805 ILCS 5/7.85
2021 Illinois Compiled Statutes|Chapter 805 - BUSINESS ORGANIZATIONS|805 ILCS 5/ - Business Corporation Act of 1983.|Article 7 - Shareholders

 (from Ch. 32, par. 7.85)Sec. 7.85.     Vote required for certain business combinations.A. This  Section shall apply to any domestic corporation that (i) has  any  equity securities registered under Section 12 of the Securities Exchange  Act of 1934 or is subject to Section 15(d) of that Act (a "reporting  company") and (ii) any domestic  corporation other than one described in (i) that either  specifically adopts  this Section 7.85 in its original articles of incorporation or amends its  articles of incorporation to specifically adopt this Section 7.85, however,  the restrictions contained in this Section shall not apply in the event of any  of the following:(1) In case of a reporting company, the corporation's     articles of incorporation immediately prior to the time it becomes a reporting company contains a provision expressly electing not to be governed by this Section.(2) The corporation, by action of its board of     directors, adopts an amendment to its by-laws within 90 days after the effective date of this amendatory Act of 1997 expressly electing not to be governed by this Section, which amendment shall not be further amended by the board of directors.(3) In the case of a reporting company, the     corporation, by action of its shareholders, adopts an amendment to its articles of incorporation or by-laws expressly electing not to be governed by this Section, provided that, in addition to any other vote required by law, such amendment to the articles of incorporation or by-laws must be approved by the affirmative vote of a majority of the voting shares (as defined in paragraph B of this Section 7.85).  An amendment adopted under this paragraph shall not be effective until 12 months after the adoption of the amendment and shall not apply to a business combination between the corporation and a person who became an interested shareholder of the corporation at the same time as or before the adoption of the amendment.  A by-law amendment adopted under this paragraph shall not be further amended by the board of directors.(4) A shareholder becomes an interested shareholder     inadvertently and (i) as soon as practical divests sufficient shares so that the shareholder ceases to be an interested shareholder and (ii) would not, at any time within the 3 year period immediately before a business combination between the corporation and the shareholder, have been an interested shareholder but for the inadvertent acquisition.In the case of circumstances described in subparagraphs (1), (2), and (3) of  this  paragraph A, the election not to be governed may be in whole or in part,  generally, or generally by types, or as to specifically identified or  unidentified interested shareholders.B. Higher vote for certain business combinations.  In addition  to any  affirmative vote required by law or the articles of incorporation, except  as otherwise expressly provided in paragraph C of this Section  7.85, any business combination  shall require (i) the affirmative vote of the holders of at least 80% of  the combined voting power of the then outstanding shares of all classes and  series of the corporation entitled to vote generally in the election of  directors, voting together as a single class (the  "voting shares") (it  being understood that, for the purposes of this Section 7.85, each voting  share shall have the number of votes granted to it pursuant to the  corporation's articles of incorporation) and (ii) the  affirmative vote of a  majority of the voting shares  held by disinterested shareholders.C. When higher vote is not required.  The provisions of paragraph B of this  Section 7.85 shall not be applicable to any  particular business combination, and such business combination shall  require only such affirmative vote as is required by law and any other  provision of the corporation's article of incorporation and any  resolutions of the board of directors adopted pursuant to Section 6.10 if  all of the conditions specified in either of the following subparagraphs  (1) and (2) of this paragraph C are met:(1) Approval by disinterested directors.  The     business combination shall have been approved by two-thirds of the disinterested directors (as hereinafter defined).(2) Price and procedure requirements.  All of the     following conditions shall have been met:(a) The business combination shall provide for         consideration to be received by all holders of common shares in exchange for all their shares, and the aggregate amount of the cash and the fair market value as of the date of consummation of the business combination of consideration other than cash to be received per share by holders of common shares in such business combination shall be at least  equal to the higher of the following:(i) (if applicable) the highest per share             price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the interested shareholder or any affiliate or associate of the interested shareholder to acquire any common shares beneficially owned by the interested shareholder which were acquired (a) within the two year period immediately prior to the first public announcement of the proposal of the business combination (the "announcement date") or (b) in the transaction in which it became an interested shareholder, whichever is higher; and(ii) the fair market value per common share             on the first trading date after the announcement date or on the first trading date after the date of the first public announcement that the interested shareholder became an interested shareholder (the "Determination Date"), whichever is higher.