Full opinion text
FINDINGS OF FACT AND CONCLUSIONS OF LAW MIHM, District Judge. This action was previously consolidated with Jefferson Trust and Savings Bank of Peoria v. Simmons, et al (83-1101) and Donovan v. Simmons, et al (83-1115). Stipulated settlement agreements were entered into in both of those actions and were approved by the Court. The Court granted Plaintiffs’ motion for separate trials on the issues of liability and appropriate relief. The issues of liability were tried before the Court on February 11-15, 1985. During the trial of this case, the Court granted Motions for Judgment of Dismissal pursuant to Rule 41(b) of the Federal Rules of Civil Procedure on the claims brought pursuant to sections 404(a)(1)(C) and 405(c) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1104(a)(1)(C) and 1105(c). As to the remainder of the claims, the Court declined to render judgment until the close of all the evidence. The Court makes the following findings of fact and conclusions of law. FINDINGS OF FACT The Parties, the Principals, and the Trusts 1. Plaintiffs' are six former or current employees of the National Lock Division (“National Lock”) of Keystone Consolidated Industries, Inc. (“Keystone” or “KCÍ”). When used in this document, “KCI,” “Keystone,” and “Keystone Consolidated Industries,” are all abbreviations for Keystone Consolidated Industries, Inc. 2. Each Plaintiff is a participant in the National Lock Division Pension Plan for Hourly Employees (“Pension Plan”), which has been maintained by Keystone during the period relevant to these proceedings. 3. Harold Simmons joined the Keystone Consolidated Industries, Inc. board of directors in February, 1982. 4. In 1964 Harold Simmons formed a trust for the benefit of his children and grandchildren (“the Simmons Trust”). Harold Simmons is the sole trustee of the Simmons Trust. 5. Since 1982, the only substantial asset of the Simmons Trust is approximately 99% of the stock of Contran Corporation (“Contran”). 6. At all times relevant herein, Contran maintained two employee pension benefit plans: the Retirement Trust for Employees of Contran Corporation and the Profit Sharing Trust for Employees of Contran Corporation (“the Contran Trusts”). 7. An original Schedule 13D concerning the stock of National City Lines, Inc. (“National”), signed by Harold Simmons and Michael Snetzer, was filed with the U.S. Securities and Exchange Commission (“SEC”) on April 7,1980 on behalf of NOA, Inc., Valhi, Inc., Contran, Flight Proficiency and Harold Simmons. 8. On April 10, 1980, Harold Simmons and Glenn Simmons, Harold Simmons’ brother, met with representatives of National to discuss the possibility of Harold Simmons’ nomination to the Boards of Directors of National and T.I.M.E.-DC (“TIME-DC”), which was then a subsidiary of National. In May 1980, Harold Simmons became a director of both National and TIME-DC. Within seven months, Glenn Simmons and Michael Snetzer also became directors. 9. Throughout 1980, certain subsidiaries of Contran obtained approximately 91% of the outstanding common stock of National through open market purchases and through tender offer. By the end of 1980, Harold Simmons was elected to the position of President and Chief Executive Officer of National and Chairman of the Boards of TIME-DC and National. 10. In December 1980, Harold Simmons was elected a director and Chairman of the Board of NLI Corp. (“NLI”), a wholly-owned subsidiary of TIME-DC; Glenn Simmons was elected a director and President of NLI; and Michael Snetzer was elected a director, Vice President and Treasurer of NLI. 11. On March 16, 1981, at a special meeting of the Executive Committee of the TIME-DC Board of Directors, attended only by Harold Simmons, Glenn Simmons and Hugh C. Shurtleff, the Committee accepted the resignation of the TIME-DC Retirement Committee and the Trustees of the TIME-DC Pension Trust (“TIME-DC Trust”) and appointed Harold Simmons, Glenn Simmons and Michael Snetzer to the resulting vacancies. 12. On May 5, 1981, National purchased all of the issued and outstanding stock of Gibson Products of Shreveport, Inc. (“Gibson”). On the same day, Gibson combined its two employee benefit plans, thereby forming the Profit Sharing Plan and Trust for Employees of Gibson Products of Shreveport, Inc. (“Gibson Trust”). Harold Simmons, Glenn Simmons and A1 Knutson were appointed to administer the Gibson Trust. 13. On September 8, 1981, National announced its intention to make a tender offer to purchase all outstanding shares of LLC Corporation (“LLC”). It also filed suit against LLC in that regard. 14. On September 14, 1981, National made a cash offer to purchase any and all outstanding shares of LLC’s common stock. 15. On October 30,1981, an LLC subsidiary filed a petition for injunctive relief against National, Contran, Harold Simmons, Michael Snetzer and Glenn Simmons, regarding National’s tender offer. 16. On November 10, 1981, National, Harold Simmons and other individuals announced that they were soliciting proxies for a slate of directors in opposition to the nominees of LLC’s Board of Directors for an election to be held November 17, 1981. 17. On November 16, 1981, LLC filed suit against National, Harold Simmons and Contran, seeking to. enjoin them from voting any proxies received by them in their proxy contest. 18. By November 17, 1981, Harold Simmons and persons associated with him held six seats on LLC’s 15-member Board of Directors. 19. By November 23, 1981, Contran was the beneficial owner of approximately 43% of LLC’s outstanding shares of common stock. 20. In October 1982, Michael Snetzer became Chairman of the Board of LLC. Effective January 18, 1983, Harold Simmons replaced him. Snetzer remained as a director. 21. Since at least September 1981, Harold Simmons has been the sole trustee of the Simmons Trust; a director and the President of Contran; Chief Executive Officer, Chairman of the Board and a director of National; director of TIME-DC; a Trustee of the Contran Trusts; the President and director of NOA, a subsidiary of Contran; a Trustee of the TIME-DC Trust; and a Trustee (until March 24, 1984) of the Gibson Trust. 22. At all relevant times herein, Harold Simmons has frequently engaged in a practice of seeking to take control of companies through stock purchases or other means. Harold Simmons involves himself, his companies and trusts over which he exercises investment authority in corporate control contests. 23. Glenn Simmons is the brother of Harold Simmons. Since at least September 1981, Glenn Simmons has been Vice President and a director of Contran; President and director of National; Vice President and director of NOA; a director of TIME-DC; a Trustee of the Contran Trusts; a Trustee of the TIME-DC Trust; and a Trustee (until March 24, 1984) of the Gibson Trust. 24. Since at least September 1981, Michael Snetzer has been a Vice President, Treasurer and director of Contran; Financial Vice President and Treasurer of National; a director of TIME-DC; and a Trustee of the TIME-DC Trust. 25. At all times relevant herein, Harold Simmons has been the official with responsibility for setting investment policy for Contran; National; NOA; NLI Corporation, a National subsidiary; and Keycon Insurance, Ltd., a Keystone subsidiary (collectively “the Simmons Companies”). He also set the investment policy for and exercised discretionary control over the assets of TIME-DC, Contran and Gibson Trusts. Harold Simmons did not have investment authority for LLC and Keystone. 