Brazen v. Bell Atlantic Corp.

VEASEY, Chief Justice:

In this appeal, the issues facing the Court surround the question of whether a two-tiered $550 million termination fee in a merger agreement is a valid liquidated damages provision or whether the termination fee was an invalid penalty and tended improperly to coerce stockholders into voting for the merger.

Although there are judgmental aspects involved in the traditional liquidated damages analysis applicable here, we do not apply the business judgment rule as such. We hold that the termination fee should be analyzed as a liquidated damages provision because the merger…