AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange (the "Agreement"), dated as of
October 29, 1996, between American Public Life Insurance Company, a Mississippi
insurance corporation (the "Company"), and American Public Holdings, Inc., a
Mississippi corporation (the "Holding Company"), which was formed by the Company
for the purpose of consummating the transfers contemplated by this Agreement
(the "Exchange").
Recitals
The Company, a publicly held corporation engaged in the business of
insurance, is authorized to issue 500,000 shares of Common Stock. As of the date
of this Agreement, 53,869 shares of Company Common Stock are issued and
outstanding.
The Holding Company is a Mississippi corporation that was recently
formed for the purpose of effecting the transactions contemplated by this
Agreement. The Holding Company is authorized to issue 50,000,000 shares of
Common Stock and 25,000,000 shares of Preferred Stock. As of the date of this
Agreement, all of the issued and outstanding shares of Common Stock of the
Holding Company are owned by the Company.
The respective Boards of Directors of the Company and the Holding
Company have determined that it is desirable and in the best interests of each
of the corporations and their stockholders to effect the transactions
contemplated by this Agreement. Pursuant to this Agreement, each outstanding
share of Common Stock of the Company, other than those shares held in the
treasury of the Company and those shares as to which rights of dissent have been
exercised, shall be converted and exchanged for one (1) share of Common Stock of
the Holding Company, and all of the outstanding shares of Common Stock of the
Company will be held by the Holding Company (the "Exchange"). As used herein,
the Effective Time shall mean the date and time that the Exchange becomes
effective in accordance with ss.▇▇-▇▇-▇▇▇ of the Mississippi Code of 1972, as
amended, as described more specifically in Article II F. hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the Company and the Holding Company
agree as follows:
ARTICLE I
REPRESENTATIONS
A. Holding Company. The Holding Company hereby represents that
a) it is a corporation duly organized under the laws of Mississippi; (b) it has
its registered office and principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇; (c) its authorized capital stock
199180.1/07964.98735
1
consists of 50,000,000 shares of Common Stock, no par value ("Holding Company
Common Stock"), and 25,000,000 shares of Preferred Stock, par value of $1.00 per
share ("Holding Company Preferred Stock"); (d) there is as of the date of this
Agreement one (1) share of Holding Company Common Stock issued and outstanding
and no shares of Holding Company Preferred Stock issued and outstanding; and (e)
no additional shares of Holding Company Common Stock or Holding Company
Preferred Stock will be issued and outstanding prior to the Effective Time.
The Company. The Company hereby represents that (a) it is a Mississippi
insurance company duly organized under the laws of Mississippi and authorized to
conduct the business of life and health insurance; (b) it has its principal
office and registered office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇; (c)
the authorized capital stock of the Company consists of 500,000 shares of Common
Stock, par value of $20.00 per share (the "Company Common Stock"); (d) there are
as of the date of this Agreement 53,869 shares of Company Common Stock issued
and outstanding, and no shares of Company Common Stock shall be issued or
redeemed prior to the Effective Time of the Exchange; (e) the Company presently
owns one (1) share of the Holding Company Common Stock; and (f) at all times
prior to the Effective Time, the Company will own such Holding Company Common
Stock.
ARTICLE II
EXCHANGE
A. Undertakings. As soon as is practicable, the parties,
through their respective officers and directors, shall submit this Agreement
to the Mississippi Commissioner of Insurance (the "Commissioner") for his
approval. Each of the parties shall take every reasonable and necessary action
to secure the approval of this Agreement by the Commissioner.
The parties, through their respective officers and directors, shall
execute and file with the appropriate state officials of any other state all the
documents and papers necessary and required by any such state and shall take
every reasonable and necessary step and action to comply with and to secure any
required approval of this Agreement and the transactions contemplated herein as
may be required by the statutes, rules and regulations of any such state.
The Company shall prepare and deliver to its stockholders a Proxy
Statement/Prospectus meeting the requirements of applicable law.
B. Exchange and Conversion. At the Effective Time, upon the terms and
conditions set forth in the provisions of this Agreement, each outstanding share
of Company Common Stock (other than shares held in the treasury of the Company
and shares as to which rights of dissent have been exercised) shall be converted
into one (1) share of Holding Company Common Stock.
