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COURT OF COMMON PLEAS
HAMILTON COUNTY, OHIO
___________________________________________
)
EARL TUCKER )
6 Kim Court ) Case No. A9901672
Gilford, CT 06437, on behalf of himself and ) ---------------
all others similarly situated, ) (_______________, Judge)
)
)
Plaintiff, )
)
vs. ) CLASS ACTION COMPLAINT
) ----------------------
WIZTEC SOLUTIONS, LTD., CONVERGYS )
CORPORATION, STEVEN G. ROLLS, BRIAN ) (JURY TRIAL DEMANDED)
C. HENRY, ROY T. HEGGLAND, YARON )
POLAK, THOMAS SMALDONE, KATRIEL )
ZIMET and RON ZOR, )
)
Defendants. )
____________________________________________)
Plaintiff, by his attorneys, alleges upon information and belief, except
as to paragraph 1 which is alleged upon knowledge, as follows:
THE PARTIES
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1. Plaintiff is the owner of shares of common stock of Defendant Wiztec
Solutions, Ltd ("Wiztec" or the "Company") and has been the owners continuously
of such shares since prior to the wrongs complained of herein.
2. Defendant Wiztec, an Israeli company, has offices located at 8 Maskit
Street, Herzlia, 46766 Israel. The Company transacts business in this county.
Wiztec develops, markets, and supports computer software which provides
multi-channel subscription television system operators with a comprehensive
customer care and billing system. The Company's software, marketed under the
"Wizard" name, incorporates subscriber management functions
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such as billing, collection, customer service, and work order processing. As of
September 30, 1998, Wiztec had approximately 6.6 million shares outstanding.
Wiztec shares trade on the NASDAQ National Market.
3. Defendant Convergys Corporation ("Convergys"), a Ohio corporation,
has offices located at 201 East Fourth Street, Cincinnati, Ohio. Convergys is a
provider of outsourced billing and customer management solutions, which
encompass activities such as targeting, acquiring, serving and retaining
customers on behalf of its clients. Convergys beneficially owns approximately
70% of the outstanding shares of Wiztec.
4. Defendant Steven G. Rolls ("Rolls") is and was at all relevant times
hereto a director of Wiztec and Chief Financial Officer of Convergys.
5. Defendant Brian C. Henry ("Henry") is and was at all relevant times
hereto a director of the Company and Chief Operating Officer of Convergys
Information Management Group, Inc. ("Convergys IMG"), a subsidiary of Convergys.
6. Defendant Roy T. Heggland ("Heggland") is and was at all relevant
times hereto a director of the Company and Senior Vice President and General
Counsel of Convergys.
7. Defendant Yaron Polak ("Polak") is and was at all relevant times
herein President, Chief Executive and Director of the Company.
8. Defendants Thomas Smaldone, Katriel Zimet and Ron Zor are and were at
all relevant times hereto directors of the Company.
9. The Defendants referred to in paragraphs 4 through 8 are collectively
referred to herein as the "Director Defendants."
10. By reason of the above Director Defendants' positions with the
Company as officers and/or directors, said individuals are in a fiduciary
relationship with Plaintiff and the other public shareholders of Wiztec, and owe
Plaintiff and the other members of the Class the highest obligations of good
faith, fair dealing, due care, loyalty and full, candid and adequate disclosure.
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CLASS ACTION ALLEGATIONS
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11. Plaintiffs bring this action for declaratory, injunctive and other
relief on their own behalf and as a class action pursuant to Ohio Rules of Civil
Procedure on behalf of all common shareholders of Wiztec (except Defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants) or their successors in interest, who are
being damaged by the wrongful acts of the Defendants as described herein.
12. This action is properly maintainable as a class action for the
following reasons:
(a) The class of shareholders for whose benefit this action is
brought is so numerous that joinder of all Class Members is impracticable. There
are approximately 6.6 million shares of Wiztec outstanding, owned by at least
hundreds of shareholders of record. Members of the Class are scattered
throughout the United States.
(b) There are questions of law and fact which are common to members
of the Class and which predominate over all questions affecting only individual
members, including whether the Defendants have breached or aided and abetted a
breach of the fiduciary duties owed by them to Plaintiff and members of the
Class by reason of the acts described herein and whether Plaintiff and the other
Class Members would be irreparably damaged if the Defendants are not enjoined
in the manner described below.
(c) The claim of Plaintiffs are typical of the claims of the other
members of the Class and Plaintiff have no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation of this
nature. Accordingly, Plaintiff is adequate representatives of the Class and will
fairly and adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent adjudications with respect to
individual members of the Class and establish incompatible standards of conduct
for the party opposing the Class.
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(f) Defendants have acted and are about to act on grounds generally
applicable to the Class, thereby making appropriate final injunctive or
corresponding declaratory relief with respect to the Class as a whole.
FACTUAL ALLEGATIONS
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13. On March 3, 1999, the Company announced over the BUSINESSWIRE that
Formula Systems (1985) Ltd. along with certain other shareholders have
consummated a transaction with Convergys IMG to sell all of their ordinary
shares in Wiztec, approximately 50% of the outstanding ordinary shares of the
Company. Formula, received for its 42% holdings in Wiztec ordinary shares $35
million in net proceeds, or $15.25 a share. This increased Convergys' holdings
in Wiztec to 70% of the Company's ordinary shares. In connection with the
consummation of the transaction, Dan Goldstein, Gad Goldstein and Shai Beilis
resigned as directors of the Board of Directors of Wiztec and were replaced by
Steven G. Rolls, Brian C. Henry and Roy T. Heggland.
