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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Corporations and Associations
Chapter : CORPORATE TAKEOVERS
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10-2701 Definitions
In this chapter, unless the context otherwise requires:
1. "Acquiring person" means a person that makes or proposes to make a control share
acquisition. If two or more persons act as a partnership, syndicate or other group
pursuant to any agreement, arrangement, relationship, understanding or otherwise, whether
or not in writing, for the purposes of acquiring, owning or voting shares of an issuing
public corporation, all members of the partnership, syndicate or other group constitute a
person. Acquiring person does not include a licensed broker or dealer or licensed
underwriter that purchases shares of an issuing public corporation solely for purposes of
resale to the public and that is not acting in concert with an acquiring person.
2. "Affiliate" means a person that directly or indirectly controls, is controlled
by or is under common control with a specified person.
3. "Announcement date", when used in reference to any business combination, means
the date of the first public announcement of the final, definitive proposal for the
business combination.
4. "Associate", when used to indicate a relationship with any person, means any of
the following:
(a) Any corporation or entity of which the person is an officer, director or
partner or is, directly or indirectly, the beneficial owner of ten per cent or more of
any class or series of shares or other equity interest.
(b) Any trust or estate in which the person has a substantial beneficial interest
or as to which the person serves as trustee or personal representative or in a similar
fiduciary capacity.
(c) Any relative or spouse of the person, or any relative of the spouse, residing
in the home of the person.
5. "Beneficial owner", "beneficial ownership" and "beneficially owned", when used
with respect to shares, refers to any of the following:
(a) A person who, directly or indirectly through any agreement, arrangement,
relationship, understanding or otherwise, whether or not in writing, has or shares the
power to vote, or direct the voting of the shares, or has or shares the power to dispose
of or direct the disposition of the shares, except that:
(i) A person is not deemed the beneficial owner of shares tendered pursuant to a
tender or exchange offer made by the person or any of the person's affiliates or
associates until the tendered shares are accepted for purchase or exchange.
(ii) A person is not deemed the beneficial owner of shares with respect to which
the person or any of the person's affiliates or associates has the power to vote or
direct the voting arising solely from a revocable proxy given in response to a proxy
solicitation required to be made and made in accordance with the applicable rules and
regulations under the securities exchange act of 1934 and is not then reportable under
that act on a schedule 13d or comparable report.
(iii) A person is not deemed the beneficial owner of shares to be issued to or
transferred to the person or any of the person's affiliates or associates pursuant to
terms of an agreement and plan of merger between the person and the issuing public
corporation unless the merger is effective.
(b) A person who presently has the right to acquire shares through the exercise of
options, warrants or rights, the conversion of convertible securities or otherwise. The
shares subject to the options, warrants, rights or conversion privileges held by a person
are deemed to be outstanding for the purpose of computing the percentage of outstanding
shares of the class or series owned or voting power held by the person but are not deemed
to be outstanding for the purpose of computing the percentage of the class or series
owned or voting power held by any other person.
(c) A person whose relative or spouse, or any relative of the spouse, residing in
the home of the person is the beneficial owner of the shares.
(d) A person who owns ten per cent or more of the total beneficial interest in or
serves as trustee or personal representative in any trust or estate beneficially owning
the shares.
(e) A person who owns ten per cent or more of the equity in any corporation or
entity beneficially owning the shares.
(f) A person who is an affiliate of the person beneficially owning the shares.
6. "Business combination", when used in reference to any issuing public corporation
and any interested shareholder of the issuing public corporation, means any of the
following:
(a) Any merger or consolidation of the issuing public corporation or any subsidiary
of the issuing public corporation with either:
(i) The interested shareholder.
(ii) Any other corporation or entity, whether or not itself an interested
shareholder of the issuing public corporation, that is, or after the merger would be, an
affiliate or associate of the interested shareholder, except that the foregoing does not
include the merger of a wholly owned subsidiary of the issuing public corporation into
the issuing public corporation or the merger of two or more wholly owned subsidiaries of
the issuing public corporation.
(b) Any exchange, pursuant to a plan of exchange under the laws of this state or a
comparable statute of any other state or jurisdiction, of shares of the issuing public
corporation or any subsidiary of the issuing corporation for shares of either:
(i) The interested shareholder.
(ii) Any other corporation or entity, whether or not itself an interested
shareholder of the issuing public corporation, that is, or after the exchange would be,
an affiliate or associate of the interested shareholder.
