UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Amendment No. 2
to
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Under the Securities Exchange Act of 1934
----------------
Global Crossing Ltd.
(Name of Subject Company)
U S WEST, Inc.
(Bidder)
Common Stock, $.01 Par Value
(Titles of Class of Securities)
CUSIP: G3921A100
(CUSIP Number of Class of Securities) (Common Stock)
U S WEST, Inc.
1801 California Street
Denver, CO 80202
(303) 672-2700
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of bidder)
Copies to:
Dennis J. Block, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6000
Thomas O. McGimpsey, Esq.
U S WEST, Inc.
1801 California Street
Suite 5100
Denver, CO 80202
(303) 672-2712
<PAGE>
U S WEST, Inc. hereby amends and supplements its Schedule 14D-1 and 13D
originally filed on May 21, 1999 (the "Original Filing"), as amended by its
Schedule 14D-1 and 13D, Amendment No. 1, filed on May 24, 1999 (together with
the Original Filing, the "Statement") with respect to the Offer by U S WEST,
Inc. to purchase 39,259,305 shares of Common Stock of Global Crossing Ltd., as
set forth in the Statement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned such terms in the Statement.
Item 10. Additional Information.
Item 10 is hereby amended by the addition of the following:
(e)(1) On or about May 19, 1999, a complaint was filed in the Superior
Court of the State of California for the County of Los Angeles entitled ADELE
BRODY, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED V. US WEST, INC.,
LINDA G. ALVARADO, CRAIG R. BARRETT, HANK BROWN, JERRY J. COLANGELO, GEORGE J.
HARAD, PETER S. HELLMAN, ALLAN F. JACOBSON, RICHARD D. MCCORMICK, MARILYN C.
NELSON, F. POPOFF, SOLOMON D. TRUJILLO, AND DOES 1-50 INCLUSIVE (Case No.
BC210605). This action is a purported class action brought on behalf of all
persons, other than defendants, who own the common stock of US West, Inc.
against US West, Inc. and the directors of US West, Inc. alleging that the
defendants breached fiduciary duties of care, candor and loyalty in connection
with their approval of the Merger. The complaint further alleges that the
defendants aided and abetted breaches of fiduciary duties by each other. The
complaint seeks an order (1) declaring that defendants have committed or aided
and abetted breaches of fiduciary duties, (2) enjoining the consummation of the
Merger or, in the alternative, rescinding the Merger if consummated, or awarding
damages caused by the defendants' alleged breaches of fiduciary duty, (3)
requiring defendants to account for all profits realized by them as a result of
the Merger and (4) the appointment of a committee of stockholders to participate
in any proposed transaction involving US West, Inc. The defendants intend to
vigorously defend this action.
(e)(2) On or about May 18, 1999 a complaint was filed in the District
Court of the State of Colorado, City and County of Denver entitled PAMELA CAGAN
V. US WEST COMMUNICATIONS, INC., SOLOMON TRUJILLO, RICHARD MCCORMICK, MANUEL
FERNANDEZ, HANK BROWN, LINDA ALVARADO, DR. CRAIG BARRETT, MARILYN CARLSON
NELSON, FRANK POPOFF, PETER HELLMAN, GEORGE HARAD AND JERRY COLANGELO (Case No.
99CV3354). This action is a purported class action brought on behalf of all
persons, other than defendants, who own the common stock of US West, Inc.
against US West Communications, Inc. the directors of US West, Inc. alleging
that the defendants breached their fiduciary duties to the class members,
resulting in the stockholders being prevented from obtaining a fair price for
their common stock. The complaint seeks an order (1) declaring that defendants
breached their fiduciary and other duties, (2) requiring defendants to act in
accordance with their fiduciary duties by undertaking an evaluation of US West,
Inc.'s worth as a merger/acquisition candidate, taking steps to enhance that
value by, among other things, engaging in negotiations with other interested
parties, acting independently and avoiding conflicts of interest and (3)
awarding compensatory damages against defendants individually and severally. The
defendants intend to vigorously defend this action.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended by the addition of the following exhibits:
(g)(1) Complaint filed in the Superior Court of the State of California
for the County of Los Angeles entitled ADELE BRODY, ON BEHALF OF
HERSELF AND ALL OTHERS SIMILARLY SITUATED V. US WEST, INC., LINDA
G. ALVARADO, CRAIG R. BARRETT, HANK BROWN, JERRY J. COLANGELO,
GEORGE J. HARAD, PETER S. HELLMAN, ALLAN F. JACOBSON, RICHARD D.
