Exhibit (a)(5)(F)
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
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IN AND FOR NEW CASTLE COUNTY
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) Case No. 18046NC
DAVID BRETT, )
)
Plaintiff, )
)
v. )
)
STEVEN C. HALSTEDT, JUSTIN L. JASCHKE, JAMES C. )
ALLEN, TRYGVE E. MYHREN, PAUL J. SALEM, YUKIMASA )
ITO, ARTHUR L. CAHOON, VERIO INC., and NIPPON )
TELEGRAPH AND TELEPHONE CORPORATION, )
)
Defendants. )
)
)
CLASS ACTION COMPLAINT
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Plaintiff alleges upon information and belief, except for paragraph 1
hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of the common stock of Verio Inc.
("Verio" or the "Company") since prior to the wrongs herein complained of and
continuously to date.
2. Verio is a corporation duly organized and existing under the laws of
the State of Delaware. The Company is the largest provider of Web sites for
businesses and is a leading provider of comprehensive Internet services.
3. Defendant Nippon Telegraph and Telephone Corporation ("NTT") is a
Japanese corporation and is the national telephone company of Japan. NTT owns or
controls approximately 11.4% of Verio. NTT acquired its Verio shares for
approximately $11 per share.
4. Defendant Steven C. Halstedt is Chairman of the Board of the Company.
5. Defendant Justin L. Jaschke is Chief Executive Officer and a Director
of the Company.
6. Defendant Yukimasa Ito is a Director of the Company and a Vice
President of NTT Communications Corp.
7. Defendants James C. Allen, Trygve E. Myhren, Paul J. Salem and
Arthur L. Cahoon are Directors of Verio.
8. The Individual Defendants are in a fiduciary relationship with
Plaintiff and the other public stockholders of Verio and owe them the highest
obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
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9. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
common stockholders of the Company (except the defendants herein and any person,
firm, trust, corporation, or other entity related to or affiliated with any of
the defendants) and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully described herein (the
"Class").
10. This action is properly maintainable as a class action because:
(a) The Class is so numerous that joinder of all members is
impracticable. As of March 14, 2000, there were approximately 78,724,424 shares
of Verio common stock outstanding owned by hundreds, if not thousands, of record
and beneficial holders;
(b) There are questions of law and fact which are common to the
Class, including, inter alia the following:
(i) whether defendants have breached their fiduciary and other
common law duties owed by them to plaintiff and the members of the Class; and
(ii) whether the Class is entitled to injunctive relief or
damages as a result of the wrongful conduct committed by defendants.
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(c) Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of the plaintiff are typical of the claims of other members of the Class and
plaintiff has the same interests as the other members of the Class. Plaintiff
will fairly and adequately represent the Class.
(d) Defendants have acted in a manner which affects plaintiff and
all members of the Class alike, thereby making appropriate injunctive relief
and/or corresponding declaratory relief with respect to the Class as a whole.
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, which would establish incompatible standards
of conduct for defendants, or adjudications with respect to individual members
of the Class which would, as a practical matter, be dispositive of the interests
of other members or substantially impair or impede their ability to protect
their interests.
SUBSTANTIVE ALLEGATIONS
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11. On May 7, 2000, Reuters reported that Verio and NTT announced that
they had entered into a definitive merger agreement whereby NTT will acquire the
Verio shares it does not already own for $60 per share in cash in a transaction
valued at $5.5 billion. Under the terms of the transaction as presently
proposed, a U.S. subsidiary of NTT will commence a cash tender offer for all of
Verio's outstanding common shares at a price of $60 per share no later than May
17, 2000.
12. Although the $60 per share offer represents a premium to Verio's
closing stock price on Friday, May 4, 2000, the offer is significantly below
Verio's recent high of $84 per share, reached in March 2000. Additionally, given
NTT's basis of $11 per share in the shares of Verio that it already owns, the
cost of the proposed acquisition to NTT will be approximately $55 per share.
