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1
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LETTER OPINION
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EXTRACTED KEY WORDS
PEERLESS MEETING ADJOURNMENT SHAREHOLDER LAW REARGUMENT FACTS MOTION SWIB DELAWARE DEL INTERFERE VOTE JUSTIFICATION REASONS MEM COURT ARGUE DIRECTORS WILLIAMS READING MERIT GALVADON SUMMARY JUDGMENT FIDUCIARY DUTIES EXERCISE PRIMARY PURPOSE DENY STANDARD |
COURT OF CHANCERY
OF THE
S TATE OF D ELAWARE
W IL L I A M 8. C H AN D L E R III
CHANCELLCJR January 5,200O G E O R G E
David C. McBride
Bruce Silverstein
Danielle Gibbs
Young Conaway Stargatt & Taylor
P.O. Box 391
Wilmington, DE 19899
Rodman Ward, Jr.
Stephen D. Dargitz
Skadden, Arps, Slate, Meagher & Flom
P.O. Box 636
Wilmington, DE 19899
Re: State of Wisconsin Investment Board
v. Peerless Systems Corp., et al.
Civil Action No. 17637
Dear Counsel:
Defendants Peerless Systems Corporation ("Peerless") and Edward A.
Galvadon have moved for reargument on a portion of this Court's December
4, 2000 Memorandum Opinion' pursuant to Rule 59(f).2 The defendants
challenge the Court's denial of summary judgment to both the plaintiff, the
State of Wisconsin Investment Board ("SWIB"), and the defendants on
' State of Wisconsin Investment Board v. Peerless Systems Corp., Del. Ch., C.A. No.
17637, Chandler, C. (Dec. 4, 2000).
2 Ct. Ch. R. 59(f).
1
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2
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DEFENDANTS NOTICE AND MOTION FOR REARGUMENT
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EXTRACTED KEY WORDS
VOTES COURT ADJOURNMENT MEETING DEFENDANTS MOTION STOCKHOLDER LAW DELAWARE GAVALDON SESSION EDWARD REARGUMENT PURSUANT INTERFERE IMPEDE EXPECTATION SWIB RULING FAILURE HEREBY SUMMARY JUDGMENT GOVERNANCE REASONABLE STOCKHOLDER LAWFUL CUSTOM CAST MANAGEMENT SOLICITING |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN INVESTMENT
BOARD,
Plaintiff,
:,
V .
Civil Action ?
PEERLESS SYSTEMS CORPORATION : No. 17637NC,
and EDWARD A. GAVALDON,
; ~.
/
Defendants. I
DEFENDANTS' NOTICE-AND MOTION FOR REARGUMENT
TO: David C. McBride, Esquire Andrew N. Vollmer, Esquire
YOUNG, CONAWAY, WILMER, CUTLER &
STARGATT & TAYLOR PICKERING
Rodney Square North 2445 M Street, N.W.
P.O. Box 391 Washington, DC 20037-1420
Wilmington, Delaware 19801 (202) 663-6000
(302) 571-6639
PLEASE TAKE NOTICE that the defendants Peerless Systems
Corporation ("Peerless") and Edward A. Gavaldon ("Gavaldon") (collectively, the
"Defendants") hereby respectfully move the Court for reargument pursuant to Rule
58(f) with respect to the Court's December 4,200O denial of Peerless' and Gavaldon's
motions for summary judgment on the following grounds:
1) The Court correctly held, quoting Williams v. Geier, Del. Supr., 671 A.2d
1368, 1376 (1996), that:
the application of the "compelling justification" standard set forth in
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3
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MEMORANDUM OPINION
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EXTRACTED KEY WORDS
PROPOSALS MEETING PEERLESS ADJOURNMENT ANNUAL MEETING DEFENDANTS VOTE COURT GALVADON DELAWARE POLLS SHARES SWIB OFFICERS PLAINTIFF DIRECTORS SUMMARY JUDGMENT DISCLOSURES PRIMARY PURPOSE ADJOURNMENT PERIOD RECONVENED MEETING FIDUCIARY DUTY OUTSTANDING STOCKHOLDERS INVESTORS JUSTIFICATION OPTION PLAN MATERIALS SPECIAL MEETING |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN 1
INVESTMENT BOARD, >>
Plaintiff, >>
V. ) Civil Action No. 17637
>
PEERLESS SYSTEMS 1
CORPORATION and 1
EDWARD A. GAVALDON, >)
Defendants. 1
MEMORANDUM OPINION
Date Submitted: September 27,200O
Date Decided: December 4,200O
David C. McBride, Bruce Silverstein and Danielle Gibbs, of YOUNG
CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; OF
COUNSEL: Andrew N. Vollmer and Steven Rosen, of WILMER, CUTLER
& PICKERING, Washington, D.C., Attorneys for Plaintiff.
