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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 7)
The Chicago Dock and Canal Trust
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
1673391
----------------------------------------
(CUSIP Number)
Fred Eychaner, c/o Newsweb Corporation, 1645 W. Fullerton Avenue, Chicago, IL
60614 (312) 975-0400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 6, 1996
------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP No. 1673391 Page 2 of 6 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fred Eychaner (S.S.# ###-##-####)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
7 SOLE VOTING POWER
533,200
8 SHARED VOTING POWER
NUMBER OF SHARES -100-
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
533,200
10 SHARED DISPOSITIVE POWER
-100-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
533,300
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.2%
14 TYPE OF REPORTING PERSON*
IN
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
CUSIP No. 1673391 Page 3 of 6 Pages
<TABLE>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Newsweb Corporation (I.R.S.# 362728759)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
7 SOLE VOTING POWER
-0-
8 SHARED VOTING POWER
NUMBER OF SHARES -100-
BENEFICIALLY OWNED
BY EACH REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
-0-
10 SHARED DISPOSITIVE POWER
-100-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.002%
14 TYPE OF REPORTING PERSON*
CO
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
ITEM 1. SECURITY AND ISSUER
In accordance with Rule 101 (a)(2)(i) of Regulation S-T of the Securities
Exchange Act of 1934, as amended, this Amendment No. 7 hereby amends and
supplements the statement of Schedule 13D, dated January 24, 1995, as amended
and restated in its entirety by Amendment No. 1 dated June 16, 1995, as amended
and supplemented by Amendment No. 2 dated July 28, 1995, as amended and
supplemented by Amendment No. 3 dated November 3, 1995, as amended and
supplemented by Amendment No. 4 dated March 4, 1996, as amended and
supplemented by Amendment No. 5 dated June 20, 1996 and as amended and
supplemented by Amendment No. 6 dated October 1, 1996 (the "Schedule 13D"),
filed by Fred Eychaner individually and on behalf of Newsweb Corporation,
relating to the shares of Common Stock, no par value (the "Common Stock" or the
"Shares") of the Chicago Dock and Canal Trust (the "Company") with its
principal executive offices located at 455 East Illinois Street, Suite 565,
Chicago, Illinois 60611. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to such terms in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 hereby is amended to add the following paragraph at the end of such
section:
On December 6, 1996, Newsweb Corporation and CDCT Acquisition Trust
(collectively, "Plaintiffs") filed a Verified Complaint for Injunctive Relief
and Damages (the "Complaint") against Cityfront Center, L.L.C., Cityfront
Acquisition Trust, MCL Chicago Homes, Inc., MCL Construction Corporation and
Daniel McLean (collectively, "McLean"). The Complaint is an action to halt
McLean's alleged unlawful interference with the Merger Agreement entered into
by Plaintiffs and the Company on September 27, 1996. In particular, Plaintiffs
allege that a "proposal" submitted by McLean for acquiring the Company after
Plaintiffs were declared the successful bidder in the auction for the Company
and had entered into the Merger Agreement has damaged and will continue to
damage Plaintiffs. Plaintiffs seek relief based on tortious interference with
contractual relations, tortious interference with prospective business
advantage and equitable estoppel. The foregoing is a summary of the Complaint,
which summary is qualified by reference to the text of the Complaint filed as
Exhibit 1 hereto.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Eychaner beneficially owns 533,300 Shares representing 9.2% of the
outstanding Shares.
(b) Eychaner has the sole power to vote and the sole power to dispose of
533,200 Shares. Eychaner has the shared power to vote and the shared
power to dispose of 100 Shares. Newsweb Corporation has the sole
power to dispose of -0- Shares. Newsweb has the shared power to vote
and the shared power to dispose of 100 Shares.
(c) No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of such
securities.
(d) Not applicable.
<PAGE> 5
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Item 6 hereby is amended to add the paragraph added to Item 4 hereby at the
end of such section.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A copy of the Complaint is attached hereto as Exhibit 1.
<PAGE> 6
Signatures
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.
