UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 3)
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GLOBAL MOTORSPORT GROUP, INC.
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(Name of Issuer)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
378937106
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(CUSIP Number)
Wolf, Block, Schorr and Solis-Cohen LLP
111 South 15th Street
Philadelphia, PA 19102
Attention: Herbert Henryson II, Esquire
(215) 977-2556
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 6, 1998
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(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 ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
Golden Cycle, LLC hereby amends its Schedule 13D (the
"Schedule 13D") relating to the Common Stock, par value $0.001 per share, of
Global Motorsport Group, Inc. to add the following information. All capitalized
terms used and not otherwise defined herein have the meanings ascribed to them
in the Schedule 13D.
<PAGE>
Item 4. Purpose of Transaction.
Item 4 is hereby amended to add the following:
On April 6, 1998, the Reporting Person sent a letter to the Company
modifying, amending and clarifying the March 25, 1998 Demand to Inspect Books
and Records. A copy of the demand letter is attached hereto as Exhibit 8.
On April 7, 1998, the Reporting Person commenced a tender offer to
purchase all the outstanding shares of Common Stock, together with the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of November 13, 1996, between the Company and American
Stock Transfer and Trust Company, as Rights Agent, at a price of $18 per share
(and associated Right). The Schedule 14D-1 filed with the Securities and
Exchange Commission is hereby incorporated herein by reference.
On April 7, 1998, the Reporting Person commenced litigation against
the Company in the Court of Chancery of the State of Delaware seeking an order
enjoining the Company from improperly interfering with, and the Board of
Directors of the Company from breaching its fiduciary duties in connection with,
the Reporting Person's tender offer and consent solicitation. A copy of the
complaint is attached hereto as Exhibit 9.
Item 7. Material to Be Filed as Exhibits.
Item 7 is hereby amended to add the following:
8. Demand to inspect certain books and records of the Company,
dated April 6, 1998.
9. Complaint filed by the Reporting Person on April 7, 1998 in
the Court of Chancery of the State of Delaware.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Dated: April 8, 1998
GOLDEN CYCLE, LLC
By: /s/ Roger L. Grass
--------------------------
Vice President and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
8 Demand to inspect certain books and records of the
Company, dated April 6, 1998.
9 Complaint filed by the Reporting Person on April 7, 1998
in the Court of Chancery of the State of Delaware.
Exhibit 8
GOLDEN CYCLE, LLC
4025 Crooked Hill Road
Harrisburg, Pennsylvania 17110
April 6, 1998
Global Motorsport Group, Inc.
16100 Jacqueline Court
Morgan Hill, California 95037
Att: Corporate Secretary
RE: Demand to Inspect Books and Records
Dear Sir or Madam:
I write as Vice President of Golden Cycle, LLC ("Golden Cycle"), which
is currently the record owner of 100 shares of common stock of Global Motorsport
Group, Inc. (the "Company") and the beneficial owner of 528,700 shares. This
letter modifies, amends and clarifies the March 25, 1998, Demand to Inspect
Books and Records executed and delivered to the Company by Cede & Co. (the
"March 25 Demand"). Pursuant to Section 220 of the General Corporation Law and
the common law of the State of Delaware, we demand the right to inspect and copy
the following books and records of the Company.
