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98. Georgia Pacific Corp vs Great Northern Nekoosa Corp 8 Feb 1990 Carter | JA FACTS: 1! "n #1 "ct 1989$ %reat &aci'ic co((ence) its atte(*t to ta+e over %reat Nort,ern Ne+oosa Cor* b- a cas, ten)er o''er! .t see+s to oust %reat Nort,ern/s 0oar) o' 1irectors$ 2,ic, ,as t2ice o**ose) t,e ta+eover$ on a (eeting s*ecia33- ca33e) 'or t,at *ur*ose on 2 Mar 1990! 2! .n Ma- 1984$ %reat Nort,ern a(en)e) its artic3es o' incor*oration to inc3u)e t,e 'o33o2ing$ so5ca33e) su*er(a6orit- *rovision 'or re(ova3 o' )irectors7 8ub6ect to t,e rig,ts o' t,e ,o3)ers o' an- series o' *re'erre) stoc+ t,en outstan)ing$ an- )irector$ or t,e entire 0oar) o' 1irectors$ (abe re(ove) 'ro( o''ice at an- ti(e$ but only by the affir ative vote of the hol!ers of at least "#$ of the voting po%er of all the shares o' t,e Cor*oration entit3e) to vote genera33- in t,e e3ection o' )irectors$ voting toget,er as a sing3e c3ass! an) a3so inc3u)e sections *rovi)ing t,at an- vacancies in t,e 0oar) o' 1irectors 9s,a33 only be fille! by a a&ority vote of the !irectors then in office t,oug, 3ess t,an a quoru(!9 #! %eorgia &aci'ic 'i3e) t,is )ec3arator- re3ie' case arguing t,at t,e a(en)(ents con'3ict 2it, section :0:(2) an) (;) o' t,e Maine 0usiness Cor*oration Act (M0CA)! <,e M0CA s*eci'ica33- *rovi)es 'or re(ova3 o' )irectors in section :0: (2)7 1! At a s*ecia3 (eeting o' s,are,o3)ers ca33e) e=*ress3- 'or t,at *ur*ose$ t,e entire boar) o' )irectors or an- in)ivi)ua3 )irectors (abe re(ove)$ 2it, or 2it,out cause$ b- a vote o' t,e s,are,o3)ers as *rovi)e) in t,is section! 2! 8ub6ect to t,e 3i(itation in subsection 4$ i' t,e cor*oration )oes not ,ave a boar) o' )irectors so c3assi'ie) t,at )i''erent c3asses o' s,ares e3ect )i''erent )irectors$ suc, re(ova3 (a- be acco(*3is,e) b- t,e a''ir(ative vote of '() of the o*tstan!ing shares entit3e) to vote 'or )irectors! <,e artic3es o' incor*oration (a- *rovi)e t,at suc, re(ova3 (a- be acco(*3is,e) b- a 3esser vote$ but in no case b- a vote o' 3ess t,an a (a6orit- o' s,ares voting on t,e *ro*ose) re(ova3! An) to cover vacancies in t,e boar) o' )irectors7 M0CA sec! :0>(1)(b)7 ?n3ess t,e artic3es o' incor*oration or t,e b-3a2s reserve to t,e s,are,o3)ers t,e rig,t to 'i33 vacancies$ anot,er vacanc-$ ,o2ever occurring$ in t,e boar) o' )irectors (a- be 'i33e) b- a (a6orit- o' t,e re(aining )irectors or b- a so3e re(aining )irector! M0CA sec! :0:(;)7 .' an- or a33 )irectors are re(ove) at suc, (eeting o' t,e s,are,o3)ers$ ne2 )irectors (a- be e3ecte) at t,e sa(e (eeting 2it,out e=*ress notice being given o' suc, e3ection 4! %eorgia5&aci'ic conten)s t,at t,e re(ova3 *rovisions in %reat Nort,ern@s artic3es o' incor*oration an) b-3a2s are voi) because$ in requiring a :;A (a6orit- to re(ove )irectors rat,er t,an t,e t2o5t,ir)s (a6orit- set 'ort, in B :0:$ t,e- con'3ict 2it, t,e M0CA! <,e M0CA (a+es c3ear t,at t,e b-3a2s an) a(en)(ents to artic3es o' incor*oration (a- not be inconsistent 2it, t,e M0CA or ot,er 3a2! a! %reat Nort,ern argues t,at section :0: )oes not estab3is, a (an)ator- cei3ing 'or t,e (a6orit- require) to unseat )irectors because it no2,ere *ro,ibits Maine cor*orations 'ro( a)o*ting a ,ig,er stan)ar)! +SS,-: Are t,e a(en)(ents va3i)C .