APPRAISAL RIGHTS A. Any shareholder of a corporation of this state who holds shares of stock on the date of the making of a demand pursuant to the provisions of subsection D of this section with respect to the shares, who continuously holds the shares through the effective date of the merger, consolidation, or conversion who has otherwise complied with the provisions of subsection D of this section and who has neither voted in favor of the merger, consolidation, or conversion nor consented thereto pursuant to the provisions of Section 1073 of this title shall be entitled to an appraisal by the district court of the fair value of the shares of stock under the circumstances described in subsections B and C of this section. As used in this section, “shareholder” means a holder of record of stock in a stock corporation; “stock” and “share” mean and include what is ordinarily meant by those words; “depository receipt” means an instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository; “beneficial owner” means a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person; and “person” means any individual, corporation, partnership, unincorporated association, or other entity. B. 1. Except as otherwise provided for in this subsection, appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger, consolidation, or conversion or of the acquired corporation in a share acquisition, to be effected pursuant to the provisions of Section 1081 of this title, other than a merger effected pursuant to subsection G of Section 1081 of this title, or the provisions of Section 1082, 1084, 1085, 1086, 1087, 1090.1, 1090.2 or 1090.5 of this title. 2. a. No appraisal rights under this section shall be available for the shares of any class or series of stock which stock, or depository receipts in respect thereof, at the record date fixed to determine the shareholders entitled to receive notice of the meeting of shareholders, or at the record date fixed to determine the shareholders entitled to consent under Section 1073 of this title, to act upon the agreement of merger or consolidation or the resolution providing for conversion, or, the case of a merger pursuant to subsection H of Section 1081 of this title, as of immediately before the execution of the agreement of merger, were either: (1) listed on a national securities exchange, or (2) held of record by more than two thousand holders. b. In addition, no appraisal rights shall be available for any shares of stock, or depository receipts in respect thereof, of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the shareholders of the surviving corporation as provided for in subsection F of Section 1081 of this title. 3. Notwithstanding the provisions of paragraph 2 of this subsection, appraisal rights provided for in this section shall be available for the shares of any class or series of stock of a constituent or converting corporation if the holders thereof are required by the terms of an agreement of merger or consolidation, or by the terms of a resolution providing for conversion pursuant to the provisions of Section 1081, 1082, 1084, 1085, 1086, 1087, 1090.1, 1090.2 or 1090.5 of this title to accept for the stock anything except: a. shares of stock of the corporation surviving or resulting from the merger or consolidation, or of the converted entity if such entity is a corporation as a result of the conversion, or depository receipts thereof, b. shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock or depository receipts at the effective date of the merger, consolidation, or conversion will be either listed on a national securities exchange or held of record by more than two thousand holders, c. cash in lieu of fractional shares or fractional depository receipts described in subparagraphs a and b of this paragraph, or d. any combination of the shares of stock, depository receipts, and cash in lieu of the fractional shares or depository receipts described in subparagraphs a, b, and c of this paragraph. 4. In the event all of the stock of a subsidiary domestic corporation party to a merger effected pursuant to the provisions of Section 1083 or 1083.1 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary domestic corporation. C. Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation, the sale of all or substantially all of the assets of the corporation, or a conversion effected under Section 1090.5 of this title. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections D and E of this section, shall apply as nearly as is practicable. D. Appraisal rights shall be perfected as follows: 1. If a proposed merger, consolidation, or conversion for which appraisal rights are provided under this section is to be submitted for approval at a meeting of shareholders, the corporation, not less than twenty (20) days prior to the meeting, shall notify each of its shareholders who was such on the record date for notice of such meeting, or such members who received notice in accordance with subsection C of Section 1081 of this title, with respect to shares for which appraisal rights are available pursuant to subsection B or C of this section that appraisal rights are available for any or all of the shares of the constituent corporations or the converting corporation, and shall include in the notice a copy of this section and, if one of the constituent corporations or the converting corporation is a nonstock corporation, a copy of Section 1004.1 of this title or information directing shareholders to a publicly available electronic resource at which such sections may be accessed without subscription or cost. Each shareholder electing to demand the appraisal of the shares of the shareholder shall deliver to the corporation, before the taking of the vote on the merger, consolidation, or conversion, a written demand for appraisal of the shares of the shareholder. The demand will be sufficient if it reasonably informs the corporation of the identity of the shareholder and that the shareholder intends thereby to demand the appraisal of the shares of the shareholder. A proxy or vote against the merger, consolidation, or conversion shall not constitute such a demand. A shareholder electing to take such action must do so by a separate written demand as herein provided. Within ten (10) days after the effective date of the merger, consolidation, or conversion, the surviving, resulting, or converted entity shall notify each shareholder of each constituent or converting corporation who has complied with the provisions of this subsection and has not voted in favor of or consented to the merger, consolidation, or conversion, and any beneficial owner who has demanded appraisal under paragraph 3 of this subsection, as of the date that the merger, consolidation, or conversion has become effective; or 2. If the merger, consolidation, or conversion is approved pursuant to the provisions of Section 1073, subsection H of Section 1081, Section 1083 or Section 1083.1 of this title, either a constituent or converting corporation before the effective date of the merger, consolidation, or conversion or the