§ 912 — Requirements relating to certain business combinations

§ 912. Requirements relating to certain business combinations.\n (a) For the purposes of this section:\n (1) "Affiliate" means a person that directly, or indirectly through\none or more intermediaries, controls, or is controlled by, or is under\ncommon control with, a specified person.\n (2) "Announcement date", when used in reference to any business\ncombination, means the date of the first public announcement of the\nfinal, definitive proposal for such business combination.\n (3) "Associate", when used to indicate a relationship with any person,\nmeans (A) any corporation or organization of which such person is an\nofficer or partner or is, directly or indirectly, the beneficial owner\nof ten percent or more of any class of voting stock, (B) any trust or\nother estate in which such person has a substantial beneficial interest\nor as to which such person serves as trustee or in a similar fiduciary\ncapacity, and (C) any relative or spouse of such person, or any relative\nof such spouse, who has the same home as such person.\n (4) "Beneficial owner", when used with respect to any stock, means a\nperson:\n (A) that, individually or with or through any of its affiliates or\nassociates, beneficially owns such stock, directly or indirectly; or\n (B) that, individually or with or through any of its affiliates or\nassociates, has (i) the right to acquire such stock (whether such right\nis exercisable immediately or only after the passage of time), pursuant\nto any agreement, arrangement or understanding (whether or not in\nwriting), or upon the exercise of conversion rights, exchange rights,\nwarrants or options, or otherwise; provided, however, that a person\nshall not be deemed the beneficial owner of stock tendered pursuant to a\ntender or exchange offer made by such person or any of such person's\naffiliates or associates until such tendered stock is accepted for\npurchase or exchange; or (ii) the right to vote such stock pursuant to\nany agreement, arrangement or understanding (whether or not in writing);\nprovided, however, that a person shall not be deemed the beneficial\nowner of any stock under this item if the agreement, arrangement or\nunderstanding to vote such stock (X) arises solely from a revocable\nproxy or consent given in response to a proxy or consent solicitation\nmade in accordance with the applicable rules and regulations under the\nExchange Act and (Y) is not then reportable on a Schedule 13D under the\nExchange Act (or any comparable or successor report); or\n (C) that has any agreement, arrangement or understanding (whether or\nnot in writing), for the purpose of acquiring, holding, voting (except\nvoting pursuant to a revocable proxy or consent as described in item\n(ii) of clause (B) of this subparagraph), or disposing of such stock\nwith any other person that beneficially owns, or whose affiliates or\nassociates beneficially own, directly or indirectly, such stock.\n (5) "Business combination", when used in reference to any domestic\ncorporation and any interested shareholder of such corporation, means:\n (A) any merger or consolidation of such corporation or any subsidiary\nof such corporation with (i) such interested shareholder or (ii) any\nother corporation (whether or not itself an interested shareholder of\nsuch corporation) which is, or after such merger or consolidation would\nbe, an affiliate or associate of such interested shareholder;\n (B) any sale, lease, exchange, mortgage, pledge, transfer or other\ndisposition (in one transaction or a series of transactions) to or with\nsuch interested shareholder or any affiliate or associate of such\ninterested shareholder of assets of such corporation or any subsidiary\nof such corporation (i) having an aggregate market value equal to ten\npercent or more of the aggregate market value of all the assets,\ndetermined on a consolidated basis, of such corporation, (ii) having an\naggregate market value equal to ten percent or more of the aggregate\nmarket value of all the outstanding stock of such corporation, or (iii)\nrepresenting ten percent or more of the earning power or net income\ndetermined on a consolidated basis, of such corporation;\n (C) the issuance or transfer by such corporation or any subsidiary of\nsuch corporation (in one transaction or a series of transactions) of any\nstock of such corporation or any subsidiary of such corporation which\nhas an aggregate market value equal to five percent or more of the\naggregate market value of all the outstanding stock of such corporation\nto such interested shareholder or any affiliate or associate of such\ninterested shareholder except pursuant to the exercise of warrants or\nrights to purchase stock offered, or a dividend or distribution paid or\nmade, pro rata to all shareholders of such corporation;\n (D) the adoption of any plan or proposal for the liquidation or\ndissolution of such corporation proposed by, or pursuant to any\nagreement, arrangement or understanding (whether or not in writing)\nwith, such interested shareholder or any affiliate or associate of such\ninterested shareholder;\n (E) any reclassification of securities (including, without limitation,\nany stock split, stock dividend, or other distribution of stock in\nrespect of stock, or any reverse stock split), or recapitalization of\nsuch corporation, or any merger or consolidation of such corporation\nwith any subsidiary of such corporation, or any other transaction\n(whether or not with or into or otherwise involving such interested\nshareholder), proposed by, or pursuant to any agreement, arrangement or\nunderstanding (whether or not in writing) with, such interested\nshareholder or any affiliate or associate of such interested\nshareholder, which has the effect, directly or indirectly, of increasing\nthe proportionate share of the outstanding shares of any class or series\nof voting stock or securities convertible into voting stock of such\ncorporation or any subsidiary of such corporation which is directly or\nindirectly owned by such interested shareholder or any affiliate or\nassociate of such interested shareholder, except as a result of\nimmaterial changes due to fractional share adjustments; or\n (F) any receipt by such interested shareholder or any affiliate or\nassociate of such interested shareholder of the benefit, directly or\nindirectly (except proportionately as a shareholder of such corporation)\nof any loans, advances, guarantees, pledges or other financial\nassistance or any tax credits or other tax advantages provided by or\nthrough such corporation.