§ 251.

Merger or consolidation of domestic corporations

(a) Any 2 or more corporations of this State may merge into a single surviving corporation, which may be
any 1 of the constituent corporations or may consolidate into a new resulting corporation formed by the
consolidation, pursuant to an agreement of merger or consolidation, as the case may be, complying and
approved in accordance with this section.

(b) The board of directors of each corporation which desires to merge or consolidate shall adopt a
resolution approving an agreement of merger or consolidation and declaring its advisability. The agreement
shall state:

(1) The terms and conditions of the merger or consolidation;

(2) The mode of carrying the same into effect;
(3) In the case of a merger, such amendments or changes in the certificate of incorporation of the
surviving corporation as are desired to be effected by the merger (which amendments or
changes may amend and restate the certificate of incorporation of the surviving corporation
in its entirety), or, if no such amendments or changes are desired, a statement that the
certificate of incorporation of the surviving corporation shall be its certificate of incorporation;
(4) In the case of a consolidation, that the certificate of incorporation of the resulting corporation
shall be as is set forth in an attachment to the agreement;
(5) The manner, if any, of converting the shares of each of the constituent corporations into
shares or other securities of the corporation surviving or resulting from the merger or
consolidation, or of cancelling some or all of such shares, and, if any shares of any of the
constituent corporations are not to remain outstanding, to be converted solely into shares or
other securities of the surviving or resulting corporation or to be cancelled, the cash, property,
rights or securities of any other corporation or entity which the holders of such shares are to
receive in exchange for, or upon conversion of such shares and the surrender of any
certificates evidencing them, which cash, property, rights or securities of any other
corporation or entity may be in addition to or in lieu of shares or other securities of the
surviving or resulting corporation; and
(6) Such other details or provisions as are deemed desirable, including, without limiting the
generality of the foregoing, a provision for the payment of cash in lieu of the issuance or
recognition of fractional shares, rights or other securities of the surviving or resulting
corporation or of any other corporation or entity the shares, rights or other securities of which
are to be received in the merger or consolidation, or for any other arrangement with respect
thereto, consistent with § 155 of this title.

The agreement so adopted shall be executed and acknowledged in accordance with § 103 of this title. Any
of the terms of the agreement of merger or consolidation may be made dependent upon facts
ascertainable outside of such agreement, provided that the manner in which such facts shall operate upon
the terms of the agreement is clearly and expressly set forth in the agreement of merger or consolidation.
The term “facts,” as used in the preceding sentence, includes, but is not limited to, the occurrence of any
event, including a determination or action by any person or body, including the corporation.

(c) The agreement required by subsection (b) of this section shall be submitted to the stockholders of each
constituent corporation at an annual or special meeting for the purpose of acting on the agreement. Due
notice of the time, place and purpose of the meeting shall be mailed to each holder of stock, whether voting

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or nonvoting, of the corporation at the stockholder's address as it appears on the records of the
corporation, at least 20 days prior to the date of the meeting. The notice shall contain a copy of the
agreement or a brief summary thereof. At the meeting, the agreement shall be considered and a vote taken
for its adoption or rejection. If a majority of the outstanding stock of the corporation entitled to vote
thereon shall be voted for the adoption of the agreement, that fact shall be certified on the agreement by
the secretary or assistant secretary of the corporation, provided that such certification on the agreement
shall not be required if a certificate of merger or consolidation is filed in lieu of filing the agreement. If the
agreement shall be so adopted and certified by each constituent corporation, it shall then be filed and shall
become effective, in accordance with § 103 of this title. In lieu of filing the agreement of merger or
consolidation required by this section, the surviving or resulting corporation may file a certificate of merger
or consolidation, executed in accordance with § 103 of this title, which states:

(1) The name and state of incorporation of each of the constituent corporations;
(2) That an agreement of merger or consolidation has been approved, adopted, executed and
acknowledged by each of the constituent corporations in accordance with this section;
(3) The name of the surviving or resulting corporation;
(4) In the case of a merger, such amendments or changes in the certificate of incorporation of the
surviving corporation as are desired to be effected by the merger (which amendments or
changes may amend and restate the certificate of incorporation of the surviving corporation
in its entirety), or, if no such amendments or changes are desired, a statement that the
certificate of incorporation of the surviving corporation shall be its certificate of incorporation;
(5) In the case of a consolidation, that the certificate of incorporation of the resulting corporation
shall be as set forth in an attachment to the certificate;
(6) That the executed agreement of consolidation or merger is on file at an office of the surviving
or resulting corporation, stating the address thereof; and
(7) That a copy of the agreement of consolidation or merger will be furnished by the surviving or
resulting corporation, on request and without cost, to any stockholder of any constituent
corporation.
(d) Any agreement of merger or consolidation may contain a provision that at any time prior to the time
that the agreement (or a certificate in lieu thereof) filed with the Secretary of State becomes effective in
accordance with § 103 of this title, the agreement may be terminated by the board of directors of any
constituent corporation notwithstanding approval of the agreement by the stockholders of all or any of the
constituent corporations; in the event the agreement of merger or consolidation is terminated after the
filing of the agreement (or a certificate in lieu thereof) with the Secretary of State but before the agreement
(or a certificate in lieu thereof) has become effective, a certificate of termination or merger or consolidation
shall be filed in accordance with § 103 of this title. Any agreement of merger or consolidation may contain
a provision that the boards of directors of the constituent corporations may amend the agreement at any
time prior to the time that the agreement (or a certificate in lieu thereof) filed with the Secretary of State
becomes effective in accordance with § 103 of this title, provided that an amendment made subsequent
to the adoption of the agreement by the stockholders of any constituent corporation shall not (1) alter or
change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange
for or on conversion of all or any of the shares of any class or series thereof of such constituent corporation,
(2) alter or change any term of the certificate of incorporation of the surviving corporation to be effected
by the merger or consolidation, or (3) alter or change any of the terms and conditions of the agreement if
such alteration or change would adversely affect the holders of any class or series thereof of such
constituent corporation; in the event the agreement of merger or consolidation is amended after the filing
thereof with the Secretary of State but before the agreement has become effective, a certificate of
amendment of merger or consolidation shall be filed in accordance with § 103 of this title.

