§ 17-18-201 — Protection provisions; applicability; defined

(a) A qualified corporation may, if its articles of
incorporation authorize it to utilize the bondholder protection
provisions of this act, utilize any of the provisions set forth
in subsection (b) of this section. These protections shall
apply only to bonds, debentures or other debt instruments whose
original aggregate value at maturity is equal to or greater than
five million dollars ($5,000,000.00) and whose original term is
two (2) years or greater. Any number of bondholder protection
provisions may be in effect at any time.
(b) A qualified corporation may provide bondholder
protection by requiring any or all of the following:
(i) Bondholder approval of the replacement of more
than twenty-four percent (24%) of the directors in any twelve
(12) month period. The filling of vacancies created by the
death or resignation of directors shall not be counted against
the twenty-four percent (24%) limit provided that those
vacancies are filled by nominees of the board of directors. If
more than twenty-four percent (24%) of the directors are to be
replaced, the approval of holders of a majority of the bonds
shall be obtained in writing at the meeting where the directors
are to be replaced or no more than thirty (30) days prior to the
meeting. The consent of the bondholders shall be obtained to
exceeding the twenty-four percent (24%) limit rather than to the
individual directors to be replaced. If consent is denied,
which directors are to be replaced shall be determined by the
relative number of votes for each director by shares entitled to
vote;
(ii) Bondholder consent to any merger or acquisition
which the corporation may be subject to or which the corporation
may make, subject to the following:
(A) The notice of bondholder protection shall
specify the size of merger or acquisition at or above which the
bondholder consent is required. The size may vary depending on
whether the company is the acquiring party or is being acquired.
In a merger the relative memberships on the board of directors
of the surviving corporation may be used to determine whether or
not bondholder consent is required;
(B) The term acquisition shall be deemed to
include the purchase of more than a specified percentage of the
shares entitled to vote for directors by a person or combination
of persons under common ownership or control or acting in
concert. If a person or combination of persons acquires more
than the specified percentage of shares, they shall be entitled
to vote only the specified percentage until bondholder consent
is acquired. The specified percentage shall be set in the
notice of bondholder protection and shall not be less than ten
percent (10%);
(C) The bondholder consent shall be to a
specific merger or acquisition rather than the general concept
of mergers and acquisitions.
(iii) Bondholder consent to the sale or disposal of
certain assets, or assets exceeding a certain percentage of the
corporation's total assets, or assets exceeding a set total
value or any combination of these factors. The specifics of
what requires bondholder consent shall be set forth in the
notice of bondholder protection. Disposal of assets shall be
construed to include the disposition of the assets to the
shareholders either directly or through distribution of shares
in a new or subsidiary corporation;
(iv) Bondholder consent to the acquisition of debt
above a specified percentage of total assets, a specified
percentage of the net worth of the corporation, a specific
amount, or any combination of these factors. The consent may be
required generally or may be required only if the debt is to be
used to pay for a merger or acquisition or a distribution to
shareholders. The notice of bondholder protection shall specify
the conditions under which bondholder consent is required.