addition, it upheld the warrants and debentures transaction as permissible under the business judgment rule and declined to interfere in it by injunction.  Smith quickly appealed the decision.


10
More action was to come.  After negotiations with Aetna Life and Casualty Company while the parties were awaiting oral argument of Smith's appeal, Gearhart purchased complete ownership of Aetna's Geosource investment, a seismograph concern carried on the Aetna books at a value of $450 million.  In exchange, Aetna received 10,000,000 shares of Gearhart common stock, which it agreed to vote as recommended by a majority of Gearhart's directors, and other consideration.  After a hearing held on July 6 at Smith's behest, the trial court set the annual meeting of Gearhart's shareholders for August 20, 1984, declined todetermines the outcome of the struggle for corporate control.

Debentures and Warrants

36
Smith filed a counterclaim in the district court, along with a third party claim under Secs. 14(d) and 14(e) of the Securities and Exchange Act, and Sec. 78n(e) and Rules 14d-9 and 14e-2 promulgated by the SEC.  These claims by Smith center around certain debentures and warrants issued by Gearhart on April 27, 1984.


37
As we have noted, upon learning of Smith's acquisition of the Kemper block of shares, Gearhart sued both in state and federal court on April 18, 1984, seeking to halt Smith's creeping attempt to gain control of the company.  That same day, Gearhart's board of directors met with representatives of Drexel Burnham Lambert, Inc. to discuss various means of halting Smith's efforts to