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(e) In the case of a merger, the certificate of incorporation of the surviving corporation shall automatically
be amended to the extent, if any, that changes in the certificate of incorporation are set forth in the
agreement of merger.
(f) Notwithstanding the requirements of subsection (c) of this section, unless required by its certificate of
incorporation, no vote of stockholders of a constituent corporation surviving a merger shall be necessary
to authorize a merger if (1) the agreement of merger does not amend in any respect the certificate of
incorporation of such constituent corporation, (2) each share of stock of such constituent corporation
outstanding immediately prior to the effective date of the merger is to be an identical outstanding or
treasury share of the surviving corporation after the effective date of the merger, and (3) either no shares
of common stock of the surviving corporation and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or delivered under the plan of
merger plus those initially issuable upon conversion of any other shares, securities or obligations to be
issued or delivered under such plan do not exceed 20% of the shares of common stock of such constituent
corporation outstanding immediately prior to the effective date of the merger. No vote of stockholders of
a constituent corporation shall be necessary to authorize a merger or consolidation if no shares of the stock
of such corporation shall have been issued prior to the adoption by the board of directors of the resolution
approving the agreement of merger or consolidation. If an agreement of merger is adopted by the
constituent corporation surviving the merger, by action of its board of directors and without any vote of its
stockholders pursuant to this subsection, the secretary or assistant secretary of that corporation shall
certify on the agreement that the agreement has been adopted pursuant to this subsection and, (1) if it
has been adopted pursuant to the first sentence of this subsection, that the conditions specified in that
sentence have been satisfied, or (2) if it has been adopted pursuant to the second sentence of this
subsection, that no shares of stock of such corporation were issued prior to the adoption by the board of
directors of the resolution approving the agreement of merger or consolidation, provided that such
certification on the agreement shall not be required if a certificate of merger or consolidation is filed in lieu
of filing the agreement. The agreement so adopted and certified shall then be filed and shall become
effective, in accordance with § 103 of this title. Such filing shall constitute a representation by the person
who executes the agreement that the facts stated in the certificate remain true immediately prior to such
filing.
(g) Notwithstanding the requirements of subsection (c) of this section, unless expressly required by its
certificate of incorporation, no vote of stockholders of a constituent corporation shall be necessary to
authorize a merger with or into a single direct or indirect wholly-owned subsidiary of such constituent
corporation if: (1) such constituent corporation and the direct or indirect wholly-owned subsidiary of such
constituent corporation are the only constituent entities to the merger; (2) each share or fraction of a share
of the capital stock of the constituent corporation outstanding immediately prior to the effective time of
the merger is converted in the merger into a share or equal fraction of share of capital stock of a holding
company having the same designations, rights, powers and preferences, and the qualifications, limitations
and restrictions thereof, as the share of stock of the constituent corporation being converted in the merger;
(3) the holding company and the constituent corporation are corporations of this State and the direct or
indirect wholly-owned subsidiary that is the other constituent entity to the merger is a corporation or
limited liability company of this State; (4) the certificate of incorporation and by-laws of the holding
company immediately following the effective time of the merger contain provisions identical to the
certificate of incorporation and by-laws of the constituent corporation immediately prior to the effective
time of the merger (other than provisions, if any, regarding the incorporator or incorporators, the corporate
name, the registered office and agent, the initial board of directors and the initial subscribers for shares
and such provisions contained in any amendment to the certificate of incorporation as were necessary to
effect a change, exchange, reclassification, subdivision, combination or cancellation of stock, if such

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change, exchange, reclassification, subdivision, combination, or cancellation has become effective); (5) as
a result of the merger the constituent corporation or its successor becomes or remains a direct or indirect
wholly-owned subsidiary of the holding company; (6) the directors of the constituent corporation become
or remain the directors of the holding company upon the effective time of the merger; (7) the
organizational documents of the surviving entity immediately following the effective time of the merger
contain provisions identical to the certificate of incorporation of the constituent corporation immediately
prior to the effective time of the merger (other than provisions, if any, regarding the incorporator or
incorporators, the corporate or entity name, the registered office and agent, the initial board of directors
and the initial subscribers for shares, references to members rather than stockholders or shareholders,
references to interests, units or the like rather than stock or shares, references to managers, managing
members or other members of the governing body rather than directors and such provisions contained in
any amendment to the certificate of incorporation as were necessary to effect a change, exchange,
reclassification, subdivision, combination or cancellation of stock, if such change, exchange, reclassification,
subdivision, combination or cancellation has become effective); provided, however, that (i) if the
organizational documents of the surviving entity do not contain the following provisions, they shall be
amended in the merger to contain provisions requiring that (A) any act or transaction by or involving the
surviving entity, other than the election or removal of directors or managers, managing members or other
members of the governing body of the surviving entity, that requires for its adoption under this chapter or
its organizational documents the approval of the stockholders or members of the surviving entity shall, by
specific reference to this subsection, require, in addition, the approval of the stockholders of the holding
company (or any successor by merger), by the same vote as is required by this chapter and/or by the
organizational documents of the surviving entity; provided, however, that for purposes of this clause (i)(A),
any surviving entity that is not a corporation shall include in such amendment a requirement that the
approval of the stockholders of the holding company be obtained for any act or transaction by or involving
the surviving entity, other than the election or removal of directors or managers, managing members or
other members of the governing body of the surviving entity, which would require the approval of the
stockholders of the surviving entity if the surviving entity were a corporation subject to this chapter; (B)
any amendment of the organizational documents of a surviving entity that is not a corporation, which
amendment would, if adopted by a corporation subject to this chapter, be required to be included in the
certificate of incorporation of such corporation, shall, by specific reference to this subsection, require, in
addition, the approval of the stockholders of the holding company (or any successor by merger), by the
same vote as is required by this chapter and/or by the organizational documents of the surviving entity;
and (C) the business and affairs of a surviving entity that is not a corporation shall be managed by or under
the direction of a board of directors, board of managers or other governing body consisting of individuals
who are subject to the same fiduciary duties applicable to, and who are liable for breach of such duties to
the same extent as, directors of a corporation subject to this chapter; and (ii) the organizational documents
of the surviving entity may be amended in the merger (A) to reduce the number of classes and shares of
capital stock or other equity interests or units that the surviving entity is authorized to issue and (B) to
eliminate any provision authorized by § 141(d) of this title; and (8) the stockholders of the constituent
corporation do not recognize gain or loss for United States federal income tax purposes as determined by
the board of directors of the constituent corporation. Neither paragraph (g)(7)(i) of this section nor any
provision of a surviving entity's organizational documents required by paragraph (g)(7)(i) of this section
shall be deemed or construed to require approval of the stockholders of the holding company to elect or
remove directors or managers, managing members or other members of the governing body of the
surviving entity. The term “organizational documents”, as used in paragraph (g)(7) of this section and in the
preceding sentence, shall, when used in reference to a corporation, mean the certificate of incorporation
of such corporation, and when used in reference to a limited liability company, mean the limited liability
company agreement of such limited liability company.

