N.Y. Business Corporation Law § 912: Requirements relating to certain business combinations

§ 912. Requirements relating to certain business combinations.

(a) For the purposes of this section:

(1) "Affiliate" means a person that directly, or indirectly through

one or more intermediaries, controls, or is controlled by, or is under

common control with, a specified person.

(2) "Announcement date", when used in reference to any business

combination, means the date of the first public announcement of the

final, definitive proposal for such business combination.

(3) "Associate", when used to indicate a relationship with any person,

means (A) any corporation or organization of which such person is an

officer or partner or is, directly or indirectly, the beneficial owner

of ten percent or more of any class of voting stock, (B) any trust or

other estate in which such person has a substantial beneficial interest

or as to which such person serves as trustee or in a similar fiduciary

capacity, and (C) any relative or spouse of such person, or any relative

of such spouse, who has the same home as such person.

(4) "Beneficial owner", when used with respect to any stock, means a

person:

(A) that, individually or with or through any of its affiliates or

associates, beneficially owns such stock, directly or indirectly; or

(B) that, individually or with or through any of its affiliates or

associates, has (i) the right to acquire such stock (whether such right

is exercisable immediately or only after the passage of time), pursuant

to any agreement, arrangement or understanding (whether or not in

writing), or upon the exercise of conversion rights, exchange rights,

warrants or options, or otherwise; provided, however, that a person

shall not be deemed the beneficial owner of stock tendered pursuant to a

tender or exchange offer made by such person or any of such person's

affiliates or associates until such tendered stock is accepted for

purchase or exchange; or (ii) the right to vote such stock pursuant to

any agreement, arrangement or understanding (whether or not in writing);

provided, however, that a person shall not be deemed the beneficial

owner of any stock under this item if the agreement, arrangement or

understanding to vote such stock (X) arises solely from a revocable

proxy or consent given in response to a proxy or consent solicitation

made in accordance with the applicable rules and regulations under the

Exchange Act and (Y) is not then reportable on a Schedule 13D under the

Exchange Act (or any comparable or successor report); or

(C) that has any agreement, arrangement or understanding (whether or

not in writing), for the purpose of acquiring, holding, voting (except

voting pursuant to a revocable proxy or consent as described in item

(ii) of clause (B) of this subparagraph), or disposing of such stock

with any other person that beneficially owns, or whose affiliates or

associates beneficially own, directly or indirectly, such stock.

(5) "Business combination", when used in reference to any domestic

corporation and any interested shareholder of such corporation, means:

(A) any merger or consolidation of such corporation or any subsidiary

of such corporation with (i) such interested shareholder or (ii) any

other corporation (whether or not itself an interested shareholder of

such corporation) which is, or after such merger or consolidation would

be, an affiliate or associate of such interested shareholder;

(B) any sale, lease, exchange, mortgage, pledge, transfer or other

disposition (in one transaction or a series of transactions) to or with

such interested shareholder or any affiliate or associate of such

interested shareholder of assets of such corporation or any subsidiary

of such corporation (i) having an aggregate market value equal to ten

percent or more of the aggregate market value of all the assets,

determined on a consolidated basis, of such corporation, (ii) having an

aggregate market value equal to ten percent or more of the aggregate

market value of all the outstanding stock of such corporation, or (iii)

representing ten percent or more of the earning power or net income

determined on a consolidated basis, of such corporation;

(C) the issuance or transfer by such corporation or any subsidiary of

such corporation (in one transaction or a series of transactions) of any

stock of such corporation or any subsidiary of such corporation which

has an aggregate market value equal to five percent or more of the

aggregate market value of all the outstanding stock of such corporation

to such interested shareholder or any affiliate or associate of such

interested shareholder except pursuant to the exercise of warrants or

rights to purchase stock offered, or a dividend or distribution paid or

made, pro rata to all shareholders of such corporation;

(D) the adoption of any plan or proposal for the liquidation or

dissolution of such corporation proposed by, or pursuant to any

agreement, arrangement or understanding (whether or not in writing)

with, such interested shareholder or any affiliate or associate of such

interested shareholder;

