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Before Torruella and Boudin, Circuit Judges, and Saris, *fn1District Judge.

This case arises from two transactions in which WahlcoMetroflex, Inc. (“WMI” or “the company”) issued equity shares as compensation for agreements made by most of its shareholders to guaranty personally loans made to WMI. Alexander Baldwin, one of seven shareholders and founders of WMI, filed suit alleging that WMI’s directors breached their fiduciary duties to him by issuing the two sets of shares, each of which diluted his stake in WMI. The district court ruled on summary judgment that WMI’s directors were liable to Baldwin on the second transaction but not the first, and both sides now appeal.

WMI is a Delaware corporation based in Lewiston, Maine, that manufactures emissions control equipment used in power generation and other industries. The company was formed in 2001 after Baldwin and six other investors*fn2 acquired the assets of a predecessor company in a bankruptcy proceeding. All made capital contributions to WMI in the amount of approximately $14,285 each, and, in exchange, received the company’s shares in equal amounts (14.28 percent each). The seven shareholders also comprised WMI’s board of directors for much of its existence, and Baldwin served as chairman and president until 2004, when he resigned his positions in management and on the board.

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