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EXHIBIT (a)(5)
PENNSYLVANIA DISSENTERS' RIGHTS STATUTE
SECTION 1571. APPLICATION AND EFFECT OF SUBCHAPTER.
(a) General Rule. -- Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from, and
to obtain payment of the fair value of his shares in the event of, any corporate
action, or to otherwise obtain fair value for his shares, where this part
expressly provides that a shareholder shall have the rights and remedies
provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special
treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of
election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions.
(1) Except as otherwise provided in paragraph;
(2) the holders of the shares of any class or series of shares that, at the
record date fixed to determine the shareholders entitled to notice of
and to vote at the meeting at which a plan specified in any of section
1930, 1931(d), 1932(c) or 1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such
shares under this subchapter.
(3) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in
the case of:
(i) Shares converted by a plan if the shares are not converted solely
into shares of the acquiring, surviving, new or other corporation or solely
into such shares and money in lieu of fractional shares.
(ii) Shares of any preferred or special class unless the articles, the
plan or the terms of the transaction entitle all shareholders of the class
to vote thereon and require for the adoption of the plan or the
effectuation of the transaction the affirmative vote of a majority of the
votes cast by all shareholders of the class.
(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
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(4) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares,
property or assets of another corporation by the issuance of shares,
obligations or otherwise, with or without assuming the liabilities of
the other corporation and with or without the intervention of another
corporation or other person, shall not be entitled to the rights and
remedies of dissenting shareholders provided in this subchapter
regardless of the fact, if it be the case, that the acquisition was
accomplished by the issuance of voting shares of the corporation to be
outstanding immediately after the acquisition sufficient to elect a
majority or more of the directors of the corporation.
(c) Grant of Optional Dissenters Rights.
The bylaws or a resolution of the board of directors may direct that all or
a part of the shareholders shall have dissenters rights in connection with any
corporate action or other transaction that would otherwise not entitle such
shareholder to dissenters rights.
(d) Notice of Dissenters Rights. -- Unless otherwise provided by statute,
if a proposed corporate action that would give rise to dissenters rights under
this subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) a statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value
of their shares by complying with the terms of this subchapter; and
(2) a copy of this subchapter.
(e) Other Statutes.
The procedures of this subchapter shall also be applicable to any
transaction described in any statute other than this part that makes reference
to this subchapter for the purpose of granting dissenters rights.
(f) Certain Provisions of Articles Ineffective.
This subchapter may not be relaxed by any provision of the articles.
(g) Cross References.
See sections 1105 (relating to restriction on equitable relief), 1904
(relating to de facto transaction doctrine abolished) and 2512 (relating to
dissenters rights procedure).
SECTION 1572. DEFINITIONS.
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
of the resulting corporations is the successor corporation for the purposes of
this subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under this
subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and does
assert dissenters rights under this subchapter and who has performed every act
required up to the time involved for the assertion of those rights.
"Fair Value." The fair value of shares immediately before the effectuation
of the corporate action to which the dissenter objects taking into account all
relevant factors, but excluding any appreciation or depreciation in anticipation
of the corporate action.
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"Interest." Interest from the effective date of the corporate action until
the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors including the average
rate currently paid by the corporation on its principal bank loans.
SECTION 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS.
(a) Record Holders of Shares.
A record holder of shares of a business corporation may assert dissenters
rights as to fewer than all of the shares registered in his name only if he
dissents with respect to all the shares of the same class or series beneficially
owned by any one person and discloses the name and address of the person or
persons on whose behalf he dissents. In that event, his rights shall be
determined as if the shares as to which he has dissented and his other shares
were registered in the names of different shareholders.
(b) Beneficial Owners of Shares.
A beneficial owner of shares of a business corporation who is not the
record holder may assert dissenters rights with respect to shares held on his
behalf and shall be treated as a dissenting shareholder under the terms of this
subchapter if he submits to the corporation not later than the time of the
assertion of dissenters rights a written consent of the record holder. A
beneficial owner may not dissent with respect to some but less than all shares
of the same class or series owned by the owner, whether or not the shares so
owned by him are registered in his name.