1. In addition to the stocklist information identified in paragraph "1" of the
March 25 Demand, continuing updates of such information until Golden Cycle has
concluded or abandoned any efforts to solicit consents to remove and replace
directors of the Company, and its tender offer for shares of the Company's
common stock;
2. We hereby limit the request in paragraph "5" of the March 25 Demand to those
documents considered or reviewed by the Company's directors in deciding to
acquire Chrome Specialities, Inc;
3. Documents relating to concerns raised in 1997 by the Company's independent
auditors to the unaudited financial statements of the Company for the year ended
January 31, 1997, including, but not limited to, concerns or questions about the
performance of James J. Kelly, Jr.;
4. The Management Report of the Company's auditors in connection with their
audit for the year ended January 31, 1997;
5. Documents relating to the decision in or about March 1997, to terminate or to
request the resignation of James J. Kelly, Jr. as an officer and/or director of
the Company, including, but not limited to any actual or proposed severance
agreements relating to James J. Kelly, Jr.;
<PAGE>
6. Documents relating to any actual or potential employment offer made by or on
behalf of the Company to Stan Marquis;
7. Any actual or proposed severance agreements relating to Ignatius Panzica;
8. Documents relating to services provided by Lionel Allan to the Company,
including but not limited to services in connection with the acquisition of
Chrome Specialties, Inc., and the Company's payment for such services;
9. Documents relating to any consulting or other business relationships between
the Company and Lionel Allan at any time from January 1, 1992 to the present;
10. Documents relating to the consulting agreement granted by the Company to
Joseph Piazza in or about January 1997;
11. Documents relating to the health of the Company's directors including, but
not limited to Joseph Piazza;
12. Documents relating to the hiring of Joseph Piazza, Jr.;
13. Documents relating to the resignation of Daniel Stern;
14. Documents relating to the decision of Ignatius Panzica to terminate the
Company's consulting agreement with Lionel Allan;
15. Documents relating to the rescission of the termination or resignation of
James J. Kelly, Jr.;
16. Documents relating to the professional, business and personal relationships
between Lionel Allan and Joseph F. Keenan;
17. Documents relating to actual and threatened litigation between the Company
and Ignatius Panzica;
18. Documents relating to civil or criminal actions against directors of the
Company, including, but not limited to, actions against Lionel Allen for alleged
improper billing and improper use of funds;
<PAGE>
19. Documents relating to the decision not to disclose to stockholders the
consulting arrangements and other benefits granted by the Company to Lionel
Allan and Joseph Piazza; and
20. Documents relating to the Company's decision to set a March 30, 1998, record
date with respect to Golden Cycle's solicitation of consents and the Company's
communications with its record and beneficial stockholders relating to the
consent solicitation and the record date.
We incorporate here the purposes set forth in the March 25 Demand. In
addition to and in clarification of those purposes, we seek the inspection to
investigate allegations of self-dealing, mismanagement and concealment in
connection with the Company's accounting, the supervision of Mr. Kelly,
undisclosed compensation provided to certain directors, the fitness of the
present directors, the Company's response to Golden Cycle's solicitation of
consents and the Company's response to Golden Cycle's offer to acquire the
Company. As you are aware, we are in the process of commencing a solicitation of
consents to remove and replace the Company's Board and have announced today our
intent to commence tomorrow a tender offer for shares of the Company's common
stock. In addition to, and without abandoning, the purposes set forth in the
March 25 Demand, we seek the inspection to solicit consents and tenders and
communicate with stockholders of the Company on matters including whether: (a)
the Company is being managed effectively; (b) the Company's directors have
conflicts of interest in responding to Golden Cycle's interest in acquiring the
Company and (c) Golden Cycle's proposal to acquire the Company is in the
stockholders' best interests.
Golden Cycle will bear the reasonable costs incurred by the Company
(including those of its transfer agents(s) or registrar(s)) in connection with
the production of the above information. Please advise me at the above address,
or David J. Margules, of Wolf Block, Schorr and Solis-Cohen, Suite 300, 920 King
Street, Wilmington, Delaware 19801 (telephone: (302) 777- 5860) as promptly as
practicable when and where the items demanded above will be available to Golden
Cycle or its representatives.
Attached to this letter is a verification by the undersigned relating
to this demand.
Very truly yours,
Golden Cycle, LLP
BY:
-------------------------
Roger Grass, Vice President
cc: The Corporation Trust Company (by hand)
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
) ss.:
COUNTY OF MONTGOMERY )
On this 6th day of April, 1998, there personally appeared before me,
the undersigned authority, a notary public for the State of __________, Roger
Grass who, does hereby state, after being duly sworn according to the law, that
he is the Vice President of Golden Cycle, LLC, that he is authorized to make the
foregoing demand on behalf of Golden Cycle, LLC, that the facts and statements
in said demand are true and correct, and that he has duly executed the foregoing
demand.
SWORN TO AND SUBSCRIBED before me this 6th day of April, 1998.