\n (6) "Common stock" means any stock other than preferred stock.\n (7) "Consummation date", with respect to any business combination,\nmeans the date of consummation of such business combination, or, in the\ncase of a business combination as to which a shareholder vote is taken,\nthe later of the business day prior to the vote or twenty days prior to\nthe date of consummation of such business combination.\n (8) "Control", including the terms "controlling", "controlled by" and\n"under common control with", means the possession, directly or\nindirectly, of the power to direct or cause the direction of the\nmanagement and policies of a person, whether through the ownership of\nvoting stock, by contract, or otherwise. A person's beneficial ownership\nof ten percent or more of a corporation's outstanding voting stock shall\ncreate a presumption that such person has control of such corporation.\nNotwithstanding the foregoing, a person shall not be deemed to have\ncontrol of a corporation if such person holds voting stock, in good\nfaith and not for the the purpose of circumventing this section, as an\nagent, bank, broker, nominee, custodian or trustee for one or more\nbeneficial owners who do not individually or as a group have control of\nsuch corporation.\n (9) "Exchange Act" means the Act of Congress known as the Securities\nExchange Act of 1934, as the same has been or hereafter may be amended\nfrom time to time.\n (10) "Interested shareholder", when used in reference to any domestic\ncorporation, means any person (other than such corporation or any\nsubsidiary of such corporation) that\n (A) (i) is the beneficial owner, directly or indirectly, of twenty\npercent or more of the outstanding voting stock of such corporation; or\n (ii) is an affiliate or associate of such corporation and at any time\nwithin the five-year period immediately prior to the date in question\nwas the beneficial owner, directly or indirectly, of twenty percent or\nmore of the then outstanding voting stock of such corporation; provided\nthat\n (B) for the purpose of determining whether a person is an interested\nshareholder, the number of shares of voting stock of such corporation\ndeemed to be outstanding shall include shares deemed to be beneficially\nowned by the person through application of subparagraph four of this\nparagraph but shall not include any other unissued shares of voting\nstock of such corporation which may be issuable pursuant to any\nagreement, arrangement or understanding, or upon exercise of conversion\nrights, warrants or options, or otherwise.\n (11) "Market value", when used in reference to stock or property of\nany domestic corporation, means:\n (A) in the case of stock, the highest closing sale price during the\nthirty-day period immediately preceding the date in question of a share\nof such stock on the composite tape for New York stock exchange-listed\nstocks, or, if such stock is not quoted on such composite tape or if\nsuch stock is not listed on such exchange, on the principal United\nStates securities exchange registered under the Exchange Act on which\nsuch stock is listed, or, if such stock is not listed on any such\nexchange, the highest closing bid quotation with respect to a share of\nsuch stock during the thirty-day period preceding the date in question\non the National Association of Securities Dealers, Inc. Automated\nQuotations System or any system then in use, or if no such quotations\nare available, the fair market value on the date in question of a share\nof such stock as determined by the board of directors of such\ncorporation in good faith; and\n (B) in the case of property other than cash or stock, the fair market\nvalue of such property on the date in question as determined by the\nboard of directors of such corporation in good faith.\n (12) "Preferred stock" means any class or series of stock of a\ndomestic corporation which under the by-laws or certificate of\nincorporation of such corporation is entitled to receive payment of\ndividends prior to any payment of dividends on some other class or\nseries of stock, or is entitled in the event of any voluntary\nliquidation, dissolution or winding up of the corporation to receive\npayment or distribution of a preferential amount before any payments or\ndistributions are received by some other class or series of stock.\n (14) "Stock" means:\n (A) any stock or similar security, any certificate of interest, any\nparticipation in any profit sharing agreement, any voting trust\ncertificate, or any certificate of deposit for stock; and\n (B) any security convertible, with or without consideration, into\nstock, or any warrant, call or other option or privilege of buying stock\nwithout being bound to do so, or any other security carrying any right\nto acquire, subscribe to or purchase stock.\n (15) "Stock acquisition date", with respect to any person and any\ndomestic corporation, means the date that such person first becomes an\ninterested shareholder of such corporation.\n (16) "Subsidiary" of any person means any other corporation of which a\nmajority of the voting stock is owned, directly or indirectly, by such\nperson.