Exhibit 99.1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS. SUPERIOR COURT
CIVIL ACTION NO: 01-2514 BLS
HARBOR FINANCE PARTNERS,
Plaintiff,
-vs.
LIBERTY FINANCIAL COMPANIES, INC., et al.,
Defendants.
FIRST AMENDED COMPLAINT
Plaintiff, as and for its First Amended Complaint, alleges upon personal
knowledge as to itself and its own acts, and upon information and belief derived
from, inter alia, a review of documents filed by defendants with the Securities
and Exchange Commission and publicly available news sources, such as press
releases by the defendants and newspaper articles from prominent financial
periodicals such as The Wall Street Journal, as to all other matters, as
follows:
NATURE OF THE ACTION
1. This is a shareholder class action on behalf of the stockholders of
Liberty Financial Companies, Inc. ("Liberty" or the "Company") against its
directors and others to enjoin defendants' actions related to the sale of
Liberty to its controlling shareholder, defendant Liberty Mutual Insurance
Company ("Mutual"), in an illegal and fraudulent manner which defendants have
structured to allow Mutual to divert tax advantages that are the property of
Liberty to itself, and to obtain other appropriate relief. Plaintiff alleges
that these actions are and were in violation of the fiduciary duties owed
Liberty's public shareholders by Liberty's directors, and further alleges that
each of Liberty's directors had and has a conflict of interest since, inter
alia,
each director of Liberty also sits on the board of Mutual, and is
therefore not entitled to the presumptions conferred by the business judgment
rule.
2. Finally, plaintiff alleges that the proxy statement defendants have
submitted to Liberty's shareholders in conjunction with the sale of Liberty to
Mutual contains untruthful statements of material fact and omits to state
material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, in violation of Mass.
G.L. c. 110a,ss.404,ss.410, and c. 110C,ss.7,ss.9.
PARTIES
3. Plaintiff, Harbor Finance Partners, owned shares of Liberty common
stock at all relevant times and continues to own such shares.
4. Defendant, Liberty, is a Massachusetts corporation with its
principal executive offices at 600 Atlantic Avenue, Boston Massachusetts 02210.
Liberty is an asset accumulation and management company which holds itself out
as having two core product lines: (1) asset management; and (2) annuities.
Mutual currently owns approximately 71.68 percent of Liberty's outstanding
shares and controls approximately 70.68 percent of the combined voting power of
Liberty's outstanding common stock and preferred stock.
5. Defendant Mutual is a mutual insurance company which maintains its
principal place of business in Boston, Massachusetts. Mutual currently owns
approximately 71.68 percent of Liberty's outstanding shares and controls
approximately 70.68 percent of the combined voting power of Liberty's
outstanding common stock and preferred stock.
6. Defendant Fleet Boston Financial Corporation ("Fleet") is a Rhode
Island corporation with its headquarters at 100 Federal Street, Boston,
Massachusetts 02110. As alleged in more detail, infra, Fleet has aided and
abetted the other defendants in the wrongdoing alleged herein.
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7. Defendants Michael J. Babcock, Gary L. Countryman, John P. Hamill,
Marian L. Heard, Gerald E. Anderson, Charles I. Clough, Edmund F. Kelly, Ray B.
Mundt, Glenn P. Strehle, William F. Connell, Paul J. Darling, II, Thomas J. May,
and Dr. Kenneth L. Rose, are the directors of Liberty. Of these thirteen
directors of Liberty, every single one also serves as a director of Mutual and
thus each has an irremediable conflict of interest with respect to any
transactions between Liberty and Mutual. Additionally, defendant Countryman, who
is Liberty's President and Chief Executive Officer, also served as Chairman of
Mutual until April 2000, and defendant Kelly is the CEO of Mutual and the
Chairman of Liberty, and thus these two defendants have an even more heightened
conflict of interest. Also, four of these defendants, Connell, May, Heard and
Countryman, are also directors of Fleet and hence have a conflict of interest in
any transaction between Liberty and Fleet. The defendants identified in this
paragraph are hereinafter sometimes referred to collectively as the "Individual
Defendants." Further, each of the Individual Defendants signed Proxy Statements
circulated to Liberty shareholders on or about July 17, 2001 and October 4,
2001, and which contain untruthful statements of material fact and omit to state
material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
8. By virtue of their positions as directors, and where applicable,
officers of Liberty and/or their exercise of control and ownership over the
business and corporate affairs of Liberty, the Individual Defendants have, and
at all relevant times had, the power to control and influence and did control
and influence and cause Liberty to engage in the practices complained of herein.
