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VantagePoint Venture Partners 1996 v. Examen, Inc.

VantagePoint Venture Partners 1996 v. Examen, Inc.

Supreme Court of Delaware

April 13, 2005, Submitted ; May 5, 2005, Decided

No. 127, 2005

Opinion

 [*1109]  HOLLAND, Justice:

This is an expedited appeal from the Court of Chancery following the entry of a final judgment on the pleadings. We have concluded that the judgment must be affirmed.

Delaware Action

On March 3, 2005, the plaintiff-appellant, Examen, Inc. ("Examen"), filed a Complaint in the Court of Chancery against VantagePoint Venture Partners, Inc. ("VantagePoint"), a Delaware Limited Partnership and an Examen Series A Preferred shareholder, seeking a judicial declaration [**2]  that pursuant to the controlling Delaware law and under the Company's Certificate of Designations of Series A Preferred Stock ("Certificate of Designations"), VantagePoint was not entitled to a class vote of the Series A Preferred Stock on the proposed merger between Examen and a Delaware subsidiary of Reed Elsevier Inc.

California Action

On March 8, 2005, VantagePoint filed an action in the California Superior Court seeking: (1) a declaration that Examen was required to identify whether it was a "quasi-California corporation" under section 2115 of the California Corporations Code 1; (2) a declaration that Examen was  [*1110]  a quasi-California corporation pursuant to California Corporations Code section 2115 and therefore subject to California Corporations Code section 1201(a), and that, as a Series A Preferred shareholder, VantagePoint was entitled to vote its shares as a separate class in connection with the proposed merger; (3) injunctive relief; and (4) damages incurred as the result of alleged violations of California Corporations Code sections 2111(a)(2)(F) and 1201.

 [**3] Delaware Action Decided

On March 10, 2005, the Court of Chancery granted Examen's request for an expedited hearing on its motion for judgment on the pleadings. On March 21, 2005, the California Superior Court stayed its action pending the ruling of the Court of Chancery. On March 29, 2005, the Court of Chancery ruled that the case was governed by the internal affairs doctrine as explicated by this Court in McDermott v. Lewis. 2 In applying that doctrine, the Court of Chancery held that Delaware law governed the vote that was required to approve a merger between two Delaware corporate entities.

On April 1, 2005, VantagePoint filed a notice of appeal with this Court. On April 4, 2005, VantagePoint sought to enjoin the merger from closing pending its appeal. On April 5, 2005, this Court denied VantagePoint's request to enjoin the merger from closing, but granted its request for an expedited appeal.

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871 A.2d 1108 *; 2005 Del. LEXIS 179 **

VANTAGEPOINT VENTURE PARTNERS 1996, a Delaware limited partnership, Defendant Below, Appellant, v. EXAMEN, INC., a Delaware corporation, Plaintiff Below, Appellee.

Prior History:  [**1] Court Below - Court of Chancery of the State of Delaware, in and for New Castle County. C.A. No. 1142-N. Upon appeal from the Court of Chancery.

Examen, Inc. v. VantagePoint Venture, 873 A.2d 318, 2005 Del. Ch. LEXIS 48 (Del. Ch., Mar. 31, 2005)

Disposition: AFFIRMED.

CORE TERMS

internal affairs, merger, Stock, incorporation, state law, shareholders, voting, foreign corporation, parties, rights, shares, stockholders, courts, separate class, outstanding, regulating, mandated

Business & Corporate Law, Shareholders, Meetings & Voting, General Overview, Governments, State & Territorial Governments, Elections, Foreign Corporations, Qualifications, Courts, Authority to Adjudicate, Legislation, Interpretation, Civil Procedure, Appeals, Standards of Review, De Novo Review, Trials, Jury Trials, Province of Court & Jury, Mergers & Acquisitions Law, Mergers, Duties & Liabilities of Shareholders, Corporate Formation, Place of Incorporation, Preliminary Considerations, Federal & State Interrelationships, Shareholder Actions, Actions Against Corporations, Internal Corporate Affairs, Choice of Law, Torts, Procedural Matters, Conflict of Law, Business & Corporate Compliance, Transportation Law, Interstate Commerce, State Powers, Constitutional Law, Congressional Duties & Powers, Commerce Clause, Special Meetings, Fundamental Changes, Corporate Governance, Transportation Law, Federal Powers