surviving, resulting, or converted entity within ten (10) days after such effective date shall notify each shareholder of any class or series of stock of the constituent or converting corporation who is entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of the constituent corporation, and shall include in the notice either a copy of this section and, if one of the constituent corporations or the converting corporation is a nonstock corporation, a copy of Section 1004.1 of this title or information directing shareholders to a publicly available electronic resource at which this section and Section 1004.1 of this title, if applicable, may be accessed without subscription or cost. The notice may, and, if given on or after the effective date of the merger, consolidation, or conversion, shall, also notify the shareholders of the effective date of the merger, consolidation, or conversion. Any shareholder entitled to appraisal rights may, within twenty (20) days after the date of mailing of the notice or, in the case of a merger approved pursuant to subsection H of Section 1081 of this title, within the later of the consummation of an offer contemplated by subsection H of Section 1081 of this title and twenty (20) days after the date of mailing of such notice, demand in writing from the surviving or resulting entity the appraisal of the holder’s shares; provided that a demand may be delivered to the entity by electronic transmission if directed to an information processing system, if any, expressly designated for such purpose in the notice. The demand will be sufficient if it reasonably informs the entity of the identity of the shareholder and that the shareholder intends to demand the appraisal of the holder’s shares. If the notice does not notify shareholders of the effective date of the merger, consolidation, or conversion either: a. each constituent corporation or the converting corporation shall send a second notice before the effective date of the merger, consolidation, or conversion notifying each of the holders of any class or series of stock of the constituent or converting corporation that are entitled to appraisal rights of the effective date of the merger, consolidation, or conversion, or b. the surviving, resulting, or converted entity shall send a second notice to all holders on or within ten (10) days after the effective date of the merger, consolidation, or conversion; provided, however, that if the second notice is sent more than twenty (20) days following the mailing of the first notice or, in the case of a merger approved pursuant to subsection H of Section 1081 of this title, later than the later of the consummation of the offer contemplated by subsection H of Section 1081 of this title and twenty (20) days following the sending of the first notice, the second notice need only be sent to each shareholder who is entitled to appraisal rights and who has demanded appraisal of the holder’s shares in accordance with this subsection and any beneficial owner who has demanded appraisal under paragraph 3 of this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation or entity that is required to give notice that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the shareholders entitled to receive either notice, each constituent corporation or the converting corporation may fix, in advance, a record date that shall be not more than ten (10) days prior to the date the notice is given; provided, if the notice is given on or after the effective date of the merger, consolidation, or conversion, the record date shall be the effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. 3. Notwithstanding subsection A of this section, but subject to this paragraph, a beneficial owner may, in such person’s name, demand in writing an appraisal of the beneficial owner’s shares in accordance with paragraph 1 or 2 of this subsection, as applicable; provided that: a. such beneficial owner continuously owns such shares through the effective date of the merger, consolidation, or conversion and otherwise satisfies the requirements applicable to a shareholder under subsection A of this section, and b. the demand made by the beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by the surviving, resulting, or converted entity and to be set forth on the verified list required by subsection F of this section. E. Within one hundred twenty (120) days after the effective date of the merger, consolidation, or conversion, the surviving, resulting, or converted entity or any person who has complied with the provisions of subsections A and D of this section and who is otherwise entitled to appraisal rights, may file a petition in district court demanding a determination of the value of the stock of all such shareholders. Notwithstanding the foregoing, at any time within sixty (60) days after the effective date of the merger, consolidation, or conversion, any person entitled to appraisal rights who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw the person’s demand for appraisal and to accept the terms offered upon the merger, consolidation, or conversion. Within one hundred twenty (120) days after the effective date of the merger, consolidation, or conversion, any person entitled to appraisal rights who has complied with the requirements of subsections A and D of this section, upon written request, or by electronic transmission directed to an information processing system, if any, expressly designated for that purpose in the notice of appraisal, shall be entitled to receive from the surviving, resulting, or converted entity a statement setting forth the aggregate number of shares not voted in favor of the merger, consolidation, or conversion or, in the case of a merger approved pursuant to subsection H of Section 1081 of this title, the aggregate number of shares, other than any excluded stock as defined in subparagraph d of paragraph 6 of subsection H of Section 1081 of this title, that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in paragraph 2 of subsection H of Section 1081 of this title and, in either case, with respect to which demands for appraisal have been received and the aggregate number of shareholders or beneficial owners holding or owning such shares; provided that, where a beneficial owner makes a demand under paragraph 3 of subsection D of this section, the record holder of such shares shall not be considered a separate shareholder holding such shares for purposes of such aggregate number. The written statement shall be given to the person within ten (10) days after the person’s written request for a statement is received by the surviving, resulting, or converted entity or within ten (10) days after expiration of the period for delivery of demands for appraisal pursuant to the provisions of subsection D of this section, whichever is later. F. Upon the filing of any such petition by any person other than the surviving, resulting, or converted entity, service of a copy thereof shall be made upon the entity, which, within twenty (20) days after service, shall file, in the office of the court clerk of the