REPORT TITLE:
Model Business Corporation Act


DESCRIPTION:
Updates Chapter 415, to make it more desirable for existing
Hawaii corporations to remain in the State and for new businesses
to incorporate in the State.

 
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THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE CORPORATIONS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5              HAWAII REVISED BUSINESS CORPORATION ACT
 
 6                             CHAPTER 1
 
 7                        GENERAL PROVISIONS
 
 8                           Subchapter A.
 
 9               SHORT TITLE AND RESERVATION OF POWER
 
10      Section    -1.01.  Short title.
 
11      This Act shall be known and may be cited as the ``Hawaii
 
12 Revised Business Corporation Act.''
 
13      Section    -1.02.  Reservation of power to amend or repeal.
 
14  The legislature has power to amend or repeal all or part of this
 
15 Act at any time and all domestic and foreign corporations subject
 
16 to this Act are governed by the amendment or repeal.
 
17                           Subchapter B.
 
18                         FILING DOCUMENTS
 
19      Section    -1.20.  Filing Requirement.(a) A document must
 

 
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 1 satisfy the requirements of this section, and of any other
 
 2 section that adds to or varies these requirements, to be entitled
 
 3 to filing by the Director.
 
 4      (b)  This Act must require or permit filing the document in
 
 5 the office of the Director.
 
 6      (c)  The document must contain the information required by
 
 7 this Act.  It may contain other information as well.
 
 8      (d)  The document must be typewritten or printed.
 
 9      (e)  The document must be in the English language. A
 
10 corporate name need not be in English if written in English
 
11 letters or Arabic or Roman numerals, and the certificate of
 
12 existence required of foreign corporations need not be in English
 
13 if accompanied by a reasonably authenticated English translation.
 
14      (f)  The document must be certified and executed:
 
15      (1)  by the chairman of the board of directors of a domestic
 
16           or foreign corporation, by its president, or by another
 
17           of its officers;
 
18      (2)  if directors have not been selected or the corporation
 
19           has not been formed, by an incorporator; or
 
20      (3)  if the corporation is in the hands of a receiver,
 
21           trustee, or other court-appointed fiduciary, by that
 
22           fiduciary.
 

 
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 1      (g)  The person executing the document shall sign it and
 
 2 state beneath or opposite such person's signature such person's
 
 3 and the capacity in which such person signs. The document may but
 
 4 need not contain: (1) the corporate seal, (2) an attestation by
 
 5 the secretary or an assistant secretary, (3) an acknowledgment,
 
 6 verification, or proof.
 
 7      (h)  If the Director has prescribed a mandatory form for the
 
 8 document under section    -1.21, the document must be in or on
 
 9 the prescribed form.
 
10      (i)  The document must be delivered to the office of the
 
11 Director for filing and must be accompanied by one exact or
 
12 conformed copy (except as provided in sections    -5.03 and
 
13    -15.09), the correct filing fee, and any penalty required by
 
14 this Act.
 
15      Section    -1.21.  Forms.(a) The Director may prescribe
 
16 and furnish on request forms for: (1) an application for a
 
17 certificate of existence, (2) a foreign corporation's application
 
18 for a certificate of authority to transact business in this
 
19 State, (3) a foreign corporation's application for a certificate
 
20 of withdrawal, and (4) the annual report.  If the Director so
 
21 requires, use of these forms is mandatory.
 
22      (b)  The Director may prescribe and furnish on request forms
 

 
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 1 for other documents required or permitted to be filed by this Act
 
 2 but their use is not mandatory.
 
 3      Section    -1.22.  Filing, service, and copying fees.(a)
 
 4 The following fees shall be paid to the Director upon the filing
 
 5 of corporate documents:
 
 6      (1)  Articles of incorporation, $100;
 
 7      (2)  Articles of amendment, $50;
 
 8      (3)  Restated articles of incorporation, $50;
 
 9      (4)  Articles of conversion, merger, or consolidation, $200;
 
10      (5)  Articles of merger (subsidiary corporation), $100;
 
11      (6)  Articles of dissolution, $50;
 
12      (7)  Annual report of domestic and foreign corporations
 
13           organized for profit, $25;
 
14      (8)  Agent's statement of change of registered office, $50
 
15           for each affected domestic corporation or foreign
 
16           corporation, except if simultaneous filings are made
 
17           the fee is reduced to $1 for each affected domestic
 
18           corporation or foreign corporation in excess of 200.
 
19      (9)  Any other statement, report, certificate, application,
 
20           or other corporate document, except an annual report,
 
21           of a domestic or foreign corporation, $50;
 
22     (10)  Application for a certificate of authority, $100;
 

 
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 1     (11)  Application for a certificate of withdrawal, $50;
 
 2     (12)  Reservation of corporate name, $20;
 
 3     (13)  Transfer of reservation of corporate name, $20;
 
 4     (14)  Good standing certificate, $25;
 
 5     (15)  Special handling fee for review of corporation
 
 6           documents, excluding articles of conversion, merger, or
 
 7           consolidation, $50;
 
 8     (16)  Special handling fee for review of articles of
 
 9           conversion, merger ,or consolidation, $150;
 
10     (17)  Special handling fee for certificates issued by the
 
11           department, $20 per certificate; and 
 
12     (18)  Special handling fee for certification of documents, $1
 
13           per page.
 
14      (b)  All special handling fees shall be credited to the
 
15 special fund established for use by the department in expediting
 
16 the processing of documents. At least two temporary business
 
17 registration assistant I positions shall be paid out of the
 
18 special fund.
 
19      (c)  The Director shall adjust the fees assessed under this
 
20 section, as necessary from time to time, through rules adopted
 
21 under chapter 91.
 
22      (d)  The Director shall charge and collect:
 

 
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 1      (1)  For furnishing a certified copy of any document,
 
 2           instrument, or paper relating to a corporation, 25
 
 3           cents per page and $10 for the certificate and affixing
 
 4           the seal thereto; and
 
 5      (2)  At the time of any service of process on the Director
 
 6           as agent for service of process of a corporation, $25,
 
 7           which amount may be recovered as taxable costs by the
 
 8           party to the suit or action causing such service to be
 
 9           made if such party prevails in the suit or action.
 
10      Section    -1.23.  Effective time and date of document.(a)
 
11 Except as provided in subsection (b) and section    -1.24(c), a
 
12 document accepted for filing is effective at the time of filing
 
13 on the date it is filed, as evidenced by the Director's date and
 
14 time endorsement on the original document.
 
15      (b)  Articles of dissolution and articles of merger or
 
16 consolidation may specify a delayed effective time and date, and
 
17 if it does so the document becomes effective at the time and date
 
18 specified. If a delayed effective date but no time is specified,
 
19 the document is effective at the close of business on that date.
 
20 A delayed effective date for a document may not be later than the
 
21 30th day after the date it is filed.
 
22      Section    -1.24.  Correcting filed document.(a) A
 

 
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 1 domestic or foreign corporation may correct a document filed by
 
 2 the Director if the document (1) contains an incorrect statement
 
 3 or (2) was defectively executed, attested, sealed, verified, or
 
 4 acknowledged.
 
 5      (b)  A document is corrected:
 
 6      (1)  by preparing articles of correction that
 
 7           (i)  describe the document (including its filing date)
 
 8                or attach a copy of it to the articles,
 
 9          (ii)  specify the incorrect statement and the reason it
 
10                is incorrect or the manner in which the execution
 
11                was defective, and
 
12         (iii)  correct the incorrect statement or defective
 
13                execution; and
 
14      (2)  by delivering the articles to the Director for filing.
 
15      (c)  Articles of correction are effective on the effective
 
16 date of the document they correct except as to persons relying on
 
17 the uncorrected document and adversely affected by the
 
18 correction. As to those persons, articles of correction are
 
19 effective when filed.
 
20      Section    -1.25.  Filing duty of Director.(a) If a
 
21 document delivered to the office of the Director for filing
 
22 satisfies the requirements of section    -1.20, the Director
 

 
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 1 shall file it.
 
 2      (b) The Director files a document by stamping or otherwise
 
 3 endorsing ``Filed,'' together with the date and time of receipt,
 
 4 on both the original. After filing a document, except as provided
 
 5 in sections    -5.03 and    -15.09, the Director shall deliver
 
 6 the document copy, stamped with the date and time of receipt, to
 
 7 the domestic or foreign corporation or its representative.
 
 8      (c) If the Director refuses to file a document, the Director
 
 9 shall return it to the domestic or foreign corporation or its
 
10 representative together with a brief, written explanation of the
 
11 reason for the Director's refusal.
 
12      (d) The Director's duty to file documents under this section
 
13 is ministerial. The Director's filing or refusing to file a
 
14 document does not:
 
15      (1)  affect the validity or invalidity of the document in
 
16           whole or part;
 
17      (2)  relate to the correctness or incorrectness of
 
18           information contained in the document;
 
19      (3)  create a presumption that the document is valid or
 
20           invalid or that information contained in the document
 
21           is correct or incorrect.
 
22      Section    -1.26.  Appeal from director's refusal to file
 

 
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 1 document.  (a) If the Director refuses to file a document
 
 2 delivered to the department of commerce and consumer affairs for
 
 3 filing, the domestic or foreign corporation may appeal the
 
 4 refusal within 30 days after the return of the document in the
 
 5 circuit court.  The appeal is commenced by petitioning the court
 
 6 to compel filing the document and by attaching to the petition
 
 7 the document and the Director's explanation of the Director's
 
 8 refusal to file.
 
 9      (b) The court may summarily order the Director to file the
 
10 document or take other action the court considers appropriate.
 
11      (c) The court's final decision may be appealed as in other
 
12 civil proceedings.
 
13      Section    -1.27.  Evidentiary effect of copy of filed
 
14 document. A certificate attached to a copy of a document filed by
 
15 the Director, bearing the Director's signature (which may be in
 
16 facsimile) and the seal of the department, is conclusive evidence
 
17 that the original document is on file with the Director.
 
18      Section    -1.28.  Certificates and certified copies to be
 
19 received in evidence.  All certificates issued by the Director
 
20 pursuant to this Act, and all copies of documents filed in the
 
21 Director's office pursuant to this Act when certified by the
 
22 Director, shall be taken and received in all courts, public
 

 
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 1 offices, and official bodies as prima facie evidence of the facts
 
 2 therein stated.  A certificate by the Director, under the seal of
 
 3 the department, as to the existence or nonexistence of the facts
 
 4 relating to corporations, shall be taken and received in all
 
 5 courts, public offices, and official bodies as prima facie
 
 6 evidence of the existence or nonexistence of the facts therein
 
 7 stated.
 
 8      Section    -1.29.  Penalty for signing false document.(a)
 
 9 A person commits an offense if such person signs a document such
 
10 person knows is false in any material respect with intent that
 
11 the document be delivered to the Director for filing.
 
12      (b) An offense under this section is a class C felony.
 
13                           Subchapter C.
 
14                             DIRECTOR
 
15      Section    -1.30.  Powers.  The Director of the Department
 
16 of Commerce and Consumer Affairs for the State of Hawaii
 
17 (hereinafter referred to in this Act as the "Director") has the
 
18 power reasonably necessary to perform the duties required of the
 
19 Director by this Act.  The Director shall have the power and
 
20 authority reasonably necessary to enable the Director to
 
21 administer this Act efficiently and to perform the duties therein
 
22 imposed upon the Director. The Director shall establish rules and
 

 
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 1 regulations, subject to chapter 91, necessary to promulgate this
 
 2 Act.
 
 3                           Subchapter D.
 
 4                            DEFINITIONS
 
 5      Section    -1.40.  Act definitions.
 
 6      In this Act:
 
 7      (1)  ``Articles of incorporation'' include amended and
 
 8           restated articles of incorporation and articles of
 
 9           merger.
 
10      (2)  ``Authorized shares'' means the shares of all classes a
 
11           domestic or foreign corporation is authorized to issue.
 
12      (3)  ``Conspicuous'' means so written that a reasonable
 
13           person against whom the writing is to operate should
 
14           have noticed it. For example, printing in italics or
 
15           boldface or contrasting color, or typing in capitals or
 
16           underlined, is conspicuous.
 
17      (4)  ``Corporation'' or ``domestic corporation'' means a
 
18           corporation for profit, which is not a foreign
 
19           corporation, incorporated under or subject to the
 
20           provisions of this Act.
 
21      (5)  ``Deliver'' includes mail.
 
22      (6)  ``Distribution'' means a direct or indirect transfer of
 

 
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 1           money or other property (except its own shares) or
 
 2           incurrence of indebtedness by a corporation to or for
 
 3           the benefit of its shareholders in respect of any of
 
 4           its shares. A distribution may be in the form of a
 
 5           declaration or payment of a dividend; a purchase,
 
 6           redemption, or other acquisition of shares; a
 
 7           distribution of indebtedness; or otherwise.
 
 8      (7)  ``Effective date of notice'' is defined in
 
 9           section    -1.41.
 
10      (8)  ``Employee'' includes an officer but not a director. A
 
11           director may accept duties that make the director also
 
12           an employee.
 
13      (9)  ``Entity'' includes corporation and foreign
 
14           corporation; not-for-profit corporation; profit and
 
15           not-for-profit unincorporated association; business
 
16           trust, estate, partnership, trust, and two or more
 
17           persons having a joint or common economic interest; and
 
18           state, United States, and foreign government.
 
19     (10)  ``Foreign corporation'' means a corporation for profit
 
20           incorporated under a law other than the law of this
 
21           State.
 
22     (11)  ``Governmental subdivision'' includes authority,
 

 
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 1           county, district, and municipality.
 
 2     (12)  ``Includes'' denotes a partial definition.
 
 3     (13)  ``Individual'' includes the estate of an incompetent or
 
 4           deceased individual.
 
 5     (14)  ``Means'' denotes an exhaustive definition.
 
 6     (15)  ``Notice'' is defined in section    -1.41.
 
 7     (16)  ``Person'' includes individual and entity.
 
 8     (17)  ``Principal office'' means the office (in or out of
 
 9           this State) so designated in the annual report where
 
10           the principal executive offices of a domestic or
 
11           foreign corporation are located.
 
12     (18)  ``Proceeding'' includes civil suit and criminal,
 
13           administrative, and investigatory action.
 
14     (19)  ``Record date'' means the date established under
 
15           chapter 6 or 7 on which a corporation determines the
 
16           identity of its shareholders and their shareholdings
 
17           for purposes of this Act. The determinations shall be
 
18           made as of the close of business on the record date
 
19           unless another time for doing so is specified when the
 
20           record date is fixed.
 
21     (20)  ``Secretary'' means the corporate officer to whom the
 
22           board of directors has delegated responsibility under
 

 
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 1           section    -8.40(c) for custody of the minutes of the
 
 2           meetings of the board of directors and of the
 
 3           shareholders and for authenticating records of the
 
 4           corporation.
 
 5     (21)  ``Shareholder'' means the person in whose name shares
 
 6           are registered in the records of a corporation or the
 
 7           beneficial owner of shares to the extent of the rights
 
 8           granted by a nominee certificate on file with a
 
 9           corporation.
 
10     (22)  ``Shares'' means the units into which the proprietary
 
11           interests in a corporation are divided.
 
12     (23)  ``State,'' when referring to a part of the United
 
13           States, includes a state and commonwealth (and their
 
14           agencies and governmental subdivisions) and a territory
 
15           and insular possession (and their agencies and
 
16           governmental subdivisions) of the United States.
 
17     (24)  ``Subscriber'' means a person who subscribes for shares
 
18           in a corporation, whether before or after
 
19           incorporation.
 
20     (25)  ``United States'' includes district, authority, bureau,
 
21           commission, department, and any other agency of the
 
22           United States.
 

 
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 1     (26)  ``Voting group'' means all shares of one or more
 
 2           classes or series that under the articles of
 
 3           incorporation or this Act are entitled to vote and be
 
 4           counted together collectively on a matter at a meeting
 
 5           of shareholders. All shares entitled by the articles of
 
 6           incorporation or this Act to vote generally on the
 
 7           matter are for that purpose a single voting group.
 
 8      Section    -1.41.  Notice.  (a) Notice under this Act must
 
 9 be in writing unless oral notice is reasonable under the
 
10 circumstances.
 
11      (b)  Notice may be communicated in person; by telephone,
 
12 telegraph, teletype, or other form of wire or wireless
 
13 communication; or by mail or private carrier.  If these forms of
 
14 personal notice are impracticable, notice may be communicated by
 
15 a newspaper of general circulation in the area where published;
 
16 or by radio; television, or other form of public broadcast
 
17 communication.
 
18      (c)  Written notice by a domestic or foreign corporation to
 
19 its shareholder, if in a comprehensible form, is effective when
 
20 mailed, if mailed postpaid and correctly addressed to the
 
21 shareholder's address shown in the corporation's current record
 
22 of shareholders.
 

 
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 1      (d)  Written notice to a domestic or foreign corporation
 
 2 (authorized to transact business in this State) may be addressed
 
 3 to its registered agent at its registered office or to the
 
 4 corporation or its secretary at its principal office shown in its
 
 5 most recent annual report or, in the case of a foreign
 
 6 corporation that has not yet delivered an annual report, it its
 
 7 application for a certificate of authority.
 
 8      (e)  Except as provided in subsection (c), written notice,
 
 9 if in a comprehensible form, is effective at the earliest of the
 
10 following:
 
11      (1)  when received;
 
12      (2)  five days after its deposit in the United States Mail,
 
13           as evidenced by the postmark, if mailed postpaid and
 
14           correctly addressed;
 
15      (3)  on the date shown on the return receipt, if sent by
 
16           registered or certified mail, return receipt requested,
 
17           and the receipt is signed by or on behalf of the
 
18           addressee.
 
19      (f)  Oral notice is effective when communicated if
 
20 communicated in a comprehensible manner.
 
21      (g)  If this Act prescribes notice requirements for
 
22 particular circumstances, those requirements govern.  If articles
 

 
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 1 of incorporation or bylaws prescribe notice requirements, not
 
 2 inconsistent with this section or other provisions of this Act,
 
 3 those requirements govern.
 
 4      Section    -1.42.  Number of shareholders.(a) For purposes
 
 5 of this Act, the following identified as a shareholder in a
 
 6 corporation's current record of shareholders constitutes one
 
 7 shareholder;
 
 8      (1)  three or fewer coowners;
 
 9      (2)  a corporation, partnership, trust, estate, or other
 
10           entity;
 
11      (3)  the trustees, guardians, custodians, or other
 
12           fiduciaries of a single trust, estate, or account.
 
13      (b)  For purposes of this Act, shareholdings registered in
 
14 substantially similar names constitute one shareholder if it is
 
15 reasonable to believe that the names represent the same person.
 
16                             CHAPTER 2
 
17                           INCORPORATION
 
18      Section    -2.01.  Incorporators.  One or more individuals
 
19 may act as the incorporator or incorporators of a corporation by
 
20 delivering articles of incorporation to the Director for filing.
 
21      Section    -2.02.  Articles of incorporation.(a) The
 
22 articles of incorporation must set forth:
 

 
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 1      (1)  a corporate name for the corporation that satisfies the
 
 2           requirements of section    -4.01;
 
 3      (2)  the number of shares the corporation is authorized to
 
 4           issue;
 
 5      (3)  the street address of the corporation's initial
 
 6           registered office and the name of its initial
 
 7           registered agent at that office; and
 
 8      (4)  the name and address of each incorporator.
 
 9      (b)  The articles of incorporation may set forth:
 
10      (1)  the names and addresses of the individuals who are to
 
11           serve as the initial directors;
 
12      (2)  provisions not inconsistent with law regarding:
 
13           (i)  the purpose or purposes for which the corporation
 
14                is organized;
 
15          (ii)  managing the business and regulating the affairs
 
16                of the corporation;
 
17         (iii)  defining, limiting, and regulating the powers of
 
18                the corporation, its board of directors, and
 
19                shareholders;
 
20          (iv)  a par value for authorized shares or classes of
 
21                shares;
 
22           (v)  the imposition of personal liability on
 

 
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 1                shareholders for the debts of the corporation to a
 
 2                specified extent and upon specified conditions;
 
 3      (3)  any provision that under this Act is required or
 
 4           permitted to be set forth in the bylaws;
 
 5      (4)  a provision eliminating or limiting the liability of a
 
 6           director to the corporation or its shareholders for
 
 7           money damages for any action taken, or any failure to
 
 8           take any action, as a director, subject to the
 
 9           provisions of section    -8.31; and
 
10      (5)  a provision permitting or making obligatory
 
11           indemnification of a director for liability (as defined
 
12           in section    -8.50(5)) to any person for any action
 
13           taken, or any failure to take any action, as a
 
14           director, except liability for (A) receipt of a
 
15           financial benefit to which such director is not
 
16           entitled, (B) an intentional infliction of harm on the
 
17           corporation or its shareholders, (C) a violation of
 
18           section    -8.33, or (D) an intentional violation of
 
19           criminal law.
 
20      (c)  The articles of incorporation need not set forth any of
 
21 the corporate powers enumerated in this Act.
 
22      Section    -2.03.  Incorporation.  (a) The corporate
 

 
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 1 existence begins when the articles of incorporation are filed.
 
 2      (b)  The Director's filing of the articles of incorporation
 
 3 is conclusive proof that the incorporators satisfied all
 
 4 conditions precedent to incorporation except in a proceeding by
 
 5 the State to cancel or revoke the incorporation or involuntarily
 
 6 dissolve the corporation.
 
 7      Section    -2.04.  Liability for pre-incorporation
 
 8 transactions.  All persons purporting to act as or on behalf of a
 
 9 corporation, knowing there was no incorporation under this Act,
 
10 are jointly and severally liable for all liabilities created
 
11 while so acting.
 
12      Section    -2.05.  Organization of corporation.  (a) After
 
13 incorporation:
 
14      (1)  if initial directors are named in the articles of
 
15           incorporation, the initial directors shall hold an
 
16           organizational meeting, at the call of a majority of
 
17           the directors, to complete the organization of the
 
18           corporation by appointing officers, adopting bylaws,
 
19           and carrying on any other business brought before the
 
20           meeting;
 
21      (2)  if initial directors are not named in the articles, the
 
22           incorporator or incorporators shall hold an
 

 
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 1           organizational meeting at the call of a majority of the
 
 2           incorporators:
 
 3           (i)  to elect directors and complete the organization
 
 4                of the corporation; or
 
 5          (ii)  to elect a board of directors who shall complete
 
 6                the organization of the corporation.
 
 7      (b)  Action required or permitted by this Act to be taken by
 
 8 incorporators at an organizational meeting may be taken without a
 
 9 meeting if the action taken is evidenced by one or more written
 
10 consents describing the action taken and signed by each
 
11 incorporator.
 
12      (c)  An organizational meeting may be held in or out of this
 
13 State.
 
14      Section    -2.06.  Bylaws.  (a) The incorporators or board
 
15 of directors of a corporation shall adopt initial bylaws for the
 
16 corporation.
 
17      (b)  The bylaws of a corporation may contain any provision
 
18 for managing the business and regulating the affairs of the
 
19 corporation that is not inconsistent with law or the articles of
 
20 incorporation.
 
21      Section    -2.07.  Emergency bylaws.(a) Unless the
 
22 articles of incorporation provide otherwise, the board of
 

 
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 1 directors of a corporation may adopt bylaws to be effective only
 
 2 in an emergency defined in subsection (d). The emergency bylaws,
 
 3 which are subject to amendment or repeal by the shareholders, may
 
 4 make all provisions necessary for managing the corporation during
 
 5 the emergency, including:
 
 6      (1)  procedures for calling a meeting of the board of
 
 7           directors;
 
 8      (2)  quorum requirements for the meeting; and
 
 9      (3)  designation of additional or substitute directors.
 
10      (b)  All provisions of the regular bylaws consistent with
 
11 the emergency bylaws remain effective during the emergency. The
 
12 emergency bylaws are not effective after the emergency ends.
 
13      (c)  Corporate action taken in good faith in accordance with
 
14 the emergency bylaws:
 
15      (1)  binds the corporation; and
 
16      (2)  may not be used to impose liability on a corporate
 
17           director, officer, employee, or agent.
 
18      (d)  An emergency exists for purposes of this section if a
 
19 quorum of the corporation's directors cannot readily be assembled
 
20 because of some catastrophic event.
 
21                             CHAPTER 3
 
22                        PURPOSES AND POWERS
 

 
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 1      Section    -3.01.  Purposes.  (a) Every corporation
 
 2 incorporated under this Act has the purpose of engaging in any
 
 3 lawful business unless a more limited purpose is set forth in the
 
 4 articles of incorporation.
 
 5      (b)  A corporation engaging in a business that is subject to
 
 6 regulation under another statute of this State may incorporate
 
 7 under this Act only if permitted by, and subject to all
 
 8 limitations of, the other statute.
 
 9      Section    -3.02.  General powers.  Unless its articles of
 
10 incorporation provide otherwise, every corporation has perpetual
 
11 duration and succession in its corporate name and has the same
 
12 powers as an individual to do all things necessary or convenient
 
13 to carry out its business and affairs, including without
 
14 limitation power:
 
15      (1)  to sue and be sued, complain and defend in its
 
16           corporate name;
 
17      (2)  to have a corporate seal, which may be altered at will,
 
18           and to use it, or a facsimile of it, by impressing or
 
19           affixing it or in any other manner reproducing it;
 
20      (3)  to make and amend bylaws, not inconsistent with its
 
21           articles of incorporation or with the laws of this
 
22           State, for managing the business and regulating the
 

 
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 1           affairs of the corporation;
 
 2      (4)  to purchase, receive, lease, or otherwise acquire, and
 
 3           own, hold, improve, use, and otherwise deal with, real
 
 4           or personal property, or any legal or equitable
 
 5           interest in property, wherever located;
 
 6      (5)  to sell, convey, mortgage, pledge, lease, exchange, and
 
 7           otherwise dispose of all or any part of its property;
 
 8      (6)  to purchase, receive, subscribe for, or otherwise
 
 9           acquire; own, hold, vote, use, sell, mortgage, lend,
 
10           pledge, or otherwise dispose of; and deal in and with
 
11           shares or other interests in, or obligations of, any
 
12           other entity;
 
13      (7)  to make contracts and guarantees, incur liabilities,
 
14           borrow money, issue its notes, bonds, and other
 
15           obligations (which may be convertible into or include
 
16           the option to purchase other securities of the
 
17           corporation), and secure any of its obligations by
 
18           mortgage or pledge of any of its property, franchises,
 
19           or income;
 
20      (8)  to lend money, invest and reinvest its funds, and
 
21           receive and hold real and personal property as security
 
22           for repayment;
 

 
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 1      (9)  to be a promoter, partner, member, associate, or
 
 2           manager of any partnership, joint venture, trust, or
 
 3           other entity;
 
 4     (10)  to conduct its business, locate offices, and exercise
 
 5           the powers granted by this Act within or without this
 
 6           State;
 
 7     (11)  to elect directors and appoint officers, employees, and
 
 8           agents of the corporation, define their duties, fix
 
 9           their compensation, and lend them money and credit;
 
10     (12)  to pay pensions and establish pension plans, pension
 
11           trusts, profit sharing plans, share bonus plans, share
 
12           option plans, and benefit or incentive plans for any or
 
13           all of its current or former directors, officers,
 
14           employees, and agents;
 
15     (13)  to make donations for the public welfare or for
 
16           charitable, scientific, or educational purposes;
 
17     (14)  to transact any lawful business that will aid
 
18           governmental policy;
 
19     (15)  to make payments or donations, or do any other act, not
 
20           inconsistent with law, that furthers the business and
 
21           affairs of the corporation.
 
22      Section    -3.03.  Emergency powers.  (a)  In anticipation
 

 
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 1 of or during an emergency defined in subsection (d), the board of
 
 2 directors of a corporation may:
 
 3      (1)  modify lines of succession to accommodate the
 
 4           incapacity of any director, officer, employee, or
 
 5           agent; and
 
 6      (2)  relocate the principal office, designate alternative
 
 7           principal offices or regional offices, or authorize the
 
 8           officers to do so.
 
 9      (b)  During an emergency defined in subsection (d), unless
 
10 emergency bylaws provide otherwise:
 
11      (1)  notice of a meeting of the board of directors need be
 
12           given only to those directors whom it is practicable to
 
13           reach and may be given in any practicable manner,
 
14           including by publication and radio; and
 
15      (2)  one or more officers of the corporation present at a
 
16           meeting of the board of directors may be deemed to be
 
17           directors for the meeting, in order of rank and within
 
18           the same rank in order of seniority, as necessary to
 
19           achieve a quorum.
 
20      (c)  Corporate action taken in good faith during an
 
21 emergency under this section to further the ordinary business
 
22 affairs of the corporation:
 

 
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 1      (1)  binds the corporation; and
 
 2      (2)  may not be used to impose liability on a corporate
 
 3           director, officer, employee, or agent.
 
 4      (d) An emergency exists for purposes of this section if a
 
 5 quorum of the corporation's directors cannot readily be assembled
 
 6 because of some catastrophic event.
 
 7      Section    -3.04.  Ultra vires.(a) Except as provided in
 
 8 subsection (b), the validity of corporate action may not be
 
 9 challenged on the ground that the corporation lacks or lacked
 
10 power to act.
 
11      (b)  A corporation's power to act may be challenged:
 
12      (1)  in a proceeding by a shareholder against the
 
13           corporation to enjoin the act;
 
14      (2)  in a proceeding by the corporation, directly,
 
15           derivatively, or through a receiver, trustee, or other
 
16           legal representative, against an incumbent or former
 
17           director, officer, employee, or agent of the
 
18           corporation; or
 
19      (3)  in a proceeding by the Attorney General under
 
20           section    -14.30.
 
21      (c)  In a shareholder's proceeding under subsection (b)(1)
 
22 to enjoin an unauthorized corporate act, the court may enjoin or
 

 
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 1 set aside the act, if equitable and if all affected persons are
 
 2 parties to the proceeding, and may award damages for loss (other
 
 3 than anticipated profits) suffered by the corporation or another
 
 4 party because of enjoining the unauthorized act.
 
 5                             CHAPTER 4
 
 6                               NAME
 
 7      Section    -4.01.  Corporate name.  (a) A corporate name:
 
 8      (1)  must contain the word ``corporation,''
 
 9           ``incorporated,'' or ``limited,'' or the abbreviation
 
10           ``corp.'' ``inc.,'' or ``ltd.,'' or words or
 
11           abbreviations of like import in another language; and
 
12      (2)  may not contain language stating or implying that the
 
13           corporation is organized for a purpose other than that
 
14           permitted by section    -3.01 and its articles of
 
15           incorporation.
 
16      (b)  Except as authorized by subsections (c) and (d), a
 
17 corporate name may not be the same as or substantially identical
 
18 to:
 
19      (1)  the name of any domestic corporation, partnership,
 
20           limited liability company, or limited liability
 
21           partnership existing or registered under the laws of
 
22           this State, or any foreign corporation, partnership,
 

 
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 1           limited liability company, or limited liability
 
 2           partnership authorized to transact business or conduct
 
 3           affairs in this State;
 
 4      (2)  a name the exclusive right to which is, at the time,
 
 5           reserved in this State;
 
 6      (3)  the fictitious name adopted by a foreign corporation
 
 7           authorized to transact business in this State because
 
 8           its real name is unavailable; and
 
 9      (4)  any trade name, trademark, or service mark registered
 
10           in this State.
 
11      (c)  A corporation may apply to the Director for
 
12 authorization to use a name that is substantially identical upon
 
13 the Director's records from one or more of the names described in
 
14 subsection (b).  The Director shall authorize use of the name
 
15 applied for if:
 
16      (1)  the other entity or holder of a reserved or registered
 
17           name consents to the use in writing and one or more
 
18           words are added to make the name distinguishable from
 
19           the name of the applying corporation; or
 
20      (2)  the applicant delivers to the Director a certified copy
 
21           of the final judgment of a court of competent
 
22           jurisdiction establishing the applicant's right to use
 

 
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 1           the name applied for in this State.
 
 2      (d)  A corporation may use the name (including the
 
 3 fictitious name) of another domestic or foreign corporation that
 
 4 is used in this State if the other corporation is incorporated or
 
 5 authorized to transact business in this State and the proposed
 
 6 user corporation;
 
 7      (1)  has merged with the other corporation;
 
 8      (2)  has been formed by reorganization of the other
 
 9           corporation; or
 
10      (3)  has acquired all or substantially all of the assets,
 
11           including the corporate name, of the other corporation.
 
12      (e)  This Act does not control the use of fictitious names.
 
13      Section    -4.02.  Reserved name.(a) A person may reserve
 
14 the exclusive use of a corporate name, by delivering an
 
15 application to the Director for filing. The application must set
 
16 forth the name and address of the applicant and the name proposed
 
17 to be reserved. If the Director finds that the corporate name
 
18 applied for is available, the Director shall reserve the name for
 
19 the applicant's exclusive use for a 120-day period.
 