MCCORMICK, MARILYN C. NELSON, F. POPOFF, SOLOMON D. TRUJILLO, AND
DOES 1-50 INCLUSIVE.
(g)(2) Complaint filed in the District Court of the State of Colorado,
City and County of Denver entitled PAMELA CAGAN V. US WEST
COMMUNICATIONS, INC., SOLOMON TRUJILLO, RICHARD MCCORMICK, MANUEL
FERNANDEZ, HANK BROWN, LINDA ALVARADO, DR. CRAIG BARRETT, MARILYN
CARLSON NELSON, FRANK POPOFF, PETER HELLMAN, GEORGE HARAD AND JERRY
COLANGELO.
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: June 7, 1999
U S WEST, INC.
By: /s/ Thomas O. McGimpsey
----------------------------------
Name: Thomas O. McGimpsey
Title: Assistant Secretary and
Senior Attorney
<PAGE>
EXHIBIT INDEX
(g)(1) Complaint filed in the Superior Court of the State of California
for the County of Los Angeles entitled ADELE BRODY, ON BEHALF OF
HERSELF AND ALL OTHERS SIMILARLY SITUATED V. US WEST, INC., LINDA
G. ALVARADO, CRAIG R. BARRETT, HANK BROWN, JERRY J. COLANGELO,
GEORGE J. HARAD, PETER S. HELLMAN, ALLAN F. JACOBSON, RICHARD D.
MCCORMICK, MARILYN C. NELSON, F. POPOFF, SOLOMON D. TRUJILLO, AND
DOES 1-50 INCLUSIVE.
(g)(2) Complaint filed in the District Court of the State of Colorado,
City and County of Denver entitled PAMELA CAGAN V. US WEST
COMMUNICATIONS, INC., SOLOMON TRUJILLO, RICHARD MCCORMICK, MANUEL
FERNANDEZ, HANK BROWN, LINDA ALVARADO, DR. CRAIG BARRETT, MARILYN
CARLSON NELSON, FRANK POPOFF, PETER HELLMAN, GEORGE HARAD AND JERRY
COLANGELO.
Exhibit (g)(1)
Kevin Yourman (147159) FILED
Vahn Alexander (167373) LOS ANGELES SUPERIOR COURT
WEISS & YOURMAN May 19, 1999
10940 Wilshire Boulevard JOHN A. CLARKE, CLERK
Los Angeles, CA 90024 /S/ C. L. COLEMAN
(310) 208-2800 BY C.L. COLEMAN, DEPUTY
Attorneys for Plaintiff
CASE ASSIGNED TO CLASS ACTION DEPARTMENT 59
FOR ALL PRETRIAL PROCEEDINGS. CASE IS ASSIGNED
FOR TRIAL AS FOLLOWS.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
- ---------------------------------------------
|
ADELE BRODY, on behalf of herself and all |
others similarly situated, |
| CASE NO.: BC210605
Plaintiff, |
| CLASS ACTION
vs. | ------------
|
US WEST, INC., LINDA G. ALVARADO, CRAIG R. | COMPLAINT FOR
BARRETT, HANK BROWN, JERRY J. COLANGELO, | BREACH OF FIDUCIARY
GEORGE J. HARAD, PETER S. HELLMAN, ALLAN F. | DUTIES AND
JACOBSON, RICHARD D. MCCORMICK, MARILYN C. | INJUNCTIVE RELIEF
NELSON, F. POPOFF, SOLOMON D. TRUJILLO, and |
DOES 1-50 inclusive, | JURY TRIAL DEMAND
| -----------------
Defendants. |
|
- ---------------------------------------------
Plaintiff, by her undersigned attorneys, for her complaint against
defendants, alleges upon knowledge as to herself and her own acts, and upon
information and belief, as to all other matters, as follows:
1. Plaintiff brings this action, individually and as a class action on
behalf of all persons, other than defendants, who own the common stock of US
West, Inc. ("US West" or the "Company") and are similarly situated ("the
Class"), to enjoin the consummation of the proposed acquisition of US West
Global Crossing Ltd. ("Global"), which is currently in the process of acquiring
Frontier Corporation ("Frontier"). According to the terms of the proposed
acquisition, each US West share will be exchanged for approximately 1.2 shares
of Class __ or Class L Global Crossing stock, and each Global Crossing share
will be exchanged for one share of either of the two Global Crossing tracking
stocks (the "proposed transaction"). Alternatively, in the event that the
proposed transaction is consummated, plaintiff seeks to recover damages caused
by the breach of fiduciary duties of care, candor and loyalty, described herein,
owed by all defendants. The proposed transaction and the acts of defendants
constitute a breach of defendants' fiduciary duties to plaintiff and the Class
to take all necessary and appropriate steps to obtain the maximum value
realizable for the shareholders of US West.
