Business Associations, Fourth Edition, 2003

Preface to Fourth Edition xxxv

Table of Cases xxxix

CHAPTER 1: INTRODUCTION 1

'1.01 Legal and Economic Views of Business Associations 1

'1.02 Economic Theory and Business Associations 1

[A] Coase and Transaction Costs 2
[B] Shirking 2
[C] Bounded Rationality 3
[D] Agency Costs 3
[E] Opportunism 4
[F] Risk Bearing Costs 5
References 5

[A] Sole Proprietorship 5
[B] General Partnership 6
[C] Corporation 7
[D] Close Corporation 8
[E] Limited Partnership 8
[F] Limited Liability Company 9
[G] Limited Liability Partnership 9
References 9

'1.04 A Short History of Business Associations 9

References 11

'1.05 The Role of Law 12

[A] The Contractarian View 12
References 12
[B] The Regulatory View 13
Question 15
Reference 15

CHAPTER 2: AGENCY AND PARTNERSHIP: INTRODUCTION AND FORMATION 17

'2.01 Creation of Agency Relationship 17

Nichols v. Arthur Murray, Inc. (1967) 18
Notes and Questions 20
References 22

[A] An Overview of UPA and RUPA 23
[B] Informal Partnerships 24

Minute Maid Corp. v. United Foods, Inc. (1961) 26
Martin v. Peyton (1927) 32
Notes and Questions 34
Problems 35
Reference 36

[C] Financing the General Partnership 36

[1] Background 36
[2] Legal Rules Regarding Admission of Partners 37

[a] Protection of Incoming Partners 37
[b] Protection of Creditors 37
[c] Protection of Existing Partners 37

[A] Choosing the Appropriate Business Form 39
[B] Choosing the State of Incorporation 40
[C] How to Incorporate 40

[A] Important Components 41
[B] Disclosing the Capital Structure 43
Questions 44
[C] Choosing the Capital Structure 45
[D] Legal Rules Governing the Capital Structure 45

[1] Overview 45
[2] Rules Protecting Creditors 46
Problem 51
Reference 52
[3] Rules Protecting Existing Shareholders 52

[A] Introduction 56
[B] Minimizing the Cost of Capital 56
[C] The Problem of Involuntary Creditors 58
[D] Closely Held Firms: Shifting Risk to Tort Victims? 58
References 59

[A] Nonrecourse Contracts 60
[B] Purported and Defective Corporations 60
References 62
[C] Promoter Cases 63

[1] Promoter's Liability 63
[2] Corporation's Liability 64

[A] Voluntary Creditors 65
[B] Involuntary Creditors 66
[C] Undercapitalization 66
[D] Public versus Close Corporations 66
[E] Parent Subsidiary Cases 67
[F] Observance of Formalities 67

Walkovszky v. Carlton (1966) 68
Notes and Questions 73
Abraham v. Lake Forest, Inc. (1980) 75
Zaist v. Olson (1967) 78
Notes and Questions 81
Problems 83

References 85

[A] What Issues Do Owners Vote On? 88
[B] How Many Votes Control the Outcome? 88
[C] How Are Votes Allocated Among Voters? 88
Reference 89

[A] The Uniform Partnership Act 89
Problems 90
Reference 91
[B] Altering the "Standard Form" by Agreement 91
McCallum v. Asbury (1964) 91
Questions 93
Problems 93

'4.03 Transfer of Partnership Interests 94

Rapoport v. 55 Perry Co. (1975) 95
Notes and Questions 97
Reference 98

'4.04 Dissolution of the Partnership 98

[A] Overview 98
References 100
[B] Judicial Limitations on the Power to Dissolve 100
Page v. Page (1961) 100
Notes and Questions 103
References 104
[C] The Consequences of Dissolution: Liquidation 104

[1] What Does the Partnership Own? 105
[2] Computing the Partner's Share 105
[3] Partnership Accounts 106
Reference 106

