Exhibit 99.1:
MARYLAND BUSINESS COMBINATION STATUTE
Subtitle 6. Special Voting Requirements.
Section 3-601. Definitions.
(a) In general. -- In this subtitle, the following words have
the meanings indicated.
(b) Affiliate. -- "Affiliate," including the term "affiliated
person", 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.
(c) Associate. -- "Associate," when used to indicate a
relationship with any person, means:
(1) Any corporation or organization (other than the
corporation or a subsidiary of the corporation) of which such person is an
officer, director, or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities;
(2) 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
(3) Any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person or who is a
director or officer of the corporation or any of its affiliates.
(d) Beneficial owner. -- "Beneficial owner," when used with
respect to any voting stock, means a person:
(1) That, individually or with any of its affiliates or
associates, beneficially owns voting stock, directly or indirectly; or
(2) That, individually or with any of its affiliates or
associates, has:
(i) The right to acquire voting stock (whether
such right is exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement, or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise; or
(ii) The right to vote voting stock pursuant to
any agreement, arrangement, or understanding; or
(3) That has any agreement, arrangement, or
understanding for the purpose of acquiring, holding, voting, or disposing
of voting stock with any other person that beneficially owns, or whose
affiliates or associates beneficially own, directly or indirectly, such
shares of voting stock.
(e) Business combination. -- "Business combination" means:
(1) Unless the merger, consolidation, or share exchange
does not alter the contract rights of the stock as expressly set forth in
the charter or change or convert in whole or in part the outstanding
shares of stock of the corporation, any merger, consolidation, or share
exchange of the corporation or any subsidiary with (i) any interested
stockholder or (ii) any other corporation (whether or not itself an
interested stockholder) which is, or after the merger, consolidation, or
share exchange would be, an affiliate of an interested stockholder that
was an interested stockholder prior to the transaction;
(2) Any sale, lease, transfer, or other disposition,
other than in the ordinary course of business or pursuant to a dividend or
any other method affording substantially proportionate treatment to the
holders of voting stock, in one transaction or a series of transactions in
any 12-month period, to any interested stockholder or any affiliate of any
interested stockholder (other than the corporation or any of its
subsidiaries) of any assets of the corporation or any subsidiary having,
measured at the time the transaction or transactions are approved by the
board of directors of the corporation, an aggregate book value as of the
end of the corporation's most recently ended fiscal quarter of 10 percent
or more of the total market value of the outstanding stock of the
corporation or of its net worth as of the end of its most recently ended
fiscal quarter;
(3) The issuance or transfer by the corporation, or any
subsidiary, in one transaction or a series of transactions, of any equity
securities of the corporation or any subsidiary which have an aggregate
market value of 5 percent or more of the total market value of the
outstanding stock of the corporation to any interested stockholder or any
affiliate of any interested stockholder (other than the corporation or any
of its subsidiaries) except pursuant to the exercise of warrants or rights
to purchase securities offered pro rata to all holders of the
corporation's voting stock or any other method affording substantially
proportionate treatment to the holders of voting stock;
(4) The adoption of any plan or proposal for the
liquidation or dissolution of the corporation in which anything other than
cash will be received by an interested stockholder or any affiliate of any
interested stockholder;
(5) Any reclassification of securities (including any
reverse stock split), or recapitalization of the corporation, or any
merger, consolidation, or share exchange of the corporation with any of
its subsidiaries which has the effect, directly or indirectly, in one
transaction or a series of transactions, of increasing by 5 percent or
- 2 -
more of the total number of outstanding shares, the proportionate amount
of the outstanding shares of any class of equity securities of the
corporation or any subsidiary which is directly or indirectly owned by any
interested stockholder or any affiliate of any interested stockholder; or
(6) The receipt by any interested stockholder or any
affiliate of any interested stockholder (other than the corporation or any
of its subsidiaries) of the benefit, directly or indirectly (except
proportionately as a stockholder), of any loan, advance, guarantee,
pledge, or other financial assistance or any tax credit or other tax
advantage provided by the corporation or any of its subsidiaries.