(b) The business combination shall provide for         consideration to be received by all holders of outstanding shares other than common shares in exchange for all such shares, and the aggregate amount of the cash and the fair market value as of the date of the consummation of the business combination of consideration other than cash to be received per share by holders of outstanding shares other than common shares shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph (2)(b) shall be required to be met with respect to every class and series of outstanding shares other than common shares whether or not the interested shareholder or any affiliate or associate of the interested shareholder has previously acquired any shares of a particular class or series):(i) (if applicable) the highest per share             price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the interested shareholder or any affiliate or associate of the interested shareholder to acquire any shares of such class or series beneficially owned by the interested shareholder which were acquired (a) within the 2-year period immediately prior to the announcement date or (b) in the transaction in which it became an interested shareholder, whichever is higher;(ii) (if applicable) the highest preferential             amount per share to which the holders of shares of such class or series are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation;(iii) the fair market value per share of such             class or series on the first trading date after the announcement date or on the determination date, whichever is higher; and(iv) an amount equal to the fair market value             per share of such class or series determined pursuant to clause (iii) times the highest value obtained in calculating the following quotient for each class or series of which the interested shareholder has acquired shares within the 2-year period ending on the announcement date: (x) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the interested shareholder or any affiliate  or associate of the interested Shareholder for any shares of such class or series acquired within such 2-year period divided by (y) the market value per share of such class or series on the first day in such 2-year period on which the interested shareholder or any affiliate or associate of the interested shareholder acquired any shares of such class or series.(c) The consideration to be received by holders of a     particular class or series of outstanding shares shall be in cash or in the same form as the interested shareholder or any affiliate or associate of the interested shareholder has previously paid to acquire shares of such class or series beneficially owned by the interested shareholder.  If the interested shareholder and any affiliates or associates of the interested shareholder have paid for shares of any class or series with varying forms of consideration, the form of consideration for such class or series shall be either cash or the form used to acquire the largest number of shares of such class or series beneficially owned by the interested shareholder.(d) After such interested shareholder has become an     interested shareholder and prior to the consummation of such business combination: (1) except as approved by two-thirds of the disinterested directors, there shall have been no failure to declare and pay at the regular date therefor any full periodic dividends (whether or not cumulative) on any outstanding shares of the corporation other than the common shares; (2) there shall have been (a) no reduction in the annual rate of dividends paid on the common shares (except as necessary to reflect any subdivision of the common shares), except as approved by two-thirds of the disinterested directors, and (b) an increase in such annual rate of dividends (as necessary to prevent any such reduction) in the event of any reclassification (including any reverse share split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding common shares; and (3) such interested shareholder shall not have become the beneficial owner of any additional Voting Shares except as part of the transaction which results in such interested shareholder becoming an interested shareholder or as a result of action taken by the corporation not caused, directly or indirectly, by such interested shareholder.(e) After such interested shareholder has become an     interested shareholder, such interested shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the corporation or any Subsidiary, whether in anticipation of or in connection with such business combination or otherwise.(f) A proxy or information statement describing the     proposed business combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public shareholders of the corporation at least 30 days prior to the consummation of such business combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).D. Certain definitions. For the purposes of this Section 7.85:(1) "Person" means an individual, firm, corporation,     partnership, trust or other entity.(2) "Interested shareholder" means  (i) a person     (other than the corporation and a direct or indirect majority-owned subsidiary of the corporation) that (a) is the owner of 15% or more of the outstanding voting shares of the corporation or (b) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting shares of the corporation at any time within the 3 year period immediately before the date on which it is sought to be determined whether the person is an interested shareholder and (ii) the affiliates and associates of that person, provided, however, that the term "interested shareholder" shall not include (x) a person who (A) owned shares in excess of the 15% limitation as of January 1, 1997 and either (I) continued to own shares in excess of the 15% limitation or would have but for action by the corporation or (II) is an affiliate or associate of the corporation and so continued (or so would have continued but for action by the corporation) to be the owner of 15% or more of the outstanding voting shares of the corporation at any time within the 3-year period immediately prior to the date on which it is sought to be determined whether such a person is an interested shareholder or (B) acquired the shares from a person described in clause (A)  by gift, inheritance, or in a transaction in which no consideration was exchanged or (y) a person whose ownership of shares in excess of the 15% limitation is the result of action taken solely by the corporation, provided that the person shall be an interested shareholder if thereafter the person acquires additional shares of the corporation, except as a result of further corporate action not caused, directly or indirectly, by the person or if the person acquires additional shares in transactions approved by the board of directors, which approval shall include a majority of the disinterested directors.  