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Notary Public
Exhibit 9
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
GOLDEN CYCLE, LLC, a Pennsylvania )
limited liability company, )
Plaintiff, )
)
v. ) C.A. No. ________
)
LIONEL M. ALLAN, JAMES J. KELLY, JR., )
JOSEPH F. KEENAN, JOSEPH PIAZZA, SR. and )
GLOBAL MOTORSPORT GROUP, INC., )
Defendants. )
COMPLAINT
Golden Cycle, LLC ("Golden Cycle"), as and for its Complaint, alleges
on knowledge with respect to itself and its own acts, and upon information and
belief as to all other matters, as follows:
Nature Of The Action
1. More than two weeks ago, Golden Cycle proposed in writing an
acquisition of Defendant Global Motorsport Group, Inc. ("Global") for a cash
price representing a significant premium over the company's market value and
advised the company that it was continuing to evaluate its position with the
goal of maximizing stockholder value. Since then, Golden Cycle repeatedly has
sought meetings with Global representatives to discuss its interest in an
acquisition and to explore whether information available to Global would justify
a higher price. Global's only direct response has been a derisive letter
delivered a week ago.
<PAGE>
2. While Global publicly professes to be considering Golden Cycle's
bid, its actions demonstrate an intent to fend off the acquisition proposal at
any cost. In addition to hiding behind a formidable array of takeover defenses,
Global is illegally and inequitably interfering with the most basic of corporate
rights -- the stockholders' right to communicate with each other and to select
the fiduciaries empowered to represent their interests.
3. The Global Board's motivation is simple. Despite Global's lackluster
performance, the Individual Defendants have awarded themselves lucrative
salaries, fees, options and "consulting agreements." Those benefits have never
been fully or fairly disclosed to stockholders. To protect those benefits, the
Board is prepared to fight to the last dollar of stockholder value.
4. Faced with Defendants' demonstrated unwillingness to fairly consider
its offer, Golden Cycle is taking its bid directly to stockholders. This
morning, it commenced a $18 cash bid for all outstanding shares -- a 23% premium
over the closing price on the day before Golden Cycle announced its interest.
5. Defendants' conduct violates fiduciary obligations to further
stockholder interests by investigating and evaluating Golden Cycle's offer
independently and in good faith. They are preventing stockholders from
considering the offer, and are improperly obstructing the stockholders' right to
replace the Board with directors focused on maximizing stockholder value. Unless
enjoined, the Defendants illegal and inequitable conduct will continue.
6. Plaintiff seeks declaratory and injunctive relief: (i) preventing
Global and its Board from using the company's Poison Pill or other anti-takeover
devices to impede or delay Golden Cycle's all cash tender offer and its consent
solicitation; (ii) requiring Global and its Board to consider fairly Golden
Cycle's offer; and (iii) preventing Global's directors from breaching their
fiduciary duties to their stockholders in connection with Golden Cycle's offer.
<PAGE>
The Parties
7. Defendant Global Motorsport Group, Inc. is a Delaware corporation
with its principal place of business in California. Global is the largest
independent supplier of aftermarket parts and accessories, including replacement
parts, custom parts and apparel, for Harley-Davidson motorcycles. Global
distributes its own products as well as products supplied by other recognized
manufacturers.
8. The Individual Defendants comprise Global's four-member Board of
Directors. In addition, Defendant Joseph F. Keenan is the Chairman of the Board,
Defendant Joseph Piazza, Sr., is the President and Chief Executive Officer,
Defendant James J. Kelly, Jr. is the Executive Vice President and Chief
Financial Officer, and Defendant Lionel M. Allan is the company's "legal
consultant."
9. Plaintiff Golden Cycle is a Pennsylvania limited liability company
with its principal place of business in Harrisburg, Pennsylvania. Golden Cycle
is the record owner of 100 shares of Global common stock and the beneficial
owner of 528,700 shares. Golden Cycle's stock holdings represent about 10.4% of
Global's outstanding capital stock.
10. The principals of Golden Cycle are Alexander Grass and his son,
Roger Grass. Alexander Grass was a founder of Rite Aid Corporation, was its
Chairman, President and Chief Executive Officer until March 1995 and presently
serves as a director and Chairman of Rite Aid's Executive Committee. Alexander
Grass also has been a director of Hasbro, Inc., and the President, Chairman and
Chief Executive Officer of Super Rite Foods, Inc. Roger Grass is Chairman of
Biker's Depot, Inc., which owns and operates superstores that sell aftermarket
parts and accessories for Harley-Davidson motorcycles.
