IN#THE#SUPREME#COURT#OF#THE#STATE#OF#DELAWARE# # # PRAISE#VIDEO,#INC.,#A#DELAWARE#CORPORATION,# :# JACOB#BISSINGER,#FRANCIS#PENNOCK,# # :# PETER#HORNBERGER,#NEW#HOPE# # # :# PUBLISHING#CO.,#AND#PRAISE#NEW### # :# HOPE#CORP.,# # # # # # :# :# :# :# # No.#162,#2013# :# :# Defendants#Below,# :# Appellants,## # :# :# v.# # # # :# :# :# MERCER#CHRISTIAN#PUBLISHING#CO.#AND# # :# SUSAN#BEARD,#### # # # # :# :# :# Plaintiff#Below,## :## # Court#Below:# Appellee.### # :## # Court#of#Chancery#of## :# # the#State#of#Delaware## :## :## # C.A.#No.#8974VCD# # # # # # _________________________________________________________________# # # _________________________________________________________________# # # # # Team#W# Attorneys#for#Appellee# February#7,#2014# # # # #

# Table#of#Contents# TABLE#OF#CITATIONS# ................................................#iii# . NATURE#OF#PROCEEDINGS# ...............................................#1# . SUMMARY#OF#ARGUMENT# .................................................#2# . COUNTERSTATEMENT#OF#FACTS# ...........................................#3# . ARGUMENT# ............................................................#6# . I. THE# COURT# OF# CHANCERY# PROPERLY# ISSED# A# PRELIMINARY# INJUCTION# BECAUSE# PLAINTIFFS# DEMONSTRATED# A# REASONABLE# PROBABLITY# OF# SUCCESS# ON# THE# MERITS# CONCERNING# THE# MERGER# OF# PRAISE# VIDEO# WITH#NEW#HOPE#PUBLISHING#COMPANY## ...........................#6# A. Question#Presented#....................................#6# B. Scope#of#Review#.......................................#6# C. Merits#of#the#Argument#................................#6# 1. Praise# fiduciary# duties# when# they# made# no# attempt# to# balance# the# overriding# pecuniary# interests# of# the# public# benefit# iden certificate#of#incorporation# .....................#6# # a. The# Board# of# Directors# failed# to# adhere# to# which# is# required# of# all# public# benefit# corporations#...............................#7# # b. The# State# of# Delaware# intended# to# create# a# balance# of# all# interests# contained# in# the# public#benefit#corporation#statute#........#10# 2. Vprofit#public#benefit#corporation,#Praise# Video# has# no# corporate# interest# in# promoting# religious# values# because# corporations# are# separate# legal#entities#from#their#directors# .............#12#

#

#

#

3. Even# if# Praise# Video# could# claim# a# corporate# interest# in# promoting# religious# values,# religiousV oriented# conduct# postVmerger# is# not# an# appropriate# i#

#

consideration.# ..................................#14# # II. EF# WAS# PROPER#BECAUSE#THE#GAMING#OPTION#IS#A#COERCIVE#AND#PRECLUSIVE# DEAL# PROTECTIVE# DEVICE,# THE# SOLE# PURPOSE# OF# WHICH# WAS# TO# THWART#THE#SHAREHOLDER#VOTE# ................................#16# A. Question#Presented#...................................#16# B. Scope#of#Review#......................................#16# C. Merits#of#the#Argument#...............................#16# 1. Deal#Protective#Devices#Require#Enhanced#Scrutiny# 17# # 2. The# Deal# Protective# Device# Was# Illegal# Because# the# Praise# Video# Board# Did# Not# Face# a# Legitimate# Threat,# and# Because# the# Defensive# Measure# Implemented#was#Both#Coercive#and#Preclusive# ....#20# a. Praise#Video#did#not#Face#a#Legitimate#Threat #..........................................#21# # b. Even# if# Praise# Video# Did# Face# a# Legitimate# # as#it#was#Both#Coercive#and#Preclusive#....#22# # i. # # The# Deal# Protective# Device# was# Coercive # .....................................#22# The# Deal# Protective# Device# was# Preclusive# ...........................#24#

#

#

ii.

CONCLUSION# .........................................................#25# . # # # # # # # # # # ii#

# #

# # #

TABLE#OF#CITATIONS#

DELAWARE'SUPREME'COURT'CASES' Aaronson#v.#Lewis,## # # 473#A.2d#805,#812#(Del.#1984)# ..................................#7#

Dambro#v.#Meyer,## # 974#A.2d#121#(Del.#2009)# ......................................#11#

#

In#re#Unitrin,#Inc.,## # 651#A.2d#1361,#1385#(Del.#1995)# ................................#6#

#

In#re#Walt#Disney#Co.#Derivative#Litig.,## # 906#A.2d#27,#67#(Del.#2006))# ...................................#7#

#

Ivanhoe#Partners#v.#Newmont#Mining#Corp.,## # 535#A.2d#1334,#1341#(Del.#1987)# ................................#6#

#

Kaiser#Aluminum#Corp.#v.#Matheson,## # 681#A.2d#392,#394#(Del.#1996)# .................................#16# ,## # 500#A.2d#1346#(Del.2008)# ..................................#22,#26#

#

#

Omnicare,#Inc.#v.#NCS#Healthcare,#Inc.,## # 818#A.2d#914,#927#(Del.#2003)# .............................#passim# ,#Inc.#v.#QVC#Network,## # 637#A.2d#34#(Del.#1994)# .......................................#15# #Inc.#v.#Time,#Inc.,## iii#

#

#

# # # 571#A.2d#1140,#1154 55#(Del.#1990)# ........................#22,#24#

Revlon,#Inc.#v.#MacAndrews#&#Forbes#Holdings,#Inc.,## # 506#A.2d#173#(Del.#1986).# ...........................#7,#8,#10,#15#

#

Stone#ex#rel.#AmSouth#Bancorporation#v.#Ritter,## # 911#A.2d#362,#370#(Del.#2006)# ..................................#7#

#

Stroud#v.#Grace,## # 606#A.2d#75,#91V92#(Del.#1992).# .......................#18,#20,#21#

#

Unitrin,#Inc.#v.#Am.#Gen.#Corp.,## # 651#A.2d#1361,#1387V88#(Del.#1995)# ............................#22#

#

Unocal#Corp.#v.#Mesa#Petroleum#Co.,## # 493#A.2d#946#(Del.#1985)# ..................................#18,#19#

DELAWARE'CHANCERY'COURT'CASES' Blasius#Indus.,#Inc.#v.#Atlas#Corp.,## # # 564#A.2d#651,#661#(Del.#Ch.#1988).# ........................#18,#20#

