CHAPTER 371

FORMERLY

HOUSE BILL NO. 916

AS AMENDED BY HOUSE AMEND MENT NO. 1

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 the members elected to each House thereof concurring therein):

Section 1. Amend Subchapter VI, Chapter 1, Title

8, Delaware Code by adding thereto a new Section to be designated as §203 to read as follows:

§203. Tender Offers.

(a) No offeror shall make a tender offer unless:

(1) Not less than 20 nor more than 60 days before the date the tender offer is to be made, the offeror shall deliver to the corporation whose equity securities are to be subject to the tender offer, at its registered office in this State or at its principal place of business, a written statement of the offeror's intention to make the tender offer. The statement shall include the name and address of the offeror and of each director and principal officer of the offeror; a description of the equity securities to be purchased and the consideration to be offered; the duration of the offer; the date on which the offeror may first purchase tendered securities; the amount or number of equity securities to be purchased or the manner in which such number of equity securities to be purchased or the manner in which suce number or amount will be determined; whether the offeror will unconditionally accept all or any part of the equity securities tendered and, if not upon what conditions acceptance will unconditionally accept all or any part of the equity securities tendered and, if not upon what conditions acceptance will be made; the number or amount of any equity securities of the corporation owned beneficially by the offeror and any associate of the offeror as of the date of the delivery of the statement; a description of any contract, agreement or understanding to which the offeror or any associate of the offeror is a party with respect to the ownership, voting rights or any other interest in any equipty security of the corporation; and, if the offeror permits the purchase of less than all the outstanding equity securities issued by the corporation, copies of a balance sheet of the offeror as of the end of its last fiscal year and of its income statements for the three fiscal years preceeding the offer:

(2) The tender offer shall remain open for a period of at least 20 days after it is first made to the holders of the equity securities, during which period any stockholder may withdraw any of the equity securities tendered to the offeror, and any revised or amended tender offer which changes the amount or type of consideration offered or the number of equity securities for which the offer is made shall remain open for an additional period of at least 10 days following the amendment; and

(3) The offeror and any associate of the offeror will not purchase or pay for any tendered equity security for a period of at least 20 days after the tender offer is first made to the holders of the equity securities, and no such purchase or payment shall be made within 10 days after an amended or revised tender offer if the amendment or revision changes the amount or type of consideration offered or the number of equity securities for which the offer is made. If during the period the tender offer must remain open pursuant to the provisions of this Section, a greater number of equity securities is tendered than the offeror is bound or willing to purchase, the equity securities shall be purchased pro rata, as nearly as may be, according to the number of shares tendered during such period by each equity security holder;

(b) Notwithstanding the foregoing:

(1) Whenever an offeror has delivered the statement required by subsection (a)(1) of this Section, a subsequent offeror who shall also deliver the statement required by subsection (a)(1) of this Section may thereafter make a tender offer for equity securities of the same class as in the original offer at or after the date this Section permits the original offeror to make an offer.

(2) If the original offeror has made a tender offer in compliance with this Section, the date upon which a subsequent offer for equity securities of the same class may close and the offeror purchase or pay for equity securities tendered thereunder may be the same as provided in the original offer at the date the subsequent offer is made.

(c) As used in this Section, the term:

(1) 'Offeror' means any person, corporation, partnership, unincorporated association or other entity who makes a tender offer, and includes any two or more of the same who make a tender offer jointly or intend to exercise jointly or in concert any voting rights of the equity securities for which the tender offer is made;

(2) 'Tender Offer' means any offer to purchase or invitation to tender equity securities for purchase made by an offeror to more than 30 of the holders of equity securities of any corproation organized under this Chapter if, after the consummation thereof, the offeror and any associate of the offeror would own beneficially, directly or indirectly, more than five percent of any class of the outstanding equity securities of the corporation, unless the offer is exempted by any other provision of this Section;

(3) 'Tender Offer' does not mean:

(i) An offer made by a corporation to purchase its own equity securities or equity securities of another corporation, if a majority of the shares entitled to vote in the election of directors of such corporation is held directly or indirectly by the offering corporation;

(ii) An offer to purchase equity securities to be effected by a registered broker-dealer on a stock exchange or in the over-the-counter market if the broker performs only the customary broker's function, and receives no more than the customary broker's commissions, and neither the principal nor the broker solicits or arranges for the solicitation of orders to sell such equity securities;

(4) A tender offer is 'made' when it is first published or sent or given to the holders of the equity securities;

(5) 'Equity Security' means any stock, bond, or other obligation the holder of which has the right to vote, or any security convertible into, or any right, option or warrant to purchase, any such stock, bond or other obligation;

(6) 'Association of the Offeror' means:

(i) Any corporation or other organization of which the offeror is an officer, director or partner, or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities;

(ii) Any person who is an officer, director, partner or managing agent of an offeror, or who is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities of the offeror;

(iii) Any trust or other estate in which the offeror has a substantial beneficial interest or as to which the offeror serves as trustee or in a similar fiduciary capacity; or

() The spouse of the offeror, or any relative of the offeror or of such spouse who has the same home as the offeror;

(d ) The certificate of incorporation of any corporation organized under this Chapter may provide that tender offers for the purchase of its equity securities shall not be subject to the provisions of this Section.