(E) any reclassification of securities (including, without limitation,

any stock split, stock dividend, or other distribution of stock in

respect of stock, or any reverse stock split), or recapitalization of

such corporation, or any merger or consolidation of such corporation

with any subsidiary of such corporation, or any other transaction

(whether or not with or into or otherwise involving such interested

shareholder), proposed by, or pursuant to any agreement, arrangement or

understanding (whether or not in writing) with, such interested

shareholder or any affiliate or associate of such interested

shareholder, which has the effect, directly or indirectly, of increasing

the proportionate share of the outstanding shares of any class or series

of voting stock or securities convertible into voting stock of such

corporation or any subsidiary of such corporation which is directly or

indirectly owned by such interested shareholder or any affiliate or

associate of such interested shareholder, except as a result of

immaterial changes due to fractional share adjustments; or

(F) any receipt by such interested shareholder or any affiliate or

associate of such interested shareholder of the benefit, directly or

indirectly (except proportionately as a shareholder of such corporation)

of any loans, advances, guarantees, pledges or other financial

assistance or any tax credits or other tax advantages provided by or

through such corporation.

(6) "Common stock" means any stock other than preferred stock.

(7) "Consummation date", with respect to any business combination,

means the date of consummation of such business combination, or, in the

case of a business combination as to which a shareholder vote is taken,

the later of the business day prior to the vote or twenty days prior to

the date of consummation of such business combination.

(8) "Control", including the terms "controlling", "controlled by" and

"under common control with", means the possession, directly or

indirectly, of the power to direct or cause the direction of the

management and policies of a person, whether through the ownership of

voting stock, by contract, or otherwise. A person's beneficial ownership

of ten percent or more of a corporation's outstanding voting stock shall

create a presumption that such person has control of such corporation.

Notwithstanding the foregoing, a person shall not be deemed to have

control of a corporation if such person holds voting stock, in good

faith and not for the the purpose of circumventing this section, as an

agent, bank, broker, nominee, custodian or trustee for one or more

beneficial owners who do not individually or as a group have control of

such corporation.

(9) "Exchange Act" means the Act of Congress known as the Securities

Exchange Act of 1934, as the same has been or hereafter may be amended

from time to time.

(10) "Interested shareholder", when used in reference to any domestic

corporation, means any person (other than such corporation or any

subsidiary of such corporation) that

(A) (i) is the beneficial owner, directly or indirectly, of twenty

percent or more of the outstanding voting stock of such corporation; or

(ii) is an affiliate or associate of such corporation and at any time

within the five-year period immediately prior to the date in question

was the beneficial owner, directly or indirectly, of twenty percent or

more of the then outstanding voting stock of such corporation; provided

that

(B) for the purpose of determining whether a person is an interested

shareholder, the number of shares of voting stock of such corporation

deemed to be outstanding shall include shares deemed to be beneficially

owned by the person through application of subparagraph four of this

paragraph but shall not include any other unissued shares of voting

stock of such corporation which may be issuable pursuant to any

agreement, arrangement or understanding, or upon exercise of conversion

rights, warrants or options, or otherwise.

(11) "Market value", when used in reference to stock or property of

any domestic corporation, means:

(A) in the case of stock, the highest closing sale price during the

thirty-day period immediately preceding the date in question of a share

of such stock on the composite tape for New York stock exchange-listed

stocks, or, if such stock is not quoted on such composite tape or if

such stock is not listed on such exchange, on the principal United

States securities exchange registered under the Exchange Act on which

such stock is listed, or, if such stock is not listed on any such

exchange, the highest closing bid quotation with respect to a share of

such stock during the thirty-day period preceding the date in question

on the National Association of Securities Dealers, Inc. Automated

Quotations System or any system then in use, or if no such quotations

are available, the fair market value on the date in question of a share

of such stock as determined by the board of directors of such

corporation in good faith; and

(B) in the case of property other than cash or stock, the fair market

value of such property on the date in question as determined by the

board of directors of such corporation in good faith.

(12) "Preferred stock" means any class or series of stock of a

domestic corporation which under the by-laws or certificate of

incorporation of such corporation is entitled to receive payment of

dividends prior to any payment of dividends on some other class or

series of stock, or is entitled in the event of any voluntary

liquidation, dissolution or winding up of the corporation to receive

payment or distribution of a preferential amount before any payments or

distributions are received by some other class or series of stock.

(14) "Stock" means:

(A) any stock or similar security, any certificate of interest, any

participation in any profit sharing agreement, any voting trust

certificate, or any certificate of deposit for stock; and

(B) any security convertible, with or without consideration, into

stock, or any warrant, call or other option or privilege of buying stock

without being bound to do so, or any other security carrying any right

to acquire, subscribe to or purchase stock.

