Restated Bylaws (the "Bylaws") to
fix the number of directors of Wallace at five, and (iii) repealing each
provision of the Bylaws that was adopted without stockholder approval subsequent
to February 15, 1995 and prior to Wallace's 1995 annual meeting. The Nominees
intend to (a) redeem the preferred stock purchase rights under Wallace's Poison
Pill or make it inapplicable to the Offer and Proposed Merger, approve the Offer
and Proposed Merger under Section 203, take any action that is desirable or
necessary for the satisfaction of any requirements of the Article Ninth
provision and take such other actions and seek or grant such other consents or
approvals as may be desirable or necessary to expedite prompt consummation of
the Offer and Proposed Merger, or (b) if any other transaction offering more
value to Wallace's stockholders is proposed, take actions to facilitate such a
transaction, in each case subject to fulfillment of the fiduciary duties they
would have as directors of Wallace.
23. Pursuant to its intentions announced in the Notice, FRDK has
caused to be delivered to all Wallace stockholders Proxy Solicitation materials
relative to the nominations and business to be presented at the 1995 Annual
Meeting.
24. FRDK's Offer is clearly in the best interests of Wallace's
stockholders. It is an all-cash offer, available to all Wallace stockholders,
for all outstanding shares. It is not "front-end loaded" or otherwise coercive
in nature. Moreover, it provides Wallace's stockholders with the opportunity to
realize a substantial premium over the market price of their shares prior to
announcement of the Offer. On the last New York Stock Exchange trading day (July
28, 1995) before announcement of FRDK's intention to commence the Offer, the
closing price of Wallace shares was $44 per share. The initial Offer price ($56
per share) represented a premium of $12 per share (or 27%) over the market price
of the shares immediately prior to announcement of FRDK's intention to commence
the Offer, or $16.50 per share (or 42%) over the average of the market price of
the shares ($39.50 per share) for the thirty days immediately prior to such
announcement. The current Offer price ($60 per share) represents an additional
$4 per share to Wallace's stockholders.
25. The Offer, Proposed Merger and Proxy Solicitation do not pose any
threat to the interests of Wallace's stockholders or to Wallace's corporate
policy and effectiveness.
26. The Offer, Proposed Merger and Proxy Solicitation comply or will
comply with all applicable laws and other obligations, including, without
limitation, the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject. The offering documents fairly
disclosed all information material to the decision of Wallace's stockholders
whether to accept or reject the Offer, in compliance with plaintiffs'
obligations under the securities laws. Plaintiffs have made the filings required
by the Hart-Scott-Rodino Act, and on August 17, 1995, the Merger Task Force of
the United States Department of Justice, after an investigation of the proposed
transaction (which included input from Moore and Wallace as well as certain of
their competitors and customers), allowed the investigation period pursuant to
the Hart-Scott-Rodino Act to expire without a request for additional information
from the parties, thus ending the Department's investigation of Moore's and
FRDK's proposed acquisition of Wallace. The Offer, Proposed Merger and Proxy
Solicitation are lawful under the antitrust laws.
27. The Offer and Proposed Merger cannot be completed successfully
unless the Wallace Board of Directors agrees to remove or make inapplicable
Wallace's anti-takeover devices or allows the Proxy Solicitation to proceed
unhindered. The application of such anti-takeover devices to the Offer and
Proposed Merger or the attempt to interfere with such Proxy Solicitation by
Wallace's Board of Directors in the circumstances of the instant case would be
an unreasonable, disproportionate and draconian response, in breach of the
Wallace Board of Directors' fiduciary duties.
WALLACE'S DEFENSIVE MEASURES
A. The Poison Pill
28. On March 14, 1990, Wallace's Board of Directors adopted a
Preferred Stockholder Rights Plan (the "Poison Pill"), which effectively allows
the Board of Directors to block unilaterally any acquisition offers, even those
providing substantial benefit to Wallace's stockholders.