(f) Common stock. -- "Common stock" means any stock other than
preferred or preference stock.
(g) Control. -- "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 securities, by contract, or otherwise, and the beneficial ownership
of 10 percent or more of the votes entitled to be cast by a corporation's
voting stock creates a presumption of control.
(h) Corporation. -- "Corporation" includes a real estate
investment trust as defined in Title 8 of this article.
(i) Equity security. -- "Equity security" means:
(1) Any stock or similar security, certificate of
interest, or participation in any profit sharing agreement, voting trust
certificate, or certificate of deposit for an equity security;
(2) Any security convertible, with or without
consideration, into an equity security, or any warrant or other security
carrying any right to subscribe to or purchase an equity security; or
(3) Any put, call, straddle, or other option or
privilege of buying an equity security from or selling an equity security
to another without being bound to do so.
(j) Interested stockholder. -- "Interested stockholder"
means any person (other than the corporation or any subsidiary) that:
(1)(i) Is the beneficial owner, directly or indirectly,
of 10 percent or more of the voting power of the outstanding voting stock
of the corporation after the date on which the corporation had 100 or more
beneficial owners of its stock; or
(ii) Is an affiliate or associate of the corporation
and was the beneficial owner, directly or indirectly, of 10 percent or
more of the voting power of the then outstanding stock of the corporation:
- 3 -
1. At any time within the 2-year period
immediately prior to the date in question; and
2. After the date on which the corporation had
100 or more beneficial owners of its stock.
(2) For the purpose of determining whether a person is
an interested stockholder, the number of shares of voting stock deemed to
be outstanding shall include shares deemed owned by the person through
application of subsection (d) of this section but may not include any
other shares of voting stock which may be issuable pursuant to any
agreement, arrangement, or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
(k) Market value. -- "Market value" means:
(1) In the case of stock, the highest closing sale
price during the 30-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 the composite
tape, on the New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 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 30-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 the corporation in good faith; and
(2) 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 the corporation in good faith.
(l) Subsidiary. -- "Subsidiary" means any corporation of
which voting stock having a majority of the votes entitled to be cast is
owned, directly or indirectly, by the corporation.
(m) Voting stock. -- "Voting stock" means shares of capital
stock of a corporation entitled to vote generally in the election of
directors. (1983, Sp. Sess., ch. 1; 1984, ch. 255; 1989, ch. 52.)
(n) Original articles of incorporation. -- "Original articles
of incorporation" means:
(1) Articles of incorporation as originally filed or
as amended in accordance with Section 2-603 of this article; and
(2) Articles of incorporation as amended or restated
by a corporation meeting the requirements of Section 3-603(e)(i), (ii), or
- 4 -
(iv) of this subtitle, without regard to the voting requirements of
Section 3-603(e)(1)(iii) of this subtitle. (1994, ch. 595.)
Section 3-602. Business combinations - In general.
(a) Prohibited between corporation and interested stockholder
or affiliate. -- Unless an exemption under Section 3-603(c), (d), or (e)
of this subtitle applies, a corporation may not engage in any business
combination with any interested stockholder or any affiliate of the
interested stockholder for a period of 5 years following the most recent
date on which the interested stockholder became an interested stockholder.
(b) Approval of directors and stockholders. -- Unless an
exemption under Section 3-603 of this subtitle applies, in addition to any
vote otherwise required by law or the charter of the corporation, a
business combination that is not prohibited by subsection (a) of this
section shall be recommended by the board of directors and approved by the
affirmative vote of at least:
(1) 80 percent of the votes entitled to be cast by
outstanding shares of voting stock of the corporation, voting together as
a single voting group; and
(2) Two-thirds of the votes entitled to be cast by
holders of voting stock other than voting stock held by the interested
stockholder who will (or whose affiliate will) be a party to the business
combination or by an affiliate or associate of the interested stockholder,
voting together as a single voting group. (1983, Sp. Sess., ch. 1; 1989,
ch. 52.)
