Recommendation 14

We

We do not agree that a purchaser should be limited to a 20% voting interest unless he makes a tender or purchases stock from the issuer. feel the current rule requiring filing a Form 13-D at the 5% ownership level adequately regulates significant open market purchases and contains sufficient disclosure to protect the interests of public shareholders.

Recommendation 13

Current rules require filing of a Form 13-D with the S.E.C. within 10 days of crossing the 5% threshhold. Conceivably a purchaser could acquire stock over and above 5% within the 10-day period after purchase and prefiling. If the intent of Recommendation 13 is to control such post 5% purchases before they are disclosed, then we think the recommendation should be changed to require filing before a purchaser crosses the 5% ownership level.

Recommendation 16

Consistent with our position on Recommendation 17, we feel that partial offers should not have a longer minimum offering period, because partial bids would be at a disadvantage. In the case of a partial bid for cash, we think it should take no more time for a shareholder to evaluate an offer for 51% than an offer for 100%.

In the case of a partial bid for cash to be followed by a second step for securities, we feel the offer should be bound by the securities registration timetable as suggested in Recommendation 12. Terms of the securities to be offered would have to be clearly defined as required by the registration rules.

Recommendation 24

We agree that a fairness test of an offer made by an unaffiliated party should not be required. We feel strongly that the financial marketplace and/or a shareholder vote should be the sole determinants.

Recommendation 31

We agree that acquisition approval by shareholders of a bidder should be governed by state law and should be a matter for management, the Board of Directors and shareholders to decide. If a shareholder disapproves of the acquisition plans/actions of his company he may seek to influence management actively or may register disapproval by selling his stock.

Recommendations 33-43

The Advisory Committee's recommendations are appropriate, we feel, with the exception of advisory voting. We feel the S.E.C. should not impose the advisory vote procedure on corporations and shareholders. The matters suggested as being subject to advisory vote are questions now dealt with by Boards of Directors as fiduciaries for shareholders, and should be guided by the provisions of the business judgment rule. However, should the advisory voting recommendation become a rule, we feel strongly that non-binding advisory votes are meaningless. There should be a mechanism for incorporating such votes in the annual proxy for a binding count.

Recommendations 44-48

We endorse the recommendations to prohibit short tendering, hedged tendering and multiple tendering, and to require physical delivery of stock for purchase. We believe the professional trading abuses will be minimized by such controls to the good of individual investors and all parties involved in the collection aspects of the tender offer.

I am writing you as a result of
your participation
on the legislative developments panel discussion which
occurred on Saturday, April 7, 1984 at the Annual Spring
Meeting of the ABA Section of Corporation, Banking and
Business Law. While I do not know if this letter is appro-
priately directed to you, I do recall a number of comments
which you made concerning the regulation of target manage-
ment defenses to hostile take-over attempts. Because a
portion of my practice lies in that area of law, I have
become aware of a recent attempt to propose to the Louisiana
Legislature certain modifications of the Louisiana Business
Corporation Law which, inter alia, may have the effect
of further tipping the balance in hostile tender offers
in this State towards incumbent target-company management.
am particularly concerned about a proposed modification
La.Rev. Stat. 12:41 which would give statutory legitimacy
golden parachute contracts. I enclose a copy of
proposals for your review.

I

to

to

the

of

Mr. John R. Flowers Assistant Attorney General
the State of Louisiana
has invited me to participate
with his office in opposing a number of these proposals,
particularly the golden parachute proposal. To that end,
I would very much appreciate it if you would favor me with
an update of the activities of Representative Wirth's Sub-
committee in this area, copies of the materials which that
sub-committee is currently considering as well as the work
of any other committees of the House or the Senate in that
area or, alternatively, with instructions
as to how I might
best obtain that information.

I thank you in advance for the time and trouble con-
sideration of my request involves
and compliment

your presentation during the panel discussion.
let me hear from you.

you on
Please

Sincerely,

Robert B. Bieck, Jr.

#NOT FET ADMITTED IN LOUBIANA

Regular Session, 1984

BILL NO.

BY

CORPORATIONS. Relative to capital surplus; corporate powers; computation of surplus; liability of directors; shareholders' inspection rights; dissenting shareholders' rights; and, fair price protection.

AN ACT

To amend and reenact R.S. 12:1(E)(3), R.S. 12:41 (B)(9), R.S. 12:62(F), R.S. 12:92(E), R.S. 12:103(D), and PART XIII, Chapter 1, Title 12 Louisiana Revised Statutes, and to enact 12:132-134, relative to corporations, to define capital surplus; to establish general corporate powers; to provide for the computation of surplus; to provide for the liability of directors; to provide for inspection rights of shareholders; and to establish fair price protection for shareholders, and to provide for related matters.

Be it enacted by the Legislature of Louisiana:

Section 1. R.S. 12:1 (E) (3), R.S. 12:41 (B) (9), R.S. 12:62(F), R.S. 12:92(E), and

R.S. 12:103 (D) are hereby amended and reenacted to read as follows:

§1. Terms defined

As used in this Chapter, unless the context requires otherwise,

E. "Capital Surplus" means the aggregate of:

(3) Surplus arising from revaluation to reflect unrealized appreciation in value of assets made in good faith by the board of directors of a corporation, including, but not limited to, revaluations based on appraisals of assets, and in the case of corporations engaged in extraction and oil and gas

activities, reserve reports and reserve valuation information; less

§41. General powers

B. Without limiting the grant of power contained in subsection A of this Section, it is hereby specifically provided that every corporation shall have authority:

(9) To elect or appoint directors, officers and agents, to define their duties, and to fix their compensation; to pay pensions and establish pension plans, pension trusts, profit-sharing plans and other incentive and benefit plans for any or all of its directors, officers and employees; to enter into agreements or establish arrangements for severance payments or other special benefits to directors, officers and employees in the event of changes in control of the corporation or other events and to establish stock bonus plans, stock option plans and plans for the offer and sale of any or all of its unissued shares, or of shares purchased or to be purchased, to the employees of the corporation, or to employees of subsidiary corporations, or to trustees on their behalf, which plans (a) may include the establishment of a special fund or funds for the purchase of such shares, in which such employees, during the period of their employment, or any other period of time, may be privileged to share on such terms as are imposed with respect thereto, and (b) may provide for the payment of the price of such shares in installments;

§62. Surplus

F. Unless the articles provide otherwise, a corporation, including a corporation engaged in extractive or oil and gas activities, which owns wasting assets, including oil and gas properties, intended for sale in the ordinary or usual course of business, or which owns property having a limited life, such as a lease for a term of years, or patents, need made no allowance for depletion or amortorization of the cost of such assets in computing surplus. Without limitation of other items which may be properly includable therein in accordance with generally accepted accounting principles or otherwise, corporations engaged in the business of extraction and sale of oil and gas may include in the calculation of depletion for such purposes their aggregate intangible drilling costs of drilling oil and gas wells, including any item of expense or cost not recoverable from a well after it becomes uneconomical other than casing, such as seismic costs, drilling costs,