Document: Amazon.com, Inc. v. Hoffman, et al., C.A. No. 2239-VCN, Noble, V.C. (Del. Ch. June 30, 2009)
Plaintiff Amazon challenged the issuance of preferred stock by defendant Basis Technology Corporation to a third party on the grounds that the defendant directors of Basis breached their fiduciary duties by “engaging in a concerted effort to avoid triggering Amazon’s anti-dilution rights”, which also allegedly constituted breach of the implied covenant of good faith and fair dealing. The Court dismissed Amazon’s complaint (with leave to amend as to one claim), which essentially alleged that Basis’ board wrongfully issued stock at too high of a price, above the triggering price of its anti-dilution rights. The Court held that the challenged conduct did not constitute a breach of loyalty and since the defendant corporation had a 102(b)(7) exculpatory provision, the directors were protected against duty of care claims. The Court also dismissed the implied covenant claims.