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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
(Amendment No. 2)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
LORAL CORPORATION
(Name of Subject Company)
LOCKHEED MARTIN CORPORATION
LAC ACQUISITION CORPORATION
(Bidders)
Common Stock, par value $0.25 per share
(Title of Class of Securities)
543859 10 2
(CUSIP number of Class of Securities)
Frank H. Menaker, Esq.
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
(301) 897-6000
(Name, address and telephone number of person
authorized to receive notice and communications on
behalf of the person(s) filing statement)
With a copy to:
Peter Allan Atkins, Esq.
Lou R. Kling, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
This Amendment No. 2 amends and supplements the
Tender Offer Statement on Schedule 14D-1 (as may be
amended from time to time, the "Schedule 14D-1") of LAC
Acquisition Corporation, a New York corporation (the
"Purchaser") and a wholly-owned subsidiary of Lockheed
Martin Corporation, a Maryland corporation ("Lockheed
Martin"), filed on January 12, 1996 with the Securities
and Exchange Commission (the "Commission") in respect of
the tender offer (the "Offer") by the Purchaser for all
of the outstanding shares of Common Stock, par value $.25
per share, of Loral Corporation (the "Company"). The
Offer is being made pursuant to an Agreement and Plan of
Merger dated as of January 7, 1995 by and among the
Company, Purchaser and Lockheed Martin. All capitalized
terms set forth herein which are not otherwise defined
herein shall have the same meanings as ascribed thereto
in the Offer to Purchase, dated January 12, 1996 (which
is attached as Exhibit (a)(9) to the Schedule 14D-1 (the
"Offer to Purchase")). In connection with the foregoing,
the Purchaser and Lockheed Martin are hereby amending the
Schedule 14D-1 as follows:
Item 10. Additional Information.
Item 10(b)-(c) is hereby amended and supplemented by
the addition of the following paragraph thereto:
"Hart-Scott-Rodino Filing. On January 24,
1996, Lockheed Martin filed a Notification and
Report Form pursuant to the HSR Act with respect to
the Offer. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares
under the Offer may not be consummated until the
expiration of a 15-calendar day waiting period
following such filing by Lockheed Martin.
Accordingly, the waiting period with respect to the
Offer will expire at 11:59 p.m., New York City time,
on February 8, 1996, unless either Lockheed Martin
or the Company receives a request for additional
information or documentary material, or the
Antitrust Division and the FTC terminate the waiting
period prior thereto. Section 16 of the Offer to
Purchase sets forth additional information relating
to the HSR Act and such waiting period as they
relate to the Offer."
Item 10(e) is hereby amended and supplemented by the
addition of the following paragraph thereto:
"Piven Lawsuit. The Company, certain of
its directors (the "Director Defendants") and
Lockheed Martin have been named as defendants in a
purported class action lawsuit entitled Sylvia B.
Piven v. Loral Corp., Bernard L. Schwartz, Frank C.
Lanza, Howard Gittis, Robert B. Hodes, Gershon
Kekst, Charles Lazarus, Donald E. Shapiro, Allen M.
Shinn, Thomas J. Stanton, Jr., Daniel Yankelovich,
Arthur L. Simon, and Lockheed Martin Corp., Index
Number 96-100390 (such lawsuit, the "Piven
Lawsuit"), which was filed in the Supreme Court of
the State of New York, in the County of New York, on
or about January 9, 1996. The plaintiff in the
Piven Lawsuit purportedly served a copy of the
complaint (the "Piven Complaint") upon the Company
and the Director Defendants on January 19, 1996 and
purportedly served a copy of the complaint upon
Lockheed Martin thereafter. Such action purports to
be brought as a class action on behalf of all
shareholders of the Company. The Piven Complaint
alleges, among other things, that (a) the defendants
allegedly sought to enrich and/or entrench
themselves at the expense of the Company's
stockholders, (b) the Director Defendants allegedly
breached their fiduciary duties and allegedly have
not protected stockholders from any alleged
conflicts of interest between such Defendant
Directors and the Company's stockholders, (c) the
defendants allegedly have taken advantage of their
allegedly superior information regarding the
Company's relative values, (d) the Director
Defendants allegedly did not seek other purchasers
for the Company at the highest possible price for
Loral shareholders and allegedly sought to chill
third party offers for the Company, and (e) Parent
allegedly induced, aided and abetted the breach of
fiduciary duty by the Director Defendants.
As relief, the Piven Complaint seeks,
among other things, (a) a declaration that the
defendants conduct is unfair, unjust and inequitable
to plaintiff and other members of the purported
class, (b) an injunction preliminarily and
permanently enjoining the defendants from taking any
steps to complete the Offer, the Merger and the
Spin-Off (the "Transaction"), (c) the award of
compensatory damages in an unspecified amount, and
(d) the award to plaintiff of attorney's fees and
costs. Lockheed Martin believes that the Piven
Lawsuit is without merit and intends to vigorously
defend such action. The above summary of the Piven
lawsuit does not purport to be complete and is
qualified in its entirety by reference to the full
text of the Piven complaint, which is attached as
Exhibit (c)(11) hereto and which is hereby
incorporated herein by reference.
Goltz Lawsuit. The Company and certain of
its directors and officers (the "Individual
Defendants") have been named as defendants in a
purported class action lawsuit entitled Arthur Goltz
and Murray Zucker v. Loral Corporation, Bernard L.
Schwartz, Frank C. Lanza, Howard Gittis, Robert B.
Hodes, Gershon Kekst, Charles Lazarus, Malvin A.
Ruderman, E. Donald Shapiro, Allen M. Shinn, Thomas
J. Stanton, Jr., Daniel Yankelovich, Michael P.
DeBlasio, Robert V. LaPenta and Michael B. Targoff,
Case Number BC142098 (such lawsuit, the "Goltz
Lawsuit"), which was filed in the Superior Court of
the State of California, in the County of Los
Angeles, on or about January 22, 1996. Such action
purports to be brought as a class action on behalf
of all shareholders of the Company. The complaint
in the Goltz Lawsuit (the "Goltz Complaint")
alleges, among other things, that (a) the Individual
Defendants allegedly breached their fiduciary duties
and failed to attempt in good faith to maximize
shareholder value in connection with the
Transaction, (b) the Individual Defendants allegedly
sought to entrench themselves in their position with
the Company at the expense of the Company's
stockholders, (c) the Individual Defendants
allegedly sought to thwart third party offers for
the Company allegedly through, among other things,
the adoption of a shareholder rights plan and
providing in the Merger Agreement for the payment of
certain termination fees under certain
circumstances, and (d) the Individual Defendants
allegedly have not protected stockholders from any
alleged conflicts of interest between such Defendant
Directors and the Company's stockholders.
