48-103-302 - Part definitions. - Tennessee Statutes

48-103-302. Part definitions.

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

     (1)  “Associate,” when used to indicate a relationship with any person means:

          (A)  A person that directly or indirectly controls, or is controlled by, or is under common control with, the person specified or who is or intends to act jointly or in concert with such specified person;

          (B)  Any corporation or organization of which such person is an officer, director or partner or which corporation or organization is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities of such person;

          (C)  Any trust or other estate in which such person has a beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and

          (D)  Any parent, child, sibling, in-law (mother, father, sons and daughters), of such person, or any relative of such person who has the same residence as such person;

     (2)  “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person whether through the ownership of voting securities, by contract or otherwise;

     (3)  (A)  “Control share acquisition” means the acquisition, directly or indirectly, by any person of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares. All shares acquired within ninety (90) days and all shares acquired pursuant to a plan to make a control share acquisition shall be deemed to have been acquired in the same acquisition for purposes of this subdivision (3);

          (B)  “Control share acquisition” does not include:

                (i)  Shares acquired for the benefit of others by a person acting in the ordinary course of business, in good faith and not for the purpose of circumventing this part, to the extent that such person may not exercise or direct the exercise of the voting power of such shares except upon the instruction of others;

                (ii)  Shares or shares issuable upon conversion, exchange or exercise of securities convertible into or exchangeable or exercisable for shares acquired:

                     (a)  Before the date on which the issuing corporation becomes subject to this part;

                     (b)  Pursuant to a contract existing before the date on which the issuing corporation becomes subject to this part;

                     (c)  Pursuant to the laws of descent and distribution;

                     (d)  Pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing this section;

                     (e)  Pursuant to a merger or share exchange effected in compliance with chapter 21 of this title if the issuing public corporation is a party to the agreement of merger or consolidation;

                (iii)  Shares with respect to which voting rights are held pursuant to a revocable proxy conferring the right to vote on any matter, including a vote of shareholders under § 48-103-307, or pursuant to written consent; or

                (iv)  Any acquisition described in subdivision (3)(C);

          (C)  Unless the acquisition, when added to the shares previously held by the acquiring person would entitle the acquiring person to exercise or direct the exercise of voting power in a range in excess of a range of voting power previously authorized pursuant to § 48-103-307 or subdivision (3)(B)(ii) the acquisition of shares, or of securities convertible into shares, does not constitute a control share acquisition if the acquisition is made:

                (i)  By or from a person whose voting rights previously were authorized by the shareholders of the corporation in compliance with this part;

                (ii)  By or from a person whose acquisition of shares of the corporation would have constituted a control share acquisition but for the application of any of the exceptions set forth in subdivision (3)(B)(ii); or

                (iii)  By a person who acquires any of the shares that were previously transferred pursuant to the provisions of subdivision (3)(B)(ii);

     (4)  “Control shares” means shares which, but for the provisions of this part, would have voting power with respect to shares of a corporation that, when added to all other shares of the corporation owned by a person or with respect to which that person may exercise or direct the exercise of voting power, except by virtue of a revocable proxy or written consent, would entitle that person, immediately upon acquisition of the shares, to exercise or direct the exercise of voting power of the corporation in the election of directors within any of the following ranges of voting power:

          (A)  One fifth (1/5) or more but less than one third (1/3) of all voting power;

          (B)  One third (1/3) or more but less than a majority of all voting power; or

          (C)  A majority or more of all voting power;

provided, that “control shares” includes such shares only to the extent to which their acquisition causes the acquiring person to exceed any threshold of voting power set forth above for which approval has not been obtained previously pursuant to § 48-103-307;

     (5)  “Corporation” means a corporation organized under the laws of Tennessee which has become subject to this part pursuant to § 48-103-310 and which has:

          (A)  One hundred (100) or more shareholders;

          (B)  Its principal place of business, its principal office, or substantial assets within Tennessee; and

          (C)  Either:

                (i)  More than ten percent (10%) of its shareholders resident in Tennessee;

                (ii)  More than ten percent (10%) of its shares owned by shareholders resident in Tennessee; or

                (iii)  Ten thousand (10,000) or more shareholders resident in Tennessee;

     (6)  “Interested shares” means the shares of a corporation which are owned, or with respect to which an irrevocable proxy is held, by:

          (A)  An acquiring person;

          (B)  Any officer of the corporation; or

          (C)  Any employee of the corporation who is also a director of the corporation; and

     (7)  “Person” means any individual, corporation, partnership, unincorporated association or other entity and any “associate” (as defined in subdivision (1)) of such individual or entity.

[Acts 1988, ch. 500, § 17; T.C.A., § 48-35-302.]