ÿWPC@ A½¥)ÇÆî° )° Ñìs¾»MÏ:ñ§ñëIÂJ×üKõº¤¸ó§~G ôʪ-A~R% 5‡é·lŽ ™68:O™– z;yEQíík¬pMáØe¬§>e¶Þ+ù…&5 «™#ì¥ÈÅýhûXDí`bvß|önò±ëùú¤òt÷s2kz;‘F ç>ÿk7‘‰#9cŸ¼+:‹¼ªë. +Ò¦ìE&gÿšªlÌX7G–Á˜1ž¼4n^{&XMsIk¸ó˰vàÑíd8±IØ>r~Ä÷ü)8¢u†íiÜžzŠðç¿ÝÞÀ]Tm]’À"Axš÷4*詆ÛnnÁ—ì ðÄŸÞøiÃþaŒ® ÆŸãDÓNËÙ/ áWàE.‡0Ê*å<=ßî äAÃCòm*Ÿ&rñóƒM1nGV©³‹QŠã©èsÑÛå[¤Û“ìôxO3HÂ3‚ Môñ 8VèâÓÄ6XKû¥ Ñ ŸÔdû*{oÄÍÊ/v+ö!v'¤ÍgQ­d»Š©ùʹRS´.J¼J@?Šž·•¯ü:Óò?¡³=g?;C (é¢Å~a@gbX5¯&¶½ä+ž‹Ì¿eÆWwÁ<%”´(#!0UNQ %Ÿ 0(¥ÍfÍwÏ4Óçö møa B#˜HP LaserJet 1200 Series PCL 6ÈÈÈÈÈÈ0xÖÃ9 Z‹6Times New Roman RegularX($¡¡l N4Œ-è„ê„î„3|xÿU‹ÿÀÀÀTABLE A dÝ ƒ!ÝÝ  ݛԇ˜ÂXXÔCase€list:Ð ° Ѐ¹Ô*wƒ' ddd Xdd Xdd X°(#°(#wÔÔ,‘dd ÔÔ,½dd ÔÔ,*dd ÔÔ+  ÔÐ  ` ТArrearages£:€a€wayÏaround€Ð  $t Ðòò¢Bove£€v.€Comm€Hospóó€(38)Ð  tÄ Ðmerge€corp€into€wholly„owned€subsidiary,€created€for€the€purpose.€GiveÏpref€shareholders€common€stock€in€new.€Value€less€than€face€amount€ofÏPS€+€¢arrearages£.€Okay,€but€have€appraisal€rights€if€donððt€approve.€NOTE:Ï¢Psholders£,€less€general€wealth„maximizing€obligation€toward€them.€Ð  „Ô  ÐBusiness€judgmentÏrule:€exceptions,Ïand€duty€of€careÐ  ( x  ÐòòFrancis€v.€United€JerseyÐ È   ÐBankóó€(23)Ð  x È Ðaging,€alcoholic,€depressed€director€still€liable€for€breach€of€duty€of€caseÏif€didnððt€follow€good€practices.€Reasonable€director€standard€of€care;Ïmust€at€the€very€least€be€aware€generally€of€corporate€operationsÐ  ( x ÐBusiness€judgmentÏrule€and€processÐ   l ÐòòDisneyóó€(25),€and€òò¢Kamin£óóÐ  l ¼ ÐCEO€found€it€more€valuable€$€to€resign€than€stay€own;€orchestrated€ownÏdeparture;€¢downsides£€for€company.€shielded,€though€because€brd€gotÏadvice€from€compensation€expertÐ  Ì   ÐBusiness€judgmentÏrule:€exceptions€Ð  À  ÐòòJoy€v.€Northóó€(23)Ð  `  Ðcourt€removed€protection€of€rule€in€face€of€self„interest€and€evidence€thatÏmanagement€had€ignored€evidence€that€decisions€were€bad;€conflict€ofÏinterest€as€exception€to€business€judgment€rule.ÌÐ   p  ÐCharitableÏDonationsÐ  d  ÐòòSmith€v.€¢Barlow£óó€(11)Ð  d´ ! Ðcorp€can€make€gifts€so€long€as€ð ðbenefits€shareholdersðð€„€see€11„12Ð  d´ " ÐConflict€of€interestÏand€proportionalityÏprinciple€(and€dutyÏof€loyalty)Ð  h¸& ÐòòLewis€v.€SLEóó€(26)Ð  X¨' Ðtransaction€not€upheld€because€is€disproportionately€advantageous€forÏone€group€of€shareholders€who€are€insiders.€Fairness€is€criterion,Ïfiduciary€obl:€not€shielded€by€business€judgment€rule€„€violates€duty€ofÏloyaltyÐ  h¸+ Ðcorporate€controlÐ  ¬ü, Ðòò¢McQuade£€v.€Stoneóó€(38)Ð  ¬ü- ÐNo€agreement€among€shareholders€can€commit€them€to€displace€certainÏdiscretionary€powers€of€directors.€Inherent€function€of€bd€is€to€exerciseÏdiscretion€and€canððt€surrender€through€specific€agreements€toÏshareholders.