MODEL BUSINESS CORPORATION ACT

Contents

SUBCHAPTER A. SHORT TITLE AND RESERVATION OF POWER............................................8

§ 1.01. SHORT TITLE........................................................................................................................8
§ 1.02. RESERVATION OF POWER TO AMEND OR REPEAL.................................................8
SUBSCHAPTER B. FILING DOCUMENTS..........................................................................................8
§ 1.20.REQUIREMENTS FOR DOCUMENTS; EXTRINSIC FACTS..........................................8
§ 1.21.FORMS...................................................................................................................................10
§ 1.22.FILING, SERVICE, AND COPYING FEES.......................................................................11
§ 1.23.EFFECTIVE TIME AND DATE OF DOCUMENT..........................................................12
§ 1.24.CORRECTING FILED DOCUMENT................................................................................12
§ 1.25.FILING DUTY OF SECRETARY OF STATE....................................................................13
§ 1.26.APPEAL FROM SECRETARY OF STATE’S REFUSAL TO FILE DOCUMENT........13
§ 1.27.EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT.......................................14
§ 1.28.CERTIFICATE OF EXISTENCE.........................................................................................14
§ 1.29.PENALTY FOR SIGNING FALSE DOCUMENT............................................................15
SUBCHAPTER C. SECRETARY OF STATE.......................................................................................15
§ 1.30.POWERS................................................................................................................................15
SUBCHAPTER D. DEFINITIONS........................................................................................................15
§ 1.40.ACT DEFINITIONS.............................................................................................................15
§ 1.41.NOTICES AND OTHER COMMUNICATIONS.............................................................20
§ 1.42.NUMBER OF SHAREHOLDERS.......................................................................................22
§ 1.43.QUALIFIED DIRECTOR.....................................................................................................23
§ 1.44.HOUSEHOLDING...............................................................................................................23
§ 2.01.INCORPORATORS..............................................................................................................24
§ 2.02.ARTICLES OF INCORPORATION...................................................................................24
§ 2.03.INCORPORATION..............................................................................................................25
§ 2.04.LIABILITY FOR PREINCORPORATION TRANSACTIONS........................................26
§ 2.05.ORGANIZATION OF CORPORATION...........................................................................26
§ 2.06.BYLAWS................................................................................................................................26
§ 2.07.EMERGENCY BYLAWS......................................................................................................27
CHAPTER 3.............................................................................................................................................28
§ 3.01.PURPOSES.............................................................................................................................28
§ 3.02.GENERAL POWERS............................................................................................................28
§ 3.03.EMERGENCY POWERS......................................................................................................29
§ 3.04.ULTRA VIRES.......................................................................................................................30
§ 4.01.CORPORATE NAME..........................................................................................................30
§ 4.02.RESERVED NAME...............................................................................................................31
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 § 4.03.REGISTERED NAME...........................................................................................................32
§ 5.01. REGISTERED OFFICE AND REGISTERED AGENT.....................................................33
§ 5.02. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT...............................33
§ 5.03. RESIGNATION OF REGISTERED AGENT....................................................................34
§ 5.04. SERVICE ON CORPORATION.........................................................................................34
SUBCHAPTER A. SHARES...................................................................................................................34
§ 6.01.AUTHORIZED SHARES.....................................................................................................34
§ 6.02.TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS...........36
§ 6.03.ISSUED AND OUTSTANDING SHARES........................................................................36
§ 6.04.FRACTIONAL SHARES......................................................................................................36
SUBCHAPTER B. ISSUANCE OF SHARES.......................................................................................37
§ 6.20.SUBSCRIPTION FOR SHARES BEFORE INCORPORATION......................................37
§ 6.21.ISSUANCE OF SHARES......................................................................................................38
§ 6.22.LIABILITY OF SHAREHOLDERS.....................................................................................39
§ 6.23.SHARE DIVIDENDS............................................................................................................39
§ 6.24.SHARE OPTIONS................................................................................................................40
§ 6.25.FORM AND CONTENT OF CERTIFICATES..................................................................40
§ 6.26.SHARES WITHOUT CERTIFICATES...............................................................................41
§ 6.27.RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES................41
§ 6.28.EXPENSE OF ISSUE.............................................................................................................42
SUBCHAPTER C. SUBSEQUENT ACQUISITION OF SHARES BY SHAREHOLDERS AND
CORPORATION.....................................................................................................................................42
§ 6.30.SHAREHOLDERS’ PREEMPTIVE RIGHTS.....................................................................42
§ 6.31.CORPORATION’S ACQUISITION OF ITS OWN SHARES..........................................44
SUBCHAPTER D. DISTRIBUTIONS...................................................................................................44
§ 6.40.DISTRIBUTIONS TO SHAREHOLDERS..........................................................................44
SUBCHAPTER A. MEETINGS............................................................................................................45
§ 7.01. ANNUAL MEETING..........................................................................................................45
§ 7.02. SPECIAL MEETING............................................................................................................46
§ 7.03. COURT-ORDERED MEETING.........................................................................................47
§ 7.04.ACTION WITHOUT MEETING........................................................................................47
§ 7.05.NOTICE OF MEETING.......................................................................................................49
§ 7.06.WAIVER OF NOTICE..........................................................................................................50
§ 7.07.RECORD DATE....................................................................................................................50
§ 7.08.CONDUCT OF THE MEETING.........................................................................................51
§ 7.09. REMOTE PARTICIPATION IN ANNUAL AND SPECIAL MEETINGS..................51
SUBCHAPTER B. VOTING...................................................................................................................51
§ 7.20.SHAREHOLDERS’ LIST FOR MEETING.........................................................................51
§ 7.21.VOTING ENTITLEMENT OF SHARES............................................................................52
§ 7.22.PROXIES................................................................................................................................53
§ 7.23.SHARES HELD BY NOMINEES........................................................................................54
§ 7.24.CORPORATION’S ACCEPTANCE OF VOTES..............................................................54
§ 7.25.QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS......................56
§ 7.26.ACTION BY SINGLE AND MULTIPLE VOTING GROUPS........................................56
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 § 7.27.GREATER QUORUM OR VOTING REQUIREMENTS.................................................56
§ 7.28.VOTING FOR DIRECTORS; CUMULATIVE VOTING.................................................57
§ 7.29.INSPECTORS OF ELECTION............................................................................................57
SUBCHAPTER C. VOTING TRUSTS AND AGREEMENTS...........................................................58
§ 7.30.VOTING TRUSTS.................................................................................................................58
§ 7.31.VOTING AGREEMENTS....................................................................................................58
§ 7.32.SHAREHOLDER AGREEMENTS.....................................................................................59
SUBCHAPTER D. DERIVATIVE PROCEEDINGS............................................................................61
§ 7.40.SUBCHAPTER DEFINITIONS...........................................................................................61
§ 7.41.STANDING...........................................................................................................................61
§ 7.42.DEMAND..............................................................................................................................61
§ 7.43.STAY OF PROCEEDINGS..................................................................................................62
§ 7.44.DISMISSAL............................................................................................................................62
§ 7.45.DISCONTINUANCE OR SETTLEMENT.........................................................................62
§ 7.46.PAYMENT OF EXPENSES.................................................................................................63
§ 7.47.APPLICABILITY TO FOREIGN CORPORATIONS.......................................................63
SUBCHAPTER E. PROCEEDING TO APPOINT CUSTODIAN OR RECEIVER.........................63
§ 7.48.SHAREHOLDER ACTION TO APPOINT CUSTODIAN OR RECEIVER..................63
SUBCHAPTER A. BOARD OF DIRECTORS......................................................................................64
§ 8.01. REQUIREMENT FOR AND FUNCTIONS OF BOARD OF DIRECTORS..................64
§ 8.02. QUALIFICATIONS OF DIRECTORS...............................................................................65
§ 8.03. NUMBER AND ELECTION OF DIRECTORS................................................................65
§ 8.04. ELECTION OF DIRECTORS BY CERTAIN CLASSES OF SHAREHOLDERS..........66
§ 8.05. TERMS OF DIRECTORS GENERALLY...........................................................................66
§ 8.06. STAGGERED TERMS FOR DIRECTORS........................................................................66
§ 8.07. RESIGNATION OF DIRECTORS......................................................................................67
§ 8.08. REMOVAL OF DIRECTORS BY SHAREHOLDERS......................................................67
§ 8.09. REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING........................................67
§ 8.10. VACANCY ON BOARD....................................................................................................68
§ 8.11. COMPENSATION OF DIRECTORS.................................................................................68
SUBCHAPTER B. MEETINGS AND ACTION OF THE BOARD...................................................68
§ 8.20. MEETINGS...........................................................................................................................68
§ 8.21. ACTION WITHOUT MEETING.......................................................................................69
§ 8.22. NOTICE OF MEETING......................................................................................................69
§ 8.23. WAIVER OF NOTICE.........................................................................................................69
§ 8.24. QUORUM AND VOTING.................................................................................................70
§ 8.25. COMMITTEES.....................................................................................................................70
§ 8.26. SUBMISSION OF MATTERS FOR SHAREHOLDER VOTE.......................................71
SUBCHAPTER C. DIRECTORS............................................................................................................72
§ 8.30. STANDARDS OF CONDUCT FOR DIRECTORS..........................................................72
§ 8.31. STANDARDS OF LIABILITY FOR DIRECTORS...........................................................73
§ 8.32. [RESERVED].........................................................................................................................75
§ 8.33. DIRECTORS' LIABILITY FOR UNLAWFUL DISTRIBUTIONS..................................75
SUBCHAPTER D. OFFICERS...............................................................................................................75
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 § 8.40. OFFICERS.............................................................................................................................75
§ 8.41. FUNCTIONS OF OFFICERS..............................................................................................76
§ 8.42. STANDARDS OF CONDUCT FOR OFFICERS..............................................................76
§ 8.43. RESIGNATION AND REMOVAL OF OFFICERS.........................................................77
§ 8.44. CONTRACT RIGHTS OF OFFICERS...............................................................................77
SUBCHAPTER E. INDEMNIFICATION AND ADVANCE FOR EXPENSES..............................78
§ 8.50. SUBCHAPTER DEFINITIONS..........................................................................................78
§ 8.51. PERMISSIBLE INDEMNIFICATION...............................................................................79
§ 8.52. MANDATORY INDEMNIFICATION.............................................................................80
§ 8.53. ADVANCE FOR EXPENSES.............................................................................................80
§ 8.54.COURT-ORDERED INDEMNIFICATION AND ADVANCE FOR EXPENSES........81
§ 8.55. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.................82
§ 8.56. INDEMNIFICATION OF OFFICERS...............................................................................82
§ 8.57. INSURANCE........................................................................................................................83
§ 8.58. VARIATION BY CORPORATE ACTION; APPLICATION OF SUBCHAPTER.......83
§ 8.59. EXCLUSIVITY OF SUBCHAPTER....................................................................................84
§ 8.60. SUBCHAPTER DEFINITIONS..........................................................................................84
§ 8.61. JUDICIAL ACTION............................................................................................................86
§ 8.62. DIRECTORS' ACTION.......................................................................................................87
§ 8.63. SHAREHOLDERS' ACTION.............................................................................................88
SUBCHAPTER G. BUSINESS OPPORTUNITIES..............................................................................89
§ 8.70. BUSINESS OPPORTUNITIES............................................................................................89
SUBCHAPTER A. PRELIMINARY PROVISIONS.............................................................................90
§ 9.01.EXCLUDED TRANSACTIONS..........................................................................................90
§ 9.02.REQUIRED APPROVALS [OPTIONAL]..........................................................................90
SUBCHAPTER B. DOMESTICATION................................................................................................90
§ 9.20.DOMESTICATION..............................................................................................................90
§ 9.21.ACTION ON A PLAN OF DOMESTICATION...............................................................91
§ 9.22.ARTICLES OF DOMESTICATION....................................................................................93
§ 9.23.SURRENDER OF CHARTER UPON DOMESTICATION.............................................94
§ 9.24.EFFECT OF DOMESTICATION........................................................................................94
§ 9.25.ABANDONMENT OF A DOMESTICATION.................................................................96
SUBCHAPTER C. NONPROFIT CONVERSION..............................................................................96
§ 9.30.NONPROFIT CONVERSION.............................................................................................96
§ 9.31.ACTION ON A PLAN OF NONPROFIT CONVERSION.............................................97
§ 9.32.ARTICLES OF NONPROFIT CONVERSION..................................................................98
§ 9.33.SURRENDER OF CHARTER UPON FOREIGN NONPROFIT CONVERSION........99
§ 9.34.EFFECT OF NONPROFIT CONVERSION.......................................................................99
§ 9.35.ABANDONMENT OF A NONPROFIT CONVERSION..............................................101
SUBCHAPTER D. FOREIGN NONPROFIT DOMESTICATION AND CONVERSION...........101
§ 9.40.FOREIGN NONPROFIT DOMESTICATION AND CONVERSION.........................101
§ 9.41.ARTICLES OF DOMESTICATION AND CONVERSION...........................................102
§ 9.42.EFFECT OF FOREIGN NONPROFIT DOMESTICATION AND CONVERSION. . .102
§ 9.43.ABANDONMENT OF A FOREIGN NONPROFIT DOMESTICATION AND
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 CONVERSION...............................................................................................................................104
SUBCHAPTER E. ENTITY CONVERSION......................................................................................104
§ 9.50.ENTITY CONVERSION AUTHORIZED; DEFINITIONS............................................104
§ 9.51.PLAN OF ENTITY CONVERSION.................................................................................105
§ 9.52.ACTION ON A PLAN OF ENTITY CONVERSION.....................................................106
§ 9.53.ARTICLES OF ENTITY CONVERSION.........................................................................107
§ 9.54.SURRENDER OF CHARTER UPON CONVERSION..................................................109
§ 9.55. EFFECT OF ENTITY CONVERSION............................................................................109
§ 9.56.ABANDONMENT OF AN ENTITY CONVERSION....................................................111
SUBCHAPTER A. AMENDMENT OF ARTICLES OF INCORPORATION...............................111
§ 10.01. AUTHORITY TO AMEND.............................................................................................111
§ 10.03. AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS................112
§ 10.04. VOTING ON AMENDMENTS BY VOTING GROUPS.............................................113
§ 10.05. AMENDMENT BY BOARD OF DIRECTORS.............................................................114
§ 10.06. ARTICLES OF AMENDMENT......................................................................................115
§ 10.07. RESTATED ARTICLES OF INCORPORATION.........................................................115
§ 10.08. AMENDMENT PURSUANT TO REORGANIZATION............................................116
§ 10.09. EFFECT OF AMENDMENT..........................................................................................116
SUBCHAPTER B. AMENDMENT OF BYLAWS..........................................................................117
§ 10.20. AMENDMENT BY BOARD OF DIRECTORS OR SHAREHOLDERS....................117
§ 10.21. BYLAW INCREASING QUORUM OR VOTING REQUIREMENT FOR
DIRECTORS...................................................................................................................................117
§ 10.22. BYLAW PROVISIONS RELATING TO THE ELECTION OF DIRECTORS...........118
§ 11.01. DEFINITIONS..................................................................................................................119
§ 11.02. MERGER...........................................................................................................................119
§ 11.03. SHARE EXCHANGE......................................................................................................121
§ 11.04. ACTION ON A PLAN OF MERGER OR SHARE EXCHANGE..............................123
§ 11.05. MERGER BETWEEN PARENT AND SUBSIDIARY OR BETWEEN SUBSIDIARIES
125
§ 11.06. ARTICLES OF MERGER OR SHARE EXCHANGE...................................................126
§ 11.07. EFFECT OF MERGER OR SHARE EXCHANGE.......................................................126
§ 11.08. ABANDONMENT OF A MERGER OR SHARE EXCHANGE................................128
§ 12.01. DISPOSITION OF ASSETS NOT REQUIRING SHAREHOLDER APPROVAL....129
§ 12.02. SHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS................................129
SUBCHAPTER A. RIGHT TO APPRAISAL AND PAYMENT FOR SHARES............................130
§ 13.01. DEFINITIONS..................................................................................................................130
§ 13.02. RIGHT TO APPRAISAL.................................................................................................133
§ 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS............135
SUBCHAPTER B. PROCEDURE FOR EXERCISE OF APPRAISAL RIGHTS.............................136
§ 13.20. NOTICE OF APPRAISAL RIGHTS...............................................................................136
§ 13.21. NOTICE OF INTENT TO DEMAND PAYMENT AND CONSEQUENCES OF
VOTING OR CONSENTING.......................................................................................................137
§ 13.22. APPRAISAL NOTICE AND FORM..............................................................................137
§ 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW..............................................138
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 § 13.24. PAYMENT........................................................................................................................139
§ 13.25. AFTER-ACQUIRED SHARES.......................................................................................139
§ 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
140
SUBCHAPTER C. JUDICIAL APPRAISAL OF SHARES...............................................................141
§ 13.30. COURT ACTION.............................................................................................................141
§ 13.31. COURT COSTS AND EXPENSES................................................................................141
SUBCHAPTER D. OTHER REMEDIES.............................................................................................142
§ 13.40. OTHER REMEDIES LIMITED.......................................................................................142
SUBCHAPTER A. VOLUNTARY DISSOLUTION..........................................................................143
§ 14.01. DISSOLUTION BY INCORPORATORS OR INITIAL DIRECTORS......................143
§ 14.02. DISSOLUTION BY BOARD OF DIRECTORS AND SHAREHOLDERS...............144
§ 14.03. ARTICLES OF DISSOLUTION......................................................................................144
§ 14.04. REVOCATION OF DISSOLUTION..............................................................................145
§ 14.05. EFFECT OF DISSOLUTION...........................................................................................146
§ 14.06. KNOWN CLAIMS AGAINST DISSOLVED CORPORATION................................146
§ 14.07. OTHER CLAIMS AGAINST DISSOLVED CORPORATION...................................147
§ 14.08. COURT PROCEEDINGS................................................................................................148
§ 14.09. DIRECTOR DUTIES........................................................................................................149
SUBCHAPTER B. ADMINISTRATIVE DISSOLUTION.................................................................149
§ 14.20. GROUNDS FOR ADMINISTRATIVE DISSOLUTION..............................................149
§ 14.21. PROCEDURE FOR AND EFFECT OF ADMINISTRATIVE DISSOLUTION.........150
§ 14.22. REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION...............150
§ 14.23. APPEAL FROM DENIAL OF REINSTATEMENT.....................................................151
SUBCHAPTER C. JUDICIAL DISSOLUTION.................................................................................151
§ 14.30. GROUNDS FOR JUDICIAL DISSOLUTION..............................................................151
§ 14.31. PROCEDURE FOR JUDICIAL DISSOLUTION..........................................................153
§ 14.32. RECEIVERSHIP OR CUSTODIANSHIP......................................................................153
§ 14.33. DECREE OF DISSOLUTION.........................................................................................154
§ 14.34. ELECTION TO PURCHASE IN LIEU OF DISSOLUTION......................................155
SUBCHAPTER A. CERTIFICATE OF AUTHORITY.......................................................................157
§ 15.01. AUTHORITY TO TRANSACT BUSINESS REQUIRED............................................157
§ 15.02. CONSEQUENCES OF TRANSACTING BUSINESS WITHOUT AUTHORITY....158
§ 15.03. APPLICATION FOR CERTIFICATE OF AUTHORITY............................................158
§ 15.04. AMENDED CERTIFICATE OF AUTHORITY............................................................159
§ 15.05. EFFECT OF CERTIFICATE OF AUTHORITY............................................................159
§ 15.06. CORPORATE NAME OF FOREIGN CORPORATION.............................................159
§ 15.07. REGISTERED OFFICE AND REGISTERED AGENT OF FOREIGN
CORPORATION............................................................................................................................161
§ 15.08. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT OF FOREIGN
CORPORATION............................................................................................................................161
§ 15.09. RESIGNATION OF REGISTERED AGENT OF FOREIGN CORPORATION........162
§ 15.10. SERVICE ON FOREIGN CORPORATION.................................................................162
SUBCHAPTER B. WITHDRAWAL OR TRANSFER OF AUTHORITY.......................................163
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 § 15.20. WITHDRAWAL OF FOREIGN CORPORATION......................................................163
§ 15.21. AUTOMATIC WITHDRAWAL UPON CERTAIN CONVERSIONS......................164
§ 15.22. WITHDRAWAL UPON CONVERSION TO A NONFILING ENTITY..................164
§ 15.23. TRANSFER OF AUTHORITY.......................................................................................165
SUBCHAPTER C. REVOCATION OF CERTIFICATE OF AUTHORITY....................................165
§ 15.30. GROUNDS FOR REVOCATION..................................................................................165
§ 15.31. PROCEDURE FOR AND EFFECT OF REVOCATION.............................................166
§ 15.32. APPEAL FROM REVOCATION...................................................................................167
SUBCHAPTER A. RECORDS.............................................................................................................167
§ 16.01. CORPORATE RECORDS...............................................................................................167
§ 16.02. INSPECTION OF RECORDS BY SHAREHOLDERS.................................................168
§ 16.03. SCOPE OF INSPECTION RIGHT.................................................................................169
§ 16.04. COURT-ORDERED INSPECTION...............................................................................170
§ 16.05. INSPECTION OF RECORDS BY DIRECTORS...........................................................170
§ 16.06. EXCEPTION TO NOTICE REQUIREMENT...............................................................171
SUBCHAPTER B. REPORTS...............................................................................................................171
§ 16.20. FINANCIAL STATEMENTS FOR SHAREHOLDERS..............................................171
§ 16.21. ANNUAL REPORT FOR SECRETARY OF STATE....................................................172
§ 17.01. APPLICATION TO EXISTING DOMESTIC CORPORATIONS..............................173
OFFICIAL COMMENT......................................................................................................................173
§ 17.02. APPLICATION TO QUALIFIED FOREIGN CORPORATIONS..............................174
§ 17.03. SAVING PROVISIONS...................................................................................................174
§ 17.04. SEVERABILITY................................................................................................................174
§ 17.05. REPEAL.............................................................................................................................174
§ 17.06. EFFECTIVE DATE...........................................................................................................174

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SUBCHAPTER A.
SHORT TITLE AND RESERVATION OF POWER

§ 1.01. SHORT TITLE

This Act shall be known and may be cited as the “[name of state] Business Corporation Act.”

§ 1.02. RESERVATION OF POWER TO AMEND OR REPEAL

The [name of state legislature] has power to amend or repeal all or part of this Act at any time
and all domestic and foreign corporations subject to this Act are governed by the amendment
or repeal.

SUBSCHAPTER B.
FILING DOCUMENTS

§ 1.20. REQUIREMENTS FOR DOCUMENTS; EXTRINSIC FACTS

(a) A document must satisfy the requirements of this section, and of any other section that
adds to or varies these requirements, to be entitled to filing by the secretary of state.

(b) This Act must require or permit filing the document in the office of the secretary of
state.

(c) The document must contain the information required by this Act. It may contain other
information as well.

(d) The document must be typewritten or printed or, if electronically transmitted, it must
be in a format that can be retrieved or reproduced in typewritten or printed form.

(e) The document must be in the English language. A corporate name need not be in
English if written in English letters or Arabic or Roman numerals, and the certificate of
existence required of foreign corporations need not be in English if accompanied by a
reasonably authenticated English translation.

(f) The document must be signed:

(1) by the chairman of the board of directors of a domestic or foreign corporation, by

its president, or by another of its officers;

(2) if directors have not been selected or the corporation has not been formed, by an
incorporator; or

(3) if the corporation is in the hands of a receiver, trustee, or other court-appointed

fiduciary, by that fiduciary.
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(g) The person executing the document shall sign it and state beneath or opposite the
person’s signature the person’s name and the capacity in which the document is signed.
The document may but need not contain a corporate seal, attestation, acknowledgment,
or verification.

(h) If the secretary of state has prescribed a mandatory form for the document under
section 1.21, the document must be in or on the prescribed form.

(i) The document must be delivered to the office of the secretary of state for filing.
Delivery may be made by electronic transmission if and to the extent permitted by the
secretary of state. If it is filed in typewritten or printed form and not transmitted
electronically, the secretary of state may require one exact or conformed copy to be
delivered with the document (except as provided in sections 5.03 and 15.09).

(j) When the document is delivered to the office of the secretary of state for filing, the
correct filing fee, and any franchise tax, license fee, or penalty required to be paid
therewith by this Act or other law must be paid or provision for payment made in a
manner permitted by the secretary of state.

(k) Whenever a provision of this Act permits any of the terms of a plan or a filed document
to be dependent on facts objectively ascertainable outside the plan or filed document,
the following provisions apply:

(1) The manner in which the facts will operate upon the terms of the plan or filed
document shall be set forth in the plan or filed document.

(2) The facts may include, but are not limited to:

(i) any of the following that is available in a nationally recognized news or

information medium either in print or electronically: statistical or market
indices, market prices of any security or group of securities, interest rates,
currency exchange rates, or similar economic or financial data;

(ii) a determination or action by any person or body, including the

corporation or any other party to a plan or filed document; or (iii) the
terms of, or actions taken under, an agreement to which the

(iii) corporation is a party, or any other agreement or document.

(3) As used in this subsection:

(i) “filed document’’ means a document filed with the secretary of state
under any provision of this Act except chapter 15 or section 16.21; and

(ii) “plan’’ means a plan of domestication, nonprofit conversion, entity

conversion, merger, or share exchange.
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 (4) The following provisions of a plan or filed document may not be made
dependent on facts outside the plan or filed document:

(i) The name and address of any person required in a filed document.

(ii) The registered office of any entity required in a filed document.

(iii) The registered agent of any entity required in a filed document.

(iv) The number of authorized shares and designation of each class or series of
shares.

(v) The effective date of a filed document.

(vi) Any required statement in a filed document of the date on which the
underlying transaction was approved or the manner in which that
approval was given.

(5) If a provision of a filed document is made dependent on a fact ascertainable

outside of the filed document, and that fact is not ascertainable by reference to a
source described in subsection (k)(2)(i) or a document that is a matter of public
record, or the affected shareholders have not received notice of the fact from the
corporation, then the corporation shall file with the secretary of state articles of
amendment setting forth the fact promptly after the time when the fact referred
to is first ascertainable or thereafter changes. Articles of amendment under this
subsection (k)(5) are deemed to be authorized by the authorization of the original
filed document or plan to which they relate and may be filed by the corporation
without further action by the board of directors or the shareholders.

§ 1.21. FORMS
(a) The secretary of state may prescribe and furnish on request forms for: (1) an application
for a certificate of existence, (2) a foreign corporation’s application for a certificate of
authority to transact business in this state, (3) a foreign corporation’s application for a
certificate of withdrawal, (4) and the annual report. If the secretary of state so requires,
use of these forms is mandatory.

(b) The secretary of state may prescribe and furnish on request forms for other documents
required or permitted to be filed by this Act but their use is not mandatory.

§ 1.22. FILING, SERVICE, AND COPYING FEES

(a) The secretary of state shall collect the following fees when the documents described in
this subsection are delivered to the secretary of state for filing:

10
Document Fee

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 (1) Articles of incorporation $ .
(2) Application for use of indistinguishable name $ .
(3) Application for reserved name $ .
(4) Notice of transfer of reserved name $ .
(5) Application for registered name $ .
(6) Application for renewal of registered name $ .
(7) Corporation’s statement of change of registered
agent or registered office or both $ .
(8) Agent’s statement of change of registered office
for each affected corporation not to exceed a total
of _______ $ .
(9) Agent’s statement of resignation No fee.
(9.A) Articles of domestication $ .
(9.B) Articles of charter surrender $ .
(9.C) Articles of nonprofit conversion $ .
(9.D) Articles of domestication and conversion $ .
(9.E) Articles of entity conversion $ .
(10) Amendment of articles of incorporation $ .
(11) Restatement of articles of incorporation with
amendment of articles $ .
(12) Articles of merger or share exchange $ .
(13) Articles of dissolution $ .
(14) Articles of revocation of dissolution $ .
(15) Certificate of administrative dissolution No fee.
(16) Application for reinstatement following
administrative dissolution $ .
(17) Certificate of reinstatement No fee.
(18) Certificate of judicial dissolution No fee.
(19) Application for certificate of authority $ .
(20) Application for amended certificate of authority $ .
(20.A) Application for certificate of withdrawal $ .
(21) Application for transfer of authority $ .
(22) Certificate of revocation of authority to transact
business No fee.
(23) Annual report $ .
(24) Articles of correction $ .
(25) Application for certificate of existence or
authorization $ .
(26) Any other document required or permitted to be
filed by this Act $ .

(b) The secretary of state shall collect a fee of $ ______ each time process is served on the
secretary of state under this Act. The party to a proceeding causing service of process is
entitled to recover this fee as costs if such party prevails in the proceeding.
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(c) The secretary of state shall collect the following fees for copying and certifying the copy
of any filed document relating to a domestic or foreign corporation:

(1) $ a page for copying; and

(2) $ for the certificate.

§ 1.23. EFFECTIVE TIME AND DATE OF DOCUMENT

(a) Except as provided in subsection (b) and section 1.24(c), a document accepted for filing
is effective:

(1) at the date and time of filing, as evidenced by such means as the secretary of
state may use for the purpose of recording the date and time of filing; or

(2) at the time specified in the document as its effective time on the date it is filed.

(b) A document may specify a delayed effective time and date, and if it does so the
document becomes effective at the time and date specified. If a delayed effective date
but no time is specified, the document is effective at the close of business on that date.
A delayed effective date for a document may not be later than the 90th day after the
date it is filed.

§ 1.24. CORRECTING FILED DOCUMENT

(a) A domestic or foreign corporation may correct a document filed with the secretary of
state if (1) the document contains an inaccuracy, or (2) the document was defectively
signed, attested, sealed, verified, or acknowledged, or (3) the electronic transmission
was defective.

(b) A document is corrected:

(1) by preparing articles of correction that

(i) describe the document (including its filing date) or attach a copy of it to
the articles,

(ii) specify the inaccuracy or defect to be corrected, and

(iii) correct the inaccuracy or defect; and

(2) by delivering the articles to the secretary of state for filing.

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(c) Articles of correction are effective on the effective date of the document they correct
except as to persons relying on the uncorrected document and adversely affected by the
correction. As to those persons, articles of correction are effective when filed.

§ 1.25. FILING DUTY OF SECRETARY OF STATE

(a) If a document delivered to the office of the secretary of state for filing satisfies the
requirements of section 1.20, the secretary of state shall file it.

(b) The secretary of state files a document by recording it as filed on the date and time of
receipt. After filing a document, except as provided in sections 5.03 and 15.09, the
secretary of state shall deliver to the domestic or foreign corporation or its
representative a copy of the document with an acknowledgement of the date and time
of filing.

(c) If the secretary of state refuses to file a document, it shall be returned to the domestic or
foreign corporation or its representative within five days after the document was
delivered, together with a brief, written explanation of the reason for the refusal.

(d) The secretary of state’s duty to file documents under this section is ministerial. The
secretary’s filing or refusing to file a document does not:

(1) affect the validity or invalidity of the document in whole or part;

(2) relate to the correctness or incorrectness of information contained in the

document; or

(3) create a presumption that the document is valid or invalid or that information
contained in the document is correct or incorrect.

§ 1.26. APPEAL FROM SECRETARY OF STATE’S REFUSAL TO FILE DOCUMENT

(a) If the secretary of state refuses to file a document delivered for filing, the domestic or
foreign corporation may appeal the refusal within 30 days after the return of the
document to the [name or describe] court [of the county where the corporation’s
principal office (or, if none in this state, its registered office) is or will be located] [of
______ county]. The appeal is commenced by petitioning the court to compel filing the
document and by attaching to the petition the document and the secretary of state’s
explanation of his refusal to file.

(b) The court may summarily order the secretary of state to file the document or take other
action the court considers appropriate.

(c) The court’s final decision may be appealed as in other civil proceedings.

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§ 1.27. EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT
A certificate from the secretary of state delivered with a copy of a document filed by the
secretary of state, is conclusive evidence that the original document is on file with the secretary
of state.

§ 1.28. CERTIFICATE OF EXISTENCE

(a) Anyone may apply to the secretary of state to furnish a certificate of existence for a
domestic corporation or a certificate of authorization for a foreign corporation.

(b) A certificate of existence or authorization sets forth:

(1) the domestic corporation’s corporate name or the foreign corporation’s corporate
name used in this state;

(2) that

(i) the domestic corporation is duly incorporated under the law of this state,
the date of its incorporation, and the period of its duration if less than
perpetual; or

(ii) that the foreign corporation is authorized to transact business in this state;

(3) that all fees, taxes, and penalties owed to this state have been paid, if

(i) payment is reflected in the records of the secretary of state and

(ii) nonpayment affects the existence or authorization of the domestic or

foreign corporation;

(4) that its most recent annual report required by section 16.21 has been filed with
the secretary of state;

(5) that articles of dissolution have not been filed; and

(6) other facts of record in the office of the secretary of state that may be requested
by the applicant.

(c) Subject to any qualification stated in the certificate, a certificate of existence or

authorization issued by the secretary of state may be relied upon as conclusive evidence
that the domestic or foreign corporation is in existence or is authorized to transact
business in this state.

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§ 1.29. PENALTY FOR SIGNING FALSE DOCUMENT
(a) A person commits an offense by signing a document that the person knows is false in
any material respect with intent that the document be delivered to the secretary of state
for filing.

(b) An offense under this section is a [  ] misdemeanor [punishable by a fine of not to
exceed $[  ].

SUBCHAPTER C.
SECRETARY OF STATE

§ 1.30. POWERS
The secretary of state has the power reasonably necessary to perform the duties
required of the secretary of state by this Act.

SUBCHAPTER D.
DEFINITIONS

§ 1.40. ACT DEFINITIONS

In this Act:

(1) “Articles of incorporation” means the original articles of incorporation, all

amendments thereof, and any other documents permitted or required to be filed
by a domestic business corporation with the secretary of state under any
provision of this Act except section 16.21. If an amendment of the articles or any
other document filed under this Act restates the articles in their entirety,
thenceforth the “articles” shall not include any prior documents.

(2) “Authorized shares” means the shares of all classes a domestic or foreign
corporation is authorized to issue.

(3) “Conspicuous” means so written, displayed, or presented that a reasonable

person against whom the writing is to operate should have noticed it. For
example, text in italics, boldface, contrasting color, capitals or underlined is
conspicuous.

(4) “Corporation,” “domestic corporation” or “domestic business corporation”

means a corporation for profit, which is not a foreign corporation, incorporated
under or subject to the provisions of this Act.

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(5) “Deliver” or “delivery” means any method of delivery used in conventional
commercial practice, including delivery by hand, mail, commercial delivery, and,
if authorized in accordance with section 1.41, by electronic transmission.

(6) “Distribution” means a direct or indirect transfer of money or other property

(except its own shares) or incurrence of indebtedness by a corporation to or for
the benefit of its shareholders in respect of any of its shares. A distribution may
be in the form of a declaration or payment of a dividend; a purchase,
redemption, or other acquisition of shares; a distribution of indebtedness; or
otherwise.

(6A) “Document” means (i) any tangible medium on which information is inscribed,
and includes any writing or written instrument, or (ii) an electronic record.

(6B) “Domestic unincorporated entity” means an unincorporated entity whose internal

affairs are governed by the laws of this state.

(7) “Effective date of notice” is defined in section 1.41.

(7.A) “Electronic” means relating to technology having electrical, digital, magnetic,

wireless, optical, electromagnetic, or similar capabilities.

(7.B) “Electronic record” means information that is stored in an electronic or other

medium and is retrievable in paper form through an automated process used in
conventional commercial practice, unless otherwise authorized in accordance
with section 1.41(j).

(7.C) “Electronic transmission” or “electronically transmitted,” means any form or

process of communication, not directly involving the physical transfer of paper
or another tangible medium, which (a) is suitable for the retention, retrieval, and
reproduction of information by the recipient, and (b) is retrievable in paper form
by the recipient through an automated process used in conventional commercial
practice, unless otherwise authorized in accordance with section 1.41(j).

(7.D) “Eligible entity” means a domestic or foreign unincorporated entity or a

domestic or foreign nonprofit corporation.

(7.E) “Eligible interests” means interests or memberships.

(8) “Employee” includes an officer but not a director. A director may accept duties
that make the director also an employee.

(9) “Entity” includes domestic and foreign business corporation; domestic and
foreign nonprofit corporation; estate; trust; domestic and foreign unincorporated
entity; and state, United States, and foreign government.

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(9.A) The phrase “facts objectively ascertainable” outside of a filed document or plan is
defined in section 1.20(k).

(9AA) “Expenses” means reasonable expenses of any kind that are incurred in
connection with a matter.

(9.B) “Filing entity” means an unincorporated entity that is of a type that is created by
filing a public organic document.

(10) “Foreign corporation” means a corporation incorporated under a law other than
the law of this state; which would be a business corporation if incorporated
under the laws of this state.

(10.A) “Foreign nonprofit corporation” means a corporation incorporated under a law

other than the law of this state, which would be a nonprofit corporation if
incorporated under the laws of this state.

(10.B) “Foreign unincorporated entity” means an unincorporated entity whose internal

affairs are governed by an organic law of a jurisdiction other than this state.

(11) “Governmental subdivision” includes authority, county, district, and

municipality.

(12) “Includes” denotes a partial definition.

(13) “Individual” means a natural person.

(13.A) “Interest” means either or both of the following rights under the organic law of
an unincorporated entity:

(i) the right to receive distributions from the entity either in the ordinary
course or upon liquidation; or

(ii) the right to receive notice or vote on issues involving its internal affairs,
other than as an agent, assignee, proxy or person responsible for
managing its business and affairs.

(13.B) “Interest holder” means a person who holds of record an interest.

(14) “Means” denotes an exhaustive definition.

(14.A) “Membership” means the rights of a member in a domestic or foreign nonprofit

corporation.

(14.B) “Nonfiling entity” means an unincorporated entity that is of a type that is not
created by filing a public organic document.
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(14.C) “Nonprofit corporation” or “domestic nonprofit corporation” means a
corporation incorporated under the laws of this state and subject to the
provisions of the [Model Nonprofit Corporation Act].

(15) “Notice” is defined in section 1.41.