20      (b) The owner of a reserved corporate name may transfer the
 
21 reservation to another person by delivering to the Director a
 
22 signed notice of the transfer that states the name and address of
 

 
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 1 the transferee.
 
 2      Section    -4.03.  Administrative order of abatement for
 
 3 infringement of corporate name.(a) Any domestic corporation in
 
 4 good standing or foreign corporation authorized to do business in
 
 5 this State claiming that the name of any domestic corporation,
 
 6 partnership, limited partnership, limited liability partnership
 
 7 or limited liability company existing under the laws of this
 
 8 State, or any foreign corporation, partnership, limited
 
 9 partnership, limited liability partnership, or limited liability
 
10 company authorized to transact business in this State is
 
11 substantially identical to, or confusingly similar to, its name
 
12 may file a petition with the Director for an administrative order
 
13 of abatement to address the infringement of its name.  The
 
14 petition shall set forth the facts and authority that support the
 
15 petitioner's claim that further use of the name should be abated.
 
16 The petitioner, at the petitioner's expense, shall notify the
 
17 registrant of the hearing in the manner prescribed by chapter 91
 
18 and the registrant shall be given an opportunity to respond to
 
19 the petition at a hearing.  The notice shall be made and the
 
20 hearing held in accordance with the contested case provisions of
 
21 chapter 91.
 
22      (b)  In addition to any other remedy or sanction allowed by
 

 
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 1 law, the order of abatement may:
 
 2      (1)  Allow the entity to retain its registered name, but;
 
 3           (A)  Require the entity to register a new trade name
 
 4                with the Director; and
 
 5           (B)  Require the entity to conduct business in this
 
 6                State under this new trade name;
 
 7           or
 
 8      (2)  (A)  Require the entity to change its registered name;
 
 9           (B)  Require the entity to register the new name with
 
10                the Director; and
 
11           (C)  Require the entity to conduct business in this
 
12                State under its new name.
 
13 If the entity fails to comply with the order of abatement within
 
14 sixty days, the Director may involuntarily dissolve or terminate
 
15 the entity, or cancel or revoke the entity's registration or
 
16 certificate of authority; after the time to appeal has lapsed and
 
17 no appeal has been timely filed.  The Director shall mail notice
 
18 of the dissolution, termination, or cancellation to the entity at
 
19 its last known mailing address.  The entity shall wind up its
 
20 affairs in accordance with this Act or chapter 415A, 415B, 425,
 
21 425D, or 428, as applicable.
 
22      (c)  Any person aggrieved by the Director's order under this
 

 
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 1 section may obtain judicial review in accordance with chapter 91
 
 2 by filing a notice of appeal in circuit court within thirty days
 
 3 after the issuance of the Director's order.  The trial by the
 
 4 circuit court of any such proceeding shall be de novo.  Review of
 
 5 any final judgment of the circuit court under this section shall
 
 6 be governed by chapter 602.
 
 7                             CHAPTER 5
 
 8                         OFFICE AND AGENT
 
 9      Section    -5.01.  Registered office and registered agent.
 
10 (a) Except as provided in subsection (b) below, each corporation
 
11 must continuously maintain in this State:
 
12      (1)  a registered office that may be the same as any of its
 
13           places of business; and
 
14      (2)  a registered agent, who may be:
 
15           (i)  an individual who resides in this State and whose
 
16                business office is identical with the registered
 
17                office;
 
18          (ii)  a domestic corporation or not-for-profit domestic
 
19                corporation whose business office is identical
 
20                with the registered office; or
 
21         (iii)  a foreign corporation or not-for-profit foreign
 
22                corporation authorized to transact business or
 

 
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 1                conduct affairs in this State whose business
 
 2                office is identical with the registered office.
 
 3      (b)  A corporation may, but shall not be required, to
 
 4 maintain a registered office and a registered agent in this State
 
 5 during such time as the corporation has at least one officer or
 
 6 director who is a resident of this State.
 
 7      Section    -5.02.  Designating or change of registered
 
 8 office or registered agent.(a) A corporation may designate or
 
 9 change its registered office or registered agent by delivering to
 
10 the Director for filing a statement of change that sets forth:
 
11      (1)  the name of the corporation;
 
12      (2)  the street address of its current registered office;
 
13      (3)  if the current registered office is to be changed, the
 
14           street address of the new registered office;
 
15      (4)  the name of its current registered agent;
 
16      (5)  if the current registered agent is to be changed, the
 
17           name of the new registered agent; and
 
18      (6)  that after the change or changes are made, the street
 
19           addresses of its registered office and the business
 
20           office of its registered agent will be identical.
 
21      (b)  If the street address of the registered agent's
 
22 business office changes, the registered agent may change the
 

 
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 1 street address of the corporation's registered office by
 
 2 notifying the corporation in writing of the change and signing
 
 3 (either manually or in facsimile) and delivering to the Director
 
 4 for filing a statement that complies with the requirements of
 
 5 subsection (a) and recites that the corporation has been notified
 
 6 of the change.
 
 7      Section    -5.03.  Resignation of registered agent.(a) A
 
 8 registered agent may resign from the registered agent's
 
 9 appointment by signing and delivering to the Director for filing
 
10 the signed original and two exact or conformed copies of a
 
11 statement of resignation. The statement may include a statement
 
12 that the registered office is also discontinued.
 
13      (b)  The registered agent shall mail one copy to the
 
14 registered office (if not discontinued) and the other copy to the
 
15 corporation at its principal office.
 
16      (c)  The appointment of the agent is terminated, and the
 
17 registered office discontinued if so provided, on the 31st day
 
18 after the date on which the statement was filed.
 
19      Section    -5.04.  Service on corporation.  (a) Service of
 
20 any notice or process authorized by law issued against any
 
21 corporation, whether domestic or foreign, by any court, judicial
 
22 or administrative officer, or board, may be made in the manner
 

 
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 1 provided by law upon any registered agent, officer, or director
 
 2 of the corporation who is found within the jurisdiction of the
 
 3 court, officer, or board; or if any registered agent, officer, or
 
 4 director cannot be found, upon the manager or superintendent of
 
 5 the corporation or any person who is found in charge of the
 
 6 property, business, or office of the corporation within the
 
 7 jurisdiction.
 
 8      (b)  If no officer, director, manager, superintendent, or
 
 9 other person in charge of the property, business, or office of
 
10 the corporation can be found within the State, and in case the
 
11 corporation has not filed with the Director pursuant to this Act,
 
12 the name of a registered agent upon whom legal notice and process
 
13 from the courts of the State may be served, and likewise if the
 
14 person named is not found within the State, service may be made
 
15 upon the corporation by registered or certified mail, return
 
16 receipt requested, addressed to the secretary of the corporation
 
17 at its principal office.  Service using registered or certified
 
18 mail is perfected at the earliest of:
 
19      (1)  The date the corporation receives the mail;
 
20      (2)  The date shown on the return receipt, if signed on
 
21           behalf of the corporation; or
 
22      (3)  Five days after its deposit in the United States mail,
 

 
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 1           as evidenced by postmark, if mailed postpaid and
 
 2           correctly addressed.
 
 3      (c)  Nothing contained herein shall limit or affect the
 
 4 right to serve any process, notice, or demand required or
 
 5 permitted by law to be served upon a corporation in any other
 
 6 manner permitted by law.
 
 7                             CHAPTER 6
 
 8                     SHARES AND DISTRIBUTIONS
 
 9                           Subchapter A.
 
10                              SHARES
 
11      Section    -6.01.  Authorized shares.(a) The articles of
 
12 incorporation must prescribe the classes of shares and the number
 
13 of shares of each class that the corporation is authorized to
 
14 issue. If more than one class of shares is authorized, the
 
15 articles of incorporation must prescribe a distinguishing
 
16 designation for each class, and, prior to the issuance of shares
 
17 of a class, the preferences, limitations, and relative rights of
 
18 that class must be described in the articles of incorporation.
 
19 All shares of a class must have preferences, limitations, and
 
20 relative rights identical with those of other shares of the same
 
21 class except to the extent otherwise permitted by
 
22 section    -6.02.
 

 
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 1      (b)  The articles of incorporation must authorize (1) one or
 
 2 more classes of shares that together have unlimited voting
 
 3 rights, and (2) one or more classes of shares (which may be the
 
 4 same class or classes as those with voting rights) that together
 
 5 are entitled to receive the net assets of the corporation upon
 
 6 dissolution.
 
 7      (c)  The articles of incorporation may authorize one or more
 
 8 classes of shares that:
 
 9      (1)  have special, conditional, or limited voting rights, or
 
10           no right to vote, except to the extent prohibited by
 
11           this Act;
 
12      (2)  are redeemable or convertible as specified in the
 
13           articles of incorporation (i) at the option of the
 
14           corporation, the shareholder, or another person or upon
 
15           the occurrence of a designated event; (ii) for cash,
 
16           indebtedness, securities, or other property; (iii) in a
 
17           designated amount or in an amount determined in
 
18           accordance with a designated formula or by reference to
 
19           extrinsic data or events;
 
20      (3)  entitle the holders to distributions calculated in any
 
21           manner, including dividends that may be cumulative,
 
22           noncumulative, or partially cumulative;
 

 
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 1      (4)  have preference over any other class of shares with
 
 2           respect to distributions, including dividends and
 
 3           distributions upon the dissolution of the corporation.
 
 4      (d)  The description of the designations, preferences,
 
 5 limitations, and relative rights of share classes in subsection
 
 6 (c) is not exhaustive.
 
 7      Section    -6.02.  Terms of class or series determined by
 
 8 board of directors.(a) If and to the extent the articles of
 
 9 incorporation so provide, the board of directors may determine,
 
10 in whole or part, the preferences, limitations, and relative
 
11 rights (within the limits set forth in section    -6.01) of (1)
 
12 any class of shares before the issuance of any shares of that
 
13 class or (2) one or more series within a class before the
 
14 issuance of any shares of that series.
 
15      (b)  Each series of a class must be given a distinguishing
 
16 designation.
 
17      (c)  All shares of a series must have preferences,
 
18 limitations, and relative rights identical with those of other
 
19 shares of the same series and, except to the extent otherwise
 
20 provided in the description of the series, with those of other
 
21 series of the same class.
 
22      (d)  Before issuing any shares of a class or series created
 

 
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 1 under this section, the corporation must deliver to the Director
 
 2 for filing an articles of amendment, or a resolution which is
 
 3 effective without shareholder action, that set forth:
 
 4      (1)  the name of the corporation;
 
 5      (2)  the text of the amendment or resolution determining the
 
 6           terms of the class or series or shares;
 
 7      (3)  the date it was adopted; and
 
 8      (4)  a statement that the amendment or resolution was duly
 
 9           adopted by the board of directors.  Upon the filing of
 
10           such articles of amendment or resolution by the
 
11           Director, it shall constitute an amendment of the
 
12           articles of incorporation.
 
13      Section    -6.03.  Issued and outstanding shares.  (a) A
 
14 corporation may issue the number of shares of each class or
 
15 series authorized by the articles of incorporation. Shares that
 
16 are issued are outstanding shares until they are reacquired,
 
17 redeemed, converted, or cancelled.
 
18      (b)  The reacquisition, redemption, or conversion of
 
19 outstanding shares is subject to the limitations of subsection
 
20 (c) of this section and to section    -6.40.
 
21      (c)  At all times that shares of the corporation are
 
22 outstanding, one or more shares that together have unlimited
 

 
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 1 voting rights and one or more shares that together are entitled
 
 2 to receive the net assets of the corporation upon dissolution
 
 3 must be outstanding.
 
 4      Section    -6.04.  Fractional shares.  (a) A corporation
 
 5 may:
 
 6      (1)  issue fractions of a share or pay in money the value of
 
 7           fractions of a share;
 
 8      (2)  arrange for disposition of fractional shares by the
 
 9           shareholders;
 
10      (3)  issue scrip in registered or bearer form entitling the
 
11           holder to receive a full share upon surrendering enough
 
12           scrip to equal a full share.
 
13      (b)  Each certificate representing scrip must be
 
14 conspicuously labeled ``scrip'' and must contain the information
 
15 required by section    -6.25(b).
 
16      (c)  The holder of a fractional share is entitled to
 
17 exercise the rights of a shareholder, including the right to
 
18 vote, to receive dividends, and to participate in the assets of
 
19 the corporation upon liquidation. The holder of scrip is not
 
20 entitled to any of these rights unless the scrip provides for
 
21 them.
 
22      (d)  The board of directors may authorize the issuance of
 

 
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 1 scrip subject to any condition considered desirable, including:
 
 2      (1)  that the scrip will become void if not exchanged for
 
 3           full shares before a specified date; and,
 
 4      (2)  that the shares for which the scrip is exchangeable may
 
 5           be sold and the proceeds paid to the scripholders.
 
 6                           Subchapter B.
 
 7                        ISSUANCE OF SHARES
 
 8      Section    -6.20.  Subscription for shares before
 
 9 incorporation.
 
10      (a)  A subscription for shares entered into before
 
11 incorporation is irrevocable for six months unless the
 
12 subscription agreement provides a longer or shorter period or all
 
13 the subscribers agree to revocation.
 
14      (b)  The board of directors may determine the payment terms
 
15 of subscription for shares that were entered into before
 
16 incorporation, unless the subscription agreement specifies them.
 
17 A call for payment by the board of directors must be uniform so
 
18 far as practicable as to all shares of the same class or series,
 
19 unless the subscription agreement specifies otherwise.
 
20      (c)  Shares issued pursuant to subscriptions entered into
 
21 before incorporation are fully paid and nonassessable when the
 
22 corporation receives the consideration specified in the
 

 
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 1 subscription agreement.
 
 2      (d)  If a subscriber defaults in payment of money or
 
 3 property under a subscription agreement entered into before
 
 4 incorporation, the corporation may collect the amount owed as any
 
 5 other debt. Alternatively, unless the subscription agreement
 
 6 provides otherwise, the corporation may rescind the agreement and
 
 7 may sell the shares if the debt remains unpaid for more than 20
 
 8 days after the corporation sends written demand for payment to
 
 9 the subscriber.
 
10      (e)  A subscription agreement entered into after
 
11 incorporation is a contract between the subscriber and the
 
12 corporation subject to section    -6.21.
 
13      Section    -6.21.  Issuance of shares.(a) The powers
 
14 granted in this section to the board of directors may be reserved
 
15 to the shareholders by the articles of incorporation.
 
16      (b)  The board of directors may authorize shares to be
 
17 issued for consideration consisting of any tangible or intangible
 
18 property or benefit to the corporation, including cash,
 
19 promissory notes, services performed, contracts for services to
 
20 be performed, or other securities of the corporation.
 
21      (c)  Before the corporation issues shares, the board of
 
22 directors must determine that the consideration received or to be
 

 
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 1 received for shares to be issued is adequate. That determination
 
 2 by the board of directors is conclusive insofar as the adequacy
 
 3 of consideration for the issuance of shares relates to whether
 
 4 the shares are validly issued, fully paid, and nonassessable.
 
 5      (d)  When the corporation receives the consideration for
 
 6 which the board of directors authorized the issuance of shares,
 
 7 the shares issued therefor are fully paid and nonassessable.
 
 8      (e)  The corporation may place in escrow shares issued for a
 
 9 contract for future services or benefits or a promissory note, or
 
10 make other arrangements to restrict the transfer of the shares,
 
11 and may credit distributions in respect of the shares against
 
12 their purchase price, until the services are performed, the note
 
13 is paid, or the benefits received. If the services are not
 
14 performed, the note is not paid, or the benefits are not
 
15 received, the shares escrowed or restricted and the distributions
 
16 credited may be cancelled in whole or part.
 
17      Section    -6.22.  Liability of shareholders.(a) A
 
18 purchaser from a corporation of its own shares is not liable to
 
19 the corporation or its creditors with respect to the shares
 
20 except to pay the consideration for which the shares were
 
21 authorized to be issued (section    -6.21) or specified in the
 
22 subscription agreement (section    -6.20).
 

 
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 1      (b)  Unless otherwise provided in the articles of
 
 2 incorporation a shareholder of a corporation is not personally
 
 3 liable for the acts or debts of the corporation except that such
 
 4 shareholder may become personally liable by reason of such
 
 5 shareholder's own acts or conduct.
 
 6      Section    -6.23.  Share dividends.  (a) Unless the articles
 
 7 of incorporation provide otherwise, shares may be issued pro rata
 
 8 and without consideration to the corporation's shareholders or to
 
 9 the shareholders of one or more classes or series.  An issuance
 
10 of shares under this subsection is a share dividend.
 
11      (b)  Shares of one class or series may not be issued as a
 
12 share dividend in respect of shares of another class or series
 
13 unless (1) the articles of incorporation so authorize, (2) a
 
14 majority of the votes entitled to be cast by the class or series
 
15 to be issued approve the issue, or (3) there are not outstanding
 
16 shares of the class or series to be issued.
 
17      (c)  If the board of directors does not fix the record date
 
18 for determining shareholders entitled to a share dividend, it is
 
19 the date the board of directors authorizes the share dividend.
 
20      Section    -6.24.  Share options.  A corporation may issue
 
21 rights, options, or warrants for the purchase of shares of the
 
22 corporation. The board of directors shall determine the terms
 

 
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 1 upon which the rights, options, or warrants are issued, their
 
 2 form and content, and the consideration for which the shares are
 
 3 to be issued.
 
 4      Section    -6.25.  Form and content of certificates.(a)
 
 5 Shares may but need not be represented by certificates. Unless
 
 6 this Act or another statute expressly provides otherwise, the
 
 7 rights and obligations of shareholders are identical whether or
 
 8 not their shares are represented by certificates.
 
 9      (b)  At a minimum each share certificate must state on its
 
10 face:
 
11      (1)  the name of the issuing corporation and that it is
 
12           organized under the law of this State;
 
13      (2)  the name of the person to whom issued; and
 
14      (3)  the number and class of shares and the designation of
 
15           the series, if any, the certificate represents.
 
16      (c)  If the issuing corporation is authorized to issue
 
17 different classes of shares or different series within a class,
 
18 the designations, relative rights, preferences, and limitations
 
19 applicable to each class and the variations in rights,
 
20 preferences, and limitations determined for each series (and the
 
21 authority of the board of directors to determine variations for
 
22 future series) must be summarized on the front or back of each
 

 
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 1 certificate. Alternatively, each certificate may state
 
 2 conspicuously on its front or back that the corporation will
 
 3 furnish the shareholder this information on request in writing
 
 4 and without charge.
 
 5      (d)  Each share certificate (1) must be signed (either
 
 6 manually or in facsimile) by two officers designated in the
 
 7 bylaws or by the board of directors and (2) may bear the
 
 8 corporate seal or its facsimile.
 
 9      (e)  If the person who signed (either manually or in
 
10 facsimile) a share certificate no longer holds office when the
 
11 certificate is issued, the certificate is nevertheless valid.
 
12      Section    -6.26.  Shares without certificates.  (a) Unless
 
13 the articles of incorporation or bylaws provide otherwise, the
 
14 board of directors of a corporation may authorize the issue of
 
15 some or all of the shares of any or all of its classes or series
 
16 without certificates. The authorization does not affect shares
 
17 already represented by certificates until they are surrendered to
 
18 the corporation.
 
19      (b)  Within a reasonable time after the issue or transfer of
 
20 shares without certificates, the corporation shall send the
 
21 shareholder a written statement of the information required on
 
22 certificates by section    -6.25(b) and (c), and, if applicable,
 

 
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 1 section    -6.27.
 
 2      Section    -6.27.  Restriction on transfer of shares and
 
 3 other securities.(a) The articles of incorporation, bylaws, an
 
 4 agreement among shareholders, or an agreement between
 
 5 shareholders and the corporation may impose restrictions on the
 
 6 transfer or registration of transfer of shares of the
 
 7 corporation. A restriction does not affect shares issued before
 
 8 the restriction was adopted unless the holders of the shares are
 
 9 parties to the restriction agreement or voted in favor of the
 
10 restriction.
 
11      (b)  A restriction on the transfer or registration of
 
12 transfer of shares is valid and enforceable against the holder or
 
13 a transferee of the holder if the restriction is authorized by
 
14 this section and its existence is noted conspicuously on the
 
15 front or back of the certificate or is contained in the
 
16 information statement required by section    -6.26(b). Unless so
 
17 noted, a restriction is not enforceable against a person without
 
18 knowledge of the restriction.
 
19      (c)  A restriction on the transfer or registration of
 
20 transfer of shares is authorized:
 
21      (1)  to maintain the corporation's status when it is
 
22           dependent on the number or identity of its
 

 
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 1           shareholders;
 
 2      (2)  to preserve exemptions under federal or state
 
 3           securities law;
 
 4      (3)  for any other reasonable purpose.
 
 5      (d)  A restriction on the transfer or registration of
 
 6 transfer of shares may:
 
 7      (1)  obligate the shareholder first to offer the corporation
 
 8           or other persons (separately, consecutively, or
 
 9           simultaneously) an opportunity to acquire the
 
10           restricted shares;
 
11      (2)  obligate the corporation or other persons (separately,
 
12           consecutively, or simultaneously) to acquire the
 
13           restricted shares;
 
14      (3)  require the corporation, the holders of any class of
 
15           its shares, or another person to approve the transfer
 
16           of the restricted shares, if the requirement is not
 
17           manifestly unreasonable;
 
18      (4)  prohibit the transfer of the restricted shares to
 
19           designated persons or classes of persons, if the
 
20           prohibition is not manifestly unreasonable.
 
21      (e)  For purposes of this section, ``shares'' includes a
 
22 security convertible into or carrying a right to subscribe for or
 

 
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 1 acquire shares.
 
 2      Section    -6.28.  Expense of issue.  A corporation may pay
 
 3 the expenses of selling or underwriting its shares, and of
 
 4 organizing or reorganizing the corporation, from the
 
 5 consideration received for shares.
 
 6                           Subchapter C.
 
 7                 SUBSEQUENT ACQUISITION OF SHARES
 
 8                  BY SHAREHOLDERS AND CORPORATION
 
 9      Section    -6.30.  Shareholders' preemptive rights.(a) The
 
10 shareholders of a corporation do not have a preemptive right to
 
11 acquire the corporation's unissued shares except to the extent
 
12 the articles of incorporation so provide.
 
13      (b)  A statement included in the articles of incorporation
 
14 that ``the corporation elects to have preemptive rights'' (or
 
15 words of similar import) means that the following principles
 
16 apply except to the extent the articles of incorporation
 
17 expressly provide otherwise:
 
18      (1)  The shareholders of the corporation have a preemptive
 
19           right, granted on uniform terms and conditions
 
20           prescribed by the board of directors to provide a fair
 
21           and reasonable opportunity to exercise the right, to
 
22           acquire proportional amounts of the corporation's
 

 
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 1           unisssued shares upon the decision of the board of
 
 2           directors to issue them.
 
 3      (2)  A shareholder may waive such shareholder's preemptive
 
 4           right. A waiver evidenced by a writing is irrevocable
 
 5           even though it is not supported by consideration.
 
 6      (3)  There is no preemptive right with respect to:
 
 7           (i)  shares issued as compensation to directors,
 
 8                officers, agents, or employees of the corporation,
 
 9                its subsidiaries or affiliates:
 
10          (ii)  shares issued to satisfy conversion or option
 
11                rights created to provide compensation to
 
12                directors, officers, agents, or employees of the
 
13                corporation, its subsidiaries or affiliates;
 
14         (iii)  shares authorized in articles of incorporation
 
15                that are issued within six months from the
 
16                effective date of incorporation;
 
17          (iv)  shares sold otherwise than for money.
 
18      (4)  Holders of shares of any class without general voting
 
19           rights but with preferential rights to distributions or
 
20           assets have no preemptive rights with respect to shares
 
21           of any class.
 
22      (5)  Holders of shares of any class with general voting
 

 
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 1           rights but without preferential rights to distributions
 
 2           or assets have no preemptive rights with respect to
 
 3           shares of any class with preferential rights to
 
 4           distributions or assets unless the shares with
 
 5           preferential rights are convertible into or carry a
 
 6           right to subscribe for or acquire shares without
 
 7           preferential rights.
 
 8      (6)  Shares subject to preemptive rights that are not
 
 9           acquired by shareholders may be issued to any person
 
10           for a period of one year after being offered to
 
11           shareholders at a consideration set by the board of
 
12           directors that is not lower than the consideration set
 
13           for the exercise of preemptive rights. An offer at a
 
14           lower consideration or after the expiration of one year
 
15           is subject to the shareholders' preemptive rights.
 
16      (c)  For purposes of this section, ``shares'' includes a
 
17 security convertible into or carrying a right to subscribe for or
 
18 acquire shares.
 
19      (d)  Nothing in this section shall affect the validity of
 
20 any action taken prior to April 21, 1953, by any corporation.
 
21      Section    -6.31.  Corporation's acquisition of its own
 
22 shares.(a) A corporation may acquire its own shares and shares
 

 
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 1 so acquired constitute authorized but unissued shares.
 
 2      (b)  If the articles of incorporation prohibit the reissue
 
 3 of acquired shares, the number of authorized shares is reduced by
 
 4 the number of shares acquired, effective upon delivery to the
 
 5 Director for filing, a statement of cancellation showing the
 
 6 reduction in the authorized shares.
 
 7      (c)  The statement of cancellation must set forth:
 
 8      (1)  the name of the corporation;
 
 9      (2)  the number of acquired shares cancelled, itemized by
 
10           class and series; and
 
11      (3)  the total number of authorized shares, itemized by
 
12           class and series, remaining after reduction of the
 
13           shares.
 
14                           Subchapter D.
 
15                           DISTRIBUTIONS
 
16      Section    -6.40.  Distributions to shareholders.(a) A
 
17 board of directors may authorize and the corporation may make
 
18 distributions to its shareholders subject to restriction by the
 
19 articles of incorporation and the limitation in subsection (c).
 
20      (b)  If the board of directors does not fix the record date
 
21 for determining shareholders entitled to a distribution (other
 
22 than one involving a purchase, redemption, or other acquisition
 

 
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 1 of the corporation's shares), it is the date the board of
 
 2 directors authorizes the distribution.
 
 3      (c)  No distribution may be made if, after giving it effect:
 
 4      (1)  the corporation would not be able to pay its debts as
 
 5           they become due in the usual course of business; or
 
 6      (2)  the corporation's total assets would be less than the
 
 7           sum of its total liabilities plus (unless the articles
 
 8           of incorporation permit otherwise) the amount that
 
 9           would be needed, if the corporation were to be
 
10           dissolved at the time of the distribution, to satisfy
 
11           the preferential rights upon dissolution of
 
12           shareholders whose preferential rights are superior to
 
13           those receiving the distribution.
 
14      (d)  The board of directors may base a determination that a
 
15 distribution is not prohibited under subsection (c) either on
 
16 financial statements prepared on the basis of accounting
 
17 practices and principles that are reasonable in the circumstances
 
18 or on a fair valuation or other method that is reasonable in the
 
19 circumstances.
 
20      (e)  Except as provided in subsection (g), the effect of a
 
21 distribution under subsection (c) is measured:
 
22      (1)  in the case of distribution by purchase, redemption, or
 

 
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 1           other acquisition of the corporation's shares, as of
 
 2           the earlier of (i) the date money or other property is
 
 3           transferred or debt incurred by the corporation or (ii)
 
 4           the date the shareholder ceases to be a shareholder
 
 5           with respect to the acquired shares;
 
 6      (2)  in the case of any other distribution of indebtedness,
 
 7           as of the date the indebtedness is distributed; and
 
 8      (3)  in all other cases, as of (i) the date the distribution
 
 9           is authorized if the payment occurs within 120 days
 
10           after the date of authorization or (ii) the date the
 
11           payment is made if it occurs more than 120 days after
 
12           the date of authorization.
 
13      (f)  A corporation's indebtedness to a shareholder incurred
 
14 by reason of a distribution made in accordance with this section
 
15 is at parity with the corporation's indebtedness to its general,
 
16 unsecured creditors except to the extent subordinated by
 
17 agreement.
 
18      (g)  Indebtedness of a corporation, including indebtedness
 
19 issued as a distribution, is not considered a liability for
 
20 purposes of determinations under subsection (c) if its terms
 
21 provide that payment of principal and interest are made only if
 
22 and to the extent that payment of a distribution to shareholders
 

 
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 1 could then be made under this section. If the indebtedness is
 
 2 issued as a distribution, each payment of principal or interest
 
 3 is treated as a distribution, the effect of which is measured on
 
 4 the date the payment is actually made.
 
 5                             CHAPTER 7
 
 6                           SHAREHOLDERS
 
 7                           Subchapter A.
 
 8                             MEETINGS
 
 9      Section    -7.01.  Annual meeting.(a) A corporation shall
 
10 hold a meeting of shareholders annually at a time stated in or
 
11 fixed in accordance with the bylaws.
 
12      (b)  Annual shareholders' meetings may be held in or out of
 
13 this State at the place stated in or fixed in accordance with the
 
14 bylaws. If no place is stated in or fixed in accordance with the
 
15 bylaws, annual meetings shall be held at the corporation's
 
16 principal office.
 
17      (c)  The failure to hold an annual meeting at the time
 
18 stated in or fixed in accordance with a corporation's bylaws does
 
19 not affect the validity of any corporate action.
 
20      Section    -7.02.  Special meeting.(a) A corporation shall
 
21 hold a special meeting of shareholders:
 
22      (1)  on call of its board of directors or the person or
 

 
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 1           persons authorized to do so by the articles of
 
 2           incorporation or bylaws; or
 
 3      (2)  if the holders of at least 10 percent of all the votes
 
 4           entitled to be cast on any issue proposed to be
 
 5           considered at the proposed special meeting sign, date,
 
 6           and deliver to the corporation's secretary one or more
 
 7           written demands for the meeting describing the purpose
 
 8           or purposes for which it is to be held.
 
 9      (b)  If not otherwise fixed under section    -7.03 or
 
10    -7.07, the record date for determining shareholders entitled
 
11 to demand a special meeting is the date the first shareholder
 
12 signs the demand.
 
13      (c)  Special shareholders' meetings may be held in or out of
 
14 this State at the place stated in or fixed in accordance with the
 
15 bylaws. If no place is stated or fixed in accordance with the
 
16 bylaws, special meetings shall be held at the corporation's
 
17 principal office.
 
18      (d)  Only business within the purpose or purposes described
 
19 in the meeting notice required by section    -7.05(c) may be
 
20 conducted at a special shareholders' meeting.
 
21      Section    -7.03.  Court-ordered meeting.(a) The circuit
 
22 court may summarily order a meeting to be held:
 

 
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 1      (1)  on application of any shareholder of the corporation
 
 2           entitled to participate in an annual meeting if an
 
 3           annual meeting was not held within the earlier of 6
 
 4           months after the end of the corporation's fiscal year
 
 5           or 15 months after its last annual meeting; or
 
 6      (2)  on application of a shareholder who signed a demand for
 
 7           a special meeting valid under section    -7.02, if:
 
 8           (i)  notice of the special meeting was not given within
 
 9                30 days after the date the demand was delivered to
 
10                the corporation's secretary; or
 
11          (ii)  the special meeting was not held in accordance
 
12                with the notice.
 
13      (b)  The court may fix the time and place of the meeting,
 
14 determine the shares entitled to participate in the meeting,
 
15 specify a record date for determining shareholders entitled to
 
16 notice of and to vote at the meeting, prescribe the form and
 
17 content of the meeting notice, fix the quorum required for
 
18 specific matters to be considered at the meeting (or direct that
 
19 the votes represented at the meeting constitute a quorum for
 
20 action on those matters), and enter other orders necessary to
 
21 accomplish the purpose or purposes of the meeting.
 
22      Section    -7.04.  Action without meeting.(a) Action
 

 
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 1 required or permitted by this Act to be taken at a shareholders'
 
 2 meeting may be taken without a meeting if the action is taken by
 
 3 all the shareholders entitled to vote on the action. The action
 
 4 must be evidenced by one or more written consents describing the
 
 5 action taken, signed before or after the intended effective date
 
 6 of the action by all the shareholders entitled to vote on the
 
 7 action, and delivered to the corporation for inclusion in the
 
 8 minutes or filing with the corporate records.
 
 9      (b)  If not otherwise fixed under section    -7.03 or
 
10    -7.07, the record date for determining shareholders entitled
 
11 to take action without a meeting is the date the first
 
12 shareholder signs the consent under subsection (a).
 
13      (c)  A consent signed under this section has the effect of a
 
14 meeting vote and may be described as such in any document.
 
