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EXHIBIT (c)(16)
SUMMONS
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CRANDON CAPITAL PARTNERS,
Plaintiff
vs.
L. BEN LYTLE, FRANK C. WITTHUN,
PATRICK M. SHERIDAN, JOHN C. ALPIN,
BIRCH E. BAYH, JOHN C. CRANE,
MITCHELL E. DANIELS, JR., CATHERINE CIVIL ACTION NO. 15719-NC
E. DOLAN, ERNIE GREEN, DUANE R.
HOUSER, THOMAS C. ROBERTS, WILLIAM SUMMONS
W. ROSENBLATT, JAMES B. STRADTNER,
MICHAEL L. SMITH, and ACORDIA INC.,
Defendants
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named defendants so that, within 20 days after service
hereof upon defendants, exclusive of the day of service, defendants shall serve
upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O. Box 1070
Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof and of the complaint.
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above an
answer to the complaint, judgment by default will be rendered against you for
the relief demanded in the complaint.
Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------------
Register in Chancery
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
CRANDON CAPITAL PARTNERS, |
Plaintiff | CIVIL ACTION NO. 15719-NC
|
VS. | SUMMONS PURSUANT
| TO 10 DEL.C. Sec. 3114
L. BEN LYTLE, FRANK C. WITTHUN, PATRICK M. |
SHERIDAN, JOHN C. ALPIN, BIRCH E. BAYH, JOHN |
C. CRANE, MITCHELL E. DANIELS, JR., CATHERINE |
E. DOLAN, ERNIE GREEN, DWANE R. HOUSER, |
THOMAS C. ROBERTS, WILLIAM W. ROSENBLATT, |
JAMES B. STRADTNER, MICHAEL L. SMITH, and |
ACORDIA, INC., |
Defendants |
|
|
|
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to 10
Del.C. Sec. 3114 upon Acordia Inc., a Delaware corporation, by serving its
registered agent The Corporation Trust Company, which is designated for service
of process in Delaware, so that within the time required by law, such defendants
shall serve upon Kevin Gross, Esq., plaintiff's attorney whose address is P.O.
Box 1070 Wilmington, DE 19899-1070 an answer to the complaint.
To serve upon defendants a copy hereof, of the complaint, and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc)(1).
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by 10 Del.C. Sec.
3114*, to serve on plaintiff's attorney named above an answer to the complaint,
judgment by default may be rendered against you for the relief demanded in the
complaint.
Dated June 4, 1997 /s/ Dianne M. Kempski
----------------------- --------------------------------------
Register in Chancery
*The text of 10 Del.C. Sec. 3114 is set out on the reverse of this Summons
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CIVIL ACTION NO. 15719-NC
CRANDON CAPITAL PARTNERS,
Plaintiff
vs.
L. BEN LYTLE, ET AL,
Defendant
SUMMONS
1. L. Ben Lytle
2. Frank C. Witthun
3. Patrick M. Sheridan
4. John C. Alpin
5. Birch E. Bayh
6. John C. Crane
7. Mitchell E. Daniels, Jr.
8. Catherine E. Dolan
9. Ernie Green
10. Dwane R. Houser
11. Thomas C. Roberts
12. William W. Rosenblatt
13. James B. Stradtner
14. Michael L. Smith
by serving the registered
agent for: Acordia Inc.
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
pursuant to 10 Del.C. section 3114
SERVICE TO BE COMPLETED BY
SPECIAL PROCESS SERVER
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ----------------------------------------X
CRANDON CAPITAL PARTNERS, )
a Florida Partnership, )
Individually )
And On Behalf of All Others )
Similarly Situated, ) C.A. No. 15719-NC
)
Plaintiff, )
)
- against - )
) CLASS ACTION COMPLAINT
L. BEN LYTLE, FRANK C. WITTHUN, )
PATRICK M. SHERIDAN, JOHN C. )
ALPIN, BIRCH E. BAYH, JOHN C. )
CRANE, MITCHELL E. DANIELS, JR., )
CATHERINE E. DOLAN, ERNIE GREEN, )
DWANE E. HOUSER, THOMAS C. )
ROBERTS, WILLIAM W. ROSENBLATT, )
JAMES B. STRADTNER, MICHAEL L. )
SMITH, and ACORDIA INC., )
)
Defendants. )
- ----------------------------------------X
Plaintiff, by its attorneys, alleges upon personal knowledge as to its
own acts and upon information and belief as to all other matters, as follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a class action
on behalf of all persons, other than defendants, who own the securities of
Acordia Inc. ("Acordia" or the "Company") and who are similarly situated (the
"Class"), for injunctive and other relief. Plaintiff seeks the injunctive
relief herein, inter alia, to enjoin the implementation of a proposed
transaction whereby Anthem Insurance Cos. ("Anthem"), which presently owns
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approximately 67% of Acordia's outstanding common stock, would buy all of the
outstanding common stock which it does not already own. Alternatively, in the
event that the proposed transaction is implemented, plaintiff seeks to recover
damages caused by the breach of fiduciary duties owed by the defendants.
