Emergency Shareholder Meeting that Didn’t Happen

imageI promised to write a blog post about what was supposed to be our shareholder meeting.  So here it goes: the meeting didn’t happen.  Or rather, Fitzpatrick and Myers from Davis Malm showed up and made for an awesome movie scene that is Facebook + Tarantino – blood & cussing. Cast:

Bernstein – wearing all black, clean, composed, careful not to come across as hostile in any way, but firm.

Myers – erratic, Dustin Hoffman might do him justice, although would need to eat a little more.  Gets there early, realizes I am already in the room, runs out. Aggressive, sits down, starts to rail the meeting through.  Apparently he is supposed to the temporary secretary or some such? They didn’t really explain that part.

I asked if we could do audio recording in the interests of accurate recordkeeping and because meeting notes at the last meeting were not properly kept, but they refused.  Fine, this will work in my favor since now the onus is on them and, given that the meeting was not conducted in good faith in multiple respects and they are participating in the freeze-out, effectively there was no meeting.

Some choice moments (from memory):

Myers: I am commencing the shareholder meeting.

Bernstein: Sorry.  Who are you?

Myers: I am the secretary (or some such).  I am commencing the meeting.

Bernstein: With all due respect, please hold on.  What is going on?

Fitzpatrick: He is the secretary, we are having a shareholder meeting.

Bernstein: Without the shareholders…

Myers: The meeting is by proxy.  There will be time for questions. I am commencing the meetings.

Bernstein: Gentlemen, with all due respect, I am very confused.  I really don’t feel comfortable with this.  I’d like to understand.  Are you representing the corporation?

Fitzpatrick: No, we are proxies.

Bernstein: So are you being paid by the Corporation?

Fitzpatrick: No.

Bernstein: So are you being paid by Moshe and Klaus?

Fitzpatrick: No.  We are actually not being paid.  We are just proxies.

Bernstein: I am confused.  Mr. Fitzpatrick is a lawyer acting against me in a lawsuit and now he is a proxy?  So who is who?  Mr. Fitzpatrick is Moshe and Mr. Myers is Klaus?

Fitzpatrick: The other way around.

Bernstein: … I see…  well I object to this meeting.  There is clear conflict of interests.

Myers: We don’t have time for this. I am commencing the meeting.

Fitzpatrick: Mr. Myers, please continue.

Nikita: Gent…

Myers: (cuts Nikita off) At this meeting to elect directors…

You get the idea.  One of my favorite moments was:

Bernstein: Mr. Myers, with all due respect…  (Fitzpatrick loudly chewing gum)   Mr. Fitzpatrick, I am sorry, but would you mind losing the gum? It’s distracting.

Fitzpatrick: Actually (dramatic pause, Fitzpatrick glares at Bernstein) I would.

BAM!  Take THAT Mr. Bernstein.  I got a skateboard too, want me to take that sh*t and ollie in your FACE?  Why yes, I would love that, Mr. Fitzpatrick.  That would be quite awesome actually.

So anyway, then they basically try to shove a vote with a ballot, which has effectively “I vote for Moshe and Klaus to be directors” vs. “I vote for someone else”.  I didn’t even have time to review the ballot.  Myers at some point:

Myers: “Here is the ballot, Mr. Bernstein. You can sign that. No? Let me fill that out for you.”

Yanks ballot.  Start filling out.

Myers: “We’ll record you as voting for yourself then.  Thank you Gentlemen, I am closing the meeting.”

Fitzpatrick: “I second”.

Bernstein: “Sorry, what?  Gentlemen, if I could have a minute to compose myself and take some notes.”

Fitzpatrick: “Sure.”

Myers: waits a bit. Gets up “I am not going to wait while he is typing.”  and starts walking towards the door…  hilariously stops in the doorway just before walking out “Tom, would you like me to wait for you?”.

Oh guys, come on.  Really?

So, bad faith meeting, but it gets better.  The ballot actually is a violation of 156D Section 7.28(b), which reads:

(a) Unless otherwise provided in the articles of organization or bylaws, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

(b) Shareholders do not have a right to cumulate their votes for directors unless the articles of organization so provide.

(c) A statement included in the articles of organization that “a designated voting group of shareholders are entitled to cumulate their votes for directors”, or words of similar import, means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.

In “I vote for X and Y”, you are actually cumulating votes because you are voting twice.  On top of that, the vote was for two directors, when our bylaws clearly say that there must be a minimum of three.  And our bylaws state clearly that only a stockholder who elected a director can remove that directors, which means that stockholders elect director to represent their interests.

So there you have it. No meeting in good faith, an illegal ballot, and I am still frozen out.  But somehow, deep inside, I think we are moving in the right direction.  In the meantime, will need to prep a bunch of things to file next week.

1 Comment

Filed under JoVE, Legal

One response to “Emergency Shareholder Meeting that Didn’t Happen

  1. Pingback: Allow Me to Reintroduce Myself… I am your Director. | Nikita's Blog

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