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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
AMENDMENT NO. 1
TO
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of
the Securities Exchange Act of 1934
______________
DART GROUP CORPORATION
(Name of Subject Company)
DART GROUP CORPORATION
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
237415104
(CUSIP Number of Class of Securities)
______________
Richard B. Stone
Chairman and Chief Executive Officer
Dart Group Corporation
3300 75th Avenue
Landover, Maryland 20785
(301) 226-1200
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of
the person filing statement)
With a copy to:
David G. Pommerening, Esq.
O'Melveny & Myers LLP
555 13th Street, N.W.
Washington, D.C. 20004-1109
(202) 383-5300
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This Amendment No. 1 supplements and amends the Solicitation/
Recommendation Statement on Schedule 14D-9, originally filed on April 15, 1998
(the "Schedule 14D-9"), by Dart Group Corporation, Inc., a Delaware corporation
(the "Company"). The Schedule 14D-9 relates to the tender offer by DGC
Acquisition, Inc., a Delaware corporation (the "Purchaser") and an indirect
wholly owned subsidiary of Richfood Holdings, Inc., a Virginia corporation
("Parent"), disclosed in a Tender Offer Statement on Schedule 14D-1, dated April
15, 1998, to purchase all outstanding shares of common stock, par value $1.00
per share (the "Shares"), of the Company at a price of $160.00 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated April 15, 1998, and the related Letter of
Transmittal. Capitalized terms used and not otherwise defined herein have the
meanings set forth in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
On April 24, 1998, Jerry Krim ("Plaintiff") filed a putative class action
in the Court of Chancery for the State of Delaware in and for the County of New
Castle (the "Complaint"). The Complaint asserts a cause of action sounding in
breach of fiduciary duty against the Company, each of the Company's directors
(the "Director Defendants"), Parent and the Purchaser.
The Complaint alleges that the Director Defendants, in agreeing to the
merger of the Company with the Purchaser, breached their fiduciary duties owed
to the Company's stockholders to take all necessary steps to ensure that the
stockholders will receive the maximum value realizable for their shares in any
merger or acquisition of the Company. For example, Plaintiff alleges that the
Director Defendants failed to adequately evaluate the Company's value as a
potential merger or acquisition candidate and/or did not act to enhance the
Company's value as such a candidate, and failed to implement "a bidding
mechanism to foster a fair auction of Dart to the highest bidder". The
Complaint alleges that Parent pressed the Company and the Director Defendants
"into agreeing to deal exclusively with Parent and thereby breach their
fiduciary obligation," which allegedly makes Parent and the Purchaser liable to
Plaintiff and the class. The Complaint also alleges that the Director
Defendants engaged in all or part of the allegedly unlawful acts, plans, schemes
or transactions complained of and thus aided and abetted the alleged breach of
fiduciary duty. The Complaint seeks an injunction preventing the Purchaser and
Parent from consummating the tender offer, an injunction preventing the Company,
Parent and the Purchaser from consummating the Merger Agreement and unspecified
monetary damages.
The Company believes that the lawsuit is without merit. A copy of the
Complaint is filed herewith as Exhibit K and is incorporated herein by
reference.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit K Complaint filed in the Court of Chancery of the State of Delaware
in and for New Castle County in an action titled Jerry Krim, on
--------------
behalf of himself and all others similarly situated v. Richard B.
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Stone, et al.
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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.
Dart Group Corporation
By: /s/ Richard B. Stone
-------------------------------------
Name: Richard B. Stone
Title: President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
Exhibit K Complaint filed in the Court of Chancery of the State of
Delaware in and for New Castle County in an action
titled Jerry Krim, on behalf of himself and all others
-----------------------------------------------
similarly situated v. Richard B. Stone, et al.
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Exhibit K
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- -----------------------------------------
JERRY KRIM, on behalf of himself )
and all others similarly situated, ) C.A.
