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1
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LETTER OPINION
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EXTRACTED KEY WORDS
FINANCING PLAINTIFFS DAVCO PROJECTIONS FRIENDCO BUYOUT RESTAURANTS MOTION MERGER TRANSACTION MATERIALS RELEVANCE CONTEND INCOME ARGUE CAPITAL COSTS OBJECTION MERITS SHAREHOLDERS CONTROVERSY MANAGEMENT DISCOVERY PURPOSES REQUEST STORE-BY-STORE REDUNDANT COMPEL PRODUCTION BANK |
C OURT OF C HANCERY
OF THE
S TATE OF D ELAWARE
June 2,200O
Camella P. Keener Jon 1~. Abramczyk
Rosenthal, Monhait, Gross Morris, Nichols, Arsht
& Goddess, P.A. & Tunnel1
P.O. Box 1070 P.O. Box 1347
Wilmington, DE 19899 Wilmington, DE 19899
Anne C. Foster
Richards, Layton & Finger
P.O. Box 551
Wilmington, DE 19801
Re: In r'e DavCo Restaurants, Inc. Shareholders Litig. ,",' .:l
Consolidated Civil Action No. 15912 -i c.2
Dear Counsel:
Defendant DavCo Restaurants, Inc. ("DavCo") operates over 200 fast-
food restaurants throughout the mid-Atlantic region. Defendant Citicorp
Venture Capital, Ltd. ("CVC") controlled about 40% of DavCo's stock
before the management buyout in controversy and 67% of the post-buyout
equity
On September 5, 1997, DavCo announced that certain of its executive
ofticers, in conjunction with CVC, had proposed a leveraged buyout
transaction to DavCo's board of directors. Plaintiffs tiled suit in September
1997, shortly after announcement of the transaction, primarily claiming that
the i-nterested defendants created materially false buyout projections (the
"Buyout Projections") in order to support a below fair value transaction.
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2
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RESPONSE OF DEFENDANTS TO PLAINTIFFS MOTION TO COMPEL
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EXTRACTED KEY WORDS
DAVCO MERGER FRIENDCO RESTAURANTS FINANCING PROJECTIONS REQUEST MOTION DEFENDANTS DISCOVERY ASSERTION BUYOUT PROJECTIONS EVIDENCE SUPPORT INCOME PRODUCTION COURT RESPONSE CONSOL POST-MERGER COST CASH CONSUMMATION COMPEL DAVCO STOCKHOLDERS OPERATING REASONS POSSESSION SLIP |
IN THIE COURT OF CHANCERY OF THE STATE OF DELAWARE
1N AND FQRNTEW:CA$TLj@ COUNTY
IN RE DAVCO RESTAURANTS, $J$. ) Cons&dated
S H A R E H O L D E R S L I T I G A T I O N !,I ) Ci?i?ActionNo. 15912
RESPONSE OF DEFENDANTS DAVCO RlESTAlJRANTS, INC.,
EDWARD H. CHAMBERS, GINO MARCHETTI,
BARTON Jr. WINOKUR, JAMES D. FARLEY AND HAROLD 0. ROSSER
TO PLAINTIFFS' MOTION TO COMPEL
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Defendants IDavCo Restaurants, Inc. ("DavCo"), Edward II. Chambers, Gino Marchetti,
Barton .I. Winokur, James D. Farley and Harold 0. Rosser (the "DavCo Defendants"), through their
attorneys, hereby re:spond to Plaintiffs' Motion To Compel P.roduction of Documents as follows:
1. Plaintiffs filed this litigation over two years ago, seeking to enjoin a proposed
management buyout of the DavCo minority shareholders for ,$20 per share in cash (the "Merger")
After consolidation of the three actions filed based on the same set of alleged facts, plaintiffs
an amended class complaint on March 4, 1998 (the "Complaint") and moved for a preliminary
injunction to prevent the closing of the Merger. The Court permitted plaintiffs to proceed on an
expedited basis solely on the issue of whether the proxy statement sent to the DavCo stockholders
adequately disclosed all material information, Nevertheless, plaintiffs took discovery prior to the
hearing on the preliminary injunction on many of their substantive claims, including those claims
relating to the fairness of the price to be paid stockholders pursuant to the Merger
2. Argument on plaintiffs' motion for preliminary injunction was held on March 19,
1998 and at that hearing, this Court denied plaintiffs' motion. The shareholders of DavCo voted on
and approved the Merger on March 24, 1998. The Merger was consummated on April 1, 1998.
3. Over the next two years, plaintiffs proceeded sporadically with discovery. As
of that discovery defendants produced to plaintiffs thousands of pages of documents evidencing the
RLFl-2115956-2 -l-
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