(15.A) “Organic document” means a public organic document or a private organic

document.

(15.B) “Organic law “means the statute governing the internal affairs of a domestic or
foreign business or nonprofit corporation or unincorporated entity.

(15.C) “Owner liability” means personal liability for a debt, obligation or liability of a
domestic or foreign business or nonprofit corporation or unincorporated entity
that is imposed on a person:

(i) solely by reason of the person’s status as a shareholder, member or

interest holder; or

(ii) by the articles of incorporation, bylaws or an organic document under a

provision of the organic law of an entity authorizing the articles of
incorporation, bylaws or an organic document to make one or more
specified shareholders, members or interest holders liable in their capacity
as shareholders, members or interest holders for all or specified debts,
obligations or liabilities of the entity.

(16) “Person” includes an individual and an entity.

(17) “Principal office” means the office (in or out of this state) so designated in the
annual report where the principal executive offices of a domestic or foreign
corporation are located.

(17.A) “Private organic document” means any document (other than the public organic
document, if any) that determines the internal governance of an unincorporated
entity. Where a private organic document has been amended or restated, the
term means the private organic document as last amended or restated.

(17.B) “Public organic document” means the document, if any, that is filed of public
record to create an unincorporated entity. Where a public organic document has
been amended or restated, the term means the public organic document as last
amended or restated.

(18) “Proceeding” includes civil suit and criminal, administrative, and investigatory
action.

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(18.A) “Public corporation” means a corporation that has shares listed on a national
securities exchange or regularly traded in a market maintained by one or more
members of a national securities association.

(18.B) “Qualified director” is defined in section 1.43.

(19) “Record date” means the date established under chapter 6 or 7 on which a
corporation determines the identity of its shareholders and their shareholdings
for purposes of this Act. The determinations shall be made as of the close of
business on the record date unless another time for doing so is specified when
the record date is fixed.

(20) “Secretary” means the corporate officer to whom the board of directors has
delegated responsibility under section 8.40(c) for custody of the minutes of the
meetings of the board of directors and of the shareholders and for authenticating
records of the corporation.

(21) “Shareholder” means the person in whose name shares are registered in the
records of a corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee certificate on file with a corporation.

(22) “Shares” means the units into which the proprietary interests in a corporation are
divided.

(22.A) “Sign” or “signature” means, with present intent to authenticate or adopt a

document:

(i) to execute or adopt a tangible symbol to a document, and includes any

manual, facsimile, or conformed signature; or

(ii) to attach to or logically associate with an electronic transmission an

electronic sound, symbol or process, and includes an electronic signature
in an electronic transmission.

(23) “State,” when referring to a part of the United States, includes a state and
commonwealth (and their agencies and governmental subdivisions) and a
territory and insular possession (and their agencies and governmental
subdivisions) of the United States.

(24) “Subscriber” means a person who subscribes for shares in a corporation, whether
before or after incorporation.

(24.A) “Unincorporated entity” means an organization or artificial legal person that

either has a separate legal existence or has the power to acquire an estate in real
property in its own name and that is not any of the following: a domestic or

20
 foreign business or nonprofit corporation, an estate, a trust, a state, the United
States, or a foreign government. The term includes a general partnership, limited
liability company, limited partnership, business trust, joint stock association and
unincorporated nonprofit association.

(25) “United States” includes district, authority, bureau, commission, department,

and any other agency of the United States.

(26) “Voting group” means all shares of one or more classes or series that under the
articles of incorporation or this Act are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders. All shares entitled by the
articles of incorporation or this Act to vote generally on the matter are for that
purpose a single voting group.

(27) “Voting power” means the current power to vote in the election of directors.

(28) “Writing” or “written” means any information in the form of a document.

§ 1.41. NOTICES AND OTHER COMMUNICATIONS

(a) Notice under this Act must be in writing unless oral notice is reasonable in the
circumstances. Unless otherwise agreed between the sender and the recipient, words in
a notice or other communication under this Act must be in English.

(b) A notice or other communication may be given or sent by any method of delivery,
except that electronic transmissions must be in accordance with this section. If these
methods of delivery are impracticable, a notice or other communication may be
communicated by a newspaper of general circulation in the area where published, or by
radio, television, or other form of public broadcast communication.

(c) Notice or other communication to a domestic or foreign corporation authorized to

transact business in this state may be delivered to its registered agent at its registered
office or to the secretary of the corporation at its principal office shown in its most
recent annual report or, in the case of a foreign corporation that has not yet delivered an
annual report, in its application for a certificate of authority.

(d) Notice or other communications may be delivered by electronic transmission if

consented to by the recipient or if authorized by subsection (j).

(e) Any consent under subsection (d) may be revoked by the person who consented by
written or electronic notice to the person to whom the consent was delivered. Any such
consent is deemed revoked if (1) the corporation is unable to deliver two consecutive
electronic transmissions given by the corporation in accordance with such consent, and

21
 (2) such inability becomes known to the secretary or an assistant secretary of the
corporation or to the transfer agent, or other person responsible for the giving of notice
or other communications; provided, however, the inadvertent failure to treat such
inability as a revocation shall not invalidate any meeting or other action.

(f) Unless otherwise agreed between the sender and the recipient, an electronic
transmission is received when:

(1) it enters an information processing system that the recipient has designated or
uses for the purposes of receiving electronic transmissions or information of the
type sent, and from which the recipient is able to retrieve the electronic
transmission; and

(2) it is in a form capable of being processed by that system.

(g) Receipt of an electronic acknowledgement from an information processing system

described in subsection (f)(1) establishes that an electronic transmission was received
but, by itself, does not establish that the content sent corresponds to the content
received.

(h) An electronic transmission is received under this section even if no individual is aware
of its receipt.

(i) Notice or other communication, if in a comprehensible form or manner, is effective at

the earliest of the following:

(1) if in physical form, the earliest of when it is actually received, or when it is left at:

(A) a shareholder’s address shown on the corporation’s record of shareholders

maintained by the corporation under section 16.01(c);

(B) a director’s residence or usual place of business; or

(C) the corporation’s principal place of business;

(2) if mailed postage prepaid and correctly addressed to a shareholder, upon deposit
in the United States mail;

(3) if mailed by United States mail postage prepaid and correctly addressed to a
recipient other than a shareholder, the earliest of when it is actually received, or:

(A) if sent by registered or certified mail, return receipt requested, the date
shown on the return receipt signed by or on behalf of the addressee; or

(B) five days after it is deposited in the United States mail;

22
 (4) if an electronic transmission, when it is received as provided in subsection
(f); and

(5) if oral, when communicated.

(j) A notice or other communication may be in the form of an electronic transmission that
cannot be directly reproduced in paper form by the recipient through an automated
process used in conventional commercial practice only if (i) the electronic transmission
is otherwise retrievable in perceivable form, and (ii) the sender and the recipient have
consented in writing to the use of such form of electronic transmission.

(k) If this Act prescribes requirements for notices or other communications in particular
circumstances, those requirements govern. If articles of incorporation or bylaws
prescribe requirements for notices or other communications, not inconsistent with this
section or other provisions of this Act, those requirements govern. The articles of
incorporation or bylaws may authorize or require delivery of notices of meetings of
directors by electronic transmission.

§ 1.42. NUMBER OF SHAREHOLDERS

(a) For purposes of this Act, the following identified as a shareholder in a corporation’s
current record of shareholders constitutes one shareholder:

(1) three or fewer co-owners;

(2) a corporation, partnership, trust, estate, or other entity;

(3) the trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or
account.

(b) For purposes of this Act, shareholdings registered in substantially similar names
constitute one shareholder if it is reasonable to believe that the names represent the same
person.

§ 1.43. QUALIFIED DIRECTOR

(a) A “qualified director” is a director who, at the time action is to be taken under:
(1) section 7.44, does not have (i) a material interest in the outcome of the proceeding, or (ii)
a material relationship with a person who has such an interest;
(2) section 8.53 or 8.55, (i) is not a party to the proceeding, (ii) is not a director as to whom a
transaction is a director’s conflicting interest transaction or who sought a disclaimer of the
corporation’s interest in a business opportunity under section 8.70, which transaction or
disclaimer is challenged in the proceeding, and (iii) does not have a material relationship with
a director described in either clause (i) or clause (ii) of this subsection (a)(2);

23
(3) section 8.62, is not a director (i) as to whom the transaction is a director’s conflicting
interest transaction, or (ii) who has a material relationship with another director as to whom
the transaction is a director’s conflicting interest transaction; or
(4) section 8.70, would be a qualified director under subsection (a)(3) if the business
opportunity were a director’s conflicting interest transaction.
(b) For purposes of this section:
(1) “material relationship” means a familial, financial, professional, employment or other
relationship that would reasonably be expected to impair the objectivity of the director’s
judgment when participating in the action to be taken; and
(2) “material interest” means an actual or potential benefit or detriment (other than one
which would devolve on the corporation or the shareholders generally) that would reasonably
be expected to impair the objectivity of the director’s judgment when participating in the
action to be taken.
(c) The presence of one or more of the following circumstances shall not automatically
prevent a director from being a qualified director:
(1) nomination or election of the director to the current board by any director who is not a
qualified director with respect to the matter (or by any person that has a material relationship
with that director), acting alone or participating with others;
(2) service as a director of another corporation of which a director who is not a qualified
director with respect to the matter (or any individual who has a material relationship with that
director), is or was also a director; or
(3) with respect to action to be taken under section 7.44, status as a named defendant, as a
director against whom action is demanded, or as a director who approved the conduct being
challenged.

§ 1.44. HOUSEHOLDING
(a) A corporation has delivered written notice or any other report or statement under this
Act, the articles of incorporation or the bylaws to all shareholders who share a common
address if:

(1) The corporation delivers one copy of the notice, report or statement to the
common address;

(2) The corporation addresses the notice, report or statement to those shareholders
either as a group or to each of those shareholders individually or to the
shareholders in a form to which each of those shareholders has consented; and

(3) Each of those shareholders consents to delivery of a single copy of such notice,
report or statement to the shareholders’ common address. Any such consent
shall be revocable by any of such shareholders who deliver written notice of
revocation to the corporation. If such written notice of revocation is delivered,
the corporation shall begin providing individual notices, reports or other
statements to the revoking shareholder no later than 30 days after delivery of the
written notice of revocation.
24
(b) Any shareholder who fails to object by written notice to the corporation, within 60 days
of written notice by the corporation of its intention to send single copies of notices,
reports or statements to shareholders who share a common address as permitted by
subsection (a), shall be deemed to have consented to receiving such single copy at the
common address.

§ 2.01. INCORPORATORS
One or more persons may act as the incorporator or incorporators of a corporation by
delivering articles of incorporation to the secretary of state for filing.

§ 2.02. ARTICLES OF INCORPORATION

(a) The articles of incorporation must set forth:

(1) a corporate name for the corporation that satisfies the requirements of
section 4.01;

(2) the number of shares the corporation is authorized to issue;

(3) the street address of the corporation’s initial registered office and the name of its
initial registered agent at that office; and

(4) the name and address of each incorporator.

(b) The articles of incorporation may set forth:

(1) the names and addresses of the individuals who are to serve as the initial
directors;

(2) provisions not inconsistent with law regarding:

(i) the purpose or purposes for which the corporation is organized;

(ii) managing the business and regulating the affairs of the corporation;

(iii) defining, limiting, and regulating the powers of the corporation, its board
of directors, and shareholders;

(iv) a par value for authorized shares or classes of shares;

(v) the imposition of personal liability on shareholders for the debts of the
corporation to a specified extent and upon specified conditions;

25
 (3) any provision that under this Act is required or permitted to be set forth in the
bylaws;

(4) a provision eliminating or limiting the liability of a director to the corporation or

its shareholders for money damages for any action taken, or any failure to take
any action, as a director, except liability for (A) the amount of a financial benefit
received by a director to which the director is not entitled; (B) an intentional
infliction of harm on the corporation or the shareholders; (C) a violation of
section 8.33; or (D) an intentional violation of criminal law; and

(5) a provision permitting or making obligatory indemnification of a director for

liability (as defined in section 8.50(5)) to any person for any action taken, or any
failure to take any action, as a director, except liability for (A) receipt of a
financial benefit to which the director is not entitled, (B) an intentional infliction
of harm on the corporation or its shareholders, (C) a violation of section 8.33, or
(D) an intentional violation of criminal law.

(c) The articles of incorporation need not set forth any of the corporate powers enumerated
in this Act.

(d) Provisions of the articles of incorporation may be made dependent upon facts
objectively ascertainable outside the articles of incorporation in accordance with
section 1.20(k).

§ 2.03. INCORPORATION
(a) Unless a delayed effective date is specified, the corporate existence begins when the
articles of incorporation are filed.

(b) The secretary of state’s filing of the articles of incorporation is conclusive proof that the
incorporators satisfied all conditions precedent to incorporation except in a proceeding
by the state to cancel or revoke the incorporation or involuntarily dissolve the
corporation.

§ 2.04. LIABILITY FOR PREINCORPORATION TRANSACTIONS

All persons purporting to act as or on behalf of a corporation, knowing there was no
incorporation under this Act, are jointly and severally liable for all liabilities created while so
acting.

§ 2.05. ORGANIZATION OF CORPORATION

(a) After incorporation:

26
 (1) if initial directors are named in the articles of incorporation, the initial directors
shall hold an organizational meeting, at the call of a majority of the directors, to
complete the organization of the corporation by appointing officers, adopting
bylaws, and carrying on any other business brought before the meeting;

(2) if initial directors are not named in the articles, the incorporator or incorporators
shall hold an organizational meeting at the call of a majority of the incorporators:

(i) to elect directors and complete the organization of the corporation; or

(ii) to elect a board of directors who shall complete the organization of the
corporation.

(b) Action required or permitted by this Act to be taken by incorporators at an

organizational meeting may be taken without a meeting if the action taken is evidenced
by one or more written consents describing the action taken and signed by each
incorporator.

(c) An organizational meeting may be held in or out of this state.

§ 2.06. BYLAWS
(a) The incorporators or board of directors of a corporation shall adopt initial bylaws for
the corporation.

(b) The bylaws of a corporation may contain any provision that is not inconsistent with law
or the articles of incorporation.

(c) The bylaws may contain one or both of the following provisions:

(1) A requirement that if the corporation solicits proxies or consents with

respect to an election of directors, the corporation include in its proxy
statement and any form of its proxy or consent, to the extent and subject
to such procedures or conditions as are provided in the bylaws, one or
more individuals nominated by a shareholder in addition to individuals
nominated by the board of directors; and

(2) A requirement that the corporation reimburse the expenses incurred by a

shareholder in soliciting proxies or consents in connection with an election
of directors, to the extent and subject to such procedures or conditions as
are provided in the bylaws, provided that no bylaw so adopted shall
apply to elections for which any record date precedes its adoption.

(d) Notwithstanding section 10.20(b)(2), the shareholders in amending, repealing, or

adopting a bylaw described in subsection (c) may not limit the authority of the board
27
 of directors to amend or repeal any condition or procedure set forth in or to add any
procedure or condition to such a bylaw in order to provide for a reasonable,
practicable, and orderly process.

§ 2.07. EMERGENCY BYLAWS

(a) Unless the articles of incorporation provide otherwise, the board of directors of a
corporation may adopt bylaws to be effective only in an emergency defined in
subsection (d). The emergency bylaws, which are subject to amendment or repeal by
the shareholders, may make all provisions necessary for managing the corporation
during the emergency, including:

(1) procedures for calling a meeting of the board of directors;

(2) quorum requirements for the meeting; and

(3) designation of additional or substitute directors.

(b) All provisions of the regular bylaws consistent with the emergency bylaws remain
effective during the emergency. The emergency bylaws are not effective after the
emergency ends.

(c) Corporate action taken in good faith in accordance with the emergency bylaws:

(1) binds the corporation; and

(2) may not be used to impose liability on a corporate director, officer, employee, or
agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation’s
directors cannot readily be assembled because of some catastrophic event.

CHAPTER 3

§ 3.01. PURPOSES
(a) Every corporation incorporated under this Act has the purpose of engaging in any
lawful business unless a more limited purpose is set forth in the articles of
incorporation.

(b) A corporation engaging in a business that is subject to regulation under another statute
of this state may incorporate under this Act only if permitted by, and subject to all
limitations of, the other statute.

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§ 3.02. GENERAL POWERS
Unless its articles of incorporation provide otherwise, every corporation has perpetual
duration and succession in its corporate name and has the same powers as an individual to do
all things necessary or convenient to carry out its business and affairs, including without
limitation power:

(1) to sue and be sued, complain and defend in its corporate name;

(2) to have a corporate seal, which may be altered at will, and to use it, or a facsimile of it,
by impressing or affixing it or in any other manner reproducing it;

(3) to make and amend bylaws, not inconsistent with its articles of incorporation or with
the laws of this state, for managing the business and regulating the affairs of the
corporation;

(4) to purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and
otherwise deal with, real or personal property, or any legal or equitable interest in
property, wherever located;

(5) to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any
part of its property;

(6) to purchase, receive, subscribe for, or otherwise acquire; own, hold, vote, use, sell,
mortgage, lend, pledge, or otherwise dispose of; and deal in and with shares or other
interests in, or obligations of, any other entity;

(7) to make contracts and guarantees, incur liabilities, borrow money, issue its notes,
bonds, and other obligations (which may be convertible into or include the option to
purchase other securities of the corporation), and secure any of its obligations by
mortgage or pledge of any of its property, franchises, or income;

(8) to lend money, invest and reinvest its funds, and receive and hold real and personal
property as security for repayment;

(9) to be a promoter, partner, member, associate, or manager of any partnership, joint

venture, trust, or other entity;

(10) to conduct its business, locate offices, and exercise the powers granted by this Act
within or without this state;

(11) to elect directors and appoint officers, employees, and agents of the corporation, define
their duties, fix their compensation, and lend them money and credit;

29
(12) to pay pensions and establish pension plans, pension trusts, profit sharing plans, share
bonus plans, share option plans, and benefit or incentive plans for any or all of its
current or former directors, officers, employees, and agents;

(13) to make donations for the public welfare or for charitable, scientific, or educational
purposes;

(14) to transact any lawful business that will aid governmental policy;

(15) to make payments or donations, or do any other act, not inconsistent with law, that
furthers the business and affairs of the corporation.

§ 3.03. EMERGENCY POWERS

(a) In anticipation of or during an emergency defined in subsection (d), the board of
directors of a corporation may:

(1) modify lines of succession to accommodate the incapacity of any director, officer,
employee, or agent; and

(2) relocate the principal office, designate alternative principal offices or regional
offices, or authorize the officers to do so.

(b) During an emergency defined in subsection (d), unless emergency bylaws provide
otherwise:

(1) notice of a meeting of the board of directors need be given only to those directors
whom it is practicable to reach and may be given in any practicable manner,
including by publication and radio; and

(2) one or more officers of the corporation present at a meeting of the board of
directors may be deemed to be directors for the meeting, in order of rank and
within the same rank in order of seniority, as necessary to achieve a quorum.

(c) Corporate action taken in good faith during an emergency under this section to further
the ordinary business affairs of the corporation:

(1) binds the corporation; and

(2) may not be used to impose liability on a corporate director, officer, employee, or
agent.

(d) An emergency exists for purposes of this section if a quorum of the corporation’s
directors cannot readily be assembled because of some catastrophic event.

30
§ 3.04. ULTRA VIRES
(a) Except as provided in subsection (b), the validity of corporate action may not be
challenged on the ground that the corporation lacks or lacked power to act.

(b) A corporation’s power to act may be challenged:

(1) in a proceeding by a shareholder against the corporation to enjoin the act;

(2) in a proceeding by the corporation, directly, derivatively, or through a receiver,

trustee, or other legal representative, against an incumbent or former director,
officer, employee, or agent of the corporation; or

(3) in a proceeding by the attorney general under section 14.30.

(c) In a shareholder’s proceeding under subsection (b)(1) to enjoin an unauthorized

corporate act, the court may enjoin or set aside the act, if equitable and if all affected
persons are parties to the proceeding, and may award damages for loss (other than
anticipated profits) suffered by the corporation or another party because of enjoining
the unauthorized act.

§ 4.01. CORPORATE NAME

(a) A corporate name:

(1) must contain the word “corporation,” “incorporated,” “company,” or “limited,”

or the abbreviation “corp.,” “inc.,” “co.,” or “ltd.,” or words or abbreviations of
like import in another language; and

(2) may not contain language stating or implying that the corporation is organized
for a purpose other than that permitted by section 3.01 and its articles of
incorporation.

(b) Except as authorized by subsections(c) and (d), a corporate name must be

distinguishable upon the records of the secretary of state from:

(1) the corporate name of a corporation incorporated or authorized to transact

business in this state;

(2) a corporate name reserved or registered under section 4.02 or 4.03;

(3) the fictitious name adopted by a foreign corporation authorized to transact

business in this state because its real name is unavailable; and

(4) the corporate name of a not-for-profit corporation incorporated or authorized to

transact business in this state.

31
(c) A corporation may apply to the secretary of state for authorization to use a name that is
not distinguishable upon the secretary of state’s records from one or more of the names
described in subsection (b). The secretary of state shall authorize use of the name
applied for if:

(1) the other corporation consents to the use in writing and submits an undertaking
in form satisfactory to the secretary of state to change its name to a name that is
distinguishable upon the records of the secretary of state from the name of the
applying corporation; or

(2) the applicant delivers to the secretary of state a certified copy of the final
judgment of a court of competent jurisdiction establishing the applicant’s right to
use the name applied for in this state.

(d) A corporation may use the name (including the fictitious name) of another domestic or
foreign corporation that is used in this state if the other corporation is incorporated or
authorized to transact business in this state and the proposed user corporation:

(1) has merged with the other corporation;

(2) has been formed by reorganization of the other corporation; or

(3) (3) has acquired all or substantially all of the assets, including the corporate
name, of the other corporation.

(4) This Act does not control the use of fictitious names.

§ 4.02. RESERVED NAME

(a) A person may reserve the exclusive use of a corporate name, including a fictitious name
for a foreign corporation whose corporate name is not available, by delivering an
application to the secretary of state for filing. The application must set forth the name
and address of the applicant and the name proposed to be reserved. If the secretary of
state finds that the corporate name applied for is available, the secretary of state shall
reserve the name for the applicant’s exclusive use for a nonrenewable 120-day period.

(b) The owner of a reserved corporate name may transfer the reservation to another person
by delivering to the secretary of state a signed notice of the transfer that states the name
and address of the transferee.

§ 4.03. REGISTERED NAME

(a) A foreign corporation may register its corporate name, or its corporate name with any
addition required by section 15.06, if the name is distinguishable upon the records of

32
 the secretary of state from the corporate names that are not available under section
4.01(b).

(b) A foreign corporation registers its corporate name, or its corporate name with any
addition required by section 15.06, by delivering to the secretary of state for filing an
application:

(1) setting forth its corporate name, or its corporate name with any addition
required by section 15.06, the state or country and date of its incorporation, and a
brief description of the nature of the business in which it is engaged; and

(2) accompanied by a certificate of existence (or a document of similar import) from

the state or country of incorporation.

(c) The name is registered for the applicant’s exclusive use upon the effective date of the
application.

(d) A foreign corporation whose registration is effective may renew it for successive years
by delivering to the secretary of state for filing a renewal application, which complies
with the requirements of subsection (b), between October 1 and December 31 of the
preceding year. The renewal application when filed renews the registration for the
following calendar year.

(e) A foreign corporation whose registration is effective may thereafter qualify as a foreign
corporation under the registered name or consent in writing to the use of that name by
a corporation thereafter incorporated under this Act or by another foreign corporation
thereafter authorized to transact business in this state. The registration terminates
when the domestic corporation is incorporated or the foreign corporation qualifies or
consents to the qualification of another foreign corporation under the registered name.

§ 5.01. REGISTERED OFFICE AND REGISTERED AGENT

Each corporation must continuously maintain in this state:

(1) a registered office that may be the same as any of its places of business; and

(2) a registered agent, who may be:

(i) an individual who resides in this state and whose business office is identical with
the registered office;

(ii) a domestic or foreign corporation or other eligible entity whose business office is
identical with the registered office and, in the case of a foreign corporation or
foreign eligible entity, is authorized to transact business in the state.

33
§ 5.02. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT
(a) A corporation may change its registered office or registered agent by delivering to the
secretary of state for filing a statement of change that sets forth:

(1) the name of the corporation;

(2) the street address of its current registered office;

(3) if the current registered office is to be changed, the street address of the new
registered office;

(4) the name of its current registered agent;

(5) if the current registered agent is to be changed, the name of the new registered
agent and the new agent’s written consent (either on the statement or attached to
it) to the appointment; and

(6) that after the change or changes are made, the street addresses of its registered
office and the business office of its registered agent will be identical.

(b) If the street address of a registered agent’s business office changes, the agent may
change the street address of the registered office of any corporation for which the
agent is the registered agent by delivering a signed written notice of the change to the
corporation and delivering to the secretary of state for filing a signed statement that
complies with the requirements of subsection (a) and recites that the corporation has
been notified of the change.

§ 5.03. RESIGNATION OF REGISTERED AGENT

(a) A registered agent may resign the agent’s appointment by signing and delivering to the
secretary of state for filing the signed original and two exact or conformed copies of a
statement of resignation. The statement may include a statement that the registered
office is also discontinued.

(b) After filing the statement the secretary of state shall mail one copy to the registered
office (if not discontinued) and the other copy to the corporation at its principal office.

(c) The agency appointment is terminated, and the registered office discontinued if so
provided, on the 31st day after the date on which the statement was filed.

§ 5.04. SERVICE ON CORPORATION

(a) A corporation’s registered agent is the corporation’s agent for service of process, notice,
or demand required or permitted by law to be served on the corporation.

34
(b) If a corporation has no registered agent, or the agent cannot with reasonable diligence
be served, the corporation may be served by registered or certified mail, return receipt
requested, addressed to the secretary of the corporation at its principal office. Service is
perfected under this subsection at the earliest of:

(1) the date the corporation receives the mail;

(2) the date shown on the return receipt, if signed on behalf of the corporation; or

(3) five days after its deposit in the U.S. Mail, as evidenced by the postmark, if
mailed postpaid and correctly addressed.

(c) This section does not prescribe the only means, or necessarily the required means of
serving a corporation.

SUBCHAPTER A. SHARES

§ 6.01. AUTHORIZED SHARES

(a) The articles of incorporation must set forth any classes of shares and series of shares
within a class, and the number of shares of each class and series, that the corporation is
authorized to issue. If more than one class or series of shares is authorized, the articles
of incorporation must prescribe a distinguishing designation for each class or series and
must describe, prior to the issuance of shares of a class or series, the terms, including
the preferences, rights, and limitations, of that class or series. Except to the extent
varied as permitted by this section, all shares of a class or series must have terms,
including preferences, rights, and limitations that are identical with those of other
shares of the same class or series.

(b) The articles of incorporation must authorize:

(1) one or more classes or series of shares that together have unlimited voting rights,
and

(2) one or more classes or series of shares (which may be the same class or classes as
those with voting rights) that together are entitled to receive the net assets of the
corporation upon dissolution.

(c) The articles of incorporation may authorize one or more classes or series of shares that:

(1) have special, conditional, or limited voting rights, or no right to vote, except to
the extent otherwise provided by this Act;

(2) are redeemable or convertible as specified in the articles of incorporation:

35
 (i) at the option of the corporation, the shareholder, or another person or
upon the occurrence of a specified event;

(ii) for cash, indebtedness, securities, or other property; and

(iii) at prices and in amounts specified, or determined in accordance with a

formula;

(3) entitle the holders to distributions calculated in any manner, including dividends
that may be cumulative, noncumulative, or partially cumulative; or

(4) have preference over any other class or series of shares with respect to
distributions, including distributions upon the dissolution of the corporation.

(d) Terms of shares may be made dependent upon facts objectively ascertainable outside
the articles of incorporation in accordance with section 1.20(k).

(e) Any of the terms of shares may vary among holders of the same class or series so long
as such variations are expressly set forth in the articles of incorporation.

(f) The description of the preferences, rights and limitations of classes or series of shares in
subsection (c) is not exhaustive.

§ 6.02. TERMS OF CLASS OR SERIES DETERMINED BY BOARD OF DIRECTORS

(a) If the articles of incorporation so provide, the board of directors is authorized, without
shareholder approval, to:

(1) classify any unissued shares into one or more classes or into one or more series
within a class,

(2) reclassify any unissued shares of any class into one or more classes or into one or
more series within one or more classes, or

(3) reclassify any unissued shares of any series of any class into one or more classes
or into one or more series within a class.

(b) If the board of directors acts pursuant to subsection (a), it must determine the terms,
including the preferences, rights and limitations, to the same extent permitted under
section 6.01, of:

(1) any class of shares before the issuance of any shares of that class, or

(2) any series within a class before the issuance of any shares of that series.

36
(c) Before issuing any shares of a class or series created under this section, the corporation
must deliver to the secretary of state for filing articles of amendment setting forth the
terms determined under subsection (a).

§ 6.03. ISSUED AND OUTSTANDING SHARES

(a) A corporation may issue the number of shares of each class or series authorized by the
articles of incorporation. Shares that are issued are outstanding shares until they are
reacquired, redeemed, converted, or cancelled.

(b) The reacquisition, redemption, or conversion of outstanding shares is subject to the

limitations of subsection (c) of this section and to section 6.40.

(c) At all times that shares of the corporation are outstanding, one or more shares that
together have unlimited voting rights and one or more shares that together are entitled
to receive the net assets of the corporation upon dissolution must be outstanding.

§ 6.04. FRACTIONAL SHARES

(a) A corporation may:

(1) issue fractions of a share or pay in money the value of fractions of a share;

(2) arrange for disposition of fractional shares by the shareholders;

(3) issue scrip in registered or bearer form entitling the holder to receive a full share
upon surrendering enough scrip to equal a full share.

(b) Each certificate representing scrip must be conspicuously labeled “scrip” and must
contain the information required by section 6.25(b).

(c) The holder of a fractional share is entitled to exercise the rights of a shareholder,
including the right to vote, to receive dividends, and to participate in the assets of the
corporation upon liquidation. The holder of scrip is not entitled to any of these rights
unless the scrip provides for them.

(d) The board of directors may authorize the issuance of scrip subject to any condition
considered desirable, including:

(1) that the scrip will become void if not exchanged for full shares before a specified
date; and

(2) that the shares for which the scrip is exchangeable may be sold and the proceeds
paid to the scripholders.

37
SUBCHAPTER B.
ISSUANCE OF SHARES

§ 6.20. SUBSCRIPTION FOR SHARES BEFORE INCORPORATION

(a) A subscription for shares entered into before incorporation is irrevocable for six months
unless the subscription agreement provides a longer or shorter period or all the
subscribers agree to revocation.

(b) The board of directors may determine the payment terms of subscription for shares that
were entered into before incorporation, unless the subscription agreement specifies
them. A call for payment by the board of directors must be uniform so far as
practicable as to all shares of the same class or series, unless the subscription agreement
specifies otherwise.

(c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid
and nonassessable when the corporation receives the consideration specified in the
subscription agreement.

(d) If a subscriber defaults in payment of money or property under a subscription

agreement entered into before incorporation, the corporation may collect the amount
owed as any other debt. Alternatively, unless the subscription agreement provides
otherwise, the corporation may rescind the agreement and may sell the shares if the
debt remains unpaid for more than 20 days after the corporation sends a written
demand for payment to the subscriber.

(e) A subscription agreement entered into after incorporation is a contract between the
subscriber and the corporation subject to section 6.21.

§ 6.21. ISSUANCE OF SHARES

(a) The powers granted in this section to the board of directors may be reserved to the
shareholders by the articles of incorporation.

(b) The board of directors may authorize shares to be issued for consideration consisting of
any tangible or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts for services to be performed, or other
securities of the corporation.

(c) Before the corporation issues shares, the board of directors must determine that the
consideration received or to be received for shares to be issued is adequate. That
determination by the board of directors is conclusive insofar as the adequacy of
consideration for the issuance of shares relates to whether the shares are validly issued,
fully paid, and nonassessable.

38
(d) When the corporation receives the consideration for which the board of directors
authorized the issuance of shares, the shares issued therefore are fully paid and
nonassessable.

(e) The corporation may place in escrow shares issued for a contract for future services or
benefits or a promissory note, or make other arrangements to restrict the transfer of the
shares, and may credit distributions in respect of the shares against their purchase price,
until the services are performed, the note is paid, or the benefits received. If the services
are not performed, the note is not paid, or the benefits are not received, the shares
escrowed or restricted and the distributions credited may be cancelled in whole or part.

(f) (1) An issuance of shares or other securities convertible into or rights exercisable for
shares, in a transaction or a series of integrated transactions, requires approval of
the shareholders, at a meeting at which a quorum consisting of at least a majority
of the votes entitled to be cast on the matter exists, if:

(i) the shares, other securities, or rights are issued for consideration other
than cash or cash equivalents, and

(ii) the voting power of shares that are issued and issuable as a result of the
transaction or series of integrated transactions will comprise more than
20% of the voting power of the shares of the corporation that were
outstanding immediately before the transaction.

(2) In this subsection:

(i) For purposes of determining the voting power of shares issued and
issuable as a result of a transaction or series of integrated transactions, the
voting power of shares shall be the greater of (A) the voting power of the
shares to be issued, or (B) the voting power of the shares that would be
outstanding after giving effect to the conversion of convertible shares and
other securities and the exercise of rights to be issued.

(ii) A series of transactions is integrated if consummation of one transaction is

made contingent on consummation of one or more of the other
transactions.

§ 6.22. LIABILITY OF SHAREHOLDERS

(a) A purchaser from a corporation of its own shares is not liable to the corporation or its
creditors with respect to the shares except to pay the consideration for which the shares
were authorized to be issued (section 6.21) or specified in the subscription agreement
(section 6.20).

39
(b) Unless otherwise provided in the articles of incorporation, a shareholder of a
corporation is not personally liable for the acts or debts of the corporation except that he
may become personally liable by reason of his own acts or conduct.

§ 6.23. SHARE DIVIDENDS

(a) Unless the articles of incorporation provide otherwise, shares may be issued pro rata
and without consideration to the corporation’s shareholders or to the shareholders of
one or more classes or series. An issuance of shares under this subsection is a share
dividend.

(b) Shares of one class or series may not be issued as a share dividend in respect of shares
of another class or series unless (1) the articles of incorporation so authorize, (2) a
majority of the votes entitled to be cast by the class or series to be issued approve the
issue, or (3) there are no outstanding shares of the class or series to be issued.

(c) If the board of directors does not fix the record date for determining shareholders
entitled to a share dividend, it is the date the board of directors authorizes the share
dividend.

§ 6.24. SHARE OPTIONS

(a) A corporation may issue rights, options, or warrants for the purchase of shares or other
securities of the corporation. The board of directors shall determine (i) the terms upon
which the rights, options, or warrants are issued and (ii) the terms, including the
consideration for which the shares or other securities are to be issued. The
authorization by the board of directors for the corporation to issue such rights, options,
or warrants constitutes authorization of the issuance of the shares or other securities for
which the rights, options or warrants are exercisable.

(b) The terms and conditions of such rights, options or warrants, including those
outstanding on the effective date of this section, may include, without limitation,
restrictions or conditions that:

(1) preclude or limit the exercise, transfer or receipt of such rights, options or
warrants by any person or persons owning or offering to acquire a specified
number or percentage of the outstanding shares or other securities of the
corporation or by any transferee or transferees of any such person or persons, or

(2) invalidate or void such rights, options, or warrants held by any such person or
persons or any such transferee or transferees.

(c) The board of directors may authorize one or more officers to (1) designate the recipients
of rights, options, warrants, or other equity compensation awards that involve the issuance
of shares and (2) determine, within an amount and subject to any other limitations
40
 established by the board and, if applicable, the stockholders, the number of such rights,
options, warrants, or other equity compensation awards and the terms thereof to be
received by the recipients, provided that an officer may not use such authority to designate
himself or herself or any other persons the board of directors may specify as a recipient of
such rights, options, warrants, or other equity compensation awards.

§ 6.25. FORM AND CONTENT OF CERTIFICATES

(a) Shares may but need not be represented by certificates. Unless this Act or another
statute expressly provides otherwise, the rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.

(b) At a minimum each share certificate must state on its face:

(1) the name of the issuing corporation and that it is organized under the law of this
state;

(2) the name of the person to whom issued; and

(3) the number and class of shares and the designation of the series, if any, the
certificate represents.

(c) If the issuing corporation is authorized to issue different classes of shares or different
series within a class, the designations, relative rights, preferences, and limitations
applicable to each class and the variations in rights, preferences, and limitations
determined for each series (and the authority of the board of directors to determine
variations for future series) must be summarized on the front or back of each certificate.
Alternatively, each certificate may state conspicuously on its front or back that the
corporation will furnish the shareholder this information on request in writing and
without charge.

(d) Each share certificate (1) must be signed (either manually or in facsimile) by two officers
designated in the bylaws or by the board of directors and (2) may bear the corporate
seal or its facsimile.

(e) If the person who signed (either manually or in facsimile) a share certificate no longer
holds office when the certificate is issued, the certificate is nevertheless valid.

§ 6.26. SHARES WITHOUT CERTIFICATES

(a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors
of a corporation may authorize the issue of some or all of the shares of any or all of its
classes or series without certificates. The authorization does not affect shares already
represented by certificates until they are surrendered to the corporation.

41
(b) Within a reasonable time after the issue or transfer of shares without certificates, the
corporation shall send the shareholder a written statement of the information required
on certificates by section 6.25(b) and (c), and, if applicable, section 6.27.

§ 6.27. RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES

(a) The articles of incorporation, bylaws, an agreement among shareholders, or an
agreement between shareholders and the corporation may impose restrictions on the
transfer or registration of transfer of shares of the corporation. A restriction does not
affect shares issued before the restriction was adopted unless the holders of the shares
are parties to the restriction agreement or voted in favor of the restriction.