As relief, the Goltz Complaint seeks,
among other things, (a) an injunction enjoining the
defendants to fulfill their fiduciary duties by
seeking third party offers for the Company, (b) an
injunction enjoining the Transaction and enjoining
defendants from enforcing either the Company's
shareholder rights plan or the Merger Agreement
provisions for the payment of certain termination
fees, (c) the award of compensatory damages in an
unspecified amount, and (d) the award to plaintiff
of attorney's fees and costs. Lockheed Martin
believes that the Goltz Lawsuit is without merit and
intends to vigorously defend such action. The above
summary of the Goltz lawsuit does not purport to be
complete and is qualified in its entirety by
reference to the full text of the Goltz complaint,
which is attached as Exhibit (c)(12) hereto and
which is hereby incorporated herein by reference.
NYSE Inquiry. On January 19, 1996,
Lockheed Martin received a written inquiry from the
New York Stock Exchange (the "NYSE") in connection
with the NYSE's regularly conducted review of market
activity surrounding significant corporate
announcements. In connection with the Transaction,
the NYSE has initiated a review of the trading in
common stock of the Company which preceded the
January 8, 1996 public announcement that the Company
and Lockheed Martin were entering into the
Transaction. The NYSE has requested, and Lockheed
Martin intends to provide to the NYSE, certain
information relating to the Transaction and the
events preceding such public announcement.
Information Statement. On January 24,
1996, Loral Space filed with the Commission pursuant
to the Exchange Act a Registration Statement on Form
10 (such document, which includes and incorporates
by reference the Information Statement, the "Form
10") with respect to the Loral Space Common Stock.
As noted in the Offer to Purchase, the Distribution
is conditioned upon the satisfaction or waiver of a
number of conditions, including, among others, the
condition that the Form 10 shall have been declared
effective by the Commission. Pursuant to Section
3.1(a) of the Distribution Agreement, the Company
and Loral Space have agreed to use their respective
reasonable efforts to cause the Form 10 to be
declared effective under the Exchange Act."
Item 11. Material to be Filed as Exhibits
Item 11 is hereby amended by the addition of the
following exhibits thereto:
Exhibit (a)(10) Copy of notice to plan participants
from Fidelity Management Trust
Company, as trustee under certain
benefit plans ("Fidelity"), relating
to the Offer, and accompanying form
of instruction to Fidelity from such
plan participants
Exhibit (c)(11) Complaint in an action filed in the
Supreme Court of the State of New
York, County of New York, entitled
Sylvia B. Piven v. Loral Corp.,
Bernard L. Schwartz, Frank C. Lanza,
Howard Gittis, Robert B. Hodes,
Gershon Kekst, Charles Lazarus,
Donald E. Shapiro, Allen M. Shinn,
Thomas J. Stanton, Jr., Daniel
Yankelovich, Arthur L. Simon, and
Lockheed Martin Corp., Index No. 96-
100390
Exhibit (c)(12) Complaint in an action filed in the
Superior Court of the State of
California, in the County of Los
Angeles, entitled Arthur Goltz and
Murray Zucker v. Loral Corporation,
Bernard L. Schwartz, Frank C. Lanza,
Howard Gittis, Robert B. Hodes,
Gershon Kekst, Charles Lazarus,
Malvin A. Ruderman, E. Donald
Shapiro, Allen M. Shinn, Thomas J.
Stanton, Jr., Daniel Yankelovich,
Michael P. DeBlasio, Robert V.
LaPenta and Michael B. Targoff, Case
Number BC142098
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
LAC ACQUISITION CORPORATION
By:/s/ STEPHEN M. PIPER
Name: Stephen M. Piper
Title: Assistant Secretary
Dated: January 25, 1996
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
LOCKHEED MARTIN CORPORATION
By:/s/ STEPHEN M. PIPER
Name: Stephen M. Piper
Title: Assistant Secretary
Dated: January 25, 1996
EXHIBIT INDEX
Exhibit No. Description
Exhibit (a)(10) Copy of notice to plan participants from
Fidelity Management Trust Company, as trustee
under certain benefit plans ("Fidelity"),
relating to the Offer, and accompanying form of
instruction to Fidelity from such plan
participants
Exhibit (c)(11) Complaint in an action filed in the Supreme
Court of the State of New York, County of New
York, entitled Sylvia B. Piven v. Loral Corp.,
Bernard L. Schwartz, Frank C. Lanza, Howard
Gittis, Robert B. Hodes, Gershon Kekst, Charles
Lazarus, Donald E. Shapiro, Allen M. Shinn,
Thomas J. Stanton, Jr., Daniel Yankelovich,
Arthur L. Simon, and Lockheed Martin Corp.,
Index No. 96-100390
Exhibit (c)(12) Complaint in an action filed in the Superior
Court of the State of California, in the County
of Los Angeles, entitled Arthur Goltz and
Murray Zucker v. Loral Corporation, Bernard L.
Schwartz, Frank C. Lanza, Howard Gittis, Robert
B. Hodes, Gershon Kekst, Charles Lazarus,
Malvin A. Ruderman, E. Donald Shapiro, Allen M.
Shinn, Thomas J. Stanton, Jr., Daniel
Yankelovich, Michael P. DeBlasio, Robert V.
LaPenta and Michael B. Targoff, Case Number
BC142098
Exhibit (a)(10)
82 Devonshire Street
Boston, Massachusetts 02109
FIDELITY MANAGEMENT TRUST COMPANY
NOTICE TO PARTICIPANTS
IN THE FOLLOWING PLANS
The Conic Corporation Deferred Income Retirement Plan, The
Frequency Sources, Inc. 401(k) Retirement Savings Plan, The K&F
Industries Savings Plan, The Loral/Rolm Mil-Spec Corp. Retirement
Income Savings Plan, The Loral Aerospace Savings Plan, The Loral
Corporation Deferred Income Savings Plan, The Loral Defense Systems
Retirement Savings Plan, The Loral Defense Systems Savings and
Investment Plan, The Loral Electro-Optical Systems, Inc. 401(k)
Matching Contribution Plan, The Loral Fairchild Corp. Savings Plan,
The Loral Federal Systems Deferred Income Retirement Plan, The
Loral Infrared & Imaging Systems, Inc. Savings Plan, The Loral
Librascope Retirement Savings Plan, The Loral Vought Systems
Corporation Capitol Accumulation Plan, The Narda Microwave
Supplemental Retirement Savings Plan, and The Narda-Western
Operations 401(k) Deferred Income Retirement Plan
(THE "PLANS")
Dear Plan Participant:
Enclosed are tender offer materials and a Trustee Direction
Form relating to an offer by LAC Acquisition Corporation (the
"Purchaser"), a wholly owned subsidiary of Lockheed Martin
Corporation, to purchase all outstanding shares of Common Stock,
par value $.25 per share ("Shares"), of Loral Corporation (the
"Company") at $38.00 per share, net to the seller in cash, without
interest (the "Offer"). The tender offer materials comprised of
the Purchaser's Offer to Purchase, the Letter of Transmittal and
the Company's Recommendation Statement, which have been furnished
to you, together describe the terms and conditions of the Offer as
well as the facts and circumstances surrounding the Offer. SUCH
MATERIALS CONTAIN IMPORTANT INFORMATION THAT YOU NEED TO READ IN
THEIR ENTIRETY PRIOR TO MAKING ANY DECISION REGARDING THE OFFER.
