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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9/A
(AMENDMENT NO. 2)
Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934
------------------------
BRC HOLDINGS, INC.
(Name of Subject Company)
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BRC HOLDINGS, INC.
(Name of Person(s) Filing Statement)
------------------------
COMMON STOCK, $.10 PAR VALUE
(Title of Class of Securities)
227174-10-9
(CUSIP Number of Class of Securities)
------------------------
JERROLD L. MORRISON
PRESIDENT AND CHIEF OPERATING OFFICER
BRC HOLDINGS, INC.
1111 W. MOCKINGBIRD LANE, SUITE 1400
DALLAS, TEXAS 75247-5014
(214) 688-1800
(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications on Behalf of the Person(s) Filing
Statement)
WITH COPIES TO:
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JEFFERY M. SONE, ESQ. CHARLES S. GILBERT, ESQ.
ARTER & HADDEN, LLP JACKSON WALKER L.L.P.
1717 MAIN STREET, SUITE 4100 901 MAIN STREET, SUITE 6000
DALLAS TX 75201-4605 DALLAS, TEXAS 75202
(214) 761-2100 (214) 953-6000
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This Amendment No. 2 to the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Statement") relates to the tender offer (the "Offer")
disclosed in a Tender Offer Statement on Schedule 14D-1, dated October 23, 1998
(the "Schedule 14D-1") of ACS Acquisition Corporation, a Delaware corporation
(the "Purchaser") and a wholly-owned subsidiary of Affiliated Computer Services,
Inc., a Delaware corporation ("Parent") for 8,704,238 shares of Common Stock,
par value $.10 per share (the "Shares"), of the Company. The purpose of this
Amendment No. 2 is to amend and supplement Items 8 and 9 of the Schedule 14D-9
as described below.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is hereby amended and supplemented as follows:
(e) Litigation
On October 30, 1998, a putative class action lawsuit was filed by Matador
Capital Management Corporation and related companies against the Company, its
directors, the Purchaser and Parent in the Delaware Court of Chancery in and for
New Castle County on behalf of all persons (other than the defendants) who owned
common stock, par value $0.10 per share, of the Company on October 19, 1998
requesting, among other things, the Delaware court to issue an injunction
prohibiting consummation of the Offer and a declaratory judgement that the
Merger Agreement and the Stoffel Agreement are invalid and unenforceable. The
complaint alleges, among other things, certain misstatements and omissions in
certain documents mailed to the Company's stockholders in connection with the
Offer, certain breaches of fiduciary duties by of the Company's Board and the
aiding and abetting of such breaches of fiduciary duties by Parent and the
Purchaser. The Company intends to defend vigorously against these allegations. A
copy of the complaint is filed herewith as Exhibit 11 and is incorporated herein
by reference.
2
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended and restated as follows:
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Exhibit 1 Agreement and Plan of Merger, dated October 18, 1998, among Parent, the Company
and Purchaser.(2)(4)
Exhibit 2 Transitional Compensation Agreement, dated October 9, 1998, between the Company
and Jerrold L. Morrison.(2)(4)
Exhibit 3 Transitional Compensation Agreement, dated October 9, 1998, between the Company
and Harvey Braswell.(2)(4)
Exhibit 4 Transitional Compensation Agreement, dated October 9, 1998, between the Company
and Thomas E. Kiraly.(2)(4)
Exhibit 5 Transitional Compensation Agreement, dated October 9, 1998, between the Company
and Bernard J. Owens.(2)(4)
Exhibit 6 Agreement, dated October 18, 1998, between the Company and Paul T.
Stoffel.(2)(4)
Exhibit 7 Stock Tender Agreement, dated October 19, 1998, by and between Parent, Purchaser
and each of Paul T. Stoffel, individually, and Kathryn Ayres Esping,
individually and as Independent Executor of the Estate of P.E. Esping and as
Director of the Esping Family Foundation.(2)(4)
Exhibit 8 Letter, dated October 23, 1998, to the stockholders of the Company from the
Chief Operating Officer of the Company.(1)(4)
Exhibit 9 Opinion of Donaldson Lufkin & Jenrette, dated October 18, 1998.(1)(4)
Exhibit 10 Press Release by the Company, dated October 19, 1998.(2)(4)
Exhibit 11 Complaint-- Matador Capital Management Corporation, Everglades Partners, L.P.,
Everglades Offshore Fund, Ltd. and Contrarian Opportunities Fund, L.P. v. BRC
Holdings, Inc., ACS Acquisition Corporation, Affiliated Computer Services, Inc.,
Paul T. Stoffel, L. D. Brinkman, Robert E. Masterson and David H. Monnich, C.A.
No. 16758-NC (Del. Ch., filed October 30, 1998).(2) (5)
Exhibit 12 Press Release by the Company, dated November 2, 1998.(2) (5)
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(1) These documents are included in the materials mailed to stockholders
pursuant to the Offer.
(2) These documents were filed with the Securities and Exchange Commission as
exhibits to this Statement, but were not included in the mailing to
stockholders. Such documents and other information may be inspected at the
public reference facilities maintained by the Securities and Exchange
Commission (the "Commission") at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may also be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a World Wide Web site
on the Internet at http://www.sec.gov that contains reports and other
information regarding registrants that file electronically with the
Commission. Such material may also be inspected at the offices of The Nasdaq
Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
(3) Schedules to this Agreement have been omitted but description of such
schedules may be found in the Agreement where referred to. The Company
hereby undertakes to provide copies of such omitted schedules to the staff
of the Commission upon request.
(4) Previously filed.
(5) Filed herewith.
3
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SIGNATURE
AFTER REASONABLE 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.
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BRC HOLDINGS, INC.
By: /s/ JERROLD L. MORRISON
-----------------------------------------
Jerrold L. Morrison
PRESIDENT AND CHIEF
OPERATING OFFICER
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Date: November 3, 1998
4
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION EVERGLADES )
PARTNERS, L.P., EVERGLADES )
OFFSHORE FUND, LTD., and CONTRARIAN )
OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, )
and DAVID H. MONNICH, )
)
Defendants. )
VERIFIED CLASS ACTION COMPLAINT
Plaintiffs Matador Capital Management Corporation ("Matador"),
Everglades Partners, L.P., Everglades Offshore Fund, Ltd. and Contrarian
Opportunities Fund, L.P., by their undersigned attorneys, for their class
action complaint against defendants BRC Holdings, Inc. ("BRC Holdings" or the
"Company"), ACS Acquisition Corporation ("ACS Acquisition"), Affiliated
Computer Services, Inc. ("Affiliated Computer"), Paul T. Stoffel, L.D.
Brinkman, Robert E. Masterson, and David H. Monnich, allege, upon knowledge
as to their own actions and upon information and belief as to all other
matters, as follows:
NATURE OF THE ACTION
1. Plaintiffs bring this action individually and as a class action on
behalf of all persons (except defendants herein), who owned common stock of
defendant BRC Holdings, Inc. on October 19, 1998, the date of the first
public announcement of the proposed merger and tender offer for 51% of the
outstanding stock of BRC Holdings made by defendant ACS Acquisition.
