## Facts

- Oceanic Exploration Company was a Delaware corporation; the Grynberg family group beneficially owned about 76% of its stock.
- On February 10, 1976, the Grynberg group executed a written agreement placing 51% of Oceanic’s stock into a voting trust, transferring voting power to three outside directors for a four-year term ending February 9, 1980.
- On June 2, 1976, the parties executed an instrument titled “Amendment to Voting Trust Agreement and Purchase Option Agreement,” which placed all of the Grynberg group’s 76% block (about 5.22 million shares) into the trust and changed the term to five years from June 2, 1976.
- The June 2 instrument included an option for Oceanic to buy all or part of the deposited shares for five years, with a first-year price of $2.87 per share (about half of the then-market price) and 10% annual increases.
- The broader restructuring included Jack Grynberg’s resignation from certain corporate positions and a non-competition commitment, described as intended to stabilize corporate control and respond to financial difficulties.
- The February and June documents were filed under Delaware’s voting-trust statute, 8 Del. C. § 218.
- The Court of Chancery treated the June 2 instrument as a voting trust (or extension) governed by § 218 and held it invalid for noncompliance, including § 218(b)’s limitation that extensions may occur only within the last two years of the trust’s term.
- Oceanic pursued an interlocutory appeal challenging the legal characterization that made § 218’s timing/formal requirements dispositive.

## Issues

1. Whether the June 2, 1976 instrument had to be treated as a “voting trust” (or an extension) within 8 Del. C. § 218, so that statutory noncompliance rendered it invalid as a matter of law.
2. Whether filing an agreement under § 218 conclusively establishes that the arrangement is, in substance, a statutory voting trust subject to § 218’s restrictive requirements.
3. Whether a complex corporate reorganization instrument combining voting control, an issuer purchase option, and related commitments should instead be evaluated under equitable and contractual principles rather than voided mechanically under § 218.

## Decision

- The Delaware Supreme Court reversed the Court of Chancery’s interlocutory order.
- The Court held that § 218 should not be applied mechanically to invalidate the June 2, 1976 arrangement based solely on formal characterization as a voting trust or extension.
- The Court concluded the Chancery Court erred in determining, as a matter of law, that the June 2 instrument necessarily fell within the “situation contemplated” by § 218’s restrictive provisions.
- The case was remanded for further proceedings, including development of the facts and an equitable determination regarding enforceability.

## Legal Principles

- Whether an arrangement is a statutory voting trust under 8 Del. C. § 218 depends on substance and the statutory purpose, not merely on labels or the fact of filing under § 218.
- Statutory restrictions aimed at historical abuses associated with voting trusts should not be applied reflexively to atypical, multi-term corporate control arrangements that may serve legitimate corporate purposes.
- When a transaction combines voting control mechanisms with additional contractual features (e.g., issuer purchase options and related performance commitments), courts may need to assess enforceability through broader corporate, contract, and equitable analysis rather than per se invalidation.
- An interlocutory determination voiding such an arrangement requires careful fit between the instrument and the specific statutory limits invoked.

## Conclusion

The Delaware Supreme Court held that the June 2, 1976 control-and-option agreement could not be declared void solely through a rigid application of § 218’s voting-trust restrictions and remanded for fact development and equitable evaluation of whether, and on what terms, the agreement should be enforced.


Oceanic Expl. Co. v. Grynberg, 428 A.2d 1 (Del. 1981)