<PAGE>
Global's Lackluster Performance
11. In the past decade, Harley-Davidson has experienced a renaissance
with increased demand for its motorcycles and associated products. Global's
stockholder have not benefited from that rebirth. Founded in 1970, Global has
never paid a dividend. While its stock closed as high as $20 1/4 in the first
quarter of 1997, it closed at $14 15/16 the day before Golden Cycle announced
its interest in an acquisition.
12. In September 1997, Global acquired competitor, Chrome Specialties
Inc., of Fort Worth, Texas. According to published sources, Global paid an
overly generous price for Chrome Specialties -- $36 million cash, compared with
annual revenues of $35 million.
13. Despite the consolidation of Chrome Specialities, Global's
performance continues to flag. Although more than four months of Chrome
Specialties' results are incorporated in Global's financial statements for the
year ended January 31, 1998, Global's revenues increased by only $14.2 million.
Global's pre-tax income plummeted from $13.0 million in the year ended January
31, 1997, to $4.4 million in most recently completed fiscal year.
The Board Amply Rewards
Itself For Its Mediocre Stewardship
14. For stockholders, Global's performance has been less than
successful. For the Board, however, Global is a source of great financial
reward.
15. According to Global's September 1997 Proxy Statement (the "1997
Proxy"), Defendant Kelly's 1997 salary and bonus as CFO was about $140,000. He
also received options to buy 32,250 shares of Global stock. Global has not
disclosed Defendant Piazza's compensation as CEO but, presumably, it is greater
than Defendant Kelly's.
16. Global's public disclosures indicate Defendants Keenan and Allan
are well compensated. According to the 1997 Proxy, non-management directors
receive $20,000 per year plus expenses. The Board also created a plan granting
to non-management directors options to acquire 2,500 shares each time they are
elected, which is annually.
17. In fact, the Board has funneled to certain of its members
significant undisclosed compensation in the form of "consulting agreements"
concealed from Global stockholders. Effective on January 1, 1997, Defendants
Piazza was awarded a $2,500 a week consulting contract. Since 1992, Defendant
Allan has acted as a "legal consultant" to the company an arrangement pursuant
to which he has been paid hundreds of thousands of dollars.
<PAGE>
18. The concealment of the consulting arrangements creates the
misleading impression that Global's Board includes independent directors. In
addition, while the parties to such agreements have the economic benefits of a
lucrative employment contract, they presumably claim the perquisites to which
"non-management" directors are entitled.
19. Rather than linking themselves economically to the interests of
stockholders, the Individual Defendants hold virtually no common stock. As of
the date of the 1997 Proxy, Mr. Kelly owned fewer than 2,000 shares of stock.
Mr. Keenan held 2,500 shares. Mr. Allan and Mr. Piazza held no shares.
20. The directors have granted themselves options. As of the date of
the 1997 Proxy: Mr. Kelly held options to purchase 53,488 shares; Mr. Allan held
options for 10,071 shares; Mr. Piazza held options for 1,614 shares and Mr.
Keenan held options for 2,874 shares. The company also adopted a "Director
Option Plan," pursuant to which 50,000 share were reserved for options to be
granted to "non-employee directors."
<PAGE>
Management Disarray
21. Squabbling over concealed consulting benefits led last year to a
coup which has left the company rudderless. In March 1997, Global's outside
auditors questioned accounting treatments used by the company's CFO, Defendant
Kelly, which artificially inflated income. The Board was sufficiently concerned
about Defendant Kelly's performance to demand and obtain his resignation as an
officer, employee and director. Defendant Kelly was asked to remain in place
until a replacement was hired. By late October 1997, a replacement was found and
presented with a written employment offer.
22. Defendant Kelly retained his position by provoking the ouster of
Global co-founder, Chairman and CEO, Ignatius Panzica. Having concluded
Defendant Allan's involvement with the September 1997 Chrome Specialties
acquisition unnecessarily inflated the outside counsel fees, Mr. Panzica stated
in Defendant Kelly's presence that he intended to cancel Defendant Allan's
consulting contract. Defendant Kelly informed Defendant Allan of Mr. Panzica's
intent.