2. ACS Acquisition has commenced a negotiated tender offer for 51% of
the stock of BRC Holdings at a price of $19 per share. The tender offer
expires on November 20, 1998. Under an Agreement and Plan of Merger signed on
October 19, 1998 by ACS Acquisition, its parent Affiliated Computer, and the
target BRC Holdings, the tender offer is to be followed by a second-step
cash-out merger, also at a price of $19 per share, resulting in total
consideration for all of the stock of BRC Holdings of approximately $261
million. Of course, once ACS Acquisition acquires 51% of the outstanding
shares of BRC Holdings in the tender offer, the result of the stockholder
vote on the merger is a foregone conclusion.
3. BRC Holdings is a very profitable information technology business.
The
<PAGE>
Company has no debt, has over $110 million in cash reserves and liquid
marketable investments, and generates substantial cash flow. Within weeks of
the death of the Company's founder in June of this year, the remaining
members of the board of directors decided -- for reasons they have never
disclosed -- completely to reverse the Company's business strategy. BRC
Holdings had grown and diversified through selective acquisitions of other
companies, and had set aside over $110 million for future acquisitions.
Within days of defendant Stoffel having replacemed the Company's late founder
as Chairman of the Board, however, Stoffel was talking with Affiliated
Computer about having it acquire the Company.
4. The decision of the board of directors of BRC Holdings to sell
control of the Company triggered an obligation to pursue one objective -- the
transaction offering the best value available for the stockholders. The
pursuit of that objective required the board to examine the proposed
transaction closely, to take an active and direct role in the sale process
and to inform itself of all material information reasonably available,
including whether more valuable bids are available.
5. The board of directors willfully ignored its obligations. The board
also failed to negotiate with other interested purchasers who had made
expressions of interest at prices higher than the $19 offered by Affiliated
Computer. The board failed to inform itself of alternatives -- indeed, the
Merger Agreement prohibits the board from even talking to other potential
bidders, and includes a $13 million "Breakup Fee" designed to discourage
competing bids. The board failed to understand and analyze premiums obtained
for sale of similarly situated companies. The board let its Chairman, Mr.
Stoffel, negotiate with Affiliated Computer (which was at the same time asked
to approve a $1.3 million payment by the Company to Stoffel himself if the
tender offer succeeded). Stoffel agreed separately with Affiliated Computer
that he would tender his own stock, and that he would not even talk to other
potential bidders.
6. Delaware law assures stockholders that if their corporation is to be
sold, they will receive the benefit of an active, involved and diligent board
carrying out its settled fiduciary obligation to maximize the value the
shareholders will receive. The conduct of the board of BRC Holdings offers a
pale substitute -- the board approved the terms of the tender offer and merger
in what the Company has described as an "informal" meeting the very next
morning after Stoffel reached an agreement on the price.
7. The board of directors of BRC Holdings approved a grossly inadequate
price for the Company, and did so in a hasty and uninformed manner. The board
then filed tender offer materials recommending that stockholders tender their
stock (thereby ensuring the approval of the merger), but which provided no
information from which the stockholders could make an informed decision as to
whether the board had fulfilled its duties to them. The materials failed to
disclose to stockholders material information relevant to their decision to
tender (and thereby ensure the approval of the merger), including (i) other
expressions of interest received in 1998 at prices higher than $19 per share,
(ii) that other similarly situated companies were sold for much higher
multiples of earnings, (iii) the fact that with $6-7 of the per share price
attributable to cash reserves, the price/earnings multiple is particularly
low, (iv) the real price for the acquisition is more than $110 million less
than announced because, on acquiring BRC, Affiliated Computer will own BRC's
cash and liquid assets of in excess of $110 million, (v) that in excess of $
110 million of the funds needed to purchase the BRC stock after the tender
offer will come from BRC, itself, and (vi) ANY of the reasons supporting the
fairness opinion received by the board.
<PAGE>
8. Plaintiffs seek a preliminary and permanent injunction against
consummation of the ACS Acquisition tender offer. Plaintiffs also seek a
declaration that the Merger Agreement is void and unenforceable, as the
product of a breach of fiduciary duty, an injunction against the payment of
the $13 million Breakup Fee to Affiliated Computer, and other relief.
Plaintiffs have no adequate remedy at law. The rights of the stockholders of
BRC Holdings under Delaware law -- to receive adequate information in
connection with the tender offer, to have the board of directors honor its
fiduciary duties in connection with the sale of the Company, and to ensure
that the board does not squander the one-time opportunity to receive a
"control premium" -- are being irretrievably lost.
THE PARTIES
9. Plaintiff Matador is a Delaware corporation with its principal place
of business in St. Petersburg, Florida. Matador is a registered investment
adviser and was, as of October 19, 1998, the beneficial owner of an aggregate
of 918,850 shares of common stock of BRC Holdings, approximately 6.8% of the
total number of shares issued and outstanding. Matador has discretionary
authority with respect to the disposition and voting of those shares.
10. Plaintiff Everglades Partners, L.P. is a limited partnership formed
under the laws of the State of Delaware and was, as of October 19, 1998, the
beneficial owner of 353,650 shares of common stock of BRC Holdings. Matador
acts as investment adviser to Everglades Partners, L.P.
11. Plaintiff Everglades Offshore Fund, Ltd. is a company formed under
the laws of the British Virgin Islands and was, as of October 19, 1998, the
beneficial owner of 358,100 shares of common stock of BRC Holdings. Matador
acts as investment adviser to Everglades Offshore, Ltd.
12. Plaintiff Contrarian Opportunities Fund, L.P. is a limited
partnership formed under the laws of the State of Delaware and was, as of
October 19, 1998, the beneficial owner of 84,850 shares of common stock of
BRC Holdings. Matador acts as investment adviser to Contrarian Opportunities
Fund, L.P.
13. Defendant BRC Holdings, Inc. is a Delaware corporation with its
principal place of business in Dallas, Texas. BRC Holdings provides
specialized information technology services to clients in many fields,
including primarily local governments and healthcare institutions, through
three wholly owned subsidiaries. BRC Holdings has approximately 13.7 million
shares of common stock outstanding. The Company's stock is traded on NASDAQ.
14. Defendant ACS Acquisition is a Delaware corporation with its
principal place of business in Dallas, Texas. ACS Acquisition is a wholly
owned subsidiary of defendant Affiliated Computer, formed for the purpose of
acquiring BRC Holdings.
15. Defendant Affiliated Computer is a Delaware corporation with its
principal place of business in Dallas, Texas. Affiliated Computer provides
"technology outsourcing" services to a wide variety of businesses and
government agencies.
16. Defendant Paul T. Stoffel is Chairman of the board of directors of
BRC Holdings, a position he assumed on or about September 16, 1998.
17. Defendants L.D. Brinkman, Robert E. Masterson and David H. Monnich
are each directors of BRC Holdings and, along with defendant Stoffel
(collectively, the "Director Defendants"), constitute the entire board of
directors of BRC Holdings.
