Public Act 90-0461 of the 90th General Assembly
Public Act 90-0461
HB0613 Enrolled LRB9002696WHpk
AN ACT to amend the Business Corporation Act of 1983 by
changing Sections 7.85 and 11.75.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Business Corporation Act of 1983 is
amended by changing Sections 7.85 and 11.75 as follows:
(805 ILCS 5/7.85) (from Ch. 32, par. 7.85)
Sec. 7.85. A. Vote required for certain business
combinations.
A. This Section shall apply to any domestic corporation
that which (i) has any a class of equity securities
registered under Section 12 of the Securities Exchange Act of
1934 or is subject to Section 15(d) of that Act (a "reporting
company") and (or any subsequent provisions replacing such
Act), or (ii) any domestic corporation other than one
described in (i) that which either specifically adopts this
Section 7.85 in its original articles of incorporation or
amends its articles of incorporation to specifically adopt
this Section 7.85, however, the restrictions contained in
this Section shall not apply in the event of any of the
following:.
(1) In case of a reporting company, the
corporation's articles of incorporation immediately prior
to the time it becomes a reporting company contains a
provision expressly electing not to be governed by this
Section.
(2) The corporation, by action of its board of
directors, adopts an amendment to its by-laws within 90
days after the effective date of this amendatory Act of
1997 expressly electing not to be governed by this
Section, which amendment shall not be further amended by
the board of directors.
(3) In the case of a reporting company, the
corporation, by action of its shareholders, adopts an
amendment to its articles of incorporation or by-laws
expressly electing not to be governed by this Section,
provided that, in addition to any other vote required by
law, such amendment to the articles of incorporation or
by-laws must be approved by the affirmative vote of a
majority of the voting shares (as defined in paragraph B
of this Section 7.85). An amendment adopted under this
paragraph shall not be effective until 12 months after
the adoption of the amendment and shall not apply to a
business combination between the corporation and a person
who became an interested shareholder of the corporation
at the same time as or before the adoption of the
amendment. A by-law amendment adopted under this
paragraph shall not be further amended by the board of
directors.
(4) A shareholder becomes an interested shareholder
inadvertently and (i) as soon as practical divests
sufficient shares so that the shareholder ceases to be an
interested shareholder and (ii) would not, at any time
within the 3 year period immediately before a business
combination between the corporation and the shareholder,
have been an interested shareholder but for the
inadvertent acquisition.
In the case of circumstances described in subparagraphs
(1), (2), and (3) of this paragraph A, the election not to be
governed may be in whole or in part, generally, or generally
by types, or as to specifically identified or unidentified
interested shareholders. Notwithstanding any other provisions
of the Articles of Incorporation or the By-Laws of the
corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, the Articles of
Incorporation or the By-Laws of the corporation), the
affirmative vote of (i) the holders of 80% or more of the
combined voting power of the then outstanding Voting Shares
voting together as a single class, and (ii) a majority of the
combined voting power of the then outstanding Voting Shares
held by Disinterested Shareholders (as hereinafter defined),
voting together as a single class, shall be required to
amend, or repeal, or to adopt any provision inconsistent
with, any provision in the Articles of Incorporation of the
corporation specifically adopting this Section 7.85.
