§ 55-9-03. Exception to voting requirement. - North Carolina Statutes

§55‑9‑03.  Exception to voting requirement.

The voting requirement of G.S.55‑9‑02 shall not be applicable to a business combination if eachof the following conditions is met:

(1)        The cash, or fairmarket value of other consideration, to be received per share by the holders ofthe corporation's common stock in such business combination bears the same or agreater percentage relationship to the market price of the corporation's commonstock immediately prior to the announcement of such business combination by thecorporation as the highest per share price (including brokerage commissionsand/or soliciting dealers' fees) which such other entity has theretofore paidfor any of the shares of the corporation's common stock already owned by itbears to the market price of the corporation's common stock immediately priorto the commencement of acquisition of the corporation's common stock by suchother entity, directly or indirectly;

(2)        The cash, or fairmarket value of other consideration, to be received per share by holders of thecorporation's common stock in such business combination (i) is not less thanthe highest per share price (including brokerage commissions and/or solicitingdealers' fees) paid by such other entity in acquiring any of its holdings of theshares of the corporation's common stock and (ii) is not less than the earningsper share of the corporation's common stock for the four full consecutivefiscal quarters immediately preceding the record date for the solicitation ofvotes on such business combination, multiplied by the then price/earningsmultiple, if any, of such other entity as customarily computed and reported inthe financial community;

(3)        After the otherentity has acquired a twenty percent (20%) interest and prior to theconsummation of such business combination:  (i) the other entity shall havetaken steps to ensure that the corporation's board of directors included at alltimes representation by continuing directors proportionate to the outstandingshares of the corporation's common stock held by persons not affiliated withthe other entity (with a continuing director to occupy any resulting fractionalboard position); (ii) there shall have been no reduction in the rate ofdividends payable on the corporation's common stock, except as may have beenapproved by a unanimous vote of its directors; (iii) the other entity shallhave not acquired any newly issued shares of the corporation's capital stock,directly or indirectly, from the corporation, except upon conversion of anyconvertible securities acquired by the other entity prior to obtaining a twentypercent (20%) interest or as a result of a pro rata stock dividend or stocksplit; and (iv) the other entity shall not have acquired any additional sharesof the corporation's outstanding common stock, or securities convertible intocommon stock, except as part of the transaction which resulted in the otherentity acquiring its twenty percent (20%) interest;

(4)        The other entityshall not have (i) received the benefit, directly or indirectly, exceptproportionately with other shareholders, of any loans, advances, guarantees,pledges, or other financial assistance or tax credits provided by thecorporation or (ii) made any major change in the corporation's business orequity capital structure unless by a unanimous vote of the directors, in eithercase prior to the consummation of the business combination; and

(5)        A proxy statementresponsive to the requirements of the Exchange Act shall be mailed to thepublic shareholders of the corporation for the purpose of solicitingshareholder approval of the business combination and shall contain prominentlyin the forepart thereof any recommendations as to the advisability orinadvisability of the business combination which the continuing directors, orany of them, may choose to state and, if deemed advisable by a majority of thecontinuing directors, an opinion of a reputable investment banking firm as tothe fairness (or not) of the terms of the business combination to the remainingpublic shareholders of the corporation, which investment banking firm shall beselected by a majority of the continuing directors and shall be paid by thecorporation a reasonable fee for its services upon receipt of such opinion. (1987,c. 88, s. 1; 1989, c. 265, s. 1.)