PARTIES
-------
2. Plaintiff Adele Brody is, and has been since prior to the announcement
of the proposed transaction described herein, the owner of shares of common
stock of US West.
3. Defendant US West, is incorporated in Colorado and has its executive
offices located at 1801 California Street, Denver, Colorado, 80202-2658. US West
provides a full range of advanced telecommunications services - including
wireline, wireless PCS, data networking, directory and information services - to
more than 25 million customers nationally and in some of the nation's fastest
growing communities in 14 Western and Midwestern states. It is the nation's
leader in the deployment of digital subscriber line (DSL) technology.
4. Defendant Linda G. Alvarado ("Alvarado") was at all relevant times a
director of defendant US West.
5. Defendant Craig R. Barrett ("Barrett") was at all relevant times a
director of defendant US West.
6. Defendant Hank Brown ("Brown") was at all relevant times a director of
defendant US West.
7. Defendant Jerry J. Colangelo ("Colangelo") was at all relevant times a
director of defendant US West.
8. Defendant George J. Harad ("Harad") was at all relevant times a
director of defendant US West.
9. Defendant Peter S. Hellman ("Hellman") was at all relevant times a
director of defendant US West.
10. Defendant Allan F. Jacobson ("Jacobson") was at all relevant times a
director of defendant US West.
11. Defendant Richard D. McCormick ("McCormick") was at all relevant
times a director of defendant US West.
12. Defendant Marilyn C. Nelson ("Nelson") was at all relevant times a
director of defendant US West.
13. Defendant F. Popoff ("Popoff") was at all relevant times a director
of defendant US West.
14. Defendant Solomon D. Trujillo ("Trujillo") was at all relevant times,
President, CEO, and Chairman of the Board of Directors of US West.
15. The true names and capacities of defendants sued herein under
California Code of Civil Procedures ss. 474 as Does 1 through 50, inclusive, are
presently not known to plaintiff, who therefore sues these defendants by such
fictitious names. Plaintiff will seek to amend this Complaint and include these
Doe defendants' true names and capacities when they are ascertained. Each of the
fictitiously named defendants is responsible in some manner for the conduct
alleged herein and for the injuries suffered by the Class.
16. The defendants described in paragraphs 4-14 above are hereinafter
sometimes collectively referred to as the "Individual Defendants" or the
"Director Defendants."
17. The Individual Defendants, by reason of their corporate
directorships, stand in a fiduciary position relative to US West's minority
shareholders. The fiduciary duties, at all times relevant herein, require the
Individual Defendants to exercise their best judgment and to act in a prudent
manner and in the best interests of the Company's minority shareholders. Said
defendants owe the public shareholders of US West the highest duty of good
faith, fair dealing, due care, loyalty, and full, candid and adequate
disclosure.
18. Each defendant herein is sued individually as an aider and abettor,
as well as in his capacity as a director of the Company (in the case of the
Individual Defendants), or as a control person. The liability of each arises
from the fact that he has engaged in all or part of the unlawful acts, plans,
schemes, or transactions described herein.
JURISDICTION AND VENUE
----------------------
19. This Court has proper jurisdiction over this action pursuant to ss.
410.10 of the CALIFORNIA CODE OF CIVIL PROCEDURE. Furthermore, the amounts in
controversy exceed the jurisdictional minimum of this Court.
20. Venue is proper in the Superior Court of the County of Los Angeles
pursuant to California Code of Civil Procedure ss.ss. 395 and 395.5. Global
employs marketing professionals and maintains regional sales and marketing
offices in this county.