(c) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in
a single transaction or a series of transactions, to or with the interested shareholder
or any affiliate or associate of the interested shareholder, of assets of the issuing
public corporation or any subsidiary of the issuing public corporation to which any of
the following applies:
(i) Has an aggregate market value, as defined in paragraph 12 of this section,
equal to ten per cent or more of the aggregate market value of all the assets, determined
on a consolidated basis, as of the end of the most recent fiscal quarter, of the issuing
public corporation.
(ii) Has an aggregate market value, as defined in paragraph 12 of this section,
equal to ten per cent or more of the aggregate market value of all the outstanding shares
of the issuing public corporation.
(iii) Represents ten per cent or more of either the revenues or net income,
determined on a consolidated basis for the most recent four fiscal quarters, or such
shorter period as the issuing public corporation has been in existence, of the issuing
public corporation.
(d) The issuance or transfer by the issuing public corporation or any subsidiary of
the issuing public corporation, in a single transaction or a series of transactions, of
any shares of the issuing public corporation or any subsidiary of the issuing public
corporation that have an aggregate market value equal to five per cent or more of the
aggregate market value of all the outstanding shares of the issuing public corporation to
the interested shareholder or any affiliate or associate of the interested shareholder,
except pursuant to the exercise of warrants or rights to purchase shares offered or a
dividend or distribution paid or made pro rata to all shareholders of the issuing public
corporation.
(e) The adoption of any plan or proposal for the liquidation or dissolution of the
issuing public corporation, or any reincorporation of the issuing public corporation in
another state or jurisdiction, proposed by, on behalf of or pursuant to any agreement,
arrangement or understanding, whether or not in writing, with the interested shareholder
or any affiliate or associate of the interested shareholder.
(f) Any reclassification of securities, including any share dividend or split,
reverse share split or other distribution of shares in respect of shares,
recapitalization of the issuing public corporation, merger or consolidation of the
issuing public corporation with any subsidiary of the issuing public corporation,
exchange of shares of the issuing public corporation with any subsidiary of the issuing
public corporation or other transaction, whether or not with or into or otherwise
involving the interested shareholder, proposed by, on behalf of or pursuant to any
agreement, arrangement or understanding, whether or not in writing, with the interested
shareholder or any affiliate or associate of the interested shareholder that has the
effect, directly or indirectly, of increasing the proportionate share of the outstanding
shares of any class or series of shares, or securities that are exchangeable for or
convertible into or that carry a right to acquire shares, of the issuing public
corporation or any subsidiary of the issuing public corporation that is, directly or
indirectly, owned by the interested shareholder or any affiliate or associate of the
interested shareholder, except as a result of immaterial changes due to fractional share
adjustments.
(g) Any receipt by the interested shareholder or any affiliate or associate of the
interested shareholder of the benefit, directly or indirectly, except proportionately as
a shareholder of the issuing public corporation, of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax advantages provided
by or through the issuing public corporation or any subsidiary of the issuing public
corporation.
7. "Consummation date", with respect to any business combination, means the date on
which the business combination is effective, except in the case of a business combination
as to which a shareholder vote is taken by the shareholders of the issuing public
corporation, in which case it means the later of:
(a) The business day before the vote.
(b) Twenty days before the date on which the business combination is effective.
8. "Control", "controlling", "controlled by" or "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. A person's beneficial ownership of ten per cent
or more of the voting power of a corporation's outstanding securities creates a
presumption that the person has control of the corporation. A person is not considered
to have control of a corporation if the person holds voting power, in good faith and not
for the purpose of avoiding article 2 of this chapter, as an agent, bank, broker,
nominee, custodian or trustee for one or more beneficial owners who do not individually
or as a group have control of the corporation.
9. "Control share acquisition" means an acquisition, directly or indirectly, by an
acquiring person of beneficial ownership of shares of an issuing public corporation that,
except for article 2 of this chapter, would, when added to all other shares of the
issuing public corporation beneficially owned by the acquiring person, entitle the
acquiring person, immediately after the acquisition, to exercise or direct the exercise
of a new range of voting power within any of the ranges specified in section 10-2722,
subsection A, paragraph 4, but does not include any of the following:
(a) An acquisition by a donee pursuant to an inter vivos gift not made to avoid
article 2 of this chapter or by a distributee as defined in section 14-1201.
(b) An acquisition pursuant to a security agreement not created to avoid article 2
of this chapter.
(c) An acquisition under chapter 1, article 4 of this title if the issuing public
corporation or a subsidiary is a party to the transaction.
(d) An acquisition from the issuing public corporation.