In a related transaction, following the consummation of the
Offer, the Company will distribute (the "Spin-Off") common stock of
Loral Space & Communications Ltd. to the holders of Shares on a
record date to be determined by the Board of Directors of the
Company. In no event shall the record date occur after acceptance
of tendered Shares for payment by the Purchaser. Even if you elect
to tender your Shares, you will be considered the holder for
purposes of the Spin-Off until the Purchaser accepts these Shares
for payment. The Company expects to distribute to shareholders an
information statement with respect to the business, operations and
management of this new corporation. A copy of the information
statement will be sent to you at that time.
Background
Fidelity Management Trust Company ("Fidelity") is the trustee
of seven trusts (the "Trusts") established under the Plans. Under
the terms of the trust agreements between the Company and Fidelity
establishing the Trusts, in the case of a tender offer for any
Shares, each participant whose Plan account has an interest in
Loral Common Stock under the Trusts has the right to direct the
trustee to tender or not tender some or all of the Shares credited
to such participant's Plan account invested in Loral Common Stock
under the Trusts.
The Trusts now hold approximately seven and one tenth percent
(7.1%) of all the Company's outstanding Shares. The trust
agreements require Fidelity to tender the Shares held in the Trusts
in accordance with directions received from participants with an
interest in Loral Common Stock under the Trusts, and have been or
will be amended to require that, with respect to Shares for which
no instructions are received, Fidelity tender in accordance with
directions received from an independent fiduciary to be appointed
by the Company.
Direction to the Trustee
Only the Trustee can tender the Shares held by the Trusts.
However, participants whose Plan accounts are credited with Shares
held in Loral Common Stock under the Trusts have the opportunity to
direct Fidelity to tender such Shares pursuant to the Offer.
PLEASE NOTE THAT UNDER THE TERMS OF THE TRUSTS, FIDELITY IS
REQUIRED TO HOLD YOUR INSTRUCTIONS IN CONFIDENCE AND IS NOT
PERMITTED TO DISCLOSE THE CONTENTS OF YOUR DIRECTIONS TO THE
COMPANY, THE PURCHASER OR ANY EMPLOYEE OR OFFICER THEREOF.
Instructions
In order to be assured that your tender instructions to
Fidelity will be followed, you must, in accordance with the
procedures set forth below, complete, sign, date and return the
enclosed Direction Form to Fidelity as soon as possible, BUT IN NO
EVENT LATER THAT 12:00 MIDNIGHT, NEW YORK TIME, ON MONDAY, FEBRUARY
5, 1996, UNLESS THE OFFER IS EXTENDED. PLEASE COMPLETE AND RETURN
THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE
OFFER.
You may change, amend or rescind your directions to Fidelity
at any time prior to the deadline specified in the preceding
paragraph by delivering to Fidelity a new Direction Form. Upon
receipt of a timely change, amendment or rescission of a previously
delivered Direction Form, any previous instructions will be deemed
canceled. Additional Direction Forms and transmittal envelopes can
be obtained by telephoning the Loral Savings Plan Service Center at
1-800-354-7125. No facsimile transmittals of the Direction Form
will be accepted.
PLEASE NOTE THAT THE LETTER OF TRANSMITTAL HAS BEEN PROVIDED
FOR YOUR INFORMATION ONLY, AND CAN NOT BE USED TO TENDER THE SHARES
CREDITED TO YOUR ACCOUNT.
Please note that on the reverse side of the Direction Form the
number of Shares credited to your account (based on your holdings
as of Tuesday, January 9, 1996) is indicated to the right of your
address. This number of Shares may fluctuate somewhat from January
9, 1996 until February 2, 1996, the date the Trustee will begin the
process of tabulating directions, unless the Offer is extended, due
to additional employee and employer contributions. Because of this
fluctuation, the instructions on the Direction Form refer to the
percentage of Shares allocated to your account on February 2, 1996,
unless the Offer is extended.
IF YOUR DIRECTION FORM IS NOT TIMELY RECEIVED BY FIDELITY AT
ITS ADDRESS SET FORTH ON THE DIRECTION FORM, THE DECISION TO TENDER
OR NOT TO TENDER THE SHARES CREDITED TO YOUR ACCOUNT WILL BE MADE
BY AN INDEPENDENT FIDUCIARY TO BE APPOINTED BY THE COMPANY.
YOUR DIRECTION FORM MUST BE RECEIVED BY FIDELITY AT ITS
ADDRESS SET FORTH ON THE DIRECTION FORM BY 12:00 MIDNIGHT, NEW YORK
TIME, ON MONDAY, FEBRUARY 5, 1996, UNLESS THE OFFER IS EXTENDED.
BE SURE TO REVIEW ALL OF THE TENDER OFFER MATERIALS BEFORE YOU
COMPLETE YOUR DIRECTION FORM. FIDELITY MAKES NO RECOMMENDATION
WITH RESPECT TO YOUR DECISION REGARDING THE OFFER. PLEASE REMEMBER
TO RETURN YOUR DIRECTION FORM DIRECTLY TO FIDELITY IN THE ENCLOSED
ENVELOPE, RATHER THAN TO THE COMPANY OR TO THE PURCHASER.
If you hold Shares directly, you will receive, under separate
cover, tender offer materials directly from the Purchaser, which
can be used to tender such Shares directly to the Purchaser. Those
tender offer materials may not be used to direct the Trustee to
tender or not tender the Shares credited to your account under the
Plans. The direction to tender or not tender Shares credited to
your account under the Plans may be made only in accordance with
the procedure set forth herein.
In accordance with the provisions of the Trusts, the proceeds
from the sale of Shares in your account will not be distributed to
you. Cash proceeds will be invested in the investment option
designated for such purposes in the trust agreements (either a pool
of guaranteed investment contracts or a money market fund). Shares
of Loral Space & Communications Corporation received in connection
with the Spin-Off will be retained in the Plan in a unitized stock
fund, and your account will be credited with a proportional number
of units in that fund. You may change the investment option in
which such proceeds are invested by telephoning the Loral Savings
Plan Center at 1-800-354-7125 in accordance with the normal
procedures for changing investment options.
If you require additional information concerning the procedure
to tender your Shares, please contact the Loral Savings Plan
Service Center at 1-800-354-7125. If you have any questions about
the terms and conditions of the Offer, please contact the
manager/dealer for the Offer, Bear Stearns, at 1-800-7216-9849.
