IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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MAGTEN PARTNERS, L.P., MAGTEN GROUP TRUST, :
MAGTEN OFFSHORE FUND LTD., ALLEN LURAY, :
LESLIE LURAY, THE BAKAL COMPANY, ELLEN'S : Civil Action No. !
TRUST U/W J.H. PEARLSTONE, PEGGY MEYERHOFF :
PEARLSTONE FOUNDATION, THE ESTHER
PEARLSTONE FOUNDATION, RICHARD L.
PEARLSTONE, THE RICHARD L. PEARLSTONE 54 ;
TRUST, THE ELLEN P. LEARY 54 TRUST,
MADELAINE SA.CHS, ROBERT SACHS, H. SANDRA :
LURAY, THE PEARLSTONE FAMILY FUND, ANNE :
EMBRY, JULIE KAMMERER, T.R. EMBRY TRUST :
FOR THE BENEFIT OF DORIS EMBRY, GENIERAL :
MOTORS EMPLOYEES GLOBAL GROUP PENSION :
TRUST, JENNIFER RUSSELL, DEPARTMENT OF FIRE :
AND POLICE PENSIONS - CITY OF LOS ANGELES, :
and VEY SMITHERS,
Plaintiffs,
- against -
RICHARD JALKUT, PETER J. BARRIS, KEVIN J. :
MARONI, PATRICK J. KERINS, STEPHEN A.
REINSTADTLER, A. R. CARPENTER, DAVID
LEMMON, THOMAS N. HUND, COLONIAL PIPELINE i
COMPANY, THE BURLINGTON NORTHERN AND :
SANTA FE RAILWAY COMPANY and CSX
TRANSPORTATION, INC.,
Defendants.
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COMPLAIE
Plaintiffs, by their attorneys, as and for their complaint, allege upon
knowledge as to themselves and their own acts and upon information and belief as to all
other matters, as follows:
Introduction
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1. Plaintiffs are collectively the beneficial holders of approximately
SNIPPETS:
MAGTEN PARTNERS, L.P., MAGTEN GROUP TRUST,:
TRUST U/W J.H. PEARLSTONE, PEGGY MEYERHOFF: PEARLSTONE FOUNDATION, THE ESTHER
MOTORS EMPLOYEES GLOBAL GROUP PENSION: TRUST, JENNIFER RUSSELL, DEPARTMENT OF FIRE:
Plaintiffs are collectively the beneficial holders of approximately 20% of certain senior
On April 6, 2000, Pathnet announced that it had closed, over plaintiffs' objection, a
Its directors therefore owed duties of good faith, care and loyalty to plaintiffs in
Pathnet's directors nonetheless approved and implemented the transaction in breach of their
As for the Railroads, they sought to obtain substantial tax benefits from the transaction and
As a result of defendants' wrongful conduct, on April 2,200l --less than one year after the
Mr. Reinstadtler is also a vice president and director of Toronto Dominion Capital, Inc. --
Mr. Reinstadtler was personally involved in the Reorganization Transaction and related events
Patrick J. Kerins has been a director of Pathnet from and after July 1997, and a director of
Mr. Kerins is also the managing director of the general partner of Grotech Partners IV, L.P.
A. R. Carpenter was a director of New Pathnet from April 2000 until on or around October 2000.
David Lemmon was a director of New Pathnet from April 2000 until March 2001.
Thomas N. Hund was a director of New Pathnet from March 2000 until IMarch 200 1.
During that time Mr. Hund was a senior vice president and the chief financial officer of
Pathnet continued to recklessly pursue the business plan required by the Reorganization
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