(15) "Stock acquisition date", with respect to any person and any

domestic corporation, means the date that such person first becomes an

interested shareholder of such corporation.

(16) "Subsidiary" of any person means any other corporation of which a

majority of the voting stock is owned, directly or indirectly, by such

person.

(17) "Voting stock" means shares of capital stock of a corporation

entitled to vote generally in the election of directors.

(b) Notwithstanding anything to the contrary contained in this chapter

(except the provisions of paragraph (d) of this section), no domestic

corporation shall engage in any business combination with any interested

shareholder of such corporation for a period of five years following

such interested shareholder's stock acquisition date unless such

business combination or the purchase of stock made by such interested

shareholder on such interested shareholder's stock acquisition date is

approved by the board of directors of such corporation prior to such

interested shareholder's stock acquisition date. If a good faith

proposal is made in writing to the board of directors of such

corporation regarding a business combination, the board of directors

shall respond, in writing, within thirty days or such shorter period, if

any, as may be required by the Exchange Act, setting forth its reasons

for its decision regarding such proposal. If a good faith proposal to

purchase stock is made in writing to the board of directors of such

corporation, the board of directors, unless it responds affirmatively in

writing within thirty days or such shorter period, if any, as may be

required by the Exchange Act, shall be deemed to have disapproved such

stock purchase.

(c) Notwithstanding anything to the contrary contained in this chapter

(except the provisions of paragraphs (b) and (d) of this section), no

domestic corporation shall engage at any time in any business

combination with any interested shareholder of such corporation other

than a business combination specified in any one of subparagraph (1),

(2) or (3):

(1) A business combination approved by the board of directors of such

corporation prior to such interested shareholder's stock acquisition

date, or where the purchase of stock made by such interested shareholder

on such interested shareholder's stock acquisition date had been

approved by the board of directors of such corporation prior to such

interested shareholder's stock acquisition date.

(2) A business combination approved by the affirmative vote of the

holders of a majority of the outstanding voting stock not beneficially

owned by such interested shareholder or any affiliate or associate of

such interested shareholder at a meeting called for such purpose no

earlier than five years after such interested shareholder's stock

acquisition date.

(3) A business combination that meets all of the following conditions:

(A) The aggregate amount of the cash and the market value as of the

consummation date of consideration other than cash to be received per

share by holders of outstanding shares of common stock of such

corporation in such business combination is at least equal to the higher

of the following:

(i) the highest per share price paid by such interested shareholder at

a time when he was the beneficial owner, directly or indirectly, of five

percent or more of the outstanding voting stock of such corporation, for

any shares of common stock of the same class or series acquired by it

(X) within the five-year period immediately prior to the announcement

date with respect to such business combination, or (Y) within the

five-year period immediately prior to, or in, the transaction in which

such interested shareholder became an interested shareholder, whichever

is higher; plus, in either case, interest compounded annually from the

earliest date on which such highest per share acquisition price was paid

through the consummation date at the rate for one-year United States

treasury obligations from time to time in effect; less the aggregate

amount of any cash dividends paid, and the market value of any dividends

paid other than in cash, per share of common stock since such earliest

date, up to the amount of such interest; and

(ii) the market value per share of common stock on the announcement

date with respect to such business combination or on such interested

shareholder's stock acquisition date, whichever is higher; plus interest

compounded annually from such date through the consummation date at the

rate for one-year United States treasury obligations from time to time

in effect; less the aggregate amount of any cash dividends paid, and the

market value of any dividends paid other than in cash, per share of

common stock since such date, up to the amount of such interest.

(B) The aggregate amount of the cash and the market value as of the

consummation date of consideration other than cash to be received per

share by holders of outstanding shares of any class or series of stock,

other than common stock, of such corporation is at least equal to the

highest of the following (whether or not such interested shareholder has

previously acquired any shares of such class or series of stock):

(i) the highest per share price paid by such interested shareholder at

a time when he was the beneficial owner, directly or indirectly, of five

percent or more of the outstanding voting stock of such corporation, for

any shares of such class or series of stock acquired by it (X) within

the five-year period immediately prior to the announcement date with

respect to such business combination, or (Y) within the five-year period

immediately prior to, or in, the transaction in which such interested

shareholder became an interested shareholder, whichever is higher; plus,

in either case, interest compounded annually from the earliest date on

which such highest per share acquisition price was paid through the

consummation date at the rate for one-year United States treasury

obligations from time to time in effect; less the aggregate amount of

any cash dividends paid, and the market value of any dividends paid

other than in cash, per share of such class or series of stock since

such earliest date, up to the amount of such interest;

