Please answer;

1. Shlensky v. Wrigley question... 1. In your view, should the court have intervened in Shlensky's favor, and why or why not?

2. Question, A corporation in which you own a small amount of stock wants to amend its charter to add an exculpation provision. Would you vote in favor of the amendment?

3. Exercise 10.2

4. Exercise 10.3

5. Exercise 10.4

Shlensky V. Wrigley, 237 N.E.2d 776 (Ill. App. lst Dist. 1968) 1 7 77----7 7 7-777- l _ -7-7777-- 7 7,..-77777777777- October 12, 2023 Opinion SULLIVAN, Justice. This is an appeal from a dismissal of plaintiff's amended complaint on motion of the defendants. The action was a stockholders' derivative suit against the directors for negligence and mismanagement. The corporation was also made a defendant. Plaintiff sought damages and an order that defendants cause the installation of lights in Wrigley Field and the scheduling of night baseball games. Plaintiff is a minority stockholder of defendant corporation, Chicago National League Ball Club (Inc), a Delaware corporation with its principal place of business in Chicago, Illinois. Defendant corporation owns and operates the major league professional baseball team known as the Chicago Cubs. The corporation also engages in the opera- tion of Wrigley Field, the Cubs' home park, the concessionaire sales during Cubs' home games, television and radio broadcasts of Cubs' home games, the leasing of the field for football games and other events and receives its share, as visiting team, of admission moneys from games played in other National League stadia. The individual defendants are directors of the Cubs and have served for varying periods of years. Defendant Philip K. Wrigley is also president of the corporation and owner of approximately 80% of the stock therein. Plaintiff alleges that since night baseball was first played in 1935 nineteen of the twenty major league teams have scheduled night games. In 1966. out of a total of 1620 games in the major leagues, 932 were played at night. Plaintiff alleges that every member of the major leagues. other than the Cubs, scheduled substantially all of its home games in 1966 at night, exclusive of opening days, Saturdays, Sundays, holidays and days prohibited by league rules. Allegedly this has been done for the specific purpose of maximizing attendance and thereby maximizing revenue and income. The Cubs, in the years 1961-65, sustained operating losses from its direct baseball operations. Plaintiff attributes those losses to inadequate attendance at Cubs' home games. He concludes that if the directors continue to refuse to install lights at Wrigley Field and schedule night baseball games, the Cubs will continue to sustain comparable losses and its financial condition will continue to deteriorate. Plaintiff alleges that, except for the year 1963, attendance at Cubs' home games has been substantially below that at their road games, many of which were played at night. Plaintiff compares attendance at Cubs' games with that of the Chicago White Sox, an American League club, whose weekday games were generally played at night. The weekend attendance figures for the two teams was similar; however, the White Sox week-night games drew many more patrons than did the Cubs' weekday games. Plaintiff alleges that the funds for the installation of lights can be readily obtained through financing and the cost of installation would be far more than offset and recaptured by increased revenues and incomes resulting from the increased attendance. Plaintiff further alleges that defendant Wrigley has refused to install lights, not because of interest in the welfare of the corporation but because of his personal opinions 'that baseball is a 'daytime sport' and that the installation of lights and night baseball games will have a deteriorating effect upon the surrounding neighborhood.' It is alleged that he has admitted that he is not interested in whether the Cubs would benet nancially from such action because of his concern for the neighborhood, and that he would be willing for the team to play night games if a new stadium were built in Chicago. Plaintiff alleges that the other defendant directors, with full knowledge of the foregoing matters. have acquiesced in the policy laid down by Wrigley and have permitted him to dominate the board of directors in matters involving the installation of lights and scheduling of night games, even though they knew he was not motivated by a good faith concern as to the best interests of defendant corporation, but solely by his personal views set forth above. It is charged that the directors are acting for a reason or reasons contrary and wholly unrelated to the business interests of the corporation; that such arbitrary and capricious acts constitute mismanagement and waste of corporate assets, and that the directors have been negligent in failing to exercise reasonable care and prudence in the management of the corporate affairs. The question on appeal is whether plaintiffs amended complaint states a cause of action. It is plaintiff's posi- tion that fraud, illegality and conict of interest are not the only bases for a stockholder's derivative action against the directors. Contrariwise, defendants argue that the courts will not step in and interfere with honest business judgment of the directors unless there is a showing of fraud, illegality or conflict of interest. The cases in this area are numerous and each differs from the others on a factual basis. However, the courts have pronounced certain ground rules which appear in all cases and which are then applied to the given factual situation. 