26. An original schedule 13D concerning the common stock of Keystone, signed by Harold Simmons and Michael Snetzer, was filed on November 16, 1981, on behalf of National, NOA, Southwest Louisiana, Dixie Rice, Contran, Contran Holding Company, TIME-DC Trust, the Contran Trusts and Harold Simmons, individually. This schedule 13D and amendments thereto reflect that between September 14, 1981 and August 31, 1982, NLI was added to the list of those that had purchased Keystone stock. 27. Harold Simmons and Michael Snetzer announced in November 1981 that National might attempt to acquire control of Keystone by purchasing additional shares, and that National might seek to obtain possible majority representation on Keystone’s Board of Directors. Subsequently, Harold Simmons and Michael Snetzer announced that National may be deemed to be the beneficial owner of approximately 54.1% of the outstanding shares of Keystone common stock. As of September 1982 National beneficially owned or controlled more than 50% of the outstanding voting securities of Keystone. 28. In November 1981 Harold Simmons and Michael Snetzer reported in Amendment No. 2 to the Keystone 13D that NLI’s purchases of Keystone's shares were to be funded by a credit agreement with Mercantile National Bank at Dallas (“Mercantile”). 29. On February 25, 1982, at a special meeting of Keystone’s stockholders, Harold Simmons, Glenn Simmons and Snetzer were elected directors of Keystone; Glenn Simmons was elected President of Keystone; and Snetzer was appointed to serve on Keystone’s Audit and Executive Committees. 30. At all times relevant herein, the principal executive offices of Contran, National, NOA, NLI, Dixie Rice Agricultural Corp., and Southwest Louisiana Land Company were located at 4835 LBJ Freeway, Suite 600, Dallas, Texas 75234. 31. At all times relevant herein, the business address of the Contran, Gibson and TIME-DC Trusts has been 4835 LBJ Freeway, Suite 600, Dallas, Texas. 32. The principal executive offices of Keystone were moved from Peoria, Illinois to 4835 LBJ Freeway, Suite 600, Dallas, Texas on or about June 1, 1982. 33. The assets of several of Keystone’s employee pension benefit plans, including those of the Pension Plan, are held as part of the Keystone Master Pension Trust (“KMPT”), and have been so held at all times relevant herein. 34. The KMPT was established by an agreement dated May 1,1977 between Keystone and the Northern Trust Company of Chicago, Illinois, which was named as the trustee under the agreement. It was signed on behalf of Keystone by Alex Galbraith. This agreement provides for a Corporate Committee to be appointed by the Keystone Board of Directors. The committee, inter alia, is the named fiduciary for purposes of ERISA and establishes investment policy. Under the agreement, the Northern Trust Company was to hold the trust fund as a single, co-mingled fund, but for bookkeeping purposes, was to maintain an account which reflected the interest of each plan with assets in the trust fund. 35. Keystone established the Keystone Master Deferred Incentive Trust (“KDIT”) to hold the assets of the Keystone Deferred Incentive Plans. The KDIT was established by an agreement dated May 1, 1977 between Keystone and the Northern Trust Company of Chicago, Illinois, which was named as trustee under the agreement. This agreement was signed on behalf of Keystone by Alex Galbraith. This agreement provided for the appointment of a Corporate Committee by the Keystone Board of Directors. The committee, inter alia, is the named fiduciary for purposes of ERISA and establishes investment policy. 36. Since 1980, the Jefferson Trust and Savings Bank of Peoria (“Jefferson Bank”) has served as successor trustee of KDIT. 37. Alex Galbraith became associated with KCI in 1972, almost ten years before Harold Simmons’ involvement with the Company. Galbraith served as chief financial officer for KCI until March of 1984 when he became chief officer for Keycon Industries, Inc. 38. John Sommer began his career with KCI in 1935 and retired in 1974 as president. Since 1974 his exclusive relationship with KCI has been as a member of the board of directors and of the Corporate Committee. 39. Galbraith first became associated with the Corporate Committee in 1976 when he was asked to analyze the investment results of the investment managers retained by the Committee and to recommend changes in the investment managers. 40. In 1977 Alex Galbraith and John Sommer were appointed by the Keystone Board of Directors to the Corporate Committee, and the Board adopted resolutions designating the Corporate Committee as the fiduciary responsible for planned investments for the plans within the KDIT and KMPT. Galbraith and Sommer have served on the Corporate Committee continuously since that time. 41. Galbraith is a vested participant in employee benefit plans whose assets are held by the Keystone Deferred Incentive Trust and the Keystone Master Pension Trust. Galbraith holds the largest interest of any Keystone employee in the Keystone Deferred Incentive Plan. 42. Galbraith does not now have and never has had an association or affiliation of any sort with any of the following entities: Contran, Dixie Rice, National City Lines, LLC, NO A, Southwest Louisiana Land Company, Gibson Products, NLI, T.I. M.E.-D.C., and Amalgamated Sugar. He has never had any association with any Simmons’ affiliated trust or corporate entity except KCI, Keycon Insurance, a KCI subsidiary, and now Keycon Industries, Inc. 43. Alex Galbraith moved from Illinois to Dallas, Texas in June 1982. 44. Sommer receives no compensation for his activity as a member of the Corporate Committee and receives a total annual compensation of $7,500 as a member of the board of directors. That money does not constitute a significant portion of his current income. 45. Sommer is a beneficiary of plans whose assets are held and invested as part of the Keystone Master Pension Trust. 46. Sommer’s only involvement with Harold Simmons or any of his affiliated entities has been through his concurrent membership with Simmons on the Corporate Committee and, for a period, on the Board of Directors of KCI. Appointment of Harold Simmons to the Corporate Committee and his Assumption of Management Authority 47. Several additional members were added to the Corporate Committee subsequent to May 1, 1977. As of February 25, 1982 the Corporate Committee had seven members. The number remained at seven until the reconstitution of the Committee on April 22, 1982. 48. Keystone’s operations had experienced severe losses in 1981 and early 1982, and the employee benefit plans within the Keystone Master Pension Trust had substantial unfunded liabilities. 49. The contribution obligations of Keystone Consolidated Industries to the KMPT for the year ended June 30, 1982, as reflected on the Forms 5500, was approximately $11,400,000. 50. The aggregate future contribution obligations of Keystone Consolidated Industries on the plans whose assets were held by the KMPT as reflected in the 1982 annual report were approximately $129 million for vested benefits and approximately $11 million for nonvested benefits, constituting an aggregate obligation of approximately $140 million. 