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As used in this subsection only, the term “holding company” means a corporation which, from its
incorporation until consummation of a merger governed by this subsection, was at all times a direct or
indirect wholly-owned subsidiary of the constituent corporation and whose capital stock is issued in such
merger. From and after the effective time of a merger adopted by a constituent corporation by action of
its board of directors and without any vote of stockholders pursuant to this subsection: (i) to the extent the
restrictions of § 203 of this title applied to the constituent corporation and its stockholders at the effective
time of the merger, such restrictions shall apply to the holding company and its stockholders immediately
after the effective time of the merger as though it were the constituent corporation, and all shares of stock
of the holding company acquired in the merger shall for purposes of § 203 of this title be deemed to have
been acquired at the time that the shares of stock of the constituent corporation converted in the merger
were acquired, and provided further that any stockholder who immediately prior to the effective time of
the merger was not an interested stockholder within the meaning of § 203 of this title shall not solely by
reason of the merger become an interested stockholder of the holding company, (ii) if the corporate name
of the holding company immediately following the effective time of the merger is the same as the corporate
name of the constituent corporation immediately prior to the effective time of the merger, the shares of
capital stock of the holding company into which the shares of capital stock of the constituent corporation
are converted in the merger shall be represented by the stock certificates that previously represented
shares of capital stock of the constituent corporation and (iii) to the extent a stockholder of the constituent
corporation immediately prior to the merger had standing to institute or maintain derivative litigation on
behalf of the constituent corporation, nothing in this section shall be deemed to limit or extinguish such
standing. If an agreement of merger is adopted by a constituent corporation by action of its board of
directors and without any vote of stockholders pursuant to this subsection, the secretary or assistant
secretary of the constituent corporation shall certify on the agreement that the agreement has been
adopted pursuant to this subsection and that the conditions specified in the first sentence of this subsection
have been satisfied, provided that such certification on the agreement shall not be required if a certificate
of merger or consolidation is filed in lieu of filing the agreement. The agreement so adopted and certified
shall then be filed and become effective, in accordance with § 103 of this title. Such filing shall constitute a
representation by the person who executes the agreement that the facts stated in the certificate remain
true immediately prior to such filing.
<For applicability of subsection (h), see 79 Laws 2014, ch. 327, § 8.>
(h) Notwithstanding the requirements of subsection (c) of this section, unless expressly required by its
certificate of incorporation, no vote of stockholders of a constituent corporation that has a class or series
of stock that is listed on a national securities exchange or held of record by more than 2,000 holders
immediately prior to the execution of the agreement of merger by such constituent corporation shall be
necessary to authorize a merger if:
(1) The agreement of merger expressly:
a. Permits or requires such merger to be effected under this subsection; and
b. Provides that such merger shall be effected as soon as practicable following the consummation of the
offer referred to in paragraph (h)(2) of this section if such merger is effected under this subsection;
(2) A corporation consummates an offer for all of the outstanding stock of such constituent corporation on
the terms provided in such agreement of merger that, absent this subsection, would be entitled to vote on
the adoption or rejection of the agreement of merger; provided, however, that such offer may be
conditioned on the tender of a minimum number or percentage of shares of the stock of such constituent
corporation, or of any class or series thereof, and such offer may exclude any excluded stock and provided
further that the corporation may consummate separate offers for separate classes or series of the stock of
such constituent corporation;
(3) Immediately following the consummation of the offer referred to in paragraph (h)(2) of this section, the
stock irrevocably accepted for purchase or exchange pursuant to such offer and received by the depository

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prior to expiration of such offer, together with the stock otherwise owned by the consummating
corporation or its affiliates and any rollover stock, equals at least such percentage of the shares of stock of
such constituent corporation, and of each class or series thereof, that, absent this subsection, would be
required to adopt the agreement of merger by this chapter and by the certificate of incorporation of such
constituent corporation;
(4) The corporation consummating the offer referred to in paragraph (h)(2) of this section merges with or
into such constituent corporation pursuant to such agreement; and
(5) Each outstanding share (other than shares of excluded stock) of each class or series of stock of such
constituent corporation that is the subject of and is not irrevocably accepted for purchase or exchange in
the offer referred to in paragraph (h)(2) of this section is to be converted in such merger into, or into the
right to receive, the same amount and kind of cash, property, rights or securities to be paid for shares of
such class or series of stock of such constituent corporation irrevocably accepted for purchase or exchange
in such offer.
(6) As used in this section only, the term:
a. “Affiliate” means, in respect of the corporation making the offer referred to in paragraph (h)(2) of this
section, any person that (i) owns, directly or indirectly, all of the outstanding stock of such corporation or
(ii) is a direct or indirect wholly-owned subsidiary of such corporation or of any person referred to in clause
(i) of this definition;
b. “Consummates” (and with correlative meaning, “consummation” and “consummating”) means
irrevocably accepts for purchase or exchange stock tendered pursuant to an offer;
c. “Depository” means an agent, including a depository, appointed to facilitate consummation of the offer
referred to in paragraph (h)(2) of this section;
d. “Excluded stock” means (i) stock of such constituent corporation that is owned at the commencement
of the offer referred to in paragraph (h)(2) of this section by such constituent corporation, the corporation
making the offer referred to in paragraph (h)(2) of this section, any person that owns, directly or indirectly,
all of the outstanding stock of the corporation making such offer, or any direct or indirect wholly-owned
subsidiary of any of the foregoing and (ii) rollover stock;
e. “Person” means any individual, corporation, partnership, limited liability company, unincorporated
association or other entity;
f. “Received” (solely for purposes of paragraph (h)(3) of this section) means (a) with respect to certificated
shares, physical receipt of a stock certificate accompanied by an executed letter of transmittal, (b) with
respect to uncertificated shares held of record by a clearing corporation as nominee, transfer into the
depository's account by means of an agent's message, and (c) with respect to uncertificated shares held of
record by a person other than a clearing corporation as nominee, physical receipt of an executed letter of
transmittal by the depository; provided, however, that shares shall cease to be “received” (i) with respect
to certificated shares, if the certificate representing such shares was canceled prior to consummation of
the offer referred to in paragraph (h)(2) of this section, or (ii) with respect to uncertificated shares, to the
extent such uncertificated shares have been reduced or eliminated due to any sale of such shares prior to
consummation of the offer referred to in paragraph (h)(2) of this section; and
g. “Rollover stock” means any shares of stock of such constituent corporation that are the subject of a
written agreement requiring such shares to be transferred, contributed or delivered to the consummating
corporation or any of its affiliates in exchange for stock or other equity interests in such consummating
corporation or an affiliate thereof; provided, however, that such shares of stock shall cease to be rollover
stock for purposes of paragraph (h)(3) of this section if, immediately prior to the time the merger becomes
effective under this chapter, such shares have not been transferred, contributed or delivered to the
consummating corporation or any of its affiliates pursuant to such written agreement.