(e) An acquisition for the benefit of others by a person acting in good faith and
not made to avoid article 2 of this chapter to the extent that the person may not
exercise or direct the exercise of voting power or dispose of or direct the disposition
of the shares except on the instruction of others.
All shares, the beneficial ownership of which is acquired within a one hundred twenty day
period, and all shares, the beneficial ownership of which is acquired pursuant to a plan
to make a control share acquisition, are deemed to have been acquired in the same
acquisition.
10. "Interested shareholder", when used in reference to any issuing public
corporation, means any person, other than the issuing public corporation or any
subsidiary of the issuing public corporation, that is either:
(a) The beneficial owner, directly or indirectly, of ten per cent or more of the
voting power of the outstanding shares of the issuing public corporation.
(b) An affiliate or associate of the issuing public corporation who at any time
within the three year period immediately before the date in question was the beneficial
owner of ten per cent or more of the voting power of the then outstanding shares of the
issuing public corporation.
11. "Issuing public corporation" means a corporation that has a class of equity
securities registered pursuant to section 12 or is subject to section 15(d) of the
securities exchange act of 1934 or has elected to be subject to all or part of this
chapter pursuant to section 10-2706 and which either:
(a) Is incorporated under the laws of this state.
(b) Has its principal place of business or its principal executive office located
in this state and owns or controls assets located within this state that have a fair
market value of at least one million dollars and has more than five hundred employees
residing in this state.
12. "Market value", when used in reference to stock or property of any issuing
public corporation, means the following:
(a) In the case of stock, the highest closing sale price during the thirty day
period immediately preceding the date in question of the stock on the composite tape for
New York stock exchange listed stock or, if the stock is not quoted on the composite tape
or not listed on the New York stock exchange, on the principal United States securities
exchange registered under the securities exchange act of 1934 on which the stock is
listed or, if the stock is not listed on any such exchange, on the national association
of securities dealers, inc. automated quotations national market system or, if the stock
is not quoted on the national association of securities dealers, inc. automated
quotations national market system, the highest closing bid quotation during the thirty
day period preceding the date in question of the stock on the national association of
securities dealers, inc. automated quotations system or any system then in use or, if no
such quotation is available, the fair market value on the date in question of the stock
as determined in good faith by the board of directors of the issuing public corporation.
(b) In the case of property other than cash or stock, the fair market value of the
property on the date in question as determined in good faith by the board of directors of
the issuing public corporation.
13. "Person" means an individual, a corporation, a partnership, a syndicate, an
association, a joint stock company, a trust in which the interests of the beneficiaries
are evidenced by securities, an unincorporated organization or entity or a government or
political subdivision of a government.
14. "Share acquisition date", with respect to any person and any issuing public
corporation, means the date that the person first becomes an interested shareholder of
the issuing public corporation.
15. "Shares" means those shares presently entitled to vote in the election of
directors of the issuing public corporation.
16. "Subsidiary of a person" means a corporation or entity of which the person is
the beneficial owner of a majority of the voting power of the corporation or entity.
17. "Tender offer" means a tender offer under the securities exchange act of 1934.
10-2702 Duties of director
In discharging the duties of the position of director under this chapter, a director
of an issuing public corporation, in considering the best interests of the corporation,
shall consider the long-term as well as the short-term interests of the corporation and
its shareholders including the possibility that these interests may be best served by the
continued independence of the corporation. This section shall not modify the duties of
the position of director in any matter outside the scope of this chapter.
10-2703 Special meetings of shareholders
A. Special meetings of the shareholders of issuing public corporations may be
called for any purpose or purposes under this chapter at any time by any of the
following:
1. The president.
2. The secretary.
3. Two or more directors.
4. A person authorized in the articles of incorporation or bylaws to call special
meetings.
5. A shareholder or shareholders holding ten per cent or more of the voting power
of all shares, except that a special meeting for the purpose of considering any action to
directly or indirectly facilitate or effect a business combination, including any action
to change or otherwise affect the composition of the board of directors for that purpose,
must be called by twenty-five per cent or more of the voting power of all shares.
B. A shareholder or shareholders holding the voting power specified in subsection
A, paragraph 5 may demand a special meeting of shareholders by written notice of demand
given to the president or secretary of the issuing public corporation and containing the
purposes of the meeting. Within thirty days after receipt of the demand by one of those
officers, the board shall cause a special meeting of shareholders to be called and held
on notice no later than ninety days after receipt of the demand, all at the expense of
the issuing public corporation. If the board fails to call and hold a special meeting as
required by this section, the shareholder or shareholders making the demand may call the
meeting by giving notice as required, all at the expense of the issuing public
corporation.
