Benchmark Capital Partners IV, L.P. v. Vague

Facts

Plaintiff Benchmark Capital Partners, IV, L.P. invested in the first two series of the defendant Juniper Financial Corp.’s preferred stock. When additional capital was required, defendant Canadian Imperial Bank of Commerce was a willing investor. As a result of that investment, Benchmark’s holdings were relegated to the status of junior preferred stock. Juniper’s certificate of incorporation grants the junior preferred stockholders a series vote on corporate actions that would materially adversely change the rights, preference and privileges of the series of junior preferred stock. Juniper now must seek more capital to satisfy regulators and business requirements, so it elected to structure a merger. The merger is scheduled to occur on July 16, 2002 with a subsidiary merging with and into Juniper. As part of this transaction, Juniper, after the merger, intends to issue a new series of preferred, the series D preferred stock, to CIBC in exchange for a $50 million capital contribution. Due to the events, the equity holdings of the junior preferred stockholders will be reduced from 29% to 7%.