6
If an agreement of merger is adopted without the vote of stockholders of a corporation pursuant to this
subsection, the secretary or assistant secretary of the surviving corporation shall certify on the agreement
that the agreement has been adopted pursuant to this subsection and that the conditions specified in this
subsection (other than the condition listed in paragraph (h)(4) of this section) have been satisfied; provided
that such certification on the agreement shall not be required if a certificate of merger is filed in lieu of
filing the agreement. The agreement so adopted and certified shall then be filed and shall become effective,
in accordance with § 103 of this title. Such filing shall constitute a representation by the person who
executes the agreement that the facts stated in the certificate remain true immediately prior to such filing.

8 Del.C. § 259
§ 259. Status, rights, liabilities, of constituent and surviving or resulting corporations following merger or
consolidation
Currentness
(a) When any merger or consolidation shall have become effective under this chapter, for all purposes of
the laws of this State the separate existence of all the constituent corporations, or of all such constituent
corporations except the one into which the other or others of such constituent corporations have been
merged, as the case may be, shall cease and the constituent corporations shall become a new corporation,
or be merged into 1 of such corporations, as the case may be, possessing all the rights, privileges, powers
and franchises as well of a public as of a private nature, and being subject to all the restrictions, disabilities
and duties of each of such corporations so merged or consolidated; and all and singular, the rights,
privileges, powers and franchises of each of said corporations, and all property, real, personal and mixed,
and all debts due to any of said constituent corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of such corporations shall be vested in the
corporation surviving or resulting from such merger or consolidation; and all property, rights, privileges,
powers and franchises, and all and every other interest shall be thereafter as effectually the property of
the surviving or resulting corporation as they were of the several and respective constituent corporations,
and the title to any real estate vested by deed or otherwise, under the laws of this State, in any of such
constituent corporations, shall not revert or be in any way impaired by reason of this chapter; but all rights
of creditors and all liens upon any property of any of said constituent corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the respective constituent corporations shall thenceforth
attach to said surviving or resulting corporation, and may be enforced against it to the same extent as if
said debts, liabilities and duties had been incurred or contracted by it.
(b) In the case of a merger of banks or trust companies, without any order or action on the part of any court
or otherwise, all appointments, designations, and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, trustee of
estates of persons mentally ill and in every other fiduciary capacity, shall be automatically vested in the
corporation resulting from or surviving such merger; provided, however, that any party in interest shall
have the right to apply to an appropriate court or tribunal for a determination as to whether the surviving
corporation shall continue to serve in the same fiduciary capacity as the merged corporation, or whether a
new and different fiduciary should be appointed.

8 Del.C. § 271
§ 271. Sale, lease or exchange of assets; consideration; procedure

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Currentness
(a) Every corporation may at any meeting of its board of directors or governing body sell, lease or exchange
all or substantially all of its property and assets, including its goodwill and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in whole or in part of money or
other property, including shares of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors or governing body deems expedient and for the best interests of the
corporation, when and as authorized by a resolution adopted by the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon or, if the corporation is a nonstock
corporation, by a majority of the members having the right to vote for the election of the members of the
governing body and any other members entitled to vote thereon under the certificate of incorporation or
the bylaws of such corporation, at a meeting duly called upon at least 20 days' notice. The notice of the
meeting shall state that such a resolution will be considered.
(b) Notwithstanding authorization or consent to a proposed sale, lease or exchange of a corporation's
property and assets by the stockholders or members, the board of directors or governing body may
abandon such proposed sale, lease or exchange without further action by the stockholders or members,
subject to the rights, if any, of third parties under any contract relating thereto.
(c) For purposes of this section only, the property and assets of the corporation include the property and
assets of any subsidiary of the corporation. As used in this subsection, “subsidiary” means any entity wholly-
owned and controlled, directly or indirectly, by the corporation and includes, without limitation,
corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies,
and/or statutory trusts. Notwithstanding subsection (a) of this section, except to the extent the certificate
of incorporation otherwise provides, no resolution by stockholders or members shall be required for a sale,
lease or exchange of property and assets of the corporation to a subsidiary.