DIRECTION FORM
BEFORE COMPLETING THIS FORM, READ CAREFULLY THE ACCOMPANYING OFFER TO
PURCHASE AND ALL OTHER ENCLOSED MATERIALS
In connection with the Offer to Purchase dated January 12, 1996, (the
"Offer"), made by LAC Acquisition Corporation, a Wholly Owned Subsidiary of
Lockheed Martin Corporation, a copy of which I have received, I hereby
instruct Fidelity Management Trust Company (the "Trustee") to tender the
shares of Loral Corporation Common Stock held in my account in the Plan
before the expiration of the Offer, as follows (check one box and
complete):
Box 1 ( ) I direct the Trustee to tender ALL of the shares of Loral
Corporation held in my account in the Plan, in accordance
with the terms of the Offer.
Box 2 ( ) I direct the Trustee to tender percent (insert a
percentage less than 100%) of the shares of Loral
Corporation held in my account in the Plan, in accordance
with the terms of the Offer, and not to tender the remainder
of such shares.
Box 3 ( ) I direct the Trustee NOT to tender any of the shares of
Loral Corporation held in my account in the Plan, in
accordance with the terms of the Offer.
The Trustee makes no recommendation to any Plan participant as to whether
to tender or not. Your instructions to the Trustee will be kept
confidential, and will not be disclosed to anyone at Loral Corporation or
Lockheed Martin Corporation.
PLEASE NOTE THAT IF YOU DO NOT SEND IN YOUR FORM, OR IF IT IS NOT RECEIVED
BEFORE 12:00 MIDNIGHT NEW YORK TIME ON FEBRUARY 5, 1996, THE DECISION TO
TENDER YOUR SHARES OR NOT TO TENDER YOUR SHARES WILL BE MADE BY AN
INDEPENDENT FIDUCIARY APPOINTED BY LORAL CORPORATION.
YOUR FORM MUST BE RECEIVED BEFORE 12:00 MIDNIGHT NEW YORK TIME AT P.O. BOX
9124, HINGHAM, MA 02043 ON FEBRUARY 5, 1996 IN ORDER TO BE EFFECTIVE.
Date
Please print name
Signature
Exhibit (c)(11)
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
----------------------------------------x
SYLVIA B. PIVEN, On Behalf Of : Index No.
Herself And All Others Similarly :
Situated, : 96100390
:
Plaintiff, :
: CLASS ACTION
- against : COMPLAINT
:
LORAL CORP., BERNARD L. SCHWARTZ, :
FRANK C. LANZA, HOWARD GITTIS, :
ROBERT B. HODES, GERSHON KEKST, :
CHARLES LAZARUS, DONALD E. SHAPIRO, :
ALLEN M. SHINN, THOMAS J. STANTON, JR., :
DANIEL YANKELOVICH, ARTHUR L. SIMON, :
and LOCKHEED MARTIN CORP., :
:
Defendants. :
----------------------------------------x
Plaintiff, by her attorneys, alleges upon
information and belief (said information and belief being
based, in part, upon the investigation conducted by and
through her counsel), except with respect to her ownership
of Loral Corp. common stock and her suitability to serve as
a class representative, which are alleged upon personal
knowledge, as follows:
PARTIES
1. Plaintiff Sylvia B. Piven is, and has been
for years, the owner of 800 shares of common stock of
defendant Loral Corp. ("Loral" or the "Company").
2. Defendant Loral is a corporation organized
and existing under and by virtue of the laws of the State of
New York. Defendant Loral maintains its principal offices
at 600 Third Avenue, New York, New York, which is in the
City, County and State of New York.
3. Defendant Bernard L. Schwartz ("Schwartz") is
the Chairman of the Board and Chief Executive Officer of
defendant Loral.
4. Defendant Frank C. Lanza ("Lanza") is
President, Chief Operating Officer and a Director of
defendant Loral.
5. Defendant Howard Gittis ("Gittis") is a
Director of defendant Loral.
6. Defendant Robert B. Hodes ("Hodes") is a
Director of defendant Loral.
7. Defendant Gershon Kekst ("Kekst") is a
Director of defendant Loral.
8. Defendant Charles Lazarus ("Lazarus") is a
Director of defendant Loral.
9. Defendant Donald E. Shapiro ("Shapiro") is a
Director of defendant Loral.
10. Defendant Allen M. Shinn ("Shinn") is a
Director of Defendant Loral.
11. Defendant Thomas J. Stanton, Jr. ("Stanton")
is a Director of defendant Loral.
12. Defendant Daniel Yankelovich ("Yankelovich")
is a Director of defendant Loral.
13. Defendant Arthur L. Simon ("Simon") is a
Director of defendant Loral.
14. The foregoing individuals, collectively
referred to as the "Defendant Directors," as directors
and/or officers of Loral, owe fiduciary duties to Loral and
its shareholders.
15. Defendant Lockheed Martin Corp. ("Lockheed")
is a corporation organized and existing under and by virtue
of the laws of the State of Maryland. Defendant Lockheed
maintains its principal offices at 6801 Rockledge Drive,
Bethesda, Maryland.
CLASS ACTION ALLEGATIONS
16. Plaintiff brings this action on her own
behalf and as a class action, pursuant to Section 901 of the
CPLR, on behalf of all shareholders of Loral (except
defendants herein and any person, firm, trust, corporation
or other entity related to or affiliated with any of the
defendants) or their successors in interest, who have been
or will be adversely affected by the conduct of defendants
alleged herein.
17. This action is properly maintainable as a
class action for the following reasons:
(a) The class of shareholders for whose
benefit this action is brought is so numerous that joinder
of all class members is impracticable. As of October 31,
1995, there were over 172 million shares of defendant
Loral's common stock outstanding owned by 4,500 shareholders
of record scattered throughout the United States and foreign
countries.
(b) There are questions of law and fact
which are common to members of the class and which
predominate over any questions affecting any individual
members. The common questions include, inter alia, the
following:
i. Whether the defendants have engaged in a
plan and scheme to enrich and/or entrench themselves at the
expense of Loral's public shareholders;
ii. Whether the Defendant Directors have
breached fiduciary duties owed by them to plaintiff and
members of the Class, and/or have aided and abetted in such
breach, by virtue of their participation and/or acquiescence
and by their other conduct complaint of herein;
iii. Whether defendants have failed to fully
disclose the true value of defendant Loral's assets and
earning power and the future financial benefits which they
expect to derive from the takeover by Lockheed;
iv. Whether the Defendant Directors have
wrongfully failed and refused to seek a purchaser of Loral
at the highest possible price and instead, have sought to
chill potential offers and acquire the valuable assets of
defendant Loral for defendant Lockheed at an unfair and
inadequate price;
v. Whether defendant Lockheed has induced,
aided or abetted breaches of fiduciary duty by members of
Loral's Board of Directors.
vi. Whether plaintiff and the other members
of the Class will be irreparably damaged by the conduct and
transactions complained of herein;
vii. Whether defendants have breached or
aided and abetted the breach of the fiduciary and other
common law duties owed by them to plaintiff and the other
members of the Class; and
viii. Whether defendants are pursuing a
scheme and course of business designed to eliminate the
public shareholders of defendant Loral in violation of the
laws of the State of New York.
