Raub v. Classics International Enter., No. Cv97 034 73 30 S (Nov. 16, 1999)

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]

ORDER The plaintiffs seek a temporary restraining order in order to enjoin the defendant corporation from entering into a merger with Zideo.com, Inc. The plaintiffs and the defendant have previously entered into a "Prejudgment Remedy Agreement", wherein the parties agreed to put $812,500.00 worth of the defendant's common stock in escrow for the plaintiffs. The agreement provides that if there are five consecutive trading days in which the closing price of the defendant's common stock is forty percent greater or less than a certain value, either party may petition the court to increase or decrease the number of shares in escrow. The plaintiffs now seek to enjoin a merger in which the number of shares issued by the defendant corporation would be greatly increased thereby risking dilution of the per share value.

The court finds that the price of this stock is extremely volatile, and bears little relationship to assets or earnings of the corporation which would normally influence the price of stock. Accordingly, using the price of the stock to determine the number of shares to be held in escrow would cause a frequent readjustment as to the number of shares held in escrow. Therefore, it is the order of the court that the present number of shares in escrow remain in escrow. If the stock maintains a trading price range for a period of sixty days, resulting in the value of the shares held in escrow being significantly increased or decreased, then either the plaintiff or the defendant may petition the court for substitution of a surety bond in the amount of $812,500, which petition will be granted by the court.

Accordingly, the court denies the request for a temporary restraining order to block the merger of the defendant with Zideo.com, Inc.

SKOLNICK, J.