Each Individual Defendant owed and owes Liberty and its shareholders fiduciary
obligations and were and are required to: (1) use their ability to control and
manage Liberty in a fair, just and equitable manner and not in a fraudulent and
illegal manner; (2) act in furtherance of the best
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interests of Liberty and its shareholders; (3) act to maximize shareholder value
in connection with any change in ownership and control; (4) govern Liberty in
such a manner as to heed the expressed views of its public shareholders; (5)
refrain from abusing their positions of control; and (6) not to illegally or
fraudulently favor their own interests or Mutual's interests at the expense of
Liberty and its public shareholders.
9. Each defendant herein is sued individually and/or as a conspirator
and aider and abettor. The Individual Defendants are also sued in their capacity
as directors of Liberty. The liability of each defendant arises from the fact
that they have engaged in all or part of the unlawful acts, plans, schemes, or
transactions complained of herein.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action as a class action pursuant to
Massachusetts Rule of Civil Procedure 23 on behalf of all Liberty stockholders.
Excluded from the Class are defendants, members of the immediate families of the
defendants, their heirs and assigns, and those in privity with them.
11. The members of the Class are so numerous that joinder of all of
them would be impracticable. While the exact number of Class members is unknown
to plaintiff, and can be ascertained only through appropriate discovery,
plaintiff believes there are many hundreds, if not thousands, of Class members.
Liberty has millions of shares of common stock outstanding.
12. Plaintiff's claims are typical of the claims of the Class, since
plaintiff and the other members of the Class have and will sustain damages
arising out of defendants' breaches of their fiduciary duties. Plaintiff does
not have any interests that are adverse or antagonistic to those of the Class.
Plaintiff will fairly and adequately protect the interests of the Class.
Plaintiff is committed to the vigorous prosecution of this action and has
retained counsel competent and experienced in this type of litigation.
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13. There are questions of law and fact common to the members of the
Class that predominate over any questions which, if they exist, may affect
individual class members. The predominant questions of law and fact include,
among others, whether:
(a) the defendants have and are breaching their fiduciary duties
in a fraudulent and illegal manner to the detriment of Liberty shareholders;
(b) the Class has been damaged and the extent to which members of
the Class have sustained damages, and what is the proper measure of those
damages; and
(c) the defendants have violated the Massachusetts Code through
signing and circulating a proxy statement with materially false or misleading
statements in it to Liberty shareholders.
14. A class action is superior to all other available methods for the
fair and efficient adjudication of this controversy, since joinder of all
members is impracticable. Further, as individual damages may be relatively small
for most members of the Class, the burden and expense of prosecuting litigation
of this nature makes it unlikely that members of the Class would prosecute
individual actions. Plaintiff anticipates no difficulty in the management of
this action as a class action. Further, the prosecution of separate actions by
individual members of the class would create a risk of inconsistent or varying
results, which may establish incompatible standards of conduct for defendants.
SUBSTANTIVE ALLEGATIONS
15. Liberty was a wholly owned subsidiary of Mutual until 1995, when
Liberty acquired the Colonial Group Inc., and issued, inter alia, Liberty common
stock to former Colonial shareholders in exchange for their Colonial shares.
Additionally, Mutual sold 3,750,000 shares of Liberty stock in 1997 in a public
offering. At all times, Mutual has owned more than 70 percent of Liberty's
outstanding stock and has thus been its controlling shareholder.
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As earlier alleged, Liberty has two business units, asset management and
annuities, and these constitute essentially all of the Company's assets.