'It is, however, fundamental in the law of corporations, that the majority of its stockholders shall control the policy of the corporation. and regulate and govern the lawful exercise of its franchise and business. Every one purchasing or subscribing for stock in a corporation impliedly agrees that he will be bound by the acts and proceedings done or sanctioned by a majority of the shareholders, or by the agents of the corporation duly chosen by such majority, within the scope of the powers conferred by the charter, and courts of equity will not undertake to control the policy or business methods of a corporation, although it may be seen that a wiser policy might be adopted and the business more successful if other methods were pursued. The majority of shares of its stock, or the agents by the holders thereof lawilly chosen, must be permitted to control the business of the corporation in their discretion, when not in violation of its charter or some public law, or corruptly and fraudulently subversive of the rights and interests of the corporation or of a shareholder.' The standards set in Delaware are also clearly stated in the cases. 'We have then a conflict in view between the responsible managers of a corporation and an overwhelm- ing majority of its stockholders on the one hand and a dissenting minority on the other-a conflict touch- ing matters of business policy, such as has occasioned innumerable applications to courts to intervene and determine which of the two conicting views should prevail. The response which courts make to such applications is that it is not their function to resolve for corporations questions of policy and busi- ness management. The directors are chosen to pass upon such questions and their judgment Unless shown to be tainted with fraud is accepted as final. The judgment of the directors of corporations en- joys the benefit of a presumption that it was formed in good faith and was designed to promote the best interests of the corporation they serve.' 'ln a purely business corporation the authority of the directors in the conduct of the business of the corpo- ration must be regarded as absolute when they act within the law, and the court is without authority to substitute its judgment for that of the directors." Plaintiff argues that the allegations of his amended complaint are sufficient to set forth a cause of action under the principles set out in Dodge v. Ford Motor Co., 204 Mich. 459. 170 N.W. 668. in that case plaintiff, owner of about 10% of the outstanding stock. brought suit against the directors seeking payment of additional dividends and the enjoining of further business expansion. In ruling on the request for dividends the court indicated that the motives of Ford in keeping so much money in the corporation for expansion and security were to benet the public generally and spread the profits out by means of more jobs. etc. The court felt that these were not only far from related to the good of the stockholders. but amounted to a change in the ends of the corporation and that this was not a purpose contemplated or allowed by the corporate charter. 'Courts of equity will not interfere in the management of the directors unless it is clearly made to appear that they are guilty of fraud or misappropriation of the corporate funds, or refuse to declare a dividend when the corporation has a surplus of net profits which it can, without detriment to its business, di vide among its stockholders, and when a refusal to do so would amount to such an abuse of discretion as would constitute a fraud or breach of that good faith which they are bound to exercise toward the stockholders.' From the authority relied upon in that case it is clear that the court felt that there must be fraud or a breach of that good faith which directors are bound to exercise toward the stockholders in order to justify the courts entering into the internai affairs of corporations. This is made clear when the court refused to interfere with the directors decision to expand the business. 'We are not, however, persuaded that we should interfere with the proposed expansion of the business of the Ford Motor Company. In view of the fact that the selling price of products may be increased at any time, the ultimate results of the larger business cannot be certainly estimated. The judges are not business experts. It is recognized that plans must often be made for a long future, for expected competition, for a continuing as well as an immediately profitable venture. We are not satisfied that the alleged motives of the directors, in so far as they are reflected in the conduct of business, menace the interests of the shareholders.' Plaintiff in the instant case argues that the directors are acting for reasons unrelated to the financial interest and welfare of the Cubs. However, we are not satisfied that the motives assigned to Philip K. Wrigley, and through him to the other directors, are contrary to the best interests of the corporation and the stockholders. For example, it appears to us that the effect on the surrounding neighborhood might well be considered by a director who was considering the patrons who would or would not attend the games if the park were in a poor neighborhood. Fur- thermore. the long run interest of the corporation in its property value at Wrigley Field might demand all efforts to keep the neighborhood from deteriorating. By these thoughts we do not mean to say that we have decided that the decision of the directors was a correct one. That is beyond our jurisdiction and ability. We are merely saying that the decision is one properly before directors and the motives alleged in the amended complaint showed no fraud, illegality or conict of interest in their making of that decision. While all the courts do not insist that one or more of the three elements must be present for a stockholder's derivative action to lie, nevertheless we feel that unless the conduct of the defendants at least borders on one of the elements, the courts should not interfere. The trial court in the instant case acted properly in dismissing plaintiffs amended complaint. [The court also concluded that the complaint was not well-pleaded because it did not allege facts supporting an inference of \"damage to the corporation." Although the complaint had alleged that the board's decision "would have resulted in large amounts of additional revenues," it did not allege anything related to the costs of producing those revenues. and so did not adequately plead that night games would be more protable, all considered] Finally, we