§ 55-9-04. General.
§ 55‑9‑04. General.
(a) The provisions ofthis Article shall also apply to a business combination with an other entitywhich at any time has been the beneficial owner, directly or indirectly, ofmore than twenty percent (20%) of the outstanding voting shares, considered forthe purposes of this section as one class, notwithstanding that the otherentity has reduced its percentage of shares below twenty percent (20%) if, asof the record date for the determination of shareholders entitled to notice ofand to vote on the business combination, the other entity is an"affiliate" of the corporation.
(b) For the purposes ofthe Article, an other entity shall be deemed the beneficial owner of any sharesof the corporation's capital stock which the other entity has the right toacquire pursuant to any agreement, or upon exercise of any conversion rights,warrants or options, or otherwise (whether the right to acquire shares isexercisable immediately or only after the passage of time); and, further, theoutstanding shares of any class of capital stock of the corporation shallinclude shares deemed beneficially owned through the application of theforegoing, but shall not include any other shares which may be issuablepursuant to any agreement, or upon exercise of any conversion rights, warrantsor options, or otherwise.
(c) A majority of thecontinuing directors shall have the power and duty to determine for thepurposes of this Article on the basis of information known to them whether (i)an other entity beneficially owns more than twenty percent (20%) of the votingshares; (ii) an other entity is an "affiliate" or"associate" of another; (iii) an other entity has an agreement,arrangement or understanding with another; and (iv) the assets to be acquiredby the corporation, or any subsidiary thereof, have an aggregate fair marketvalue of less than five million dollars ($5,000,000).
(d) Nothing containedin this Article shall be construed to relieve any other entity from anyfiduciary obligation imposed by law. This Article shall be broadly construed soas to be applicable to any transaction reasonably calculated to avoid theapplication of the provisions hereof including, without limitation, any mergeror other recapitalization, initiated by or for the benefit of an other entitythat owns more than twenty percent (20%) of the voting shares, which wouldreincorporate a corporation under the laws of another state or which wouldreorganize a corporation as an unincorporated entity. (1987,c. 88, s. 1; 1989, c. 265, s. 1; 1999‑369, s. 1.6.)