Rodman Ward, Jr. and Stephen D. Dargitz, of SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP, Wilmington, Delaware; OF COUNSEL:
Michael A. Hood, of PAUL HASTINGS, JANOFSKY & WALKER, Costa
Mesa, California, Attorneys for Defendants.
CHANDLER, Chancellor
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4
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REPLY BRIEF IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT (PUBLIC VERSION)
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EXTRACTED KEY WORDS
SWIB SHAREHOLDERS ADJOURNMENT MEETING VOTES GAVALDON SUMMARY JUDGMENT DEL SYSTEMS CORPORATION SHARES DILUTION PLAINTIFF DEFENDANTS COUNSEL COURT PRIMARY PURPOSE ANNUAL MEETING VOTING POWER DILUTION DIRECTORS DISENFRANCHISEMENT AUTHORITIES MANAGEMENT INCENTIVE PLAN SWIB ARGUES GRANT OPTIONS FAIR OPPORTUNITY COSTA MESA CALIFORNIA PRELIMINARY STATEMENT |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN INVESTMENT
BOARD,
Plaintiff,
V . Civil Action No. 17637-NC
PEERLESS SYSTEMS CORPORATION
and EDWARD A. GAVALDON,
P U B L I C V E R S I O N
Defendants.
REPLY BRIEF IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT
BY PEERLESS SYSTEMS CORPORATION AND EDWARD A. GAVALDOh'
SKADDEN, ARPS, SLATE, MEAGHEI:
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
OF COUNSEL:
PAUL HASTINGS, JANOFSKY
& WALKER
695 Town Center Drive
1 7'h Floor
Costa Mesa, California 92626
(714) 668-6260
DATED: September 22,200O
-.
.
TABLE OF (CONTENTS
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5
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PLAINTIFFS MEMORANDUM IN SUPPORT OF EMERGENCY MOTION FOR PRELIMINARY INJUNCTION
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EXTRACTED KEY WORDS
COURT SWIB INJUNCTION OPTION SHARES SHAREHOLDER HARM PRELIMINARY INJUNCTION MOTION SUMMARY JUDGMENT DEL REASONS RELIEF INCENTIVE PLAN GRANT DEFENDANTS STOCK REQUEST COMPENSATION DELAWARE LAW MATTER PREVENTING COMPLAINT GAVALDON EQUITY RESOLUTION OUTWEIGHS ADEQUATE SUFFER SHAREHOLDER FRANCHISE |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN INVESTMENT
BOAFLD,
Plain tiff,
V. ) C.A. No. 17637
PEERLBSS SYSTEMS CORPORATION i
and EDWARD A. GAVALDON, >
Defendants.
PLAINTIFF'S MEMORANDUM 1N SUPPORT OF ITS
EMERGENCY .MOTION FOK A PRELIMINARY INJUNCTION
This case is about whether the shareholders of defendant Peerless Systems
Corporation properly approved the addition of one million shares to the company's
incentive stock op&n plan. Despite repeated requests, Peerless has refused to represent
to plamtiff State of Wisconsin Investment Board ("SWIB") that the company has not
issued and will not issue in the immediate future any options on these additional shares
SWIB therefore must request as an emergency and urgent matter an order from this Court
preventing Peer& from granting any options on any of the Peerless shares that are
implicated by SWIB's (complaint.