B. (1) Higher vote for certain business combinations.
In addition to any affirmative vote required by law or the
articles of incorporation, except as otherwise expressly
provided in paragraph C B of this Section 7.85, any business
combination:
(a) any merger, consolidation or share exchange of the
corporation or any Subsidiary (as hereinafter defined) with
or involving (1) any Interested Shareholder (as hereinafter
defined) or (2) any other corporation (whether or not itself
an Interested Shareholder) which is, or after such merger,
consolidation or share exchange would be, an Affiliate (as
hereinafter defined) or an Associate (as hereinafter defined)
of an Interested Shareholder;
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder (other
than the corporation or any Subsidiary) of any assets of the
corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) equal to 10% or more of the
corporation's consolidated net worth as of its then most
recent fiscal year end;
(c) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or a series of transactions)
of any securities of the corporation or any Subsidiary to any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder;
(d) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by, or
in which anything other than cash will be received by, an
Interested Shareholder or any Affiliate or Associate of an
Interested Shareholder; or
(e) any reclassification of securities (including any
reverse share split), or recapitalization of the corporation,
or any merger, consolidation or share exchange of the
corporation with or involving any of its Subsidiaries which
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder;
shall require (i) the affirmative vote of the holders of at
least 80% of the combined voting power of the then
outstanding shares of all classes and series of the
corporation entitled to vote generally in the election of
directors (the "Voting Shares"), voting together as a single
class (the "voting shares") (it being understood that, for
the purposes of this Section 7.85, each voting share shall
have the number of votes granted to it pursuant to the
corporation's articles of incorporation) and (ii) the
affirmative vote of a majority of the combined voting power
of the then outstanding voting shares held by disinterested
shareholders voting together as a single class.
(2) Definition of "Business Combination." The term
"business combination" as used in this Section 7.85 shall
mean any transaction which is referred to in any one or more
of clauses (a) through (e) of subparagraph (1) of this
paragraph A.
C B. When higher vote is not required. The provisions
of subparagraph (1) of paragraph B A of this Section 7.85
shall not be applicable to any particular business
combination, and such business combination shall require only
such affirmative vote as is required by law and any other
provision of the corporation's article of incorporation and
any resolutions of the board of directors adopted pursuant to
Section 6.10 if all of the conditions specified in either of
the following subparagraphs (1) and (2) of this paragraph C B
are met:
(1) Approval by disinterested directors. The
business combination shall have been approved by
two-thirds of the disinterested directors (as hereinafter
defined).
(2) Price and procedure requirements. All of the
following conditions shall have been met:
(a) The business combination shall provide for
consideration to be received by all holders of
common shares in exchange for all their shares, and
the aggregate amount of the cash and the fair market
value as of the date of consummation of the business
combination of consideration other than cash to be
received per share by holders of common shares in
such business combination shall be at least equal
to the higher of the following:
(i) (1) (if applicable) the highest per
share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by the interested
shareholder or any affiliate or associate of
the interested shareholder to acquire any
common shares beneficially owned by the
interested shareholder which were acquired (a)
within the two year period immediately prior to
the first public announcement of the proposal
of the business combination (the "announcement
date") or (b) in the transaction in which it
became an interested shareholder, whichever is
higher; and
(ii) the fair market value per common
share on the first trading date after the
announcement date or on the first trading date
after the date of the first public announcement
that the interested shareholder became an
interested shareholder (the "Determination
Date"), whichever is higher.
(b) The business combination shall provide for
consideration to be received by all holders of
outstanding shares other than common shares in
exchange for all such shares, and the aggregate
amount of the cash and the fair market value as of
the date of the consummation of the business
combination of consideration other than cash to be
received per share by holders of outstanding shares
other than common shares shall be at least equal to
the highest of the following (it being intended that
the requirements of this subparagraph (2)(b) shall
be required to be met with respect to every class
and series of outstanding shares other than common
shares whether or not the interested shareholder or
any affiliate or associate of the interested
shareholder has previously acquired any shares of a
particular class or series):
(i) (1) (if applicable) the highest per
share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by the interested
shareholder or any affiliate or associate of
the interested shareholder to acquire any
shares of such class or series beneficially
owned by the interested shareholder which were
acquired (a) within the 2-year period
immediately prior to the announcement date or
(b) in the transaction in which it became an
interested shareholder, whichever is higher;
(ii) (2) (if applicable) the highest
preferential amount per share to which the
holders of shares of such class or series are
entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding
up of the corporation;
(iii) (3) the fair market value per share
of such class or series on the first trading
date after the announcement date or on the
determination date, whichever is higher; and
(iv) (4) an amount equal to the fair
market value per share of such class or series
determined pursuant to clause (iii) (3) times
the highest value obtained in calculating the
following quotient for each class or series of
which the interested shareholder has acquired
shares within the 2-year period ending on the
announcement date: (x) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees)
paid by the interested shareholder or any
affiliate or associate of the interested
Shareholder for any shares of such class or
series acquired within such 2-year period
divided by (y) the market value per share of
such class or series on the first day in such
2-year period on which the interested
shareholder or any affiliate or associate of
the interested shareholder acquired any shares
of such class or series.
