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EXHIBIT G
Chapter 13
GENERAL CORPORATION LAW OF CALIFORNIA
DISSENTERS RIGHTS
SECTION 1300. Right to Require Purchase-"Dissenting Shares" and
"Dissenting Shareholder" Defined.
(e) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and
(b) or subdivision (e) of Section 1201, each shareholder of the
corporation entitled to vote on the transaction and each shareholder of a
subsidiary corporation in a short-form merger may. by complying with this
chapter, require the corporation in which the shareholder holds shares to
purchase for cash at their fair market value the shares owned by the
shareholder which are dissenting shares as defined in subdivision
(b). The fair market value shall be determined as of the day before the
first announcement of the terms of the proposed reorganization or short-
form merger, excluding any appreciation or depreciation in consequence of
the proposed action, but adjusted for any stock split; reverse stock
split or share dividend which becomes effective thereafter.
(f) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1 ) Which were not immediately prior to the reorganization or short-form
merger either (i) listed on any national securities exchange certified by
the Commissioner of Corporations under subdivision (o) of Section 25100
or (ii) listed on the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System, and the notice of meeting of
shareholders to act upon the reorganization summarizes this section
and Sections 1301, 1302, 1303 and 1304; provided, however, that this
provision does not apply to any shares with respect to which there exists
any restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply to
any class of shares described in clause (i) or (ii) if demands for
payment are filed with respect to 5 percent or more of the outstanding
shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (i) were not
voted in favor of the reorganization or, (ii) if described in clause
(i) or (ii) of paragraph (1) (without regard to the provisos in that
paragraph), were voted against the reorganization, or which were held of
record on the effective date of a short-form merger; provided, ho, ever,
that clause (i) rather than clause (ii) of this paragraph applies in any
case where the approval required by Section 1201 is sought by written
consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(g) As used in this chapter, "dissenting shareholder" means the record
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holder of dissenting shares and includes a transferee of record.
SECTION 1301. Demand for Purchase.
(a) If, in the case of a reorganization, any shareholders of a
corporation have a right under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, to require the
corporation to purchase their shares for cash, such corporation shall
mail to each such shareholder a notice of the approval of the
reorganization by its outstanding shares (Section 152) within 10 days
after the date of such approval, accompanied by a copy of Sections 1300,
1302, 1303, 1304 and this section, a statement of the price determined by
the corporation to represent the fair market value of the dissenting
shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such
sections. The statement of price constitutes an offer by the corporation
to purchase at the price stated any dissenting shares as defined in
subdivision (b) of Section 1300, unless they lose their status as
dissenting shares under Section 1309.
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(b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and
who desires the corporation to purchase such shares shall make written
demand upon the corporation for the purchase of such shares and payment
to the shareholder in cash of their fair market value. The demand is not
effective for any purpose unless it is received by the corporation or any
transfer agent thereof (1) in the case of shares described in clause (i)
or (ii) of paragraph (1) of subdivision (b) of Section 1300 (without
regard to the provisos in that paragraph), not later than the date of the
shareholders' meeting to vote upon the reorganization, or (2) in any
other case within 30 days after the date on which the notice of the
approval by the outstanding shares pursuant to subdivision (a) or
the notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the
corporation purchase and shall contain a statement of what such
shareholder claims to be the fair market value of those shares as of the
day before the announcement of the proposed reorganization or short-form
merger. The statement of fair market value constitutes an offer by the
shareholder to sell the shares at such price.
SECTION 1302. Endorsement of Shares.
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section I
110 was mailed to the shareholder, the shareholder shall submit to the
corporation at its principal office or at the office of any transfer
agent thereof, (a) if the shares are certificated securities. the
shareholder's certificates representing any shares which the shareholder
demands that the corporation purchase, to be stamped or endorsed with a
statement that the shares are dissenting shares or to be exchanged for
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certificates of appropriate denomination so stamped or endorsed or (b) if
the shares are uncertificated securities, written notice of the number of
shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the
corporation, the new certificates, initial transaction statement, and
other written statements issued therefor shall bear a like statement,
together with the name of the original dissenting holder of the shares.
SECTION 1303. Agreed Price -Time for Payment.
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the
legal rate on judgments from the date of the Agreement. Any agreements
fixing the fair market value of an) dissenting shares as between the
corporation and the holders thereof shall be filed with the secretary of
the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory. or
contractual conditions to the reorganization are satisfied, whichever is
later. and in the case of certificated securities, subject to surrender
of the certificates therefor, unless provided otherwise by Agreement.
SECTION 1304. Dissenter's Action to Enforce Payment.
