Rational Strategies Fund, a stockholder of SCBT Financial Corp. ("SCBT") has petitioned the court for an order (i) preliminarily enjoining defendants from consummating the merger of First Financial Holdings, Inc. (First Financial) and SCBT (the Merger) pending expedited discovery (ii) directing Defendants to submit to expedited document and deposition discovery and (iii) scheduling a post-expedited discovery hearing on a motion to continue the preliminary injunction pending trial

A preliminary injunction may be granted when the party seeking such relief demonstrates: "(1) a likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is withheld; and (3) a balance of equities tipping in the moving party's favor." Doe v Axelrod, 73 NY2d 748, 750 (1988). Considering these factors, and the current circumstances, a temporary injunction is warranted in this case.

The plaintiff has a significant likelihood of success on the merits. The official comment to the South Carolina statute on mergers states that, "In Delaware, case law establishes that these transactions must be fully disclosed and entirely fair to the minority shareholders." SC Code Ann § 33-11-101. This official comment gives the court reason to believe that the plaintiff is correct that South Carolina imposes a more exacting disclosure requirement than the disclosure necessary to comply with federal regulations.

Courts have acknowledged the materiality of disclosure deficiencies that are similar to the deficiencies alleged by the plaintiff. See In re Del Monte Foods Co. Shareholders Litig., [*2]25 A3d 813, 832 (Del Ch 2011) (acknowledging the materiality of conflicts of interest relating to the advice of financial advisors). See also In re Netsmart Tech., Inc. Shareholders Litig., 924 A2d 171, 177 (Del Ch 2007) (acknowledging the need to disclose financial projections). See also In re Pure Resources, Inc., Shareholders Litig., 808 A2d 421, 449 (Del Ch 2002) (discussing the need for a "fair summary of the substantive work performed by the investment banker."). At this early stage, there is sufficient reason to conclude that the plaintiff has a reasonable likelihood of success in demonstrating the inadequacy of the prospectus.

The defendant has made several arguments that there are procedural issues that will undermine this likelihood of success. First, the defendant argues that the court lacks personal jurisdiction over the both SCBT and the Individual Defendants listed in the caption hereof. The court has issued a decision holding that there are sufficient facts to establish the need for further discovery on the issue of personal jurisdiction. At this point, it is enough to conclude that while discovery continues, there is a likelihood that the issue of personal jurisdiction will not impede this case.

Second, the defendant argues this claim can only be brought derivatively, and consequently, that the plaintiff lacks standing. A derivative action is one in which a shareholder takes steps to recover for an injury to the corporation, because the corporation "fails or refuses to assert a claim of injury on its own behalf." Rivers v Wachovia Corp., 665 F3d 610 (4th Cir 2011). South Carolina courts have held that in cases against directors, "A shareholder may maintain an individual action only if his loss is separate and distinct from that of the corporation." Rice-Marko v Wachovia Corp., 398 SC 301, 308, 728 SE2d 61, 65 (SC Ct App 2012). An action seeking to vindicate shareholder rights is "separate" from any harm done to the corporation itself. A corporation itself has no shareholder rights to vindicate and therefore nothing upon which a derivative action could be established.

Third, the defendant argues that this action cannot proceed because First Financial has not been made party to the action. This claim rests upon the rule that, "In an action to set aside a contract all parties who may be affected by determination are indispensable." Stanley v Amalithone Realty, Inc., 31 Misc 3d 995, 1000 (Sup Ct 2011). This is not an action to set aside a contract, and the validity of the merger agreement is not being challenged. Any concerns about prejudicing First Financial are assuaged by acknowledging that it has received notice of this action.

The plaintiff has demonstrated that there is a serious prospect of irreparable harm if the injunction as not granted. Delaware courts have held that disclosure violations threaten "irreparable harm because stockholders may vote yes' on a transaction they otherwise would have voted no' on." In re MONY Group Inc. Shareholder Litig., 852 A2d 9, 18 (Del Ch 2004). This allegation is properly laid out by the plaintiff's attorney in is affidavit, and while this affidavit is not based on personal knowledge, it is submitted with the prospectus. An affidavit "may, of course, serve as the vehicle for the submission of acceptable attachments which do provide evidentiary proof in admissible form." Zuckerman v City of New York, 49 NY2d 557, 563 (1980).

The balance of the equities favors the issuance of a preliminary injunction. The delay in a shareholder vote may have certain costs for the defendant. There is little risk that this delay will undermine the merger itself. As the plaintiff asserts, and the defendant does not dispute, the merger agreement binds First Financial and SCBT to the merger until a permanent non-appealable injunction, or until December 31, 2013. When presented with a colorable claim of [*3]irreparable damages on the one hand, and whatever costs are associated with a temporary delay in a shareholder vote on the other, the correct decision is clear. The court grants a temporary injunction.

The plaintiff has also sought expedited document and deposition discovery. The decision of whether to grant expedited discovery is within the discretion of this Court. See J.G. v. Zachman, 34 AD3d 1277, 1278 (4th Dept 2006) ("A trial judge is vested with broad discretion to control discovery ."). There are costs associated with the decision to temporarily enjoin the merger, and the court recognizes the need to resolve this dispute efficiently. For this reason, the court grants plaintiffs motion for that expedited discovery. The parties are directed to submit discovery-schedule proposals to the court. The court will schedule a post-expedited discovery hearing on a motion to continue the preliminary injunction in the future.

Dated:July 18, 2013

ENTER:

/s/Melvin L. Schweitzer

J.S.C.