’WPC 1LÓĪhk7Üļķś P&ūXĄ÷hž±”KLh’¾Ąe½„÷ 8&ā Y Š×© rĘ@ˆQP?PūŚ2h;‰tųLģNŠąą~*q»Ķ6§Ń웸Ć&p×ęß ˜¤ŗ‰'ƒ&īĻeMśŌ¢ł{•æüʋøєÉ”éøC*,·hIJ…óÆ&“pč5€3–Ų8<ćŅ Iķ’ąēÆĄ³ź³Ü©Ch_KéÕōZ剐fvYą9x…C7ću˜Ū†¾xt÷vļF%\–ŁĢŲņbL˜6Ͻxó­.UpDĖ.dæŗ  Så.˜F1Ģę#Ŗ œųx1ؾŲD³¹I‡¶Å1īVģjŽbģ,ģ”ō*–”Ģž ?nÆ^ĆeżoNU·Ę`EœRōkžĢI“ŖŚųwŃžBœEœ‘<øó2eÅŃpÅ ¹ĖM ŃXä˶‚n2¢shs½“ōM9Ź>U+$Ś\pšC³ū›’Øl^ØäšÜ¼šŪv»"ÄR5pR_{0¼°Ÿ}šŹ†|OE1¦„é• zÆlU.čE %n­ 0xĖ C BI #!f ^ ‡ UN“  į ķ  dó "ģW UC T[ Æ ! æ )_Ne gw@m4­Į mĆUNŚ 0•(¢½ ________________________________________________________________________ AQeʶ 0•| 0• 0D¦¦ D3źH Œ 9`(CourierX«H Œ 9`(Courierōōx Œ @ɧĶĒ;ō@(P/ó$””Ó  ÓŃ7€ģßōXdČ7ŃŃ € ŃČĢ d˜HP DeskJet 820C Series Printer,(,,,,,(0剢(c(ÖĆ9 Z‹6Times New Roman RegularąŻ0”ČĢ< Œ 9p`(<žž9p`+†2Courier 10RomanSpeedo’’zNxxx,,XxU^’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’Ō3s4ddd,,ōdŠšž’ž’ž’ž’ž’ž’ž’’’ž’’’’’’’ž’’’’’ž’’’’’ž’’’ž’ž’’’ž’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ž’ž’ž’ž’ž’ž’’’’’’’’’< Œ 9p`(’MCI’’Tojama’’Prez’’Konfusion’#|xĮuž’"BIP[rƒ’’’’’’’’’’’’ń÷Ćó’’’’’’ż’’’’’?’’÷’’’Ļ’’Ļ’ü=Ą//’’’’’N·’’ń’Ź£ü«żššhłŸž &@€ģFRŃĄ@FL .HĢ ø¹Eŗ»¼½E¾æŹĄŹĮŹó€4(ƃ‚ ĢO„’U‹’ĄĄĄ(ÖĆ9 Z‹6Times New Roman Regular(m3Kœ$¦¦Ż ƒ/ó!ŻÓ  ÓŃ8€ «ōõd“dŌ8ŃŃ € ŃŻ  Ż Riker WorfKlingonLangevoort YallChokaBridgwareMacrohardČĢfghikCž’<<C’’ƒLevel 1Level 2Level 3Level 4Level 5(m3Kœ$¢¢Ż ƒ/ó!ŻÓ  ÓŃ8€ «ōõd“dŌ8ŃŃ € ŃŻ  Ż(m3Kœ$££Ż ƒ/ó!ŻÓ  ÓŃ8€ «ōõd“dŌ8ŃŃ € ŃŻ  Ż($$””ņ ņŚ  Ś1Ś  Śó ó'’’dxdŻ ƒ/ó!ŻÓ  ÓŃ8€ ”ōõd“dČ8ŃŃ € ŃŻ  ŻŌ_ŌŌ€X_DXXXŌŃ8€_DXXdģōõd“8ŃŌ_ŌŌ_ŌŌ_ŌŌ_ŌńĮńŌ% € ŌńĮńŌ_Ōą@Ŗ Ŗ ģąņ ņŌ‡„£©„XX_DŌADVANCED€CORPORATIONSŌ#†X_DX„„£©O#ԈŠ ° Šó óą@šš!ģąProfessor€BradfordˆŠ ` ŠĢą@ģąSaturday,€April€29,€2000ˆĢą@vv&ģą9:00€a.m.ˆĢą@‚‚#ģąņ ņ3€Hours€(3:00)ó óˆŠ Ą  Šą  ąą ` ąą ø ąą  ąą h ąą Ą ąą  ąą p ąĢĢą@$ģąņņINSTRUCTIONSóóˆŠ „ Ō Šą@` ` ģą(ņ ņPLEASE€READ€BEFORE€PROCEEDING!ó ó)ˆŠ p Ą  Šą  ąą ` ąą ø ąą  ąą h ąą Ą ąą  ąą p ąą Č ąą  ąĢĢą  ą1.€€This€is€an€open€book€exam.€€You€may€use€any€materials€you€wish€to€use,€withoutĻlimitation.€€You€may€not€consult€with€or€communicate€with€any€other€person€during€this€exam.ĢĢą  ą2.€€You€have€ņ ņthree€hours€(3:00)ó ó€to€complete€the€exam.€€The€time€at€which€the€exam€endsŠ üL Šwill€be€posted€on€the€blackboard.€€Writing€anything€after€time€is€called€is€an€Honor€CodeĻviolation.€€You€may€not€even€finish€a€word€or€sentence.ĢŌ‡ X_DXXX_DŌĢą  ą3.€€If€you€finish€the€exam€more€than€five€minutes€early,€you€may€turn€in€your€answers€inĻthe€Dean's€Office.€€Otherwise,€you€must€turn€in€your€answers€in€this€roomš!šregardless€of€whereĻyou€take€the€exam.Ō#†X_DXX X_DÆ#ŌŠ ˆŲ ŠĢą  ą4.€€This€exam€has€ņ ņseven€(7)€pagesó ó,€including€the€instructions.€€The€page€numbers€appearŠ `° Šon€the€top€right„hand€corner€of€each€page.€€Please€check€to€be€sure€that€this€copy€has€all€theĻpages.ĢĢą  ą5.€€The€exam€consists€of€ņ ņthree€(3)€questionsó ó.