State of Illinois
90th General Assembly
Legislation

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90_HB0613sam001

                                             LRB9002696NTsbam
 1                     AMENDMENT TO HOUSE BILL 613
 2        AMENDMENT NO.     .  Amend House Bill 613 as follows:
 3    on page 1, line 2, by replacing "Section 7.85" with "Sections
 4    7.85 and 11.75"; and
 5    on page 1, line 6, by replacing "Section 7.85" with "Sections
 6    7.85 and 11.75"; and
 7    on page 10, line 12, after "and", by inserting "either  (I)";
 8    and
 9    on  page  10,  line 14, after "corporation", by inserting the
10    following:
11    "or (II) is an affiliate or associate of the corporation  and
12    so  continued  (or  so would have continued but for action by
13    the corporation) to be the  owner  of  15%  or  more  of  the
14    outstanding  voting  shares  of  the  corporation at any time
15    within the 3-year period immediately prior  to  the  date  on
16    which  it is sought to be determined whether such a person is
17    an interested shareholder"; and
18    on page 13, lines 6 and 7,  by  replacing  "or  organization"
19    with  ",  partnership,  unincorporated  association, or other
20    entity"; and
21    on page 15,  immediately  below  line  9,  by  inserting  the
                            -2-              LRB9002696NTsbam
 1    following:
 2             "(12)  "Shares"   means,   with   respect   to   any
 3        corporation, capital stock and, with respect to any other
 4        entity, any equity interest.
 5             (13)  "Voting  shares"  means,  with  respect to any
 6        corporation, shares of any class or  series  entitled  to
 7        vote  generally  in  the  election of directors and, with
 8        respect to any entity that  is  not  a  corporation,  any
 9        equity   interest  entitled  to  vote  generally  in  its
10        election of the governing body of the entity."; and
11    on page 15, below line 25, by inserting the following:
12        "(805 ILCS 5/11.75) (from Ch. 32, par. 11.75)
13        Sec.  11.75.   Business  combinations   with   interested
14    shareholders.  (a)  Notwithstanding  any  other provisions of
15    this Act, a corporation (as defined in  this  Section  11.75)
16    shall  not  engage  in  any  business  combination  with  any
17    interested  shareholder for a period of 3 years following the
18    time  date  that  such  shareholder  became   an   interested
19    shareholder,  unless (1) prior to such time date the board of
20    directors of the corporation  approved  either  the  business
21    combination   or   the  transaction  which  resulted  in  the
22    shareholder becoming an interested shareholder, or  (2)  upon
23    consummation   of  the  transaction  which  resulted  in  the
24    shareholder   becoming   an   interested   shareholder,   the
25    interested shareholder owned  at  least  85%  of  the  voting
26    shares  of  the  corporation  outstanding  at  the  time  the
27    transaction  commenced, excluding for purposes of determining
28    the number of shares outstanding those shares  owned  (i)  by
29    persons who are directors and also officers and (ii) employee
30    stock  plans  in  which employee participants do not have the
31    right to determine confidentially whether shares held subject
32    to the plan will be tendered in a tender or  exchange  offer,
33    or  (3)  at  on  or subsequent to such time date the business
                            -3-              LRB9002696NTsbam
 1    combination  is  approved  by  the  board  of  directors  and
 2    authorized at an annual or special meeting  of  shareholders,
 3    and  not  by  written  consent, by the affirmative vote of at
 4    least 66 2/3% of the outstanding voting shares which are  not
 5    owned by the interested shareholder.
 6        (b)  The restrictions contained in this Section shall not
 7    apply if:
 8             (1)  the    corporation's   original   articles   of
 9        incorporation contains a provision expressly electing not
10        to be governed by this Section;
11             (2)  the corporation, by  action  of  its  board  of
12        directors,  adopts  an amendment to its by-laws within 90
13        days of the effective date  of  this  amendatory  Act  of
14        1989,  expressly  electing  not  to  be  governed by this
15        Section, which amendment shall not be further amended  by
16        the board of directors.