10-2704 Limitation on share repurchases; definition
A. An issuing public corporation shall not, directly or indirectly, purchase or
agree to purchase any shares from a beneficial owner of more than five per cent of the
voting power of the issuing public corporation for more than the average market price of
the shares if the shares have been beneficially owned by the beneficial owner for less
than three years, unless either:
1. The purchase or agreement to purchase is approved at a meeting of shareholders
by the affirmative vote of the holders of a majority of the voting power of all shares
excluding shares beneficially owned by the beneficial owner or its affiliates or
associates or by any officer or director of the issuing public corporation.
2. The issuing public corporation makes an offer, of at least equal value per
share, to all holders of shares of such class or series and to all holders of any class
or series into which the shares may be converted.
B. For the purposes of this section, "average market price" means the average
closing sale price during the thirty trading days immediately preceding the purchase of
the shares in question, or if the person or persons have commenced a tender offer or have
announced an intention to seek control of the issuing public corporation, during the
thirty trading days preceding the earlier of the commencement of the tender offer or the
making of the announcement, of a share on the composite tape for New York stock exchange
listed shares or, if the shares are not quoted on the composite tape or not listed on the
New York stock exchange, on the principal United States securities exchange registered
under the securities exchange act of 1934 on which the shares are listed or, if the
shares are not listed on any such exchange, on the national association of securities
dealers, inc. automated quotations national market system or, if the shares are not
quoted on the national association of securities dealers, inc. automated quotations
national market system, the average closing bid quotation, during the thirty trading days
preceding the purchase of the shares in question of a share on the national association
of securities dealers, inc. automated quotations system or any system then in use, or if
the person or persons have commenced a tender offer or have announced an intention to
seek control of the issuing public corporation, during the thirty trading days preceding
the earlier of the commencement of the tender offer or the making of the announcement,
except that if no quotation is available the average market price is the fair market
value on the date of purchase of the shares in question of a share as determined in good
faith by the board of directors of the issuing public corporation.
10-2705 Compensation agreements
During any tender offer or request or invitation for tenders of any class or series
of shares of an issuing public corporation, other than an offer, request or invitation by
the issuing public corporation, the issuing public corporation shall not enter into or
amend, directly or indirectly, agreements containing provisions, whether or not dependent
on the occurrence of any event or contingency, that increase, directly or indirectly, the
current or future compensation of any officer or director of the issuing public
corporation. This section does not prohibit routine increases in compensation or other
routine compensation agreements undertaken in the ordinary course of the issuing public
corporation's business.
10-2706 Application
A. This chapter applies only to issuing public corporations and to corporations
which elect pursuant to subsection C of this section to be subject to:
1. All of the provisions of this article.
2. All of the provisions of article 2 of this chapter.
3. All of the provisions of article 3 of this chapter.
4. Any combination of paragraph 1, 2 or 3.
B. A corporation may not elect to be subject to less than all of the provisions in
any article of this chapter. A corporation which elects to be subject to all or part of
this chapter pursuant to subsection C of this section, for purposes of applying the
provisions of this chapter or part of this chapter, shall be deemed an issuing public
corporation.
C. An election by a corporation pursuant to subsection A of this section must be
contained either:
1. In its articles of incorporation at the time of incorporation.
2. In an amendment to its articles of incorporation or bylaws which is approved by
the shareholders holding a majority of the outstanding voting power of all shares.
10-2721 Control share acquisitions; exemption from article
A. This article does not apply to a control share acquisition if any of the
following applies:
1. The articles of incorporation or bylaws of the issuing public corporation
contain a provision adopted before it became an issuing public corporation and not
subsequently amended expressly electing not to be subject to this article.
2. An amendment to the articles of incorporation or bylaws of the issuing public
corporation is approved by the shareholders which hold a majority of the outstanding
voting power of all shares, excluding shares beneficially owned by interested
shareholders and their affiliates and associates, expressly electing not to be subject to
this article and the amendment provides that it does not apply to any control share
acquisition made on or before the effective date of the amendment to the articles of
incorporation or bylaws.
3. The control share acquisition was consummated before, or a binding agreement to
make the control share acquisition was entered into before, July 23, 1987.
4. The control share acquisition was inadvertent and the acquiring person, as soon
as practicable, divests itself of a sufficient amount of the shares so that it no longer
is the beneficial owner, directly or indirectly, of shares within the range specified in
section 10-2722, subsection A that resulted in the control share acquisition.