(a) If the corporation denies that the shares are dissenting shares, or
the corporation and the shareholder fail to agree upon the fair market
value of the shares, then the shareholder demanding purchase of such
shares as dissenting shares or any interested corporation, within six
months after the date on which notice of the approval by the outstanding
shares (Section 152) or notice pursuant to subdivision (i) of Section I
110 was mailed to the shareholder, but not thereafter, may file a
complaint in the superior court of the proper count) praying the court to
determine whether the shares are dissenting shares or the fair market
value of the dissenting shares or both or may intervene in and action
pending on such a complaint.
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(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendant, in any such action and two or more such actions may
be consolidated. On the trial of the action. the court shall determine
the issues. If the status of the shares as dissenting shares is in issue,
the court shall first determine that issue. If the fair market value of
the dissenting shares is in issue. the court shall determine, or shall
appoint one or more impartial appraisers to determine, the fair market
value of the shares.
SECTION 1305. Appraiser's Report - Payment - Costs.
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time
fixed by the court, the appraisers, or a majority of them, shall make and
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file a report in the office of the clerk of the court. Thereupon, on the
motion of any party, the report shall be submitted to the court and
considered on such evidence as the court considers relevant. If the court
finds the report reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not
confirmed by the court, the court shall determine the fair market value
of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market
value of each dissenting share multiplied by the number of dissenting
shares which any dissenting shareholder who is a party, or who has
intervened, is entitled to require the corporation to purchase. with
interest thereon at the legal rate from the date on which judgment was
entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated
securities, only upon the endorsement and delivery to the corporation of
the certificates for the shares described in the judgment. Any party may
appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as
the court considers equitable, but, if the appraisal exceeds the price
offered by the corporation. the corporation shall pay the costs
(including in the discretion of the court attorneys' fees, fees of expert
witnesses and interest at the legal rate on judgments from the date of
compliance with Sections 1300, 1301 and 1302 if the value awarded by the
court for the shares is more than 125 percent of the price offered by the
corporation under subdivision (a) of Section 1301).
SECTION 1306. Dissenting Shareholder's Status as Creditor.
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall
become creditors of the corporation for the amount thereof together with
interest at the legal rate on judgments until the date of payment, but
subordinate to all other creditors in any liquidation proceeding. such
debt to be payable when permissible under the provisions of Chapter 5.
SECTION 1307. Dividends Paid as Credit Against Payment.
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the
outstanding shares (Section 152) and prior to payment for the shares by
the corporation shall be credited against the total amount to be paid by
the corporation therefor.
SECTION 1308. Continuing Rights and Privileges of Dissenting
Shareholders.
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Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares,
until the fair market value of their shares is agreed upon or determined.
A dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.
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SECTION 1309. Termination of Dissenting Shareholder Status.
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of
any of the following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this
chapter all necessary expenses incurred in such proceedings and
reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement
in accordance with Section 1302 or are surrendered for conversion into
shares of another class in accordance with the articles.
(b) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of
the shares, and neither files a complaint or intervenes in a pending
action as provided in Section 1304, within six months after the date on
which notice of the approval by the outstanding shares or notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
SECTION 1310. Suspension of Proceedings for Payment Pending Litigation.
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any
proceedings under Sections 1304 and 1305 shall be suspended until final
determination of such litigation.
SECTION 1311. Exempt Shares.
This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid
in respect to such shares in the event of a reorganization or merger.
SECTION 1312. Attacking Validity of Reorganization or Merger.
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have
any right at law or in equity to attack the validity of the
reorganization or short-form merger, or to have the reorganization or
short-form merger set aside or rescinded, except in an action to test
whether the number of shares required to authorize or approve the
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reorganization have been legally voted in favor thereof; but any holder
of shares of a class whose terms and provisions specifically set forth
the amount to be paid in respect to them in the event of a reorganization
or short-form merger is entitled to payment in accordance with those
terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to
payment in accordance with the terms and provisions of the approved
reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, subdivision (a)
shall not apply to any shareholder of such party who has not demanded
payment of cash for such shareholder's shares pursuant to this chapter;
but if the shareholder institutes any action to attack the validity of
the reorganization or short-form merger or to have the reorganization or
short-form merger set aside or rescinded. the shareholder shall not
thereafter have any right to demand payment of cash for the shareholder's
shares pursuant to this chapter. The court in any action attacking the
validity of the reorganization or short form merger or to have the
reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10
days' prior notice to the corporation and upon a determination by the
court that clearly no other remedy will adequately protect the
complaining shareholder or the class of shareholders of which such
shareholder is a member.
(c) If one of the patties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, in any action
to attack the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded. (1)
a party to a reorganization or short-form merger which controls another
party to the reorganization or short-form merger shall have the burden of
proving that the transaction is just and reasonable as to the
shareholders of the controlled part. and (2) a person who controls two
or more parties to a reorganization shall have the burden of proving that
the transaction is just and reasonable a. to the shareholder, of any
party so controlled.
