Part Definitions

  1. Law
  2. Tennessee Code
  3. Securities, Corporations and Associations
  4. Corporate Takeovers
  5. Tennessee Business Combination Act
  6. Part Definitions

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As used in this part, unless the context otherwise requires:

  1. “Affiliate,” when used to indicate a relationship with an interested shareholder, means a person that directly or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, or is acting in concert with, a specified person;
  2. “Announcement date,” when used in reference to any business combination, means the date of the first public announcement of a final definitive proposal for such business combination;
  3. “Associate,” when used to indicate a relationship with an interested shareholder, means:
    1. Any domestic or foreign corporation, partnership, syndicate, joint venture or other unincorporated organization of which such person is an officer, director, manager or partner (either general or limited) or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of voting stock;
    2. All members or investors in any partnership (either general or limited), syndicate or other unincorporated organization described in subdivision (3)(A);
    3. Any trust or other estate in which such person has at least a ten percent (10%) beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; or
    4. Any parent, child, sibling, in-law (mother, father, sons and daughters), of such person or any relative of such person who has the same residence as such person;
  4. “Beneficial owner,” when used with respect to any class or series of shares or other securities, means a person that:
    1. Individually, or with or through any of its affiliates or associates, beneficially owns such shares or other securities, directly or indirectly;
    2. Individually, or with or through any of its affiliates or associates, has or shares with others:
      1. The right to acquire or dispose of, or direct the disposition of such shares or other securities (whether such right is exercisable immediately or only after the passage of time or the satisfaction of one (1) or more other conditions), pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise; provided, that a person shall not be deemed the beneficial owner of any shares or other securities tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered shares or other securities are accepted for purchase or exchange; or
      2. The right to vote or direct the voting of such shares or other securities pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, that a person shall not be deemed the beneficial owner of any shares or other securities under this subdivision (4)(B)(ii) if the agreement, arrangement or understanding to vote such shares or other securities:
  1. Arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable rules and regulations under the Exchange Act; and
  2. Is not then reportable on a Schedule 13D or 13G under the Exchange Act (or any comparable or successor report); or

Has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in subdivision (4)(B)) or disposing of such shares or other securities with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such shares;

“Business combination,” when used in reference to any resident domestic corporation and any interested shareholder of such resident domestic corporation or any affiliate or associate of such interested shareholder, means:

Any merger or consolidation of such resident domestic corporation or any subsidiary of such resident domestic corporation with:

An interested shareholder or any affiliate or associate of such interested shareholder; or

Any other corporation (whether or not itself an interested shareholder of such resident domestic corporation) which is, or after such merger or consolidation would be, an affiliate or associate of such interested shareholder;

Any exchange of shares or securities convertible into shares of the resident domestic corporation with:

An interested shareholder or any affiliate or associate of such interested shareholder; or

Any other domestic or foreign corporation (whether or not itself an interested shareholder of the resident domestic corporation) which is, or after the exchange would be, an affiliate or associate of the interested shareholder;

Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one (1) transaction or a series of transactions) to, with or proposed by or on behalf of an interested shareholder, or any affiliate or associate of such interested shareholder, of assets of such resident domestic corporation or any subsidiary of such resident domestic corporation:

Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the assets, determined on a consolidated basis, of such resident domestic corporation;

Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the outstanding shares of such resident domestic corporation; or

Representing ten percent (10%) or more of the net income determined on a consolidated basis of such resident domestic corporation;

Any transaction which results in the issuance or transfer by such resident domestic corporation or any subsidiary of such resident domestic corporation (in one (1) transaction or a series of transactions) of any shares or securities convertible into shares of such resident domestic corporation or any subsidiary of such resident domestic corporation to such interested shareholder or any affiliate or associate of such interested shareholder except pursuant to the exercise of warrants or rights to purchase shares or securities convertible into shares, or a dividend or distribution paid or made pro rata to all shareholders of such resident domestic corporation, or in connection with the exercise or conversion of securities exercisable for or convertible into shares of such resident domestic corporation (or any subsidiary of such resident domestic corporation) which securities were issued and outstanding prior to the interested shareholder's share acquisition date;