€€The€recommended€time€for€each€question€isŠ d Šas€follows:ĢĢÓ  ÓQuestion€One......................60€MinutesĢQuestion€Two.....................75€MinutesĢQuestion€Three...................45€MinutesĢĢÓQÓEach€question€will€be€weighted€in€accordance€with€its€recommended€time.ĢĢĢĢĢĢĢĢĢą€ąą1(#ąņ ņCONTINUE€TO€THE€NEXT€PAGE.ó óˆŠ  Ų,((+B ŠŌ‡ X_DXXX_DŌą  ą6.€€You€may€take€the€exam€in€this€room€or€in€a€designated€special€purpose€room€(typing€orŠ d Šoverflow€room)€posted€on€the€board.€€If€you€decide€to€take€the€exam€in€a€special€purpose€room,Ļremember€that€(1)€time€will€be€called€only€in€this€room,€and€(2)€when€time€is€called,€you€mustĻeither€be€present€in€this€room€or€have€already€turned€in€your€answers.ĢĢŌ#†X_DXX X_D #Ōą  ą7.€€Be€clear.€€Be€concise.€€Be€organized.€€Use€your€brain€before€you€use€your€pen.Š  œ ŠĢą  ą8.€€Please€write€legibly.€€I€canššt€give€you€credit€for€what€I€canššt€read.ĢĢą  ą9.€€If€you€believe€that€additional€facts€are€necessary€to€answer€a€question,€state€exactlyĻwhat€those€facts€are€and€how€they€would€affect€your€answer.€€If€you€believe€that€a€question€isĻambiguous€or€unclear,€note€the€ambiguity€or€lack€of€clarity€and€indicate€how€it€affects€yourĻanswer.ĢĢą  ą10.€€Assume€that€Delaware€law€applies,€unless€the€facts€indicate€otherwise.ĢĢą  ą11.€€The€questions€should€be€answered€in€blue€books,€or€on€typing€paper€if€you€type€yourĻexam.€€Please€write€or€type€on€only€one€side€of€each€page.€€Double„space€if€you€type.€€ņ ņWRITEŠ ¬ ŠYOUR€EXAM€IDENTIFICATION€NUMBER€ON€EACH€BLUE€BOOK€OR€PIECE€OFĻTYPING€PAPER€THAT€YOU€USEó ó.€€Do€not€put€your€name€on€any€materials€you€turn€in.Š ģˆ ŠĢą  ą12.€€The€Honor€Code€is€in€effect.ĢĢą  ą13.€€Good€luck€and€have€a€great€summer.ĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢņ ņDO€NOT€TURN€THIS€PAGE€UNTIL€YOU€ARE€GIVEN€THE€SIGNAL€TO€START.ó óŠ  `*ü#' Šą@ģģ$ģąņ ņQUESTION€ONEˆŠ d ŠĢą@ŹŹ$ģą(60€Minutes)ó óˆŠ <Ų ŠĢĢą  ąOn€February€15,€2000,€after€extensive€negotiations,€the€directors€of€Ō_ŌTrysomeŌ_Ō€ChickenĻCorporation€(š šChickenšš)€and€the€directors€of€Nebraska€Beef,€Inc.€(š šBeefšš)€executed€a€š šLetterĻAgreement.šš€€The€Letter€Agreement€provided€for€a€stock„for„stock€merger€of€Beef€into€Chicken.€ĻBeef€shareholders€would€receive€one€share€of€Chicken€common€stock€for€every€three€shares€ofĻBeef€common€stock€they€own.€€Prior€to€signing€the€Letter€Agreement,€the€Beef€directors€obtainedĻan€opinion€from€a€prominent€investment€banking€firm€that€the€terms€of€the€merger€were€fair€to€theĻBeef€shareholders.ĢĢą  ąBoth€Chicken€and€Beef€stock€is€publicly€traded.€€When€the€Letter€Agreement€wasĻexecuted,€Chicken€had€100,000€shares€outstanding,€with€a€market€price€of€$100€a€share.€€BeefĻalso€had€100,000€shares€outstanding,€with€a€market€price€of€$25€a€share.€€Beef€and€Chicken€haveĻno€common€directors€or€officers;€the€two€companies€are€completely€unrelated.ĢĢą  ąThe€Letter€Agreement€was€contingent€on€approval€by€both€the€Beef€and€ChickenĻshareholders€and€š šexecution€of€a€definitive€final€merger€agreement€by€Beef€and€Chicken.