)
Plaintiff, )
) CLASS ACTION
v. ) COMPLAINT
) ------------
RICHARD B. STONE, HOWARD M. )
METZENBAUM, HARRY M. LINOWES, )
RICHFOOD HOLDINGS, INC., a Virginia )
corporation, DGC ACQUISITION, INC., )
a Delaware corporation, and DART )
GROUP CORPORATION, a Delaware )
corporation, )
)
Defendants. )
________________________________________)
The plaintiff, Jerry Krim ("the Plaintiff"), by his attorneys, alleges
upon information and belief, except for paragraph 2 which is alleged upon
personal knowledge, as follows:
JURISDICTION
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1. The Court has jurisdiction over Dart Group Corporation ("Dart"),
DGC Acquisition, Inc. ("DGC"), and Richfood Holdings, Inc. ("Richfood") pursuant
to Section 10.5 of the Agreement And Plan of Merger By And Among Richfood
Holdings, Inc., DGC Acquisition, Inc., And Dart Group Corporation, dated as of
April 9, 1998 ("the Merger Agreement"):
Section 10.5 Governing Law; Consent to Jurisdiction. This Agreement
--------------------------------------
shall be governed by and construed in accordance with the laws of the
State of Delaware regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof. Each of the
parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises
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out of this Agreement or any of the transactions contemplated by this
Agreement, and, in connection with any such matter, to service of
process by notice as otherwise provided herein, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (c) agrees
that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other
than a federal court sitting in the State of Delaware or a Delaware
state court.
THE PARTIES
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2. The Plaintiff is, and at all relevant times was, the owner of
shares of common stock of Dart.
3. Dart is a Delaware corporation with its principal offices based
at 3300 75th Avenue, Landover, Maryland, 20785. Dart's business consists of the
Shoppers Food Warehouse Corp., a Delaware corporation (Shoppers"), a supermarket
chain, as well as majority stakes in (a) Trak Auto Corporation, a Delaware
corporation (Trak"), an auto parts retailer; (b) Crown Books Corporation, a
Delaware corporation ("Crown"), a bookstore chain, and (c) Total Beverage Corp.,
a Delaware corporation ("Total"), a retailer.
4. Richfood is a Virginia corporation with its principal offices
based at 4860 Cox Road, Suite 300, Glen Allen, Virginia, 23060. Richfood is a
wholesale distributor and supermarket operator.
5. DGC is a wholly-owned subsidiary of Richfood formed to facilitate
the implementation of the Merger Agreement and is named as a party to enable the
Court to grant full relief.
6. Dart's Board of Directors consists of the following persons:
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(a) Richard B. Stone is, and at all relevant times has been, a
Director of Dart;
(b) Howard M. Metzenbaum is, and at all relevant times has been,
a Director of Dart; and
(c) Harry M. Linowes is, and at all relevant times has been, a
Director of Dart.
7. The persons named in paragraph 6 above are collectively referred
to herein as the "Individual Defendants."
8. The Individual Defendants, by reason of their corporate
directorships stand in a fiduciary relationship relative to Dart's shareholders
that at all times relevant herein required the Individual Defendants (a) to
exercise their best judgment, (b) to act in a prudent manner, and (c) to act in
the best interests of Dart's shareholders. They were and are required: (a) to
use their ability to control and manage Dart in a fair, just and equitable
manner; (b) to act in furtherance of the best interests of Dart's shareholders;
(c) to refrain from abusing their positions of control; and (d) not to favor
their own interests at the expense of Dart's shareholders.
9. Each of the Individual Defendants is sued individually as an
aider and abettor, as well as in his or her capacity as an officer and/or
director of Dart, and the liability of each arises from the fact he has engaged
in all or part of the unlawful acts, plans, schemes, or transactions complained
of herein.