15      (d)  If this Act requires that notice of proposed action be
 
16 given to nonvoting shareholders and the action is to be taken by
 
17 unanimous consent of the voting shareholders, the corporation
 
18 must give its nonvoting shareholders written notice of the
 
19 proposed action at least 10 days before the action is taken. The
 
20 notice must contain or be accompanied by the same material that,
 
21 under this Act, would have been required to be sent to nonvoting
 
22 shareholders in a notice of meeting at which the proposed action
 

 
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 1 would have been submitted to the shareholders for action.
 
 2      Section    -7.05.  Notice of meeting.  (a) A corporation
 
 3 shall notify shareholders of the date, time, and place of each
 
 4 annual and special shareholders' meeting no fewer than 10 nor
 
 5 more than 60 days before the meeting date. Unless this Act or the
 
 6 articles of incorporation require otherwise, the corporation is
 
 7 required to give notice only to shareholders entitled to vote at
 
 8 the meeting.
 
 9      (b)  Unless this Act or the articles of incorporation
 
10 require otherwise, notice of an annual meeting need not include a
 
11 description of the purpose or purposes for which the meeting is
 
12 called.
 
13      (c)  Notice of a special meeting must include a description
 
14 of the purpose or purposes for which the meeting is called.
 
15      (d)  If not otherwise fixed under section    -7.03 or
 
16    -7.07, the record date for determining shareholders entitled
 
17 to notice of and to vote at an annual or special shareholders'
 
18 meeting is the day before the first notice is delivered to
 
19 shareholders.
 
20      (e)  Unless the bylaws require otherwise, if an annual or
 
21 special shareholders' meeting is adjourned to a different date,
 
22 time, or place, notice need not be given of the new date, time,
 

 
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 1 or place if the new date, time, or place is announced at the
 
 2 meeting before adjournment. If a new record date for the
 
 3 adjourned meeting is or must be fixed under section    -7.07,
 
 4 however, notice of the adjourned meeting must be given under this
 
 5 section to persons who are shareholders as of the new record
 
 6 date.
 
 7      Section    -7.06.  Waiver of notice.  (a) A shareholder may
 
 8 waive any notice required by this Act, the articles of
 
 9 incorporation, or bylaws before or after the date and time stated
 
10 in the notice. The waiver must be in writing, be signed by the
 
11 shareholder entitled to the notice, and be delivered to the
 
12 corporation for inclusion in the minutes or filing with the
 
13 corporate records.
 
14      (b)  A shareholder's attendance at a meeting:
 
15      (1)  waives objection to lack of notice or defective notice
 
16           of the meeting, unless the shareholder at the beginning
 
17           of the meeting objects to holding the meeting or
 
18           transacting business at the meeting;
 
19      (2)  waives objection to consideration of a particular
 
20           matter at the meeting that is not within the purpose or
 
21           purposes described in the meeting notice, unless the
 
22           shareholder objects to considering the matter when it
 

 
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 1           is presented.
 
 2      Section    -7.07.  Record date.  (a) The bylaws may fix or
 
 3 provide the manner of fixing the record date for one or more
 
 4 voting groups in order to determine the shareholders entitled to
 
 5 notice of a shareholders' meeting, to demand a special meeting,
 
 6 to vote, or to take any other action. If the bylaws do not fix or
 
 7 provide for fixing a record date, the board of directors of the
 
 8 corporation may fix a future date as the record date.
 
 9      (b)  A record date fixed under this section may not be more
 
10 than 70 days before the meeting or action requiring a
 
11 determination of shareholders.
 
12      (c)  A determination of shareholders entitled to notice of
 
13 or to vote at a shareholders' meeting is effective for any
 
14 adjournment of the meeting unless the board of directors fixes a
 
15 new record date, which it must do if the meeting is adjourned to
 
16 a date more than 120 days after the date fixed for the original
 
17 meeting.
 
18      (d)  If a court orders a meeting adjourned to a date more
 
19 than 120 days after the date fixed for the original meeting, it
 
20 may provide that the original record date continues in effect or
 
21 it may fix a new record date.
 
22                           Subchapter B.
 

 
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 1                              VOTING
 
 2      Section    -7.20.  Shareholders' list for meeting.(a)
 
 3 After fixing a record date for a meeting, a corporation shall
 
 4 prepare an alphabetical list of the names of all its shareholders
 
 5 who are entitled to notice of a shareholders' meeting. The list
 
 6 must be arranged by voting group (and within each voting group by
 
 7 class or series of shares) and show the address of and number of
 
 8 shares held by each shareholder.
 
 9      (b)  The shareholders' list must be available for inspection
 
10 by any shareholder, beginning two business days after notice of
 
11 the meeting is given for which the list was prepared and
 
12 continuing through the meeting, at the corporation's principal
 
13 office or at a place identified in the meeting notice in the city
 
14 where the meeting will be held. A shareholder, such shareholder's
 
15 agent, or attorney is entitled on written demand to inspect and,
 
16 subject to the requirements of section    -16.02(c), to copy the
 
17 list, during regular business hours and at such shareholder's
 
18 expense, during the period it is available for inspection.
 
19      (c)  The corporation shall make the shareholders' list
 
20 available at the meeting, and any shareholder, such shareholder's
 
21 agent, or attorney is entitled to inspect the list at any time
 
22 during the meeting or any adjournment.
 

 
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 1      (d)  If the corporation refuses to allow a shareholder, such
 
 2 shareholder's agent, or attorney to inspect the shareholders'
 
 3 list before or at the meeting (or copy the list as permitted by
 
 4 subsection (b)), the circuit court, on application of the
 
 5 shareholder, may summarily order the inspection or copying at the
 
 6 corporation's expense and may postpone the meeting for which the
 
 7 list was prepared until the inspection or copying is complete.
 
 8      (e)  Refusal or failure to prepare or make available the
 
 9 shareholders' list does not affect the validity of action taken
 
10 at the meeting.
 
11      Section    -7.21.  Voting entitlement of shares.  (a) Except
 
12 as provided in subsections (b) and (d) or unless the articles of
 
13 incorporation provide otherwise, each outstanding share,
 
14 regardless of class, is entitled to one vote on each matter voted
 
15 on at a shareholders' meeting. Only shares are entitled to vote.
 
16      (b)  Absent special circumstances, the shares of a
 
17 corporation are not entitled to vote if they are owned, directly
 
18 or indirectly, by a second corporation, domestic or foreign, and
 
19 the first corporation owns, directly or indirectly, a majority of
 
20 the shares entitled to vote for directors of the second
 
21 corporation.
 
22      (c)  Subsection (b) does not limit the power of a
 

 
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 1 corporation to vote any shares, including its own shares, held by
 
 2 it in a fiduciary capacity.
 
 3      (d)  Redeemable shares are not entitled to vote after notice
 
 4 of redemption is mailed to the holders and a sum sufficient to
 
 5 redeem the shares has been deposited with a bank, trust company,
 
 6 or other financial institution under an irrevocable obligation to
 
 7 pay the holders the redemption price on surrender of the shares.
 
 8      Section    -7.22.  Proxies.(a) A shareholder may vote such
 
 9 shareholder's shares in person or by proxy.
 
10      (b)  A shareholder may appoint a proxy to vote or otherwise
 
11 act for such shareholder by signing an appointment form, either
 
12 personally or by such shareholder's attorney-in-fact. A
 
13 shareholder may authorize another person to act as a proxy for
 
14 the shareholder by:
 
15      (1)  Executing a writing authorizing another person or
 
16           persons to act as a proxy for the shareholder, which
 
17           may be accomplished by the shareholder or the
 
18           shareholder's authorized attorney-in-fact, officer,
 
19           director, employee, or agent signing such writing or
 
20           causing the shareholder's signature to be affixed to
 
21           such writing by any reasonable means, including without
 
22           limitation the use of a facsimile signature; or
 

 
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 1      (2)  Transmitting or authorizing the transmission of a
 
 2           telegram, cablegram, facsimile, or other means of
 
 3           electronic transmission to the person who will be the
 
 4           holder of the proxy or to a proxy solicitation firm,
 
 5           proxy support service organization, or similar agent
 
 6           duly authorized by the person who will be the holder of
 
 7           the proxy to receive such transmission; provided that
 
 8           any such transmission shall specify at the transmission
 
 9           was authorized by the shareholder.
 
10 A copy, facsimile telecommunication, or other reliable
 
11 reproduction of the writing or transmission created pursuant to
 
12 the foregoing may be used in lieu of the original writing or
 
13 transmission for any and all purposes for which the original
 
14 writing or transmission could be used; provided that any such
 
15 copy, facsimile telecommunication, or other reproduction shall be
 
16 a complete reproduction of the entire original writing or
 
17 transmission.  
 
18      (c)  An appointment of a proxy is effective when received by
 
19 the secretary or other officer or agent authorized to tabulate
 
20 votes. An appointment is valid for 11 months unless a longer
 
21 period is expressly provided in the appointment form.
 
22      (d)  An appointment of a proxy is revocable by the
 

 
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 1 shareholder unless the appointment form conspicuously states that
 
 2 it is irrevocable and the appointment is coupled with an
 
 3 interest. Appointments coupled with an interest include the
 
 4 appointment of:
 
 5      (1)  a pledgee;
 
 6      (2)  a person who purchased or agreed to purchase the
 
 7           shares;
 
 8      (3)  a creditor of the corporation who extended it credit
 
 9           under terms requiring the appointment;
 
10      (4)  an employee of the corporation whose employment
 
11           contract requires the appointment; or
 
12      (5)  a party to a voting agreement created under
 
13           section    -7.31.
 
14      (e)  The death or incapacity of the shareholder appointing a
 
15 proxy does not affect the right of the corporation to accept the
 
16 proxy's authority unless notice of the death or incapacity is
 
17 received by the secretary or other officer or agent authorized to
 
18 tabulate votes before the proxy exercises authority under the
 
19 appointment.
 
20      (f)  An appointment made irrevocable under subsection (d) is
 
21 revoked when the interest with which it is coupled is
 
22 extinguished.
 

 
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 1      (g)  A transferee for value of shares subject to an
 
 2 irrevocable appointment may revoke the appointment if the
 
 3 transferee did not know of its existence when such transferee
 
 4 acquired the shares and the existence of the irrevocable
 
 5 appointment was not noted conspicuously on the certificate
 
 6 representing the shares or on the information statement for
 
 7 shares without certificates.
 
 8      (h)  Subject to section    -7.24 and to any express
 
 9 limitation on the proxy's authority appearing on the face of the
 
10 appointment form, a corporation is entitled to accept the proxy's
 
11 vote or other action as that of the shareholder making the
 
12 appointment.
 
13      Section    -7.23.  Shares held by nominees.  (a) A
 
14 corporation may establish a procedure by which the beneficial
 
15 owner of shares that are registered in the name of a nominee is
 
16 recognized by the corporation as the shareholder. The extent of
 
17 this recognition may be determined in the procedure.
 
18      (b)  The procedure may set forth:
 
19      (1)  the types of nominees to which it applies;
 
20      (2)  the rights or privileges that the corporation
 
21           recognizes in a beneficial owner;
 
22      (3)  the manner in which the procedure is selected by the
 

 
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 1           nominee;
 
 2      (4)  the information that must be provided when the
 
 3           procedure is selected;
 
 4      (5)  the period for which selection of the procedure is
 
 5           effective; and
 
 6      (6)  other aspects of the rights and duties created
 
 7      Section    -7.24.  Corporation's acceptance of votes.  (a)
 
 8 If the name signed on a vote, consent, waiver, or proxy
 
 9 appointment corresponds to the name of a shareholder, the
 
10 corporation if acting in good faith is entitled to accept the
 
11 vote, consent, waiver, or proxy appointment and give it effect as
 
12 the act of the shareholder.
 
13      (b)  If the name signed on a vote, consent, waiver, or proxy
 
14 appointment does not correspond to the name of its shareholder,
 
15 the corporation if acting in good faith is nevertheless entitled
 
16 to accept the vote, consent, waiver, or proxy appointment and
 
17 give it effect as the act of the shareholder if:
 
18      (1)  the shareholder is an entity and the name signed
 
19           purports to be that of an officer or agent of the
 
20           entity;
 
21      (2)  the name signed purports to be that of an
 
22           administrator, executor, guardian, or conservator
 

 
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 1           representing the shareholder and, if the corporation
 
 2           requests, evidence of fiduciary status acceptable to
 
 3           the corporation has been presented with respect to the
 
 4           vote, consent, waiver, or proxy appointment;
 
 5      (3)  the name signed purports to be that of a receiver or
 
 6           trustee in bankruptcy of the shareholder and, if the
 
 7           corporation requests, evidence of this status
 
 8           acceptable to the corporation has been presented with
 
 9           respect to the vote, consent, waiver, or proxy
 
10           appointment;
 
11      (4)  the name signed purports to be that of a pledgee,
 
12           beneficial owner, or attorney-in-fact of the
 
13           shareholder and, if the corporation requests, evidence
 
14           acceptable to the corporation of the signatory's
 
15           authority to sign for the shareholder has been
 
16           presented with respect to the vote, consent, waiver, or
 
17           proxy appointment;
 
18      (5)  two or more persons are the shareholder as cotenants or
 
19           fiduciaries and the name signed purports to be the name
 
20           of at least one of the coowners and the person signing
 
21           appears to be acting on behalf of all the coowners.
 
22      (c)  The corporation is entitled to reject a vote, consent,
 

 
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 1 waiver, or proxy appointment if the secretary or other officer or
 
 2 agent authorized to tabulate votes, acting in good faith, has
 
 3 reasonable basis for doubt about the validity of the signature on
 
 4 it or about the signatory's authority to sign for the
 
 5 shareholder.
 
 6      (d)  The corporation and its officer or agent who accepts or
 
 7 rejects a vote consent, waiver, or proxy appointment in good
 
 8 faith and in accordance with the standards of this section are
 
 9 not liable in damages to the shareholder for the consequences of
 
10 the acceptance or rejection.
 
11      (e)  Corporate action based on the acceptance or rejection
 
12 of a vote, consent, waiver, or proxy appointment under this
 
13 section is valid unless a court of competent jurisdiction
 
14 determines otherwise.
 
15      Section    -7.25.  Quorum and voting requirements for voting
 
16 groups.(a) Shares entitled to vote as a separate voting group
 
17 may take action on a matter at a meeting only if a quorum of
 
18 those shares exists with respect to that matter. Unless the
 
19 articles of incorporation or this Act provide otherwise, a
 
20 majority of the votes entitled to be cast on the matter by the
 
21 voting group constitutes a quorum of that voting group for action
 
22 on that matter.
 

 
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 1      (b)  Once a share is represented for any purpose at a
 
 2 meeting, it is deemed present for quorum purposes for the
 
 3 remainder of the meeting and for any adjournment of that meeting
 
 4 unless a new record date is or must be set for that adjourned
 
 5 meeting.
 
 6      (c)  If a quorum exists, action on a matter (other than the
 
 7 election of directors) by a voting group is approved if the votes
 
 8 cast within the voting group favoring the action exceed the votes
 
 9 cast opposing the action, unless the articles of incorporation or
 
10 this Act require a greater number of affirmative votes.
 
11      (d)  An amendment of articles of incorporation adding,
 
12 changing, or deleting a quorum or voting requirement for a voting
 
13 group greater than specified in subsection (a) or (c) is governed
 
14 by section    -7.27.
 
15      (e)  The election of directors is governed by
 
16 section    -7.28.
 
17      Section    -7.26.  Action by single and multiple voting
 
18 groups.  (a) If the articles of incorporation or this Act provide
 
19 for voting by a single voting group on a matter, action on that
 
20 matter is taken when voted upon by that voting group as provided
 
21 in section    -7.25.
 
22      (b)  If the articles of incorporation or this act provide
 

 
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 1 for voting by two or more voting groups on a matter, action on
 
 2 that matter is taken only when voted upon by each of those voting
 
 3 groups counted separately as provided in section    -7.25. Action
 
 4 may be taken by one voting group on a matter even though no
 
 5 action is taken by another voting group entitled to vote on the
 
 6 matter.
 
 7      Section    -7.27.  Greater quorum or voting requirements.
 
 8 (a) The articles of incorporation may provide for a greater
 
 9 quorum or voting requirement for shareholders (or voting groups
 
10 of shareholders) than is provided for by this Act.
 
11      (b)  An amendment to the articles of incorporation that
 
12 adds, changes, or deletes a greater quorum or voting requirement
 
13 must meet the same quorum requirement and be adopted by the same
 
14 vote and voting groups required to take action under the quorum
 
15 and voting requirements then in effect or proposed to be adopted,
 
16 whichever is greater.
 
17      Section    -7.28.  Voting for directors; cumulative voting.
 
18 (a) Unless otherwise provided in the articles of incorporation,
 
19 directors are elected by a plurality of the votes cast by the
 
20 shares entitled to vote in the election at a meeting at which a
 
21 quorum is present.
 
22      (b)  If, not less than forty-eight hours prior to the time
 

 
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 1 fixed for any annual or special meeting, any shareholder or
 
 2 shareholders delivers to any officer of the corporation, a
 
 3 request that the election of directors to be elected at the
 
 4 meeting be by cumulative voting, then the directors to be elected
 
 5 at the meeting shall be chosen as follows:
 
 6      (1)  Each shareholder present in person or represented by
 
 7           proxy at the meeting shall have a number of votes equal
 
 8           to the number of shares of capital stock owned by the
 
 9           shareholder multiplied by the number of directors to be
 
10           elected at the meeting;
 
11      (2)  Each shareholder shall be entitled to cumulate the
 
12           votes of said shareholder and give all thereof to one
 
13           nominee or to distribute the votes of said shareholder
 
14           in such manner as the shareholder determines among any
 
15           or all of the nominees; and
 
16      (3)  The nominees receiving the highest number of votes on
 
17           the foregoing basis, up to the total number of
 
18           directors to be elected at the meeting, shall be the
 
19           successful nominees. The right to have directors
 
20           elected by cumulative voting as aforesaid shall exist
 
21           notwithstanding that provision therefor is not included
 
22           in the articles of incorporation or bylaws, and this
 

 
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 1           right shall not be restricted or qualified by any
 
 2           provisions of the articles of incorporation or bylaws;
 
 3           provided that this right may be restricted, qualified,
 
 4           or eliminated by a provision of the articles of
 
 5           incorporation or bylaws of any corporation having a
 
 6           class of equity securities registered pursuant to the
 
 7           Securities Exchange Act of 1934, as amended, which are
 
 8           either listed on a national securities exchange or
 
 9           traded over-the-counter on the National Market of the
 
10           National Association of Securities Dealers, Inc.
 
11           Automated Quotation System. This section shall not
 
12           prevent the filling of vacancies in the board of
 
13           directors, which vacancies may be filled in such manner
 
14           as may be provided in the articles of incorporation or
 
15           bylaws.
 
16                           Subchapter C.
 
17                   VOTING TRUSTS AND AGREEMENTS
 
18      Section    -7.30.  Voting trusts.  (a) One or more
 
19 shareholders may create a voting trust, conferring on a trustee
 
20 the right to vote or otherwise act for them, by signing an
 
21 agreement setting out the provisions of the trust (which may
 
22 include anything consistent with its purpose) and transferring
 

 
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 1 their shares to the trustee. When a voting trust agreement is
 
 2 signed, the trustee shall prepare a list of the names and
 
 3 addresses of all owners of beneficial interests in the trust,
 
 4 together with the number and class of shares each transferred to
 
 5 the trust, and deliver copies of the list and agreement to the
 
 6 corporation's principal office.
 
 7      (b)  A voting trust becomes effective on the date the first
 
 8 shares subject to the trust are registered in the trustee's name.
 
 9 A voting trust is valid for not more than 10 years after its
 
10 effective date unless extended under subsection (c).
 
11      (c)  All or some of the parties to a voting trust may extend
 
12 it for additional terms of not more than 10 years each by signing
 
13 written consent to the extension. An extension is valid for 10
 
14 years from the date the first shareholder signs the extension
 
15 agreement. The voting trustee must deliver copies of the
 
16 extension agreement and list of beneficial owners to the
 
17 corporation's principal office. An extension agreement binds only
 
18 those parties signing it.
 
19      Section    -7.31.  Voting agreements.(a) Two or more
 
20 shareholders may provide for the manner in which they will vote
 
21 their shares by signing an agreement for that purpose. A voting
 
22 agreement created under this section is not subject to the
 

 
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 1 provisions of section    -7.30.
 
 2      (b)  A voting agreement created under this section is
 
 3 specifically enforceable.
 
 4      Section    -7.32.  Shareholder agreements.(a) An agreement
 
 5 among the shareholders of a corporation that complies with this
 
 6 section is effective among the shareholders and the corporation
 
 7 even though it is inconsistent with one or more other provisions
 
 8 of this Act in that it:
 
 9      (1)  eliminates the board of directors or restricts the
 
10           discretion or powers of the board of directors;
 
11      (2)  governs the authorization or making of distributions
 
12           whether or not in proportion to ownership of shares,
 
13           subject to limitations in section    -6.40;
 
14      (3)  establishes who shall be directors or officers of the
 
15           corporation, or their terms of office or manner of
 
16           selection or removal;
 
17      (4)  governs, in general or in regard to specific matters,
 
18           the exercise or division of voting power by or between
 
19           the shareholders and directors or by or among any of
 
20           them, including use of weighted voting rights or
 
21           director proxies;
 
22      (5)  establishes the terms and conditions of any agreement
 

 
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 1           for the transfer or use of property or the provision of
 
 2           services between the corporation and any shareholder,
 
 3           director, officer or employee of the corporation or
 
 4           among any of them;
 
 5      (6)  transfers to one or more shareholders or other persons
 
 6           all or part of the authority to exercise the corporate
 
 7           powers or to manage the business and affairs of the
 
 8           corporation, including the resolution of any issue
 
 9           about which there exists a deadlock among directors or
 
10           shareholders;
 
11      (7)  requires dissolution of the corporation at the request
 
12           of one or more of the shareholders or upon the
 
13           occurrence of a specified event or contingency; or
 
14      (8)  otherwise governs the exercise of the corporate powers
 
15           or the management of the business and affairs of the
 
16           corporation or the relationship among the shareholders,
 
17           the directors and the corporation, or among any of
 
18           them, and is not contrary to public policy.
 
19      (b)  An agreement authorized by this section shall be:
 
20      (1)  set forth (A) in the articles of incorporation or
 
21           bylaws and approved by all persons who are shareholders
 
22           at the time of the agreement or (B) in a written
 

 
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 1           agreement that is signed by all persons who are
 
 2           shareholders at the time of the agreement and is made
 
 3           known to the corporation;
 
 4      (2)  subject to amendment only by all persons who are
 
 5           shareholders at the time of the amendment, unless the
 
 6           agreement provides otherwise; and
 
 7      (3)  valid for 10 years, unless the agreement provides
 
 8           otherwise.
 
 9      (c)  The existence of an agreement authorized by this
 
10 section shall be noted conspicuously on the front or back of each
 
11 certificate for outstanding shares or on the information
 
12 statement required by section    -6.26(b). If at the time of the
 
13 agreement the corporation has shares outstanding represented by
 
14 certificates, the corporation shall recall the outstanding
 
15 certificates and issue substitute certificates that comply with
 
16 this subsection. The failure to note the existence of the
 
17 agreement on the certificate or information statement shall not
 
18 affect the validity of the agreement or any action taken pursuant
 
19 to it. Any purchaser of shares who, at the time of purchase, did
 
20 not have knowledge of the existence of the agreement shall be
 
21 entitled to rescission of the purchase. A purchaser shall be
 
22 deemed to have knowledge of the existence of the agreement if its
 

 
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 1 existence is noted on the certificate or information statement
 
 2 for the shares in compliance with this subsection and, if the
 
 3 shares are not represented by a certificate, the information
 
 4 statement is delivered to the purchaser at or prior to the time
 
 5 of purchase of the shares. An action to enforce the right of
 
 6 rescission authorized by this subsection must be commenced within
 
 7 the earlier of 90 days after discovery of the existence of the
 
 8 agreement or two years after the time of purchase of the shares.
 
 9      (d)  An agreement authorized by this section shall cease to
 
10 be effective when shares of the corporation are listed on a
 
11 national securities exchange or regularly traded in a market
 
12 maintained by one or more members of a national or affiliated
 
13 securities association. If the agreement ceases to be effective
 
14 for any reason, the board of directors may, if the agreement is
 
15 contained or referred to in the corporation's articles of
 
16 incorporation or bylaws, adopt an amendment to the articles of
 
17 incorporation or bylaws, without shareholder action, to delete
 
18 the agreement and any references to it.
 
19      (e)  An agreement authorized by this section that limits the
 
20 discretion or powers of the board of directors shall relieve the
 
21 directors of, and impose upon the person or persons in whom such
 
22 discretion or powers are vested, liability for acts or omissions
 

 
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 1 imposed by law on directors to the extent that the discretion or
 
 2 powers of the directors are limited by the agreement.
 
 3      (f)  The existence or performance of an agreement authorized
 
 4 by this section shall not be a ground for imposing personal
 
 5 liability on any shareholder for the acts or debts of the
 
 6 corporation even if the agreement or its performance treats the
 
 7 corporation as if it were a partnership or results in failure to
 
 8 observe the corporate formalities otherwise applicable to the
 
 9 matters governed by the agreement.
 
10      (g)  Incorporators or subscribers for shares may act as
 
11 shareholders with respect to an agreement authorized by this
 
12 section if no shares have been issued when the agreement is made.
 
13                           Subchapter D.
 
14                      DERIVATIVE PROCEEDINGS
 
15      Section    -7.40.  Subchapter definitions.  In this
 
16 subchapter:
 
17      (1)  ``Derivative proceeding'' means a civil suit in the
 
18           right of a domestic corporation or, to the extent
 
19           provided in section    -7.47, in the right of a foreign
 
20           corporation.
 
21      (2)  ``Shareholder'' includes a beneficial owner whose
 
22           shares are held in a voting trust or held by a nominee
 

 
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 1           on the beneficial owner's behalf.
 
 2      Section    -7.41.  Standing.  A shareholder may not commence
 
 3 or maintain a derivative proceeding unless the shareholder:(1)
 
 4 was a shareholder of the corporation at the time of the act or
 
 5 omission complained of or became a shareholder through transfer
 
 6 by operation of law from one who was a shareholder at that time;
 
 7 and (2) fairly and adequately represents the interests of the
 
 8 corporation in enforcing the right of the corporation.
 
 9      Section    -7.42.  Demand.  No shareholder may commence a
 
10 derivative proceeding until:
 
11      (1)  a written demand has been made upon the corporation to
 
12           take suitable action; and
 
13      (2)  90 days have expired from the date the demand was made
 
14           unless the shareholder has earlier been notified that
 
15           the demand has been rejected by the corporation or
 
16           unless irreparable injury to the corporation would
 
17           result by waiting for the expiration of the 90 day
 
18           period.
 
19      Section    -7.43.  Stay of proceedings.  If the corporation
 
20 commences an inquiry into the allegations made in the demand or
 
21 complaint, the court may stay any derivative proceeding for such
 
22 period as the court deems appropriate.
 

 
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 1      Section    -7.44.  Dismissal.(a) A derivative proceeding
 
 2 shall be dismissed by the court on motion by the corporation if
 
 3 one of the groups specified in subsections (b) or (f) has
 
 4 determined in good faith after conducting a reasonable inquiry
 
 5 upon which its conclusions are based that the maintenance of the
 
 6 derivative proceeding is not in the best interests of the
 
 7 corporation.
 
 8      (b)  Unless a panel is appointed pursuant to subsection (f),
 
 9 the determination in subsection (a) shall be made by:
 
10      (1)  a majority vote of independent directors present at a
 
11           meeting of the board of directors if the independent
 
12           directors constitute a quorum; or
 
13      (2)  a majority vote of a committee consisting of two or
 
14           more independent directors appointed by majority vote
 
15           of independent directors present at a meeting of the
 
16           board of directors, whether or not such independent
 
17           directors constituted a quorum.
 
18      (c)  None of the following shall by itself cause a director
 
19 to be considered not independent for purposes of this section:
 
20      (1)  the nomination or election of the director by persons
 
21           who are defendants in the derivative proceeding or
 
22           against whom action is demanded;
 

 
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 1      (2)  the naming of the director as a defendant in the
 
 2           derivative proceeding or as a person against whom
 
 3           action is demanded; or
 
 4      (3)  the approval by the director of the act being
 
 5           challenged in the derivative proceeding or demand if
 
 6           the act resulted in no personal benefit to the
 
 7           director.
 
 8      (d)  If a derivative proceeding is commenced after a
 
 9 determination has been made rejecting a demand by a shareholder,
 
10 the complaint shall allege with particularity facts establishing
 
11 either (1) that a majority of the board of directors did not
 
12 consist of independent directors at the time the determination
 
13 was made or (2) that the requirements of subsection (a) have not
 
14 been met.
 
15      (e)  If a majority of the board of directors does not
 
16 consist of independent directors at the time the determination is
 
17 made, the corporation shall have the burden of proving that the
 
18 requirements of subsection (a) have been met. If a majority of
 
19 the board of directors consists of independent directors at the
 
20 time the determination is made, the plaintiff shall have the
 
21 burden of proving that the requirements of subsection (a) have
 
22 not been met.
 

 
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 1      (f)  The court may appoint a panel of one or more
 
 2 independent persons upon motion by the corporation to make a
 
 3 determination whether the maintenance of the derivative
 
 4 proceeding is in the best interests of the corporation. In such
 
 5 case, the plaintiff shall have the burden of proving that the
 
 6 requirements of subsection (a) have not been met.
 
 7      Section    -7.45.  Discontinuance or settlement.  A
 
 8 derivative proceeding may not be discontinued or settled without
 
 9 the court's approval. If the court determines that a proposed
 
10 discontinuance or settlement will substantially affect the
 
11 interests of the corporation's shareholders or a class of
 
12 shareholders, the court shall direct that notice be given to the
 
13 shareholders affected.
 
14      Section    -7.46.  Payment of expenses.  On termination of
 
15 the derivative proceeding the court may:(1)order the corporation
 
16 to pay the plaintiff's reasonable expenses (including counsel
 
17 fees) incurred in the proceeding if it finds that the proceeding
 
18 has resulted in a substantial benefit to the corporation;
 
19      (2)  order the plaintiff to pay any defendant's reasonable
 
20           expenses (including counsel fees) incurred in defending
 
21           the proceeding if it finds that the proceeding was
 
22           commenced or maintained without reasonable cause or for
 

 
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 1           an improper purpose; or
 
 2      (3)  order a party to pay an opposing party's reasonable
 
 3           expenses (including counsel fees) incurred because of
 
 4           the filing of a pleading, motion or other paper, if it
 
 5           finds that the pleading, motion or other paper was not
 
 6           well grounded in fact, after reasonable inquiry, or
 
 7           warranted by existing law or a good faith argument for
 
 8           the extension, modification or reversal of existing law
 
 9           and was interposed for an improper purpose, such as to
 
10           harass or cause unnecessary delay or needless increase
 
11           in the cost of litigation.
 
12      Section    -7.47.  Applicability to foreign corporations.
 
13 In any derivative proceeding in the right of a foreign
 
14 corporation, the matters covered by this subchapter shall be
 
15 governed by the laws of the jurisdiction of incorporation of the
 
16 foreign corporation except for sections    -7.43,    -7.45,
 
17 and    -7.46.
 
18                             CHAPTER 8
 
19                      DIRECTORS AND OFFICERS
 
20                           Subchapter A.
 
21                        BOARD OF DIRECTORS
 
22      Section    -8.01.  Requirement for and duties of board of
 

 
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 1 directors.  (a) Except as provided in section    -7.32, each
 
 2 corporation must have a board of directors.
 
 3      (b)  All corporate powers shall be exercised by or under the
 
 4 authority of, and the business and affairs of the corporation
 
 5 managed under the direction of, its board of directors, subject
 
 6 to any limitation set forth in the articles of incorporation or
 
 7 in an agreement authorized under section    -7.32.
 
 8      Section    -8.02.  Qualifications of directors.  The
 
 9 articles of incorporation or bylaws may prescribe qualifications
 
10 for directors. A director need not be a resident of this State or
 
11 a shareholder of the corporation unless the articles of
 
12 incorporation or bylaws so prescribe.
 
13      Section    -8.03.  Number and election of directors.  (a) A
 
14 board of directors must consist of one or more individuals, with
 
15 the number specified in or fixed in accordance with the articles
 
16 of incorporation or bylaws.
 
17      (b)  If a board of directors has power to fix or change the
 
18 number of directors, the board may increase or decrease by 30
 
19 percent or less the number of directors last approved by the
 
20 shareholders, but only the shareholders may increase or decrease
 
21 by more than 30 percent the number of directors last approved by
 
22 the shareholders.
 