(b) A restriction on the transfer or registration of transfer of shares is valid and enforceable
against the holder or a transferee of the holder if the restriction is authorized by this
section and its existence is noted conspicuously on the front or back of the certificate or
is contained in the information statement required by section 6.26(b). Unless so noted
or contained, a restriction is not enforceable against a person without knowledge of the
restriction.

(c) A restriction on the transfer or registration of transfer of shares is authorized:

(1) to maintain the corporation’s status when it is dependent on the number or

identity of its shareholders;

(2) to preserve exemptions under federal or state securities law;

(3) for any other reasonable purpose.

(d) A restriction on the transfer or registration of transfer of shares may:

(1) obligate the shareholder first to offer the corporation or other persons
(separately, consecutively, or simultaneously) an opportunity to acquire the
restricted shares;

(2) obligate the corporation or other persons (separately, consecutively, or

simultaneously) to acquire the restricted shares;

(3) require the corporation, the holders of any class of its shares, or another person
to approve the transfer of the restricted shares, if the requirement is not
manifestly unreasonable;

(4) prohibit the transfer of the restricted shares to designated persons or classes of
persons, if the prohibition is not manifestly unreasonable.

(e) For purposes of this section, “shares” includes a security convertible into or carrying a
right to subscribe for or acquire shares.
42
§ 6.28. EXPENSE OF ISSUE
A corporation may pay the expenses of selling or underwriting its shares, and of organizing or
reorganizing the corporation, from the consideration received for shares.

SUBCHAPTER C.
SUBSEQUENT ACQUISITION OF SHARES BY SHAREHOLDERS AND CORPORATION

§ 6.30. SHAREHOLDERS’ PREEMPTIVE RIGHTS

(a) The shareholders of a corporation do not have a preemptive right to acquire the
corporation’s unissued shares except to the extent the articles of incorporation so
provide.

(b) A statement included in the articles of incorporation that “the corporation elects to have
preemptive rights” (or words of similar import) means that the following principles
apply except to the extent the articles of incorporation expressly provide otherwise:

(1) The shareholders of the corporation have a preemptive right, granted on uniform
terms and conditions prescribed by the board of directors to provide a fair and
reasonable opportunity to exercise the right, to acquire proportional amounts of
the corporation’s unisssued shares upon the decision of the board of directors to
issue them.

(2) A shareholder may waive his preemptive right. A waiver evidenced by a writing
is irrevocable even though it is not supported by consideration.

(3) There is no preemptive right with respect to:

(i) shares issued as compensation to directors, officers, agents, or employees

of the corporation, its subsidiaries or affiliates:

(ii) shares issued to satisfy conversion or option rights created to provide

compensation to directors, officers, agents, or employees of the
corporation, its subsidiaries or affiliates;

(iii) shares authorized in articles of incorporation that are issued within six
months from the effective date of incorporation;

(iv) shares sold otherwise than for money.

(4) Holders of shares of any class without general voting rights but with preferential
rights to distributions or assets have no preemptive rights with respect to shares
of any class.

43
 (5) Holders of shares of any class with general voting rights but without preferential
rights to distributions or assets have no preemptive rights with respect to shares
of any class with preferential rights to distributions or assets unless the shares
with preferential rights are convertible into or carry a right to subscribe for or
acquire shares without preferential rights.

(6) Shares subject to preemptive rights that are not acquired by shareholders may be
issued to any person for a period of one year after being offered to shareholders
at a consideration set by the board of directors that is not lower than the
consideration set for the exercise of preemptive rights. An offer at a lower
consideration or after the expiration of one year is subject to the shareholders’
preemptive rights.

(c) For purposes of this section, “shares” includes a security convertible into or carrying a
right to subscribe for or acquire shares.

§ 6.31. CORPORATION’S ACQUISITION OF ITS OWN SHARES

(a) A corporation may acquire its own shares, and shares so acquired constitute authorized
but unissued shares.

(b) If the articles of incorporation prohibit the reissue of the acquired shares, the number of
authorized shares is reduced by the number of shares acquired.

SUBCHAPTER D.
DISTRIBUTIONS

§ 6.40. DISTRIBUTIONS TO SHAREHOLDERS

(a) A board of directors may authorize and the corporation may make distributions to its
shareholders subject to restriction by the articles of incorporation and the limitation in
subsection (c).

(b) If the board of directors does not fix the record date for determining shareholders
entitled to a distribution (other than one involving a purchase, redemption, or other
acquisition of the corporation’s shares), it is the date the board of directors authorizes
the distribution.

(c) No distribution may be made if, after giving it effect:

(1) the corporation would not be able to pay its debts as they become due in the
usual course of business; or

44
 (2) the corporation’s total assets would be less than the sum of its total liabilities
plus (unless the articles of incorporation permit otherwise) the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those receiving the distribution.

(d) The board of directors may base a determination that a distribution is not prohibited
under subsection (c) either on financial statements prepared on the basis of accounting
practices and principles that are reasonable in the circumstances or on a fair valuation
or other method that is reasonable in the circumstances.

(e) Except as provided in subsection (g), the effect of a distribution under subsection (c) is
measured:

(1) in the case of distribution by purchase, redemption, or other acquisition of the

corporation’s shares, as of the earlier of (i) the date money or other property is
transferred or debt incurred by the corporation or (ii) the date the shareholder
ceases to be a shareholder with respect to the acquired shares;

(2) in the case of any other distribution of indebtedness, as of the date the
indebtedness is distributed; and

(3) in all other cases, as of (i) the date the distribution is authorized if the payment
occurs within 120 days after the date of authorization or (ii) the date the payment
is made if it occurs more than 120 days after the date of authorization.

(f) A corporation’s indebtedness to a shareholder incurred by reason of a distribution

made in accordance with this section is at parity with the corporation’s indebtedness to
its general, unsecured creditors except to the extent subordinated by agreement.

(g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not

considered a liability for purposes of determinations under subsection (c) if its terms
provide that payment of principal and interest are made only if and to the extent that
payment of a distribution to shareholders could then be made under this section. If the
indebtedness is issued as a distribution, each payment of principal or interest is treated
as a distribution, the effect of which is measured on the date the payment is actually
made.

(h) This section shall not apply to distributions in liquidation under chapter 14.

45
SUBCHAPTER A. MEETINGS

§ 7.01. ANNUAL MEETING

(a) Unless directors are elected by written consent in lieu of an annual meeting as permitted by
section 7.04, a corporation shall hold a meeting of shareholders annually at a time stated
in or fixed in accordance with the bylaws; provided, however, that if a corporation’s
articles of incorporation authorize shareholders to cumulate their votes when electing
directors pursuant to section 7.28, directors may not be elected by less than unanimous
consent.

(b) Annual shareholders’ meetings may be held in or out of this state at the place stated in or
fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with
the bylaws, annual meetings shall be held at the corporation’s principal office.

(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a
corporation’s bylaws does not affect the validity of any corporate action.

CROSS-REFERENCES
Action without meeting, see § 7.04.
Bylaws, see § 2.06, ch.10B.
Close corporations, see Model Statutory Close Corporation Supplement.
Court-ordered meeting, see § 7.03.
Director holdover terms, see § 8.05.
Notice of meeting, see § 7.05.
“Principal office”:
defined, see § 1.40.
designated in annual report, see § 16.21.
Proxies, see § 7.22.
Quorum and voting requirements, see §§ 7.25–7.27.
Shareholders’ list at meeting, see § 7.20.
Special meeting, see § 7.02.
Voting entitlement generally, see § 7.21.
“Voting group” defined, see § 1.40.

§ 7.02. SPECIAL MEETING

(a) A corporation shall hold a special meeting of shareholders:

(1) on call of its board of directors or the person or persons authorized to do so by

the articles of incorporation or bylaws; or

(2) if the holders of at least 10% of all the votes entitled to be cast on an issue
proposed to be considered at the proposed special meeting sign, date, and
deliver to the corporation one or more written demands for the meeting

46
 describing the purpose or purposes for which it is to be held, provided that the
articles of incorporation may fix a lower percentage or a higher percentage not
exceeding 25% of all the votes entitled to be cast on any issue proposed to be
considered. Unless otherwise provided in the articles of incorporation, a written
demand for a special meeting may be revoked by a writing to that effect received
by the corporation prior to the receipt by the corporation of demands sufficient
in number to require the holding of a special meeting.

(b) If not otherwise fixed under section 7.03 or 7.07, the record date for determining
shareholders entitled to demand a special meeting is the date the first shareholder signs
the demand.

(c) Special shareholders’ meetings may be held in or out of this state at the place stated in
or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with
the bylaws, special meetings shall be held at the corporation’s principal office.

(d) Only business within the purpose or purposes described in the meeting notice required
by section 7.05(c) may be conducted at a special shareholders’ meeting.

§ 7.03. COURT-ORDERED MEETING

(a) The [name or describe] court of the county where a corporation’s principal office (or, if
none in this state, its registered office) is located may summarily order a meeting to be
held:

(1) on application of any shareholder of the corporation entitled to participate in an

annual meeting if an annual meeting was not held or action by written consent in
lieu thereof did not become effective within the earlier of 6 months after the end
of the corporation’s fiscal year or 15 months after its last annual meeting; or

(2) on application of a shareholder who signed a demand for a special meeting valid
under section 7.02, if:

(i) notice of the special meeting was not given within 30 days after the date
the demand was delivered to the corporation’s secretary; or

(ii) the special meeting was not held in accordance with the notice.

(b) The court may fix the time and place of the meeting, determine the shares entitled to
participate in the meeting, specify a record date or dates for determining shareholders
entitled to notice of and to vote at the meeting, prescribe the form and content of the
meeting notice, fix the quorum required for specific matters to be considered at the
meeting (or direct that the votes represented at the meeting constitute a quorum for
action on those matters), and enter other orders necessary to accomplish the purpose or
purposes of the meeting.
47
§ 7.04. ACTION WITHOUT MEETING
(a) Action required or permitted by this Act to be taken at a shareholders’ meeting may be
taken without a meeting if the action is taken by all the shareholders entitled to vote on
the action. The action must be evidenced by one or more written consents bearing the
date of signature and describing the action taken, signed by all the shareholders entitled
to vote on the action and delivered to the corporation for inclusion in the minutes or
filing with the corporate records.

(b) The articles of incorporation may provide that any action required or permitted by this
Act to be taken at a shareholders’ meeting may be taken without a meeting, and
without prior notice, if consents in writing setting forth the action so taken are signed
by the holders of outstanding shares having not less than the minimum number of
votes that would be required to authorize or take the action at a meeting at which all
shares entitled to vote on the action were present and voted. The written consent shall
bear the date of signature of the shareholder who signs the consent and be delivered to
the corporation for inclusion in the minutes or filing with the corporate records.

(c) If not otherwise fixed under section 7.07 and if prior board action is not required
respecting the action to be taken without a meeting, the record date for determining the
shareholders entitled to take action without a meeting shall be the first date on which a
signed written consent is delivered to the corporation. If not otherwise fixed under
section 7.07 and if prior board action is required respecting the action to be taken
without a meeting, the record date shall be the close of business on the day the
resolution of the board taking such prior action is adopted. No written consent shall be
effective to take the corporate action referred to therein unless, within 60 days of the
earliest date on which a consent delivered to the corporation as required by this section
was signed, written consents signed by sufficient shareholders to take the action have
been delivered to the corporation. A written consent may be revoked by a writing to
that effect delivered to the corporation before unrevoked written consents sufficient in
number to take the corporate action are delivered to the corporation.

(d) A consent signed pursuant to the provisions of this section has the effect of a vote taken
at a meeting and may be described as such in any document. Unless the articles of
incorporation, bylaws or a resolution of the board of directors provides for a reasonable
delay to permit tabulation of written consents, the action taken by written consent shall
be effective when written consents signed by sufficient shareholders to take the action
are delivered to the corporation.

(e) If this Act requires that notice of a proposed action be given to nonvoting shareholders
and the action is to be taken by written consent of the voting shareholders, the
corporation must give its nonvoting shareholders written notice of the action not more
than 10 days after (i) written consents sufficient to take the action have been delivered
to the corporation, or (ii) such later date that tabulation of consents is completed
pursuant to an authorization under subsection (d). The notice must reasonably describe
48
 the action taken and contain or be accompanied by the same material that, under any
provision of this Act, would have been required to be sent to nonvoting shareholders in
a notice of a meeting at which the proposed action would have been submitted to the
shareholders for action.

(f) If action is taken by less than unanimous written consent of the voting shareholders, the
corporation must give its nonconsenting voting shareholders written notice of the
action not more than 10 days after (i) written consents sufficient to take the action have
been delivered to the corporation, or (ii) such later date that tabulation of consents is
completed pursuant to an authorization under subsection (d). The notice must
reasonably describe the action taken and contain or be accompanied by the same
material that, under any provision of this Act, would have been required to be sent to
voting shareholders in a notice of a meeting at which the action would have been
submitted to the shareholders for action.

(g) The notice requirements in subsections (e) and (f) shall not delay the effectiveness of
actions taken by written consent, and a failure to comply with such notice requirements
shall not invalidate actions taken by written consent, provided that this subsection shall
not be deemed to limit judicial power to fashion any appropriate remedy in favor of a
shareholder adversely affected by a failure to give such notice within the required time
period.

§ 7.05. NOTICE OF MEETING

(a) A corporation shall notify shareholders of the date, time, and place of each annual and
special shareholders’ meeting no fewer than 10 nor more than 60 days before the
meeting date. The notice shall include the record date for determining the shareholders
entitled to vote at the meeting, if such date is different than the record date for
determining shareholders entitled to notice of the meeting. If the board of directors has
authorized participation by means of remote communication pursuant to section 7.09
for any class or series of shareholders, the notice to such class or series of shareholders
shall describe the means of remote communication to be used. Unless this Act or the
articles of incorporation require otherwise, the corporation is required to give notice
only to shareholders entitled to vote at the meeting as of the record date for
determining the shareholders entitled to notice of the meeting.

(b) Unless this Act or the articles of incorporation require otherwise, notice of an annual
meeting need not include a description of the purpose or purposes for which the
meeting is called.

(c) Notice of a special meeting must include a description of the purpose or purposes for
which the meeting is called.

49
(d) If not otherwise fixed under section 7.03 or 7.07, the record date for determining
shareholders entitled to notice of and to vote at an annual or special shareholders’
meeting is the day before the first notice is delivered to shareholders.

(e) Unless the bylaws require otherwise, if an annual or special shareholders’ meeting is
adjourned to a different date, time, or place, notice need not be given of the new date,
time, or place if the new date, time, or place is announced at the meeting before
adjournment. If a new record date for the adjourned meeting is or must be fixed under
section 7.07, however, notice of the adjourned meeting must be given under this section
to shareholders entitled to vote at such adjourned meeting as of the record date fixed
for notice of such adjourned meeting.

§ 7.06. WAIVER OF NOTICE

(a) A shareholder may waive any notice required by this Act, the articles of incorporation,
or bylaws before or after the date and time stated in the notice. The waiver must be in
writing, be signed by the shareholder entitled to the notice, and be delivered to the
corporation for inclusion in the minutes or filing with the corporate records.

(b) A shareholder’s attendance at a meeting:

(1) waives objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting;

(2) waives objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.

§ 7.07. RECORD DATE

(a) The bylaws may fix or provide the manner of fixing the record date or dates for one or
more voting groups in order to determine the shareholders entitled to notice of a
shareholders’ meeting, to demand a special meeting, to vote, or to take any other action.
If the bylaws do not fix or provide for fixing a record date, the board of directors of the
corporation may fix a future date as the record date.

(b) A record date fixed under this section may not be more than 70 days before the meeting
or action requiring a determination of shareholders.

(c) A determination of shareholders entitled to notice of or to vote at a shareholders’

meeting is effective for any adjournment of the meeting unless the board of directors
fixes a new record date or dates, which it must do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.

50
(d) If a court orders a meeting adjourned to a date more than 120 days after the date fixed
for the original meeting, it may provide that the original record date or dates continue
in effect or it may fix a new record date or dates.

(e) The record date for a shareholders’ meeting fixed by or in the manner provided in the
bylaws or by the board of directors shall be the record date for determining
shareholders entitled both to notice of and to vote at the shareholders’ meeting, unless
in the case of a record date fixed by the board of directors and to the extent not
prohibited by the bylaws, the board, at the time it fixes the record date for shareholders
entitled to notice of the meeting, fixes a later record date on or before the date of the
meeting to determine the shareholders entitled to vote at the meeting.

§ 7.08. CONDUCT OF THE MEETING

(a) At each meeting of shareholders, a chair shall preside. The chair shall be appointed as
provided in the bylaws or, in the absence of such provision, by the board.

(b) The chair, unless the articles of incorporation or bylaws provide otherwise, shall
determine the order of business and shall have the authority to establish rules for the
conduct of the meeting.

(c) Any rules adopted for, and the conduct of, the meeting shall be fair to shareholders.

(d) The chair of the meeting shall announce at the meeting when the polls close for each
matter voted upon. If no announcement is made, the polls shall be deemed to have
closed upon the final adjournment of the meeting. After the polls close, no ballots,
proxies or votes nor any revocations or changes thereto may be accepted.

§ 7.09. REMOTE PARTICIPATION IN ANNUAL AND SPECIAL MEETINGS

(a) Shareholders of any class or series may participate in any meeting of shareholders by
means of remote communication to the extent the board of directors authorizes such
participation for such class or series. Participation by means of remote communication
shall be subject to such guidelines and procedures as the board of directors adopts, and
shall be in conformity with subsection (b).

(b) Shareholders participating in a shareholders’ meeting by means of remote

communication shall be deemed present and may vote at such a meeting if the
corporation has implemented reasonable measures:

(1) to verify that each person participating remotely is a shareholder, and

(2) to provide such shareholders a reasonable opportunity to participate in the

51
 meeting and to vote on matters submitted to the shareholders, including an
opportunity to communicate, and to read or hear the proceedings of the
meeting, substantially concurrently with such proceedings.

SUBCHAPTER B.
VOTING

§ 7.20. SHAREHOLDERS’ LIST FOR MEETING

(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list
of the names of all its shareholders who are entitled to notice of a shareholders’
meeting. If the board of directors fixes a different record date under section 7.07(e) to
determine the shareholders entitled to vote at the meeting, a corporation also shall
prepare an alphabetical list of the names of all its shareholders who are entitled to vote
at the meeting. A list must be arranged by voting group (and within each voting group
by class or series of shares) and show the address of and number of shares held by each
shareholder.

(b) The shareholders’ list for notice must be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the list was
prepared and continuing through the meeting, at the corporation’s principal office or at
a place identified in the meeting notice in the city where the meeting will be held. A
shareholders’ list for voting must be similarly available for inspection promptly after
the record date for voting. A shareholder, or the shareholder’s agent or attorney, is
entitled on written demand to inspect and, subject to the requirements of section
16.02(d), to copy a list, during regular business hours and at the shareholder’s expense,
during the period it is available for inspection.

(c) The corporation shall make the list of shareholders entitled to vote available at the
meeting, and any shareholder, or the shareholder’s agent or attorney, is entitled to
inspect the list at any time during the meeting or any adjournment.

(d) If the corporation refuses to allow a shareholder, or the shareholder’s agent or attorney.
to inspect a shareholders’ list before or at the meeting (or copy a list as permitted by
subsection (b)), the [name or describe] court of the county where a corporation’s
principal office (or, if none in this state, its registered office) is located, on application of
the shareholder, may summarily order the inspection or copying at the corporation’s
expense and may postpone the meeting for which the list was prepared until the
inspection or copying is complete.

(e) Refusal or failure to prepare or make available a shareholders’ list does not affect the
validity of action taken at the meeting.

52
§ 7.21. VOTING ENTITLEMENT OF SHARES
(a) Except as provided in subsections (b) and (d) or unless the articles of incorporation
provide otherwise, each outstanding share, regardless of class, is entitled to one vote on
each matter voted on at a shareholders’ meeting. Only shares are entitled to vote.

(b) Absent special circumstances, the shares of a corporation are not entitled to vote if they
are owned, directly or indirectly, by a second corporation, domestic or foreign, and the
first corporation owns, directly or indirectly, a majority of the shares entitled to vote for
directors of the second corporation.

(c) Subsection (b) does not limit the power of a corporation to vote any shares, including its
own shares, held by it in a fiduciary capacity.

(d) Redeemable shares are not entitled to vote after notice of redemption is mailed to the
holders and a sum sufficient to redeem the shares has been deposited with a bank, trust
company, or other financial institution under an irrevocable obligation to pay the
holders the redemption price on surrender of the shares.

§ 7.22. PROXIES
(a) A shareholder may vote the shareholder’s shares in person or by proxy.

(b) A shareholder, or the shareholder’s agent or attorney-in-fact, may appoint a proxy to

vote or otherwise act for the shareholder by signing an appointment form, or by an
electronic transmission. An electronic transmission must contain or be accompanied by
information from which the recipient can determine the date of the transmission, and
that the transmission was authorized by the sender or the sender’s agent or attorney-in-
fact.

(c) An appointment of a proxy is effective when a signed appointment form or an

electronic transmission of the appointment is received by the inspector of election or the
officer or agent of the corporation authorized to tabulate votes. An appointment is
valid for 11 months unless a longer period is expressly provided in the appointment
form.

(d) An appointment of a proxy is revocable unless the appointment form or electronic

transmission states that it is irrevocable and the appointment is coupled with an
interest. Appointments coupled with an interest include the appointment of:

(1) a pledgee;

(2) a person who purchased or agreed to purchase the shares;

(3) a creditor of the corporation who extended it credit under terms requiring the
appointment;
53
 (4) an employee of the corporation whose employment contract requires the
appointment; or

(5) a party to a voting agreement created under section 7.31.

(e) The death or incapacity of the shareholder appointing a proxy does not affect the right
of the corporation to accept the proxy’s authority unless notice of the death or
incapacity is received by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises authority under the appointment.

(f) An appointment made irrevocable under subsection (d) is revoked when the interest
with which it is coupled is extinguished.

(g) A transferee for value of shares subject to an irrevocable appointment may revoke the
appointment if the transferee did not know of its existence when acquiring the shares
and the existence of the irrevocable appointment was not noted conspicuously on the
certificate representing the shares or on the information statement for shares without
certificates.

(h) Subject to section 7.24 and to any express limitation on the proxy’s authority stated in
the appointment form or electronic transmission, a corporation is entitled to accept the
proxy’s vote or other action as that of the shareholder making the appointment.

§ 7.23. SHARES HELD BY NOMINEES

(a) A corporation may establish a procedure by which the beneficial owner of shares that
are registered in the name of a nominee is recognized by the corporation as the
shareholder. The extent of this recognition may be determined in the procedure.

(b) The procedure may set forth:

(1) the types of nominees to which it applies;

(2) the rights or privileges that the corporation recognizes in a beneficial owner;

(3) the manner in which the procedure is selected by the nominee;

(4) the information that must be provided when the procedure is selected;

(5) the period for which selection of the procedure is effective; and

(6) other aspects of the rights and duties created.

54
§ 7.24. CORPORATION’S ACCEPTANCE OF VOTES
(a) If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the
name of a shareholder, the corporation if acting in good faith is entitled to accept the
vote, consent, waiver, or proxy appointment and give it effect as the act of the
shareholder.

(b) If the name signed on a vote, consent, waiver, or proxy appointment does not
correspond to the name of its shareholder, the corporation if acting in good faith is
nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give
it effect as the act of the shareholder if:

(1) the shareholder is an entity and the name signed purports to be that of an officer
or agent of the entity;

(2) the name signed purports to be that of an administrator, executor, guardian, or

conservator representing the shareholder and, if the corporation requests,
evidence of fiduciary status acceptable to the corporation has been presented
with respect to the vote, consent, waiver, or proxy appointment;

(3) the name signed purports to be that of a receiver or trustee in bankruptcy of the
shareholder and, if the corporation requests, evidence of this status acceptable to
the corporation has been presented with respect to the vote, consent, waiver, or
proxy appointment;

(4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-
in-fact of the shareholder and, if the corporation requests, evidence acceptable to
the corporation of the signatory’s authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver, or proxy appointment;

(5) two or more persons are the shareholder as co-tenants or fiduciaries and the
name signed purports to be the name of at least one of the co-owners and the
person signing appears to be acting on behalf of all the co-owners.

(c) The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the
secretary or other officer or agent authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature on it or about the
signatory’s authority to sign for the shareholder.

(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or
proxy appointment in good faith and in accordance with the standards of this section or
section 7.22(b) are not liable in damages to the shareholder for the consequences of the
acceptance or rejection.

55
(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver, or
proxy appointment under this section is valid unless a court of competent jurisdiction
determines otherwise.

§ 7.25. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS

(a) Shares entitled to vote as a separate voting group may take action on a matter at a
meeting only if a quorum of those shares exists with respect to that matter. Unless the
articles of incorporation provides otherwise, a majority of the votes entitled to be cast
on the matter by the voting group constitutes a quorum of that voting group for action
on that matter.

(b) Once a share is represented for any purpose at a meeting, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.

(c) If a quorum exists, action on a matter (other than the election of directors) by a voting
group is approved if the votes cast within the voting group favoring the action exceed
the votes cast opposing the action, unless the articles of incorporation require a greater
number of affirmative votes.

(d) An amendment of articles of incorporation adding, changing, or deleting a quorum or

voting requirement for a voting group greater than specified in subsection (a) or (c) is
governed by section 7.27.

(e) The election of directors is governed by section 7.28.

(f) Whenever a provision of this Act provides for voting of classes or series as separate
voting groups, the rules provided in section 10.04 (c) for amendments of articles of
incorporation apply to that provision.

§ 7.26. ACTION BY SINGLE AND MULTIPLE VOTING GROUPS

(a) If the articles of incorporation or this Act provide for voting by a single voting group on
a matter, action on that matter is taken when voted upon by that voting group as
provided in section 7.25.

(b) If the articles of incorporation or this act provide for voting by two or more voting
groups on a matter, action on that matter is taken only when voted upon by each of
those voting groups counted separately as provided in section 7.25. Action may be
taken by one voting group on a matter even though no action is taken by another voting
group entitled to vote on the matter.

56
§ 7.27. GREATER QUORUM OR VOTING REQUIREMENTS
(a) The articles of incorporation may provide for a greater quorum or voting requirement
for shareholders (or voting groups of shareholders) than is provided for by this Act.

(b) An amendment to the articles of incorporation that adds, changes, or deletes a greater
quorum or voting requirement must meet the same quorum requirement and be
adopted by the same vote and voting groups required to take action under the quorum
and voting requirements then in effect or proposed to be adopted, whichever is greater.

§ 7.28. VOTING FOR DIRECTORS; CUMULATIVE VOTING

(a) Unless otherwise provided in the articles of incorporation, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present.

(b) Shareholders do not have a right to cumulate their votes for directors unless the articles
of incorporation so provide.

(c) A statement included in the articles of incorporation that “[all] [a designated voting
group of] shareholders are entitled to cumulate their votes for directors” (or words of
similar import) means that the shareholders designated are entitled to multiply the
number of votes they are entitled to cast by the number of directors for whom they are
entitled to vote and cast the product for a single candidate or distribute the product
among two or more candidates.

(d) Shares otherwise entitled to vote cumulatively may not be voted cumulatively at a
particular meeting unless:

(1) the meeting notice or proxy statement accompanying the notice states
conspicuously that cumulative voting is authorized; or

(2) a shareholder who has the right to cumulate his votes gives notice to the
corporation not less than 48 hours before the time set for the meeting of the
shareholder’s intent to cumulate votes during the meeting, and if one
shareholder gives this notice all other shareholders in the same voting group
participating in the election are entitled to cumulate their votes without giving
further notice.

§ 7.29. INSPECTORS OF ELECTION

(a) A public corporation shall, and any other corporation may, appoint one or more
inspectors to act at a meeting of shareholders and make a written report of the
inspectors’ determinations. Each inspector shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the best of the
inspector’s ability.
57
(b) The inspectors shall:

(1) ascertain the number of shares outstanding and the voting power of each;

(2) determine the shares represented at a meeting;

(3) determine the validity of proxies and ballots;

(4) count all votes; and

(5) determine the result.

(c) An inspector may be an officer or employee of the corporation.

SUBCHAPTER C.
VOTING TRUSTS AND AGREEMENTS

§ 7.30. VOTING TRUSTS

(a) One or more shareholders may create a voting trust, conferring on a trustee the right to
vote or otherwise act for them, by signing an agreement setting out the provisions of the
trust (which may include anything consistent with its purpose) and transferring their
shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare
a list of the names and addresses of all owners of beneficial interests in the trust,
together with the number and class of shares each transferred to the trust, and deliver
copies of the list and agreement to the corporation’s principal office.

(b) A voting trust becomes effective on the date the first shares subject to the trust are
registered in the trustee’s name. A voting trust is valid for not more than 10 years after
its effective date unless extended under subsection (c).

(c) All or some of the parties to a voting trust may extend it for additional terms of not
more than 10 years each by signing written consent to the extension. An extension is
valid for 10 years from the date the first shareholder signs the extension agreement.
The voting trustee must deliver copies of the extension agreement and list of beneficial
owners to the corporation’s principal office. An extension agreement binds only those
parties signing it.

§ 7.31. VOTING AGREEMENTS

(a) Two or more shareholders may provide for the manner in which they will vote their
shares by signing an agreement for that purpose. A voting agreement created under
this section is not subject to the provisions of section 7.30.

(b) A voting agreement created under this section is specifically enforceable.

58
§ 7.32. SHAREHOLDER AGREEMENTS
(a) An agreement among the shareholders of a corporation that complies with this section
is effective among the shareholders and the corporation even though it is inconsistent
with one or more other provisions of this Act in that it:

(1) eliminates the board of directors or restricts the discretion or powers of the board
of directors;

(2) governs the authorization or making of distributions whether or not in

proportion to ownership of shares, subject to the limitations in section 6.40;

(3) establishes who shall be directors or officers of the corporation, or their terms of
office or manner of selection or removal;

(4) governs, in general or in regard to specific matters, the exercise or division of

voting power by or between the shareholders and directors or by or among any
of them, including use of weighted voting rights or director proxies;

(5) establishes the terms and conditions of any agreement for the transfer or use of
property or the provision of services between the corporation and any
shareholder, director, officer or employee of the corporation or among any of
them;

(6) transfers to one or more shareholders or other persons all or part of the authority
to exercise the corporate powers or to manage the business and affairs of the
corporation, including the resolution of any issue about which there exists a
deadlock among directors or shareholders;

(7) requires dissolution of the corporation at the request of one or more of the
shareholders or upon the occurrence of a specified event or contingency; or

(8) otherwise governs the exercise of the corporate powers or the management of the
business and affairs of the corporation or the relationship among the
shareholders, the directors and the corporation, or among any of them, and is not
contrary to public policy.

(b) An agreement authorized by this section shall be:

(1) as set forth (A) in the articles of incorporation or bylaws and approved by all
persons who are shareholders at the time of the agreement or (B) in a written
agreement that is signed by all persons who are shareholders at the time of the
agreement and is made known to the corporation;

(2) subject to amendment only by all persons who are shareholders at the time of the
amendment, unless the agreement provides otherwise; and

59
 (3) valid for 10 years, unless the agreement provides otherwise.

(c) The existence of an agreement authorized by this section shall be noted conspicuously
on the front or back of each certificate for outstanding shares or on the information
statement required by section 6.26(b). If at the time of the agreement the corporation
has shares outstanding represented by certificates, the corporation shall recall the
outstanding certificates and issue substitute certificates that comply with this
subsection. The failure to note the existence of the agreement on the certificate or
information statement shall not affect the validity of the agreement or any action taken
pursuant to it. Any purchaser of shares who, at the time of purchase, did not have
knowledge of the existence of the agreement shall be entitled to rescission of the
purchase. A purchaser shall be deemed to have knowledge of the existence of the
agreement if its existence is noted on the certificate or information statement for the
shares in compliance with this subsection and, if the shares are not represented by a
certificate, the information statement is delivered to the purchaser at or prior to the time
of purchase of the shares. An action to enforce the right of rescission authorized by this
subsection must be commenced within the earlier of 90 days after discovery of the
existence of the agreement or two years after the time of purchase of the shares.

(d) An agreement authorized by this section shall cease to be effective when the
corporation becomes a public corporation. If the agreement ceases to be effective for
any reason, the board of directors may, if the agreement is contained or referred to in
the corporation’s articles of incorporation or bylaws, adopt an amendment to the
articles of incorporation or bylaws, without shareholder action, to delete the agreement
and any references to it.

(e) An agreement authorized by this section that limits the discretion or powers of the
board of directors shall relieve the directors of, and impose upon the person or persons
in whom such discretion or powers are vested, liability for acts or omissions imposed
by law on directors to the extent that the discretion or powers of the directors are
limited by the agreement.

(f) The existence or performance of an agreement authorized by this section shall not be a
ground for imposing personal liability on any shareholder for the acts or debts of the
corporation even if the agreement or its performance treats the corporation as if it were
a partnership or results in failure to observe the corporate formalities otherwise
applicable to the matters governed by the agreement.

(g) Incorporators or subscribers for shares may act as shareholders with respect to an
agreement authorized by this section if no shares have been issued when the agreement
is made.

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SUBCHAPTER D.
DERIVATIVE PROCEEDINGS

§ 7.40. SUBCHAPTER DEFINITIONS

In this subchapter:

(1) “Derivative proceeding” means a civil suit in the right of a domestic corporation
or, to the extent provided in section 7.47, in the right of a foreign corporation.

(2) “Shareholder” includes a beneficial owner whose shares are held in a voting
trust or held by a nominee on the beneficial owner’s behalf.

§ 7.41. STANDING
A shareholder may not commence or maintain a derivative proceeding unless the shareholder:

(1) was a shareholder of the corporation at the time of the act or omission complained of or
became a shareholder through transfer by operation of law from one who was a
shareholder at that time; and

(2) fairly and adequately represents the interests of the corporation in enforcing the right of
the corporation.

§ 7.42. DEMAND
No shareholder may commence a derivative proceeding until:

(1) a written demand has been made upon the corporation to take suitable action; and

(2) 90 days have expired from the date delivery of the demand was made unless the
shareholder has earlier been notified that the demand has been rejected by the
corporation or unless irreparable injury to the corporation would result by waiting for
the expiration of the 90-day period.

§ 7.43. STAY OF PROCEEDINGS

If the corporation commences an inquiry into the allegations made in the demand or
complaint, the court may stay any derivative proceeding for such period as the court deems
appropriate.

§ 7.44. DISMISSAL
(a) A derivative proceeding shall be dismissed by the court on motion by the corporation if
one of the groups specified in subsection (b) or subsection (e) has determined in good
faith, after conducting a reasonable inquiry upon which its conclusions are based, that
61
 the maintenance of the derivative proceeding is not in the best interests of the
corporation.

(b) Unless a panel is appointed pursuant to subsection (e), the determination in subsection
(a) shall be made by:

(1) a majority vote of qualified directors present at a meeting of the board of

directors if the qualified directors constitute a quorum; or

(2) a majority vote of a committee consisting of two or more qualified directors

appointed by majority vote of qualified directors present at a meeting of the
board of directors, regardless of whether such qualified directors constitute a
quorum.

(c) If a derivative proceeding is commenced after a determination has been made rejecting
a demand by a shareholder, the complaint shall allege with particularity facts
establishing either (1) that a majority of the board of directors did not consist of
qualified directors at the time the determination was made or (2) that the requirements
of subsection (a) have not been met.

(d) If a majority of the board of directors consisted of qualified directors at the time the
determination was made, the plaintiff shall have the burden of proving that the
requirements of subsection (a) have not been met; if not, the corporation shall have the
burden of proving that the requirements of subsection (a) have been met.

(e) Upon motion by the corporation, the court may appoint a panel of one or more
individuals to make a determination whether the maintenance of the derivative
proceeding is in the best interests of the corporation. In such case, the plaintiff shall
have the burden of proving that the requirements of subsection (a) have not been met.

§ 7.45. DISCONTINUANCE OR SETTLEMENT

A derivative proceeding may not be discontinued or settled without the court’s approval. If
the court determines that a proposed discontinuance or settlement will substantially affect the
interests of the corporation’s shareholders or a class of shareholders, the court shall direct that
notice be given to the shareholders affected.

§ 7.46. PAYMENT OF EXPENSES

On termination of the derivative proceeding the court may:

(1) order the corporation to pay the plaintiff’s expenses incurred in the proceeding if it
finds that the proceeding has resulted in a substantial benefit to the corporation;

62
(2) order the plaintiff to pay any defendant’s expenses incurred in defending the
proceeding if it finds that the proceeding was commenced or maintained without
reasonable cause or for an improper purpose; or

(3) order a party to pay an opposing party’s expenses incurred because of the filing of a
pleading, motion or other paper, if it finds that the pleading, motion or other paper was
not well grounded in fact, after reasonable inquiry, or warranted by existing law or a
good faith argument for the extension, modification or reversal of existing law and was
interposed for an improper purpose, such as to harass or cause unnecessary delay or
needless increase in the cost of litigation.

§ 7.47. APPLICABILITY TO FOREIGN CORPORATIONS

In any derivative proceeding in the right of a foreign corporation, the matters covered by this
subchapter shall be governed by the laws of the jurisdiction of incorporation of the foreign
corporation except for sections 7.43, 7.45, and 7.46.

SUBCHAPTER E.
PROCEEDING TO APPOINT CUSTODIAN OR RECEIVER

§ 7.48. SHAREHOLDER ACTION TO APPOINT CUSTODIAN OR RECEIVER

(a) The [name or describe court or courts] may appoint one or more persons to be
custodians, or, if the corporation is insolvent, to be receivers, of and for a corporation in
a proceeding by a shareholder where it is established that:

(1) the directors are deadlocked in the management of the corporate affairs, the
shareholders are unable to break the deadlock, and irreparable injury to the
corporation is threatened or being suffered; or

(2) the directors or those in control of the corporation are acting fraudulently and
irreparable injury to the corporation is threatened or being suffered.