17             (3)  the corporation, by action of its shareholders,
18        adopts  an  amendment to its articles of incorporation or
19        by-laws expressly electing not to  be  governed  by  this
20        Section,  provided  that,  in  addition to any other vote
21        required by  law,  such  amendment  to  the  articles  of
22        incorporation   or   by-laws  must  be  approved  by  the
23        affirmative vote of a majority of the shares entitled  to
24        vote.  An  amendment  adopted  pursuant to this paragraph
25        shall  be  effective  immediately  in  the  case   of   a
26        corporation that both (i) has never had a class of voting
27        shares that falls within any of the categories set out in
28        paragraph  (4)  of  this  subsection (b) and (ii) has not
29        elected by  a  provision  in  its  original  articles  of
30        incorporation  or any amendment thereto to be governed by
31        this Section.  In all other cases, an  amendment  adopted
32        pursuant  to  this paragraph shall not be effective until
33        12 months after the adoption of such amendment and  shall
34        not  apply  to  any  business  combination  between  such
                            -4-              LRB9002696NTsbam
 1        corporation  and  any  person  who  became  an interested
 2        shareholder of such  corporation  on  or  prior  to  such
 3        adoption.  A  by-law  amendment  adopted pursuant to this
 4        paragraph shall not be further amended by  the  board  of
 5        directors;
 6             (4)  the  he  corporation  does  not have a class of
 7        voting shares that is (i) listed on a national securities
 8        exchange, (ii) authorized for  quotation  on  the  NASDAQ
 9        Stock  Market  an  inter-dealer  quotation  system  of  a
10        registered  national securities association or (iii) held
11        of record by more than 2,000 shareholders, unless any  of
12        the  foregoing  results  from  action  taken, directly or
13        indirectly,  by  an  interested  shareholder  or  from  a
14        transaction in  which  a  person  becomes  an  interested
15        shareholder;
16             (5)  a shareholder becomes an interested shareholder
17        inadvertently  and  (i)  as  soon  as practicable divests
18        itself of ownership of  sufficient  shares  so  that  the
19        shareholder  ceases  to  be an interested shareholder and
20        (ii) would not, at any time  within  the  3  year  period
21        immediately  prior  to a business combination between the
22        corporation and such shareholder, have been an interested
23        shareholder  but  for  the  inadvertent  acquisition   of
24        ownership; or
25             (6)  the  business  combination is proposed prior to
26        the consummation or abandonment of and subsequent to  the
27        earlier of the public announcement or the notice required
28        hereunder of a proposed transaction which (i) constitutes
29        one  of the transactions described in the second sentence
30        of this paragraph; (ii) is with or by a person who either
31        was not an interested shareholder during the  previous  3
32        years  or  who  became an interested shareholder with the
33        approval of  the  corporation's  board  of  directors  or
34        during  the  period  described  in  paragraph (7) of this
                            -5-              LRB9002696NTsbam
 1        subsection (b); and (iii) is approved or not opposed by a
 2        majority of the members of the board of directors then in
 3        office (but not less than 1) who were directors prior  to
 4        any  person becoming an interested shareholder during the
 5        previous 3 years or  were  recommended  for  election  or
 6        elected  to  succeed such directors by a majority of such
 7        directors.  The proposed transactions referred to in  the
 8        preceding  sentence  are  limited  to  (x)  a  merger  or
 9        consolidation  of the corporation (except for a merger in
10        respect of which, pursuant to subsection (c)  of  Section
11        11.20  of  this  Act,  no vote of the shareholders of the
12        corporation is required); (y) a  sale,  lease,  exchange,
13        mortgage,  pledge,  transfer or other disposition (in one
14        transaction or a series of transactions), whether as part
15        of  a  dissolution  or  otherwise,  of  assets   of   the
16        corporation  or  of any direct or indirect majority-owned
17        subsidiary of the corporation (other than to  any  direct
18        or   indirect   wholly-owned   subsidiary   or   to   the
19        corporation)  having  an  aggregate market value equal to
20        50% or more of either the aggregate market value  of  all
21        of   the  assets  of  the  corporation  determined  on  a
22        consolidated basis or the aggregate market value  of  all
23        the  outstanding  shares  of  the  corporation;  or (z) a
24        proposed tender or exchange offer for 50% or more of  the
25        outstanding   voting  shares  of  the  corporation.   The
26        corporation shall give not less than 20  days  notice  to
27        all  interested shareholders prior to the consummation of
28        any of the transactions described in clauses (x)  or  (y)
29        of the second sentence of this paragraph; or
30             (7)  The  business combination is with an interested
31        shareholder who became an  interested  shareholder  at  a
32        time  when the restrictions contained in this Section did
33        not apply by reason of any of the paragraphs (1)  through
34        (4)  of this subsection (b), provided, however, that this
                            -6-              LRB9002696NTsbam
 1        paragraph (7)  shall  not  apply  if,  at  the  time  the
 2        interested  shareholder became an interested shareholder,
 3        the corporation's articles of incorporation  contained  a
 4        provision   authorized  by  the  last  sentence  of  this
 5        subsection (b).  Notwithstanding paragraphs (1), (2), (3)
 6        and (4)  of  this  subsection  and  subparagraph  (A)  of
 7        paragraph (5) of subsection (c), any domestic corporation
 8        may  elect  by  a  provision  of its original articles of
 9        incorporation or any amendment thereto to be governed  by
10        this  Section,  provided  that  any such amendment to the
11        articles of incorporation shall not apply to  restrict  a
12        business  combination  between  the  corporation  and  an
13        interested   shareholder   of   the  corporation  if  the
14        interested shareholder became such prior to the effective
15        date of the amendment.