16. Defendant Gary Countryman joined Liberty as its Chief Executive
Officer ("CEO") in January 2000. As earlier alleged, he was also the Chairman of
Mutual until April 2000, and at all relevant times has been a director of Mutual
and thus has a conflict of interest in Liberty's dealings with Mutual. When
defendant Countryman became Liberty's CEO, both Mutual and Liberty's other
directors (the Individual Defendants) anticipated that he would serve until a
successor was found.
17. The Individual Defendants have represented in a proxy submitted to
Liberty's public shareholders that they were unsuccessful in searching for and
finding a successor for Mr. Countryman. However, in searching for a successor
they had a conflict of interest since each of them serves as a director of
Mutual, and if a successor were hired, he or she would likely not be a director
of Mutual and hence would not have the same potential bias toward Mutual as Mr.
Countryman.
18. Further, the Individual Defendants have not disclosed in the proxy
statements they have distributed to Liberty's public shareholders what steps
they took to find a successor for Mr. Countryman.
19. In the fourth quarter of 2000, based on their purported failure to
find a successor for Mr. Countryman as Liberty's CEO, the Individual Defendants
decided to consider the sale of Liberty, and hired Credit Suisse First Boston
("Credit Suisse") to assist it in that process. At this time, the Individual
Defendants were already contemplating how Mutual might benefit from this
transaction apart from Liberty's public shareholders, as reflected in the fact
that Mutual (as
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alleged, all Liberty directors are also Mutual directors)
contemporaneously hired Lehman Brothers as its financial advisor in conjunction
with any sale of Liberty.
20. Beginning on December 18, 2000, Credit Suisse began to send a
confidential offering memorandum to parties who had expressed an interest in
acquiring Liberty and had executed a confidentiality agreement.
21. Then, on January 5, 2001, Credit Suisse sent letters of instruction
for submitting preliminary bids to those parties who had expressed an interest.
These letters indicated that offers would be accepted for all of Liberty or for
one or the other of its two businesses, I.E., its asset management business
and/or its annuity business. The letter requested that bids be submitted by
January 22, 2001.
22. On January 22, 2001, the Individual Defendants and Credit Suisse
reviewed the preliminary bids that had been received and decided to pursue most
of them, including bids for Liberty in its entirety and bids for each of its two
business units.
23. Between February 20 and February 23, 2001, Mutual discussed with
Credit Suisse and Liberty the possibility that rather than Liberty selling its
two business units outright to purchasers in what would be taxable transactions,
Liberty might sell one of the two business units to one purchaser in a taxable
transaction and then have the other purchaser acquire the second business unit
through a merger with Liberty.
24. At this discussion, it was noted that in an outright sale of the
business units the purchase price would be higher because the purchaser gets a
substantial tax deduction for the purchase price, while Liberty would realize
income on which it would be taxed. Were one of the business units to be sold
through a merger, the converse would be true, as Liberty would not realize
taxable income and the purchaser would not realize a tax deduction. It was
observed at
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this meeting that the tax advantages of a merger would almost certainly outweigh
any higher price paid through an outright sale, and thus FROM THE STANDPOINT OF
LIBERTY AS A CORPORATION THE MERGER SCENARIO WOULD BE BETTER.
25. At this meeting, however, Mutual expressly observed that it might
prefer Liberty to sell its two business units outright, notwithstanding the
capital gain and attendant taxes Liberty would accrue, because Mutual could then
merge with the empty shell of liberty in a squeeze out merger in which Liberty's
public shareholders received their pro rata allocation of the cash paid for the
two business units incurring, inter alia, capital gains taxes, while Mutual did
not.
26. Following these discussions, the Individual Defendants decided to
ask bidders for the asset management business unit to bid only on the basis of
an outright sale of that business unit, but to ask bidders for the annuity
business unit to submit alternate bids, I.E., to acquire the business as an
outright sale and to acquire it through a merger with Liberty after the asset
management business unit had been spun off.