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C. Effect of the Exchange on the Company. From and after the
Effective Time:
(1) All issued and outstanding Company Common Stock, subject
to the exercise of right of dissent by a stockholder of the Company, shall
immediately, by operation of law and without any conveyance, transfer, or
further action, become the property of the Holding Company;
(2) The Articles of Incorporation and Bylaws of the
Company shall continue in full force and effect following the Exchange until
amended or repealed;
(3) The business presently conducted by the Company shall,
subject to the actions of the Board of Directors and officers of the Company,
continue to be conducted by the Company as a wholly-owned subsidiary of the
Holding Company; and
(4) The directors and officers of the Company and the Holding
Company, respectively, immediately prior to the Effective Time shall continue in
their respective positions with the Company and the Holding Company,
respectively. A list of directors of the Company and the Holding Company, their
addresses, and terms of office is attached to this Agreement as Exhibit 1.
D. Stock. At the Effective Time:
(1) Each issued and outstanding share of Company Common Stock
other than shares held in the treasury of the Company and shares as to which
rights of dissent shall have been exercised, shall, without any action on the
part of the holder thereof, become and be converted into one (1) share of
Holding Company Common Stock, and all outstanding certificates representing
shares of Company Common Stock thereafter shall represent the right to receive
certificates representing shares of Holding Company Common Stock at the rate of
one (1) share of Holding Company Common Stock for each share of Company Common
Stock.
(2) The issued and outstanding shares of Holding Company
Common Stock presently held by the Company shall be canceled and retired.
(3) Each issued and outstanding share of Company Common Stock,
the holder of which has perfected his right to dissent and receive the "fair
value" of such share in accordance with ss.▇▇-▇▇-▇▇▇ and ▇▇.▇▇. 79-4-13.01
through 79-4-13.31 of the Mississippi Code of 1972, as amended, copies of which
are attached as Exhibit 2 hereto (the "Statutory Dissent Provisions") and has
not effectively withdrawn or lost such right as of the Effective Time, shall be
entitled to the rights granted by the Statutory Dissent Provisions.
E. Issuance of Stock Certificates.
(1) As soon as practicable after the Effective Time, the
Holding Company shall furnish each person who was a holder of Company Common
Stock immediately prior to
3
the Effective Time with a form letter of transmittal to be used to exchange the
certificate previously representing their Company Common Stock for certificates
representing their ownership of Holding Company Common Stock.
(2) Upon the surrender by former stockholders of the Company
of certificates previously representing their Company Common Stock accompanied
by properly completed and executed letters of transmittal in a form designated
by the Holding Company, the Holding Company shall deliver to such stockholders
certificates representing the number of shares of the Holding Company Common
Stock to which they are entitled pursuant to this Agreement.
(3) Until a physical exchange of certificates has occurred,
the Holding Company shall be entitled to withhold all distributions, including
dividends, to persons holding certificates of stock which before the Exchange
represented Company Common Stock.
F. Effective Time. The Effective Time of the Exchange will be
the close of businesson the last day of the month during which the Agreement is
recorded by the Commissioner in accordance with ss.▇▇-▇▇-▇▇▇ of the Mississippi
Code of 1972, as amended.
G. Accounting Treatment. The Exchange will be treated as though
a "pooling of interests" for financial reporting purposes.
ARTICLE III
CONDITIONS
Consummation of the Exchange is conditioned upon:
A. Board Approval. At or prior to the Effective Time, the
Company and the Holding Company shall each have duly authorized, approved and
ratified this Agreement by a majority vote of their entire Boards of Directors
and delivered this Agreement to each other, and such authorization shall not
have been revoked or modified at the Effective Time.
B. Stockholder Approval. The holders of Company Common Stock
shall have approved this Agreement by the affirmative vote of at least two-
thirds of the outstanding shares of outstanding capital stock at a meeting of
the stockholders of the Company; and the holder of the outstanding shares of
the Holding Company shall have approved this Agreement; and such approvals
shall not have been revoked or modified at the Effective Time; provided,
however, that this Agreement shall not be submitted to the stockholders for
their approval, unless it has first been approved by the Commissioner.