§ 181. Reorganization
Currentness
“Reorganization” means either:
(a) A merger pursuant to Chapter 11 (commencing with Section 1100) other than a short-form merger (a
“merger reorganization”).
(b) The acquisition by one domestic corporation, foreign corporation, or other business entity in
exchange, in whole or in part, for its equity securities (or the equity securities of a domesticcorporation, a
foreign corporation, or an other business entity which is in control of the acquiring entity) of equity
securities of another domestic corporation, foreign corporation, or other business entity if, immediately
after the acquisition, the acquiring entity has control of the other entity (an “exchange reorganization”).
(c) The acquisition by one domestic corporation, foreign corporation, or other business entityin exchange
in whole or in part for its equity securities (or the equity securities of a domesticcorporation, a foreign
corporation, or an other business entity which is in control of the acquiring entity) or for its debt securities
(or debt securities of a domestic corporation, foreign corporation, or other business entity which is in
control of the acquiring entity) which are not adequately secured and which have a maturity date in excess
of five years after the consummation of the reorganization, or both, of all or substantially all of the assets
of another domestic corporation, foreign corporation, or other business entity (a “sale-of-assets
reorganization”).

Credits
(Added by Stats.1975, c. 682, § 7, eff. Jan. 1, 1977. Amended by Stats.1976, c. 641, § 4.6, eff. Jan. 1,
1977; Stats.1987, c. 627, § 1; Stats.1989, c. 1116, § 3, eff. Sept. 30, 1989; Stats.1999, c. 437 (A.B.198), § 5.)

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Editors' Notes
LEGISLATIVE COMMITTEE COMMENTS--ASSEMBLY
1975 [Corrected]
Source: New. The new law treats various methods of corporate fusion as different means to the same end.
This approach is intended to adopt and codify the so-called “de facto merger” doctrine so that the rights
of shareholders in a corporate combination do not depend upon the form in which the transaction is cast.
As a basis for this approach, the term “reorganization” is defined to encompass the three principal methods
of corporate fusion:
First, the term means a merger pursuant to Chapter 11 or, in the terminology of the definition, a “merger
reorganization”. This is the so-called “statutory merger”. Due to the nature of a “short form merger” [§
187], such a transaction is excluded from the definition of a merger reorganization and therefore from the
special treatment accorded a “reorganization”.
Second, the definition includes an “exchange reorganization”, which is the acquisition by one corporation
of shares and, thereby, control of another corporation in exchange for the securities, in whole or in part,
of the acquiring corporation or the parent of the acquiring corporation. For an exchange reorganization to
occur, control of the acquired corporation must be obtained as an immediate result of the specified
transaction. In order that the determination of such an event be certain, control is objectively defined as
the ownership, directly or indirectly, of shares possessing more than 50% of the total combined voting
power of all classes of shares entitled to vote. [§ 160(b)].
Third, the definition includes a “sale-of-assets reorganization”, which is the acquisition by one corporation
of all or substantially all of the assets of another corporation in exchange for the equity securities, in whole
or in part, or for certain debt securities (or both), of the acquiring corporation or the parent of the acquiring
corporation. Only debt securities which are not adequately secured and which have a maturity date in
excess of five years after the consummation of the transaction are within the scope of this definition, with
the result that acquisition by one corporation of all or substantially all of the assets of another corporation
for either or both of cash and debt securities which are adequately secured or which have a maturity date
of five years or less are not within the definition and therefore are not a “reorganization” within the scope
of the definition. The idea behind this is that debt securities which are not adequately secured and have a
maturity date in excess of five years involve a degree of risk at least similar to that of equity securities for
the shareholders who are to receive them and that, accordingly, such shareholders should be entitled to
voting and dissenter's rights to the same extent as if they were to receive equity securities in the
transaction.

§ 1001. Disposition of substantially all assets; approval

Currentness
(a) A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all
of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual
and regular course of its business, approved by the outstanding shares (Section 152), either before or after
approval by the board and before or after the transaction. A transaction constituting a reorganization
(Section 181) is subject to the provisions of Chapter 12 (commencing with Section 1200) and not this
section (other than subdivision (d)). A transaction constituting a conversion (Section 161.9) is subject to the
provisions of Chapter 11.5 (commencing with Section 1150) and not this section.
(b) Notwithstanding approval of the outstanding shares (Section 152), the board may abandon the
proposed transaction without further action by the shareholders, subject to the contractual rights, if any,
of third parties.

9
(c) The sale, lease, conveyance, exchange, transfer or other disposition may be made upon those terms and
conditions and for that consideration as the board may deem in the best interests of the corporation. The
consideration may be money, securities, or other property.
(d) If the acquiring party in a transaction pursuant to subdivision (a) of this section or subdivision (g) of
Section 2001 is in control of or under common control with the disposing corporation, the principal terms
of the sale must be approved by at least 90 percent of the voting power of the disposing corporation unless
the disposition is to a domestic or foreign corporation or other business entity in consideration of the
nonredeemable common shares or nonredeemable equity securities of the acquiring party or its parent.
(e) Subdivision (d) does not apply to any transaction if the Commissioner of Corporations, the Commissioner
of Financial Institutions, the Insurance Commissioner or the Public Utilities Commission has approved the
terms and conditions of the transaction and the fairness of those terms and conditions pursuant to Section
25142, Section 696.5 of the Financial Code, Section 838.5 of the Insurance Code, or Section 822 of the
Public Utilities Code.

Credits
(Added by Stats.1975, c. 682, § 7, eff. Jan. 1, 1977. Amended by Stats.1976, c. 641, § 18.8, eff. Jan. 1, 1977;
Stats.1977, c. 235, p. 1061, § 10.5; Stats.1978, c. 370, p. 1097, § 8.2; Stats.1996, c. 1064 (A.B.3351), § 10,
operative July 1, 1997; Stats.1999, c. 437 (A.B.198), § 6; Stats.2002, c. 480 (S.B.399), § 5.)

Editors' Notes
LEGISLATIVE COMMITTEE COMMENTS--ASSEMBLY
1975
This section authorizes a corporation to dispose of all or substantially all of its property in a transaction not
in the usual and regular course of the corporation's business if the principal terms thereof are approved by
the board and the outstanding shares. The distinction between a transaction in the usual and regular course
of business and one not in the usual and regular course of business is new and intended to eliminate the
necessity of obtaining shareholder approval in certain appropriate situations. For instance, a sale of major
assets in connection with modernization of capital assets, although not an everyday occurrence, is generally
within the powers of a corporation. Shareholder approval should not be required in such case.
The provisions of the new law relating to reorganizations are intended to codify the “de facto merger”
doctrine and, accordingly, a transaction constituting a reorganization is expressly excluded from this
section.
To provide flexibility, this section permits the board to abandon a proposed transaction without further
action by the shareholders (notwithstanding their approval of the transaction) subject to the contractual
rights, if any, of third parties. A similar provision under prior law permits abandonment of a merger without
further shareholder action [former § 4112].