[D] Consequences of Dissolution: Buyout of Dissolving Partners 106
In re Brown (1926) 107
Notes and Questions 110
References 113
[E] Altering the Consequences of Dissolution 114
Pav Saver Corporation v. Vasso Corporation (1986) 114
Notes and Questions 118
[F] RUPA and Dissolution at Will 119
References 120

References 122

'5.01 The Standard Form of Corporate Governance 122

[A] General Considerations 122
[B] Allocating Power Between Board and Shareholders 123
[1] Management by the Board and Officers 123
[2] Voting by Shareholders 124
[C] Decisionmaking Procedures 125
[1] Directors' Meetings 125
[2] Shareholders' Meetings: General Rules 126
[3] Shareholder Meetings: Voting on Directors 126
Reference 127

[A] Introduction 127
[B] Types of Shareholder Voting Arrangements 129
[1] Irrevocable Proxies 129
[2] Voting Agreements 130
Background Note on Ringling v. Ringling Bros.-Barnum & Bailey Combined
Shows, Inc. 130
Ringling v. Ringling Brothers-Barnum & Bailey Combined Shows, Inc. (1946) 135
Notes and Questions 137
[3] Voting Trusts 140
Abercrombie v. Davies (1957) 141
Notes and Questions 146
Oceanic Exploration Co. v. Grynberg (1981) 147
Notes and Questions 149
Problem 150

'5.03 Agreements Controlling Action by the Board of Directors 151

[A] Common Law 151
Clark v. Dodge (1936) 152
Notes and Questions 154
Problem 155
[B] Modern Statutory Provisions 155
Notes and Questions 156
Zion v. Kurtz (1980) 157
Notes and Questions 161
Problems 161
References 162

[A] Validity of the Restriction 162
Rafe v. Hindin (1968) 162
Notes and Questions 165
Problem 166
[B] Planning Corporate Share Transfer Agreements 166
[1] Choosing the Type of Agreement 166
[2] Availability of the Funds for Purchase 167
[3] Ensuring the Effectiveness of the Restriction 168
[4] Price 168
[C] Drafting and Interpretation of Share Transfer Agreements 168
Problem 171
[D] Price Provisions 172
Piedmont Publishing Co. v. Rogers (1961) 172
Notes and Questions 176
[E] Statutory Close Corporation Provisions 179
Maryland Code Annotated, Corporations and Associations 179
Questions 181

[A] Overview of Statutory Provisions 182
New York Business Corporation Law 182
[1] The Scope of Judicial Power 184
[2] Policy Issues 186
[3] Drafting and Planning to Avoid Problems 187
References 188
[B] Deadlock 189
Weiss v. Gordon (1969) 189
Notes and Questions 191
Problem 191
[C] Dissolution for Oppression or Other Misconduct 193
Gardstein v. Kemp & Beatley (1984) 193
Notes and Questions 197
Problems 201
References 202
[D] Judicial Buyout Rights 202
Donahue v. Rodd Electrotype Co. (1975) 203
Notes and Questions 209
Problems 213
References 214
[E] Breach of Fiduciary Duty in the Issuance of Stock 214
Schwartz v. Marien (1975) 214
Katzowitz v. Sidler (1969) 217
Notes and Questions 221

[A] Tax Consequences of Partnership 224
[B] Rules for Characterizing Firms 225
References 226

[A] Formation of a Limited Partnership 228
[B] Management and Control and the "Control Rule" 229
Gast v. Petsinger (1974) 230
Notes and Questions 233
Problems 234
[C] Transfer of Interests and Dissolution 235
References 235

[A] Formation 236
[B] Management and Control 236
[C] Transfer of Interests and Dissolution 237
Notes and Questions 237
References 238

Notes and Questions 239
References 242

[A] The Starting Point: Present Value of Expected Future Cash Flows 244
[B] Expected Value 245
[C] Risk 245
[D] Another Look at Risk: The Portfolio Theory and CAPM 246
[E] The Separation Theorem and CAPM 247
[F] The Efficient Market Hypothesis 249
[G] Implications for Leverage 252
References 253

[A] Do Shareholders Need Legal Protections to Constrain Managers?: The Berle Means Thesis and Rebuttal 254