C. Registration. The shares of the Holding Company Common Stock
to be issued to the holders of the Company Common Stock pursuant to the
Exchange either (i) shall have been the subject of a "no-action" position
issued by the staff of the Securities and Exchange Commission, or an opinion
of counsel to the Holding Company, indicating that the issuance of
such Holding Company Common Stock is exempt from registration to Section
3(a)(10) of the
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Securities Act of 1933 or (ii) shall have been registered with the Securities
and Exchange Commission under the Securities Act of 1933.
D. Resales. The shares of Holding Company Common Stock to be
issued pursuant to the Exchange either (i) shall have been the subject of a
"no-action" position issued by the staff of the Securities and Exchange
Commission, or an opinion of counsel to the Holding Company, to the effect that
the shares are not subject to the holding period for restricted securities
under SEC Rule 144(d) adopted pursuant to the Securities Act of 1933, or (ii)
shall have been registered with the Securities and Exchange Commission under
the Securities Act of 1933.
E. Approvals and Consents. All approvals and consents required
for the lawful consummation of the Exchange shall have been received from the
Commissioner, and any other federal or state official.
F. Tax Status. The Company shall have received an opinion from
Deloitte & Touche LLP to the effect that, for federal income tax purposes, the
Exchange will be treated as a nontaxable transaction under the Internal Revenue
Code of 1986 (the "Code"), and related regulations, that the Exchange will not
give rise to gain or loss to the stockholders of the Company (except to the
extent of any cash received), that the basis of the shares of the Holding
Company Common Stock to be received in the Exchange will, in each instance,
include the basis of the respective shares of Company Common Stock exchanged
therefor, that the holding period of the shares of the Holding Company Common
Stock to be received in the Exchange will, in each instance, include the
holding period of the respective shares of Company Common Stock exchanged
therefor, and the consummation of the transactions in connection with the
Exchange will not constitute a distribution from the policyholders or
stockholders surplus of the Company within the meaning of Section 815 of the
Code and such opinion will not have been withdrawn prior to the Effective
Time.
G. Dissents. The holders of fewer than 10% of the shares of
Company Common Stock shall have properly exercised dissenters' rights under the
Statutory Dissent Provisions.
H. Performance. Each of the parties shall have performed and
complied with all the obligations imposed upon it hereunder which are to be
complied with or performed on or before the Effective Time.
I. State Securities Laws. The Holding Company shall have
complied with all applicable state securities or "blue sky" laws relating to the
issuance and distribution of Holding Company Common Stock.
J. Accounting Treatment. The Company shall have received an
opinion from Deloitte & Touche LLP to the effect that the Exchange will be
treated as though a "pooling of interests" for financial reporting purposes.
5
K. Opinion of Counsel. The Company and the Holding Company shall have
received an opinion of counsel to the effect that: (i) the Company and the
Holding Company are duly organized, validly existing and in good standing under
the laws of the State of Mississippi; (ii) the Agreement has been duly
authorized and validly executed and delivered by the Company and the Holding
Company, and constitutes a valid, legal and enforceable obligation of both
parties in accordance with its terms, except as such may be limited by any
future proceedings under bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally; (iii) all shares of Holding Company stock to be issued in the
Exchange, when issued in accordance with this Agreement shall be legally and
validly issued, fully paid and nonassessable shares; and (iv) to the best
knowledge of such counsel, execution and delivery of this Agreement and
performance hereunder, shall not conflict with, or constitute a default under,
the Articles of Incorporation of the Company, the Articles of Incorporation of
the Holding Company, the Bylaws of the Company or the Holding Company, or any
material agreement to which either the Company or the Holding Company is a
party.
ARTICLE IV
TERMINATION
A. This Agreement may be terminated at any time prior to the
Effective Time (whether before or after any approval by the stockholders of the
Company);
(1) at the option of either the Company or the Holding Company
if any one (1) or more of the conditions to the obligations of any of them under
this Agreement shall not have been satisfied and shall not be waived at or prior
to the Effective Time;
(2) by the mutual consent of the parties;
(3) by the Company or by the Holding Company if any suit,
action, or other proceeding shall be pending or threatened by the federal
government or by a state government before any court or governmental agency in
which it is sought to restrain, or prohibit, or otherwise affect the
consummation of this Exchange, or any legal proceeding pending or threatened
before any court or other governmental body seeking to enjoin or prohibit the
reorganization and Exchange contemplated herein, or which might restrict the
operation of the business of the Company or the Holding Company or the ownership
of Company stock or the exercise of any rights with respect thereto by the
Holding Company, or to subject any of the parties, their directors or officers
to any liability, fine or forfeiture arising out of the transactions
contemplated hereby, or asserting that the parties hereto or their directors or
officers, have breached or will breach any applicable law or regulation, or have
otherwise acted improperly in connection with the transactions contemplated
hereby.