SECTION 1574. NOTICE OF INTENTION TO DISSENT.
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect no
change in the beneficial ownership of his shares from the date of such filing
continuously through the effective date of the proposed action and must refrain
from voting his shares in approval of such action. A dissenter who fails in any
respect shall not acquire any right to payment of the fair value of his shares
under this subchapter. Neither a proxy nor a vote against the proposed corporate
action shall constitute the written notice required by this section.
SECTION 1575. NOTICE TO DEMAND PAYMENT.
(a) General Rule.
If the proposed corporate action is approved by the required vote at a
meeting of shareholders of a business corporation, the corporation shall mail a
further notice to all dissenters who gave due notice of intention to demand
payment of the fair value of their shares and who refrained from voting in favor
of the proposed action. If the proposed corporate action is to be taken without
a vote of shareholders, the corporation shall send to all shareholders who are
entitled to dissent and demand payment of the fair value of their shares a
notice of the adoption of the plan or other corporate action. In either case,
the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is
received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the
shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for Receipt of Demand for Payment.
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The time set for receipt of the demand and deposit of certificated shares
shall be not less than 30 days from the mailing of the notice.
SECTION 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) Effect of Failure of Shareholder to Act.
A shareholder who fails to timely demand payment, or fails (in the case of
certificated shares) to timely deposit certificates, as required by a notice
pursuant to section 1575 (relating to notice to demand payment) shall not have
any right under this subchapter to receive payment of the fair value of his
shares.
(b) Restriction on Uncertificated Shares.
If the shares are not represented by certificates, the business corporation
may restrict their transfer from the time of receipt of demand for payment until
effectuation of the proposed corporate action or the release of restrictions
under the terms of section 1577(a) (relating to failure to effectuate corporate
action).
(c) Rights Retained by Shareholder.
The dissenter shall retain all other rights of a shareholder until those
rights are modified by effectuation of the proposed corporate action.
SECTION 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES.
(a) Failure to Effectuate Corporate Action.
Within 60 days after the date set for demanding payment and depositing
certificates, if the business corporation has not effectuated the proposed
corporate action, it shall return any certificates that have been deposited and
release uncertificated shares from any transfer restrictions imposed by reason
of the demand for payment.
(b) Renewal of Notice to Demand Payment.
When uncertificated shares have been released from transfer restrictions
and deposited certificates have been returned, the corporation may at any later
time send a new notice conforming to the requirements of section 1575 (relating
to notice to demand payment), with like effect.
(c) Payment of Fair Value of Shares.
Promptly after effectuation of the proposed corporation action, or upon
timely receipt of demand for payment if the corporate action has already been
effectuated, the corporation shall either remit to dissenters who have made
demand and (if their shares are certificated) have deposited their certificates
the amount that the corporation estimates to be the fair value of the shares, or
give written notice that no remittance under this section will be made. The
remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of
the shares held or owned by the dissenter for a fiscal year ending not more
than 16 months before the date of remittance or notice together with the
latest available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(d) Failure to Make Payment.
If the corporation does not remit the amount of its estimate of the fair
value of the shares as provided by subsection (c), it shall return any
certificates that have been deposited and release uncertificated shares from any
transfer restrictions imposed by reason of the demand for payment. The
corporation may make a notation on any such certificate or on the records of the
corporation relating to any such uncertificated shares that such demand has been
made. If shares with respect to which notation has been so made shall be
transferred, each
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new certificate issued therefor or the records relating to any transferred
uncertificated shares shall bear a similar notation, together with the name of
the original dissenting holder or owner of such shares. A transferee of such
shares shall not acquire by such transfer any rights in the corporation other
than those that the original dissenters had after making demand for payment of
their fair value.
SECTION 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES.
(a) General Rule.
If the business corporation gives notice of its estimate of the fair value
of the shares, without remitting such amount, or remits payment of its estimate
of the fair value of a dissenter's shares as permitted by section 1577(c)
(relating to payment of fair value of shares) and the dissenter believes that
the amount stated or remitted is less than the fair value of his shares, he may
send to the corporation his own estimate of the fair value of the shares, which
shall be deemed a demand for payment of the amount or the deficiency.