[1] Devices that Overcome Free Rider Problems 255
[a] Takeovers 256
[b] Proxy Contests 256
[2] Monitoring by Large Shareholders 257
[3] Monitoring by Creditors 258
[4] Monitoring by Directors and Auditors 258
[5] Employment Contracts and Managerial Markets 258
References 259

[B] Federal versus State Regulation of Public Corporations 260
References 262
[C] Corporate Social Responsibility 262
Notes and Questions 265
References 267

[A] Introduction to Federal Proxy Regulation 269
[B] Overview of the Federal Proxy Solicitation Rules 269

[1] What Is a Solicitation? 270
[2] Disclosure Obligations 271
[3] Proxy Form and Dissemination 272
[4] Exemptions 272
References 273

[C] Misleading Proxy Statements 273
United Paperworkers International Union v. International Paper Company (1993) 274
Notes and Questions 280
References 285
[D] Remedies for Misleading Proxy Statements 285
[E] Evaluation and Revision of Federal Proxy Regulation 286

[1] Proxy Regulation and Shareholder Passivity 287
[2] The Mandatory Nature of Proxy Regulation 288
[3] Proxy Rules and Shareholder Monitoring 288

References 289

[A] Types of Shareholder Proposals 289
[B] Procedures 290
[C] Categories of Excludable Proposals 291
Medical Committee For Human Rights v. SEC (1970) 291
Notes and Questions 299
New York City Employees' Retirement System v. Dole Food Company, Inc. (1992) 303
Notes and Questions 308
[D] An Appraisal and Critique of Shareholder Proposals 309
Problems 311
References 311

[A] Statutory and Common Law Rights 312
[B] Who May Inspect? 313
[C] Proper Purpose 313
State ex rel. Pillsbury v. Honeywell, Inc. (1971) 314
Food and Allied Service Trades Department v. Wal Mart Stores, Inc. (1992) 317
Notes and Questions 320
[D] Certificate Restrictions 320

References 322
Question 322

[A] Devices for Monitoring Management 323
[B] The Monitoring Board 323
Notes and Questions 330
References 330
[C] Representing Other Constituencies 331
References 332

Reference 336

Burns v. Gonzalez (1969) 336
Notes and Questions 339
Problem 342

Lee v. Jenkins Bros. (1959) 343
Notes and Questions 349
Problems 350
References 350

Goodman v. Ladd Estate Co. (1967) 353
Problems 354
Reference 355

[A] The Nature of Fiduciary Duties 357
[1] What Is a Fiduciary Duty? 357
[2] The Contractual Nature of Fiduciary Duties 358
[3] What Is a Fiduciary Relationship? 358
[4] Distinguishing Fiduciary Duties from the Obligation of "Good Faith" 359 References 359
[B] The Appropriate Scope of Fiduciary Duties 360
[1] Benefits of Fiduciary Duties 360
[2] Alternatives to Fiduciary Duties 360
[3] Costs of Fiduciary Duties 361
[4] Balancing Costs and Benefits 362
[C] Overview of Chapter 363
References 363

Federal Deposit Insurance Corporation v. Bierman (1993) 364
Notes and Questions 370
Problems 374
Reference 374

[A] Substantive Review of Disinterested Decisions 376
Shlensky v. Wrigley (1968) 376
Notes 378
Brehm v. Eisner (2000) 383
Notes and Questions 387
References 393
[B] Procedural Review of Disinterested Decisions 393
Smith v. Van Gorkom (1985) 393
Notes and Questions 411
References 415
Brehm v. Eisner (2000) 416
Notes and Questions 419
[C] Statutory Responses to Director Liability 420
[D] The Consequences of Failing Substantive or Procedural Review Under the Business Judgment Rule 421
Cede & Co. v. Technicolor, Inc. (1993) 421
Notes and Questions 425
Problem 427
References 428