šš€€TheĻLetter€Agreement€provided€that€the€final€agreement€would€contain€the€customary€warranties€andĻcovenants€used€by€Chicken€in€a€stock„for„stock€merger.€€The€Letter€Agreement€also€provided€forĻa€termination€fee€of€$500,000€to€be€paid€by€Beef€if€the€deal€failed€to€close€for€any€reason,Ļincluding€any€breach€of€the€Agreement.ĢĢą  ąThe€Letter€Agreement€further€provided€that€Beef€and€its€board€of€directors€would€useĻtheir€best€efforts€to€obtain€the€approval€of€the€Beef€shareholders€and€close€the€merger.€€TheĻAgreement€contained€no€š šfiduciary€outšš€language.ĢĢą  ąBeef€scheduled€a€shareholderššs€meeting€for€April€15€and€Chicken€and€Beef€beganĻpreparing€the€final€merger€agreement.€€Negotiations€on€the€warranties€and€covenants€wentĻsmoothly,€and,€by€March€15,€the€parties€were€substantially€in€agreement€on€the€terms€of€theĻcontract,€except€for€one€key€problem.€€Since€the€Letter€Agreement€was€executed,€the€market€priceĻof€Chickenššs€common€stock€had€dropped€to€$90€a€share€and€the€market€price€of€Beefššs€commonĻstock€had€risen€to€$30€a€share.€€Beefššs€directors€refused€to€approve€the€final€agreement€unless€theĻconversion€ratio€was€changed€so€Beef€shareholders€would€receive€one€Chicken€share€for€everyĻtwo€Beef€shares.€€Chicken€refused€to€agree€to€this.ĢĢą  ąIn€spite€of€the€deadlock,€Beef€held€its€scheduled€shareholder€meeting€on€April€15.€€At€theĻmeeting,€the€Beef€directors€described€the€terms€of€the€Letter€Agreement,€including€the€original€1:3Ļconversion€ratio,€and€urged€the€shareholders€not€to€approve€the€merger€on€those€terms.€€The€finalĻvote€was€51%€to€49%€against€the€proposed€merger.€€Three€percentage€points€of€the€negative€voteĻcame€from€stock€owned€by€Beefššs€directors.Š -ø&* Їą  ąDiscuss€the€possible€liability€of€Beef€and/or€its€directors.€€(You€may€assume€that,€beforeĻthey€signed€the€Letter€Agreement,€Beefššs€directors€adequately€performed€any€š šauctionšš€duty€theyĻmay€have€had.€€Do€not€address€any€issues€arising€under€federal€securities€law.)€€Beef€and€ChickenĻare€both€incorporated€in€the€State€of€Pound,€which€has€never€addressed€any€of€these€issues€before,Ļso€there€is€no€directly€applicable€precedent.Š   ° Šą@ŠŠ$ģąņ ņQUESTION€TWOˆŠ d ŠĢą@ŹŹ$ģą(75€Minutes)ó óˆŠ <Ų ŠĢĢą  ąBabylon€5€Corporation€(š šBabylon€5")€and€Centauri€Prime€Development€CompanyĻ(š šCentaurišš)€are€Delaware€corporations.€€Both€Babylon€5€and€Centauri€are€traded€on€the€NewĻYork€Stock€Exchange.€€Babylon€5€owns€40€percent€of€the€voting€stock€of€Centauri.€€Four€ofĻCentauriššs€eight€directors€are€also€officers€and€directors€of€Babylon€5.€€The€other€four€CentauriĻdirectors,€all€outside€directors,€are€completely€unrelated€to€Babylon€5.ĢĢą  ąOn€December€1,€1999,€John€Sheridan€(š šSheridanšš),€Babylon€5ššs€CEO,€who€is€not€aĻCentauri€director,€asked€the€Centauri€board€to€consider€a€Ō_ŌńæńŌ% € ŌńæńńĮńńĄńŌ% € ŌńĄńńĮńcashoutŌ_Ō€merger€between€Babylon€5€andĻCentauri,€with€all€of€Centauriššs€shareholders€other€than€Babylon€5€to€receive€$100€cash€for€eachĻCentauri€share.