29. By virtue of the Poison Pill, Wallace's Board of Directors
declared a dividend of one preferred stock purchase right per share of common
stock (a "Right"), payable to each of Wallace's stockholders of record as of
March 28, 1990. Each Right entitles the registered holder thereof to purchase
from Wallace, following the Distribution Date (as defined in the Poison Pill),
one two-hundredth of a share of Wallace's Series A Preferred Stock at an
exercise price of $115. Furthermore, following the occurrence of certain other
events, including the acquisition of 20% or more of Wallace's common stock, each
holder of a Right will be able to exercise that Right and purchase common stock
of Wallace (or the surviving company in the event of merger) at half-price.
Because any current acquiror of 20% or more of Wallace's common stock would not
be entitled to exercise Rights in its possession, the dilutive effect of the
Poison Pill, if implemented, on the value of such acquiror's common stock is
overwhelming. Because of this prohibitive economic consequence, the Poison Pill
effectively precludes the Proposed Merger.
30. Wallace's Board of Directors can redeem the Rights at a redemption
price of $.01 per Right, or alternatively, can amend the Poison Pill to make the
Rights inapplicable to the Offer and the Proposed Merger. Given the nature and
value of the Offer, a proper exercise of the Wallace Board of Directors'
fiduciary duties would require it to redeem the Rights, or amend the Poison Pill
to make the Rights inapplicable to the Offer and Proposed Merger, to enable
stockholders to decide upon the merits of the Offer for themselves.
B. Delaware Business Combination Statute, Section 203
31. Section 203, entitled "Business Combinations With Interested
Stockholders," applies to any Delaware corporation that has not opted out of the
statute's coverage. Wallace has not opted out of the statute's coverage.
32. Section 203 was designed to impede coercive and inadequate tender
offers. Section 203 provides that if a person acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder"), such
interested stockholder may not engage in a "business combination" with the
corporation (defined to include a merger or consolidation) for three years after
the interested stockholder becomes such, unless: (i) prior to the 15%
acquisition, the corporation's board of directors has approved either the
acquisition or the business combination, (ii) the interested stockholder
acquires 85% of the corporation's voting stock in the same transaction in which
it crosses the 15% threshold, or (iii) on or subsequent to the date of the 15%
acquisition, the business combination is approved by the corporation's board of
directors and authorized at an annual or special meeting of the corporation's
stockholders, and not by written consent, by the affirmative vote of at least
66-2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
33. Because a proper exercise of the Wallace Board of Directors'
fiduciary duties would require it to approve the Offer, Section 203 should not
be applicable. Wallace's Board of Directors should not use Section 203 to
obstruct the Offer, which is non-coercive, offers Wallace's stockholders a
substantial premium for their shares, and poses no threat to the interests of
Wallace's stockholders or to Wallace's corporate policy and effectiveness.
C. Article Ninth Of Wallace's
Restated Certificate Of Incorporation
34. Article Ninth of Wallace's Restated Certificate of Incorporation,
entitled "Certain Business Combinations" is designed to impede coercive and
inadequate tender offers.
35. Article Ninth purports to prohibit certain business combinations
(each, an "Article Ninth Transaction") between Wallace and any "Interested
Shareholder" (defined generally as any person that directly or indirectly is (i)
entitled to exercise or direct the exercise or is the owner of 20% or more of
the outstanding voting power of Wallace, or (ii) is an affiliate of such person
and at any time immediately prior to the date in question was entitled to
exercise or direct the exercise of 20% or more of the outstanding voting power
of Wallace, or (iii) an assignee of any Shares during the two year period
immediately prior to the date in question beneficially owned by an Interested
Shareholder) unless the affirmative vote of at least 80% of the combined voting
power of the then outstanding shares of stock of Wallace entitled to vote
generally in the election of directors is obtained.
