<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934,
Guaranty National Corporation
(Name of Subject Company)
Orion Capital Corporation
(Bidder)
Common Stock, par value $1.00 Per Share
(Title of Class of Securities)
401192109
(CUSIP Number of Class of Securities)
Michael P. Maloney, Esq.
9 Farm Springs Road
Farmington, Connecticut 06032
(860) 674-6600
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of bidder)
Copy to:
John J. McCann, Esq.
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
(212) 632-3000
<PAGE> 2
This Statement is filed by Orion Capital Corporation ("Orion"). This
Statement relates to the tender offer of Orion to purchase all outstanding
shares of common stock, par value $1.00 per share (including any associated
stock purchase rights) (the "Shares"), of Guaranty National Corporation, a
Colorado corporation ("Guaranty"), for $36.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in Orion's Offer to
Purchase dated November 5, 1997 (the "Original Offer to Purchase"), as
supplemented by the Supplement to the Offer to Purchase dated December 1, 1997
(together referred to as the "Offer to Purchase") and the related Letter of
Transmittal, which together with amendments or supplements thereto constitute
the Offer (the "Offer"). The Offer terminated by its terms on the Expiration
Date, December 5, 1997, at 12:00 midnight, New York City time.
The Offer was made pursuant to the Agreement and Plan of Merger dated
October 31, 1997 between Orion and Guaranty, which also provides for the merger
(the "Merger") of a wholly-owned subsidiary of Orion with and into Guaranty. If
the Merger is consummated, each Share outstanding immediately prior to the time
when the Merger becomes effective, other than Shares as to which dissenters'
rights of appraisal have been duly and timely asserted and perfected under the
Colorado Business Corporation Act, and Shares held by Orion, its wholly-owned
subsidiaries or Guaranty, will be converted into the right to receive $36.00 in
cash per Share, without interest, all as more fully described in the Offer to
Purchase referred to herein.
2
<PAGE> 3
This Statement further amends the Schedule 14D-1 of Orion dated
November 5, 1997 previously amended by Amendment No. 1 dated December 1, 1997
(as heretofore and hereby amended, the "Schedule 14D-1") by incorporating by
reference herein the information set forth in the press release, dated December
8, 1997 of Orion attached hereto as Exhibit (a)(12). This Statement also amends
Items 6, 7, 10 and 11 by adding the information set forth below. Except as
otherwise indicated herein, the Schedule 14D-1 remains unchanged in all
respects. Capitalized terms not defined herein are deemed defined as set forth
in the Offer to Purchase, as previously supplemented, and the Schedule 14D-1.
Item 6. Interest in Securities of the Subject Company.
The information set forth in Item 6 of the Schedule 14D-1 is hereby
supplemented as follows:
At 12:00 midnight, New York City time, on December 5, 1997, the Offer
expired. Based on its preliminary tabulation, State Street Bank and Trust
Company, the depositary for the Offer, has informed Orion that 2,884,526 Shares
were validly tendered and not withdrawn pursuant to the Offer (including 129,223
Shares tendered by means of notices of guaranteed delivery). On December 6,
1997, effective as of 12:01 a.m., Orion accepted for payment 2,884,526 Shares
validly tendered and not withdrawn prior to the expiration of the Offer, which
together with the 12,129,942 Shares then owned by Orion and certain of Orion's
wholly-owned subsidiaries represented approximately 99.4% of the Shares
outstanding; all such shares were thereupon transferred to GNC Transition Corp.,
a wholly-owned subsidiary of Orion (see Item 7, below). The information set
forth in the press release attached hereto as Exhibit (a)(12) dated December 8,
1997 is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the Notice to Shareholders of Merger of
GNC Transition Corp. into Guaranty National Corporation and Dissenters' Rights
and the Articles of Merger dated December 6, 1997, a copy of which is attached
hereto as Exhibit (c) (7), is incorporated herein by reference.
Item 10. Additional Information.
Whether or not otherwise specifically referenced herein in response to
the Items of the Statement, the information contained in the press release dated
December 8, 1997 of Orion, a copy of which is attached hereto as Exhibit
(a)(12), is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a)(12) Press release issued on December 8, 1997.
(c)(7) Notice to Shareholders of Merger of GNC Transition Corp. into
Guaranty National Corporation and of Dissenters' Rights and Articles of Merger
dated December 6, 1997.