Section 3-603. Same -- Exemptions.
(a) Definitions applicable to subsection (b). -- For purposes
of this section:
(1) "Announcement date" means the first general
public announcement of the proposal or intention to make a proposal of the
business combination or its first communication generally to stockholders
of the corporation, whichever is earlier;
(2) "Determination date" means the most recent date
on which the interested stockholder became an interested stockholder; and
(3) "Valuation date" means:
(i) For a business combination voted upon by
stockholders, the latter of the day prior to the date of the stockholders'
vote or the day 20 days prior to the consummation of the business
combination; and
- 5 -
(ii) For a business combination not voted
upon by stockholders, the date of the consummation of the business
combination.
(b) Exemption from Section 3-602 -- In general. -- The vote
required by Section 3-602 (b) of this subtitle does not apply to a
business combination as defined in Section 3-601(e)(1) of this subtitle if
each of the following conditions is met:
(1) The aggregate amount of cash and the market value
as of the valuation date of consideration other than cash to be received
per share by holders of common stock in such business combination is at
least equal to the highest of the following:
(i) The highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the interested stockholder for any shares of common stock of the
same class or series acquired by it within the 5-year period immediately
prior to the announcement date of the proposal of the business
combination, plus an amount equal to interest compounded annually from the
earliest date on which the highest per share acquisition price was paid
through the valuation date at the rate for 1-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 in other
than cash, per share of common stock from the earliest date through the
valuation date, up to the amount of the interest; or
(ii) The highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the interested stockholder for any shares of common stock of the
same class or series acquired by it on, or within the 5-year period
immediately before, the determination date, plus an amount equal to
interest compounded annually from the earliest date on which the highest
per share acquisition price was paid through the valuation date at the
rate for 1-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 in other than cash, per share of common
stock from the earliest date through the valuation date, up to the amount
of the interest; or
(iii) The market value per share of common
stock of the same class or series on the announcement date, plus an amount
equal to interest compounded annually from that date through the valuation
date at the rate for 1-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 in other than cash, per share
of common stock from that date through the valuation date, up to the
amount of the interest; or
(iv) The market value per share of common
stock of the same class or series on the determination date, plus an
- 6 -
amount equal to interest compounded annually from that date through the
valuation date at the rate for 1-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 in other than
cash, per share of common stock from that date through the valuation date,
up to the amount of the interest; or
(v) The price per share equal to the market
value per share of common stock of the same class or series on the
announcement date or on the determination date, whichever is higher,
multiplied by the fraction of:
1. The highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the interested stockholder for any shares of common
stock of the same class or series acquired by it within the 5-year period
immediately prior to the announcement date, over
2. The market value per share of
common stock of the same class or series on the first day in such 5-year
period on which the interested stockholder acquired any shares of common
stock.