\n (17) "Voting stock" means shares of capital stock of a corporation\nentitled to vote generally in the election of directors.\n (b) Notwithstanding anything to the contrary contained in this chapter\n(except the provisions of paragraph (d) of this section), no domestic\ncorporation shall engage in any business combination with any interested\nshareholder of such corporation for a period of five years following\nsuch interested shareholder's stock acquisition date unless such\nbusiness combination or the purchase of stock made by such interested\nshareholder on such interested shareholder's stock acquisition date is\napproved by the board of directors of such corporation prior to such\ninterested shareholder's stock acquisition date. If a good faith\nproposal is made in writing to the board of directors of such\ncorporation regarding a business combination, the board of directors\nshall respond, in writing, within thirty days or such shorter period, if\nany, as may be required by the Exchange Act, setting forth its reasons\nfor its decision regarding such proposal. If a good faith proposal to\npurchase stock is made in writing to the board of directors of such\ncorporation, the board of directors, unless it responds affirmatively in\nwriting within thirty days or such shorter period, if any, as may be\nrequired by the Exchange Act, shall be deemed to have disapproved such\nstock purchase.\n (c) Notwithstanding anything to the contrary contained in this chapter\n(except the provisions of paragraphs (b) and (d) of this section), no\ndomestic corporation shall engage at any time in any business\ncombination with any interested shareholder of such corporation other\nthan a business combination specified in any one of subparagraph (1),\n(2) or (3):\n (1) A business combination approved by the board of directors of such\ncorporation prior to such interested shareholder's stock acquisition\ndate, or where the purchase of stock made by such interested shareholder\non such interested shareholder's stock acquisition date had been\napproved by the board of directors of such corporation prior to such\ninterested shareholder's stock acquisition date.\n (2) A business combination approved by the affirmative vote of the\nholders of a majority of the outstanding voting stock not beneficially\nowned by such interested shareholder or any affiliate or associate of\nsuch interested shareholder at a meeting called for such purpose no\nearlier than five years after such interested shareholder's stock\nacquisition date.\n (3) A business combination that meets all of the following conditions:\n (A) The aggregate amount of the cash and the market value as of the\nconsummation date of consideration other than cash to be received per\nshare by holders of outstanding shares of common stock of such\ncorporation in such business combination is at least equal to the higher\nof the following:\n (i) the highest per share price paid by such interested shareholder at\na time when he was the beneficial owner, directly or indirectly, of five\npercent or more of the outstanding voting stock of such corporation, for\nany shares of common stock of the same class or series acquired by it\n(X) within the five-year period immediately prior to the announcement\ndate with respect to such business combination, or (Y) within the\nfive-year period immediately prior to, or in, the transaction in which\nsuch interested shareholder became an interested shareholder, whichever\nis higher; plus, in either case, interest compounded annually from the\nearliest date on which such highest per share acquisition price was paid\nthrough the consummation date at the rate for one-year United States\ntreasury obligations from time to time in effect; less the aggregate\namount of any cash dividends paid, and the market value of any dividends\npaid other than in cash, per share of common stock since such earliest\ndate, up to the amount of such interest; and\n (ii) the market value per share of common stock on the announcement\ndate with respect to such business combination or on such interested\nshareholder's stock acquisition date, whichever is higher; plus interest\ncompounded annually from such date through the consummation date at the\nrate for one-year United States treasury obligations from time to time\nin effect; less the aggregate amount of any cash dividends paid, and the\nmarket value of any dividends paid other than in cash, per share of\ncommon stock since such date, up to the amount of such interest.\n (B) The aggregate amount of the cash and the market value as of the\nconsummation date of consideration other than cash to be received per\nshare by holders of outstanding shares of any class or series of stock,\nother than common stock, of such corporation is at least equal to the\nhighest of the following (whether or not such interested shareholder has\npreviously acquired any shares of such class or series of stock):\n (i) the highest per share price paid by such interested shareholder at\na time when he was the beneficial owner, directly or indirectly, of five\npercent or more of the outstanding voting stock of such corporation, for\nany shares of such class or series of stock acquired by it (X) within\nthe five-year period immediately prior to the announcement date with\nrespect to such business combination, or (Y) within the five-year period\nimmediately prior to, or in, the transaction in which such interested\nshareholder became an interested shareholder, whichever is higher; plus,\nin either case, interest compounded annually from the earliest date on\nwhich such highest per share acquisition price was paid through the\nconsummation date at the rate for one-year United States treasury\nobligations from time to time in effect; less the aggregate amount of\nany cash dividends paid, and the market value of any dividends paid\nother than in cash, per share