C. Subsequent Acquisition of Shares

byShareholders and Corporation

 

[§414-101]  Shareholders' preemptive rights. (a)  The shareholders of a corporation do not have a preemptive right toacquire the corporation's unissued shares except to the extent the articles ofincorporation so provide.

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

(1)  The shareholders of the corporation have apreemptive right, granted on uniform terms and conditions prescribed by theboard of directors to provide a fair and reasonable opportunity to exercise theright, to acquire proportional amounts of the corporation's unissued sharesupon the decision of the board of directors to issue them;

(2)  A shareholder may waive the shareholder'spreemptive right.  A waiver evidenced by a writing is irrevocable even thoughit is not supported by consideration;

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

(A)  Shares issued as compensation todirectors, officers, agents, or employees of the corporation, its subsidiariesor affiliates;

(B)  Shares issued to satisfy conversion oroption rights created to provide compensation to directors, officers, agents,or employees of the corporation, its subsidiaries or affiliates;

(C)  Shares authorized in articles ofincorporation that are issued within six months from the effective date ofincorporation; or

(D)  Shares sold otherwise than for money;

(4)  Holders of shares of any class without generalvoting rights but with preferential rights to distributions or assets have nopreemptive rights with respect to shares of any class;

(5)  Holders of shares of any class with generalvoting rights but without preferential rights to distributions or assets haveno preemptive rights with respect to shares of any class with preferentialrights to distributions or assets unless the shares with preferential rightsare convertible into or carry a right to subscribe for or acquire shareswithout preferential rights; or

(6)  Shares subject to preemptive rights that are notacquired by shareholders may be issued to any person for a period of one yearafter being offered to shareholders at a consideration set by the board ofdirectors that is not lower than the consideration set for the exercise ofpreemptive rights.  An offer at a lower consideration or after the expirationof 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 tosubscribe for or acquire shares.

(d)  Nothing in this section shall affect thevalidity of any action taken prior to April 21, 1953, by any corporation. [L2000, c 244, pt of §1]