CORPORATE 05

Question 1

Proxy

Answer 1

A written document signed by a shareholder that authorizes another person to vote the share holder’s shares.

Question 2

Section 14(a)

Answer 2

A provision of the Securities Exchange Act of 1934 that gives the SEC the authority to regulate the solicitation of proxies.

Question 3

Proxy Statement

Answer 3

A document that fully describes 1. the matter for which a proxy is being solicitied, 2. who is soliciting the proxy and 3. any other pertinent information.

Question 4

Antifraud Provision

Answer 4

Section 14(a) of the Securities Exchange Act of 1934 which prohibits misrepresentations or omissions of a material fact in the proxy materials.

Question 5

Proxy Contest

Answer 5

A contest in which opposing factions of shareholders and managers solicit proxies from other shareholders; the side that receives the greatest number of votes wins the proxy contest.

Question 6

Shareholder Resolution

Answer 6

A resolution that a shareholder who meets certain ownership requirements may submit to other shareholders for a vote. Many shareholder resolutions concern social issues.

Question 7

Merger

Answer 7

A situation in which one corporation is absorbed into another corporation and ceases to exist.

Question 8

Share Exchange

Answer 8

A situation in which one corporation acquires all the shares of another corporation, and both corporations retain their separate legal existence.

Question 9

Short-Form Merger

Answer 9

A merger between a parent corporation that does not require the approval of the shareholders of either corporation or the approval of the board of directors of the subsidiary corporation.

Question 10

Dissenting Shareholder Appraisal Rights

Answer 10

The rights of shareholders who object to a proposed merger, share exchange, or sale or lease of all or substantially all of the property of a corporation to have their shares valued by the court and receive cash payment of this value from the corporation.

Question 11

Tender Offeror

Answer 11

The party that makes a tender offer.

Question 12

Tender Offer

Answer 12

An offer that an acquirer makes directly to a target corporation’s shareholders in an effort to acquire the target corporation.

Question 13

Target Corporation

Answer 13

The corporation that is proposed to be acquired in a tender offer situation.

Question 14

Williams Act

Answer 14

An amendment to the Securities Exchange At of 1934 made in 1968 that specifically regulates tender offers.

Question 15

Fair Price Rule

Answer 15

A rule that says any increase in prie paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares.

Question 16

Pro Rata Rule

Answer 16

A rule that says shares must be purchased on a pro rata basis if too many shares are tendered.

Question 17

Section 14(e)

Answer 17

A provision of the Williams Act that prohibits fraudulent, deceptive and manipulative practices in connection with a tender offer.

Question 18

Crown Jewel

Answer 18

A valuable asset of a target corporation that the tender offeror particularly wants to acquire in a tender offer.

Question 19

Greenmail

Answer 19

The purchase by a target corporation of its stock from an actual or perceived tender offeror at a premium.

Question 20

Business Judgement Rule

Answer 20

A rule that protects the decisions of a board of directors that acts on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the corporation and its shareholders.

Question 21

Antitakeover Statutes

Answer 21

Statutes enacted by a state legislature that protect against the hostile takeover of corporations incorporated in or doing business in the state.