18. Plaintiff is committed to prosecuting this
action and has retained competent counsel experienced in
litigation of this nature. The claims of plaintiff 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. Accordingly, plaintiff is an adequate representative
of the Class and will fairly and adequately protect the
interests of the Class.
19. Plaintiff anticipates that there will not be
any difficulty in the management of this litigation.
20. For the reasons stated herein, a class action
is superior to other available methods for the fair and
efficient adjudication of this action.
SUBSTANTIVE ALLEGATIONS
21. Defendant Loral develops and manufactures
airborne electronic warfare systems and equipment, weapons
systems trainers and microwave components; produces
electronic communications equipment and systems used in
antisubmarine and space warfare; operates and maintains
simulator networks for ground vehicle and airborne platform
training; and provides systems integration services,
operations management services and post-deployment systems
support services.
22. Defendant Lockheed is a holding company with
subsidiaries which research, develop and produce aerospace
products, systems and services; design, manufacture and
integrate advanced technology products and services for the
U.S. Government and private industry; produce construction
aggregates and specialty chemical products; and manage
certain facilities for the Department of Energy.
23. On January 8, 1996, it was announced that
defendant Lockheed had agreed to acquire Loral's defense
electronics and systems integration businesses for
approximately $9.1 billion (the "Transaction"). The
Transaction essentially has three elements: first, each
shareholder of Loral will receive $38 in cash per share
through a tender offer set to commence by January 12, 1996;
second, Loral shareholders will receive, for each share, one
share of the newly-formed public company, to be called Loral
Space and Communications Corp. ("Loral Space"), which will
own Loral's present satellite and telecommunications
interests; and third, Lockheed will invest $344 million for
a 20% equity position in Loral Space.
24. Defendant Schwartz admits that the Company
has had no "serious discussions" regarding a combination
with any third parties. In fact, according to press
reports, at the same time it approved the Lockheed
transaction, the Loral Board also adopted a shareholder
rights plan to deter other potential suitors from making a
competing offer. In addition, the $38 per share offer
provides little premium to shareholders for their Loral
stock which closed on January 5, 1996, at $36 1/4 per share.
Also, the value of the Loral Space stock can only be
"estimated" at this time and its business according to the
Los Angeles Times has been "untested."
25. The Transaction is wrongful, unfair and
harmful to Loral's public stockholders, the Class members,
and represents an attempt by defendants to aggrandize their
personal and financial positions and interests and to enrich
themselves at the expense of and to the detriment of the
public shareholders of the Company. The Transaction will
deny plaintiff and other Class members their rights to share
proportionately in the true value of the Company's assets
and future growth in profits and earnings, while usurping
the same for the benefit of defendant Lockheed at an unfair
and inadequate price. According to the Dow Jones News Wire,
in conjunction with the Transaction, defendant Schwartz will
become chairman and CEO of Loral Space and will become Vice
Chairman of the Board of Lockheed. Defendant Lanza will
also join Lockheed's Board of Directors and serve as
Executive Vice President and Chief Operating Officer of
Lockheed.
CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTIES
26. Defendants other than defendant Lockheed,
acting in concert, have violated their fiduciary duties owed
to the public shareholders of Loral and put their own
personal interests and the interests of defendant Lockheed
ahead of the interests of the Loral public shareholders at
the expense of Loral's public shareholders.
27. The Defendant Directors failed to (1)
undertake an adequate evaluation of Loral's worth as a
potential merger/acquisition candidate; (2) take adequate
steps to enhance Loral's value and/or attractiveness as a
merger/acquisition candidate; (3) effectively expose Loral
to the marketplace in an effort to create an active and open
auction for Loral; or (4) act independently so that the
interests of public shareholders would be protected.
Instead, defendants have accepted a cash value for the
publicly held shares of defendant Loral without an
appropriate premium or recognition of the added value of
Loral that will result from it being wholly-owned by
defendant Lockheed, and have agreed to terms which will
impede maximization of shareholder value.
28. Furthermore, in contemplating and
implementing their plan to obtain immediate financial
rewards for themselves, the Defendant Directors have failed
to (1) adequately insure that no conflicts of interest
existed, and, instead, have resolved such conflicts in favor
of themselves and defendant Lockheed, rather than ensure
that all conflicts were resolved in the best interest of
Loral and its public shareholders; or (2) acted
independently or in any other way to ensure that the
interests of Loral's public shareholders will be protected.
29. Defendants have reached understandings among
themselves that they will not solicit a proposal or initiate
any discussions with any person or entity regarding any
offer or proposal for the acquisition of the business of
Loral by merger, asset sale, stock sale or otherwise, while
Loral is still a publicly-held company. While the Defendant
Directors of Loral should seek out other possible purchasers
of the assets of Loral or its stock in a manner designed to
obtain the highest possible price for Loral's shareholders,
or seek to enhance the value of Loral for all its current
shareholders, they have instead resolved to wrongfully
obtain the valuable assets of Loral for defendant Lockheed
at a bargain price, which under the circumstances here,
disproportionately benefits them. These understandings have
been reached in violation of the Defendant Directors'
fiduciary duties.
30. These tactics pursued by the defendants are,
and will continue to be, wrongful, unfair and harmful to
Loral's public shareholders, serve no legitimate business
purpose of Loral, and are an attempt by the defendants to
aggrandize their personal positions, interests and finances
at the expense of and to the detriment of the public
stockholders of Loral. These maneuvers by the defendants
will deny members of the Class their right to share in the
true value of Loral's valuable assets, future earnings and
profitable businesses to the same extent as they would as
Loral shareholders.
31. In contemplating, planning and/or doing the
foregoing specified acts and in pursuing and structuring the
Transaction, the defendants are not acting in good faith
toward plaintiff and the Class, and have breached, and are
breaching, their fiduciary duties to plaintiff and the
Class.
32. Because the Defendant Directors (and those
acting in concert with them) dominate and control the
business and corporate affairs of Loral and because they are
in possession of private corporate information concerning
Loral's businesses and future prospects, there exists an
imbalance and disparity of knowledge and economic power
between the defendants and the public shareholders of Loral
which makes it inherently unfair to Loral's public
shareholder. The Transaction will ensure that defendants
disproportionately benefit from the value and future
financial prospects of Loral, in contravention of
defendants' fiduciary duties to assure that Loral's
shareholders receive the highest value for their shares.
33. Defendant Lockheed has acted and is acting
with knowledge that the other defendants are in breach of
their fiduciary duties to Loral's public shareholders and
has intentionally, recklessly or negligently induced, aided
and abetted such breaches of fiduciary duties by the
directors of Loral.