of such class or series of stock since\nsuch earliest date, up to the amount of such interest;\n (ii) the highest preferential amount per share to which the holders of\nshares of such class or series of stock are entitled in the event of any\nvoluntary liquidation, dissolution or winding up of such corporation,\nplus the aggregate amount of any dividends declared or due as to which\nsuch holders are entitled prior to payment of dividends on some other\nclass or series of stock (unless the aggregate amount of such dividends\nis included in such preferential amount); and\n (iii) the market value per share of such class or series of stock on\nthe announcement date with respect to such business combination or on\nsuch interested shareholder's stock acquisition date, whichever is\nhigher; plus interest compounded annually from such date through the\nconsummation date at the rate for one-year United States treasury\nobligations from time to time in effect; less the aggregate amount of\nany cash dividends paid, and the market value of any dividends paid\nother than in cash, per share of such class or series of stock since\nsuch date, up to the amount of such interest.\n (C) The consideration to be received by holders of a particular class\nor series of outstanding stock (including common stock) of such\ncorporation in such business combination is in cash or in the same form\nas the interested shareholder has used to acquire the largest number of\nshares of such class or series of stock previously acquired by it, and\nsuch consideration shall be distributed promptly.\n (D) The holders of all outstanding shares of stock of such corporation\nnot beneficially owned by such interested shareholder immediately prior\nto the consummation of such business combination are entitled to receive\nin such business combination cash or other consideration for such shares\nin compliance with clauses (A), (B) and (C) of this subparagraph.\n (E) After such interested shareholder's stock acquisition date and\nprior to the consummation date with respect to such business\ncombination, such interested shareholder has not become the beneficial\nowner of any additional shares of voting stock of such corporation\nexcept:\n (i) as part of the transaction which resulted in such interested\nshareholder becoming an interested shareholder;\n (ii) by virtue of proportionate stock splits, stock dividends or other\ndistributions of stock in respect of stock not constituting a business\ncombination under clause (E) of subparagraph five of paragraph (a) of\nthis section;\n (iii) through a business combination meeting all of the conditions of\nparagraph (b) of this section and this paragraph; or\n (iv) through purchase by such interested shareholder at any price\nwhich, if such price had been paid in an otherwise permissible business\ncombination the announcement date and consummation date of which were\nthe date of such purchase, would have satisfied the requirements of\nclauses (A), (B) and (C) of this subparagraph.\n (d) The provisions of this section shall not apply:\n (1) to any business combination of a domestic corporation that does\nnot have a class of voting stock registered with the Securities and\nExchange Commission pursuant to section twelve of the Exchange Act,\nunless the certificate of incorporation provides otherwise; or\n (2) to any business combination of a domestic corporation whose\ncertificate of incorporation has been amended to provide that such\ncorporation shall be subject to the provisions of this section, which\ndid not have a class of voting stock registered with the Securities and\nExchange Commission pursuant to section twelve of the Exchange Act on\nthe effective date of such amendment, and which is a business\ncombination with an interested shareholder whose stock acquisition date\nis prior to the effective date of such amendment; or\n (3) to any business combination of a domestic corporation (i) the\noriginal certificate of incorporation of which contains a provision\nexpressly electing not to be governed by this section, or (ii) which\nadopts an amendment to such corporation's by-laws prior to March\nthirty-first, nineteen hundred eighty-six, expressly electing not to be\ngoverned by this section, or (iii) which adopts an amendment to such\ncorporation's by-laws, approved by the affirmative vote of a majority of\nvotes of the outstanding voting stock of such corporation, excluding the\nvoting stock of interested shareholders and their affiliates and\nassociates, expressly electing not to be governed by this section,\nprovided that such amendment to the by-laws shall not be effective until\neighteen months after such vote of such corporation's shareholders and\nshall not apply to any business combination of such corporation with an\ninterested shareholder whose stock acquisition date is on or prior to\nthe effective date of such amendment; or\n (4) to any business combination of a domestic corporation with an\ninterested shareholder of such corporation which became an interested\nshareholder inadvertently, if such interested shareholder (i) as soon as\npracticable, divests itself of a sufficient amount of the voting stock\nof such corporation so that it no longer is the beneficial owner,\ndirectly or indirectly, of twenty percent or more of the outstanding\nvoting stock of such corporation, and (ii) would not at any time within\nthe five-year period preceding the announcement date with respect to\nsuch business combination have been an interested shareholder but for\nsuch inadvertent acquisition; or\n (5) to any business combination with an interested shareholder who was\nthe beneficial owner, directly or indirectly, of five percent or more of\nthe outstanding voting stock of such corporation on October thirtieth,\nnineteen hundred eighty-five, and remained so to such interested\nshareholder's stock acquisition date.\n