Opinion ID: 1799426
Heading Depth: 2
Heading Rank: 7

Heading: June 28th Board Meeting Hostilities Between Management and Gulf.

Text: The June 28th board meeting began with President Leslie reading from a prepared statement in which he related that he had received a number of reports concerning the true intentions of Gulf. In view of these reports, he said that management felt a duty to inquire of Gulf's nominees to the board what was the true financial condition of Gulf and whether it intended to gain control of Fenestra to use Fenestra's resources to finance Gulf's development operations. The entire board meeting was stenographically recorded. In launching into its business, the resignations of Brainin and Kaiserman were accepted and Gulf nominees, Friedman and Farley, were elected in their places. Immediately thereafter, hostilities broke into the open. What had been brewing for some time quickly came to a head. Fenestra's attorney and director, Mr. Klein, using a prepared set of questions, proceeded on behalf of the managing directors, to question Gulf's other nominees for the record. During the course of questioning Klein said (to be brief about it) that the purposes of Gulf acquiring control were unlawful. The first nominee questioned was a Mr. London, a certified public accountant from Baltimore, Maryland. After certain preliminary inquiries were made as to London's background and relations with Gulf, Mr. Klein then proceeded to ask him questions probing into the need of Gulf for funds and into its purposes and plans for acquiring Fenestra stock. On the advice of Mr. Friedman, who is an attorney, London refused to answer the questions. Other Gulf nominees, Herzfeld and Burgess, were also advised not to respond to any questions of Mr. Klein beyond that of their personal qualifications to serve as directors. Gulf later characterized this as third degree treatment. Fenestra management said it was done pursuant to their fiduciary duty. It was considered pointless to proceed with any further questions of London, Herzfeld, and Burgess, whereupon the board took up the matter of the proposed purchase of Freeman Industries. President Leslie and Vice-President Porch strongly recommended that the board approve the transaction. It was felt that the acquisition was an advantageous one for Fenestra; terms were discussed as well as other details of the Freeman operation. No action was taken on the matter at this June 28th meeting although management indicated that its 6 directors had already made up their minds to purchase Freeman. The next scheduled directors' meeting was set for July 29, 1963.