The adoption of any plan or proposal for the liquidation or dissolution of such resident domestic corporation, or any reincorporation of the resident domestic corporation in another state or jurisdiction, proposed by or on behalf of, or pursuant to any agreement, arrangement or understanding (whether or not in writing) with, an interested shareholder or any affiliate or associate of such interested shareholder;

Any transaction (whether or not with or into or otherwise involving such interested shareholder), proposed by or on behalf of, or pursuant to any agreement, arrangement or understanding (whether or not in writing) with, an interested shareholder or any affiliate or associate of such interested shareholder, which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of shares or securities convertible into shares entitled to vote or securities that are exchangeable for, convertible into, or carry a right to acquire shares entitled to vote, of such resident domestic corporation or any subsidiary of such resident domestic corporation which are, directly or indirectly, owned or controlled by such interested shareholder or any affiliate or associate of such interested shareholder, except as a result of immaterial changes due to fractional share adjustments; or

Any loans, advances, guarantees, pledges, financial assistance, security arrangements, restrictive covenants or any tax credits or other tax advantages provided by, through or to such resident domestic corporation or any subsidiary of the resident domestic corporation as a result of which an interested shareholder or any affiliate or associate of such interested shareholder receives a benefit, directly or indirectly, except proportionately as a shareholder of such resident domestic corporation;

“Consummation date,” with respect to any business combination, means the date of consummation of such business combination;

“Continuing shares” means shares held continuously of record in the name of the beneficial owner or the beneficial owner's trustee, guardian, administrator, executor, conservator or similar fiduciary on behalf of such beneficial owner, on the resident domestic corporation's stock transfer records or reported to the securities and exchange commission on a Schedule 13D or 13G or Form 3 or 4 filing pursuant to the Exchange Act for one (1) year or more prior to the date of the shareholders' meeting at which the charter or bylaw amendment is considered;

“Control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract or otherwise. A person's beneficial ownership of ten percent (10%) or more of the voting power of a corporation's outstanding voting stock shall create a presumption that such person has control of such corporation. Notwithstanding the foregoing, a person shall not be deemed to have control of a corporation if such person holds voting power, in good faith and not for the purpose of circumventing this part, as an agent, bank, broker, nominee, custodian or trustee or one (1) or more beneficial owners who do not individually or as a group have control of such corporation;

“Exchange” means any share exchange whether pursuant to a plan of exchange under §§48-21-102,48-21-104, and48-21-105 or any successor or related statute, rule or law of this state or the comparable statute, rule or law of any other state or jurisdiction;

“Exchange Act” means the Act of Congress known as the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.), as the same has been or hereafter may be amended from time to time;

“Interested shareholder,” when used in reference to any resident domestic corporation, means any person (other than such resident domestic corporation or any subsidiary of such resident domestic corporation) that:

(i)  Is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the voting power of any class or series of the then outstanding voting stock of such resident domestic corporation; or

Is an affiliate or associate of such resident domestic corporation and at any time within the five-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent (10%) or more of the voting power of any class or series of the then outstanding stock of such resident domestic corporation;

For the purpose of determining whether a person is an interested shareholder, the number of shares of voting stock of such resident domestic corporation deemed to be outstanding shall include shares deemed to be beneficially owned by such person through application of subdivision (4), but shall not include any other unissued shares of voting stock of such resident domestic corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise;

“Market value,” when used in reference to property of any resident domestic corporation, means:

