APPENDIX E

Quick Guide to Appraisal for Public Benefit Corporations

Appraisal rights are a statutory remedy available to shareholders who object to certain extraordinary actions taken by a corporation (such as mergers, and now, under the PBCS, charter amendments to elect PBC status or similar events). This remedy allows shareholders to require the corporation to buy their stock at a price equal to its fair market value (plus interest) as of the time immediately before the extraordinary corporate action is taken.

The Corporation’s Obligations Relating to Appraisal Rights

Vote at a shareholder meeting. If the event is to be submitted for approval at a meeting of the shareholders, the corporation must:

notify all of the shareholders (as of the record date for notice) at least

include in the notice a copy of Section 262 of the DGCL; and

include in the notice all information material to the shareholders’ decision whether to seek appraisal.

Approval by written consent. If the event is approved by written consent of the shareholders (in accordance with DGCL § 228), the corporation must:

before the effective date of the event or within 10 days thereafter, notify each shareholder of the approval of the event and that appraisal rights are available;

include in the notice a copy of Section 262 of the DGCL;

include in the notice all information material to the shareholders’ decision whether to seek appraisal; and

notify such shareholders of the effective date of the event if given on or after the effective date.

How a Shareholder Perfects Appraisal Rights

To perfect appraisal rights in Delaware, a shareholder must comply with all of the following procedures:

Demand appraisal. The shareholder must file a written demand for appraisal with the corporation before the shareholder vote on the event (or, if the event is approved by written consent, within 20 days of the appraisal notice).

Not vote in favor of or consent to the event. The shareholder must either vote against the event or abstain from the vote.

Maintain continuous record ownership. The shareholder making the demand must be the record (registered) holder of the stock from the date of the demand for appraisal through the effective date of the event.

File a petition with the Delaware Court of Chancery and serve a copy of the petition on the corporation. Within 120 days after the effective date of the event, the shareholder must file a petition with the Court of Chancery and demand that it determine the value of the stock of all shareholders. It is not necessary for all dissenting shareholders to file the petition, but one shareholder (or the corporation) must file to start the proceeding to determine the fair value of the corporation’s stock (DGCL § 262[e]). All dissenting shareholders share in the cost of the proceeding.

How a Corporation Must Respond to a Demand for Appraisal Rights

The corporation must follow certain procedures set out in the statute when responding to a demand for appraisal. These requirements include:

Providing a statement stating the aggregate number of shares for which demands for appraisal have been received if requested by a shareholder who has perfected the right to an appraisal. This statement must be provided within ten days of the request (DGCL § 262[e]).

Filing a verified list of shareholders who have demanded appraisal with the office of the Register in Chancery within 20 days from receiving service of the appraisal petition (DGCL § 262[f]).