23. Defendant's Allan and Kelly agreed to cooperate to force Mr.
Panzica out as an officer and director. By doing so, Defendant Allan preserved
his lucrative "consulting" contract and Defendant Kelly's termination as CFO was
rescinded. Defendant Piazza supported the move, in exchange for which he was
named to succeed Mr. Panzica as the Company's CEO. Defendant Keenan, a long-time
friend of Defendant Allan, also agreed to cooperate and was named Global's
Chairman. In a March 25 press release, the company euphemistically described the
reshuffle as a "restructuring [of] its operations and management."
<PAGE>
24. The unseating of Mr. Panzica has left the company with little
industry experience at the highest level. The new Chairman, Defendant Keenan, is
a lawyer in private practice. While the CEO, Defendant Piazza, is a former
officer of a motorcycle parts and accessory distributor, he has had no active
involvement in the industry for years. Defendant Allen is also lawyer, working
as a "legal consultant" since leaving his law firm amidst allegations of
improper billing and cash diversions.
25. One of Defendant Piazza's early acts as CEO was to hire his son,
Joseph Piazza, Jr., to a senior sales position. The hiring prompted the
resignation of Global's Senior Vice President of Sales and Marketing, Daniel
Stern.
The Takeover Defenses
26. The Board's performance and skimpy stock holdings provide little
assurance of continued incumbency. Moreover, the company's equity is heavily
concentrated in the hands of a few, highly sophisticated investors. On
information and belief, half or more of the stock is held by ten institutional
investors.
27. On November 13, 1996, the Board adopted a potent takeover defense
in the form of a stockholder rights plan (the "Poison Pill"). The Poison Pill
allows the Board to prevent the consummation of any tender or exchange offer,
even one providing substantial benefits to Global's stockholders. The Board
declared a dividend of one common stock purchase right (a "Right"), payable to
each of Global's stockholders of record as of December 13, 1996. Each Right
entitles the holder to purchase one one-thousandth of a share of Global's Series
A Participating Preferred Stock, $0.001 par value for each share of Global
common stock held by the Right holder for $80 per share (the "Purchase Price"),
subject to adjustment.
<PAGE>
28. The Rights are exercisable on the earlier of 10 days (or such later
date as may be determined by a majority of the Board following: (i) a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of Global's
outstanding common stock, or (ii) the commencement of, or the announcement of
the intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of 15% or
more of Global's outstanding common stock.
29. In the event a person becomes an Acquiring Person, each holder of a
Right (other than Rights exercised or beneficially owned by the Acquiring
Person) will be entitled to receive on exercise a number of shares of Global
common stock having a market value of twice the Purchase Price. In the event the
holder does not exercise its Right and accept the common stock and Global is
acquired through a merger, the Right holder would be entitled to receive, on
exercise, shares of the acquiring company's common stock equal to two times the
Purchase Price. Global's Board can redeem the Rights for $0.001 each, or can
amend the Poison Pill to make the Rights inapplicable to a proposed acquisition.
30. Due to the prohibitive costs the Poison Pill imposes on an
Acquiring Person, any tender offer which triggers the Rights cannot practically
be consummated unless Global's Board redeems or amends the Poison Pill or
declares the tender offer to be a Permitted Offer. Accordingly, the Individual
Defendants can block any proposed tender offer regardless of the interests of
Global's stockholders.
31. In addition to the Poison Pill, Global is subject to the
anti-takeover provisions of 8 Del. C. ss.203. As with the Poison Pill, the Board
can exempt Golden Cycle's offer from the effects of Section 203.
32. The actions of the Individual Defendants make it clear they will
not fairly consider the Global Cycle bid and determine whether, in the interests
of the stockholders, it should be declared to be a Permitted Offer.
<PAGE>
The Golden Offer
33. On March 23, 1998, Golden Cycle delivered a letter to Global
offering to purchase all of Global common stock for $18 per share (the
"Proposal") -- a 26% premium over the market close on the last previous trading
day. In the letter, Golden Cycle advised Global all terms of the Proposal,
including price, were negotiable. Golden Cycle requested access to Global's
books and records in order to identify undisclosed value Golden Cycle had not
taken into account.