51. When the Corporate Committee met on February 24, 1982, Alex Galbraith reported to the Committee that he had conferred by phone with all money managers, and that all seemed to have a good understanding of the market situation. Galbraith stated that he did not recommend the Committee make any changes at that time. The Committee agreed with Galbraith’s recommendations and decided to reevaluate the situation when investment results were reported at the March and April meetings of the Committee. 52. When the Corporate Committee met on April 21, 1982, Galbraith reported that Mr. Brokaw seemed to be less in control of the investments of Brokaw Capital Management (the KMPT and KDIT equity manager) than he had been in prior, more successful years. 53. The record reflects that the Corporate Committee met regularly up until April 22, 1982. Written minutes of those meetings were kept by the designated Secretary to the Committee. At the meetings, the Committee, inter alia, reviewed and discussed written summaries of the performance of the various investment managers retained by the Committee and established investment guidelines for those managers. 54. When the Keystone Board of Directors met on April 22, 1982, in response to advice from Glenn Simmons, the Board adopted a resolution authorizing and directing the officers of Keystone to execute documents necessary to amend, restate and continue the plans and trusts. The Board also adopted a resolution terminating previous appointments to the Corporate Committee, appointing Harold Simmons to be Chairman, and reappointing Alex Galbraith and John Sommer as members of the Corporate Committee; appointing Warren Reynolds as a non-voting member and the Secretary to the Committee; authorizing the Committee to continue to employ, supervise and remove investment managers, investment trustees or insurance companies as required from time to time and to perform such other duties as authorized in the pension plans included under the Master Pension Trust Agreement; and ratifying and confirming all prior actions of the Committee with regard to investments of Trust Funds and appointments or changes in investment managers. All of the directors present, including Glenn Simmons and Michael Snetzer, voted in favor of the resolution. 55. Two directors of KCI, J. Walter Tucker and Stanley Vermeil, nominated Harold Simmons to fill the remaining seat on the Corporate Committee. Tucker and Vermeil were independent of the Simmons interests. 56. On April 22, 1982 Glenn Simmons and Snetzer knew of and were familiar with Harold Simmons’ principals of fundamental securities analysis. They were aware of the high degree of skill that Harold Simmons had shown in applying his investment method to the portfolios of employee benefit plans. They were aware that Harold Simmons was successful in both managing the downside risk of the plans and achieving long term gains for the plans. 57. Glenn Simmons and Snetzer were not at any time members of the Corporate Committee. They were not at any time investment managers for the KMPT. 58. At the time Harold Simmons was named to the Corporate Committee and Galbraith and Sommer were reappointed to the Corporate Committee in April of 1982, KCI had no reason to doubt the competence, integrity or responsibility of any of these men. 59. In late April or early May of 1982, Harold Simmons approached Alex ■ Galbraith and raised the possibility that Harold Simmons be permitted to make initial investment decisions on behalf of the Corporate Committee. 60. Galbraith sought clarification from Northern Trust Company (the Trustee for the plans at the time) as to the Corporate Committee’s authority to delegate initial investment decisions to Harold Simmons and was advised that the Corporate Committee was empowered to assume full management of all pension funds under the trust agreement. Galbraith received this information on June 8, 1982. 61. Galbraith did not check to see if the KMPT trust documents required that the delegation of investment authority to Harold Simmons be in writing. 62. Prior to October 28, 1982, the KMPT Trust Agreement did not address any administrative aspect of the internal functioning of the Corporate Committee. The KMPT trust document did not provide that an oral delegation of investment authority could be made by the Corporate Committee as a body to any of its members individually. In fact, there was no provision in the trust agreement prohibiting one Corporate Committee member from assuming such responsibility. 63. Prior to the Fall of 1981, Galbraith had never heard of Harold Simmons. He first learned of Simmons’ involvement with KCI when he was told by the Chief Executive Officer of KCI of a Schedule 13D filing indicating that Simmons had increased his stock ownership in KCI to over five percent (5%). 64. Prior to delegation of initial investment authority to Harold Simmons, Alex Galbraith formed an opinion of Harold Simmons’ ability on the basis of statements made to Galbraith by a bank officer that Harold Simmons checked out fine and had the reputation of being an astute investor; Galbraith’s first-hand exposure to Harold Simmons during the period since the fall of 1981 when the Simmons’ companies became significant investors in KCI; a statement from Michael Snetzer that Harold Simmons successfully managed the investment of certain Contran trusts with a rate of return of 60 to 70 percent per year over the last several years; and confirmation by Glenn Simmons of that investment return. 65. In May and/or early June of 1982 Galbraith spoke with Sommer regarding Harold Simmons’ proposal that he be given responsibility to manage investment of the plan assets. They discussed at that time Galbraith’s knowledge of Harold Simmons. 66. Sometime after June 8, 1982, Messrs. Sommer and Galbraith both engaged in a telephone conversation with Harold Simmons in which they indicated to him that they had reviewed his request and had determined that it was sensible and a good idea that he should assume initial investment responsibility. 67. Galbraith assumed de facto responsibility for administrative duties of the Corporate Committee. 68. Glenn Simmons, Snetzer and Keystone did not object to Harold Simmons’ taking over management of the assets of the KMPT and KDIT. 69. On June 25, 1982, the Corporate Committee terminated all investment management agreements. 70. The fees paid to outside investment managers had been approximately $350,000 per year up until that time. Bringing the investment management functions “in house” relieved the trust funds of this expense. 71. In part, allocation of primary investment responsibility to Harold Simmons was intended to benefit the KMPT by increasing its rate of return on investments. 72. In a letter dated June 25, 1982, Galbraith informed Robert Grimshaw of Northern Trust Company of recent actions which had taken place with regard to the KMPT including the change in the composition of the Corporate Committee and the removal of the KMPT’s investment managers. 73. Galbraith did not inform Grimshaw that the Corporate Committee had delegated its investment authority to Harold Simmons. 74. Prior to Harold Simmons’ assumption of investment authority, members of the Corporate Committee had received only monthly reports concerning the investment activities of the Trust and those were often not received until approximately forty-five days after the close of each month. After Harold Simmons assumed investment responsibility for the KMPT, the other Corporate Committee members received more frequent and more detailed reports than they had previously received. These reports included information on the KMPT’s portfolio composition and liquidity needs. 