EmpireCollegeSchool of Law

Business Organizations Final

Issue Outline

April 9, 2007

Question One – Pirates of the Caribbean

  1. Dissolution
  1. One-third shares to dissolve in California
  2. Purchase of shares by non-dissolving shareholders
  1. Termination of employment
  1. At will employee
  2. Fiduciary duties (employed for life, business purpose, less drastic alternative?)
  1. Nonpayment of dividend – problem?
  1. Refusal to provide records – problem?
  1. Removal as officer – valid?
  1. Removal as director – valid?
  1. Addition of new director – valid?
  1. Cumulative voting – Can Jack still elect himself? (Yes, if new shares aren’t issued)
  2. Issuance of shares to Will and Elizabeth – valid?
  1. Purchase of Jack’s shares – valid?
  1. Lack of notice
  2. Purchase at company’s option, does Jack vote?
  3. Appraisal – good faith?
  1. Securities law concerns (knowledge of merger when purchasing Jack’s shares?)
  1. Shareholders agreement – valid? (payment of salaries, naming of officers)
  1. Withdrawal of shareholders – trigger buyout? Can Will and Elizabeth withdraw?
  1. Pass through taxation – unfair to eliminate Jack?
  1. Conclusion

Question Two – Presidents, Inc.

  1. 16(a) reporting requirement – did anyone file?
  1. Securities laws
  1. 10b-5 – insider trading and misappropriation
  2. 16(b)
  3. 14e-3 – tender offer
  1. 12/12/06 Issuance of debentures – 10b-5 insider trading?
  1. 1/1/07 – Is Gore greater than 10% shareholder?
  1. 4/4/07 – Reagan trade
  1. Death exception to 16(b)?
  2. spousal attribution for 16(b)
  3. Violation of 16(b) - $2,000,000 profit (200,000*20)-(200,000*10)
  1. 5/5/07 sales
  1. Clinton - $18,900,000 profit (210,000*100) - (210,000*10)
  2. Gore – doesn’t violate 16(b) – why?
  3. Bush - $34,000,000 profit (400,000*100)-(200,000*10)-(200,000*20)
  4. No one is liable – Forced sale pursuant to merger
  1. 10b-5 violations
  1. Bush trade with Nancy
  2. Quayle misappropriation
  3. Clinton breach of duty in restaurant
  4. Gore and Clinton did abstain
  1. 14e-3 violation
  1. Quayle knew about tender offer
  1. Conclusion for each individual
  2. Clinton
  3. Gore
  4. Bush
  5. Reagan
  6. Quayle

Question Three – Katrina and Sophia combination

  1. Statutory merger of companies
  1. Board approval from both
  2. Shareholder approval and appraisal rights for both
  3. Number of Sophia shares outstanding (must it be a cash merger?)
  4. Assumption of liabilities by Sophia
  1. Triangular or reverse triangular merger
  1. Board approval from both
  2. Only shareholders of Katrina have approval, appraisal rights
  3. Same issue with outstanding Sophia shares
  4. No assumption of liabilities by Sophia
  1. Asset acquisition
  1. Board approval from both
  2. No shareholder approval?
  3. No appraisal rights?
  4. Practical effect of appraisal rights – not good for shareholders, may not exercise
  5. Perhaps can eliminate bank from acquisition
  6. No assumption of liabilities by Sophia
  7. De Facto Merger doctrine
  1. Tender offer
  1. No Board approval from Katrina
  2. No shareholder approval from either company
  3. State statutes (back-end merger)
  4. Unocal analysis for poison pill and staggered board
  5. Unocal for cancellation fee and lockup
  6. Revlon duties triggered? Public companies?
  7. Poison Pill redemption?
  1. Dissolution of Katrina, distribution of favored assets to Sophia
  1. Fiduciary duty of controlling shareholder
  2. Entire fairness
  1. Conclusion – Recommend something