3
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 8, 1997
ORION CAPITAL CORPORATION
By: /s/ Michael P. Maloney
Name: Michael P. Maloney
Title: Senior Vice President, Secretary and
General Counsel
4
<PAGE> 5
EXHIBIT INDEX
Exhibit Description
(a)(12) Press Release issued on December 8, 1997
(c)(7) Notice to Shareholders of Merger of GNC Transition Corp. into Guaranty
National Corporation and of Dissenters' Rights and Articles of Merger
dated December 6, 1997.
5
<PAGE> 1
NOTICE TO SHAREHOLDERS OF MERGER OF
GNC TRANSITION CORP INTO GUARANTY NATIONAL CORPORATION
AND OF DISSENTERS' RIGHTS
To the Shareholders of Guaranty National Corporation:
Please be advised that the board of directors of GNC Transition Corp, at a
meeting held December 6, 1997, approved a Plan of Merger between that
corporation and Guaranty National Corporation as set forth in Articles of Merger
dated December 6, 1997. Copies of the Articles of Merger and the directors'
resolution approving the plan are attached hereto. The effective date of the
merger is December 16, 1997.
Shareholders wishing to surrender shares for the merger price of $36.00 per
share should deliver certificated shares properly endorsed, or direct the record
holder of shares to deliver them, to the attention of the Corporate Secretary of
Guaranty National Corporation at 9800 South Meridian Boulevard, Englewood, CO
80112. It is recommended that certificated shares be delivered by registered or
certified mail to ensure proper delivery. If you have any questions concerning
this procedure, they may be directed to the Corporate Secretary's Office by
calling, collect, (303) 754-8400.
Approval of the Plan of Merger by the shareholders of Guaranty National
Corporation is not required pursuant to sec. 7-111-104 of the Colorado Business
Corporation Act since GNC Transition Corp owns more than 90% of the outstanding
common stock of Guaranty National Corporation. Shareholders who do not exercise
dissenters' rights in accordance with the following paragraph will receive a
cash payment of $36 each for their shares as set forth above.
You are entitled to exercise dissenters' rights and demand payment for your
shares under C.R.S. sec.sec. 7-113-101 to 7-113-302, copies of which are
attached hereto. The address at which Guaranty National Corporation will receive
payment demands and where certificates for certificated shares must be deposited
by shareholders making a demand for payment is 9800 South Meridian Boulevard,
Englewood, Colorado 80112. A form for demanding payment is also enclosed.
Guaranty National Corporation must receive the demand for payment and the
certificates for certificated shares on or before January 7, 1998. When a record
shareholder dissents with respect to the shares held by any one or more
beneficial shareholders, each such beneficial shareholder must certify to
Guaranty National Corporation that the beneficial shareholder and the record
shareholder or record shareholders of all shares owned beneficially by the
beneficial shareholder have asserted, or will timely assert, dissenters' rights
as to all such shares as to which there is no limitation on the ability to
exercise dissenters' rights.
Dated: December 6, 1997
/s/ BEVERLY SILK
--------------------------------------
Secretary
<PAGE> 2
GUARANTY NATIONAL CORPORATION
FORM FOR DEMANDING PAYMENT
IN CONNECTION WITH THE EXERCISE OF DISSENTERS' RIGHTS
The undersigned shareholder of Guaranty National Corporation (the
"Company") pursuant to C.R.S. sec. 7-113-204 hereby demands payment for the
shares of the Company held by the undersigned as represented by the enclosed
stock certificate.
Name of shareholder:
- --------------------------------------------------------------------------------
Number of shares Owned:
- --------------------------------------------------------------------------------
Address to which payment is to be made:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
--------------------------------------
(Signature of shareholder)
This form should be used only if you wish to exercise dissenters' rights.
Do not use this form if you wish to surrender shares for the merger price of
$36.00 per share. Instead, follow the instructions in the second paragraph of
the Notice to Shareholders.
<PAGE> 3
ARTICLES OF MERGER
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporations adopt the following Articles of Merger:
First: The Plan of Merger is as follows:
A. At the effective date of the merger, GNC Transition Corp shall be merged
with and into Guaranty National Corporation (the "Company" or the "Surviving
Corporation"), and the separate corporate existence of GNC Transition Corp shall
cease.
B. At the effective date, all the property, rights, privileges, powers and
franchises of the Company and GNC Transition Corp shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and GNC
Transition Corp shall become the debts, liabilities and duties of the Surviving
Corporation.
