CHAPTER 352

CORPORATIONS - CONSOLIDATION OR MERGER OF NON-STOCK CORPORATIONS

AN ACT TO AMEND CHAPTER 65 OF THE REVISED CODE OF THE STATE OF DELAWARE RELATING TO CORPORATIONS TO PROVIDE FOR THE CONSOLIDATION OR MERGER OF NON-STOCK CORPORATIONS, WHETHER ORGANIZED FOR PROFIT OR NOT FOR PROFIT, WITH STOCK CORPORATIONS.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met (two-thirds of all the Members elected to each Branch thereof concurring therein):

Section 1. That Section 59 of Chapter 65 of the Revised Code of the State of Delaware, being Section 2091. of said Code, be, and the same is hereby amended by adding thereto a new Section to be known as Code Section 2091D., Section 59D., as follows:

"2091D. Sec. 59D. CONSOLIDATION OR MERGER OF NON-STOCK CORPORATIONS, ORGANIZED FOR PROFIT OR NOT FOR PROFIT, WITH STOCK CORPORATIONS; PROCEEDINGS FOR:--Any one or more non-stock corporations, whether organized for profit or not organized for profit, organized under the provisions of this Chapter, or existing under the laws of this State, may consolidate or merge with one or more stock corporations, whether organized for profit or not organized for profit, organized under the provisions of this Chapter, or existing under the laws of this State, into a single corporation which may be any one of said constituent corporations or a new corporation to be formed by means of such consolidation or merger as shall be specified in the agreement hereinafter required. The new corporation or the surviving constituent corporation may be organized for profit or not organized for profit and may be a stock corporation or a membership corporation; the directors, or a majority of them, of such stock corporations as desire to consolidate or merge and the members of the governing body, however called, or a majority of them, of such non-stock corporations as desire to consolidate or merge may enter into an agreement signed by them arid under the corporate seals of the respective corporations, prescribing the terms and conditions of consolidation or merger, the mode of carrying the same into effect, and stating such other facts required or permitted by the provisions of this Chapter to be set out in Certificates of Incorporation, as can be stated in the case of a consolidation or merger, stated in such altered form as the circumstances of the case require, as well as the manner of converting the shares of stock of a stock corporation and the interests of members of a non-stock corporation into shares or other securities of the corporation resulting from or surviving such consolidation or merger or of converting the shares of stockholders in a stock corporation and the interests of members of a non-stock corporation into membership interests of the non-stock corporation resulting from or surviving such consolidation or merger, as the case may be, with such other details and provisions as are deemed necessary; provided, however, that in such consolidation or merger the interests of members Of a constituent non-stock corporation may be treated in various ways so as to convert such interests into interests of value, other than shares of stock, in the proposed new or resulting stock corporation or into shares of stock in the proposed new or resulting stock corporation, voting or non-voting, or into creditor interests or any other interests of value equivalent to their membership interests in their non-stock corporation, and further provided that the voting rights of members of a constituent non-stock corporation need not be considered an element of value in measuring the reasonable equivalence of the value of the interests received in the new or resulting stock corporation by members of a constituent non-stock corporation, nor need the voting rights of shares of stock in a constituent stock corporation be considered as an element of value in measuring the reasonable equivalence of the value of the interests in the new or resulting non-stock corporations received by stockholders of a constituent stock corporation, and the voting or nonvoting shares of a stock corporation may be converted into voting or non-voting regular, life, general, special or other type of membership, however designated, creditor interests or participating interests, in the non-stock corporation resulting from or surviving such consolidation or merger of a stock corporation and a non-stock corporation.

"Said agreement, in the case of each constituent stock corporation, shall be authorized, adopted, approved, signed and acknowledged by each of said constituent corporations in the manner provided by the first two paragraphs of Section 59. of this Chapter and, in the case of each constituent non-stock corporation, it shall be authorized, adopted, approved, signed and acknowledged by each of said constituent corporations in the manner provided by the first two paragraphs of Section 59C. of this Chapter. The agreement so authorized, adopted, approved, signed and acknowledged shall be filed in the Office of the Secretary of State and a copy thereof duly certified by the Secretary of State, shall be recorded as provided in the second paragraph of Section 59. of this Chapter; and said agreement, when so recorded, shall thenceforth be taken and deemed to be the agreement and act of consolidation or merger of said constituent corporations for all purposes of the law of this State.