Cantor#Fitzgerald#v.#Cantor,## # 724#A.2d#571,#579#(Del.#Ch.#1998)# .............................#16#

#

Consolidated#Forest#Industries#v.#BTRT#Forest#Products,#Inc.,## # C.A.#No.#6943VCJ#(Del#Ch.#Jan.#26,#2012)# ....................#8,#9# '

DELAWARE'STATUTES'

8#Del.#C.#§#362(a)# ..........................................#7,#8,#9# UNITED'STATES'SUPREME'COURT'CASES' Cedric#Kushner#Promotions,#Ltd.#v.#King,## iv#

# # # 533#U.S.#158,#163#(2001)# ..................................#12,#13#

United#States#v.#Lee,## # 455#U.S.#252#(1982)# ...........................................#14#

UNITED'STATES'COURT'OF'APPEALS'CASES' Conestoga#Wood#Specialties#v.#Sebelius,# # # Grote#v.#Sebelius,## # # 708#F.3d#850,#859#(7th#Cir.#2013)# .............................#10# #No.#13V1144,#2013#WL#1277419#(3d#Cir.#Feb.#8,#2013).# .#12,#13,#14#

Hobby#Lobby#v.#Sebelius,## # 723#F.3d#1114#(10th#Cir.#2013)# ................................#13#

UNITED'STATES'DISTRICT'COURT'CASES' Conestoga#Wood#Specialties#Corp.#v.#Sebelius,## # # 917#F.#Supp.#2d#394,#408#(E.D.#Pa.#2013)# ..................#12,#13#

Hobby#Lobby#Stores,#Inc.#v.#Sebelius,## # 870#F.#Supp.#2d#at#1291#(W.D.#Okla.#2012)# .....................#13#

LAW'REVIEW'ARTICLES' J.#William#Callison,#Benefit(Corporations,(Innovation,(and(Statutory( Design,#26#Regent#U.L.#Rev.#143,#155#(2013)# ...................#11# ELECTRONIC'SOURCES' Hal#m.#Bundrick,#Impact#Investing:#PR#Ploy#or#Public#Benefit?,# THESTREET.COM#(Aug.#28,#2013,#5:36#PM)# ........................#11# # # v#

# OTHER'JURISDICTIONS' Kellytown#Co.#v.#Williams,## 426#A.2d#663,#668#(Pa.#Super.#Ct.#1981).# .........................#12# # # # # # # # # #

vi#

#

NATURE#OF#PROCEEDINGS# # Appellees,# Plaintiffs# below,# brought# suit# seeking# injunctive# relief# against# Appellants,# Defendants# below,# in# the# Court# of# Chancery#

January# 9,# 2014.# Chancellor# Develin# granted# a# preliminary# injunction# against# the# consummation# of# the# merger# between# New# Hope# and# Praise# Video#on#January#14,#2014.## Appellants#filed#a#notice#of#appeal#on#January#22,#2014,#and#this# Court#accepted#expedited#appeal#on#January#23,#2014.### Appellees# request# that# this# Court# affirm# the# Order# of# the# Chancery# Court.# Specifically,# Appellees# ask# this# Court# to# hold# that#

### # # # # # # # # # # # # # # # # # # # # # # # #

1#

# SUMMARY#OF#ARGUMENT# Denied.# # The# public# benefit# corporation# statute# declares# that#

# 1.

boards# of# public# benefit# corporations# are# required# to# balance#

materially# affected# by# the# public# benefit.# # As# a# forVprofit# corporation,# Praise# Video# does# not# have# a# corporate# interest# in# promoting# religious# values.# # Even# if# Praise# Video# does# possess# that#

board# from# attempting# to# influence# business# policy# postVmerger# after# the# corporation# ceases# to# exist.# # Thus,# this# Court# should# affirm# the# injunction#below.# 2.# Denied.##This#Court#shou rder#that#

the# deal# protective# device# of# Appellant's# merger# agreement# is# unenforceable.## This# Court# should# not# review# the# deal# protective# device# under# the# deferential# business# judgment# rule# because# it# represents# a# conflict# of# interest# of# the# Board# of# Directors# and# violates# its# duty# of# loyalty.## The# Gaming# Option# is# specifically# tailored# to# restric ## Further,#

the# Gaming# Option# is# unenforceable# because# it# is# not# a# reasonable# response#to#a#perceived#threati#the#option#was#drafted#to#preclude#the# shareholders# from# freely# exercising# their# voting# capabilities# and# to# coerce# the# shareholders# into# accepting# a# managementVsponsored# alternative#to#a#superior#offer#from#Appellee.### # # # # 2#

# COUNTERSTATEMENT#OF#FACTS# This# appeal# and# the# underlying# action# arise# out# of# Defendant# decision# to# accept# a# $41# per#share#merger#agreement#instead#of#an#offer#of#$50#per#share.##Mem.# Op.#at#9.##Praise#Video#is#a#public#benefit#corporation.##Mem.#Op.#at# 3.# # Praise# Video# predominately# operates# in# the# production# and# film# and# digital# entertainment# as# an# alternative# to# violent# and/or# sexually# offensive# entertainment.# Mem.#Op.#at#4.# # Originally,# Praise# Video# limited# itself# to# film# recreations# of#

Bible# storiesi# however# after# about# forty# years,# it# diversified# its# output# with# a# video# game# division# ristian#

video# game# market,# the# corporation# has# experienced# consistent# financial# success,# with# the# video# game# department# generating# 60%# of# Mem.#Op.#at#4.# # Video shares.# Mem.# Op.# at# 4.# # The# rest# of# the# board# members# own# 4%# of# the# outstanding# shares.# Id.# # CoVdefendants# Francis# Pennock# ( Pennock ),#Mark#Van#Zandt#( Van#Zandt ),#Howard#Metcalf#( Metcalf ),# and# Peter# Hornberger# ( Hornberger Board#of#Directors.#Mem.#Op.#at#5.##The#lone#unnamed#director#to#this# litigation# is# Samuel# Holbrook.# Mem.# Op.# at# 6.# # New# Hope# Publishing# Company# ( New# Hope )# and# Praise# New# Hope# Corporation# ( Praise# New# Hope 3# which# is# to# be# the# Jacob#Bissinger#( Bissinger )#is#a#board#member#and#CEO#of#Praise#