€Ð  ¼ 1 Ðcorporate€controlÐ  P2 ÐòòClark€v.€Dodgeóó€(39)Ð  P3 Ðsee€39€„€somewhat€similar€to€¢McQuade£,€with€diff€outcome.€Ð  P4 ÐCorporate€control,ÏmisuseÐ  ôD6 ÐòòWilkes€v.€SpringdaleÐ D”7 ÐNursing€Homeóó€(41)Ð  ôD8 ÐWilkes€Rule:€in€closely€held€corp,€maj€shareholders€have€specificÏfiduciary€obligation€to€minority.€Recommend€buy/sell€agreements.€Ð  ôD: ÐCorporate€control,ÏtransferÐ  è8< ÐòòPerlman€v€Feldmanóó€(42)Ð  8ˆ= ÐControl€is€not€an€asset€of€corp€and€not€asset€of€shareholders.€This€isÏlooting€case€as€well€„€¢ISEN£:€go€after€looters,€not€seller.€Ð  è8? ÐCorporateÏOpportunitiesÏDoctrineÐ  Œ!ÜB Ðòò¢Broz£€v.€Cellular€Info€SysóóÐ , |C Ð(28)€Ð  Ü ,D ÐDirector€of€one€corp€and€CEO€of€another:€offer€made,€never€formallyÏsubmits€to€brd;€lose€deal,€he€acquires€for€other€company.€Shows€strengthÏof€presumption€against€insiders;€slightest€deviation€from€procedure€drawsÏsuspicion.€Ð  <"ŒH ÐCorporate€control,ÏmisuseÐ  0$€J ÐòòJordan€v.€Duff€andÐ €#ÐK ÐPhelpsóó€(42)Ð  0$€L Ðdo€a€buy/sell€arrangement!€when€have€employee€status€and€shareholderÏstatus€combined!€Court€here€says€canððt€fire€at€will€for€opportunisticÏreasons.€¢ISEN£:€likes€dissent€„€normally,€closely„held€corp€has€obl€toÏinform€shareholders€of€info€relevant€to€stock€price€if€they€have€a€buyoutÏagreement,€but€not€here,€where€status€tied€to€employment.€€Ð  @&!Q ÐCorporate€control,ÏmisuseÐ  4(„#S ÐòòIngle€v.€¢Glamore£€MotorÐ „'Ô"T ÐSales€óó(41)Ð  4(„#U ÐWhere€status€as€shareholder€is€based€on€status€as€employee,€lessÏprotection€for€rights€as€shareholder.€May€be€fired.€Ð  4(„#W ÐCorporate€wasteÐ  x)È$X ÐòòBayer€v.€¢Beran£óó€(25)Ð  x)È$Y Ðpresumption€that€managers€use€corp€assets€in€non„wasteful€way;€hereÏwithin€range€of€judgement,€protected€by€business€judgment€rule€.€ButÏnote€insider€benefit€exception€(26)â âÐ  Ø*(&\ ÐCorporate€control,ÏtransferÐ  Ä Ðòò¢Zetlin£€v.€HansonÐ d ÐHoldingsóó€(43)Ð  Ä ÐControlling€shareholder€may€sell€control€block€at€premium:€doesnððt€hurtÏother€shareholders,€compensates€for€effort€of€putting€together€controllingÏblock,€puts€buyers€in€situation€to€avail€themselves€if€have€betterÏâ âmousetrap.€MAJ:€cf€FeldmanÐ  $t ÐCorporate€control,ÏmisuseÐ   h  ÐòòSmith€v.€Atlantic€PropóóÐ h¸  Ð(42)Ð   h  Ðapplies€Wilkes€Rule.€¢ISEN£:€way€off€„€here€were€four€equal€owners;€whyÏaccuse€one€of€blocking€wishes€of€three;€why€not€the€other€way€around?€Ð   h ÐDebt€in€context€ofÏparent€subsidiaryÐ   \ ÐòòStandard€Gas€v.€TayloróóÐ \ ¬ Ð(18)€Ð   \ Ðostensible€loan€of€parent€to€subsidiary,€advance,€court€recast€as€equity€toÏpreferred€shareholders€were€in€priority€position;€debt€shouldnððt€be€covert.