2006 Code of Virginia § 13.1-725 - Definitions
For purposes of this article:
An "affiliate" means a person that directly, or indirectly through one ormore intermediaries, controls, is controlled by, or is under common controlwith the person specified.
An "affiliated transaction" means any of the following transactions:
1. Any merger of the corporation or any of its subsidiaries with anyinterested shareholder or with any other corporation that immediately afterthe merger would be an affiliate of an interested shareholder that was aninterested shareholder immediately before the merger;
2. Any share exchange pursuant to 13.1-717 in which any interestedshareholder acquires one or more classes or series of voting shares of thecorporation or any of its subsidiaries;
3. Except for transactions in the ordinary course of business, (i) any sale,lease, exchange, mortgage, pledge, transfer or other disposition (in onetransaction or a series of transactions) to or with any interestedshareholder of any assets of the corporation or of any of its subsidiarieshaving an aggregate fair market value in excess of five percent of thecorporation's consolidated net worth as of the date of the most recentlyavailable financial statements, or (ii) any guaranty by the corporation orany of its subsidiaries (in one transaction or a series of transactions) ofindebtedness of any interested shareholder in an amount in excess of fivepercent of the corporation's consolidated net worth as of the date of themost recently available financial statements;
4. The sale or other disposition by the corporation or any of itssubsidiaries to an interested shareholder (in one transaction or a series oftransactions) of any voting shares of the corporation or any of itssubsidiaries having an aggregate fair market value in excess of five percentof the aggregate fair market value of all outstanding voting shares of thecorporation as of the determination date except pursuant to a share dividendor the exercise of rights or warrants distributed or offered on a basisaffording substantially proportionate treatment to all holders of the sameclass or series of voting shares;
5. The dissolution of the corporation if proposed by or on behalf of aninterested shareholder; or
6. Any reclassification of securities, including any reverse stock split, orrecapitalization of the corporation, or any merger of the corporation withany of its subsidiaries or any distribution or other transaction, whether ornot with or into or otherwise involving an interested shareholder, which hasthe effect, directly or indirectly (in one transaction or a series oftransactions), of increasing by more than five percent the percentage of theoutstanding voting shares of the corporation or any of its subsidiariesbeneficially owned by any interested shareholder.
The "announcement date" means the date of the first general publicannouncement of the proposed affiliated transaction or of the intention topropose an affiliated transaction or the date on which the proposedaffiliated transaction or the intention to propose an affiliated transactionis first communicated generally to shareholders of the corporation, whicheveris earlier.
An "associate" means as to any specified person:
1. Any entity, other than the corporation and any of its subsidiaries, ofwhich such person is an officer, director, manager, or general partner or isthe beneficial owner of 10 percent or more of any class of voting shares orother interests;
2. Any trust or other estate in which such person has a substantialbeneficial interest or as to which such person serves as trustee or in asimilar fiduciary capacity; and
3. Any relative or spouse of such person, or any relative of such spouse, whohas the same home as such person or who is an officer or director of thecorporation or any of its affiliates.
A person is deemed to be a "beneficial owner" of voting shares as to whichsuch person and such person's affiliates and associates, individually or inthe aggregate, have or share directly, or indirectly through any contract,arrangement, understanding, relationship, or otherwise:
1. Voting power, which includes the power to vote or to direct the voting ofthe voting shares, unless such power results solely from a revocable proxygiven in response to a proxy solicitation made to 10 or more persons and inaccordance with the Securities Exchange Act of 1934;
2. Investment power, which includes the power to dispose or to direct thedisposition of the voting shares; or
3. The right to acquire voting power or investment power, whether such rightis exercisable immediately or only after the passage of time, pursuant to anycontract, arrangement, or understanding, upon the exercise of conversionrights, exchange rights, warrants, or options, or otherwise; provided, that(i) a person shall not be deemed to be a beneficial owner of voting sharestendered pursuant to a tender or exchange offer made by such person or suchperson's affiliates or associates until such tendered voting shares areaccepted for purchase or exchange, (ii) a member of a national securitiesexchange shall not be deemed to be a beneficial owner of shares held directlyor indirectly by it on behalf of another person solely because such member isthe record holder of such securities and, pursuant to the rules of suchexchange may direct the vote of such shares, without instructions, on otherthan contested matters or matters that may affect substantially the rights orprivileges of the holders of the shares to be voted but is otherwiseprecluded by the rules of such exchange from voting without instructions and(iii) a director of the corporation shall not be deemed to be a beneficialowner of voting shares beneficially owned by another director of thecorporation solely by reason of actions undertaken by such persons in theircapacity as directors of the corporation.
"Control" means the possession, directly or indirectly, through theownership of voting securities, by contract, arrangement, understanding,relationship or otherwise, of the power to direct or cause the direction ofthe management and policies of a person. The beneficial ownership of 10percent or more of a corporation's voting shares shall be deemed toconstitute control.
The "determination date" means the date on which an interested shareholderbecame an interested shareholder.
Unless otherwise specified in the articles of incorporation initially filedwith the Commission, for purposes of this article a "disinteresteddirector" means as to any particular interested shareholder (i) any memberof the board of directors of the corporation who was a member of the board ofdirectors before the later of January 1, 1988, and the determination date and(ii) any member of the board of directors of the corporation who wasrecommended for election by, or was elected to fill a vacancy and receivedthe affirmative vote of, a majority of the disinterested directors then onthe board.
"Fair market value" means:
1. In the case of shares, the highest closing sale price of a share quotedduring the 30-day period immediately preceding the date in question on thecomposite tape for shares listed on the New York Stock Exchange, or, if suchshares are not quoted on the composite tape on the New York Stock Exchange,on the principal United States securities exchange registered under theSecurities Exchange Act of 1934 on which such shares are listed, or, if suchshares are not listed on any such exchange, the highest closing bid quotationwith respect to a share during the 30-day period preceding the date inquestion on the National Association of Securities Dealers, Inc., automatedquotations system or any similar system then in general use, or, if no suchquotations are available, the fair market value of a share on the date inquestion as determined by a majority of the disinterested directors; and
2. In the case of property other than cash or shares, the fair market valueof such property on the date in question as determined by a majority of thedisinterested directors.
An "interested shareholder" means any person that is:
1. The beneficial owner of more than 10 percent of any class of theoutstanding voting shares of the corporation; however, the term "interestedshareholder" shall not include the corporation or any of its subsidiaries,any savings, employee stock ownership, or other employee benefit plan of thecorporation or any of its subsidiaries, or any fiduciary with respect to anysuch plan when acting in such capacity. For the purpose of determiningwhether a person is an interested shareholder, the number of voting sharesdeemed to be outstanding shall include shares deemed owned by the interestedshareholder through application of subdivision 3 under the definition of"beneficial owner" but shall not include any other voting shares that maybe issuable pursuant to any contract, arrangement, or understanding, upon theexercise of any conversion right, exchange right, warrant, or option, orotherwise; or
2. An affiliate or associate of the corporation and at any time within thepreceding three years was an interested shareholder of such corporation.
"Valuation date" means, if the affiliated transaction is voted upon byshareholders, the day before the date of the vote of shareholders or, if theaffiliated transaction is not voted upon by shareholders, the date of theconsummation of the transaction.
"Voting shares" means the outstanding shares of all classes or series ofthe corporation entitled to vote generally in the election of directors.
(1985, c. 522; 1988, c. 442; 2005, c. 765.)
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