BACKGROUND
Unlike many motions for a preliminary injunction, this one arises in the course of
a pending proceedi.ng. SWIB, a significant shareholder owning over 10 percent of the
company's common stock, sued Peerless in December 1999 claiming that the company
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6
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PLAINTIFFS MEMORANDUM IN SUPPORT OF ITS MOTION FOR JUDGMENT ON THE PLEADINGS
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EXTRACTED KEY WORDS
PEERLESS DEFENDANTS COUNTERCLAIM MEETING GAVALDON DECLARATORY RELIEF JUDGEMENT COURT DEL PROPOSALS PEERLESS SYSTEMS CORPORATION SWIB MOTION FIDUCIARY DUTIES LIABILITY PLEADINGS WISCONSIN INVESTMENT CHIEF EXECUTIVE OFFICER DIRECTORS FILED SUIT ALLEGATIONS INCENTIVE PLAN COMMON STOCK COMPLAINT ADJOURNMENT PLAINTIFF STATE AMENDMENT PROXY STATEMENT INVESTORS |
INTHECOURTOFCHANCERYOFTHESTATEOFDELAWARE
INANDFORNEWCASTLECOUNTY
STATE OF WISCONSIN INVESTMENT )
BOARD,
;
Plaintiff,
;
V. C.A. No. 1'7637
t
PEERLESS SYSTEMS CORPORATION )
and EDWARD A. GAVALDON,
;
Defendants. )
PLAINTIFF'S MEMORANDUM IN SUPPORT OF ITS
MOTION FOR JUDGMENT ON THE PLEADINGS
On December 7, 1999, plaintiff State of Wisconsin Investment Board ("SWIB")
filed suit in this Court alleging that the defendants, Peerless Systems Corporation
("Peerless") and its Chairman and Chief Executive Officer, Edward A. Gavaldon,
inequitably and in breach of their fiduciary duties manipulated the voting at a shareholder
meeting, deceived the shareholders, and deprived the shareholders of their voting rights
to further the personal financial interests of Gavaldon, the remaining directors, and
others. Along with their answer, the defendants tiled a counterclaim purportedly brought
under 8 Del. C. 9 225(b) that sought declaratory relief but in essence simply restated the
denial of liability in the answer.
The Court should enter judgment on the pleadings in SWIB's favor and dismiss
the counterclaim. As a matter of law, the defendants may not invoke section 225(b),
which is expressly reserved for shareholders, and SWIB is not a proper defendant for a
section 225(b) action. In addition, the counterclaim does not go beyond the allegations of
the complaint, is essentially a general denial of SWIB's claim, and therefore is not an
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7
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ANSWER TO COUNTERCLAIM
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EXTRACTED KEY WORDS
PARAGRAPH SWIB ADMITS DEFENDANTS TRUTH COUNTERCLAIM INFORMATION SUFFICIENT DELAWARE COUNSEL HEREBY BYLAWS UNDERSTANDING THIRD SENTENCE RESPONSIVE PLEADING COUNTERCLAIM FAILS ASSERT DEL DANIELLE GIBBS ESQUIRE HEREBY CERTIFY FOREGOING HAND DELIVERV RODMAN WARD DARGITZ ARPS SLATE MEAGHER FLOM LLP RODNEY SQUARE WILMINGTON |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN INVESTMENT )
BOARD, >
Plaintiff, 1
V. ; C . A . N o . 17637NC f
- -
PEERLESS SYSTEMS CORPORATION i ---
and EDWARD A. GAVALDON, > `,?
> - -
Defendants. 1 . "
: ! Cd
ANSWER TO COUNTERCLAIM ' ' -z-
Plaintiff and Counterclaim Defendant, State of Wisconsin Investment Board ("SWIB"),
by and through its counsel, hereby answers the Counterclaim of the defendants, Peerless
Systems Corporation ("Peerless") and Edward A. Gavaldon, as follows:
1. S WIB admits the allegations of Paragraph 43.
2. SWIB admits the allegations of Paragraph 44.
3. SWIB admits the allegations of Paragraph 45.
4. SWTB admits the allegations of Paragraph 46.
5. SWIB admits the first sentence of Paragraph 47 except for the designation of the
place for reconvening the meeting; and denies the remaining allegations of Paragraph 47 for
lack of knowledge or information sufficient to form a belief as to the truth of those allegations.