14. On March 26, 1999, Convergys announced over the BUSINESSWIRE that
its board of directors has authorized its wholly-owned subsidiary, Convergys
Israel Investments Ltd., to acquire through a tender offer all of the
outstanding shares of Wiztec at a price of $18.30 per share. This proposal is
for the 30% of Wiztec ordinary shares outstanding not beneficially owned by
Convergys.
15. The announcement that Wiztec is considering acquiring the remaining
outstanding public shares of Wiztec comes at a time when Wiztec has performed
well and when Defendants who are most knowledgeable about the Company's existing
and future financial condition expect it will continue to perform well. As
stated above, Convergys IMG owns a 70% stake in Wiztec and three of Wiztec Board
members are also Convergys officers and/or directors.
16. Because of Convergys control over Wiztec, no competition proposal
can reasonably be made.
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17. The purpose of any proposed acquisition is to enable Convergys to
acquire the shares of Wiztec it does not already own for Convergys' own benefit
and at the expense of Wiztec's public shareholders.
18. Defendants and Convergys are in a position of control and power over
the Wiztec minority shareholders and have access to internal financial
information about Wiztec, its true value, expected increase in true value and
the benefits to Convergys of 100% ownership of Wiztec to which Plaintiff and the
Class members are not privy. Defendants would be using their positions of power
and control to benefit Convergys this transaction, to the detriment of the
Wiztec shareholders and in breach of the duties owed by Convergys, Wiztec and
their directors to the Wiztec shareholders.
19. The Director Defendants have clear and material conflicts of
interest and are acting to better their own interests and the interests of
Convergys at the expense of Wiztec's public shareholders.
20. The loyalties of Wiztec's Board of Directors are, at best, divided
and they cannot be expected to act in the best interest of Wiztec's
shareholders.
21. Defendants have breached, conspired to breach, or aided and abetted
the breach of their fiduciary and other common law duties owed to Plaintiff and
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 in order to benefit themselves. Any contemplated transaction would not
be the product of arm's length negotiations and is not based upon any
independent evaluation of the current value of Wiztec's common stock, assets or
business. Defendants have failed and refused to take those steps necessary to
ensure that the Company's shareholders will receive maximum value for their
shares of Wiztec's stock. As a result, Defendants are acting to put their own
interests ahead of the public shareholders, all at the expense and to the
detriment of the Company's public stockholders.
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22. By virtue of the acts and conduct alleged herein, the Defendants,
who control the actions of the Company, have violated their fiduciary duties
owed to Plaintiff and the Class in that they have not and are not exercising
independent business judgment and have acted and are acting to the detriment of
Wiztec's public shareholders for their own personal benefit.
23. As a result of the actions of the Defendants, Plaintiff and the
other members of the Class have been and will be damaged that they have not and
will not receive their fair proportion of the value of Wiztec's assets and
businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their Wiztec shares.
24. Plaintiff seeks preliminary and permanent injunctive relief and
declaratory relief preventing Defendants from inequitably and unlawfully
depriving Plaintiff and the Class of their right to realize a full and fair
value for their stock.
25. Plaintiff and the Class have no adequate remedy at law. Only through
the exercise of this Court's equitable powers can Plaintiff be fully protected
from the immediate and irreparable injury which Defendants' actions threaten to
inflict.
26. Unless enjoined by this Court, Defendants will continue to breach
their fiduciary duties owed to Plaintiffs and the other members of the Class, by
Wiztec's failing to take the steps set forth herein above, excluding the Class
from its fair proportionate share of Wiztec's valuable assets and businesses,
all to the irreparable harm of the Class.
27. Plaintiff and the other members of the Class have no adequate remedy
at law.
WHEREFORE, Plaintiff demands judgment as follows:
(A) declaring Plaintiff as adequate Class representatives;
(B) declaring this to be a proper class action;
(C) preliminarily and permanently enjoining the proposed transaction
until Defendants have taken the steps set forth herein and requiring Defendants
to make full and fair disclosure of all material facts to the class before the
completion of any such transaction;
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(D) to the extent, if any, that the transaction complained of is
consummated prior to the entry of this Court's final judgment, rescinding such
transaction or transactions, including, but not limited to rescissory damages;
(E) directing that Defendants pay to Plaintiff and the class all
damages caused to them and account for all profits and any special benefits
obtained as a result of their unlawful conduct;
(F) awarding to Plaintiffs the cost and disbursement of this action,
including a reasonable allowance for the fees and expenses of Plaintiff's
attorneys and expert; and
(G) granting such other further relief as may be just and proper.
Dated: March 29, 1999 Respectfully submitted,
STRAUSS & TROY
By:
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Richard S. Wayne (0022390)
William K. Flynn (0029536)
2100 PNC Center
OF COUNSEL: 201 East Fifth Street
Cincinnati, OH 45202-4186
(513) 621-2120
FARUQI & FARUQI, LLP
415 Madison Avenue
New York,NY 10017
(212) 966-1074
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JURY DEMAND
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Plaintiff demands a trial by jury for all issues so triable.
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Richard S. Wayne (0022390)
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