27. On February 23, 2001, Credit Suisse sent to each of the bidders
with whom the Individual Defendants were interested in pursuing negotiations, a
letter requesting the submission of definitive acquisition proposals by March
12, 2001.
28. On March 12, 2001, Liberty received two offers for its asset
management business unit. One was not in compliance with the bidding
instructions, while the other offered to pay $1.1 billion and assume
indebtedness of approximately $110 million.
29. Also on March 12, 2001, Liberty received two offers for its annuity
business unit. One, by Sun Life, offered $1.65 billion to purchase the business
unit in an outright sale and $1.078 billion to acquire the business unit in a
merger with Liberty after the asset management
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business unit had been spun off. As earlier alleged, the higher offer for the
business unit in an outright sale reflected that Sun Life would realize a tax
deduction for the purchase price while Liberty would realize a taxable event.
The lower price for the merger scenario reflected that Sun Life would not
realize a tax deduction and Liberty would not realize a capital gain.(1) The
other offerer proposed to acquire the annuity business unit for $1.7 billion in
an outright sale, and did not make an offer to acquire Liberty through a merger.
30. Shortly after March 12, 2001, Liberty and Mutual reviewed a draft
merger agreement between Liberty and Mutual, under which Liberty would merge
with a subsidiary of Mutual subsequent to the spin off of the asset management
and annuity business segments and under which Liberty's public shareholders
would be frozen out. This demonstrates that the Individual Defendants had by
that time all but decided to structure the transaction as an outright sale of
the two business units with a merger of the shell of Liberty into Mutual, and
thus in a way that conferred tax advantages on Mutual at the expense of
Liberty's public shareholders.
31. On March 23, 2001, the Individual Defendants reviewed final bids
from each of the three bidders.
32. The bidder for the asset management business unit offered the same
amount as its previous bid, $1.1 billion. Sun Life increased its bid for the
annuity business unit in an outright sale to $1.705 billion, and increased its
bid assuming the purchase were consummated through a merger with Liberty (after
the sale of the asset management unit) to $1.125 billion. The other bidder for
the annuity business unit decreased its bid.
33. Between March 14 and March 27, 2001, Liberty and Mutual again
discussed the fact that if the transaction were to proceed in two cash segment
sales followed by a merger of
--------
(1) As also earlier alleged, the tax differential would have more than offset
the price difference and thus Liberty and its public shareholders would have
been better off with a merger scenario.
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Liberty's shell with Mutual in a freeze-out merger, that Mutual would receive
very significant tax advantages at the expense of Liberty's public shareholders.
They held these discussions without any independent person representing the
interests of Liberty's public shareholders since, as earlier alleged, all of
Liberty's directors are also directors of Mutual.
34. One approach discussed was to give Liberty's public shareholders
their PRO RATA share of the cash to be received from the sale of the two
business units without any adjustment for the tax advantages Mutual would gain
at their expense. Another approach discussed was to give the public shareholders
the amount they would have received if the offer by Sun Life to merge with
Liberty at $1.125 billion were accepted, with its attendant tax benefits for
Liberty and its public shareholders. Specifically the amounts discussed, based
on the then pending offers from Sun Life, were $35.99 per share if no adjustment
were made, AND $39.84 per share if Liberty's public shareholders were treated as
if the offer to merge were accepted. Thus, this illustrates that, because of the
tax consequences, the structuring of the transaction as a merger rather than an
outright sale, would result in significantly higher consideration to Liberty's
public shareholders, notwithstanding that the offer to acquire Liberty's
business units in an outright sale was somewhat lower.
35. Throughout March and early April 2001, Liberty and its directors
conducted discussions with Sun Life, and the remaining bidder for the asset
management business unit.
36. The Individual Defendants have represented in the proxy they
circulated to Liberty shareholders that, during this time Sun Life purportedly
indicated that its preferred structure was to purchase the annuity business
segment, outright, I.E., in the form that conferred significant tax benefits on
Mutual at the expense of Liberty and its public shareholders.
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However, the Individual Defendants have not disclosed in the proxy why Sun Life
indicated that it would prefer to structure the transaction in this way.