(b) The court

(1) may issue injunctions, appoint a temporary custodian or temporary receiver with
all the powers and duties the court directs, take other action to preserve the
corporate assets wherever located, and carry on the business of the corporation
until a full hearing is held;

(2) shall hold a full hearing, after notifying all parties to the proceeding and any
interested persons designated by the court, before appointing a custodian or
receiver; and

(3) has jurisdiction over the corporation and all of its property, wherever located.
63
(c) The court may appoint an individual or domestic or foreign corporation (authorized to
transact business in this state) as a custodian or receiver and may require the custodian
or receiver to post bond, with or without sureties, in an amount the court directs.

(d) The court shall describe the powers and duties of the custodian or receiver in its
appointing order, which may be amended from time to time. Among other powers,

(1) a custodian may exercise all of the powers of the corporation, through or in place
of its board of directors, to the extent necessary to manage the business and
affairs of the corporation; and

(2) a receiver (i) may dispose of all or any part of the assets of the corporation
wherever located, at a public or private sale, if authorized by the court; and (ii)
may sue and defend in the receiver’s own name as receiver in all courts of this
state.

(e) The court during a custodianship may redesignate the custodian a receiver, and during
a receivership may redesignate the receiver a custodian, if doing so is in the best
interests of the corporation.

(f) The court from time to time during the custodianship or receivership may order
compensation paid and expense disbursements or reimbursements made to the
custodian or receiver from the assets of the corporation or proceeds from the sale of its
assets.

SUBCHAPTER A. BOARD OF DIRECTORS

§ 8.01. REQUIREMENT FOR AND FUNCTIONS OF BOARD OF DIRECTORS

(a) Except as provided in section 7.32, each corporation must have a board of
directors.

(b) All corporate powers shall be exercised by or under the authority of the board of
directors of the corporation, and the business and affairs of the corporation shall
be managed by or under the direction, and subject to the oversight, of its board
of directors, subject to any limitation set forth in the articles of incorporation or
in an agreement authorized under section 7.32.

(c) In the case of a public corporation, the board's oversight responsibilities include
attention to:

(1) business performance and plans;

(2) major risks to which the corporation is or may be exposed;

64
 (3) the performance and compensation of senior officers;

(4) policies and practices to foster the corporation's compliance with law and
ethical conduct;

(5) preparation of the corporation's financial statements;

(6) the effectiveness of the corporation's internal controls;

(7) arrangements for providing adequate and timely information to directors;

and

(8) the composition of the board and its committees, taking into account the
important role of independent directors.

§ 8.02. QUALIFICATIONS OF DIRECTORS

The articles of incorporation or bylaws may prescribe qualifications for directors. A
director need not be a resident of this state or a shareholder of the corporation unless
the articles of incorporation or bylaws so prescribe.

§ 8.03. NUMBER AND ELECTION OF DIRECTORS

(a) A board of directors must consist of one or more individuals, with the number
specified in or fixed in accordance with the articles of incorporation or bylaws.

(b) The number of directors may be increased or decreased from time to time by
amendment to, or in the manner provided in, the articles of incorporation or the
bylaws.

(c) Directors are elected at the first annual shareholders' meeting and at each annual
meeting thereafter unless their terms are staggered under section 8.06.

§ 8.04. ELECTION OF DIRECTORS BY CERTAIN CLASSES OF SHAREHOLDERS

If the articles of incorporation authorize dividing the shares into classes, the
articles may also authorize the election of all or a specified number of directors by the
holders of one or more authorized classes of shares. A class (or classes) of shares
entitled to elect one or more directors is a separate voting group for purposes of the
election of directors.

§ 8.05. TERMS OF DIRECTORS GENERALLY

(a) The terms of the initial directors of a corporation expire at the first shareholders'

65
 meeting at which directors are elected.

(b) The terms of all other directors expire at the next, or if their terms are staggered
in accordance with section 8.06, at the applicable second or third, annual
shareholders' meeting following their election, except to the extent (i) provided
in section 10.22 if a bylaw electing to be governed by that section is in effect or (ii)
a shorter term is specified in the articles of incorporation in the event of a
director nominee failing to receive a specified vote for election.

(c) A decrease in the number of directors does not shorten an incumbent director's
term.

(d) The term of a director elected to fill a vacancy expires at the next shareholders'
meeting at which directors are elected.

(e) Except to the extent otherwise provided in the articles of incorporation or under
section 10.22 if a bylaw electing to be governed by that section is in effect, despite
the expiration of a director's term, the director continues to serve until the
director's successor is elected and qualifies or there is a decrease in the number of
directors.

§ 8.06. STAGGERED TERMS FOR DIRECTORS

The articles of incorporation may provide for staggering the terms of directors by
dividing the total number of directors into two or three groups, with each group
containing 1/2 or 1/3 of the total, as near as may be practicable. In that event, the terms
of directors in the first group expire at the first annual shareholders' meeting after their
election, the terms of the second group expire at the second annual shareholders'
meeting after their election, and the terms of the third group, if any, expire at the third
annual shareholders' meeting after their election. At each annual shareholders' meeting
held thereafter, directors shall be chosen for a term of two years or three years, as the
case may be, to succeed those whose terms expire.

§ 8.07. RESIGNATION OF DIRECTORS

(a) A director may resign at any time by delivering a written resignation to the board
of directors, or its chair, or to the secretary of the corporation.

(b) A resignation is effective when the resignation is delivered unless the resignation
specifies a later effective date or an effective date determined upon the
happening of an event or events. A resignation that is conditioned upon failing
to receive a specified vote for election as a director may provide that it is
irrevocable.

66
§ 8.08. REMOVAL OF DIRECTORS BY SHAREHOLDERS
(a) The shareholders may remove one or more directors with or without cause
unless the articles of incorporation provide that directors may be removed only
for cause.

(b) If a director is elected by a voting group of shareholders, only the

shareholders of that voting group may participate in the vote to remove that
director.

(c) If cumulative voting is authorized, a director may not be removed if the

number of votes sufficient to elect the director under cumulative voting is voted
against removal. If cumulative voting is not authorized, a director may be
removed only if the number of votes cast to remove exceeds the number of votes
cast not to remove the director.

(d) A director may be removed by the shareholders only at a meeting called for
the purpose of removing the director and the meeting notice must state that the
purpose, or one of the purposes, of the meeting is removal of the director.

§ 8.09. REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING

(a) The [name or describe] court of the county where a corporation's principal
office (or, if none in this state, its registered office) is located may remove a
director of the corporation from office in a proceeding commenced by or in the
right of the corporation if the court finds that (1) the director engaged in
fraudulent conduct with respect to the corporation or its shareholders, grossly
abused the position of director, or intentionally inflicted harm on the
corporation; and (2) considering the director's course of conduct and the
inadequacy of other available remedies, removal would be in the best interest of
the corporation.

(b) A shareholder proceeding on behalf of the corporation under subsection (a)

shall comply with all of the requirements of sub-chapter 7D, except section
7.41(1).

(c) The court, in addition to removing the director, may bar the director from
reelection for a period prescribed by the court.

(d) Nothing in this section limits the equitable powers of the court to order other
relief.

§ 8.10. VACANCY ON BOARD

(a) Unless the articles of incorporation provide otherwise, if a vacancy occurs on a
67
 board of directors, including a vacancy resulting from an increase in the number
of directors:

(1) the shareholders may fill the vacancy;

(2) the board of directors may fill the vacancy; or

(3) if the directors remaining in office constitute fewer than a quorum of the
board, they may fill the vacancy by the affirmative vote of a majority of all
the directors remaining in office.

(b) If the vacant office was held by a director elected by a voting group of
shareholders, only the holders of shares of that voting group are entitled to vote
to fill the vacancy if it is filled by the shareholders, and only the directors elected
by that voting group are entitled to fill the vacancy if it is filled by the directors.

(c) A vacancy that will occur at a specific later date (by reason of a resignation
effective at a later date under section 8.07(b) or otherwise) may be filled before
the vacancy occurs but the new director may not take office until the vacancy
occurs.

§ 8.11. COMPENSATION OF DIRECTORS

Unless the articles of incorporation or bylaws provide otherwise, the board of directors
may fix the compensation of directors.

SUBCHAPTER B. MEETINGS AND ACTION OF THE BOARD

§ 8.20. MEETINGS
(a) The board of directors may hold regular or special meetings in or out of this state.

(b) Unless the articles of incorporation or bylaws provide otherwise, the board of
directors may permit any or all directors to participate in a regular or special
meeting by, or conduct the meeting through the use of, any means of
communication by which all directors participating may simultaneously hear
each other during the meeting. A director participating in a meeting by this
means is deemed to be present in person at the meeting.

§ 8.21. ACTION WITHOUT MEETING

(a) Except to the extent that the articles of incorporation or bylaws require that
action by the board of directors be taken at a meeting, action required or
permitted by this Act to be taken by the board of directors may be taken without
68
 a meeting if each director signs a consent describing the action to be taken and
delivers it to the corporation.

(b) Action taken under this section is the act of the board of directors when one or
more consents signed by all the directors are delivered to the corporation. The
consent may specify the time at which the action taken thereunder is to be
effective. A director's consent may be withdrawn by a revocation signed by the
director and delivered to the corporation prior to delivery to the corporation of
unrevoked written consents signed by all the directors.

(c) A consent signed under this section has the effect of action taken at a meeting of
the board of directors and may be described as such in any document.

§ 8.22. NOTICE OF MEETING

(a) Unless the articles of incorporation or bylaws provide otherwise, regular
meetings of the board of directors may be held without notice of the date, time,
place, or purpose of the meeting.

(b) Unless the articles of incorporation or bylaws provide for a longer or shorter
period, special meetings of the board of directors must be preceded by at least
two days' notice of the date, time, and place of the meeting. The notice need not
describe the purpose of the special meeting unless required by the articles of
incorporation or bylaws.

§ 8.23. WAIVER OF NOTICE

(a) A director may waive any notice required by this Act, the articles of
incorporation, or bylaws before or after the date and time stated in the notice.
Except as provided by subsection (b), the waiver must be in writing, signed by
the director entitled to the notice, and filed with the minutes or corporate
records.

(b) A director's attendance at or participation in a meeting waives any required

notice to the director of the meeting unless the director at the beginning of the
meeting (or promptly upon arrival) objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to action taken
at the meeting.

§ 8.24. QUORUM AND VOTING

(a) Unless the articles of incorporation or bylaws require a greater number or unless
otherwise specifically provided in this Act, a quorum of a board of directors
consists of:

69
 (1) a majority of the fixed number of directors if the corporation has a fixed
board size; or

(2) a majority of the number of directors prescribed, or if no number is

prescribed the number in office immediately before the meeting begins, if
the corporation has a variable-range size board.

(b) The articles of incorporation or bylaws may authorize a quorum of a board of

directors to consist of no fewer than 1/3 of the fixed or prescribed number of
directors determined under subsection (a).

(c) If a quorum is present when a vote is taken, the affirmative vote of a majority of
directors present is the act of the board of directors unless the articles of
incorporation or bylaws require the vote of a greater number of directors.

(d) A director who is present at a meeting of the board of directors or a committee

of the board of directors when corporate action is taken is deemed to have
assented to the action taken unless: (1) the director objects at the beginning of the
meeting (or promptly upon arrival) to holding it or transacting business at the
meeting; (2) the dissent or abstention from the action taken is entered in the
minutes of the meeting; or (3) the director delivers written notice of the director's
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting. The right of dissent or abstention is not available to a director who
votes in favor of the action taken.

§ 8.25. COMMITTEES
(a) Unless this Act, the articles of incorporation or the bylaws provide otherwise, a
board of directors may create one or more committees and appoint one or more
members of the board of directors to serve on any such committee.

(b) Unless this Act otherwise provides, the creation of a committee and appointment
of members to it must be approved by the greater of (1) a majority of all the
directors in office when the action is taken or (2) the number of directors
required by the articles of incorporation or bylaws to take action under section
8.24.

(c) Sections 8.20 through 8.24 apply both to committees of the board and to their
members.

(d) To the extent specified by the board of directors or in the articles of incorporation
or bylaws, each committee may exercise the powers of the board of directors
under section 8.01.

70
 (e) A committee may not, however:

(1)authorize or approve distributions, except according to a formula or method,

or within limits, prescribed by the board of directors;

(2)approve or propose to shareholders action that this Act requires be approved

by shareholders;

(3)fill vacancies on the board of directors or, subject to subsection (g), on any of
its committees; or

(4)adopt, amend, or repeal bylaws.

(f) The creation of, delegation of authority to, or action by a committee does not
alone constitute compliance by a director with the standards of conduct
described in section 8.30.

(g) The board of directors may appoint one or more directors as alternate members
of any committee to replace any absent or disqualified member during the
member's absence or disqualification. Unless the articles of incorporation or the
bylaws or the resolution creating the committee provide otherwise, in the event
of the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, unanimously,
may appoint another director to act in place of the absent or disqualified
member.

§ 8.26. SUBMISSION OF MATTERS FOR SHAREHOLDER VOTE

A corporation may agree to submit a matter to a vote of its shareholders even if,
after approving the matter, the board of directors determines it no longer recommends
the matter.

SUBCHAPTER C. DIRECTORS

§ 8.30. STANDARDS OF CONDUCT FOR DIRECTORS

(a) Each member of the board of directors, when discharging the duties of a director,
shall act: (1) in good faith, and (2) in a manner the director reasonably believes to
be in the best interests of the corporation.

(b) The members of the board of directors or a committee of the board, when
becoming informed in connection with their decision-making function or
devoting attention to their oversight function, shall discharge their duties with
71
 the care that a person in a like position would reasonably believe appropriate
under similar circumstances.

(c) In discharging board or committee duties a director shall disclose, or cause to be

disclosed, to the other board or committee members information not already
known by them but known by the director to be material to the discharge of their
decision-making or oversight functions, except that disclosure is not required to
the extent that the director reasonably believes that doing so would violate a
duty imposed under law, a legally enforceable obligation of confidentiality, or a
professional ethics rule.

(d) In discharging board or committee duties a director who does not have
knowledge that makes reliance unwarranted is entitled to rely on the
performance by any of the persons specified in subsection (f) (1) or subsection (f)
(3) to whom the board may have delegated, formally or informally by course of
conduct, the authority or duty to perform one or more of the board's functions
that are delegable under applicable law.

(e) In discharging board or committee duties a director who does not have
knowledge that makes reliance unwarranted is entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial data, prepared or presented by any of the persons specified in
subsection (f).

(f) A director is entitled to rely, in accordance with subsection (d) or (e), on:

(1) one or more officers or employees of the corporation whom the director
reasonably believes to be reliable and competent in the functions
performed or the information, opinions, reports or statements provided;

(2) legal counsel, public accountants, or other persons retained by the

corporation as to matters involving skills or expertise the director
reasonably believes are matters (i) within the particular person's
professional or expert competence or (ii) as to which the particular person
merits confidence; or

(3) a committee of the board of directors of which the director is not a

member if the director reasonably believes the committee merits
confidence.

§ 8.31. STANDARDS OF LIABILITY FOR DIRECTORS

(a) A director shall not be liable to the corporation or its shareholders for any
decision to take or not to take action, or any failure to take any action, as a
director, unless the party asserting liability in a proceeding establishes that:
72
(1)no defense interposed by the director based on (i) any provision in the articles
of incorporation authorized by section 2.02(b)(4) or, (ii) the protection
afforded by section 8.61 (for action taken in compliance with section 8.62
or section 8.63), or (iii) the protection afforded by section 8.70, precludes
liability; and

(2)the challenged conduct consisted or was the result of:

(i) action not in good faith; or

(ii) a decision

(A) which the director did not reasonably believe to be in the

best interests of the corporation, or

(B) as to which the director was not informed to an extent the

director reasonably believed appropriate in the
circumstances; or

(iii) a lack of objectivity due to the director's familial, financial or

business relationship with, or a lack of independence due to the
director's domination or control by, another person having a
material interest in the challenged conduct

(A) which relationship or which domination or control could

reasonably be expected to have affected the director's
judgment respecting the challenged conduct in a manner
adverse to the corporation, and

(B) after a reasonable expectation to such effect has been

established, the director shall not have established that the
challenged conduct was reasonably believed by the director
to be in the best interests of the corporation; or

(iv) a sustained failure of the director to devote attention to ongoing

oversight of the business and affairs of the corporation, or a failure
to devote timely attention, by making (or causing to be made)
appropriate inquiry, when particular facts and circumstances of
significant concern materialize that would alert a reasonably
attentive director to the need therefore; or

(v) receipt of a financial benefit to which the director was not entitled
or any other breach of the director's duties to deal fairly with the
corporation and its shareholders that is actionable under applicable
law.

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 (b) The party seeking to hold the director liable:

(1) for money damages, shall also have the burden of establishing that:

(i) harm to the corporation or its shareholders has been suffered, and

(ii) the harm suffered was proximately caused by the director's challenged
conduct; or

(2) for other money payment under a legal remedy, such as compensation for
the unauthorized use of corporate assets, shall also have whatever
persuasion burden may be called for to establish that the payment sought
is appropriate in the circumstances; or

(3) for other money payment under an equitable remedy, such as profit
recovery by or disgorgement to the corporation, shall also have whatever
persuasion burden may be called for to establish that the equitable
remedy sought is appropriate in the circumstances.

(c) Nothing contained in this section shall (1) in any instance where fairness is at
issue, such as consideration of the fairness of a transaction to the corporation
under section 8.61(b)(3), alter the burden of proving the fact or lack of fairness
otherwise applicable, (2) alter the fact or lack of liability of a director under
another section of this Act, such as the provisions governing the consequences of
an unlawful distribution under section 8.33 or a transactional interest under
section 8.61, or (3) affect any rights to which the corporation or a shareholder
may be entitled under another statute of this state or the United States.

§ 8.32. [RESERVED]

§ 8.33. DIRECTORS' LIABILITY FOR UNLAWFUL DISTRIBUTIONS

(a) A director who votes for or assents to a distribution in excess of what maybe
authorized and made pursuant to section 6.40(a) or 14.09(a) is personally liable to
the corporation for the amount of the distribution that exceeds what could have
been distributed without violating section 6.40(a) or 14.09(a) if the party asserting
liability establishes that when taking the action the director did not comply with
section 8.30.

(b) A director held liable under subsection (a) for an unlawful distribution is entitled
to:

(1) contribution from every other director who could be held liable under
subsection (a) for the unlawful distribution; and
74
 (2) recoupment from each shareholder of the pro-rata portion of the amount
of the unlawful distribution the shareholder accepted, knowing the
distribution was made in violation of section 6.40(a) or 14.09(a).

(c) A proceeding to enforce:

(1) the liability of a director under subsection (a) is barred unless it is

commenced within two years after the date (i) on which the effect of the
distribution was measured under section 6.40(e) or (g), (ii) as of which the
violation of section 6.40(a) occurred as the consequence of disregard of a
restriction in the articles of incorporation or (iii) on which the distribution
of assets to Shareholders under section 14.09(a) was made; or

(2) contribution or recoupment under subsection (b) is barred unless it is

commenced within one year after the liability of the claimant has been
finally adjudicated under subsection (a).

SUBCHAPTER D. OFFICERS

§ 8.40. OFFICERS
(a) A corporation has the officers described in its bylaws or appointed by the
board of directors in accordance with the bylaws.

(b) The board of directors may elect individuals to fill one or more offices of the
corporation. An officer may appoint one or more officers if authorized by the
bylaws or the board of directors.

(c) The bylaws or the board of directors shall assign to one of the officers
responsibility for preparing the minutes of the directors' and shareholders'
meetings and for maintaining and authenticating the records of the corporation
required to be kept under sections 16.01(a) and 16.01(e).

(d) The same individual may simultaneously hold more than one office in a
corporation.

§ 8.41. FUNCTIONS OF OFFICERS

Each officer has the authority and shall perform the functions set forth in the
bylaws or, to the extent consistent with the bylaws, the functions prescribed by the
board of directors or by direction of an officer authorized by the board of directors to
prescribe the functions of other officers.

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§ 8.42. STANDARDS OF CONDUCT FOR OFFICERS
(a) An officer, when performing in such capacity, has the duty to act:

(1) in good faith;

(2) with the care that a person in a like position would reasonably exercise
under similar circumstances; and

(3) in a manner the officer reasonably believes to be in the best interests of

the corporation.

(b) The duty of an officer includes the obligation:

(1) to inform the superior officer to whom, or the board of directors or the
committee thereof to which, the officer reports of information about the
affairs of the corporation known to the officer, within the scope of the
officer's functions, and known to the officer to be material to such superior
officer, board or committee; and

(2) to inform his or her superior officer, or another appropriate person within
the corporation, or the board of directors, or a committee thereof, of any
actual or probable material violation of law involving the corporation or
material breach of duty to the corporation by an officer, employee, or
agent of the corporation, that the officer believes has occurred or is likely
to occur.

(c) In discharging his or her duties, an officer who does not have knowledge that
makes reliance unwarranted is entitled to rely on:

(1) the performance of properly delegated responsibilities by one or more

employees of the corporation whom the officer reasonably believes to be
reliable and competent in performing the responsibilities delegated; or

(2) information, opinions, reports or statements, including financial

statements and other financial data, prepared or presented by one or more
employees of the corporation whom the officer reasonably believes to be
reliable and competent in the matters presented or by legal counsel, public
accountants, or other persons retained by the corporation as to matters
involving skills or expertise the officer reasonably believes are matters (i)
within the particular person's professional or expert competence or (ii) as
to which the particular person merits confidence.

(d) An officer shall not be liable to the corporation or its shareholders for any
decision to take or not to take action, or any failure to take any action, as an
officer, if the duties of the office are performed in compliance with this section.
76
 Whether an officer who does not comply with this section shall have liability will
depend in such instance on applicable law, including those principles of section
8.31 that have relevance.

§ 8.43. RESIGNATION AND REMOVAL OF OFFICERS

(a) An officer may resign at any time by delivering notice to the corporation. A
resignation is effective when the notice is delivered unless the notice specifies a
later effective time. If a resignation is made effective at a later time and the board
or the appointing officer accepts the future effective time, the board or the
appointing officer may fill the pending vacancy before the effective time if the
board or the appointing officer provides that the successor does not take office
until the effective time.

(b) An officer may be removed at any time with or without cause by: (i) the board
of directors; (ii) the officer who appointed such officer, unless the bylaws or the
board of directors provide otherwise; or (iii) any other officer if authorized by the
bylaws or the board of directors.

(c) In this section, "appointing officer" means the officer (including any successor
to that officer) who appointed the officer resigning or being removed.

§ 8.44. CONTRACT RIGHTS OF OFFICERS

(a)The appointment of an officer does not itself create contract rights.

(b) An officer's removal does not affect the officer's contract rights, if any, with the
corporation. An officer's resignation does not affect the corporation's contract
rights, if any, with the officer.

SUBCHAPTER E. INDEMNIFICATION AND ADVANCE FOR EXPENSES

§ 8.50. SUBCHAPTER DEFINITIONS

In this subchapter:

(1) "Corporation" includes any domestic or foreign predecessor entity of a

corporation in a merger.

(2) "Director" or "officer" means an individual who is or was a director or officer,

respectively, of a corporation or who, while a director or officer of the
corporation, is or was serving at the corporation's request as a director, officer,
manager, partner, trustee, employee, or agent of another entity or employee
benefit plan. A director or officer is considered to be serving an employee benefit
77
 plan at the corporation's request if the individual's duties to the corporation also
impose duties on, or otherwise involve services by, the individual to the plan or
to participants in or beneficiaries of the plan. "Director" or "officer" includes,
unless the context requires otherwise, the estate or personal representative of a
director or officer.

(3) "Liability" means the obligation to pay a judgment, settlement, penalty, fine
(including an excise tax assessed with respect to an employee benefit plan), or
reasonable expenses incurred with respect to a proceeding.

(4) "Official capacity" means: (i) when used with respect to a director, the office of
director in a corporation; and (ii) when used with respect to an officer, as
contemplated in section 8.56, the office in a corporation held by the officer.
"Official capacity" does not include service for any other domestic or foreign
corporation or any partnership, joint venture, trust, employee benefit plan, or
other entity.

(5) "Party" means an individual who was, is, or is threatened to be made, a

defendant or respondent in a proceeding.

(6) "Proceeding" means any threatened, pending, or completed action, suit, or

proceeding, whether civil, criminal, administrative, arbitrative, or investigative
and whether formal or informal.

§ 8.51. PERMISSIBLE INDEMNIFICATION

(a) Except as otherwise provided in this section, a corporation may indemnify an
individual who is a party to a proceeding because the individual is a director
against liability incurred in the proceeding if:

(1)

(i) the director conducted himself or herself in good faith; and

(ii) reasonably believed:

(A) in the case of conduct in an official capacity, that his or her

conduct was in the best interests of the corporation; and

(B) in all other cases, that the director's conduct was at least not
opposed to the best interests of the corporation; and

(iii) in the case of any criminal proceeding, the director had no

reasonable cause to believe his or her conduct was unlawful; or

78
 (2) the director engaged in conduct for which broader indemnification has
been made permissible or obligatory under a provision of the articles of
incorporation (as authorized by section 2.02(b)(5)).

(b) A director's conduct with respect to an employee benefit plan for a purpose the
director reasonably believed to be in the interests of the participants in, and the
beneficiaries of, the plan is conduct that satisfies the requirement of subsection
(a)(1)(ii)(B).

(c) The termination of a proceeding by judgment, order, settlement, or conviction, or

upon a plea of nolo contendere or its equivalent, is not, of itself, determinative
that the director did not meet the relevant standard of conduct described in this
section.

(d) Unless ordered by a court under section 8.54(a)(3), a corporation may not
indemnify a director:

(1) in connection with a proceeding by or in the right of the corporation,

except for expenses incurred in connection with the proceeding if it is
determined that the director has met the relevant standard of conduct
under subsection (a); or

(2) in connection with any proceeding with respect to conduct for which the
director was adjudged liable on the basis of receiving a financial benefit to
which he or she was not entitled, whether or not involving action in the
director's official capacity.

§ 8.52. MANDATORY INDEMNIFICATION

A corporation shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the director was a party because
he or she was a director of the corporation against expenses incurred by the director in
connection with the proceeding.

§ 8.53. ADVANCE FOR EXPENSES

(a) A corporation may, before final disposition of a proceeding, advance funds to
pay for or reimburse expenses incurred in connection with the proceeding by an
individual who is a party to the proceeding because that individual is a member
of the board of directors if the director delivers to the corporation:

(1) a signed written affirmation of the director's good faith belief that the
relevant standard of conduct described in section 8.51 has been met by the
director or that the proceeding involves conduct for which liability has
been eliminated under a provision of the articles of incorporation as
79
 authorized by section 2.02(b)(4); and

(2) a signed written undertaking of the director to repay any funds advanced
if the director is not entitled to mandatory indemnification under section
8.52 and it is ultimately determined under section 8.54 or section 8.55 that
the director has not met the relevant standard of conduct described in
section 8.51.

(b) The undertaking required by subsection (a)(2) must be an unlimited general

obligation of the director but need not be secured and may be accepted without
reference to the financial ability of the director to make repayment.

(c) Authorizations under this section shall be made:

(1) by the board of directors:

(i) if there are two or more qualified directors, by a majority vote of all
the qualified directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a
committee of two or more qualified directors appointed by such a
vote; or

(ii) if there are fewer than two qualified directors, by the vote
necessary for action by the board in accordance with section 8.24(c),
in which authorization directors who are not qualified directors
may participate; or

(2) by the shareholders, but shares owned by or voted under the

control of a director who at the time is not a qualified director may not be
voted on the authorization.

§ 8.54. COURT-ORDERED INDEMNIFICATION AND ADVANCE FOR EXPENSES

(a) A director who is a party to a proceeding because he or she is a director may
apply for indemnification or an advance for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. After receipt of an
application and after giving any notice it considers necessary, the court shall:

(1)order indemnification if the court determines that the director is entitled to

mandatory indemnification under section 8.52;

(2)order indemnification or advance for expenses if the court determines that the
director is entitled to indemnification or advance for expenses pursuant to
a provision authorized by section 8.58(a); or

80
 (3)order indemnification or advance for expenses if the court determines, in view
of all the relevant circumstances, that it is fair and reasonable

(i) to indemnify the director, or

(ii) to advance expenses to the director, even if he or she has not met
the relevant standard of conduct set forth in section 8.51(a), failed
to comply with section 8.53 or was adjudged liable in a proceeding
referred to in subsection 8.51(d)(1) or (d)(2), but if the director was
adjudged so liable indemnification shall be limited to expenses
incurred in connection with the proceeding.

(b) If the court determines that the director is entitled to indemnification under
subsection (a)(1) or to indemnification or advance for expenses under subsection
(a)(2), it shall also order the corporation to pay the director's expenses incurred in
connection with obtaining court-ordered indemnification or advance for
expenses. If the court determines that the director is entitled to indemnification
or advance for expenses under subsection (a)(3), it may also order the
corporation to pay the director's expenses to obtain court-ordered
indemnification or advance for expenses.

§ 8.55. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION

(a) A corporation may not indemnify a director under section 8.51 unless
authorized for a specific proceeding after a determination has been made that
indemnification is permissible because the director has met the relevant standard
of conduct set forth in section 8.51.

(b) The determination shall be made:

(1) if there are two or more qualified directors, by the board of directors by a
majority vote of all the qualified directors (a majority of whom shall for
such purpose constitute a quorum), or by a majority of the members of a
committee of two or more qualified directors appointed by such a vote;

(2) by special legal counsel:

(i) selected in the manner prescribed in subdivision (1); or

(ii) if there are fewer than two qualified directors, selected by

the board of directors (in which selection directors who are not
qualified directors may participate); or

(3) by the shareholders, but shares owned by or voted under the control of a

81
 director who at the time is not a qualified director may not be voted on the
determination.

(c) Authorization of indemnification shall be made in the same manner as the

determination that indemnification is permissible except that if there are fewer
than two qualified directors, or if the determination is made by special legal
counsel, authorization of indemnification shall be made by those entitled to
select special legal counsel under subsection (b)(2)(ii).

§ 8.56. INDEMNIFICATION OF OFFICERS

(a) A corporation may indemnify and advance expenses under this subchapter to an
officer of the corporation who is a party to a proceeding because he or she is an
officer of the corporation

(1) to the same extent as a director; and

(2) if he or she is an officer but not a director, to such further extent as may be
provided by the articles of incorporation, the bylaws, a resolution of the board of
directors, or contract except for

(A) liability in connection with a proceeding by or in the right of the

corporation other than for expenses incurred in connection with the
proceeding or

(B) liability arising out of conduct that constitutes

(i) receipt by the officer of a financial benefit to which he or she is not

entitled,

(ii) an intentional infliction of harm on the corporation or the shareholders,

or

(iii) an intentional violation of criminal law.

(b) The provisions of subsection (a)(2) shall apply to an officer who is also a director
if the basis on which he or she is made a party to the proceeding is an act or
omission solely as an officer.

(c) An officer of a corporation who is not a director is entitled to mandatory

indemnification under section 8.52, and may apply to a court under section 8.54
for indemnification or an advance for expenses, in each case to the same extent to
which a director may be entitled to indemnification or advance for expenses
under those provisions.

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§ 8.57. INSURANCE
A corporation may purchase and maintain insurance on behalf of an individual
who is a director or officer of the corporation, or who, while a director or officer of the
corporation, serves at the corporation's request as a director, officer, partner, trustee,
employee, or agent of another domestic or foreign corporation, partnership, joint
venture, trust, employee benefit plan, or other entity, against liability asserted against or
incurred by the individual in that capacity or arising from his or her status as a director
or officer, whether or not the corporation would have power to indemnify or advance
expenses to the individual against the same liability under this subchapter.

§ 8.58. VARIATION BY CORPORATE ACTION; APPLICATION OF SUBCHAPTER

(a) A corporation may, by a provision in its articles of incorporation or bylaws or
in a resolution adopted or a contract approved by its board of directors or
shareholders, obligate itself in advance of the act or omission giving rise to a
proceeding to provide indemnification in accordance with section 8.51 or
advance funds to pay for or reimburse expenses in accordance with section 8.53.
Any such obligatory provision shall be deemed to satisfy the requirements for
authorization referred to in section 8.53(c) and in section 8.55(c). Any such
provision that obligates the corporation to provide indemnification to the fullest
extent permitted by law shall be deemed to obligate the corporation to advance
funds to pay for or reimburse expenses in accordance with section 8.53 to the
fullest extent permitted by law, unless the provision specifically provides
otherwise.

(b) A right of indemnification or to advances for expenses created by this

subchapter or under subsection (a) and in effect at the time of an act or omission
shall not be eliminated or impaired with respect to such act or omission by an
amendment of the articles of incorporation or bylaws or a resolution of the
directors or shareholders, adopted after the occurrence of such act or omission,
unless, in the case of a right created under subsection (a), the provision creating
such right and in effect at the time of such act or omission explicitly authorizes
such elimination or impairment after such act or omission has occurred.

(c) Any provision pursuant to subsection (a) shall not obligate the corporation to
indemnify or advance expenses to a director of a predecessor of the corporation,
pertaining to conduct with respect to the predecessor, unless otherwise
specifically provided. Any provision for indemnification or advance for expenses
in the articles of incorporation, bylaws, or a resolution of the board of directors
or shareholders of a predecessor of the corporation in a merger or in a contract to
which the predecessor is a party, existing at the time the merger takes effect, shall
be governed by section 11.07(a) (4).

83
 (c) Subject to subsection (b), a corporation may, by a provision in its articles of
incorporation, limit any of the rights to indemnification or advance for expenses
created by or pursuant to this subchapter.

(d) This subchapter does not limit a corporation's power to pay or reimburse
expenses incurred by a director or an officer in connection with appearing as a
witness in a proceeding at a time when he or she is not a party.

(e) This subchapter does not limit a corporation's power to indemnify, advance
expenses to or provide or maintain insurance on behalf of an employee or agent.

§ 8.59. EXCLUSIVITY OF SUBCHAPTER

A corporation may provide indemnification or advance expenses to a director or an
officer only as permitted by this subchapter.

§ 8.60. SUBCHAPTER DEFINITIONS

In this subchapter:

(1) "Director's conflicting interest transaction" means a transaction effected or

proposed to be effected by the corporation (or by an entity controlled by the
corporation)

(i) to which, at the relevant time, the director is a party; or

(ii) respecting which, at the relevant time, the director had knowledge and a
material financial interest known to the director; or

(iii) respecting which, at the relevant time, the director knew that a related
person was a party or had a material financial interest.

(2) "Control" (including the term "controlled by") means (i) having the power,
directly or indirectly, to elect or remove a majority of the members of the board
of directors or other governing body of an entity, whether through the
ownership of voting shares or interests, by contract, or otherwise, or (ii) being
subject to a majority of the risk of loss from the entity's activities or entitled to
receive a majority of the entity's residual returns.

(3) "Relevant time" means (i) the time at which directors' action respecting the
transaction is taken in compliance with section 8.62, or (ii) if the transaction is not
brought before the board of directors of the corporation (or its committee) for

84
 action under section 8.62, at the time the corporation (or an entity controlled by
the corporation) becomes legally obligated to consummate the transaction.

(4) "Material financial interest" means a financial interest in a transaction that would
reasonably be expected to impair the objectivity of the director's judgment when
participating in action on the authorization of the transaction.

(5) "Related person" means:

(i) the director's spouse;

(ii) a child, stepchild, grandchild, parent, step parent, grandparent, sibling,

step sibling, half sibling, aunt, uncle, niece or nephew (or spouse of any
thereof) of the director or of the director's spouse;

(iii) an individual living in the same home as the director;

(iv) an entity (other than the corporation or an entity controlled by the

corporation) controlled by the director or any person specified above in
this subdivision (5);

(v) a domestic or foreign (A) business or nonprofit corporation (other than the
corporation or an entity controlled by the corporation) of which the
director is a director, (B) unincorporated entity of which the director is a
general partner or a member of the governing body, or (C) individual,
trust or estate for whom or of which the director is a trustee, guardian,
personal representative or like fiduciary; or

(vi) a person that is, or an entity that is controlled by, an employer of the
director.

(6) "Fair to the corporation" means, for purposes of section 8.61(b)(3), that the
transaction as a whole was beneficial to the corporation, taking into appropriate
account whether it was (i) fair in terms of the director's dealings with the
corporation, and (ii) comparable to what might have been obtainable in an arm's
length transaction, given the consideration paid or received by the corporation.

(7) "Required disclosure" means disclosure of (i) the existence and nature of the
director's conflicting interest, and (ii) all facts known to the director respecting
the subject matter of the transaction that a director free of such conflicting
interest would reasonably believe to be material in deciding whether to proceed
with the transaction.

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§ 8.61. JUDICIAL ACTION
(a) A transaction effected or proposed to be effected by the corporation (or by an
entity controlled by the corporation) may not be the subject of equitable relief, or
give rise to an award of damages or other sanctions against a director of the
corporation, in a proceeding by a shareholder or by or in the right of the
corporation, on the ground that the director has an interest respecting the
transaction, if it is not a director's conflicting interest transaction.

(b) A director's conflicting interest transaction may not be the subject of equitable
relief, or give rise to an award of damages or other sanctions against a director of
the corporation, in a proceeding by a shareholder or by or in the right of the
corporation, on the ground that the director has an interest respecting the
transaction, if:

(1) directors' action respecting the transaction was taken in compliance with
section 8.62 at any time; or

(2) shareholders' action respecting the transaction was taken in compliance

with section 8.63 at any time; or

(3) the transaction, judged according to the circumstances at the relevant

time, is established to have been fair to the corporation.

§ 8.62. DIRECTORS' ACTION

(a) Directors' action respecting a director's conflicting interest transaction is effective
for purposes of section 8.61(b)(l) if the transaction has been authorized by the
affirmative vote of a majority (but no fewer than two) of the qualified directors
who voted on the transaction, after required disclosure by the conflicted director
of information not already known by such qualified directors, or after modified
disclosure in compliance with subsection (b), provided that:

(1)the qualified directors have deliberated and voted outside the presence of and
without the participation by any other director; and

(2)where the action has been taken by a committee, all members of the committee
were qualified directors, and either (i) the committee was composed of all
the qualified directors on the board of directors or (ii) the members of the
committee were appointed by the affirmative vote of a majority of the
qualified directors on the board.

