65-25-213 - Sale or lease-sale of assets and property. - Tennessee Statutes

65-25-213. Sale or lease-sale of assets and property.

(a)  Except as provided in subdivision (a)(4), a cooperative having a primary purpose may sell or lease-sell all or any substantial portion of its assets and properties that are devoted to and used or useful in pursuance of such a purpose only if it does so in accordance with the provisions of subdivisions (a)(1), (2) and (3):

     (1)  Such sale or lease-sale shall be authorized at a meeting of its members by the affirmative votes of as many as but not fewer than:

          (A)  A majority of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than four hundred percent (400%) of the cooperative's net worth;

          (B)  Fifty-five percent (55%) of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than three hundred fifty percent (350%) of the cooperative's net worth;

          (C)  Sixty percent (60%) of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than three hundred percent (300%) of the cooperative's net worth;

          (D)  Sixty-five percent (65%) of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than two hundred fifty percent (250%) of the cooperative's net worth;

          (E)  Seventy percent (70%) of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than two hundred percent (200%) of the cooperative's net worth;

          (F)  Seventy-five percent (75%) of its total members, if the purchase price or other consideration shall be sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, be equal to or greater than one hundred fifty percent (150%) of the cooperative's net worth; or

          (G)  Eighty percent (80%) of its total members, if the purchase price or other consideration shall be less than sufficient to discharge or provide for the discharge of all of the cooperative's liabilities and, additionally, an amount equal to one hundred fifty percent (150%) of the cooperative's net worth.

If a sale or lease-sale is of a substantial portion but less than all of the cooperative's such assets and properties, then the net worth shall be that amount that is determined by the ratio of the book value of such assets and properties to the book value of all of the cooperative's such assets and properties; and liabilities to be discharged or to be provided for discharge shall be that amount determined in the same manner, plus such additional amount, if any, required for such discharge or provision for such discharge by any holder of a lien on such assets and properties; provided, that if the cooperative is also engaged in business in pursuance of one (1) or more secondary purposes, the net worth and liabilities referred to in this subsection shall be those related to the cooperative's assets and properties devoted to and used or useful in pursuance of a primary purpose, as separately accounted for in accordance with § 65-25-204(d)(1).

     (2)  A proposal for such a sale or lease-sale shall, except as provided in subdivision (a)(2)(D), first be recommended and submitted to the members by the board, but only after the board's compliance with the following requirements:

          (A)  It shall first appoint three (3) persons, each of whom is independent of the cooperative and of the other two (2) and each being expert in electric utility property evaluations, and commission them, separately, to study, appraise and evaluate such assets and properties, including their going concern value and the values associated with the right of the members to participate in the ownership and control of the cooperative. Such appraisers shall be instructed to and shall take into account any other factors they may deem relevant in determining the present market value of such assets and properties. Within not more than sixty (60) days after their appointment and commission, each appraiser shall render their highest determination of such present value. The board shall not recommend and submit any proposal that, within one (1) year theretofore or within one (1) year thereafter, it shall have received to purchase or lease-purchase such assets and properties, or, within one (1) year thereafter, make any offer to sell or lease-sell such assets and properties, for a consideration that is less than the highest such determination rendered by the appraisers; nor shall it, following the expiration of one (1) year thereafter, make such a recommendation or offer without, again, first complying with the foregoing requirements;

          (B)  If, after receiving such appraisals, the board resolves to pursue the matter further, it shall, within not more than sixty (60) days next following such resolution, transmit the appraisals, together with any underlying data and information that may have accompanied them, to every other cooperative that is engaged in business for the primary purpose and invite them to submit competing or alternative proposals, including proposals to merge or consolidate with the cooperative. Such appraisals shall also be accompanied by any proposal for such a sale or lease-sale received by the cooperative within one (1) year prior to the receipt of the last appraisal or received subsequent thereto but prior to the adoption of such resolution; provided, that only the most recent proposal from a person that has made two (2) or more proposals need be so transmitted. Such other cooperatives shall be given at least sixty (60) days within which to submit competing or alternative proposals, and they shall be notified in such transmittal of the actual final date for such submissions;

          (C)  If, after such date, the board so resolves, it shall recommend and submit to the members a proposal for such a sale or lease-sale or a proposal to merge or consolidate the cooperative with one (1) or more other cooperatives having the primary purpose, accompanying the proposal with verbatim copies of all competing or alternative proposals it has received, together with all of the appraisals and any underlying data and information that may have accompanied such appraisals. Such transmittals shall also be accompanied by a notice of a meeting of the members to consider and act upon the recommended proposal, which meeting may be a special or the regular annual meeting of the members; and