Date: December 10, 1996 /s/ FRED EYCHANER
-----------------------
Fred Eychaner
NEWSWEB CORPORATION
/s/ FRED EYCHANER
------------------------
Fred Eychaner, President
<PAGE> 1
IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS
COUNTY DEPARTMENT, CHANCERY DIVISION
NEWSWEB CORPORATION, an Illinois )
corporation, CDCT ACQUISITION TRUST, )
an Illinois business trust, )
)
Plaintiffs, )
)
)
v. )
)
CITYFRONT CENTER, L.L.C., CITYFRONT )
ACQUISITION TRUST, MCL CHICAGO HOMES, )
INC., MCL CONSTRUCTION CORPORATION )
AND DANIEL MCLEAN, )
)
Defendants. )
VERIFIED COMPLAINT
FOR INJUNCTIVE RELIEF AND DAMAGES
Plaintiffs, Newsweb Corporation and CDCT Acquisition Trust (collectively,
"Newsweb"), by and through their attorneys, and for their complaint against the
defendants, Cityfront Center, L.L.C., ("Cityfront"), Cityfront Acquisition
Trust ("Cityfront Trust"), MCL Chicago Homes, Inc. ("MCL"), MCL Construction
Corporation and Daniel McLean (Cityfront, Cityfront Trust, MCL, MCL
Construction Corporation and McLean are collectively referred to herein as
"McLean") state as follows:
NATURE OF THE ACTION
1. This is an action to halt McLean's unlawful interference with the valid
and legally binding Merger Agreement entered into by Newsweb and The Chicago
Dock and Canal Trust ("DOCKS"), an Illinois
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common law trust, on September 27, 1996 (the "Merger Agreement"). A copy of
the Merger Agreement is attached hereto as Exhibit A.
2. The Merger Agreement was entered into at the close of what was an open and
thorough auction and bidding process for all or substantially all of the
capital stock of DOCKS and was conducted by DOCKS and its Board of Trustees and
its financial advisor, Lehman Brothers, Inc. ("Lehman Brothers").
3. After numerous rounds of bidding involving scores of potential and actual
bidders, McLean finished the auction in third place. Newsweb finished first,
having submitted the highest offer per share for the Company.
4. Having failed in its efforts to acquire DOCKS through the auction, McLean
now seeks to subvert the procedures that have occurred and are continuing to
occur in connection with the sale of DOCKS to Newsweb, by wrongfully
interfering with the Merger Agreement.
5. In particular, after Newsweb was declared the successful bidder in the
auction for DOCKS and had entered into the Merger Agreement, McLean submitted a
new "proposal" for acquiring DOCKS dated November 27, 1996 (the "McLean
Proposal"), and attached hereto as Exhibit B. Although the McLean Proposal
identified Cityfront as the offeror, it was signed by Daniel McLean and
otherwise identified Cityfront as an affiliate of MCL - - an entity controlled
by Daniel McLean and the losing bidder in the auction for DOCKS.
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6. The McLean Proposal has threatened and could entirely defeat the orderly
auction process established by DOCKS and Lehman Brothers. That auction process
is one that McLean agreed to when it became a participant in the auction and
executed an agreement with DOCKS to enable that participation (the "McLean
Confidentiality and Standstill Agreement"). That Agreement prohibited McLean
from making any offer for DOCKS outside the auction itself. Pursuant to the
McLean Confidentiality and Standstill Agreement, McLean further agreed to use
confidential information received from DOCKS solely for the purposes of
participating in the auction under the terms established for the benefit of
DOCKS and all actual and potential bidders.
7. In submitting the McLean Proposal, McLean knew that the Proposal omitted
essential terms necessary for it to constitute a bona fide offer. As a
participant in the earlier auction process, McLean knew that any proposal for
acquiring DOCKS had to include, among all other essential terms, information
about the offeror and detailed information about the offeror's financial
ability, in the form of financing commitments and otherwise, to consummate the
transaction on the terms proposed. The McLean Proposal lacked any such
information.
8. The McLean Proposal is a sham offer. It was submitted, despite its
untimeliness and substantive deficiencies, for the sole purpose of causing
confusion and speculation among DOCKS' shareholders about whether a merger with
Newsweb would result in the best value being paid for the company. McLean
hoped, by such
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confusion, to induce a vote "against" the Merger Agreement by DOCKS'
shareholders, at a forthcoming shareholders' meeting on January 9, 1997.