§ 1200. Approval by board

Currentness
A reorganization (Section 181) or a share exchange tender offer (Section 183.5) shall be approved by the
board of:
(a) Each constituent corporation in a merger reorganization;
(b) The acquiring corporation in an exchange reorganization;
(c) The acquiring corporation and the corporation whose property and assets are acquired in a sale-of-
assets reorganization;

10
(d) The acquiring corporation in a share exchange tender offer (Section 183.5); and
(e) The corporation in control of any constituent or acquiring domestic or foreign corporation or other
business entity under subdivision (a), (b) or (c) and whose equity securities are issued, transferred, or
exchanged in the reorganization (a “parent party”).

Credits
(Added by Stats.1975, c. 682, § 7, eff. Jan. 1, 1977. Amended by Stats.1990, c. 616 (S.B.2574), §
1; Stats.1999, c. 437 (A.B.198), § 11.)

Editors' Notes
LEGISLATIVE COMMITTEE COMMENTS--ASSEMBLY
1975
Under the new law, various methods of corporate fusion are treated as different means to the same end
for the purpose of codifying the “de facto merger” doctrine.
As a basis for this approach, “reorganization” is defined to encompass the three basic methods of
combination [former § 181]. This section generally requires a reorganization to be approved by the board
of each party, as well as the board of any “parent party” to the transaction. Taken together, these provisions
specify the transactions (including the so-called “upside-down” and “triangular” transactions) in which §
1201 may require shareholder approval and, in turn, § 1300 may require dissenters' rights.

West's Ann.Cal.Corp.Code § 1202

§ 1202. Terms of merger reorganization or sale-of-assets reorganization; approval by shareholders; foreign
corporations
Currentness
(a) In addition to the requirements of Section 1201, the principal terms of a merger reorganization shall be
approved by all the outstanding shares of a corporation if the agreement of merger provides that all the
outstanding shares of that corporation are canceled without consideration in the merger.
(b) In addition to the requirements of Section 1201, if the terms of a merger reorganization or sale-of-assets
reorganization provide that a class or series of preferred shares is to have distributed to it a lesser amount
than would be required by applicable article provisions, the principal terms of the reorganization shall be
approved by the same percentage of outstanding shares of that class or series which would be required to
approve an amendment of the article provisions to provide for the distribution of that lesser amount.
(c) If a parent party within the meaning of Section 1200 is a foreign corporation (other than a foreign
corporation to which subdivision (a) of Section 2115 is applicable), any requirement or lack of a
requirement for approval by the outstanding shares of the foreign corporation shall be based, not on the
application of Sections 1200 and 1201, but on the application of the laws of the state or place of
incorporation of the foreign corporation.

5/11.05. Procedure for merger or consolidation

Currentness
§ 11.05. Procedure for merger or consolidation. Any 2 or more corporations may merge into one of such
corporations or consolidate into a new corporation in the following manner:

11
The board of directors of each corporation shall, by resolution adopted by a majority vote of the members
of each such board, approve a plan of merger or consolidation setting forth:
(a) The names of the corporations proposing to merge or consolidate, and the name of the corporation
into which they propose to merge, which is hereinafter designated as the surviving corporation or to
consolidate, which is hereinafter designated as the new corporation.
(b) The terms and conditions of the proposed merger or consolidation and the mode of carrying the same
into effect.
(c) The manner and basis of converting the shares of each merging or consolidating corporation into shares,
obligations or other securities of the surviving or new corporation, or into shares, obligations or other
securities of any other corporation which immediately before or immediately after the merger or
consolidation is effected is the owner of all of the outstanding voting securities of the corporation named
as the surviving or new corporation, or into cash or other property, or into any combination of the
foregoing.
(d) A statement of any changes in the articles of incorporation of the surviving corporation to be effected
by such merger or a statement of the articles of incorporation of the new corporation.
(e) Such other provisions with respect to the proposed merger or consolidation as are deemed necessary
or desirable, including provisions, if any, under which the proposed merger or consolidation may be
abandoned prior to the filing of articles of merger or consolidation by the Secretary of State.
805 ILCS 5/11.55
Formerly cited as IL ST CH 32 ¶ 11.55
5/11.55. Sale, lease, exchange, or mortgage of assets in usual and regular course of business
Currentness
§ 11.55. Sale, lease, exchange, or mortgage of assets in usual and regular course of business. The sale, lease,
exchange, mortgage, pledge, or other disposition of all, or substantially all, the property and assets of a
corporation, when made in the usual and regular course of the business of the corporation, may be made
upon such terms and conditions and for such considerations, which may consist, in whole or in part, of
money or property, real or personal, including shares of any other corporation, domestic or foreign, as shall
be authorized by its board of directors; and in such case no authorization or consent of the shareholders
shall be required.

05 ILCS 5/11.60
Formerly cited as IL ST CH 32 ¶ 11.60
5/11.60. Sale, lease or exchange of assets, other than in usual and regular course of business
Currentness
§ 11.60. Sale, lease or exchange of assets, other than in usual and regular course of business. A sale, lease,
exchange, or other disposition of all, or substantially all, the property and assets, with or without the good
will, of a corporation, if not made in the usual and regular course of its business, may be made upon such
terms and conditions and for such consideration, which may consist, in whole or in part, of money or
property, real or personal, including shares of any other corporation, domestic or foreign, as may be
authorized in the following manner:
(a) The board of directors shall adopt a resolution recommending such sale, lease, exchange, or other
disposition and directing the submission thereof to a vote at a meeting of shareholders, which may be
either an annual or a special meeting.

