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PART 13
DISSENTERS' RIGHTS
16-10a.1301. DEFINITIONS.
For purposes of Part 13:
(1)"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.
(2)"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.
(3)"Dissenter" means a shareholder who is entitled to dissent
from corporate action under Section 16-10a-1302 and who
exercises that right when and in the manner required by
Sections 16-10a-1320 through 16-10a-1328.
(4)"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.
(5)"Interest" means interest from the effective date of the
corporate action until the date of payment, at the statutory
rate set forth in Section 15-1-1, compounded annually.
(6)"Record shareholder" means the person in whose name shares
are registered in the records of a corporation or the
beneficial owner of shares that are registered in the name of
a nominee to the extent the beneficial owner is recognized by
the corporation as the shareholder as provided in Section 16-
10a-723.
(7)"Shareholder" means the record share-holder or the
beneficial shareholder.
16.10a-1302. RIGHT TO DISSENT.
(1)A shareholder, whether or not entitled to vote, is
entitled to dissent from, and obtain payment of the fair value
of shares held by him in the event of, any of the following
corporate actions:
(a)consummation of a plan of merger to which the
corporation is a party if-
(i)shareholder approval is required for the
merger by Section 16-lOa-1103 or the articles
of incorporation; or
(ii)the corporation is a subsidiary that is
merged with its parent under Section 16-10a-1104;
(b)consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares
will be acquired;
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(c)consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property
of the corporation for which a shareholder vote is
required under Subsection 16-10a-1202(l), but not
including 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; and
(d)consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property
of an entity controlled by the corporation if the
shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant
to Subsection 16-10a-1202(2).
(2)A shareholder is entitled to dissent and obtain payment of
the fair value of his shares in the event of any other
corporate action to the extent the articles of incorporation,
bylaws, or a resolution of the board of directors so provides.
(3)Notwithstanding the other provisions of this part, except
to the extent otherwise provided in the articles of
incorporation, bylaws, or a resolution of the board of
directors, and subject to the limitations set forth in
Subsection (4), a shareholder is not entitled to dissent and
obtain payment under Subsection (1) of the fair value of the
shares of any class or series of shares which either were
listed on a national securities exchange registered under the
federal Securities Exchange Act of 1934, as amended, or on the
National Market System of the National Association of
Securities Dealers Automated Quotation System, or were held of
record by more than 2,000 shareholders, at the time of.
(a)the record date fixed under Section 16-10a-707 to
determine the shareholders entitled to receive notice of
the shareholders' meeting at which the corporate action is
submitted to a vote;
(b)the record date fixed under Section 16-10a-704 to
determine shareholders entitled to sign writings
consenting to the proposed corporate action; or
(c)the effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(4)The limitation set forth in Subsection (3) does not apply
if the shareholder will receive for his shares, pursuant to
the corporate action, anything except:
(a)shares of the corporation surviving the con-
summation of the plan of merger or share exchange;
(b)shares of a corporation which at the effective
date of the plan of merger or share exchange either will
be listed on a national securities exchange registered
under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National
Association of Securities Dealers Automated Quotation
System, or will be held of record by more than 2,000
shareholders;
(c)cash in lieu of fractional shares; or
(d)any combination of the shares described in
Subsection (4), or cash in lieu of fractional shares.
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(5)A shareholder entitled to dissent and obtain payment for
his shares under this part may not challenge the corporate
action creating the entitlement unless the action is unlawful
or fraudulent with respect to him or to the corporation.
16-10a-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(1)A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in his name only if the
shareholder dissents with respect to all shares beneficially
owned by any one person and causes the corporation to receive
written notice which states the dissent and the name and
address of each person on whose behalf dissenters' rights are
being asserted. The rights of a partial dissenter under this
subsection are determined as if the shares as to which the
shareholder dissents and the other shares held of record by
him were registered in the names of different shareholders.
(2)A beneficial shareholder may assert dissenters rights as
to shares held on his behalf only if.