CLASS ACTION ALLEGATIONS
------------------------
21. Plaintiff brings this action individually on her own behalf and as a
class action, on behalf of all stockholders of US West (except defendants
herein, and any person, firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in interest, who are
or will be threatened with injury arising from defendants' actions as more fully
described herein (the "Class").
22. This action is properly maintained as a class action.
23. The class is so numerous that joinder of all members is
impracticable. As of May 17, 1999, there were 503,594,000 shares of US West
common stock issued and outstanding. The disposition of shareholders' claims in
a class action will be of benefit to the parties and the Court. The record
holders of US West's stock can be easily determined from the stock transfer
journals maintained by US West or its agents.
24. 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 action as a
class action.
25. There is a well-defined community of interests in the questions of
law and fact involved affecting the members of the Class. Among the questions of
law and fact which are common to the Class, which predominate over questions
affecting any individual class member are, inter alia, the following:
A. whether defendants have breached their fiduciary duties by engaging in
concerted and continual action to entrench themselves in their lucrative
positions and enrich themselves at the expense of US West's public stockholders;
B. whether defendants are unlawfully impeding other possible merger or
takeover attempts at the expense of US West's public stockholders;
C. whether defendants have failed to disclose all material facts relating
to the takeover, including the potential and expected positive future financial
benefits which they expect to derive;
D. whether defendants have failed and will fail to negotiate in good
faith with other prospective purchasers of the Company; and
E. whether the plaintiff and other members of the class would be
irreparably damaged were the defendants not enjoined from the conduct described
herein below.
1. Plaintiff is a member of the Class and is committed to prosecuting this
action and has retained competent counsel experienced in litigation of
this nature. Plaintiff's claims are typical of the claims of the other
members of the Class and plaintiff has the same interests as the other
members of the Class. Plaintiff does not have interests antagonistic to
or in conflict with those he seeks to represent. Plaintiff is an adequate
representative of the Class.
2. The likelihood of individual Class members prosecuting separate
individual actions is remote due to the relatively small loss suffered by
each Class member as compared to the burden and expense of prosecuting
litigation of this nature and magnitude. Absent a class action, the
defendants are likely to avoid liability for their wrongdoing, and Class
members are unlikely to obtain redress for their wrongs alleged herein.
This Court is an appropriate forum for this dispute.
SUBSTANTIVE ALLEGATIONS
-----------------------
3. In a press release issued over PR Newswire on April 21, 1999, the Company
announced first quarter diluted earnings per share of $.78. According to
the announcement, results were aided by overall revenue growth of 5.7%,
better than the 5.0% normalized growth in fourth quarter, 1998. In
addition, first quarter data revenues grew to nearly $380 million, up 31%
over first quarter 1998. The Company's in-region and out-of-region
emerging data products, including digital subscriber line, Internet
access, ATM and Frame Relay-grew revenues by 50% over first quarter 1998
to $173 million for the quarter. Customer levels for the Company's
Internet access service, uswest.net, grew by almost 50,000 to nearly
200,000. Customers opting for the Company's high-speed digital subscriber
line (DSL) date product, MegaBit Services, grew by about 10,000 for the
quarter and now total more than 30,000. The Company expects to have more
than 100,000 DSL subscribers by year's end.
4. Shortly thereafter, in a press release issued over PR Newswire on May 17,
1999, the Company announced a definitive agreement to merge with Global
Crossing Ltd., which is currently acquiring Frontier Corporation.
According to the announcement, the new company will be 50% owned by
Global Crossing/Frontier shareholders and 50% owned by US West
shareholders. The new company will be called Global Crossing Corporation,
which has a current pro forma market capitalization of more than $75
billion.
5. According to the same press release, each US West share will be exchanged
for approximately 1.2 shares of Class G or Class L Global Crossing stock,
and each Global Crossing share will be exchanged for one share of either
of the two Global Crossing tracking stocks. At their option, each US West
and Global Crossing shareholder may elect to receive differing
percentages of the two tracking stocks, subject to prorations. The exact
number of Class G and Class L Global Crossing shares to be issued in the
transaction will be in proportion to the relative valuations of the Class
G and Class L shares, as determined through an appraisal process shortly
before the transaction is completed. As part of the transaction, US West
will make a cash tender offer for approximately 39 million Global
Crossing shares (or approximately 9.5% of Global Crossing's outstanding
shares) at a price of $62.75 per share. Under the agreement, Chief
Executive Officer of Global Crossing, Robert Annunziata, and Trujillo
will become Co-Chairmen and Co-CEOs of the combined company. There will
be a 22-member Board of Directors: 10 designated by Global Crossing, 10
designated by US West, and two selected by mutual agreement. The Board of
Directors of US West intends to declare a special cash dividend of $0.215
per share payable to US West shareholders in each quarter prior to
closing. This will increase US West quarterly dividend payments to $0.75
per share prior to closing. In addition, US West intends to declare a
one-time special cash dividend of up to $1.00 per share (plus the
proportionate share of the unpaid special dividend in the quarter in
which the merger closes) payable to US West shareholders immediately
prior to closing.
