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Exhibit (a)(19)
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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HARBOR FINANCE PARTNERS, on behalf :
of itself and all others
similarly situated, : Case No.: 18282
Plaintiff, :
v. :
CLASS ACTION COMPLAINT
CHARLES G. McCLURE, LUDVIK P. KOCI, :
ROGER S. PENSKE, DIETER E. ZETSCHE,
ECKHARD CORDES, WILLIAM E. HOGLUND, :
R. JAMISON WILLIAMS, JR., JOSEPH F.
WELCH, GARY G. JACOBS, RICHARD M. :
DONNELLY, JOHN E. DODDRIDGE, AND
DETROIT DIESEL CORP., :
Defendants. :
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Plaintiff, by its attorneys, alleges upon personal knowledge
as to its own acts and upon information and belief as to all other matters, as
follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a class
action on behalf of all persons, other than defendants, who own the common stock
of Detroit Diesel Corp. ("Detroit Diesel" or the "Company") and who are
similarly situated (the "Class"), for injunctive and other relief. Plaintiff
seeks injunctive relief herein, INTER ALIA, to enjoin the implementation of a
transaction whereby DaimlerChrysler AG, through its North American subsidiary,
would buy the Company's outstanding shares for $23.00 per share
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in cash in a transaction valued at approximately $423 million. Alternatively, in
the event that the proposed transaction is implemented, plaintiff seeks to
recover damages caused by the breach of fiduciary duties owed by the defendants.
2. The offer, which is described in offering materials
disseminated on July 31, 2000 and amendments thereto, is being advanced through
unfair procedures and without full disclosure of material information.
3. Defendants have breached their fiduciary duties owed to
Detroit Diesel's public stockholders to inform them of all material information
in connection with the decision whether to accept the proposed transaction.
Specifically, defendants have failed to advise the public shareholders about the
terms of the proposed employment contracts with eleven members of management
that will result from the consummation of the proposed transaction between
Detroit Diesel and DaimlerChrysler and the identities of the members of a
special committee.
THE PARTIES
4. Plaintiff is and, at all relevant times, has been the
owner of shares of Detroit Diesel common stock.
5. Defendant Detroit Diesel is a corporation organized under
the laws of Delaware with its principal executive offices located at 13400 Outer
Drive West, Detroit, Michigan. Detroit Diesel designs, manufactures, and markets
a full range of products for high performance diesel and alternative fuel
engines. As of July 20, 2000, Detroit Diesel has approximately 23,120,291
shares of common stock outstanding and hundreds of stockholders of record.
6. Defendant Charles G. McClure is, and was at all relevant
times, President, Chief Executive Officer and a Director of the Detroit Diesel
Board of
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Directors.
7. Defendant Ludvick F. Koci is the Vice Chairman of the
Detroit Diesel Board of Directors and was formerly the President and Chief
Operating Officer of the Company.
8. Defendant Roger Penske is, and was at all relevant times,
Chairman of the Board of Detroit Diesel.
9. Defendants Dieter E. Zetsche and Eckhard Cordes are, and
were at all relevant times, Directors of Detroit Diesel. Zetsche and Cordes also
members of the DaimlerChrysler Board of Directors.
10. Defendants William E. Hoglund, R. Jamison Williams, Jr.,
Joseph F. Welch, Gary C. Jacobs, Richard M. Donnelly, and John E. Doddridge are,
and were at all relevant times, directors of Detroit Diesel.
11. The foregoing individuals are referred to herein as the
Individual Defendants.
12. Because of their positions as officers/directors, the
Individual Defendants owe fiduciary duties of loyalty, due care and disclosure
to plaintiff and the other members of the Class.
13. Each defendant herein is sued individually as a
conspirator, as well as in his/her/its capacity as an officer, director and/or
controlling shareholder of the Company, and the liability of each arises from
the fact that each defendant has engaged in all or part of the unlawful acts,
plans, schemes, or transactions complained of herein.
CLASS ACTION ALLEGATIONS
14. Plaintiff brings this action on its own behalf and as a
class action, on behalf of all stockholders of the Company, except defendants
herein and any person, firm, trust, corporation, or other entity related to or
affiliated with any of the defendants,
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or any of the Company's principal stockholders, who will be threatened with
injury arising from defendants' actions as is described more fully below.
15. This action is properly maintainable as a class action.
16. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 23,000,000 shares of common stock.
There are hundreds of record and beneficial stockholders.
17. There are questions of law and fact common to the Class
including, INTER ALIA, whether:
(a) defendants have breached and will continue to
breach their fiduciary and other common law duties owed by them to plaintiff and
the members of the Class; and
(b) plaintiff and the other members of the Class
would be irreparably damaged by the wrongs complained of herein.