(b) Notwithstanding subsection (a), when a transaction is a director's conflicting

interest transaction only because a related person described in clause (v) or
clause (vi) of section 8.60(5) is a party to or has a material financial interest in the
transaction, the conflicted director is not obligated to make required disclosure to
86
 the extent that the director reasonably believes that doing so would violate a
duty imposed under law, a legally enforceable obligation of confidentiality, or a
professional ethics rule, provided that the conflicted director discloses to the
qualified directors voting on the transaction:

(1)all information required to be disclosed that is not so violative,

(2)the existence and nature of the director's conflicting interest, and

(3)the nature of the conflicted director's duty not to disclose the confidential
information.

(c) A majority (but no fewer than two) of all the qualified directors on the board of
directors, or on the committee, constitutes a quorum for purposes of action that
complies with this section.

(d) Where directors' action under this section does not satisfy a quorum or voting
requirement applicable to the authorization of the transaction by reason of the
articles of incorporation, the bylaws or a provision of law, independent action to
satisfy those authorization requirements must be taken by the board of directors
or a committee, in which action directors who are not qualified directors may
participate.

§ 8.63. SHAREHOLDERS' ACTION

(a) Shareholders' action respecting a director's conflicting interest transaction is
effective for purposes of section 8.61(b)(2) if a majority of the votes cast by the
holders of all qualified shares are in favor of the transaction after (1) notice to
shareholders describing the action to be taken respecting the transaction, (2)
provision to the corporation of the information referred to in subsection (b), and
(3) communication to the shareholders entitled to vote on the transaction of the
information that is the subject of required disclosure, to the extent the
information is not known by them. In the case of shareholders’ action at a
meeting, the shareholders entitled to vote shall be determined as of the record
date for notice of the meeting.

(b) A director who has a conflicting interest respecting the transaction shall, before
the shareholders' vote, inform the secretary or other officer or agent of the
corporation authorized to tabulate votes, in writing, of the number of shares that
the director knows are not qualified shares under subsection (c), and the identity
of the holders of those shares.

(c) For purposes of this section: (1) "holder" means and "held by" refers to shares held
by both a record shareholder (as defined in section 13.01(7)) and a beneficial
87
 shareholder (as defined in section 13.01(2)); and (2) "qualified shares" means all
shares entitled to be voted with respect to the transaction except for shares that
the secretary or other officer or agent of the corporation authorized to tabulate
votes either knows, or under subsection (b) is notified, are held by (A) a director
who has a conflicting interest respecting the transaction or (B) a related person of
the director (excluding a person described in clause (vi) of Section 8.60(5)).

(d) A majority of the votes entitled to be cast by the holders of all qualified shares
constitutes a quorum for purposes of compliance with this section. Subject to the
provisions of subsection (e), shareholders' action that otherwise complies with
this section is not affected by the presence of holders, or by the voting, of shares
that are not qualified shares.

(e) If a shareholders' vote does not comply with subsection (a) solely because of a
director's failure to comply with subsection (b), and if the director establishes
that the failure was not intended to influence and did not in fact determine the
outcome of the vote, the court may take such action respecting the transaction
and the director, and may give such effect, if any, to the shareholders' vote, as the
court considers appropriate in the circumstances.

(f) 'Where shareholders' action under this section does not satisfy a quorum or voting
requirement applicable to the authorization of the transaction by reason of the
articles of incorporation, the bylaws or a provision of law, independent action to
satisfy those authorization requirements must be taken by the shareholders, in
which action shares that are not qualified shares may participate.

SUBCHAPTER G. BUSINESS OPPORTUNITIES

§ 8.70. BUSINESS OPPORTUNITIES

(a) A director's taking advantage, directly or indirectly, of a business opportunity
may not be the subject of equitable relief, or give rise to an award of damages or
other sanctions against the director, in a proceeding by or in the right of the
corporation on the ground that such opportunity should have first been offered
to the corporation, if before becoming legally obligated respecting the
opportunity the director brings it to the attention of the corporation and:

(1) action by qualified directors disclaiming the corporation's interest in the

opportunity is taken in compliance with the procedures set forth in section
8.62, as if the decision being made concerned a director's conflicting
interest transaction, or

(2) shareholders' action disclaiming the corporation's interest in the

opportunity is taken in compliance with the procedures set forth in section
88
 8.63, as if the decision being made concerned a director's conflicting
interest transaction; except that, rather than making "required disclosure"
as defined in section 8.60, in each case the director shall have made prior
disclosure to those acting on behalf of the corporation of all material facts
concerning the business opportunity that are then known to the director.

(b) In any proceeding seeking equitable relief or other remedies based upon an
alleged improper taking advantage of a business opportunity by a director, the
fact that the director did not employ the procedure described in subsection (a)
before taking advantage of the opportunity shall not create an inference that the
opportunity should have been first presented to the corporation or alter the
burden of proof otherwise applicable to establish that the director breached a
duty to the corporation in the circumstances.

SUBCHAPTER A.
PRELIMINARY PROVISIONS

§ 9.01. EXCLUDED TRANSACTIONS

This chapter may not be used to effect a transaction that:

(1) [converts an insurance company organized on the mutual principle to one organized on
a stock-share basis];

(2)

(3)

§ 9.02. REQUIRED APPROVALS [OPTIONAL]

(a) If a domestic or foreign business corporation or eligible entity may not be a party to a
merger without the approval of the [attorney general], the [department of banking], the
[department of insurance] or the [public utility commission], the corporation or eligible
entity shall not be a party to a transaction under this chapter without the prior approval
of that agency.

(b) Property held in trust or for charitable purposes under the laws of this state by a
domestic or foreign eligible entity shall not, by any transaction under this chapter, be
diverted from the objects for which it was donated, granted or devised, unless and until
the eligible entity obtains an order of [court] [the attorney general] specifying the
disposition of the property to the extent required by and pursuant to [cite state
statutory cy pres or other nondiversion statute].

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SUBCHAPTER B.
DOMESTICATION

§ 9.20. DOMESTICATION
(a) A foreign business corporation may become a domestic business corporation only if the
domestication is permitted by the organic law of the foreign corporation.

(b) A domestic business corporation may become a foreign business corporation if the
domestication is permitted by the laws of the foreign jurisdiction. Regardless of
whether the laws of the foreign jurisdiction require the adoption of a plan of
domestication, the domestication shall be approved by the adoption by the corporation
of a plan of domestication in the manner provided in this subchapter.

(c) The plan of domestication must include:

(1) a statement of the jurisdiction in which the corporation is to be domesticated;

(2) the terms and conditions of the domestication;

(3) the manner and basis of reclassifying the shares of the corporation following its
domestication into shares or other securities, obligations, rights to acquire shares
or other securities, cash, other property, or any combination of the foregoing; and

(4) any desired amendments to the articles of incorporation of the corporation

following its domestication.

(d) The plan of domestication may also include a provision that the plan may be amended
prior to filing the document required by the laws of this state or the other jurisdiction to
consummate the domestication, except that subsequent to approval of the plan by the
shareholders the plan may not be amended to change:

(1) the amount or kind of shares or other securities, obligations, rights to acquire
shares or other securities, cash, or other property to be received by the
shareholders under the plan;

(2) the articles of incorporation as they will be in effect immediately following the
domestication, except for changes permitted by section 10.05 or by comparable
provisions of the laws of the other jurisdiction; or

(3) any of the other terms or conditions of the plan if the change would adversely
affect any of the shareholders in any material respect.

(e) Terms of a plan of domestication may be made dependent upon facts objectively
ascertainable outside the plan in accordance with section 1.20(k).

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(f) If any debt security, note or similar evidence of indebtedness for money borrowed,
whether secured or unsecured, or a contract of any kind, issued, incurred or signed by a
domestic business corporation before [the effective date of this subchapter] contains a
provision applying to a merger of the corporation and the document does not refer to a
domestication of the corporation, the provision shall be deemed to apply to a
domestication of the corporation until such time as the provision is amended
subsequent to that date.

§ 9.21. ACTION ON A PLAN OF DOMESTICATION

In the case of a domestication of a domestic business corporation in a foreign jurisdiction:

(1) The plan of domestication must be adopted by the board of directors.

(2) After adopting the plan of domestication, the board of directors must submit the
plan to the shareholders for their approval. The board of directors must also
transmit to the shareholders a recommendation that the shareholders approve
the plan, unless (i) the board of directors makes a determination that because of
conflicts of interest or other special circumstances it should not make such a
recommendation or (ii) section 8.26 applies. If (i) or (ii) applies, the board must
transmit to the shareholders the basis for so proceeding.

(3) The board of directors may condition its submission of the plan of domestication
to the shareholders on any basis.

(4) If the approval of the shareholders is to be given at a meeting, the corporation

must notify each shareholder, whether or not entitled to vote, of the meeting of
shareholders at which the plan of domestication is to be submitted for approval.
The notice must state that the purpose, or one of the purposes, of the meeting is
to consider the plan and must contain or be accompanied by a copy or summary
of the plan. The notice shall include or be accompanied by a copy of the articles
of incorporation as they will be in effect immediately after the domestication.

(5) Unless the articles of incorporation, or the board of directors acting pursuant to
paragraph (3), requires a greater vote or a greater number of votes to be present,
approval of the plan of domestication requires the approval of the shareholders
at a meeting at which a quorum consisting of at least a majority of the votes
entitled to be cast on the plan exists, and, if any class or series of shares is entitled
to vote as a separate group on the plan, the approval of each such separate
voting group at a meeting at which a quorum of the voting group consisting of at
least a majority of the votes entitled to be cast on the domestication by that
voting group exists.

(6) Subject to subsection (7), separate voting by voting groups is required by each
class or series of shares that:
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 (i) are to be reclassified under the plan of domestication into other securities,
obligations, rights to acquire shares or other securities, cash, other
property, or any combination of the foregoing;

(ii) are entitled to vote as a separate group on a provision of the plan that,
constitutes a proposed amendment to articles of incorporation of the
corporation following its domestication that requires action by separate
voting groups under section 10.04; or

(iii) is entitled under the articles of incorporation to vote as a voting group to

approve an amendment of the articles.

(7) The articles of incorporation may expressly limit or eliminate the separate voting
rights provided in subsection (6) (i).

(8) If any provision of the articles of incorporation, bylaws or an agreement to which

any of the directors or shareholders are parties, adopted or entered into before
[the effective date of this subchapter], applies to a merger of the corporation and
that document does not refer to a domestication of the corporation, the provision
shall be deemed to apply to a domestication of the corporation until such time as
the provision is amended subsequent to that date.

§ 9.22. ARTICLES OF DOMESTICATION

(a) After the domestication of a foreign business corporation has been authorized as
required by the laws of the foreign jurisdiction, articles of domestication shall be signed
by any officer or other duly authorized representative. The articles shall set forth:

(1) the name of the corporation immediately before the filing of the articles of
domestication and, if that name is unavailable for use in this state or the
corporation desires to change its name in connection with the domestication, a
name that satisfies the requirements of section 4.01;

(2) the jurisdiction of incorporation of the corporation immediately before the filing
of the articles of domestication and the date the corporation was incorporated in
that jurisdiction; and

(3) a statement that the domestication of the corporation in this state was duly
authorized as required by the laws of the jurisdiction in which the corporation
was incorporated immediately before its domestication in this state.

(b) The articles of domestication shall either contain all of the provisions that section 2.02(a)
requires to be set forth in articles of incorporation and any other desired provisions that
section 2.02(b) permits to be included in articles of incorporation, or shall have attached

92
 articles of incorporation. In either case, provisions that would not be required to be
included in restated articles of incorporation may be omitted.

(c) The articles of domestication shall be delivered to the secretary of state for filing, and
shall take effect at the effective time provided in section 1.23.

(d) If the foreign corporation is authorized to transact business in this state under chapter
15, its certificate of authority shall be cancelled automatically on the effective date of its
domestication.

§ 9.23. SURRENDER OF CHARTER UPON DOMESTICATION

(a) Whenever a domestic business corporation has adopted and approved, in the manner
required by this subchapter, a plan of domestication providing for the corporation to be
domesticated in a foreign jurisdiction, articles of charter surrender shall be signed on
behalf of the corporation by any officer or other duly authorized representative. The
articles of charter surrender shall set forth:

(1) the name of the corporation;

(2) a statement that the articles of charter surrender are being filed in connection
with the domestication of the corporation in a foreign jurisdiction;

(3) a statement that the domestication was duly approved by the shareholders and,
if voting by any separate voting group was required, by each such separate
voting group, in the manner required by this Act and the articles of
incorporation;

(4) the corporation’s new jurisdiction of incorporation.

(b) The articles of charter surrender shall be delivered by the corporation to the secretary of
state for filing. The articles of charter surrender shall take effect on the effective time
provided in section 1.23.

§ 9.24. EFFECT OF DOMESTICATION

(a) When a domestication becomes effective:

(1) the title to all real and personal property, both tangible and intangible, of the
corporation remains in the corporation without reversion or impairment;

(2) the liabilities of the corporation remain the liabilities of the corporation;

(3) an action or proceeding pending against the corporation continues against the
corporation as if the domestication had not occurred;

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 (4) the articles of domestication, or the articles of incorporation attached to the
articles of domestication, constitute the articles of incorporation of a foreign
corporation domesticating in this state;

(5) the shares of the corporation are reclassified into shares, other securities,
obligations, rights to acquire shares or other securities, or into cash or other
property in accordance with the terms of the domestication, and the shareholders
are entitled only to the rights provided by those terms and to any appraisal
rights they may have under the organic law of the domesticating corporation;
and

(6) the corporation is deemed to:

(i) be incorporated under and subject to the organic law of the domesticated
corporation for all purposes;

(ii) be the same corporation without interruption as the domesticating

corporation; and

(iii) have been incorporated on the date the domesticating corporation was
originally incorporated.

(b) When a domestication of a domestic business corporation in a foreign jurisdiction

becomes effective, the foreign business corporation is deemed to:

(1) appoint the secretary of state as its agent for service of process in a proceeding to
enforce the rights of shareholders who exercise appraisal rights in connection
with the domestication; and

(2) agree that it will promptly pay the amount, if any, to which such shareholders
are entitled under chapter 13.

(c) The owner liability of a shareholder in a foreign corporation that is domesticated in this
state shall be as follows:

(1) The domestication does not discharge any owner liability under the laws of the
foreign jurisdiction to the extent any such owner liability arose before the
effective time of the articles of domestication.

(2) The shareholder shall not have owner liability under the laws of the foreign
jurisdiction for any debt, obligation or liability of the corporation that arises after
the effective time of the articles of domestication.

(3) The provisions of the laws of the foreign jurisdiction shall continue to apply to
the collection or discharge of any owner liability preserved by paragraph (1), as if
the domestication had not occurred.
94
 (4) The shareholder shall have whatever rights of contribution from other
shareholders are provided by the laws of the foreign jurisdiction with respect to
any owner liability preserved by paragraph (1), as if the domestication had not
occurred.

(d) A shareholder who becomes subject to owner liability for some or all of the debts,
obligations or liabilities of the corporation as a result of its domestication in this state
shall have owner liability only for those debts, obligations or liabilities of the
corporation that arise after the effective time of the articles of domestication.

§ 9.25. ABANDONMENT OF A DOMESTICATION

(a) Unless otherwise provided in a plan of domestication of a domestic business
corporation, after the plan has been adopted and approved as required by this
subchapter, and at any time before the domestication has become effective, it may be
abandoned by the board of directors without action by the shareholders.

(b) If a domestication is abandoned under subsection (a) after articles of charter surrender
have been filed with the secretary of state but before the domestication has become
effective, a statement that the domestication has been abandoned in accordance with
this section, signed by an officer or other duly authorized representative, shall be
delivered to the secretary of state for filing prior to the effective date of the
domestication. The statement shall take effect upon filing and the domestication shall
be deemed abandoned and shall not become effective.

(c) If the domestication of a foreign business corporation in this state is abandoned in

accordance with the laws of the foreign jurisdiction after articles of domestication have
been filed with the secretary of state, a statement that the domestication has been
abandoned, signed by an officer or other duly authorized representative, shall be
delivered to the secretary of state for filing. The statement shall take effect upon filing
and the domestication shall be deemed abandoned and shall not become effective.

SUBCHAPTER C.
NONPROFIT CONVERSION

§ 9.30. NONPROFIT CONVERSION

(a) A domestic business corporation may become a domestic nonprofit corporation
pursuant to a plan of nonprofit conversion.

(b) A domestic business corporation may become a foreign nonprofit corporation if the
nonprofit conversion is permitted by the laws of the foreign jurisdiction. Regardless of
whether the laws of the foreign jurisdiction require the adoption of a plan of nonprofit
conversion, the foreign nonprofit conversion shall be approved by the adoption by the

95
 domestic business corporation of a plan of nonprofit conversion in the manner
provided in this subchapter.

(c) The plan of nonprofit conversion must include:

(1) the terms and conditions of the conversion;

(2) the manner and basis of reclassifying the shares of the corporation following its
conversion into memberships, if any, or securities, obligations, rights to acquire
memberships or securities, cash, other property, or any combination of the
foregoing;

(3) any desired amendments to the articles of incorporation of the corporation

following its conversion; and

(4) if the domestic business corporation is to be converted to a foreign nonprofit

corporation, a statement of the jurisdiction in which the corporation will be
incorporated after the conversion.

(d) The plan of nonprofit conversion may also include a provision that the plan may be
amended prior to filing articles of nonprofit conversion, except that subsequent to
approval of the plan by the shareholders the plan may not be amended to change:

(1) the amount or kind of memberships or securities, obligations, rights to acquire

memberships or securities, cash, or other property to be received by the
shareholders under the plan;

(2) the articles of incorporation as they will be in effect immediately following the
conversion, except for changes permitted by section 10.05; or

(3) any of the other terms or conditions of the plan if the change would adversely
affect any of the shareholders in any material respect.

(e) Terms of a plan of nonprofit conversion may be made dependent upon facts objectively
ascertainable outside the plan in accordance with section 1.20(k).

(f) If any debt security, note or similar evidence of indebtedness for money borrowed,
whether secured or unsecured, or a contract of any kind, issued, incurred or signed by a
domestic business corporation before [the effective date of this subchapter] contains a
provision applying to a merger of the corporation and the document does not refer to a
nonprofit conversion of the corporation, the provision shall be deemed to apply to a
nonprofit conversion of the corporation until such time as the provision is amended
subsequent to that date.

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§ 9.31. ACTION ON A PLAN OF NONPROFIT CONVERSION
In the case of a conversion of a domestic business corporation to a domestic or foreign
nonprofit corporation:

(1) The plan of nonprofit conversion must be adopted by the board of directors.

(2) After adopting the plan of nonprofit conversion, the board of directors must submit the
plan to the shareholders for their approval. The board of directors must also transmit to
the shareholders a recommendation that the shareholders approve the plan, unless (i)
the board of directors makes a determination that because of conflicts of interest or
other special circumstances it should not make such a recommendation, or (ii) section
8.26 applies. If (i) or (ii) applies, the board must transmit to the shareholders the basis
for so proceeding.

(3) The board of directors may condition its submission of the plan of nonprofit conversion
to the shareholders on any basis.

(4) If the approval of the shareholders is to be given at a meeting, the corporation must
notify each shareholder of the meeting of shareholders at which the plan of nonprofit
conversion is to be submitted for approval. The notice must state that the purpose, or
one of the purposes, of the meeting is to consider the plan and must contain or be
accompanied by a copy or summary of the plan. The notice shall include or be
accompanied by a copy of the articles of incorporation as they will be in effect
immediately after the nonprofit conversion.

(5) Unless the articles of incorporation, or the board of directors acting pursuant to
paragraph (3), requires a greater vote or a greater number of votes to be present,
approval of the plan of nonprofit conversion requires the approval of each class or
series of shares of the corporation voting as a separate voting group at a meeting at
which a quorum of the voting group consisting of at least a majority of the votes
entitled to be cast on the nonprofit conversion by that voting group exists.

(6) If any provision of the articles of incorporation, bylaws or an agreement to which any of
the directors or shareholders are parties, adopted before [the effective date of this
subchapter] applies to a merger , other than a provision that eliminates or limits voting
or appraisal rights, and the document does not refer to a nonprofit conversion of the
corporation, the provision shall be deemed to apply to a nonprofit conversion of the
corporation until such time as the provision is amended subsequent to that date.

§ 9.32. ARTICLES OF NONPROFIT CONVERSION

(a) After a plan of nonprofit conversion providing for the conversion of a domestic
business corporation to a domestic nonprofit corporation has been adopted and
approved as required by this Act, articles of nonprofit conversion shall be signed on

97
 behalf of the corporation by any officer or other duly authorized representative. The
articles shall set forth:

(1) the name of the corporation immediately before the filing of the articles of
nonprofit conversion and if that name does not satisfy the requirements of [the
Model Nonprofit Corporation Act], or the corporation desires to change its name
in connection with the conversion, a name that satisfies the requirements of [the
Model Nonprofit Corporation Act];

(2) a statement that the plan of nonprofit conversion was duly approved by the
shareholders in the manner required by this Act and the articles of incorporation.

(b) The articles of nonprofit conversion shall either contain all of the provisions that [the
Model Nonprofit Corporation Act] requires to be set forth in articles of incorporation of
a domestic nonprofit corporation and any other desired provisions permitted by [the
Model Nonprofit Corporation Act], or shall have attached articles of incorporation that
satisfy the requirements of [the Model Nonprofit Corporation Act]. In either case,
provisions that would not be required to be included in restated articles of
incorporation of a domestic nonprofit corporation may be omitted.

(c) The articles of nonprofit conversion shall be delivered to the secretary of state for filing,
and shall take effect at the effective time provided in section 1.23.

§ 9.33. SURRENDER OF CHARTER UPON FOREIGN NONPROFIT CONVERSION

(a) Whenever a domestic business corporation has adopted and approved, in the manner
required by this subchapter, a plan of nonprofit conversion providing for the
corporation to be converted to a foreign nonprofit corporation, articles of charter
surrender shall be signed on behalf of the corporation by any officer or other duly
authorized representative. The articles of charter surrender shall set forth:

(1) the name of the corporation;

(2) a statement that the articles of charter surrender are being filed in connection
with the conversion of the corporation to a foreign nonprofit corporation;

(3) a statement that the foreign nonprofit conversion was duly approved by the
shareholders in the manner required by this Act and the articles of incorporation;

(4) the corporation’s new jurisdiction of incorporation.

(b) The articles of charter surrender shall be delivered by the corporation to the secretary of
state for filing. The articles of charter surrender shall take effect on the effective time
provided in section 1.23.

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§ 9.34. EFFECT OF NONPROFIT CONVERSION
(a) When a conversion of a domestic business corporation to a domestic nonprofit
corporation becomes effective:

(1) the title to all real and personal property, both tangible and intangible, of the
corporation remains in the corporation without reversion or impairment;

(2) the liabilities of the corporation remain the liabilities of the corporation;

(3) an action or proceeding pending against the corporation continues against the
corporation as if the conversion had not occurred;

(4) the articles of incorporation of the domestic or foreign nonprofit corporation

become effective;

(5) the shares of the corporation are reclassified into memberships, securities,
obligations, rights to acquire memberships or securities, or into cash or other
property in accordance with the plan of conversion, and the shareholders are
entitled only to the rights provided in the plan of nonprofit conversion or to any
rights they may have under chapter 13; and

(6) the corporation is deemed to:

(i) be a domestic nonprofit corporation for all purposes;

(ii) be the same corporation without interruption as the corporation that

existed prior to the conversion; and

(iii) have been incorporated on the date that it was originally incorporated as a
domestic business corporation.

(b) When a conversion of a domestic business corporation to a foreign nonprofit

corporation becomes effective, the foreign nonprofit corporation is deemed to:

(1) appoint the secretary of state as its agent for service of process in a proceeding to
enforce the rights of shareholders who exercise appraisal rights in connection
with the conversion; and

(2) agree that it will promptly pay the amount, if any, to which such shareholders
are entitled under chapter 13.

(c) The owner liability of a shareholder in a domestic business corporation that converts to
a domestic nonprofit corporation shall be as follows:

99
 (1) The conversion does not discharge any owner liability of the shareholder as a
shareholder of the business corporation to the extent any such owner liability
arose before the effective time of the articles of nonprofit conversion.

(2) The shareholder shall not have owner liability for any debt, obligation or liability
of the nonprofit corporation that arises after the effective time of the articles of
nonprofit conversion.

(3) The laws of this state shall continue to apply to the collection or discharge of any
owner liability preserved by paragraph (1), as if the conversion had not occurred
and the nonprofit corporation was still a business corporation.

(4) The shareholder shall have whatever rights of contribution from other
shareholders are provided by the laws of this state with respect to any owner
liability preserved by paragraph (1), as if the conversion had not occurred and
the nonprofit corporation were still a business corporation.

(d) A shareholder who becomes subject to owner liability for some or all of the debts,
obligations or liabilities of the nonprofit corporation shall have owner liability only for
those debts, obligations or liabilities of the nonprofit corporation that arise after the
effective time of the articles of nonprofit conversion.]

§ 9.35. ABANDONMENT OF A NONPROFIT CONVERSION

Unless otherwise provided in a plan of nonprofit conversion of a domestic business
corporation, after the plan has been adopted and approved as required by this subchapter, and
at any time before the nonprofit conversion has become effective, it may be abandoned by the
board of directors without action by the shareholders.

If a nonprofit conversion is abandoned under subsection (a) after articles of nonprofit

conversion or articles of charter surrender have been filed with the secretary of state but before
the nonprofit conversion has become effective, a statement that the nonprofit conversion has
been abandoned in accordance with this section, signed by an officer or other duly authorized
representative, shall be delivered to the secretary of state for filing prior to the effective date of
the nonprofit conversion. The statement shall take effect upon filing and the nonprofit
conversion shall be deemed abandoned and shall not become effective.

SUBCHAPTER D.
FOREIGN NONPROFIT DOMESTICATION AND CONVERSION

§ 9.40. FOREIGN NONPROFIT DOMESTICATION AND CONVERSION

A foreign nonprofit corporation may become a domestic business corporation if the
domestication and conversion is permitted by the organic law of the foreign nonprofit
corporation.
100
§ 9.41. ARTICLES OF DOMESTICATION AND CONVERSION
(a) After the conversion of a foreign nonprofit corporation to a domestic business
corporation has been authorized as required by the laws of the foreign jurisdiction,
articles of domestication and conversion shall be signed by any officer or other duly
authorized representative. The articles shall set forth:

(1) the name of the corporation immediately before the filing of the articles of
domestication and conversion and, if that name is unavailable for use in this state
or the corporation desires to change its name in connection with the
domestication and conversion, a name that satisfies the requirements of section
4.01;

(2) the jurisdiction of incorporation of the corporation immediately before the filing
of the articles of domestication and conversion and the date the corporation was
incorporated in that jurisdiction; and

(3) a statement that the domestication and conversion of the corporation in this state
was duly authorized as required by the laws of the jurisdiction in which the
corporation was incorporated immediately before its domestication and
conversion in this state.

(b) The articles of domestication and conversion shall either contain all of the provisions
that section 2.02(a) requires to be set forth in articles of incorporation and any other
desired provisions that section 2.02(b) permits to be included in articles of
incorporation, or shall have attached articles of incorporation. In either case, provisions
that would not be required to be included in restated articles of incorporation may be
omitted.

(c) The articles of domestication and conversion shall be delivered to the secretary of state
for filing, and shall take effect at the effective time provided in section 1.23.

(d) If the foreign nonprofit corporation is authorized to transact business in this state under
[the foreign qualification provision of the Model Nonprofit Corporation Act], its
certificate of authority shall be cancelled automatically on the effective date of its
domestication and conversion.

§ 9.42. EFFECT OF FOREIGN NONPROFIT DOMESTICATION AND CONVERSION

(a) When a domestication and conversion of a foreign nonprofit corporation to a domestic
business corporation becomes effective:

(1) the title to all real and personal property, both tangible and intangible, of the
corporation remains in the corporation without reversion or impairment;

(2) the liabilities of the corporation remain the liabilities of the corporation;
101
 (3) an action or proceeding pending against the corporation continues against the
corporation as if the domestication and conversion had not occurred;

(4) the articles of domestication and conversion, or the articles of incorporation

attached to the articles of domestication and conversion, constitute the articles of
incorporation of the corporation;

(5) shares, other securities, obligations, rights to acquire shares or other securities of
the corporation, or cash or other property shall be issued or paid as provided
pursuant to the laws of the foreign jurisdiction, so long as at least one share is
outstanding immediately after the effective time; and

(6) the corporation is deemed to:

(i) be a domestic corporation for all purposes;

(ii) be the same corporation without interruption as the foreign nonprofit

corporation; and

(iii) have been incorporated on the date the foreign nonprofit corporation was
originally incorporated.

(b) The owner liability of a member of a foreign nonprofit corporation that domesticates
and converts to a domestic business corporation shall be as follows:

(1) The domestication and conversion does not discharge any owner liability under
the laws of the foreign jurisdiction to the extent any such owner liability arose
before the effective time of the articles of domestication and conversion.

(2) The member shall not have owner liability under the laws of the foreign
jurisdiction for any debt, obligation or liability of the corporation that arises after
the effective time of the articles of domestication and conversion.

(3) The provisions of the laws of the foreign jurisdiction shall continue to apply to
the collection or discharge of any owner liability preserved by paragraph (1), as if
the domestication and conversion had not occurred.

(4) The member shall have whatever rights of contribution from other members are
provided by the laws of the foreign jurisdiction with respect to any owner
liability preserved by paragraph (1), as if the domestication and conversion had
not occurred.

(c) A member of a foreign nonprofit corporation who becomes subject to owner liability for
some or all of the debts, obligations or liabilities of the corporation as a result of its
domestication and conversion in this state shall have owner liability only for those

102
 debts, obligations or liabilities of the corporation that arise after the effective time of the
articles of domestication and conversion.

§ 9.43. ABANDONMENT OF A FOREIGN NONPROFIT DOMESTICATION AND

CONVERSION
If the domestication and conversion of a foreign nonprofit corporation to a domestic
business corporation is abandoned in accordance with the laws of the foreign jurisdiction after
articles of domestication and conversion have been filed with the secretary of state, a statement
that the domestication and conversion has been abandoned, signed by an officer or other duly
authorized representative, shall be delivered to the secretary of state for filing. The statement
shall take effect upon filing and the domestication and conversion shall be deemed abandoned
and shall not become effective.

SUBCHAPTER E.
ENTITY CONVERSION

§ 9.50. ENTITY CONVERSION AUTHORIZED; DEFINITIONS

(a) A domestic business corporation may become a domestic unincorporated entity
pursuant to a plan of entity conversion.

(b) A domestic business corporation may become a foreign unincorporated entity if the
entity conversion is permitted by the laws of the foreign jurisdiction.

(c) A domestic unincorporated entity may become a domestic business corporation. If the
organic law of a domestic unincorporated entity does not provide procedures for the
approval of an entity conversion, the conversion shall be adopted and approved, and
the entity conversion effectuated, in the same manner as a merger of the unincorporated
entity. If the organic law of a domestic unincorporated entity does not provide
procedures for the approval of either an entity conversion or a merger, a plan of entity
conversion shall be adopted and approved, the entity conversion effectuated, and
appraisal rights exercised, in accordance with the procedures in this subchapter and
chapter 13. Without limiting the provisions of this subsection, a domestic
unincorporated entity whose organic law does not provide procedures for the approval
of an entity conversion shall be subject to subsection (e) and section 9.52(7). For
purposes of applying this subchapter and chapter 13:

(1) the unincorporated entity, its interest holders, interests and organic documents
taken together, shall be deemed to be a domestic business corporation,
shareholders, shares and articles of incorporation, respectively and vice versa, as
the context may require; and

103
 (2) if the business and affairs of the unincorporated entity are managed by a group
of persons that is not identical to the interest holders, that group shall be deemed
to be the board of directors.

(d) A foreign unincorporated entity may become a domestic business corporation if the
organic law of the foreign unincorporated entity authorizes it to become a corporation
in another jurisdiction.

(e) If any debt security, note or similar evidence of indebtedness for money borrowed,
whether secured or unsecured, or a contract of any kind, issued, incurred or signed by a
domestic business corporation before [the effective date of this subchapter], applies to a
merger of the corporation and the document does not refer to an entity conversion of
the corporation, the provision shall be deemed to apply to an entity conversion of the
corporation until such time as the provision is amended subsequent to that date.

(f) As used in this subchapter:

(1) “Converting entity” means the domestic business corporation or domestic

unincorporated entity that adopts a plan of entity conversion or the foreign
unincorporated entity converting to a domestic business corporation.

(2) “Surviving entity” means the corporation or unincorporated entity that is in

existence immediately after consummation of an entity conversion pursuant to
this subchapter.

§ 9.51. PLAN OF ENTITY CONVERSION

(a) A plan of entity conversion must include:

(1) a statement of the type of other entity the surviving entity will be and, if it will be
a foreign other entity, its jurisdiction of organization;

(2) the terms and conditions of the conversion;

(3) the manner and basis of converting the shares of the domestic business
corporation following its conversion into interests or other securities, obligations,
rights to acquire interests or other securities, cash, other property, or any
combination of the foregoing; and

(4) the full text, as they will be in effect immediately after consummation of the
conversion, of the organic documents of the surviving entity.

(b) The plan of entity conversion may also include a provision that the plan may be
amended prior to filing articles of entity conversion, except that subsequent to approval
of the plan by the shareholders the plan may not be amended to change:

104
 (1) the amount or kind of shares or other securities, interests, obligations, rights to
acquire shares, other securities or interests, cash, or other property to be received
under the plan by the shareholders;

(2) the organic documents that will be in effect immediately following the
conversion, except for changes permitted by a provision of the organic law of the
surviving entity comparable to section 10.05; or

(3) any of the other terms or conditions of the plan if the change would adversely
affect any of the shareholders in any material respect.

(c) Terms of a plan of entity conversion may be made dependent upon facts objectively
ascertainable outside the plan in accordance with section 1.20(k).

§ 9.52. ACTION ON A PLAN OF ENTITY CONVERSION

In the case of an entity conversion of a domestic business corporation to a domestic or foreign
unincorporated entity:

(1) The plan of entity conversion must be adopted by the board of directors.

(2) After adopting the plan of entity conversion, the board of directors must submit
the plan to the shareholders for their approval. The board of directors must also
transmit to the shareholders a recommendation that the shareholders approve
the plan, unless (i) the board of directors makes a determination that because of
conflicts of interest or other special circumstances it should not make such a
recommendation or (ii) section 8.26 applies. If (i) or (ii) applies, the board must
transmit to the shareholders the basis for so proceeding.

(3) The board of directors may condition its submission of the plan of entity
conversion to the shareholders on any basis.

(4) If the approval of the shareholders is to be given at a meeting, the corporation

must notify each shareholder, whether or not entitled to vote, of the meeting of
shareholders at which the plan of entity conversion is to be submitted for
approval. The notice must state that the purpose, or one of the purposes, of the
meeting is to consider the plan and must contain or be accompanied by a copy or
summary of the plan. The notice shall include or be accompanied by a copy of
the organic documents as they will be in effect immediately after the entity
conversion.

(5) Unless the articles of incorporation, or the board of directors acting pursuant to
paragraph (3), requires a greater vote or a greater number of votes to be present,
approval of the plan of entity conversion requires the approval of each class or
series of shares of the corporation voting as a separate voting group at a meeting
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 at which a quorum of the voting group consisting of at least a majority of the
votes entitled to be cast on the conversion by that voting group exists.

(6) If any provision of the articles of incorporation, bylaws or an agreement to which

any of the directors or shareholders are parties, adopted or entered into before
[the effective date of this subchapter], applies to a merger of the corporation,
other than a provision that limits or eliminates voting or appraisal rights, and the
document does not refer to an entity conversion of the corporation, the provision
shall be deemed to apply to an entity conversion of the corporation until such
time as the provision is subsequently amended.

(7) If as a result of the conversion one or more shareholders of the corporation

would become subject to owner liability for the debts, obligations or liabilities of
any other person or entity, approval of the plan of conversion shall require the
signing, by each such shareholder, of a separate written consent to become
subject to such owner liability.

§ 9.53. ARTICLES OF ENTITY CONVERSION

(a) After the conversion of a domestic business corporation to a domestic unincorporated
entity has been adopted and approved as required by this Act, articles of entity
conversion shall be signed on behalf of the corporation by any officer or other duly
authorized representative. The articles shall:

(1) set forth the name of the corporation immediately before the filing of the articles
of entity conversion and the name to which the name of the corporation is to be
changed, which shall be a name that satisfies the organic law of the surviving
entity;

(2) state the type of unincorporated entity that the surviving entity will be;

(3) set forth a statement that the plan of entity conversion was duly approved by the
shareholders in the manner required by this Act and the articles of incorporation;

(4) if the surviving entity is a filing entity, either contain all of the provisions
required to be set forth in its public organic document and any other desired
provisions that are permitted, or have attached a public organic document;
except that, in either case, provisions that would not be required to be included
in a restated public organic document may be omitted.

(b) After the conversion of a domestic unincorporated entity to a domestic business

corporation has been adopted and approved as required by the organic law of the
unincorporated entity, articles of entity conversion shall be signed on behalf of the
unincorporated entity by any officer or other duly authorized representative. The
articles shall:
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 (1) set forth the name of the unincorporated entity immediately before the filing of
the articles of entity conversion and the name to which the name of the
unincorporated entity is to be changed, which shall be a name that satisfies the
requirements of section 4.01;

(2) set forth a statement that the plan of entity conversion was duly approved in
accordance with the organic law of the unincorporated entity;

(3) either contain all of the provisions that section 2.02(a) requires to be set forth in
articles of incorporation and any other desired provisions that section 2.02(b)
permits to be included in articles of incorporation, or have attached articles of
incorporation; except that, in either case, provisions that would not be required
to be included in restated articles of incorporation of a domestic business
corporation may be omitted.