9. Newsweb seeks preliminary and permanent injunctive relief (i) to halt
McLean's unlawful contacts with DOCKS in connection with the transaction
contemplated by the Merger Agreement; (ii) to halt McLean's interference with
Newsweb's Merger Agreement with DOCKS; (iii) to halt McLean's interference with
Newsweb's prospective economic advantage arising from the merger; (iv) to
require McLean to abide by the terms of the McLean Confidentiality and
Standstill Agreement; (v) to allow Newsweb to enjoy the benefits to which it is
fairly entitled as a participant and the successful bidder in the auction
process, including the benefits to which it is entitled as a result of the
Merger Agreement and the McLean Confidentiality and Standstill Agreement; and
(vi) awarding it such other and further relief as this Court may deem
appropriate.
GENERAL ALLEGATIONS
(THE PARTIES)
10. Plaintiff Newsweb Corporation is an Illinois corporation whose principal
businesses are printing and television broadcasting. Newsweb owns WPWR TV
Channel 50 in Chicago and prints a variety of newspapers and other publications
in the Chicago area.
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11. Plaintiff CDCT Acquisition Trust is an Illinois business trust formed
solely for the purpose of consummating the merger between Newsweb and DOCKS.
12. Defendant Daniel McLean is a real estate developer with his principal
place of business in Chicago, Illinois. Upon information and belief, Daniel
McLean is an officer, director, or principal of all other named defendants.
13. Defendants MCL and MCL Construction are Illinois corporations who
participated fully and completely in the auction for DOCKS.
14. Defendant Cityfront is a Delaware limited liability company, and is the
parent and 99% owner of Cityfront Trust, an Illinois business trust. Cityfront
and Cityfront Trust are affiliates of MCL, and were formed by MCL and Daniel
McLean in connection with their efforts to consummate a merger with DOCKS.
(DOCKS)
15. DOCKS is a publicly-held Illinois business trust which owns undeveloped
land in downtown Chicago, Illinois and income-producing real property in
Chicago and elsewhere.
16. DOCKS' principal assets consist of fee title or other interests in
approximately 22 acres of prime, partially developed land, commonly known as
Cityfront Center, in downtown Chicago, an office complex in Indianapolis,
Indiana and an office complex in Tampa, Florida. The shares of DOCKS are
traded on the Nasdaq Stock
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<PAGE> 6
Market, and there are approximately 5.8 million shares outstanding.
(THE DOCKS AUCTION)
17. The Merger Agreement between DOCKS and Newsweb was the culmination of an
extensive auction process conducted by DOCKS and participated in by McLean and
Newsweb. This auction process was designed to obtain the best value reasonably
available to DOCKS' shareholders and is described in detail in the November 14,
1996 Proxy Statement issued by DOCKS in relation to a special meeting of
shareholders for purposes of voting on the merger with Newsweb. (See Proxy
Statement attached hereto as Exhibit C).
18. On February 28, 1996, DOCKS issued a press release stating that its
Board of Trustees had formed a special committee to study strategic
alternatives available to DOCKS to maximize shareholder value and that it had
retained Lehman Brothers as its exclusive financial advisor to assist in that
study.
19. In April 1996, Lehman Brothers made a presentation to DOCKS and the
Board of Trustees regarding various strategies for maximizing shareholder
value. After taking into account all alternatives, Lehman Brothers opined that
a sale or merger of DOCKS through an open and thorough auction process had the
potential to yield the best value reasonably available for DOCKS' shareholders.
20. On or about April 11, 1996, DOCKS' Board of Trustees decided to proceed
with soliciting indications of interest for a potential merger agreement with
DOCKS. A press release was
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<PAGE> 7
immediately issued announcing that Lehman Brothers had been authorized to seek
indications of interest on behalf of DOCKS.
21. During the weeks immediately following this public announcement, Lehman
Brothers contacted over 90 parties to determine whether they had an interest in
acquiring DOCKS. Approximately 70 of the parties contacted by Lehman Brothers,
including Newsweb and McLean, expressed interest in receiving information from
DOCKS in order to evaluate a potential acquisition.