34. The March 23 letter expressed Golden Cycle's commitment to pursuing
a negotiated transaction, but advised that if Global's Board "do[es] not wish to
proceed with negotiations or to provide us with an opportunity to conduct due
diligence so that we can determine if there is greater value in the company, we
will consider attempting to seek control of the Board of Directors through a
consent solicitation which would elect directors committed to selling the
company for the highest price reasonably available." To prepare for such a
possibility, Golden Cycle disclosed its intent to file with the Securities and
Exchange Commission ("SEC") preliminary materials for soliciting written
consents.
35. Hoping to promote a constructive dialogue, Golden Cycle President
Alexander Grass called Global's CEO, Defendant Piazza, the day the letter was
transmitted. Defendant Piazza did not take the call, and to date has made no
effort to contact Mr. Grass.
36. On March 24, Golden Cycle filed its preliminary proxy materials.
Golden Cycle intends to begin soliciting proxies as soon as its materials are
cleared by the SEC.
<PAGE>
Defendants' Obstructionism
37. Since March 23, Alexander Grass made several attempts to establish
communications with Global, through letters and personal telephone calls.
Global's initial response was silence, punctuated by hostility. No response was
directed to Golden Cycle during the week following transmission of the proposal.
Its only comment came indirectly, in a March 25 press release disclosing the
disappointing results for the quarter and fiscal year ended January 31, 1998.
Buried in the narrative, Global stated it would undertake "an analysis" of the
Proposal but that "[t]he Company is not for sale and has not invited the Golden
Cycle proposal or any other proposal. It should not be assumed that any
transaction will occur."
38. On March 27, Alexander Grass wrote again to Mr. Piazza to express
disappointment over Global's failure to respond. Four days later, on March 31,
Global sent its only direct response to date in the form of a letter from
Defendant Keenan to Alexander Grass. Pointedly, the letter was faxed with a
cover sheet of Global's counsel, Gibson, Dunn & Crutcher. The invective-filled
letter describes Golden Cycle as failing to treat its offer "as a serious
proposal," and accuses it of attempting to "bull[y]" the Global Board. Further,
Defendant Keenan wrote:
Your letter of March 27, 1998 states that you are
"extremely disappointed" that Mr. Piazza has not responded to
your letter of March 23. Let me assure you that your
disappointment pales in comparison to my disappointment that
with absolutely no prior discussion between you and any
representative of the Company, you faxed Mr. Piazza a letter
... and then filed materials with the Securities and Exchange
Commission ... calling for the removal of the entire Board.
Then on Wednesday, March 25, 1998, you arranged for Cede &
Company to send us a demand to open up the Company's books and
records to you.
Defendant Keenan went on to state Global had retained "the investment banking
firm of Cleary, Gull ... to assist in evaluating your proposal." Defendant
Keenan also represented that if the Board decides to "consider proposals for the
sale of the Company, I can so no reason why we would not offer you the same
opportunity to obtain information, evaluate the Company and compete with any
other bidders that might surface."
39. Apparently fueled by Defendant Keenan's "dissapointment,"
Defendants have attempted to disrupt the Golden Cycle offer at any cost. In
numerous ways, Defendants have manipulated the corporate machinery to obstruct
the Consent Solicitation and Golden Cycle's acquisition bid. The Defendant's
inequitable actions include the following:
<PAGE>
A. The Board purported to set a record date for the
Consent Solicitation intended to impede Golden Cycle's ability
to gather consents. On April 1, Global announced the Board had
approved a March 30 record date for stockholders entitled to
express consents. In doing so, the Board knew or should have
known that the period for SEC comments on Golden Cycle's
preliminary proxy materials had not run and that Golden Cycle
could not begin solicitations for at least several business
days. The selection of the record date was calculated to
maximize the amount of trading before the solicitation began.
In that way, the Defendants could maximize the number of
stockholders with the economic incentive to give a consent,
but without the power to do so.
B. The Board's vote to set the record date must have
been on or before March 30. Nevertheless, the Board did not
announce its action until April 1 -- at least two days later.