€€The€Centauri€board€appointed€a€three„person€independent€committee,€composedĻof€three€of€the€four€Centauri€independent€directors,€to€review€the€offer.€€The€board€instructed€theĻindependent€committee€to€consider€whether€to€accept€Babylon€5ššs€offer,€but€not€to€consider€anyĻalternative€transactions.€€The€Centauri€board€had€in€the€past€rebuffed€other€parties€who€expressedĻinterest€in€an€acquisition.ĢĢą  ąThe€independent€committeeššs€first€action€was€to€appoint€its€own€investment€banker€andĻindependent€legal€counsel.€€After€three€months€of€careful€review€and€negotiation,€the€independentĻcommittee€unanimously€recommended€that€the€Centauri€board€accept€Babylon€5ššs€offer.€€The€fullĻCentauri€board€then€voted€7„1,€with€the€one€independent€director€who€was€not€on€theĻindependent€committee€opposed,€to€accept€Babylon€5ššs€offer.€€On€April€1,€2000,€the€CentauriĻshareholders€met€to€consider€the€merger.€€Sixty„seven€percent€of€the€shares,€including€thoseĻowned€by€Babylon€5,€voted€in€favor€of€the€transaction.€€Twenty„five€percent€of€the€shares€votedĻagainst€the€deal,€and€eight€percent€of€the€shares€were€not€present€or€represented€at€the€meeting.ĢĢą  ąMichael€Garibaldi€(š šGaribaldišš)€is€a€Centauri€shareholder€who€voted€against€the€merger.€ĻHe€is€dissatisfied€with€the€merger€consideration,€and€wishes€to€bring€a€legal€challenge€to€theĻmerger.€€He€has€discovered€the€following€additional€facts:ĢĢą  ą1.€€The€investment€banker€hired€by€the€independent€committee€opined€that€$100€a€shareĻwas€within€the€range€of€a€fair€price,€but€on€the€low€end€of€fairness.€€The€investment€bankerĻindicated€that€Centauri€probably€would€receive€a€higher€price€if€the€whole€company€wereĻauctioned€to€a€third€party.ĢĢą  ą2.€€Babylon€5€proposed€the€cashout€merger€only€as€a€way€to€get€rid€of€Centauriššs€minorityĻshareholders.€€Babylon€5's€management€did€not€believe€that€the€transaction€provided€any€realĻbusiness€benefits€to€either€Babylon€5€or€Centauri.ĢĢą  ą3.€€On€December€1,€1999,€the€market€price€of€Centauriššs€stock€was€$80€a€share.€€OnŠ -ø&* ŠFebruary€1,€2000,€that€market€price€reached€its€all„time€high€of€$101€a€share.€€However,€by€MarchĻ1,€2000,€it€had€dropped€back€to€$98€a€share,€where€it€remained€until€the€merger€was€completed.ĢĢą  ą4.€€Before€Babylon€5€made€its€offer,€two€of€Babylon€5ššs€officers€prepared€a€detailedĻconfidential€memo€with€a€post„merger€business€plan€for€Centauri.€€The€ń·ńmemoń·ń€calls€for€changes€inĻmarketing€and€manufacturing,€and€selling€some€of€Centauriššs€less€productive€assets,€and€indicatesĻa€probable€gain€in€Centauriššs€value€of€$10„15€a€share€if€the€plan€is€implemented.€€ńøńThe€plan€wasĻapproved€by€Babylon€5's€ńøńń»ńboard€of€ń»ńńøńdirectors€on€Febńøńń¹ńńøńuńøńń¹ńńŗńruary€15ńŗńń½ńńŗń.