(2) The aggregate amount of the cash and the market
value as of the valuation date of consideration other than cash to be
received per share by holders of shares of any class or series of
outstanding stock other than common stock in the business combination is
at least equal to the highest of the following (whether or not the
interested stockholder has previously acquired any shares of the
particular class or series of stock);
(i) The highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the interested stockholder for any shares of such class or series
of stock acquired by it within the 5-year period immediately prior to the
announcement date of the proposal of the business combination, plus an
amount equal to the interest compounded annually from the earliest date on
which the highest per share acquisition price was paid through the
valuation date at the rate for 1-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 in other than
cash, per share of the class or series of stock from the earliest date
through the valuation date, up to the amount of the interest; or
(ii) The highest per share price (including
any brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the interested stockholder for any shares of such class or series
of stock acquired by it on, or within the 5-year period immediately prior
to, the determination date, plus an amount equal to interest compounded
annually from the earliest date on which the highest per share acquisition
price was paid through the valuation date at the rate for 1-year United
- 7 -
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 in other than cash, per share of the class or series of
stock from the earliest date through the valuation date, up to the amount
of the interest; or
(iii) 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 or involuntary liquidation,
dissolution or winding up of the corporation; or
(iv) The market value per share of such class
or series of stock on the announcement date, plus an amount equal to
interest compounded annually from that date through the valuation date at
the rate for 1-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 in other than cash, per share of the
class or series of stock from that date through the valuation date, up to
the amount of the interest; or
(v) The market value per shares of such
class or series of stock on the determination date, plus an amount equal
to interest compounded annually from that date through the valuation date
at the rate for 1-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 in other than cash, per share of
the class or series of stock from that date through the valuation date, up
to the amount of the interest; or
(vi) The price per share equal to the market
value per share of such class or series of stock on the announcement date
or on the determination date, whichever is higher, multiplied by the
fraction of:
1. The highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the interested stockholder for any shares of any
class of voting stock acquired by it within the 5-year period immediately
prior to the announcement date, over
2. The market value per share of
the same class of voting stock on the first day in such 5-year period on
which the interested stockholder acquired any shares of the same class of
voting stock.
(3) The consideration to be received by holders of
any class or series of outstanding stock is to be in cash or in the same
form as the interested stockholder has previously paid for shares of the
same class or series of stock. If the interested stockholder has paid for
shares of any class or series of stock with varying forms of
consideration, the form of consideration for such class or series of stock
- 8 -
shall be either cash or the form used to acquire the largest number of
shares of such class or series of stock previously acquired by it.
(4) (i) After the determination date and prior
to the consummation of such business combination:
1. There shall have been no failure
to declare and pay at the regular date therefor any full periodic
dividends (whether or not cumulative) on any outstanding preferred stock
of the corporation;
2. There shall have been:
A. No reduction in the
annual rate of dividends paid on any class or series of stock of the
corporation that is not preferred stock (except as necessary to reflect
any subdivision of the stock); and
B. An increase in such
annual rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization or
any similar transaction which has the effect of reducing the number of
outstanding shares of the stock; and
3. The interested stockholder did
not become the beneficial owner of any additional shares of stock of the
corporation except as part of the transaction which resulted in such
interested stockholder becoming an interested stockholder or by virtue of
proportionate stock splits or stock dividends.
(ii) The provisions of sub-paragraphs 1. and
2. of subparagraph (i) do not apply if no interested stockholder or an
affiliate or associate of the interested stockholder voted as a director
of the corporation in a manner inconsistent with such sub-subparagraphs
and the interested stockholder, within 10 days after any act or failure to
act inconsistent with such sub-subparagraphs, notifies the board of
directors of the corporation in writing that the interest stockholder
disapproves thereof and requests in good faith that the board of directors
rectify such act or failure to act.
(c) Same -- Resolution of board of directors. -- (1) Whether
or not such business combinations are authorized or consummated in whole
or in part after July 1, 1983 or after the determination date, the
provisions of Section 3-602 of this subtitle do not apply to business
combinations that specifically, generally, or generally by types, as to
specifically identified or unidentified existing or future interested
stockholders or their affiliates, have been approved or exempted
therefrom, in whole or in part, by resolution of the board of directors of
the corporation:
- 9 -
(i) Prior to September 1, 1983 or such
earlier date as may be irrevocably established by resolution of the board
of directors; or
(ii) If involving transactions with a
particular interested stockholder or its existing or future affiliates, at
any time prior to the determination date.
(2) Unless by its terms a resolution adopted under
this subsection is made irrevocable, it may be altered or repealed by the
board of directors, but this shall not affect any business combinations
that have been consummated, or are the subject of an existing agreement
entered into, prior to the alteration or repeal.
