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Corporations Keyed to O’Kelley
Aronson v. Lewis
Citation:
473 A.2d 805 (1984)Facts
Plaintiff, Harry Lewis, is a stockholder of Meyers. The defendants are Meyers and its ten directors. In 1970, Prudential Building Maintenance Corp. spun off its shares of Meyers to Prudential’s stockholders. Prior thereto Meyers was a wholly owned subsidiary of Prudential. This suit challenges certain transactions between Meyers and one of its directors, Leo Fink, who owns 47% of its outstanding stock. Plaintiff claims that these transactions were approved only because Fink personally selected each director and officer of Meyers. On January 1, 1981, defendants approved an employment agreement between Meyers and Fink. Meyers agreed to pay Fink $150,000 per year. Fink could terminate the contract at any time, but Meyers could do so only upon six months’ notice. Additionally, the Meyers board approved and made interest-free loans to Fink totaling $225,000. The complaint charges that these transactions had no valid business purpose and were a waste of corporate assets. Defendants moved to dismiss for plaintiff’s failure to make demand on the Meyers board prior to suit, or to allege with particularity why demand is excused.
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