"In the consolidation or merger of Delaware and foreign stock and non-stock corporations, any one or more corporations, whether stock or non-stock corporations and whether organized for profit or not organized for profit, organized under the provisions of this Chapter, or existing under the laws of this State, may consolidate or merge with one or more other corporations, whether stock or non-stock corporations and whether organized for profit or not organized for profit, organized under the laws of any other State or States of the United States of America, if the laws under which said other corporation or corporations are formed shall permit such consolidation or merger. The constituent corporations may merge into a single corporation, which may be any one of said constituent corporations, or they may consolidate to form a new corporation, which may be a corporation of the State of incorporation of any one of said constituent corporations, and the new or surviving corporation may be either a stock corporation or a membership corporation as shall be specified in the agreement hereinafter required.

"The method and procedure to be followed by said constituent corporations so consolidating or merging shall be as prescribed in the first two paragraphs of this Section in the case of Delaware corporations; provided, however, that the agreement of consolidation or merger shall also set forth such other facts as shall then be required to be set forth in certificates of incorporation by the laws of the State, which are stated in said agreement to be the laws which shall govern the resulting or surviving corporation and that can be stated in the case of a consolidation or merger and said agreement, in the case of foreign corporations, shall be authorized, adopted, approved, signed and acknowledged by each of said constituent foreign corporations in accordance with the laws under which each is formed. The requirements of the concluding paragraph of Section 59. of this Chapter as to the appointment of the Secretary of State to receive process and the manner of serving the same in the event the new or surviving corporation is to be governed by the laws of any other State shall also apply to consolidations or mergers effected under the provisions of this Section."

Section 2. That Section 60. of Chapter 65 of the Revised Code of the State of Delaware, being Section 2092. of said Code, be and the same is hereby amended by striking out the words, "or in" between the words "Section 59B." and "Section 59C." and by inserting after the words "Section 59C." the additional words "or in Section 59D."

Section 3. That Paragraph 11 of Section 5. of Chapter 65 of the Revised Code of the State of Delaware, being Section 2037. of said Code, be, and the same is hereby amended by inserting "59D." after "59C." in the last line of said paragraph.

Section 4. That Section 61. of Chapter 65 of the Revised Code of the State of Delaware, being Section 2093. of said Code, be, and the same is hereby amended by striking out all of said Section and inserting in lieu thereof a new Section reading as follows:

"2093. Sec. 61. CONSOLIDATION OR MERGER; PAYMENT FOR STOCK OR MEMBERSHIP OF DISSATISFIED STOCKHOLDER OR MEMBER:--The corporation resulting from or surviving any consolidation or merger as aforesaid shall within ten days after the date on which the agreement of consolidation or merger has been filed and recorded, as aforesaid, notify each stockholder or member in any corporation of this State consolidating or merging as aforesaid, who objected thereto in writing and, in the case of a stock corporation, whose shares were not voted in favor of such consolidation or merger and, in the case of a non-stock corporation, who did not vote in favor of such consolidation or merger, and who filed such written objection with the corporation before the taking of the vote on such consolidation or merger, that said agreement has been filed and recorded, by registered mail, return receipt requested, addressed to said stockholder or to said member at his last known address as appears on the books of the corporation and if any of such stockholders or of such members shall within twenty days after the date of mailing of said notice demand in writing, from the corporation resulting from or surviving such consolidation or merger, payment for his stock or his membership, such resulting or surviving corporation shall, within thirty days after the expiration of said period of twenty days, pay to him the value of his stock or of his membership on the date of the recording of said agreement of consolidation or merger, exclusive of any element of value arising from the expectation or accomplishment of such consolidation or merger. If during said period of thirty days the corporation and any such stockholder or any such member fail to agree as to the value of such stock or of such membership, any such stockholder or any such member or the corporation resulting from or surviving such consolidation or merger, may by petition filed in the Court of Chancery within four months after the expiration of said period of thirty days demand a determination of the value of the stock of all such stockholders and of the memberships of all such members by an appraiser to be appointed by the Court.