C. At the effective date, the Restated Articles of Incorporation of the
Company, as in effect immediately prior to the effective date, shall be the
Articles of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
a. The Bylaws of the Company, as in effect at the effective date,
shall be the Bylaws of the Surviving Corporation, until duly amended in
accordance with applicable law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
D. Each share of the Company's common stock ("Share") issued and
outstanding immediately prior to the effective date (other than shares held in
the Company's treasury or by GNC Transition Corp and other than Shares as to
which dissenters' rights have been properly exercised, shall, by virtue of the
merger and without any action on the part of the holder thereof, be converted
into the right to receive $36.00 in cash (the "Merger Price"), payable to the
holder thereof, without interest thereon, upon the surrender of the certificate
formerly representing such Share.
a. Each Share held in the treasury of the Company immediately prior to
the effective date shall, by virtue of the merger and without any action on
the part of the holder thereof, be cancelled, retired and cease to exist
and no payment shall be made with respect thereto.
b. Each Share held by GNC Transition Corp immediately prior to the
effective date shall remain outstanding and unchanged after the merger as a
share of the Surviving Corporation.
E. The shares of common stock of GNC Transition Corp issued and outstanding
immediately prior to the effective date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
exchangeable for such number of shares of common stock, par value $1.00 per
share, of the Surviving Corporation as shall equal the number of Shares
converted into the right to receive the Merger Price pursuant to Paragraph D,
above.
F. At the effective date, each outstanding option to purchase Shares from
the Company (an "Option"), whether or not then exercisable shall be converted
into or replaced by an option to purchase a number of shares of Orion Capital
Corporation ("Orion") common stock (which shall be rounded up if .5 or more and
rounded down if less than .5 so that no option on Orion common stock shall
relate to a fractional share) equal to the number of Shares subject to the
Option multiplied by a fraction the numerator of which shall be 36 and the
denominator of which shall be the average of the closing price of Orion common
stock on the ten trading days ending on the fifth trading day prior to the
effective date, at a price per share (rounded to the nearest whole cent) equal
to (i) the aggregate exercise price for the Shares otherwise purchasable
pursuant to such stock option, divided by (ii) the number of full shares of
Orion common stock deemed purchasable pursuant to such option in accordance with
the foregoing.
Second: The Plan of Merger has been adopted by action of the shareholders
and board of directors of GNC Transition Corp and by action of the board of
directors of the Company, without any vote of its shareholders, pursuant to
C.R.S. sec. 7-111-104(3). As of the date of execution of these Articles of
Merger,
<PAGE> 4
GNC Transition Corp owned more than 90% of the outstanding shares of the only
class of voting stock of the Company, so as to render C.R.S. sec. 7-111-104(3)
applicable.
Third: The effective date of the merger is December 16, 1997, which date
complies with the provisions of C.R.S. sec. 7-111-104(5).
Dated: December 6, 1997.
<TABLE>
<S> <C>
GUARANTY NATIONAL CORPORATION
(the Company)
By: /s/ BEVERLY SILK By: /s/ JAMES R. POULIOT
- --------------------------------------------- ---------------------------------------------
Secretary President
GNC TRANSITION CORP
By: /s/ MICHAEL P. MALONEY By: /s/ DANIEL L. BARRY
- --------------------------------------------- ---------------------------------------------
Senior Vice President Senior Vice President
Secretary
</TABLE>
2
<PAGE> 5
RESOLVED, that the form and substance of the Articles of Merger and the
Notice to Shareholders of Merger of GNC Transition Corp into Guaranty National
Corporation and of Dissenters' Rights, copies of which are hereby ordered
attached to the minutes of this meeting as Exhibits 1 and 2, respectively, and
incorporated in this resolution by reference, are hereby approved and adopted
and the officers of the Corporation, and each of them, are authorized to
execute, deliver and/or file such documents in accordance with the provisions
thereof and of the Colorado Business Corporation Act, as set forth therein and
as necessary or appropriate to give effect to the merger.