(c) The consideration to be received by holders of
a particular class or series of outstanding shares shall
be in cash or in the same form as the interested
shareholder or any affiliate or associate of the
interested shareholder has previously paid to acquire
shares of such class or series beneficially owned by the
interested shareholder. If the interested shareholder
and any affiliates or associates of the interested
shareholder have paid for shares of any class or series
with varying forms of consideration, the form of
consideration for such class or series shall be either
cash or the form used to acquire the largest number of
shares of such class or series beneficially owned by the
interested shareholder.
(d) After such interested shareholder has become an
interested shareholder and prior to the consummation of
such business combination: (1) except as approved by
two-thirds of the disinterested directors, there shall
have been no failure to declare and pay at the regular
date therefor any full periodic dividends (whether or not
cumulative) on any outstanding shares of the corporation
other than the common shares; (2) there shall have been
(a) no reduction in the annual rate of dividends paid on
the common shares (except as necessary to reflect any
subdivision of the common shares), except as approved by
two-thirds of the disinterested directors, and (b) an
increase in such annual rate of dividends (as necessary
to prevent any such reduction) in the event of any
reclassification (including any reverse share split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the number
of outstanding common shares; and (3) such interested
shareholder shall not have become the beneficial owner of
any additional Voting Shares except as part of the
transaction which results in such interested shareholder
becoming an interested shareholder or as a result of
action taken by the corporation not caused, directly or
indirectly, by such interested shareholder.
(e) After such interested shareholder has become an
interested shareholder, such interested shareholder shall
not have received the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the corporation or any Subsidiary, whether in
anticipation of or in connection with such business
combination or otherwise.
(f) A proxy or information statement describing the
proposed business combination and complying with the
requirements of the Securities Exchange Act of 1934 and
the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations)
shall be mailed to public shareholders of the corporation
at least 30 days prior to the consummation of such
business combination (whether or not such proxy or
information statement is required to be mailed pursuant
to such Act or subsequent provisions).
D. C. Certain definitions. For the purposes of this
Section 7.85:
(1) A "Person" means an shall mean any individual,
firm, corporation, partnership, trust or other entity.
(2) "Interested shareholder" means (i) a shall
mean any person (other than the corporation and a direct
or indirect majority-owned subsidiary of the corporation)
that (a) is the owner of 15% or more of the outstanding
voting shares of the corporation or (b) is an affiliate
or associate of the corporation and was the owner of 15%
or more of the outstanding voting shares of the
corporation at any time within the 3 year period
immediately before the date on which it is sought to be
determined whether the person is an interested
shareholder and (ii) the affiliates and associates of
that person, provided, however, that the term "interested
shareholder" shall not include (x) a person who (A) owned
shares in excess of the 15% limitation as of January 1,
1997 and either (I) continued to own shares in excess of
the 15% limitation or would have but for action by the
corporation or (II) is an affiliate or associate of the
corporation and so continued (or so would have continued
but for action by the corporation) to be the owner of 15%
or more of the outstanding voting shares of the
corporation at any time within the 3-year period
immediately prior to the date on which it is sought to be
determined whether such a person is an interested
shareholder or (B) acquired the shares from a person
described in clause (A) by gift, inheritance, or in a
transaction in which no consideration was exchanged or
(y) a person whose ownership of shares in excess of the
15% limitation is the result of action taken solely by
the corporation, provided that the person shall be an
interested shareholder if thereafter the person acquires
additional shares of the corporation, except as a result
of further corporate action not caused, directly or
indirectly, by the person or if the person acquires
additional shares in transactions approved by the board
of directors, which approval shall include a majority of
the disinterested directors. For the purpose of
determining whether a person is an interested
shareholder, the voting shares of the corporation deemed
to be outstanding shall include shares deemed to be owned
by the person through application of subparagraph (3) of
this paragraph, but shall not include any other unissued
shares of the corporation that may be issuable or any
Subsidiary) who or which:
(a) is the beneficial owner, directly or
indirectly, of Voting Shares conveying 10% or more of the
combined voting power of the outstanding Voting Shares;
or
(b) is an Affiliate or Associate of the corporation
and at any time within the 2-year period immediately
prior to the date in question was the beneficial owner,
directly or indirectly, of Voting Shares conveying 10% or
more of the combined voting power of the then outstanding
Voting Shares.
