                                 CODE OF VIRGINIA

SHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS (§ 13.1-724)

A. A sale, lease, exchange or other disposition of the corporation&#8217;s
assets, other than a disposition described in &#xA7; 13.1-723, requires approval
of the corporation&#8217;s shareholders if the disposition would leave the
corporation without a significant continuing business activity. The corporation
will conclusively be deemed to have retained a significant continuing business
activity if it retains a business activity that represented, for the corporation
and its subsidiaries on a consolidated basis, (i) at least 20 percent of total
assets at the end of the most recently completed fiscal year, and (ii) at least
20 percent of either (a) income from continuing operations before taxes or (b)
revenues from continuing operations, in each case for the most recently
completed fiscal year.

B. A disposition that requires approval of the shareholders under subsection A
shall be initiated by adoption of a resolution by the board of directors
authorizing the disposition. After adoption of such a resolution, the board of
directors shall submit the proposed disposition to the shareholders for their
approval. The board of directors shall also submit to the shareholders a
recommendation that the shareholders approve the proposed disposition, unless
the board of directors makes a determination that because of conflicts of
interest or other special circumstances it should not make such a
recommendation, in which case the board of directors shall inform the
shareholders of the basis for that determination.

C. The board of directors may set conditions for the approval of a disposition
by the shareholders or the effectiveness of the disposition.

D. If a disposition is required to be approved by the shareholders and if the
approval is to be sought at a shareholders&#8217; meeting, the corporation shall
notify each shareholder, whether or not entitled to vote, of the
shareholders&#8217; meeting at which the disposition is to be submitted for
approval in accordance with &#xA7; 13.1-658. The notice shall also state that
the purpose, or one of the purposes, of the meeting is to consider the
disposition and shall contain or be accompanied by a copy or summary of the
agreement pursuant to which the disposition will be effected. If only a summary
of the agreement is sent to shareholders, the corporation also shall send a copy
of the agreement to any shareholder who requests it.

E. Unless the articles of incorporation or board of directors, acting pursuant
to subsection C, requires a greater vote or a greater quorum, the approval of a
disposition by the shareholders shall require at a meeting at which a quorum
exists the approval of the holders of more than two-thirds of all the votes
entitled to be cast on the disposition. The articles of incorporation may
provide for a greater or lesser vote than that provided for in this subsection
or a vote by separate voting groups so long as the vote provided for is not less
than a majority of all the votes cast on the disposition by each voting group
entitled to vote on the disposition at a meeting at which a quorum of the voting
group exists.

F. Unless the parties to the disposition have agreed otherwise, after a
disposition has been approved by the shareholders, and at any time before the
disposition has been consummated, it may be abandoned without action by the
shareholders, subject to any contractual rights of the parties to the
disposition.

G. A disposition of assets in the course of dissolution under Article 16 (&#xA7;
13.1-742 et seq.) is not governed by this section.

H. The assets of a direct or indirect consolidated subsidiary shall be deemed to
be the assets of the parent corporation for the purposes of this section.

I. Notwithstanding any other provision of this section, no corporation organized
to conduct the business of a railroad or other public service or a banking
business, or a savings institution, an industrial loan association or a credit
union may sell, lease or exchange its properties for the conduct of such
business in the Commonwealth except to a corporation of the Commonwealth
organized for the same purpose or in the case of a bank to a savings and loan
association or a corporation of the United States, and in the case of a savings
and loan association to a bank or a corporation of the United States.

HISTORY: Code 1950, §§ 13-83, 13-84, 13.1-77; 1954, c. 499; 1956, c. 428;
1968, c. 109; 1971, Ex. Sess., c. 117; 1975, c. 500; 1985, c. 522; 1987, c. 181;
1996, c. 77; 2005, c. 765; 2019, c. 734.