75. Galbraith received current daily trading reports indicating the securities that had been bought or sold and the prices with respect thereto. 76. Galbraith read the reports upon receipt. If purchases of securities with which he was not familiar were indicated, it was his practice to obtain published materials or other information to familiarize himself with the investment. Galbraith periodically reviewed Harold Simmons’ investment files to obtain additional information on investments made by Simmons on behalf of the KMPT. 77. In certain circumstances Galbraith would investigate other aspects of a company in which the KMPT invested, such as their proprietary technology. With respect to National Standard Corp., for example, he engaged the KCI engineering department to advise him as to their views about a particular type of powder metal technology- 78. Sommer received some daily reports but generally received current weekly reports. Sommer also received cumulative records kept by KCI listing purchases, sales, commission rates, and prices at relevant dates. Sommer did not carefully review the materials he received. He just took “a quick look.” 79. Harold Simmons himself obtained and utilized both weekly and monthly reports of the cash availability, cash needs, and portfolio status of the KMPT. 80. Contrary to prior practice, there were no meetings of the Corporate Committee between April 22, 1982 and October 3, 1982. 81. Harold Simmons is not aware of any written policy with respect to the investment of the assets of the KMPT. 82. Harold Simmons has not committed his investment policy to writing. Harold Simmons’ Investments for the KMPT Prior to September 1982 and his Interest in Amalgamated 83. In contrast to paid investment managers, who commonly liquidate the previous manager’s portfolio upon undertaking a new investment responsibility, Harold Simmons did not liquidate the KMPT’s investment portfolio at the start of his management tenure. Mr. Simmons wanted to avoid unnecessary costs or losses to the Trust. 84. The Form 5500 for the Pension Plan for the plan year ending June 30, 1982, reflects net assets of $9,778,002, including a receivable for contributions from Keystone in the amount of approximately $3,267,900. Attached to the Form 5500 is a Summary of Assets held in the KMPT as of June 30, 1982. The Summary reflects KMPT assets of $33,311,210, of which $6,634,689, or 19.92% was held for the Pension Plan. 85. Harold Simmons began to make significant changes in the KMPT's stock portfolio during July 1982. His investment strategy involved buying stocks in depressed industries where the price was likely to improve when the general stock market turned up. 86. Harold Simmons also utilized an investment strategy of purchasing “special situation” stocks in which he had identified unusual economic values in relation to their market prices. Harold Simmons’ method in selecting a special situation stock followed principles of fundamental securities analysis. This method of analysis, as Mr. Simmons applied it, concentrated on the economic strength and underlying asset values of a company. Harold Simmons believed that this method tended to protect the stock investment from any large downside risk of loss. 87. One aspect of Harold Simmons’ investment method was the perceived need to concentrate his investment in relatively few companies. He made his investments in companies that he had studied carefully and in which he had found substantial values not widely recognized by other investors and not reflected in the stock market prices of the securities. 88. Harold Simmons imposed upon himself a 25 percent concentration limit for any single security when making investments on behalf of the KMPT and other ERISA-governed plans as to which he exercised investment authority. 89. Harold Simmons had shown a high degree of skill prior to 1982 in applying his investment method to the portfolios of employee benefit plans. For example, his seven-year performance for the Contran Plans had outperformed the general stock market in every year with no losing year. His successful method and performance were also displayed in the T.I.M.E.-D.C. Pension Trust prior to 1982. 90. Harold Simmons identified the Amalgamated Sugar Company (“Amalgamated”) in 1981 as a special situation stock that was suitable for investment. Mr. Simmons had followed the sugar industry since 1974 and had closely analyzed Amalgamated’s financial statements from early 1981 onward. He concluded that the intrinsic asset value of the stock was considerably higher than its public trading price. Before the summer of 1982, Harold Simmons also learned that Congress had reenacted a price support program for the U.S. sugar industry. In Harold Simmons’ view, the federal price supports practically eliminated any risk that Amalgamated would incur a loss in its sugar operations for a period of at least five years. 91. Harold Simmons had directed the purchase of Amalgamated stock by various employee benefit plans and affiliated companies since July 1981, even before his affiliation with KCI or with the Keystone plans. 92. On September 14, 1981, an original schedule 13D, signed by Harold Simmons and Michael Snetzer, concerning the common stock of The Amalgamated Sugar Company, was filed on behalf of National, NO A, Southwest Louisiana Land Company, Dixie Rice Agricultural Corp., Contran, Contran Holding Company, and Harold Simmons, individually (“the reporting persons”). This schedule 13D and amendments thereto reflect that between July 17, 1981 and July 15, 1982, added to the list of reporting persons were, inter alia, TIME-DC Trust, Gibson Trust, NLI, Keycon and Keystone and that the various reporting persons purchased shares of Amalgamated at prices ranging from $38.25 to $50.00. 93. In Amendments to the Amalgamated 13D, Harold Simmons and Michael Snetzer reported that certain of the Simmons’ Companies’ purchases of Amalgamated stock were in part funded by credit agreements with Mercantile. 94. Galbraith had become interested in Amalgamated stock as a possible investment for the KMPT in early 1982. At that time he requested and received from Coopers & Lybrand Amalgamated’s annual reports. He also received and reviewed Amalgamated’s Form 10-K and other information including Standard & Poor’s reports. 95. Galbraith first learned of purchases of Amalgamated stock on behalf of the KMPT in July of 1982. As of that date, he engaged in further investigation of Amalgamated stock. 96. Galbraith’s curiosity about Amalgamated was triggered because, although Amalgamated and Keystone were substantially similar in that they operated in mature industries usually plagued by slow growth and old plants and although both were subject to fluctuations in the market price of raw materials, Amalgamated managed to be profitable even when the sugar industry was in a down part of its business cycle. Galbraith knew that Amalgamated was the low cost producer in its industry. Additionally, he considered that the Sugar Act of 1981 lent stability and protection to domestic sugar prices. 97. In February 1982, Harold Simmons offered to fill a recent vacancy on Amalgamated’s Board of Directors. In March 1982, Arthur Benning, Chairman and Chief Executive Officer of Amalgamated, communicated to Simmons the Amalgamated Board’s determination that it would not be advisable to have Simmons as a director. 