# surviving# corporation# upon# the# controverted# merger# with# Praise# Video are#Delaware#corporations.##Mem.#Op.#at#6.## # Plaintiff,# Susan# Beard# ( Beard )# owns# approximately# 3%# of#

outstanding# Praise# Video# shares.# # Plaintiff,# Mercer# Christian# Publishing# ( Mercer )# owns# approximately# 2%# of# Praise# Video# shares.## Mem.# Op.# at# 5.# # Mercer# is# an# indirect# wholly# owned# subsidiary# of# Mercer# Media,# Inc.# ( Mercer# Media )# that# continues# to# maintain# an# entirely#distinct#identity#from#its#parent#company.##Mem.#Op.#at#5.### In# early# 2013,# Bissinger# expressed# his# desire# to# retire# and# liquidate# all# of# his# ownership# in# the# company# within# a# yeari# therefore,#the#board#decided#to#sell#Praise#Video.##Mem.#Op.#at#6.##As# the# preeminent# potential# buyer,# Mercer# proposed# a# cash# buyout# of# $50# per# share.# # Mem.# Op.# at# 6,# 9.# # On# June# 24,# 2013,# several# directors#

growth#by#designing#combatVoriented#video#games.#Mem.#Op.#at#7.#### # offer,# Pennock# approached# Norman# Stoltzfus# ( Stoltzfus financial#advisor,#to#discuss#an#alternative#offering.##Mem.#Op.#at#9.## Pennock#and#a#venture#capitalist#formed#New#Hope#for# the#sole#purpose# of# acquiring# Praise# Video.# # Mem.# Op.# at# 9.# # Pennock# owns# 20%# of# New# Mem.#Op.#at#4.## # absenting# from# every# deliberation),# only# two# bids# remained# intact:# Mercer,#offering#$50#per#share,#and#New#Hope,#offering#$41#per#share.# Mem.#Op.#at#9.# #

4#

# existing# charter# postVmerger.# # Mem.# Op.# at# 9.# # Both# offers# contained# termination# fees# and# noVshop# commitment# provisions.# # Mem.# Op.# at# 9,# 10.##

#to#secure#shareholder# support.# # Mem.# Op.# at# 10.# # The# provision# would# become# exercisable# in# the# event# of# a# shareholder# rejection# of# the# merger# offer# and# if# they# had# another# offer# at# time# of# rejection,# and# if# within# a# year# of# ad# merged# with# another# company.# # Mem.# Op.# at# 10.# # As# part# of# the# New# Hope# deal,# New# Hope# promised# that# defendant# Pennock# would# be# named# CEO# and# that# he# would# continue# to# manage# the# company# in# a# manner# consistent# with# Praise#
1##Mem.#Op.#at#10.###

bids.##Mem.#Op.#at#10.##The#board#voted#4V1#in#favor#of#accepting#New# # # directors# acknowledged# that# the# Gaming# Option# would# entice#

shareholders# to# vote# in# favor# of# the# merger# deal,# regardless# of# the# quality#of#the#offer#from#Mercer.##Mem.#Op.#at#12.# # # # # # #

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1#The#Chancery#Judge#found#that#the#Gaming#Option#afforded#New#Hope#the#

ability#to#purchase#the#gaming#division#for#60%#of#the#true#market# value.##Mem.#Op.#at#10.# 5#

# ARGUMENT# # I. THE# COURT# OF# CHANCERY# PROPERLY# ISSUED# A# PRELIMINARY# INJUCTION# BECAUSE# PLAINTIFFS# DEMONSTRATED# A# REASONABLE# PROBABILITY# OF# SUCCESS# ON# THE# MERITS# CONCERNING# THE# MERGER# OF# PRAISE# VIDEO# WITH# NEW# HOPE# PUBLISHING# COMPANY.## # A. Question#Presented# # Whether# the# directors# of# Praise# Video# violated# their# fiduciary# duties# to# shareholders# and# the# public# benefit# corporation# when# they# approved# a# merger# with# New# Hope# based# on# an# unsubstantiated# belief# that# New# Hope# would# be# more# faithful# to# Praise# mission# instead# of# another# corporation# that# also# shared# in# Praise#

share.# # B. Scope#of#Review# Courts#have#the#ability#to#grant#a#preliminary#injunction#when#a#

plaintiff# can# prove:# (1)# a# reasonable# probability# of# success# on# the# meritsi# (2)# an# imminent# threat# of# irreparable# injuryi# and# (3)# a# balancing#of#the#equities#that#tips#in#its#favor.##Ivanhoe#Partners#v.# Newmont#Mining#Corp.,#535#A.2d#1334,#1341#(Del.#1987).##The#grant#of#a# preliminary#injunction#shall#be#reviewed#for#abuse#of#discretion.##Id.# Defendants# do# not# contest# the# second# or# third# elements.# # Mem.# Op.# at# 13.# This# C novo.##In#re#Unitrin,#Inc.,#651#A.2d#1361,#1385#(Del.#1995).## C. Merits#of#the#Argument## # 1. onsciously# Violated# Their# Fiduciary# Duties# When# They# Made# no# Attempt# to# Balance# The# Shareholders# with# Those# Materially# Affected# by# the# # 6# ncorporation.# de(

# a. The# Board# of# Directors# Failed# to# Adhere# to# the# nterestVBalancing# Provision,# Which# is# Required#of#All#Public#Benefit#Corporations.# board# violated# its# fiduciary# duties# when# it# made#

#

no# attempt# to# balance# the# interests# outlined# for# public# benefit# corporations#under#newly#minted#Delaware#corporation#law.##The#duty#of# care#requires#that#directors#act#on#an#informed#basis,#in#good#faith,# and# in# the# honest# belief# that# the# action# taken# was# in# the# best# interests# of# the# company.# # See# Aaronson# v.# Lewis,# 473# A.2d# 805,# 812# (Del.#1984).## a#failure# #which# demonstrates#a# See# Stone# ex# rel.# AmSouth# Bancorporation#v.# Ritter,#911#A.2d#362,#370# (Del.#2006)#(citing#In#re# Walt# Disney# Co.# Derivative# Litig.,# 906# A.2d# 27,# 67# (Del.# 2006)).## Directors# must# keep# the# best# interests# of# shareholders# in# mind# when# making#saleVofVcontrol#decisions.##Revlon,#Inc.#v.#MacAndrews#&#Forbes# Holdings,# Inc.,# 506# A.2d# 173# (Del.# 1986).# # corporation#statute#instructs#directors#of#public#benefit#corporations# # 8# Del.# C.# §# 362(a) erests,# the# best# interests# of# those#materially#affected#by#the#corporation s#conduct,#and#the#public#