36. An Article Ninth Transaction may avoid the 80% stockholder
approval requirement if either (a) the Article Ninth Transaction is approved by
a majority of the Disinterested Directors (as defined in Wallace's Restated
Certificate of Incorporation), or (b) certain "fair price" provisions are
complied with. The Article Ninth restrictions do not apply to an Article Ninth
Transaction if such transaction is approved by a resolution of the Board of
Directors of Wallace adopted prior to the date on which the Interested
Shareholder became an Interested Shareholder.
37. Because a proper exercise of the Wallace Board of Directors'
fiduciary duties would require it to approve FRDK's Offer, Article Ninth's
prohibition on certain business combinations should not be applicable. Article
Ninth should not be used by the Wallace Board of Directors to obstruct the
Offer, which is non-coercive, offers Wallace's stockholders a substantial
premium for their shares, and poses no threat to the interests of Wallace's
stockholders or to Wallace's corporate policy and effectiveness.
WALLACE'S OPPOSITION
38. Wallace's Board of Directors has expressed its opposition to an
acquisition of Wallace by Moore. In February 1995, Moore attempted to initiate
discussions with Wallace regarding a possible business combination between Moore
and Wallace. In response, defendant Cronin, the President and CEO of Wallace,
advised Mr. Reto Braun, Chairman of Moore, that Wallace's Board of Directors had
considered Moore's proposal, was not interested in any such combination or in
pursuing the matter further. All efforts by Moore to engage in further
discussions with Wallace concerning a possible business combination with Moore
since that time have been rebuffed by Wallace.
39. In addition to its expressed opposition to a business combination
with Moore, Wallace's Board of Directors has taken specific steps since Moore's
initial approach in February 1995 to create additional obstacles to any merger.
Under a Bylaw provision purportedly adopted in June 1995, in probable response
to Moore's previous approaches, any business to be raised by a stockholder at
the annual meeting must now be presented sixty (60) to ninety (90) days before
the meeting. Also in probable response to Moore's previous approaches, the Board
of Directors approved a "golden parachute" employment contract with defendant
Cronin, which among other things, provides that defendant Cronin will receive
millions of dollars from Wallace, including reimbursement of tax penalties, in
the event of a takeover and a change in his job duties. Such contract is
purportedly retroactive to January 1995.
40. On August 15, 1995, Wallace issued a press release, filed a
complaint against Moore and FRDK in the United States District Court for the
Southern District of New York (the "SDNY Action"), and filed a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with the Securities and Exchange Commission, which stated the recommendation of
the Wallace Board of Directors that the Wallace stockholders should reject the
Offer.
41. Wallace's complaint in the SDNY Action marked the initiation by
the defendants of a campaign of meritless litigation designed to create further
obstacles to the Offer, and which has wasted the money of the Wallace
stockholders rather than protected their interests. The complaint in the SDNY
Action asserted without any basis that (i) the transactions contemplated by the
Offer may substantially lessen competition in a relevant market and therefore
violate Section 7 of the Clayton Act, 15 U.S.C. ss. 18; and (ii) Moore and FRDK
have made false and misleading statements of fact in connection with the Offer.
The complaint in the SDNY Action sought declaratory relief and injunctive relief
preliminarily and permanently enjoining Moore and FRDK (i) from acquiring any
voting securities of Wallace, and (ii) from soliciting, acquiring, or attempting
to acquire in any manner, any Wallace shares until 60 days after they have fully
complied with the Securities Exchange Act of 1934, as amended.
42. On August 21, 1995, a representative from Lazard Freres, on behalf
of Moore and FRDK, contacted a representative from Goldman Sachs, the Company's
financial advisor in connection with the Offer, to suggest that Lazard Freres
and Goldman Sachs, the Company, Moore and FRDK or any combination thereof
schedule a meeting to discuss the Offer. On August 26, 1995, the Goldman Sachs
representative advised the Lazard Freres representative that the Board of
Directors of the Company had rejected Moore and Purchaser's suggestion to meet
in order to discuss the Offer.