16        (c)  As used in this Section 11.75 only, the term:
17             (1)  "Affiliate" means a person  that  directly,  or
18        indirectly  through one or more intermediaries, controls,
19        or is controlled by, or is  under  common  control  with,
20        another person.
21             (2)  "Associate"    when    used   to   indicate   a
22        relationship with any person, means (i) any  corporation,
23        partnership,  unincorporated association, or other entity
24        or organization of  which  such  person  is  a  director,
25        officer  or  partner  or  is, directly or indirectly, the
26        owner of 20% or more of any class of voting shares,  (ii)
27        any  trust  or  other  estate in which such person has at
28        least a 20% beneficial  interest  or  as  to  which  such
29        person  serves  as  trustee  or  in  a  similar fiduciary
30        capacity, and  (iii)  any  relative  or  spouse  of  such
31        person,  or any relative of such spouse, who has the same
32        residence as such person.
33             (3)  "Business combination" when used  in  reference
34        to any corporation and any interested shareholder of such
                            -7-              LRB9002696NTsbam
 1        corporation, means:
 2                  (A)  any   merger   or   consolidation  of  the
 3             corporation or any direct or indirect majority-owned
 4             subsidiary  of  the   corporation   with   (i)   the
 5             interested  shareholder,  or  (ii)  with  any  other
 6             corporation if the merger or consolidation is caused
 7             by  the  interested  shareholder  and as a result of
 8             such merger or consolidation subsection (a) of  this
 9             Section   is   not   applicable   to  the  surviving
10             corporation;
11                  (B)  any  sale,  lease,   exchange,   mortgage,
12             pledge,   transfer  or  other  disposition  (in  one
13             transaction or a  series  of  transactions),  except
14             proportionately    as    a   shareholder   of   such
15             corporation, to or with the interested  shareholder,
16             whether  as  part  of a dissolution or otherwise, of
17             assets of  the  corporation  or  of  any  direct  or
18             indirect    majority-owned    subsidiary    of   the
19             corporation which assets have  an  aggregate  market
20             value  equal  to 10% or more of either the aggregate
21             market value of all the assets  of  the  corporation
22             determined  on a consolidated basis or the aggregate
23             market value of all the outstanding  shares  of  the
24             corporation;
25                  (C)  any   transaction  which  results  in  the
26             issuance or transfer by the corporation  or  by  any
27             direct  or indirect majority-owned subsidiary of the
28             corporation of any shares of the corporation  or  of
29             such   subsidiary  to  the  interested  shareholder,
30             except (i) pursuant to  the  exercise,  exchange  or
31             conversion    of    securities    exercisable   for,
32             exchangeable for or convertible into shares of  such
33             corporation  or any such subsidiary which securities
34             were  outstanding  prior  to  the  time   that   the
                            -8-              LRB9002696NTsbam
 1             interested shareholder became such, (ii) pursuant to
 2             a  dividend  or  distribution  paid  or made, or the
 3             exercise,  exchange  or  conversion  of   securities
 4             exercisable  for,  exchangeable  for  or convertible
 5             into  shares  of  such  corporation  or   any   such
 6             subsidiary  which  security is distributed, pro rata
 7             to all holders of a class or  series  of  shares  of
 8             such   corporation   subsequent   to  the  time  the
 9             interested shareholder became such,  (iii)  pursuant
10             to  an exchange offer by the corporation to purchase
11             shares made on the same terms to all holders of said
12             shares, or (iv)  any issuance or transfer of  shares
13             by  the  corporation,  provided  however, that in no
14             case under clauses (ii), (iii) and (iv) above  shall
15             there be an increase in the interested shareholder's
16             proportionate  share  of  the shares of any class or
17             series of the corporation or of the voting shares of
18             the corporation;
19                  (D)  any transaction involving the  corporation