Id.## While# the# statute# at# issue# here# requires# a# thorough# examination# of# all# potential# interests,# Delaware# courts# have# held# that# pecuniary# interests# are# predominant.# # See# Revlon,# 506# A.2d# at# 173i# Consolidated# 7#

# Forest#Industries#v.#BTRT#Forest#Products,#Inc.,#C.A.#No.#6943VCJ#(Del# Ch.# Jan.# 26,# 2012)# ( olders# constituted# a#

362(a)# merely# modifies# the# duty# of# loyalty# in# public# benefit# corporations#in#that#it#allows#for#directors#to#consider#nonVpecuniary# factors.# # The# fact# remains# that# boards# have# a# predominant# duty# to# consider# monetary# interests# in# saleVofVcontrol# transactions.# # See# Revlon,#506#A.2d#at#173.## This#Court#in#Revlon#confirmed#that#directors #roles#change#from# defenders# # to# auctioneers# charged# with# # Revlon,#506#A.2d#at#182.##The#public#benefit#structure#does#not#change# the#gospel#of#Revloni#it#simply#expands#it#with#the#addition#of#other# legitimate# interests# that# may# be# considered# in# conjunction# with# the# predominant# pecuniary# interests# of# stockholders.# # Thus,# §# 362(a)# does# not# redefine# existing# fiduciary# duties# for# directorsi# rather,# it# provides#for#the#added#consideration#of#public#benefits#when#important# operational# decisions# are# made.# Here,# the# Praise# Video# directors# violated# their# duties# under# the# law# when# they# considered# only# the# public# benefit# instead# of# considering# the# public# benefit# in# conjunction#with#the#shareholders #pecuniary#interests.# While#courts#in#this#state#have#yet#to#rule#on#issues#concerning# public# benefit# corporations,# there# is# precedent# in# the# realm# of# traditional#forVprofit#corporations.##Consolidated#Forest#provides#the# most# useful# guidance# in# this# jurisdiction# on# corporations# attempting# 8#

# to# pursue# a# societal# interest# in# the# boardroom.# # See# Consolidated# Forest,# C.A.# No.# 6943VCJ.# # There,# a# Delaware# corporation# attempted# to# place# a# provision# in# its# certificate# of# incorporation# that# emphasized#

corporate#citizenship.# #Id.##Similar#to#§#362,#the#provision#required# direct ]ocial,# economic,# legal,# or#

company.# # Id.# board# in# Consolidated# Forest# accepted# a# merger# offer# that# outlined# a# price# per# share# that# was# substantially# lower# than# other# bidders# based# on# its# concern# for# the# unique# provision# listed# above.# Id.# # The# court# rejected# the# suggestion# that# such# nonVpecuniary# interests# were# controlling,# fearing# that# such# a# provision# in# a# certificate# of#

interests# of# stockholders# than# would# otherwise# be# the# case# in# the# absence# of# the# p Id.# at# 15.# # Accordingly,# the# court# held#

that# the# weighing# of# societal# interests# other# than# the# financial# interests# of# stockholders# constituted# a# breach# of# fiduciary# duties.## Id.#at#16.#

from# any# number# of# business# people# who# must,# in# compliance# with# a# variety# of# statutory# mandates,# take# actions# that# may# be# inconsistent# with# their# ind Grote# v.# Sebelius,# 708#

F.3d# 850,# 859# (7th# Cir.# 2013)# (Rovner,# J.,# dissenting).# # Under#

consideration# of# pecuniary# consequences# when# it# considered# potential# 9#

# merger# offers.# Revlon,# 506# A.2d# at# 173

Mem.# Op.# at# 3.# # When# the# board# initiated# discussion# on# the# Mercer# and# New# Hope# bids,# the# defendant# dir # the# continuation# of# the# Mem.# Op.# at# 8.# # Even# after# Holbrook# objected# to# the# course# of# debate# and# suggested# that# the# directors# s# board# continued# to# improperly# base# its# decision# on# religious# motives.# Mem.#Op.#at#8.##Further,#after#it#was#revealed#that#Mercer#might#alter# the# course# of# business# policy# postVmerger# in# a# manner# not# consistent# # #

instructed# their# financial# advisor# to# seek# out# new# bidders:# entities# that#would#honor#the#religious#values#of#the#current#management.##Mem.# Op.# at# 8.# This# was# all# done# in# spite# of# M share.# # Mem.# Op.# at# 9.# # At# the# very# least,# §# 362(a)# mandates# that# ts# contemplating# a# merger.# # Therefore,# because# failed#in#this#respect,#this#Court#should#affirm#the#injunction#issued# below.# b.#The#State#of#Delaware#Intended#to#Create#a#Balance#of# all# Interests# Contained# in# the# Public# Benefit# Corporation#Statute.## The# General# Assembly# considered# a# number# of# different# model# when#

(

approaches# to# public# benefit# statutes.# # J.# William# Callison,# Benefit( Corporations,( Innovation,( and( Statutory( Design,# 26# Regent# U.L.# Rev.# 143,# 155# (2013).# # However,# the# legislature# eventually# adopted,# 10#

# verbatim,# poration#Law#Section#draft#

for# a# public# benefit# corporation# statute.# Id.# at# 155.# # The# statute# itself# differs# greatly# from# many# other# states# that# have# comparable# legislation.# # Namely,# Delaware# requires# the# identification# of# a# specific# public# benefit# to# which# the# company# must# add# to# the# balance# equation#for#business#decisions.##Id.#at#157.## ition# in# corporation# law,# this# Court# should# consider# only# the# motives# of# the# Delaware# General# tion# of# a# statute# must# not# be# inconsistent# with# Dambro# #

v.# Meyer,# 974# A.2d# 121,# 129# (Del.# 2009).# # The# General# Assembly

committee# reports# contain# statements# from# state# government# officials,# which# reveal# that# the# purpose# for# enacting# the# public# benefit# corporation# statute# was# to# strike# a# balance# between# directors# who# strictly#focus#on#profit#and#the#promulgation#of#a#benefit#to#society.# Hal# M.# Bundrick,# Impact# Investing:# PR# Ploy# or# Public# Benefit?,# TheStreet.com#(Aug.#28,#2013,#5:36#PM)#(emphasis#added).##When#signing# the# statute# into# law,# Delaware# Governor# Jack# Markell# stated# that# overarching# language# [of# the# statute]# helps# ensure# that# a# public# benefit# corporation# serves# the# best# interests# of# society# while# it# creates# value# Id.# # The# actions# of# the# state#

legislature#and#the#language#of#the#statute#create#a#special#structure# for# organizations# that# seek# a# more# sustainable,# socially# conscious# business.# # ot#