CLASS ACTION ALLEGATIONS
18. Plaintiffs bring this action on their own behalf and as a class
action, pursuant to
<PAGE>
Rule 23 of the Rules of the Court of Chancery, on behalf of all persons
(except defendants herein), and their successors in interest, who owned
common stock of defendant BRC Holdings on October 19, 1998, the date of the
first public announcement of the proposed merger and tender offer by ACS
Acquisition for the shares of the Company (the "Class").
19. This action is properly maintained as a class action. The Class is
so numerous that joinder of all members is impracticable. The Class consists
of the owners of more than ten million shares of common stock in BRC
Holdings, whose identity and location are, for the most part, unknown to
plaintiffs.
20. There are questions of law and fact which are common to the Class
and which predominate over questions affecting any individual Class member.
The common questions include, INTER ALIA, (i) whether defendants breached
their fiduciary duties of care, loyalty and disclosure in connection with the
tender offer, or aided and abetted such a breach, (ii) whether an Order
should be entered enjoining the proposed tender offer and merger, and (iii)
the amount of damages to be awarded plaintiffs and other members of the Class
as a consequence of defendants' conduct.
21. Plaintiffs are committed to prosecuting this action and have
retained competent counsel experienced in litigation of this nature. The
claims of plaintiffs are typical of the claims of other members of the Class
and plaintiffs have the same interests as the other members of the Class.
22. Plaintiffs are adequate representatives of the Class. Plaintiffs
have a large stake in the Company and have closely monitored the affairs of
BRC Holdings for several years.
23. Defendants have acted or refused to act on grounds generally
applicable to the Class, thereby making it appropriate to award relief to the
Class as a whole.
24. The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class, which would establish
incompatible standards of conduct for the party opposing the Class or
adjudications with respect to individual members of the Class which would as
a practical matter be dispositive of the interests of the other members of
the Class who were not parties to those adjudications.
BACKGROUND OF THE ACTION
25. BRC Holdings was founded in 1976 by Perry E. Esping to provide
computer services, products and software to county and local governments,
primarily for use in land title recording and political elections. The
business prospered under Mr. Esping's guidance and, during the early 1990's,
the company began to branch out into a number of other "information
technology" products and services, with a primary emphasis on providing such
services to local governments and to clients in the health care industry. BRC
Holdings' diversification came about largely through the acquisition of
several smaller computer service companies, each concentrating on servicing
clients in a particular industry.
26. BRC Holdings has in the past three years evolved into a diversified
provider of "information technology services," providing clients in numerous
industries with a broad range of management consulting, customized software,
"outsourcing" of computer operations, data processing, computer system design
and related services. In addition, the Company has made a significant
investment in a firm that specializes in providing software and other
solutions to address "millennium bug" or "Year 2000" issues.
27. Through a disciplined operating focus and a strategy of selective
acquisitions,
<PAGE>
BRC Holdings has become a highly profitable, debt-free business with a
rapidly growing revenue stream, the vast majority of which (approximately
85%) is recurring in nature, resulting from long-term service contracts with
businesses in many fields.
28. BRC Holdings' earnings growth and operating history have been
impressive. In 1997, the Company had earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $18 million, on revenues of $107
million. In the first nine months of 1998, the Company's income from
continuing operations was $9.3 million, as opposed to $7.7 million for all of
1997. Operating income in the first nine months of 1998 was $9.6 million, as
opposed to $8.3 million for all of 1997. The Company generates returns of
over 20% on capital employed and substantial unencumbered cash flow. At
present, BRC Holdings holds cash and government bonds (primarily U.S.
Government Treasury securities and state and municipal bonds, along with
other highly liquid securities) with a fair value in excess of $110 million.
The Company managed to accumulate this cash reserve despite an ambitious $10
million share repurchase program, and despite having made six strategic
acquisitions in the past three years. BRC Holdings' 1997 annual report states
that "[t]he company is not currently subject to any material indebtedness."
29. In short, BRC Holdings has an excellent track record of earnings
growth, has no debt to speak of, has over $110 million in cash or highly
liquid securities, and generates substantial after-tax earnings. The
Company's stock has traded on NASDAQ at prices ranging in the past twelve
months up to a high of nearly $22 per share. Any decision by the board of
directors of BRC Holdings to sell control of such an attractive merger
candidate would be expected to result in a price that includes a larger than
usual premium. Unfortunately, the board has, in its unexplained haste to sell
the Company following the death of its founder Mr. Esping, squandered this
value and, instead of recognizing its duty to shareholders, has pursued its
own interests. In violation of its fundamental obligation to achieve the best
transaction available for shareholders, the board has agreed, in a hasty,
uninformed and ill-considered manner, to achieve far less.
EVENTS LEADING UP TO THE MERGER AGREEMENT WITH AFFILIATED COMPUTER
30. In June 1998, Mr. Esping, BRC Holdings' founder and chairman,
underwent heart bypass surgery. Mr. Esping died several weeks later. Before
his death, at the urging of other board members, including Mr. Stoffel, Mr.
Esping engaged in discussions with the President of Affiliated Computer about
a possible "business combination." Before he died, however, Mr. Esping had
determined that it was not in the best interests of BRC Holdings'
shareholders to sell control of the Company to Affiliated Computer, or to
anyone else. Indeed, BRC Holdings had built up its cash reserves to over $110
million with the expectation that the Company could itself acquire a larger
company.
31. After Mr. Esping's death, defendant Stoffel held discussions with
Affiliated Computer, but on July 6, 1998, Affiliated Computer advised Mr.
Stoffel that it was not interested in pursuing a transaction.
32. On or about September 16, 1998, Mr. Stoffel was named Chairman of
the Board of BRC Holdings. One of his first acts as the new Chairman was to
contact Affiliated Computer and request that the Company reconsider an
acquisition of BRC Holdings. It did, and by October 7,1998, twenty-one days
after Stoffel had become chairman, Stoffel and Affiliated Computer rushed
into a tender offer/merger agreement at $19 per share for the sale of BRC
Holdings, a total consideration of approximately $261 million for all
outstanding shares of the Company. Of course, that is not the true price. As
soon as the merger is accomplished, $113 million of cash
<PAGE>
and other liquid assets will become the property of Affiliated Computer.
Thus, the real price is $148 million, or roughly $10.80 per share.
33. Having determined that control of BRC Holdings should be sold, the
board of directors of the Company was obligated, under settled Delaware law,
to focus on and pursue one primary objective -- to secure The transaction
offering the best value available for the stockholders. Thus, the board was
required to examine the proposed transaction closely, to take an active and
direct role in the sale process and to inform itself of all material
information reasonably available. In addition, the board was under the
obligation to examine whether a sale in 1998, rather than no sale, was in the
best interests of stockholders other than the board members themselves. The
board of directors of BRC Holdings ignored these obligations.
