Exhibit No. 1 Article 13 of the North Carolina Business Corporation Act
Article 13
Dissenters' Rights.
Part 1. Right to Dissent and Obtain Payment for Shares. 55-13-01. Definitions.
In 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 G.S. 55-13-02
and who exercises that right when and in the manner
required by G.S. 55-13-20 through 55-13-28.
(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 a rate that is fair and equitable under all the
circumstances, giving due consideration to the rate
currently paid by the corporation on its principal
bank loans, if any, but not less than the rate
provided in G.S. 24-1.
(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. (1925, c. 77, s. 1; 1943,
c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969,
c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c.
265, s. 1.)
55-13-02. Right to dissent.
(a)In addition to any rights granted under Article 9, 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 (other than a parent corporation in a
merger whose shares are not affected under G.S.
55-11-04) is a party unless (i) approval by the
shareholders of that corporation is not required
under G.S. 55-11-03(g) or (ii) such shares are then
redeemable by the corporation at a price not
greater than the cash to be received in exchange
for such shares;
(2) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose
shares will be acquired, unless such shares are
then redeemable by the corporation at a price not
greater than the cash to be received in exchange
for such shares;
(2a) Consummation of a plan of conversion pursuant to
Part 2 of Article 11A of this Chapter;
(3) Consummation of a sale or exchange of all, or
substantially all, of the property of the
corporation other than as permitted by G.S.
55-12-01, including a sale in dissolution, but not
including a sale pursuant to court order or a sale
pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be
distributed in cash 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 an amendment of the
articles of incorporation permitting action without
meeting to be taken by less than all shareholders
entitled to vote, without advance notice, or both,
as provided in G.S. 55-7-04; (v) reduces the number
of shares owned by the shareholder to a fraction of
a share if the fractional share so created is to be
acquired for cash under G.S. 55-6-04; or (vi)
changes the corporation into a nonprofit
corporation or cooperative organization; 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) A shareholder entitled to dissent and obtain payment for
his shares under this Article may not challenge the corporate
action creating his entitlement, including without limitation a
merger solely or partly in exchange for cash or other property,
unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
(c) Notwithstanding any other provision of this Article,
there shall be no right of shareholders to dissent from, or
obtain payment of the fair value of the shares in the event of,
the corporate actions set forth in subdivisions (1), (2), or (3)
of subsection (a) of this section if the affected shares are any
class or series which, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the
meeting at which the plan of merger or share exchange or the
sale or exchange of property is to be acted on, were (i) listed
on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or (ii) held
by at least 2,000 record shareholders. This subsection does not
apply in cases in which either:
(1) The articles of incorporation, bylaws, or a
resolution of the board of directors of the
corporation issuing the shares provide otherwise;
or
(2) In the case of a plan of merger or share exchange,
the holders of the class or series are required
under the plan of merger or share exchange to
accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of
fractional shares of the surviving or
acquiring corporation, or of any other
corporation which, at the record date fixed to
determine the shareholders entitled to receive
notice of and vote at the meeting at which the
plan of merger or share exchange is to be
acted on, were either listed subject to notice
of issuance on a national securities exchange
or designated as a national market system
security on an interdealer quotation system by
the National Association of Securities
Dealers, Inc., or held by at least 2,000
record shareholders; or
c. A combination of cash and shares as set forth
in sub-subdivisions a. and b. of this
subdivision. (1925, c. 77, s. 1; c. 235; 1929,
c. 269; 1939, c. 279; 1943, c. 270; G.S., ss.
55-26, 55-167; 1955, c. 1371, s. 1; 1959, c.
1316, ss. 30, 31; 1969, c. 751, ss. 36, 39;
1973, c. 469, ss. 36, 37; c. 476, s. 193;
1989, c. 265, s. 1; 1989 (Reg. Sess., 1990),
c. 1024, s. 12.18; 1991, c. 645, s. 12;
1997-202, s. 1; 1999-141, s. 1; 2001-387, s.
26; 2003-157, s. 1.)
55-13-03. 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. (1925, c. 77, s. 1;
1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1;
1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37;
1989, c. 265, s. 1.)
55-13-04 through 55-13-19. Reserved for future
codification purposes.
Part 2. Procedure for Exercise of Dissenters' Rights.
55-13-20. Notice of dissenters' rights.
(a)If proposed corporate action creating dissenters'
rights under G.S. 55-13-02 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
G.S. 55-13-02 is taken without a vote of shareholders or is
taken by shareholder action without meeting under G.S. 55-7-04,
the corporation shall no later than 10 days thereafter notify in
writing all shareholders entitled to assert dissenters' rights
that the action was taken and send them the dissenters' notice
described in G.S. 55-13-22. A shareholder who consents to
shareholder action taken without meeting under G.S. 55-7-04
approving a corporate action is not entitled to payment for the
shareholder's shares under this Article with respect to that
corporate action.
(c) If a corporation fails to comply with the requirements of
this section, such failure shall not invalidate any corporate
action taken; but any shareholder may recover from the
corporation any damage which he suffered from such failure in a
civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights
under G.S. 55-13-02 unless he voted for such corporate action.
(1925, c. 77, s. 1; c. 235; 1929, c. 269; 1939, c. 5; c. 279;
1943, c. 270; G.S., ss. 55-26, 55-165, 55-167; 1955, c. 1371, s.