3
<PAGE> 6
From: Jeanne Hotchkiss Dawn W. Dover
Orion Capital Corporation Kekst & Company
9 Farm Springs Road 437 Madison Avenue
Farmington, CT 06032 New York, NY 10022
(860) 674-6754 (212) 521-4817
FOR IMMEDIATE RELEASE
ORION CAPITAL CORPORATION TENDER OFFER
FOR GUARANTY NATIONAL SHARES COMPLETED
--------------------
Farmington, CT (December 8, 1997) - Orion Capital Corporation (NYSE:OC) today
announced that its tender offer to purchase all outstanding shares of the common
stock of Guaranty National Corporation (NYSE: GNC) for $36 per share was
successfully completed, with 97.1% of the Guaranty National shares not held by
Orion or its subsidiaries having been validly tendered. The tender offer, which
expired at 12:00 midnight, New York time on December 5, 1997, was made pursuant
to an agreement entered into by Orion and Guaranty National and will be followed
by the merger of Guaranty with a wholly-owned subsidiary of Orion.
Based on its preliminary tabulation, the Depositary for the Offer has informed
Orion that 2,884,526 shares of Guaranty National Corporation were tendered and
not withdrawn pursuant to the Offer (including 129,233 shares tendered by means
of notices of guaranteed delivery). Orion has accepted the shares tendered for
payment, which together with the 12,129,942 shares currently owned by certain of
Orion's wholly-owned subsidiaries, represents approximately 99.4% of the shares
of Guaranty National Corporation outstanding. Only 85,653 shares of Guaranty
National Corporation were not tendered.
The remaining shareholders of Guaranty National Corporation will receive,
pursuant to the terms of the Merger Agreement, $36 per share in cash upon
delivery of their shares of Guaranty National common stock. The merger is
expected to close on or about December 16, 1997.
W. Martson Becker, Orion Chairman and CEO, stated, "In the growing and
attractive nonstandard automobile market, Guaranty National has a solid
presence, excellent management, an extremely well-positioned product portfolio
and outstanding prospects. This merger will provide Guaranty with additional
financing options to continue its expansion in this rapidly consolidating arena.
Orion, in turn, will benefit from the financial performance that derives from a
growing and well-run operation."
-more-
<PAGE> 7
Orion Capital Tender Offer
for Guaranty National Shares Completed 2.
"Orion and Guaranty National have enjoyed a mutually rewarding relationship for
more than a dozen years. We expect that this new chapter in our association will
benefit our customers, agents, employees and shareholders for years to come,"
Mr. Becker added.
Guaranty National is a Colorado-based property and casualty insurance holding
company with operating subsidiaries that write private passenger automobile
insurance, as well as specialty commercial automobile, collateral protection and
other commercial coverages. The Company is a leading provider of nonstandard
personal automobile insurance written through independent agents.
Orion Capital is engaged in the specialty property and casualty insurance
business through wholly-owned subsidiaries which include EBI Companies, DPIC
Companies, Connecticut Specialty, and Wm. H. McGee, as well as through its
ownership interest in Guaranty National Corporation.
###
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934,
Guaranty National Corporation
(Name of Subject Company)
Orion Capital Corporation
(Bidder)
Common Stock, par value $1.00 Per Share
(Title of Class of Securities)
401192109
(CUSIP Number of Class of Securities)
Michael P. Maloney, Esq.
9 Farm Springs Road
Farmington, Connecticut 06032
(860) 674-6600
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of bidder)
Copy to:
John J. McCann, Esq.
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
(212) 632-3000
<PAGE> 9
This Statement is filed by Orion Capital Corporation ("Orion"). This
Statement relates to the tender offer of Orion to purchase all outstanding
shares of common stock, par value $1.00 per share (including any associated
stock purchase rights) (the "Shares"), of Guaranty National Corporation, a
Colorado corporation ("Guaranty"), for $36.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in Orion's Offer to
Purchase dated November 5, 1997 (the "Original Offer to Purchase"), as
supplemented by the Supplement to the Offer to Purchase dated December 1, 1997
(together referred to as the "Offer to Purchase") and the related Letter of
Transmittal, which together with amendments or supplements thereto constitute
the Offer (the "Offer"). The Offer terminated by its terms on the Expiration
Date, December 5, 1997, at 12:00 midnight, New York City time.
The Offer was made pursuant to the Agreement and Plan of Merger dated
October 31, 1997 between Orion and Guaranty, which also provides for the merger
(the "Merger") of a wholly-owned subsidiary of Orion with and into Guaranty. If
the Merger is consummated, each Share outstanding immediately prior to the time
when the Merger becomes effective, other than Shares as to which dissenters'
rights of appraisal have been duly and timely asserted and perfected under the
Colorado Business Corporation Act, and Shares held by Orion, its wholly-owned
subsidiaries or Guaranty, will be converted into the right to receive $36.00 in
cash per Share, without interest, all as more fully described in the Offer to
Purchase referred to herein.