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13. By entering into the agreement with NTT, the Verio Board has initiated
a process to sell the Company which imposes heightened fiduciary
responsibilities and requires enhanced scrutiny by the court. However, the terms
of the proposed transaction were not the result of an auction process or active
market check; they were arrived at without a full and thorough investigation by
the Individual Defendants; and they are intrinsically unfair and inadequate from
the standpoint of the Verio shareholders.
14. The Individual Defendants failed to make an informed decision, as no
market check of the Company's value was obtained. In agreeing to the merger, the
Individual Defendants failed to properly inform themselves of Verio's highest
transactional value.
15. According to a May 8, 2000 Bloomberg's article, "[b]oth companies said
there was at least one rival suitor for Verio, though they declined to provide
details."
16. The Individual Defendants have violated the fiduciary duties owed to
the public shareholders of Verio. The Individual Defendants' agreement to the
terms of the transaction, its timing, and the failure to auction the Company and
invite other bidders, and defendants' failure to provide a market check
demonstrate a clear absence of the exercise of due care and loyalty to Verio's
public shareholders.
17. The Individual Defendants' fiduciary obligations under these
circumstances require them to:
(a) Undertake an appropriate evaluation of Verio's net worth as a
merger/acquisition candidate; and
(b) Engage in a meaningful auction with third parties in an attempt
to obtain the best value for Verio's public shareholders.
18. The Individual Defendants have breached their fiduciary duties by
reason of the acts and transactions complained of herein, including their
decision to merge with NTT without making the requisite effort to obtain the
best offer possible.
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19. Plaintiff and other members of the Class have been and will be damaged
in that they have not and will not receive their fair proportion of the value of
Verio's assets and business, and will be prevented from obtaining fair and
adequate consideration for their shares of Verio common stock.
20. The consideration to be paid to Class members in the proposed merger
is unfair and inadequate because, among other things:
(a) The intrinsic value of Verio's common stock is materially in
excess of the amount offered for those securities in the merger
giving due consideration to the anticipated operating results,
net asset value, cash flow, and profitability of the Company.
(b) The merger price is not the result of an appropriate
consideration of the value of the Verio because the Verio Board
approved the proposed merger without undertaking steps to
accurately ascertain Verio's value through open bidding or at
least a "market check mechanism"; and
(c) By entering into the agreement with NTT, the Individual
Defendants have allowed the price of Verio stock to be capped,
thereby depriving plaintiff and the Class of the opportunity to
realize any increase in the value of Verio stock.
21. By reason of the foregoing, each member of the Class will suffer
irreparable injury and damages absent injunctive relief by this Court.
22. NTT, because of its stock ownership and representation on Verio's
Board has access to information about the Company that gives it an unfair
advantage over other potential bidders. NTT used this information to negotiate a
transaction favorable to itself and unfair to Verio's public shareholders.
Additionally, NTT knowingly aided and abetted the breaches of fiduciary duty
committed by the Individual Defendants in order to buy Verio at the lowest
possible price.
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23. Plaintiff and other members of the Class have no adequate remedy at
law.
WHEREFORE, plaintiff and members of the Class demand judgement against
defendants as follows:
(a) Declaring that this action is properly maintainable as a class action
and certifying plaintiff as the representative of the Class;
(b) Preliminarily and permanently enjoining defendants and their counsel
agents, employees and all persons acting under, in concert with, or for them,
from proceeding with, consummating, or closing the proposed transaction;
(c) In the event that the proposed transaction is consummated, rescinding
it and setting it aside, or awarding rescissory damages to the Class;
(d) Awarding compensatory damages against defendants, individually and
severally, in an amount to be determined at trial, together with pre-judgment
and post-judgment interest at the maximum rate allowable by law, arising from
the proposed transaction;
(e) Awarding plaintiff his costs and disbursements, including a reasonable
allowance for plaintiff's counsel and expert fees and expenses; and
(f) Granting plaintiff and the Class such other and further relief as the
Court may deem just and proper.
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ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: ______________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for the Plaintiff
OF COUNSEL:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
WEISS & YOURMAN
551 Fifth Ave., #1600
New York, NY 10176
(212) 682-3025
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