€Ð   \ ÐDividendÏdistribution€of€lowÏvalue€stockÐ  °  Ðòò¢Kamin£€v.€¢AmEx£óó€(22)Ð  P   Ðcourts€wonððt€challenge€decision€to€distribute€low€value€stock€as€dividend,Ïeven€though€it€wiped€out€¢8M£$.€business€judgment€rule,€despiteÏarithmetic.€actions€procedurally€impeccable.€see€23€for€critique€ofÏholding.€Insulates€bad€corporate€practice.€Ð  `°  ÐDividends€v.Ïexpansion,Ïredundant€earningsÐ  T  ÐòòDodge€v.€Fordóó€(11)Ð  ¤ô  Ðhave€to€distribute€redundant€earnings,€although€decision€to€expandÏprotected€by€¢bjr£Ð  T¤ " ÐEmploymentÏdecisions;ÏextraordinaryÏactionsÐ  X¨& ÐòòLee€v.€Jenkinsóó€(21)Ð  H˜ ' Ðcorp€officer€canððt€bind€corporation€to€pay€a€lifetime€salary€or€pensionÏbecause€there€are€considered€operating€leverage€(debt).€Factors€toÏdetermine€ordinary€or€extraordinary:€spectrum;€customary€expectations,Ïusual€course€of€dealing;€effect€on€long„term€capital€structure.€Ð  X¨+ ÐEnterprise€LiabilityÏ:€when€all€assets€inÏsame€line€ofÏbusiness€underÏcommon€controlÏwill€often€use€assetsÏof€all€to€satisfyÏclaim€against€one:ÏenvironmentalÏexception€(9)Ð  Ì5 Ðòò¢Walkovszky£óó€(9)Ð  œì6 Ðall€little€cab€corps€in€same€business,€largely€disregarded€formalities;€so€allÏbrought€into€liability€suitÐ  Lœ8 ÐForming€a€CorpÐ  `9 Ðòò¢Cranson£€v.€IBMóó€(4)Ð  `: Ðexample€of€de€facto/estoppel€principles€where€formalities€not€metÏpreciselyÐ  À< ÐForming€a€Cor;Ð  T= ÐòòSouthern€Gulf€MarineÐ T> Ðóó(5)Ð  ´? Ðestoppel:€strong€inclination€of€courts€to€cure€minor€defects€in€formalitiesÐ  T@ ÐFreeze€out€MergerÐ  ø HA ÐòòWeinberger€v.€¢UOP£óó€(36)Ð  ø HB ÐCourts€should€scrutinize€freeze€out€mergers€for€intrinsic€fairness.€Look€atÏwhether€fair€procedure€(did€independent€group€of€disinterested€brdÏmembers€recommend€transaction)€and€was€fair€price€offered€(fairnessÏreport€by€outside€auditor)?Ð  #XF ÐFreeze€out€MergerÐ  L$œG Ðòò¢Coggins£€v.€¢N.Eng£.Ð L$œH ÐPatriotsóó€(37)Ð  ü$L I ÐReally€low€2d€stage€price;€self€interest€for€majority€owner.€patentlyÏunfair,€but€court€didnððt€order€recission€because€too€long€had€elapsed€(10Ïyears.Ð  ¬%ü L ÐFreeze€out€MergerÐ  ð&@"M Ðòò¢Rabkin£€v.€Hunt€ChemóóÐ ð&@"N Ð(37)Ð   'ð"O Ðhad€contracted€for€2d€stage€price€of€25$€within€a€year;€waited€year€andÏday€ð˜ð€20.€Court:€complied€with€contract,€but€not€fair.€Timing,€structure,Ð  'ð"Q Ðnegotiation,€disclosure€all€bear€on€fairness.€Remanded€for€determinationÏof€fairness.Ð  )P$S ÐHostile€TakeoverÏDefenseÐ  ô*D&U ÐòòCTS€Corp.€v.€DynamicsÐ D*”%V ÐCorpóó€(48)Ð  ô*D&W ÐState€laws€prohibiting€corp€raiders€from€voting€(forces€two„stageÏtakeover)€and€other€techniques€are€not€preempted€by€Williams€Act€andÏare€not€undue€burden€on€interstate€commerce.