22. Beginning in May 1996, Newsweb engaged in discussions with DOCKS
concerning a potential merger transaction, pursuant to which Newsweb would
acquire 100% of the capital stock of DOCKS.
23. In connection with the auction process, Lehman Brothers advised Newsweb
that DOCKS would make available to Newsweb certain non-public information
concerning its business, financial condition, operations, assets, and
liabilities. The information consisted of a "Confidential Offering Memorandum"
and other proprietary business data (hereinafter "Confidential Information")
needed by Newsweb and other potential bidders to evaluate DOCKS.
24. Lehman Brothers advised Newsweb that the Confidential Information
would only be made available to it if Newsweb executed a letter agreement
providing for, among other things, confidential treatment of the Confidential
Information. Newsweb executed such an agreement, dated June 20, 1996 (the
"Newsweb Confidentiality and Standstill Agreement").
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25. DOCKS represented to Newsweb that all parties allowed to receive DOCKS'
confidential information and participate in the auction process would be
required to sign substantially similar Confidentiality and Standstill
Agreements.
26. In executing the Newsweb Confidentiality and Standstill Agreement,
Newsweb relied on DOCKS' representations, consistent with its own experience in
transactions of this kind, that all parties interested in receiving
Confidential Information for the purposes of evaluating DOCKS would also be
required to sign a confidentiality agreement containing substantially similar
terms.
27. McLean also executed the McLean Confidentiality and Standstill
Agreement.
28. The Confidentiality and Standstill Agreements signed by Newsweb, McLean
and the other bidders in connection with the DOCKS auction were designed to
provide all interested parties with a fair and equal opportunity to acquire the
company, and to obtain the best available value for the company's shareholders.
29. Thus, in executing their respective Confidentiality and Standstill
Agreements, Newsweb and McLean agreed not to "acquire or agree, offer, seek or
propose to acquire" any stock or ownership in DOCKS "unless specifically
requested in writing in advance by [DOCKS'] Board of Trustees."
30. Based upon this "standstill" provision, once the auction had concluded
with the execution of a definitive Merger Agreement between DOCKS and the
winning bidder, none of the other bidders in
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the auction could lawfully make a topping bid and no such bid would be
considered by DOCKS.
31. Each of the parties that signed a confidentiality and standstill
agreement and received information regarding DOCKS was asked to submit to
Lehman Brothers, on or before July 12, 1996, a written preliminary indication
of interest for a transaction involving DOCKS.
32. On or about July 12, 1996, Lehman Brothers received 13 preliminary
indications of interest, including ones from Newsweb and McLean, with proposed
transaction prices for DOCKS ranging in estimated value from $14.67 per share
to $17.29 per share.
33. On or about July 22, 1996, DOCKS, through Lehman Brothers, sent 11 of
the 13 interested parties letters authorizing them to meet with DOCKS and
conduct extensive due diligence. These letters stated that DOCKS expected the
due diligence phase to take up to 6 weeks to complete. DOCKS further stated
that, "We expect to set a date for final offers in late August/early September.
Revised offers may be submitted at any time up to the final offer date." (See
Exhibit E, July 22, 1996 letter Lehman Brothers to Newsweb.)
34. Newsweb and McLean were among the 11 parties chosen to conduct due
diligence on DOCKS. These parties conducted their due diligence between July
12, 1996 and September 18, 1996.
35. Upon information and belief, on August 30, 1996, DOCKS furnished a
letter to each of the 11 remaining bidders, requesting that these parties
submit their "final and best proposal" to
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<PAGE> 10
acquire DOCKS. (See Exhibit E, August 30, 1996 letter from Lehman Brothers to
Newsweb.) That letter set forth rules which all of the potential bidders were
required to follow in submitting a proposal to purchase DOCKS. In particular,
the letter noted that "any proposals should reflect a potential purchaser's
highest offer." The letter was also accompanied by a draft Merger Agreement
that each of the prospective purchasers were required to review and mark-up.
The letter further required that all proposals submitted to DOCKS pursuant to
this auction process remain in effect until September 27, 1996.
36. On September 18, 1996, DOCKS, through Lehman Brothers, received seven
final proposals from interested parties. These proposals included bids from
both Newsweb and McLean. The cash consideration to be received by the
shareholders in connection with these proposals ranged from $17.50 to $18.50
per share.