2
<PAGE> 10
This Statement further amends the Schedule 14D-1 of Orion dated
November 5, 1997 previously amended by Amendment No. 1 dated December 1, 1997
(as heretofore and hereby amended, the "Schedule 14D-1") by incorporating by
reference herein the information set forth in the press release, dated December
8, 1997 of Orion attached hereto as Exhibit (a)(12). This Statement also amends
Items 6, 7, 10 and 11 by adding the information set forth below. Except as
otherwise indicated herein, the Schedule 14D-1 remains unchanged in all
respects. Capitalized terms not defined herein are deemed defined as set forth
in the Offer to Purchase, as previously supplemented, and the Schedule 14D-1.
Item 6. Interest in Securities of the Subject Company.
The information set forth in Item 6 of the Schedule 14D-1 is hereby
supplemented as follows:
At 12:00 midnight, New York City time, on December 5, 1997, the Offer
expired. Based on its preliminary tabulation, State Street Bank and Trust
Company, the depositary for the Offer, has informed Orion that 2,884,526 Shares
were validly tendered and not withdrawn pursuant to the Offer (including 129,223
Shares tendered by means of notices of guaranteed delivery). On December 6,
1997, effective as of 12:01 a.m., Orion accepted for payment 2,884,526 Shares
validly tendered and not withdrawn prior to the expiration of the Offer, which
together with the 12,129,942 Shares then owned by Orion and certain of Orion's
wholly-owned subsidiaries represented approximately 99.4% of the Shares
outstanding; all such shares were thereupon transferred to GNC Transition Corp.,
a wholly-owned subsidiary of Orion (see Item 7, below). The information set
forth in the press release attached hereto as Exhibit (a)(12) dated December 8,
1997 is incorporated herein by reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the Notice to Shareholders of Merger of
GNC Transition Corp. into Guaranty National Corporation and Dissenters' Rights
and the Articles of Merger dated December 6, 1997, a copy of which is attached
hereto as Exhibit (c) (7), is incorporated herein by reference.
Item 10. Additional Information.
Whether or not otherwise specifically referenced herein in response to
the Items of the Statement, the information contained in the press release dated
December 8, 1997 of Orion, a copy of which is attached hereto as Exhibit
(a)(12), is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a)(12) Press release issued on December 8, 1997.
(c)(7) Notice to Shareholders of Merger of GNC Transition Corp. into
Guaranty National Corporation and of Dissenters' Rights and Articles of Merger
dated December 6, 1997.
3
<PAGE> 11
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: December 8, 1997
ORION CAPITAL CORPORATION
By: /s/ Michael P. Maloney
Name: Michael P. Maloney
Title: Senior Vice President, Secretary and
General Counsel
4
<PAGE> 1
COLORADO BUSINESS CORPORATION ACT
ARTICLE 113
DISSENTERS' RIGHTS
7-113-101. DEFINITIONS. For purposes of this article:
(1) "Beneficial shareholder" means the 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 domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "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 the legal rate as
specified in section 5-12-101, C.R.S.
(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 such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
<PAGE> 2
7-113-102. RIGHT TO DISSENT.
(1) A shareholder, whether or not entitled
to vote, is entitled to dissent and obtain payment of the fair value of the
shareholder's shares 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) Approval by the shareholders of that corporation is required for the
merger by section 7-111-103 or 7-111-104 or by the articles of incorporation;
or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired;
(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 section 7-112-102 (1); 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 section 7-112-102
(2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, 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 two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 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 7-107-104 to determine
shareholders entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall
not apply if the shareholder will receive for the shareholder's shares,
pursuant to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other 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 two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment, L. 96, p. 1321, 30, effective June 1, 1996.)