 
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 1      (c)  The articles of incorporation or bylaws may establish a
 
 2 variable range for the size of the board of directors by fixing a
 
 3 minimum and maximum number of directors. If a variable range is
 
 4 established, the number of directors may be fixed or changed from
 
 5 time to time, within the minimum and maximum, by the shareholders
 
 6 or the board of directors. After shares are issued, only the
 
 7 shareholders may change the range for the size of the board or
 
 8 change from a fixed to a variable-range size board or vice versa.
 
 9      (d)  Directors are elected at the first annual shareholders'
 
10 meeting and at each annual meeting thereafter unless their terms
 
11 are staggered under section    -8.06.
 
12      Section    -8.04.  Election of directors by certain classes
 
13 of shareholders.  If the articles of incorporation authorize
 
14 dividing the shares into classes, the articles may also authorize
 
15 the election of all or a specified number of directors by the
 
16 holders of one or more authorized classes of shares. A class (or
 
17 classes) of shares entitled to elect one or more directors is a
 
18 separate voting group for purposes of the election of directors.
 
19      Section    -8.05.  Terms of directors generally.(a) The
 
20 terms of the initial directors of a corporation expire at the
 
21 first shareholders' meeting at which directors are elected.
 
22      (b)  The terms of all other directors expire at the next
 

 
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 1 annual shareholders' meeting following their election unless
 
 2 their terms are staggered under section    -8.06.
 
 3      (c)  A decrease in the number of directors does not shorten
 
 4 an incumbent director's term.
 
 5      (d)  The term of a director elected to fill a vacancy
 
 6 expires at the next shareholders' meeting at which directors are
 
 7 elected.
 
 8      (e)  Despite the expiration of a director's term, the
 
 9 director continues to serve until the director's successor is
 
10 elected and qualifies or until there is a decrease in the number
 
11 of directors.
 
12      Section    -8.06.  Staggered terms for directors.  If there
 
13 are nine or more directors, the articles of incorporation may
 
14 provide for staggering their terms by dividing the total number
 
15 of directors into two or three groups, with each group containing
 
16 one half or one-third of the total, as near as may be. In that
 
17 event, the terms of directors in the first group expire at the
 
18 first annual shareholders' meeting after their election, the
 
19 terms of the second group expire at the second annual
 
20 shareholders' meeting after their election, and the terms of the
 
21 third group, if any, expire at the third annual shareholders'
 
22 meeting after their election. At each annual shareholders'
 

 
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 1 meeting held thereafter, directors shall be chosen for a term of
 
 2 two years or three years, as the case may be, to succeed those
 
 3 whose terms expire.
 
 4      Section    -8.07.  Resignation of directors.  (a) A director
 
 5 may resign at any time by delivering written notice to the board
 
 6 of directors, its chairperson, or to the corporation.
 
 7      (b)  A resignation is effective when the notice is delivered
 
 8 unless the notice specifies a later effective date.
 
 9      Section    -8.08.  Removal of directors by shareholders.
 
10 (a) The shareholders may remove one or more directors with or
 
11 without cause unless the articles of incorporation provide that
 
12 directors may be removed only for cause.
 
13      (b)  If a director is elected by a voting group of
 
14 shareholders, only the shareholders of that voting group may
 
15 participate in the vote to remove such director.
 
16      (c)  If cumulative voting is authorized, a director may not
 
17 be removed if the number of votes sufficient to elect such
 
18 director under cumulative voting is voted against such director's
 
19 removal. If cumulative voting is not authorized, a director may
 
20 be removed only if the number of votes cast to remove such
 
21 director exceeds the number of votes cast not to remove such
 
22 director.
 

 
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 1      (d)  A director may be removed by the shareholders only at a
 
 2 meeting called for the purpose of removing such director and the
 
 3 meeting notice must state that the purpose, or one of the
 
 4 purposes, of the meeting is removal of the director.
 
 5      Section    -8.09.  Removal of directors by judicial
 
 6 proceeding.  (a) The circuit court may remove a director of the
 
 7 corporation from office in a proceeding commenced either by the
 
 8 corporation or by its shareholders holding at least 10 percent of
 
 9 the outstanding shares of any class if the court finds that (1)
 
10 the director engaged in fraudulent or dishonest conduct, or gross
 
11 abuse of authority or discretion, with respect to the corporation
 
12 and (2) removal is in the best interest of the corporation.
 
13      (b)  The court that removes a director may bar the director
 
14 from reelection for a period prescribed by the court.
 
15      (c)  If shareholders commence a proceeding under subsection
 
16 (a), they shall make the corporation a party defendant.
 
17      Section    -8.10.  Vacancy on board.(a) Unless the
 
18 articles of incorporation provide otherwise, if a vacancy occurs
 
19 on a board of directors, including a vacancy resulting from an
 
20 increase in the number of directors:
 
21      (1)  the shareholders may fill the vacancy
 
22      (2)  the board of directors may fill the vacancy; or
 

 
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 1      (3)  if the directors remaining in office constitute fewer
 
 2           than a quorum of the board, they may fill the vacancy
 
 3           by the affirmative vote of a majority of all the
 
 4           directors remaining in office.
 
 5      (b)  If the vacant office was held by a director elected by
 
 6 a voting group of shareholders, only the holders of shares of
 
 7 that voting group are entitled to vote to fill the vacancy if it
 
 8 is filled by the shareholders.
 
 9      (c)  A vacancy that will occur at a specific later date (by
 
10 reason of a resignation effective at a later date under section
 
11    -8.07(b) or otherwise) may be filled before the vacancy occurs
 
12 but the new director may not take office until the vacancy
 
13 occurs.
 
14      Section    -8.11.  Compensation of directors.  Unless the
 
15 articles of incorporation or bylaws provide otherwise, the board
 
16 of directors may fix the compensation of directors.
 
17                           Subchapter B.
 
18                 MEETINGS AND ACTION OF THE BOARD
 
19      Section    -8.20.  Meetings.  (a) The board of directors may
 
20 hold regular or special meetings in or out of this State.
 
21      (b)  Unless the articles of incorporation or bylaws provide
 
22 otherwise, the board of directors may permit any or all directors
 

 
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 1 to participate in a regular or special meeting by, or conduct the
 
 2 meeting through the use of, any means of communication by which
 
 3 all directors participating may simultaneously hear each other
 
 4 during the meeting. A director participating in a meeting by this
 
 5 means is deemed to be present in person at the meeting.
 
 6      Section    -8.21.  Action without meeting.(a) Unless the
 
 7 articles of incorporation or bylaws provide otherwise, action
 
 8 required or permitted by this Act to be taken at a board of
 
 9 directors' meeting may be taken without a meeting if the action
 
10 is taken by all members of the board. The action must be
 
11 evidenced by one or more written consents describing the action
 
12 taken, signed before or after the intended effective date of the
 
13 action by each director, and included in the minutes or filed
 
14 with the corporate records reflecting the action taken.
 
15      (b)  Action taken under this section is effective when the
 
16 last director signs the consent, unless the consent specifies a
 
17 different effective date.
 
18      (c)  A consent signed under this section has the effect of a
 
19 meeting vote and may be described as such in any document.
 
20      Section    -8.22.  Notice of meeting.(a) Unless the
 
21 articles of incorporation or bylaws provide otherwise, regular
 
22 meetings of the board of directors may be held without notice of
 

 
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 1 the date, time, place, or purpose of the meeting.
 
 2      (b)  Unless the articles of incorporation or bylaws provide
 
 3 for a longer or shorter period, special meetings of the board of
 
 4 directors must be preceded by at least two days' notice of the
 
 5 date, time, and place of the meeting. The notice need not
 
 6 describe the purpose of the special meeting unless required by
 
 7 the articles of incorporation or bylaws.
 
 8      Section    -8.23.  Waiver of notice.  (a) A director may
 
 9 waive any notice required by this Act, the articles of
 
10 incorporation, or bylaws before or after the date and time stated
 
11 in the notice. Except as provided by subsection (b), the waiver
 
12 must be in writing, signed by the director entitled to the
 
13 notice, and filed with the minutes or corporate records.
 
14      (b)  A director's attendance at or participation in a
 
15 meeting waives any required notice to such director of the
 
16 meeting unless the director at the beginning of the meeting (or
 
17 promptly upon such director's arrival) objects to holding the
 
18 meeting or transacting business at the meeting and does not
 
19 thereafter vote for or assent to action taken at the meeting.
 
20      Section    -8.24.  Quorum and voting.(a) Unless the
 
21 articles of incorporation or bylaws require a greater number or
 
22 unless otherwise specifically provided in this Act, a quorum of a
 

 
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 1 board of directors consists of:
 
 2      (1)  a majority of the fixed number of directors if the
 
 3           corporation has a fixed board size; or
 
 4      (2)  a majority of the number of directors prescribed, or if
 
 5           no number is prescribed the number in office
 
 6           immediately before the meeting begins, if the
 
 7           corporation has a variable-range size board.
 
 8      (b)  The articles of incorporation or bylaws may authorize a
 
 9 quorum of a board of directors to consist of no fewer than one-
 
10 third of the fixed or prescribed number of directors determined
 
11 under subsection (a).
 
12      (c)  If a quorum is present when a vote is taken, the
 
13 affirmative vote of a majority of directors present is the act of
 
14 the board of directors unless the articles of incorporation or
 
15 bylaws require the vote of a greater number of directors.
 
16      (d)  A director who is present at a meeting of the board of
 
17 directors or a committee of the board of directors when corporate
 
18 action is taken is deemed to have assented to the action taken
 
19 unless: (1) the director objects at the beginning of the meeting
 
20 (or promptly upon such director's arrival) to holding it or
 
21 transacting business at the meeting; (2) the director's dissent
 
22 or abstention from the action taken is entered in the minutes of
 

 
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 1 the meeting; or (3) the director delivers written notice of such
 
 2 director's dissent or abstention to the presiding officer of the
 
 3 meeting before its adjournment or to the corporation immediately
 
 4 after adjournment of the meeting. The right of dissent or
 
 5 abstention is not available to a director who votes in favor of
 
 6 the action taken.
 
 7      Section    -8.25.  Committees.(a) Unless the articles of
 
 8 incorporation or bylaws provide otherwise, a board of directors
 
 9 may create one or more committees and appoint members of the
 
10 board of directors to serve on them. Each committee must have two
 
11 or more members, who serve at the pleasure of the board of
 
12 directors.
 
13      (b)  The creation of a committee and appointment of members
 
14 to it must be approved by the greater of (1) a majority of all
 
15 the directors in office when the action is taken or (2) the
 
16 number of directors required by the articles of incorporation or
 
17 bylaws to take action under section    -8.24.
 
18      (c)  Section   s 8.20 through 8.24, which govern meetings,
 
19 action without meetings, notice and waiver of notice, and quorum
 
20 and voting requirements of the board of directors, apply to
 
21 committees and their members as well.
 
22      (d)  To the extent specified by the board of directors or in
 

 
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 1 the articles of incorporation or bylaws, each committee may
 
 2 exercise the authority of the board of directors under
 
 3 section    -8.01.
 
 4      (e)  A committee may not, however:
 
 5      (1)  authorize distributions;
 
 6      (2)  approve or propose to shareholders action that this Act
 
 7           requires be approved by shareholders;
 
 8      (3)  fill vacancies on the board of directors or on any of
 
 9           its committees;
 
10      (4)  amend articles of incorporation pursuant to section
 
11              -10.02;
 
12      (5)  adopt, amend, or repeal bylaws;
 
13      (6)  approve a plan of merger not requiring shareholder
 
14           approval;
 
15      (7)  authorize or approve reacquisition of shares, except
 
16           according to a formula or method prescribed by the
 
17           board of directors; or
 
18      (8)  authorize or approve the issuance or sale or contract
 
19           for sale of shares, or determine the designation and
 
20           relative rights, preferences, and limitations of a
 
21           class or series of shares, except that the board of
 
22           directors may authorize a committee (or a senior
 

 
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 1           executive officer of the corporation) to do so within
 
 2           limits specifically prescribed by the board of
 
 3           directors.
 
 4      (f)  The creation of, delegation of authority to, or action
 
 5           by a committee does not alone constitute compliance by
 
 6           a director with the standards of conduct described in
 
 7           section    -8.30.
 
 8                           Subchapter C.
 
 9                       STANDARDS OF CONDUCT
 
10      Section    -8.30.  General standards for directors.(a) A
 
11 director shall discharge such director's duties as a director,
 
12 including such director's duties as a member of a committee:
 
13      (1)  In good faith;
 
14      (2)  with the care an ordinarily prudent person in a like
 
15           position would exercise under similar circumstances;
 
16           and
 
17      (3)  in a manner the director reasonably believes to be in
 
18           the best interests of the corporation.
 
19 In determining the best interests of the corporation, a director,
 
20 in addition to considering the interests of the corporation's
 
21 shareholders, may consider, in the director's discretion, any of
 
22 the following factors:
 

 
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 1      (1)  The interests of the corporation's employees,
 
 2           customers, suppliers and creditors;
 
 3      (2)  The economy of the State and the nation;
 
 4      (3)  Community and societal considerations, including,
 
 5           without limitation, the impact of any action upon the
 
 6           communities in or near which the corporation has
 
 7           offices or operations; and
 
 8      (4)  The long-term as well as short-term interests of the
 
 9           corporation and its shareholders, including, without
 
10           limitation, the possibility that these interests may be
 
11           best served by the continued independence of the
 
12           corporation.
 
13      (b)  In discharging duties as a director, the director is
 
14 entitled to rely on information, opinions, reports, or
 
15 statements, including financial statements and other financial
 
16 data, if prepared or presented by:
 
17      (1)  one or more officers or employees of the corporation
 
18           whom the director reasonably believes to be reliable
 
19           and competent in the matters presented;
 
20      (2)  legal counsel, public accountants, or other persons as
 
21           to matters the director reasonably believes are within
 
22           the person's professional or expert competence; or
 

 
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 1      (3)  a committee of the board of directors of which the
 
 2           director is not a member if the director reasonably
 
 3           believes the committee merits confidence.
 
 4      (c)  A director is not acting in good faith if the director
 
 5 has knowledge concerning the matter in question that makes
 
 6 reliance otherwise permitted by subsection (b) unwarranted.
 
 7      (d)  A director is not liable for any action taken as a
 
 8 director, or any failure to take any action, if the director
 
 9 performed the duties of the director's office in compliance with
 
10 this section.
 
11      Section    -8.31.  Limitation of liability of directors;
 
12 shareholder approval required. (a) A corporation shall have the
 
13 power to eliminate or limit the personal liability of its
 
14 directors in any action brought by the shareholders or the
 
15 corporation for monetary damages against any director of the
 
16 corporation for any action taken, or any failure to take any
 
17 action, as a director, provided that:
 
18      (1)  The elimination or limitation shall be authorized,
 
19           directed, or provided for in:
 
20           (A)  The articles of incorporation of the corporation;
 
21                or
 
22           (B)  Any duly adopted amendment of the articles of
 

 
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 1                incorporation; and
 
 2      (2)  If the provision eliminating or limiting the personal
 
 3           liability of a corporation's directors is authorized,
 
 4           directed, or provided for by amendments to the articles
 
 5           of incorporation, it shall be adopted upon the
 
 6           affirmative vote of the holders of two-thirds of the
 
 7           shares represented at the shareholders' meeting and
 
 8           entitled to vote; provided that the vote also
 
 9           constitutes a majority of the shares entitled to vote.
 
10      (b)  A corporation shall not have the power to eliminate or
 
11 limit the personal liability of a director for:
 
12      (1)  the amount of a financial benefit received by a
 
13           director to which such director is not entitled;
 
14      (2)  an intentional infliction of harm on the corporation or
 
15           the shareholders;
 
16      (3)  a violation of section    -8.33; or
 
17      (4)  an intentional violation of criminal law.
 
18      (c)  The shareholders of the corporation shall receive
 
19 written notice of any proposal by the corporation to eliminate or
 
20 limit the personal liability of the directors under subsection
 
21 (a)(2), and the corporation shall in such cases submit the duly
 
22 adopted amendment to the articles of incorporation to the
 

 
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 1 Director.
 
 2      (d)  No provision pursuant to subsection (a)(1) shall be
 
 3 authorized by the corporation to eliminate or limit the liability
 
 4 of directors for acts, omissions, or causes of action occurring,
 
 5 accruing, or arising prior to June 7, 1989.
 
 6      (e)  Nothing in this section shall impair or affect the
 
 7 validity of any provisions of the bylaws of a corporation
 
 8 eliminating or limiting the personal liability of the directors
 
 9 which were authorized, directed, or provided for and approved by
 
10 the shareholders of the corporation in compliance with this
 
11 section prior to July 1, 1996.
 
12      Section    -8.32.   (reserved)
 
13      Section    -8.33.  Liability for unlawful distributions.
 
14 (a) A director who votes for or assents to a distribution made in
 
15 violation of section    -6.40 or the articles of incorporation is
 
16 personally liable to the corporation for the amount of the
 
17 distribution that exceeds what could have been distributed
 
18 without violating section    -6.40 or the articles of
 
19 incorporation if it is established that the director did not
 
20 perform such director's duties in compliance with section
 
21    -8.30. In any proceeding commenced under this section, a
 
22 director has all of the defenses ordinarily available to a
 

 
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 1 director.
 
 2      (b)  A director held liable under subsection (a) for an
 
 3 unlawful distribution is entitled to contribution:
 
 4      (1)  from every other director who could be held liable
 
 5           under subsection (a) for the unlawful distribution; and
 
 6      (2)  from each shareholder for the amount the shareholder
 
 7           accepted knowing the distribution was made in violation
 
 8           of section    -6.40 or the articles of incorporation.
 
 9      (c)  A proceeding under this section is barred unless it is
 
10 commenced within two years after the date on which the effect of
 
11 the distribution was measured under section    -6.40(e) or (g).
 
12      (d)  Nothing in this Act shall prohibit the distribution of
 
13 assets to shareholders permitted or authorized by the Federal
 
14 Housing Commissioner by any corporation organized for the purpose
 
15 of providing housing for rent pursuant to regulations of the
 
16 Federal Housing Commissioner under the provisions of Title VIII
 
17 of the National Housing Act, as amended, where the principal
 
18 assets of the corporation consist of real property belonging to
 
19 the United States and leased to the corporation pursuant to Title
 
20 VIII of the National Housing Act as amended or supplemented from
 
21 time to time.
 
22                           Subchapter D.
 

 
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 1                             OFFICERS
 
 2      Section    -8.40.  Required officers.(a) A corporation has
 
 3 the officers described in its bylaws or appointed by the board of
 
 4 directors in accordance with the bylaws. (b) A duly appointed
 
 5 officer may appoint one or more officers or assistant officers if
 
 6 authorized by the bylaws or the board of directors. (c) The
 
 7 bylaws or the board of directors shall delegate to one of the
 
 8 officers responsibility for preparing minutes of the directors'
 
 9 and shareholders' meetings and for authenticating records of the
 
10 corporation. (d) The same individual may simultaneously hold more
 
11 than one office in a corporation.
 
12      Section    -8.41.  Duties of officers.  Each officer has the
 
13 authority and shall perform the duties set forth in the bylaws
 
14 or, to the extent consistent with the bylaws, the duties
 
15 prescribed by the board of directors or by direction of an
 
16 officer authorized by the board of directors to prescribe the
 
17 duties of other officers.
 
18      Section    -8.42.  Standards of conduct for officers.  a) An
 
19 officer with discretionary authority shall discharge such
 
20 officer's duties under that authority:
 
21      (1)  in good faith;
 
22      (2)  with the care an ordinarily prudent person in a like
 

 
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 1           position would exercise under similar circumstances;
 
 2           and
 
 3      (3)  in a manner the officer reasonably believes to be in
 
 4           the best interests of the corporation.
 
 5      (b)  In discharging the duties of an officer, the officer is
 
 6 entitled to rely on information, opinions, reports, or
 
 7 statements, including financial statements and other financial
 
 8 data, if prepared or presented by:
 
 9      (1)  one or more officers or employees of the corporation
 
10           whom the officer reasonably believes to be reliable and
 
11           competent in the matters presented; or
 
12      (2)  legal counsel, public accountants, or other persons as
 
13           to matters the officer reasonably believes are within
 
14           the person's professional or expert competence.
 
15      (c)  An officer is not acting in good faith if the officer
 
16 has knowledge concerning the matter in question that makes
 
17 reliance otherwise permitted by subsection (b) unwarranted. (d)
 
18 An officer is not liable for any action taken as an officer, or
 
19 any failure to take any action, if such officer performed the
 
20 duties of such officer's office in compliance with this section.
 
21      Section    -8.43.  Resignation and removal of officers.  (a)
 
22 An officer may resign at any time by delivering notice to the
 

 
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 1 corporation. A resignation is effective when the notice is
 
 2 delivered unless the notice specifies a later effective date. If
 
 3 a resignation is made effective at a later date and the
 
 4 corporation accepts the future effective date, its board of
 
 5 directors may fill the pending vacancy before the effective date
 
 6 if the board of directors provides that the successor does not
 
 7 take office until the effective date.
 
 8      (b)  Any officer or agent may be removed by the board of
 
 9 directors whenever in its judgment the best interests of the
 
10 corporation will be served thereby, but such removal shall be
 
11 without prejudice to the contract rights, if any, of the person
 
12 so removed.  Election or appointment of an officer or agent shall
 
13 not of itself create contract rights.
 
14      Section    -8.44.  Contract rights of officers.  (a) The
 
15 appointment of an officer does not itself create contract rights.
 
16      (b)  An officer's removal does not affect the officer's
 
17 contract rights, if any, with the corporation. An officer's
 
18 resignation does not affect the corporation's contract rights, if
 
19 any, with the officer.
 
20                           Subchapter E.
 
21                          INDEMNIFICATION
 
22      Section    -8.50.  Subchapter definitions.  In this
 

 
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 1 subchapter:
 
 2      (1)  ``Corporation'' includes any domestic or foreign
 
 3           predecessor entity of a corporation in a merger.
 
 4      (2)  ``Director'' or ``officer'' means an individual who is
 
 5           or was a director or officer, respectively, of a
 
 6           corporation or who, while a director or officer of the
 
 7           corporation, is or was serving at the corporation's
 
 8           request as a director, officer, partner, trustee,
 
 9           employee, or agent of another domestic or foreign
 
10           corporation, partnership, joint venture, trust,
 
11           employee benefit plan, or other entity. A director or
 
12           officer is considered to be serving an employee benefit
 
13           plan at the corporation's request if the duties of such
 
14           director or officer to the corporation also impose
 
15           duties on, or otherwise involve services by, such
 
16           director or officer to the plan or to participants in
 
17           or beneficiaries of the plan. ``Director'' or
 
18           ``officer'' includes, unless the context requires
 
19           otherwise, the estate or personal representative of a
 
20           director or officer.
 
21      (3)  ``Disinterested director'' means a director who, at the
 
22           time of a vote referred to in section    -8.53(c) or a
 

 
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 1           vote or selection referred to in section    -8.55(b) or
 
 2           (c), is not (i) a party to the proceeding, or (ii) an
 
 3           individual having a familial, financial, professional
 
 4           or employment relationship with the director whose
 
 5           indemnification or advance for expenses is the subject
 
 6           of the decision being made, which relationship would,
 
 7           in the circumstances, reasonably be expected to exert
 
 8           an influence on the director's judgment when voting on
 
 9           the decision being made.
 
10      (4)  ``Expenses'' includes counsel fees.
 
11      (5)  ``Liability'' means the obligation to pay a judgment,
 
12           settlement, penalty, fine (including an excise tax
 
13           assessed with respect to an employee benefit plan), or
 
14           reasonable expenses incurred with respect to a
 
15           proceeding.
 
16      (6)  ``Official capacity'' means: (i) when used with respect
 
17           to a director, the office of director in a corporation;
 
18           and (ii) when used with respect to an officer, as
 
19           contemplated in section    -8.56, the office in a
 
20           corporation held by the officer. ``Official capacity''
 
21           does not include service for any other domestic or
 
22           foreign corporation or any partnership, joint venture,
 

 
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 1           trust, employee benefit plan, or other entity.
 
 2      (7)  ``Party'' means an individual who was, is, or is
 
 3           threatened to be made, a defendant or respondent in a
 
 4           proceeding.
 
 5      (8)  ``Proceeding'' means any threatened, pending, or
 
 6           completed action, suit, or proceeding, whether civil,
 
 7           criminal, administrative, arbitrative, or investigative
 
 8           and whether formal or informal.
 
 9      Section    -8.51.  Permissible indemnification.(a) Except
 
10 as otherwise provided in this section, a corporation may
 
11 indemnify an individual who is a party to a proceeding because
 
12 the individual is a director against liability incurred in the
 
13 proceeding if:
 
14      (1)  (i)  such individual conducted himself or herself in
 
15           good faith; and
 
16          (ii)  such individual reasonably believed:
 
17                (A)  in the case of conduct of official capacity,
 
18                     that such individual's conduct was in the
 
19                     best interests of the corporation; and
 
20                (B)  in all other cases, that such individual's
 
21                     conduct was at least not opposed to the best
 
22                     interests of the corporation; and
 

 
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 1         (iii)  in the case of any criminal proceeding, such
 
 2                individual had no reasonable cause to believe such
 
 3                individual's conduct was unlawful; or
 
 4      (2)  such individual engaged in conduct for which broader
 
 5           indemnification has been made permissible or obligatory
 
 6           under a provision of the articles of incorporation (as
 
 7           authorized by section    -2.02(b)(5)).
 
 8      (b)  A director's for a purpose such director reasonably
 
 9 believed to be in the interests conduct with respect to an
 
10 employee benefit plan of the participants in, and the
 
11 beneficiaries of, the plan is conduct that satisfies the
 
12 requirement of subsection (a)(1)(ii)(B).
 
13      (c)  The termination of a proceeding by judgment, order,
 
14 settlement, or conviction, or upon a plea of nolo contendere or
 
15 its equivalent, is not, of itself, determinative that the
 
16 director did not meet the relevant standard of conduct described
 
17 in this section.
 
18      (d)  Unless ordered by a court under section    -8.54(a)(3),
 
19 a corporation may not indemnify a director:
 
20      (1)  in connection with a proceeding by or in the right of
 
21           the corporation, except for reasonable expenses
 
22           incurred in connection with the proceeding if it is
 

 
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 1           determined that the director has met the relevant
 
 2           standard of conduct under subsection (a); or
 
 3      (2)  in connection with any proceeding with respect to
 
 4           conduct for which such director was adjudged liable on
 
 5           the basis that such director received a financial
 
 6           benefit to which such director was not entitled,
 
 7           whether or not involving action in such director's
 
 8           official capacity.
 
 9      Section    -8.52.  Mandatory indemnification.  A corporation
 
10 shall indemnify a director who was wholly successful, on the
 
11 merits or otherwise, in the defense of any proceeding to which
 
12 such director was a party because such director was a director of
 
13 the corporation against reasonable expenses incurred by such
 
14 director in connection with the proceeding.
 
15      Section    -8.53.  Advance for expenses.  (a) A corporation
 
16 may, before final disposition of a proceeding, advance funds to
 
17 pay for or reimburse the reasonable expenses incurred by a
 
18 director who is a party to a proceeding because such director is
 
19 a director if such director delivers to the corporation:
 
20      (1)  a written affirmation of the director's good faith
 
21           belief that such director has met the relevant standard
 
22           of conduct described in section    -8.51 or that the
 

 
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 1           proceeding involves conduct for which liability has
 
 2           been eliminated under a provision of the articles of
 
 3           incorporation as authorized by section    -2.02(b)(4);
 
 4           and
 
 5      (2)  the director's written undertaking to repay any funds
 
 6           advanced if such director is not entitled to mandatory
 
 7           indemnification under section    -8.52 and it is
 
 8           ultimately determined under section    -8.54 or
 
 9           section    -8.55 that such director has not met the
 
10           relevant standard of conduct described in
 
11           section    -8.51.
 
12      (b)  The undertaking required by subsection (a)(2) must be
 
13 an unlimited general obligation of the director but need not be
 
14 secured and may be accepted without reference to the financial
 
15 ability of the director to make repayment. (c) Authorizations
 
16 under this section shall be made:
 
17      (1)  by the board of directors:
 
18           (i)  if there are two or more disinterested directors,
 
19                by a majority vote of all the disinterested
 
20                directors (a majority of whom shall for such
 
21                purpose constitute a quorum) or by a majority of
 
22                the members of a committee of two or more
 

 
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 1                disinterested directors appointed by such a vote;
 
 2                or
 
 3          (ii)  if there are fewer than two disinterested
 
 4                directors, by the vote necessary for action by the
 
 5                board in accordance with section    -8.24(c), in
 
 6                which authorization directors who do not qualify
 
 7                as disinterested directors may participate; or
 
 8      (2)  by the shareholders, but shares owned by or voted under
 
 9           the control of a director who at the time does not
 
10           qualify as a disinterested director may not be voted on
 
11           the authorization.
 
12      Section    -8.54.  Court-ordered indemnification and advance
 
13 for expenses.(a) A director who is a party to a proceeding
 
14 because such director is a director may apply for indemnification
 
15 or an advance for expenses to the court conducting the proceeding
 
16 or to another court of competent jurisdiction. After receipt of
 
17 an application and after giving any notice it considers
 
18 necessary, the court shall:
 
19      (1)  order indemnification if the court determines that the
 
20           director is entitled to mandatory indemnification under
 
21           section    -8.52;
 
22      (2)  order indemnification or advance for expenses if the
 

 
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 1           court determines that the director is entitled to
 
 2           indemnification or advance for expenses pursuant to a
 
 3           provision authorized by section    -8.58(a); or
 
 4      (3)  order indemnification or advance for expenses if the
 
 5           court determines, in view of all the relevant
 
 6           circumstances, that it is fair and reasonable
 
 7           (i)  to indemnify the director, or
 
 8          (ii)  to advance expenses to the director, even if such
 
 9                director has not met the relevant standard of
 
10                conduct set forth in section    -8.51(a), failed
 
11                to comply with section    -8.53 or was adjudged
 
12                liable in a proceeding referred to in
 
13                subsection    -8.51(d)(1) or (d)(2), but if such
 
14                director was adjudged so liable such director's
 
15                indemnification shall be limited to reasonable
 
16                expenses incurred in connection with the
 
17                proceeding.
 
18      (b)  If the court determines that the director is entitled
 
19 to indemnification under subsection (a)(1) or to indemnification
 
20 or advance for expenses under subsection (a)(2), it shall also
 
21 order the corporation to pay the director's reasonable expenses
 
22 incurred in connection with obtaining court-ordered
 

 
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 1 indemnification or advance for expenses. If the court determines
 
 2 that the director is entitled to indemnification or advance for
 
 3 expenses under subsection (a)(3), it may also order the
 
 4 corporation to pay the director's reasonable expenses to obtain
 
 5 court-ordered indemnification or advance for expenses.
 
 6      Section    -8.55.  Determination and authorization of
 
 7 indemnification.(a) A corporation may not indemnify a director
 
 8 under section    -8.51 unless authorized for a specific
 
 9 proceeding after a determination has been made that
 
10 indemnification of the director is permissible because the
 
11 director has met the relevant standard of conduct set forth in
 
12 section    -8.51. (b) The determination shall be made:
 
13      (1)  if there are two or more disinterested directors, by
 
14           the board of directors by a majority vote of all the
 
15           disinterested directors (a majority of whom shall for
 
16           such purpose constitute a quorum), or by a majority of
 
17           the members of a committee of two or more disinterested
 
18           directors appointed by such a vote;
 
19      (2)  by special legal counsel:
 
20           (i)  selected in the manner prescribed in subdivision
 
21                (1); or
 
22          (ii)  if there are fewer than two disinterested
 

 
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 1                directors, selected by the board of directors (in
 
 2                which selection directors who do not qualify as
 
 3                disinterested directors may participate); or
 
 4      (3)  by the shareholders, but shares owned by or voted under
 
 5           the control of a director who at the time does not
 
 6           qualify as a disinterested director may not be voted on
 
 7           the determination.
 
 8      (c)  Authorization of indemnification shall be made in the
 
 9 same manner as the determination that indemnification is
 
10 permissible, except that if there are fewer than two
 
11 disinterested directors or if the determination is made by
 
12 special legal counsel, authorization of indemnification shall be
 
13 made by those entitled under subsection (b)(2)(ii) to select
 
14 special legal counsel.
 
15      Section    -8.56.  Officers.  (a) A corporation may
 
16 indemnify and advance expenses under this subchapter to an
 
17 officer of the corporation who is a party to a proceeding because
 
18 the officer is an officer of the corporation
 
19      (1)  to the same extent as a director; and
 
20      (2)  if such person is an officer but not a director, to
 
21           such further extent as may be provided by the articles
 
22           of incorporation, the bylaws, a resolution of the board
 

 
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 1           of directors, or contract except for (A) liability in
 
 2           connection with a proceeding by or in the right of the
 
 3           corporation other than for reasonable expenses incurred
 
 4           in connection with the proceeding or (B) liability
 
 5           arising out of conduct that constitutes (i) receipt by
 
 6           such officer of a financial benefit to which such
 
 7           officer is not entitled, (ii) an intentional infliction
 
 8           of harm on the corporation or the shareholders, or
 
 9           (iii) an intentional violation of criminal law.
 