34. According to BRC Holdings' public filings in connection with the
proposed transaction, the BRC Holdings board met "informal[ly]" the VERY NEXT
MORNING after Stoffel and Affiliated Computer had agreed on a price of $19
per share, to discuss the proposed transaction. Neither that morning nor
within a reasonable period of time prior thereto, did defendants properly
analyze this transaction, discuss alternatives, participate in the sale
process or attempt to ascertain whether a higher value could be attained from
any other potential bidder. Instead, the board agreed that very morning to
recommend to the stockholders of the company the purchase price of $19 per
share. Mr. Stoffel immediately called Affiliated Computer to relay the news.
35. Thereafter, senior management of BRC Holdings met with a financial
advisor, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). DLJ was
engaged on October 16, 1998 for the sole purpose of providing a "fairness
opinion." DLJ was not hired to recommend the proposed transaction, and was
not hired to, and did not, evaluate whether any possibilities for sale of
control to other parties would offer superior terms for the Company's
stockholders. DLJ would later carefully note in its opinion letter that "we
were not requested to, nor did we, solicit the interest of any other party in
acquiring the Company." Moreover, DLJ cautioned, "[o]ur opinion does not
address the relative merits of the [proposed merger]." That is, DLJ expressly
disclaimed any intention of opining whether a higher price could be obtained
for the Company or whether other types of corporate transactions might be
better for shareholders.
36. In short, the board made no effort to determine whether control
should not be sold, whether a merger cashing out all shareholders in 1998 was
not in the best interests of shareholders, whether BRC Holdings would be
better off continuing to pursue acquisitions with its in excess of $110
million in cash and liquid assets, whether a competing bidder would be
willing to exceed the $19 offer from Affiliated Computer, or whether other
companies would offer other transactions that brought greater value to the
stockholders.
THE PURCHASE PRICE OF $19 PER SHARE IS GROSSLY INADEQUATE
37. BRC Holdings has cash and highly liquid securities on hand with a
value of over $110 million, and operating income in the first nine months of
1998 of almost $10 million. Subtracting the value of the Company's cash and
liquid securities from the purchase price proposed for the entire Company (as
the purchaser would in effect be acquiring that cash), the proposed $19 per
share price equates to approximately $10.80 per share. That price is between
4.5 and 5.5 times Matador's estimate of the Company's cash flow for 1999.
Comparable companies are trading at multiples of earnings that are between
150% and 250% higher.
38. As recently as July 1998, shares in BRC Holdings have traded above
$20 per share. The shares traded at nearly $22 per share as recently as
November 1997. Even in
<PAGE>
comparison to the historically low market price for BRC Holdings' stock
immediately prior to the announcement of the tender offer, the $19 per share
price represents a premium of only 16.9%.
39. A stock analyst at Brown Brothers Harriman published a report on
Affiliated Computer the day after Affiliated Computer announced the tender
offer for BRC Holdings stock. The report noted that the acquisition of BRC
Holdings would be "immediately accretive to earnings ... in a sizable way."
The report concluded that "[b]efore yesterday, we viewed [Affiliated Computer]
as an inexpensive stock. Now it appears embarrassingly inexpensive."
THE STOFFEL AGREEMENT
40. By October 18, 1998, the terms of the Agreement and Plan of Merger
(the "Merger Agreement") among Affiliated Computer, ACS Acquisition and BRC
Holdings were approved by the board of BRC Holdings. A copy of the Merger
Agreement appears as an exhibit to BRC Holdings' Solicitation and
Recommendation Statement in connection with the tender offer, a copy of which
is annexed hereto as Exhibit A.
41. In the Merger Agreement, Affiliated Computer consented to allow BRC
Holdings to enter into an agreement with defendant Stoffel to pay him a $1.3
million fee upon consummation of any tender offer that resulted in the
acquisition of a majority stake in the Company by any unaffiliated third
party, or any merger of the Company with an unaffiliated entity on or before
December 31, 2000 (the "Stoffel Agreement").
42. BRC Holdings had to obtain the consent of Affiliated Computer and
ACS Acquisition to the Stoffel Agreement because BRC Holdings would be
transferring cash to Stoffel that would otherwise still be in the Company
when it was purchased. In effect, the $1.3 million fee to be paid to Stoffel
is to be paid by Affiliated Computer. Neither the Merger Agreement, nor BRC's
public filings, indicate what services Stoffel performed, or was expected to
perform, in exchange for the $1.3 million fee that were not already within
the scope of his responsibilities as Chairman of the Board of the Company.
43. As a result of the $1.3 million fee that Stoffel is due to receive
if Affiliated Computer's tender offer succeeds, Stoffel will, alone among the
stockholders of the Company, receive in connection with the tender offer and
merger cash equal to nearly $23, not $19, for each share in BRC Holdings that
he owns.
THE MERGER AGREEMENT VIOLATES THE BOARD'S DUTY TO THE STOCKHOLDERS
44. Under the pre-approved Merger Agreement, ACS Acquisition is to make
a tender offer to purchase 8,704,238 shares of common stock of BRC Holdings
for a cash price of $19 per share. Following the acquisition of 51% of the
common stock by ACS Acquisition, the shareholders will vote on the merger of
ACS Acquisition into BRC Holdings (of course, the approval of the merger will
be a foregone conclusion upon the consummation of the tender offer, as ACS
Acquisition will then own the requisite member of shares to effect the merger
unilaterally). BRC Holdings will be the surviving corporation in the merger
and a wholly owned subsidiary of Affiliated Computer as a result of the
merger. In the merger, each outstanding share of a BRC Holdings' common stock
(other than those belonging to stockholders who exercise their dissenters'
appraisal rights) will be converted into the right to receive $19 in cash,
without interest.
45. In the Merger Agreement, the board of directors of BRC Holdings
agreed to recommend acceptance of the tender offer to the stockholders of the
Company and to recommend that the stockholders vote in favor of the merger of
ACS Acquisition into BRC Holdings.
46. The Merger Agreement contains provisions designed to discourage
other potential
<PAGE>
acquirors from bidding for the company, and to prevent the board of directors
from fulfilling its obligation to inform themselves of the available
alternatives, or to secure a transaction offering more value to the
stockholders. These provisions include:
(i) A provision barring BRC Holdings from soliciting or
encouraging potential purchasers from making any inquiries or proposals to
acquire the Company (the "No-Shop" provision). The No-Shop provision
prohibits BRC Holdings from even responding to unsolicited inquiries by
providing a potential purchaser with ANY information concerning the Company.
