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BUS LAW FINAL EXAM CH41

Terms in this set (40)

A merger involves the legal combination of two or more corporations, after which both continue to exist.
False
Federal law establishes the specific procedures for a share exchange.
False
A merger, a consolidation, or a share exchange changes the rights and liabilities of shareholders, the corporation, and the corporation's creditors
False
In a merger, the surviving corporation inherits the disappearing corporation's rights.
True
The results of a consolidation are the same as those of merger.
False
In a share exchange, some or all of the shares of one corporation are exchanged for the shares of another, and both corporations cease to exist
True
The officers and other employees of each corporation involved must approve a merger or share exchange plan
False
A short-form merger requires the approval of the shareholders of both corporations.
False
The shareholder's appraisal right extends to mergers and consolidations.
True
The shareholder's appraisal right does not extend to share exchanges and sales of substantially all of the corporate assets.
False
Generally, a corporation that purchases the assets of another corporation is automatically responsible for the liabilities of the selling corporation.
False
Certain federal guidelines significantly constrain and often prohibit mergers that could result from a purchase of assets.
True
A target corporation is a corporation being acquired through the purchase of a substantial number of the voting shares of its stock.
True
Generally, an offering corporation must notify the Securities and Exchange Commission and the target corporation's management at the time a tender offer is made.
False
A target corporation's attempted takeover of an acquiring corporation is referred to as the poison pill defense.
False
A board of directors' response to a takeover attempt must be rational in relation to the threat posed.
True
A corporation's creditors want to be notified when the firm is dissolved so that they can make a tender offer.
False
The state cannot dissolve a corporation under any circumstances.
False
When dissolution takes place by voluntary action, the members of the board of directors are responsible for winding up the affairs of the corporation.
True
When deciding which form of business organization to choose, businesspersons normally consider only one factor.
False
Like other corporations, Restwell Hotels Inc. can extend its operations through

a. liquidating and distributing its assets.
b. buying the assets of, or a controlling interest in, another corporation.
c. filing articles of dissolution with the state.
d. appointing a receiver to wind up the corporate affairs.
B
Burst-o'-Flavor Burger Restaurant Corporation merges with Chick-E Chicken Franchise Corporation, with Burst-o'-Flavor absorbing Chick-E Chicken. After the merger
C
A merger between Blended Coffee Corporation and Cowland Creamery Inc. can be expressed as Blended Coffee + Cowland Creamery =

a. Cowland Creamery.
b. Delite Dairy Corporation.
c. Delite Dairy Corporation + EZ Stir & Sip Inc.
d. EZ Stir & Sip Inc.
A
Ground-Up Construction Corporation (CCC) has a right of action against Heavyquip, Inc. Ground-Up Construction merges with Investors Development, Inc., with Investors absorbing Ground-Up. After the merger, Ground-Up's right of action against Heavyquip can be exercised by

a. Ground-Up.
b. Investors.
c. Heavyquip.
d. no one.
B
DIY Fasteners Company decides to consolidate its operations with Evergrip Studs, Inc., to form Fit-Rite Bolts & Screws Inc.

B5. Refer to Fact Pattern 41-1B. Evergrip had rights in certain property. After the consolidation, Fit-Rite acquires the rights

a. automatically.
b. only after completing certain additional statutory procedures.
c. only if Evergrip's former shareholders expressly approve.
d. only if the acquisition is a specified result of the consolidation.
A
Refer to Fact Pattern 41-1B. Evergrip owed money to Guaranty Bank and other creditors. After the consolidation, Fit-Rite must pay

a. all of Evergrip's debts.
b. half of Evergrip's debts.
c. none of Evergrip's debts.
d.only debts that Evergrip incurred after consolidation was proposed.
A
Refer to Fact Pattern 41-1B. The articles of consolidation differ from Shrimp Boat's articles of incorporation. The articles

a. are replaced by Evergrip's articles of incorporation.
b. are replaced by the articles of consolidation.
c. effectively prevent the consolidation.
d. prevail.
B
Best Recording Corporation and CD Production Company wish to combine all assets, stock, and personnel into a new firm to be called DigiSongs Inc. This is