10      (b)  The provisions of subsection (a)(2) shall apply to an
 
11 officer who is also a director if the basis on which such officer
 
12 is made a party to the proceeding is an act or omission solely as
 
13 an officer.
 
14      (c)  An officer of a corporation who is not a director is
 
15 entitled to mandatory indemnification under section    -8.52, and
 
16 may apply to a court under section    -8.54 for indemnification
 
17 or an advance for expenses, in each case to the same extent to
 
18 which a director may be entitled to indemnification or advance
 
19 for expenses under those provisions.
 
20      Section    -8.57.  Insurance.  A corporation may purchase
 
21 and maintain insurance on behalf of an individual who is a
 
22 director or officer of the corporation, or who, while a director
 

 
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 1 or officer of the corporation, serves at the corporation's
 
 2 request as a director, officer, partner, trustee, employee, or
 
 3 agent of another domestic or foreign corporation, partnership,
 
 4 joint venture, trust, employee benefit plan, or other entity,
 
 5 against liability asserted against or incurred by such director
 
 6 or officer in that capacity or arising from such director's or
 
 7 officer's status as a director or officer, whether or not the
 
 8 corporation would have power to indemnify or advance expenses to
 
 9 such director or officer against the same liability under this
 
10 subchapter.
 
11      Section    -8.58.  Variation by corporate action;
 
12 application of subchapter.(a) A corporation may, by a provision
 
13 in its articles of incorporation or bylaws or in a resolution
 
14 adopted or a contract approved by its board of directors or
 
15 shareholders, obligate itself in advance of the act or omission
 
16 giving rise to a proceeding to provide indemnification in
 
17 accordance with section    -8.51 or advance funds to pay for or
 
18 reimburse expenses in accordance with section    -8.53. Any such
 
19 obligatory provision shall be deemed to satisfy the requirements
 
20 for authorization referred to in section    -8.53(c) and in
 
21 section    -8.55(c). Any such provision that obligates the
 
22 corporation to provide indemnification to the fullest extent
 

 
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 1 permitted by law shall be deemed to obligate the corporation to
 
 2 advance funds to pay for or reimburse expenses in accordance with
 
 3 section    -8.53 to the fullest extent permitted by law, unless
 
 4 the provision specifically provides otherwise. (b) Any provision
 
 5 pursuant to subsection (a) shall not obligate the corporation to
 
 6 indemnify or advance expenses to a director of a predecessor of
 
 7 the corporation, pertaining to conduct with respect to the
 
 8 predecessor, unless otherwise specifically provided. Any
 
 9 provision for indemnification or advance for expenses in the
 
10 articles of incorporation, bylaws, or a resolution of the board
 
11 of directors or shareholders of a predecessor of the corporation
 
12 in a merger or in a contract to which the predecessor is a party,
 
13 existing at the time the merger takes effect, shall be governed
 
14 by section    -11.06(a)(3). (c) A corporation may, by a provision
 
15 in its articles of incorporation, limit any of the rights to
 
16 indemnification or advance for expenses created by or pursuant to
 
17 this subchapter. (d) This subchapter does not limit a
 
18 corporation's power to pay or reimburse expenses incurred by a
 
19 director or an officer in connection with such director's or
 
20 officer's appearance as a witness in a proceeding at a time when
 
21 such officer or director is not a party. (e) This subchapter does
 
22 not limit a corporation's power to indemnify, advance expenses to
 

 
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 1 or provide or maintain insurance on behalf of an employee or
 
 2 agent.
 
 3      Section    -8.59.  Non-exclusivity of subchapter.(a) The
 
 4 indemnification provided by this subchapter shall not be deemed
 
 5 exclusive of any other rights to which those indemnified may be
 
 6 entitled under any bylaw, agreement, vote of shareholders, or
 
 7 disinterested directors or otherwise, both as to action in a
 
 8 person's official capacity and as to action in another capacity
 
 9 while holding such office, and shall continue as to a person who
 
10 has ceased to be an agent and shall inure to the benefit of the
 
11 heirs and personal representatives of such a person.
 
12      (b)  This subchapter does not apply to any proceeding
 
13 against any trustee, investment manager, or other fiduciary of an
 
14 employee benefit plan in that person's capacity, though the
 
15 person may also be an agent of the employer corporation as
 
16 defined in subsection (a). Nothing contained in this section
 
17 shall limit any right to indemnification to which a trustee,
 
18 investment manager, or other fiduciary may be entitled by
 
19 contract or otherwise.
 
20                           Subchapter F.
 
21           DIRECTORS' CONFLICTING INTEREST TRANSACTIONS
 
22      Section    -8.60.  Subchapter definitions.  In this
 

 
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 1 subchapter:
 
 2      (1)  ``Conflicting interest'' with respect to a corporation
 
 3           means the interest a director of the corporation has
 
 4           respecting a transaction effected or proposed to be
 
 5           effected by the corporation (or by a subsidiary of the
 
 6           corporation or any other entity in which the
 
 7           corporation has a controlling interest) if
 
 8           (i)  whether or not the transaction is brought before
 
 9                the board of directors of the corporation for
 
10                action, the director knows at the time of
 
11                commitment that such director or a related person
 
12                is a party to the transaction or has a beneficial
 
13                financial interest in or so closely linked to the
 
14                transaction and of such financial significance to
 
15                the director or a related person that the interest
 
16                would reasonably be expected to exert an influence
 
17                on the director's judgment if such director were
 
18                called upon to vote on the transaction; or
 
19          (ii)  the transaction is brought (or is of such
 
20                character and significance to the corporation that
 
21                it would in the normal course be brought) before
 
22                the board of directors of the corporation for
 

 
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 1                action, and the director knows at the time of
 
 2                commitment that any of the following persons is
 
 3                either a party to the transaction or has a
 
 4                beneficial financial interest in or so closely
 
 5                linked to the transaction and of such financial
 
 6                significance to the person that the interest would
 
 7                reasonably be expected to exert an influence on
 
 8                the director's judgment if such director were
 
 9                called upon to vote on the transaction: (A) an
 
10                entity (other than the corporation) of which the
 
11                director is a director, general partner, agent, or
 
12                employee; (B) a person that controls one or more
 
13                of the entities specified in subclause (A) or an
 
14                entity that is controlled by, or is under common
 
15                control with, one or more of the entities
 
16                specified in subclause (A); or (C) an individual
 
17                who is a general partner, principal, or employer
 
18                of the director.
 
19      (2)  ``Director's conflicting interest transaction'' with
 
20           respect to a corporation means a transaction effected
 
21           or proposed to be effected by the corporation (or by a
 
22           subsidiary of the corporation or any other entity in
 

 
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 1           which the corporation has a controlling interest)
 
 2           respecting which a director of the corporation has a
 
 3           conflicting interest.
 
 4      (3)  ``Related person'' of a director means (i) the spouse
 
 5           (or a parent or sibling thereof) of the director, or a
 
 6           child, grandchild, sibling, parent (or spouse of any
 
 7           thereof) of the director, or an individual having the
 
 8           same home as the director, or a trust or estate of
 
 9           which an individual specified in this clause (i) is a
 
10           substantial beneficiary; or (ii) a trust, estate,
 
11           incompetent, conservatee, or minor of which the
 
12           director is a fiduciary.
 
13      (4)  ``Required disclosure'' means disclosure by the
 
14           director who has a conflicting interest of (i) the
 
15           existence and nature of such director's conflicting
 
16           interest, and (ii) all facts known to such director
 
17           respecting the subject matter of the transaction that
 
18           an ordinarily prudent person would reasonably believe
 
19           to be material to a judgment about whether or not to
 
20           proceed with the transaction.
 
21      (5)  ``Time of commitment'' respecting a transaction means
 
22           the time when the transaction is consummated or, if
 

 
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 1           made pursuant to contract, the time when the
 
 2           corporation (or its subsidiary or the entity in which
 
 3           it has a controlling interest) becomes contractually
 
 4           obligated so that its unilateral withdrawal from the
 
 5           transaction would entail significant loss, liability,
 
 6           or other damage.
 
 7      Section    -8.61.  Judicial action.  (a) A transaction
 
 8 effected or proposed to be effected by a corporation (or by a
 
 9 subsidiary of the corporation or any other entity in which the
 
10 corporation has a controlling interest) that is not a director's
 
11 conflicting interest transaction may not be enjoined, set aside,
 
12 or give rise to an award of damages or other sanctions, in a
 
13 proceeding by a shareholder or by or in the right of the
 
14 corporation, because a director of the corporation, or any person
 
15 with whom or which such director has a personal, economic, or
 
16 other association, has an interest in the transaction. (b) A
 
17 director's conflicting interest transaction may not be enjoined,
 
18 set aside, or give rise to an award of damages or other
 
19 sanctions, in a proceeding by a shareholder or by or in the right
 
20 of the corporation, because the director, or any person with whom
 
21 or which such director has a personal, economic, or other
 
22 association, has an interest in the transaction, if:
 

 
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 1      (1)  directors' action respecting the transaction was at any
 
 2           time taken in compliance with section    -8.62;
 
 3      (2)  shareholders' action respecting the transaction was at
 
 4           any time taken in compliance with section    -8.63; or
 
 5      (3)  the transaction, judged according to the circumstances
 
 6           at the time of commitment, is established to have been
 
 7           fair to the corporation.
 
 8      Section    -8.62.  Directors' action.(a) Directors' action
 
 9 respecting a transaction is effective for purposes of
 
10 section    -8.61(b)(1) if the transaction received the
 
11 affirmative vote of a majority (but no fewer than two) of those
 
12 qualified directors on the board of directors or on a duly
 
13 empowered committee of the board who voted on the transaction
 
14 after either required disclosure to them (to the extent the
 
15 information was not known by them) or compliance with subsection
 
16 (b); provided that action by a committee is so effective only if:
 
17      (1)  all its members are qualified directors; and
 
18      (2)  its members are either all the qualified directors on
 
19           the board or are appointed by the affirmative vote of a
 
20           majority of the qualified directors on the board.
 
21      (b)  If a director has a conflicting interest respecting a
 
22 transaction, but neither such director nor a related person of
 

 
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 1 the director specified in section    -8.60(3)(i) is a party to
 
 2 the transaction, and if the director has a duty under law or
 
 3 professional canon, or a duty of confidentiality to another
 
 4 person, respecting information relating to the transaction such
 
 5 that the director may not make the disclosure described in
 
 6 section    -8.60(4)(ii), then disclosure is sufficient for
 
 7 purposes of subsection (a) if the director (1) discloses to the
 
 8 directors voting on the transaction the existence and nature of
 
 9 such director's conflicting interest and informs them of the
 
10 character and limitations imposed by that duty before their vote
 
11 on the transaction, and (2) plays no part, directly or
 
12 indirectly, in their deliberations or vote. (c) A majority (but
 
13 no fewer than two) of all the qualified directors on the board of
 
14 directors, or on the committee, constitutes a quorum for purposes
 
15 of action that complies with this section. Directors' action that
 
16 otherwise complies with this section is not affected by the
 
17 presence or vote of a director who is not a qualified director.
 
18 (d) For purposes of this section, ``qualified director'' means,
 
19 with respect to a director's conflicting interest transaction,
 
20 any director who does not have either (1) a conflicting interest
 
21 respecting the transaction, or (2) a familial, financial,
 
22 professional, or employment relationship with a second director
 

 
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 1 who does have a conflicting interest respecting the transaction,
 
 2 which relationship would, in the circumstances, reasonably be
 
 3 expected to exert an influence on the first director's judgment
 
 4 when voting on the transaction.
 
 5      Section    -8.63.  Shareholders' action.(a) Shareholders'
 
 6 action respecting a transaction is effective for purposes of
 
 7 section    -8.61(b)(2) if a majority of the votes entitled to be
 
 8 cast by the holders of all qualified shares were cast in favor of
 
 9 the transaction after (1) notice to shareholders describing the
 
10 director's conflicting interest transaction, (2) provision of the
 
11 information referred to in subsection (d), and (3) required
 
12 disclosure to the shareholders who voted on the transaction (to
 
13 the extent the information was not known by them). (b) For
 
14 purposes of this section, ``qualified shares'' means any shares
 
15 entitled to vote with respect to the director's conflicting
 
16 interest transaction except shares that, to the knowledge, before
 
17 the vote, of the secretary (or other officer or agent of the
 
18 corporation authorized to tabulate votes), are beneficially owned
 
19 (or the voting of which is controlled) by a director who has a
 
20 conflicting interest respecting the transaction or by a related
 
21 person of the director, or both. (c) A majority of the votes
 
22 entitled to be cast by the holders of all qualified shares
 

 
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 1 constitutes a quorum for purposes of action that complies with
 
 2 this section. Subject to the provisions of subsection (d) and
 
 3 (e), shareholders' action that otherwise complies with this
 
 4 section is not affected by the presence of holders, or the
 
 5 voting, of shares that are not qualified shares. (d) For purposes
 
 6 of compliance with subsection (a), a director who has a
 
 7 conflicting interest respecting the transaction shall, before the
 
 8 shareholders' vote, inform the secretary (or other office or
 
 9 agent of the corporation authorized to tabulate votes) of the
 
10 number, and the identity of persons holding or controlling the
 
11 vote, of all shares that the director knows are beneficially
 
12 owned (or the voting of which is controlled) by the director or
 
13 by a related person of the director, or both. (e) If a
 
14 shareholders' vote does not comply with subsection (a) solely
 
15 because of a failure of a director to comply with subsection (d),
 
16 and if the director establishes that such director's failure did
 
17 not determine and was not intended by such director to influence
 
18 the outcome of the vote, the court may, with or without further
 
19 proceedings respecting section    -8.61(b)(3), take such action
 
20 respecting the transaction and the director, and give such
 
21 effect, if any, to the shareholders' vote, as it considers
 
22 appropriate in the circumstances.
 

 
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 1                             CHAPTER 9
 
 2                            CONVERSIONS
 
 3      Section    -9.01.  Conversion into and from corporations.
 
 4 (a) A domestic corporation may adopt a plan of conversion and
 
 5 convert to a foreign corporation or any other entity if:
 
 6      (1)  The board of directors and shareholders of the domestic
 
 7           corporation approve a plan of conversion in the manner
 
 8           prescribed by section    -11.03 and the conversion is
 
 9           treated as a merger to which the converting entity is a
 
10           party and not the surviving entity;
 
11      (2)  The conversion is permitted by, and complies with the
 
12           laws of the state or country in which the converted
 
13           entity is to be incorporated, formed, or organized; and
 
14           the incorporation, formation, or organization of the
 
15           converted entity complies with such laws;
 
16      (3)  At the time the conversion becomes effective, each
 
17           shareholder of the domestic corporation, unless
 
18           otherwise agreed to by that shareholder, owns an equity
 
19           interest or other ownership interest in, and is a
 
20           shareholder, partner, member, owner, or other security
 
21           holder of, the converted entity;
 
22      (4)  The shareholders of the domestic corporation, as a
 

 
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 1           result of the conversion, shall not become personally
 
 2           liable, without the shareholders' consent, for the
 
 3           liabilities or obligations of the converted entity; and
 
 4      (5)  The converted entity is incorporated, formed, or
 
 5           organized as part of or pursuant to the plan of
 
 6           conversion.
 
 7      (b)  Any foreign corporation or other entity may adopt a
 
 8 plan of conversion and convert to a domestic corporation if the
 
 9 conversion is permitted by and complies with the laws of the
 
10 state or country in which the foreign corporation or other entity
 
11 is incorporated, formed, or organized.
 
12      (c)  A plan of conversion shall set forth:
 
13      (1)  The name of the converting entity and the converted
 
14           entity;
 
15      (2)  A statement that the converting entity is continuing
 
16           its existence in the organizational form of the
 
17           converted entity;
 
18      (3)  A statement describing the organizational form of the
 
19           converted entity and the state or country under the
 
20           laws of which the converted entity is to be
 
21           incorporated, formed, or organized.
 
22      (4)  The manner and basis of converting the shares or other
 

 
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 1           forms of ownership of the converting entity into shares
 
 2           or other forms of ownership of the converted entity, or
 
 3           any combination thereof;
 
 4      (5)  If the converted entity is a domestic corporation, the
 
 5           articles of incorporation of the domestic corporation
 
 6           shall be attached; and
 
 7      (6)  If the converted entity is not a domestic corporation,
 
 8           proof that the converted entity is registered in this
 
 9           Sate shall be attached.
 
10      (d)  A plan of conversion may set forth any other provisions
 
11 relating to the conversion that are not prohibited by laws,
 
12 including without limitation the initial bylaws and officers of
 
13 the converted entity.
 
14      (e)  After a conversion of a domestic or foreign corporation
 
15 is approved, and at any time before the conversion becomes
 
16 effective, the plan of conversion may be abandoned by the
 
17 converting entity without shareholder action and in accordance
 
18 with the procedures set forth in the plan of conversion or, if
 
19 these procedures are not provided in the plan, in the manner
 
20 determined by the board of directors.  If articles of conversion
 
21 have been filed with the Director but the conversion has not
 
22 become effective, the conversion may be abandoned if a statement,
 

 
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 1 executed on behalf of the converting entity by an officer or
 
 2 other duly authorized representative and stating that the plan of
 
 3 conversion has been abandoned in accordance with applicable law,
 
 4 is filed with the Director prior to the effective date of the
 
 5 conversion.  If the Director finds the statement satisfies the
 
 6 requirements provided by law, the Director, after all fees have
 
 7 been paid shall:
 
 8      (1)  Stamp the word "Filed" on the statement and the date of
 
 9           the filing;
 
10      (2)  File the document in the Director's office; and
 
11      (3)  Issue a certificate of abandonment to the converting
 
12           entity or its authorized representatives.
 
13      (f)  Once the statement provided in subsection (e) is filed
 
14 with the Director, the conversion shall be deemed abandoned and
 
15 shall not be effective.
 
16      Section    -9.02.  Articles of conversion.  (a) If a plan of
 
17 conversion has been approved in accordance with section    -9.01
 
18 and has not been abandoned, articles of conversion shall be
 
19 executed by an officer or other duly authorized representative of
 
20 the converting entity and shall set forth.
 
21      (1)  A statement certifying the following:
 
22           (A)  The name, state, or country of incorporation,
 

 
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 1                formation, or organization of the converting
 
 2                entity;
 
 3           (B)  That a plan of conversion has been approved in
 
 4                accordance with the section    -9.01;
 
 5           (C)  That an executed plan of conversion is on file at
 
 6                the principal place of business of the converting
 
 7                entity and stating the address thereof; and
 
 8           (D)  That a copy of the plan of conversion shall be
 
 9                furnished by the converting entity prior to the
 
10                conversion or by the converted entity after the
 
11                conversion on written request and without cost, to
 
12                any shareholder, partner, member, or owner of the
 
13                converting entity or the converted entity;
 
14      (2)  If the converting entity is a domestic corporation, the
 
15           number of shares outstanding and, if the shares of any
 
16           class or series are entitled to vote as a class, the
 
17           designation and number of outstanding shares of each
 
18           such class or series;
 
19      (3)  If the converting entity is a domestic corporation, the
 
20           number of shares outstanding that voted for and against
 
21           the plan, ad, if the shares of any class or series are
 
22           entitled to vote as a class, the number of shares of
 

 
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 1           each such class or series that voted for and against
 
 2           the plan; and
 
 3      (4)  If the converting entity is a foreign corporation or
 
 4           other entity, a statement that the approval of the plan
 
 5           of conversion was duly authorized and complied with the
 
 6           laws under which it was incorporated, formed, or
 
 7           organized.
 
 8      (b)  The articles of conversion shall be delivered to the
 
 9 Director.  If the converted entity is a domestic corporation, the
 
10 articles of incorporation shall also be delivered to the Director
 
11 with the articles of conversion.
 
12      (c)  If the Director finds that the articles of conversion
 
13 satisfy the requirements provided by law, and that all required
 
14 documents are filed, the Director, after all fees have been paid,
 
15 shall:
 
16      (1)  Stamp the word "Filed" on the articles of conversion
 
17           and the date of the filing:
 
18      (2)  File the document in the Director's office; and
 
19      (3)  Issue a certificate of conversion to the converted
 
20           entity or its authorized representatives.
 
21      Section    -9.03.  Effective date of the conversion.  Upon
 
22 the issuance of the certificate of conversion by the Director,
 

 
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 1 the conversion shall be effective.
 
 2      Section    -9.04.  Effect of conversion.  When a conversion
 
 3 becomes effective:
 
 4      (1)  The converting entity shall continue to exist without
 
 5           interruption, but in the organizational form of the
 
 6           converted entity;
 
 7      (2)  All rights, title, and interest in all real estate and
 
 8           other property owned by the converting entity shall
 
 9           automatically be owned by the converted entity without
 
10           reversion or impairment, subject to any existing liens
 
11           or other encumbrances thereon;
 
12      (3)  All liabilities and obligations of the converting
 
13           entity shall automatically be liabilities and
 
14           obligations of the converted entity without impairment
 
15           or diminution due to conversion;
 
16      (4)  The rights of creditors of the converting entity shall
 
17           continue against the converted entity and shall not be
 
18           impaired or extinguished by the conversion;
 
19      (5)  Any action or proceeding pending by or against the
 
20           converting entity may be continued by or against the
 
21           converted entity without any need to for substitution
 
22           of parties;
 

 
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 1      (6)  The shares and other forms of ownership in the
 
 2           converting entity that are to be converted into shares,
 
 3           or other forms of ownership, in the converted entity as
 
 4           provided in the plan of conversion shall be converted,
 
 5           and if the converting entity is a domestic corporation,
 
 6           the shareholders of the domestic corporation shall be
 
 7           entitled only to the rights provided in the plan of
 
 8           conversion or to the rights to dissent under
 
 9           section    -13.02;
 
10      (7)  A shareholder, partner, member, or other owner of the
 
11           converted entity shall be liable for the debts and
 
12           obligations of the converting entity that existed
 
13           before the conversion takes effect only to the extent
 
14           that such shareholder, partner, member, or other owner:
 
15           (A)  Agreed in writing to be liable for such debts or
 
16                obligations;
 
17           (B)  Was liable under applicable law prior to the
 
18                effective date of the conversion, for such debts
 
19                or obligations; or
 
20           (C)  Becomes liable under applicable law for existing
 
21                debts and obligations of the converted entity by
 
22                becoming a shareholder, partner, member, or other
 

 
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 1                owner of the converted entity;
 
 2      (8)  If the converted entity is a foreign corporation or
 
 3           other entity, the converted entity shall:
 
 4           (A)  Appoint a resident of this State, as its agent for
 
 5                service of process in a proceeding to enforce any
 
 6                obligation or the rights of dissenting
 
 7                shareholders of the converting domestic
 
 8                corporation; and
 
 9           (B)  Promptly pay the dissenting shareholders of the
 
10                converting domestic corporation the amount, if
 
11                any, to which they are entitled under Chapter 13
 
12                of this Act; and
 
13      (9)  If the converting entity is a domestic corporation,
 
14           Chapter 13 of this Act shall apply as if the converted
 
15           entity were the survivor of a merger with the
 
16           converting entity.
 
17                            CHAPTER 10
 
18         AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
 
19                           Subchapter A.
 
20              AMENDMENT OF ARTICLES OF INCORPORATION
 
21      Section    -10.01.  Authority to amend.  (a) A corporation
 
22 may amend its articles of incorporation at any time to add or
 

 
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 1 change a provision that is required or permitted in the articles
 
 2 of incorporation or to delete a provision not required in the
 
 3 articles of incorporation. Whether a provision is required or
 
 4 permitted in the articles of incorporation is determined as of
 
 5 the effective date of the amendment.
 
 6      (b)  A shareholder of the corporation does not have a vested
 
 7 property right resulting from any provision in the articles of
 
 8 incorporation, including provisions relating to management,
 
 9 control, capital structure, dividend, entitlement, or purpose or
 
10 duration of the corporation.
 
11      Section    -10.02.  Amendment by board of directors.  Unless
 
12 the articles of incorporation provide otherwise, a corporation's
 
13 board of directors may adopt one or more amendments to the
 
14 corporation's articles of incorporation without shareholder
 
15 action:
 
16      (1)  to delete the names and addresses of the initial
 
17           directors;
 
18      (2)  to delete the name and address of the initial
 
19           registered agent or registered office, if a statement
 
20           of change is on file with the Director; or
 
21      (3)  to make any other change expressly permitted by this
 
22           Act to be made without shareholder action.
 

 
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 1      Section    -10.03.  Amendment by board of directors and
 
 2 shareholders.(a) A corporation's board of directors may propose
 
 3 one or more amendments to the articles of incorporation for
 
 4 submission to the shareholders.
 
 5      (b)  For the amendment to be adopted:
 
 6      (1)  the board of directors must recommend the amendment to
 
 7           the shareholders unless the board of directors
 
 8           determines that because of conflict of interest or
 
 9           other special circumstances it should make no
 
10           recommendation and communicates the basis for its
 
11           determination to the shareholders with the amendment;
 
12           and
 
13      (2)  the shareholders entitled to vote on the amendment must
 
14           approve the amendment as provided in subsection (e).
 
15      (c)  The board of directors may condition its submission of
 
16 the proposed amendment on any basis.
 
17      (d)  The corporation shall notify each shareholder, whether
 
18 or not entitled to vote, of the proposed shareholders' meeting in
 
19 accordance with section    -7.05. The notice of meeting must also
 
20 state that the purpose, or one of the purposes, of the meeting is
 
21 to consider the proposed amendment and contain or be accompanied
 
22 by a copy or summary of the amendment.
 

 
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 1      (e)  Unless this Act, the articles of incorporation, or the
 
 2 board of directors (acting pursuant to subsection (c)) require a
 
 3 greater vote or a vote by voting groups, the amendment to be
 
 4 adopted must be approved by:
 
 5      (1)  With respect to corporations incorporated on or after
 
 6           July 1, 1987, at such meeting a vote of the
 
 7           shareholders entitled to vote thereon shall be taken on
 
 8           he proposed amendment.  The proposed amendment shall be
 
 9           adopted upon receiving the affirmative vote of the
 
10           holders of a majority of the shares entitled to vote
 
11           thereon, unless any class of shares is entitled to vote
 
12           thereon as a class, in which event the proposed
 
13           amendment shall be adopted upon receiving he
 
14           affirmative vote of the holders of a majority of the
 
15           shares of each class of shares entitled to vote thereon
 
16           as a class and of the total shares entitled to vote
 
17           thereon.
 
18      (2)  With respect to corporations incorporated before July
 
19           1, 1987, at such meeting a vote of the shareholders
 
20           entitled to vote thereon shall be taken on a proposed
 
21           amendment.  The proposed amendment shall be adopted
 
22           upon receiving the affirmative vote of the holders of
 

 
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 1           two-thirds of the shares entitled to vote thereon.  The
 
 2           articles of incorporation may be amended by the vote
 
 3           set forth in the preceding sentence to provide for a
 
 4           lesser proportion of shares, or of any class or series
 
 5           thereof, than is provided in the preceding sentence, in
 
 6           which case the articles of incorporation shall control,
 
 7           provided that said lesser proportion shall not be less
 
 8           than the proportion set forth in subsection (1) of this
 
 9           section.  Any number of amendments may be submitted to
 
10           the shareholders, and voted upon by them, at one
 
11           meeting.
 
12      Section    -10.04.  Voting on amendments by voting groups.
 
13 (a) The holders of the outstanding shares of a class are entitled
 
14 to vote as a separate voting group (if shareholder voting is
 
15 otherwise required by this Act) on a proposed amendment if the
 
16 amendment would:
 
17      (1)  increase or decrease the aggregate number of authorized
 
18           shares of the class;
 
19      (2)  effect an exchange or reclassification of all or part
 
20           of the shares of the class into shares of another
 
21           class;
 
22      (3)  effect an exchange or reclassification, or create the
 

 
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 1           right of exchange, of all or part of the shares of
 
 2           another class into shares of the class;
 
 3      (4)  change the designation, rights, preferences, or
 
 4           limitations of all or part of the shares of the class;
 
 5      (5)  change the shares of all or part of the class into a
 
 6           different number of shares of the same class;
 
 7      (6)  create a new class of shares having rights or
 
 8           preferences with respect to distributions or to
 
 9           dissolution that are prior, superior, or substantially
 
10           equal to the shares of the class;
 
11      (7)  increase the rights, preferences, or number of
 
12           authorized shares of any class that, after giving
 
13           effect to the amendment, have rights or preferences
 
14           with respect to distributions or to dissolution that
 
15           are prior, superior, or substantially equal to the
 
16           shares of the class;
 
17      (8)  limit or deny an existing preemptive right of all or
 
18           part of the shares of the class; or
 
19      (9)  cancel or otherwise affect rights to distributions or
 
20           dividends that have accumulated but not yet been
 
21           declared on all or part of the shares of the class.
 
22      (b)  If a proposed amendment would affect a series of a
 

 
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 1 class of shares in one or more of the ways described in
 
 2 subsection (a), the shares of that series are entitled to vote as
 
 3 a separate voting group on the proposed amendment.
 
 4      (c)  If a proposed amendment that entitles two or more
 
 5 series of shares to vote as separate voting groups under this
 
 6 section would affect those two or more series in the same or a
 
 7 substantially similar way, the shares of all the series so
 
 8 affected must vote together as a single voting group on the
 
 9 proposed amendment.
 
10      (d)  A class or series of shares is entitled to the voting
 
11 rights granted by this section although the articles of
 
12 incorporation provide that the shares are nonvoting shares.
 
13      Section    -10.05.  Amendment before issuance of shares.  If
 
14 a corporation has not yet issued shares, its incorporators or
 
15 board of directors may adopt one or more amendments to the
 
16 corporation's articles of incorporation.
 
17      Section    -10.06.  Articles of amendment.  A corporation
 
18 amending its articles of incorporation shall deliver to the
 
19 Director for filing articles of amendment setting forth:
 
20      (1)  the name of the corporation;
 
21      (2)  the text of each amendment adopted;
 
22      (3)  if an amendment provides for an exchange,
 

 
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 1           reclassification, or cancellation of issued shares, a
 
 2           statement that provisions necessary to effect the
 
 3           exchange, reclassification, or cancellation have been
 
 4           made;
 
 5      (4)  the date of each amendment's adoption;
 
 6      (5)  if an amendment was adopted by the incorporators or
 
 7           board of directors without shareholder action, a
 
 8           statement to that effect and that shareholder action
 
 9           was not required;
 
10      (6)  if an amendment was approved by the shareholders:
 
11           (i)  the designation, number of outstanding shares,
 
12                number of votes entitled to be cast by each voting
 
13                group entitled to vote separately on the
 
14                amendment, and number of votes of each voting
 
15                group indisputably represented at the meeting;
 
16          (ii)  either the total number of votes cast for and
 
17                against the amendment by each voting group
 
18                entitled to vote separately on the amendment or
 
19                the total number of undisputed votes cast for the
 
20                amendment by each voting group and a statement
 
21                that the number cast for the amendment by each
 
22                voting group was sufficient for approval by that
 

 
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 1                voting group.
 
 2      Section    -10.07.  Restated articles of incorporation.  (a)
 
 3 A corporation's board of directors may restate its articles of
 
 4 incorporation at any time with or without shareholder action.
 
 5      (b)  The restatement may include one or more amendments to
 
 6 the articles. If the restatement includes an amendment requiring
 
 7 shareholder approval, it must be adopted as provided in
 
 8 section    -10.03.
 
 9      (c)  If the board of directors submits a restatement for
 
10 shareholder action, the corporation shall notify each
 
11 shareholder, whether or not entitled to vote, of the proposed
 
12 shareholders' meeting in accordance with section    -7.05. The
 
13 notice must also state that the purpose, or one of the purposes,
 
14 of the meeting is to consider the proposed restatement and
 
15 contain or be accompanied by a copy of the restatement that
 
16 identifies any amendment or other change it would make in the
 
17 articles.
 
18      (d)  A corporation restating its articles of incorporation
 
19 shall deliver to the Director for filing articles of restatement
 
20 setting forth the name of the corporation and the text of the
 
21 restated articles of incorporation together with a certificate
 
22 setting forth:
 

 
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 1      (1)  whether the restatement contains an amendment to the
 
 2           articles requiring shareholder approval and, if it does
 
 3           not, that the board of directors adopted the
 
 4           restatement; or
 
 5      (2)  if the restatement contains an amendment to the
 
 6           articles requiring shareholder approval, the
 
 7           information required by section    -10.06.
 
