MR. JUSTICE MURPHY delivered the opinion of the court.
This is an interlocutory appeal from an order which (1) denied plaintiff's motion for a temporary injunction to restrain defendants from exercising their purported rights under a stock repurchase agreement, and (2) vacated a previously entered partial restraining order.
The plaintiff, until termination of his employment, effective December 29, 1964, was president of the defendant Simoniz Company. The individual defendants are all directors of Simoniz, all but two are also officers of Simoniz, and they all directly, beneficially or otherwise control in the aggregate in excess of 2/3 of all voting shares of Simoniz.
Plaintiff's verified 2-count amended complaint seeks an injunction, an accounting and damages. This appeal concerns only whether temporary injunctive relief can be granted upon the allegations of Count I, in which plaintiff seeks equitable relief permanently enjoining defendants from repurchasing plaintiff's 20,000 shares of stock of the defendant company. A stock repurchase agreement between plaintiff and defendant Simoniz executed contemporaneously with plaintiff's employment by Simoniz "in a senior executive capacity," provides that "Simoniz shall have the right and obligation to purchase" these shares at book value, within sixty days after plaintiff's termination of employment by defendant Simoniz.
On December 1, 1964, plaintiff filed his original complaint and on December 18, 1964, moved for a temporary injunction. On December 28, 1964, plaintiff filed an amended motion for temporary injunction restraining defendants "from taking any steps or action
The order also granted leave to plaintiff to file an amended complaint. On January 4, 1965, plaintiff filed his verified amended complaint. After a hearing on January 6, 1965, the court ordered the status quo to be maintained under the December 30 order, ordered plaintiff to post a $10,000 "injunction bond," with surety, and referred the matter to a master in chancery to take testimony and report his conclusions "on plaintiff's motion for temporary injunction."
On January 13, 1965, after a hearing, the master filed his written report, recommending "that the amended motion of plaintiff for a temporary injunction be denied by the court," to which plaintiff filed written exceptions. On January 20, 1965, the court approved the master's report, denied plaintiff's motion for a temporary injunction, and vacated the "restraining order" of December 30, 1964. This interlocutory appeal by plaintiff followed, and on January 25, 1965, this court, after argument, denied plaintiff's motion to stay the force and effect of the order of the Circuit Court of January 20, 1965.
The amended complaint, in substance, alleges the following. As an important inducement to plaintiff to accept employment as president of Simoniz Company, a position he has held at all times relevant to this cause, he was given the opportunity to and did purchase 20,000 Class A (voting) shares of Simoniz Company, out of a total of 749,760 of these shares issued
The amended complaint alleges that for more than a year prior to the filing of the instant action, Simoniz has been exploring the possibilities of sale of the company, to buyers named in the amended complaint, and plaintiff has been chiefly responsible for all negotiations in connection with such possibilities. These negotiations have been benefited and aided by plaintiff's conducting them. Potential buyers were interested in a purchase partly because plaintiff was the chief operating officer of Simoniz, and because he might occupy the same position with any buyer. After devoting over a year to negotiating a sale of defendant Simoniz, a sale to one buyer or another was almost at the point of consummation, when plaintiff was abruptly dismissed without cause. He was informed of his dismissal and the defendants' intention to exercise their purported rights under the repurchase agreement by telephone while in London on a business trip for defendant Simoniz. The demand for plaintiff's stock was made for its book value, a price substantially less than the price which any genuinely interested buyer would be willing to pay for the shares. One of the purposes
The amended complaint also alleges that since plaintiff's discharge, defendants wrongfully carried on further negotiations with potential buyers, intending to sell control of Simoniz in such a way as to deny plaintiff, as a minority shareholder, his just share of the proceeds. The defendants, by this course of conduct, intend to appropriate for the benefit of the controlling shareholders these corporate opportunities to the detriment of plaintiff as a minority shareholder. If defendants succeed in acquiring plaintiff's shares, the result would be to deprive him of valuable and unique rights as a shareholder, Simoniz not being a publicly held corporation and its shares not traded on any exchange or recognized market, and also deprive him of the promised capital gain should an advantageous sale be made in the future. Also, The First National Bank of Chicago, where the 20,000 shares are pledged as collateral, will yield to a demand defendants will make to transfer the shares to them, if there is no court order restraining defendants from making such demand. Without the protection of an applicable order, it is alleged, the bank will not agree to any further extension of plaintiff's loan, and the plaintiff would be unable to pay in full, pay any deficiency, or refinance this loan. Allowing defendants to repurchase these shares prior to a determination of this cause on the merits, would permit defendants to exert unfair advantage and duress on the plaintiff in this litigation.
Plaintiff prays for a temporary injunction, "to be made permanent upon a hearing of this cause," to restrain defendants from taking any further steps to enforce any of their alleged rights under the stock repurchase agreement; to restrain defendants from
Count II of the amended complaint, alleging "an unlawful combination and conspiracy," and praying for $1,500,000 in damages, is not involved in the present appeal.
Plaintiff states, "The prime equitable relief he [plaintiff] seeks in his Amended Complaint is a permanent injunction forever barring these defendants from acquiring his 20,000 shares...." Plaintiff does not contend that defendants did not fulfill the technical prerequisites prescribed in the repurchase agreement. There is no contention that this repurchase agreement is invalid per se. Illinois cases have held similar contracts to be valid (Douglas v. Aurora Daily News Co., 160 Ill.App. 506, 510 (1911); People v. Galskis, 233 Ill.App. 414 (1924); 13 ILP, Corporations, § 142, p 363; 18 CJS, Corporations, § 391, p 926), and specifically enforceable (Arentsen v. Sherman Towel Service Corp., 352 Ill. 327, 185 NE 822 (1933)). The amended complaint does not allege that any fraud, oppression or unfair conduct entered into the making of the contract, that plaintiff did not have full knowledge of its provisions, or that there was not adequate consideration. (Arentsen v. Sherman Towel Service
We consider the statements made in Lawrence v. Sudman, 70 F.Supp. 387 (1945), at page 394, to be persuasive here:
Nothing said in this opinion is to be construed as a determination by this court of the merits of the amended complaint as to any other action or remedy which plaintiff may seek to pursue. We hold only that the amended complaint does not show that the chancellor abused his discretion in denying temporary injunctive relief.
For the reasons given, that part of the order appealed from is affirmed.
BURMAN P.J. and KLUCZYNSKI, J., concur.