37. On April 20, 2001, the remaining bidder for Liberty's asset
management business informed Liberty that it would not be able to proceed with
the proposed purchase at that time.
38. Sun Life was informed of this development and advised that it
wished to proceed with its purchase of Liberty's annuity segment nonetheless.
39. Prior to this time, the Individual Defendants had insisted that the
sales of Liberty's annuity and asset management businesses be signed and
approved simultaneously, and that each segment sale be conditioned on the
simultaneous closing of the other. This had been a major issue for each of the
segment bidders during negotiations, as neither bidder wanted its transaction
subject to the risk that the other sale might not close. As a result, the
bidders would likely have offered a higher price had the Individual Defendants
not insisted that the simultaneous closing was a condition of the sale.
40. Notwithstanding the collapse of the proposed sale of Liberty's
asset management segment, the Individual Defendants and Mutual decided to go
forward with the sale of the annuity segment to Sun Life.
41. The Individual Defendants also held a number of further
negotiations with Sun Life about the sale of Liberty's annuity business to Sun
Life during this time, wherein they agreed, to indemnify Sun Life for certain
related matters. However, they did not seek an increase in the price to be paid
by Sun Life for Liberty's annuity business notwithstanding that Sun Life would
no longer run the risk of its purchase being contingent upon the simultaneous
sale of Liberty's asset management business.
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42. Nor did the Individual Defendants seek additional bids for
Liberty's asset management business, notwithstanding that the fact that its sale
was no longer contingent upon the simultaneous sale of Liberty's asset
management business made it more valuable than the last time they had offered
it. Further, the Individual Defendants do not disclose why they failed to seek
out additional bidders at this time in their proxy statement submitted to
Liberty shareholders.
43. On May 2, 2001, the Individual Defendants formally voted to approve
the Sun Life transaction, and the final documents were executed.
44. On May 4, 2001, Credit Suisse discussed the possible sale of
Liberty's asset management business with defendant Fleet. Shortly thereafter,
the CEO of Fleet, Terrence Murray, called defendant Kelly, the CEO of Mutual and
the Chairman of Liberty, to advise him that Fleet was considering making a bid
for Liberty's asset management business.
45. On May 7, 2001, Fleet's President, Mr. Gifford, called defendant
Countryman and informed him that Fleet was willing to bid between $925 million
and $975 million for Liberty's asset management business, subject to due
diligence.
46. Defendant Countryman subsequently called Mr. Gifford and informed
him that Liberty was willing to proceed to an agreement with Fleet if Fleet
could offer $975 million and if Fleet would agree to the major points in a draft
purchase agreement that would be forwarded by Liberty's counsel. Countryman did
this negotiating, notwithstanding that, as earlier alleged, he was a member of
the board of Fleet's parent, as well as a member of Mutual's board, and hence
had a conflict of interest.
47. On May 11, 2001, Liberty's counsel delivered a proposed form of
agreement to Fleet which was based on the agreement entered with Sun Life, I.E.,
an agreement providing for
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the outright sale of the asset management business unit, not a merger with
Liberty. No consideration was given at this time to trying to persuade Fleet to
merge with the remainder of Liberty, and no effort was made at this time to try
to persuade Fleet to consider doing so, notwithstanding that were Fleet to agree
to such a merger it would have benefited Liberty's public shareholders and
notwithstanding that the outright sale the Individual Defendants proposed
conferred substantial tax benefits on Mutual at the expense of Liberty's public
shareholders.
48. On May 15, 2001, Mr. Gifford called Mr. Countryman and told him
that Fleet was willing to pay $975 million and that the draft purchase agreement
forwarded by Liberty's counsel was largely acceptable.
49. Several weeks later, on May 24, 2001, after Fleet had made
substantial preparations to consummate the purchase along the lines of the
purchase agreement agreed to on May 15, Credit Suisse asked Fleet to submit an
alternative bid to acquire the asset management business unit through a merger
with Liberty after giving effect to the sale of the annuity segment to Sun
Trust, I.E., a bid that would not convey substantial tax advantages to Mutual at
the expense of Liberty and its public shareholders.