district court in which the petition was filed, a duly verified list containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements regarding the value of their shares have not been reached by the entity. If the petition shall be filed by the surviving, resulting, or converted entity, the petition shall be accompanied by such duly verified list. The court clerk, if so ordered by the court, shall give notice of the time and place fixed for the hearing on the petition by registered or certified mail to the surviving, resulting, or converted entity and to the persons shown on the list at the addresses therein stated. The forms of the notices by mail and by publication shall be approved by the court, and the costs thereof shall be borne by the surviving, resulting, or converted entity. G. At the hearing on the petition, the court shall determine the persons who have complied with the provisions of this section and who have become entitled to appraisal rights. The court may require the persons who have demanded an appraisal of their shares and who hold stock represented by certificates to submit their certificates of stock to the court clerk for notation thereon of the pendency of the appraisal proceedings; and if any person fails to comply with this direction, the court may dismiss the proceedings as to that person. If immediately before the merger, consolidation, or conversion the shares of the class or series of stock of the constituent or converting corporation as to which appraisal rights are available were listed on a national securities exchange, the court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds one percent (1%) of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger, consolidation, or conversion for such total number of shares exceeds One Million Dollars ($1,000,000.00), or (3) the merger was approved pursuant to Section 1083 or Section 1083.1 of this title. H. After determining the persons entitled to an appraisal, the court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger, consolidation, or conversion, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining the fair value, the court shall take into account all relevant factors. In determining the fair rate of interest, the court may consider all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger, consolidation, or conversion through the date of payment of the judgment shall be compounded quarterly and shall accrue at five percent (5%) over the Federal Reserve discount rate including any surcharge, as established from time to time during the period between the effective date of the merger, consolidation, or conversion and the date of payment of judgment. At any time before the entry of judgment in the proceedings, the surviving, resulting, or converted entity may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving, resulting, or converted entity or by any person entitled to participate in the appraisal proceeding, the court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the list filed by the surviving, resulting, or converted entity pursuant to the provisions of subsection F of this section may participate fully in all proceedings until it is finally determined that the person is not entitled to appraisal rights pursuant to the provisions of this section. I. The court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving, resulting, or converted entity to the persons entitled thereto. Payment shall be made to each person upon such terms and conditions as the court may order. The court’s decree may be enforced as other decrees in the district court may be enforced, whether the surviving, resulting, or converted entity is an entity of this state or of any other state. J. The costs of the proceeding may be determined by the court and taxed upon the parties as the court deems equitable in the circumstances. Upon application of a person whose name appears on the list filed by the surviving, resulting, or converted entity under subsection F of this section who participated in the proceeding and incurred expenses in connection with such proceeding, the court may order all or a portion of the expenses including but not limited to reasonable attorney fees and the fees and expenses of experts, to be charged pro rata against the value of all of the shares entitled to an appraisal not dismissed under subsection K of this section or subject to such an award under a reservation of jurisdiction under subsection K of this section. K. From and after the effective date of the merger, consolidation, or conversion, no person who has demanded appraisal rights with respect to some or all of the person’s shares as provided for in subsection D of this section shall be entitled to vote the shares for any purpose or to receive payment of dividends or other distributions on the shares, except dividends or other distributions payable to shareholders of record at a date which is prior to the effective date of the merger, consolidation, or conversion; provided, however, that if no petition for an appraisal is filed within the time provided for in subsection E of this section, or if a person who has made a demand for an appraisal in accordance with this section shall deliver to the surviving, resulting, or converted entity a written withdrawal of the person’s demand for an appraisal with respect to some or all of the person’s shares in accordance with subsection E of this section, then the right of the person to an appraisal of the shares subject to the withdrawal shall cease; provided further, no appraisal proceeding in the district court shall be dismissed as to any person without the approval of the court, and approval may be conditioned upon terms as the court deems just including but not limited to a reservation of jurisdiction for any application to the court made under subsection J of this section; provided, however, that this provision shall not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the merger, consolidation or conversion within sixty (60) days after the effective date of the merger, consolidation, or conversion, as set forth in subsection E of this section. L. The shares or other equity interests of the surviving, resulting, or converted entity into which the shares of stock subject to appraisal under this section would have otherwise converted but for an appraisal demand made in accordance with this section shall have the status of authorized but not outstanding shares of stock or other equity interests of the surviving, resulting, or converted entity, unless and until the person who has demanded appraisal is no longer entitled to appraisal under this section. Added by Laws 1986, c. 292, § 91, eff. Nov. 1, 1986. Amended by Laws 1987, c. 146, § 7, operative Nov. 1, 1987; Laws 1988, c. 323, § 19, eff. Nov. 1, 1988; Laws 1990, c. 328, § 6, eff. Sept. 1, 1990; Laws 1998, c. 422, § 21, eff. Nov. 1, 1998; Laws 2004, c. 255, § 29, eff. Nov. 1, 2004; Laws 2017, c. 323, § 26, eff. Nov. 1, 2017; Laws 2021, c. 51, § 17, eff. Nov. 1, 2021; Laws 2024, c. 120, § 33, eff. Nov. 1, 2024.
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