(e) The Court of Chancery is hereby vested with exclusive jurisdiction summarily to hear and determine alleged violations of the provisions of this Section. The Court may, in its discretion, award such relief as it may deem just and proper, including directing the corporation to refuse to transfer on its books and to refuse to recognize the vote with respect to any equity security acquired pursuant to a tender offer which does not comply with or is not exempt under the provisions of this Section."

Section 2. Amend §253(d), Subchapter IX, Chapter 1, Title 8, Delaware Code, by striking said subsection (d) in its entirety and substituting in lieu thereof a new subsection (d) to read as follows:

"(d) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under this Section is not owned by the parent corporation immediately prior to the merger, the stockholders of the subsidiary Delaware corporation party to the merger shall have appraisal rights and the surviving corporation shall comply with the provisions of subsection (b)(2) of §262 of this Title. Thereafter, the surviving corporation and the stockholders shall have such rights and duties and shall follow the procedures set. forth in subsections (c) to (j), inclusive, of §262 of this Title."

Section 3. Amend §262 (a), Subchapter IX, Chapter 1, Title 8, Delaware Code by striking said subsection (a) in its entirety and substituting in lieu thereof a new subsection (a) to read as follows:

"(a) Appraisal rights under this Section shall be available only for the shares of any stockholder who has complied with the provisions of subsection (b) of this Section and has neither voted in favor of the merger nor consented thereto in writing pursuant to §228. When used in this Section, the word 'stockholder' means a holder of record of stock in a stock corporation and also a member of record of a non-stock corporation; the words 'stock' and 'share' mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a non-stock corporation."

Section 4. Amend §262(b), Subchapter IX, Chapter

8, Title 8, Delaware Code by striking said subsection (b) in its entirety and substituting in lieu thereof a new subsection (b) to read as follows:

"(b) Appraisal rights under this Section shall be determined as follows:

(1) If a proposed merger or consolidation for which appraisal rights are provided under this Section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders entitled to such appraisal rights that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this Section. Each stockholder electing to demand the appraisal of his shares under this Section shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intents thereby to demand the appraisal of his shares; provided, however, that such demand must be in addition to and separate from any proxy or vote against the merger. Within 10 days after the effective date of such merger or consolidation, the surviving corporation shall notify each stockholder of each constituent corporation who has complied with the provisions of this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or

(2) If the merger or consolidation was approved pursuant to §228 or §253 of this Chapter, the surviving corporation, either before the effective date of the merger or within 10 days thereafter, shall notify each of the stockholders entitled to appraisal rights of the effective date of the merger or consolidation that appraisal rights are available for any or all

of the shares of the constituent corporations. A copy of this Section shall be included in the notice. The notice shall be sent by certified or registered mail, return receipt requested, addressed to the stockholder at his address as it appears on the records of the corporation. Any stockholder entitled to appraisal rights may, within 20 day after the date of mailing of the notice, demand in writing from the surviving corporation the appraisal of his shares. Such demand will be sufficient if it reasonably informs the corporation of the identify of the stockholder and that the stockholder intends thereby to demand the appraisal of his shares."

Section 5. Amend §262(c), Subchapter IX, Chapter

1, Title 8, Delaware Code by striking said subsection (c) in its entirety and substituting in lieu thereof a new subsection (c) to read as follows:

"(c) Within 120 days after the effective date of the merger or consolidation, the corporation or any stockholder who has complied with the provisions of subsections (a) and (b) hereof and who is otherwise entitled to appraisal rights under this Section, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, an any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw his demand for appraisal and to accept the terms offered upon the merger or consolidation."

Section 6. Amend §262(e), Subchapter IX, Chapter

1, Title 8, Delaware Code, by striking said subsection (e) in its entirety and substituting in lieu thereof a new subsection (e) to read as follows:

"(e) After the hearing on such petition, the Court shall determine the stockholders who have complied with the provisions of this Section and who have become entitled to appraisal rights under this Section. The Court may require the stockholders who demanded payment for their shares to submit their certificates of stock to the Register of Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder."

Section 7. Amend §262(f), Subchapter IX, Chapter

1, Title 8, Delaware Code by striking said subsection (f) in its entirety and substituting in lieu thereof a new subsection (f) to read as follows:

"(f) After the determination of the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger. Upon application by any stockholder entitled to participate in the appraisal proceeding or by the corporation, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of those other stockholders who have complied with this Section. Any stockholder whose name appears on the list filed by the corporation pursuant to subsection (d) of this Section and who has submitted his certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until the Court shall determine that he is not entitled to appraisal rights under this Section."