-/0: No! 0-C+S+1N: %rante)! Duestione) *rovisions )ec3are) inva3i)! .-/0: 1! <,e *3ain 3anguage o' section :0:(2) requires a 2E# (a6orit- vote 'or re(ova3 o' cor*orate )irectors! <,e Maine a2 Court ,as inter*rete) t,e 3anguage o' section :0: as 9e=*ress3- 3i(iting t,e (eans avai3ab3e to re(ove o''icers an) )irectors!9 2! %reat Nort,ern@s argu(ent t,at section >11 o' t,e M0CA e=*ress3*er(its cor*orations to ignore t,e t2o5t,ir)s (a6orit- require(ent in section :0: is un*ersuasive! 8ection >11 *rovi)es7 1! F=ce*t to t,e e=tent t,at t,e vote o' a greater nu(ber o' s,ares or voting b- c3asses or series o' s,ares is require) b- t,is Act or b- t,e artic3es or b-3a2s$ at an- (eeting o' s,are,o3)ers 2,ic, ,as been )u3- ca33e)$ or notice an) ca33 o' 2,ic, ,as been unani(ous32aive)$ an) at 2,ic, a quoru( is *resent7 A! An- cor*orate action s,a33 be aut,oriGe) b- a (a6orit- o' t,e votes cast at t,e (eeting b- t,e ,o3)ers o' s,ares entit3e) to vote on t,e sub6ect (atterH
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Facts7 1! 8ta,3 ,o3)s #0A o' t,e outstan)ing co((on stoc+ o' A**3e 0ancor*! Le announce) a *ub3ic ten)er o''er 'or a33 o' t,e re(aining s,ares o' 0ancor*! 2! <,e boar) o' )irectors e=*resse) concern t,at 8ta,3 (ig,t obtain contro3 o' te co(*an- 2it,out *a-ing a contro3 *re(iu(! #! <,e boar) re'use) to acce*t a stoc+ *urc,ase rig,ts *3an on be,a3' o' 8ta,3! 4! .n res*onse$ 8ta,3$ )e3ivere) a *ro*osa3 to be sub(itte) to a vote at t,e ne=t annua3 (eeting o' stoc+,o3)ers$ ca33ing 'or an a(en)(ent o' t,e b-3a2s to increase t,e nu(ber o' )irectors 'ro( 12 to 21! 8uc, a(en)(ent 2as to inc3u)e ,i(se3' as )irector! ;! <,e boar) c,ose not to convene on t,e regu3ar annua3 (eeting as set in t,e b-3a2s )ue to t,e 'act t,at t,e co(*an)i) not ,ave a 'air o**ortunit- to e=*3ore an) *ursue a3ternatives to t,e 8ta,3 o''er! >! 8ta,3 argues t,at t,at t,e boar)/s action o' c,oosing not to ,o3) t,e (eeting a(ounte) to an i(*er(issib3e (ani*u3ation o' t,e cor*orate (ac,iner- ,aving in e''ect )isen'ranc,ise) t,e co(*an- stoc+,o3)ers an) entrenc,e) t,e incu(bent )irectors! :! <,e boar) res*on) t,at t,e recor) )ate 2as 2it,)ra2n not as a res*onse to a *ro=- contest b- 8ta3,$ but rat,er as a res*onse to 8ta,3s/ ten)er o''er! <,e a**ro*riate stan)ar) 'or eva3uating t,e boar)/s action is 2,et,er t,e boar)s/ 2it,)ra2a3 o' t,e (eeting 2as a reasonab3e res*onse to a *erceive) t,reat to cor*orate or s,are,o3)er interests! 2