(3) A person shall be a "beneficial owner" of any
Voting Shares:
(a) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such person or any of its Affiliates or
Associates has (1) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement, arrangement,
or understanding, or upon the exercise of conversion
rights, exchange rights, warrants, or options, or
otherwise., or (2) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding;
or
(3) "Owner", including the terms "own" and "owned",
when used with respect to shares means a person that
individually or with or through (c) which are
beneficially owned, directly or indirectly, by any other
person which such person or any of its affiliates or
associates: has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any Voting Shares.
(4) For the purposes of determining whether a
person is an interested shareholder pursuant to
subparagraph (2) of this paragraph C, the number of
Voting Shares deemed to be outstanding shall include
shares deemed owned by such person through application of
subparagraph (3) of this paragraph C but shall not
include any other Voting Shares which may be issuable to
other persons
(a) beneficially owns the shares, directly or
indirectly; or
(b) has (i) the right to acquire the shares
(whether the right is exercisable immediately or
only after the passage of time) pursuant to any
agreement, arrangement, or understanding, or upon
exercise of conversion rights, exchange rights,
warrants, or options, or otherwise; provided,
however, that a person shall not be deemed the owner
of shares tendered pursuant to a tender or exchange
offer made by the person or any of the person's
affiliates or associates until the tendered shares
are accepted for purchase or exchange or (ii) the
right to vote the shares pursuant to an agreement,
arrangement, or understanding; provided, however,
that a person shall not be deemed the owner of any
shares because of the person's right to vote the
shares if the agreement, arrangement, or
understanding to vote the shares arises solely from
a revocable proxy or consent given in response to a
proxy or consent solicitation made to 10 or more
persons; or
(c) has an agreement, arrangement, or
understanding for the purpose of acquiring, holding,
voting (except voting pursuant to a revocable proxy
or consent as described in clause (ii) of item (b)
of this subparagraph), or disposing of the shares
with any other person that beneficially owns, or
whose affiliates or associates beneficially own,
directly or indirectly, the shares.
(4) "Affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with,
another person.
(5) "Associate", when used to indicate a
relationship with a person, means (i) a corporation,
partnership, unincorporated association, or other entity
of which the person is a director, officer, or partner or
is, directly or indirectly, the owner of 20% or more of a
class of voting shares, (ii) a trust or other estate in
which the person has at least a 20% beneficial interest
or as to which the person serves as trustee or in a
similar fiduciary capacity, and (iii) a relative or
spouse of the person, or a relative of that spouse who
has the same residence as the person.
(5) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended from time to time, or
any successor provision (or the respective meanings last
ascribed thereto if there are no amended or successor
provisions).
(6) "Subsidiary" means any corporation of which a
majority of any class of equity security is owned,
directly or indirectly, by the corporation; provided,
however, that for the purposes of the definition of
interested shareholder set forth in subparagraph (2) of
this paragraph D C, the term "subsidiary" shall mean only
a corporation of which a majority of each class or equity
security is owned, directly or indirectly, by the
corporation.
(7) "Disinterested director" means any member of
the board of directors of the corporation who: (a) is
neither the interested shareholder nor an affiliate or
associate of the interested shareholder; (b) was a member
of the board of directors prior to the time that the
interested shareholder became an interested shareholder
or was a director of the corporation before January 1,
1997, or was recommended to succeed a disinterested
director by a majority of the disinterested directors
then in office; and (c) was not nominated for election as
a director by the interested shareholder or any affiliate
or associate of the interested shareholder.