34. By reason of the foregoing acts, practices
and course of conduct, the Defendant Directors have failed
to use due care and diligence in the exercise of their
fiduciary obligations toward Loral and its public
shareholders.
35. The acts complained of here above were
willful, malicious, and oppressive, in that the defendants,
and each of them, know that their actions as complained of
herein, involve improper and illegal practices, violations
of law and other acts completely alien to the duties of
officers and directors to carry out corporate affairs in a
just, honest, and equitable manner. By reasons of the
foregoing, the Class is entitled to exemplary damages
determined through a proper process to maximize shareholder
value.
36. As a result of the actions of the defendants,
plaintiff and the Class have been and will be damaged in
that they will not receive the fair value of Loral's assets
and business in exchange for their Loral shares, and have
been and will be prevented from obtaining a price for their
shares of Loral common stock determined through a proper
process to maximize shareholder value.
37. Unless enjoined by this Court, the Defendant
Directors will continue to breach their fiduciary duties
owed to plaintiff and the Class, and will exclude the Class
from receiving fair value for their proportionate share of
Loral's valuable assets and businesses, all to the
irreparable harm of the Class, as aforesaid.
38. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring that this action may be
maintained as a class action pursuant to CPLR 901 et seq.;
(b) Declaring that defendants' conduct is
unfair, unjust and inequitable to plaintiff and the other
members of the Class;
(c) Enjoining preliminarily and permanently
the defendants from taking any steps necessary to accomplish
or implement the proposed sale of defendant Loral to
defendant Lockheed at a price that is not fair and
equitable.
(d) Imposing a voting trust upon the shares
of Loral owned or controlled by defendants to restrain their
ability to use their voting power in connection with the
Transaction;
(e) Requiring defendants to compensate
plaintiff and the members of the Class for all losses and
damages suffered and to be suffered by them as a result of
the acts and transactions complained of herein, together
with prejudgment interest from the date of the wrongs to the
date of the judgment herein;
(f) Awarding plaintiff the costs and
disbursements of this action, including reasonable
attorneys', accountants', and experts' fees; and
(g) Granting such other and further relief
as may be just and proper.
Dated: New York, New York
January 9, 1996
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
Fred Taylor Isquith
270 Madison Avenue
New York, New York 10016
(212)545-4600
Attorneys for Plaintiff
Exhibit (c)(12)
KEVIN J. YOURMAN (147159)
JAMES E. TULLMAN (175008)
WEISS & YOURMAN
10940 Wilshire Blvd.
24th Floor
Los Angeles, CA 90024
(210) 208-2800
Attorneys for Plaintiffs
(Additional Counsel Appear on Signature)
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
ARTHUR GOLTZ and MURRAY ZUCKER, on ) Case No.
behalf of themselves and all others )
similarly situated, ) CLASS ACTION
)
) CLASS ACTION COMPLAINT
Plaintiffs, ) FOR BREACH OF FIDUCIARY
) DUTIES
vs. )
) Plaintiffs Demand
LORAL CORPORATION, BERNARD L. ) Trial by Jury
SCHWARTZ, FRANK C. LANZA, HOWARD )
GITTIS, ROBERT B. HODES, GERSHON )
KEKST, CHARLES LAZARUS, MALVIN A. )
RUDERMAN, E. DONALD SHAPIRO, ALLEN )
M. SHINN, THOMAS J. STANTON, JR., )
DANIEL YANKELOVICH, MICHAEL P. )
DEBLASIO, ROBERT V. LAPENTA, )
MICHAEL B. TARGOFF, )
)
Defendants
Plaintiffs, by their attorneys, allege upon
information and belief, except as to the allegations which
are alleged upon personal knowledge, as follows:
NATURE OF THE ACTION
1. This is a class action lawsuit on behalf of
the stockholders of Loral Corporation ("Loral" or the
"Company") who have been, and continue to be, deprived of
the opportunity to fully realize the benefits of their
investment in Loral as a result of defendants' insincere
attempt to put the Company up for auction or consider offers
by other companies to acquire the Company. Defendants'
conduct constitutes breach of defendants' fiduciary duties
to maximize shareholder value and an unlawful scheme and
attempt by defendants to entrench themselves in positions of
control at the expense of the company's shareholders.
PARTIES
2. Plaintiff Murray Zucker is the owner of
shares of Loral common stock and has been the owner of such
shares during the relevant time period.
3. Plaintiff Arthur Goltz is the owner of shares
of Loral common stock and has been the owner of such shares
during the relevant time period.
4. Defendant Loral is a leading supplier of
electronic surveillance systems, electronic warfare systems,
military equipment, microwave components, telecommunications
equipment, electronic components, aircraft navigation
systems, aircraft simulators and services to the U.S. and
allied defense departments. Loral has a work-force of
39,000 employees and an estimated revenue of 6.4 billion in
1995. Two of Loral's major offices and facilities are in
California, including one in Rancho Santa Margarita,
employing 1,100 people and one in Camarillo, California
which employs 75 people. Loral maintains its corporate
headquarters at 600 Third Avenue, New York, New York, 10016.
Loral stock trades over the New York Stock Exchange under
ticker symbol ("LOR").
5. Defendant Bernard L. Schwartz ("Schwartz") is
and was at all relevant times the Chief Executive Officer
and Chairman of the Board of Loral. Schwartz is the
beneficial owner of $3.7 million shares of Loral common
stock and has served as a director since 1972. Schwartz
will receive an $18 million dollar bonus for his efforts
when the buy-out with Lockheed is consummated.
6. Defendant Frank C. Lanza ("Lanza") is and was
at all relevant times the President and Chief Operating
Officer of Loral and has served as a director since 1981.
7. Defendants Howard Gittis, Robert B. Hodes,
Gershen Kakat, Charles Lazarus, Malvin A. Ruderman, E.
Donald Shapiro, Allen M. Shinn, Thomas J. Stanton, Jr., and
Daniel Yankelovich were at all relevant times directors of
Loral and owed fiduciary duties of care, loyalty and candor
to Loral's public shareholders.
8. Defendants Michael P. Deblasio, Robert V.
LaPenta and Michael B. Targoff were at all relevant times
officers of Loral and owed fiduciary duties of care, loyalty
and candor to Loral's public shareholders.
9. By reason of their corporate positions and
because of their ability to control the business and
internal affairs of Loral, the officer and director
defendants (collectively referred to herein as the
"Individual Defendants") owe Loral shareholders, including
plaintiffs and all others similarly situated, fiduciary
obligations of fidelity, trust, loyalty and due care.
Accordingly, said defendants were, and are required to use
their utmost ability to control and manage the Company in
furtherance of the best interests of the Company's
stockholders. In addition, each of the officer and director
defendants owes Loral shareholders the fiduciary duty to
exercise due care and diligence, as well as the highest
obligations of good faith and fair dealing. Furthermore,
each of the officer and director defendants owes to the
Company and its stockholders the fiduciary duty to assure
that all reasonable offers or overtures to purchase the
Company are conveyed to the full board of directors, to
entertain, encourage, evaluate and pursue and bona fide
offers or expressions of interest to purchase the Company's
outstanding stock or other merger transactions in a manner
that will maximize shareholder value.