5. The corporation, by action of its board of directors, adopts an amendment to its
bylaws within forty-five days of the effective date of this section expressly electing
not to be governed by this article.
B. An amendment to the bylaws adopted pursuant to subsection A, paragraph 2 of this
section shall not be further amended by the board of directors without the approval of
the shareholders which hold a majority of the outstanding voting power of all shares
excluding shares beneficially owned by interested shareholders and their affiliates and
associates.
C. An amendment to the bylaws adopted pursuant to subsection A, paragraph 5 shall
not be further amended by the board of directors without the approval of shareholders
which hold a majority of the outstanding voting power of all shares excluding shares
beneficially owned by interested shareholders and their affiliates and associates.
10-2722 Information statement
A. Not later than ten days after a control share acquisition, the acquiring person
shall deliver to the issuing public corporation at its principal executive office an
information statement containing all of the following:
1. The identity of the acquiring person, including the identity of each member of
any partnership, syndicate or other group constituting the acquiring person and the
identity of each affiliate and associate of the acquiring person, including the identity
of each affiliate and associate of each member of such partnership, syndicate or other
group.
2. A reference that the information statement is made under this section.
3. The number and class or series of shares of the issuing public corporation
beneficially owned, directly or indirectly, before the control share acquisition by each
of the persons identified pursuant to paragraph 1.
4. The number and class or series of shares of the issuing public corporation
acquired or proposed to be acquired pursuant to the control share acquisition by each of
the persons identified pursuant to paragraph 1 and specification of which of the
following ranges of voting power in the election of directors that, except for this
section, the acquiring person in good faith believes resulted or would result from
consummation of the control share acquisition:
(a) At least twenty per cent but less than thirty-three and one-third per cent.
(b) At least thirty-three and one-third per cent but less than or equal to fifty
per cent.
(c) Over fifty per cent.
5. The terms of the control share acquisition or proposed control share
acquisition, including the source of monies or other consideration and the material terms
of the financial arrangements for the control share acquisition, plans or proposals of
the acquiring person, including plans or proposals under consideration, to liquidate or
dissolve the issuing public corporation, to sell all or a substantial part of its assets
or merge or consolidate it or exchange its shares with any other person, to change the
location of its principal place of business or its principal executive office or of a
material portion of its business activities, to change materially its management or
policies of employment, to change materially its charitable or community contributions or
its policies, programs or practices relating thereto, to change materially its
relationship with suppliers or customers or the communities in which it operates or to
make any other material change in its business, corporate structure, management or
personnel and such other objective facts as would be substantially likely to affect the
decision of a shareholder with respect to voting on the control share acquisition.
B. If any material change occurs in the facts set forth in the information
statement, including any material increase or decrease in the number of shares of the
issuing public corporation acquired or proposed to be acquired by the persons identified
pursuant to subsection A, paragraph 1, the acquiring person shall promptly deliver to the
issuing public corporation at its principal executive office an amendment to the
information statement containing information relating to such material change. An
increase or decrease or proposed increase or decrease equal, in the aggregate for all
persons identified pursuant to subsection A, paragraph 1, to one per cent or more of the
total number of outstanding shares of any class or series of the issuing public
corporation is deemed material for purposes of this subsection. An increase or decrease
or proposed increase or decrease of less than this amount may be material, depending on
the facts and circumstances.
10-2723 Meeting of shareholders
If the acquiring person so requests in writing at the time of delivery of an
information statement pursuant to section 10-2722 and has made, or has made a bona fide
written offer to make, a control share acquisition and gives a written undertaking to pay
or reimburse the issuing public corporation's expenses of a special meeting, except the
expenses of the issuing public corporation in opposing approval of the control share
acquisition, within thirty days after receipt by the issuing public corporation of the
information statement, a special meeting of the shareholders of the issuing public
corporation shall be called pursuant to section 10-2703, for the purpose of considering
the voting rights to be accorded to shares referred to in section 10-2725, subsection A
acquired or to be acquired pursuant to the control share acquisition. The special
meeting shall be held no later than ninety days after receipt of the information
statement, unless the acquiring person agrees to a later date. If no request for a
special meeting is made, consideration of the voting rights to be accorded to shares
referred to in section 10-2725, subsection A acquired or to be acquired pursuant to the
control share acquisition shall be presented at the next special or annual meeting of the
shareholders, unless the matter of the voting rights becomes moot. The notice of the
meeting shall be accompanied at a minimum by a copy of the information statement and a
copy of any amendment to the information statement previously delivered to the issuing
public corporation and a statement disclosing that the board of directors of the issuing
public corporation recommends approval of, expresses no opinion and is remaining neutral
toward, recommends rejection of or is unable to take a position with respect to according
voting rights to shares referred to in section 10-2725, subsection A acquired or to be
acquired in the control share acquisition. The notice of any meeting required by this
section shall be given at least thirty days before the meeting.