(8) "Fair market value" means: (a) in the case of
shares, the highest closing sale price during the 30-day
period immediately preceding the date in question of a
share on the New York Stock Exchange Composite Tape, or,
if such shares are not quoted on the Composite Tape, on
the New York Stock Exchange, or, if such shares are not
listed on such Exchange, on the principal United States
securities exchange registered under the Securities
Exchange Act of 1934 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 with respect
to a share during the 30-day period preceding the date in
question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system
then in use, or if no such quotations are available, the
fair market value on the date in question of a share as
determined by a majority of the disinterested directors
in good faith; and (b) 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 a majority of the
disinterested directors in good faith.
(9) "Disinterested shareholder" shall mean a
shareholder of the corporation who is not an interested
shareholder or an affiliate or an associate of an
interested shareholder.
(10) "Business combination" has the meaning set
forth in Section 11.75 of this Act (regardless of the
case of the word "only" in that Section).
(11) (10) In the event of any business combination
in which the corporation survives, the phrase "other
consideration other than cash to be received" as used in
subparagraphs (2)(a) and (2)(b) of paragraph C B of this
Section 7.85 shall include the common shares and the
shares of any other class or series retained by the
holders of such shares.
(12) "Shares" means, with respect to any
corporation, capital stock and, with respect to any other
entity, any equity interest.
(13) "Voting shares" means, with respect to any
corporation, shares of any class or series entitled to
vote generally in the election of directors and, with
respect to any entity that is not a corporation, any
equity interest entitled to vote generally in its
election of the governing body of the entity.
E. (11) Determinations by disinterested directors. A
majority of the disinterested directors shall have the power
to determine, for the purposes of this Section 7.85, (a)
whether a person is an interested shareholder, (b) the number
of voting shares beneficially owned by any person, (c)
whether a person is an affiliate or associate of another, and
(d) whether the transaction is the subject of any business
combination. assets which are the subject of any Business
Combination have an aggregate fair market value equal to 10%
or more of the corporation's consolidated net worth as of its
then most recent fiscal year end.
D. No Effect on Fiduciary Obligations of interested
shareholder. Nothing contained in this Section 7.85 shall be
construed to relieve any interested shareholder from any
fiduciary obligation imposed by law.
(Source: P.A. 84-204.)
(805 ILCS 5/11.75) (from Ch. 32, par. 11.75)
Sec. 11.75. Business combinations with interested
shareholders. (a) Notwithstanding any other provisions of
this Act, a corporation (as defined in this Section 11.75)
shall not engage in any business combination with any
interested shareholder for a period of 3 years following the
time date that such shareholder became an interested
shareholder, unless (1) prior to such time date the board of
directors of the corporation approved either the business
combination or the transaction which resulted in the
shareholder becoming an interested shareholder, or (2) upon
consummation of the transaction which resulted in the
shareholder becoming an interested shareholder, the
interested shareholder owned at least 85% of the voting
shares of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining
the number of shares outstanding those shares owned (i) by
persons who are directors and also officers and (ii) employee
stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer,
or (3) at on or subsequent to such time date the business
combination is approved by the board of directors and
authorized at an annual or special meeting of shareholders,
and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting shares which are not
owned by the interested shareholder.