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B. An election by a party hereto to terminate this Agreement and
abandon the Exchange and reorganization as provided in this article shall be
exercised on behalf of such corporation by its Board of Directors.
C. In the event of the termination and abandonment of this Agreement
pursuant to the provisions of this article the Agreement shall become void and
have no effect and create no liability on the part of any of the parties hereto
or their respective directors, officers or stockholders.
ARTICLE V
MISCELLANEOUS
A. Costs and Expenses. Each party shall pay all costs and
expenses incurred by it in connection with this Agreement and the transactions
contemplated by this Agreement.
(1) No director, officer, agent or employee of either the
Company or the Holding Company shall receive any fee, commission, or other
compensation or valuable consideration whatever for aiding, promoting or
assisting in the promotion of the Exchange.
(2) Employees of the Company and the Holding Company,
accountants, attorneys and others who render customary professional services in
the preparation and consummation of the Exchange shall be entitled to
compensation but such compensation shall not extend to activities that promote
the Exchange.
B. Waiver and Amendment. Any of the terms or conditions of this
Agreement, which legally may be waived, may be waived at any time by the party
that is entitled to the benefit of such terms or conditions. Any of such terms
or conditions may be amended in whole or in part at any time, to the extent
authorized by applicable law, rules and regulations, by an agreement in writing,
executed in the same manner as this Agreement.
C. Counterparts. This Agreement may be executed by the parties
in any number of separate counterparts, each of which shall be an original, but
such counterparts together shall constitute one (1) and the same instrument.
D. Headings. The article and section headings contained in this
Agreement are for reference purposes only and should not be deemed to be part
of this Agreement or to affect the meaning or interpretation of this Agreement.
E. Controlling Law. The laws of the State of Mississippi,
without reference to its choice of law principles, shall be controlling on the
construction and operation of this Agreement.
F. Further Efforts. The parties agree that if it becomes
necessary or desirable to execute further instruments or to make such other
assurances are deemed necessary, the party
7
requested to do so shall provide such executed instruments or do all things
necessary to properly carry out the purposes of this Agreement.
G. Merger Clause. This Agreement embodies the entire Agreement
among the parties and there have been and are no agreements, representations or
warranties among the parties other than those contained herein.
IN WITNESS WHEREOF, the Company and the Holding Company have entered
into this Agreement on November 7, 1996.
AMERICAN PUBLIC LIFE INSURANCE COMPANY
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Its President
ATTEST:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Its Secretary
AMERICAN PUBLIC HOLDINGS, INC.
By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Its President
ATTEST:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Its Secretary
8
EXHIBIT INDEX
NO. ITEM
1. Directors of the Company and Holding Company
2. Statutory Dissent Provisions
Exhibit 1
Directors of the Company and Holding Company
Set forth below is a complete list of the members of the Board of
Directors of American Public Holdings, Inc., as of the date of the Agreement and
Plan of Exchange of which this Exhibit is a part.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, D.V.M.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇ P.O. Box 231
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇. New, Jr. ▇▇▇▇▇ ▇. New, Sr.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Set forth below is a complete list of the members of the Board of
Directors of American Public Life Insurance Company, as of the date of the
Agreement and Plan of Exchange of which this Exhibit is a part.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, D.V.M.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇ P.O. Box 231
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇. New, Jr. ▇▇▇▇▇ ▇. New, Sr.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Each director will serve until the 1997 Annual Meeting or until his
successor is chosen and shall qualify.
Exhibit 2
Statutory Dissent Provisions
1. Miss. Code ▇▇▇. ss.▇▇-▇▇-▇▇▇
2. Miss. Code ▇▇▇. ▇▇.▇▇. 79-4-13.01 through 79-4-13.31
▇▇-▇▇-▇▇▇. Rights of dissenters.