10. Each defendant herein is used individually as
a conspirator and aider and abettor, as well as in his/her
capacity as an officer and/or director of the Company, and
the liability of each arises from the fact that he or she
has engaged in all or part of the unlawful acts, plans,
schemes, or transactions complained of herein.
CLASS ACTION ALLEGATIONS
11. This action seeks to enjoin the breach of
fiduciary duties owed to Plaintiffs and the Class by Loral
and the Individual Defendants in connection with a
prospective merger, acquisition, or other business
combination involving Loral. Plaintiffs also seek
appropriate relief to ensure that a merger, acquisition, or
other business combination or alternative transaction is not
foreclosed by Loral and the Individual Defendants, that the
Individual Defendants properly inform themselves with
respect to all such transactions, and that the Individual
Defendants take all necessary and appropriate action to
ensure that plaintiffs and the Class receive the maximum
value for their Loral securities in any sale or liquidation
of the Company.
12. Plaintiffs bring this case on their own
behalf and as a class action, pursuant to applicable rules
of the California Rules of Civil Procedure, on behalf of all
stockholders of the Company, or their successors in
interest, who ar similarly situated and who are or may be
deprived of the opportunity to maximize the value of their
Loral securities by the wrongful acts of the defendants
described herein (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation,
or other entity related to or affiliated with any of the
defendants.
13. This action is properly maintained as a class
action.
14. The class is so numerous that joinder of all
members is impracticable. The Company has over 4500
stockholders of record and has over 172 million shares
outstanding as of October 31, 1995.
15. Questions of law and fact common to the class
predominate over questions affecting any individual class
member. The common questions include, inter alia, whether:
a. defendants have breached the fiduciary
duties owed by them to plaintiffs and other members of the
Class by failing and refusing to attempt in good faith to
maximize shareholder value in connection with the sale of
Loral;
b. the individual defendants have acted to
entrench themselves in their office and deprive Loral public
shareholders of the maximum value of their holdings;
c. defendants have breached or aided and
abetted the breach of the fiduciary duties owed by them to
plaintiffs and other members of the Class;
d. defendants engaged in a plan and scheme
to thwart interested companies from participating in bidding
on Loral, and
e. plaintiffs and the other members of the
Class are being and will continue to be injured by the
wrongful conduct alleged herein, and, if so, the proper
remedy and/or measure of damages.
16. Plaintiffs are committed to prosecuting this
action and have retained competent counsel experienced in
litigation of this nature. Plaintiffs' claims are typical
of the claims of the other members of the Class, and
plaintiffs have the same interests as the other members of
the Class.
17. The class action is superior to any other
method available for the fair and efficient adjudication of
this controversy since it would be impractical and
undesirable for each of the members of the Class who has
suffered or will suffer damages to bring separate actions in
various parts of the country.
SUBSTANTIVE ALLEGATIONS
18. On January 8, 1996, the Loral Board of
Directors announced that Lockheed Martin ("Lockheed") agreed
to acquire a majority of Loral's assets. Lockheed will pay
$7 billion in cash on $38.00 for each Loral share through a
tender offer due to begin January 12, 1996. It will also
assume $2.1 billion in debt. Lockheed will consume Loral's
core defense electronics and systems integration businesses.
The remaining satellite and telecommunications business will
be reorganized into a new company called Loral Space and
Communications Corp., in which Lockheed is also buying a 20%
stake for $344 million. Loral shareholders will get $38.00
a share plus one share in Loral Space for every share of
Loral, equalling a total of $45.50 for each share owned.
19. The members of the Loral Board of Directors
possessed conflicts of interest which should have prevented
them from voting on the buy-out. Two of the members on the
Board discussed employment terms with Lockheed Martin and
will enjoy positions in Lockheed Martin after the merger.
Nevertheless, the Board determined that it was not necessary
to appoint a committee of independent directors or an
unaffiliated representative to act on behalf of the
shareholders of the Company for the purposes of negotiating
the terms of the Merger Agreement.
20. The scheme of Schwartz and Lanza to entrench
themselves in positions of power and prestige was
accomplished. According to a January 9, 1996 report in the
Los Angeles Times: "Both men will remain with Lockheed
after the merger. Schwartz will be a vice chairman of
Lockheed Martin and Lanza will be an executive vice
president of the corporation and chief operating officer of
its new tactical systems unit."
21. Furthermore, a January 9, 1996 New York Times
article reported: "One clear benefit of the acquisition is
that it will produce a fortune for Mr. Schwartz, who earned
$6.24 million in compensation last year. He owns stock that
is now worth about $160 million."
22. Finally, Bloombers News reported that: as
holder of 2% of Loral stock, Schwartz stands to make almost
$70 million from this merger.
23. On Thursday January 11, 1996, Loral set a 10
day window for any potential rival offer to the buy-out deal
with Lockheed. Such an attempt to attract outside bidders
is facile and does not adequately fulfill defendants'
fiduciary duties to shareholders in light of the fact that
talks with Lockheed Martin had been conducted for over 4
months. No doubt exists that defendants' 10-day window for
potential offers was merely a vacuous attempt to convince
Loral shareholders that defendants were acting in the
shareholders' best interests. Thus, any company which was
actually interested in making an offer for Loral would need
much more time than 10 days to adequately investigate and
analyze the company.
24. Furthermore, Loral announced that its
stockholder rights plan, which spells out investor rights
during a takeover, will take effect on January 22, 1996.
The plan contains a "poison pill" defense against hostile
takeover.
25. The Poison Pill, a typical anti-takeover
provision, would allow Loral stockholders to buy stock at a
50 percent discount if another company tries to acquire at
least 20 percent of Loral. The maneuver would dilute the
holdings of the Company attempting the takeover, making the
buy-out too expensive.
26. Loral said it has amended the stockholders'
rights plan to exempt Lockheed Martin, thus disabling the
right of shareholders to effectively object to the Lockheed
Martin buy-out.
27. Furthermore, the Poison Pill has the effect
of precluding the successful completion of any other offer
for Loral, no matter how attractive because, under the
Poison Pill, the Loral Board of Directors must approve any
offer. Thus, the Poison Pill enacted by defendants in
effect eliminated the likelihood of any bona fide offer to
purchase the Company for adequate consideration, thereby
denying the Company's shareholders an opportunity to make
their own choice as to the fate of the Company that they
own.
28. The Poison Pill is just one of the many
tactics that the defendants have used to maintain control of
the Company, and to deny shareholders the opportunity to
maximize returns by making informed investment decisions.
