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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
ZERO.NET, INC.,
Plaintiff,
V. i CaseNo. /7@7-NC
JAMES G. COUCH, STEVEN T.
STENBERG, and CRL NETWORK
SERVICES, INC.,
Defendants. j
COMPLAINT SEEKING DAMAGES AND
RESCISSION FOR BREACH OF FIDUCIARY DUTIES
For its Complaint, plaintiff Zero.Net, Inc., a California corporation (`Zero.~et"),
alleges on information and belief as follows:
NATURE OF THE ACTION
1. This action arises out of plaintiff Zero.Net's investment of $5 million in
CRL Network Services, Inc. ("CRL") and the subsequent breach, by CRL director, majority
shareholder and CEO, defendant James G. Couch ("Couch"), and CRL director, defendant
Steven T. Stenberg ("Stenberg"), of fiduciary duties owed to Zero.Net. In April 1999, Zero.Net
paid $5 million to Couch in exchange for 542,888 shares of Couch's CRL common stock. Less
than eight months later, Couch caused CRL to enter into a merger agreement that sold all CRL
stock for a small fraction of the per share price paid by Zero.Net. In agreeing to the sale of CRL
on terms favoring Couch's personal interests to the unfair detriment of Zero.Net and by failing to
provide Zero.Net with sufficient information to evaluate its rights in connection with the
SNIPPETS:
JAMES G. COUCH, STEVEN T. STENBERG, and CRL NETWORK
RESCISSION FOR BREACH OF FIDUCIARY DUTIES
For its Complaint, plaintiff Zero.Net, Inc., a California corporation,
CRL Network Services, Inc. and the subsequent breach, by CRL director, majority
shareholder and CEO, defendant James G. Couch, and CRL director, defendant
of fiduciary duties owed to Zero.Net.
paid $5 million to Couch in exchange for 542,888 shares of Couch's CRL common stock.
Couch caused CRL to enter into a merger agreement that sold all CRL
In agreeing to the sale of CRL
currently representing itself to be an Internet Service Provider.
expand CRL from its traditional business as a basic ISP business,
customer networks, systems integration services, and hosting of customer Internet content.
business plan that Couch had outlined to Zero.Net in persuading Zero.Net to purchase CRL
stock, Couch set about dismantling CRL, stripping it down to an Internet "backbone" company.
long term investment in CRL and without imposing demands on Couch to make personal
On or about December 3, 1999, the CRL directors reached an agreement
The CRL directors additionally failed and refused to disclose to Zero.Net
decision regarding its appraisal rights.
Plaintiff Zero.Net is a California corporation with its principal place of
infrastructure and personnel base that the underwriters considered necessary to a successful
Couch, with complete disregard for the interests of stockholders other than himself, began
attached hereto as Exhibit A and incorporated by reference.
the materials fail to include any of the schedules
whether Couch is receiving any additional personal compensation in connection with the
CIU's ownership in other concerns (Schedule
therefore, there is little, if any, information publicly available to shareholders.
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