12
(b) Written notice stating that the purpose, or one of the purposes, of such meeting is to consider the sale,
lease, exchange, or other disposition of all, or substantially all, the property and assets of the corporation
shall be given to each shareholder of record within the time and in the manner provided by this Act for the
giving of notice of meetings of shareholders and shall also inform the shareholders of their right to dissent
and either enclose a copy of Section 11.70 or otherwise provide adequate notice of the procedure to
dissent. If such meeting be an annual meeting, such purpose may be included in the notice of such annual
meeting.
(c) At such meeting the shareholders entitled to vote on such matter may authorize such sale, lease,
exchange, or other disposition and fix, or may authorize the board of directors to fix, any or all of the terms
and conditions thereof and the consideration to be received by the corporation therefor. Such
authorization shall require the affirmative vote of the holders of at least two-thirds of the outstanding
shares entitled to vote on such matter unless any class or series of shares is entitled to vote as a class in
respect thereof, in which event such authorization shall require the affirmative vote of the holders of at
least two-thirds of the outstanding shares of each class or series of shares entitled to vote as a class on
such matter, and of the total outstanding shares entitled to vote on such matter.
(d) After such authorization by a vote of shareholders, the board of directors nevertheless, in its discretion,
may abandon such sale, lease, exchange, or other disposition of assets, subject to the rights of third parties
under any contracts relating thereto, without further action or approval by shareholders.
(e) The articles of incorporation of a corporation may supersede the two-thirds vote requirement of this
Section by specifying any smaller or larger vote requirement, not less than a majority of the outstanding
shares entitled to vote on the matter and not less than a majority of the outstanding shares of each class
of shares entitled to vote as a class on the matter.

M&A Short Outline

Acquisition Advantage Disadvantage

Asset Purchase: §271 (1) Not purchasing liabilities (1) Documentation, due
(2) No seller appraisal rights diligence is cumbersome
(3) No SH vote by buyer. (2) Might be more $ b/c not
purchasing liabilities
(3) Uncertainty over seller SH
vote
Statutory Merger: §251 (1) No holdout problem if Buyer SHs vote on major
seller majority votes in favor acquisitions (>20% dilution)
(2) No appraisal rights if target
company is publicly traded
Tender Offer (1) Best for hostile offer b/c (1) Have to pay a premium
going to SH directly
Triangular Merger: §251(b) -No Buyer SH vote ever
-Isolate seller liabilities
Reverse Triangular Merger: -No Buyer SH vote
§251(b) -Target’s licenses, TMs,
goodwill stay intact
-Isolate target liabilities

13
 Acquisition Methods
1. Statutory Merger
a. Under DE 251, legal magic happens: if Target merges into Buyer, Target will cease to exist
and will be absorbed by Buyer: Target stock turns into the right to receive a certain amt
of Buyer stock or a certain amt of cash; Target’s stock is cancelled.
b. DE 259: all assets & liabilities of Target belong to Buyer after the merger.
c. Under DE 251b, first you need the BD of each corp to approve a merger agreement.
d. Next, under 251c, a majority of SHs of the seller must approve the deal.
e. Next, under 251f, a vote by Buyer’s SHs may or may not be needed (note Buyer’s
certificate of incorp. can alter the provisions of 251f & require SH votes)
i. Changes to Buyer’s certificate of incorp will require a majority SH vote.
ii. If the shares of Buyer to be issued or delivered as merger consideration exceed 20% of the
shares outstanding in Buyer immediately prior to the effective date of the merger, a majority SH vote will
be necessary.
iii. If the rights & powers associated w/ the shares of the surviving corp change (if you end up
w/ shares in a new corp), SH vote is needed.
f. Triangular merger: under 251b5, Buyer can create a sub, which merges w/ Target; either
the sub or the Target can be the surviving corp, but either way, no vote of Buyer’s SHs is
necessary, even if shares delivered as merger consideration exceed 20% of Buyer’s
outstanding shares immediately b/f the merger. See p. 90.
g. Under 251g, unless expressly req’d by the certificate of incorp, no SH vote is necessary
for a corp to merge w/ or into a single direct or indirectly wholly-owned subsidiary.
h. Appraisal Rights under DE 262
i. 262a: if you vote yes for the merger, you can’t seek appraisal rights. If you don’t vote or
vote no and don’t sell your shares, you may get appraisal rights.
ii. 262b1: no appraisal rights if Target’s shares are traded on a national exchange, or where
Target has more than 2000 SHs;
iii. 262b1: no appraisal rights for Buyer SHs if merger did not require a SH vote under 251f.
1. This means that if the consideration delivered in the merger did NOT exceed 20% of the shares
outstanding in the surviving corp, there will be no appraisal rights. Even if the 20% threshold is
exceeded, there are still no appraisal rights if Buyer’s shares are traded on a national exchange.
2. NOTE: 262 will not apply to a parent company in a forward or triangular merger, b/c Buyer is not a party
to the merger!
iv. 262b2: notwithstanding 262b1, you get appraisal rights if you receive anything in the
merger other than: 1) shares of stock in the surviving corp; 2) shares of stock in any corp listed on a
national exchange or w/ more than 2000 SHs; 3) cash in lieu of fractional shares; or 4) any combination of
the previous 3 things.
1. If you get publicly-traded equity securities, NO appraisal rights.
2. If you get cash only, you get appraisal rights.
3. If you get debt securities, you get appraisal rights.
4. BUT first you have to perfect your appraisal rights (which requires moving quickly), and then you will get
a hearing. At the hearing, there will be a battle of the experts to see who is right. But if Target’s shares
were traded on national exchange, it may be tough to convince a judge that an efficient market was
wrong about the shares.
i. Stock Swap Mergers are generally not taxable events.
j. Note: DE 253: Merger of Parent Corporation and Subsidiary or Subsidiaries
i. 253a: no SH vote needed for merger of parent and 90% owned sub, as long as one of the
corps is a DE corp

14
 ii. 253d: appraisal rights under 262 for minority SHs of any sub
2. Asset Purchase
a. Under DE 271a, Buyer can acquire an asset or business division from Target w/o a vote of
Target’s SHs (only target BD votes), unless the sale is of “all or substantially all” of
Target’s assets, in which case a vote of Target’s SHs is required.
b. Under DE law, no appraisal rights for target SHs for any asset purchase. 262b.
c. Liabilities generally stay w/ Target; Buyer only gets the assets, but must pay more than if
Buyer was getting the entire company.
d. Asset sales are taxable events.
e. Note 271c: for purposes of 271 only, the property/assets of the company include the
property/assets of any sub of the corp. BUT Notwithstanding 271a, except to the extent
certificate of incorp provides o/w, no SH vote necessary for a sale/lease/exchange of
assets of the corp to a sub.
f. Buyer SHs never req’d to vote.
3. Tender Offer
a. Use for hostile deals: go directly to SHs and offer a big premium over mkt price. If Buyer
can get 51% of Target’s shares thru a tender offer, it can replace Target’s board and
purchase the remaining shares thru a back-end merger.