do not agree with plaintiff's contention that failure to follow the example of the other major league clubs in scheduling night games constituted negligence. Plaintiff made no allegation that these teams' night sched- ules were profitable or that the purpose for which night baseball had been undertaken was fulfilled. Furthermore, it cannot be said that directors, even those of corporations that are losing money, must follow the lead of the other corporations in the field. Directors are elected for their business capabilities and judgment and the courts cannot require them to forego their judgment because of the decisions of directors of other companies. Courts may not decide these questions in the absence of a clear showing of dereliction of duty on the part of the specific directors and mere failure to 'follow the crowd' is not such a dereliction. For the foregoing reasons the order of dismissal entered by the trial court is affirmed... DEMPSEY, P.J., and SCHWARTZ,J.. concur. Questions 1. In your view. should the court have intervened in Shlensky's favor. and why or why not? Question A corporation in which you own a small amount of stock wants to amend its charter to add an exculpation provision. Would you vote in favor of the amendment? Exercise 10.2 Innoclub, Inc., a Delaware corporation, is a leading artificial intelligence company. The company was founded three years ago by Kuchar and has grown quickly. Kuchar is CEO and president of Innoclub. Innoclub's board of directors consists of the following individuals: 1. Kuchar 2. Alonso (Innoclub's chief financial officer) 3. Baker (Kuchar's brother-in-law) 4. Cruz (Kuchar's cousin) 5. Donos (Kuchar's high school football coach) 6. Els (Kuchar's hairdresser) 7. Fowler (Kuchar's chauffeur) Kuchar is short on cash so he decides to sell his collection of Salvador Dali paintings. Kuchar acquired the paintings over the last five years for a total of $1.5 million. The collection was appraised two years ago at $2 million. Kuchar decides that Innoclub should buy the collection to jazz up its corporate head- quarters. Innoclub buys the collection from Kuchar for $3 million. The transac- tion was handled on behalf of Innoclub by Alonso. Prior to closing, the transac- tion was unanimously approved by a board committee consisting of Baker, Cruz, Donos, Els, and Fowler. Thereafter, the full board unanimously approved the transaction.Innoclub's Certificate of Incorporation and Bylaws simply track the default provisions of the DGCL except that Innoclub's Certificate of Incorporation contains the following provision: To the fullest extent permitted by the General Corporation Law of Delaware, as the same may be amended From time to time, a director of the Corporation shall not be personally liable to the Corporation or its stockholders For monetary damages For breach of duciary duty as a director. If the General Corporation Law of Delaware is hereafter amended to authorize, with the approval ofa corporation's stockhold- ers, Further reductions in the liability of the Corporation's directors For breach of fiduciary duty, then a director ofthe Corporation shall not be liable For any such breach to the Fullest extent permitted by the General Corporation Law of Delaware, as so amended. Watson, a disgruntled Innoclub shareholder, nds out about the above transaction and hires you to bring a breach of duciary duty claim against Kuchar. Analyze the case. Include in your analysis any additional information you may require and explain why you need it. Exercise 10.3 From 2000 to 2018, Harris was a director of Northeast Harbor GolfClub, Inc. (the Club), a Delaware corporation. The Club owns and operates an 18-hole golf course in Northeast Harbor, Maine. Throughout her time on the board, the Club had continuous nancial difficulties. Occasionally, the board discussed develop- ing various parcels of real estate it owned surrounding the golf course to raise money, but never did so, despite Harris being in favor of such actions. In 2016, a real estate agent approached Harris because he knew she was con- nected to the Club and pitched her about a parcel adjacent to the Club that was for sale by a third party. Harris decided to buy the parcel for herself. She told two individual board members of her intentions to purchase the parcel at the time but did not disclose the purchase at a board meeting until 2017, saying she had no current plans to develop the land. Chapter Ten . Corporate Fiduciary Duties In 2018, she began making plans to develop homes on the property. Upon learning of these plans, the other board members became concerned and thus asked Harris to resign from the board. She acquiesced. 1. The board is considering suing Harris over her purchase and development of the parcel. They consult you about a possible cause of action under state corporate law and the likelihood of success. What do you tell them? 2. Assume Harris sought your advice on how to proceed in 2016 when she was contemplating buying the parcel. What advice would you have given her? 3. How would your analysis change if the Club has the same 122(17) provi- sion in its charter asJive Software? Exercise 10.4 A director of CVS, the nation's second largest pharmacy chain with approxi- mately 7,600 stores, has contacted you for advice on the following matter under consideration by the CVS board: I Discontinuing the sale of tobacco products at all CV S stores. Doing so will cost CVS at least $2 billion in revenue for its next fiscal year. The primary motivation is to disassociate the company from products that pose serious health risks to its users. Paying rank and le CV S store employees 20% over prevailing market wages. This move is also expected to cost CVS billions of dollars. The pri- mary motivation is to decrease the number of working poor. The director is leaning towards voting in favor of both initiatives but wants to know whether doing so would expose her or the board to legal liability under state corporate law. What do you think? Assume CVS is incorporated in Delaware and has a standard exculpation provision in its charter