11#

# only#violated#their#fiduciary#duty#of#loyalty,#but#also#the#spirit#of# the#public#benefit#corporation#statute#itself.## 2. V Has# No# Corporate# Interest# in# Promoting# Religious# Values# Because#Corporations#are#Separate#Legal#Entities#From#Their# Directors.###

# #

The# fundamental# purpose# of# forming# a# corporation# is# to# create# a#

legal# entity# separate# from# the# founders.# # See# Cedric# Kushner# Promotions,# Ltd.# v.# King,# 533# U.S.# 158,# 163# (2001).# # corporation# is# owned# by# one# person# or# a# family,# the# corporate# form# shields# the# individual# members# of# the# corporation# from# personal# Conestoga# Wood# Specialties# Corp.# v.# Sebelius,# 917# F.# Supp.# 2d# 394,# 408# (E.D.# Pa.# 2013)# (citing# Kellytown# Co.# v.# Williams,# 426# A.2d# 663,# 668# (Pa.# Super.# Ct.# 1981)),# ,# Conestoga# Wood#

Specialties#v.#Sebelius,#No.#13V1144,#2013#WL#1277419#(3d#Cir.#Feb.#8,# 2013).# # Several# United# States# Courts# of# Appeals# have# recently# ruled# on#

the# ability# of# corporations# to# claim# a# legal# right# to# exercise# or#

Religious# Freedom# Restoration# Act# ( RFRA ).# # See# Conestoga,# 2013# WL# 1277419,# at# *1i# Hobby# Lobby# v.# Sebelius,# 723# F.3d# 1114# (10th# Cir.# 2013).##While#the#Tenth#Circuit#held#that# #interest#in#

religious#values#is#legitimate,#the# Third#Circuit#did# not.## See#Hobby# Lobby,# 723# F.3d# at# 1114i# Conestoga,# 2013# WL# 1277419,# at# *3.# # Finding# against# corporations# .# .# .# do# not# pray,# worship,# observe# sacraments# or# take# other# religiouslyVmotivated# actions# separate# and# apart# from# the# intention# and# directi 12# Conestoga,# 2013#

# WL#1277419,#at#*4#(Garth,#J.,#concurring)#(quoting#Hobby#Lobby#Stores,# Inc.#v.#Sebelius,#870#F.#Supp.#2d#1278,#1291#(W.D.#Okla.#2012),# ,#

723# F.3d# 1114# (10th# Cir.# 2013).# # Unlike# nonVprofit# corporations,# the# only# relevant# religious# interests# concerning# forVprofit# entities# are# those# of# its# individuals,# not# of# the# profitVdriven# corporate# entity.## Id.#at#*4.##Further,#the#mission,# Vprofit,# Cedric,# 533#U.S.#at#163.## Like#the#Praise#Video#directors,#the#owners#of#the#corporation#at# issue# in# Conestoga# are# professed# members# of# the# Mennonite# Church.## Conestoga,#2013#WL#1277419,#at#*6.##Claiming#that#their#faith#required# them# to# operate# their# corporation# in# accordance# with# church# teachings# and# moral# principles,# the# owners# in# Conestoga# created# a# corporate#

environment# founded# upon# the# highest# ethical,# moral,# and# Christian# principals# reflecting# respect,# support,# and# trust# for# our# customers,# our# suppliers,# our# employees# a Conestoga,# 917# F.#

Supp.#2d#at#402.# Yet,#the#court#emphatically# rejected#the#notion#that# st# in# promoting# religious# values,# stating# Conestoga,# 2013# WL# 1277419,# at#*4.# In# this# appeal,# Praise# Video# is# a# distinct,# forVprofit,# legal# entity# separate# from# its# directors# and# their# religious# convictions.# nd# to# provide# a# public#benefit.##The#company#cannot,#and#should#not,#attempt#to#impose# 13#

# the# religious# values# of# its# directors# in# the# course# of# business.# # It# would# be# entirely# inconsistent# to# provide# directors# of# Praise# Video# with# the# benefits# of# incorporation# while# simultaneously# allowing# for# the#promotion#of#their#religious#views#through#the#corporation.## # When# the# followers# of# a# religious# sect# consciously# decide# to#

enter# into# commercial# activity,# the# tenets# of# their# faith# cannot# override#the#responsibilities#imposed#by#statutory#schemesi#especially# when#such#duties#are#required#of#others#in#that#same# activity.# United# States# v.# Lee,# 455# U.S.# 252# (1982).# # conscious# business# decision# to# move# into# more# profitable# markets,# namely# the# video# game# industry.# # Mem.# Op.# at# 4.# # While# the# board#

teachings,# Praise# Video# now# creates# and# manufactures# video#games.##Mem.#Op.#at#4.##The#choice#to#incorporate#Praise# Video,# paired# with# the# decision# to# enter# the# video# game# market,# represents# a# clear# and# conscious# choice# of# the# board# to# exit# the# confines# of# religious# expression# and# to# enter# the# arena# of# corporate# profit# seeking.# Accordingly,# this# Court# should# hold# that# Praise# Video# did# not# have# a# corporate# interest# in# applying# the# religious# views# of# its# directors# to# company# policy# when# considering# a# saleVofVcontrol# transaction,#and#affirm#the#injunction#below.## 3. Even# if# Praise# Video# Could# Claim# an# Interest# in# Promoting# Religious# Values,# ReligiousVOriented# Conduct# PostVMerger# is# # Consideration.# #in#a#saleVofVcontrol#transaction#is#the# current#shareholders.##Revlon,# oncern# for# nonVstockholder#

financial#interest# 506# A.2d# at# 182# (emphasis# added)# 14#

# interests# is# inappropriate# when# an# auction# among# active# bidders# is# in# progress,# and# the# object# no# longer# is# to# protect# or# maintain# the# # # Here,# the#directors#of#Praise#Video#did#not#consider#the#interests#of#their# current# shareholders# when# they# approved# the# merger# with# New# Hope.## Instead,# the# defendant# directors# focused# on# the# preservation# of# their# Mennonite# values# within# the# postVmerger# structure.# # This# is# a# violation#of#the#duties#imposed#on#directors#by#this#Court#in# Revlon,# 506# A.2d# 173# (Del.# 1986).# # Those# duties# require# the# consideration# of# not#those#of#the# speculative#future#shareholders#of#the#newly#merged#corporation.## Management#of#the#business#and#affairs#of#a#Delaware#corporation# is#entrusted#to#its#directors.## ,#637#