Triangular Mergers: Avoiding Buyer SH Vote

 Forward triangular merger: seller merges into wholly-owned sub of buyer. Seller SHs end up w/
shares of buyer; each share of seller is converted into the right to receive a specified number of
shares of buyer, into cash, or a combination of both. After the merger, seller ceases to exist &
the merger sub is the surviving party to the merger. B/c merger sub is the surviving party to the
merger, Buyer SHs do not vote on the merger.
 Reverse triangular merger: seller remains in legal existence: buyer creates a merger sub which
merges into seller; seller shares are converted into the right to receive shares of Buyer, cash, or a
combination of both. This form is used if there are biz reasons for seller remaining in existence:
patents, TMs, licenses, goodwill, etc. Buyer SHs still do not vote on the merger.
 In either triangular merger form, the liabilities (product, environmental, etc.) of the target are
isolated from buyer, as are labor forces (could be good if only one of buyer or target is subject to
a union collective bargaining agreement).
 Tax: to qualify as a tax-free reorganization, 50% of the consideration must be Buyer’s stock; the
rest can be cash or other securities.

Vote-Buying in Connection w/ Merger

 Naked vote-buying is void b/c it is presumed to defraud/disenfranchise other SHs. If vote-buying
is in interest of all SHs, & w/ full disclosure & ratification by disinterested SHs, vote-buying can be
ok; o/w vote-buying is a voidable transaction subject to intrinsic fairness test.
 Schreiber v. Carney (Del. Ch. 1982): to get a majority of SHs to vote in favor of a merger, corp
loaned money to large SH so it could purchase outstanding warrants; loan was ratified after full
disclosure, thus it gets BJR deference.

Asset Purchases: When Do Seller SHs Vote?

 Gimbel v. Signal (Del. Ch. 1974): Assets are 25-45% but least profitable line: no SH vote needed.
Focus in on economic quality: whether the transaction leaves SH w/ an investment in which the
economic terms are qualitatively different from the one they possess. If the sale is of assets that

15
 are quantitatively vital to the corp’s operation, and it’s out of the ordinary, and substantially
affects the existence of the corp, SH vote is required.
 Katz v. Bregman (Del. Ch. 1981): assets are 51% but corp’s only profitable line; SH vote required.
Critical factor in determining the character of a sale of assets is generally considered not the amt
of property sold but whether the sale is in fact an unusual transaction or one made in the regular
course of business of the seller.
 Hollinger Inc. v. Hollinger Int’l (Del. Ch. 2004): the test, while qualitative, focuses on economic
quality: whether the transaction leaves the SHs w/ an investment that in economic terms is
qualitatively different than the one they now possess…it is not an attempt to identify qualitatively
important transactions but ones that strike at the heart of the corporate existence.
 DE practitioners (p. 107) suggest that <26% of assets is clear: no vote needed; >75% of asses is
clear: vote needed. Anything in b/t is hard to predict.

De Facto Merger: DE rejects: Hariton v. Arco (Del. 1963): independent legal significance for 262/271.

Letters of Intent
 Do a letter of intent but be clear and unambiguous that the letter is NOT binding!
 United Acquisition v. Banque Paribas (SDNY 1985): Four factors for whether parties words and
deeds show an intent to be bound only by a written agreement:
o Whether a party has explicitly stated that it reserves the right to be bound only when a
written agreement is signed;
o Whether one party has partially performed and that performance bas been accepted by
the party disclaiming the K;
o Whether there is literally nothing left to negotiate or settle so that all that remained to
be done was to sign what had already been fully agreed to;
o Whether the agreement concerns those complex and substantial biz matters where
requirements that Ks be in writing are the norm rather than the exception
o [Fifth factor added by TIAA v. Tribune Co. (SDNY 1987): there is a strong presumption a/g
finding binding obligation in agreements which include open terms, call for future
approvals and expressly anticipate future preparation (like DD) and execution of contract
documents.]
 Arnold Palmer Golf v. Fuqua Indus. (6th Cir. 1976): D was buying 25% of P; very detailed letter of
intent. D backs out, P sues & gets past MTD: letter of intent did NOT include any express language
saying the parties were NOT to be bound until a formal agreement was signed.

How to Weasel Out of a Deal

 URI v. RAM (Cerberus) (Del. Ch. 2007): forthright negotiator principle: where extrinsic evidence
does not shed light on the objective meaning of the K, court may use one side’s subjective
understanding of the agreement to control the interpretation if the other party knew of or should
have known of that interpretation.

Purchase Price
 Earn out: allows seller to make more if biz performs well after sale; seller should protect himself
to make sure buyer doesn’t undermine the earn out: consistent account, specific definition of
which earnings count, control over operations.
o Earn outs common for pvt companies b/c there are no audited financial statements & no
third party analysis; thus contingent payments & adjustments after closing are common
o For publicly traded sellers, there is usually not an earn out b/c SHs are widely dispersed.

16
 Collar: low & high cap on exchange ratio: buyer’s stock may fluctuate so there may be need to re-
adjust the exchange ratio to maintain the purchase price.
 O’Tool v. Genmar (10th Cir. 2004): buyer breached implied covenant of good faith/fair dealing by
consistently undermining earn out provision; K poorly drafted: spell this stuff out!
 Cerberus v. Apollo (Del. 2002): bad drafting led to mixup over who got $ from warrant exercise;
should go to sellers but buyers were trying to sneak off by paying less than full price.

17