(a)the beneficial shareholder causes the corporation
to receive the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b)the beneficial shareholder dissents with respect
to all shares of which he is the beneficial shareholder.
(3)The corporation may require that, when a record
shareholder dissents with respect to the shares held by any
one or more beneficial shareholders, each beneficial
shareholder must certify to the corporation that both he and
the record shareholders of all shares owned beneficially by
him have asserted, or will timely assert, dissenters' rights
as to all the shares unlimited on the ability to exercise
dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section 16-
10a-1322.
16-10a-1320. NOTICE OF DISSENTERS' RIGHTS.
(1)If a proposed corporate action creating dissenters' rights
under Section 16-1Oa-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice must be sent to all
shareholders of the corporation as of the applicable record
date, whether or not they are entitled to vote at the meeting.
The notice shall state that shareholders are or may be
entitled to assert dissenters' rights under this part. The
notice must be accompanied by a copy of this part and the
materials, if any, that under this chapter are required to be
given the shareholders entitled to vote on the proposed action
at the meeting. Failure to give notice as required by this
subsection does not affect any action taken at the
shareholders' meeting for which the notice was to have been
given.
(2)If a proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is authorized without a meeting of
shareholders pursuant to Section 16-10a-704, any written or
oral solicitation of a shareholder to execute a written
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consent to the action contemplated by Section 16-10a-704 must
be accompanied or preceded by a written notice stating that
shareholders are or may be entitled to assert dissenters'
rights under this part, by a copy of this part, and by the
materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the
proposed action if the proposed action were submitted to a
vote at a shareholders' meeting. Failure to give written
notice as provided by this subsection does not affect any ac-
tion taken pursuant to Section 16-10a-704 for which the notice
was to have been given.
16-10a-1321. DEMAND FOR PAYMENT - ELIGIBILITY AND NOTICE
OF INTENT.
(1) If a proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert
dissenters' rights:
(a)must cause the corporation to receive, before the
vote is taken, written notice of his intent to demand
payment for shares if the proposed action is effectuated;
and
(b)may not vote any of his shares in favor of the
proposed action.
(2)If a proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is authorized without a meeting of
shareholders pursuant to Section 16-10a-704, a shareholder who
wishes to assert dissenters' rights may not execute a writing
consenting to the proposed corporate action.
(3)In order to be entitled to payment for shares under this
part, unless otherwise provided in the articles of
incorporation, bylaws, or a resolution adopted by the board of
directors, a shareholder must have been a shareholder with
respect to the shares for which payment is demanded as of the
date the proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is approved by the shareholders, if
shareholder approval is required, or as of the effective date
of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
(4)A shareholder who does not satisfy the requirements of
Subsections (1) through (3) is not entitled to payment for
shares under this part. 1992
16-1Oa-1322. DISSENTERS' NOTICE.
(1)If proposed corporate action creating dissenters' rights
under Section 16-10a-1302 is authorized, the corporation shall
give a written dissenters' notice to all shareholders who are
entitled to demand payment for their shares under this part.
(2)The dissenters' notice required by Subsection(1)must be
sent no later than ten days after the effective date of the
corporate action creating dissenters' rights under Section 16-
10a-1302, and shall:
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(a)state that the corporate action was authorized and
the effective date or proposed effective date of the
corporate action;
(b)state an address at which the corporation will
receive payment demands and an address at which
certificates for certificated shares must be deposited;
(c)inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the
payment demand is received;
(d)supply a form for demanding payment, which form
requests a dissenter to state an address to which payment
is to be made;
(e)set a date by which the corporation must receive
the payment demand and by which certificates for
certificated shares must be deposited at the address
indicated in the dissenters' notice, which dates may not
be fewer than 30 nor more than 70 days after the date the
dissenters' notice required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-
1Oa-1303(3), if the requirement is imposed; and
(g)be accompanied by a copy of this part. 1992
16-1Oa-1323. PROCEDURE TO DEMAND PAYMENT.