 8      (e)  Duly adopted restated articles of incorporation
 
 9 supersede the original articles of incorporation and all
 
10 amendments to them.
 
11      (f)  The Director may certify restated articles of
 
12 incorporation, as the articles of incorporation currently in
 
13 effect, without including the certificate information required by
 
14 subsection (d).
 
15      Section    -10.08.  Amendment pursuant to reorganization.
 
16 (a) A corporation's articles of incorporation may be amended
 
17 without action by the board of directors or shareholders to carry
 
18 out a plan of reorganization ordered or decreed by a court of
 
19 competent jurisdiction under federal statute if the articles of
 
20 incorporation after amendment contain only provisions required or
 
21 permitted by section    -2.02.
 
22      (b)  The individual or individuals designated by the court
 

 
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 1 shall deliver to the Director for filing articles of amendment
 
 2 setting forth:
 
 3      (1)  the name of the corporation;
 
 4      (2)  the text of each amendment approved by the court;
 
 5      (3)  the date of the court's order or decree approving the
 
 6           articles of amendment;
 
 7      (4)  the title of the reorganization proceeding in which the
 
 8           order or decree was entered; and
 
 9      (5)  a statement that the court had jurisdiction of the
 
10           proceeding under federal statute.
 
11      (c)  Shareholders of a corporation undergoing reorganization
 
12 do not have dissenters' rights except as and to the extent
 
13 provided in the reorganization plan.
 
14      (d)  This section does not apply after entry of a final
 
15 decree in the reorganization proceeding even though the court
 
16 retains jurisdiction of the proceeding for limited purposes
 
17 unrelated to consummation of the reorganization plan.
 
18      Section    -10.09.  Effect of amendment.  An amendment to
 
19 articles of incorporation does not affect a cause of action
 
20 existing against or in favor of the corporation, a proceeding to
 
21 which the corporation is a party, or the existing rights of
 
22 persons other than shareholders of the corporation. An amendment
 

 
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 1 changing a corporation's name does not abate a proceeding brought
 
 2 by or against the corporation in its former name.
 
 3                           Subchapter B.
 
 4                        AMENDMENT OF BYLAWS
 
 5      Section    -10.20.  Amendment by board of directors or
 
 6 shareholders.  (a) A corporation's board of directors may amend
 
 7 or repeal the corporation's bylaws unless:
 
 8      (1)  the articles of incorporation or this Act reserve this
 
 9           power exclusively to the shareholders in whole or part;
 
10           or
 
11      (2)  the shareholders in amending or repealing a particular
 
12           bylaw provide expressly that the board of directors may
 
13           not amend or repeal that bylaw.
 
14      (b)  A corporation's shareholders may amend or repeal the
 
15 corporation's bylaws even though the bylaws may also be amended
 
16 or repealed by its board of directors.
 
17      Section    -10.21.  Bylaw increasing quorum or voting
 
18 requirement for shareholders.(a) If authorized by the articles
 
19 of incorporation, the shareholders may adopt or amend a bylaw
 
20 that fixes a greater quorum or voting requirement for
 
21 shareholders (or voting groups of shareholders) than is required
 
22 by this Act. The adoption or amendment of a bylaw that adds,
 

 
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 1 changes, or deletes a greater quorum or voting requirement for
 
 2 shareholders must meet the same quorum requirement and be adopted
 
 3 by the same vote and voting groups required to take action under
 
 4 the quorum and voting requirement then in effect or proposed to
 
 5 be adopted, whichever is greater.
 
 6      (b)  A bylaw that fixes a greater quorum or voting
 
 7 requirement for shareholders under subsection (a) may not be
 
 8 adopted, amended, or repealed by the board of directors.
 
 9      Section    -10.22.  Bylaw increasing quorum or voting
 
10 requirement for directors.(a) A bylaw that fixes a greater
 
11 quorum or voting requirement for the board of directors may be
 
12 amended or repealed:
 
13      (1)  if originally adopted by the shareholders, only by the
 
14           shareholders;
 
15      (2)  if originally adopted by the board of directors, either
 
16           by the shareholders or by the board of directors.
 
17      (b)  A bylaw adopted or amended by the shareholders that
 
18 fixes a greater quorum or voting requirement for the board of
 
19 directors may provide that it may be amended or repealed only by
 
20 a specified vote of either the shareholders or the board of
 
21 directors.
 
22      (c)  Action by the board of directors under subsection
 

 
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 1 (a)(2) to adopt or amend a bylaw that changes the quorum or
 
 2 voting requirement for the board of directors must meet the same
 
 3 quorum requirement and be adopted by the same vote required to
 
 4 take action under the quorum and voting requirement then in
 
 5 effect or proposed to be adopted, whichever is greater.
 
 6                            CHAPTER 11
 
 7                     MERGER AND SHARE EXCHANGE
 
 8      Section    -11.01.  Merger.  (a) One or more corporations
 
 9 may merge into another corporation if the board of directors of
 
10 each corporation adopts and its shareholders (if required by
 
11 section    -11.03) approve a plan of merger.
 
12      (b) The plan of merger must set forth:
 
13      (1)  the name of each corporation planning to merge and the
 
14           name of the surviving corporation into which each other
 
15           corporation plans to merge;
 
16      (2)  the terms and conditions of the merger; and
 
17      (3)  the manner and basis of converting the shares of each
 
18           corporation into shares, obligations, or other
 
19           securities of the surviving or any other corporation or
 
20           into cash or other property in whole or in part.
 
21      (c)  The plan of merger may set forth:
 
22      (1)  amendments to the articles of incorporation of the
 

 
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 1           surviving corporation and;
 
 2      (2)  other provisions relating to the merger.
 
 3      Section    -11.02.  Share exchange.(a) A corporation
 
 4 acquire all of the outstanding shares of one or more classes or
 
 5 series of another corporation if the board of directors of each
 
 6 corporation adopts and its shareholders (if required by
 
 7 section    -11.03) approve the exchange.
 
 8      (b)  The plan of exchange must set forth:
 
 9      (1)  the name of the corporation whose shares will be
 
10           acquired and the name of the acquiring corporation;
 
11      (2)  the terms and conditions of the exchange;
 
12      (3)  the manner and basis of exchanging the shares to be
 
13           acquired for shares, obligations, or other securities
 
14           of the acquiring or any other corporation or for cash
 
15           or other property in whole or in part.
 
16      (c)  The plan of exchange may set forth other provisions
 
17 relating to the exchange.
 
18      (d)  This section does not limit the power of a corporation
 
19 to acquire all or part of the shares of one or more classes or
 
20 series of another corporation through a voluntary exchange or
 
21 otherwise.
 
22      Section    -11.03.  Action plan.  (a) After adopting a plan
 

 
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 1 of merger or share exchange, the board of directors of each
 
 2 corporation party to the merger, and the board of directors of
 
 3 the corporation whose shares will be acquired in the share
 
 4 exchange, shall submit the plan of merger (except as provided in
 
 5 subsection (g)) or share exchange for approval by its
 
 6 shareholders.
 
 7      (b)  For a plan of merger or share exchange to be approved:
 
 8      (1)  the board of directors must recommend the plan of
 
 9           merger or share exchange to the shareholders, unless
 
10           the board of directors determines that because of
 
11           conflict of interest or other special circumstances it
 
12           should make no recommendation and communicates the
 
13           basis for its determination to the shareholders with
 
14           the plan; and
 
15      (2)  the shareholders entitled to vote must approve the
 
16           plan.
 
17      (c)  The board of directors may condition its submission of
 
18 the proposed merger or share exchange on any basis.
 
19      (d)  The corporation shall notify each shareholder, whether
 
20 or not entitled to vote, of the proposed shareholders meeting in
 
21 accordance with section    -7.05.  The notice must also state
 
22 that the purpose, or one of the purposes, of the meeting is to
 

 
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 1 consider the plan of merger or share exchange and contain or be
 
 2 accompanied by a copy or summary of the plan.
 
 3      (e)  With respect to corporations incorporated on or after
 
 4 July 1, 1987, at such a meeting, a vote of the shareholders shall
 
 5 be taken on the proposed plan.  The plan shall be approved upon
 
 6 receiving the affirmative vote of the holders of a majority of
 
 7 each class of the shares entitled to vote thereon as a class and
 
 8 of the total shares entitled to vote thereon.  Any class of
 
 9 shares of any such corporation shall be entitled to vote as a
 
10 class if any such plan contains any provision which, if contained
 
11 in a proposed amendment to articles of incorporation, would
 
12 entitle such class of shares to vote as a class and, in the case
 
13 of an exchange, if the class is included in the exchange.
 
14      (f)  With respect to corporations incorporated before July
 
15 1, 1987, at such meeting, a vote of the shareholders shall be
 
16 taken on the proposed plan.  The plan shall be approved upon
 
17 receiving the affirmative vote of the holders of three-fourths of
 
18 all the issued and outstanding shares of stock having voting
 
19 power even though their right to vote is otherwise restricted or
 
20 denied by the articles, bylaws, or resolutions of any such
 
21 corporation.  The articles of incorporation may be amended by the
 
22 vote set forth in the preceding sentence to provide for a lesser
 

 
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 1 proportion of shares, or of any class or series thereof, than is
 
 2 provided in the preceding sentence, in which case the articles of
 
 3 incorporation shall control, provided that said lesser proportion
 
 4 shall be not less than the proportion set forth in subsection (e)
 
 5 of this section.
 
 6      (g)  Separate voting by voting groups is required:
 
 7      (1)  on a plan of merger if the plan contains a provision
 
 8           that, if contained in a proposed amendment to articles
 
 9           of incorporation, would require action by one or more
 
10           separate voting groups on the proposed amendment under
 
11           section    -10.04;
 
12      (2)  on a plan of share exchange by each class or series of
 
13           shares included in the exchange, with each class or
 
14           series constituting a separate voting group.
 
15      (h)  Action by the shareholders of the surviving corporation
 
16 on a plan of merger is not required if:
 
17      (1)  the articles of incorporation of the surviving
 
18           corporation will not differ (except for amendments
 
19           enumerated in section    -10.02) from articles before
 
20           the merger;
 
21      (2)  each shareholder of the surviving corporation whose
 
22           shares were outstanding immediately before the
 

 
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 1           effective date of the merger will hold the same number
 
 2           of shares, with identical designations, preferences,
 
 3           limitations, and relative rights, immediately after;
 
 4      (3)  the number of voting shares outstanding immediately
 
 5           after the merger, plus the number of voting shares
 
 6           issuable as a result of the merger (either by the
 
 7           conversion of securities issued pursuant to the merger
 
 8           or the exercise of rights and warrants issued pursuant
 
 9           to the merger), will not exceed by more that 20 percent
 
10           the total number of voting shares of the surviving
 
11           corporation outstanding immediately before the merger;
 
12           and
 
13      (4)  the number of participating shares outstanding
 
14           immediately after the merger, plus the number of
 
15           participating shares issuable as a result of the merger
 
16           (either by the conversion of securities issued pursuant
 
17           to the merger or exercise of rights and warrants issued
 
18           pursuant to the merger), will not exceed by more than
 
19           20 percent the total number of participating shares
 
20           outstanding immediately before the merger.
 
21           (i)  As used in subsection (h):
 
22      (1)  "Participating shares" means shares that entitle their
 

 
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 1           holders to participate without limitations in
 
 2           distributions.
 
 3      (2)  "Voting shares" means shares that entitle their holders
 
 4           to vote unconditionally in elections of directors.
 
 5      (j)  After a merger or share exchange is authorized, and at
 
 6 any time before articles of merger or share exchange are filed,
 
 7 the planed merger or share exchange may be abandoned (subject to
 
 8 any contractual rights), without further shareholder action, in
 
 9 accordance with the procedure set forth in the plan of merger or
 
10 share exchange or, if none is set forth, in the manner determined
 
11 by the board of directors.
 
12      Section    -11.04.  Merger of subsidiary.(a) A parent
 
13 corporation owning at least 90 percent of the outstanding shares
 
14 of each class of a subsidiary corporation may merge the
 
15 subsidiary into itself without approval of the shareholders of
 
16 the parent or subsidiary.
 
17      (b)  The board of directors of the parent shall adopt a plan
 
18 of merger that sets forth:
 
19      (1)  the names of the parent and subsidiary; and
 
20      (2)  the manner and basis of converting the shares of the
 
21           subsidiary into shares, obligations, or other
 
22           securities of the parent or any other corporation or
 

 
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 1           into cash or other property in whole or in part.
 
 2      (c)  The parent shall mail a copy of the plan of merger to
 
 3 each shareholder of the subsidiary who does not waive the mailing
 
 4 requirement in writing.
 
 5      (d)  The parent may not deliver articles of merger to the
 
 6 Director for filing until at least 30 days after the date it
 
 7 mailed a copy of the plan of merger to each shareholder of the
 
 8 subsidiary who did not waive the mailing requirement.
 
 9      (e)  Articles of merger under this section may not contain
 
10 amendments to the articles of incorporation of the parent
 
11 corporation (except for amendments enumerated in
 
12 section    -10.02).
 
13      Section    -11.05.  Articles of merger or share exchange.
 
14 (a) After a plan of merger or share exchange is approved by the
 
15 shareholders, or adopted by the board of directors if
 
16 shareholders, or adopted by the board of directors if shareholder
 
17 approval is not required, the surviving or acquiring corporation
 
18 shall deliver to the Director for filing articles of merger or
 
19 share exchange setting forth:
 
20      (1)  a statement that the plan of merger or share exchange
 
21           has been approved by the board of directors of each
 
22           corporation involved in the merger or share exchange;
 

 
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 1      (2)  if shareholder approval was not required, a statement
 
 2           to that effect;
 
 3      (3)  if approval of the shareholders of one or more
 
 4           corporations party to the merger or share exchange was
 
 5           required:
 
 6           (i)  the designation, number of outstanding shares, and
 
 7                number of votes entitled to be cast by each voting
 
 8                group entitled to vote separately on the plan as
 
 9                to each corporation; and
 
10          (ii)  either the total number of votes cast for and
 
11                against the plan by each voting group entitled to
 
12                vote separately on the plan or the total number of
 
13                undisputed votes cast for the plan separately by
 
14                each voting group and a statement that the number
 
15                cast for the plan by each voting group was
 
16                sufficient for approval by that voting group; and
 
17      (4)  if a merger, a statement indicating the changes in the
 
18           articles of incorporation of the surviving corporation
 
19           to be effected by the merger.
 
20      (b)  A merger or share exchange takes effect upon the
 
21 effective date of the articles of merger or share exchange.
 
22      Section    -11.06.  Effect of merger or share exchange.  (a)
 

 
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 1 When a merger takes effect:
 
 2      (1)  every other corporation party to the merger merges into
 
 3           the surviving corporation and the separate existence of
 
 4           every corporation except the surviving corporation
 
 5           ceases;
 
 6      (2)  the title to all real estate and other property owned
 
 7           by each corporation party to the merger is vested in
 
 8           the surviving corporation without reversion or
 
 9           impairment;
 
10      (3)  the surviving corporation has all liabilities of each
 
11           corporation party to the merger;
 
12      (4)  a proceeding pending against any corporation party to
 
13           the merger may be continued as if the merger did not
 
14           occur or the surviving corporation may be substituted
 
15           in the proceeding for the corporation whose existence
 
16           ceased;
 
17      (5)  the articles of incorporation of the surviving
 
18           corporation are amended to the extent provided in the
 
19           plan of merger and indicated in the articles of merger;
 
20           and
 
21      (6)  the shares of each corporation party to the merger that
 
22           are to be converted into shares, obligations, or other
 

 
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 1           securities of the surviving or any other corporation or
 
 2           into cash or other property are converted, and the
 
 3           former holders of the shares are entitled only to the
 
 4           rights provided in the articles of merger or to their
 
 5           rights under chapter 13.
 
 6      (b)  When a share exchange takes effect, the shares of each
 
 7 acquired corporation are exchanged as provided in the plan, and
 
 8 the former holders of the shares are entitled only to the
 
 9 exchange rights provided in the articles of share exchange or to
 
10 their rights under chapter 13.
 
11      Section    -11.07.  Merger or share exchange with foreign
 
12 corporation.(a) One or more foreign corporations may merge or
 
13 enter into a share exchange with one or more domestic
 
14 corporations if:
 
15      (1)  in a merger, the merger is permitted by the law of the
 
16           state or country under whose law each foreign
 
17           corporation is incorporated and each foreign
 
18           corporation complies with that law in effecting the
 
19           merger;
 
20      (2)  in a share exchange, the corporation whose shares will
 
21           be acquired is a domestic corporation, whether or not a
 
22           share exchange is permitted by the law of the state or
 

 
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 1           country under whose law the acquiring corporation is
 
 2           incorporated;
 
 3      (3)  the foreign corporation complies with section    -11.05
 
 4           if it is the surviving corporation of the merger or
 
 5           acquiring corporation of the share exchange; and
 
 6      (4)  each domestic corporation complies with the applicable
 
 7           provisions of sections    -11.01 through 11.04 and, if
 
 8           it is the surviving corporation of the merger or
 
 9           acquiring corporation of the share exchange, with
 
10           section    -11.05.
 
11      (b)  Upon the merger or share exchange taking effect, the
 
12 surviving foreign corporation of a merger and the acquiring
 
13 foreign corporation of a share exchange is deemed:
 
14      (1)  to appoint the Director as its agent for service of
 
15           process in a proceeding to enforce any obligation or
 
16           the rights of dissenting shareholders of each domestic
 
17           corporation party to the merger or share exchange; and
 
18      (2)  to agree that it will promptly pay to the dissenting
 
19           shareholders of each domestic corporation party to the
 
20           merger or share exchange the amount, if any, to which
 
21           they are entitled under chapter 13.
 
22      (c)  This section does not limit the power of a foreign
 

 
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 1 corporation to acquire all or part of the shares of one or more
 
 2 classes or series of a domestic corporation through a voluntary
 
 3 exchange or otherwise.
 
 4      Section    -11.08.  Merger of subsidiary corporations  (a)
 
 5 Any corporation owning at least ninety per cent of the
 
 6 outstanding shares of each class of two or more corporations may
 
 7 adopt a plan of merger pursuant to section    -11.04 and deliver
 
 8 to the Director for filing articles of merger. The articles of
 
 9 merger shall be signed by the parent corporation and the
 
10 surviving subsidiary corporation, and the plan of merger shall
 
11 set forth:
 
12      (1)  The name of the parent corporation owning at least
 
13           ninety per cent of the shares of the subsidiary
 
14           corporations, the name of any nonsurviving subsidiary
 
15           corporation, and the name of the surviving subsidiary
 
16           corporation; and
 
17      (2)  The manner and basis of converting the shares of any
 
18           nonsurviving subsidiary corporation into shares,
 
19           obligations, or other securities of the surviving
 
20           subsidiary corporation or of any other corporation or,
 
21           in whole or in part, into cash or other property.
 
22      (b)  A copy of the plan of merger shall be mailed to each
 

 
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 1 shareholder of record of any nonsurviving  subsidiary
 
 2 corporation, except the parent corporation.
 
 3      (c)  Articles of merger shall be delivered to the Director
 
 4 for filing and shall set forth:
 
 5      (1)  A statement that the plan of merger has been approved
 
 6           by the board of directors of the parent corporation;
 
 7      (2)  The number of outstanding shares of each class of any
 
 8           nonsurviving subsidiary corporation and the number of
 
 9           such shares of each class owned by the parent
 
10           corporation; and
 
11      (3)  The date a copy of the plan of merger is mailed to
 
12           shareholders of any nonsurviving subsidiary corporation
 
13           entitled to receive the plan of merger.
 
14      (d)  On and after the thirtieth day after the mailing of a
 
15 copy of the plan of merger to shareholders of any nonsurviving
 
16 subsidiary corporation or upon the waiver thereof by the holders
 
17 of all outstanding shares, the articles of merger shall be
 
18 delivered to the Director for filing.
 
19      Section    -11.08.  Merger with or into domestic or foreign
 
20 limited liability company.(a) As used in this section, the
 
21 terms "limited liability company" and "foreign limited liability
 
22 company" shall have the meanings defined in section 428-101.
 

 
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 1      (b)  One or more corporations or foreign corporations may
 
 2 merge with or into one or more limited liability companies or
 
 3 foreign limited liability companies if in the case of a domestic
 
 4 corporation the board of directors and the shareholders approve a
 
 5 plan of merger as provided in sections    -11.01 and    -11.03,
 
 6 and in the case of a foreign corporation it complies with section
 
 7     -11.07.
 
 8      (c)  In addition to the requirements of section    -11.05,
 
 9 the plan of merger shall also set forth:
 
10      (1)  The name of each limited liability company and foreign
 
11           limited liability company proposing to merge; and
 
12      (2)  If the surviving entity is a limited liability company
 
13           or a foreign limited liability company:
 
14           (A)  The manner and basis of converting the shares of
 
15                each corporation or foreign corporation and the
 
16                interests as members of each limited liability
 
17                company or foreign limited liability company into
 
18                interests as members of the surviving domestic
 
19                limited liability company or foreign limited
 
20                liability company pursuant to such merger, or a
 
21                statement that such information is contained in
 
22                the operating agreement proposed for such
 

 
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 1                surviving entity;
 
 2           (B)  The contents of the articles of organization of
 
 3                the surviving entity pursuant to such merger in
 
 4                accordance with section 428-203 if a domestic
 
 5                limited liability company is the surviving entity,
 
 6                or in accordance with comparable provisions of
 
 7                applicable law if a foreign limited liability
 
 8                company is the surviving entity; and
 
 9           (C)  The contents of the operating agreement to be
 
10                entered into among the persons who will be the
 
11                members of the surviving entity pursuant to the
 
12                merger, which shall, if not separately provided in
 
13                the plan of merger, state the manner and basis for
 
14                the conversion of the shares of each merging
 
15                corporation or foreign corporation and the
 
16                interests as members of each merging limited
 
17                liability company or foreign limited liability
 
18                company into interests as members of the surviving
 
19                entity and that notice of the approval of the
 
20                merger will be deemed to be execution of the
 
21                operating agreement by such persons.
 
22      (d)  After a plan of merger is approved by the shareholders
 

 
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 1 of each corporation and foreign corporation as provided in
 
 2 subsection (b), and by the members of each domestic limited
 
 3 liability company as provided in section 428-904, or as provided
 
 4 in comparable provisions of applicable law for each foreign
 
 5 limited liability company, the surviving entity shall deliver to
 
 6 the office of the Director for filing articles of merger
 
 7 complying with section    -11.05, executed on behalf of each
 
 8 party to the merger.
 
 9      (e)  Section    -11.06 shall be applicable to each
 
10 corporation that is a party to the plan of merger.
 
11      (f)  If a foreign corporation is a party to the merger,
 
12 section    -11.07 shall apply to such foreign corporation.
 
13                            CHAPTER 12
 
14                          SALE OF ASSETS
 
15      Section    -12.01.  Sale of assets in regular course of
 
16 business and mortgage of assets.  (a) A corporation may, on the
 
17 terms and conditions and for the consideration determined by the
 
18 board of directors:
 
19           (1)  sell, lease, exchange, or otherwise dispose of
 
20                all, or substantially all, of its property in the
 
21                usual and regular course of business;
 
22           (2)  mortgage, pledge, dedicate to the repayment of
 

 
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 1                indebtedness (whether with or without recourse),
 
 2                or otherwise encumber any or all of its property
 
 3                whether or not in the usual and regular course of
 
 4                business; or
 
 5           (3)  transfer any or all of its property to a
 
 6                corporation all the shares of which are owned by
 
 7                the corporation.
 
 8      (b)  Unless the articles of incorporation require it,
 
 9 approval by the shareholders of a transaction described in
 
10 subsection (a) is not required.
 
11      Section    -12.02.  Sale of assets other than in regular
 
12 course of business.(a) A corporation may sell, lease, exchange,
 
13 or otherwise dispose of all, or substantially all, of its
 
14 property (with or without the good will), otherwise than in the
 
15 usual and regular course of business, on the terms and conditions
 
16 and for the consideration determined by the corporation's board
 
17 of directors, if the board of directors proposes and its
 
18 shareholders approve the proposed transaction.
 
19      (b)  For a transaction to be authorized:
 
20      (1)  the board of directors must recommend the proposed
 
21           transaction to the shareholders unless the board of
 
22           directors determines that because of conflict of
 

 
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 1           interest or other special circumstances it should make
 
 2           no recommendation and communicates the basis for its
 
 3           determination to the shareholders with the submission
 
 4           of the proposed transaction; and
 
 5      (2)  the shareholders entitled to vote must approve the
 
 6           transaction.
 
 7      (c)  The board of directors may condition its submission of
 
 8 the proposed transaction on any basis.
 
 9      (d)  The corporation shall notify each shareholder, whether
 
10 or not entitled to vote, of the proposed shareholders' meeting in
 
11 accordance with section    -7.05. The notice must also state that
 
12 the purpose, or one of the purposes, of the meeting is to
 
13 consider the sale, lease, exchange, or other disposition of all,
 
14 or substantially all, the property of the corporation and contain
 
15 or be accompanied by a description of the transaction.
 
16      (e)  With respect to the corporations incorporated on or
 
17 after July 1, 1987, at such meeting the shareholders may
 
18 authorize the sale, lease, exchange, or other disposition and may
 
19 fix, or may authorize the board of directors to fix, any or all
 
20 of the terms and conditions thereof and the consideration to be
 
21 received by the corporation therefor.  The authorization shall
 
22 require the affirmative vote of the holders of a majority of the
 

 
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 1 shares of the corporation entitled to vote thereon, unless any
 
 2 class of shares is entitled to vote thereon as a class, in which
 
 3 event the authorization shall require the affirmative vote of the
 
 4 holders of a majority of the shares of each class of shares
 
 5 entitled to vote as a class thereon and of the total shares
 
 6 entitled to vote thereon;
 
 7      (f)  With respect to corporations incorporated before July
 
 8 1, 1987, at such meeting the shareholders may authorize the sale,
 
 9 lease, exchange, or other disposition and may fix, or may
 
10 authorize the board of directors to fix, any or all of the terms
 
11 and conditions therefor.  The authorization shall require the
 
12 affirmative vote of the holders of three-fourths of the shares of
 
13 the corporation entitled to vote as a class thereon and of the
 
14 total shares entitled to vote thereon.  The articles of
 
15 incorporation may be amended by the vote set forth in the
 
16 preceding sentence to provide for a lesser proportion of shares,
 
17 or of any class or series thereof, than is provided in the
 
18 preceding sentence, in which case the articles of incorporation
 
19 shall control, provided that said lesser proportion shall not be
 
20 less than the proportion set forth in subsection (e) of this
 
21 section; and
 
22      (g)  After a sale, lease, exchange, or other disposition of
 

 
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 1 property is authorized, the transaction may be abandoned (subject
 
 2 to any contractual rights) without further shareholder action.
 
 3      (h)  A transaction that constitutes a distribution is
 
 4 governed by section    -6.40 and not by this section.
 
 5                            CHAPTER 13
 
 6                        DISSENTERS' RIGHTS
 
 7                           Subchapter A.
 
 8          RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
 
 9      Section    -13.01.  Definitions.  In this Act:
 
10      (1)  ``Corporation'' means the issuer of the shares held by
 
11           a dissenter before the corporate action, or the
 
12           surviving or acquiring corporation by merger or share
 
13           exchange of that issuer.
 
14      (2)  ``Dissenter'' means a shareholder who is entitled to
 
15           dissent from corporate action under section    -13.02
 
16           and who exercises that right when and in the manner
 
17           required by sections    -13.20 through    -13.28.
 
18      (3)  ``Fair value,'' with respect to a dissenter's shares,
 
19           means the value of the shares immediately before the
 
20           effectuation of the corporate action to which the
 
21           dissenter objects, excluding any appreciation or
 
22           depreciation in anticipation of the corporate action
 

 
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 1           unless exclusion would be inequitable.
 
 2      (4)  ``Interest'' means interest from the effective date of
 
 3           the corporate action until the date of payment, at the
 
 4           average rate currently paid by the corporation on its
 
 5           principal bank loans or, if none, at a rate that is
 
 6           fair and equitable under all the circumstances.
 
 7      (5)  ``Record shareholder'' means the person in whose name
 
 8           shares are registered in the records of a corporation
 
 9           or the beneficial owner of shares to the extent of the
 
10           rights granted by a nominee certificate on file with a
 
11           corporation.
 
12      (6)  ``Beneficial shareholder'' means the person who is a
 
13           beneficial owner of shares held in a voting trust or by
 
14           a nominee as the record shareholder.
 
15      (7)  ``Shareholder'' means the record shareholder or the
 
16           beneficial shareholder.
 
17      Section    -13.02.  Right to dissent.(a) A shareholder is
 
18 entitled to dissent from, and obtain payment of the fair value of
 
19 such shareholder's shares in the event of, any of the following
 
20 corporate actions:
 
21      (1)  consummation of a plan of merger to which the
 
22           corporation is a party (i) if shareholder approval is
 

 
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 1           required for the merger by section    -11.03 or the
 
 2           articles of incorporation and the shareholder is
 
 3           entitled to vote on the merger or (ii) if the
 
 4           corporation is a subsidiary that is merged with its
 
 5           parent under section    -11.04;
 
 6      (2)  consummation of a plan of share exchange to which the
 
 7           corporation is a party as the corporation whose shares
 
 8           will be acquired, if the shareholder is entitled to
 
 9           vote on the plan;
 
10      (3)  consummation of a sale or exchange of all, or
 
11           substantially all, of the property of the corporation
 
12           other than in the usual and regular course of business,
 
13           if the shareholder is entitled to vote on the sale or
 
14           exchange, including a sale in dissolution, but not
 
15           including a sale pursuant to court order or a sale for
 
16           cash pursuant to a plan by which all or substantially
 
17           all of the net proceeds of the sale will be distributed
 
18           to the shareholders within one year after the date of
 
19           sale;
 
20      (4)  an amendment of the articles of incorporation that
 
21           materially and adversely affects rights in respect of a
 
22           dissenter's shares because it:
 

 
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 1           (i)  alters or abolishes a preferential right of the
 
 2                shares;
 
 3          (ii)  creates, alters, or abolishes a right in respect
 
 4                of redemption, including a provision respecting a
 
 5                sinking fund for the redemption or repurchase, of
 
 6                the shares;
 
 7         (iii)  alters or abolishes a preemptive right of the
 
 8                holder of the shares to acquire shares or other
 
 9                securities;
 
10          (iv)  excludes or limits the right of the shares to vote
 
11                on any matter, or to cumulate votes, other than a
 
12                limitation by dilution through issuance of shares
 
13                or other securities with similar voting rights; or
 
14           (v)  reduces the number of shares owned by the
 
15                shareholder to a fraction of a share if the
 
16                fractional share so created is to be acquired for
 
17                cash under section    -6.04;
 
18      (5)  any corporate action taken pursuant to a shareholder
 
19           vote to the extent the articles of incorporation,
 
20           bylaws, or a resolution of the board of directors
 
21           provides that voting or nonvoting shareholders are
 
22           entitled to dissent and obtain payment for their
 

 
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 1           shares; or
 
 2      (6)  consummation of a plan of conversion to which the
 
 3           corporation is the converting entity, if the
 
 4           shareholder is entitled to vote on the plan.
 
 5      (b)  A shareholder entitled to dissent and obtain payment
 
 6 for such shareholder's shares under this chapter may not
 
 7 challenge the corporate action creating such shareholder's
 
 8 entitlement unless the action is unlawful or fraudulent with
 
 9 respect to the shareholder or the corporation.
 
10      Section    -13.03.  Dissent by nominees and beneficial
 
11 owners.(a) A record shareholder may assert dissenters' rights
 
12 as to fewer than all the shares registered in such shareholder's
 
13 name only if such shareholder dissents with respect to all shares
 
14 beneficially owned by any one person and notifies the corporation
 
15 in writing of the name and address of each person on whose behalf
 
16 such record shareholder asserts dissenters' rights. The rights of
 
17 a partial dissenter under this subsection are determined as if
 
18 the shares as to which such partial dissenter dissents and such
 
19 partial dissenter's other shares were registered in the names of
 
20 different shareholders.
 
21      (b)  A beneficial shareholder may assert dissenters' rights
 
22 as to shares held on such beneficial shareholder's behalf only
 

 
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 1 if:
 
 2      (1)  such beneficial shareholder submits to the corporation
 
 3           the record shareholder's written consent to the dissent
 
 4           not later than the time the beneficial shareholder
 
 5           asserts dissenters' rights; and
 
 6      (2)  such beneficial shareholder does so with respect to all
 
 7           shares of which such beneficial shareholder is the
 
 8           beneficial shareholder or over which such beneficial
 
 9           shareholder has power to direct the vote.
 