98. By letter dated April 23, 1982, Harold Simmons informed Horace Havemeyer, Jr., one of the directors of Amalgamated, that he would be interested in purchasing Havemeyer’s block of Amalgamated stock. 99. By letter dated May 3, 1982, Harold Simmons informed Mr. R.H. Burton, a director of Amalgamated, that he might be interested in purchasing Burton’s Amalgamated stock if Burton ever considered selling. Simmons also noted his earlier unaccepted request to be considered for the Amalgamated Board of Directors. 100. By letter dated May 19, 1982, Harold Simmons informed Spencer Eccles— Chairman of First Security Corporation in Salt Lake City, a director of Amalgamated — that if he or his bank ever considered selling a block of Amalgamated stock, Simmons would be interested in buying. 101. In July 1982, Harold Simmons used assets of the KMPT to purchase 429,400 shares of stock in 22 companies for a total cost of $7,120,677. 102. The first time Harold Simmons used assets of the KMPT to purchase Amalgamated stock was on July 14, 1982 at prices of $49,125 and $49.50. In Amendment No. 9 to the Amalgamated 13D, dated July 15, 1982 and signed by Harold Simmons, Alex Galbraith, and Michael Snetzer, the KMPT was added to the list of reporting persons who had purchased Amalgamated stock. 103. Amendment No. 10 to the Amalgamated 13D dated July 22, 1982, was signed by Harold Simmons, Michael Snetzer and Alex Galbraith. Harold Simmons purchased Amalgamated shares for Keycon and the KMPT between July 16 and 20, 1982 at prices ranging from $50.00 to $52.75. 104. In August 1982 Harold Simmons purchased 17,400 Amalgamated shares for Keycon at prices ranging from $48,375 to $53.00. 105. In August 1982 Harold Simmons used almost $1.4 million of KMPT assets to purchase 130,000 shares of stock — but no Amalgamated stock. Because of his heavy stock purchases in July and August, Simmons virtually depleted the cash balances in the KMPT, i.e., as of August 31, 1982 there was only slightly more than $80,000 in cash and cash equivalents. 106. As of September 2,1982: NLI held 182,200 shares of Amalgamated common stock and had paid an average of $48,128 for each such share; NOA held 104,500 shares of Amalgamated and had paid an average of $43,833 for each such share; the TIME-DC Trust held 32,900 shares of Amalgamated and had paid an average of $43,777 for each such share; the Gibson Trust held 1,200 shares of Amalgamated and had paid an average of $42,458 for each such share; Keycon held 27,000 shares of Amalgamated and had paid an average of $50.99 for each such share; and the KMPT held 22,100 shares of Amalgamated and had paid an average of $51,415 for each such share. 107. As of September 2, 1982, NLI, NOA and Keycon held 313,700 shares of Amalgamated. These shares represented about 15.50% of the total number of outstanding Amalgamated shares as reported in Amalgamated’s quarterly report on Form 10-Q for the quarter ended June 28, 1982 (“the June 1982 Form 10-Q”). NLI, NOA and Keycon purchased these shares for approximately $14,726,500 (exclusive of commissions). 108. As of September 2, 1982, the KMPT held 22,100 shares of Amalgamated. These shares represented about 1.1% of the total number of Amalgamated shares as reported in the June 1982 Form 10-Q. The KMPT purchased these Amalgamated shares for approximately $1,136,262.50 (exclusive of commissions). The Amalgamated — SKZ Merger Proposal 109. Amalgamated’s board of directors had hired First Boston Corporation in early 1981 to study and propose a major restructuring of the company, including a possible sale of the company. The hiring of First Boston preceded any purchase of Amalgamated stock by the Simmons interests in 1981 and 1982. 110. During most of 1982, First Boston looked for potential purchasers of Amalgamated. First Boston proposed to structure a “leveraged buy-out.” A “leveraged buyout” would be a transaction in which the purchaser would buy Amalgamated primarily with Amalgamated’s own assets and earnings. 111. Amalgamated’s decision in March of 1982 to authorize First Boston Corporation to explore the possibility of a sale of Amalgamated and the resultant SKZ merger proposal were in part a response to the possibility that Harold Simmons might be able to acquire working control of Amalgamated through open market purchases of shares without acquiring 100% of the shares outstanding and without paying a control premium. First Boston approached 40 to 50 companies seeking a buyer, but it never approached Harold Simmons or one of his Companies. 112. On September 2,1982, Amalgamated announced a Merger Agreement with SKZ Holdings, Inc., a company newly formed by investor Selim Zilkha for purposes of the merger. The agreement provided for the merger of Mina, Inc. into Amalgamated, the surviving company. The successful completion of the SKZ merger proposal was to result in SKZ’s control of Amalgamated. 113. The proposed SKZ/Amalgamated merger was structured to be a leveraged but-out. It also was structured to be an involuntary “freeze-out” in which Amalgamated’s shareholders would receive $60 per share in cash, plus a $1.25 per share dividend, payable to shareholders of record as of October 15, 1982, regardless of whether they wished to sell their stock. 114. On September 2, 1982, Amalgamated also entered into a Stock Option Agreement pursuant to which SKZ was granted the unconditional option to purchase up to 374,000 shares of Amalgamated at $60 per share. 115. On September 2,1982, Amalgamated Directors A.E. Benning, R.H. Burton, Spencer F. Eccles and Horace Havemeyer, Jr. entered into separate Shareholder Agreements with SKZ, which provided that they would vote all shares they beneficially owned (which constituted 16.1% of the approximately two million shares outstanding as of September 2, 1982) in favor of the SKZ merger proposal and that they would not dispose of their shares to anyone but SKZ. 116. Amalgamated announced that a special shareholders meeting to vote on the proposed merger had been scheduled for October 19, 1982. Harold Simmons’ Amalgamated Stock Investments for the KMPT During September 1982 117. On September 2, 1982 Harold Simmons learned of and decided to oppose the SKZ merger proposal. 118. Harold Simmons thought that the SKZ merger price was too low. He believed that the Amalgamated stock held by his affiliated companies and by the employee benefit plans had an intrinsic value greater than $61.25 per share. If SKZ’s efforts to control Amalgamated succeeded and the merger was consumated, Harold Simmons believed that he would stand to lose at least $90 to $100 for every Amalgamated share then owned by the Simmons Companies and Trusts over which he exercised investment authority. He intended to vote the Amalgamated shares held by the Simmons Companies and Trusts over which he exercised investment authority against the merger. 119. Harold Simmons believed that the proposed SKZ/Amalgamated merger confirmed his own analysis of Amalgamated’s intrinsic value. Mr. Simmons believed that, even if the SKZ/Amalgamated merger proposal were defeated, Amalgamated stock would not in the future trade below $61.25 per share. 120. On September 2, 1982, Harold Simmons advised Mr. Benning by telephone that he intended to contest the SKZ merger proposal. Harold Simmons told Mr. Benning that the proposed $60 SKZ merger price was inadequate. Harold Simmons then offered to buy Mr. Benning’s Amalgamated stock for $61 per share. Mr. Benning declined the offer. 