IN THE COTJRT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
HUDSON CITY PROPERTIES, INC. (F/K/A U-DO-IT pi
HOME DECORATING CENTER, INC.),
Plaintiflr,
-against-
JOE W. BLAGG, JAMES D. BURNETT, WILLIAM M. :
CLAYPOIOL, III, DANIEL A. COTTER, JAY B.
FEXNSOD, WILLIAM M. HALTERMAN, WILLIAM H. ; COMPLAINT
HOOD, JAMES D. HOWENSTEIN, DONALD J. HOYE, : -
JERRALD T. KABELIN, PETER G. KELLY, ROBERT :
J. LADNER, PAUL E. PENT.Z, GEORGE V. SHEFFER, :
DENNIS A. SWANSON, JOHN B. WAKE, JR., JOHN :
M. WEST, JR., BARBARA El. WILKERSON and :
TRUSERV CORPORATION,
Defendants.
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Plaintiff alleges upon information and belief, except as to paragraph 10 which plaintiff
alleges upon knowledge, as follows:
INTRODUCTION
1. Plaintiff brings Count I of this Complaint derivatively in the right and for the
of TruServ Corporation ("TruServ" or the "Company") against its directors, the individual
defendants named above. Plamtiff brings Count II and Count III of this Complaint on behalf of itself
and all other similarly situated owners of shares of TruServ.
2. TruServ's diresctors have been guilty of a sustained and systematic failure to
oversight of the Company's accounting and business practices, thereby causing or countenancing
grossly improper and misleading economic reporting and causing the Company to recognize 1999
fiscal-year losses in excess of $13 1 million. When the losses were finally discovered in January
2000, the individual defendants further breached their fiduciary duties by causing the Company to
SNIPPETS:
Plaintiff alleges upon information and belief, except as to paragraph 10 which plaintiff
of TruServ Corporation against its directors,
defendants named above.
and all other similarly situated owners of shares of TruServ.
oversight of the Company's accounting and business practices,
breach its contract with its shareholders/ members, as set forth fully herein, by suspending
to them of their annual patronage dividend to which they are contractually entitled and by
lumber/building materials and related merchandise in the United States.
from the merger of Cotter & Company and ServiStar Coast to Coast Corporation
During the months preceding the Merger, the directors and officers of Cotter, SCC
approve the Merger and increase their investment in the combined company.
m.essage from management to the members was clear: if you approve the Merger,
The Company was reeling from a major accounting scandal and still had not gotten
the fiscal year (ended December 31, 1999, compared to a net margin gain of $20
l The $13 1 million margin loss cut into the members' equity and, as a result, the value
l For the tirst time in at least 22 years, and in violation of its agreement with the
retail names, forcing more than 3,000 hardware stores owners to abandon the ServiStar and
and Plan of Merger between Cotter and SCC, defendants' promotional materials, defendants'
TruServ in the amount of $60,254.67 is represented by 60 shares of Class A Common Stock, 266
Joe W. Blagg is chairman of the TruServ Board of Directors.
distribution, automation, retail support services.
cooperatives even stronger.
Company would have enough cash to pay the annual patronage dividend and would indeed continue
direct result of defendants' sustained and systematic failure to exercise oversight of
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