The only exception is in the case of an "unsolicited bona fide written
Acquisition Proposal," at a price higher than that offered by ACS
Acquisition, a prospect that the No-Shop provision itself renders highly
unlikely, however, because no information concerning the Company can be
provided to potential bidders. The "exception" is therefore, for all practical
purposes, illusory. The No-Shop provision plainly inhibits the Company's
board from negotiating with other potential bidders; and
(ii) A $10 million penalty, plus expenses of up to $3 million
(the "Breakup Fee") payable by BRC Holdings to ACS Acquisition in the event
of a termination of the Merger Agreement on certain grounds set forth in the
agreement. Among the grounds on which Affiliated Computer and ACS Acquisition
may terminate the Merger Agreement -- and impose the Breakup Fee on BRC
Holdings -- is if BRC Holdings should engage in negotiations with another
potential bidder, or if BRC Holdings should recommend a competing bid to the
stockholders. As a result, Affiliated Computer and ACS Acquisition have the
right to impose a $10 million penalty on BRC Holdings SIMPLY FOR NEGOTIATING
WITH ANOTHER POTENTIAL BIDDER. Another effect of the Breakup Fee is to give
ACS Acquisition a built-in $13 million advantage over other potential
bidders, thus discouraging potential bidders from even attempting to
negotiate an alternative to the Merger Agreement.
THE STOCK TENDER AGREEMENT
47. In addition to the provisions of the Merger Agreement that are
intended to prevent the board from fulfilling its obligations to the
stockholders to secure the highest value reasonably attainable, ACS
Acquisition and Affiliated Computer entered into another agreement with
certain stockholders of the Company -- the widow of the founder Mr. Esping,
the family foundation to which Mr. Esping bequeathed his shares and Mr.
Stoffel -- that had the same effect (the "Stock Tender Agreement"). The
stockholder parties to the Stock Tender Agreement together own a total of
nearly three million shares of BRC Holdings common stock, or 21.6% of the
total shares issued and outstanding, or 17.6% of the total number of shares
on a fully diluted basis.
48. Each of the stockholder parties agreed in the Stock Tender
Agreement to tender their shares within five business days of any tender
offer by ACS Acquisition at $19 per share. In addition, each of the
stockholder parties -- including Mr. Stoffel -- agreed not to take or to permit
any action that would initiate, solicit or facilitate any third-party inquiry
with respect to a potential merger with BRC Holdings, or any proposal or
offer to acquire more than 15% of the stock of the Company. Moreover, Mr.
Stoffel agreed not to communicate at all with any person or entity that might
even be considering a competing bid.
49. The intent and effect of the Stock Tender Agreement is to make a
competing bid for BRC Holdings less likely, because ACS Acquisition will have
a 20% locked-up "head start" on any other acquiror. In addition, although the
agreement purports to bind Stoffel only in his capacity as shareholder, a
transparent and ineffectual attempt to appear disinterested in his capacity
as a director, the agreement on its face prohibits the Chairman of the Board
of BRC
<PAGE>
Holdings from even communicating with third parties that might be considering
a competing bid.
THE TENDER OFFER AND THE COMPANY'S INADEQUATE AND MISLEADING DISCLOSURES
50. The Merger Agreement was executed on October 19, 1998. On that
date, ACS Acquisition and Affiliated Computer announced That they would
within five business days commence a tender offer for 51% of the outstanding
shares of BRC Holdings, on a fully diluted basis, at a price of $19 per share.
51. On or about October 23, 1998, ACS Acquisition mailed its tender
offer to the stockholders of BRC Holdings (the "Tender Offer") and filed a
Schedule 14D-1 (copy annexed hereto as Exhibit B) with the Securities and
Exchange Commission (the "SEC"). The Tender Offer expires, unless extended,
on November 20, 1998.
52. Also on or about October 23, 1998, BRC Holdings filed a Schedule
14D-9 with the SEC, consisting of the required "Solicitation/Recommendation
Statement" with respect to the Tender Offer (the "Solicitation") -- a copy of
which is annexed hereto as Exhibit A. The Solicitation makes material
misstatements, omits to disclose material information necessary to make the
statements made in the Solicitation not misleading, and does not give the
stockholders of the Company any basis for evaluating the merits of the Tender
Offer (and second-step merger).
FIRST CLAIM FOR RELIEF
(Against All Defendants)
53. Plaintiffs repeat and reallege the allegations of paragraphs 1
through 52 of the Class Action Complaint as if fully set forth herein.
54. In contacting Affiliated Computer and entering into the Merger
Agreement, BRC Holdings determined to cease its independent corporate
existence and transfer control of BRC Holdings from the public stockholders
of the company to ACS Acquisition and Affiliated Computer. Therefore, before
agreeing to the Merger Agreement, the board of directors of BRC Holdings had
a duty to seek all material information reasonably available in order to
determine whether the bid made by ACS Acquisition offered the best value
available to its shareholders, including whether more valuable bids were
available, and reasonably to consider other offers made.
55. Given the events leading up to the Merger Agreement, the provisions
of the Merger Agreement itself, the haste with which the agreement was
considered and the failure of the Company to explore alternatives, there was
no basis for the Director Defendants to conclude that the Merger Agreement
represented the best available alternative for BRC Holdings stockholders.
56. The directors of BRC Holdings have breached their duties of care
and loyalty by, among other actions:
(i) approving the Merger Agreement without making any attempt to
determine whether that agreement, as opposed to any other potential offer for
control of BRC Holdings, was in the best interests of the stockholders; in
approving a transaction designed to preclude any other proposal for
acquisition of BRC Holdings, without determining the adequacy of the price or
whether other proposals were available;
(ii) failing adequately to inform themselves of, or adequately to
consider, other actual offers made in 1998, or other potential transactions
available to BRC Holdings
<PAGE>
before voting upon and approving the Merger Agreement;
(iii) failing adequately to inform themselves, or adequately to
consider, the effect of the Merger Agreement upon BRC Holdings' ability to
obtain better offers and upon the interests of BRC Holdings' stockholders; and
(iv) in failing to oppose the transaction reflected in the Merger
Agreement.
57. The execution of the Merger Agreement violated the Defendant
Directors' fiduciary duties of loyalty and care, and the Merger Agreement is
therefore unenforceable. Such breaches were knowingly pursued by and aided
and abetted by the acts of defendant Affiliated Computer, particularly in
connection with encouraging and approving Mr. Stoffel's Stock Tender
Agreement, an agreement that creates substantial incentive to Mr. Stoffel to
ignore his duties as Chairman of the Board of BRC Holdings. Accordingly, the
Stock Tender Agreement is also invalid and unenforceable.
58. Plaintiffs have no adequate remedy at law.
SECOND CLAIM FOR RELIEF
(Against BRC Holdings and the Director Defendants for Breach
of the Duty of Disclosure/Duty of Candor)
59. Plaintiffs repeat and reallege the allegations of paragraph 1
through 58 of the Class Action Complaint as if fully set forth herein.
60. The fiduciary duties of BRC Holdings and the Director Defendants
imposed upon them an obligation to be entirely candid with plaintiffs and the
other members of the Class by disclosing only true and accurate information,
and by disclosing all relevant information in their possession that is
material to the stockholders' decision whether to tender their stock to ACS
Acquisition.
61. In violation of these duties, BRC Holdings' Solicitation misstated
and omitted to disclose information material to the stockholders' decision
whether to tender their stock to ACS Acquisition and/or to seek other relief
from the Court.