For the purpose of determining whether a person is an interested shareholder, the voting shares of the corporation deemed to be outstanding shall include shares deemed to be owned by the person through application of subparagraph (3) of this paragraph, but shall not include any other unissued shares of the corporation that may be issuable pursuant to any agreement, arrangement, or understanding, upon exercise of conversion rights, warrants, or options, or otherwise.(3) "Owner", including the terms "own" and "owned",     when used with respect to shares means a person that individually or with or through any of its affiliates or associates:(a) beneficially owns the shares, directly or         indirectly; or(b) has (i) the right to acquire the shares         (whether the right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding, upon exercise of conversion rights, exchange rights, warrants, or options, or otherwise; provided, however, that a person shall not be deemed the owner of shares tendered pursuant to a tender or exchange offer made by the person or any of the person's affiliates or associates until the tendered shares are accepted for purchase or exchange or (ii) the right to vote the shares pursuant to an agreement, arrangement, or understanding; provided, however, that a person shall not be deemed the owner of any shares because of the person's right to vote the shares if the agreement, arrangement, or understanding to vote the shares arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or(c) has an agreement, arrangement, or         understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in clause (ii) of item (b) of this subparagraph), or disposing of the shares with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, the shares.(4) "Affiliate" means a person that directly, or     indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another person.(5) "Associate", when used to indicate a relationship     with a person, means (i) a corporation, partnership, unincorporated association, or other entity of which the person is a director, officer, or partner or is, directly or indirectly, the owner of 20% or more of a class of voting shares, (ii) a trust or other estate in which the person has at least a 20% beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity, and (iii) a relative or spouse of the person, or a relative of that spouse who has the same residence as the person.(6) "Subsidiary" means any corporation of which a     majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that for the purposes of the definition of interested shareholder set forth in subparagraph (2) of this paragraph D, the term "subsidiary" shall mean only a corporation of which a majority of each class or equity security is owned, directly or indirectly, by the corporation.(7) "Disinterested director" means any member of the     board of directors of the corporation who:  (a) is neither the interested shareholder nor an affiliate or associate of the interested shareholder; (b) was a member of the board of directors prior to the time that the interested shareholder became an interested shareholder or was a director of the corporation before January 1, 1997, or was recommended to succeed a disinterested director by a majority of the disinterested directors then in office; and (c) was not nominated for election as a director by the interested shareholder or any affiliate or associate of the interested shareholder.(8) "Fair market value" means:  (a) in the case of     shares, the highest closing sale price during the 30-day period immediately preceding the date in question of a share on the New York Stock Exchange Composite Tape, or, if such shares are not quoted on the Composite Tape, on the New York Stock Exchange, or, if such shares are not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such shares are listed, or, if such shares are not listed on any such exchange, the highest closing sale price or bid quotation with respect to a share during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share as determined by a majority of the disinterested directors in good faith; and (b) in the case of property other than cash or shares, the fair market value of such property on the date in question as determined by a majority of the disinterested directors in good faith.(9) "Disinterested shareholder" shall mean a     shareholder of the corporation who is not an interested shareholder or an affiliate or an associate of an interested shareholder.(10) "Business combination" has the meaning set forth     in Section 11.75 of this Act (regardless of the case of the word "only" in that Section).(11) In the event of any business combination in     which the corporation survives, the phrase " consideration other than cash" as used in subparagraphs (2)(a) and (2)(b) of paragraph C of this Section 7.85 shall include the common shares and the shares of any other class or series retained by the holders of such shares.(12) "Shares" means, with respect to any corporation,     capital stock and, with respect to any other entity, any equity interest.(13) "Voting shares" means, with respect to any     corporation, shares of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in its election of the governing body of the entity.E. Determinations by disinterested directors.  A majority  of the disinterested directors shall have the power to  determine, for the purposes of this Section 7.85, (a) whether a person is  an interested shareholder, (b) the number of voting shares beneficially  owned by any person, (c) whether a person is an affiliate or associate of  another, and (d) whether the transaction is the subject of any business  combination.    (Source: P.A. 90-461, eff. 1-1-98.)