(c) After the conversion of a foreign unincorporated entity to a domestic business

corporation has been authorized as required by the laws of the foreign jurisdiction,
articles of entity conversion shall be signed on behalf of the foreign unincorporated
entity by any officer or other duly authorized representative. The articles shall:

(1) set forth the name of the unincorporated entity immediately before the filing of
the articles of entity conversion and the name to which the name of the
unincorporated entity is to be changed, which shall be a name that satisfies the
requirements of section 4.01;

(2) set forth the jurisdiction under the laws of which the unincorporated entity was
organized immediately before the filing of the articles of entity conversion and
the date on which the unincorporated entity was organized in that jurisdiction;

(3) set forth a statement that the conversion of the unincorporated entity was duly
approved in the manner required by its organic law; and

(4) either contain all of the provisions that section 2.02(a) requires to be set forth in
articles of incorporation and any other desired provisions that section 2.02(b)
permits to be included in articles of incorporation, or have attached articles of
incorporation; except that, in either case, provisions that would not be required
to be included in restated articles of incorporation of a domestic business
corporation may be omitted.

(d) The articles of entity conversion shall be delivered to the secretary of state for filing, and
shall take effect at the effective time provided in section 1.23. Articles of entity
conversion under section 9.53(a) or (b) may be combined with any required conversion
filing under the organic law of the domestic unincorporated entity if the combined
filing satisfies the requirements of both this section and the other organic law.

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(e) If the converting entity is a foreign unincorporated entity that is authorized to transact
business in this state under a provision of law similar to chapter 15, its certificate of
authority or other type of foreign qualification shall be cancelled automatically on the
effective date of its conversion.

§ 9.54. SURRENDER OF CHARTER UPON CONVERSION

(a) Whenever a domestic business corporation has adopted and approved, in the manner
required by this subchapter, a plan of entity conversion providing for the corporation to
be converted to a foreign unincorporated entity, articles of charter surrender shall be
signed on behalf of the corporation by any officer or other duly authorized
representative. The articles of charter surrender shall set forth:

(1) the name of the corporation;

(2) a statement that the articles of charter surrender are being filed in connection
with the conversion of the corporation to a foreign unincorporated entity;

(3) a statement that the conversion was duly approved by the shareholders in the
manner required by this Act and the articles of incorporation;

(4) the jurisdiction under the laws of which the surviving entity will be organized;

(5) if the surviving entity will be a nonfiling entity, the address of its executive office
immediately after the conversion.

(b) The articles of charter surrender shall be delivered by the corporation to the secretary of
state for filing. The articles of charter surrender shall take effect on the effective time
provided in section 1.23.

§ 9.55. EFFECT OF ENTITY CONVERSION

(a) When a conversion under this subchapter becomes effective:

(1) the title to all real and personal property, both tangible and intangible, of the
converting entity remains in the surviving entity without reversion or
impairment;

(2) the liabilities of the converting entity remain the liabilities of the surviving entity;

(3) an action or proceeding pending against the converting entity continues against
the surviving entity as if the conversion had not occurred;

(4) in the case of a surviving entity that is a filing entity, its articles of incorporation
or public organic document and its private organic document become effective;

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 (5) in the case of a surviving entity that is a nonfiling entity, its private organic
document becomes effective;

(6) the shares or interests of the converting entity are reclassified into shares,
interests, other securities, obligations, rights to acquire shares, interests or other
securities, or into cash or other property in accordance with the plan of
conversion; and the shareholders or interest holders of the converting entity are
entitled only to the rights provided to them under the terms of the conversion
and to any appraisal rights they may have under the organic law of the
converting entity; and

(7) the surviving entity is deemed to:

(i) be incorporated or organized under and subject to the organic law of the
converting entity for all purposes;

(ii) be the same corporation or unincorporated entity without interruption as

the converting entity; and

(iii) have been incorporated or otherwise organized on the date that the
converting entity was originally incorporated or organized.

(b) When a conversion of a domestic business corporation to a foreign other entity becomes
effective, the surviving entity is deemed to:

(1) appoint the secretary of state as its agent for service of process in a proceeding to
enforce the rights of shareholders who exercise appraisal rights in connection
with the conversion; and

(2) agree that it will promptly pay the amount, if any, to which such shareholders
are entitled under chapter 13.

(c) A shareholder who becomes subject to owner liability for some or all of the debts,
obligations or liabilities of the surviving entity shall be personally liable only for those
debts, obligations or liabilities of the surviving entity that arise after the effective time of
the articles of entity conversion.

(d) The owner liability of an interest holder in an unincorporated entity that converts to a
domestic business corporation shall be as follows:

(1) The conversion does not discharge any owner liability under the organic law of
the unincorporated entity to the extent any such owner liability arose before the
effective time of the articles of entity conversion.

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 (2) The interest holder shall not have owner liability under the organic law of the
unincorporated entity for any debt, obligation or liability of the corporation that
arises after the effective time of the articles of entity conversion.

(3) The provisions of the organic law of the unincorporated entity shall continue to
apply to the collection or discharge of any owner liability preserved by
paragraph (1), as if the conversion had not occurred.

(4) The interest holder shall have whatever rights of contribution from other interest
holders are provided by the organic law of the unincorporated entity with
respect to any owner liability preserved by paragraph (1), as if the conversion
had not occurred.

§ 9.56. ABANDONMENT OF AN ENTITY CONVERSION

(a) Unless otherwise provided in a plan of entity conversion of a domestic business
corporation, after the plan has been adopted and approved as required by this
subchapter, and at any time before the entity conversion has become effective, it may be
abandoned by the board of directors without action by the shareholders.

(b) If an entity conversion is abandoned after articles of entity conversion or articles of

charter surrender have been filed with the secretary of state but before the entity
conversion has become effective, a statement that the entity conversion has been
abandoned in accordance with this section, signed by an officer or other duly
authorized representative, shall be delivered to the secretary of state for filing prior to
the effective date of the entity conversion. Upon filing, the statement shall take effect
and the entity conversion shall be deemed abandoned and shall not become effective.

SUBCHAPTER A. AMENDMENT OF ARTICLES OF INCORPORATION

§ 10.01. AUTHORITY TO AMEND

(a) A corporation may amend its articles of incorporation at any time to add or
change a provision that is required or permitted in the articles of
incorporation as of the effective date of the amendment or to delete a
provision that is not required to be contained in the articles of incorporation.

(b) A shareholder of the corporation does not have a vested property right
resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.

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§ 10.03. AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS
If a corporation has issued shares, an amendment to the articles of incorporation
shall be adopted in the following manner:

(a) The proposed amendment must be adopted by the board of directors.

(b) Except as provided in sections 10.05, 10.07, and 10.08, after adopting the
proposed amendment the board of directors must submit the amendment to
the shareholders for their approval. The board of directors must also transmit
to the shareholders a recommendation that the shareholders approve the
amendment, unless (i) the board of directors makes a determination that
because of conflicts of interest or other special circumstances it should not
make such a recommendation or (ii) section 8.26 applies. If (i) or (ii) applies,
the board must transmit to the shareholders the basis for so proceeding.

(c) The board of directors may condition its submission of the amendment to the
shareholders on any basis.

(d) If the amendment is required to be approved by the shareholders, and the

approval is to be given at a meeting, the corporation must notify each
shareholder, whether or not entitled to vote, of the meeting of shareholders at
which the amendment is to be submitted for approval. The notice must state
that the purpose, or one of the purposes, of the meeting is to consider the
amendment and must contain or be accompanied by a copy of the
amendment.

(e) Unless the articles of incorporation, or the board of directors acting pursuant
to subsection (c), requires a greater vote or a greater number of shares to be
present, approval of the amendment requires the approval of the
shareholders at a meeting at which a quorum consisting of at least a majority
of the votes entitled to be cast on the amendment exists, and, if any class or
series of shares is entitled to vote as a separate group on the amendment,
except as provided in section 10.04(c), the approval of each such separate
voting group at a meeting at which a quorum of the voting group consisting
of at least a majority of the votes entitled to be cast on the amendment by that
voting group exists.

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§ 10.04. VOTING ON AMENDMENTS BY VOTING GROUPS
(a) If a corporation has more than one class of shares outstanding, the holders of
the outstanding shares of a class are entitled to vote as a separate voting
group (if shareholder voting is otherwise required by this Act) on a proposed
amendment to the articles of incorporation if the amendment would:

1. effect an exchange or reclassification of all or part of the shares of the class

into shares of another class;

2. effect an exchange or reclassification, or create the right of exchange, of all

or part of the shares of another class into shares of the class;

3. change the rights, preferences, or limitations of all or part of the shares of

the class;

4. change the shares of all or part of the class into a different number of
shares of the same class;

5. create a new class of shares having rights or preferences with respect to

distributions that are prior or superior to the shares of the class;

6. increase the rights, preferences, or number of authorized shares of any

class that, after giving effect to the amendment, have rights or preferences
with respect to distributions that are prior or superior to the shares of the
class;

7. limit or deny an existing preemptive right of all or part of the shares of the
class; or

8. cancel or otherwise affect rights to distributions that have accumulated

but not yet been authorized on all or part of the shares of the class.

(b) If a proposed amendment would affect a series of a class of shares in one or

more of the ways described in subsection (a), the holders of shares of that
series are entitled to vote as a separate voting group on the proposed
amendment.

(c) If a proposed amendment that entitles the holders of two or more classes or
series of shares to vote as separate voting groups under this section would
affect those two or more classes or series in the same or a substantially similar
way, the holders of shares of all the classes or series so affected must vote
together as a single voting group on the proposed amendment, unless
otherwise provided in the articles of incorporation or required by the board
of directors.

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 (d) A class or series of shares is entitled to the voting rights granted by this
section although the articles of incorporation provide that the shares are
nonvoting shares.

§ 10.05. AMENDMENT BY BOARD OF DIRECTORS

Unless the articles of incorporation provide otherwise, a corporation’s board of
directors may adopt amendments to the corporation’s articles of incorporation without
shareholder approval:

1. to extend the duration of the corporation if it was incorporated at a time when

limited duration was required by law;

2. to delete the names and addresses of the initial directors;

3. to delete the name and address of the initial registered agent or registered office,
if a statement of change is on file with the secretary of state;

4. if the corporation has only one class of shares outstanding:

a. to change each issued and unissued authorized share of the class into a
greater number of whole shares of that class; or

b. to increase the number of authorized shares of the class to the extent

necessary to permit the issuance of shares as a share dividend;

5. to change the corporate name by substituting the word “corporation,”

“incorporated,” “company,” “limited,” or the abbreviation “corp.,” “inc.,” “co.,”
or “ltd.,” for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name;

6. to reflect a reduction in authorized shares, as a result of the operation of

section 6.31(b), when the corporation has acquired its own shares and the articles
of incorporation prohibit the reissue of the acquired shares;

7. to delete a class of shares from the articles of incorporation, as a result of the

operation of section 6.31(b), when there are no remaining shares of the class
because the corporation has acquired all shares of the class and the articles of
incorporation prohibit the reissue of the acquired shares; or

8. to make any change expressly permitted by section 6.02(a) or (b) to be made

without shareholder approval.

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§ 10.06. ARTICLES OF AMENDMENT
After an amendment to the articles of incorporation has been adopted and approved
in the manner required by this Act and by the articles of incorporation, the corporation shall
deliver to the secretary of state, for filing, articles of amendment, which shall set forth:

1. the name of the corporation;

2. the text of each amendment adopted, or the information required by

section 1.20(k)(5);

3. if an amendment provides for an exchange, reclassification, or cancellation of

issued shares, provisions for implementing the amendment if not contained in
the amendment itself, (which may be made dependent upon facts objectively
ascertainable outside the articles of amendment in accordance with
section 1.20(k)(5);

4. the date of each amendment’s adoption; and

5. if an amendment:

a. was adopted by the incorporators or board of directors without shareholder

approval, a statement that the amendment was duly approved by the
incorporators or by the board of directors, as the case may be, and that
shareholder approval was not required;

b. required approval by the shareholders, a statement that the amendment was

duly approved by the shareholders in the manner required by this Act and by
the articles of incorporation; or

c. is being filed pursuant to section 1.20(k) (5), a statement to that effect.

§ 10.07. RESTATED ARTICLES OF INCORPORATION

(a) A corporation’s board of directors may restate its articles of incorporation at
any time, with or without shareholder approval, to consolidate all
amendments into a single document.

(b) If the restated articles include one or more new amendments that require
shareholder approval, the amendments must be adopted and approved as
provided in section 10.03.

(c) A corporation that restates its articles of incorporation shall deliver to the
secretary of state for filing articles of restatement setting forth the name of the
corporation and the text of the restated articles of incorporation together with
a certificate which states that the restated articles consolidate all amendments

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 into a single document and, if a new amendment is included in the restated
articles, which also includes the statements required under section 10.06.

(d) Duly adopted restated articles of incorporation supersede the original articles
of incorporation and all amendments thereto.

(e) The secretary of state may certify restated articles of incorporation as the
articles of incorporation currently in effect, without including the certificate
information required by subsection (c).

§ 10.08. AMENDMENT PURSUANT TO REORGANIZATION

(a) A corporation’s articles of incorporation may be amended without action by
the board of directors or shareholders to carry out a plan of reorganization
ordered or decreed by a court of competent jurisdiction under the authority
of a law of the United States.

(b) The individual or individuals designated by the court shall deliver to the
secretary of state for filing articles of amendment setting forth:

1. the name of the corporation;

2. the text of each amendment approved by the court;

3. the date of the court’s order or decree approving the articles of

amendment;

4. the title of the reorganization proceeding in which the order or decree

was entered; and

5. a statement that the court had jurisdiction of the proceeding under

federal statute.

(c) This section does not apply after entry of a final decree in the reorganization
proceeding even though the court retains jurisdiction of the proceeding for
limited purposes unrelated to consummation of the reorganization plan.

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§ 10.09. EFFECT OF AMENDMENT
An amendment to the articles of incorporation does not affect a cause of action
existing against or in favor of the corporation, a proceeding to which the corporation is a party,
or the existing rights of persons other than shareholders of the corporation. An amendment
changing a corporation’s name does not abate a proceeding brought by or against the
corporation in its former name.

SUBCHAPTER B. AMENDMENT OF BYLAWS

§ 10.20. AMENDMENT BY BOARD OF DIRECTORS OR SHAREHOLDERS

(a) A corporation’s shareholders may amend or repeal the corporation’s bylaws.

(b) A corporation’s board of directors may amend or repeal the corporation’s

bylaws, unless:

1. the articles of incorporation, section 10.21 or, if applicable,

section 10.22 reserve that power exclusively to the shareholders in
whole or part; or

2. except as provided in section 2.06(d), the shareholders in amending,

repealing, or adopting a bylaw expressly provide that the board of
directors may not amend, repeal, or reinstate that bylaw.

§ 10.21. BYLAW INCREASING QUORUM OR VOTING REQUIREMENT FOR

DIRECTORS
(a) A bylaw that increases a quorum or voting requirement for the board of
directors may be amended or repealed:

1. if originally adopted by the shareholders, only by the shareholders,

unless the bylaw otherwise provides;

2. if adopted by the board of directors, either by the shareholders or by

the board of directors.

(b) A bylaw adopted or amended by the shareholders that increases a quorum or

voting requirement for the board of directors may provide that it can be
amended or repealed only by a specified vote of either the shareholders or the
board of directors.

(c) Action by the board of directors under subsection (a) to amend or repeal a
bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the

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 same vote required to take action under the quorum and voting requirement
then in effect or proposed to be adopted, whichever is greater.

§ 10.22. BYLAW PROVISIONS RELATING TO THE ELECTION OF DIRECTORS

(a) Unless the articles of incorporation (i) specifically prohibit the adoption of a
bylaw pursuant to this section, (ii) alter the vote specified in section 7.28(a), or
(iii) provide for cumulative voting, a public corporation may elect in its
bylaws to be governed in the election of directors as follows:

1. each vote entitled to be cast may be voted for or against up to that

number of candidates that is equal to the number of directors to be
elected, or a shareholder may indicate an abstention, but without
cumulating the votes;

2. to be elected, a nominee must have received a plurality of the votes

cast by holders of shares entitled to vote in the election at a meeting at
which a quorum is present, provided that a nominee who is elected
but receives more votes against than for election shall serve as a
director for a term that shall terminate on the date that is the earlier of
(i) 90 days from the date on which the voting results are determined
pursuant to section 7.29(b) (5) or (ii) the date on which an individual is
selected by the board of directors to fill the office held by such director,
which selection shall be deemed to constitute the filling of a vacancy
by the board to which section 8.10 applies. Subject to clause (3) of this
section, a nominee who is elected but receives more votes against than
for election shall not serve as a director beyond the 90-day period
referenced above; and

3. the board of directors may select any qualified individual to fill the
office held by a director who received more votes against than for
election.

(b) Subsection (a) does not apply to an election of directors by a voting group if
(i) at the expiration of the time fixed under a provision requiring advance
notification of director candidates, or (ii) absent such a provision, at a time
fixed by the board of directors which is not more than 14 days before notice is
given of the meeting at which the election is to occur, there are more
candidates for election by the voting group than the number of directors to be
elected, one or more of whom are properly proposed by shareholders. An
individual shall not be considered a candidate for purposes of this subsection
if the board of directors determines before the notice of meeting is given that
such individual’s candidacy does not create a bona fide election contest.

(c) A bylaw electing to be governed by this section may be repealed:

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 1. if originally adopted by the shareholders, only by the shareholders,
unless the bylaw otherwise provides;

2. if adopted by the board of directors, by the board of directors or the

shareholders.

§ 11.01. DEFINITIONS
As used in this chapter:

(a) “Merger” means a business combination pursuant to section 11.02.

(b) “Party to a merger” or “party to a share exchange” means any domestic or foreign
corporation or eligible entity that will:

(1) merge under a plan of merger;

(2) acquire shares or eligible interests of another corporation or an eligible entity in a

share exchange; or

(3) have all of its shares or eligible interests or all of one or more classes or series of
its shares or eligible interests acquired in a share exchange.

(c) “Share exchange” means a business combination pursuant to section 11.03.

(d) “Survivor” in a merger means the corporation or eligible entity into which one or more
other corporations or eligible entities are merged. A survivor of a merger may preexist
the merger or be created by the merger.

§ 11.02. MERGER
(a) One or more domestic business corporations may merge with one or more domestic or
foreign business corporations or eligible entities pursuant to a plan of merger, or two or
more foreign business corporations or domestic or foreign eligible entities may merge
into a new domestic business corporation to be created in the merger in the manner
provided in this chapter.

(b) A foreign business corporation, or a foreign eligible entity, may be a party to a merger
with a domestic business corporation, or may be created by the terms of the plan of
merger, only if the merger is permitted by the foreign business corporation or eligible
entity.

(b.1) If the organic law of a domestic eligible entity does not provide procedures for
the approval of a merger, a plan of merger may be adopted and approved, the
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 merger effectuated, and appraisal rights exercised in accordance with the
procedures in this chapter and chapter 13. For the purposes of applying this
chapter and chapter 13:

(1) the eligible entity, its members or interest holders, eligible interests and
organic documents taken together shall be deemed to be a domestic
business corporation, shareholders, shares and articles of incorporation,
respectively and vice versa as the context may require; and

(2) if the business and affairs of the eligible entity are managed by a group of
persons that is not identical to the members or interest holders, that group
shall be deemed to be the board of directors.

(c) The plan of merger must include:

(1) the name of each domestic or foreign business corporation or eligible entity that
will merge and the name of the domestic or foreign business corporation or
eligible entity that will be the survivor of the merger;

(2) the terms and conditions of the merger;

(3) the manner and basis of converting the shares of each merging domestic or
foreign business corporation and eligible interests of each merging domestic or
foreign eligible entity into shares or other securities, eligible interests,
obligations, rights to acquire shares, other securities or eligible interests, cash,
other property, or any combination of the foregoing;

(4) the articles of incorporation of any domestic or foreign business or nonprofit

corporation, or the organic documents of any domestic or foreign
unincorporated entity, to be created by the merger, or if a new domestic or
foreign business or nonprofit corporation or unincorporated entity is not to be
created by the merger, any amendments to the survivor’s articles of
incorporation or organic documents; and

(5) any other provisions required by the laws under which any party to the merger
is organized or by which it is governed, or by the articles of incorporation or
organic document of any such party.

(d) Terms of a plan of merger may be made dependent on facts objectively ascertainable
outside the plan in accordance with section 1.20(k).

(e) The plan of merger may also include a provision that the plan may be amended prior to
filing articles of merger, but if the shareholders of a domestic corporation that is a party
to the merger are required or permitted to vote on the plan, the plan must provide that

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 subsequent to approval of the plan by such shareholders the plan may not be amended
to change:

(1) the amount or kind of shares or other securities, eligible interests, obligations,
rights to acquire shares, other securities or eligible interests, cash, or other
property to be received under the plan by the shareholders of or owners of
eligible interests in any party to the merger;

(2) the articles of incorporation of any corporation, or the organic documents of any
unincorporated entity, that will survive or be created as a result of the merger,
except for changes permitted by section 10.05 or by comparable provisions of the
organic laws of any such foreign corporation or domestic or foreign
unincorporated entity; or

(3) any of the other terms or conditions of the plan if the change would adversely
affect such shareholders in any material respect.

(f) Property held in trust or for charitable purposes under the laws of this state by a
domestic or foreign eligible entity shall not be diverted by a merger from the objects for
which it was donated, granted or devised, unless and until the eligible entity obtains an
order of [court] [the attorney general] specifying the disposition of the property to the
extent required by and pursuant to [cite state statutory cy pres or other nondiversion
statute].

§ 11.03. SHARE EXCHANGE

(a) Through a share exchange:

(1) a domestic corporation may acquire all of the shares of one or more classes or
series of shares of another domestic or foreign corporation, or all of the interests
of one or more classes or series of interests of a domestic or foreign other entity,
in exchange for shares or other securities, interests, obligations, rights to acquire
shares or other securities, cash, other property, or any combination of the
foregoing, pursuant to a plan of share exchange, or

(2) all of the shares of one or more classes or series of shares of a domestic
corporation may be acquired by another domestic or foreign corporation or other
entity, in exchange for shares or other securities, interests, obligations, rights to
acquire shares or other securities, cash, other property, or any combination of the
foregoing, pursuant to a plan of share exchange.

(b) A foreign corporation or eligible entity, may be a party to a share exchange only if the
share exchange is permitted by the corporation or other entity is organized or by which
it is governed.

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 (b.1) If the organic law of a domestic other entity does not provide procedures for the
approval of a share exchange, a plan of share exchange may be adopted and
approved, and the share exchange effectuated, in accordance with the
procedures, if any, for a merger. If the organic law of a domestic other entity
does not provide procedures for the approval of either a share exchange or a
merger, a plan of share exchange may be adopted and approved, the share
exchange effectuated, and appraisal rights exercised, in accordance with the
procedures in this chapter and chapter 13. For the purposes of applying this
chapter and chapter 13:

(1) the other entity, its interest holders, interests and organic documents taken
together shall be deemed to be a domestic business corporation, shareholders,
shares and articles of incorporation, respectively and vice versa as the context
may require; and

(2) if the business and affairs of the other entity are managed by a group of persons
that is not identical to the interest holders, that group shall be deemed to be the
board of directors.

(c) The plan of share exchange must include:

(1) the name of each corporation or other entity whose shares or interests will be
acquired and the name of the corporation or other entity that will acquire those
shares or interests;

(2) the terms and conditions of the share exchange;

(3) the manner and basis of exchanging shares of a corporation or interests in an

other entity whose shares or interests will be acquired under the share exchange
into shares or other securities, interests, obligations, rights to acquire shares,
other securities, or interests, cash, other property, or any combination of the
foregoing; and

(4) any other provisions required by the laws under which any party to the share
exchange is organized or by the articles of incorporation or organic document of
any such party.

(d) Terms of a plan of share exchange may be made dependent on facts objectively
ascertainable outside the plan in accordance with section 1.20(k).

(e) The plan of share exchange may also include a provision that the plan may be amended
prior to filing articles of share exchange, but if the shareholders of a domestic
corporation that is a party to the share exchange are required or permitted to vote on
the plan, the plan must provide that subsequent to approval of the plan by such
shareholders the plan may not be amended to change:
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 (1) the amount or kind of shares or other securities, interests, obligations, rights to
acquire shares, other securities or interests, cash, or other property to be issued
by the corporation or to be received under the plan by the shareholders of or
owners of interests in any party to the share exchange; or

(2) any of the other terms or conditions of the plan if the change would adversely
affect such shareholders in any material respect.

(f) Section 11.03 does not limit the power of a domestic corporation to acquire shares of
another corporation or interests in another entity in a transaction other than a share
exchange.

§ 11.04. ACTION ON A PLAN OF MERGER OR SHARE EXCHANGE

In the case of a domestic corporation that is a party to a merger or share exchange:

(a) The plan of merger or share exchange must be adopted by the board of directors.

(b) Except as provided in subsection (g) and in section 11.05, after adopting the plan of
merger or share exchange the board of directors must submit the plan to the
shareholders for their approval. The board of directors must also transmit to the
shareholders a recommendation that the shareholders approve the plan, unless (i) the
board of directors makes a determination that because of conflicts of interest or other
special circumstances it should not make such a recommendation or (ii) section 8.26
applies. If either (i) or (ii) applies, the board must transmit to the shareholders the basis
for so proceeding.

(c) The board of directors may condition its submission of the plan of merger or share
exchange to the shareholders on any basis.

(d) If the plan of merger or share exchange is required to be approved by the shareholders,
and if the approval is to be given at a meeting, the corporation must notify each
shareholder, whether or not entitled to vote, of the meeting of shareholders at which the
plan is to be submitted for approval. The notice must state that the purpose, or one of
the purposes, of the meeting is to consider the plan and must contain or be
accompanied by a copy or summary of the plan. If the corporation is to be merged into
an existing corporation or other entity, the notice shall also include or be accompanied
by a copy or summary of the articles of incorporation or organizational documents of
that corporation or other entity. If the corporation is to be merged into a corporation or
other entity that is to be created pursuant to the merger, the notice shall include or be
accompanied by a copy or a summary of the articles of incorporation or organizational
documents of the new corporation or other entity.

(e) Unless the articles of incorporation, or the board of directors acting pursuant to
subsection (c), requires a greater vote or a greater number of votes to be present,
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 approval of the plan of merger or share exchange requires the approval of the
shareholders at a meeting at which a quorum consisting of at least a majority of the
votes entitled to be cast on the plan exists, and, if any class or series of shares is entitled
to vote as a separate group on the plan of merger or share exchange, the approval of
each such separate voting group at a meeting at which a quorum of the voting group
consisting of at least a majority of the votes entitled to be cast on the merger or share
exchange by that voting group is present.

(f) Subject to subsection (g), separate voting by voting groups is required:

(1) on a plan of merger, by each class or series of shares that:

(i) are to be converted under the plan of merger into other securities,
interests, obligations, rights to acquire shares, other securities or interests,
cash, other property, or any combination of the foregoing; or

(ii) are entitled to vote as a separate group on a provision in the plan that
constitutes a proposed amendment to articles of incorporation of a
surviving corporation, that requires action by separate voting groups
under section 10.04;

(2) on a plan of share exchange, by each class or series of shares included in the
exchange, with each class or series constituting a separate voting group; and

(3) on a plan of merger or share exchange, if the voting group is entitled under the
articles of incorporation to vote as a voting group to approve a plan of merger or
share exchange.

(g) The articles of incorporation may expressly limit or eliminate the separate voting rights
provided in subsections (f) (1) (i) and (f) (2) as to any class or series of shares, except for
a transaction that (A) includes what is or would be, if the corporation were the
surviving corporation, an amendment subject to subsection (f) (1) (ii), and (B) will effect
no significant change in the assets of the resulting entity, including all parents and
subsidiaries on a consolidated basis.

(h) Unless the articles of incorporation otherwise provide, approval by the corporation’s
shareholders of a plan of merger or share exchange is not required if:

(1) the corporation will survive the merger or is the acquiring corporation in a share
exchange;

(2) except for amendments permitted by section 10.05, its articles of incorporation
will not be changed;

(3) each shareholder of the corporation whose shares were outstanding immediately

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 before the effective date of the merger or share exchange will hold the same
number of shares, with identical preferences, limitations, and relative rights,
immediately after the effective date of change; and

(4) the issuance in the merger or share exchange of shares or other securities
convertible into or rights exercisable for shares does not require a vote under
section 6.21(f).

(i) If as a result of a merger or share exchange one or more shareholders of a domestic

corporation would become subject to owner liability for the debts, obligations or
liabilities of any other person or entity, approval of the plan of merger or share
exchange shall require the execution, by each such shareholder, of a separate written
consent to become subject to such owner liability.

§ 11.05. MERGER BETWEEN PARENT AND SUBSIDIARY OR BETWEEN SUBSIDIARIES

(a) A domestic parent corporation that owns shares of a domestic or foreign subsidiary
corporation that carry at least 90% of the voting power of each class and series of the
outstanding shares of the subsidiary that have voting power may merge the subsidiary
into itself or into another such subsidiary, or merge itself into the subsidiary, without
the approval of the board of directors or shareholders of the subsidiary, unless the
articles of incorporation of any of the corporations otherwise provide, and unless, in the
case of a foreign subsidiary, approval by the subsidiary’s board of directors or
shareholders is required by the laws under which the subsidiary is organized.

(b) If under subsection (a) approval of a merger by the subsidiary’s shareholders is not
required, the parent corporation shall, within 10 days after the effective date of the
merger, notify each of the subsidiary’s shareholders that the merger has become
effective.

(c) Except as provided in subsections (a) and (b), a merger between a parent and a
subsidiary shall be governed by the provisions of chapter 11 applicable to mergers
generally.

§ 11.06. ARTICLES OF MERGER OR SHARE EXCHANGE

(a) After a plan of merger or share exchange has been adopted and approved as required
by this Act, articles of merger or share exchange shall be signed on behalf of each party
to the merger or share exchange by any officer or other duly authorized representative.
The articles shall set forth:

(1) the names of the parties to the merger or share exchange;

(2) if the articles of incorporation of the survivor of a merger are amended, or if a

new corporation is created as a result of a merger, the amendments to the
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 survivor’s articles of incorporation or the articles of incorporation of the new
corporation;

(3) if the plan of merger or share exchange required approval by the shareholders of
a domestic corporation that was a party to the merger or share exchange, a
statement that the plan was duly approved by the shareholders and, if voting by
any separate voting group was required, by each such separate voting group, in
the manner required by this Act and the articles of incorporation;

(4) if the plan of merger or share exchange did not require approval by the
shareholders of a domestic corporation that was a party to the merger or share
exchange, a statement to that effect; and

(5) as to each foreign corporation or eligible entity that was a party to the merger or
share exchange, a statement that the participation of the foreign corporation or
eligible entity was duly authorized as required by the organic law of the
corporation or eligible entity.

(b) Articles of merger or share exchange shall be delivered to the secretary of state for filing
by the survivor of the merger or the acquiring corporation in a share exchange, and
shall take effect at the effective time provided in section 1.23. Articles of merger or
share exchange filed under this section may be combined with any filing required
under the organic law of any domestic eligible entity involved in the transaction if the
combined filing satisfies the requirements of both this section and the other organic law.

§ 11.07. EFFECT OF MERGER OR SHARE EXCHANGE

(a) When a merger becomes effective:

(1) the corporation or eligible entity that is designated in the plan of merger as the
survivor continues or comes into existence, as the case may be;

(2) the separate existence of every corporation or eligible entity that is merged into
the survivor ceases;

(3) all property owned by, and every contract right possessed by, each corporation
or eligible entity that merges into the survivor is vested in the survivor without
reversion or impairment;

(4) all liabilities of each corporation or eligible entity that is merged into the survivor
are vested in the survivor;

(5) the name of the survivor may, but need not be, substituted in any pending
proceeding for the name of any party to the merger whose separate existence
ceased in the merger;

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 (6) the articles of incorporation or organic documents of the survivor are amended
to the extent provided in the plan of merger;

(7) the articles of incorporation or organic documents of a survivor that is created by

the merger become effective; and

(8) the shares of each corporation that is a party to the merger, and the interests in
an eligible entity that is a party to a merger, that are to be converted under the
plan of merger into shares, eligible interests, obligations, rights to acquire
securities, other securities, or eligible interests, cash, other property, or any
combination of the foregoing, are converted, and the former holders of such
shares or eligible interests are entitled only to the rights provided to them in the
plan of merger or to any rights they may have under chapter 13 or the organic
law of the eligible entity.

(b) When a share exchange becomes effective, the shares of each domestic corporation that
are to be exchanged for shares or other securities, interests, obligations, rights to acquire
shares or other securities, cash, other property, or any combination of the foregoing, are
entitled only to the rights provided to them in the plan of share exchange or to any
rights they may have under chapter 13.

(c) A person who becomes subject to owner liability for some or all of the debts, obligations
or liabilities of any entity as a result of a merger or share exchange shall have owner
liability only to the extent provided in the organic law of the entity and only for those
debts, obligations and liabilities that arise after the effective time of the articles of
merger or share exchange.

(d) Upon a merger becoming effective, a foreign corporation, or a foreign eligible entity,
that is the survivor of the merger is deemed to:

(1) appoint the secretary of state as its agent for service of process in a proceeding to
enforce the rights of shareholders of each domestic corporation that is a party to
the merger who exercise appraisal rights, and

(2) agree that it will promptly pay the amount, if any, to which such shareholders
are entitled under chapter 13.

(e) The effect of a merger or share exchange on the owner liability of a person who had
owner liability for some or all of the debts, obligations or liabilities of a party to the
merger or share exchange shall be as follows:

(1) The merger or share exchange does not discharge any owner liability under the
organic law of the entity in which the person was a shareholder or interest holder
to the extent any such owner liability arose before the effective time of the
articles of merger or share exchange.
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 (2) The person shall not have owner liability under the organic law of the entity in
which the person was a shareholder or interest holder prior to the merger or
share exchange for any debt, obligation or liability that arises after the effective
time of the articles of merger or share exchange.

(3) The provisions of the organic law of any entity for which the person had owner
liability before the merger or share exchange shall continue to apply to the
collection or discharge of any owner liability preserved by paragraph (1), as if the
merger or share exchange had not occurred.

(4) The person shall have whatever rights of contribution from other persons are
provided by the organic law of the entity for which the person had owner
liability with respect to any owner liability preserved by paragraph (1), as if the
merger or share exchange had not occurred.

§ 11.08. ABANDONMENT OF A MERGER OR SHARE EXCHANGE

(a) Unless otherwise provided in a plan of merger or share exchange or in the laws under
which a foreign business corporation or a domestic or foreign eligible entity that is a
party to a merger or a share exchange is organized or by which it is governed, after the
plan has been adopted and approved as required by this chapter, and at any time before
the merger or share exchange has become effective, it may be abandoned by a domestic
business corporation that is a party thereto without action by its shareholders in
accordance with any procedures set forth in the plan of merger or share exchange or, if
no such procedures are set forth in the plan, in the manner determined by the board of
directors, subject to any contractual rights of other parties to the merger or share
exchange.

(b) If a merger or share exchange is abandoned under subsection (a) after articles of merger
or share exchange have been filed with the secretary of state but before the merger or
share exchange has become effective, a statement that the merger or share exchange has
been abandoned in accordance with this section, signed on behalf of a party to the
merger or share exchange by an officer or other duly authorized representative, shall be
delivered to the secretary of state for filing prior to the effective date of the merger or
share exchange. Upon filing, the statement shall take effect and the merger or share
exchange shall be deemed abandoned and shall not become effective.

§ 12.01. DISPOSITION OF ASSETS NOT REQUIRING SHAREHOLDER APPROVAL

No approval of the shareholders of a corporation is required, unless the articles of
incorporation otherwise provide:

(1) to sell, lease, exchange, or otherwise dispose of any or all of the corporation’s assets in
the usual and regular course of business;

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(2) to mortgage, pledge, dedicate to the repayment of indebtedness (whether with or
without recourse), or otherwise encumber any or all of the corporation’s assets, whether
or not in the usual and regular course of business;

(3) to transfer any or all of the corporation’s assets to one or more corporations or other
entities all of the shares or interests of which are owned by the corporation; or

(4) to distribute assets pro rata to the holders of one or more classes or series of the
corporation’s shares.

§ 12.02. SHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS

(a) A sale, lease, exchange, or other disposition of assets, other than a disposition described
in section 12.01, requires approval of the corporation’s shareholders if the disposition
would leave the corporation without a significant continuing business activity. If a
corporation retains a business activity that represented at least 25% of total assets at the
end of the most recently completed fiscal year, and 25% of either income from
continuing operations before taxes or revenues from continuing operations for that
fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis,
the corporation will conclusively be deemed to have retained a significant continuing
business activity.

(b) A disposition that requires approval of the shareholders under subsection (a) shall be
initiated by a resolution by the board of directors authorizing the disposition. After
adoption of such a resolution, the board of directors shall submit the proposed
disposition to the shareholders for their approval. The board of directors shall also
transmit to the shareholders a recommendation that the shareholders approve the
proposed disposition, unless (i) the board of directors makes a determination that
because of conflicts of interest or other special circumstances it should not make such a
recommendation, or (ii) section 8.26 applies. If either (i) or (ii) applies, the board must
transmit to the shareholders the basis for so proceeding.

(c) The board of directors may condition its submission of a disposition to the shareholders
under subsection (b) on any basis.

(d) If a disposition is required to be approved by the shareholders under subsection (a), and
if the approval is to be given at a meeting, the corporation shall notify each shareholder,
whether or not entitled to vote, of the meeting of shareholders at which the disposition
is to be submitted for approval. The notice shall state that the purpose, or one of the
purposes, of the meeting is to consider the disposition and shall contain a description of
the disposition, including the terms and conditions thereof and the consideration to be
received by the corporation.

(e) Unless the articles of incorporation or the board of directors acting pursuant to
subsection (c) requires a greater vote, or a greater number of votes to be present, the
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 approval of a disposition by the shareholders shall require the approval of the
shareholders at a meeting at which a quorum consisting of at least a majority of the
votes entitled to be cast on the disposition exists.

(f) After a disposition has been approved by the shareholders under subsection (b), and at
any time before the disposition has been consummated, it may be abandoned by the
corporation without action by the shareholders, subject to any contractual rights of
other parties to the disposition.