62. The misrepresentations, omissions and misleading statements in the
Solicitation include the following:
(i) The Solicitation omits to disclose that the Company received
several expressions of interest to acquire the shares of the Company at a
price higher than $19, before the Merger Agreement was executed, omits to
disclose that the board failed appropriately to evaluate or to respond to the
potential bidders, or to describe any reason for the board's evident lack of
interest in a competing bid.
(ii) The Solicitation fails to disclose whether the board has
reached a determination that it had maximized shareholders' value, much less
how and on what basis the board made that determination.
(iii) The Solicitation omits to disclose whether the board
considered just saying no - i.e. whether it was in the best interests of
stockholders, for example, not to accept this deal, to use the $110 million
in cash and liquid assets to make acquisitions, or to wait until 1999 or
later to sell control.
(iv) The Solicitation purports to describe the "Reasons for the
Transaction," but nowhere does it state any reason why the Company should be
up for sale in the first place, fails to disclose that the founder of the
Company was seemingly opposed to a sale of the Company, and indeed had built
up a cash reserve in excess of $110 million for the purpose of
<PAGE>
having the Company make acquisitions itself, fails to state any reason why the
board made such a sudden and complete reversal in the Company's business
strategy after the death of Mr. Esping and does not explain why the reversal
in the Company's strategy had to be implemented in such an abbreviated time
frame.
(v) The Solicitation includes a "fairness" opinion of DLJ, but
fails to provide any reasons for DLJ's conclusions, fails to set forth what
information DLJ considered, what DLJ's "fairness" range was, or whether DLJ
was advised of the other offers, fails to disclose whether DLJ based its
conclusion on a multiple of earnings, multiple of EBITDA, discounted cash
flow analysis, or net asset value analysis.
(vi) The Solicitation fails to disclose that similar companies
have routinely been sold for much higher multiples of earnings and EBITDA
over the past several years or to disclose whether the board was even aware
of that fact.
(vii) The Solicitation fails to disclose that senior officers of
the Company believed $19 per share to be an inadequate and insupportable
price.
(viii) The Solicitation represents that the purchase price of the
stock is $19 per share, but since, after the merger, Affiliated Computer will
own all of BRC's cash and liquid assets (currently, approximately $113
million) the true purchase price is materially less than $19 per share.
(ix) The Solicitation attempts to portray $19 per share as a
premium to the market price of shares of the Company's stock but does not
explain that the prevailing market price was below the stock's historical
average, like many other "small cap" stocks in the summer of 1998, or that,
with $6-7 of the per share price attributable to the Company's cash reserves
the price/earnings multiple is particularly low, especially for a company
with zero debt and steadily increasing earnings.
(x) The Solicitation does not explain ACS Acquisition's role in
approving the $1.3 million paid to Stoffel pursuant to the Stoffel Agreement,
that those funds are effectively coming from Affiliated Computer, giving
Stoffel an effective price per share of nearly $23 for his stock, and does
not explain what, if any, services Stoffel rendered in exchange for this
payment why such services were not already part of his duties as Chairman of
the Board or why that agreement was reached at the same time as BRC's board
voted to recommend this transaction.
63. Plaintiffs have no adequate remedy at law.
THIRD CLAIM FOR RELIEF
(Against Defendants ACS Acquisition and Affiliated Computer)
64. Plaintiffs repeat and reallege the allegations of paragraphs 1
through 63 of the Class Action Complaint as if fully set forth herein.
65. Defendants ACS Acquisition and Affiliated Computer knowingly
induced, aided and abetted BRC Holdings' directors in the breach of their
duties described above. ACS Acquisition and Affiliated Computer suggested or
approved the Stoffel Agreement described in paragraphs 40-43 above at the same
time Stoffel was deciding whether BRC would enter this transaction. And
Affiliated Computer, knowing that the BRC Holdings directors did not
understand the price that could be obtained for these assets now or within a
reasonable period of time, pushed for No-Shop and Breakup Fee provisions that
would make it impossible for the directors to obtain such an understanding.
66. Plaintiffs have no adequate remedy at law.
<PAGE>
WHEREFORE, plaintiffs pray for judgment against defendants as follows:
A. Declaring and decreeing that the Merger Agreement was entered into
in breach of the fiduciary duties of the BRC Holdings directors and is thus
invalid and unenforceable;
B. Declaring and decreeing that the Stoffel Agreement was entered into
in breach of the fiduciary duties of defendant Stoffel and the other BRC
Holdings directors and is thus invalid and unenforceable;
C. Enjoining, temporarily, preliminarily and permanently, the
consummation of the Tender Offer, any payment of money by BRC Holdings
pursuant to the terms of the Breakup Fee and the merger;
D. Declaring and decreeing that any rights acquired by ACS
Acquisitions or Affiliated Computer in the Merger Agreement were procured by
aiding and abetting a breach of fiduciary duty, and that the Merger Agreement
is null and void and of no further effect;
E. To the extent that the Merger Agreement or Tender Offer is
performed or consummated prior to the entry of final judgment by this Court,
rescinding such transaction or transactions and declaring and decreeing such
transaction or transactions to be null and void;
F. Declaring and decreeing that the consummation of the proposed
Merger Agreement is unlawful and in breach of the fiduciary duties of the
BRC Holdings directors;
G. Enjoining, preliminarily and permanently, the consummation of the
Merger Agreement;
H. If the Merger Agreement is performed or consummated prior to the
entry of final judgment by this Court, awarding plaintiffs compensatory
and/or rescissory damages against all defendants, jointly and severally, in
an amount to be determined at trial, together with prejudgment and
postjudgment interest at the maximum rate allowable by law;
I. Awarding plaintiffs the costs and disbursements of this action,
including reasonable attorneys' and experts' fees and expenses; and
J. Granting such other and further relief as the Court may deem just
and proper.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Bruce L. Silverstein
------------------------------------
William D. Johnston
Bruce L. Silverstein
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
Attorneys for Plaintiffs
OF COUNSEL:
Leon P. Gold
Scott A. Eggers
John Margiotta
PROSKAUER ROSE LLP
1585 Broadway
New York, New York 10036
<PAGE>
(212) 969-3000
Dated: October 30, 1998
<PAGE>
VERIFICATION
Jeffrey A. Berg, being duly sworn, states:
I am the President of Matador Capital Management Corporation, one
of the plaintiffs in the forgoing Class Action Complaint. I have read the
Complaint and know its contents. I have authority to verity the Complaint on
behalf of Matador Capital Management Corporation. The allegations of the
Complaint made on personal knowledge are true and correct to my knowledge,
and I believe the allegations of the Complaint made on information and belief
to be true.