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CLASS ACTION ALLEGATIONS
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10. The Plaintiff brings this action on his own behalf and, pursuant
to Rule 23 of the Rules of the Court of Chancery of the State of Delaware, on
behalf of all stockholders of Dart (except Dart, Richfood and DGC and the
Individual Defendants herein and any person, firm, trust, corporation, or other
entity related to or affiliated with Dart, Richfood and DGC or any of the
Individual Defendants) and their successors in interest, who are or will be
threatened with injury arising from Dart's, Richfood's and DGC's and the
Individual Defendants' actions as more fully described herein ("the Class").
11. The Plaintiff seeks injunctive relief and to recover damages for
himself and the other members of the Class caused by the breach of fiduciary
duties the Individual Defendants owe, in that the Plaintiff and the other
members of the Class will not receive their fair proportion of the value of
Dart's assets and businesses since that value is not fully reflected in the
price to be paid by Richfood and that can only truly be determined if the
Individual Defendants create a level playing field for other bidders to come in
and bid for Dart, its assets and businesses.
12. The Individual Defendants' decision to agree to the Merger
Agreement was give in breach of their fiduciary duties owed to Dart's
stockholders to take all necessary steps to ensure that the stockholders will
receive the maximum value realizable for their shares in any merger or
acquisition of Dart. In the context of this action, the Individual Defendants
as the Board of
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Directors of Dart 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 Dart to the highest bidder or the exploration of strategic
alternatives which will return greater or equivalent value to the Plaintiff and
the Class. What Dart, Richfood and DGC and the Individual Defendants have done
prevents the Plaintiff and the other members of the Class from obtaining a fair
price for their shares of Dart's common stock.
13. This action is properly maintainable as a class action.
14. The Class is so numerous that joinder of all members is
impracticable. There were at least 1,129,234 shares of Dart common stock issued
and outstanding in the hands of approximately 315 members of the Class,
including "street name" holders, as of April 13, 1997, which shares are traded
on NASDAQ.
15. A class action is superior to other methods for the fair and
efficient adjudication of the claims herein asserted and no unusual difficulties
are likely to be encountered in the management of this class action. The
likelihood of the individual Class members prosecuting separate claims is
remote.
16. 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, the following:
----- ----
(a) whether the value of Dart's assets and businesses is greater than
the $160 per share Richfood has offered;
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(b) whether Dart, Richfood and DGC and the Individual Defendants have
failed to disclose all material facts about the value of Shoppers, Trak, Crown
and Total, information that is indispensable to the public stockholders in
acting on the Tender Offer and the Merger, as defined below:
(c) whether Dart, Richfood and DGC and the Individual Defendants have
failed to disclose all material facts relating to the Tender Offer and the
Merger Agreement, including the potential and expected positive future financial
benefits Richfood expects to derive;
(e) whether Richfood pressed Dart and the Individual Defendants into
agreeing to deal exclusively with Richfood thereby causing them to breach their
fiduciary obligation owed to Dart's public stockholders without providing other
bidders equivalent time and opportunity to study Dart and its subsidiaries and
propose a meaningful bid;
(f) whether Dart, Richfood and DGC and the Individual Defendants are
unlawfully impeding other possible merger or takeover attempts at the expense of
Dart's public stockholders; and
(g) whether Dart and the Individual Defendants have failed and will
fail to negotiate in good faith with other prospective purchasers of Dart.
17. The prosecution of separate claims would create a risk of either
inconsistent or varying adjudications concerning individual members of the
Class, which would establish incompatible standards of conduct for the parties
opposing the
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Class, and adjudications concerning individual members of the Class would, as a
practical matter, be dispositive of the interests of other members of the Class
who are not parties to the adjudications or substantially impair or impede the
ability of other members of the Class who are not parties to the adjudications,
to protect their interests. The Individual Defendants have acted on grounds
generally applicable to all members of the Class, making relief concerning the
Class wholly appropriate.
