IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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DAVID .I. STEINBERG and CHAILE B.
STEINBERG, Derivatively and on behalf of :
Digex, Inc.,
Plaintiffs, CIVIL ACTION NO.
V. :
DAVID CC. RUBERG, PHILIP A. CAMPBELL, :
JOHN C. BAKER, GEORGIE F. KNAPP,
JACK E. REICH, MARK K.. SHULL,
ROBERT M. MANNING, RICHARD A.
JALKUT, and INTERMEDIA
COMMUNICATIONS, INC,
IDefendants,
and ::
DIGEX, INC.;
Nominal Defendant.
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DERIVATIVE COMPLAINT
Plaintiffs, by their attorneys, allege upon personal knowledge as to their own
upon information and belief as to all other matters, as follows:
1. PlaintifFs bring this action derivatively on behalf of Digex, Inc.
the "Company") for irrjunctive and other relief. Plaintiffs seek injunctive relief herein, inter
enjoin the implementation of a transaction whereby WorldCorn Inc. ("WorldCorn") has agreed to
buy defendant Inter-media Communications, Inc. ("Intermedia"), the 54% owner of Digex, for
approximately $6 billion in stock and debt in order to gain control of Digex. Intermedia had put
Digex up for sale and had received at least one offer from Exodus Communications, Inc. ("Exodus")
to purchase Digex for $120 per #share, representing a significant premium for Digex stock, which
SNIPPETS:
Digex, Inc.,
SHULL, ROBERT M. MANNING, RICHARD A. JALKUT, and INTERMEDIA
Plaintiffs, by their attorneys, allege upon personal knowledge as to their own acts and
Plaintiffs seek injunctive relief herein, inter alia, to
approximately $6 billion in stock and debt in order to gain control of Digex.
thereby usurping Digex's corporate opportunity for itself.
Intermedia and Digex's Board of Directors, half of whom are also Intermedia Board members,
from a conflict of interest and divided loyalties and have breached their fiduciary duty of
Digex by permitting Intermedia to usurp Digex's corporate opportunity and approving the
WorldCorn transaction.
Plaintiffs are shareholders of Digex and have been shareholders during the
period when defendants breached their duties and committed the acts alleged herein.
shares an.d controls approximately 94.2% of the voting interest in Digex.
Executive Officer of Digex.
Intermedia currently owns approximately 54% of Digex's outstanding shares and controls
As the majority shareholder of Digex,
Intermedia owes a fiduciary duty of loyalty to Digex and its minority shareholders.
Specifically, Digex announced that second quarter 2000 sales more than tripled, and Digex
to sell Digex alone and instead insisted that buyers acquire Intermedia instead.
WorldCom and Digex had each approved a definitive merger agreement
in WorldCorn common stock, subject to a collar.
suffering from disabling conflicts of interest and divided loyalties,
and divided loyalties .which preclude them from exercising independent business judgment.
Preliminarily and permanently enjoining defendants and their counsel, agents,
Awarding Digex its damages caused by defendants' breach of fiduciary duty
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