(b) The restrictions contained in this Section shall not
apply if:
(1) the corporation's original articles of
incorporation contains a provision expressly electing not
to be governed by this Section;
(2) the corporation, by action of its board of
directors, adopts an amendment to its by-laws within 90
days of the effective date of this amendatory Act of
1989, expressly electing not to be governed by this
Section, which amendment shall not be further amended by
the board of directors;
(3) the corporation, by action of its shareholders,
adopts an amendment to its articles of incorporation or
by-laws expressly electing not to be governed by this
Section, provided that, in addition to any other vote
required by law, such amendment to the articles of
incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to
vote. An amendment adopted pursuant to this paragraph
shall be effective immediately in the case of a
corporation that both (i) has never had a class of voting
shares that falls within any of the categories set out in
paragraph (4) of this subsection (b) and (ii) has not
elected by a provision in its original articles of
incorporation or any amendment thereto to be governed by
this Section. In all other cases, an amendment adopted
pursuant to this paragraph shall not be effective until
12 months after the adoption of such amendment and shall
not apply to any business combination between such
corporation and any person who became an interested
shareholder of such corporation on or prior to such
adoption. A by-law amendment adopted pursuant to this
paragraph shall not be further amended by the board of
directors;
(4) the he corporation does not have a class of
voting shares that is (i) listed on a national securities
exchange, (ii) authorized for quotation on the NASDAQ
Stock Market an inter-dealer quotation system of a
registered national securities association or (iii) held
of record by more than 2,000 shareholders, unless any of
the foregoing results from action taken, directly or
indirectly, by an interested shareholder or from a
transaction in which a person becomes an interested
shareholder;
(5) a shareholder becomes an interested shareholder
inadvertently and (i) as soon as practicable divests
itself of ownership of sufficient shares so that the
shareholder ceases to be an interested shareholder and
(ii) would not, at any time within the 3 year period
immediately prior to a business combination between the
corporation and such shareholder, have been an interested
shareholder but for the inadvertent acquisition of
ownership; or
(6) the business combination is proposed prior to
the consummation or abandonment of and subsequent to the
earlier of the public announcement or the notice required
hereunder of a proposed transaction which (i) constitutes
one of the transactions described in the second sentence
of this paragraph; (ii) is with or by a person who either
was not an interested shareholder during the previous 3
years or who became an interested shareholder with the
approval of the corporation's board of directors or
during the period described in paragraph (7) of this
subsection (b); and (iii) is approved or not opposed by a
majority of the members of the board of directors then in
office (but not less than 1) who were directors prior to
any person becoming an interested shareholder during the
previous 3 years or were recommended for election or
elected to succeed such directors by a majority of such
directors. The proposed transactions referred to in the
preceding sentence are limited to (x) a merger or
consolidation of the corporation (except for a merger in
respect of which, pursuant to subsection (c) of Section
11.20 of this Act, no vote of the shareholders of the
corporation is required); (y) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions), whether as part
of a dissolution or otherwise, of assets of the
corporation or of any direct or indirect majority-owned
subsidiary of the corporation (other than to any direct
or indirect wholly-owned subsidiary or to the
corporation) having an aggregate market value equal to
50% or more of either the aggregate market value of all
of the assets of the corporation determined on a
consolidated basis or the aggregate market value of all
the outstanding shares of the corporation; or (z) a
proposed tender or exchange offer for 50% or more of the
outstanding voting shares of the corporation. The
corporation shall give not less than 20 days notice to
all interested shareholders prior to the consummation of
any of the transactions described in clauses (x) or (y)
of the second sentence of this paragraph; or
(7) The business combination is with an interested
shareholder who became an interested shareholder at a
time when the restrictions contained in this Section did
not apply by reason of any of the paragraphs (1) through
(4) of this subsection (b), provided, however, that this
paragraph (7) shall not apply if, at the time the
interested shareholder became an interested shareholder,
the corporation's articles of incorporation contained a
provision authorized by the last sentence of this
subsection (b). Notwithstanding paragraphs (1), (2), (3)
and (4) of this subsection and subparagraph (A) of
paragraph (5) of subsection (c), any domestic corporation
may elect by a provision of its original articles of
incorporation or any amendment thereto to be governed by
this Section, provided that any such amendment to the
articles of incorporation shall not apply to restrict a
business combination between the corporation and an
interested shareholder of the corporation if the
interested shareholder became such prior to the effective
date of the amendment.
(c) As used in this Section 11.75 only, the term:
(1) "Affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with,
another person.
(2) "Associate" when used to indicate a
relationship with any person, means (i) any corporation,
partnership, unincorporated association, or other entity
or organization of which such person is a director,
officer or partner or is, directly or indirectly, the
owner of 20% or more of any class of voting shares, (ii)
any trust or other estate in which such person has at
least a 20% beneficial interest or as to which such
person serves as trustee or in a similar fiduciary
capacity, and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same
residence as such person.