A.2d#34,#42#(Del.#1994).##The#defendant#directors#had#a#right,#indeed# a# duty,# to# manage# the# business# and# affairs# of# Praise# Video.# They# do# not,#however,#possess#a#right#to#manage#the#affairs#of#the#corporation# with# which# they# choose# to# combine# postVmerger.# # Revlon,# 506# A.2d# at# 173.# # After# a# merger# is# consummated,# the# newly# board#is#charged#with#the#care#of#that#corporation.##The#directors#of# Praise# Video# inappropriately# attempted# to# control# a# company# that# they# did#not#have#a#legal#right#to#manage#when#they#imputed#their#personal# religious# values# into# the# saleVofVcontrol# transaction.# # Thus,# the# was#proper.### # #

15#

# II.# #

THE#GAMING#OPTION#IS#A#COERCIVE#AND#PRECLUSIVE#DEAL#PROTECTIVE#DEVICE,# THE#SOLE#PURPOSE#OF#WHICH#WAS#TO#THWART#THE#SHAREHOLDER#VOTE.# A. Question#Presented## # Whether# a# deal# protective# device# is# preclusive# or# coercive# when#

at# 40%# of# the# true# value# of# the# asset,# and# the# option,# which# is# not# implemented# in# response# to# a# reasonable# corporate# threat,# vests# only# # B. Scope#of#Review# Courts# will# review# the# grant# or# denial# of# a# preliminary# injunction# for# abuse# of# discretion,# but# without# deference# to# the# legal# conclusions# of# the# trial# court.## Kaiser# Aluminum# Corp.# v.# Matheson,# 681# A.2d# 392,# 394# (Del.# 1996).## As# noted# supra,( the# plaintiff# must# establish# a# reasonable# likelihood# of# success# on# the# merits,# that# he# will# suffer# imminent# irreparable# harm# if# the# preliminary# junction# is# not# granted,# and#that# the# damage# to# the# plaintiff,# if# the# injunction# is#denied,#must#exceed#the#damage#to#the#defendant,#if#the#preliminary# injunction# is# granted.## Id.# at# 579.## Defendant# has# ceded# the# second# and#third#elements#of#this#legal#framework.##Mem.#Op.#at#13.## C. Merits#of#Argument# The#Gaming#Option#is#an#invalid#and#unenforceable#deal#protective# device.##The#option#was#not#proffered#as#a#reasonable#response#to#a# perceived#threati#rather,#Praise#Video#was#actively#soliciting# bidders.##Even#if#the#option#was#in#response#to#a#reasonably# legitimate#threat,#it#is#coercive#to#the#shareholders,#and#thus#was# unreasonable.##Finally,#the#Gaming#Option#is#also#unreasonable,#and# 16#

# thus#unenforceable,#because#it#constitutes#a#preclusive#defensive# measure.##In#all,#this#deal#protective#device#is#an#unreasonable# response#to#a#nonVexistent#threat,#and#it#coerces#and#precludes#the# ##Therefore,#this#Court# should#find#it#is#unenforceable.## 1.#Deal#Protective#Devices#Require#Enhanced#Scrutiny.# The# Gaming# Option# is# a# deal# protective# device# because# it# questions# the# loyalty# of# the# directors,# and# thus# this# Court# should# Unocal# Corp.# v.# Mesa# Petroleum# Co.,# 493# A.2d# 946# (Del.# 1985).# # Business# decisions# that# directors# make# concerning# the# management# of# a# company# are# traditionally# reviewed# under# the# deferential# standard# of# the# business# judgment# rule.# # Omnicare,# Inc.# v.# NCS# Healthcare,# Inc.,# 818# A.2d# 914,# 927# (Del.# 2003).# # However,# courts# must# apply# a# heightened#

merger.##Unocal,#493#A.2d#at#954.##Delaware#corporation#law#mandates#a# balance#of#authority#between#directors#and#stockholders#because#merger# transactions# are# a# shared# enterprise# and# an# ownership# decision.## Omnicare,#818#A.2d#at#930.##When#a#board#of#directors#utilizes#a#deal# protective# device# to# ensure# a# merger# agreement,# constricting# the#

standard#of#review#is#required.##Id.##When#a#board#acts#with#the#sole# or# primary# purpose# to# prevent# stockholders# from# voting# independently,# the# board# maintains# a# heavy# burden# to# demonstrate# a# compelling# justification# for# its# actions.# # Blasius# Indus.,# Inc.# v.# Atlas# Corp.,# 564# A.2d# 651,# 661# (Del.# Ch.# 1988).# # When# directors# prevent# the# 17#

# effectiveness# of# a# shareholder# vote,# it# conflicts# with# their# duty# of# loyalty,#and#the#court#imposes#a#heightened#standard#of#review.#Stroud# v.#Grace,#606#A.2d#75,#91V92#(Del.#1992).## The# directors# in# Unocal# structured# a# selective# tender# offer,# intentionally# excluding# the# plaintiff,# as# a# defensive# measure# from# .# # The# court# held# that# the# business# judgment# rule# would# not# apply# because# there# was# a# clear# conflict#of#the#duty#of#loyalty.##Id.#at#954.##It#was#unclear#whether# the# selective# selfV if#the#offer#was#the#bona(fide#best#interest#of#the#corporation.##Id.## After# a# reasonable# investigation# of# the# threat# posed,# the# court# determined# that# the# plan# was# a# proportionally# reasonable# defense# to# the#hostile#takeover.##Id.##Here,#similar#to#Unocal,#the#Gaming#Option#

provision#in#the#merger#agreement.##The#Praise#Video#directors#did#not# concern# themselves# with# the# best# interest# of# the# shareholdersi# they# selected#the#lower#offer#from#New#Hope,#bringing#their#duty#of#loyalty# under# heightened# review.# # Mem.# Op.# at# 10.# # This# Court# should# use# the# Unocal#standard#when#reviewing#the#Gaming#Option.# The# board# of# directors# in# Omnicare# included# a# Force# the# Vote# provision# in# the# merger# agreement,# requiring# submission# of# the# agreement# to# stockholders# for# approval,# even# if# the# board# ceased# to# support# the# merger.# # 818# A.2d# at# 914.# # Two# board# members# who# owned# a# majority# of# the# shares# also# entered# into# a# stockholder# voting# agreement,#through#which#they#obligated#themselves#to#vote#in#favor#of# the# merger.# # Id.# # The# court# held# that,# absent# a# fiduciary# out# 18#