10-2724 Financing
No call of a special meeting of the shareholders of the issuing public corporation
is required to be made pursuant to section 10-2723 and no consideration of the voting
rights to be accorded to shares referred to in section 10-2725, subsection A acquired or
to be acquired pursuant to a control share acquisition shall be presented at any special
or annual meeting of the shareholders of the issuing public corporation unless at the
time of delivery of the information statement pursuant to section 10-2722 the acquiring
person has entered into and has delivered to the issuing public corporation a copy or
copies of a definitive financing agreement or agreements with one or more responsible
financial institutions or other entities having the necessary financial capacity for any
financing of the control share acquisition not to be provided by monies of the acquiring
person.
10-2725 Voting rights
A. Shares of an issuing public corporation that are acquired by an acquiring person
in a control share acquisition and that exceed the threshold of voting power of any of
the ranges prescribed in section 10-2722, subsection A, paragraph 4 have the same voting
rights as other shares of the same class or series for all elections of directors but do
not have the right to vote on other matters unless approved by a resolution of
shareholders of the issuing public corporation at a special or annual meeting of
shareholders pursuant to section 10-2723.
B. The resolution of shareholders must be approved by the affirmative vote of the
holders of a majority of the voting power of all shares, excluding all shares
beneficially owned by the acquiring person or its affiliates or associates or by any
officer or director of the issuing public corporation.
C. A class or series of shares of the issuing public corporation is entitled to
vote separately as a class or series if any provision of the control share acquisition
would, if contained in a proposed amendment to the articles of incorporation, entitle the
class or series to vote separately as a class or series.
D. To have the voting rights accorded by approval of a resolution of shareholders,
any proposed control share acquisition not consummated before the time of the
shareholders' approval must be consummated within one hundred eighty days after the
shareholders' approval.
E. Any shares referred to in subsection A of this section acquired in a control
share acquisition that do not have voting rights accorded to them by approval of a
resolution of shareholders shall regain their voting rights on transfer to a person other
than the acquiring person or any affiliate or associate of the acquiring person unless
the acquisition of the shares by the other person constitutes a control share
acquisition, in which case the voting rights of the shares remain subject to the
provisions of this article.
10-2726 Rights of action
An acquiring person, an issuing public corporation and shareholders of an issuing
public corporation may sue at law or in equity to enforce the provisions of this article.
10-2727 Redemption
A. Unless otherwise expressly provided in the articles of incorporation or in
bylaws approved by the shareholders of an issuing public corporation, the issuing public
corporation may call for redemption of all but not less than all shares referred to in
section 10-2725, subsection A acquired in a control share acquisition at a redemption
price equal to the market value of the shares at the time the call for redemption is
given if either:
1. An information statement has not been delivered to the issuing public
corporation by the acquiring person by the tenth day after the control share acquisition.
2. An information statement has been delivered but the shareholders have voted not
to accord voting rights to such shares pursuant to section 10-2725, subsection B.
B. If exercising its redemption right pursuant to this section, the issuing public
corporation shall give the acquiring person written notice of the call for redemption
within thirty days after the event giving the issuing public corporation the option to
call the shares for redemption and the shares shall be redeemed within sixty days after
the call is given.
10-2741 Business combination with interested shareholder; approval by committee of the directors
A. Except for the provisions of section 10-2743, an issuing public corporation may
not engage in any business combination or vote, consent or otherwise act to authorize a
subsidiary of the issuing public corporation to engage in any business combination with
respect to, proposed by or on behalf of or pursuant to any agreement, arrangement or
understanding, whether or not in writing, with any interested shareholder of the issuing
public corporation or any affiliate or associate of the interested shareholder for a
period of three years after the interested shareholder's share acquisition date, unless
either:
1. The business combination with the interested shareholder is approved by a
committee, formed in accordance with subsection D of this section, of the board of
directors of the issuing public corporation before the interested shareholder's share
acquisition date pursuant to subsection B of this section.
