CHAPTER 106

FORMERLY

HOUSE BILL NO. 275

AN ACT TO AMEND CHAPTER 1, TITLE 8, DELAWARE CODE, RELATING TO THE GENERAL CORPORATION LAW.

Be it enacted by the General Assembly of the State of Delaware (two-thirds of all members elected to each House thereof concurring therein):

Section 1. Amend Section 151 of Title 8, Delaware Code, by striking subsection (b) of said section in its entirety, and substituting in lieu thereof a new subsection (b) to read as follows:

"(b) Any stock which is entitled upon any distribution of the corporation's assets, whether by dividend or by liquidation, to a preference over another class or series of stock may be made subject to redemption by the corporation at its option or at the option of the holders of such stock or upon the happening of a specified event. Any stock of a regulated investment company registered under the Investment Company Act of 1940, as heretofore or hereafter amended, may be given the right to require the corporation to redeem or repurchase the stock at the option of the holder of the stock, provided such redemption or repurchase would not impair or cause a further impairment of the capital of the corporation. Any stock of a corporation which has a license or franchise from a governmental agency to conduct its business or is a member of a national securities exchange, which license, franchise or membership is conditioned upon some or all of the holders of its stock possessing prescribed qualifications, may be made subject to redemption by the corporation to the extent necessary to prevent the loss of such license, franchise or membership or to reinstate it. Any stock which may be made redeemable under this section may be redeemed for cash, property or rights, including securities of the same or another corporation, at such time or times, price or prices, or rate or rates, and with such adjustments, as shall be stated in the certificate of incorporation or in the resolution or resolutions providing for the issue of such stock adopted by the board of directors as herein-above provided."

Section 2. Amend Section 154 of Title 8, Delaware Code, by inserting in such section a new sentence following the third sentence in such section, to read as follows:

"The amount of the consideration so determined to be capital in respect of any shares without par value shall be the stated capital of such shares."

Section 3. Amend Section 160 of Title 8, Delaware Code, by striking said section in its entirety and substituting in lieu thereof a new Section 160 to read as follows:

§ 160. Corporation's powers respecting ownership, voting, etc. of its own stock; rights of stock called for redemption

(a) Every corporation may purchase, redeem, receive, take or otherwise acquire, own and hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares ; provided, however, that no corporation shall-

1. Purchase or redeem its own shares of capital stock for cash or other property when the capital of the corporation is impaired or when such purchase or redemption would cause any impairment of the capital of the corporation, except that a corporation may purchase or redeem out of capital any of its own shares which are entitled upon any distribution of its assets, whether by dividend or in liquidation, to a preference over another class or series of its stock if such shares will be retired upon their acquisition and the capital of the corporation reduced in accordance with Sections 243 and 244 of this title;

2. Purchase, for more than the price at which they may then be redeemed, any of its shares which are redeemable at the option of the corporation; or,

3. Redeem any of its shares unless their redemption is authorized by Section 151 (b) of this title and then only in accordance with such Section and the certificate of incorporation.

(b) Nothing in this section limits or affects a corporation's right to resell any of its shares theretofore purchased or redeemed out of surplus and which have not been retired, for such consideration as shall be fixed by the board of directors.

(c) Shares of its own capital stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes. Nothing in this section shall be construed as limiting the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

(d) Shares which have been called for redemption shall not be deemed to be outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been irrevocably deposited or set aside to pay the redemption price to the holders of the shares upon surrender of certificates therefor.

Section 4. Amend Section 164 of Title 8, Delaware Code, by inserting in the last sentence thereof the word "stockholder" immediately following the word "delinquent" and before the word "on".

Section 5. Amend Section 170(a) of Title 8, Delaware Code, by striking therefrom the word "243" as such word appears twice in such subsection, in the first sentence thereof and in the second sentence thereof.

Section 6. Amend Section 174 of Title 8, Delaware Code, by striking therefrom the words "or 243" as the same appear in the first sentence of such section after .the word "173" and before the word "of"; and by inserting the word "or" in the first sentence of such section after the word '1.60" and before the word "173".

Section 7. Amend Section 242(b) of Title 8, Delaware Code, by striking such subsection in its entirety and substituting a new subsection (b) in lieu thereof to read as follows:

"(b) If an amendment effects any change in the issued shares of the corporation, and if, when the amendment becomes effective the aggregate amount of capital represented by all issued shares immediately after the amendment will be less than the aggregate amount of capital represented by all issued shares immediately before the amendment, the certificate of amendment shall state that a certificate of reduction of capital pursuant to Section 244(c) of this title is being filed with the certificate of amendment."