# provision# (meaning# the# board# members# were# acting# as# shareholders# and# not# as# directors)# all# deal# protective# devices# were# subject# to# the# heightened# judicial# review# standard# of# Unocal.# # Id.# # Here,# Praise# Video# directors# manipulated# shareholder# voting# and# did# not# utilize# a# fiduciary# out# clause.# # Similar# to# the# Omnicare# court,# this# Court# scrutinize#the#Gaming#Option#under#the#Unocal#standard.##See#id.# Finally,#the#court#in# Stroud,#considered#whether#an#amendment#to# the#corporate#charter#concerning#board#elections#was#enforceable.##The# court# found# that# the# boardVrecommended# changes# to# the# comp charter#were#intrinsically#fair#to#its#shareholders.# # 606#A.2d#at#75.## Also,# the# court# found# that# the# board# was# not# under# threat# of# losing# control,# nor# were# the# proposed# measures# defensive# in# nature.# # Id.## Finally,# the# court# also# posited# that# a# majority# of# wellVinformed# stockholders#approved#the#decision.##Id.##For#these#reasons,#the#court# held# that# the# business# judgment# rule# was# the# appropriate# standard# of# review.# # Id.# # Here,# unlike# Stroud,# the# Gaming# Option# is# not# intrinsically#fair#to#the#shareholders,#since#it#allows#for#the#gaming#

true#value#if#the#shareholders#do#not#approve#the#merger.##Mem.#Op.#at# 10.##Additionally,#the#option#is#defensive#in#nature,#as#it#is#a#deal# protective#device#structured#to#goad#the#vote#of#shareholders#in#favor# of# the# merger.# # Mem.# Op.# at# 12.# The# shareholders# cannot# freely# exercise# their# voting# franchise,# and# therefore,# the# Unocal# standard# should#apply.##See#Stroud,#606#A.2d#at#75.# # # 19#

# 2.# The# Deal# Protective# Device# Was# Illegal# Because# the# Praise# Video# Board# Did# Not# Face#a# Legitimate# Threat,# and# Because# the# Defensive# Measure# Implemented# Was# Both# Coercive# and# Preclusive.# # A#deal#protective#device#is#a#defensive#measure#or#combination#of# measures,# either# structural# and/or# economic,# that# are# intended# to# protect#a#merger#agreement.##Omnicare,#818#A.2d#at#935.##To#be#valid,# directors# must# first# demonstrate# that# they# reasonably# believed# that# the# device# was# needed# to# protect# corporate# policy# and# effectiveness.## Id.# # This# is# satisfied# if# a# board# shows# that# it# acted# in# good# faith,# and# that# it# performed# a# reasonable# inquiry# into# the# perceived# danger.## Id.# # The# second# part# of# the# analysis# turns# on# whether# the# protective# device# was# reasonable# in# response# to# the# threat# posed.# # If# it# is# not# reasonable,# the# deal# protective# device# is# illegal# and# unenforceable.# Id.# # Critically,# a# deal# protective# device# is# unreasonable# if# it# is#

merger.##Unitrin,#Inc.#v.#Am.#Gen.#Corp.,#651#A.2d#1361,#1387V88#(Del.# 1995)# (citing# 1154 55# (Del.# 1990) forcing# stockholders# to# accept# a# managementVsponsored# alternative# offer.# # Omnicare,# 818# A.2d# at# 935i# Unitrin,# 651# A.2d# at# 1387.# # A# ,# 571# A.2d# 1140,#

considering#other#offers#or#precludes#a#bidder#from#seeking#control#by# necessarily# hampering# proxy# contests.# # Unitrin,# 651# A.2d# at# 1387# (discussing# ,# 500# A.2d# 1346# (Del.2008)).# # Any#

conduct# intended# to# impede# the# free# voting# rights# of# shareholders# violates#Delaware#law.##Stroud,#606#A.2d#at#92.# a.#Praise#Video#Did#Not#Face#a#Legitimate#Threat.# 20#

# The# Gaming# Option# is# unenforceable# because# Praise# Video# did# not# face# a# legitimate# threat.# For# a# court# to# uphold# a# deal# protective# device,# it# must# be# reasonable# in# response# to# a# perceived# threat.## Omnicare,# 818# A.2d# at# 931.# # In# Omnicare,# two# members# of# the# target# board# entered# into# an# agreement# with# the# acquiring# corporation# to# irrevocably# proxy# their# vote# in# favor# of# the# mergeri# together,# they# constituted# a# majority# of# the# shareholder# vote.# # Id.# at# 926.# # The# court# found# that# this# agreement# was# so# indistinguishably# intertwined# with#the#merger#proposal#that#it#constituted#a#deal#protective#device.## Id.# at# 934.# The# court# found# that# this# agreement# was# unenforceable# because# the# directors# discarded# their# fiduciary# duties# when# they# effectively# sold# the# company# without# ensuring# that# the# merger# was# the# best# offer# available.# # Id.# at# 936.# # Since# a# superior# offer# surfaced# after#the#directors#entered#into#the#voting#agreement,#the#court#found# that#there#was#no#threat#to#the#company.##Id.#at#937.# Similar# to# Omnicare,# the# Gaming# Option# represents# a# deal# protective# device# because# it# strongly# encourages# the# shareholders# to# vote# in# favor# of# the# merger,# essentially# leaving# them# without# a# choice.# # Mem.# Op.# at# 12.# # Additionally,# the# Gaming# Option# was# not# a# reasonable# response# to# a# perceived# threat,# as# there# was# a# more# lucrative#option#available:#the#$50# per#share#Mercer#offer.##Mem.#Op.# at#9.##The#Gaming#Option#is#unenforceable#because#Praise#Video#was#not# # action# does# not# satisfy#the#first#element#of#the#Unocal#inquiry.### # # 21#