2. The members of the board of directors who are also directors of
Anthem suffer from irreconcilable conflicts of interest between their fiduciary
duty to maximize value for Acordia's public shareholders and their selfish
interest to pay the lowest possible price. Because of the close personal and
business relationship between these members and other directors of Acordia, it
cannot be expected that any of Acordia's directors will be able to carry out
their fiduciary duties faithfully and impartially to ensure Acordia's public
shareholders are treated fairly and receive maximum value for their investment
in the Company.
3. The individual defendants are obligated to take all necessary
steps to ensure that Acordia's public shareholders will receive the maximum
value realizable for their shares, including implementation of a bidding
mechanism to foster a fair auction of the Company to the highest bidder or the
exploration of strategic alternatives which will return maximum value to
plaintiff and the class. Because of their conflicting interests, the individual
defendants will not fulfill their obligations since an auction or the
exploration of strategic alternatives would force Anthem to pay more for the
Company than they would otherwise be willing to pay.
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Parties
4. Plaintiff is and, at all relevant times, has been the owner of
shares of Acordia common stock.
5. Acordia is a holding company with subsidiaries that provide
insurance brokering, risk management consulting, managed health care
integration and administration, workers' compensation administration, and
underwriting. Acordia maintains its principal executive offices at 120 Monument
Circle, Indianapolis, Indiana 46204. Acordia has approximately 13,005,106
shares of common stock outstanding and hundreds of stockholders of record.
Anthem still owns 67% of the Company's stock. Acordia stock trades on the New
York Stock Exchange.
6. Anthem is a corporation duly organized and existing under the laws
of the State of Indiana. Anthem is a mutual insurance company and provider of
health insurance and managed health care services in Indiana, Kentucky, and
Ohio. Anthem maintains its principal executive offices at 120 Monument Circle,
Indianapolis, Indiana 46204.
7. Defendant L. Ben Lytle ("Lytle"), at all times material hereto, has
been Chairman of the Board and a director of Acordia. He served as the
Company's Chief Executive Officer until November 1996 and as President from
March 1993 to November 1994. He has served as President, Chief Executive
Officer, and a director of Anthem since March 1989. From February 1994 until
October 1995 he served as Chairman of the Board of Anthem. Lytle owns
approximately 1% of the outstanding shares of the Company. Lytle,
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among other things, serves a member of the Advisory Board of CID Equity
Partners, L.P. ("CID"), a director of IPALCO Enterprises, Inc. ("IPALCO") and
its subsidiary, Indianapolis Power & Light Company ("Indianapolis"), and Bank
One, N.A.
8. Defendant Frank C. Witthun ("Witthun"), at all times material
hereto, has been President, Chief Executive Officer, and a director of Acordia.
9. Defendant Patrick M. Sheridan ("Sheridan"), at all times material
hereto, has been a director of Acordia. From 1989 to August 1996 he served as
Executive Vice President and Chief Financial Officer of the Company. From 1987
until 1991 he served as the Treasurer of Anthem, and has served as Chief
Financial Officer and Executive Vice President of Anthem since 1987.
10. Defendant John C. Aplin ("Aplin"), at all times material hereto,
has been a director of Acordia. Aplin, among other things, is currently a
general partner of CID.
11. Defendant Birch E. Bayh ("Bayh"), at all times material hereto,
has been a director of Acordia.
12. Defendant John C. Crane ("Crane"), at all times material hereto,
has been a director of Acordia.
13. Defendant Mitchell E. Daniels, Jr. ("Daniels"), at all times
material hereto, has been a director of Acordia. Daniels is also a director of
IPALCO and Indianapolis.
14. Defendant Catherine E. Dolan ("Dolan"), at all times material
hereto, has been a director of Acordia.
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15. Defendant Ernie Green ("Green"), at all times material hereto, has
been a director of Acordia.
16. Defendant Dwane R. Houser ("Houser") has been a director of the
Company since September 1995. Houser has also been Chairman of the Board of
Anthem since October 1995.
17. Defendant Thomas C. Roberts ("Roberts"), at all times material
hereto, has been a director of Acordia.
18. Defendant William W. Rosenblatt ("Rosenblatt"), at all times
material hereto, has been a director of Acordia.
19. Defendant James B. Stradtner ("Stradtner"), at all times material
hereto, has been a director of Acordia.