[A] Rebutting the Presumption of Loyalty 429
Cede & Co. v. Technicolor, Inc. (1993) 429
Cinerama v. Technicolor, Inc. (1995) 432
Notes and Questions 435
[B] Rules Governing Conflict of Interest Transactions 436
[1] No Disinterested Director or Shareholder Approval 437
Lewis v. S.L. & E., Inc. (1980) 437
Notes and Questions 443
References 444
[2] Approval by Disinterested Directors 444
Puma v. Marriott (1971) 445
Notes and Questions 447
References 449
[3] Shareholder Approval 450
Fliegler v. Lawrence (1976) 450
Notes and Questions 454
References 456
[C] The Interplay of Substance and Procedure 457
Problem 457

[A] General Considerations 458
[1] Competing in the Market for Managers 458
[2] Determining the Market Value of Managers 458
[3] Designing Incentive Compensation 459
[4] Other Considerations 460
[B] Specific Types of Compensation 460
[1] Salary 460
[2] Executive Perquisites 461
[3] Bonuses 461
[4] Deferred Compensation and Pension Plans 462
[5] Stock Options 462
[6] Golden Parachutes 463
[C] Fiduciary Duty Liability for Excessive Compensation 465
Problem 466
References 467
[D] Other Legal Challenges to Compensation Arrangements 467
Grimes v. Donald (1996) 467
Note 470

Broz v. Cellular Information Systems, Inc. (1996) 471
Farber v. Servan Land Co., Inc. (1981) 475
Burg v. Horn (1967) 479
Notes and Questions 482
Problem 488
References 489

Sinclair Oil Corp. v. Levien (1971) 489
Notes and Questions 493
Problem 495

[A] General Partnerships 496
[B] Limited Partnerships 497
[C] Limited Liability Companies 498
Question 499
References 499

[A] Policy Considerations: Closely Held Firms 500
[B] Policy Considerations: Publicly Held Firms 501
[1] Public Corporations as Adhesion Contracts 501
[2] The Efficient Securities Markets Do Not Protect Investors from Management Misconduct 502
[a] Securities Markets Are Not Completely Efficient 502
[b] Expected Agency Costs Are Not Reflected in Share Price 502
[c] Governance Terms Are Not Reflected in Stock Prices 503
[3] Shareholder Voting on Opt Out Is Flawed 504
[4] Optimal versus Complete Discipline of Managers 504
[C] Policy Considerations: The Costs of Mandatory Rules 505
Question 505
[D] The Scope of Permissible Opt Out 505
[1] Face to Face Contracting: Opt Out in the Partnership and Close Corporation 505
[2] The Care/Loyalty Distinction 506
[3] Specific versus General Opt Outs 508
[4] Damages versus Injunctive Relief 508
[5] Other Limits on Opt Out 509
[E] The Role of Statutory Authorization 509
Problems 509
References 509

CHAPTER 10: CORPORATE LITIGATION: SHAREHOLDER SUITS 513

'10.01 Introduction to Shareholder Litigation 513

[A] Direct Actions 513
[B] Derivative Suits 514
[C] The Policy Debate on Derivative Suits 515
[1] The Benefits of Derivative Suits 515
[2] Costs of Derivative Suits 515
[D] Overview of Chapter 516
References 517

Rose v. Schantz (1972) 517
Notes and Questions 520
In re Paxson Communication Corporation Shareholders Litigation (2001) 521
Notes and Questions 525

[A] Nature of Plaintiff's Interest 528
[B] Time of Shareholding 528
[1] Plaintiff Must Have Been a Shareholder at the Time of the Wrong ("Contemporoneous Shareholder Requirement") 528
[2] Plaintiff Must Be a Shareholder at the Time of the Litigation 530
[C] Plaintiff is Subject to Personal Defenses 531
[D] Fair and Adequate Representation 531
Note and Questions 533

Question 534

[A] The Aronson Test 535
Starrels v. First National Bank of Chicago (1989) 535
Notes and Questions 538
[B] Alternatives to Aronson: Universal Demand 541
Kamen v. Kemper Financial Services (1991) 541
Notes and Questions 545

Zapata Corp. v. Maldonado (1981) 547
Notes and Questions 553
References 562
Problem 562

[A] Effect of Shareholder Approval 563
[B] Effect of Shareholder Termination 564
[C] Requirement of Demand on Shareholders 564
References 565