€â âÐ  ¤+ô&Z ÐHostile€TakeoverÏDefenseÐ  Ä ÐòòParamount€v.€¢QVC£óó€(48)Ð  d Ðapplies€Van€¢Gorkom£:€once€a€corp€moves€toward€selling€assets€orÏtransferring€control,€it€has€unilaterally€abandoned€control€and€mustÏâ âmaximize€shareholder€wealth€ð˜ð€auction.€Ð  tÄ ÐHostile€TakeoverÏDefenseÐ  h¸ ÐòòParamount€v.€Timeóó€(48)Ð  ¸  Ðempire€building€is€encouraged.€Time€acquiring€Warner€to€expand,€butÏTime€will€retain€corp€identity.€Was€threatened€with€takeover€byÏParamount;€changed€to€cash€acquisition€of€Warner,€diluted€Time€stock,Ïmade€Pððs€attempt€worthless.€OK€because€Time€retained€its€corp€identity,Ïwas€publicly€traded€after€the€deal,€and€was€not€giving€up€its€corp€policyÏor€surrendering€control.€Was€growing€its€empire.€Ð  ( x ÐHostile€TakeoverÏDefenseÐ   l ÐòòRevlon€v.€¢MacAndrews£óóÐ l ¼ Ð(47)Ð   l Ðif€incumbents€themselves€effect€the€shift€in€corp€control€to€someone€elseÏto€avoid€hostile€takeover€(white€knight),€then€they€must€maximizeÏshareholder€wealth,€i.e.,€auction.€canððt€claim€preserving€corp€policy€andÏeffectiveness€in€this€case,€because€they€have€already€surrendered€toÏsomeone€else.€Ð  ,|  ÐHostile€TakeoverÏDefenseÐ   p  ÐòòUnocal€v.€Mesaóó€(46)Ð  pÀ  Ðre:€exclusionary€repurchase€of€shares:€okay,€if€incumbents€are€resistingÏhostile€takeover€that€implies€a€threat€to€corp€policy€and€effectivenessÏand/or€to€shareholders€(here,€junk€bonds).€The€rule€is€not€unqualified€andÏcorp€insiders€must€proceed€on€basis€of€full€information€and€adequateÏprocess€with€a€response€in€the€range€of€reasonableness.€Also€ò òenhancedÐ 0€  Ðscrutinyó ó€¢bc£€of€inherent€self„interest€of€incumbents;€reasonable€responseÐ ã3! Ðwill€be€one€that€is€proportionate€to€threat.€Ð  –æ" ÐHostile€Takeover,ÏdefensesÐ  ŠÚ$ Ðòò¢Cheff£€v.€¢Mathes£óó€(46)Ð  Ú*% ÐPaying€greenmail€is€impermissible€if€the€only€reason€directors€causedÏcorp€to€buy€back€its€own€stock€was€to€cover€its€ass,€not€shielded€byÏbusiness€judgment€rule€because€self„serving.€BUT€paying€to€ð ðpreserveÏcorp€policy€and€effectivenessðð€is€okay.€Secret€is€that€they€mustnððt€initiateÏchange€of€control.Ð  šê* ÐLiability€of€corpÏ(tort)Ð  ŽÞ, „„Ðòˆò¢Walkovszky£óˆó€(6)€Ð Þ.- Ðsole€owner€not€liable,€because€hadnððt€broken€down€sep€identity€betweenÏself€and€corp;€question€turns€on€formalitiesÐ  ŽÞ/ ÐLiability€of€corpÏ(tort)Ð  ‚Ò1 ÐòòIn€re€Silicone€BreastÐ Ò"2 ÐImplantóó€(8)Ð  ‚Ò3 Ðdisregard€of€corp€formalities€to€keep€parent€and€sub€separate.€Agency,Ïdirect€liability€theory€(9)€€¢ISEN£:€doesnððt€likeÐ  ‚Ò5 ÐLiability€ofÏincorporatorÐ  vÆ7 ÐòòHow€v.