IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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DAVID SCHNEIDER, :
: C.A. No. 20088
Plaintiff, :
:
v. :
:
ATALANTA/SOSNOFF CAPITAL :
CORPORATION, JAY S. GOLDSMITH, :
RONALD H. MENAKER, MARTIN T. :
SOSNOFF, CRAIG B. STEINBERG and :
THURSTON TWIGG-SMITH, :
:
Defendants. :
:
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COMPLAINT
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Plaintiff, David Schneider, by his attorneys, alleges upon information
and belief, except as to paragraph 1. which is alleged upon personal knowledge,
as follows:
THE PARTIES
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1. Plaintiff David Schneider ("Plaintiff") is the owner of common stock of
Atalanta/Sosnoff Capital Corporation ("Atalanta/Sosnoff" or the "Company") and
has been the owner of such shares continuously since prior to the wrongs
complained of herein.
2. Atalanta/Sosnoff is a corporation duly existing and organized
under the laws of the State of Delaware, with its principal executive offices
located at 101 Park Avenue, New York, New York. Atalanta/Sosnoff, through its
operating subsidiaries, provides discretionary investment advisory, brokerage
and other related services.
3. Defendant Martin T. Sosnoff ("Sosnoff") is the founder of the Company
and has been, at all times relevant hereto, Chief Executive Officer, Chief
Investment Officer and Chairman of the
Board of Directors of Atalanta/Sosnoff. Sosnoff owns and/or controls
approximately 83% of the Company's outstanding common stock. As the majority
shareholder of Atalanta/Sosnoff, Sosnoff owes fiduciary duties of good faith,
fair dealing, loyalty, candor, and due care to plaintiff and the other members
of the Class.
4. Defendant Craig B. Steinberg ("Steinberg") is and at all times relevant
hereto has been a director of Atalanta/Sosnoff. Steinberg also serves as
President and Director of Research and has held other offices with the Company
and its subsidiaries since 1985.
5. Defendants Jay S. Goldsmith, Ronald H. Menaker and Thurston Twigg-Smith
are and at all times relevant hereto have been directors of Atalanta/Sosnoff.
6. The defendants referred to in paragraphs 3 through 5 are collectively
referred to herein as the "Individual Defendants."
7. The Individual Defendants, as directors of the Company, are in a
fiduciary relationship with plaintiff and the other public stockholders of
Atalanta/Sosnoff, and owe them the highest obligations of good faith, fair
dealing, due care, loyalty and full, candid and adequate disclosure.
CLASS ACTION ALLEGATIONS
------------------------
8. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Court of Chancery Rule 23, on behalf of himself and the public
shareholders of Atalanta/Sosnoff common stock (the "Class"). Excluded from the
Class are defendants herein and any person, firm, trust, corporation or other
entity related to or affiliated with any of the defendants.
9. This action is properly maintainable as a class action.
10. The Class is so numerous that joinder of all members is impracticable.
As of
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December 17, 2002, there were approximately 8.5 million shares of
Atalanta/Sosnoff common stock outstanding.
11. There are questions of law and fact which are common to the Class
including, inter a1ia, the following:
(a) whether the offer described herein is unfair to the Class;
(b) whether defendants have breached their fiduciary and other common
law duties owed by them to plaintiff and the other members of the Class and;
(c) whether plaintiff and the other members of the Class would be
irreparably damaged were the transactions complained of herein consummated.
12. Plaintiff is committed to prosecuting this 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. Accordingly, plaintiff is
an adequate representative of the Class and will fairly and adequately protect
the interests of the Class.
13. 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 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.
14. 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
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Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
-----------------------
15. On December 6, 2002, Atalanta/Sosnoff announced that it has received a
proposal from defendant Sosnoff to acquire the remaining 17% stake in the
Company that he doesn't already own for $12.50 per share in cash.
16. Sosnoff has timed the proposal to freeze out Atalanta/Sosnoff's public
shareholders in order to capture for himself Atalanta/Sosnoff's future potential
without paying an adequate or fair price to the Company's public shareholders.
17. Sosnoff timed the announcement of the proposed buyout to place an
artificial lid on the market price of Atalanta/Sosnoff's stock so that the
market would not reflect Atalanta/Sosnoff's improving potential, thereby
purporting to justify an unreasonably low price.
18. Sosnoff has access to internal financial information about
Atalanta/Sosnoff, its true value, expected increase in true value and the
benefits of 100% ownership of Atalanta/Sosnoff to which plaintiff and
the Class members are not privy. Sosnoff is using such inside information to
benefit himself in this transaction, to the detriment of the Atalanta/Sosnoff
public stockholders.
19. Sosnoff has clear and material conflicts of interest and is acting to
better his own interests at the expense of Atalanta/Sosnoff's public
shareholders. Sosnoff, with the acquiescence of the directors of
Atalanta/Sosnoff, is engaging in self-dealing and not acting in good faith
toward plaintiff and the other members of the Class. By reason of the
foregoing, Defendants have breached and are breaching their fiduciary duties to
the members of the Class.
20. Unless the proposed buyout is enjoined by the Court, defendants will
continue to breach their fiduciary duties owed to plaintiff and the members of
the Class to the irreparable harm
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of the members of the Class.
21. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as follows;
A. Ordering that this action may be maintained as a class action and
certifying plaintiff as the Class representative;
B. Preliminarily and permanently enjoining defendants and all persons
acting in concert with them, from proceeding with, consummating or closing the
proposed transaction;
C. In the event the proposed buyout is consummated, rescinding it and
setting it aside or awarding rescissory damages to the Class;
D. Directing defendants to account to Class members for their damages
sustained as a result of the wrongs complained of herein;
E. Awarding plaintiff the costs of this action, including reasonable
allowance for plaintiffs attorneys' and experts' fees;
F. Granting such other and further relief as this Court may deem just and
proper.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ Carmella P. Keener
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919 N. Market Street, Suite 1401
P.O. Box 1070
Wilmington, DE l9899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
SCHIFFRIN & BARROWAY, LLP
Marc A. Topaz
Patricia. C. Weiser
Three Bala Plaza East
Suite 400
Bala Cynwyd, PA 19004
(610) 667-7706