ńŗńń¼ń€ń¼ńń½ńń¾ń,€but€Centauri€did€not€begin€toĻimplement€the€plan€until€after€the€merger€was€completed.€€Ō_Ōń¾ńńĄńńæńŌ% € ŌńæńńĄńń½ńń¼ń€ń¼ńń¼ńBabylon€ń¼ńń¼ń5ń¼ńń½ńTheŌ_Ō€two€Babylon€5€officers€whoĻprepared€the€plan€are€not€connected€to€Centauri€in€any€way,€and€did€not€have€access€to€anyĻnonpublic€data€concerning€Centauri.€€Babylon€never€disclosed€the€memo€to€the€independentĻcommittee.ĢĢą  ą5.€€The€members€of€the€independent€committee€believed€they€could€get€a€higher€price€ifĻthey€auctioned€Centauri€to€a€third€party,€but€considered€that€outside€the€scope€of€the€authority€theĻCentauri€board€had€delegated€to€them.ĢĢą  ą6.€€The€independent€committee€negotiated€strenuously€with€Babylon€5€on€the€terms€of€theĻdeal.€€Babylon€5€made€several€concessions,€but€refused€to€offer€a€higher€price€than€the€originalĻ$100€a€share€offer.€€By€the€end€of€the€negotiations,€it€was€clear€that€some€of€the€Babylon€5Ļnegotiators€were€very€irritated€by€the€committeeššs€tough€negotiating€tactics.ĢĢą  ą7.€€Two€of€the€three€independent€committee€members€were€worried€about€theĻconsequences€to€the€Centauri€shareholders€if€they€rejected€Babylon€5ššs€offer.€€Babylon€5€made€noĻthreats€to€the€committee,€but€Babylon€5ššs€management€was€pushing€hard€for€the€merger,€andĻBabylon€5€had€a€reputation€in€the€business€community€as€a€cutthroat€competitor.€€The€committeeĻmembers€decided€that€the€$100€price€was€clearly€better€than€the€value€of€shareholdersšš€continuingĻinterest€in€Centauri€if€they€did€not€approve€the€deal.ĢĢą  ąDiscuss€Garibaldiššs€possible€remedies€under€Delaware€law.Š   !¼ ŠŌ‡ X_GXXX_GŌą@hh#ģąņ ņQUESTION€THREEˆŠ d ŠĢą@ŹŹ$ģą(45€Minutes)ó óˆŠ <Ų ŠĢĢą  ąTarget€Corporation€(š šTargetšš)€is€a€Delaware€corporation.€€Targetššs€board€of€directors€hasĻjust€signed€an€acquisition€agreement€with€Bidder€Corporation€(š šBidderšš).€€Included€in€theĻagreement€is€a€clause€giving€Bidder€the€option€to€buy€10,000€shares€of€Target€common€stock€atĻthe€pre„bid€market€price€if€the€acquisition€is€not€closed€and€Target€accepts€a€bid€from€anotherĻcompany.ĢĢą  ąDiscuss€the€different€standards€of€judicial€review€that€a€Delaware€court€might€apply€inĻreviewing€the€Target€boardššs€decision€to€grant€the€stock€option.€€As€to€each€possible€standard€ofĻreview,€describe€the€test€the€court€would€use€and€the€factual€context€in€which€the€court€wouldĻapply€that€test.Ō#†X_GXX X_G2#ŌŠ Lč  ŠĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢĢßA€) °°xdE°»%xAߊ ¼%X" ŠĢą@ĢĢ ģąņ ņEXTRA€CREDIT€QUESTIONó óˆŠ ·&S $ Šą@ŅŅ$ģąņ ņ(30€Seconds)ó óˆŠ £'?!% ŠĢą  ąIn€the€next€thirty€seconds,€successfully€complete€a€hostile€tender€offer€for€a€major€publicĻcorporation.€€Increase€the€efficiency€of€its€operations€by€twenty€percent.€€Distribute€the€resultingĻprofits€to€yourself,€being€careful€not€to€share€with€the€minority€shareholders.€€WARNING:€NOĻCREDIT€WILL€BE€GIVEN€IF€YOUR€STRATEGY€RESULTS€IN€A€FELONY€CONVICTION.