18. The Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of the Plaintiff are typical of the claims of other members of the Class and the
Plaintiff has the same interests as the other members of the Class. The
Plaintiff is an adequate representatives of the Class. A class action poses no
management problems and this case is ideally suited for class action
certification.
SUBSTANTIVE ALLEGATIONS
-----------------------
19. On or about April 9, 1998, Richfood and Dart announced their
signing of a definitive merger agreement in which Richfood would acquire Dart at
a price of $160 per share in cash ("the Merger Agreement") ("the Merger").
20. Under the terms of the Merger Agreement, Richfood will commence a
cash tender offer for all outstanding shares of Dart's common stock at $160 per
share within five (5) business days ("the Tender Offer"). The completion of the
tender offer is not subject to financing, but is subject to a number of other
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customary conditions, including a majority of Dart's outstanding shares on a
fully diluted basis being tendered and the expiration of the waiting period
under the Hart-Scott-Rodino Act. Following the successful completion of the
Richfood tender offer, all shares not purchased in the Tender Offer will be
converted in a subsequent merger into the right to receive $160 per share in
cash and Dart will become a wholly-owned subsidiary of Richfood. The Merger
Agreement is also subject to various further conditions.
21. Richfood insisted the Individual Defendants and Dart agree (a)
not to solicit any other offer to acquire Dart and, (b) moreover, that "Dart
shall immediately cease and cause to be terminated any existing discussions or
negotiations with any persons (other than Richfood and [DGC]) conducted
heretofore with respect to any Acquisition Proposal."
22. Richfood insisted upon an agreement from Dart to pay a
termination fee if Dart did not go forward with the Merger.
23. Richfood's actions caused Dart and the Individual Defendants to
abandon all other negotiations without determining whether other proposals were
more favorable to Dart's public stockholders than that of Richfood.
24. In a statement Richfood said it was buying Dart primarily to
acquire Shoppers and planned to divest itself of the other Dart assets i.e.,
----
Trak, Crown and Total.
25. Upon the announcement of the Merger Agreement, Dart stock rose to
$169 a share reflecting the market's belief that the business and assets of Dart
were and are worth more than
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the $160 a share the Tender Offer and the Merger Agreement provide.
26. The Merger Agreement Dart and the Individual Defendants agreed to
with Richfood is unfair to the Class since the consideration to be paid to
Dart's shareholders does not recognize the underlying value of Dart's assets and
future profitability.
27. In agreeing to the Tender Offer and the Merger Agreement, Dart
and the Individual Defendants did not provide to the financial advisor
Wasserstein Perella & Co., Inc. ("WPC"), detailed financial projections for Dart
and its subsidiaries of the type customarily used for performing a discounted
cash flow analysis. WPC did not perform such analysis in opining on the
fairness of the Tender Offer and the Merger from a financial point of view.
28. Dart and the Individual Defendants agreed with WPC that WPC would
not have to review any of the books and records of Dart or its subsidiaries and,
further, that WPC did not assume any responsibility for conducting a physical
inspection of the properties or facilities of Dart or its subsidiaries or for
making or obtaining an independent valuation or appraisal of the assets, lease,
portfolio, or the liabilities of Dart or its subsidiaries.
29. Although Dart and the Individual Defendants provided WPC with
copies of certain appraisals concerning real estate holdings of Dart and its
subsidiaries, WPC made no independent inquiry with reference to these
valuations.
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Moreover, Dart and the Individual Defendants did not provide any independent
valuation or appraisal to WPC with reference to any other assets or liabilities
of Dart and its subsidiaries.
30. In agreeing to the Tender Offer and the Merger Agreement, Dart
and the Individual Defendants did not disclose either to WPC or its public
stockholders the separate valuations of the assets and business of Dart to
enable the Plaintiff and the Class to determine whether to tender their shares
on the Tender Offer or acquiesce to the Merger or oppose the Merger.
