1-1.5 hours for multiple-choice2-2.5 hours for essay question (30 minutes brainstorming) CORPORATION ESSAY CHECKLIST1. Are we under Delaware law or MBCA? Moreover, does the NASDQ or NYSE Rules apply?2. Who is bringing the lawsuit? (Majority s/h, minority s/h, bidder, outsider?) 3. What are they alleging? a. Breach of duty of care i. Focuses on the process directors take in making decisions. They are required to exercise reasonable care in overseeing corporations affairs and in making business decisions.b. Breach of the duty of loyalty i. Requires a director to place the best interests of the corporation above his own personal interests. ii. Duty of oversightiii. Duty of good faith c. Breach of Federal Regulation of proxies d. Unconstitutionality of something under state or federal law? 4. Is this a derivative or direct suit? a. Does it affect the corporation as a whole or just individual s/h; does it benefit the corporation as a whole, or just individual s/h? 5. Is demand required or excused? a. Yes if derivative, but can be excused (except under MBCA must always make demand) 6. What type of transaction are we in? (is it a cash-out merger/hostile takeover, parent-sub transaction, tender offering, selling controlling shares, solicitation of proxies, board actions or lack thereof, demanding the board do something, oversight) 7. What is the standard that applies to this particular transaction? a. BJR?i. Standard for the duty of care, decision must be: informed (rebut my showing gross negligence); had a rational business purpose (rebut by showing waste); disinterested (rebut by showing that the directors or managers had personal interests); independent of outside influence (rebut by showing dominancewas beholden or under the influence of someone) 1. Trans Union Case (Smith v. Van Gorkom) 2. Shlensky v. Wrigley3. Schnell v. Chris 4. Dodge v. Ford (limits to the BJR) 5. Theodora Holding Corp. V. Henderson ii. Board Oversight (breach of duty of loyalty) 1. Monitoring of legal complianceGraham v. Allis-Chalmers 2. Caremark 3. Stone v. Ritter 4. ATR v. Aranteta 5. Citigroup b. Internal affairs (whether or not such acts fall under internal affairs is likely the standard) i. McDermott v. Lewis ii. Louisiana Pacific Case iii. Anti-takeovers: CTS Corp., Amanda Acquisition Corp., c. Piercing of the Veil? i. The Parent completely dominates the subsidiary so that the corporate entity as to this transaction had at the time no separate mind of its own. Merely that the parent is the sole s/h is not sufficient.ii. The defendant must have used this arrangement to commit fraud or wrong, to perpetrate a violation of a positive legal duty. This is basically a claim of undercapitalization. iii. The aforesaid control and breach of duty is the proximate cause of the injury or the unjust level of compensationiv. *When the corporation disregards corporate formalities to the point where they can be deemed to have forfeited corporate protection. v. *When corporations involved in hazardous activities and they dont maintain a capital cushion to be available in case its activities give rise to liability.* From Browning Ferris, Posner says this 1. Walkoyszky v. Carlton2. Radaszewski v. Telecom3. Kinney Shoe v. Polan 4. Garmedal v. Westin Hotel 5. OTR Associates v. IBC d. S/h authority/ Duties to s/h i. Lovenheim v. Iroquois ii. Auer v. Dressel iii. Blasius iv. CA, Inc. v. AFSCME v. Duties to shareholder 1. Disclosure of materiality-TSC Industries v. Northway2. Basic, Inc. v. Levinson3. Virginia Bankshares, Inc. v. Sandberg4. Gantler v. Stephens5. CausationMills v. Electric Auto-Lite Co. 6. State lawMalone v. Brincat e. Entire Fairness? i. Conflict of Interest 1. eBay 2. Walt Disney f. Revlon duties? i. What the Revlon duties trigger? Was the company effectively up for sale? 1. New controlling s/h-Paramount v. Viacom 2. Effectuate a long-term business planParamount v. Time 3. Deal ProtectionsToys R US 4. Substantive CoercionChesapeake g. Unocal Test?i. A reasonable threat ?ii. Was the response reasonable in relation to this threat h. Blasius under Unocal?i. Oppression of minority s/h in closed corp.? i. Triggs v. Triggs ii. Smith v. Atlantic Properties iii. Wilkes v. Springside Nursing Home iv. Merola v. Evergen Corp. v. Nixon v. Blackwell vi. Matter of Kemp & Beatley vii. Bonavita v. Corbo viii. Haley v. Talcott (dissolution) j. Insider Trading (gets reviewed under Martha Stwert, Oracle) k. Conflict of Interest w/in the Board/ Independence of Boardi. Breach of duty of loyalty 1. Self-dealingBenihana of Tokyo 2. EBay3. Walt Disney l. Independence of Independent Committee? m. Majority minority s/h approval? n. Corporate opportunity? o. Proxy contest? 8. How will you apply the standard to this particular set of factsa. The pros and the cons 9. What is the likely outcome, given the standard and the facts 10. Any other information that is important to note? (Policy, indemnification, Delaware law, MBCA, federal law, BJR, equity?)

Does the defensive measure relate to shareholder election of directors or a shareholder vote that would effectuate a change in corporate control (e,g., a vote on a merger, as was the case in Mercier)? If no, go to Unocal two-step reasonableness analysis.If yes, was it adopted for the primary purpose of impeding the effectiveness of a shareholder vote on either of those matters? That is, was the primary purpose to make it more difficult to elect new directors or to effectuate a change in control? If no, go to Unocal two-step reasonableness analysis. If yes, there must be a compelling justification for the measure. Factors in determining primary purpose:Was it adopted in response to a threat to control of the company by the current board? If no, it probably was not adopted to impede an effective shareholder vote, absent evidence otherwise, even though it may relate to shareholder voting. If yes, it likely was adopted for the primary purpose of impeding an effective shareholder vote. The impact of the defensive measure in this case need not be preclusive in order to trigger the requirement for a compelling justification, although it still must make more difficult an effective shareholder vote to elect new directors or effect a change in control.However, even if it was not adopted in response to a threat, does it nonetheless have the effect of precluding an effective shareholder vote? I.e., is an effective shareholder vote realistically unattainable? If no, proceed to Unocal two-step reasonableness analysisIf yes, there must be a compelling justification for the measure. This means that the measure must be a response to an especially serious threat to the corporation. Is there a compelling justification? If no, the measure is invalid.If yes, the measure is valid. Concluding that the measure has a compelling justification also effectively is a conclusion that the measure is a reasonable response to a very serious threat Unocal two-step reasonableness analysis Does the board reasonably perceive a genuine threat to the corporation? If no, the measure is invalid. If yes, proceed to second question below. If the board reasonably perceives a genuine threat, is the defensive measure a proportionate response to it? If no, the measure is invalid. If yes, the measure is valid.