10                           Subchapter B.
 
11           PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
 
12      Section    -13.20.  Notice of dissenters' rights.  (a) If
 
13 proposed corporate action creating dissenters' rights under
 
14 section    -13.02 is submitted to a vote at a shareholders'
 
15 meeting, the meeting notice must state that shareholders are or
 
16 may be entitled to assert dissenters' rights under this chapter
 
17 and be accompanied by a copy of this chapter.
 
18      (b)  If corporate action creating dissenters' rights under
 
19 section    -13.02 is taken without a vote of shareholders, the
 
20 corporation shall notify in writing all shareholders entitled to
 
21 assert dissenters' rights that the action was taken and send them
 
22 the dissenters' notice described in section    -13.22.
 

 
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 1      Section    -13.21.  Notice of intent to demand payment.(a)
 
 2 If proposed corporate action creating dissenters' rights under
 
 3 section    -13.02 is submitted to a vote at a shareholders'
 
 4 meeting, a shareholder who wishes to assert dissenters' rights
 
 5 (1) must deliver to the corporation before the vote is taken
 
 6 written notice of such shareholder's intent to demand payment for
 
 7 such shareholder's shares if the proposed action is effectuated
 
 8 and (2) must not vote such shareholder's shares in favor of the
 
 9 proposed action.
 
10      (b)  A shareholder who does not satisfy the requirements of
 
11 subsection (a) is not entitled to payment for such shareholder's
 
12 shares under this chapter.
 
13      Section    -13.22.  Dissenters' notice.  (a) If proposed
 
14 corporate action creating dissenters' rights under
 
15 section    -13.02 is authorized at a shareholders' meeting, the
 
16 corporation shall deliver a written dissenters' notice to all
 
17 shareholders who satisfied the requirements of section    -13.21.
 
18      (b)  The dissenters' notice must be sent no later than 10
 
19 days after the corporate action was taken, and must:
 
20      (1)  state where the payment demand must be sent and where
 
21           and when certificates for certificated shares must be
 
22           deposited;
 

 
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 1      (2)  inform holders of uncertificated shares to what extent
 
 2           transfer of the shares will be restricted after the
 
 3           payment demand is received;
 
 4      (3)  supply a form for demanding payment that includes the
 
 5           date of the first announcement to news media or to
 
 6           shareholders of the terms of the proposed corporate
 
 7           action and requires that the person asserting
 
 8           dissenters' rights certify whether or not such person
 
 9           acquired beneficial ownership of the shares before that
 
10           date;
 
11      (4)  set a date by which the corporation must receive the
 
12           payment demand, which date may not be fewer than 30 nor
 
13           more than 60 days after the date the subsection (a)
 
14           notice is delivered; and
 
15      (5)  be accompanied by a copy of this chapter.
 
16      Section    -13.23.  Duty to demand payment.(a) A
 
17 shareholder sent a dissenters' notice described in
 
18 section    -13.22 must demand payment, certify whether such
 
19 shareholder acquired beneficial ownership of the shares before
 
20 the date required to be set forth in the dissenter's notice
 
21 pursuant to section    -13.22(b)(3), and deposit such
 
22 shareholder's certificates in accordance with the terms of the
 

 
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 1 notice.
 
 2      (b)  The shareholder who demands payment and deposits such
 
 3 shareholder's share certificates under section (a) retains all
 
 4 other rights of a shareholder until these rights are cancelled or
 
 5 modified by the taking of the proposed corporate action.
 
 6      (c)  A shareholder who does not demand payment or deposit
 
 7 such shareholder's share certificates where required, each by the
 
 8 date set in the dissenters' notice, is not entitled to payment
 
 9 for such shareholder's shares under this chapter.
 
10      Section    -13.24.  Share restrictions.  (a) The corporation
 
11 may restrict the transfer of uncertificated shares from the date
 
12 the demand for their payment is received until the proposed
 
13 corporate action is taken or the restrictions released under
 
14 section    -13.26.
 
15      (b)  The person for whom dissenters' rights are asserted as
 
16 to uncertificated shares retains all other rights of a
 
17 shareholder until these rights are cancelled or modified by the
 
18 taking of the proposed corporate action.
 
19      Section    -13.25.  Payment.(a) Except as provided in
 
20 section    -13.27, as soon as the proposed corporate action is
 
21 taken, or upon receipt of a payment demand, the corporation shall
 
22 pay each dissenter who complied with section    -13.23 the amount
 

 
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 1 the corporation estimates to be the fair value of the dissenter's
 
 2 shares, plus accrued interest.
 
 3      (b)  The payment must be accompanied by:
 
 4      (1)  the corporation's balance sheet as of the end of a
 
 5           fiscal year ending not more than 16 months before the
 
 6           date of payment, an income statement for that year, a
 
 7           statement of changes in shareholders' equity for that
 
 8           year, and the latest available interim financial
 
 9           statements, if any;
 
10      (2)  a statement of the corporation's estimate of the fair
 
11           value of the shares;
 
12      (3)  an explanation of how the interest was calculated;
 
13      (4)  a statement of the dissenter's right to demand payment
 
14           under section    -13.28; and
 
15      (5)  a copy of this chapter.
 
16      Section    -13.26.  Failure to take action.(a) If the
 
17 corporation does not take the proposed action within 60 days
 
18 after the date set for demanding payment and depositing share
 
19 certificates, the corporation shall return the deposited
 
20 certificates and release the transfer restrictions imposed on
 
21 uncertificated shares.
 
22      (b)  If after returning deposited certificates and releasing
 

 
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 1 transfer restrictions, the corporation takes the proposed action,
 
 2 it must send a new dissenters' notice under section    -13.22 and
 
 3 repeat the payment demand procedure.
 
 4      Section    -13.27.  After-acquired shares.(a) A
 
 5 corporation may elect to withhold payment required by
 
 6 section    -13.25 from a dissenter unless the dissenter was the
 
 7 beneficial owner of the shares before the date set forth in the
 
 8 dissenters' notice as the date of the first announcement to news
 
 9 media or to shareholders of the terms of the proposed corporate
 
10 action.
 
11      (b)  To the extent the corporation elects to withhold
 
12 payment under subsection (a), after taking the proposed corporate
 
13 action, it shall estimate the fair value of the shares, plus
 
14 accrued interest, and shall pay this amount to each dissenter who
 
15 agrees to accept it in full satisfaction of such dissenter's
 
16 demand. The corporation shall send with its offer a statement of
 
17 its estimate of the fair value of the shares, an explanation of
 
18 how the interest was calculated, and a statement of the
 
19 dissenter's right to demand payment under section    -13.28.
 
20      Section    -13.28.  Procedure if shareholder dissatisfied
 
21 with payment or offer.(a) A dissenter may notify the
 
22 corporation in writing of the dissenter's own estimate of the
 

 
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 1 fair value of the dissenter's shares and amount of interest due,
 
 2 and demand payment of the dissenter's estimate (less any payment
 
 3 under section    -13.25), or reject the corporation's offer under
 
 4 section    -13.27 and demand payment of the fair value of the
 
 5 dissenter's shares and interest due, if:
 
 6      (1)  the dissenter believes that the amount paid under
 
 7           section    -13.25 or offered under section    -13.27 is
 
 8           less than the fair value of the dissenter's shares or
 
 9           that the interest due is incorrectly calculated;
 
10      (2)  the corporation fails to make payment under
 
11           section    -13.25 within 60 days after the date set for
 
12           demanding payment; or
 
13      (3)  the corporation, having failed to take the proposed
 
14           action, does not return the deposited certificates or
 
15           release the transfer restrictions imposed on
 
16           uncertificated shares within 60 days after the date set
 
17           for demanding payment.
 
18      (b)  A dissenter waives such dissenter's right to demand
 
19 payment under this section unless the dissenter notifies the
 
20 corporation of the dissenter's demand in writing under subsection
 
21 (a) within 30 days after the corporation made or offered payment
 
22 for the dissenter's shares.
 

 
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 1                           Subchapter C.
 
 2                   JUDICIAL APPRAISAL OF SHARES
 
 3      Section    -13.30.  Court action.  (a) If a demand for
 
 4 payment under section    -13.28 remains unsettled, the
 
 5 corporation shall commence a proceeding within 60 days after
 
 6 receiving the payment demand and petition the court to determine
 
 7 the fair value of the shares and accrued interest. If the
 
 8 corporation does not commence the proceeding within the 60-day
 
 9 period, it shall pay each dissenter whose demand remains
 
10 unsettled the amount demanded.
 
11      (b)  The corporation shall commence the proceeding in the
 
12 circuit court. If the corporation is a foreign corporation
 
13 without a registered office in this State, it shall commence the
 
14 proceeding in the county in this State where the registered
 
15 office of the domestic corporation merged with or whose shares
 
16 were acquired by the foreign corporation was located.
 
17      (c)  The corporation shall make all dissenters (whether or
 
18 not residents of this State) whose demands remain unsettled
 
19 parties to the proceeding as in an action against their shares
 
20 and all parties must be served with a copy of the petition.
 
21 Nonresidents may be served by registered or certified mail or by
 
22 publication as provided by law.
 

 
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 1      (d)  The jurisdiction of the court in which the proceeding
 
 2 is commenced under subsection (b) is plenary and exclusive. The
 
 3 court may appoint one or more persons as appraisers to receive
 
 4 evidence and recommend decision on the question of fair value.
 
 5 The appraisers have the powers described in the order appointing
 
 6 them, or in any amendment to it. The dissenters are entitled to
 
 7 the same discovery rights as parties in other civil proceedings.
 
 8      (e)  Each dissenter made a party to the proceeding is
 
 9 entitled to judgment (1) for the amount, if any, by which the
 
10 court finds the fair value of the dissenter's shares, plus
 
11 interest, exceeds the amount paid by the corporation or (2) for
 
12 the fair value, plus accrued interest, of the dissenter's after-
 
13 acquired shares for which the corporation elected to withhold
 
14 payment under section    -13.27.
 
15      Section    -13.31.  Court costs and counsel fees.  (a) The
 
16 court in an appraisal proceeding commenced under
 
17 section    -13.30 shall determine all costs of the proceeding,
 
18 including the reasonable compensation and expenses of appraisers
 
19 appointed by the court. The court shall assess the costs against
 
20 the corporation, except that the court may assess costs against
 
21 all or some of the dissenters, in amounts the court finds
 
22 equitable, to the extent the court finds the dissenters acted
 

 
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 1 arbitrarily, vexatiously, or not in good faith in demanding
 
 2 payment under section    -13.28.
 
 3      (b)  The court may also assess the fees and expenses of
 
 4 counsel and experts for the respective parties, in amounts the
 
 5 court finds equitable:
 
 6      (1)  against the corporation and in favor of any or all
 
 7           dissenters if the court finds the corporation did not
 
 8           substantially comply with the requirements of
 
 9           sections    -13.20 through    -13.28; or
 
10      (2)  against either the corporation or a dissenter, in favor
 
11           of any other party, if the court finds that the party
 
12           against whom the fees and expenses are assessed acted
 
13           arbitrarily, vexatiously, or not in good faith with
 
14           respect to the rights provided by this chapter.
 
15      (c)  If the court finds that the services of counsel for any
 
16 dissenter were of substantial benefit to other dissenters
 
17 similarly situated, and that the fees for those services should
 
18 not be assessed against the corporation, the court may award to
 
19 these counsel reasonable fees to be paid out of the amounts
 
20 awarded the dissenters who were benefited.
 
21                            CHAPTER 14
 
22                            DISSOLUTION
 

 
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 1                           Subchapter A.
 
 2                       VOLUNTARY DISSOLUTION
 
 3      Section    -14.01.  Dissolution by incorporators or initial
 
 4 directors.  A majority of the incorporators or initial directors
 
 5 of a corporation that has not issued shares or has not commenced
 
 6 business may dissolve the corporation by delivering to the
 
 7 Director for filing articles of dissolution that set forth:
 
 8      (1)  the name of the corporation;
 
 9      (2)  the date of its incorporation;
 
10      (3)  either that none of the corporation's shares has been
 
11           issued or (ii) that the corporation has not commenced
 
12           business;
 
13      (4)  that no debt of the corporation remains unpaid;
 
14      (5)  that the net assets of the corporation remaining after
 
15           winding up have been distributed to the shareholders,
 
16           if shares were issued; and
 
17      (6)  that a majority of the incorporators or initial
 
18           directors authorized the dissolution.
 
19      Section    -14.02.  Dissolution by board of directors and
 
20 shareholders.(a) A corporation's board of directors may propose
 
21 dissolution for submission to the shareholders
 
22      (b)  For a proposal to dissolve to be adopted:
 

 
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 1      (1)  the board of directors must recommend dissolution to
 
 2           the shareholders unless the board of directors
 
 3           determines that because of conflict of interest or
 
 4           other special circumstances it should make no
 
 5           recommendation and communicates the basis for its
 
 6           determination to the shareholders; and
 
 7      (2)  the shareholders entitled to vote must approve the
 
 8           proposal to dissolve as provided in subsection (e).
 
 9      (c)  The board of directors may condition its submission of
 
10 the proposal for dissolution on any basis.
 
11      (d)  The corporation shall notify each shareholder, whether
 
12 or not entitled to vote, of the proposed shareholders' meeting in
 
13 accordance with section    -7.05.  The notice must also state
 
14 that the purpose, or one of the purposes, of the meeting is to
 
15 consider dissolving the corporation.
 
16      (e)  With respect to the corporations incorporated on or
 
17 after July 1, 1987, at such meeting a vote of shareholders
 
18 entitled to vote thereat shall be taken on a resolution to
 
19 dissolve the corporation.  The resolution shall be adopted upon
 
20 receiving the affirmative vote of the holders of a majority of
 
21 the shares of the corporation entitled to vote thereon, unless
 
22 any class of shares is entitled to vote thereon as a class, in
 

 
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 1 which event the resolution shall be adopted upon receiving the
 
 2 affirmative vote of the holders of a majority of the shares of
 
 3 each class of shares entitled to vote thereon as a class and of
 
 4 the total shares entitled to vote thereon;
 
 5      (f)  With respect to corporations incorporated before July
 
 6 1, 1987, at such meeting a vote of shareholders entitled to vote
 
 7 thereat shall be taken on a resolution to dissolve the
 
 8 corporation.  The resolution shall be adopted upon receiving the
 
 9 affirmative vote of the holders of three-fourths of the shares of
 
10 the corporation entitled to vote thereon, unless any class of
 
11 shares is entitled to vote thereon as a class, in which event the
 
12 resolution shall be adopted upon receiving the affirmative vote
 
13 of the holders of the holders of three-fourths of the shares of
 
14 each class of shares entitled to vote thereon as a class and of
 
15 the total shares entitled to vote thereon.  The articles of
 
16 incorporation may be amended by the vote set forth in the
 
17 preceding sentence to provide for a lesser proportion of shares,
 
18 or of any class or series thereof, than is provided in the
 
19 preceding sentence, in which case the articles of incorporation
 
20 shall control, provided that said lesser proportion shall not be
 
21 less than the proportion set forth in subsection (e) of this
 
22 section.
 

 
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 1      Section    -14.03.  Articles of dissolution.  (a) At any
 
 2 time after dissolution is authorized, the corporation may
 
 3 dissolve by delivering to the Director for filing articles of
 
 4 dissolution setting forth:
 
 5      (1)  the name of the corporation;
 
 6      (2)  the date dissolution was authorized;
 
 7      (3)  if dissolution was approved by the shareholders;
 
 8           (i)  the number of votes entitled to be cast on the
 
 9                proposal to dissolve; and
 
10          (ii)  either the total number of votes cast for and
 
11                against dissolution or the total number of
 
12                undisputed votes cast for dissolution and a
 
13                statement that the number cast for dissolution was
 
14                sufficient for approval.
 
15      (4)  If voting by voting groups was required, the
 
16 information required by subsection (3) must be separately
 
17 provided for each voting group entitled to vote separately on the
 
18 plan to dissolve.
 
19      (b)  A corporation is dissolved upon the effective date of
 
20 its articles of dissolution.
 
21      Section    -14.04.  Revocation of dissolution.(a) A
 
22 corporation may revoke its dissolution within 120 days of its
 

 
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 1 effective date.
 
 2      (b)  Revocation of dissolution must be authorized in the
 
 3 same manner as the dissolution was authorized unless that
 
 4 authorization permitted revocation by action of the board of
 
 5 directors alone, in which event the board of directors may revoke
 
 6 the dissolution without shareholder action.
 
 7      (c)  After the revocation of dissolution is authorized, the
 
 8 corporation may revoke the dissolution by delivering to the
 
 9 Director for filing articles of revocation of dissolution,
 
10 together with a copy of its articles of dissolution, that set
 
11 forth:
 
12      (1)  the name of the corporation;
 
13      (2)  the effective date of the dissolution that was revoked;
 
14      (3)  the date that the revocation of dissolution was
 
15           authorized;
 
16      (4)  if the corporation's board of directors (or
 
17           incorporators) revoked the dissolution, a statement to
 
18           that effect;
 
19      (5)  if the corporation's board of directors revoked a
 
20           dissolution authorized by the shareholders, a statement
 
21           that revocation was permitted by action by the board of
 
22           directors alone pursuant to that authorization; and
 

 
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 1      (6)  if shareholder action was required to revoke the
 
 2           dissolution, the information required by
 
 3           section    -14.03(a)(3) or (4).
 
 4      (d)  Revocation of dissolution is effective upon the
 
 5 effective date of the articles of revocation of dissolution.
 
 6      (e)  When the revocation of dissolution is effective, it
 
 7 relates back to and takes effect as of the effective date of thee
 
 8 dissolution and the corporation resumes carrying on its business
 
 9 as if dissolution had never occurred.
 
10      Section    -14.05.  Effect of dissolution.(a) A dissolved
 
11 corporation continues its corporate existence but may not carry
 
12 on any business except that appropriate to wind up and liquidate
 
13 its business and affairs, including:
 
14      (1)  collecting its assets;
 
15      (2)  disposing of its properties that will not be
 
16           distributed in kind to its shareholders;
 
17      (3)  discharging or making provision for discharging its
 
18           liabilities;
 
19      (4)  distributing its remaining property among its
 
20           shareholders according to their interests; and
 
21      (5)  doing every other act necessary to wind up and
 
22           liquidate its business and affairs.
 

 
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 1      (b)  Dissolution of a corporation does not:
 
 2      (1)  transfer title to the corporation's property;
 
 3      (2)  prevent transfer of its shares or securities, although
 
 4           the authorization to dissolve may provide for closing
 
 5           the corporation's share transfer records;
 
 6      (3)  subject to its director or officers to standards of
 
 7           conduct different from those prescribed in chapter 8;
 
 8      (4)  change quorum or voting requirements for its board of
 
 9           directors or shareholders; change provisions for
 
10           selection, resignation, or removal of its directors or
 
11           officers or both; or change provisions for amending its
 
12           bylaws;
 
13      (5)  prevent commencement of a proceeding by or against the
 
14           corporation in its corporate name;
 
15      (6)  abate or suspend a proceeding pending by or against the
 
16           corporation on the effective date of dissolution; or
 
17      (7)  terminate the authority of the registered agent of the
 
18           corporation.
 
19      Section    -14.06.  Known claims against dissolved
 
20 corporation.  (a) A dissolved corporation may dispose of the
 
21 known claims against it by following the procedure described in
 
22 this section.
 

 
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 1      (b)  The dissolved corporation shall notify its know
 
 2 claimants in writing of the dissolution at any time after its
 
 3 effective date.  The written notice must:
 
 4      (1)  describe information that must be included in a claim;
 
 5      (2)  provide a mailing address where a claim may be sent;
 
 6      (3)  state the deadline, which may not be fewer that 120
 
 7           days from the effective date of the written notice, by
 
 8           which the dissolved corporation must receive the claim;
 
 9           and
 
10      (4)  state the claim will be barred if not received by the
 
11           deadline.
 
12      (c)  A claim against the dissolved corporation is barred:
 
13      (1)  if a claimant who was given written notice under
 
14           subsection (b) does not deliver the claim to the
 
15           dissolved corporation by the deadline;
 
16      (2)  if a claimant whose claim was rejected by the dissolved
 
17           corporation does not commence a proceeding to enforce
 
18           the claim within 90 days from the effective date of the
 
19           rejection notice.
 
20      (d)  For purposes of this section, "claim" does not include
 
21 a contingent liability or a claim based on an event occurring
 
22 after the effective date of dissolution.
 

 
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 1      Section    -14.07.  Unknown claims against dissolved
 
 2 corporation.(a) A dissolved corporation may also publish notice
 
 3 of its dissolution and request that persons with claims against
 
 4 the corporation present them in accordance with the notice.
 
 5      (b)  the notice must:
 
 6      (1)  be published one time in a newspaper of general
 
 7           circulation in the county where the dissolved
 
 8           corporation's principal office (or, if none in this
 
 9           State, its registered office) is or was last located;
 
10      (2)  describe the information that must be included in a
 
11           claim and provided a mailing address where the claim
 
12           may be sent; and
 
13      (3)  state that a claim against the corporation will be
 
14           barred unless a proceeding to enforce the claim is
 
15           commenced within five years after the publication of
 
16           the notice.
 
17      (c)  If the dissolved corporation publishes a newspaper
 
18 notice in accordance with subsection (b), the claim of each of
 
19 the following claimants is barred unless the claimant commences a
 
20 proceeding to enforce the claim against the dissolved corporation
 
21 within five years after the publication date of the newspaper
 
22 notice:
 

 
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 1      (1)  a claimant who did not receive written notice under
 
 2           section    -14.06;
 
 3      (2)  a claimant whose claim was timely sent to the dissolved
 
 4           corporation but not acted on;
 
 5      (3)  a claimant whose claim is contingent or based on an
 
 6           event occurring after the effective date of
 
 7           dissolution.
 
 8      (d)  A claim may be enforced under this section:
 
 9      (1)  against the dissolved corporation, to the extent of its
 
10           undistributed assets; or
 
11      (2)  if the assets have been distributed in liquidation,
 
12           against a shareholder of the dissolved corporation to
 
13           the extent of the shareholder's pro rata share of such
 
14           shareholder claim or the corporate assets distributed
 
15           to such shareholder in liquidation, whichever is less,
 
16           but a shareholder's total liability for all claims
 
17           under this section may not exceed the total amount of
 
18           assets distributed to such shareholder.
 
19                           Subchapter B.
 
20                    ADMINISTRATIVE DISSOLUTION
 
21      Section    -14.20.  Grounds for administrative dissolution.
 
22 The Director may commence a proceeding under section    -14.21 to
 

 
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 1 administratively dissolve a corporation if:
 
 2      (1)  the corporation has failed to file its annual report
 
 3           with the Director for a period of two years or;
 
 4      (2)  the corporation procured its articles of incorporation
 
 5           through fraud; or
 
 6      (3)  the corporation has continued to exceed or abuse the
 
 7           authority conferred upon it by law; or
 
 8      (4)  the corporation does not notify the Director within 60
 
 9           days that its registered agent or registered office has
 
10           been changed, that its registered agent has resigned,
 
11           or that its registered office has been discontinued.
 
12      Section    -14.21.  Procedure for and effect of
 
13 administrative dissolution.(a) If the Director determines that
 
14 one or more grounds exist under section    -14.20 for dissolving
 
15 a corporation, the Director shall give written notice of the
 
16 Director's determination by mailing the notice to the corporation
 
17 at its last known address appearing in the records of the
 
18 Director.
 
19      (b)  If the corporation does not correct each ground for
 
20 dissolution or demonstrate to the reasonable satisfaction of the
 
21 Director that each ground determined by the Director does not
 
22 exist within 60 days after the date of mailing of the Director's
 

 
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 1 written notice, the Director shall administratively dissolve the
 
 2 corporation by signing a decree of dissolution that recites the
 
 3 ground or for dissolution and its effective date.  The decree
 
 4 shall be filed in the Director's office.
 
 5      (c)  A corporation administratively dissolved continues its
 
 6 corporate existence but may not carry on any business except that
 
 7 necessary to wind up and liquidate its business and affairs under
 
 8 section    -14.05 and notify claimants under sections     -14.06
 
 9 and    -14.07.
 
10      (d)  The administrative dissolution of a corporation does
 
11 not terminate the authority of its registered agent.
 
12      (e)  Parties of interest may petition a court of competent
 
13 jurisdiction to appoint a trustee to settle the affairs of any
 
14 corporation so dissolved.  If a trustee is appointed, the trustee
 
15 shall pay to the State out of any funds that may come into the
 
16 trustee's hands as trustee, a sum equal to any penalty imposed
 
17 under section    -16.21.  If a trustee is not appointed by a
 
18 court of competent jurisdiction, the last directors of the
 
19 dissolved corporation shall be and act as trustees  for the
 
20 creditors and shareholders of he dissolved corporation with full
 
21 powers to settle its affairs.
 
22      (f)  A corporation whose articles of incorporation have
 

 
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 1 expired shall cease to exist by operation of law.
 
 2      Section    -14.22.  Reinstatement following administrative
 
 3 dissolution.(a) A corporation administratively dissolved under
 
 4 section    -14.21 may apply to the Director for reinstatement
 
 5 within two years after the effective date of dissolution. The
 
 6 application must:
 
 7      (1)  recite the name of the corporation and the effective
 
 8           date of its administrative dissolution;
 
 9      (2)  contain all reports due and unfiled;
 
10      (3)  contain the payment of all delinquent fees and
 
11           penalties;
 
12      (4)  contain a certificate from the Department of Taxation;
 
13           State of Hawaii reciting that all taxes owed by the
 
14           corporation have been paid.
 
15      (b)  Within the applicable reinstatement period, should the
 
16 name of the corporation, or a name substantially identical
 
17 thereto be registered or reserved by another corporation,
 
18 partnership, limited liability company, or limited liability
 
19 partnership, or should such name or a name substantially
 
20 identical thereto be registered be registered as a trade name,
 
21 trademark, or service mark, then reinstatement shall be allowed
 
22 only upon the registration of a new name by the involuntary
 

 
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 1 dissolved corporation pursuant to the amendment provisions of
 
 2 this chapter.
 
 3      (c)  When the reinstatement is effective, it relates back to
 
 4 and takes effect as of the effective date of the administrative
 
 5 dissolution and the corporation resumes carrying on its business
 
 6 as if the administrative dissolution had never occurred.
 
 7      Section    -14.23.  Appeal from denial of reinstatement.
 
 8 (a) If the Director denies a corporation's application for
 
 9 reinstatement following administrative dissolution, the Director
 
10 shall mail a written notice to the corporation that explains the
 
11 reason or reasons for denial.
 
12      (b)  The corporation may appeal the denial of reinstatement
 
13 to the circuit court within 30 days after service of the notice
 
14 of denial is perfected. The corporation appeals by petitioning
 
15 the court to set aside the dissolution and attaching to the
 
16 petition copies of the Director's certificate of dissolution, the
 
17 corporation's application for reinstatement, and the Director's
 
18 notice of denial.
 
19      (c)  The court may summarily order the Director to reinstate
 
20 the dissolved corporation or may take other action the court
 
21 considers appropriate.
 
22      (d)  The court's final decision may be appealed as in other
 

 
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 1 civil proceedings.
 
 2                           Subchapter C.
 
 3                       JUDICIAL DISSOLUTION
 
 4      Section    -14.30.  Grounds for judicial dissolution.  The
 
 5 circuit court may dissolve a corporation:
 
 6      (1)  in a proceeding by the attorney general if it is
 
 7           established that:
 
 8           (i)  the corporation obtained its articles of
 
 9                incorporation through fraud; or
 
10           (ii) the corporation has continued to exceed or abuse
 
11                the authority conferred upon it by law;
 
12      (2)  in a proceeding by a shareholder if it is established
 
13           that:
 
14           (i)  the directors are deadlocked in the management of
 
15                the corporate affairs, the shareholders are unable
 
16                to break the deadlock, and irreparable injury to
 
17                the corporation is threatened or being suffered,
 
18                or the business and affairs of the corporation can
 
19                no longer be conducted to the advantage of the
 
20                shareholders generally, because of the deadlock;
 
21          (ii)  the directors or those in control of the
 
22                corporation have acted, are acting, or will act in
 

 
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 1                a manner that is illegal, oppressive, or
 
 2                fraudulent;
 
 3         (iii)  the shareholders are deadlocked in voting power
 
 4                and have failed, for a period that includes at
 
 5                least two consecutive annual meeting dates, to
 
 6                elect successors to directors whose terms have
 
 7                expired; or
 
 8          (iv)  the corporate assets are being misapplied or
 
 9                wasted;
 
10      (3)  in a proceeding by a creditor if it is established
 
11           that:
 
12           (i)  the creditor's claim has been reduced to judgment,
 
13                the execution on the judgment returned
 
14                unsatisfied, and the corporation is insolvent; or
 
15          (ii)  the corporation has admitted in writing that the
 
16                creditor's claim is due and owing and the
 
17                corporation is insolvent; or
 
18      (4)  in a proceeding by the corporation to have its
 
19           voluntary dissolution continued under court
 
20           supervision.
 
21      Section    -14.31.  Procedure for judicial dissolution.(a)
 
22 Venue for a proceeding by the attorney general to dissolve a
 

 
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 1 corporation lies in circuit court. Venue for a proceeding brought
 
 2 by any other party named in section    -14.30 lies in the county
 
 3 where a corporation's principal office (or, if none in this
 
 4 State, its registered office) is or was last located.
 
 5      (b)  It is not necessary to make shareholders parties to a
 
 6 proceeding to dissolve a corporation unless relief is sought
 
 7 against them individually.
 
 8      (c)  A court in a proceeding brought to dissolve a
 
 9 corporation may issue injunctions, appoint a receiver or
 
10 custodian pendente lite with all powers and duties the court
 
11 directs, take other action required to preserve the corporate
 
12 assets wherever located, and carry on the business of the
 
13 corporation until a full hearing can be held.
 
14      (d)  Within 10 days of the commencement of a proceeding
 
15 under section    -14.30(2) to dissolve a corporation that has no
 
16 shares listed on a national securities exchange or regularly
 
17 traded in a market maintained by one or more members of a
 
18 national or affiliated securities association, the corporation
 
19 must send to all shareholders, other than the petitioner, a
 
20 notice stating that the shareholders are entitled to avoid the
 
21 dissolution of the corporation by electing to purchase the
 
22 petitioner's shares under section    -14.34 and accompanied by a
 

 
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 1 copy of section    -14.34.
 
 2      Section    -14.32.  Receivership or custodianship.(a) A
 
 3 court in a judicial proceeding brought to dissolve a corporation
 
 4 may appoint one or more receivers to wind up and liquidate, or
 
 5 one or more custodians to manage, the business and affairs of the
 
 6 corporation. The court shall hold a hearing, after notifying all
 
 7 parties to the proceeding and any interested persons designated
 
 8 by the court, before appointing a receiver or custodian. The
 
 9 court appointing a receiver or custodian has exclusive
 
10 jurisdiction over the corporation and all of its property
 
11 wherever located.
 
12      (b)  The court may appoint an individual or a domestic or
 
13 foreign corporation (authorized to transact business in this
 
14 State) as a receiver or custodian. The court may require the
 
15 receiver or custodian to post bond, with or without sureties, in
 
16 an amount the court directs.
 
17      (c)  The court shall describe the powers and duties of the
 
18 receiver or custodian in its appointing order, which may be
 
19 amended from time to time. Among other powers:
 
20      (1)  the receiver (i) may dispose of all or any part of the
 
21           assets of the corporation wherever located, at a public
 
22           or private sale, if authorized by the court; and (ii)
 

 
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 1           may sue and defend in the receiver's own name as
 
 2           receiver of the corporation in all courts of this
 
 3           State;
 
 4      (2)  the custodian may exercise all of the powers of the
 
 5           corporation, through or in place of its board of
 
 6           directors, to the extent necessary to manage the
 
 7           affairs of the corporation in the best interests of its
 
 8           shareholders and creditors.
 
 9      (d)  The court during a receivership may redesignate the
 
10 receiver a custodian, and during a custodianship may redesignate
 
11 the custodian a receiver, if doing so is in the best interests of
 
12 the corporation, its shareholders, and creditors.
 
13      (e) The court from time to time during the receivership or
 
14 custodianship may order compensation paid and expense
 
15 disbursements or reimbursements made to the receiver or custodian
 
16 and the receiver's or custodian's counsel from the assets of the
 
17 corporation or proceeds from the sale of the assets.
 
18      Section    -14.33.  Decree of dissolution.  (a) If after a
 
19 hearing the court determines that one or more grounds for
 
20 judicial dissolution described in section    -14.30 exist, it may
 
21 enter a decree dissolving the corporation and specifying the
 
22 effective date of the dissolution, and the clerk of the court
 

 
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 1 shall deliver a certified copy of the decree to the Director, who
 
 2 shall file it.
 