43. In a further attempt to frustrate a business combination between
Moore and Wallace, the Wallace Board of Directors on September 6, 1995 approved
and adopted amendments to certain of its employee benefit plans, including its
employee profit sharing plan and its long-term performance plan. The Wallace
Board of Directors also approved and adopted an amendment to its employee
severance pay plan to provide that the amount of severance payable to certain
participants shall not be less than one year's compensation upon the occurrence
of certain events following a change in control of Wallace, irrespective of
their seniority with Wallace. The Compensation Committee of the Wallace Board of
Directors designated 37 participants for this purpose.
44. On September 25, 1995, Wallace filed a First Amended Complaint in
the SDNY Action. Among other things, the First Amended Complaint in the SDNY
Action added Mr. Braun as a defendant and introduced an additional meritless
claim, namely that Moore, FRDK and Mr. Braun allegedly made false and misleading
statements of fact in connection with their preliminary proxy statement. (On
September 27, 1995, however, the motion of Moore and FRDK to dismiss the SDNY
Action was granted.)
45. Also on September 25, 1995, the defendants filed an Answer and
Counterclaim in this action and added Mr. Braun as an additional
counter-defendant. The Counterclaim brought against Moore, FRDK and Mr. Braun
contains similar allegations and requests for relief to that contained in the
First Amended Complaint in the SDNY Action, and it too was brought in
furtherance of defendants' ongoing campaign of using meritless and money-wasting
litigation to obstruct the Offer.
46. In light of Wallace's expressed opposition to any proposed
business combination with Moore, and its actions since Moore's initial approach
in February 1995 to create additional obstacles to any such merger, unless
enjoined by this Court, Wallace's directors will continue to use Wallace's
numerous defensive measures to block the Offer and Proposed Merger and may take
steps to block the Proxy Solicitation, all in violation of their fiduciary
duties to Wallace's stockholders.
<PAGE>
IRREPARABLE INJURY
47. Plaintiffs do not have an adequate remedy at law. Only through the
exercise of the Court's equitable powers will plaintiffs and Wallace's other
stockholders be protected from immediate and irreparable injury. Unless the
Court enjoins the application of Wallace's anti-takeover devices to FRDK's Offer
and enjoins Wallace from impeding the Offer, Proposed Merger and Proxy
Solicitation by any other measures, Wallace's stockholders will be deprived of
the opportunity to decide for themselves whether or not to accept the Offer.
Moreover, FRDK will be precluded from consummating the Offer, which is
conditioned on the removal or inapplicability of Wallace's anti-takeover
devices, will be denied any meaningful access to or control over Wallace, and
will be hindered in or prevented from exercising its fundamental stockholder
rights under Delaware law. Should that occur, plaintiffs will have lost the
unique opportunity to acquire Wallace, and Wallace's other stockholders will
have lost the opportunity to sell their shares for a substantial premium.
AS AND FOR A FIRST CAUSE OF ACTION
(Injunctive Relief)
48. Plaintiffs repeat and reallege each and every allegation contained
in paragraphs 1 through 47 above, as if fully set forth herein.
49. FRDK's Offer is non-coercive and non-discriminatory; it is fair to
Wallace's stockholders; and it represents a substantial premium over the market
price of Wallace shares prior to the announcement of FRDK's intention to
commence the Offer. The Offer, Proposed Merger and Proxy Solicitation comply
with all applicable laws and other obligations -- including, without limitation,
the securities laws, the antitrust laws, and all other legal obligations to
which plaintiffs are subject -- and pose no threat to the interests of Wallace's
stockholders or to Wallace's corporate policy or effectiveness. Use of Wallace's
anti-takeover devices or any other defensive measures to prevent Wallace's
stockholders from deciding for themselves whether or not to accept the Offer or
Proxy Solicitation is not proportionate, nor within the range of reasonable
responses to the Offer, Proposed Merger or Proxy Solicitation, and is a breach
of the Board of Directors' fiduciary duties to Wallace's stockholders.
