§490:8-108  Warranties in direct holding. 
(a)  A person who transfers a certificated security to a purchaser for value
warrants to the purchaser, and an indorser, if the transfer is by indorsement,
warrants to any subsequent purchaser, that:



(1)  The certificate is genuine and has not been
materially altered;



(2)  The transferor or indorser does not know of any
fact that might impair the validity of the security;



(3)  There is no adverse claim to the security;



(4)  The transfer does not violate any restriction on
transfer;



(5)  If the transfer is by indorsement, the
indorsement is made by an appropriate person, or if the indorsement is by an
agent, the agent has actual authority to act on behalf of the appropriate
person; and



(6)  The transfer is otherwise effective and rightful.



(b)  A person who originates an instruction for
registration of transfer of an uncertificated security to a purchaser for value
warrants to the purchaser that:



(1)  The instruction is made by an appropriate person,
or if the instruction is by an agent, the agent has actual authority to act on
behalf of the appropriate person;



(2)  The security is valid;



(3)  There is no adverse claim to the security; and



(4)  At the time the instruction is presented to the
issuer:



(i)  The purchaser will be entitled to the
registration of transfer;



(ii)  The transfer will be registered by the
issuer free from all liens, security interests, restrictions, and claims other
than those specified in the instruction;



(iii)  The transfer will not violate any
restriction on transfer; and



(iv)  The requested transfer will otherwise be
effective and rightful.



(c)  A person who transfers an uncertificated
security to a purchaser for value and does not originate an instruction in
connection with the transfer warrants that:



(1)  The uncertificated security is valid;



(2)  There is no adverse claim to the security;



(3)  The transfer does not violate any restriction on
transfer; and



(4)  The transfer is otherwise effective and rightful.



(d)  A person who indorses a security
certificate warrants to the issuer that:



(1)  There is no adverse claim to the security; and



(2)  The indorsement is effective.



(e)  A person who originates an instruction for
registration of transfer of an uncertificated security warrants to the issuer
that:



(1)  The instruction is effective; and



(2)  At the time the instruction is presented to the
issuer the purchaser will be entitled to the registration of transfer.



(f)  A person who presents a certificated
security for registration of transfer or for payment or exchange warrants to
the issuer that the person is entitled to the registration, payment, or
exchange, but a purchaser for value and without notice of adverse claims to
whom transfer is registered warrants only that the person has no knowledge of
any unauthorized signature in a necessary indorsement.



(g)  If a person acts as agent of another in
delivering a certificated security to a purchaser, the identity of the
principal was known to the person to whom the certificate was delivered, and
the certificate delivered by the agent was received by the agent from the
principal or received by the agent from another person at the direction of the
principal, the person delivering the security certificate warrants only that
the delivering person has authority to act for the principal and does not know
of any adverse claim to the certificated security.



(h)  A secured party who redelivers a security
certificate received, or after payment and on order of the debtor delivers the
security certificate to another person, makes only the warranties of an agent
under subsection (g).



(i)  Except as otherwise provided in subsection
(g), a broker acting for a customer makes to the issuer and a purchaser the
warranties provided in subsections (a) to (f).  A broker that delivers a
security certificate to its customer, or causes its customer to be registered
as the owner of an uncertificated security, makes to the customer the
warranties provided in subsection (a) or (b), and has the rights and privileges
of a purchaser under this section.  The warranties of and in favor of the
broker acting as an agent are in addition to applicable warranties given by and
in favor of the customer. [L 1997, c 33, pt of §2]