18. Plaintiff is committed to prosecuting the action and
have retained competent counsel experienced in litigation of this nature.
Plaintiff's claims are typical of the claims of the other members of the Class
and plaintiff has the same interests as the other members of the Class.
Plaintiff is an adequate representatives of the Class.
19. The prosecution of separate actions by individual
members of the Class would create the risk of inconsistent or varying
adjudications with respect to individual members of the Class which would
establish incompatible standards of conduct for defendants, or adjudications
with respect to individual members of the Class which would as a practical
matter be dispositive of the interests of the other members not parties to the
adjudications or substantially impair or impede their ability to protect their
interests.
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20. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
21. On July 20, 2000, the BLOOMBERG news wire reported that
Detroit Diesel and Daimler Chrysler agreed to a proposed transaction whereby
Daimler Chrysler would acquire 18.1 millions shares of Detroit Diesel that it
does not already own through a tender offer priced at $23.00 per share in a
transaction valued at $423 million.
22. The tender offer, which was originally slated to close
on August 26, 2000 had been extended to at least September 11, 2000 with
antitrust clearance not expected until September 30, 2000.
23. Daimler Chrysler owned approximately 21% of Detroit
Diesel's stock at the time of the announcement.
24. Penske Corporation, a privately held company controlled
by defendant Roger Penske, owned approximately 48% of Detroit Diesel. As part of
the proposed transaction, Daimler Chrysler entered into a voting agreement with
Penske Corp. and its affiliate to secure the tender of its shares.
25. On July 31, 2000, the Company filed a copy of the
Solicitation Statement and Information Statement with the Securities & Exchange
Commission (the "solicitation materials"). The solicitation materials and
amendments thereto, are defective in that they fail to adequately describe all
of the terms of the proposed tender offer.
26. The 14D-9 Solicitation Statement states that certain
proposed employment agreements were to be entered into with eleven executive
officers of Detroit Diesel. The only reference to the expected payment to
management is that the executive
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compensation previously received by the employee was "subject to increase," with
no further explanation as to what the increase was expected to be. The
employment agreements have never been annexed as exhibits to the offering
materials and subsequent amendments to the offering materials have never
addressed the employment agreements.
27. Defendants further erred by failing to disclose the
identities of the special committee that allegedly considered whether the
proposed tender offer was fair and in the best interests of the Company's
stockholders. The offering materials, which cite the special committee's opinion
as one factor in recommending the solicitation, make no reference to who
comprised the special committee or even how often they met. Thus, stockholders
are unable to determine whether the special committee was made up of
disinterested members.
28. Defendants, have breached their fiduciary obligations to
Detroit Diesel stockholders by failing to disclose with all candor the material
terms of the proposed tender offer.
29. Without meaningful disclosure, Detroit Diesel's
shareholders are forced to make a determination whether or not to tender their
shares without all information to which they are entitled.
30. As a result of defendants' action, plaintiff and the
Class have been and will be damaged by the breaches of fiduciary duty and,
therefore, plaintiff and the Class will not receive the fair value of Detroit
Diesel's assets and businesses.
31. Unless enjoined by this Court, defendants will continue
to breach their fiduciary duties owed to plaintiff and the Class, and will
succeed in their plan to exclude plaintiff and the Class from the fair
proportionate share of Detroit Diesel's valuable assets and businesses, all to
the irreparable harm of the Class.
32. Plaintiff and the Class have no adequate remedy of law.
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WHEREFORE, plaintiff prays for judgment and relief as follows:
(c) declaring that this lawsuit is properly maintainable as
a class action and certifying plaintiff as a representative of the Class;
(d) declaring that the defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and the other members of the Class;
(e) preliminarily and permanently enjoining defendants and
their counsel, agents, employees, and all persons acting under, in concert with,
or for them, from proceeding with or implementing the tender offer until full
disclosure is made;
(f) in the event the proposed transaction is consummated,
rescinding it and setting it aside;
(g) awarding compensatory damages against defendants,
jointly and severally, in an amount to be determined at trial, together with
prejudgment interest at the maximum rate allowable by law;
(h) awarding plaintiff and the Class their costs and
disbursements and reasonable allowances for plaintiff's counsel and experts'
fees and expenses; and
(i) granting such other and further relief as may be just
and proper.
Dated: August 31, 2000
CHIMICLES & TIKELLIS LLP
By: ____________________________
Pamela S. Tikellis
Robert J. Kriner, Jr.
One Rodney Square; P.O. Box 1035
Wilmington, DE 19899
(302) 656-2500
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Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD
HALEBIAN & FEFFER LLP
488 Madison Avenue
New York, New York 10022
(212) 935-7400
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