(b) Effect of Failure to File Estimate.
Where the dissenter does not file his own estimate under subsection (a)
within 30 days after the mailing by the corporation of its remittance or notice,
the dissenter shall be entitled to no more than the amount stated in the notice
or remitted to him by the corporation.
SECTION 1579. VALUATION PROCEEDINGS GENERALLY.
(a) General Rule.
Within 60 days after the latest of:
(1) Effectuation of the proposed corporate action;
(2) Timely receipt of any demands for payment under section 1575
(relating to notice to demand payment); or
(3) Timely receipt of any estimates pursuant to section 1578 (relating
to estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may
file in court an application for relief requesting that the fair value of the
shares be determined by the court.
(b) Mandatory Joinder of Dissenters.
All dissenters, wherever residing, whose demands have not been settled
shall be made parties to the proceeding as in an action against their shares. A
copy of the application shall be served on each such dissenter. If a dissenter
is a nonresident, the copy may be served on him in the manner provided or
prescribed by or pursuant to 42 Pa.C.S. Ch. 53 (relating to bases of
jurisdiction and interstate and international procedure).
(c) Jurisdiction of the Court.
The jurisdiction of the court shall be plenary and exclusive. The court may
appoint an appraiser to receive evidence and recommend a decision on the issue
of fair value. The appraiser shall have such power and authority as may be
specified in the order of appointment or in any amendment thereof.
(d) Measure of Recovery.
Each dissenter who is made a party shall be entitled to recover the amount
by which the fair value of his shares is found to exceed the amount, if any,
previously remitted, plus interest.
(e) Effect of Corporation's Failure to File Application.
If the corporation fails to file an application as provided in subsection
(a), any dissenter who made a demand and who has not already settled his claim
against the corporation may do so in the name of the
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corporation at any time within 30 days after the expiration of the 60-day
period. If a dissenter does not file an application within the 30-day period,
each dissenter entitled to file an application shall be paid the corporation's
estimate of the fair value of the shares and no more, and may bring an action to
recover any amount not previously remitted.
SECTION 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS.
(a) General Rule.
The costs and expenses of any proceeding under section 1579 (relating to
valuation proceedings generally), including the reasonable compensation and
expenses of the appraiser appointed by the court, shall be determined by the
court and assessed against the business corporation except that any part of the
costs and expenses may be apportioned and assessed as the court deems
appropriate against all or some of the dissenters who are parties and whose
action in demanding supplemental payment under section 1578 (relating to
estimate by dissenter of fair value of shares) the court finds to be dilatory,
obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of Counsel Fees and Expert Fees Where Lack of Good Faith
Appears.
Fees and expenses of counsel and of experts for the respective parties may
be assessed as the court deems appropriate against the corporation and in favor
of any or all dissenters if the corporation failed to comply substantially with
the requirements of this subchapter and may be assessed 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 in bad faith or
in a dilatory, obdurate, arbitrary or vexatious manner in respect to the rights
provided by this subchapter.
(c) Award of Fees for Benefits to Other Dissenters.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and should not be
assessed against the corporation, it may award to those counsel reasonable fees
to be paid out of the amounts awarded to the dissenters who were benefited.
SECTION 1930. DISSENTERS RIGHTS.
(a) General Rule.
If any shareholder of a domestic business corporation that is to be a party
to a merger or consolidation pursuant to a plan of merger or consolidation
objects to the plan of merger or consolidation and complies with the provisions
of Subchapter D of Chapter 15 (relating to dissenters rights), the shareholder
shall be entitled to the rights and remedies of dissenting shareholders therein
provided, if any. See also section 1906(c) (relating to dissenters rights upon
special treatment).
(b) Plans Adopted by Directors Only.
Except as otherwise provided pursuant to section 1571(c) (relating to grant
of optional dissenters rights), Subchapter D of Chapter 15 shall not apply to
any of the shares of a corporation that is a party to a merger or consolidation
pursuant to section 1924(b)(1)(i) (relating to adoption by board of directors).
(c) Cross References.
See sections 1571(b) (relating to exceptions) and 1904 (relating to de
facto transaction doctrine abolished).