[A] Jurisdiction Over Non Resident Directors 566
[B] Choice of Law 567
[1] Federal or State Law? 567
[2] Which State's Law? 568
References 568

Rosenfeld v. Black (1972) 570
Notes and Questions 573

[A] General Rules 577
[B] Theoretical Considerations Underlying Compensation of Plaintiff's Counsel 579
[C] Other Approaches to Aligning the Interests of Plaintiff's Attorney and the Shareholders 581
[1] Formation of Plaintiff "Firms" 581
[2] Prohibiting Simultaneous Negotiation of the Settlement and the Fee 581
[3] Non Pecuniary Settlements 581
[4] Tightening Screening Rules 582
[5] Selling Lawsuits to Lawyers 582
[6] Eliminating the Derivative Suit 583
[D] The ALI Approach 583
References 583

[A] Indemnification 584
[1] Common Law 584
[2] Statutes 585
[3] Role of Bylaw and Charter Provisions 585
[4] Specific Indemnification Situations 587
[a] The Type of Cost Reimbursed 587
[b] The Disposition of the Suit in Connection with which Indemnification Is Being Made 587
[c] Whether the Action Is Brought by a Third Party of by or on Behalf of the Corporation 588
[d] The Identity of the Defendant 588
Problems 588
References 590
[B] Insurance 590
References 592

[A] The Accounting Remedy 592
[B] Limited Partnership Derivative Suits 593
[C] Limited Liability Companies 593
[D] Contracting Around Remedies in Partnerships and LLCs 594
References 594

[A] Interests of Common Shareholders 595
[1] The "Irrelevance Theorem" 595
[2] The Role of Taxes 596
[3] Information, Transaction Costs and Market Efficiency 597
[4] Manager/Shareholder Conflicts 597
[B] Preferred Shareholders' Interests in Receiving Dividends 598
[C] Protection of Creditors and Other Fixed Claimants From Excessive Distributions 598
References 599

[A] Basic Accounting Procedures 599
[B] Role of Accounting Rules 599
Reference 600

[A] Traditional Corporation Statutes: Overview 600
[1] Balance Sheet Surplus 601
[2] Earned Surplus 601
[3] Nimble Dividends 602
Problem 602
[B] Specific Problems of Operation 602
[1] Unrealized Appreciation 603
[2] Unrealized Diminution in Value 605
[C] Other Limitations on Dividends under Traditional Corporation Statutes 605
Notes and Questions 606
Problems 607
References 607

Fixed Claimants 608
Katz v. Oak Industries, Inc. (1986) 608
Notes and Questions 615
References 621

'11.05 Preferred's Contractual Right to Receive Distributions 621

'11.06 Directors' Fiduciary Duty to Declare Dividends on Common Stock 623

'11.07 Repurchases of Stock 623

'11.08 Distributions by Partnerships and LLCs 625

Question 626
References 626

[A] Introduction 627
[B] The Operation of the 1933 Act 628
[1] The Pre Filing Period 628
[2] The Waiting Period 628
[3] The Post Effective Period 629
[C] The Contents of the Prospectus 629
[D] Civil Liability under the 1933 Act 632
[1] Section 12(a)(1) 632
[2] Section 12(A)(2) 633
[3] Section 11 634
[E] Coverage of the 1933 Act: Definition of a Security 636
[F] Exemptions from Registration under the 1933 Act 640
[1] In General 640
[2] Private Offering Exemption 640
[3] Regulation D and Related Rules Governing Small Issues 641
[4] Secondary Transactions 643
[G] State Securities Regulation 646

[A] Overview of the 1934 Act 646
[B] Express Disclosure Requirements under the 1934 Act 647
[C] Implied Duties under '10(b) and Rule 10b 5 647
[1] Misleading Statements 648
[2] Duty to Speak 650
[D] Civil Remedies for Breach of Disclosure Duties under Rule 10b-5 652
[1] Purchaser Seller Requirement 653
[2] Reliance: Transaction Causation 653
[3] Reliance: Fraud oh the Market 654
[4] Reliance: Fraud Created the Market 656
[5] Damages 656
[6] Waiver 657
[E] Responsibilities of Collateral Participants 658
[1] Who Is Liable? 658
[2] Proportionate Liability 661
[3] Contribution and Indemnification 662