/s/ Jeffrey A. Berg
-----------------------------
Jeffrey A. Berg
Sworn to before me this
30th day of October, 1998
/s/ A. Diane Jennings
- -----------------------------
Notary Public
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD., )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
MOTION FOR APPOINTMENT OF SPECIAL PROCESS SERVER
Plaintiffs hereby move pursuant to Chancery Court Rules 4(a) and (c) for
an order appointing a special process server. In support of its motion,
plaintiffs submit herewith the affidavit of Bruce L. Silverstein., Esquire.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Bruce L. Silverstein
----------------------------------
William D. Johnston
Bruce L. Silverstein
11th Floor, Rodney Square North
P.O. Box 391
OF COUNSEL: Wilmington, Delaware 19899-0391
(302) 571-6659
Leon P. Gold Attorneys for Plaintiffs
Scott A. Eggers
John Margiotta
PROSKAUER ROSE, LLP
1585 Broadway
New York New York 10036-8299
(212) 969-3000 Dated: October 30, 1998
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD, )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
)
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
AFFIDAVIT OF BRUCE L. SILVERSTEIN
IN SUPPORT OF PLAINTIFFS' MOTION FOR
APPOINTMENT OF A SPECIAL PROCESS SERVER
STATE OF DELAWARE )
NEW CASTLE COUNTY )
The undersigned, being duly sworn according to law, does hereby depose
and say:
1. I am a member of the Bar of this Court and a partner with the law
firm of Young Conaway Stargatt & Taylor, LLP, counsel to plaintiffs in the
above-captioned action.
2. I make this affidavit in support of plaintiffs' motion, pursuant to
Rules 4(a) and (c) of this Court, for the appointment of a special process
server.
3. The appointment of a special process server will result in a
material saving of time in effecting service of process in this action. In
order to facilitate notice to defendants of the substance of plaintiffs'
Complaint and application for a preliminary injunction, it is necessary that
the Complaint be served upon defendants as promptly as possible. The
appointment of a special process server will permit such service.
<PAGE>
/s/ Bruce L. Silverstein
---------------------------------
Bruce L. Silverstein
SWORN TO AND SUBSCRIBED before me, this 30th day of October, 1998.
/s/ Kay M. Shuey
---------------------------------
Notary Public
My Commission Expires: 1/23/2001
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD., )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
ORDER APPOINTING SPECIAL PROCESS SERVER
This ____ day of ____________, 1998, the Court having been
presented with plaintiffs' motion, pursuant to Chancery Court Rules 4(a) and
(c), for the appointment of a special process server,
IT IS HEREBY ORDERED as follows:
Parcels, Inc., John Meyer, or any other employee of Young Conaway Stargatt
& Taylor, LLP, over the age of 18 and who is not a party to this action, is
hereby specially appointed pursuant to Chancery Court Rules 4(a) and (c) and is
directed to take such actions as may be necessary to effect prompt service of
the Summons, the Complaint, the aforementioned motion of plaintiffs and a copy
of this Order upon defendants and to make the return of service promptly upon
completion of service of process.
---------------------------------
Master in Chancery
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD., )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
)
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
MOTION FOR A PRELIMINARY INJUNCTION
Plaintiffs Matador Capital Management Corporation, Everglades Partners,
L.P., Everglades Offshore, Ltd, and Contrarian Opportunities Fund, L.P.
("Plaintiffs") hereby move the Court, pursuant to Chancery Court Rule 65, for
the entry of a preliminary injunction enjoining the defendants from taking
any further steps in furtherance of a transaction between defendants ACS
Acquisition Corporation ("ACS") and BRC Holdings, Inc. ("BRC"), whereby the
individual defendants have, in breach of their fiduciary duties under
Delaware law, agreed to allow ACS to acquire control of BRC through a tender
offer that is to be followed by a second-step cash-out merger of BRC's public
stockholders.
The grounds for this motion will be set forth in an opening brief
to be filed in accordance with a schedule to be determined in consultation
with the Court.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Bruce L. Silverstein
------------------------------------------
William D. Johnston
Bruce L. Silverstein
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
<PAGE>
Attorneys for Plaintiffs
OF COUNSEL:
Leon P. Gold
Scott A. Eggers
John Margiotta
PROSKAUER ROSE, LLP
1585 Broadway
New York, New York 10036-8299
(212) 969-3000
Dated: October 30, 1998
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD., )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
)
v. ) C.A. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
MOTION FOR EXPEDITED PROCEEDINGS
Plaintiffs, by their attorneys, respectfully move the Court to schedule
their Motion for Preliminary Injunction, served and filed herewith, for a
hearing on or prior to November 20, 1998, the presently scheduled date for
the closing of the tender offer (the "Tender Offer") by ACS Acquisition
Corporation ("ACS") for a majority of the issued and outstanding shares of
BRC Holdings, Inc. ("BRC") at $19.00 per share. The Tender Offer is the first
step of a two-step cash-out merger that has been approved by the individual
defendants in breach of their fiduciary duties under Delaware law. As grounds
for this Motion, plaintiffs represent as follows:
Plaintiffs are stockholders of BRC. Plaintiffs bring this action on
behalf of all BRC stockholders, except defendants, contending that the
defendant directors of BRC have breached their fiduciary duties to plaintiffs
and the other public shareholders of BRC by failing to take appropriate steps
to obtain the best transaction available for BRC public shareholders; and by
failing to inform BRC's stockholders of all information material to their
decision of whether to tender their shares (and thereby facilitate the
cash-out merger of all stockholders of BRC). These allegations are
particularized in Plaintiffs' Class Action Complaint, filed with this Motion
(the "Complaint").
2. Among other things, the Complaint alleges that BRC's Board accepted
the acquisition proposal of ACS's parent, Affiliated Computer Services, Inc.
("Affiliated"), without exploring the alternatives, that the transaction price
does not fairly value BRC, and that the transaction is not the best transaction
available to the stockholders of BRC.
3. In addition, the Complaint alleges that BRC's
Solicitation/Recommendation Statement on Schedule 14D-9 omits material
information in a number of respects.
4. In short, the Complaint alleges that BRC's stockholders are being
denied the
<PAGE>
opportunity to make an informed judgment on the Tender Offer, and that the
individual defendants have failed to satisfy their duty to maximize
stockholder value in a change of control transaction. Accordingly, plaintiffs
seek a preliminary injunction against completion of the Tender Offer and
second step merger. Lack of complete information in connection with a Tender
Offer, and loss of the opportunity to obtain the best available transaction
in a change of control context constitutes irreparable injury sufficient to
warrant preliminary injunctive relief, SEE, E.G., JOSEPH V. SHELL OIL
COMPANY, Del. Ch., 482 A.2d 335 (1984); and, as this Court explained in QVC
NETWORK V. PARAMOUNT COMMUNICATIONS, Del. Ch., 635 A.2d 1245, 1273 n.50
(1993), AFFIRMED IN RELEVANT PART, PARAMOUNT COMMUNICATIONS V. QVC NETWORK,
Del. Supr., 637 A.2d 34 (1993):
Since the opportunity for shareholders to receive a superior control
premium would be irrevocably lost if injunctive relief were not granted,
that alone would be sufficient to constitute irreparable harm.
5. Since the Tender Offer is scheduled to close on November 20. 1998,
plaintiffs request that the Court hear their preliminary injunction motion
sufficiently prior to that date to permit a decision before the closing.