# # b.#Even#if#Praise#Video#Did#Face#a#Legitimate#Threat,#the# # # # Coercive#and#Preclusive.# i.#The#Deal#Protective#Device#was#Coercive.# The# Gaming# Option# is# coercive# because# it# forces# shareholders# to#

vote# in# favor# of# the# New# Hope# merger.# # A# deal# protective# device# is# coercive# if# it# is# a# provision# in# a# managementVsupported# merger# that# thwarts# the# consideration# of# available# alternative# offers.# # Omnicare,# 571# A.2d# at# 1154.# # In# Time measure# to# merge# with# Warner,# as# opposed# to# accepting# an# uninvited# tender#offer#from#Paramount,#was#a#legal,#good#faith#business#decision# and# was# conducted# with# adequate# due# diligence.# # 571# A.2d# 1140.# # The# court#posited#that#the#defensive#measure#was#reasonable,#and#not#aimed# Vsponsored# plani# rather,# it# was# merely# aimed#at#completing#a#longVterm#corporate#goal.##Id.#at#1154.##It#was,# therefore,# not# coercive,# and# it# was# subject# to# the# business# judgment# rule#because#it#was#a#preVexisting#business#plan#to#merge.##Id.### Similar#to#Time,#the#option#here#was#a#managementVsponsored#plan,# since# the# board# exclusively# negotiated# the# option# in# an# effort# to# secure# the# deal.# # Mem.# Op.# at# 12.# # However,# unlike# in# Time,# Praise# Vconceived#plan,#but#one#that#arose# from# a# bidding# process# to# acquire# the# corporation.# # Mem.# Op.# at# 8V9.## While# the# Time# court# found# that# the# managementVsponsored# plan# was# not# coercive,# here# the# option# reflects# a# strategic# device# aimed# at# altering# the# decisionVmaking# process# of# the# shareholders,# as# opposed# to#a#legitimate#business#decision.##Mem.#Op.#at#12.# 22#

# The# timing# of# when# the# Gaming# Option# becomes# exercisable# also# demonstrates# its# coercive# nature.# # Specifically,# the# option# becomes# exercisable# if# the# shareholders# do# not# vote# in# favor# of# the# merger# with# New# Hope,# and# if# prior# to# or# at# the# time# of# the# vote# rejecting# the#merger,#Praise#Video#has#an#offer#to#be#acquired#by#another#firm.## Additionally,#within#twelve#months#of#the#shareholder#rejection#of#the# merger,#Praise#Video#must#be#acquired#or#enter#into#an#agreement#to#be# acquired.##Mem.#Op.#at#10#n.12.##The#structure#of#the#option#provides# shareholders# the# choice# to# either# endure# the# deal,# or# face# a# substantial# decrease# in# the# value# of# their# stock.# # The# value# of# the# corporation# would# decrease# because# New# Hope# would# exercise# the# option# and#buy#the#most#valuable#asset#of#their#corporation#for#40%#below#its# true#value.##Mem.#Op.#at#10.## The# language# of# the# Gaming# Option# also# coerces# the# shareholders# into# voting# to# approve# the# merger,# since# no# reasonable# investor# would# intentionally#harm#the#value#of#his#own#corporate#interests.##See#Mem.# Op.# at# 12.# # This# is# amplified# by# the# fact# that# if# the# shareholders# turned#down#the#offer,#they#would#be#forced#to#wait#an#additional#year# to# invite# offers# from# other# corporations.# # Id.# # When# considering# whether# to# approve# the# New# Hope# offer,# or# observe# the# twelveVmonth# mandate#of#the#option,#a#majority#of#shareholders#would#likely#vote#in# favor#of#the#only#available#offer#rather#than#risk#a#potentially#nonV existent# speculative# prospect.# # It# is# unlikely# that# another# corporation# would# offer# to# buy# Praise# Video# within# this# twelveVmonth# period,# as# they# would# not# be# able# to# buy# the# most# valuable# asset# of#

23#

# Praise#Video,#the#gaming#division.##See#Mem.#Op.#at#4,#10.##The#Gaming# Option#is#unenforceable#because#of#its#coercive#effect.### ii.#The#Deal#Protective#Device#was#Preclusive.# The# Gaming# Option# was# also# preclusive# because# it# does# not# allow# the# shareholders# to# accept# a# different# present# tender# offer# and# fundamentally# restricts# their# ability# to# consider# all# offers# for# a# year.# # A# deal# protective# device# is# preclusive# if# it# alleviates# the# shareholders# of# the# ability# to# accept# tender# offers# or# fundamentally# restricts# proxy# contests.# # Moran,# 500# A.2d# at# 1357.# # In# Moran,# the#

an#enforceable#corporate#safety#measure.##Id.#at#1361.##The#court#held# that# the# plan# was# not# preclusive,# predominantly# because# it# did# not# nor# did#it#necessarily#restrict#proxy#contests.##Id.## Here,# unlike# Moran,# the# Gaming# Option# necessarily# restricts# both# the# right# to# receive# other# tender# offers# and# restricts# other# bidders# from#seeking#control#of#the#corporation.##Mem.#Op.#at#10.##The#Gaming# Option# becomes# exercisable# if# the# shareholders# reject# the# New# Hope# deal#while#Praise#Video#has#another#offer.##Mem.#Op.#at#10#n.12.##This# condition# precedent# was# satisfied# before# the# option# was# signed,# since# Mercer# was# already# engaged# in# a# bidding# war# with# New# Hope.# # Mem.# Op.# at# 8.# # Therefore,# the# option# is# preclusive# in# that# it# prevents# the# shareholders# from# voting# on# the# other# tender# offer# from# Mercer.## Additionally,#the#option#precludes#accepting#the#$50#offer#from#Mercer# because#it#is#susceptible#to#the#changing#market#conditions#of#a#full#

24#

# liquidate#the#shares#of#its#controlling#members#as#soon#as#possible#so# that# they# could# retire# within# a# year.# # This# demonstrates# that# the# purpose#of#the#Gaming#Option#was#to#force#Praise#Video#to#wait#a#year# to#begin#to#search#for#another#buyer.##Thus,#the# option#precludes#the# shareholders# from# entertaining# all# tender# offers# and# proxy# votes# for# the# sale# of# the# corporation# on# the# necessary# shortVterm# basis.# # Mem.# Op.#at#6.#### Moreover,# the# option# is# preclusive# considering# that# after# the# twelveVmonth# waiting# period,# there# is# no# guarantee# that# another# buyer# will# come# to# light# with# an# offer# as# generous# as# that# received# from# Mercer.##This#is# particularly#demonstrative#in#light# of#the#fact#that# the# initial# search# for# potential# buyers# only# returned# two# offers:# Mercer#and#New#Hope.##Mem.#Op.#at#9.##This#fundamentally#restricts#the# ability# of# the# shareholders# to# be# able# to# receive# an# offer# more# valuable#than#the# one#currently#before#them.# #The#decision#of#whether# to# freely# approve# the# New# Hope# offer,# to# entertain# the# Mercer# tender# offer,# or# to# wait# for# a# better# thirdVparty# offer# is# a# decision# to# which# the# Praise# Video# shareholders# are# entitled.# # The# Gaming# Option#

in# the# manner# they# deem# most# probable# to# ensure# the# financial# stability#of#their#shares.## CONCLUSION# For# the# foregoing# reasons,# this# Court# should# affirm# the# preliminary# injunction# against# the# consummation# of# the# merger# between# Praise#Video#and#New#Hope.## # # 25#