121. On September 2, 1982, Harold Simmons; told his attorneys, Michael Snetzer, Glenn Simmons and Walter Tucker that they should make plans to oppose the proposed merger with a proxy contest. Another method of opposing the merger was to buy more stock and at least Harold Simmons and Snetzer knew of that method as early as September 2nd. Another method was to file suit to enjoin the exercise of the SKZ Stock Option. 122. Harold Simmons sought to buy the Amalgamated shares owned by the First Security Corporation because “if [he] could have bought that block at $62 a share, [he thought] it would have been helpful in winning the vote against them.” First Security refused Simmons’ offer to purchase. 123. On September 3, 1982 Harold Simmons and Michael Snetzer met with James Gardner, President of Mercantile, and Phillip Bankhead, a Mercantile officer. At that meeting Mr. Simmons asked Gardner for a $25 million loan for National to buy additional Amalgamated stock. Gardner told Simmons and Snetzer that the request for $25 million was $10 million above the Bank’s informal loan limit. Gardner told them that a $25 million loan would not be a problem, but Gardner wanted to “farm out” anything over $15 million. Gardner told Simmons and Snetzer that the funds could be provided within 24 hours. Simmons made it clear that he wanted access to the borrowed money so that he could purchase Amalgamated stock in advance of the shareholders meeting. He intended to try to fight the acquisition by SKZ, thereby protecting his investment, spécifically that in NLI and NO A. Simmons intended to purchase shares on the open market and vote those shares according to his previously stated objective to vote against the merger. 124. At no time during the September 3rd meeting and at no other time in September 1982 did Mercantile ever formally approve a $25 million loan to National or any other Simmons Company. 125. Harold Simmons used KMPT assets to purchase Amalgamated stock in September 1982 in order to defeat the SKZ attempt to take over Amalgamated and acquire a controlling interest in Amalgamated. 126. Harold Simmons used KMPT assets to purchase 162,800 shares of Amalgamated Sugar stock in September 1982 at an average share price of $61.26, or $61.363 including the brokerage commission paid to Goldman, Sachs. Including the brokerage commission, the total cost was $9,989,905. If the SKZ/Amalgamated merger had been successful, the KMPT would have received $61.25 cash per share. 127. Harold Simmons instructed his brokers to buy the Amalgamated stock with or without a proxy attached. Harold Simmons instructed his brokers to “match the high bid” for Amalgamated stock. This instruction meant that purchases of Amalgamated stock in September 1982 would be split with others, thereby precluding the Simmons’ interests from purchasing all available stock. The instruction was given, at least in part, to avoid running up the market price of the stock. 128. The money used by the KMPT to buy Amalgamated stock was generated by selling other stocks in the Trust’s portfolio, including stocks purchased by the previous equity manager and stocks purchased earlier that summer by Harold Simmons. A total of 483,700 shares of stock of 26 companies other than Amalgamated were sold from the KMPT stock portfolio during September for total proceeds of $11,159,044. The stock of these 26 companies was sold over a period of five business days beginning September 3, 1982. In July and August 1982 Harold Simmons used KMPT assets to buy shares of 16 of the 26 companies that he then sold in September of 1982 sales. 129. The KMPT made a net profit on the September 1982 sales, including a net profit of $130,401.91 on the sales of the sixteen stocks that Harold Simmons had purchased for the KMPT in July and August 1982. 130. In September 1982 Harold Simmons used the assets of the KMPT to purchase shares of no company other than Amalgamated. The last date in September on which he made such purchases was September 16. From September 17, 1982 through the end of that month, Harold Simmons purchased no stock with KMPT assets. 131. In his use of Trust fund assets, Harold Simmons dominated trading in Amalgamated shares on the New York Stock Exchange from September 7th through the 23rd. 132. Harold Simmons was not certain at any time after September 2nd — when he was directing the purchase of Amalgamated shares using assets of his Companies and of the Trusts over which he exercised investment authority — that the SKZ merger proposal would not be successful. Indeed, not before September 10, 1982 did Harold Simmons know the total number of Amalgamated shares actually held or controlled by SKZ or Mr. Selim K. Zilkha. 133. Harold Simmons’ purpose in selling stock from the KMPT stock portfolio during the month of September 1982 was to generate enough cash to pay for the KMPT’s September purchases of Amalgamated. 134. Harold Simmons’ use of KMPT assets to purchase Amalgamated stock in September 1982 was an integral part of Simmons’ efforts to defeat the SKZ merger proposal in order to protect his Companies’ $14.7 million investment in Amalgamated. 135. Harold Simmons purchased Amalgamated stock for the KMPT during September 1982 believing that the stock was worth substantially more than the KMPT was paying for it and believing that the stock had little, if any, downside risk of loss. Mr. Simmons had no intention at any time to harm the plans or expose them to undue risks. However, Harold Simmons’ decision to purchase the Amalgamated shares for the Trusts was not made in the sole interest of the plan participants. 136. Even if Harold Simmons had been successful in defeating the merger proposal, there was no guarantee that the Amalgamated stock would not fall below the merger price after the control contest ended. 137. Harold Simmons’ purchase of Amalgamated stock with KMPT assets in September 1982 was not because his affiliated companies were unable to purchase the stock. If Harold Simmons had wished to purchase the Amalgamated stock for his corporate interests during September 1982, he had funds available through the companies and their regular bankers to makes those purchases. However, the purchase of Amalgamated stock by the KMPT was of benefit to Simmons’ corporate interests even if they had money available to them for purchase of Amalgamated stock since Harold Simmons was able to exercise investment authority over the stock while his companies retained their financial reserves. 138. Mercantile approved a loan to National/NLI on September 13, 1982, but only in the amount of $15 million. The purpose of the loan was to finance the acquisition of Amalgamated stock. 139. As of September 1982 National beneficially owned or controlled more than 50% of the outstanding voting securities of Keystone. On September 9, 1982, in Amendment No. 11 to the Amalgamated 13D, signed by Harold Simmons, Michael Snetzer and Alex Galbraith, it was reported that Keystone may be deemed to be controlled by National and those persons deemed to control National. 140. Amendment No. 11 also reported the SKZ merger proposal, including the $60 per share purchase price and that National had filed suit that day in federal district court against Amalgamated, SKZ and others seeking, inter alia, to enjoin the exercise of the SKZ option to purchase 374,000 shares. It also reported that National had determined to oppose the proposed merger and to solicit proxies to be voted in opposition to the transaction at a special meeting of Amalgamated’s shareholders scheduled for October 19, 1982. 