Investors who acquired shares in the interim did so without
the knowledge that they would not be entitled to express
consents as of the Board's selected record date. As a result,
they were deprived of notice that they might need to demand
proxies to express consents.
C. On March 25, Golden Cycle arranged for the
delivery on its behalf of a demand for a stockholder list to
be used to communicate about the Consent Solicitation, among
other things. Although it is obligated to produce the list,
Global has refused to do so. As a result, Golden Cycle has
been forced to seek judicial intervention from this Court.
Once more, the resulting delay is calculated to interfere with
Golden Cycle's Consent Solicitation.
<PAGE>
D. Under the federal securities laws, Global was
required to contact fiduciaries holding stock for beneficial
holders as promptly as possible after setting the record date
and request beneficial holder lists. It did not do so, but
delayed even after issuing the April 1 press release. Once
Global obtains the lists, it will be obligated to produce them
to Golden Cycle pursuant to the inspection demand. By delaying
its request for the lists, Global has delayed its receipt of
the lists and, thereby, the date on which they will have to be
provided to Golden Cycle.
E. On or about April 2, 1998, Global contacted at
least one Global record holder who holds shares as a fiduciary
for beneficial holders and informed the record holder that
April 3 was the record date for the Consent Solicitation. The
communication of a false record date can be expected to result
in creation of incorrect beneficial holders lists, further
delays in Golden Cycle's receipt of correct lists, confusion
in the market about the Consent Solicitation, and the
execution of consents for which Global will undoubtedly assert
challenges. Global's violation of federal law in its dealings
with fiduciary holders is the subject of a lawsuit commenced
yesterday in federal court.
F. On Thursday, April 2, Global commenced litigation
against Golden Cycle and its principals in the United States
District Court in the Northern District of California. The
litigation apparently was commenced for purposes of public
relations. Golden Cycle learned of it through a Global press
release issued on April 6, and it has yet to be served. The
claims are legally baseless, premised largely on fatuous
claims that the preliminary proxy materials would be false and
misleading if eventually used to solicit consents.
<PAGE>
G. On information and belief, Global has prepared
information packages and presentations which are being
circulated to potential competing bidders, but not to Golden
Cycle. Providing such information contravenes Defendant
Keenan's representations to Golden Cycle that a Alevel playing
field" will be maintained among bidders.
40. The Defendants' continued refusal to deal with Golden Cycle in a
manner consistent with their fiduciary obligations is particularly palpable
given its retention of Cleary Gull as its financial advisor. Cleary Gull
assisted Golden Cycle in purchasing more than 3.6% of Global's outstanding
shares at prices significantly less than $18, and offered to sell it restricted
shares representing an additional 3.3% of the total outstanding at the lower
price. It also sought to serve as Golden Cycle's financial advisor with respect
to its interest in Global. Under the circumstances, Cleary Gull should require
very little time to advise the Individual Defendants that the $18 cash offer is
fair.
41. Having concluded the Individual Defendants will not consider Golden
Cycle's offer independently or in good faith, Golden Cycle commenced today a
Tender Offer of all outstanding shares at the $18 cash price. The Tender Offer
is all cash, non-coercive and represents a significant premium over market.
Under the circumstances, the Global Board has a fiduciary obligation to exempt
the Tender Offer from the anti-takeover provisions of the Poison Pill and
Section 203.
<PAGE>
Irreparable Injury
42. Global's use of or reliance upon the Poison Pill and other
defensive measures to obstruct Golden Cycle's Tender Offer and Consent
Solicitation will hinder and prevent Golden Cycle from exercising its
fundamental rights under Delaware law, including, but not limited to, the right
to conduct a consent solicitation. The failure of the Individual Defendants even
to consider, much less act upon, Golden Cycle's proposal makes it impossible for
Global's stockholders to have an accurate assessment of Golden Cycle's Proposed
Tender Offer. Golden Cycle's resulting injury will not be compensable in money
damages and plaintiff has no adequate remedy at law.
COUNT I
(for interference with the corporate franchise)
43. Plaintiff repeats and realleges the allegations of the Complaint as
if fully set forth here.