          (D)  Any three hundred (300) or more members of the cooperative may, over their respective signatures and within not less than forty-five (45) days prior to the date of such member meeting, petition the cooperative to mail to all of the cooperative's members any statement of opposition to the board's recommendation and/or their own recommendation that a competing or alternative proposal, including a proposition to merge or consolidate the cooperative with one (1) or more other cooperatives, or to dissolve it as an incident of their proposal for a sale or lease-sale, be accepted and approved by the members at such meeting, in which event the board shall cause a printed copy of the petition, including the printing of the names of the member signatories thereof, together with a printed copy of the statement, to be transmitted to all of the cooperative's members via the United States mail not less than thirty (30) days prior to such member meeting, with the cost of such printing and mailing to be borne by the cooperative. If so mailed, such petition and statement shall constitute sufficient notice of any such recommended competing or alternative proposal for the same to be considered and acted upon at such meeting, but not until if and after the proposal recommended by the board shall have first been considered and rejected by vote of the members.

     (3)  If the bylaws provide for voting on such proposals by proxy or by mail balloting, neither proxy forms nor printed ballots with respect to such member meeting shall be mailed or otherwise be made available to, or be capable of being validly executed or voted by, the members sooner than twenty (20) days prior to the date of such meeting, and the bylaws shall contain appropriate provisions assuring that:

          (A)  If the same is not executed sooner than twenty (20) days prior to the date of such meeting, any otherwise legally sufficient proxy shall be honored by the cooperative, notwithstanding that the board may have prescribed and mailed or otherwise made available the form and content for proxies; and

          (B)  Only official mail ballots which as to form and content shall have been prescribed by the board shall be allowed, but such ballots shall, clearly and fairly, identify the proposal being recommended by the board and separately, if such be the case, any competing or alternative proposal being recommended by any member-filed petition, and will contain on the front or back thereof clear and accurate instructions as to how the ballots may validly be voted.

     (4)  Compliance with the requirements of subdivisions (a)(1) and (2) shall not be required if the sale or lease-sale is to be to or with one (1) or more other cooperatives which have the primary purpose and the effect thereof will be essentially the same as if a merger or consolidation were being consummated with such one (1) or more other cooperatives. In such case, the proposal and plan therefor shall be first approved by the cooperative's board and recommended and submitted by the board to the members for their consideration and action at a special member meeting called by the board for that purpose or at the next annual member meeting, the notice of which shall contain or be accompanied by a copy of such proposal and plan; and such a sale or lease-sale shall be approved and authorized if it receives the affirmative votes of a majority of the members of the cooperative; provided, that a proposal and plan for such a sale or lease-sale need not be first approved and recommended by the board if so recommended by three hundred (300) or more members and noticed to all of the members, all as provided for in subdivision (a)(2)(D), in which event the provisions of subdivision (a)(3) shall also be applicable.

(b)  A proposal for the sale or lease-sale by a cooperative having the primary purpose and one (1) or more secondary purposes of all or a substantial portion of its assets and properties devoted to and used or useful in the pursuance of one (1) or more such secondary purposes may be approved, authorized and consummated by action of its board only, unless the bylaws require the approval by the members. If the cooperative has secondary purposes only, such proposal shall be first approved by the cooperative's board and recommended and submitted to the members for their consideration and action at a special member meeting called for that purpose or at the next annual member meeting, the notice of which shall contain or be accompanied by a copy of the proposal. Such proposal shall be approved and authorized if it receives the affirmative votes of as many as but not fewer than two thirds (2/3) of the members of the cooperative voting thereon.

(c)  Notwithstanding any other provision of this section:

     (1)  A substantial portion of a cooperative's assets and properties may be sold solely upon approval and authorization of the board if such sale is in the nature of a forced sale for the reason that the purchaser possesses and otherwise would exercise the legal right to acquire, damage, relocate or destroy the same by condemnation or otherwise without the cooperative's consent;

     (2)  The board may sell or otherwise dispose of property no longer used or useful in conducting the business of the cooperative; and

     (3)  No offer to purchase or lease-purchase and no offer to sell or lease-sell all or a substantial portion of a cooperative's assets and properties shall be valid or, if made and accepted, enforceable unless the total consideration to be paid or otherwise furnished therefor, to the extent that the same is in excess of the amounts necessary to discharge or to provide for the discharge of the cooperative's liabilities, or is in excess of that portion of such discharge or provision for discharge that may be a necessary precedent to or incident of a sale or lease-sale of a substantial portion but less than all of such assets and properties, shall be distributed to, or if such be the case allocated and assigned to, the patrons or former patrons of the cooperative in the manner provided for in its articles or bylaws or applicable law.

[Acts 1988, ch. 689, § 2.]