141. Amendment No. 11 also reported that: A majority of the members of the Keystone Corporate Committee — Employee Benefit Plans ... has the power to vote and to direct the disposition of the Shares held by the Keystone Trust. The Corporate Committee has informally delegated to Harold C. Simmons the authority to make investment decisions on behalf of the Corporate Committee, subject to periodic review by the other committee members. Each member of the Corporate Committee disclaims beneficial ownership of the Shares owned by the Keystone Trust except to the extent of his vested beneficial interest therein. 142. In a press release dated September 9, 1982, National stated that it planned to file preliminary proxy solicitation material with the SEC to be used for the solicitation of proxies in opposition to the proposed merger and that it expected to mail its proxy materials as soon as practicable. However, they were never mailed. 143. Preliminary proxy solicitation material relating to National’s opposition to the proposed Amalgamated/SKZ merger indicates that National would be soliciting proxies to be voted against the merger and that the Board of Directors of Amalgamated had fixed September 20, 1982 as the record date for determination of shareholders entitled to vote at the October 19, 1982 special meeting. 144. The record does not reflect any specific evidence that, in early September 1982 any of the defendants were aware of any minimum number of days before September 20, 1982 by which Amalgamated stock had to be purchased in order to have it registered for the scheduled October shareholders’ meeting. 145. Most of the Amalgamated stock that was purchased in September 1982 could not be voted on the proposed SKZ/Amalgamated merger because the stock was bought too late in relation to Amalgamated’s stock record date for the shareholder meeting at which the merger vote would be taken. 146. Alex Galbraith learned that National was intending to oppose the SKZ merger proposal and to solicit proxies in that regard on or before September 9, 1982, when he signed Amendment No. 11 to the Amalgamated 13D. 147. On or before September 10, 1982 Alex Galbraith asked Sandra Myers to call the Jefferson Bank about making certain that Amalgamated shares purchased by Harold Simmons with KDIT assets would be registered by September 20, 1982, so they could be voted at the October 19, 1982 shareholders’ meeting. 148. On September 10, 1982, Sandra Myers twice spoke to Dale Sielaff, Vice President and Senior Trust Officer of the Jefferson Bank. In the first conversation, Myers told Sielaff that Alex Galbraith had asked her to call the Bank because there was a series of transactions that required special attention. Myers told Sielaff that certain assets in the KDIT would be liquidated and that the proceeds would be invested in Amalgamated; that their broker had advised them to be sure to settle in street name; and that the Bank might be asked to settle some transactions early. Myers apprised Sielaff of the record date and the date of the shareholders’ meeting. In the second conversation, Sielaff told Myers that he wanted to be kept advised of purchases and sales. 149. On September 13, 1982 Dale Sielaff had a telephone conversation with Alex Galbraith concerning Sielaff’s conversations with Sandra Myers. Sielaff stated that the Bank had already consulted with counsel and that he was confident that the Corporate Committee had also met with their ERISA counsel concerning the Amalgamated transactions. Sielaff stated that the Bank felt it was important to notify the Corporate Committee about ERISA issues that the Bank felt the Committee needed to address with respect to sole benefits, exclusive purpose, diversification, prudence, prohibited transactions, and parties in interest. Sielaff stated that the Bank had concerns about fiduciary and co-fiduciary responsibilities. 150. Sielaff and Michael Crecco, a Jefferson Bank Trust Officer, met with Galbraith on September 16, 1982. Galbraith told Sielaff and Crecco that he did not know what Harold Simmons’ intentions were regarding Amalgamated purchases, and that the Corporate Committee had informally delegated decision-making authority to Simmons. Sielaff asked Galbraith if voting authority with respect to an upcoming meeting of the shareholders of Amalgamated Sugar Company was still an important objective for the purchases. Galbraith stated that it was. Galbraith said that even if the Corporate Committee did not have the voting authority under the KDIT trust document, the Jefferson Bank could be assured that its proxy would be vigorously solicited. Sielaff expressed again his ERISA concerns, i.e., sole interest, exclusive purpose, diversification, prudence, party in interest and prohibited transactions. Galbraith stated that the Corporate Committee had not consulted ERISA counsel prior to the September 14, 1982 purchases of Amalgamated stock; that in-house counsel for Keystone was not qualified in ERISA matters; but that the Corporate Committee had, by then, September 16, consulted the firm of Kirkland & Ellis. Galbraith stated that any ERISA opinion responding to the Bank’s concerns would be two or three weeks in coming. 151. In September and October 1982, Kirkland & Ellis was Harold Simmons’ personal and corporate counsel. Kirkland & Ellis was not counsel to the Corporate committee. 152. After the meeting, Galbraith shared the Bank’s concern about future purchases of Amalgamated stock by the KDIT with Ralph End, Keystone’s corporate counsel, and with Glenn Simmons. Galbraith knew then that End was not an ERISA lawyer and that End was not counsel to the KMPT or the Corporate Committee. 153. Because of their connections with Keystone and Harold Simmons, neither Ralph End nor Kirkland & Ellis were in a position to provide an independent review of Harold Simmons’ use of KMPT assets to purchase Amalgamated stock. Each had obvious conflicts of interest. 154. In the fall of 1982, Galbraith was aware that Harold Simmons was Chairman and Chief Executive Officer of National, that National was owned by Contran and that Contran was owned by the 1964 Simmons Trust. In September 1982, Galbraith did not ask anyone about the propriety of Harold Simmons using KMPT assets to purchase shares of Amalgamated in light of National’s position in Amalgamated. 155. During September and October 1982, Alex Galbraith was not aware that after the merger was announced Harold Simmons was using the KMPT and the KDIT assets to purchase Amalgamated stock at prices above the SKZ merger price. Galbraith did not know what Harold Simmons’ intentions were with respect to seeking to acquire control of Amalgamated when Harold Simmons was purchasing those shares. Even as recently as May 4, 1983, Galbraith could think of no reason why Harold Simmons had used KMPT assets to buy at prices above the announced merger price. 156. On September 13, 1982, Glenn Simmons testified about Harold Simmons: “He’s Chairman of the [Corporate] Committee. I don’t know to what extent the Committee meets or discusses. That’s not in my area of effort at the present time.” 157. Glenn Simmons consulted with Harold Simmons’ own lawyers and Ralph End about Jefferson Bank’s ERISA concerns. 