Section 8. Amend Section 243 of Title 8, Delaware Code, by striking said section in its entirety and substituting a new Section 243 in lieu thereof to read as follows:

§ 243. Retirement of stock

(a) A corporation, by resolution of its board of directors, may retire any shares of its capital stock that are issued but are not outstanding. If a corporation acquires any of its shares, whether by purchase or redemption or by their having been converted into or exchanged for other shares of the corporation, and capital, as computed in accordance with Sections 154, 242 and 244 of this title, is applied in connection with such acquisition, the shares so acquired, upon their acquisition and without other action by the corporation, shall have the status of retired shares.

() Whenever any shares of the capital stock of a corporation are retired, they shall resume the status of authorized and unissued shares of the class to which they belong unless the certificate of incorporation prohibits their reissuance. If the certificate of incorporation prohibits the reissuance of such shares, a certificate, so stating, identifying the shares and reciting their retirement shall be executed, acknowledged and filed and shall become effective in accordance with Section 103 of this Title. When such certificate becomes effective, it shall have the effect of amending the certificate of incorporation so as to reduce accordingly the number of authorized shares of the class to which such shares belong or, if such retired shares constitute all of the authorized shares of the class or series to which they belong, of eliminating from the certificate of incorporation all reference to such class or series of stock.

If the capital of the corporation will be reduced by or in connection with the retirement of shares, the reduction of capital shall be effected pursuant to Section 244 of this Title.

Section 9. Amend Section 244 of Title 8, Delaware Code, by striking said section in its entirety and substituting a new Section 244 in lieu thereof to read as follows:

§ 241. Reduction of capital

(a) A corporation, by resolution of its board of directors, may reduce its capital in any of the following ways:

1. By reducing or eliminating the capital represented by shares of capital stock which have been retired ;

2. By applying to an otherwise authorized purchase or redemption of outstanding shares of its capital stock some or all of the capital represented by the shares being purchased or redeemed, or any capital that has not been allocated to any particular class of its capital stock ;

3. By applying to an otherwise authorized conversion or exchange of outstanding shares of its capital stock some or all of the capital represented by the shares being converted or exchanged, or some or all of any capital that has not been allocated to any particular class of its capital stock, or both, to the extent that such capital in the aggregate exceeds the total aggregate par value or the stated capital of any previously unissued shares issuable upon such conversion or exchange; or,

4. By transferring to surplus (i) some or all of the capital not represented by any particular class of its capital stock; (ii) some or all of the capital represented by issued shares of its par value capital stock, which capital is in excess of the aggregate par value of such shares; or (iii) some of the capital represented by issued shares of its capital stock without par value.

(b) Notwithstanding the other provisions of this section, no reduction of capital shall be made or effected unless the assets of the corporation remaining after such reduction shall be sufficient to pay any debts of the corporation for which payment has not been otherwise provided, and the certificate required by subsection (c) of this section shall so state. No reduction of capital shall release any liability of any stockholder whose shares have not been fully paid.

(c) Whenever capital of a corporation is to be reduced, such reduction shall not become effective until a certificate has been executed, acknowledged and filed and has become effective in accordance with section 103 of this title. Such certificate shall set forth the manner in and the extent to which the capital is to be reduced, including an identification of any shares of capital stock retired in connection with such reduction.

Section 10. Amend Section 253(c) of Title 8, Delaware Code, by striking said subsection in its entirety and substituting in lieu thereof a new subsection (c) to read as follows:

(c) The provisions of Section 251(d) of this title shall apply to a merger under this section, and the provisions of Section 251 (e) shall apply to a merger under this section in which the surviving corporation is the subsidiary corporation and is a corporation of this State. Any merger which effects any changes other than those authorized by this section or made applicable by this subsection shall be accomplished under the provisions of Section 251 or Section 252 of this title. The provisions of Section 262 of this title shall not apply to any merger effected under this section, except as provided in subsection (d) of this section."

Section 11. Amend Section 253 of Title 8, Delaware Code, by striking subsection (f) thereof in its entirety.