37. On September 21, 1996, DOCKS' Board of Trustees met to consider the
seven proposals. At this meeting, the Trustees determined that, in light of
the relatively similar economic terms contained in the proposals, each of the
interested parties should be provided an opportunity to make another offer and
to negotiate various aspects of the draft merger agreement.
38. On or about September 22, 1996, DOCKS contacted each of the seven
finalists and asked them to submit their final and best offer by the end of the
day on September 24, 1996. A revised draft merger agreement was also delivered
to each of the interested parties on that date.
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39. On September 24, 1996, four of the seven finalists submitted revised
proposals pursuant to DOCKS' invitation. These four parties included Newsweb
and McLean.
40. On September 25, 1996, DOCKS, its Board of Trustees and their advisors
determined that of these four final proposals, two were considered to provide
higher value. These included Newsweb's offer of $20.00 per share, and the
offer of another party for $20.25 per share, but which, unlike Newsweb's offer,
contained material contingencies. The final offer submitted by McLean was
deemed inferior to these two offers.
41. On September 25, 1996, DOCKS contacted McLean and the other party who
had submitted inferior proposals. McLean and the other prospective purchaser
informed DOCKS they were unwilling to further increase their September 24, 1996
offers. Thus, on September 25, 1996, the auction proceeded with only two
finalists remaining, Newsweb and the other party offering $20.25 per share.
42. On September 27, 1996, after being encouraged by DOCKS to increase its
offer once again in what was clearly the final round of the auction, Newsweb
increased its offer to $21.00 per share. Moreover, on the same date, DOCKS was
advised by the party that had bid $20.25 per share, that such bid represented
its final and best offer and that it was unwilling to eliminate the material
contingencies in that offer. DOCKS advised Newsweb that it had won the auction
as the highest bidder, and, on the same date, they executed the Merger
Agreement.
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43. On that same day, Lehman Brothers, as DOCKS' financial advisor, issued
an opinion letter to DOCKS' Board of Trustees that, "from a financial point of
view, the consideration to be received by the shareholders [pursuant to the
Merger Agreement] is fair to such shareholders."
44. On or before November 14, 1996, DOCKS forwarded to its shareholders a
notice of a special meeting of shareholders for January 9, 1997. The notice
specified that the special meeting was being called for purposes of considering
and voting on the merger with Newsweb. The notice further provided, as
follows:
"Your Board of Trustees has determined that the terms of the Merger are
fair to, and in the best interests of, the Trust and the Trust's
shareholders and has unanimously approved the Merger Proposal and the
Trust Amendment. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER PROPOSAL AND THE TRUST AMENDMENT."
(MCLEAN'S POST-AUCTION INTERFERENCE)
45. On or before November 27, 1996, Cityfront, acting with full knowledge of
the Merger Agreement and in violation of the standstill provisions in the
McLean Confidentiality and Standstill Agreement, submitted the McLean Proposal
to DOCKS.
46. While the McLean Proposal was submitted in Cityfront's name, it was
signed by Daniel McLean, and acknowledged that it was subject to the McLean
Confidentiality and Standstill Agreement.
47. In submitting the McLean Proposal, Cityfront advised DOCKS that "it is
our intent to offer your shareholders an offer that is identical to the
September 27, 1996 [Merger Agreement] with the exception of increasing the per
share price paid to
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<PAGE> 13
shareholders from $21.00 to $22.00." (See Exhibit B, November 27, 1996 McLean
Proposal) (emphasis added). In fact, that statement was misleading because it
failed to point out that the closing date of the transaction contemplated by
the McLean Proposal was uncertain, whereas Newsweb was and is prepared to close
on the transaction contemplated by the Merger Agreement on January 9, 1997.
48. The McLean Proposal, though cast as a topping bid for DOCKS, was not a
genuine offer because it lacked essential terms and conditions. It provided no
financial or business information concerning Cityfront. Upon information and
belief, Cityfront is a shell corporation with no assets. It also included no
information indicating, let alone confirming, that Cityfront had the financial
ability to close the transaction contemplated therein.
49. Based upon its participation in the auction, McLean knew that the McLean
Proposal did not contain all essential terms to render it acceptable.