6. According to a news article published in Reuters on May 17, 1999, US West
must pay an $850 million break-up fee if it terminates it[s] proposed $37
billion merger with Global.
7. Also on the same day, Bloomberg published a news article which reported
that Global stock had more than tripled since the company first sold
shares to the public in August of 1998 and that merger negotiations had
been complicated by an overture from rival bidder Qwest Communications
International Inc. to combine with US West.
8. According to a news article published in The Wall Street Journal on the
following day, May 18, 1999, Frontier shareholders will now receive $63
in Global Crossing stock for each Frontier share - up from the original
offer of $62 in stock for each Frontier share - as long as Global
Crossing stock doesn't fall below $34.56 a share and doesn't rise above
$56.78 a share.
9. In effect, the shareholders of US West have been committed by the
Company's board of directors to trade their valuable stock for the stock
of a company which has been in existence since only August 1998 and has
yet to file a proxy statement with the SEC. As a result, investors of US
West reacted to the proposed acquisition with skepticism, pushing US West
shares down $4, or 6.4%, to $58.25 in New York Stock Exchange Composite
trading, according to a news article published in The Wall Street Journal
on May 18, 1999. The article also reported that shares of Global Crossing
fell $1.125 to $60.25 in Nasdaq Stock Market trading.
10. The proposed purchase price does not represent the true value of the
assets and future prospects underlying each share of US West.
11. By virtue of its dominance and control over US West, the Individual
Defendants, have engaged in a plan involving acts which are grossly
unfair to plaintiff and the other members of the class. This plan will be
at the expense of the other US West minority stockholders who would be
deprived of their equity investment and the benefits to accrue
thereafter, for a grossly inadequate price.
12. Defendants' announcement of the proposed bid fails to disclose the
improving prospects for US West due to the growth prospects for the
Company.
13. The defendants' knowledge and economic power, and that of the investing
public, is unequal because the Individual Defendants are in possession of
material non-public information concerning the Company's assets,
business, and future prospects, and control the business and corporate
affairs of US West. This disparity makes the buyout of US West at the
agreed upon price inherently unfair.
14. The Individual Defendants have at all times been fiduciaries to US West
shareholders. As set forth herein, they have breached and are continuing
to breach their fiduciary duties to US West's shareholders in order to
entrench themselves in office and continue to receive their compensation,
fees and emoluments of office by negotiating only with Global Crossing.
15. This Individual Defendants have breached their fiduciary duties by reason
of the acts and transactions complained of herein, including their
failure to negotiate the highest possible acquisition price for US West
and/or their failure to provide confidential information to potential
suitors on the same playing field that it created for Global Crossing.
16. Unless enjoined by this Court, the Individual Defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of
the class, and will entrench themselves in their corporate offices, all
to the irreparable harm of the class, as aforesaid.
17. The Individual Defendants' authorization to pursue the transaction was
given in breach of their fiduciary duties owed to US West's stockholders
to take all necessary steps to ensure that the stockholders will receive
the maximum value realizable for their shares in any merger of the
Company. In the context of this action, the Board of Directors of US West
must take all reasonable steps to assure the maximization of stockholder
value, including the implementation of a bidding mechanism to foster a
fair auction of the Company to the highest bidder or the exploration of
strategic alternatives which will return greater or equivalent value to
the Plaintiff and the class.
18. Plaintiff and the other members of the class have been and will be
damaged in that they have not and will not receive their fair proportion
of the value of US West's assets and business, which is not fully
reflected in the price to be paid by Global Crossing and which can only
truly be determined if the Individual Defendants create a level playing
field for other bidders to bid for US West. Plaintiff and the other
members of the class have been and will be prevented from obtaining a
fair price for their shares of the Company's common stock.