Any shareholder of any domestic stock insurance company which is a
party to a merger, consolidation or exchange of securities as described in
sections 83-19-99 to 83-19- 123 shall have the right to dissent and receive fair
value for his shares by complying with the procedure set forth in section
79-3-161, Mississippi Code of 1972.
ARTICLE 13 OF TITLE 79, CHAPTER 4
DISSENTERS' RIGHTS
Subarticle A. Right to Dissent and Obtain Payment for Shares
79-4-13.01 DEFINITIONS--ln this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 79-4-13.02 and who exercises that right when and
in the manner required by Sections 79-4-13.20 through 79-4-13.28.
( 3) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
79-4-13.02 RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of any of
the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by Section
79-4-11.03 or the articles of incorporation and the shareholder is entitled to
vote on the merger, or (ii) if the corporation is a subsidiary that is merged
with its parent under Section 79-4-11.04;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to a fraction
of a share if the fraction share so created is to be acquired for cash under
Section 79-4-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of either
(i) making such corporation subject to application of the Mississippi Control
Share Act, or (ii) making such act inapplicable to a control share acquisition
of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
79-4-13.03 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
Subarticle B. Procedure for Exercise of Dissenters' Rights
79-4-13.20 NOTICE OF DISSENTERS' RIGHTS. --(a) If proposed corporate
action creating dissenters' rights under Section 79-4-13.02 is submitted to a
vote at a shareholders' meeting, the meeting notice must state that shareholders
are or may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Section
79-4-13.02 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
79-4-13.22.
79-4-13.21 NOTICE OF INTENT TO DEMAND PAYMENT.-- (a) If proposed
corporate action creating dissenters' rights under Section 79-4-13.02 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights (1) must deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his shares if the
proposed action is effectuated, and (2) must not vote his shares in favor of the
proposed action.
(b) A shareholder who does not satisfy the requirement of subsection
(a) is not entitled to payment for his shares under this article.
79-4-13.22 DISSENTERS' NOTICE.--(a) If proposed corporate action
creating dissenters' rights under Section 79-4-13.02 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days
after the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more that sixty (60)
days after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
79-4-13.23 DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a
dissenters' notice described in Section 79-4-13.22 must demand payment, certify
whether he acquired beneficial ownership of the shares before the date required
to be set forth in the dissenter's notice pursuant to Section 79-13.22(b)(3),
and deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required. each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
79-4-13.24 SHARE RESTRICTIONS.--(a) The corporation may restrict the
transfer of uncertified shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
79-4-13.25 PAYMENT.--(a) Except as provided in Section 79-4-13.27, as
soon as the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with Section
79-4-13.23 the amount the corporation estimates to be the fair value of his
shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares; (3) An explanation of how the interest was calculated; (4) A
statement of the dissenters' right to demand payment under Section
79-4-13.28; and (5) A copy of this article.
79-4-13.26 FAILURE TO TAKE ACTION.--(a) If the corporation does not
take the proposed action within sixty (60) days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79- 4-13.22 and repeat the payment demand
procedure.
79-4-13.27 AFTER-ACQUIRED SHARES.--(a) A corporation may elect to
withhold payment required by Section 79-4-13.25 from a dissenter unless he was
the beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-13.28.
79-4-13.28 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR
OFFER.--(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate (less any
payment under Section 79-4-13.25), or reject the corporation's offer under
Section 79-4-13.27 and demand payment of the fair value of his shares and
interest due, if:
(1) The dissenter believes that the amount paid under Section
79-4-13.25 or offered under Section 79-4-13.27 is less than the fair value of
his shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 79-4-13.25
within sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
Subarticle C. Judicial Appraisal of Shares
79-4-13.30 COURT ACTION.--(a) If a demand for payment under Section
79-4-13.28 remains unsettled, the corporation shall commence a proceeding within
sixty (60) days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery court
of the county where a corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether or not residents
of this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation, or (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under Section 79-4-13.27.
79-4-13.31 COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under Section 79-4-13.30 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 79-4-13.20 through 79-4-13.28; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.