50. In submitting the McLean Proposal, Cityfront used Confidential
Information in violation of the McLean Confidentiality and Standstill
Agreement.
51. The untimely and deficient McLean Proposal was made for the sole purpose
of creating speculation and confusion among DOCKS' shareholders about the
impending merger with Newsweb. Specifically, the "offer" was designed to
undermine support among DOCKS' shareholders for the impending merger by
creating the
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<PAGE> 14
illusion that a higher price might be paid for their shares than that provided
in the Merger Agreement.
52. It was also designed to result in disapproval of the Merger by DOCKS'
shareholders at a forthcoming January 9, 1997 shareholder meeting.
53. On November 29, 1996, DOCKS, as McLean anticipated, issued a press
release announcing that it had received the McLean Proposal. DOCKS also
informed the public, including the shareholders, that it would seek to meet
with representatives of McLean regarding its most recent proposal. In
addition, in an article in the Chicago Tribune on December 3, 1996, it was
reported that DOCKS is assessing the McLean Proposal.
54. The issuance of the press release, without obtaining the prior consent
of Newsweb was a violation of Section 9.07, Publicity, of the Merger Agreement,
and never would have occurred in the absence of the wrongful McLean Proposal.
55. As a result of the publicity surrounding the McLean Proposal, DOCKS'
stock price has increased substantially, and is now trading above the price
contemplated in the Merger Agreement. Thus, DOCKS' shareholders are now being
encouraged to disapprove the merger between Newsweb and DOCKS on the false
expectation that a higher price will be paid by McLean. The market, however,
is unaware that McLean is not a qualified bidder by virtue of its participation
in the auction and execution of the McLean Confidentiality and Standstill
Agreement.
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56. Section 5.02 of the Merger Agreement, entitled No Solicitation, required
DOCKS to "immediately cease any discussions or negotiations with any parties
that may be ongoing with respect to a Takeover Proposal." Furthermore, under
the Merger Agreement, DOCKS may not "solicit, initiate or knowingly encourage"
any "inquiries or the making of any proposal which constitutes, or would
reasonably be expected to lead to," an alternative acquisition transaction to
the transaction reflected in the Merger Agreement between DOCKS and Newsweb,
unless several very specific conditions are satisfied. In particular, DOCKS
may not consider a competing offer unless, among other conditions, that offer
is an unsolicited proposal, and its Board of Trustees is advised by legal
counsel that it is required to consider the offer to comply with its fiduciary
duties to the Company's shareholders, and DOCKS promptly advises Newsweb of any
request for information and the alternative proposal and the material terms and
conditions of such request and alternative proposal.
57. Moreover, in entering into the Merger Agreement, Section 5.01(l), DOCKS
agreed not to modify, amend, waive, or release any of its contracts or material
rights. By submitting the McLean Proposal, McLean is inducing DOCKS to release
its rights under the McLean Confidentiality and Standstill Agreement, and,
consequently, breach Section 5.01(l) of the Merger Agreement.
58. Based on the Confidentiality and Standstill Agreements and the Merger
Agreement, it is clear that DOCKS is prohibited from
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<PAGE> 16
considering bids for the company from entities, such as McLean, that had
already previously participated in the auction process.
59. If bidders such as McLean were allowed to "participate" in the auction
process and obtain confidential information through the auction process, but
were not required to put forward their "best and final" offer in the auction
process, then only low-ball offers would surface through the auction, and the
auction process would be a sham. A flawed process is unfair to the
participants, increases transaction costs and confuses the market, and,
ultimately, undermines the shareholders' ability to receive the best offer for
their shares.
60. Newsweb will suffer significant, immediate, and irreparable injury if it
is unable to complete the acquisition of DOCKS. Newsweb's contemplated merger
with DOCKS will result in the acquisition by Newsweb to acquire, among other
real estate, 22 acres of prime, lake-front real estate in downtown Chicago,
Illinois. This real estate, located directly north of the Chicago River and
the Loop and east of Michigan Avenue, includes one of the largest developable
land areas in downtown Chicago. This opportunity and their contractual rights
will be lost if McLean is not enjoined and successfully thwarts the merger.