20             or  any direct or indirect majority-owned subsidiary
21             of the corporation which has the effect, directly or
22             indirectly, of increasing the proportionate share of
23             the shares of any class  or  series,  or  securities
24             convertible  into the shares of any class or series,
25             of the corporation or of any such  subsidiary  which
26             is  owned by the interested shareholder, except as a
27             result of immaterial changes due to fractional share
28             adjustments or  as  a  result  of  any  purchase  or
29             redemption  of any shares of any class or series not
30             caused, directly or indirectly,  by  the  interested
31             shareholder; or
32                  (E)  any  receipt by the interested shareholder
33             of  the  benefit,  directly  or  indirectly  (except
34             proportionately   as   a   shareholder    of    such
                            -9-              LRB9002696NTsbam
 1             corporation)  of  any  loans,  advances, guarantees,
 2             pledges, or other  financial  benefits  (other  than
 3             those   expressly  permitted  in  subparagraphs  (A)
 4             through (D) of this paragraph (3))  provided  by  or
 5             through  the  corporation  or any direct or indirect
 6             majority owned subsidiary; or
 7                  (F)  any receipt by the interested  shareholder
 8             of  the  benefit,  directly  or  indirectly, (except
 9             proportionately   as   a   shareholder    of    such
10             corporation)   of   any   assets,  loans,  advances,
11             guarantees,  pledges  or  other  financial  benefits
12             (other   than   those   expressly    permitted    in
13             subparagraphs (A) through (D) of this paragraph (3))
14             provided  by or through any "defined benefit pension
15             plan" (as defined  in  Section  3  of  the  Employee
16             Retirement  Income  Security Act) of the corporation
17             or any direct or indirect majority owned subsidiary.
18             (4)  "Control", including  the  term  "controlling",
19        "controlled  by"  and  "under common control with", means
20        the possession, directly or indirectly, of the  power  to
21        direct  or  cause  the  direction  of  the management and
22        policies of a person, whether through  the  ownership  of
23        voting shares, by contract or otherwise.  A person who is
24        the   owner  of  20%  or  more  of  the  a  corporation's
25        outstanding   voting   shares   of    any    corporation,
26        partnership,  unincorporated association, or other entity
27        shall  be  presumed  to  have  control  of  such   entity
28        corporation,  in the absence of proof by preponderance of
29        the  evidence  to  the  contrary.   Notwithstanding   the
30        foregoing, a presumption of control shall not apply where
31        such  person  holds  voting shares, in good faith and not
32        for the purpose of  circumventing  this  Section,  as  an
33        agent,  bank,  broker,  nominee, custodian or trustee for
34        one or more owners who do not individually or as a  group
                            -10-             LRB9002696NTsbam
 1        have control of such entity corporation.
 2             (5)  "Corporation"   means  a  domestic  corporation
 3        that:
 4                  (A)  has any equity securities registered under
 5             Section 12 of the Securities Exchange Act of 1934 or
 6             is subject to Section 15(d) of that Act; and
 7                  (B)  either
 8                       (i)  has its principal place  of  business
 9                  or  its  principal  executive office located in
10                  Illinois; or
11                       (ii)  owns  or  controls  assets   located
12                  within  Illinois  that have a fair market value
13                  of at least $1,000,000, and
14                  (C)  either
15                       (i)  has more than 10% of its shareholders
16                  resident in Illinois;
17                       (ii)  has more  than  10%  of  its  shares
18                  owned by Illinois residents; or
19                       (iii)  has  2,000 shareholders resident in
20                  Illinois.
21             The residence of a shareholder is presumed to be the
22        address appearing in  the  records  of  the  corporation.
23        Shares  held  by  banks  (except  as trustee, executor or
24        guardian), securities dealers or nominees are disregarded
25        for purposes of calculating the percentages  and  numbers
26        in this paragraph (5).