19. Defendants' intention to pursue the proposed transaction, a transaction
which does not maximize the value of US West shares, is in breach of
their fiduciary duties of care, candor, and loyalty owed to the Company's
stockholders to take all necessary steps to ensure that US West's
shareholders will receive the maximum value realizable for their shares
in any extraordinary transaction involving the Company, including
offering US West for other bids.
20. The proposed per share price is not the result of arm's-length
negotiations but was unilaterally set by Global Crossing and US West and
agreed to by defendants as part of a scheme to obtain complete ownership
of US West's assets and business at the lowest possible price. The
intrinsic value of the equity of the Company is materially greater than
the consideration proposed, taking into account, inter alia, US West's
asset value, expected growth, full extent of its future earnings
potential, expected increase in profitability, strength of its business,
its revenues, cash flow, and earnings power.
21. The defendants' willingness to entertain the proposed transaction
requires them to take all reasonable steps to assure the maximization of
stockholder value, including the implementation of a bidding mechanism to
foster a fair auction of those shares not held by Global Crossing to the
highest bidder or the exploration of strategic alternatives which will
return greater or equivalent short-term value to the plaintiff and the
Class.
22. Defendants, knowing all of the above, have failed to take the necessary
and appropriate steps to obtain the maximum value realizable for the
public shareholders of US West.
23. There is no indication that defendants have taken any steps to ensure
that the interests of US West's shareholders, in maximizing the value of
their holdings, are being protected from Global Crossing's control.
Defendants have not conducted an auction for US West, solicited other
offers, or otherwise sought out other potential purchasers or the highest
possible bid for US West. Nor have defendants explored strategic
alternatives which will obtain the highest possible price for US West's
stockholders or return greater or equivalent value to the plaintiff and
the Class.
24. Further, if defendants accept Global Crossing's proposal without seeking
out other purchasers, defendants have inhibited the chances of receiving
competing offers. If the proposed transaction is consummated, US West's
shareholders will be deprived of the opportunity for substantial gains
which the Company may have realized.
25. By reason of all of the foregoing, defendants herein have willfully
participated in unfair dealing toward plaintiff and the other members of
the Class and have engaged in and substantially assisted and aided and
abetted each other in breach of the fiduciary duties owed by them to the
Class.
26. Defendants have violated fiduciary and other common law duties owed to
the plaintiff and the other members of the Class in that they have not
and are not exercising independent business judgment, and have acted and
are acting to the detriment of the Class.
27. As a result of the actions of defendants, plaintiff and the Class have
been and will be damaged in that they are not receiving the fair value of
their US West shares.
28. Unless enjoined by this Court, defendants will continue to breach their
fiduciary duties owed to plaintiff and the Class, and will succeed in
excluding the Class from its fair proportionate share of US West's assets
and businesses, all to the irreparable harm of the Class.
29. Plaintiff and the Class have no adequate remedy of law.
FIRST CAUSE OF ACTION
---------------------
AGAINST ALL DEFENDANTS
----------------------
FOR BREACH OF FIDUCIARY DUTIES OF THE CARE, CANDOR, AND LOYALTY
---------------------------------------------------------------
30. Plaintiff hereby incorporates by reference the paragraphs above as though
fully set forth herein.
31. By virtue of plaintiff's ownership of US West's common stock, and
defendants' positions as directors and/or officers of the Company, and
because plaintiff reposed trust and confidence in them, defendants owed
to plaintiff fiduciary duties of care, candor and loyalty of the highest
good faith, integrity and fair dealing.
32. In taking and/or failing to take the actions heretofore alleged,
defendants violated their fiduciary obligations to plaintiff.
33. As a proximate result of defendants' aforesaid conduct, plaintiff was
damaged by injury to her property, lost profits, loss of future income,
and other general and specific damages.