61. Newsweb and DOCKS acknowledged the uniqueness of the rights to be gained
under the Merger Agreement. They agreed that neither would object to the other
seeking specific performance, that irreparable damage would result from any
breaches, and that
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the parties would be entitled to an injunction to prevent breaches from
occurring.
"SECTION 9.09. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the United
States District Court for the Northern District of Illinois or an Illinois
state court located in Cook County, Illinois, this being an addition to any
other remedy to which they are entitled at law or in equity."
COUNT I
(TORTIOUS INTERFERENCE WITH CONTRACTUAL
RELATIONS BY DANIEL MCLEAN, MCL, MCL CONSTRUCTION,
CITYFRONT, AND CITYFRONT ACQUISITION TRUST)
62. Newsweb repeats and realleges paragraphs 1 - 61 as though set forth
fully herein.
63. Newsweb and DOCKS are parties to the Merger Agreement, which is a valid
and binding contract.
64. Prior to submitting the McLean Proposal, McLean was aware of the Merger
Agreement.
65. By virtue of the foregoing, McLean has improperly and intentionally
undertaken to procure a breach of the Merger Agreement by knowingly and
intentionally inducing DOCKS to breach its contractual obligations under the
Merger Agreement, and creating market confusion regarding the value of DOCKS'
stock that could result in a wrongful shareholder disapproval of the
Newsweb/DOCKS merger.
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66. As a result of McLean's wrongful conduct, particularly its submission of
an untimely sham offer in violation of DOCKS' auction procedures, false
representations that its September 24, 1996 bid was its highest and final bid
for DOCKS, and in violation of the McLean Confidentiality and Standstill
Agreement, DOCKS and its Board of Trustees are being induced to breach the
Merger Agreement as specified herein.
67. In addition, if McLean's unlawful sham proposal induces DOCKS' Board of
Trustees to withdraw or modify its approval and recommendation of approval of
the Merger Agreement by DOCKS shareholders, it will have caused a breach of
Section 5.02(b) of the Merger Agreement.
68. Newsweb has already been and will continue to be damaged by McLean's
tortious interference with the Merger Agreement.
69. Newsweb has no adequate remedy at law for McLean's tortious interference
with the Merger Agreement.
COUNT II
(TORTIOUS INTERFERENCE WITH
PROSPECTIVE BUSINESS ADVANTAGE BY
DANIEL MCLEAN, MCL, MCL CONSTRUCTION,
CITYFRONT AND CITYFRONT ACQUISITION TRUST)
70. Newsweb repeats and realleges paragraphs 1 - 69 as if set forth fully
herein.
71. Based on its success as the winning bidder in the protracted auction for
DOCKS and its entry into the Merger Agreement, which has received the unanimous
approval and recommendation of DOCKS' Board of Trustees, Newsweb has a
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reasonable expectation of consummating the merger on January 9, 1996, absent
further interference by McLean.
72. McLean has knowledge of the prospective economic advantage to Newsweb
arising from its impending merger with DOCKS as represented by, among other
things, the Merger Agreement.
73. McLean has intentionally undertaken to interfere with the prospective
business relations between Newsweb and DOCKS by knowingly and intentionally
seeking to induce DOCKS to abandon the merger with Newsweb.
74. McLean has used unlawful means to further its intentional interference
with the prospective business relations between Newsweb and DOCKS by, among
other things, violating its contractual obligation under the McLean
Confidentiality and Standstill Agreement, misusing Confidential Information,
violating the terms of the auction process established by DOCKS, and wrongfully
submitting the McLean Proposal.
75. The tortious acts of McLean in interfering with Newsweb's prospective
economic advantages were done knowingly and intentionally.
76. Newsweb has no adequate remedy of law for McLean's tortious interference
with its prospective business relations with DOCKS.
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<PAGE> 20
COUNT III
(EQUITABLE ESTOPPEL AGAINST DANIEL MCLEAN,
MCL, MCL CONSTRUCTION, CITYFRONT AND
CITYFRONT ACQUISITION TRUST)
77. Newsweb repeats and realleges paragraphs 1 - 76 as if fully set forth
herein.
78. As described, supra, McLean made representations and engaged in conduct
during the auction process, indicating that it would abide by the auction
procedures and the terms of the McLean Confidentiality and Standstill
Agreement. McLean further represented that its September 24, 1996 bid for
DOCKS was its best and final offer.