(ii) the highest preferential amount per share to which the holders of

shares of such class or series of stock are entitled in the event of any

voluntary liquidation, dissolution or winding up of such corporation,

plus the aggregate amount of any dividends declared or due as to which

such holders are entitled prior to payment of dividends on some other

class or series of stock (unless the aggregate amount of such dividends

is included in such preferential amount); and

(iii) the market value per share of such class or series of stock on

the announcement date with respect to such business combination or on

such interested shareholder's stock acquisition date, whichever is

higher; plus interest compounded annually from such date through the

consummation date at the rate for one-year United States treasury

obligations from time to time in effect; less the aggregate amount of

any cash dividends paid, and the market value of any dividends paid

other than in cash, per share of such class or series of stock since

such date, up to the amount of such interest.

(C) The consideration to be received by holders of a particular class

or series of outstanding stock (including common stock) of such

corporation in such business combination is in cash or in the same form

as the interested shareholder has used to acquire the largest number of

shares of such class or series of stock previously acquired by it, and

such consideration shall be distributed promptly.

(D) The holders of all outstanding shares of stock of such corporation

not beneficially owned by such interested shareholder immediately prior

to the consummation of such business combination are entitled to receive

in such business combination cash or other consideration for such shares

in compliance with clauses (A), (B) and (C) of this subparagraph.

(E) After such interested shareholder's stock acquisition date and

prior to the consummation date with respect to such business

combination, such interested shareholder has not become the beneficial

owner of any additional shares of voting stock of such corporation

except:

(i) as part of the transaction which resulted in such interested

shareholder becoming an interested shareholder;

(ii) by virtue of proportionate stock splits, stock dividends or other

distributions of stock in respect of stock not constituting a business

combination under clause (E) of subparagraph five of paragraph (a) of

this section;

(iii) through a business combination meeting all of the conditions of

paragraph (b) of this section and this paragraph; or

(iv) through purchase by such interested shareholder at any price

which, if such price had been paid in an otherwise permissible business

combination the announcement date and consummation date of which were

the date of such purchase, would have satisfied the requirements of

clauses (A), (B) and (C) of this subparagraph.

(d) The provisions of this section shall not apply:

(1) to any business combination of a domestic corporation that does

not have a class of voting stock registered with the Securities and

Exchange Commission pursuant to section twelve of the Exchange Act,

unless the certificate of incorporation provides otherwise; or

(2) to any business combination of a domestic corporation whose

certificate of incorporation has been amended to provide that such

corporation shall be subject to the provisions of this section, which

did not have a class of voting stock registered with the Securities and

Exchange Commission pursuant to section twelve of the Exchange Act on

the effective date of such amendment, and which is a business

combination with an interested shareholder whose stock acquisition date

is prior to the effective date of such amendment; or

(3) to any business combination of a domestic corporation (i) the

original certificate of incorporation of which contains a provision

expressly electing not to be governed by this section, or (ii) which

adopts an amendment to such corporation's by-laws prior to March

thirty-first, nineteen hundred eighty-six, expressly electing not to be

governed by this section, or (iii) which adopts an amendment to such

corporation's by-laws, approved by the affirmative vote of a majority of

votes of the outstanding voting stock of such corporation, excluding the

voting stock of interested shareholders and their affiliates and

associates, expressly electing not to be governed by this section,

provided that such amendment to the by-laws shall not be effective until

eighteen months after such vote of such corporation's shareholders and

shall not apply to any business combination of such corporation with an

interested shareholder whose stock acquisition date is on or prior to

the effective date of such amendment; or

(4) to any business combination of a domestic corporation with an

interested shareholder of such corporation which became an interested

shareholder inadvertently, if such interested shareholder (i) as soon as

practicable, divests itself of a sufficient amount of the voting stock

of such corporation so that it no longer is the beneficial owner,

directly or indirectly, of twenty percent or more of the outstanding

voting stock of such corporation, and (ii) would not at any time within

the five-year period preceding the announcement date with respect to

such business combination have been an interested shareholder but for

such inadvertent acquisition; or

(5) to any business combination with an interested shareholder who was

the beneficial owner, directly or indirectly, of five percent or more of

the outstanding voting stock of such corporation on October thirtieth,

nineteen hundred eighty-five, and remained so to such interested

shareholder's stock acquisition date.