(3) "Business combination" when used in reference
to any corporation and any interested shareholder of such
corporation, means:
(A) any merger or consolidation of the
corporation or any direct or indirect majority-owned
subsidiary of the corporation with (i) the
interested shareholder, or (ii) with any other
corporation if the merger or consolidation is caused
by the interested shareholder and as a result of
such merger or consolidation subsection (a) of this
Section is not applicable to the surviving
corporation;
(B) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions), except
proportionately as a shareholder of such
corporation, to or with the interested shareholder,
whether as part of a dissolution or otherwise, of
assets of the corporation or of any direct or
indirect majority-owned subsidiary of the
corporation which assets have an aggregate market
value equal to 10% or more of either the aggregate
market value of all the assets of the corporation
determined on a consolidated basis or the aggregate
market value of all the outstanding shares of the
corporation;
(C) any transaction which results in the
issuance or transfer by the corporation or by any
direct or indirect majority-owned subsidiary of the
corporation of any shares of the corporation or of
such subsidiary to the interested shareholder,
except (i) pursuant to the exercise, exchange or
conversion of securities exercisable for,
exchangeable for or convertible into shares of such
corporation or any such subsidiary which securities
were outstanding prior to the time that the
interested shareholder became such, (ii) pursuant to
a dividend or distribution paid or made, or the
exercise, exchange or conversion of securities
exercisable for, exchangeable for or convertible
into shares of such corporation or any such
subsidiary which security is distributed, pro rata
to all holders of a class or series of shares of
such corporation subsequent to the time the
interested shareholder became such, (iii) pursuant
to an exchange offer by the corporation to purchase
shares made on the same terms to all holders of said
shares, or (iv) any issuance or transfer of shares
by the corporation, provided however, that in no
case under clauses (ii), (iii) and (iv) above shall
there be an increase in the interested shareholder's
proportionate share of the shares of any class or
series of the corporation or of the voting shares of
the corporation;
(D) any transaction involving the corporation
or any direct or indirect majority-owned subsidiary
of the corporation which has the effect, directly or
indirectly, of increasing the proportionate share of
the shares of any class or series, or securities
convertible into the shares of any class or series,
of the corporation or of any such subsidiary which
is owned by the interested shareholder, except as a
result of immaterial changes due to fractional share
adjustments or as a result of any purchase or
redemption of any shares of any class or series not
caused, directly or indirectly, by the interested
shareholder; or
(E) any receipt by the interested shareholder
of the benefit, directly or indirectly (except
proportionately as a shareholder of such
corporation) of any loans, advances, guarantees,
pledges, or other financial benefits (other than
those expressly permitted in subparagraphs (A)
through (D) of this paragraph (3)) provided by or
through the corporation or any direct or indirect
majority owned subsidiary; or
(F) any receipt by the interested shareholder
of the benefit, directly or indirectly, (except
proportionately as a shareholder of such
corporation) of any assets, loans, advances,
guarantees, pledges or other financial benefits
(other than those expressly permitted in
subparagraphs (A) through (D) of this paragraph (3))
provided by or through any "defined benefit pension
plan" (as defined in Section 3 of the Employee
Retirement Income Security Act) of the corporation
or any direct or indirect majority owned subsidiary.
(4) "Control", including the term "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 shares, by contract or otherwise. A person who is
the owner of 20% or more of the a corporation's
outstanding voting shares of any corporation,
partnership, unincorporated association, or other entity
shall be presumed to have control of such entity
corporation, in the absence of proof by preponderance of
the evidence to the contrary. Notwithstanding the
foregoing, a presumption of control shall not apply where
such person holds voting shares, in good faith and not
for the purpose of circumventing this Section, as an
agent, bank, broker, nominee, custodian or trustee for
one or more owners who do not individually or as a group
have control of such entity corporation.
(5) "Corporation" means a domestic corporation
that:
(A) has any equity securities registered under
Section 12 of the Securities Exchange Act of 1934 or
is subject to Section 15(d) of that Act; and
(B) either
(i) has its principal place of business
or its principal executive office located in
Illinois; or
(ii) owns or controls assets located
within Illinois that have a fair market value
of at least $1,000,000, and
(C) either
(i) has more than 10% of its shareholders
resident in Illinois;
(ii) has more than 10% of its shares
owned by Illinois residents; or
(iii) has 2,000 shareholders resident in
Illinois.