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Mergers & Acquisitions (9 Nov 2012) .ssue7 1i) t,e boar) act res*onsib3- in )e'erring t,e boar) (eeting$ regar)ing t,e *ro*ose) a(en)(ent o' t,e b- 3a2s$ 'or t,e *ur*ose o' e=ten)ing t,eir ti(e necessar- to eva3uate t,e 'inancia3 an) business re*ercussions o' it being contro33e) co(*3ete3- b- 8ta,3C Le3)7 1! Mes! <,e genera3 ru3e is t,at 2,ere cor*orate )irectors e=ercise t,eir 3ega3 *o2ers 'or an inequitab3e *ur*ose t,eir action (a- be rescin)e) or nu33i'ie) b- a court at t,e instance o' an aggrieve) s,are,o3)er! 2! ?n)er t,is test t,e court as+s t,e question 2,et,er t,e )irectors@ *ur*ose is 9inequitab3e!9 An inequitab3e *ur*ose is not necessari3- s-non-(ous 2it, a )is,onest (otive! #! Action )esigne) *rinci*a33- to inter'ere 2it, t,e e''ectiveness o' a vote inevitab3- invo3ves a con'3ict bet2een t,e boar) an) a s,are,o3)er (a6orit-! Ju)icia3 revie2 o' suc, action invo3ves a )eter(ination o' t,e 3ega3 an) equitab3e ob3igations o' an agent to2ar)s ,is *rinci*a3! 4! ?noca3 <est7 )i) t,e )irectors reasonab3- *erceive a t,reat to a va3i) cor*orate or s,are,o3)er interest 2,en t,e- (a)e t,e )ecision un)er revie2$ an) is t,e boar)@s res*onse a reasonab3e one in re3ation to t,at t,reat! ;! 0ot, requisites e=ist in t,e 'acts! >! N,ere t,e s,are,o3)ers are in e''ect to be as+e) to )eci)e 2,et,er t,e co(*an- s,ou3) be so3) in a given transaction$ t,e boar) (a- *ro*er3- recogniGe t,e s,are,o3)ers nee) 'or in'or(ation$ ot,er t,an t,e (ar+et *rices o' t,eir stoc+$ re3evant to t,at )ecision! :! <,e essence o' t,e Unocal 'or( o' revie2 is a 6u)icia3 assess(ent o' t,e *ro*ortiona3it- o' a res*onse to a t,reat! Lere t,e res*onse to t,e t,reat 2as e=tre(e3- (i3)! 8! <,e )isaggregate) s,are,o3)ers are inca*ab3e o' obtaining a**ro*riate in'or(ation on a3ternatives ot,er t,an t,e Stahl *ro*osa3 an) t,e (ar+et 'or t,eir stoc+H on3- t,e boar) can acco(*3is, t,at tas+! <,us$ t,e absence o' re3evant in'or(ation$ in (- o*inion$ (a- reasonab3- be seen as *osing a t,reat to t,e vote o' t,e 7ancorps,are,o3)ers in t,e *articu3ar conte=t *resente)! I Lex Societas
466. 8oran v. .o*sehol! +nternational5 +nc. #66 A. '! 4)93 8,ar 464. 0yna ics Corp. of A erica v. CTS Corp. 86# F. '! "6# :4983; <i'' 46'. 8instar Ac2*iring Corp. v. A8F5 +nc. 3'4 F. S*pp. 4'#' :498#; A3)ric, (C) 46). The 7ank of Ne% <ork v. +rving 7ank Corp. #'8 N.<.S.'! 98' :4988; Facts: .0C an) 0NM are bot, ban+ ,o3)ing co(*anies incor*orate) in t,e 8tate o' Ne2 Mor+! .n 8e*te(ber 198:$ 0NM announce) its intention to acquire .0C! At t,at ti(e$ 0NM (a)e an o''er to t,e 0oar) o' 1irectors o' .0C to acquire a33 o' t,e outstan)ing s,ares o' .0C$ 2,ic, o''er 2as re6ecte)! o "ver t,e 'o33o2ing (ont,s$ t,e *ro*ose) acquisition )eve3o*e) into a conteste) ta+eover o''er$ t,e 0oar) o' .0C ,aving not a**rove) t,e initia3 o''er$ nor an- subsequent 0NM o''er! o <o t,e contrar-$ .0C ,as conteste) virtua33- ever- action ta+en b- 0NM in connection 2it, t,is (atter! As a resu3t$ severa3 3a2suits are *en)ing be'ore t,is court invo3ving t,e t2o co(*anies an)Eor t,eir s,are,o3)ers! 0NM@s *3an o' acquisition is basica33- a t2o5ste* *rocess7 (1) First$ 0NM see+s to acquire a33 or a (a6orit- o' t,e outstan)ing s,ares o' .0CH