[A] Remedies of Purchasers and Sellers 663
Strong v. Repide (1909) 664
Goodwin v. Agassiz (1933) 666
Notes and Questions 669
[B] Liability to the Corporation 670
Reference 671

[A] Basic Rule: Trading by Insiders in Shares of Their Companies 672
SEC v. Texas Gulf Sulphur Co. (1969) 673
Notes and Questions 685
Problems 686
Chiarella v. United States (1980) 687
Notes and Questions 693
[B] Tippees 693
Dirks v. SEC (1983) 693
Notes and Questions 702
Problem 706
[C] "Outsider" Trading: The Misappropriation Theory 706
United States v. O'Hagan (1997) 707
Notes and Questions 716
United States v. Chestman (1991) 717
Notes and Questions 724
References 726
[D] The Economics of Insider Trading 726
[1] Costs of Insider Trading 727
[2] Benefits of Insider Trading 729
[3] Regulatory Costs 731
[4] The Need for Mandatory Federal Regulation 731
[5] Conclusion 732
[6] Insider Trading Regulation Explained: An Interest Analysis 732
[7] The Search for the Appropriate Rule 733
Problem 733
References 734
[E] Remedies 735
Notes and Questions 737

[A] Introduction 739
[B] Who Is an Insider? 740
[C] What Transactions Are Attributable to the Insider? 741
CBI Industries, Inc. v. Horton (1982) 741
Notes and Questions 745
[D] When Must the Insider Be An Insider? 745
Problem 746
[E] What Are a "Purchase" and a "Sale"? 746
Question 747
[F] "Waiver" of '16(b) 748
References 748

[A] Wealth Creation Explanations for Corporate Acquisitions 749
[1] Synergy 750
[2] Gains in Restructurings 750
[B] Wealth Redistribution Explanations for Corporate Acquisitions 751
[1] Injuries to Acquirer Shareholders 751
[2] Injuries to Target Shareholders 752
[3] Injuries to Target "Stakeholders" 752
[4] Injuries to Consumers and Other Non Shareholders 753
References 753

'13.02 Corporate Combinations 754

[A] Introduction 754
[B] Forms of Corporate Combinations and Procedures 754
[1] Sales of Assets 754
[2] Mergers and Consolidations 755
[3] "Short Form" and "Small Scale" Mergers 756
[4] Problems of Traditional Forms of Combination and Alternative Transactional Structures 757
[a] Purchases of Controlling Stock Interests 757
[b] Triangular Mergers 758
[c] Compulsory Share Exchanges 758
[5] Tax Consequences of Choice of Form of Combination 758
[6] Combinations Involving Non Corporate Forms 759

References 762

[A] Purchase of a Control Block 762
[1] Meaning of Control 763
[2] Policy Issues 763
[3] The Traditional Rule 764
[a] Duty to Disclose 765
[b] Duty to Investigate 765
[c] Sale of Office 766
[d] Corporate Opportunity 767
[4] Toward a Broader Rule of Recovery in Sale of Control Transactions 768
Perlman v. Feldmann (1955) 768
Notes and Questions 773
Problem 778
References 778
[B] Tender Offers 779
[1] Business Background: What Is a Tender Offer? 779
[2] An Overview of Tender Offer Regulation 780
[a] State Corporation Law 780
[b] Federal Law 780

[A] Director Power to Control the Meeting Date and Set Voting Rules 784
Schnell v. Chris Craft Industries, Inc. (1971) 785
Notes and Questions 786
Blasius Industries, Inc. v. Atlas Corporation (1988) 788
Notes and Questions 793
Problem 795
[B] Shareholder Lists 795
[1] State Law 795
[2] Federal Law 797