50. Given the late date, Fleet declined to offer a bid for such a
transaction. Further the Individual Defendants have not disclosed any other
reason Fleet indicated for Fleet's refusal to offer such a bid in the proxy they
circulated to Liberty shareholders.
51. During the week of May 28, 2001, Fleet informed Liberty that after
conducting due diligence, it was revising its offer downward to $850 million.
The Individual Defendants responded that they could agree to
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a price of $900 million provided that Fleet would agree to the stock purchase
agreement in substantially the form last presented to Fleet, I.E., a form that
conveyed tax advantages on Mutual at the expense of Liberty and its public
shareholders.
52. Fleet agreed, and the parties continued their final negotiations
with respect to the transaction.
53. On June 2, 2001, Credit Suisse was approached by a bank indicating
that it believed it could offer a higher purchase price for Liberty's asset
management business unit than what it believed Fleet was offering. The
Individual Defendants decided not to pursue further conversations with this
bank.
54. During the period after negotiations with Fleet began, Mutual and
the Individual Defendants discussed what Liberty's public shareholders should be
paid for their shares when the shell of Liberty was merged into Mutual after the
two business units were sold off to Sun Life and Fleet. They gave serious
consideration to paying these public shareholders nothing more than their PRO
RATA share of the monies to be received from Sun Life and Fleet, purportedly
because Fleet had not submitted a bid to acquire Liberty's asset management
business using a merger as a vehicle. Again, since each of Liberty's directors
is also a director of Mutual, no truly independent person was negotiating for
Liberty's public shareholders.
55. On June 4, 2001, the Individual Defendants met and approved the
transaction with Fleet whereby the asset management business unit was sold to
Fleet.
56. At the same meeting, the Individual Defendants discussed the going
private transaction whereby Liberty would be merged into Mutual and also
discussed the substantial tax benefits that would accrue to Mutual but not be
available to Liberty's public shareholders. They concluded that if the amounts
paid by Sun Life and Fleet were distributed PRO RATA to Liberty's public
shareholders as part of the going private transaction that they would be
entitled to $32.17
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per share. However, they decided to increase that to $33.44 per share to take
into account the tax benefits to Mutual from the manner in which the transaction
was structured.
57. In doing so, the Individual Defendants all had a conflict of
interest since the were all members of Mutual's board, and they did not appoint
any independent person or committee to make this decision. Further, they have
acknowledged that the $33.44 figure was based solely on a highly "theoretical"
"estimate" of what the public shareholders "might" have received if the Fleet
transaction had been structured as a merger with Liberty.
58. Further, the specifics of how this amount was determined are not
disclosed by the Individual Defendants in the proxy they circulated to Liberty's
public shareholders or elsewhere.
59. The $33.44 amount to be paid to Liberty's public shareholders is
unfairly and fraudulently low given the Individual Defendants' structuring of
the transaction (with the aiding and abetting of Fleet) in a way that benefits
Mutual at the expense of Liberty and its public shareholders.
FIRST CAUSE OF ACTION
(BREACH OF FIDUCIARY DUTY)
60. Plaintiff repeats and realleges all previous allegations as if
set forth in full herein.
61. By reason of the foregoing, and including but not limited to their
taking steps at every turn to negotiate a deal that is effectuated as an
outright purchase of Liberty's two business units that confers great tax
advantages on Mutual, instead of as a merger that would result in a higher real
net gain to all shareholders, and their negotiation (with a disabling conflict
of interest) of a grossly inadequate adjustment in the amount to be paid to
Liberty's public shareholders to compensate them, the defendants have breached
their fiduciary duties to plaintiff and the Class and engaged in fraudulent and
illegal acts designed to divert assets belonging to Liberty and its
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public shareholders to Mutual, and/or aided and abetted in the breach of those
fiduciary duties and those fraudulent and illegal acts.