Section 8. Amend §262(g), Subchapter IX, Chapter

1, Title 8, Delaware Code by striking said subsection (g) in its entirety and substituting in lieu thereof a new subsection (g) to read as follows:

"(g) The Court shall direct the payment of the appraised value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any other State."

Section 9. Amend §262(h), Subchapter IX, Chapter 1, Title 8, Delaware Code by striking said subsection (h) in its entirety and substituting in lieu thereof a new subsection (h) to read as follows:

"(h) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems eqitable in the circumstances. Upon application of any party in interest, the Court shall determine the amount of interest, if any, to be paid upon the value of the stock of the stockholders entitled thereto. In making its determination with respect to interest, the Court may consider all relevant factors, including the rate of interest which the corporation has paid for money it has borrowed, if any, during the pendency of the proceeding. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all of the shares entitled to an appraisal."

Section 10. Amend §262(1), Subchapter IX, Chapter 1, Title 8, Delaware Code by striking said subsection (i) in its entirety and substituting in lieu thereof a new subsection (i) to read as follows:

"(1) Any stockholder who has demanded his appraisal rights as provided in subsection (b) of this Section shall thereafter neither be entitled to vote such stock for any purpose nor be entitled to the payment of dividends or other distribution on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (c) of this Section, or if such stockholder shall deliver to the corporation a written withdrawal of his demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (c) of this Section or thereafter with the written approval of the corporation, then the right of such stockholder to appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just."

Section 11. Amend §262(k), Subchapter IX,Chapter 1, Title 8, Delaware Code by striking said subsection (k) in its entirety and substituting in lieu thereof a new subsection (k) to read as follows:

"(k) Unless otherwise provided in the certificate of incorporation of the corporation issuing such shares, no appraisal rights under this Section shall be available for the shares of any class or series 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 to act upon the agreement of merger or consolidation, were either (1) listed on a national securities exchange or (2) held of record by more than 2,000 stockholders. No appraisal rights shall be available for any 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 §251 of this Title."

Section 12. Amend §262, Subchapter IX, Chapter 1, Title 8, Delaware Code by adding thereto a new subsection to be designated as subsection (1) to read as follows:

"(1) Notwithstanding the provisions of subsection (k) of this Section, appraisal rights under this Section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §251 or §252 of this Title to accept for such stock anything except (1) shares of stock of the corporation surviving or resulting from such merger or consolidation; (2) shares of stock of any other corporation which at the effective date of the merger or consolidation will be either listed

on a national securities exchange or held of record by more than 2,000 shareholders; (3) cash in lieu of fractional shares of the corporations described in clauses (1) and (2) of this subsection; or (4) any combination of the shares of stock and cash in lieu of fractional shares described in clauses (1), (2) and (3) of this subsection."

Section 13. Amend §284, Subchapter X, Chapter 1, Title 8, Delaware Code by striking the words "and shall be published by him in the next volume of laws, which he shall cause to be published" as the same appear in said Section in their entirety.

Section 14. Amend §371(b)(2), Subchapter XV, Chapter 1, Title 8, Delaware Code by striking the word "sworn" as the same appears on the first line thereof in its entirety; and by adding the following sentence to the end of said subsection:

"The statement shall be acknowledged in accordance with §103 of this Title."

Section 15. Amend §505, Chapter 5, Title 8, Delaware Code by relettering present subsection (b) thereof as subsection (c), present subsection (c) thereof as subsection (d), and present subsection (d) thereof as subsection (e); by inserting the words and figures "and (b)" following the words and figures "subsection (a)" and preceding the words "of this Section" in line 3 of present subsections (c) and (d) thereof, and by adding to said §505 two new subsections (b) and (f) to read as follows:

"(b) Prior to the filing of a certificate required by §312(c) of this Title, a corporation may petition the Secretary of State for a reduction of taxes, penalties or interest which the State claims are due it pursuant to §312(g) of this Title and which the corporation claims have been erroneously or illegally fixed."

permit a corporation to file a petition pursuant to subsection (a) of this Section within two years following the expiration of the 60 day period provided for in subsection (a) of this Section."

Section 16. Section 1 of this Act shall take effect on

May 1, 1976, and shall apply to all tender offers which become effective on or after May 1, 1976. Sections 2 through 12 of this Act shall takke effect on July 1, 1976, and shall apply to all mergers and consolidation which become effective on or after July 1, 1976. The remaining Sections of this Act shall take effect on July 1, 1976.

Section 17. All rights, privileges and annuities vested or accrued by and under any laws enacted prior to the adoption or amendment of this Act, all suits pending, or rights or actions convened, and/or duties, restrictions, liabilities and penalities 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 April 24, 1976