WHEREFORE, plaintiff prays for judgment and relief as follows:
(1) declaring that this lawsuit is properly maintainable as a
class action and certifying plaintiff as representative of the Class;
(2) declaring that the defendants and each of them have committed
or aided and abetted in a breach of their fiduciary duties to plaintiff and the
other members of the Class;
(3) declaring the proposed transaction to be a nullity;
(4) preliminarily and permanently enjoining defendants and all
persons acting under, in concert with, or for them, from proceeding with,
consummating or closing the proposed transaction;
(5) in the event the proposed transaction is consummated
rescinding it and setting it aside;
(6) ordering defendants, jointly and severally, to account to
plaintiff and the Class for all profits realized and to be realized by them as a
result of the proposed transaction complained of and, pending such accounting,
to hold such profits in a constructive trust for the benefit of plaintiff and
other members of the Class;
(7) ordering defendants to permit a stockholders committee
comprised of class members and their representatives only to ensure a fair
procedure, adequate procedural safe-guards, and independent input by plaintiff
and the Class in connection with any proposed transaction for the shares of US
West;
(8) awarding compensatory damages against defendants, jointly and
severally, in the amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
(9) awarding plaintiff and the Class their costs and disbursements
and reasonable allowances for plaintiff's counsel and experts' fees and
expenses; and
(10) granting such other and further relief as may be just and
proper.
Dated: May 19, 1999
WEISS & YOURMAN
KEVIN YOURMAN (147159)
VAHN ALEXANDER (167373)
By: /S/ VAHN ALEXANDER
-------------------------
Vahn Alexander
10940 Wilshire Boulevard
24th Floor
Los Angeles, CA 90024
(310) 208-2800
Attorneys for Plaintiff
<PAGE>
JURY DEMAND
-----------
Plaintiff demands a trial by jury of all issues so triable.
Dated: May 19, 1999
WEISS & YOURMAN
KEVIN YOURMAN (147159)
VAHN ALEXANDER (167373)
By: /S/ VAHN ALEXANDER
-------------------------
Vahn Alexander
10940 Wilshire Boulevard
24th Floor
Los Angeles, CA 90024
(310) 208-2800
Attorneys for Plaintiff
Exhibit (g)(2)
DISTRICT COURT, CITY AND COUNTY OF DENVER, STATE OF COLORADO
CASE NO.: 99CV3354
- --------------------------------------------------------------------------------
CLASS ACTION COMPLAINT
AND JURY DEMAND
- --------------------------------------------------------------------------------
PAMELA CAGAN,
Plaintiff,
vs.
US WEST COMMUNICATIONS, INC., SOLOMON TRUJILLO, RICHARD McCORMICK, MANUEL
FERNANDEZ, HANK BROWN, LINDA ALVARADO, DR. CRAIG BARRETT,
MARILYN CARLSON NELSON, FRANK POPOFF, PETER HELLMAN, GEORGE HARAD and JERRY
COLANGELO,
Defendants.
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Plaintiff, by her attorneys, alleges upon information and belief, except
as to paragraph 1 which plaintiff alleges upon knowledge, as follows:
2. Plaintiff Pamela Cagan is and was, at all times relevant to this
action, a stockholder of defendant US West Inc. ("US West" or the "Company").
3. Defendant US West Communications, Inc. is a corporation duly organized
and existing under the laws of the state of Colorado, with principal offices
located at 1801 California Street, Denver, Colorado. As of January 29, 1999
there were approximately 503 million shares of US West common stock outstanding.
US West is a holding company with subsidiaries which provide tele-communications
services, including local telephone services, exchange access services, domestic
and international broadcast communications, wireless communications and
directories services.
4. Defendant Solomon Trujillo is and was, at all times relevant hereto,
Chairman of the Board of Directors, President and Chief Executive Officer of US
West.
5. Defendants Richard McCormick, Manuel Fernandez, Hank Brown, Linda
Alvarado, Dr. Craig Barrett, Marilyn Carlson Nelson, Frank Popoff, Peter
Hellman, George Harad and Jerry Colangelo are and were, at all times relevant
hereto, members of US West's Board of Directors.
6. By reason of their positions as officers and directors of US West,
each Individual Defendant has a fiduciary relationship and responsibility to
plaintiff and the other common public stockholders of US West and owes to
plaintiff and the other class members the highest obligations of good faith and
fair dealing.
CLASS ACTION ALLEGATIONS
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7. Plaintiff brings this action on her own behalf and as a class action
on behalf of all common stockholders of US West, or their successors in
interest, who are being and will be harmed by defendants' actions described
below (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 defendants.
8. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. There are hundreds, if not thousands, of US West stockholders who
are located throughout the United States;
(b) There are questions of law and fact which are common to the
Class and which predominate over questions affecting any individual Class
members, including whether plaintiff and the other Class members would be
irreparably damaged if the defendants are not enjoined in the manner described
below;
(c) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of plaintiff are typical of the claims of the 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; and
(d) Plaintiff anticipates that there will be no difficulty in the
management of this litigation.