6. SWIB admits the allegations of Paragraph 48 but refers to all the Bylaws for a
complete understanding of section 9.
7. SWIB admits the first and third sentence of Paragraph 49; and the remaining
allegations of Paragraph 49 contain legal conclusions to which no responsive pleading is
V V P 3 . 4 6 2 2 2 4 . 1
56336.1001
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8
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ANSWER AND COUNTERCLAIM
|
EXTRACTED KEY WORDS
DEFENDANTS VOTE STOCK SHARES SWIB COMPLAINT PARAGRAPH STOCKHOLDERS OPTION PLAN ANNUAL MEETING DEFENDANTS ADMIT ADJOURNMENT WISCONSIN INVESTMENT BOARD PROPOSALS OWNERS COUNTERCLAIM SYSTEMS CORPORATION DEFENDANTS DENY KNOWLEDGE AMENDMENT INVESTORS ADDITIONALLY AVER ALLEGATIONS SHAREHOLDER COMMON STOCK POTENTIAL DILUTION ISS ADJOURNED MEETING RESTRICTED STOCK STOCK AWARDS |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
STATE OF WISCONSIN INVESTMENT :
BOARD,
Plaintiff,
V .
Civil Action
PEERLESS SYSTEMS CORPORATION : No. 17637NC
and EDWARD A. GAVALDON,
Defendants.
ANSWER AND COUNTERCLAIM
After its unsuccessful efforts to persuade the stockholders of Peerless
Systems Corporation ("Peerless" or "the Company") to reject an amendment to the
Company's stock option plan, Plaimiff State of Wisconsin Investment Board (" SWIB")
seeks to undo the results of the stockholder vote through this action. Defendants Peerless
and Edward A. Gavaldon ("Gavaldon"), by their undersigned attorneys, respond as
follows to the allegations in the complaint:
1. Defendants deny knowledge or information sufficient to form a
belief as to the truth of the allegations in paragraph 1 of the complaint, except that
Defendants admit that as of January 3 1, 1999, SWIB was the owner of 985,000 shares of
common stock of Peerless, and Defendants admit that SWIB continues to own Peerless
common stock.
2. Paragraph 2 of the complaint is admitted.
3. Paragraph 3 of the complaint is admitted.
4. Paragraph 4 of the complaint contains legal conclusions to which
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9
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COMPLAINT
|
EXTRACTED KEY WORDS
PEERLESS PROPOSALS MEETING GAVALDON SWIB ADJOURNMENT POLLS STOCK PLAN VOTE SHARES VOTING DISCLOSURE AMENDMENT MATERIALS INCENTIVE PLAN DIRECTORS PLAINTIFF CLOSING MANIPULATING WISCONSIN DEFENDANT DEFEAT SOLICITING REASON BENEFICIAL OWNERS OFFICERS REPEATS FOREIGN SHAREHOLDER |
INTHECOURTOPCHA~VCERYOFTHESTATEOFDELAWARE
INANDFORNEWCASTLECOUNTY
STATE OF WISCONSIN INVESTMENT )
BOARD, > ,
Plaintiff,
V .
PEERLESS SYSTEMS CORPOUTION )
and EDWARD A. GAVALDON, 1
Defendants. 1
COMPLAINT
The defendant Peerless Systems Corporation ("Peerless"), through the actions of
its director, defendant Edwar'd A. Gavaldon, inequitably and in breach of their fiduciary
duties manipulaied the voting procedures at a shareholder meeting, deceived the
shareh.olders, and deprived the shareholders of their voting rights to further the personal
financial interests of Gavaldon, the remaining directors, and others. At the June 1999
annual meeting of shareholders, Peerless and Gavaldon, who apparently chaired the
meeting, knew the company was facing defeat on an amendment to Peerless's stock option
plan that was submitted for shareholder approval. Peerless and Gavaldon therefore
surreptitiously, without public disclosure to all shareholders, adjourned the meeting
without closing the polls on the stock option proposal while closing the polls on other
issues submitted for a shareholder vote. Gavaldon had a personal financial interest in
passing the stoc 1r option proposal and took the action to allow Peerless to continue
soliciting enough votes to pass the proposal. Peerless then gave the plaintiff, the State
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