31. Dart and the Individual Defendants have breached their fiduciary
duties by reason of the acts and transactions complained of herein, including
their failure to negotiate the possible acquisition of Dart by providing
confidential information to other potential suitors with the opportunity and
time for them to study the material on the same playing field that Dart created
for Richfood.
32. Richfood, with recognition of the fiduciary duties the Individual
Defendants owed to Dart and Dart's public stockholders, nonetheless, pressed
them into agreeing to deal exclusively with Richfood and thereby breach their
fiduciary obligation and thus Richfood and DGC are as liable to the Plaintiff
and the Class as are the Individual Defendants
33. Unless enjoined by their Court from consummation of the Tender
Offer and the Merger, Dart, Richfood, DGC and the Individual Defendants will
continue to breach the fiduciary duties owed to the Plaintiff and the other
members of the Class, all to the irreparable harm of the Class, as aforesaid.
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34. The Individual Defendants' gave their authorization for Dart to
pursue the transaction in breach of their fiduciary duties owed to Dart's
stockholders to take all necessary steps for ensure that the stockholders will
receive the maximum value realizable to their shares in any merger of Dart. In
the context of this action, the Individual Defendants as the Board of Directors
of Dart 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 Dart to the highest bidder or the exploration of strategic
alternatives which will return greater or equivalent value to the Plaintiff and
the Class.
35. The 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 Dart's assets and businesses, that is not fully reflected in the
price to be paid by Richfood and which can only truly be determined if the
Individual Defendants create a level playing field for other bidders to come in
and bid for Dart. The Plaintiff and the other members of the Class have been
and will be prevented from obtaining a fair price for their shares of Dart's
common stock.
36. The Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, the Plaintiff demands judgment, as follows:
A. Declaring this to be a proper class action;
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B. Ordering Dart and the Individual Defendants to carry out their
fiduciary duties to the Plaintiff and the other members of the Class by
announcing their intention to:
(1) cooperate fully with any person or entity having a bona fide
---- ----
interest in proposing any transaction which would maximize shareholder value,
including, but not limited to, a buyout or takeover of Dart;
(2) invalidating any breakup fee agreed to by the Individual
Defendants and Dart, if there is one;
(3) undertake an appropriate evaluation of Dart's worth as a
merger/acquisition candidate;
(4) take all appropriate steps to enhance Dart's value and
attractiveness as a merger/acquisition candidate;
(5) take all appropriate steps to effectively expose Dart to the
marketplace in an effort to create an active auction for Dart;
(6) take proper action to maximize the price that Dart's
shareholders will receive for their shares;
(7) act independently so that the interests of Dart's public
stockholders will be protected; and
(8) adequately ensure that no conflicts of interest exist between
Individual Defendants' own interests and their fiduciary obligations to maximize
stockholder value or, if such conflicts exist, to ensure that all conflicts are
resolved in the best interests of Dart's public stockholders;
C. Ordering the Individual Defendants to carry out their fiduciary
duties to the Plaintiff and the Class and
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requiring them to respond in good faith to any bona fide potential buyer of
---- ----
Dart;
D. Temporarily and permanently enjoining Richfood and DGC from
consummating the Tender Offer;
E. Temporarily and permanently enjoining Dart, the Individual
Defendants, Richfood and DGC from consummating the Merger Agreement;
F. Awarding the Plaintiff the costs and disbursements of the action,
including a reasonable allowance for the Plaintiff's attorneys' and experts'
fees; and
G. Granting such other and further relief as may be just and proper.
DATED: April 24, 1998
MORRIS and MORRIS
By:
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Irving Morris
Patrick F. Morris
Seth D. Rigrodsky
Suite 1600
1105 North Market Street
Wilmington, DE 19801
(302) 426-0400
Attorneys for the Plaintiff
OF COUNSEL:
Law Firm of Harvey Greenfield
Harvey Greenfield, Esquire
Laura Perrone, Esquire
10 East 40th Street
44th Floor
New York, NY 10016
(212) 679-0600
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