€Bossóó€(5)Ð  Æ8 Ðbe€really€clear€on€who€has€obligation;€explicit€statement,€ð ðwithoutÏrecourseððÐ  vÆ: ТLLP£Ð  º ; Ðòò¢Frigidaire£€v.€Union€PropóóÐ º < Ð(10)Ð  j º= Ðassets€of€limited€partners€protected€so€long€as€keep€on€the€right€hat,€whenÏare€directors€of€corp€that€serves€as€general€partner€Ð  j º? ÐMerger€orÏRedemption?€(deÏfacto€non€merger)Ð  #^B Ðòò¢Rauch£€v.€RCAóó€(38)Ð  ®!þC ÐWhat€corp€canððt€do€in€normal€course,€force€redemption,€can€be€done€inÏmerger.€Merger€not€treated€as€redemption€even€if€has€the€consequence€ofÏredemption.€Merger€rules€displaced€terms€of€redemption€because€mergerÏrules€arenððt€subject€to€contractual€aspects€of€preferred€stock€CF€rule€inÏòò¢Hariton£óó.€Ð  n$¾H ÐMerger?€or€AssetÏAcquisition?Ð  b&²!J ÐòòFerris€v.€Glen€Aldenóó€(33)Ð  ²%!K Ðcourt€says€result€is€the€same,€so€treat€like€merger;€¢ISEN£€„€wrong;€PA€lawÏpassed€saying€acquisition€€ðcð€mergerÐ  b&²!M ÐMerger?€or€AssetÏAcquisition?Ð  V(¦#O Ðòò¢Hariton£€v.€¢Arco£óó€(33)Ð  ¦'ö"P ÐDEL:€sale€of€assets€€ðcð€merger;€of€ð ðequal€dignityðð€Ð ¦'ö"Q ТISEN£:€right€onÐ  V(¦#R ÐPiercing€the€veilÐ  š)ê$S ÐòòPerpetual€Real€Estate€v.Ð š)ê$T ТMichaelson£óó€(9)Ð  J*š%U Ðplaying€by€the€rules€pays€off;€incorporator€only€liable€for€things€heððdÏpersonally€guaranteed,€others,€assumed€covered€by€corp;€key:€wonðð[tÏdissolve€corp€unless€itððs€really€egregiousÐ  ú*J&X ÐPiercing€the€veilÐ  >,Ž'Y ÐòòSea„Landóó€(8)Ð  >,Ž'Z Ðextreme€disregard€of€formalities,€but€needs€also€explicit€element€ofÏfraud/injusticeâ âÐ  î,>(\ ÐPiercing€the€veilÐ  d „„Ðâ âKinney€Shoesòˆò€(8)óˆóÐ d Ðsystematic€undercapitalization€may€be€tantamount€to€fraud/injustice;Ïmore€formalities€ð˜ð€cureÐ  Ä ÐProportionality:Ïcorp€control€mustÏbe€exercised€forÏbenefits€of€allÏsimilarly€placed€¢shs£Ð  È   ÐòòFordóó;€òòSinclair€v.€LevienóóÐ  X  ÐÐ  X  ÐRefusal€to€dealÐ   \  ÐòòEnergy€Resources€v.Ð  \  ÐPorteróó€(28)Ð  ¼  Ðdeparture€from€formalities€fatal:€must€inform€of€opportunity€and€whyÏlost.€See€also€ALI€suggested€code€on€28Ð  ¼  ÐSelf„interest,€self„¼dealing€(andÏvulnerability/annoy¼ance€of€minority)Ð  `  ÐòòSinclair€v.€Levienóó€(27)Ð   P Ðnot€shielded€by€business€judgment€rule,€when€majority€owner€workedÏdeal€with€subsidiary€for€advantageous€payment€scheme;€in€effect€interest„¼free€loan€that€made€him€better€off€than€3%€shareholder.€Ð  `°  ÐShareholderÏderivativeÐ  T  ÐòòCohen€v.€Beneficial€óó(24)Ð  T¤  Ðupheld€state€law€requiring€¢bringer£€of€shareholder€action€to€post€relativelyÏhigh€bond€as€deposit.€€Ð  T  ÐShareholderÏrepresentativeÏactionÐ  ¨ø  ÐòòEisenberg€v.€FlyingÐ H˜ ! ÐTigeróó€(29)Ð  øH" Ðto€be€deriv€action,€has€to€assert€harm€to€corp,€not€to€selfÐ H˜ # . ÐÔ#†XËX˜#Ô