158. Glenn Simmons did not believe it relevant to a determination whether the purchases of Amalgamated were solely in the interest of the participants to know that the Simmons Companies were preparing a proxy contest against SKZ’s merger proposal. Glenn Simmons did not question Harold Simmons about the sales of stock from the KMPT stock portfolio to generate cash to buy Amalgamated shares. 159. On September 14, 1982 Snetzer— an Officer and Director of National — believed that, in the event of the SKZ merger was approved, National and NLI would be damaged, because — in Snetzer’s opinion— the $60.00 per share merger price was below the fair value of the Amalgamated shares. 160. In September 1982 Snetzer was aware that Harold Simmons was using KMPT assets to purchase Amalgamated stock and that the purchase price the KMPT was paying was above the $60 merger price. Snetzer knew of the purchases within one day of the transaction date. 161. During September 1982 Snetzer was unaware that employees of Jefferson Bank had communicated with Alex Galbraith about the Bank’s concerns over the KDIT’s purchases of Amalgamated stock. 162. On September 17, 1982, the federal district court in Utah denied National’s motion for a preliminary injunction against SKZ’s exercising its option to purchase 374,000 shares of Amalgamated. 163. On September 20, 1982, National unsuccessfully sought an injunction pending appeal from the Court of Appeals for the Tenth Circuit. National then sought an expedited appeal from the denial of the preliminary injunction. That was granted. The Court of Appeals indicated that it was prepared to hear oral argument on October 18 or 19, 1982, and that it contemplated that Amalgamated’s special meeting of shareholders, scheduled for October 19, 1982, might be required to be postponed. 164. On September 20, 1982, SKZ exercised its option and purchased 374,000 shares of Amalgamated for $22,440,000. 165. On September 20, 1982, Dale Sielaff spoke with Glenn Simmons by telephone. Glenn Simmons stated that he had in his possession the materials that Sielaff had provided to Alex Galbraith at their meeting, and that the “Corporate Committee’s counsel” was having discussions with the Bank’s counsel about the Bank’s ERISA concerns. Glenn Simmons stated that he would not want Jefferson Bank to take any hasty action, and that he was confident that the Bank’s ERISA concerns would be put quickly and amicably to rest. 166. By letter dated September 21, 1982, Harold Simmons responded to Sielaff’s inquiry about the use of EDIT assets to purchase Amalgamated stock. This letter from Harold Simmons was sent with a cover letter of the same date signed by Glenn Simmons. 167. John Sommer learned of the SKZ merger proposal when he read the letter that Harold Simmons had sent to Sielaff. Sommer had no idea what risks were associated with Simmons using KMPT’s assets to purchase Amalgamated shares at prices above the $60 merger price. Sommer has never questioned Harold Simmons about the risk factors involved in any of Simmons’ uses of KMPT assets. 168. On September 21, 1982, Amalgamated and SKZ filed counterclaims and third party claims against National, alleging violations of, inter alia, the disclosure obligations under § 13(d) of the Securities Exchange Act and provisions of ERISA. 169. In Amendment No. 14 to the Amalgamated 13D signed by Harold Simmons and others, it was reported that: The reporting persons may, in the event that the proposed merger is disapproved, determine to seek representations on Amalgamated’s Board of Directors commensurate with their then-existing equity interest in Amalgamated____ It was also reported that “National intends to continue to seek a judicial determination of the [SKZ stock] option.” 170. On Wednesday, September 22, 1982, Harold Simmons “started thinking that the odds of winning the election [re: SKZ merger proposal] and defeating the $60 offer were substantially diminished.” Harold Simmons believed that the exercise of the SKZ option, on September 20, 1982, “switched the odds from the probability of us winning to the probability of them winning.” Those doubts increased when Simmons found out that the Court of Appeals would probably not delay the stockholders meeting and after he read the appellate briefs. 171. As of September 23, 1982, the Simmons Companies and the Trusts over which Harold Simmons had investment authority owned a total of 622,300 shares of Amalgamated, or approximately 25.95% of then outstanding shares of Amalgamated. The largest block of these Amalgamated shares consisted of 184,900 shares held by the KMPT; the total number of Amalgamated shares owned by all the Trusts over which Harold Simmons had investment authority was 297,600 shares. 172. Between September 2nd and September 23rd, Harold Simmons spent approximately $686,000 of his Companies' money to buy 11,000 Amalgamated shares. During that same twenty-day period, Harold Simmons used in excess of $15 million of the Trusts’ assets to purchase 241,400 Amalgamated shares. Of that $15 million, almost $10 million came from the KMPT and was used to purchase 162,800 shares of Amalgamated. The National-Amalgamated' Acquisition Agreement 173. On September 23, 1982, Simmons discussed the possibility of purchasing all the stock of Amalgamated with Michael Snetzer and an attorney from Kirkland & Ellis. They drafted and sent a letter to Amalgamated that afternoon and received a positive response from Amalgamated that evening. 174. The transaction proposed in the September 23rd letter was wholly conceived by Harold Simmons. He decided to make a leveraged buy-out proposal for Amalgamated in the form of a voluntary tender offer. 175. On September 23, Harold Simmons sent a written proposal to Amalgamated and ceased further purchases of Amalgamated shares. 176. In a letter to the Board of Directors of Amalgamated, Harold Simmons, as the Chairman of the Board of National, proposed that National and Amalgamated enter into an agreement under which they would make a joint tender offer for any and all outstanding shares of Amalgamated’s Common Stock at $65.00 per share. According to the letter, the cost of purchasing the shares was to be allocated as follows: (1) the first $77 million was to be paid by Amalgamated from “cash on hand”; (2) the next $30 million was to be paid by Amalgamated from bank loans; and (3) the “balance ... would be paid by National from its available working capital and currently available bank lines.” Simmons stated in the letter that National and certain of its affiliates would agree not to tender their shares under the offer. He proposed that, following the consummation of the joint tender offer, a sufficient number of representatives of National would be elected to Amalgamated’s Board of Directors so that such representatives would constitute a majority of the Board of Directors. 177. On September 27, 1982 Glenn Simmons told Dale Sielaff that he was very upset that the Bank’s counsel would not assure the “Corporate Committee’s counsel” that the Bank would not notify the Department of Labor about the Bank’s ER-ISA concerns. Glenn Simmons stated that he needed 24 to 48 hours with respect to Amalgamated negotiations; that once the Department of Labor is unleashed, it can’t be stopped; and that Mr. Sutkowski, counsel to the Bank, would have to stand the résult of any notification to the Department of Labor. At that time, Glenn Simmons was President and a director of National. 178. In addition to Harold and Glenn Simmons, Michae