2. The acquisition of shares made by the interested shareholder on the
shareholder's share acquisition date is approved by a committee, formed in accordance
with subsection D of this section, of the board of directors of the issuing public
corporation before the interested shareholder's share acquisition date pursuant to
subsection C of this section.
B. Any approval of a business combination pursuant to subsection A, paragraph 1 of
this section must be given by the committee in writing within forty-five days after
receipt by the committee of a good faith definitive proposal in writing regarding the
business combination, and in the absence of such approval, the proposed business
combination shall be deemed to have been disapproved.
C. Any approval of a share acquisition pursuant to subsection A, paragraph 2 of
this section must be given by the committee in writing within forty-five days after
receipt by the committee of a good faith definitive proposal in writing regarding the
share acquisition, and in the absence of such approval, the proposed share acquisition
shall be deemed to have been disapproved.
D. When a business combination or acquisition of shares is proposed pursuant to
this section, the board of directors shall promptly form a committee composed of all
disinterested directors. The committee shall take action on the proposal by the
affirmative vote of a simple majority of committee members. The committee is not subject
to any direction or control by the board of directors with respect to the committee's
consideration of or any action concerning a proposed business combination or acquisition
of shares pursuant to this section. A committee formed pursuant to this subsection shall
be composed of one or more members. Only disinterested directors may be members of a
committee formed pursuant to this subsection. However, if there are no disinterested
directors, the board of directors shall select three or more disinterested persons to be
committee members. For purposes of this subsection, a director or person is
disinterested if the director or person is not an interested shareholder, an affiliate or
associate of an interested shareholder or a present or former officer or employee of the
issuing public corporation or of an affiliate or associate of the issuing public
corporation or of the interested shareholder or of any affiliate or associate of the
interested shareholder.
10-2742 Requirements after three years
Except for the provisions of sections 10-2741 and 10-2743, an issuing public
corporation may not engage at any time in any business combination or vote, consent or
otherwise act to authorize a subsidiary of the issuing public corporation to engage in
any business combination with respect to, proposed by or on behalf of or pursuant to any
agreement, arrangement or understanding, whether or not in writing, with an interested
shareholder of the issuing public corporation or any affiliate or associate of the
interested shareholder other than a business combination meeting all the requirements of
this chapter, any other applicable section of this title, the articles of incorporation
of the issuing public corporation and the requirements specified in any of the following:
1. A business combination, with respect to which the consummation date is no
earlier than three years after the interested shareholder's share acquisition date,
approved by the board of directors of the issuing public corporation before the
interested shareholder's share acquisition date, or as to which the acquisition of shares
made by the interested shareholder on the interested shareholder's share acquisition date
had been approved by the board of directors of the issuing public corporation before the
interested shareholder's share acquisition date.
2. A business combination approved by the affirmative vote of the shareholders
holding a majority of the voting power of all shares, excluding shares beneficially owned
by the interested shareholder proposing the business combination or any affiliate or
associate of the interested shareholder proposing the business combination, at a meeting
called for that purpose no earlier than three years after the interested shareholder's
share acquisition date.
3. A business combination, with respect to which the consummation date is no
earlier than three years after the interested shareholder's share acquisition date, that
meets all of the following conditions:
(a) The aggregate amount of the cash and the market value as of the consummation
date of consideration other than cash to be received per share by holders of outstanding
common shares of the issuing public corporation in the business combination is at least
equal to the higher of the following:
(i) The highest per share price paid by the interested shareholder, at a time when
the interested shareholder was the beneficial owner, directly or indirectly, of five per
cent or more of the voting power of all shares of the issuing public corporation, for any
common shares of the same class or series acquired by it within the three year period
immediately before the announcement date with respect to the business combination or
within the three year period immediately before, or in, the transaction in which the
interested shareholder became an interested shareholder, whichever is higher, plus, in
either case, interest compounded annually from the earliest date on which the highest per
share acquisition price was paid through the consummation date at the rate for one 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 other than in
cash, per common share since the earliest date, up to the amount of the interest.
(ii) The market value per common share on the announcement date with respect to the
business combination or on the interested shareholder's share acquisition date, whichever
is higher, plus interest compounded annually from that date through the consummation date
at the rate for one 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 other than in cash, per common share since that date, up to the amount of
the interest.