79. These representations and conduct were false and misleading in that
McLean subsequently submitted the McLean Proposal in violation of the auction
procedures, the McLean Confidentiality and Standstill Agreement, and its
specific representations during the auction process.
80. McLean engaged in the aforementioned conduct and misrepresentations,
knowing that such conduct and representations were false and/or misleading.
81. Newsweb did not know that McLean's conduct and representations
throughout the auction process were false at the time they occurred or at the
time Newsweb acted upon those representations and conduct.
82. McLean intended or reasonably expected that Newsweb would rely upon its
conduct and representations throughout the auction
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process by, among other things, participating in the auction and entering into
the Merger Agreement.
83. Newsweb did in fact rely on McLean's execution of the McLean
Confidentiality and Standstill Agreement and conduct throughout the auction
process when Newsweb submitted its bids for DOCKS and entered into the Merger
Agreement.
84. Newsweb was and continues to be damaged by its reliance on McLean's
misrepresentations and misleading conduct in that the newly submitted McLean
Proposal has undermined the Merger Agreement and may lead to its disapproval by
DOCKS' shareholders.
85. McLean is therefore estopped from making any offer to purchase DOCKS, is
estopped from denying the validity of its Confidentiality and Standstill
Agreement, is estopped from interfering with the merger agreement between
Newsweb and DOCKS, and is estopped from interfering with any prospective
business relationship between Newsweb and DOCKS.
86. Newsweb has no adequate remedy at law.
WHEREFORE, Newsweb respectfully demands judgment granting the following relief:
(a) An order preliminarily and permanently enjoining defendants from
interfering with the Merger Agreement between DOCKS and Newsweb;
(b) An order preliminarily and permanently enjoining defendants from
interfering with the prospective business relations between DOCKS and Newsweb;
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(c) An order preliminarily and permanently enjoining defendants from taking
any further actions in breach of the McLean Confidentiality and Standstill
Agreement;
(d) An order preliminarily and permanently enjoining defendants from
exploiting their past misconduct, including their breaches of the McLean
Confidentiality and Standstill Agreement, by any actions, including but not
limited to:
(i) proposing to DOCKS or any other person any transaction between
defendants and DOCKS and/or DOCKS security holders, or involving any of DOCKS
securities or security holders;
(ii) acquiring or attempting to acquire any of DOCKS' securities;
(iii) making, or in any way participating, in any "solicitation" of
"proxies" to vote, as such terms are used in the proxy rules of the
Securities and Exchange Commission, or seeking to advise or influence any
person or entity with respect to the voting of any of DOCKS' voting
securities;
(iv) forming, joining or in any way participating in, a "group"
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934) with respect to any of DOCKS' voting securities;
(v) using or disclosing any information deemed to be confidential
under the McLean Confidentiality and Standstill Agreement; and
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(vi) acting alone or in concert with others, to seek to control or
influence the management, Board of Trustees or policies of DOCKS.
(e) An award of damages in an amount to be determined at trial;
(f) An award of costs and expenses incurred herein; and
(g) such further relief as the Court deems just and proper.
Dated: December 6, 1996
/s/ Samuel B. Isaacson
-------------------------------------
One of the attorneys for plaintiffs,
Newsweb Corporation and
CDCT Acquisition Trust
Steven L. Bashwiner
Samuel B. Isaacson
Clay A. Tillack
James M. Witz
KATTEN MUCHIN & ZAVIS
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
(312) 902-5200
Firm No. 80428
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STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
VERIFICATION
Charles F. Gross, being first duly sworn at oath, deposes and states that he
is the Chief Financial Officer of plaintiffs Newsweb Corporation and CDCT
Acquisition Trust; that he has read the Verified Complaint for Injunctive
Relief and Damages in this action; that he has knowledge of these facts alleged
in the Verified Complaint; that the insertions of fact contained in the
Verified Complaint are true and correct.
/s/ Charles F. Gross
-------------------------------------
Charles F. Gross
SUBSCRIBED and SWORN to
before me this 6th day of
December, 1996.
/s/ Rita S. Kopf
- ------------------------------
Notary Public