Section 12. Amend Section 262 of Title 8, Delaware Code, by striking subsection (k) thereof in its entirety and substituting a new subsection (k) to read as follows:

(k) This section shall not apply to the shares of any class or series of a class of stock, which, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders at which the agreement of merger or consolidation is to be acted on, were either (1) listed on a national securities exchange, or (2) held of record by more than 2,000 stockholders, unless the certificate of incorporation of the corporation issuing such stock shall otherwise provide; nor shall this section apply to any of the shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation, as provided in subsection (f) of Section 251 of this title. This subsection shall not be applicable to shares of any class or series of a class of stock of a constituent corporation if under the terms of a merger or consolidation pursuant to Section 251 or Section 252 of this title the holders thereof are required to accept for such stock anything except (a) shares of stock or shares of stock and cash in lieu of fractional shares of the corporation surviving or resulting from such merger or consolidation; or (b) shares of stock or shares of stock and cash in lieu of fractional shares of any other corporation, which at the effective date of the merger or consolidation will be either (1) listed on a national securities exchange or (2) held of record by more than 2,000 stockholders; or (c) a combination of shares of stock or shares of stock and cash in lieu of fractional shares as set forth in (a) and (b) of this subsection.

Section 13. Amend Section 274 of Title 8, Delaware Code, by striking said section in its entirety and substituting a new section to read as follows:

§ 274. Dissolution before beginning business

"Before beginning the business for which the corporation was organized a majority of the incorporators, or, if directors were named in the certificate of incorporation or have been elected, a majority of the directors, may surrender all of the corporation's rights and franchises by filing in the office of the Secretary of State a certificate, executed and acknowledged by a majority of the incorporators or directors, stating that the business or activity for which the corporation was organized has not been begun; that no part of the capital of the corporation has been paid, or if some capital has been paid, that the amount actually paid in for the corporation's shares, less any part thereof disbursed for necessary expenses, has been returned to those entitled thereto; that all issued stock certificates, if any, have been surrendered and cancelled ; and that all rights and franchises of the corporation are surrendered. Upon such certificate becoming effective in accordance with Section 103 of this title, the corporation shall be dissolved."

Section 14. Amend Section 275 of Title 8, Delaware Code, by striking subsections (b) and (c) thereof in their entirety and substituting in lieu thereof new subsections (b) and (c) to read as follows:

(b) At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon shall vote for the proposed dissolution, a certificate stating that the dissolution has been authorized in accordance with the provisions of this section and setting forth the names and residences of the directors and officers shall be executed, acknowledged and filed, and shall become effective, in accordance with Section 103 of this title. Upon such certificate becoming effective in accordance with Section 103 of this title, the corporation shall be dissolved.

(c) Whenever all the stockholders entitled to vote on a dissolution shall consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of this title. Upon such consent becoming effective in accordance with Section 103 of this title, the corporation shall be dissolved. In the event that the consent is signed by an attorney, the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution ; in addition there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation.

Section 15. Amend Section 295 of Title 8, Delaware Code, by striking the first sentence of such section and substituting in lieu thereof a new first sentence for such section to read as follows:

All creditors shall make proof under oath of their respective claims against the corporation, and cause the same to be filed in the office of the Register in Chancery of the county in which the proceeding is pending within the time fixed by and in accordance with the procedure established by the Rules of the Court of Chancery.

Section 16. Amend Section 312 of Title 8, Delaware Code, by striking subsections (b), (d) (5), (e), (f) and (g) thereof in their entirety and substituting in lieu thereof new subsections (b), (d) (5), (e), (f) and (g) to read as follows:

(b) Any corporation may, at any time before the expiration of the time limited for its existence and any corporation whose certificate of incorporation has become inoperative by law for non-payment of taxes and any corporation whose certificate of incorporation has been forfeited pursuant to Section 136(c) of this title and any corporation whose certificate of incorporation has expired by reason of failure to renew it or whose certificate of incorporation has been renewed, but, through failure to comply strictly with the provisions of this chapter, the validity of whose renewal has been brought into question, may at any time procure an extension, restoration, renewal or revival of its certificate of incorporation, together with all the rights, franchises, privileges and immunities and subject to all of its duties, debts and liability which had been secured or imposed by its original certificate of incorporation and all amendments thereto.