"Upon the filing of any such petition by a stockholder or by a member, service of a copy thereof shall be made upon the corporation, which shall within ten days after such service file in the Office of the Register in Chancery in which said petition was filed a duly verified list containing the names and addresses of all stockholders and of all members who have demanded payment for their shares and memberships, respectively, and with whom agreements as to value for said shares and memberships have not been reached by the corporation. If the petition shall be filed by the corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery shall give notice of the time and place fixed for the hearing of such petition by registered mail to the corporation and the stockholders and the members shown upon said list at the addresses therein stated and notice shall also be given by publishing a notice at least once a week for two successive weeks, the second publication to appear at least one week before the day of hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware. The Court shall have power to direct such additional publications of notice as it may deem advisable. The forms of the notices by mail and by publication shall be approved by the Court.

"After the hearing of such petition the Court shall determine the stockholders and the members who have complied with the provisions of this Section and become entitled to the valuation of and payment for their shares and memberships, respectively, and shall appoint an appraiser to determine such value. Such appraiser shall have power to examine any of the books and records of the corporation or corporations the stock or memberships of which he is charged with the duty of valuing and he shall make a determination of the value of the shares and of the memberships upon such investigation as to him may seem proper. The appraiser shall also afford a reasonable opportunity to the parties interested to submit to him pertinent evidence on the value of the shares and of the memberships. The appraiser, also, shall have such powers and authority as may be conferred upon masters by the rules of the Court of Chancery or by the order of his appointment.

"The appraiser shall determine the value of the stock of the stockholders and the value of the memberships of the members adjudged by the Chancellor to be entitled to payment therefor and shall file his report respecting such value in the Office of the Register in Chancery and notice of the filing of such report shall be given by the Register in Chancery to the parties in interest. Such report shall be subject to exceptions to be heard before the Court both upon the law and facts. The Court shall by its decree determine the value of the stock of the stockholders and the value of the memberships of the members entitled to payment therefor and shall direct the payment of such value, together with interest, if any, as hereinafter provided, to the stockholders and to the members entitled thereto by the resulting or surviving corporation upon the transfer to it of the certificates representing such stock and representing such memberships which decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such resulting or surviving corporation be a corporation of this State or of any other State of the United States of America. The shares of the surviving or resulting corporation into which the shares or memberships of such dissenting stockholders and members would have been converted had they assented to the consolidation or merger shall have the status of authorized and unissued shares of the surviving or resulting corporation, as the case may be. The interests of value other than shares of the surviving or resulting corporation into which the memberships of such dissenting members would have been converted had they assented to the consolidation or merger shall be cancelled.

"The cost of any such appraisal, including a reasonable fee to and the reasonable expenses of the appraiser, but exclusive of fees of counsel or of experts retained by any party, may on application of any party in interest be determined by the Court and taxed upon the parties to such appraisal or any of them as may appear to be equitable, except that the cost of giving of notice by publication and by registered mail hereinabove provided for shall be paid by the corporation. The Court may, on application of any party in interest, determine the amount of interest, if any, to be paid upon the value of the stock of the stockholders and upon the value of the memberships of the members entitled thereto.

"Any stockholder who shall have demanded payment of his stock as herein provided shall not thereafter be entitled to vote such stock for any purpose or be entitled to the payment of dividends or other distribution on said stock (except dividends payable to stockholders of record at a date which is prior to the date of the recording of said agreement) unless the appointment of an appraiser shall not be applied for within the time herein provided, or the proceeding be dismissed as to such stockholder, or unless such stockholder shall with the written approval of the corporation deliver to the corporation a written withdrawal of his objections to and an acceptance of such consolidation or merger, in any of which cases the right of such stockholder to payment of his stock shall cease. Any member who shall have demanded payment for his membership as herein provided shall not thereafter be entitled to vote for any purpose or be entitled to the payment of any distribution on said membership (except sums payable to members of record at a date which is prior to the date of the recording of said agreement) unless the appointment of an appraiser shall not be applied for within the time herein provided, or the proceeding be dismissed as to such member, or unless such member shall with the written approval of the corporation deliver to the corporation a written withdrawal of his objections to and an acceptance of such consolidation or merger, in any of which cases the right of such member to payment for his membership shall cease.

"At the time of appointing the appraiser or at any time thereafter the Court may require the dissenting stockholders or members to submit their certificates of stock or of membership to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder or member fails to comply with such direction the Court may dismiss the proceedings as to such stockholder or such member.

"This Section shall apply only to cases of agreements of consolidation or merger filed after the Fifteenth day of April, 1943. All prior cases shall be governed by the law in force immediately prior to the said Fifteenth day of April, 1943, which, as to such cases, and only such cases, is continued in force and effect."

Approved June 15, 1951.