[A] Types of Defensive Tactics 797
[1] Shareholder Approved Defenses 797
[a] Charter Amendments Impeding Transfers of Board Control 798
[b] Charter Amendments Creating Barriers to "Second Step" Transactions 798
[c] Recapitalizations Allocating Voting Power to Incumbent Managers 799
[d] Leveraged (Management) Buyout 799
[2] Director Approved Defenses 800
[a] Bylaw Provisions 800
[b] Stock Repurchases and Stock Issuances 800
[c] Defensive Acquisitions 801
[d] Poison Pills 801
[e] Lock Ups and No Shops 802
[B] Policy Issues Concerning Defenses to Tender Offers 803
[1] Shareholder Disadvantages in Tender Offers 803
[a] Information 803
[b] The Extra Value of Minority Shares 803
[c] The Prisoners' Dilemma 804
[d] Creating an Auction 805
[2] Effect of Tender Offers on Managers 806
[3] Fashioning the Appropriate Rule 806
References 807
[C] Legal Standards Governing Shareholder Approved Defenses 808
Question 809
References 810
[D] Legal Standards Governing Director Approved Tender Offer Defenses 810
[1] The "Motive" Test 810
[2] The Unocal and Revlon Rules 811
Unocal Corporation v. Mesa Petroleum Co. (1985) 812
Notes and Questions 818
References 824
Revlon Inc. v. MacAndrews & Forbes Holdings, Inc. (1986) 824
Notes and Questions 831
References 836
[3] Strategic Mergers and Transfers of Control 836
Paramount Communications, Inc. v. Time Incorporated (1990) 836
Notes and Questions 848
Paramount Communications Inc. v. QVC Network Inc. (1994) 850
Notes and Questions 860
Omnicare v. NCS Healthcare, Inc. (2003) 864
Notes and Questions 874
References 874
[4] Dead Hand and No Hand Poison Pills 875
Carmody v. Toll Brothers, Inc. (1998) 875
Quickturn Design Systems, Inc. v. Shapiro (1998) 882
Notes and Questions 885
Problem 888
References 889
[E] State Anti Takeover Statutes 889
CTS Corporation v. Dynamics Corporation of America (1987) 890
Notes and Questions 901
Amanda Acquisition Corp. v. Universal Foods Corp. (1989) 904
Notes and Questions 910
References 912

[A] Introduction: Fundamental Changes and Vested Rights 915
References 916
[B] Appraisal Right Procedures 916
[C] Determining "Fair Value" in an Appraisal Proceeding: The "Delaware Block" Approach 917
Francis I. DuPont & Co. v. Universal City Studios, Inc. (1973) 918
Note 924
Universal City Studios, Inc. v. Francis I. DuPont & Co. (1975) 924
Notes and Questions 926
Problem 933
[D] Availability of Appraisal Rights: De Facto Mergers 934
Applestein v. United Board & Carton Corp. (1960) 934
Notes and Questions 940
Hariton v. Arco Electronics, Inc. (1963) 941
Notes and Questions 942
[E] A Functional Analysis of Appraisal Rights 945
References 946

[A] Exclusivity of the Appraisal Remedy 947
[1] Policy Considerations 947
[2] Statutory Provisions 948
[B] Merger Fairness: In General 949
Sterling v. Mayflower Hotel Corp. (1952) 950
Notes and Questions 955
References 958
[C] Freezeout Transactions: Introduction and Historical Background 958
[D] A Reexamination of Merger Fairness and Appraisal Rights: Weinberger and
Statutory Approaches 962
Weinberger v. UOP, Inc. (1983) 962
Rabkin v. P.A. Hunt Chemical Corporation (1985) 970
Kahn v. Lynch Communication Systems, Inc. (1995) 973
Notes and Questions 980
Problems 986
References 986

[A] 1934 Act Liability for Misleading Proxy Materials 987
Virginia Bankshares, Inc. v. Sandberg (1991) 988
Note 994
[B] 10(b) and 10b 5 Liability Where There is No Proxy Solicitation 994
Santa Fe Industries, Inc. v. Green (1977) 995
Notes and Questions 1000
[C] Regulation of Corporate Combinations under 1933 Act 1005
Problem 1006
Reference 1006