(d) (5) The date when the certificate of incorporation would expire, if such is the case, or such other facts as may show that the certificate of incorporation has been forfeited pursuant to section 136 (c) of this title, or has become inoperative or void or that the validity of any renewal has been brought into question;

(e) Upon the filing of the certificate in accordance with section 103 of this title the corporation shall be renewed and revived with the same force and effect as if its certificate of incorporation had not been forfeited pursuant to Section 136(c) of this title, or inoperative and void, or had not expired by limitation. Such reinstatement shall validate all contracts, acts, matters and things made, done and performed within the scope of its certificate of incorporation by the corporation, its officers and agents during the time when its certificate of incorporation was forfeited pursuant to Section 136(c) of this title, or was inoperative or void or after its expiration by limitation, with the same force and effect and to all intents and purposes as if the certificate of incorporation had at all times remained in full force and effect. All real and personal property, rights and credits, which belonged to the corporation at the time its certificate of incorporation became forfeited pursuant to Section 136(c) of this title, or inoperative or void, or expired by limitation and which were not disposed of prior to the time of its revival or renewal shall be vested in the corporation, after its revival and renewal, as fully and amply as they were held by the corporation at and before the time its certificate of incorporation became forfeited pursuant to Section 136 (c) of this title, inoperative or void, or expired by limitation, and the corporation after its renewal and revival shall be as exclusively liable for all contracts, acts, matters and things made, done or performed in its name and on its behalf by its officers and agents prior to its reinstatement, as if its certificate of incorporation had at all times remained in full force and effect.

(f) If, since the certificate of incorporation became forfeited pursuant to Section 136 (c) of this title, or inoperative or void for non-payment of taxes, or expired by limitation, any other corporation organized under the laws of this State shall have adopted the same name as the corporation sought to be renewed or revived or shall have adopted a name so nearly similar thereto as not to distinguish it from the corporation to be renewed or revived or any foreign corporation qualified to accordance with section 371 of this title shall have adopted the same name as the corporation sought to be renewed or revived or shall have adopted a name so nearly similar thereto as not to distinguish it from the corporation to be renewed or revived, then in such case the corporation to be renewed or revived shall not be renewed under the same name which it bore when its certificate of incorporation became forfeited pursuant to section 136 (c) of this title, inoperative or void, or expired but shall adopt or be renewed under some other name and in such case the certificate to be filed under the provisions of this section shall set forth the name borne by the corporation at the time its certificate of incorporation became forfeited pursuant to section 136 (c) of this title, inoperative or void, or expired and the new name under which the corporation is to be renewed or revived.

(g) Any corporation seeking to renew or revive its certificate of incorporation under the provisions of this chapter shall pay to this State a sum equal to all franchise taxes and penalties thereon due at the time its certificate of incorporation became forfeited pursuant to section 136 (c) of this title, inoperative and void for non-payment of taxes, or expired by limitation or otherwise.

Section 17. Amend Section 324 of Title 8, Delaware Code, by striking subsection (b) thereof in its entirety and substituting in lieu thereof a new subsection (b) to read as follows:

(b) When shares of stock, or any option to acquire such or any right or interest in such, shall be so attached, a certified copy of the process shall be left in this State with any officer or director, or with the registered agent of the corporation. Within 20 days after service of the process, the corporation shall serve upon the plaintiff a certificate of the number of shares held or owned by the debtor in the corporation, with the number or other marks distinguishing the same, or in the case the debtor appears on the books of the corporation to have an option to acquire shares of stock or any right or interest in any shares of stock of the corporation, there shall be served upon the plaintiff within 20 days after service of the process a certificate setting forth any such option, right or interest in the shares of the corporation in the language and form in which the option, right or interest appears on the books of the corporation, anything in the certificate of incorporation or by-laws of the corporation to the contrary notwithstanding. Service upon a corporate registered agent may be made in the manner provided in Section 321 of this title.

Section 18. Amend subsection 391 (a) (3) of Title 8, Delaware Code, by deleting therefrom the word "preferred" as the same appears between the words "of' and "stock" in the first sentence of such subsection.

Section 19. This Act shall take effect on July 1, 1973.

Section 20. All rights, privileges and immunities vested or accrued by and under any laws enacted prior to the adoption or amendment of this Act, all suits pending, all rights of action conferred, and all duties, restrictions, liabilities and penalties imposed or required by and under laws enacted prior to the adoption or amendment of this Act, shall not be impaired, diminished or affected by this Act.

Approved June 25, 1973.