9. For the reasons stated herein, a class action is superior to other
available methods for the fair and efficient adjudication of this controversy
and the class action requirements are satisfied.
CLAIM FOR RELIEF
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10. On May 17, 1999 defendants announced that US West had entered a
definitive agreement to merge with Global Crossing Ltd. ("Global Crossing") in
which US West will purchase 9.5% of Global Crossing for approximately $2.4
billion and the companies will subsequently merge in a 50-50 stock combination.
Under the proposed transaction (the "Transaction"), defendant Trujillo, the
Chief Executive Officer of US West, will head the combined entity with Robert
Annuziata, Global Crossing's Chief Executive Officer.
11. The announcement followed Global Crossing's agreement in March, 1999
to acquire Frontier Corp. ("Frontier"), a phone company based in Rochester, New
York for about $11 billion in stock.
12. On May 17, 1999, news stories revealed that the companies'
negotiations concerning the proposed Transaction were complicated because QWEST
Communications International, Inc. ("QWEST") had expressed interest in a
transaction with US West but US West rejected QWEST's overture.
13. In the proposed Transaction between US West and Global Crossing, US
West would have to pay to Global Crossing a $600 million breakup fee if it did
not proceed with the proposed Transaction and pay an additional $250 million fee
to Global Crossing if US West initiates a break-up of the proposed Transaction.
14. After the proposed Transaction was announced on May 17, 1999, US
West's shares fell $4 per share, to close at $58.25.
15. The reaction of the stock price reflected the dilution to US West's
shareholders as a result of the proposed Transaction. US West's revenues would
account for more than 80% of the revenues of the combined companies if the
Transaction were completed but US West and its shareholders would own only half
of the merged entity.
16. In light of the foregoing, the Individual Defendants must, as their
fiduciary obligations require:
o undertake an appropriate evaluation of US West's worth as a
merger/acquisition candidate;
o take all appropriate steps to enhance US West's value and
attractiveness as a merger/acquisition candidate;
o take all appropriate steps to effectively expose US West to the
marketplace, including but not limited to engaging in serious
negotiations with QWEST or its representatives and other
interested parties;
o act independently so that the interests of US West's public
stockholders will be protected; and
o adequately ensure that no conflicts of interest exist between
defendants' own interests and their fiduciary obligation to
maximize stockholder value or, if such conflicts exist, to ensure
that all conflicts be resolved in the best interests of US West's
public stockholders.
17. As a result of defendants' failure to take such steps, plaintiff and
the other members of the Class have been and will be damaged in that they have
not and will not receive their proportionate share of the value of the Company's
assets and business, and have been and will be prevented from obtaining a fair
price for their common stock.
18. Unless enjoined by this Court, defendants will continue to breach
their fiduciary duties owed to plaintiff and the other members of the Class, by
maintaining themselves in office and/or failing to take the steps set forth
above, excluding the Class from its fair proportionate share of US West's
valuable assets and businesses, all to the irreparable harm of the Class.
19. Plaintiff and the other members of the Class have no adequate remedy
at law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as a Class representative;
B. Declaring that defendants breached their fiduciary and other duties to
plaintiff and the other members of the Class;
C. Entering an order requiring defendants to take the steps set forth
hereinabove;
D. Awarding compensatory damages against defendants individually and
severally in an amount to be determined upon the proof submitted to this Court;
E. Awarding costs and disbursements, including plaintiff's counsel's fees
and experts' fees; and
F. Granting such other and further relief as to the Court may seem just
and proper.
PLAINTIFF DEMANDS A TRIAL BY JURY.
Dated at Denver, Colorado this 18th day of May, 1999.
BADER & ASSOCIATES, P.C.
By: /S/ GERALD L. BADER JR.
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Gerald L. Bader Jr. No. 3625
1660 Wynkoop Street, Suite 1100
Denver, Colorado 80202
Telephone: (303) 534-1700
Telecopier: (303) 534-0725
ATTORNEYS FOR PLAINTIFF
OF COUNSEL:
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ABBEY, GARDY & SQUITIERI, LLP
Stephen J. Fearon, Jr.
212 East 39th Street
New York, New York 10016
(212) 889-3700