a. a consolidation.
b. a merger.
c. a share exchange.
d. a takeover.
A
Garden Supply Company and Home & Lawn Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with

a. the county recording office.
b. the local retailers' association.
c. the state's secretary of state.
d. the U.S. Department of Commerce.
C
Scuba Adventures Inc. and Tours of the Sea Company decide to consolidate. This corporate combination does not require the approval of

a. Scuba and Tours directors.
b. Scuba and Tours officers.
c. Scuba shareholders.
d. Tours shareholders.
B
Online GPS Corporation owns 95 percent of the shares of Pinpoint App Inc. Through a certain transaction, Online GPS combines with Pinpoint App, but only Online GPS continues to exist. This is

a. a consolidation.
b. a share exchange.
c. a short-form merger.
d. a termination.
C
Alana is a dissenting shareholder of Bulls-Eye Arrow Company whose management is considering a tender offer by Crossbow, Inc. Alana and Bulls-Eye cannot agree on the fair value of the stock. The value will be determined by

a. a court.
b. Alana.
c. Bulls-Eye.
d. Crossbow.
A
Imogen is a shareholder of Jazz Street Studios, Inc. Imogen could normally exercise appraisal rights if Jazz Street participated in

a. a share exchange.
b. a dissolution.
c. a takeover.
d. a winding up.
A
Ramon is a shareholder of Quantum Mechanix Corporation. Ramon could normally exercise appraisal rights if Quantum participated in

a. a consolidation.
b. a dissolution.
c. a liquidation.
d. a winding up.
A
Bread & Bagels Corporation wants to purchase all of the assets of Coffee & Tea Inc. Dolly is a Coffee & Tea shareholder. The approval of Dolly and other Coffee & Tea shareholders is necessary

a. in all circumstances.
b. in no circumstances.
c. only if Coffee & Tea will be paid with unauthorized, unissued stock.
d. only if Bread & Bagels agrees to assume Coffee & Tea's liabilities.
A
Brite Cosmetics Corporation purchases all of the assets of Color-All Lipsticks Corporation. With respect to Brite Cosmetics' liabilities, Color-All Lipsticks is

a. automatically responsible.
b. not responsible under any circumstances.
c. responsible if Color-All Lipsticks is a competitor of Bright Cosmetics.
d. responsible if the sale is actually a merger or consolidation.
D
Ribeye Restaurants Inc. wants to acquire or merge with SteakHouse Corporation. Ribeye should

a. file a plan of merger with the secretary of state.
b. file an article of merger with SteakHouse.
c. make a tender offer to the SteakHouse shareholders.
d. make a tender offer to the Ribeye shareholders
C
Popular Movies Corporation wants to gain control of Quality Films, Inc. The companies negotiate for several months, without coming to terms. Popular Movies decides to pursue a takeover attempt. Quality Films decides to resist.

B18. Refer to Fact Pattern 41-2B. Quality Films issues shares that its shareholders can exchange for cash if a takeover is successful, intending to make Popular Movies's takeover attempt too expensive. This is a

a. crown jewel defense.
b. Pac-Man defense.
c. poison pill defense.
d. white knight defense.
C
Refer to Fact Pattern 41-2B. Quality Films solicits a merger with Real2Reel Corporation, a third party, which makes a better offer to Quality Films's shareholders. Real2Reel is a

a. crown jewel.
b. Pac-Man.
c. poison pill.
d. white knight.
D
Study Aids Inc. offers to buy the stock of Test Prep Products Corporation. Test Prep's directors oppose the offer. Some of the Test Prep shareholders file a suit, alleging a breach of the directors' fiduciary duties. Most likely, the court will

a. apply the business judgment rule to analyze the directors' acts.
b. dismiss the suit as a non-judicial dispute over "fair value."
c. evaluate the terms of the deal on the basis of antitrust law.
d. order the shareholders to be paid a "premium" for their stock.
A
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