44. Delaware law recognizes the corporate franchise as a fundamental
stockholder right. The right to solicit and to express consents is an important
part of that right.
45. As part of an effort to entrench themselves in office, Defendants
have improperly and inequitably interfered with the corporate franchise by,
among other things: (i) purporting to set a premature record date for the
Consent Solicitation; (ii) delaying the announcement of its claimed designation
of the record date; (iii) interfering with Golden Cycle's right to a stocklist
and to inspect corporate books and records; (iv) delaying requests to fiduciary
holders for beneficial holder lists; and (v) misinforming record holders about
the purported record date.
46. Plaintiff has no adequate remedy at law.
<PAGE>
COUNT II
(for breach of fiduciary duty)
47. Plaintiff repeats and realleges the allegations of the Complaint as
if fully set forth here.
48. The Individual Defendants bear fiduciary obligations to Global's
stockholders, including Golden Cycle. The Individual Defendants are violating
those duties to entrench themselves in office by, among other things:
obstructing the Consent Solicitation; using corporate assets to bring baseless
litigation against Golden Cycle and its principals; failing to consider Golden
Cycle's $18 cash offer independently and in good faith; refusing to exempt
Golden Cycle's $18 cash offer from the Poison Pill and from ss.203; and failing
to maintain a level playing field in connection with Golden Cycle's $18 cash
offer.
49. As fiduciaries, Defendants also owe a duty of candor to Global's
stockholders, including Golden Cycle. Defendants have violated that duty by,
among other things: concealing significant payments to various of the Individual
Defendants; creating and failing to correct a materially false and misleading
impression that Defendants Allan and Keenan are "independent" and
"non-management" directors; falsely claiming to be considering Golden Cycle's
$18 cash offer; misrepresenting the purported record date; and representing a
"level playing field" would be maintained regarding Golden Cycle's offer.
50. Plaintiff has no adequate remedy at law.
COUNT III
(for fraud)
51. Plaintiff repeats and realleges the allegations of the Complaint as
if fully set forth here.
52. As alleged above, Defendants have disseminated materially false and
misleading statements about their compensation, their independence, the Consent
Solicitation, and the $18 cash offer. Defendants made such statements with
knowledge of their falsity or with reckless disregard as to whether or not they
are false, and with the expectation that Global's stockholders would rely on the
false and misleading statements. The stockholders have relied.
53. Plaintiff has no adequate remedy at law.
WHEREFORE, Plaintiff Golden Cycle LLC respectfully requests that this
Court enter judgment against all Defendants, and all persons in active concert
or participation with them, as follows:
<PAGE>
A. Temporarily, preliminarily and permanently enjoining Global
and the Individual Defendants:
(i) against employing any devices or taking any steps
that would interfere with the Consent Solicitation or
would interfere with, or to limit the power of,
directors elected pursuant to the Consent
Solicitation to execute fully their fiduciary duties;
(ii) against taking any action that would interfere
with the or the Tender Offer, or entering into any
agreement or arrangement or using any device that
would interfere with, restrict or that would have the
effect of restricting consummation of the Tender
Offer;
(iii) against making any false or misleading
statements in connection with the Consent
Solicitation or the Tender Offer;
(iv) compelling the redemption of the Poison Pill or
the exemption of the Tender Offer from its
anti-takeover effects;
(v) compelling the exemption of the Tender Offer from
the anti-takeover effects of 8 Del. C. ss.203; and
(vi) compelling the dissemination of curative
disclosures.
B. Declaring the Defendants to have breached their fiduciary
duties.
C. Declaring the purported March 30 Record Date to be void and
without effect;
D. Granting plaintiff and Global's stockholders damages for all
incidental injuries suffered as a result of defendants' unlawful
conduct.
E. Awarding plaintiff the costs and disbursements of this action,
including attorneys' fees.
<PAGE>
F. Granting plaintiff such other and further relief as the Court
deems just and proper.
WOLF, BLOCK, SCHORR and SOLIS-COHEN LLP
BY:
------------------------------
David J. Margules
Todd C. Schiltz
One Rodney Square
920 King Street, Suite 300
Wilmington, DE 19801
(302) 777-5860
DATE: April 7, 1998