62. As a result, plaintiff and the Class have been and will be damaged.
SECOND CAUSE OF ACTION
(VIOLATION OF MASS. G.L.c. 110A Section 404, Section 410 AND
c. 110C , Section 7, Section 9)
(AGAINST ALL DEFENDANTS EXCEPT FLEET)
63. Plaintiff repeats and realleges all previous allegations as if set
forth in full herein.
64. The conduct complained of above constitutes evasive, deceptive,
manipulative or grossly unfair practices in connection with a takeover as
prohibited by Mass. G.L. c. 110C,ss.7.
65. Further, in the proxy statements the Individual Defendants and
Liberty and Mutual have circulated to plaintiff and class members it is
represented that the Individual Defendants unanimously believe that the Sun Life
transaction, the Fleet transaction and the squeeze out merger with Mutual are in
the best interests of Liberty's shareholders.
66. Those statements are untruthful in that based on the foregoing, it
appears that the Individual Defendants do not believe that the transactions are
in the best interests of Liberty's shareholders, but that they are in the best
interests of Mutual.
67. Further, the statements are misleading in that defendants have
concealed the following material facts, among others, necessary to make their
statements in the proxy statement not misleading in light of the context in
which they were made:
(a) what steps the Individual Defendants took to find a
replacement for defendant Countryman (as alleged, it was defendants' inability
to find a replacement for Countryman that first caused defendants to consider
the sale of Liberty and its business units);
(b) why Sun Life indicated that it preferred to acquire Liberty's
annuity business through a cash purchase and not a merger, I.E., why Sun Life
indicated it wished to
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acquire Liberty's annuity business in a way which conferred substantial tax
benefits on Mutual, but not on Liberty's other public shareholders;
(c) why defendants did not seek to increase the price to be paid
by Sun Life for Liberty's annuity business in April and May 2001 after they
decided that the sale would no longer be conditioned on the simultaneous sale of
Liberty's asset management business to another purchaser;
(d) why defendants did not seek additional bids for Liberty's
asset management business in April and May 2001 after the original bidder
indicated on April 20, 2001, that it would not be able to proceed with the
proposed purchase;
(e) why Fleet indicated that it would not make an alternative bid
to acquire Liberty's asset management business through a merger after the
Individual Defendants asked it to do so on May 24, 2001;
(f) how the Individual Defendants arrived at their "theoretical"
"estimate" that $33.44 is what Liberty's public shareholders would have received
had the sale of Liberty's asset management business to Fleet been structured
through a merger of Liberty with Fleet.
68. The Individual Defendants are liable not only because they have
signed the proxy statement but also because they are directors of Mutual and
Liberty and because they control the same.
69. As a result of the conduct alleged above, plaintiff and the class
have and/or will be damaged.
WHEREFORE, plaintiff demands judgment as follows:
1. determining that this action is a proper class action under
Massachusetts Rule of Civil Procedure 23, and that plaintiff is a proper class
representative;
2. declaring that defendants have breached their fiduciary duties to
plaintiff and the Class and aided and abetted such breaches;
3. declaring that defendants have violated Mass G.L. c.
110A,ss.404,ss.410 and Mass G.L. c. 110Css.7,ss.9;
4. Requiring defendants to make full disclosure of the material facts
that they have omitted from their proxy statement to date;
5. enjoining the proposed transaction and, if the proposed transaction
is consummated, rescinding it;
6. awarding plaintiff and the class compensatory and/or rescissory
damages as allowed by law;
7. awarding interest, attorney's fees, expert fees and other costs, in
an amount to be determined; and
8. granting such other relief as the Court may find just and proper.
JURY TRIAL DEMANDED
Plaintiff hereby demands a trial by jury.
Dated: October 9, 2001
By its attorneys,
-------------------------------------
Thomas G. Shapiro BBO #454680
SHAPIRO HABER & URMY LLP
75 State Street
Boston, Massachusetts 02109
(617) 439-3939
Attorneys for Plaintiff
Of Counsel:
Richard B. Brualdi
Kevin T. O'Brien
The Brualdi Law Firm
29 Broadway, Suite 1515
New York, New York 10006
(212) 952-0602
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