50. Plaintiffs do not have an adequate remedy at law.
AS AND FOR A SECOND CAUSE OF ACTION
(Declaratory Judgment)
51. Plaintiffs repeat and reallege each and every allegation contained
in paragraphs 1 through 50 above, as if fully set forth herein.
52. The Offer, Proposed Merger and Proxy Solicitation comply or will
comply with all applicable laws and other obligations, including, without
limitation, the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject. Given the nature of the Offer and
its benefits, Wallace should assist plaintiffs in obtaining any necessary
regulatory approvals. In any event, Wallace should not be permitted to attempt
to delay consummation of the Offer, Proposed Merger or Proxy Solicitation. To
prevent any unnecessary impediment to consummation of the Offer, Proposed Merger
and Proxy Solicitation, plaintiffs seek a declaratory judgment that the Offer,
Proposed Merger and Proxy Solicitation comply with all applicable laws and other
obligations.
53. Plaintiffs do not have an adequate remedy at law.
WHEREFORE, plaintiffs respectfully request that this Court enter an
order:
(a) preliminarily and permanently enjoining Wallace, its
directors, officers, successors, agents, servants, subsidiaries, employees
and attorneys, and all persons acting in concert or participating with
them, from taking any steps to impede or frustrate the ability of Wallace's
stockholders to consider and make their own determination as to whether to
accept the terms of the Offer or give or withhold consent to the terms of
the Proxy Solicitation, or taking any other action to thwart or interfere
with the Offer, Proposed Merger or Proxy Solicitation;
(b) compelling Wallace's Board of Directors to redeem the Rights
associated with the Poison Pill or to amend the Poison Pill so as to make
the Rights inapplicable to the Offer and the Proposed Merger, and
preliminarily and permanently enjoining Wallace, its directors, officers,
successors, agents, servants, subsidiaries, employees and attorneys, and
all persons acting in concert or participating with them, from taking any
action to implement, distribute or recognize any rights or powers with
respect to said Rights (other than to redeem the Rights), and from taking
any actions pursuant to the Poison Pill that would dilute or interfere with
FRDK's voting rights or in any other way discriminate against FRDK in the
exercise of its rights with respect to its Wallace stock;
(c) compelling Wallace's Board of Directors to approve the Offer
and the Proposed Merger for the purposes of Section 203, and preliminarily
and permanently enjoining Wallace, its directors, officers, successors,
agents, servants, subsidiaries, employees and attorneys, and all persons
acting in concert or participating with them, from taking any actions to
enforce or apply Section 203 that would interfere with the commencement,
continuation or consummation of FRDK's Offer;
(d) compelling Wallace's Board of Directors to approve the
Proposed Merger for the purposes of Article Ninth, and preliminarily and
permanently enjoining Wallace, its directors, officers, successors, agents,
servants, subsidiaries, employees and attorneys, and all persons acting in
concert or participating with them, from taking any actions to enforce or
apply Article Ninth in any way that would interfere with the consummation
of the Proposed Merger;
(e) declaring and adjudging that the Offer and Proposed Merger
comply with all applicable laws and other obligations, including, without
limitation, the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject;
(f) awarding plaintiffs their costs and disbursements in this
action, including reasonable attorneys' fees; and
<PAGE>
(g) granting such other and further relief as the Court deems
just and proper.
October 19, 1995
RICHARDS, LAYTON & FINGER
By /s/ Jesse A. Finkelstein
Jesse A. Finkelstein
(I.D. No. 1090)
Daniel A. Dreisbach
(I.D. No. 2583)
A Member of the Firm
RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
(302) 658-6541
Attorneys for Plaintiffs
Of Counsel
Donald I Strauber
William S. D'Amico
Thomas J. McCormack
Robert A. Schwinger
CHADBOURNE & PARKE LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-5100