(b) The aggregate amount of the cash and the market value as of the consummation
date of consideration other than cash to be received per share by holders of outstanding
shares of any class or series of stock, other than common shares, of the issuing public
corporation in the business combination is at least equal to the highest of the
following, whether or not the interested shareholder has previously acquired any stock of
the class or series:
(i) The highest per share price paid by the interested shareholder, at a time when
the interested shareholder was the beneficial owner, directly or indirectly, of five per
cent or more of the voting power of all shares of the issuing public corporation, for any
shares of the class or series acquired by it within the three year period immediately
before the announcement date with respect to the business combination or within the three
year period immediately before, or in, the transaction in which the interested
shareholder became an interested shareholder, whichever is higher, plus, in either case,
interest compounded annually from the earliest date on which the highest per share
acquisition price was paid through the consummation date at the rate for one 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 other than in cash, per
share of the class or series since such earliest date, up to the amount of the interest.
(ii) The highest preferential amount per share to which the holders of stock of the
class or series are entitled in the event of any voluntary liquidation, dissolution or
winding up of the issuing public corporation, plus the aggregate amount of any unpaid
dividends declared or due as to which the holders are entitled before payment of
dividends on some other class or series of stock, unless the aggregate amount of the
dividends is included in the preferential amount.
(iii) The market value per share of the class or series on the announcement date
with respect to the business combination or on the interested shareholder's share
acquisition date, whichever is higher, plus interest compounded annually from that date
through the consummation date at the rate for one 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 other than in cash, per share of the class or series
since that date, up to the amount of the interest.
(c) The consideration to be received by holders of a particular class or series of
outstanding stock, including common shares, of the issuing public corporation in the
business combination is in cash or in the same form as the interested shareholder has
used to acquire the largest number of shares of the class or series of stock previously
acquired by it and the consideration is distributed promptly.
(d) The holders of all outstanding stock of the issuing public corporation not
beneficially owned by the interested shareholder immediately before the consummation date
with respect to the business combination are entitled to receive in the business
combination cash or other consideration for the stock in compliance with subdivisions
(a), (b) and (c).
(e) After the interested shareholder's share acquisition date and before the
consummation date with respect to the business combination, the interested shareholder
has not become the beneficial owner of any additional shares of the issuing public
corporation except:
(i) As part of the transaction that resulted in the interested shareholder becoming
an interested shareholder.
(ii) By virtue of proportionate share splits, share dividends or other
distributions of shares in respect of shares not constituting a business combination.
(iii) Through a business combination meeting all of the conditions of this article.
(iv) Through purchase by the interested shareholder at any price that, if the price
had been paid in an otherwise permissible business combination the announcement date and
consummation date of which were the date of the purchase, would have satisfied the
requirements of subdivisions (a), (b) and (c).
10-2743 Business combinations; exemptions
A. This article does not apply to any business combination of an issuing public
corporation if any of the following applies:
1. The articles of incorporation or bylaws of the issuing public corporation
contain a provision adopted before it became an issuing public corporation and not
subsequently amended expressly electing not to be subject to this article.
2. An amendment to the articles of incorporation or bylaws of the issuing public
corporation is approved by the shareholders holding a majority of the outstanding voting
power of all shares, excluding shares beneficially owned by interested shareholders and
their affiliates and associates, expressly electing not to be subject to this article and
such amendment provides that it does not apply to any business combination of the issuing
public corporation with an interested shareholder whose share acquisition date is on or
before the effective date of the amendment to the articles of incorporation or bylaws.
3. The business combination was consummated before, or a binding agreement for the
business combination was entered into before, July 23, 1987.
4. The business combination of the issuing public corporation is with an interested
shareholder whose share acquisition date is on or before July 22, 1987, if the business
combination is approved by a simple majority vote of a committee of the board of
directors of the issuing public corporation which is formed in accordance with section
10-2741, subsection D.
5. The business combination of the issuing public corporation is with an interested
shareholder of the issuing public corporation who became an interested shareholder
inadvertently, if the interested shareholder both:
(a) As soon as practicable, divests itself of a sufficient amount of the shares so
that it no longer is the beneficial owner, directly or indirectly, of ten per cent or
more of the outstanding shares of the issuing public corporation.
(b) Would not at any time within the three year period preceding the announcement
date with respect to the business combination have been an interested shareholder except
for the inadvertent acquisition.
6. The issuing public corporation is an insurance company regulated under title 20,
unless the company elects to be subject to this article in whole or in part pursuant to
section 10-2706.
B. A bylaw adopted or amended pursuant to subsection A, paragraph 2 of this section
shall not be amended or further amended without the approval of the shareholders which
hold a majority of the outstanding voting power of all shares excluding shares
beneficially owned by an interested shareholder or their affiliates or associates.
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