In the case of shares, the highest closing sale price during the thirty-day period immediately preceding the date in question of a share of such shares on the composite tape for New York Stock Exchange-listed stocks, or, if such shares are not quoted on such composite tape or if such shares are not listed on such exchange, on the principal United States securities exchange registered under the Exchange Act on which such shares are listed or, if such shares are not listed on any such exchange, the highest closing sale price (or bid quotation if no such sale price exists) with respect to such shares during the thirty-day period preceding the date in question on the National Association of Securities Dealers, Inc., Automated Quotations System or any successor system then in use, or if no such price or quotation is available, the fair market value on the date in question of a share of such resident domestic corporation's stock as determined by the board of directors of such resident domestic corporation in good faith; or

In the case of property other than cash or shares, the fair market value of such property on the date in question as determined by the board of directors of such resident domestic corporation in good faith;

“Merger” means any merger whether pursuant to a plan of merger under §§48-21-102,48-21-104,48-21-105 and48-21-109 or any successor or related statute, rule or law of this state or the comparable statute, rule or law of any other state or jurisdiction respecting mergers or consolidations;

“Person” means any individual, domestic or foreign corporation, partnership (general or limited), syndicate, joint venture, trust estate, unincorporated association or other entity;

“Resident domestic corporation” means an issuer of voting stock which, as of the share acquisition date in question, is organized under the laws of Tennessee and meets two (2) or more of the following requirements:

(i)  The corporation has more than either ten thousand (10,000) or ten percent (10%) of its shareholders resident in Tennessee or more than ten percent (10%) of its outstanding shares held by resident Tennessee shareholders;

For purposes of this subdivision (15), the record date for determining the percentage, number and residency of the outstanding shares and shareholders shall be the last record date before the event requiring that the determination be made. Residence of each shareholder shall be presumed to be the address appearing in the records of the corporation. Shares held of record by brokers or nominees shall be disregarded if the address of the beneficial owner is known. Shares allocated to the account of an employee or former employee or beneficiaries of employees or former employees of a corporation and held in a plan that is qualified under § 401(a) of the federal Internal Revenue Code of 1986 (26 U.S.C. § 401(a)), as amended, and is a defined contribution plan within the meaning of § 414(i) of such Code (26 U.S.C. § 414(i)), shall be deemed, for purposes of this subdivision (15), to be held of record by the employee to whose account such shares are allocated. Any shares which are not allocated under any such plan and which are held by trustees, custodians, administrators or other fiduciaries under the terms of such plan shall be deemed to be held of record by the trustee, custodian, administrator or other fiduciary with residency to be determined by home address in the case of an individual, and principal place of business in the case of a corporation;

The corporation has its principal office or place of business located in this state;

The corporation has the principal office or place of business of a significant subsidiary, representing not less than twenty-five percent (25%) of the issuer's consolidated net sales, located in this state;

The corporation employs more than two hundred fifty (250) individuals in this state or has a combined annual payroll paid to residents of this state which is in excess of five million dollars ($5,000,000);

The corporation produces goods and/or services in this state which result in annual gross receipts in excess of ten million dollars ($10,000,000); or

The corporation has physical assets and/or deposits, including those of any subsidiary, located within this state which exceed ten million dollars ($10,000,000) in value;

“Share” or “shares” means:

Any stock or other equity interest in any class or series of stock designated in the charter of the resident domestic corporation or its subsidiaries, any certificate of interest, any participation in any profit sharing agreement, any voting trust certificate, or any certificate of deposit for stock in any class or series; and

Any security convertible, with or without consideration, into stock or other equity interest in any class or series, or any warrant, call or other option or privilege of buying stock without being bound to do so, or any other security carrying any right to acquire, subscribe to or purchase stock in any class or series;

“Share acquisition date,” with respect to any person and any resident domestic corporation, means the date that such person first becomes an interested shareholder of such resident domestic corporation;

“Subsidiary” or “subsidiaries,” with respect to any resident domestic corporation, means any other corporation which is wholly owned by the resident domestic corporation or which is organized under the laws of this state in which a majority of the shares entitled to vote are owned or controlled, directly or indirectly, by such resident or domestic corporation; and

“Voting stock” means all shares of the resident domestic corporation entitled to vote generally in the election of directors.


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