(2.5) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
-2-
<PAGE> 3
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
-3-
<PAGE> 4
7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the
shares held on the beneficial shareholder's 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
beneficially owned by 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 such beneficial shareholder must certify to the corporation that the
beneficial shareholder and the record shareholder or record shareholders of all
shares owned beneficially by the beneficial shareholder have asserted, or will
timely assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
7-113-201. NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting, the notice
of the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of
this article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the
proposed action at the meeting. Failure to give notice as provided by this
subsection (1) shall not affect any action taken at the shareholders' meeting
for which the notice was to have been given, but any shareholder who was
entitled to dissent but who was not given such notice shall not be precluded
from demanding payment for the shareholder's shares under this article by
reason of the shareholder's failure to comply with the provisions of section
7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or
may be entitled to assert dissenters' rights under this article, by a copy of
this article, and by the materials, if any, that, under articles 101 to 117 of
this title, 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 notice as provided by this subsection
(2) shall not affect any action taken pursuant to section 7-107-104 for which
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the notice was to have been given, but any shareholder who was entitled to
dissent but who was not given such notice shall not be precluded from demanding
payment for the shareholder's shares under this article by reason of the
shareholder's failure to comply with the provisions of section 7-113-202 (2).
7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting and if
notice of dissenters' rights has been given to such shareholder in connection
with the action pursuant to section 7-113-201 (1), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201 (2), a
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1)
or (2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
7-113-203. DISSENTERS' NOTICE.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section
shall be given no later than ten days after the effective date of the corporate
action creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where 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 shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this
section is given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
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7-113-204. PROCEDURE TO DEMAND PAYMENT.
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, 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 section 7-113-203 (2) (d), duly completed,
or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1)
of this section 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 shareholder's exercise of dissenters' rights and has only
the right to receive payment for the shares after the effective date of such
corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the
demand for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the
shareholder's share certificates as required by the date or dates set in the
dissenters' notice is not entitled to payment for the shares under this
article.
7-113-205. UNCERTIFICATED SHARES.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206. PAYMENT.
(1) Except as provided in section 7-113-208, upon the effective date of
the corporate action creating dissenters' rights under section 7-113-102 or
upon receipt of a payment demand pursuant to section 7-113-204, whichever is
later, the corporation shall pay each dissenter who complied with section
7-113-204, at the address stated in the payment demand, or if no such address
is stated in the payment demand, at the address shown on the corporation's
current record of shareholders for the record shareholder holding the
dissenter's shares, the amount the corporation estimates to be the fair value
of the dissenter's shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent
fiscal year or, if that is not available, the corporation's balance sheet as of
the end of a fiscal year ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the corporation customarily
provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to shareholders, as well as
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<PAGE> 7
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
7-113-207. FAILURE TO TAKE ACTION.
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the corporation must receive the payment demand
as provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set
by the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new
dissenters' notice, as provided in section 7-113-203, and the provisions of
sections 7-113-204 to 7-113-209 shall again be applicable.
7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION. (1) The corporation may, in or with
the dissenters' notice given pursuant to section 7-113-203, 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 7-113-102
and state that the dissenter shall certify in writing, in or with the
dissenter's payment demand under section 7-113-204, whether or not the
dissenter (or the person on whose behalf dissenters' rights are asserted)
acquired beneficial ownership of the shares before that date. With respect to
any dissenter who does not so certify in writing, in or with the payment
demand, that the dissenter or the person on whose behalf the dissenter asserts
dissenters' rights acquired beneficial ownership of the shares before such
date, the corporation may, in lieu of making the payment provided in section
7-113-206, offer to make such payment if the dissenter agrees to accept it in
full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206 (2).
7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any
payment made under section 7-113-206, or reject the corporation's offer under
section 7-113-208 and demand payment of the fair value of the shares and
interest due, if:
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(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
7-113-301. COURT ACTION.
(1) If a demand for payment under section 7-113-209 remains unresolved,
the corporation may, within sixty days after receiving the payment demand,
commence a proceeding 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 sixty-day period, it shall pay to each dissenter whose
demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court of the county in this state where the
corporation's principal office is located or, if the corporation has no
principal office in this state, in the district court of the county in which
its registered office is located. If the corporation is a foreign corporation
without a registered office, it shall commence the proceeding in the county
where the registered office of the domestic corporation merged into, or whose
shares were acquired by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, or as
provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to such order. The
parties to the proceeding 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) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
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7-113-302. COURT COSTS AND COUNSEL FEES.
(1) The court in an appraisal proceeding commenced under section 7-113-301
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 7-113-209.
(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 dissenters if the court
finds the corporation did not substantially comply with the requirements of
part 2 of this article; 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 article.
(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 said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
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