HOUSE OF REPRESENTATIVES

153rd GENERAL ASSEMBLY

HOUSE AMENDMENT NO. 4

TO

SENATE SUBSTITUTE NO. 1

FOR

SENATE BILL NO. 21

AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 4 by deleting “ section, ” as it appears therein and inserting in lieu thereof " section or an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title, ".

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 32 by deleting “ transaction) ” as it appears therein and inserting in lieu thereof “ or extraordinary transaction) ”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 on line 48 by inserting “ or extraordinary transaction ” after “ private transaction ” and before “ may ” therein.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill No. 21 after line 120 and before line 121 by inserting the following and redesignating accordingly:

“ (6) “Extraordinary transaction” means:

a. Any “business combination” as defined under § 203(c)(3) of this title.

b. Any act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title.

c. Any transaction that requires stockholder approval (whether by vote or written consent) under any provision of this title, the corporation’s certificate of incorporation, bylaws, or any plan or agreement to which the corporation is a party.

d. Any tender or exchange offer for shares not held by the controlling stockholder.

e. Any purchase or sale by the corporation in which the consideration, whether in cash or stock, has an aggregate value in excess of the lesser of:

1. $100 million.

2. 20% of either:

A. The aggregate market value of all the assets of the corporation as determined on a consolidated basis.

B. The aggregate market value of all the outstanding stock of the corporation. ”.

FURTHER AMEND Senate Substitute No. 1 for Senate Bill 21 on line 124 by inserting “ or any other transaction in which all shares of a corporation not held by the controlling stockholder or control group are cancelled, converted, purchased, acquired, or exchanged for consideration ” before “ ;” as it appears therein.

SYNOPSIS

This Amendment amends SS1 to SB21 by excluding from the safe harbor rules of § 144(a) "an act or transaction that involves a sale, breakup, or change in control of the corporation or that otherwise gives rise to appraisal rights under § 262 of this title." This is intended to conform the statute with Kahn v. Stern, 183 A.3d 715 (Del. 2018) and the line of Delaware case law that follows Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) and Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304 (Del. 2015), to apply enhanced scrutiny review to such transactions unless approved by a fully informed vote of disinterested stockholders. This amendment is intended to preserve the ability of transaction planners to obtain common-law cleansing under Corwin. This Amendment further amends SS1 to SB21 to define an additional category of transaction, called an "extraordinary transaction" under § 144(e) that requires the use of dual cleansing devices to avoid fairness review by the Court. It further amends SS1 to SB21 by amending the definition of "going private transaction" to include any other transaction wherein minority stockholders lose control of their shares.