27             (6)  "Interested   shareholder"   means  any  person
28        (other than the corporation and any  direct  or  indirect
29        majority-owned subsidiary of the corporation) that (i) is
30        the owner of 15% or more of the outstanding voting shares
31        of  the corporation, or (ii) is an affiliate or associate
32        of the corporation and was the owner of 15%  or  more  of
33        the  outstanding  voting shares of the corporation at any
34        time within the 3 year period immediately  prior  to  the
                            -11-             LRB9002696NTsbam
 1        date  on which it is sought to be determined whether such
 2        person is an interested shareholder; and  the  affiliates
 3        and  associates  of  such person, provided, however, that
 4        the term "interested shareholder" shall not  include  (x)
 5        any  person  who  (A)  owned  shares in excess of the 15%
 6        limitation set forth  herein  as  of,  or  acquired  such
 7        shares  pursuant to a tender offer commenced prior to the
 8        effective date of this amendatory Act of 1989 or pursuant
 9        to an exchange offer announced  prior  to  the  aforesaid
10        date  and  commenced within 90 days thereafter and either
11        (I) and continued to own shares in  excess  of  such  15%
12        limitation   or   would   have  but  for  action  by  the
13        corporation or (II) is an affiliate or associate  of  the
14        corporation  and so continued (or so would have continued
15        but for action by the corporation) to be the owner of 15%
16        or  more  of  the  outstanding  voting  shares   of   the
17        corporation   at   any  time  within  the  3-year  period
18        immediately prior to the date on which it is sought to be
19        determined  whether  such  a  person  is  an   interested
20        shareholder  or  (B)  acquired  said shares from a person
21        described in (A) above  by  gift,  inheritance  or  in  a
22        transaction  in  which no consideration was exchanged; or
23        (y) any person whose ownership of shares in excess of the
24        15% limitation set forth herein is the result  of  action
25        taken  solely  by  the  corporation,  provided  that such
26        person shall be an interested shareholder  if  thereafter
27        such  person  acquires additional shares of voting shares
28        of  the  corporation,  except  as  a  result  of  further
29        corporate action not caused, directly or  indirectly,  by
30        such  person.   For  the purpose of determining whether a
31        person is an interested shareholder, the voting shares of
32        the corporation deemed to be  outstanding  shall  include
33        shares   deemed   to  be  owned  by  the  person  through
34        application of paragraph  (8)  of  this  subsection,  but
                            -12-             LRB9002696NTsbam
 1        shall  not  include  any  other  unissued  shares of such
 2        corporation  which  may  be  issuable  pursuant  to   any
 3        agreement, arrangement or understanding, or upon exercise
 4        of conversion rights, warrants or options, or otherwise.
 5             (7)  "Person"  means  any  individual,  corporation,
 6        partnership, unincorporated association or other entity.
 7             (7.5)  "Shares"   means,   with   respect   to   any
 8        corporation, capital stock and, with respect to any other
 9        entity, any equity interest.
10             (8)  "Voting  shares"  means,  with  respect  to any
11        corporation, shares of any class or  series  entitled  to
12        vote  generally  in  the  election of directors and, with
13        respect to any entity that  is  not  a  corporation,  any
14        equity   interest  entitled  to  vote  generally  in  its
15        election of the governing body of the entity.
16             (9)  "Owner" including the terms "own"  and  "owned"
17        when  used with respect to any shares means a person that
18        individually or with or through any of its affiliates  or
19        associates:
20                  (A)  beneficially owns such shares, directly or
21             indirectly; or
22                  (B)  has  (i)  the right to acquire such shares
23             (whether such right is  exercisable  immediately  or
24             only  after  the  passage  of  time) pursuant to any
25             agreement, arrangement or understanding, or upon the
26             exercise  of  conversion  rights,  exchange  rights,
27             warrants  or  options,   or   otherwise;   provided,
28             however, that a person shall not be deemed the owner
29             of  shares tendered pursuant to a tender or exchange
30             offer made by such person or any  of  such  person's
31             affiliates  or associates until such tendered shares
32             is accepted for purchase or exchange;  or  (ii)  the
33             right to vote such shares pursuant to any agreement,
34             arrangement  or  understanding;  provided,  however,
                            -13-             LRB9002696NTsbam
 1             that  a  person shall not be deemed the owner of any
 2             shares because of such person's right to  vote  such
 3             shares    if    the    agreement,   arrangement   or
 4             understanding to vote such shares arises solely from
 5             a revocable proxy or consent given in response to  a
 6             proxy  or  consent  solicitation  made to 10 or more
 7             persons; or
 8                  (C)  has   any   agreement,   arrangement    or
 9             understanding for the purpose of acquiring, holding,
10             voting  (except voting pursuant to a revocable proxy
11             or  consent  as  described   in   clause   (ii)   of
12             subparagraph (B) of this paragraph), or disposing of
13             such  shares with any other person that beneficially
14             owns, or whose affiliates or associates beneficially
15             own, directly or indirectly, such shares.
16        (d)  No provision of a certificate  of  incorporation  or
17    by-law  shall  require, for any vote of shareholders required
18    by this Section a greater  vote  of  shareholders  than  that
19    specified in this Section.
20        (e)  The  provisions  of this Section 11.75 are severable
21    and any provision held invalid shall not affect or impair any
22    of the remaining provisions of this Section.
23    (Source: P.A. 86-126.)".

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