17-12,100.   Business combinations with interested shareholders; definitions.As used in this act:

      (a)   "Affiliate" means a person that directly, or indirectly through oneor more intermediaries, controls, or is controlled by, or is under commoncontrol with, another person.

      (b)   "Associate," when used to indicate a relationship with any person, means:

      (1)   Any corporation or organization of which such person is a director,officer or partner or is, directly or indirectly, the owner of 20% or moreof any class of voting stock;

      (2)   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 asimilar fiduciary capacity; and

      (3)   any relative or spouse of such person, or any relative of suchspouse, who has the same residence as such person.

      (c)   "Business combination," when used in reference to any corporationand any interested stockholder of such corporation, means:

      (1)   Any merger or consolidation of the corporation or of any direct orindirect majority-owned subsidiary of the corporation with the interestedstockholder or with any other corporation if the merger or consolidation iscaused by the interested stockholder and as a result of such merger orconsolidation, K.S.A. 17-12,101 and amendments thereto is notapplicable to the surviving corporation;

      (2)   any sale, lease, exchange, mortgage, pledge, transfer or otherdisposition, in one transaction or a series of transactions, exceptproportionately as a stockholder of such corporation, to or with theinterested stockholder, whether as part of a dissolution or otherwise, ofassets of the corporation or of any direct or indirect majority-ownedsubsidiary of the corporation, which assets have an aggregate market valueequal to 10% or more of either the aggregate market value of all the assetsof the corporation determined on a consolidated basis or the aggregatemarket value of all the outstanding stock of the corporation;

      (3)   any transaction which results in the issuance or transfer by thecorporation or by any direct or indirect majority-owned subsidiary of thecorporation of any stock of the corporation or of such subsidiary to theinterested stockholder, except:

      (A)   Pursuant to the exercise, exchange or conversion of securitiesexercisable for, exchangeable for or convertible into stock of suchcorporation or any such subsidiary, which securities were outstanding priorto the time that the interested stockholder became such;

      (B)   pursuant to a dividend or distribution paid or made, or theexercise, exchange or conversion of securities exercisable for,exchangeable for or convertible into stock of such corporation or any suchsubsidiary, which security is distributed, pro rata to all holders of aclass or series of stock of such corporation subsequent to the time theinterested stockholder became such;

      (C)   pursuant to an exchange offer by the corporation to purchase stockmade on the same terms to all holders of such stock; or

      (D)   any issuance or transfer of stock by the corporation, except that inno case under subsections (c)(3)(B) through (c)(3)(D) of this subsection shall there be anincrease in the interested stockholder's proportionate share of the stockof any class or series of the corporation or of the voting stock of the corporation;

      (4)   any transaction involving the corporation or any direct or indirectmajority-owned subsidiary of the corporation which has the effect, directlyor indirectly, of increasing the proportionate share of the stock of anyclass or series, or securities convertible into the stock of any class orseries, of the corporation or of any such subsidiary which is owned by theinterested stockholder, except as a result of immaterial changes due tofractional share adjustments or as a result of any purchase or redemptionof any shares of stock not caused, directly or indirectly, by theinterested stockholder; or

      (5)   any receipt by the interested stockholder of the benefit, directlyor indirectly, except proportionately as a stockholder of such corporation,of any loans, advances, guarantees, pledges, or other financial benefits,other than those expressly permitted in subsections (c)(1) through (c)(4)of this subsection provided by or through the corporation or any direct or indirectmajority-owned subsidiary.

      (d)   "Control," "controlling," "controlled by" and "under common controlwith" mean the possession, directly or indirectly, of the power to director cause the direction of the management and policies of a person, whetherthrough the ownership of voting stock, by contract or otherwise. A personwho is the owner of 20% or more of a corporation's outstanding voting stockshall be presumed to have control of such corporation, in the absence ofproof by a preponderance of the evidence to the contrary. Notwithstandingthe foregoing, a presumption of control shall not apply where such personholds voting stock, in good faith and not for the purpose of circumventingthis section, as an agent, bank, broker, nominee, custodian or trustee forone or more owners who do not individually or as a group have control ofsuch corporation.

      (e) (1)   "Interested stockholder" means any person, other than thecorporation and any direct or indirect majority-owned subsidiary of thecorporation, that is:

      (A)   The owner of 15% or more of the outstanding voting stock of the corporation; or

      (B)   an affiliate or associate of the corporation and was the owner of15% or more of the outstanding voting stock of the corporation at any timewithin the three-year period immediately prior to the date on which it issought to be determined whether such person is an interested stockholderand the affiliates and associates of such person;

      (2)   the term interested stockholder shall not include:

      (A)   Any person who:

      (i)   Owned shares in excess of the 15% limitation as provided in thissubsection as of, or acquired such shares pursuant to a tender offercommenced prior to, the effective date of this act or pursuant to anexchange offer announced prior to the effective date of this act andcommenced within 90 days thereafter and continued to own shares in excessof such 15% limitation or would have but for action by the corporation; or

      (ii)   acquired such shares from a person described in subsection(e)(2)(i) by gift, inheritance or in a transaction in which noconsideration was exchanged; or

      (B)   any person whose ownership of shares in excess of the 15% limitationas provided in this subsection (e) is the result of action taken solely bythe corporation. Such person shall be an interested stockholder ifthereafter such person acquires additional shares of voting stock of thecorporation, except as a result of further corporate action not caused,directly or indirectly, by such person;

      (3)   for the purpose of determining whether a person is an interestedstockholder, the voting stock of the corporation deemed to be outstandingshall include stock deemed to be owned by the person as provided insubsection (h), but shall not include any other unissued stock of suchcorporation which may be issuable pursuant to any agreement, arrangement orunderstanding, or upon exercise of conversion rights, warrants or options, or otherwise.

      (f)   "Person" means any individual, corporation, partnership,unincorporated association or other entity.

      (g)   "Voting stock" means stock of any class or series entitled to votegenerally in the election of director.

      (h)   "Owner," "own" and "owned" when used with respect to any stock, meana person that individually or with or through any of its affiliates or associates:

      (1)   Beneficially owns such stock, directly or indirectly;

      (2) (A)   has the right to acquire such stock, whether such right isexercisable immediately or only after the passage of time, pursuant to anyagreement, arrangement or understanding, or upon the exercise of conversionrights, exchange rights, warrants or options, or otherwise. A person shallnot be deemed the owner of stock tendered pursuant to a tender or exchangeoffer made by such person or any of such person's affiliates or associatesuntil such tendered stock is accepted for purchase or exchange; or

      (B)   the right to vote such stock pursuant to any agreement, arrangementor understanding. A person shall not be deemed the owner of any stockbecause of such person's right to vote such stock if the agreement,arrangement or understanding to vote such stock arises solely from arevocable proxy or consent given in response to a proxy or consentsolicitation made to 10 or more persons; or

      (3)   has any agreement, arrangement or understanding for the purpose ofacquiring, holding, voting, except voting pursuant to a revocable proxy orconsent as provided in subsection (h)(2)(B) of this subsection, or disposing of such stockwith any other person that beneficially owns, or whose affiliates orassociates beneficially own, directly or indirectly, such stock.

      History:   L. 1989, ch. 75, § 1; July 1.