an) (2) t,erea'ter$ 0NM ,o*es to consu((ate a (erger bet2een .0C an) eit,er 0NM or an a''i3iate o' 0NM! o <,e acquisition o' .0C@s s,ares 2ou3) be in e=c,ange 'or cas, an) s,ares o' 0NM! <,at is$ 0NM 2ou3) *a- a certain a(ount o' cas, *3us bet2een 1 an) 2 0NM s,ares 'or eac, .0C s,are acquire)! An obstac3e 2,ic, (ig,t *revent or )e3a- t,e subsequent (erger even s,ou3) 0NM success'u33- ac,ieve acquisition o' a (a6orit- o' t,e s,ares o' .0C is *ose) b- 0usiness Cor*oration a2 8ec! 912! o 0usiness Cor*oration a2 8ec! 912 2ou3) *revent a (erger
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469. Stahl v. Apple 7ancorp.5 +nc. Fe!. Sec. /. =ep. >9#594' :4996; C,a) Takeover Defenses 46#. ,nilever5 Ac2*isition Corp. ?@s? =ichar!son?@icks5 +nc. :A0iana; 34# F. S*pp. 96" :498#; #0 8e*t 198;H &7 "2en -ntities +nvolve!: =ichar!son?@icks +nc. (a+ers o' Pic+s Pa*orub an) ot,er 2e33 +no2n *ro)uctsH a *ub3ic3-5,e3) 1e3a2are cor*oration$ 2it, 1E# (ore o' its stoc+ contro33e) or ,e3) b- various Oic,ar)sons!
Facts: 1! .n ear3- 8e*t 198;$ ?ni3ever sent a *ro*osa3 to acquire a33 o' Pic+s/ s,ares at Q ;4Es,are but Oic,ar)sons/ boar) o' )irectors re'use)! 2! "n 1> 8e*t$ ?ni3ever )i) t,e '' si(u3taneous3-7 a! Fi3e) a case against Oic,ar)sonsH an) b! &ub3ic3- announce) a ten)er o''er 'or a33 outstan)ing s,ares o' Oic,ar)sons/co((on stoc+$ at a cas, *rice o' Q ;>E s,are i' Pic+s/ boar) o' )irectors a**rove) t,e o''er an) Q 48 i' it )i) not! #! "n 1: 8e*t$ Oic,ar)sons/ boar) o' )irectors vote) an) announce) t,e issuance o' a BSeries A C9.66 Participating C* *lative Convertible Preferre! StockB to be )istribute) as a stoc+ )ivi)en) to co((on stoc+,o3)ers o' recor) as o' 2: 8e*t 198;! J.M&"O<AN<K Terms and Conditions ?n)er t,is$ 1 s,are o' t,e ne2 *re'erre) stoc+ 2i33 be issue) 'or eac, ; s,ares o' co((on stoc+ Fac, *re'erre) s,are 2i33 entit3e t,e ,o3)er to cast 2; votes on a33 issues on 2,ic, t,e co((on can vote! 0?< i' t,e *re'erre) s,are is trans'erre)$ t,e ne2 ,o3)er (ae=ercise on3- ; o' 2; votes 'or t,e 'irst #> (ont,s t,e stoc+ is ,e3)! Effect Fac, co((on stoc+,o3)er 2i33 ,ave t,e sa(e voting *o2er 0?< ,eEs,e 2i33 be unab3e to trans'er t,ose voting rig,ts$ since 2E# 2i33 be une=ercisab3e 'or #> (ont,s 'o33o2ing t,e trans'er! End Effect: +t %ill be i possible for ,nilever to ac2*ire =ichar!son?@icks at this ti e Nit,out t,e consent o' t,e Oic,ar)son s,ares$ Oic,ar)son grou*@s co((an) o' t,e tota3 e=ercisab3e vote 'ro( about 1E# to an abso3ute (a6orit- 'or t,e 'o33o2ing #> (ont,s! 4! ?ni3ever (ove) to te(*orar- restrain t,e issuance o' sai) )ivi)en)! .t 2as %OAN<F1! Ground: .t/s an i33ega3 inter'erence bot, 2it, its rig,t as a stoc+,o3)er an) 2it, its atte(*t to acquire t,e co(*an- un)er 1e3a2are 3a2 8e*te(ber 19! ;! ?ni3ever 3ater a**3ie) 'or *re3i(inar- in6unction to en6oin t,e issuance o' t,e stoc+ )ivi)en) *en)ing tria3! +ss*e: .s it *ro*er 'or t,e Court to issue a *re3i(inar- in6unctionC
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