(1)A shareholder who is given a dissenters' notice described
in Section 16-10a-1322, who meets the requirements of Section
16-1Oa-1321, and wishes to assert dissenters' rights must, in
accordance with the terms of the dissenters' notice:
(a)cause the corporation to receive a payment demand,
which may be the payment demand form contemplated in
Subsection 16-10a-1322(2)(d), duly completed, or may be
stated in another writing;
(b)deposit certificates for his certificated shares
in accordance with the terms of the dissenters' notice;
and
(c)if required by the corporation in the dissenters'
notice described in Section 16-1Oa-1322, as contemplated
by Section 16-10a-1327, certify in writing, in or with the
payment demand, whether or not he or the person on whose
behalf he asserts dissenters' rights acquired beneficial
ownership of the shares before the date of the first
announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters'
rights under Section 16-10a-1302.
(2)A shareholder who demands payment in accordance with
Subsection (1) retains all rights of a shareholder except the
right to transfer the shares until the effective date of the
proposed corporate action giving rise to the exercise of
dissenters' rights and has only the right to receive payment
for the shares after the effective date of the corporate
action.
(3)A shareholder who does not demand payment and deposit
share certificates as required, by the date or dates set in
the dissenters' notice, is not entitled to payment for shares
under this part. 1992
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16-10a-1324. UNCERTIFICATED SHARES.
(1)Upon receipt of a demand for payment under Section 16-10a-
1323 from a shareholder holding uncertificated shares, and in
lieu of the deposit of certificates representing the shares,
the corporation may restrict the transfer of the shares until
the proposed corporate action is taken or the restrictions are
released under Section 16-10a-1326.
(2)In all other respects, the provisions of Section 16-10a-
1323 apply to shareholders who own uncertificated shares. 1992
16-1Oa-1325. PAYMENT.
(1) Except as provided in Section 16-1Oa-1327, upon the later
of the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and receipt by
the corporation of each payment demand pursuant to Section 16-
1Oa-1323, the corporation shall pay the amount the corporation
estimates to be the fair value of the dissenter's shares, plus
interest to each dissenter who has complied with Section 16-
1Oa-1323, and who meets the requirements of Section 16-1Oa-
1321, and who has not yet received payment.
(2)Each payment made pursuant to Subsection (1) must be
accompanied by:
(a)(i) (A) the corporation's balance sheet as of the end
of its most recent fiscal year, or if not available,
a fiscal year ending not more than 16 months before the
date of payment; (B)an income statement for that year;
(C)a statement of changes in shareholders' equity for
that year and a statement of cash flow for that year,
if the corporation customarily provides such statements
to shareholders; and (D)the latest available interim
financial statements, if any;
(ii)the balance sheet and statements referred to in
Subsection (i) must be audited if the corporation
customarily provides audited financial statements to
shareholders;
(b) a statement of the corporation's estimate of the fair
value of the shares and the amount of interest payable
with respect to the shares;
(c) a statement of the dissenter's right to demand payment
under Section 16-10a-1328; and
(d) a copy of this part. 1992
16-10a-1326. FAILURE TO TAKE ACTION.
(1)If the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302 does not occur
within 60 days after the date set by the corporation as the
date by which the corporation must receive payment demands as
provided in Section 16-10a-1322, the corporation shall return
all deposited certificates and release the transfer restric-
tions imposed on uncertificated shares, and all shareholders
who submitted a demand for payment pursuant to Section 16-10a-
1323 shall thereafter have all rights of a shareholder as if
no demand for payment had been made.
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(2)If the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302 occurs more than
60 days after the date set by the corporation as the date by
which the corporation must receive payment demands as provided
in Section 16-10a-1322, then the corporation shall send a new
dissenters' notice, as provided in Section 16-10a-1322, and the
provisions of Sections 16-10a-1323 through 16-10a-1328 shall
again be applicable. 1992
16-10a-1327. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED
AFTER ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.