20. Defendant Michael L. Smith ("Smith"), at all times material
hereto, has been a director of Acordia. Smith has been the Chief Operating and
Chief Financial Officer of American Health Network, an Anthem subsidiary, since
April 1996.
21. The defendants named in paragraphs 7 through 20 are hereinafter
referred to as the "Individual Defendants."
22. Because of their positions as officers/directors, defendants owe
fiduciary duties of loyalty and due care to plaintiff and the other members of
the Class.
CLASS ACTION ALLEGATIONS
23. Plaintiff brings this case in its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants,
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or any of the Company's principal stockholders, who will be threatened with
injury arising from defendants' actions as is described more fully below.
24. This action is properly maintainable as a class action.
25. The Class is so numerous that joinder of all members is
impracticable. The Company has approximately 3.7 million shares of common
stock. There are hundreds of record and beneficial stockholders.
26. There are questions of law and fact common to the Class including,
inter alia, whether:
a. defendants have breached and will continue to breach their
fiduciary and other common law duties owned by them to plaintiff and the
members of the Class; and
b. plaintiff and the other members of the Class would be
irreparably damaged by the wrongs complained of herein.
27. Plaintiff is committed to prosecuting the action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.
28. The prosecution of separate actions by individual members of the
Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for
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defendants, or adjudications with respect to individual members of the Class
which would as a practical matter be dispositive of the interests of the other
members not parties to the adjudications or substantially impair or impede
their ability to protect their interests.
29. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
30. By the acts, transactions, and courses of conduct alleged herein,
defendants, in breach of their fiduciary duties, have not dealt fairly with the
plaintiff and the Class.
31. On May 21, 1997, The New York Times reported that the Company was
in discussions with Anthem about a reorganization of its health business,
including Anthem's acquisition of the 33% of Acordia it does not already own.
Anthem also announced that it was in discussions with a third party about a
sale of Acordia's brokerage business.
32. Previously, on February 7, 1997, The Wall Street Journal reported
that the Board of Directors had approved a "strategic review" of Acordia's
relationship with Anthem.
33. On June 2, 1997, Acordia and Anthem announced that they had agreed
to enter into a definitive merger agreement, whereby Anthem will acquire,
through a two step tender offer, all the outstanding shares of Acordia common
stock for $40 per share.
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The tender offer is subject to several conditions, including the tender and
nonwithdrawal of at least a majority of the then-outstanding Acordia shares not
owned by Anthem or its subsidiaries.
34. As set forth above, the directors of Acordia suffer from
conflicts of interest either because they are affiliated with Anthem or
maintain close business and personal relationships with the members of
Acordia's senior management. In these circumstances, the Individual Defendants
are not in a position to protect the interests of Acordia's public
shareholders, particularly in determining whether or not Acordia should be sold
at this time. A sale of the Company at this time could well deny Class members
their right to share proportionately in the true value of Acordia's valuable
assets, profitable business, and future growth in profits and earnings, while
usurping the same for the benefit for Anthem.
35. Additionally, defendants have not seriously considered other
potential purchasers of Acordia or its stock although the Anthem offer put the
Company into play in February 1997.
36. Defendants have violated fiduciary and other common law duties
owed to the plaintiff and the other members of the Class in that they have not
and are not exercising independent business judgment, and have acted and are
acting to the detriment of the Class.
37. As a result of defendants' action, plaintiff and the Class have
been and will be damaged by the breaches of fiduciary
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duty and, therefore, plaintiff and the Class will not receive the fair value
of Acordia's assets and businesses.
38. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the Class, and will succeed
in their plan to exclude plaintiff and the Class from the fair proportionate
share of Acordia's valuable assets and businesses, all to the irreparable harm
of the Class.
39. Plaintiff and the Class have no adequate remedy of law.
WHEREFORE, plaintiff prays for judgment and relief as follows:
a. declaring that this lawsuit is properly maintainable as a
class action and certifying plaintiff as representative of the Class;
b. declaring that the defendants and each of them have
committed a gross abuse of trust and have breached their fiduciary duties to
plaintiff and the other members of the Class;
c. preliminarily and permanently enjoining defendants and their
counsel, agents, employees, and all persons acting under, in concert with, or
for them, from proceeding with or implementing the transaction;
d. in the event the transaction is consummated, rescinding it
and setting it aside;
e. awarding compensatory damages against defendants, jointly
and severally, in an amount to be determined at
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trial, together with prejudgment interest at the maximum rate allowable by law;
f. awarding plaintiff and the Class their costs and disbursements and
reasonable allowances for plaintiff's counsel and experts' fees and expenses;
and
g. granting such other and further relief as may be just and proper.
Dated: June 2, 1997
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ Harmon M. Monhait
--------------------------------
Suite 214 Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
Of Counsel:
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
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