-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NFSBC5HW5PH+YxCZYtasrdFuMA1vOYUqc1aGuKrFXSGisbWHGhZLQ8fhrfpHInuF 3LbiA7zbCYnFeOuDi0seqw== 0000950123-97-010142.txt : 19971210 0000950123-97-010142.hdr.sgml : 19971210 ACCESSION NUMBER: 0000950123-97-010142 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19971209 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GUARANTY NATIONAL CORP CENTRAL INDEX KEY: 0000044358 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 840445021 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-43461 FILM NUMBER: 97734215 BUSINESS ADDRESS: STREET 1: 9800 SOUTH MERIDIAN BOULEVARD CITY: ENGLEWOOD STATE: CO ZIP: 80112-5901 BUSINESS PHONE: 3037548400 MAIL ADDRESS: STREET 1: 9800 SOUTH MERIDIAN BLVD CITY: ENGLEWOOD STATE: CO ZIP: 80112-5901 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ORION CAPITAL CORP CENTRAL INDEX KEY: 0000074931 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 956069054 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 9 FARM SPRINGS RD STREET 2: 24TH FLOOR CITY: FARMINGTON STATE: CT ZIP: 06032 BUSINESS PHONE: 8606746600 MAIL ADDRESS: STREET 1: 600 FIFTH AVENUE STREET 2: 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020-2302 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY FUNDING CORP OF AMERICA DATE OF NAME CHANGE: 19760518 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP OF AMERICA DATE OF NAME CHANGE: 19670330 FORMER COMPANY: FORMER CONFORMED NAME: TONGOR CORP DATE OF NAME CHANGE: 19661024 SC 14D1/A 1 AMENDMENT NO. 2 TO SC 14D1 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 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 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 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 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 EX-99.A.12 2 PRESS RELEASE 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 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. 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, 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. 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
2 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 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- 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. ### 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 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 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 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 EX-99.C.7 3 NOTICE TO SHAREHOLDERS 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. 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- 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- 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 -4- 5 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. -5- 6 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 -6- 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: -7- 8 (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. -8- 9 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. -9- -----END PRIVACY-ENHANCED MESSAGE-----