(g) A disposition of assets in the course of dissolution under chapter 14 is not governed by
this section.

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

SUBCHAPTER A.
RIGHT TO APPRAISAL AND PAYMENT FOR SHARES

§ 13.01. DEFINITIONS
In this chapter:

(1) “Affiliate” means a person that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with another
person or is a senior executive thereof. For purposes of section 13.02(b)(4), a person is
deemed to be an affiliate of its senior executives.

(2) “Beneficial shareholder” means a person who is the beneficial owner of shares held in a
voting trust or by a nominee on the beneficial owner’s behalf.

(3) “Corporation” means the issuer of the shares held by a shareholder demanding
appraisal and, for matters covered in sections 13.22-13.31, includes the surviving entity
in a merger.

(4) “Fair value” means the value of the corporation’s shares determined:

(i) immediately before the effectuation of the corporate action to which the
shareholder objects;

(ii) using customary and current valuation concepts and techniques generally
employed for similar businesses in the context of the transaction requiring
appraisal; and

(iii) without discounting for lack of marketability or minority status except, if

appropriate, for amendments to the articles pursuant to section 13.02(a)(5).

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(5) “Interest” means interest from the effective date of the corporate action until the date of
payment, at the rate of interest on judgments in this state on the effective date of the
corporate action.

(5.1) “Interested transaction” means a corporate action described in section 13.02(a),

other than a merger pursuant to section 11.05, involving an interested person in
which any of the shares or assets of the corporation are being acquired or
converted. As used in this definition:

(i) “Interested person” means a person, or an affiliate of a person, who at any time
during the one-year period immediately preceding approval by the board of
directors of the corporate action:

(A) was the beneficial owner of 20% or more of the voting power of the
corporation, other than as owner of excluded shares;

(B) had the power, contractually or otherwise, other than as owner of

excluded shares, to cause the appointment or election of 25% or more of
the directors to the board of directors of the corporation; or

(C) was a senior executive or director of the corporation or a senior executive

of any affiliate thereof, and that senior executive or director will receive,
as a result of the corporate action, a financial benefit not generally
available to other shareholders as such, other than:

(I) employment, consulting, retirement, or similar benefits established

separately and not as part of or in contemplation of the corporate
action; or

(II) employment, consulting, retirement, or similar benefits established

in contemplation of, or as part of, the corporate action that are not
more favorable than those existing before the corporate action or, if
more favorable, that have been approved on behalf of the
corporation in the same manner as is provided in section 8.62; or

(III) in the case of a director of the corporation who will, in the

corporate action, become a director of the acquiring entity in the
corporate action or one of its affiliates, rights and benefits as a
director that are provided on the same basis as those afforded by
the acquiring entity generally to other directors of such entity or
such affiliate.

(ii) “Beneficial owner” means any person who, directly or indirectly, through any
contract, arrangement, or understanding, other than a revocable proxy, has or
shares the power to vote, or to direct the voting of, shares; except that a member
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 of a national securities exchange is not deemed to be a beneficial owner of
securities held directly or indirectly by it on behalf of another person solely
because the member is the record holder of the securities if the member is
precluded by the rules of the exchange from voting without instruction on
contested matters or matters that may affect substantially the rights or privileges
of the holders of the securities to be voted. When two or more persons agree to
act together for the purpose of voting their shares of the corporation, each
member of the group formed thereby is deemed to have acquired beneficial
ownership, as of the date of the agreement, of all voting shares of the corporation
beneficially owned by any member of the group.

(iii) “Excluded shares” means shares acquired pursuant to an offer for all shares
having voting power if the offer was made within one year prior to the corporate
action for consideration of the same kind and of a value equal to or less than that
paid in connection with the corporate action;

(6) “Preferred shares” means a class or series of shares whose holders have preference over
any other class or series with respect to distributions.

(7) “Record shareholder” means the person in whose name shares are registered in the
records of the corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee certificate on file with the corporation.

(8) “Senior executive” means the chief executive officer, chief operating officer, chief
financial officer, and anyone in charge of a principal business unit or function.

(9) “Shareholder” means both a record shareholder and a beneficial shareholder.

§ 13.02. RIGHT TO APPRAISAL

(a) A shareholder is entitled to appraisal rights, and to obtain payment of the fair value of
that shareholder’s shares, in the event of any of the following corporate actions:

(1) consummation of a merger to which the corporation is a party (i) if shareholder

approval is required for the merger by section 11.04, except that appraisal rights
shall not be available to any shareholder of the corporation with respect to shares
of any class or series that remain outstanding after consummation of the merger,
or (ii) if the corporation is a subsidiary and the merger is governed by section
11.05;

(2) consummation of a share exchange to which the corporation is a party as the

corporation whose shares will be acquired, except that appraisal rights shall not
be available to any shareholder of the corporation with respect to any class or
series of shares of the corporation that is not exchanged;

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 (3) consummation of a disposition of assets pursuant to section 12.02 except that
appraisal rights shall not be available to any shareholder of the corporation with
respect to shares of any class or series if (i) under the terms of the corporate
action approved by the shareholders there is to be distributed to shareholders in
cash its net assets, in excess of a reasonable amount reserved to meet claims of
the type described in sections 14.06 and 14.07, (A) within one year after the
shareholders’ approval of the action and (B) in accordance with their respective
interests determined at the time of distribution, and (ii) the disposition of assets
is not an interested transaction;

(4) an amendment of the articles of incorporation with respect to a class or series of

shares that reduces the number of shares of a class or series owned by the
shareholder to a fraction of a share if the corporation has the obligation or right
to repurchase the fractional share so created;

(5) any other amendment to the articles of incorporation, merger, share exchange or
disposition of assets to the extent provided by the articles of incorporation,
bylaws or a resolution of the board of directors;

(6) consummation of a domestication if the shareholder does not receive shares in

the foreign corporation resulting from the domestication that have terms as
favorable to the shareholder in all material respects, and represent at least the
same percentage interest of the total voting rights of the outstanding shares of
the corporation, as the shares held by the shareholder before the domestication;

(7) consummation of a conversion of the corporation to nonprofit status pursuant to

subchapter 9C; or

(8) consummation of a conversion of the corporation to an unincorporated entity

pursuant to subchapter 9E.

(b) Notwithstanding subsection (a), the availability of appraisal rights under subsections
(a)(1), (2), (3), (4), (6) and (8) shall be limited in accordance with the following
provisions:

(1) Appraisal rights shall not be available for the holders of shares of any class or
series of shares which is:

(i) a covered security under section 18(b)(1)(A) or (B) of the Securities Act of
1933, as amended; or

(ii) traded in an organized market and has at least 2,000 shareholders and a
market value of at least $20 million (exclusive of the value of such shares
held by the corporation’s subsidiaries, senior executives, directors and
beneficial shareholders owning more than 10% of such shares); or
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 (iii) issued by an open end management investment company registered with
the Securities and Exchange Commission under the Investment Company
Act of 1940 and may be redeemed at the option of the holder at net asset
value.

(2) The applicability of subsection (b)(1) shall be determined as of:

(i) the record date fixed to determine the shareholders entitled to receive
notice of the meeting of shareholders to act upon the corporate action
requiring appraisal rights; or

(ii) the day before the effective date of such corporate action if there is no
meeting of shareholders.

(3) Subsection (b)(1) shall not be applicable and appraisal rights shall be available
pursuant to subsection (a) for the holders of any class or series of shares (i) who
are required by the terms of the corporate action requiring appraisal rights to
accept for such shares anything other than cash or shares of any class or any
series of shares of any corporation, or any other proprietary interest of any other
entity, that satisfies the standards set forth in subsection (b)(1) at the time the
corporate action becomes effective or (ii) in the case of the consummation of a
disposition of assets pursuant to section 12.02, unless such cash, shares or
proprietary interests are, under the terms of the corporate action approved by the
shareholders, to be distributed to the shareholders, as part of a distribution to
shareholders of the net assets of the corporation in excess of a reasonable amount
to meet claims of the type described in sections 14.06 and 14.07, (A) within one
year after the shareholders’ approval of the action, and (B) in accordance with
their respective interests determined at the time of the distribution.

(4) Subsection (b)(1) shall not be applicable and appraisal rights shall be available
pursuant to subsection (a) for the holders of any class or series of shares where
the corporate action is an interested transaction.

(c) Notwithstanding any other provision of section 13.02, the articles of incorporation as
originally filed or any amendment thereto may limit or eliminate appraisal rights for
any class or series of preferred shares, except that (i) no such limitation or elimination
shall be effective if the class or series does not have the right to vote separately as a
voting group (alone or as part of a group) on the action or if the action is a nonprofit
conversion under subchapter 9C or a conversion to an unincorporated entity under
subchapter 9E, or a merger having a similar effect, and (ii) any such limitation or
elimination contained in an amendment to the articles of incorporation that limits or
eliminates appraisal rights for any of such shares that are outstanding immediately
prior to the effective date of such amendment or that the corporation is or may be
required to issue or sell thereafter pursuant to any conversion, exchange or other right
existing immediately before the effective date of such amendment shall not apply to any
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 corporate action that becomes effective within one year of that date if such action would
otherwise afford appraisal rights.

§ 13.03. ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS

(a) A record shareholder may assert appraisal rights as to fewer than all the shares
registered in the record shareholder’s name but owned by a beneficial shareholder only
if the record shareholder objects with respect to all shares of the class or series owned
by the beneficial shareholder and notifies the corporation in writing of the name and
address of each beneficial shareholder on whose behalf appraisal rights are being
asserted. The rights of a record shareholder who asserts appraisal rights for only part of
the shares held of record in the record shareholder’s name under this subsection shall
be determined as if the shares as to which the record shareholder objects and the record
shareholder’s other shares were registered in the names of different record
shareholders.

(b) A beneficial shareholder may assert appraisal rights as to shares of any class or series
held on behalf of the shareholder only if such shareholder:

(1) submits to the corporation the record shareholder’s written consent to the
assertion of such rights no later than the date referred to in section 13.22(b)(2)(ii);
and

(2) does so with respect to all shares of the class or series that are beneficially owned
by the beneficial shareholder.

SUBCHAPTER B.
PROCEDURE FOR EXERCISE OF APPRAISAL RIGHTS

§ 13.20. NOTICE OF APPRAISAL RIGHTS

(a) Where any corporate action specified in section 13.02(a) is to be submitted to a vote at a
shareholders’ meeting, the meeting notice must state that the corporation has concluded
that the shareholders are, are not or may be entitled to assert appraisal rights under this
chapter. If the corporation concludes that appraisal rights are or may be available, a
copy of this chapter must accompany the meeting notice sent to those record
shareholders entitled to exercise appraisal rights.

(b) In a merger pursuant to section 11.05, the parent corporation must notify in writing all
record shareholders of the subsidiary who are entitled to assert appraisal rights that the
corporate action became effective. Such notice must be sent within 10 days after the
corporate action became effective and include the materials described in section 13.22.

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(c) Where any corporate action specified in section 13.02(a) is to be approved by written
consent of the shareholders pursuant to section 7.04:

(1) written notice that appraisal rights are, are not or may be available must be sent
to each record shareholder from whom a consent is solicited at the time consent
of such shareholder is first solicited and, if the corporation has concluded that
appraisal rights are or may be available, must be accompanied by a copy of this
chapter; and

(2) written notice that appraisal rights are, are not or may be available must be
delivered together with the notice to nonconsenting and nonvoting shareholders
required by sections 7.04(e) and (f), may include the materials described in
section 13.22 and, if the corporation has concluded that appraisal rights are or
may be available, must be accompanied by a copy of this chapter.

(d) Where corporate action described in section 13.02(a) is proposed, or a merger pursuant
to section 11.05 is effected, the notice referred to in subsection (a) or (c), if the
corporation concludes that appraisal rights are or may be available, and in subsection
(b) of this section 13.20 shall be accompanied by:

(1) the annual financial statements specified in section 16.20(a) of the corporation
that issued the shares that may be subject to appraisal, which shall be as of a date
ending not more than 16 months before the date of the notice and shall comply
with section 16.20(b); provided that, if such annual financial statements are not
reasonably available, the corporation shall provide reasonably equivalent
financial information; and

(2) the latest available quarterly financial statements of such corporation, if any.

(e) The right to receive the information described in subsection (d) may be
waived in writing by a shareholder before or after the corporate action.

§ 13.21. NOTICE OF INTENT TO DEMAND PAYMENT AND CONSEQUENCES OF

VOTING OR CONSENTING
(a) If a corporate action specified in section 13.02(a) is submitted to a vote at a shareholders’
meeting, a shareholder who wishes to assert appraisal rights with respect to any class or
series of shares:

(1) must deliver to the corporation, before the vote is taken, written notice of the
shareholder’s intent to demand payment if the proposed action is effectuated;
and

(2) must not vote, or cause or permit to be voted, any shares of such class or series in
favor of the proposed action.
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(b) If a corporate action specified in section 13.02(a) is to be approved by less than
unanimous written consent, a shareholder who wishes to assert appraisal rights with
respect to any class or series of shares must not sign a consent in favor of the proposed
action with respect to that class or series of shares.

(c) A shareholder who fails to satisfy the requirements of subsection (a) or (b) is not
entitled to payment under this chapter.

§ 13.22. APPRAISAL NOTICE AND FORM

(a) If a corporate action requiring appraisal rights under section 13.02(a) becomes effective,
the corporation must send a written appraisal notice and the form required by
subsection (b)(1) to all shareholders who satisfy the requirements of section 13.21(a) or
section 13.21(b). In the case of a merger under section 11.05, the parent must deliver an
appraisal notice and form to all record shareholders who may be entitled to assert
appraisal rights.

(b) The appraisal notice must be delivered no earlier than the date the corporate action
specified in section 13.02(a) became effective, and no later than 10 days after such date,
and must:

(1) supply a form that (i) specifies the first date of any announcement to
shareholders made prior to the date the corporate action became effective of the
principal terms of the proposed corporate action, and (ii) if such announcement
was made, requires the shareholder asserting appraisal rights to certify whether
beneficial ownership of those shares for which appraisal rights are asserted was
acquired before that date, and (iii) requires the shareholder asserting appraisal
rights to certify that such shareholder did not vote for or consent to the
transaction;

(2) state:

(i) where the form must be sent and where certificates for certificated shares
must be deposited and the date by which those certificates must be
deposited, which date may not be earlier than the date for receiving the
required form under subsection (2)(ii);

(ii) a date by which the corporation must receive the form, which date may
not be fewer than 40 nor more than 60 days after the date the subsection
(a) appraisal notice is sent, and state that the shareholder shall have
waived the right to demand appraisal with respect to the shares unless the
form is received by the corporation by such specified date;

(iii) the corporation’s estimate of the fair value of the shares;

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 (iv) that, if requested in writing, the corporation will provide, to the
shareholder so requesting, within 10 days after the date specified in
subsection (2)(ii) the number of shareholders who return the forms by the
specified date and the total number of shares owned by them; and

(v) the date by which the notice to withdraw under section 13.23 must be
received, which date must be within 20 days after the date specified in
subsection (2)(ii); and

(3) be accompanied by a copy of this chapter.

§ 13.23. PERFECTION OF RIGHTS; RIGHT TO WITHDRAW

(a) A shareholder who receives notice pursuant to section 13.22 and who wishes to exercise
appraisal rights must sign and return the form sent by the corporation and, in the case
of certificated shares, deposit the shareholder’s certificates in accordance with the terms
of the notice by the date referred to in the notice pursuant to section 13.22(b)(2)(ii). In
addition, if applicable, the shareholder must certify on the form whether the beneficial
owner of such shares acquired beneficial ownership of the shares before the date
required to be set forth in the notice pursuant to section 13.22(b)(1). If a shareholder
fails to make this certification, the corporation may elect to treat the shareholder’s
shares as after-acquired shares under section 13.25. Once a shareholder deposits that
shareholder’s certificates or, in the case of uncertificated shares, returns the signed
forms, that shareholder loses all rights as a shareholder, unless the shareholder
withdraws pursuant to subsection (b).

(b) A shareholder who has complied with subsection (a) may nevertheless decline to
exercise appraisal rights and withdraw from the appraisal process by so notifying the
corporation in writing by the date set forth in the appraisal notice pursuant to section
13.22(b)(2)(v). A shareholder who fails to so withdraw from the appraisal process may
not thereafter withdraw without the corporation’s written consent.

(c) A shareholder who does not sign and return the form and, in the case of certificated
shares, deposit that shareholder’s share certificates where required, each by the date set
forth in the notice described in section 13.22(b), shall not be entitled to payment under
this chapter.

§ 13.24. PAYMENT
(a) Except as provided in section 13.25, within 30 days after the form required by section
13.22(b)(2)(ii) is due, the corporation shall pay in cash to those shareholders who
complied with section 13.23(a) the amount the corporation estimates to be the fair value
of their shares, plus interest.

(b) The payment to each shareholder pursuant to subsection (a) must be accompanied by:
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 (1) (i) the annual financial statements specified in section 16.20(a) of the corporation
that issued the shares to be appraised, which shall be of a date ending not more
than 16 months before the date of payment and shall comply with section
16.20(b); provided that, if such annual financial statements are not reasonably
available, the corporation shall provide reasonably equivalent financial
information, and (ii) the latest available quarterly financial statements of such
corporation, if any;

(2) a statement of the corporation’s estimate of the fair value of the shares, which
estimate must equal or exceed the corporation’s estimate given pursuant to
section 13.22(b)(2)(iii);

(3) a statement that shareholders described in subsection (a) have the right to
demand further payment under section 13.26 and that if any such shareholder
does not do so within the time period specified therein, such shareholder shall be
deemed to have accepted such payment in full satisfaction of the corporation’s
obligations under this chapter.

§ 13.25. AFTER-ACQUIRED SHARES

(a) A corporation may elect to withhold payment required by section 13.24 from any
shareholder who was required to, but did not certify that beneficial ownership of all of
the shareholder’s shares for which appraisal rights are asserted was acquired before the
date set forth in the appraisal notice sent pursuant to section 13.22(b)(1).

(b) If the corporation elected to withhold payment under subsection (a), it must, within 30
days after the form required by section 13.22(b)(2)(ii) is due, notify all shareholders who
are described in subsection (a):

(1) of the information required by section 13.24(b)(1);

(2) of the corporation’s estimate of fair value pursuant to section 13.24(b)(2);

(3) that they may accept the corporation’s estimate of fair value, plus interest, in full
satisfaction of their demands or demand appraisal under section 13.26;

(4) that those shareholders who wish to accept such offer must so notify the
corporation of their acceptance of the corporation’s offer within 30 days after
receiving the offer; and

(5) that those shareholders who do not satisfy the requirements for demanding
appraisal under section 13.26 shall be deemed to have accepted the corporation’s
offer.

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(c) Within 10 days after receiving the shareholder’s acceptance pursuant to subsection (b),
the corporation must pay in cash the amount it offered under subsection (b)(2) to each
shareholder who agreed to accept the corporation’s offer in full satisfaction of the
shareholder’s demand.

(d) Within 40 days after sending the notice described in subsection (b), the corporation
must pay in cash the amount it offered to pay under subsection (b)(2) to each
shareholder described in subsection (b)(5).

§ 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER

A shareholder paid pursuant to section 13.24 who is dissatisfied with the amount of the
payment must notify the corporation in writing of that shareholder’s estimate of the fair value
of the shares and demand payment of that estimate plus interest (less any payment under
section 13.24). A shareholder offered payment under section 13.25 who is dissatisfied with
that offer must reject the offer and demand payment of the shareholder’s stated estimate of the
fair value of the shares plus interest.

A shareholder who fails to notify the corporation in writing of that shareholder’s

demand to be paid the shareholder’s stated estimate of the fair value plus interest under
subsection (a) within 30 days after receiving the corporation’s payment or offer of payment
under section 13.24 or section 13.25, respectively, waives the right to demand payment under
this section and shall be entitled only to the payment made or offered pursuant to those
respective sections.

SUBCHAPTER C.
JUDICIAL APPRAISAL OF SHARES

§ 13.30. COURT ACTION

(a) If a shareholder makes demand for payment under section 13.26 which remains
unsettled, the corporation shall commence a proceeding within 60 days after receiving
the payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within the
60-day period, it shall pay in cash to each shareholder the amount the shareholder
demanded pursuant to section 13.26 plus interest.

(b) The corporation shall commence the proceeding in the appropriate court of the county
where the corporation’s principal office (or, if none, its registered office) in this state is
located. If the corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state where the principal
office or registered office of the domestic corporation merged with the foreign
corporation was located at the time of the transaction.

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(c) The corporation shall make all shareholders (whether or not residents of this state)
whose demands remain unsettled parties to the proceeding as in an action against their
shares, and all parties must be served with a copy of the petition. Nonresidents may be
served by registered or certified mail or by publication as provided by law.

(d) The jurisdiction of the court in which the proceeding is commenced under subsection
(b) is plenary and exclusive. The court may appoint one or more persons as appraisers
to receive evidence and recommend a decision on the question of fair value. The
appraisers shall have the powers described in the order appointing them, or in any
amendment to it. The shareholders demanding appraisal rights are entitled to the same
discovery rights as parties in other civil proceedings. There shall be no right to a jury
trial.

(e) Each shareholder made a party to the proceeding is entitled to judgment (i) for the
amount, if any, by which the court finds the fair value of the shareholder’s shares, plus
interest, exceeds the amount paid by the corporation to the shareholder for such shares
or (ii) for the fair value, plus interest, of the shareholder’s shares for which the
corporation elected to withhold payment under section 13.25.

§ 13.31. COURT COSTS AND EXPENSES

(a) The court in an appraisal proceeding commenced under section 13.30 shall determine
all court costs of the proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess the court costs against the
corporation, except that the court may assess court costs against all or some of the
shareholders demanding appraisal, in amounts which the court finds equitable, to the
extent the court finds such shareholders acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this chapter.

(b) The court in an appraisal proceeding may also assess the expenses of the respective
parties in amounts the court finds equitable:

(1) against the corporation and in favor of any or all shareholders demanding
appraisal if the court finds the corporation did not substantially comply with the
requirements of sections 13.20, 13.22, 13.24, or 13.25; or

(2) against either the corporation or a shareholder demanding appraisal, in favor of

any other party, if the court finds the party against whom expenses are assessed
acted arbitrarily, vexatiously, or not in good faith with respect to the rights
provided by this chapter.

(c) If the court in an appraisal proceeding finds that the expenses incurred by any
shareholder were of substantial benefit to other shareholders similarly situated and that
such expenses should not be assessed against the corporation, the court may direct that

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 such expenses be paid out of the amounts awarded the shareholders who were
benefited.

(d) To the extent the corporation fails to make a required payment pursuant to sections
13.24, 13.25, or 13.26, the shareholder may sue directly for the amount owed, and to the
extent successful, shall be entitled to recover from the corporation all expenses of the
suit.

SUBCHAPTER D.
OTHER REMEDIES

§ 13.40. OTHER REMEDIES LIMITED

(a) The legality of a proposed or completed corporate action described in section 13.02(a)
may not be contested, nor may the corporate action be enjoined, set aside or rescinded,
in a legal or equitable proceeding by a shareholder after the shareholders have
approved the corporate action.

(b) Subsection (a) does not apply to a corporate action that:

(1) was not authorized and approved in accordance with the applicable provisions
of:

(i) chapter 9, 10, 11, or 12,

(ii) the articles of incorporation or bylaws, or

(iii) the resolution of the board of directors authorizing the corporate action;

(2) was procured as a result of fraud, a material misrepresentation, or an omission of

a material fact necessary to make statements made, in light of the circumstances
in which they were made, not misleading;

(3) is an interested transaction, unless it has been recommended by the board of

directors in the same manner as is provided in section 8.62 and has been
approved by the shareholders in the same manner as is provided in section 8.63
as if the interested transaction were a director’s conflicting interest transaction; or

(4) is approved by less than unanimous consent of the voting shareholders pursuant
to section 7.04 if:

(i) the challenge to the corporate action is brought by a shareholder who did
not consent and as to whom notice of the approval of the corporate action
was not effective at least 10 days before the corporate action was effected;
and

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 (ii) the proceeding challenging the corporate action is commenced within 10
days after notice of the approval of the corporate action is effective as to
the shareholder bringing the proceeding.

SUBCHAPTER A. VOLUNTARY DISSOLUTION

§ 14.01. DISSOLUTION BY INCORPORATORS OR INITIAL DIRECTORS

A majority of the incorporators or initial directors of a corporation that has not
issued shares or has not commenced business may dissolve the corporation by
delivering to the secretary of state for filing articles of dissolution that set forth:

(1) the name of the corporation;

(2) the date of its incorporation;

(3) either (i) that none of the corporation's shares has been issued or (ii) that the
corporation has not commenced business;

(4) that no debt of the corporation remains unpaid;

(5) that the net assets of the corporation remaining after winding up have been
distributed to the shareholders, if shares were issued; and

(6) that a majority of the incorporators or initial directors authorized the

dissolution.

§ 14.02. DISSOLUTION BY BOARD OF DIRECTORS AND SHAREHOLDERS

(a) A corporation's board of directors may propose dissolution for submission to
the shareholders.

(b) For a proposal to dissolve to be adopted:

(1) The board of directors must recommend dissolution to the shareholders

unless (i) the board of directors determines that because of conflict of
interest or other special circumstances it should make no
recommendation or (ii) section 8.26 applies. If (i) or (ii) applies, it must
communicate to the shareholders the basis for so proceeding; and

(2) The shareholders entitled to vote must approve the proposal to dissolve
as provided in subsection (e).

(c) The board of directors may condition its submission of the proposal for
dissolution on any basis.

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 (d) The corporation shall notify each shareholder, whether or not entitled to vote,
of the proposed shareholders' meeting. The notice must also state that the
purpose, or one of the purposes, of the meeting is to consider dissolving the
corporation.

(e) Unless the articles of incorporation or the board of directors acting pursuant
to subsection (c) require a greater vote, a greater number of shares to be
present, or a vote by voting groups, adoption of the proposal to dissolve shall
require the approval of the shareholders at a meeting at which a quorum
consisting of at least a majority of the votes entitled to be cast exists.

§ 14.03. ARTICLES OF DISSOLUTION

(a) At any time after dissolution is authorized, the corporation may dissolve by
delivering to the secretary of state for filing articles of dissolution setting
forth:

(1) the name of the corporation;

(2) the date dissolution was authorized; and

(3) if dissolution was approved by the shareholders, a statement that the

proposal to dissolve was duly approved by the shareholders in the
manner required by this Act and by the articles of incorporation.

(b) A corporation is dissolved upon the effective date of its articles of dissolution.

(c) For purposes of this subchapter, "dissolved corporation" means a corporation

whose articles of dissolution have become effective and includes a successor
entity to which the remaining assets of the corporation are transferred subject
to its liabilities for purposes of liquidation.

§ 14.04. REVOCATION OF DISSOLUTION

(a) A corporation may revoke its dissolution within 120 days of its effective date.

(b) Revocation of dissolution must be authorized in the same manner as the

dissolution was authorized unless that authorization permitted revocation by
action of the board of directors alone, in which event the board of directors
may revoke the dissolution without shareholder action.

(c) After the revocation of dissolution is authorized, the corporation may revoke
the dissolution by delivering to the secretary of state for filing articles of
revocation of dissolution, together with a copy of its articles of dissolution,
that set forth:

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 (1) the name of the corporation;

(2) the effective date of the dissolution that was revoked;

(3) the date that the revocation of dissolution was authorized;

(4) if the corporation's board of directors (or incorporators) revoked the

dissolution, a statement to that effect;

(5) if the corporation's board of directors revoked a dissolution authorized

by the shareholders, a statement that revocation was permitted by
action by the board of directors alone pursuant to that authorization;
and

(6) if shareholder action was required to revoke the dissolution, the

information required by section 14.03(a) (3).

(d) Revocation of dissolution is effective upon the effective date of the articles of
revocation of dissolution.

(e) When the revocation of dissolution is effective, it relates back to and takes
effect as of the effective date of the dissolution and the corporation resumes
carrying on its business as if dissolution had never occurred.

§ 14.05. EFFECT OF DISSOLUTION

(a) A dissolved corporation continues its corporate existence but may not carry
on any business except that appropriate to wind up and liquidate its business
and affairs, including:

(1) collecting its assets;

(2) disposing of its properties that will not be distributed in kind to its
shareholders;

(3) discharging or making provision for discharging its liabilities;

(4) distributing its remaining property among its shareholders according to

their interests; and

(5) doing every other act necessary to wind up and liquidate its business
and affairs.

(b) Dissolution of a corporation does not:

(1) transfer title to the corporation's property;

144
 (2) prevent transfer of its shares or securities, although the authorization to
dissolve may provide for closing the corporation's share transfer
records;

(3) subject its directors or officers to standards of conduct different from

those prescribed in chapter 8;

(4) change quorum or voting requirements for its board of directors or

shareholders; change provisions for selection, resignation, or removal
of its directors or officers or both; or change provisions for amending its
bylaws;

(5) prevent commencement of a proceeding by or against the corporation

in its corporate name;

(6) abate or suspend a proceeding pending by or against the corporation

on the effective date of dissolution; or

(7) terminate the authority of the registered agent of the corporation.

§ 14.06. KNOWN CLAIMS AGAINST DISSOLVED CORPORATION

(a) A dissolved corporation may dispose of the known claims against it by
notifying its known claimants in writing of the dissolution at any time after its
effective date.

(b) The written notice must:

(1) describe information that must be included in a claim;

(2) provide a mailing address where a claim may be sent;

(3) state the deadline, which may not be fewer than 120 days from the
effective date of the written notice, by which the dissolved corporation
must receive the claim; and

(4) state that the claim will be barred if not received by the deadline.

(c) A claim against the dissolved corporation is barred:

(1) if a claimant who was given written notice under subsection (b) does
not deliver the claim to the dissolved corporation by the deadline; or

(2) if a claimant whose claim was rejected by the dissolved corporation

does not commence a proceeding to enforce the claim within 90 days
from the effective date of the rejection notice.
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 (d) For purposes of this section, "claim" does not include a contingent liability or a
claim based on an event occurring after the effective date of dissolution.

§ 14.07. OTHER CLAIMS AGAINST DISSOLVED CORPORATION

(a) A dissolved corporation may also publish notice of its dissolution and request
that persons with claims against the dissolved corporation present them in
accordance with the notice.

(b) The notice must:

(1) be published one time in a newspaper of general circulation in the

county where the dissolved corporation's principal office (or, if none in
this state, its registered office) is or was last located;

(2) describe the information that must be included in a claim and provide a
mailing address where the claim may be sent; and

(3) state that a claim against the dissolved corporation will be barred unless
a proceeding to enforce the claim is commenced within three years after
the publication of the notice.

(c) If the dissolved corporation publishes a newspaper notice in accordance with

subsection (b), the claim of each of the following claimants is barred unless
the claimant commences a proceeding to enforce the claim against the
dissolved corporation within three years after the publication date of the
newspaper notice:

(1) a claimant who was not given written notice under section 14.06;

(2) a claimant whose claim was timely sent to the dissolved corporation
but not acted on;

(3) a claimant whose claim is contingent or based on an event occurring after

the effective date of dissolution.

(d) A claim that is not barred by section 14.06(b) or section 14.07(c) may be
enforced:

(1) against the dissolved corporation, to the extent of its undistributed

assets; or

(2) except as provided in section 14.08(d), if the assets have been distributed
in liquidation, against a shareholder of the dissolved corporation to the
extent of the shareholder's pro rata share of the claim or the corporate
assets distributed to the shareholder in liquidation, whichever is less, but a
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 shareholder's total liability for all claims under this section may not
exceed the total amount of assets distributed to the shareholder.

§ 14.08. COURT PROCEEDINGS

(a) A dissolved corporation that has published a notice under section 14.07
may file an application with the [name or describe] court of the county where
the dissolved corporation's principal office (or, if none in this state, its
registered office) is located for a determination of the amount and form of
security to be provided for payment of claims that are contingent or have not
been made known to the dissolved corporation or that are based on an event
occurring after the effective date of dissolution but that, based on the facts
known to the dissolved corporation, are reasonably estimated to arise after the
effective date of dissolution. Provision need not be made for any claim that is
or is reasonably anticipated to be barred under section 14.07(c).

(b) Within 10 days after the filing of the application, notice of the proceeding
shall be given by the dissolved corporation to each claimant holding a
contingent claim whose contingent claim is shown on the records of the
dissolved corporation.

(c) The court may appoint a guardian ad litem to represent all claimants whose
identities are unknown in any proceeding brought under this section. The
reasonable fees and expenses of such guardian, including all reasonable
expert witness fees, shall be paid by the dissolved corporation.

(d) Provision by the dissolved corporation for security in the amount and the
form ordered by the court under section 14.08(a) shall satisfy the dissolved
corporation's obligations with respect to claims that are contingent, have not
been made known to the dissolved corporation or are based on an event
occurring after the effective date of dissolution, and such claims may not be
enforced against a shareholder who received assets in liquidation.

§ 14.09. DIRECTOR DUTIES

(a) Directors shall cause the dissolved corporation to discharge or make
reasonable provision for the payment of claims and make distributions of
assets to shareholders after payment or provision for claims.

(b) Directors of a dissolved corporation which has disposed of claims under

sections 14.06, 14.07, or 14.08 shall not be liable for breach of section 14.09(a)
with respect to claims against the dissolved corporation that are barred or
satisfied under sections 14.06, 14.07, or 14.08.

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SUBCHAPTER B. ADMINISTRATIVE DISSOLUTION

§ 14.20. GROUNDS FOR ADMINISTRATIVE DISSOLUTION

The secretary of state may commence a proceeding under section 14.21 to
administratively dissolve a corporation if:

(1) the corporation does not pay within 60 days after they are due any
franchise taxes or penalties imposed by this Act or other law;

(2) the corporation does not deliver its annual report to the secretary of state
within 60 days after it is due;

(3) the corporation is without a registered agent or registered office in this

state for 60 days or more;

(4) the corporation does not notify the secretary of state within 60 days that its
registered agent or registered office has been changed, that its
registered agent has resigned, or that its registered office has been
discontinued; or

(5) the corporation's period of duration stated in its articles of incorporation

expires.

§ 14.21. PROCEDURE FOR AND EFFECT OF ADMINISTRATIVE DISSOLUTION

(a) If the secretary of state determines that one or more grounds exist under section
14.20 for dissolving a corporation, the secretary of state shall serve the
corporation with written notice of such determination under section 5.04.

(b) If the corporation does not correct each ground for dissolution or demonstrate
to the reasonable satisfaction of the secretary of state that each ground
determined by the secretary of state does not exist within 60 days after service
of the notice is perfected under section 5.04, the secretary of state shall
administratively dissolve the corporation by signing a certificate of
dissolution that recites the ground or grounds for dissolution and its effective
date. The secretary of state shall file the original of the certificate and serve a
copy on the corporation under section 5.04.

(c) A corporation administratively dissolved continues its corporate existence but

may not carry on any business except that necessary to wind up and liquidate
its business and affairs under section 14.05 and notify claimants under
sections 14.06 and 14.07.

(d) The administrative dissolution of a corporation does not terminate the

authority of its registered agent.
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§ 14.22. REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION
(a) A corporation administratively dissolved under section 14.21 may apply to
the secretary of state for reinstatement within two years after the effective
date of dissolution. The application must:

(1) recite the name of the corporation and the effective date of its
administrative dissolution;

(2) state that the ground or grounds for dissolution either did not exist or
have been eliminated;

(3) state that the corporation's name satisfies the requirements of section
4.01; and

(4) contain a certificate from the [taxing authority] reciting that all taxes
owed by the corporation have been paid.

(b) If the secretary of state determines that the application contains the
information required by subsection (a) and that the information is correct, the
secretary of state shall cancel the certificate of dissolution and prepare a
certificate of reinstatement that recites such determination and the effective
date of reinstatement, file the original of the certificate, and serve a copy on the
corporation under section 5.04.

(c) When the reinstatement is effective, it relates back to and takes effect as of the
effective date of the administrative dissolution and the corporation resumes
carrying on its business as if the administrative dissolution had never
occurred.

§ 14.23. APPEAL FROM DENIAL OF REINSTATEMENT

(a) If the secretary of state denies a corporation's application for reinstatement
following administrative dissolution, the secretary of state shall serve the
corporation under section 5.04 with a written notice that explains the reason
or reasons for denial.

(b) The corporation may appeal the denial of reinstatement to the [name or
describe] court within 30 days after service of the notice of denial is perfected.
The corporation appeals by petitioning the court to set aside the dissolution
and attaching to the petition copies of the secretary of state's certificate of
dissolution, the corporation's application for reinstatement, and the secretary
of state's notice of denial.

(c) The court may summarily order the secretary of state to reinstate the dis solved
corporation or may take other action the court considers appropriate.
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 (d) The court's final decision may be appealed as in other civil proceedings.

SUBCHAPTER C. JUDICIAL DISSOLUTION

§ 14.30. GROUNDS FOR JUDICIAL DISSOLUTION

The [name or describe court or courts] may dissolve a corporation:
(a) (1) in a proceeding by the attorney general if it is established that:

(i) the corporation obtained its articles of incorporation

through fraud; or

(ii) the corporation has continued to exceed or abuse the authority

conferred upon it by law;

(2) in a proceeding by a shareholder if it is established that:

(i) the directors are deadlocked in the management of the corporate

affairs, the shareholders are unable to break the deadlock, and
irreparable injury to the corporation is threatened or being
suffered, or the business and affairs of the corporation can no
longer be conducted to the advantage of the shareholders
generally, because of the deadlock;

(ii) the directors or those in control of the corporation have acted,

are acting, or will act in a manner that is illegal, oppressive, or
fraudulent;

(iii) the shareholders are deadlocked in voting power and have

failed, for a period that includes at least two consecutive annual
meeting dates, to elect successors to directors whose terms have
expired; or

(iv) the corporate assets are being misapplied or wasted;

(3) in a proceeding by a creditor if it is established that:

(i) the creditor's claim has been reduced to judgment, the execution
on the judgment returned unsatisfied, and the corporation is
insolvent; or

(ii) the corporation has admitted in writing that the creditor's claim
is due and owing and the corporation is insolvent; or

(4) in a proceeding by the corporation to have its voluntary dissolution

continued under court supervision.
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 (5) in a proceeding by a shareholder if the corporation has abandoned its
business and has failed within a reasonable time to liquidate and
distribute its assets and dissolve.