(d) Same -- Exception where board of directors elects to be
bound. -- (1) Unless the charter or bylaws of the corporation
specifically provides otherwise, the provisions of Section 3-602 of this
subtitle do not apply to business combinations of a corporation that, on
July 1, 1983, had an existing interested stockholder, whether a business
combination is with the existing stockholder or with any other person that
becomes an interested stockholder after July 1, 1983, or their present or
future affiliates, unless, at any time after July 1, 1983, the board of
directors of the corporation elects by resolution to be subject, in whole
or in part, specifically, generally, or generally by types, as to
specifically identified or unidentified interested stockholders, to the
provisions of Section 3-602 of this subtitle.
(2) The charter or bylaws of the corporation may
provide that if the board of directors adopts a resolution under paragraph
(1) of this subsection the resolution shall be subject to approval of the
stockholders in the manner and by the vote specified in the charter or the
bylaws.
(3) An election under this subsection may be added to
but may not be altered or repealed except by a charter amendment adopted
by a vote of stockholders meeting the requirements of subsection
(e)(1)(iii) of this section.
(4) If a corporation elects under this subsection to
be included within the provisions of this subtitle generally, without
qualification or limitation, it shall file with the Department articles
supplementary including a copy of the resolution making the election and a
statement describing the manner in which the resolution was adopted. The
articles supplementary shall be executed in the manner required by Title 1
of this article. Section 1-101(e)(2) of this article, but do not
constitute an amendment to the charter.
(e) Same - Inapplicability to certain business combinations.
-- (1) Unless the charter of the corporation provides otherwise, the
provisions of Section 3-602 of this subtitle do not apply to any business
combination of:
- 10 -
(i) A close corporation as defined in Section 4-
101(b) of this article;
(ii) A corporation having fewer than 100 beneficial
owners of its stock;
(iii) A corporation whose original articles of
incorporation have a provision, or whose stockholders adopt a charter
amendment after June 30, 1983 by a vote of at least 80 percent of the
votes entitled to be cast by outstanding shares of voting stock of the
corporation, voting together as a single voting group, and two-thirds of
the votes entitled to be cast by persons (is any) who are not interested
stockholders of the corporation or affiliates or associates of interested
stockholders, voting together as a single voting group, expressly electing
not to be governed by the provisions of Section 3-602 of this subtitle in
whole or in part, or in either case as to business combinations,
specifically, generally, or generally by types, or as to identified or
unidentified existing or future interested stockholders or their
affiliates, provided that, other than in the case of the original articles
of incorporation, an amendment may not be effective until 18 months after
the vote of stockholders and may not apply to any business combination of
the corporation with an interested stockholder (or any affiliate of the
interested stockholder) who became an interested stockholder on or before
the date of the vote;
(iv) An investment company registered under the
Investment Company Act of 1940; or
(v) A corporation with an interested stockholder that
became an interested stockholder inadvertently, if the interested
stockholder:
1. As soon as practicable (but not more
than 10 days after the interested stockholder knew or should have known it
had become an interested stockholder) divests itself of a sufficient
amount of the voting stock of the corporation so that it no longer is the
beneficial owner, directly or indirectly, of 10 percent or more of the
outstanding voting stock of the corporation; and
2. Would not at any time within the 5-year
period preceding the announcement date with respect to the business
combination have been an interested stockholder except by inadvertence.
(2) For purposes of paragraph (1)(ii) of this subsection, all
stockholders of a corporation that have executed an agreement to which the
corporation is an executing party governing the purchase and sale of stock
of the corporation or a voting trust agreement governing stock of the
corporation shall be considered a single beneficial owner of the stock
covered by the agreement.
- 11 -
(f) Business combinations of corporation having Section 2-
104(b)(5) charter provision. -- A business combination of a corporation
that has a charter provision permitted by Section 2-104(b)(5) of this
article is subject to the voting requirements of Section 3-602 of this
subtitle unless one of the requirements or exemptions of subsection (b),
(c), (d), or (e) of this section have been met. (1993, ch. 5, Section 1;
1994, ch. 595.)
- 12 -