 3      (b)  After entering the decree of dissolution, the court
 
 4 shall direct the winding up and liquidation of the corporation's
 
 5 business and affairs in accordance with section    -14.05 and the
 
 6 notification of claimants in accordance with sections    -14.06
 
 7 and    -14.07.
 
 8      Section    -14.34.  Election to purchase in lieu of
 
 9 dissolution.(a) In a proceeding under section    -14.30(2) to
 
10 dissolve a corporation that has no shares listed on a national
 
11 securities exchange or regularly traded in a market maintained by
 
12 one or more members of a national or affiliated securities
 
13 association, the corporation may elect or, if it fails to elect,
 
14 one or more shareholders may elect to purchase all shares owned
 
15 by the petitioning shareholder at the fair value of the shares.
 
16 An election pursuant to this section shall be irrevocable unless
 
17 the court determines that it is equitable to set aside or modify
 
18 the election.
 
19      (b)  An election to purchase pursuant to this section may be
 
20 filed with the court at any time within 90 days after the filing
 
21 of the petition under section    -14.30(2) or at such later time
 
22 as the court in its discretion may allow. If the election to
 

 
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 1 purchase is filed by one or more shareholders, the corporation
 
 2 shall, within 10 days thereafter, give written notice to all
 
 3 shareholders, other than the petitioner. The notice must state
 
 4 the name and number of shares owned by the petitioner and the
 
 5 name and number of shares owned by each electing shareholder and
 
 6 must advise the recipients of their right to join in the election
 
 7 to purchase shares in accordance with this section. Shareholders
 
 8 who wish to participate must file notice of their intention to
 
 9 join in the purchase no later than 30 days after the effective
 
10 date of the notice to them. All shareholders who have filed an
 
11 election or notice of their intention to participate in the
 
12 election to purchase thereby become parties to the proceeding and
 
13 shall participate in the purchase in proportion to their
 
14 ownership of shares as of the date the first election was filed,
 
15 unless they otherwise agree or the court otherwise directs. After
 
16 an election has been filed by the corporation or one or more
 
17 shareholders, the proceeding under section    -14.30(2) may not
 
18 be discontinued or settled, nor may the petitioning shareholder
 
19 sell or otherwise dispose of such shareholder's shares, unless
 
20 the court determines that it would be equitable to the
 
21 corporation and the shareholders, other than the petitioner, to
 
22 permit such discontinuance, settlement, sale, or other
 

 
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 1 disposition.
 
 2      (c)  If, within 60 days of the filing of the first election,
 
 3 the parties reach agreement as to the fair value and terms of
 
 4 purchase of the petitioner's shares, the court shall enter an
 
 5 order directing the purchase of petitioner's shares upon the
 
 6 terms and conditions agreed to by the parties.
 
 7      (d)  If the parties are unable to reach an agreement as
 
 8 provided for in subsection (c), the court, upon application of
 
 9 any party, shall stay the section    -14.30(2) proceedings and
 
10 determine the fair value of the petitioner's shares as of the day
 
11 before the date on which the petition under section    -14.30(2)
 
12 was filed or as of such other date as the court deems appropriate
 
13 under the circumstances.
 
14      (e)  Upon determining the fair value of the shares, the
 
15 court shall enter an order directing the purchase upon such terms
 
16 and conditions as the court deems appropriate, which may include
 
17 payment of the purchase price in installments, where necessary in
 
18 the interests of equity, provision for security to assure payment
 
19 of the purchase price and any additional costs, fees, and
 
20 expenses as may have been awarded, and, if the shares are to be
 
21 purchased by shareholders, the allocation of shares among them.
 
22 In allocating petitioner's shares among holders of different
 

 
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 1 classes of shares, the court should attempt to preserve the
 
 2 existing distribution of voting rights among holders of different
 
 3 classes insofar as practicable and may direct that holders of a
 
 4 specific class or classes shall not participate in the purchase.
 
 5 Interest may be allowed at the rate and from the date determined
 
 6 by the court to be equitable, but if the court finds that the
 
 7 refusal of the petitioning shareholder to accept an offer of
 
 8 payment was arbitrary or otherwise not in good faith, no interest
 
 9 shall be allowed. If the court finds that the petitioning
 
10 shareholder had probable grounds for relief under subsections
 
11 (ii) or (iv) of section    -14.30(2), it may award to the
 
12 petitioning shareholder reasonable fees and expenses of counsel
 
13 and of any experts employed by such petitioning shareholder.
 
14      (f)  Upon entry of an order under subsections (c) or (e),
 
15 the court shall dismiss the petition to dissolve the corporation
 
16 under section    -14.30, and the petitioning shareholder shall no
 
17 longer have any rights or status as a shareholder of the
 
18 corporation, except the right to receive the amounts awarded to
 
19 such petitioning shareholder by the order of the court which
 
20 shall be enforceable in the same manner as any other judgment.
 
21      (g)  The purchase ordered pursuant to subsection (e), shall
 
22 be made within 10 days after the date the order becomes final
 

 
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 1 unless before that time the corporation files with the court a
 
 2 notice of its intention to adopt articles of dissolution pursuant
 
 3 to sections    -14.02 and    -14.03, which articles must then be
 
 4 adopted and filed within 50 days thereafter. Upon filing of such
 
 5 articles of dissolution, the corporation shall be dissolved in
 
 6 accordance with the provisions of sections 14.05 through 14.07,
 
 7 and the order entered pursuant to subsection (e) shall no longer
 
 8 be of any force or effect, except that the court may award the
 
 9 petitioning shareholder reasonable fees and expenses in
 
10 accordance with the provisions of the last sentence of subsection
 
11 (e) and the petitioner may continue to pursue any claims
 
12 previously asserted on behalf of the corporation.
 
13      (h)  Any payment by the corporation pursuant to an order
 
14 under subsections (c) or (e), other than an award of fees and
 
15 expenses pursuant to subsection (e), is subject to the provisions
 
16 of section    -6.40.
 
17                           Subchapter D.
 
18                           MISCELLANEOUS
 
19      Section    -14.40.  Deposit with director of finance.
 
20 Assets of a dissolved corporation that should be transferred to a
 
21 creditor, claimant, or shareholder of the corporation who cannot
 
22 be found or who is not competent to receive them shall be reduced
 

 
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 1 to cash and deposited with the director of finance for
 
 2 disposition in accordance with the State Uniform Unclaimed
 
 3 Property Act.
 
 4                            CHAPTER 15
 
 5                       FOREIGN CORPORATIONS
 
 6                           Subchapter A.
 
 7                     CERTIFICATE OF AUTHORITY
 
 8      Section    -15.01.  Authority to transact business required.
 
 9 (a) A foreign corporation may not transact business in this State
 
10 until it obtains a certificate of authority from the Director.
 
11      (b)  The following activities, among others, do not
 
12 constitute transacting business within the meaning of subsection
 
13 (a):
 
14      (1)  maintaining, defending, or settling any proceeding;
 
15      (2)  holding meetings of the board of directors or
 
16           shareholders or carrying on other activities concerning
 
17           internal corporate affairs;
 
18      (3)  maintaining bank accounts;
 
19      (4)  maintaining offices or agencies for the transfer,
 
20           exchange, and registration of the corporation's own
 
21           securities or maintaining trustees or depositaries with
 
22           respect to those securities;
 

 
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 1      (5)  selling through independent contractors;
 
 2      (6)  soliciting or obtaining orders, whether by mail or
 
 3           through employees or agents or otherwise, if the orders
 
 4           require acceptance outside this State before they
 
 5           become contracts;
 
 6      (7)  creating as borrower or lender, or acquiring, as
 
 7           borrower or lender, indebtedness, mortgages, and
 
 8           security interests in real or personal property;
 
 9      (8)  securing or collecting debts or enforcing mortgages and
 
10           security interests in property securing the debts;
 
11      (9)  owning, without more, real or personal property;
 
12     (10)  conducting an isolated transaction that is completed
 
13           within 30 days and that is not one in the course of
 
14           repeated transactions of a like nature;
 
15     (11)  transacting business in interstate commerce.
 
16      (c)  The list of activities in subsection (b) is not
 
17 exhaustive.
 
18      Section    -15.02.  Consequences of transacting business
 
19 without authority.  (a) A foreign corporation transacting
 
20 business in this State without a certificate of authority may not
 
21 maintain a proceeding in any court in this State until it obtains
 
22 a certificate of authority.
 

 
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 1      (b)  The successor to a foreign corporation that transacted
 
 2 business in this State without a certificate of authority and the
 
 3 assignee of a cause of action arising out of that business may
 
 4 not maintain a proceeding based on that cause of action in any
 
 5 court in this State until the foreign corporation or its
 
 6 successor obtains a certificate of authority.
 
 7      (c)  A court may stay a proceeding commenced by a foreign
 
 8 corporation, its successor, or assignee until it determines
 
 9 whether the foreign corporation or its successor requires a
 
10 certificate of authority. If it so determines, the court may
 
11 further stay the proceeding until the foreign corporation or its
 
12 successor obtains the certificate.
 
13      (d)  A foreign corporation which transacts business in this
 
14 State without a certificate of authority shall be liable to this
 
15 State, for the years or parts thereof during which it transacted
 
16 business in this State without a certificate of authority, in an
 
17 amount equal to all fees which would have been imposed by this
 
18 Act upon the corporation had it duly applied for and received a
 
19 certificate of authority to transact business in this State as
 
20 required by this Act and thereafter filed all reports required by
 
21 this Act, plus all penalties imposed by this Act for failure to
 
22 pay the fees.
 

 
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 1      The attorney general shall bring proceedings to recover all
 
 2 amounts due this State under the provisions of this section.
 
 3      (e)  Notwithstanding subsections (a) and (b), the failure of
 
 4 a foreign corporation to obtain a certificate of authority does
 
 5 not impair the validity of its corporate acts or prevent it from
 
 6 defending any proceeding in this State.
 
 7      Section    -15.03.  Application for certificate of
 
 8 authority.(a) A foreign corporation may apply for a certificate
 
 9 of authority to transact business in this State by delivering an
 
10 application to the Director for filing. The application must set
 
11 forth:
 
12      (1)  the name of the foreign corporation or, if its name is
 
13           unavailable for use in this State, a corporate name
 
14           that satisfies the requirements of section    -15.06;
 
15      (2)  the name of the state or country under whose law it is
 
16           incorporated;
 
17      (3)  its date of incorporation and period of duration;
 
18      (4)  the street address of its principal office;
 
19      (5)  the street address of its registered office in this
 
20           State and the name of its registered agent at that
 
21           office; and
 
22      (6)  the names and usual business addresses of its current
 

 
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 1           directors and officers.
 
 2      (b)  The foreign corporation shall deliver with the
 
 3 completed application a certificate of existence (or a document
 
 4 of similar import) duly authenticated by the Secretary of State
 
 5 or other official having custody of corporate records in the
 
 6 state or country under whose law it is incorporated.
 
 7      Section    -15.04.  Change of name by foreign corporation.
 
 8 (a) Whenever the name of a foreign corporation authorized to
 
 9 transact business in this State is changed by the amendment of
 
10 its articles of incorporation, the foreign corporation shall,
 
11 within thirty days after the amendment becomes effective, deliver
 
12 to the Director a certificate evidencing the name change, duly
 
13 authenticated by the proper officer of the state or country under
 
14 the laws of which it is incorporated.  If the certificate is in a
 
15 foreign language, a translation under oath of the translator
 
16 shall accompany the certificate.
 
17      (b)  Whenever a foreign corporation which is authorized to
 
18 transact business in this State shall change its name to one
 
19 under which a certificate of authority would not be granted to it
 
20 on application therefor, the foreign corporation shall not
 
21 thereafter transact any business in this State until it has
 
22 changed its name to a name which is available to it under the
 

 
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 1 laws of this State or has otherwise complied with the provisions
 
 2 of this Act.
 
 3      (c)  If a foreign corporation is unable to change its name
 
 4 to a name which is available to it under the laws of this State,
 
 5 it may deliver to the Director a copy of a certificate of
 
 6 registration of a trade name for the foreign corporation's file
 
 7 ad thereafter become authorized to transact business in the State
 
 8 under that name.
 
 9      Section    -15.05.  Effect of certificate of authority.  (a)
 
10 A certificate of authority authorizes the foreign corporation to
 
11 which it is issued to transact business in this State subject,
 
12 however, to the right of this State to revoke the certificate as
 
13 provided in this Act.
 
14      (b)  A foreign corporation with a valid certificate of
 
15 authority has the same but no greater rights and has the same but
 
16 no greater privileges as, and except as otherwise provided by
 
17 this Act is subject to the same duties, restrictions, penalties,
 
18 and liabilities now or later imposed on, a domestic corporation
 
19 of like character.
 
20      (c)  This Act does not authorize this State to regulate the
 
21 organization or internal affairs of a foreign corporation
 
22 authorized to transact business in this State.
 

 
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 1      Section    -15.06.  Corporate name of foreign corporation.
 
 2 (a) If the corporate name of a foreign corporation does not
 
 3 satisfy the requirements of section    -4.01, the foreign
 
 4 corporation to obtain or maintain a certificate of authority to
 
 5 transact business in this State may use a fictitious name to
 
 6 transact business in this State if its real name is unavailable
 
 7 and it delivers to the Director for filing a copy of a
 
 8 certificate of registration of a trade name by the foreign
 
 9 corporation under which trade name that the foreign corporation
 
10 will transact business in this State.
 
11      (b)  Except as authorized by subsections (c) and (d), the
 
12 corporate name (including a fictitious name) of a foreign
 
13 corporation may not be the same as, or substantially identical
 
14 to:
 
15      (1)  the name of any domestic corporation, partnership,
 
16           limited liability company, or limited liability
 
17           partnership existing or registered under the laws of
 
18           this State, or any foreign corporation, partnership
 
19           authorized to transact business in this State;
 
20      (2)  a name the exclusive right to which is, at the time,
 
21           reserved in this State;
 
22      (3)  the fictitious name of another foreign corporation
 

 
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 1           authorized to transact business in this State; and
 
 2      (4)  any trade name, trademark, or service mark registered
 
 3           in this State.
 
 4      (c)  A foreign corporation may apply to the Director for
 
 5 authorization to use in this State the name of another
 
 6 corporation (incorporated or authorized to transact business in
 
 7 this State) that is substantially identical upon the Director's
 
 8 records from the name applied for.  The Director shall authorize
 
 9 use of the name applied for if:
 
10      (1)  the other entity or holder of a reserved or registered
 
11           name consents to the use in writing and one or more
 
12           words are added to make the name distinguishable from
 
13           the name of the applying corporation; or
 
14      (2)  the applicant delivers to the Director a certified copy
 
15           of a final judgment of a court of competent
 
16           jurisdiction establishing the applicant's right to use
 
17           the name applied for in this State.
 
18      (d)  A foreign corporation may use in this State the name
 
19 (including the fictitious name) of another domestic or foreign
 
20 corporation that is used in this State if the other corporation
 
21 is incorporated or authorized to transact business in this State
 
22 and the foreign corporation:
 

 
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 1      (1)  has merged with the other corporation;
 
 2      (2)  has been formed by reorganization of the other
 
 3           corporation; or
 
 4      (3)  has acquired all or substantially all of the assets,
 
 5           including the corporate name, of the other corporation.
 
 6      (e)  Whenever a foreign corporation which is authorized to
 
 7 transact business in this State shall change its name to one
 
 8 under which a certificate of authority would not be granted to it
 
 9 on application therefor, the foreign corporation shall not
 
10 thereafter transact any business in this State until it has
 
11 changed its name to a name which is available to it under the
 
12 laws of this State or has otherwise complied with the provisions
 
13 of this Act.   If a foreign corporation is unable to change its
 
14 name to a name which is available to it under the laws of this
 
15 State, it may deliver to the Director a copy of a certificate of
 
16 registration of a trade name for the foreign corporation's file
 
17 and thereafter become authorized to transact business in the
 
18 State under the name.
 
19      Section    -15.07.  Registered office and registered agent
 
20 of foreign corporation.  Each foreign corporation authorized to
 
21 transaction business in this State must continuously maintain in
 
22 this State:
 

 
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 1      (1)  a registered office that may be the same as any of its
 
 2 places of business; and
 
 3      (2)  a registered agent, who may be:
 
 4           (i)   an individual who resides in this State and whose
 
 5                 business office is identical with the registered
 
 6                 office;
 
 7           (ii)  a domestic corporation or not-for-profit domestic
 
 8                 corporation whose business office is identical
 
 9                 with the registered office; or
 
10           (iii) a foreign corporation or foreign not-for-profit
 
11                 corporation authorized to transact business or
 
12                 conduct affairs in this State whose business
 
13                 office is identical with the registered office.
 
14      Section    -15.08.  Change of registered office or
 
15 registered agent of foreign corporation.(a) A foreign
 
16 corporation authorized to transact business in this State may
 
17 change its registered office or registered agent by delivering to
 
18 the Director for filing a statement of change that sets forth:
 
19      (1)  its name;
 
20      (2)  the street address of its current registered office;
 
21      (3)  if the current registered office is to be changed, the
 
22           street address of its new registered office;
 

 
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 1      (4)  the name of its current registered agent;
 
 2      (5)  if the current registered agent is to be changed, the
 
 3           name of its new registered agent; and
 
 4      (6)  that after the change or changes are made, the street
 
 5           addresses of its registered office and the business
 
 6           office of its registered agent will be identical.
 
 7      (b)  If a registered agent changes the street address of the
 
 8 agent's business office, the agent may change the street address
 
 9 of the registered office of any foreign corporation for which the
 
10 agent is the registered agent by notifying the corporation in
 
11 writing of the change and signing (either manually or in
 
12 facsimile) and delivering to the Director for filing a statement
 
13 of change that complies with the requirements of subsection (a)
 
14 and recites that the corporation has been notified of the change.
 
15      Section    -15.09.  Resignation of registered agent of
 
16 foreign corporation.(a) The registered agent of a foreign
 
17 corporation may resign from the registered agent's appointment by
 
18 signing and delivering to the Director for filing the original
 
19 and two exact or conformed copies of a statement of resignation.
 
20 The statement of resignation may include a statement that the
 
21 registered office is also discontinued.
 
22      (b)  The registered agent shall attach the filing receipt to
 

 
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 1 one copy and mail the copy and receipt to the registered office
 
 2 if not discontinued. The Director shall mail the other copy to
 
 3 the foreign corporation at its principal office address shown in
 
 4 its most recent annual report.
 
 5      (c)  The appointment of the agent is terminated, and the
 
 6 registered office discontinued if so provided, on the 31st day
 
 7 after the date on which the statement was filed.
 
 8      Section    -15.10.  Service on foreign corporation.  (a) The
 
 9 registered agent of a foreign corporation authorized to transact
 
10 business in this State is the corporation's agent for service of
 
11 process, notice, or demand required or permitted by law to be
 
12 served on the foreign corporation.
 
13      (b)  A foreign corporation may be served by registered or
 
14 certified mail, return receipt requested, addressed to the
 
15 secretary of the foreign corporation at its principal office
 
16 shown in its application for a certificate of authority or in its
 
17 most recent annual report if the foreign corporation:
 
18      (1)  has no registered agent or its registered agent cannot
 
19           with reasonable
 
20      (3)  has had its certificate of authority revoked under
 
21           section    -15.31.
 
22      (c)  Service is perfected under subsection (b) at the
 

 
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 1 earliest of:
 
 2      (1)  the date the foreign corporation receives the mail;
 
 3      (2)  the date shown on the return receipt, if signed on
 
 4           behalf of the foreign corporation; or
 
 5      (3)  five days after its deposit in the United States Mail,
 
 6           as evidenced by the postmark, if mailed postpaid and
 
 7           correctly addressed.
 
 8      (d)  This section does not prescribe the only means, or
 
 9           necessarily the required means, of serving a foreign
 
10           corporation.
 
11      Section    -15.11.  Application to corporations heretofore
 
12 authorized to transact business in this state.  Foreign
 
13 corporations which are duly authorized to transact business in
 
14 this State at the time this Act takes effect, for a purpose or
 
15 purposes for which a corporation might secure such authority
 
16 under this Act, shall be entitled to all of the rights and
 
17 privileges applicable to foreign corporations procuring
 
18 certificates of authority to transact business in this State
 
19 under this Act, and from the time this Act takes effect such
 
20 corporations shall be subject to all of the limitations,
 
21 restrictions, liabilities, and duties prescribed herein for
 
22 foreign corporations procuring certificates of authority to
 

 
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 1 transact business in this State under this Act.
 
 2                           Subchapter B.
 
 3                            WITHDRAWAL
 
 4      Section    -15.20.  Withdrawal of foreign corporation.  (a)
 
 5 A foreign corporation authorized to transact business in this
 
 6 State may not withdraw from this State until it obtains a
 
 7 certificate of withdrawal from the Director.
 
 8      (b)  A foreign corporation authorized to transact business
 
 9 in this State may apply for a certificate of withdrawal by
 
10 delivering an application to the Director for filing. The
 
11 application must set forth:
 
12      (1)  the name of the foreign corporation and the name of the
 
13           state or country under whose law it is incorporated;
 
14      (2)  that it is not transacting business in this State and
 
15           that it surrenders its authority to transact business
 
16           in this State;
 
17      (3)  that it revokes the authority of its registered agent
 
18           to accept service on its behalf and appoints the
 
19           Director as its agent for service of process in any
 
20           proceeding based on a cause of action arising during
 
21           the time it was authorized to transact business in this
 
22           State;
 

 
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 1      (4)  a mailing address to which the Director may mail a copy
 
 2           of any process served on the Director under subdivision
 
 3           (3); and
 
 4      (5)  a commitment to notify the Director in the future of
 
 5           any change in its mailing address.
 
 6      (c)  After the withdrawal of the corporation is effective,
 
 7 service of process on the Director under this section is service
 
 8 on the foreign corporation. Upon receipt of process, the Director
 
 9 shall mail a copy of the process to the foreign corporation at
 
10 the mailing address set forth under subsection (b).
 
11      (d)  After the filing of the application of withdrawal, the
 
12 Director shall issue a certificate of withdrawal which shall be
 
13 effective as of the date of the filing of the application of
 
14 withdrawal, and the authority of the foreign corporation to
 
15 transact business in this State shall cease.
 
16                           Subchapter C.
 
17              REVOCATION OF CERTIFICATE OF AUTHORITY
 
18      Section    -15.30.  Grounds for revocation.  The Director
 
19 may commence a proceeding under section    -15.31 to revoke the
 
20 certificate of authority of a foreign corporation authorized to
 
21 transact business in this State if:
 
22      (1)  the foreign corporation has failed to file its annual
 

 
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 1           report with the Director for a period of two years; or
 
 2      (2)  the foreign corporation is without a registered agent
 
 3           or registered office in this State as required by this
 
 4           Act;
 
 5      (3)  the foreign corporation does not inform the Director
 
 6           under section    -15.08 or 15.09 that its registered
 
 7           agent or registered office has changed, that its
 
 8           registered agent has resigned, or that its registered
 
 9           office has been discontinued within 60 days of the
 
10           change, resignation, or discontinuance;
 
11      (4)  an incorporator, director, officer, or agent of the
 
12           foreign corporation signed a document such
 
13           incorporator, director, officer or agent knew was false
 
14           in any material respect with intent that the document
 
15           be delivered to the Director for filing;
 
16      (5)  the Director receives a duly authenticated certificate
 
17           from the Director or other official having custody of
 
18           corporate records in the state or country under whose
 
19           law the foreign corporation is incorporated stating
 
20           that it has been dissolved or disappeared as the result
 
21           of a merger.
 
22      Section    -15.31  procedure for and effect of revocation.
 

 
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 1 (a) If the Director determines that one or more grounds exist
 
 2 under section    -15.30 for revocation of a certificate of
 
 3 authority, the Director shall give written notice of the
 
 4 Director's determination by mailing the notice to the foreign
 
 5 corporation at its last known address appearing in the records of
 
 6 the Director.
 
 7      (b)  If the foreign corporation does not correct each ground
 
 8 for revocation or demonstrate to the reasonable satisfaction of
 
 9 the Director that each ground determined by the Director does not
 
10 exist within 60 days after the date of mailing of the Director's
 
11 written notice, the Director may revoke the foreign corporation's
 
12 certificate of authority by signing a certificate of revocation
 
13 that recites the ground or grounds for revocation and its
 
14 effective date. The Director shall file the original of the
 
15 certificate. authority of a foreign corporation to transact
 
16 business in this State
 
17      (c)  The ceases on the date shown on the certificate
 
18 revoking its certificate of authority.
 
19      (d)  The Director's revocation of a foreign corporation's
 
20 certificate of authority appoints the Director the foreign
 
21 corporation's agent for service of process in any proceeding
 
22 based on a cause of action which arose during the time the
 

 
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 1 foreign corporation was authorized to transact business in this
 
 2 State. Service of process on the Director under this subsection
 
 3 is service on the foreign corporation. Upon receipt of process,
 
 4 the Director shall mail a copy of the process to the secretary of
 
 5 the foreign corporation at its principal office shown in its most
 
 6 recent annual report or in any subsequent communication received
 
 7 from the corporation stating the current mailing address of its
 
 8 principal office, or, if none are on file, in its application for
 
 9 a certificate of authority.
 
10      (e)  Revocation of a foreign corporation's certificate of
 
11 authority does not terminate the authority of the registered
 
12 agent of the corporation.
 
13      Section    -15.32.  Appeal from revocation.  (a) A foreign
 
14 corporation may appeal the Director's revocation of its
 
15 certificate of authority to the circuit court within 30 days
 
16 after the certificate of revocation is signed.  The foreign
 
17 corporation appeals by petitioning the court to set aside the
 
18 revocation and attaching to the petition copies of its
 
19 certificate of authority and the Director's certificate of
 
20 revocation.
 
21      (b)  The court may summarily order the Director to reinstate
 
22 the certificate of authority or may take any other action the
 

 
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 1 court considers appropriate.
 
 2      (c)  The court's final decision may be appealed as in other
 
 3 civil proceedings.
 
 4                            CHAPTER 16
 
 5                        RECORDS AND REPORTS
 
 6                           Subchapter A.
 
 7                              RECORDS
 
 8      Section    -16.01.  Books and records.(a) Each corporation
 
 9 shall keep accurate and complete books and records of account and
 
10 shall keep and maintain at its principal office, or such other
 
11 place as its board of directors may order, minutes of the
 
12 proceedings of its shareholders and board of directors. The books
 
13 and records of account shall include accounts of the
 
14 corporation's assets, liabilities, receipts, disbursements,
 
15 gains, and losses. The minutes of the proceedings of the
 
16 shareholders and board of directors of the corporation shall
 
17 show, as to each meeting of the shareholders or the board of
 
18 directors, the time and place thereof, whether regular or
 
19 special, whether notice thereof was given, and if so in what
 
20 manner, the names of those present at directors' meetings, the
 
21 number of shares present or represented at shareholders'
 
22 meetings, and the proceedings at each meeting.
 

 
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 1      (b)  In every corporation incorporated under this Act, the
 
 2 board of directors of the corporation shall cause a book to be
 
 3 kept for registering the names of all persons who are or shall
 
 4 become shareholders of the corporation, showing the number of
 
 5 shares of stock held by them respectively, and the time when they
 
 6 respectively became the owner of the shares. The book shall be
 
 7 open at all reasonable times for the inspection of the
 
 8 shareholders. The secretary or the person having the charge
 
 9 thereof shall give a certified transcript of anything therein
 
10 contained to any shareholder applying therefor provided that the
 
11 shareholder pays a reasonable charge for the preparation of the
 
12 certified transcript. The transcript shall be legal evidence of
 
13 the facts therein set forth in any suit by or against the
 
14 corporation.
 
15                           Subchapter B.
 
16                              REPORTS
 
17      Section    -16.20.  Annual report for Director.(a) Each
 
18 domestic corporation, and each foreign corporation authorized to
 
19 transact business in this State, shall deliver to the Director
 
20 for filing an annual report that sets forth:
 
21      (1)  the name of the corporation and the state or country
 
22           under whose law it is incorporated;
 

 
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 1      (2)  the address of its registered office and the name of
 
 2           its registered agent at that office in this State;
 
 3      (3)  the address of its principal office;
 
 4      (4)  the names and business addresses of its directors and
 
 5           principal officers;
 
 6      (5)  a brief description of the nature of its business;
 
 7      (6)  the total number of authorized shares, itemized by
 
 8           class and series, if any, within each class; and
 
 9      (7)  the total number of issued and outstanding shares,
 
10           itemized by class and series, if any, within each
 
11           class.
 
12      (b)  Information in the annual report must reflect the state
 
13 of the corporation's affairs as of December 31, of the year
 
14 preceding the year of filing.
 
15      (c)  The first annual report must be delivered to the
 
16 Director between January 1 and April 1 of the year following the
 
17 calendar year in which a domestic corporation was incorporated or
 
18 a foreign corporation was authorized to transact business.
 
19 Subsequent annual reports must be delivered to the Director
 
20 between January 1 and April 1 of the following calendar years.
 
21      (d)  If an annual report does not contain the information
 
22 required by this section, the Director shall promptly notify the
 

 
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 1 reporting domestic or foreign corporation in writing and return
 
 2 the report to it for correction. If the report is corrected to
 
 3 contain the information required by this section and delivered to
 
 4 the Director within 30 days after the effective date of notice,
 
 5 it is deemed to be timely filed.
 
 6      Section    -16.21.    Penalties imposed upon corporations.
 
 7 Each corporation, domestic or foreign, that fails or refuses to
 
 8 file its annual report for any year within the time prescribed by
 
 9 this chapter shall be subject to a forfeiture of an amount to be
 
10 determined by the Director not exceeding $100 for every such
 
11 violation, neglect, or failure, to be recovered by action brought
 
12 in the name of the State by the Director. A continuance of a
 
13 failure to file the required report shall be a separate offense
 
14 for each thirty days of the continuance. The Director may, for
 
15 good cause shown, reduce or waive the penalty imposed by this
 
16 section.
 
17                            Chapter 17
 
18                       TRANSITION PROVISIONS
 
19      Section    -17.01.  Application to existing domestic
 
20 corporations.  This Act applies to all domestic corporations in
 
21 existence on its effective date that were incorporated under any
 
22 general statute of this State providing for incorporation of
 

 
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 1 corporations for profit if power to amend or repeal the statute
 
 2 under which the corporation was incorporated was reserved.
 
 3      Section    -17.02.  Application to qualified foreign
 
 4 corporations.  A foreign corporation authorized to transact
 
 5 business in this State on the effective date of this Act is
 
 6 subject to this Act but is not required to obtain a new
 
 7 certificate of authority to transact business under this Act.
 
 8      Section    -17.03.  Saving provisions.(a) Except as
 
 9 provided in subsection (b), the repeal of a statute by this Act
 
10 does not affect:
 
11      (1)  the operation of the statute or any action taken under
 
12           it before its repeal;
 
13      (2)  any ratification, right, remedy, privilege, obligation,
 
14           or liability acquired, accrued, or incurred under the
 
15           statute before its repeal;
 
16      (3)  any violation of the statute, or any penalty,
 
17           forfeiture, or punishment incurred because of the
 
18           violation, before its repeal;
 
19      (4)  any proceeding, reorganization, or dissolution
 
20           commenced under the statute before its repeal, and the
 
21           proceeding, reorganization, or dissolution may be
 
22           completed in accordance with the statute as if it had
 

 
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 1           not been repealed.
 
 2      (b)  If a penalty or punishment imposed for violation of a
 
 3 statute repealed by this Act is reduced by this Act, the penalty
 
 4 or punishment if not already imposed shall be imposed in
 
 5 accordance with this Act.
 
 6      (c)  Nothing in this Act shall affect the validity of any
 
 7 action taken by any corporation, or shall impair or affect the
 
 8 validity of any provision of the articles of incorporation or
 
 9 bylaws adopted by any corporation, prior to the effective date of
 
10 this Act.
 
11      Section    -17.04.  Severability.  If any provision of this
 
12 Act or its application to any person or circumstance is held
 
13 invalid by a court of competent jurisdiction, the invalidity does
 
14 not affect other provisions or applications of the Act that can
 
15 be given effect without the invalid provision or application, and
 
16 to this end the provisions of the Act are severable.
 
17      SECTION 2.      Chapter 415, Hawaii Revised Statutes, is
 
18 repealed (except for Section   s 415-171 and 415-172, Hawaii
 
19 Revised Statutes, relating to Control Share Acquisitions, which
 
20 shall remain in effect, except for Section   s 415-171 and 415-
 
21 172, Hawaii Revised Statutes, relating to Control Share
 
22 Acquisitions, which shall remain in effect).
 

 
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 1      SECTION 3.  This Act shall take effect on July 1, 2001.
 
 2 
 
 3                           INTRODUCED BY:  _______________________
 

 
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