Solidus Networks v. Excel Innovations

I. BACKGROUND

Hoffman is the founder and a major shareholder of both Indivos and Excel. In 2000, Hoffman entered into a series of agreements (“Settlement Contracts”) with Indivos. These included the Settlement Agreement and General Release, the Voting Trust and Standstill Agreement, the Pledge Agree- ment, and the Proprietary Information and Inventions Agree- ment. One of the main purposes of these agreements was to separate Hoffman from the management of Indivos. Excel, which was controlled by Hoffman and separately owned Indivos shares, was not a party to the Settlement Agreement or the Pledge Agreement. However, Excel was a party to the Voting Trust and Standstill Agreement, which required Hoff- man and Excel to place their Indivos shares in a voting trust as collateral for their obligations under the Settlement Con-

IN RE EXCEL INNOVATIONS, INC. 11857

tracts. Section 9(a) of the Voting Trust and Standstill Agree- ment, which applied to Hoffman only, prohibited him from “individually or with others, directly or indirectly,” taking any action to “control, disrupt, or unduly influence the manage- ment or policies of [Indivos].” The parties agreed to submit any…