6. Plaintiffs have not previously applied for this relief.
WHEREFORE, plaintiffs respectfully request the Court to enter an Order
in the form attached hereto.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
/s/ Bruce L. Silverstein
----------------------------------------
William D. Johnston
Bruce L. Silverstein
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
Attorneys for Plaintiffs
OF COUNSEL:
Leon P. Gold
Scott A. Eggers
John Margiotta
PROSKAUER ROSE, LLP
1585 Broadway
New York, New York 10036-8299
(212) 969-3000
<PAGE>
Dated: October 30, 1998
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MATADOR CAPITAL MANAGEMENT )
CORPORATION, EVERGLADES PARTNERS, )
L.P., EVERGLADES OFFSHORE FUND, LTD., )
CONTRARIAN OPPORTUNITIES FUND, L.P., )
)
Plaintiffs, )
)
v. ) CA. No.
)
BRC HOLDINGS, INC., ACS ACQUISITION )
CORPORATION, AFFILIATED COMPUTER )
SERVICES, INC., PAUL T. STOFFEL, L.D. )
BRINKMAN, ROBERT E. MASTERSON, and )
DAVID H. MONNICH, )
)
Defendants. )
ORDER GRANTING EXPEDITED SCHEDULING
Upon the motion of the plaintiffs and for good cause shown, IT IS HEREBY
ORDERED this _____ day of November, 1998 that:
A hearing on plaintiffs' motion for a preliminary injunction shall be held
on November __, 1998, at :____.m., in ____________ Delaware.
The briefing schedule on Plaintiffs' motion for a preliminary injunction
shall be as follows;
Plaintiffs' Opening Brief: November ___, 1998
Defendants' Answering Brief: November ___, 1998
Plaintiffs' Reply Brief November ___, 1998
Defendants shall produce documents requested by plaintiffs within three
(3) calendar days of service of a request for production. Interrogatories
shall be answered within 3(3) calendar days of their service.
Plaintiffs may conduct depositions on forty-eight (48) hours' notice.
-----------------------------------
Chancellor
<PAGE>
SUPPLEMENTAL INFORMATION PURSUANT TO RULE
3(a) OF THE RULES OF THE COURT OF CHANCERY
The information contained herein is for the use by the Court for
statistical and administrative purposes only. Nothing stated herein shall be
deemed an admission by or binding upon any party.
1. Caption of Case:
Matador Capital Management Corporation, Everglades Partners, L.P.,
Everglades Offshore Fund, Ltd, and Contrarian Opportunities Fund, L.P.,
Plaintiffs, v. BRC Holdings, Inc., ACS Acquisition Corporation, Affiliated
Computer Services, Inc., Paul T. Stoffel, L.D. Brinkman, Robert E.
Masterson, and David H. Monnich, Defendants.
2. Date filed: October 30, 1998
3. Name and address of counsel for plaintiffs:
William D. Johnston
Bruce L. Silverstein
YOUNG CONAWAY STARGATT & TAYLOR, LLP
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
4. Short statement and nature of claim asserted: Action for injunctive relief
in connection with negotiated tender other and second-step cash-out merger.
5. Substantive field of law involved (check one):
___ Administrative law ___ Trade secrets/
___ Commercial law trade mark/or other
___ Constitutional law intellectual property
_x_ Corporation law ___ Trusts
___ Guardianships ___ Wills and estates
___ Labor law ___ Zoning
___ Real property ___ Other
6. Related case(s): None
7. Basis of court's jurisdiction (including the citation of any statute
conferring jurisdiction): 10 DEL. C. Section 341
8. If the complaint seeks preliminary' equitable relief, state the specific
preliminary relief
<PAGE>
sought: Injunctive relief against consummation of tender offer and
second-step cash-out merger.
9. If the complaint seeks summary or expedited proceedings. check here X .
---
YOUNG CONAWAY STARGATT & TAYLOR, LLP
---------------------------------------------
William D. Johnston
Bruce L. Silverstein
11th Floor, Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6659
Attorneys for Plaintiffs
OF COUNSEL:
Leon P. Gold
Scott A. Eggers
John Margiotta
PROSKAUER ROSE, LLP
1585 Broadway
New York, New York 10036-8299
(212) 969-3000
Dated: October 30, 1998
<PAGE>
Exhibit 12
FOR IMMEDIATE RELEASE
Contact: Paul Stoffel
Chairman
(214) 750-7778
Thomas E. Kiraly
Executive Vice President &
Chief Financial Officer
BRC RESPONDS TO MATADOR LITIGATION
DALLAS, TEXAS -November 2, 1998 - BRC HOLDINGS, INC. ("BRC") (NASDAQ-BRCP)
announced today that it has been notified that Matador Capital Management
Corporation and certain of its affiliates have filed suit in Delaware
Chancery Court against BRC, ACS Acquisition Corporation ("ACS Acquisition"),
Affiliated Computer Services, Inc. ("ACS") and the directors of BRC, making
certain allegations regarding the negotiation and contents of a Merger
Agreement among BRC, ACS and ACS Acquisition and regarding the BRC's public
disclosures relating thereto. Among other relief sought, the plaintiffs in
this lawsuit seek to enjoin the consummation of a tender offer recently
commenced by ACS and ACS Acquisition for 51% (on a fully diluted basis) of
the outstanding common stock of BRC or the consummation of any transaction
contemplated in the related Merger Agreement.
BRC is currently reviewing the allegations made in this litigation and
expects to vigorously defend the suit.
BRC Holdings, Inc., based in Dallas, Texas, is an information technology
services firm with 30 years experience in providing consulting, project
management, technical support and systems services that enable its clients to
achieve their strategic and operational objectives. BRC specializes in
information technology outsourcing, consulting, information systems and
document management. BRC is ITAA*2000 certified. For more information about
BRC, visit the Company's web site at www.brcp.com.
<PAGE>
ACS is based in Dallas, Texas, and has operations primarily in North America,
as well as Central America, South America, Europe and the Middle East. ACS
provides a full range of business services including technology outsourcing,
business process outsourcing, electronic commerce, professional services and
systems integration. The Company's Class A common stock trades on the New
York Stock Exchange under the symbol "AFA". Visit ACS on the Internet at
www.acs-inc.com.
Statements about the Company's outlook and all other statements in this
release other than historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of uncertainties and factors, many of
which are outside BRC's control, that could cause actual results to differ
materially from such statements. While the Company believes that the
assumptions concerning future events are reasonable, it cautions that there
are inherent difficulties in predicting certain important factors, especially
the timing and magnitude of technological advances; market responses to the
Company's product and service offerings, pricing pressures, results from
litigation, the timely development and acceptance of new products and
services, changes in customer preferences, inventory risks due to shifts in
market demand and the successful consummation of the transactions
contemplated in its merger agreement with Affiliated Computer Services, Inc.
Consequently, the actual results realized by the Company could differ
materially from the statements made herein. Shareholders of the Company are
cautioned not to place an undue reliance on the forward-looking statements
made herein.