The residence of a shareholder is presumed to be the
address appearing in the records of the corporation.
Shares held by banks (except as trustee, executor or
guardian), securities dealers or nominees are disregarded
for purposes of calculating the percentages and numbers
in this paragraph (5).
(6) "Interested shareholder" means any person
(other than the corporation and any direct or indirect
majority-owned subsidiary of the corporation) that (i) is
the owner of 15% or more of the outstanding voting shares
of the corporation, or (ii) is an affiliate or associate
of the corporation and was the owner of 15% or more of
the outstanding voting shares of the corporation at any
time within the 3 year period immediately prior to the
date on which it is sought to be determined whether such
person is an interested shareholder; and the affiliates
and associates of such person, provided, however, that
the term "interested shareholder" shall not include (x)
any person who (A) owned shares in excess of the 15%
limitation set forth herein as of, or acquired such
shares pursuant to a tender offer commenced prior to the
effective date of this amendatory Act of 1989 or pursuant
to an exchange offer announced prior to the aforesaid
date and commenced within 90 days thereafter and either
(I) and continued to own shares in excess of such 15%
limitation or would have but for action by the
corporation or (II) is an affiliate or associate of the
corporation and so continued (or so would have continued
but for action by the corporation) to be the owner of 15%
or more of the outstanding voting shares of the
corporation at any time within the 3-year period
immediately prior to the date on which it is sought to be
determined whether such a person is an interested
shareholder or (B) acquired said shares from a person
described in (A) above by gift, inheritance or in a
transaction in which no consideration was exchanged; or
(y) any person whose ownership of shares in excess of the
15% limitation set forth herein is the result of action
taken solely by the corporation, provided that such
person shall be an interested shareholder if thereafter
such person acquires additional shares of voting shares
of the corporation, except as a result of further
corporate action not caused, directly or indirectly, by
such person. For the purpose of determining whether a
person is an interested shareholder, the voting shares of
the corporation deemed to be outstanding shall include
shares deemed to be owned by the person through
application of paragraph (8) of this subsection, but
shall not include any other unissued shares of such
corporation which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise.
(7) "Person" means any individual, corporation,
partnership, unincorporated association or other entity.
(7.5) "Shares" means, with respect to any
corporation, capital stock and, with respect to any other
entity, any equity interest.
(8) "Voting shares" means, with respect to any
corporation, shares of any class or series entitled to
vote generally in the election of directors and, with
respect to any entity that is not a corporation, any
equity interest entitled to vote generally in its
election of the governing body of the entity.
(9) "Owner" including the terms "own" and "owned"
when used with respect to any shares means a person that
individually or with or through any of its affiliates or
associates:
(A) beneficially owns such shares, directly or
indirectly; or
(B) has (i) the right to acquire such shares
(whether such right is exercisable immediately or
only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights,
warrants or options, or otherwise; provided,
however, that a person shall not be deemed the owner
of shares 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
is accepted for purchase or exchange; or (ii) the
right to vote such shares pursuant to any agreement,
arrangement or understanding; provided, however,
that a person shall not be deemed the owner of any
shares because of such person's right to vote such
shares if the agreement, arrangement or
understanding to vote such shares arises solely from
a revocable proxy or consent given in response to a
proxy or consent solicitation made to 10 or more
persons; or
(C) has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting (except voting pursuant to a revocable proxy
or consent as described in clause (ii) of
subparagraph (B) of this paragraph), or disposing of
such shares with any other person that beneficially
owns, or whose affiliates or associates beneficially
own, directly or indirectly, such shares.
(d) No provision of a certificate of incorporation or
by-law shall require, for any vote of shareholders required
by this Section a greater vote of shareholders than that
specified in this Section.
(e) The provisions of this Section 11.75 are severable
and any provision held invalid shall not affect or impair any
of the remaining provisions of this Section.
(Source: P.A. 86-126.)