(b) Section 14.30(a) (2) shall not apply in the case of a corporation that, on the
date of the filing of the proceeding, has shares which are:

(i) listed on the New York Stock Exchange, the American Stock Exchange
or on any exchange owned or operated by the NASDAQ Stock Market
LLC, or listed or quoted on a system owned or operated by the
National Association of Securities Dealers, Inc.; or

(ii) not so listed or quoted, but are held by at least 300 shareholders and the
shares outstanding have a market value of at least $20 million (exclusive
of the value of such shares held by the corporation's subsidiaries, senior
executives, directors and beneficial shareholders owning more than
10% of such shares).

(c) In this section, "beneficial shareholder" has the meaning specified in section
13.01(2).

§ 14.31. PROCEDURE FOR JUDICIAL DISSOLUTION

(a) Venue for a proceeding by the attorney general to dissolve a corporation lies in
[name the county or counties]. Venue for a proceeding brought by any other
party named in section 14.30(a) lies in the county where a corporation's
principal office (or, if none in this state, its registered office) is or was last
located.

(b) It is not necessary to make shareholders parties to a proceeding to dissolve a

corporation unless relief is sought against them individually.

(c) A court in a proceeding brought to dissolve a corporation may issue injunctions,

appoint a receiver or custodian pendente lite with all powers and duties the
court directs, take other action required to preserve the corporate assets
wherever located, and carry on the business of the corporation until a full
hearing can be held.

(d) Within 10 days of the commencement of a proceeding to dissolve a corporation

under section 14.30(a)(2), the corporation must send to all shareholders, other
than the petitioner, a notice stating that the shareholders are entitled to avoid
the dissolution of the corporation by electing to purchase the petitioner's
shares under section 14.34 and accompanied by a copy of section 14.34.
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§ 14.32. RECEIVERSHIP OR CUSTODIANSHIP
(a) Unless an election to purchase has been filed under section 14.34, a court in a
judicial proceeding brought to dissolve a corporation may appoint one or
more receivers to wind up and liquidate, or one or more custodians to
manage, the business and affairs of the corporation. The court shall hold a
hearing, after notifying all parties to the proceeding and any interested
persons designated by the court, before appointing a receiver or custodian. The
court appointing a receiver or custodian has jurisdiction over the corporation
and all of its property wherever located.

(b) The court may appoint an individual or a domestic or foreign corporation

(authorized to transact business in this state) as a receiver or custodian. The
court may require the receiver or custodian to post bond, with or without
sureties, in an amount the court directs.

(c) The court shall describe the powers and duties of the receiver or custodian in
its appointing order, which may be amended from time to time. Among other
powers:

(1) the receiver (i) may dispose of all or any part of the assets of the
corporation wherever located, at a public or private sale, if authorized by
the court; and (ii) may sue and defend in his or her own name as
receiver of the corporation in all courts of this state;

(2) the custodian may exercise all of the powers of the corporation, through
or in place of its board of directors, to the extent necessary to manage the
affairs of the corporation in the best interests of its shareholders and
creditors.

(d) The court during a receivership may redesignate the receiver a custodian, and
during a custodianship may redesignate the custodian a receiver, if doing so
is in the best interests of the corporation, its shareholders, and creditors.

(e) The court from time to time during the receivership or custodianship may
order compensation paid and expenses paid or reimbursed to the receiver or
custodian from the assets of the corporation or proceeds from the sale of the
assets.

§ 14.33. DECREE OF DISSOLUTION

(a) If after a hearing the court determines that one or more grounds for judicial
dissolution described in section 14.30 exist, it may enter a decree dissolving
the corporation and specifying the effective date of the dissolution, and the
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 clerk of the court shall deliver a certified copy of the decree to the secretary of
state, who shall file it.

(b) After entering the decree of dissolution, the court shall direct the winding
up and liquidation of the corporation's business and affairs in accordance with
section 14.05 and the notification of claimants in accordance with sections 14.06
and 14.07.

§ 14.34. ELECTION TO PURCHASE IN LIEU OF DISSOLUTION

(a) In a proceeding under section 14.30(a)(2) to dissolve a corporation, the
corporation may elect or, if it fails to elect, one or more shareholders may elect
to purchase all shares owned by the petitioning shareholder at the fair value
of the shares. An election pursuant to this section shall be irrevocable unless
the court determines that it is equitable to set aside or modify the election.

(b) An election to purchase pursuant to this section may be filed with the court at
any time within 90 days after the filing of the petition under section 14.30(a)
(2) or at such later time as the court in its discretion may allow. If the election
to purchase is filed by one or more shareholders, the corporation shall, within
10 days thereafter, give written notice to all shareholders, other than the
petitioner. The notice must state the name and number of shares owned by the
petitioner and the name and number of shares owned by each electing
shareholder and must advise the recipients of their right to join in the election
to purchase shares in accordance with this section. Shareholders who wish to
participate must file notice of their intention to join in the purchase no later
than 30 days after the effective date of the notice to them. All shareholders
who have filed an election or notice of their intention to participate in the
election to purchase thereby become parties to the proceeding and shall
participate in the purchase in proportion to their ownership of shares as of the
date the first election was filed, unless they otherwise agree or the court
otherwise directs. After an election has been filed by the corporation or one or
more shareholders, the proceeding under section 14.30(a)(2) may not be
discontinued or settled, nor may the petitioning shareholder sell or otherwise
dispose of his or her shares, unless the court determines that it would be
equitable to the corporation and the shareholders, other than the petitioner, to
permit such discontinuance, settlement, sale, or other disposition.

(c) If, within 60 days of the filing of the first election, the parties reach agreement
as to the fair value and terms of purchase of the petitioner's shares, the court
shall enter an order directing the purchase of petitioner's shares upon the
terms and conditions agreed to by the parties.

(d) If the parties are unable to reach an agreement as provided for in subsection

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 (c), the court, upon application of any party, shall stay the section 14.30(a)(2)
proceedings and determine the fair value of the petitioner's shares as of the
day before the date on which the petition under section 14.30(a) (2) was filed
or as of such other date as the court deems appropriate under the
circumstances.

(e) Upon determining the fair value of the shares, the court shall enter an order
directing the purchase upon such terms and conditions as the court deems
appropriate, which may include payment of the purchase price in
installments, where necessary in the interests of equity, provision for security
to assure payment of the purchase price and any additional expenses as may
have been awarded, and, if the shares are to be purchased by shareholders,
the allocation of shares among them. In allocating petitioner's shares among
holders of different classes of shares, the court should attempt to preserve the
existing distribution of voting rights among holders of different classes
insofar as practicable and may direct that holders of a specific class or classes
shall not participate in the purchase. Interest may be allowed at the rate and
from the date determined by the court to be equitable, but if the court finds
that the refusal of the petitioning shareholder to accept an offer of payment
was arbitrary or otherwise not in good faith, no interest shall be allowed. If
the court finds that the petitioning shareholder had probable grounds for
relief under paragraphs (ii) or (iv) of section 14.30(a)(2), it may award
expenses to the petitioning shareholder.

(f) Upon entry of an order under subsections (c) or (e), the court shall dismiss
the petition to dissolve the corporation under section 14.30(a)(2), and the
petitioning shareholder shall no longer have any rights or status as a
shareholder of the corporation, except the right to receive the amounts
awarded by the order of the court which shall be enforceable in the same
manner as any other judgment.

(g) The purchase ordered pursuant to subsection (e) shall be made within 10
days after the date the order becomes final unless before that time the
corporation files with the court a notice of its intention to adopt articles of
dissolution pursuant to sections 14.02 and 14.03, which articles must then be
adopted and filed within 50 days thereafter. Upon filing of such articles of
dissolution, the corporation shall be dissolved in accordance with the
provisions of sections 14.05 through 14.07, and the order entered pursuant to
subsection (e) shall no longer be of any force or effect, except that the court may
award the petitioning shareholder expenses in accordance with the provisions
of the last sentence of subsection (e) and the petitioner may continue to pursue
any claims previously asserted on behalf of the corporation.

(h) Any payment by the corporation pursuant to an order under subsections (c)

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 or (e), other than an award of expenses pursuant to subsection (e), is subject to
the provisions of section 6.40.

SUBCHAPTER A.
CERTIFICATE OF AUTHORITY

§ 15.01. AUTHORITY TO TRANSACT BUSINESS REQUIRED

(a) A foreign corporation may not transact business in this state until it obtains a certificate
of authority from the secretary of state.

(b) The following activities, among others, do not constitute transacting business within the
meaning of subsection (a):

(1) maintaining, defending, or settling any proceeding;

(2) holding meetings of the board of directors or shareholders or carrying on other

activities concerning internal corporate affairs;

(3) maintaining bank accounts;

(4) maintaining offices or agencies for the transfer, exchange, and registration of the
corporation’s own securities or maintaining trustees or depositaries with respect
to those securities;

(5) selling through independent contractors;

(6) soliciting or obtaining orders, whether by mail or through employees or agents

or otherwise, if the orders require acceptance outside this state before they
become contracts;

(7) creating or acquiring indebtedness, mortgages, and security interests in real or

personal property;

(8) securing or collecting debts or enforcing mortgages and security interests in

property securing the debts;

(9) owning, without more, real or personal property;

(10) conducting an isolated transaction that is completed within 30 days and that is
not one in the course of repeated transactions of a like nature; or

(11) transacting business in interstate commerce.

(c) The list of activities in subsection (b) is not exhaustive.

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§ 15.02. CONSEQUENCES OF TRANSACTING BUSINESS WITHOUT AUTHORITY
(a) A foreign corporation transacting business in this state without a certificate of authority
may not maintain a proceeding in any court in this state until it obtains a certificate of
authority.

(b) The successor to a foreign corporation that transacted business in this state without a
certificate of authority and the assignee of a cause of action arising out of that business
may not maintain a proceeding based on that cause of action in any court in this state
until the foreign corporation or its successor obtains a certificate of authority.

(c) A court may stay a proceeding commenced by a foreign corporation, its successor, or
assignee until it determines whether the foreign corporation or its successor requires a
certificate of authority. If it so determines, the court may further stay the proceeding
until the foreign corporation or its successor obtains the certificate.

(d) A foreign corporation is liable for a civil penalty of $______ for each day, but not to
exceed a total of $______ for each year, it transacts business in this state without a
certificate of authority. The attorney general may collect all penalties due under this
subsection.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a
certificate of authority does not impair the validity of its corporate acts or prevent it
from defending any proceeding in this state.

§ 15.03. APPLICATION FOR CERTIFICATE OF AUTHORITY

(a) A foreign corporation may apply for a certificate of authority to transact business in this
state by delivering an application to the secretary of state for filing. The application
must set forth:

(1) the name of the foreign corporation or, if its name is unavailable for use in this
state, a corporate name that satisfies the requirements of section 15.06;

(2) the name of the state or country under whose law it is incorporated;

(3) its date of incorporation and period of duration;

(4) the street address of its principal office;

(5) the address of its registered office in this state and the name of its registered
agent at that office; and

(6) the names and usual business addresses of its current directors and officers.

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(b) The foreign corporation shall deliver with the completed application a certificate of
existence (or a document of similar import) duly authenticated by the secretary of state
or other official having custody of corporate records in the state or country under
whose law it is incorporated.

§ 15.04. AMENDED CERTIFICATE OF AUTHORITY

(a) A foreign corporation authorized to transact business in this state must obtain an
amended certificate of authority from the secretary of state if it changes:

(1) its corporate name;

(2) the period of its duration; or

(3) the state or country of its incorporation.

(b) The requirements of section 15.03 for obtaining an original certificate of authority apply
to obtaining an amended certificate under this section.

§ 15.05. EFFECT OF CERTIFICATE OF AUTHORITY

(a) A certificate of authority authorizes the foreign corporation to which it is issued to
transact business in this state subject, however, to the right of the state to revoke the
certificate as provided in this Act.

(b) A foreign corporation with a valid certificate of authority has the same but no greater
rights and has the same but no greater privileges as, and except as otherwise provided
by this Act is subject to the same duties, restrictions, penalties, and liabilities now or
later imposed on, a domestic corporation of like character.

(c) This Act does not authorize this state to regulate the organization or internal affairs of a
foreign corporation authorized to transact business in this state.

§ 15.06. CORPORATE NAME OF FOREIGN CORPORATION

(a) If the corporate name of a foreign corporation does not satisfy the requirements of
section 4.01, the foreign corporation to obtain or maintain a certificate of authority to
transact business in this state:

(1) may add to its corporate name for use in this state the word “corporation,”
“incorporated,” “company,” or “limited,” or the abbreviation “corp.,” “inc.,”
“co.,” or “ltd.,”; or

(2) may use a fictitious name to transact business in this state if its real name is
unavailable and it delivers to the secretary of state for filing a copy of the

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 resolution of its board of directors, certified by its secretary, adopting the
fictitious name.

(b) Except as authorized by subsections (c) and (d), the corporate name (including a
fictitious name) of a foreign corporation must be distinguishable upon the records of the
secretary of state from:

(1) the corporate name of a corporation incorporated or authorized to transact

business in this state;

(2) a corporate name reserved or registered under section 4.02 or 4.03;

(3) the fictitious name of another foreign corporation authorized to transact business
in this state; and

(4) the corporate name of a not-for-profit corporation incorporated or authorized to

transact business in this state.

(c) A foreign corporation may apply to the secretary of state for authorization to use in this
state the name of another corporation (incorporated or authorized to transact business
in this state) that is not distinguishable upon the secretary of state’s records from the
name applied for. The secretary of state shall authorize use of the name applied for if:

(1) the other corporation consents to the use in writing and delivers an undertaking
in form satisfactory to the secretary of state to change its name to a name that is
distinguishable upon the records of the secretary of state from the name of the
applying corporation; or

(2) the applicant delivers to the secretary of state a certified copy of a final judgment
of a court of competent jurisdiction establishing the applicant’s right to use the
name applied for in this state.

(d) A foreign corporation may use in this state the name (including the fictitious name) of
another domestic or foreign corporation that is used in this state if the other corporation
is incorporated or authorized to transact business in this state and the foreign
corporation:

(1) has merged with the other corporation;

(2) has been formed by reorganization of the other corporation; or

(3) has acquired all or substantially all of the assets, including the corporate name, of
the other corporation.

(e) If a foreign corporation authorized to transact business in this state changes its
corporate name to one that does not satisfy the requirements of section 4.01, it may not
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 transact business in this state under the changed name until it adopts a name satisfying
the requirements of section 4.01 and obtains an amended certificate of authority under
section 15.04.

§ 15.07. REGISTERED OFFICE AND REGISTERED AGENT OF FOREIGN

CORPORATION
Each foreign corporation authorized to transact business in this state must continuously
maintain in this state:

(1) a registered office that may be the same as any of its places of business; and

(2) a registered agent, who may be:

(i) an individual who resides in this state and whose business office is identical with
the registered office;

(ii) a domestic corporation or not-for-profit domestic corporation whose business

office is identical with the registered office; or

(iii) a foreign corporation or foreign not-for-profit corporation authorized to transact

business in this state whose business office is identical with the registered office.

§ 15.08. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT OF FOREIGN

CORPORATION
(a) A foreign corporation authorized to transact business in this state may change its
registered office or registered agent by delivering to the secretary of state for filing a
statement of change that sets forth:

(1) its name;

(2) the street address of its current registered office;

(3) if the current registered office is to be changed, the street address of its new
registered office;

(4) the name of its current registered agent;

(5) if the current registered agent is to be changed, the name of its new registered
agent and the new agent’s written consent (either on the statement or attached to
it) to the appointment; and

(6) that after the change or changes are made, the street addresses of its registered
office and the business office of its registered agent will be identical.

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(b) If the street address of a registered agent’s business office changes, the agent may
change the street address of the registered office of any foreign corporation for which
the person is the registered agent by notifying the corporation in writing of the change,
and signing and delivering to the secretary of state for filing a statement of change that
complies with the requirements of subsection (a) and recites that the corporation has
been notified of the change.

§ 15.09. RESIGNATION OF REGISTERED AGENT OF FOREIGN CORPORATION

(a) The registered agent of a foreign corporation may resign the agency appointment by
signing and delivering to the secretary of state for filing the signed original and two
exact or conformed copies of a statement of resignation. The statement of resignation
may include a statement that the registered office is also discontinued.

(b) After filing the statement, the secretary of state shall attach the filing receipt to one copy
and mail the copy and receipt to the registered office if not discontinued. The secretary
of state shall mail the other copy to the foreign corporation at its principal office address
shown in its most recent annual report.

(c) The agency appointment is terminated, and the registered office discontinued if so
provided, on the 31st day after the date on which the statement was filed.

§ 15.10. SERVICE ON FOREIGN CORPORATION

(a) The registered agent of a foreign corporation authorized to transact business in this
state is the corporation’s agent for service of process, notice, or demand required or
permitted by law to be served on the foreign corporation.

(b) A foreign corporation may be served by registered or certified mail, return receipt
requested, addressed to the secretary of the foreign corporation at its principal office
shown in its application for a certificate of authority or in its most recent annual report
if the foreign corporation:

(1) has no registered agent or its registered agent cannot with reasonable diligence
be served;

(2) has withdrawn from transacting business in this state under section 15.20; or

(3) has had its certificate of authority revoked under section 15.31.

(c) Service is perfected under subsection (b) at the earliest of:

(1) the date the foreign corporation receives the mail;

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 (2) the date shown on the return receipt, if signed on behalf of the foreign
corporation; or

(3) five days after its deposit in the United States mail, as evidenced by the
postmark, if mailed postpaid and correctly addressed.

(d) This section does not prescribe the only means, or necessarily the required means, of
serving a foreign corporation.

SUBCHAPTER B.
WITHDRAWAL OR TRANSFER OF AUTHORITY

§ 15.20. WITHDRAWAL OF FOREIGN CORPORATION

(a) A foreign corporation authorized to transact business in this state may not withdraw
from this state until it obtains a certificate of withdrawal from the secretary of state.

(b) A foreign corporation authorized to transact business in this state may apply for a
certificate of withdrawal by delivering an application to the secretary of state for filing.
The application must set forth:

(1) the name of the foreign corporation and the name of the state or country under
whose law it is incorporated;

(2) that it is not transacting business in this state and that it surrenders its authority
to transact business in this state;

(3) that it revokes the authority of its registered agent to accept service on its behalf
and appoints the secretary of state as its agent for service of process in any
proceeding based on a cause of action arising during the time it was authorized
to transact business in this state;

(4) a mailing address to which the secretary of state may mail a copy of any process
served on the secretary of state under subdivision (3); and

(5) a commitment to notify the secretary of state in the future of any change in its
mailing address.

(c) After the withdrawal of the corporation is effective, service of process on the secretary
of state under this section is service on the foreign corporation. Upon receipt of process,
the secretary of state shall mail a copy of the process to the foreign corporation at the
mailing address set forth under subsection (b).

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§ 15.21. AUTOMATIC WITHDRAWAL UPON CERTAIN CONVERSIONS
A foreign corporation authorized to transact business in this state that converts to a domestic
nonprofit corporation or any form of domestic filing entity shall be deemed to have
withdrawn on the effective date of the conversion.

§ 15.22. WITHDRAWAL UPON CONVERSION TO A NONFILING ENTITY

(a) A foreign corporation authorized to transact business in this state that converts to a
domestic or foreign nonfiling entity shall apply for a certificate of withdrawal by
delivering an application to the secretary of state for filing. The application must set
forth:

(1) the name of the foreign corporation and the name of the state or country under
whose law it was incorporated before the conversion;

(2) that it surrenders its authority to transact business in this state as a foreign
corporation;

(3) the type of unincorporated entity to which it has been converted and the
jurisdiction whose laws govern its internal affairs;

(4) if it has been converted to a foreign unincorporated entity:

(i) that it revokes the authority of its registered agent to accept service on its
behalf and appoints the secretary of state as its agent for service of process
in any proceeding based on a cause of action arising during the time it
was authorized to transact business in this state;

(ii) a mailing address to which the secretary of state may mail a copy of any
process served on the secretary of state under paragraph (i); and

(iii) a commitment to notify the secretary of state in the future of any change
in its mailing address.

(b) After the withdrawal under this section of a corporation that has converted to a foreign
unincorporated entity is effective, service of process on the secretary of state is service
on the foreign unincorporated entity. Upon receipt of process, the secretary of state
shall mail a copy of the process to the foreign unincorporated entity at the mailing
address set forth under subsection (a)(4).

(c) After the withdrawal under this section of a corporation that has converted to a
domestic unincorporated entity is effective, service of process shall be made on the
unincorporated entity in accordance with the regular procedures for service of process
on the form of unincorporated entity to which the corporation was converted.

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§ 15.23. TRANSFER OF AUTHORITY
(a) A foreign business corporation authorized to transact business in this state that converts
to a foreign nonprofit corporation or to any form of foreign unincorporated entity that
is required to obtain a certificate of authority or make a similar type of filing with the
secretary of state if it transacts business in this state shall file with the secretary of state
an application for transfer of authority signed by any officer or other duly authorized
representative. The application shall set forth:

(1) the name of the corporation;

(2) the type of unincorporated entity to which it has been converted and the
jurisdiction whose laws govern its internal affairs; and

(3) any other information that would be required in a filing under the laws of this
state by an unincorporated entity of the type the corporation has become seeking
authority to transact business in this state.

(b) The application for transfer of authority shall be delivered to the secretary of state for
filing and shall take effect at the effective time provided in section 1.23.

(c) Upon the effectiveness of the application for transfer of authority, the authority of the
corporation under this chapter to transact business in this state shall be transferred
without interruption to the converted entity which shall thereafter hold such authority
subject to the provisions of the laws of this state applicable to that type of
unincorporated entity.

SUBCHAPTER C.
REVOCATION OF CERTIFICATE OF AUTHORITY

§ 15.30. GROUNDS FOR REVOCATION

The secretary of state may commence a proceeding under section 15.31 to revoke the certificate
of authority of a foreign corporation authorized to transact business in this state if:

(1) the foreign corporation does not deliver its annual report to the secretary of state within
60 days after it is due;

(2) the foreign corporation does not pay within 60 days after they are due any franchise
taxes or penalties imposed by this Act or other law;

(3) the foreign corporation is without a registered agent or registered office in this state for
60 days or more;

(4) the foreign corporation does not inform the secretary of state under section 15.08 or
15.09 that its registered agent or registered office has changed, that its registered agent
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 has resigned, or that its registered office has been discontinued within 60 days of the
change, resignation, or discontinuance;

(5) an incorporator, director, officer, or agent of the foreign corporation signed a document
knowing it was false in any material respect with intent that the document be delivered
to the secretary of state for filing; or

(6) the secretary of state receives a duly authenticated certificate from the secretary of state
or other official having custody of corporate records in the state or country under
whose law the foreign corporation is incorporated stating that it has been dissolved or
disappeared as the result of a merger.

§ 15.31. PROCEDURE FOR AND EFFECT OF REVOCATION

(a) If the secretary of state determines that one or more grounds exist under section 15.30
for revocation of a certificate of authority, the secretary of state shall serve the foreign
corporation with written notice of such determination under section 15.10.

(b) If the foreign corporation does not correct each ground for revocation or demonstrate to
the reasonable satisfaction of the secretary of state that each ground determined by the
secretary of state does not exist within 60 days after service of the notice is perfected
under section 15.10, the secretary of state may revoke the foreign corporation’s
certificate of authority by signing a certificate of revocation that recites the ground or
grounds for revocation and its effective date. The secretary of state shall file the original
of the certificate and serve a copy on the foreign corporation under section 15.10.

(c) The authority of a foreign corporation to transact business in this state ceases on the
date shown on the certificate revoking its certificate of authority.

(d) The secretary of state’s revocation of a foreign corporation’s certificate of authority

appoints the secretary of state the foreign corporation’s agent for service of process in
any proceeding based on a cause of action which arose during the time the foreign
corporation was authorized to transact business in this state. Service of process on the
secretary of state under this subsection is service on the foreign corporation. Upon
receipt of process, the secretary of state shall mail a copy of the process to the secretary
of the foreign corporation at its principal office shown in its most recent annual report
or in any subsequent communication received from the corporation stating the current
mailing address of its principal office, or, if none are on file, in its application for a
certificate of authority.

(e) Revocation of a foreign corporation’s certificate of authority does not terminate the
authority of the registered agent of the corporation.

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§ 15.32. APPEAL FROM REVOCATION
(a) A foreign corporation may appeal the secretary of state’s revocation of its certificate of
authority to the [name or describe] court within 30 days after service of the certificate of
revocation is perfected under section 15.10. The foreign corporation appeals by
petitioning the court to set aside the revocation and attaching to the petition copies of its
certificate of authority and the secretary of state’s certificate of revocation.

(b) The court may summarily order the secretary of state to reinstate the certificate of
authority or may take any other action the court considers appropriate.

(c) The court’s final decision may be appealed as in other civil proceedings.

SUBCHAPTER A.
RECORDS

§ 16.01. CORPORATE RECORDS

(a) A corporation shall keep as permanent records minutes of all meetings of its
shareholders and board of directors, a record of all actions taken by the shareholders or
board of directors without a meeting, and a record of all actions taken by a committee of
the board of directors in place of the board of directors on behalf of the corporation.

(b) A corporation shall maintain appropriate accounting records.

(c) A corporation or its agent shall maintain a record of its shareholders, in a form that
permits preparation of a list of the names and addresses of all shareholders, in
alphabetical order by class of shares showing the number and class of shares held by
each.

(d) A corporation shall maintain its records in the form of a document, including an
electronic record, or in another form capable of conversion into paper form within a
reasonable time.

(e) A corporation shall keep a copy of the following records at its principal office:

(1) its articles or restated articles of incorporation, all amendments to them currently
in effect, and any notices to shareholders referred to in section 1.20(k)(5)
regarding facts on which a filed document is dependent;

(2) its bylaws or restated bylaws and all amendments to them currently in effect;

(3) resolutions adopted by its board of directors creating one or more classes or
series of shares, and fixing their relative rights, preferences, and limitations, if
shares issued pursuant to those resolutions are outstanding;

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 (4) the minutes of all shareholders’ meetings, and records of all action taken by
shareholders without a meeting, for the past three years;

(5) all written communications to shareholders generally within the past three years,
including the financial statements furnished for the past three years under
section 16.20;

(6) a list of the names and business addresses of its current directors and officers;
and

(7) its most recent annual report delivered to the secretary of state under section
16.21.

§ 16.02. INSPECTION OF RECORDS BY SHAREHOLDERS

(a) A shareholder of a corporation is entitled to inspect and copy, during regular business
hours at the corporation’s principal office, any of the records of the corporation
described in section 16.01(e) if the shareholder gives the corporation a signed written
notice of the shareholder’s demand at least five business days before the date on which
the shareholder wishes to inspect and copy.

(b) For any meeting of shareholders for which the record date for determining shareholders
entitled to vote at the meeting is different than the record date for notice of the meeting,
any person who becomes a shareholder subsequent to the record date for notice of the
meeting and is entitled to vote at the meeting is entitled to obtain from the corporation
upon request the notice and any other information provided by the corporation to
shareholders in connection with the meeting, unless the corporation has made such
information generally available to shareholders by posting it on its website or by other
generally recognized means. Failure of a corporation to provide such information does
not affect the validity of action taken at the meeting.

(c) A shareholder of a corporation is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the corporation, any of the following records
of the corporation if the shareholder meets the requirements of subsection (d) and gives
the corporation a signed written notice of the shareholder’s demand at least five
business days before the date on which the shareholder wishes to inspect and copy:

(1) excerpts from minutes of any meeting of the board of directors or a committee of
the board of directors while acting in place of the board of directors on behalf of
the corporation, minutes of any meeting of the shareholders, and records of
action taken by the shareholders, board of directors, or a committee of the board
without a meeting, to the extent not subject to inspection under section 16.02(a);

(2) accounting records of the corporation; and

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 (3) the record of shareholders.

(d) A shareholder may inspect and copy the records described in subsection (c) only if:

(1) the shareholder’s demand is made in good faith and for a proper purpose;

(2) the shareholder describes with reasonable particularity the shareholder’s

purpose and the records the shareholder desires to inspect; and

(3) the records are directly connected with the shareholder’s purpose.

(e) The right of inspection granted by this section may not be abolished or limited by a
corporation’s articles of incorporation or bylaws.

(f) This section does not affect:

(1) the right of a shareholder to inspect records under section 7.20 or, if the
shareholder is in litigation with the corporation, to the same extent as any other
litigant; or

(2) the power of a court, independently of this Act, to compel the production of
corporate records for examination.

(g) For purposes of this section, “shareholder” includes a beneficial owner whose shares
are held in a voting trust or by a nominee on the shareholder’s behalf.

§ 16.03. SCOPE OF INSPECTION RIGHT

(a) A shareholder’s agent or attorney has the same inspection and copying rights as the
shareholder represented.

(b) The right to copy records under section 16.02 includes, if reasonable, the right to receive
copies by xerographic or other means, including copies through an electronic
transmission if available and so requested by the shareholder.

(c) The corporation may comply at its expense with a shareholder’s demand to inspect the
record of shareholders under section 16.02(c)(3) by providing the shareholder with a list
of shareholders that was compiled no earlier than the date of the shareholder’s demand.

(d) The corporation may impose a reasonable charge, covering the costs of labor and
material, for copies of any documents provided to the shareholder. The charge may not
exceed the estimated cost of production, reproduction or transmission of the records.

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§ 16.04. COURT-ORDERED INSPECTION
(a) If a corporation does not allow a shareholder who complies with section 16.02(a) to
inspect and copy any records required by that subsection to be available for inspection,
the [name or describe court] of the county where the corporation’s principal office (or, if
none in this state, its registered office) is located may summarily order inspection and
copying of the records demanded at the corporation’s expense upon application of the
shareholder.

(b) If a corporation does not within a reasonable time allow a shareholder to inspect and
copy any other record, the shareholder who complies with sections 16.02(c) and (d) may
apply to the [name or describe court] in the county where the corporation’s principal
office (or, if none in this state, its registered office) is located for an order to permit
inspection and copying of the records demanded. The court shall dispose of an
application under this subsection on an expedited basis.

(c) If the court orders inspection and copying of the records demanded, it shall also order
the corporation to pay the shareholder’s expenses incurred to obtain the order unless
the corporation proves that it refused inspection in good faith because it had a
reasonable basis for doubt about the right of the shareholder to inspect the records
demanded.

(d) If the court orders inspection and copying of the records demanded, it may impose
reasonable restrictions on the use or distribution of the records by the demanding
shareholder.

§ 16.05. INSPECTION OF RECORDS BY DIRECTORS

(a) A director of a corporation is entitled to inspect and copy the books, records and
documents of the corporation at any reasonable time to the extent reasonably related to
the performance of the director’s duties as a director, including duties as a member of a
committee, but not for any other purpose or in any manner that would violate any duty
to the corporation.

(b) The [name or describe the court] of the county where the corporation’s principal office
(or if none in this state, its registered office) is located may order inspection and copying
of the books, records and documents at the corporation’s expense, upon application of a
director who has been refused such inspection rights, unless the corporation establishes
that the director is not entitled to such inspection rights. The court shall dispose of an
application under this subsection on an expedited basis.

(c) If an order is issued, the court may include provisions protecting the corporation from
undue burden or expense, and prohibiting the director from using information obtained
upon exercise of the inspection rights in a manner that would violate a duty to the

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 corporation, and may also order the corporation to reimburse the director for the
director’s expenses incurred in connection with the application.

§ 16.06. EXCEPTION TO NOTICE REQUIREMENT

(a) Whenever notice would otherwise be required to be given under any provision of this
Act to a shareholder, such notice need not be given if:

(i) Notices to the shareholders of two consecutive annual meetings, and all notices
of meetings during the period between such two consecutive annual meetings,
have been sent to such shareholder at such shareholder’s address as shown on
the records of the corporation and have been returned undeliverable or could not
be delivered; or

(ii) All, but not less than two, payments of dividends on securities during a 12-
month period, or two consecutive payments of dividends on securities during a
period of more than 12 months, have been sent to such shareholder at such
shareholder’s address as shown on the records of the corporation and have been
returned undeliverable or could not be delivered.

(b) If any such shareholder shall deliver to the corporation a written notice setting forth
such shareholder’s then-current address, the requirement that notice be given to such
shareholder shall be reinstated.

SUBCHAPTER B.
REPORTS

§ 16.20. FINANCIAL STATEMENTS FOR SHAREHOLDERS

(a) A corporation shall deliver to its shareholders annual financial statements, which may
be consolidated or combined statements of the corporation and one or more of its
subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year,
an income statement for that year, and a statement of changes in shareholders’ equity
for the year unless that information appears elsewhere in the financial statements. If
financial statements are prepared for the corporation on the basis of generally accepted
accounting principles, the annual financial statements must also be prepared on that
basis.

(b) If the annual financial statements are reported upon by a public accountant, the report
must accompany them. If not, the statements must be accompanied by a statement of
the president or the person responsible for the corporation’s accounting records:

(1) stating such person’s reasonable belief whether the statements were prepared on
the basis of generally accepted accounting principles and, if not, describing the
basis of preparation; and
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 (2) describing any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.

(c) Within 120 days after the close of each fiscal year, the corporation shall send the annual
financial statements to each shareholder. Thereafter, on written request from a
shareholder to whom the statements were not sent, the corporation shall send the
shareholder the latest financial statements. A public corporation may fulfill its
responsibilities under this section by delivering the specified financial statements, or
otherwise making them available, in a any manner permitted by the applicable rules
and regulations of the United States Securities Exchange Commission.

§ 16.21. ANNUAL REPORT FOR SECRETARY OF STATE

(a) Each domestic corporation, and each foreign corporation authorized to transact
business in this state, shall deliver to the secretary of state for filing an annual report
that sets forth:

(1) the name of the corporation and the state or country under whose law it is
incorporated;

(2) the address of its registered office and the name of its registered agent at that
office in this state;

(3) the address of its principal office;

(4) names and business addresses of its directors and principal officers;

(5) a brief description of the nature of its business;

(6) the total number of authorized shares, itemized by class and series, if any, within
each class; and

(7) the total number of issued and outstanding shares, itemized by class and series,
if any, within each class.

(b) Information in the annual report must be current as of the date the annual report is
signed on behalf of the corporation.

(c) The first annual report must be delivered to the secretary of state between January 1
and April 1 of the year following the calendar year in which a domestic corporation was
incorporated or a foreign corporation was authorized to transact business. Subsequent
annual reports must be delivered to the secretary of state between January 1 and April 1
of the following calendar years.

(d) If an annual report does not contain the information required by this section, the
secretary of state shall promptly notify the reporting domestic or foreign corporation in
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 writing and return the report to it for correction. If the report is corrected to contain the
information required by this section and delivered to the secretary of state within 30
days after the effective date of notice, it is deemed to be timely filed.

§ 17.01. APPLICATION TO EXISTING DOMESTIC CORPORATIONS

This Act applies to all domestic corporations in existence on its effective date that were
incorporated under any general statute of this state providing for incorporation of
corporations for profit if power to amend or repeal the statute under which the corporation
was incorporated was reserved.

OFFICIAL COMMENT

The fundamental principle underlying section 17.01 is that the revised Model Act
should ultimately be made fully applicable to all existing business corporations as well as to all
new business corporations formed after the effective date of the new statute. It is undesirable
to “grandfather” existing corporations under earlier statutes since that results in the
permanent coexistence of two different and overlapping systems of corporation law, with
resulting confusion. This is particularly true of the revised Model Act, which builds directly on
the experience of many years with existing corporation statutes and contains few major
substantive changes.

Section 17.01 applies this basic principle in its broadest sense by making the revised Act
applicable as of its “effective date” (prescribed in section 17.06) to all domestic corporations
formed under general statutes for corporations for profit. This includes all prior general
business corporation acts, but not statutes providing for not-for-profit corporations or
associations, or corporations formed for the purpose of engaging in a business for which the
state has provided a separate incorporation procedure.

Section 17.01 applies the revised Model Act to all corporations to which that application
is constitutionally permissible. In view of the universal adoption of “reservation of power”
clauses in all states for more than a century, there are very few active business corporations to
which this Act will not be applicable under this section.

§ 17.02. APPLICATION TO QUALIFIED FOREIGN CORPORATIONS

A foreign corporation authorized to transact business in this state on the effective date
of this Act is subject to this Act but is not required to obtain a new certificate of authority to
transact business under this Act.

§ 17.03. SAVING PROVISIONS

(a) Except as provided in subsection (b), the repeal of a statute by this Act does not affect:

(1) the operation of the statute or any action taken under it before its repeal;
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 (2) any ratification, right, remedy, privilege, obligation, or liability acquired,
accrued, or incurred under the statute before its repeal;

(3) any violation of the statute, or any penalty, forfeiture, or punishment incurred
because of the violation, before its repeal;

(4) any proceeding, reorganization, or dissolution commenced under the statute

before its repeal, and the proceeding, reorganization, or dissolution may be
completed in accordance with the statute as if it had not been repealed.

(b) If a penalty or punishment imposed for violation of a statute repealed by this Act is
reduced by this Act, the penalty or punishment if not already imposed shall be imposed
in accordance with this Act.

(c) In the event that any provisions of this Act are deemed to modify, limit or supersede the
federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §§ 7001
et seq., the provisions of this Act shall control to the maximum extent permitted by
Section 102(a)(2) of that federal Act.

§ 17.04. SEVERABILITY
If any provision of this Act or its application to any person or circumstance is held invalid by a
court of competent jurisdiction, the invalidity does not affect other provisions or applications
of the Act that can be given effect without the invalid provision or application, and to this end
the provisions of the Act are severable.

§ 17.05. REPEAL
The following laws and parts of laws are repealed: [to be inserted by the adopting
state].

§ 17.06. EFFECTIVE DATE

This Act takes effect ______ [to be inserted by the adopting state].

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