29. Moreover, the agreement between Loral and
Lockheed Martin provides, among other things, that in the
event that Loral terminates the agreement, it would be
required to pay Lockheed Martin a fee (or penalty) of $175
million dollars and as much as $45 million in additional
expenses. Thus, in order for another company to effectively
bid for Loral, it would have to pay a price of $220 million
above the value of the Company, effectively ruling out any
serious chance for a fair and free auction for Loral.
30. On January 12, 1996 The Orlando Sentinel
reported that: "Loral's action Thursday came in the wake of
speculation that another aerospace giant -- McDonnell
Douglas Corp. of St. Louis -- may be considering a counter-
offer for Loral."
31. By failing to entertain a meaningful public
auction of Loral as well as thwarting outside buyers'
ability to bid on Loral, the defendants were acting to the
detriment of the best interests of the Company's public
shareholders.
CAUSE OF ACTION AGAINST DEFENDANTS
32. By the acts, transactions and courses of
conduct alleged herein, defendants, individually and as part
of a common plan and scheme or in breach of their fiduciary
duties to plaintiffs and the other members of the Class, are
attempting unfairly to deprive plaintiffs and other members
of the Class of the true value of their investment in Loral.
33. Defendants owe fundamental fiduciary
obligations to the Company's shareholders to take all
necessary and appropriate steps to maximize the value of
their shares, including considering, encouraging and
accepting outside bids that would maximize the value of the
stock owners' holdings in Loral. In addition, the
Individual Defendants have the responsibility to act
independently so that the interests of Loral's public
stockholders will be protected. Defendants are obliged to
seriously consider any bona fide offers for the Company and
to conduct fair and active bidding procedures or other
mechanisms for checking the market to assure that the
highest price is achieved. Furthermore, the Individual
Defendants must adequately ensure that no conflict of
interest exists between their own interests and their
fiduciary obligations to maximize shareholder value or, if
such conflicts exist, to ensure that all such conflicts will
be resolved in the best interests of the Company's public
stockholders.
34. By failing to entertain a meaningful public
auction of Loral, as well as thwarting outside companies'
ability to bid on Loral, the Individual Defendants are
acting to entrench themselves in their offices and positions
and maintain their substantial salaries and perquisites, all
at the expense and to the detriment of the best interests of
the Company's public shareholders.
35. By the acts, transactions and courses of
conduct alleged herein, the Individual Defendants,
individually and as part of a common plan and scheme in
breach of their fiduciary duties and obligations, are
attempting to unfairly deprive plaintiffs and the other
members of the Class of the premiums they could realize in
an acquisition transaction and to ensure continuance of
their positions as directors and officers. The Individual
Defendants have been engaged in a wrongful effort to
entrench themselves in their offices and positions of
control and prevent the acquisition of Loral except on terms
which would further their own personal interests.
36. By virtue of the acts and conduct alleged
herein, the Individual Defendants, who control the actions
of the Company, have carried out a preconceived plan and
scheme to place their own personal interests ahead of the
interests of the shareholders of Loral and, thereby,
entrench themselves in their jobs and emoluments of office
within the Company.
37. The Individual Defendants have breached their
fiduciary and other common law duties owed to plaintiffs and
other members of the Class in that they have not and are not
exercising independent business judgment and have acted and
are acting to the detriment of the Class in order to benefit
themselves and Loral's senior management.
38. As a result of defendants' actions,
plaintiffs and the other members of the Class have been and
will be damaged in that they have not and will not receive
their fair proportion of the value of Loral's assets and
businesses and/or have been and will be prevented from
obtaining a fair and adequate price for their shares of
Loral's common stock.
39. Plaintiffs seek preliminary and permanent
injunctive relief and declaratory relief preventing
defendants from inequitably and unlawfully depriving
plaintiffs and the Class of their rights to realize a full
and fair value for their stock at a substantial premium over
the market price and to compel defendants to carry out their
fiduciary duties to maximize shareholder value in selling
Loral.
40. Only through the exercise of this Court's
equitable powers can plaintiffs be fully protected from the
immediate and irreparable injury which the defendants'
action threaten to inflict.
41. Unless enjoined by the Court, defendants will
continue to breach their fiduciary duties owed to plaintiffs
and the members of the Class, and/or aid and abet and
participate in such breaches of duty, and will prevent the
sale of Loral at a substantial premium, all to the
irreparable harm of plaintiffs and the other members of the
Class.
42. Plaintiffs and the Class have no adequate
remedy at law.
WHEREFORE, plaintiffs demand judgment as follows:
(a) Declaring this to be a proper class
action and certifying plaintiffs as class representatives;
(b) Ordering the Individual Defendants to
carry out their fiduciary duties to plaintiffs and the other
members of the Class by announcing their intention to:
(i) cooperate fully with any entity or
person, having a bona fide interest in proposing any
transaction that would maximize shareholder value, including
but not limited to, a buy-out or takeover of the Company'
(ii) immediately undertake an
appropriate evaluation of Loral's worth as a
merger/acquisition candidate;
(iii) take all appropriate steps to
enhance Loral's value and attractiveness as a
merger/acquisition candidate;
(iv) take all appropriate steps to
effectively expose Loral to the marketplace in an effort to
create an active auction of the Company;
(v) act independently so that the
interests of the Company's public shareholders will be
protected; and
(vi) adequately ensure that no
conflicts of interest exist between the Individual
Defendants' own interest and their fiduciary obligation to
maximize shareholder value or, in the event such conflicts
exist, to ensure that all conflicts of interest are resolved
in the best interests of the public shareholders of Loral;
(c) Enjoining the use of the Poison Pill and
imposition of the $175 million penalty fee;
(d) Enjoining the complained of transaction
or any related transaction;
(e) Appointing an independent committee of
unaffiliated directors to consider the Lockheed Martin
proposal or other possible business combinations or
alternative transactions.
(f) Ordering the Individual Defendants
jointly and severally to account to plaintiffs and the Class
for all damages suffered and to be suffered by them as a
result of the acts and transaction alleged herein;
(g) Declaring that Loral aided and abetted
and substantially participated in the individual defendants'
breach of fiduciary duties;
(h) Awarding plaintiffs the cost and
disbursements of this action, including a reasonable
allowance for plaintiffs' attorneys' and experts' fees; and
(i) Granting such other and further relief
as may be just and proper.
JURY DEMAND
Plaintiffs demand a trial by jury of all issues so
triable.
Dated: January 21, 1996
KEVIN J. YOURMAN (147159)
JAMES E. TULLMAN (175008)
WEISS & YOURMAN
Kevin J. Yourman
10940 Wilshire Blvd.
24th Floor
Los Angeles, CA 90024
(310) 208-2800
EDWARD P. DIETRICH
MICHAEL D. BRAUN
STULL STULL & BRODY
10940 Wilshire Blvd.
23rd Floor
Los Angeles, CA 90024
(310) 209-2468
Counsel for Plaintiffs