1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265,
s. 1; 2002-58, s. 2.)
55-13-21. Notice of intent to demand payment.
(a)If proposed corporate action creating dissenters'
rights under G.S. 55-13-02 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert
dissenters' rights:
(1) Must give to the corporation, and the corporation
must actually receive, 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 requirements of
subsection (a) is not entitled to payment for his shares under
this Article. (1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167;
1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss. 36,
37; 1989, c. 265, s. 1.)
55-13-22. Dissenters' notice.
(a)If proposed corporate action creating dissenters'
rights under G.S. 55-13-02 is approved at a shareholders'
meeting, the corporation shall mail by registered or certified
mail, return receipt requested, a written dissenters' notice to
all shareholders who satisfied the requirements of G.S.
55-13-21.
(b) The dissenters' notice must be sent no later than 10 days
after shareholder approval, or if no shareholder approval is
required, after the approval of the board of directors, of the
corporate action creating dissenters' rights under G.S.
55-13-02, 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;
(4) Set a date by which the corporation must receive
the payment demand, which date may not be fewer
than 30 nor more than 60 days after the date the
subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article. (1925, c.
77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c.
1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469, ss.
36, 37; 1989, c. 265, s. 1; 1997-485, s. 4;
2001-387, s. 27; 2002-58, s. 3.)
55-13-23. Duty to demand payment.
(a)A shareholder sent a dissenters' notice described in
G.S. 55-13-22 must demand payment and deposit his share
certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his
share certificates under subsection (a) retains all other rights
of a shareholder until these rights are cancelled 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. (1925, c. 77, s. 1; 1943, c. 270; G.S., s.
55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469,
ss. 36, 37; 1989, c. 265, s. 1.)
55-13-24. Share restrictions.
(a)The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment
is received until the proposed corporate action is taken or the
restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of
the proposed corporate action. (1925, c. 77, s. 1; 1943, c. 270;
G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973,
c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
55-13-25. Payment.
(a)As soon as the proposed corporate action is taken, or
within 30 days after receipt of a payment demand, the
corporation shall pay each dissenter who complied with G.S.
55-13-23 the amount the corporation estimates to be the fair
value of his shares, plus interest accrued to the date of
payment.
(b) The payment shall be accompanied by:
(1) The corporation's most recent available balance
sheet as of the end of a fiscal year ending not
more than 16 months before the date of payment, an
income statement for that year, a statement of cash
flows for that year, and the latest available
interim financial statements, if any;
(2) An explanation of how the corporation estimated the
fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand
payment under G.S. 55-13-28; and
(5) A copy of this Article. (1925, c. 77, s. 1; 1943,
c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969,
c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c.
265, s. 1; c. 770, s. 69; 1997-202, s. 2.)
55-13-26. Failure to take action.
(a)If the corporation does not take the proposed action
within 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 G.S.
55-13-22 and repeat the payment demand procedure. (1925, c. 77,
s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969,
c. 751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
55-13-27. Reserved for future codification purposes.
55-13-28. Procedure if shareholder dissatisfied with
corporation's payment or failure to perform.
(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 the amount in excess of the
payment by the corporation under G.S. 55-13-25 for the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under
G.S. 55-13-25 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 G.S.
55-13-25; 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 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 (i) under subdivision (a)(1) within 30 days after the
corporation made payment for his shares or (ii) under
subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails
to notify the corporation of his demand under subsection (a)
within such 30-day period shall be deemed to have withdrawn his
dissent and demand for payment. (1925, c. 77, s. 1; 1943, c.
270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39;
1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 1997-202, s. 3.)
55-13-29. Reserved for future codification purposes.
Part 3. Judicial Appraisal of Shares.
55-13-30. Court action.
(a)If a demand for payment under G.S. 55-13-28 remains
unsettled, the dissenter may commence a proceeding within 60
days after the earlier of (i) the date payment is made under
G.S. 55-13-25, or (ii) the date of the dissenter's payment
demand under G.S. 55-13-28 by filing a complaint with the
Superior Court Division of the General Court of Justice to
determine the fair value of the shares and accrued interest. A
dissenter who takes no action within the 60-day period shall be
deemed to have withdrawn his dissent and demand for payment.
(a1)Repealed by Session Laws 1997-202, s. 4.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to 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 complaint. Nonresidents may be served by
registered or certified mail or by publication as provided by
law.
(d) The jurisdiction of the superior court in which the
proceeding is commenced under subsection (a) 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
parties are entitled to the same discovery rights as parties in
other civil proceedings. The proceeding shall be tried as in
other civil actions. However, in a proceeding by a dissenter in
a corporation that was a public corporation immediately prior to
consummation of the corporate action giving rise to the right of
dissent under G.S. 55-13-02, there is no right to a trial by
jury.
(e) Each dissenter made a party to the proceeding is entitled
to judgment 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. (1925, c. 77, s. 1; 1943, c. 270; G.S., s.
55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973, c. 469,
ss. 36, 37; 1989, c. 265, s. 1; 1997-202, s. 4; 1997-485, ss. 5,
5.1.)
55-13-31. Court costs and counsel fees.
(a)The court in an appraisal proceeding commenced under
G.S. 55-13-30 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court, and shall assess the costs as it finds
equitable.
(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
G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in
favor of either or 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 benefited. (1925, c. 77, s. 1;
1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)