(1)A corporation may, with the dissenters' notice given
pursuant to Section 16-1Oa-1322, state the date of the first
announcement to news media or to shareholders of the terms of
the proposed corporate action creating dissenters' rights
under Section 16-10a-1302 and state that a shareholder who
asserts dissenters' rights must certify in writing, in or with
the payment demand, whether or not he or the person on whose
behalf he asserts dissenters' rights acquired beneficial
ownership of the shares before that date. With respect to any
dissenter who does not certify in writing, in or with the
payment demand that he or the person on whose behalf the
dissenters' rights are being asserted, acquired beneficial
ownership of the shares before that date, the corporation may,
in lieu of making the payment provided in Section 16-10a-1325,
offer to make payment if the dissenter agrees to accept it in
full satisfaction of his demand.
(2)An offer to make payment under Subsection (1) shall
include or be accompanied by the information required by
Subsection 16-10a-1325(2). 1992
16-10a-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT
OR OFFER.
(1) A dissenter who has not accepted an offer made by a
corporation under Section 16-1Oa-1327 may notify the
corporation in writing of his own estimate of the fair value of
his shares and demand payment of the estimated amount, plus
interest, less any payment made under Section 16-LOA-1325, if:
(a)the dissenter believes that the amount paid under
Section 16-10a-1325 or offered under Section 16-10a-1327
is less than the fair value of the shares;
(b)the corporation fails to make payment under
Section 16-10a-1325 within 60 days after the date set by
the corporation as the date by which it must receive the
payment demand; or
(c)the corporation, having failed to take the
proposed corporate action creating dissenters' rights,
does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares as
required by Section 16-10a-1326.
(2)A dissenter waives the right to demand payment under this
section unless he causes the corporation to receive the notice
required by Subsection (i) within 30 days after the
corporation made or offered payment for his shares. 1992
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16-10a-1330. JUDICIAL APPRAISAL OF SHARES COURT ACTION.
(1)If a demand for payment under Section 16-1Oa-1328 remains
unresolved, the corporation shall commence a proceeding within
60 days after receiving the payment demand contemplated by
Section 16-10a-1328, and petition the court to determine the
fair value of the shares and the amount of interest. If the
corporation does not commence the proceeding within the 60-day
period, it shall pay each dissenter whose demand remains
unresolved the amount demanded.
(2)The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this
state where the corporation's principal office, or if it has
no principal office in this state, the county where 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 corpo-
ration was located.
(3)The corporation shall make all dissenters who have
satisfied the requirements of Sections 16-10a-1321, 16-10a-
1323, and 16-10a-1328, whether or not they are residents of
this state whose demands remain unresolved, parties to the
proceeding commenced under Subsection (2) as an action against
their shares. All such dissenters who are named as parties
must be served with a copy of the petition. Service on each
dissenter may be by registered or certified mail to the
address stated in his payment demand made pursuant to Section
16-10a-1328. If no address is stated in the payment demand,
service may be made at the address stated in the payment
demand given pursuant to Section 16-10a-1323. If no address
is stated in the payment demand, service may be made at the
address shown on the corporation's current record of
shareholders for the record shareholder holding the
dissenter's shares. Service may also be made otherwise as
provided by law.
(4)The jurisdiction of the court in which the proceeding is
commenced under Subsection (2) 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 ap-
pointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other
civil proceedings.
(5)Each dissenter made a party to the proceeding commenced
under Subsection (2) is entitled to judgment:
(a)for the amount, if any, by which the court finds
that the fair value of his shares, plus interest, exceeds
the amount paid by the corporation pursuant to Section 16-
10a-1325; or
(b)for the fair value, plus interest, of the dis-
senter's after-acquired shares for which the corporation
elected to withhold payment under Section 16-10a-1327. 1992
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16-10a-1331. COURT COSTS AND COUNSEL FEES.
(1)The court in an appraisal proceeding commenced under
Section 16-10a-1330 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 that
the dissenters acted arbitrarily, vexatiously, or not in good
faith in demanding payment under Section 16-10a-1328.
(2)The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the court
finds equitable:
(a)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 16-
10a-1320 through 16-10a-1328; or
(b)against either the corporation or one or more
dissenters, 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
part.
(3) 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 those counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited. 1992