Chapter 127

AN ACT ESTABLISHING A NEW BUSINESS CORPORATION ACT.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Subsection (h) of section 21 of chapter 40D of the General Laws, as appearing in the 2002 Official Edition, is hereby amended by striking out the third sentence and inserting in place thereof the following sentence:- In the event that solid waste disposal facilities financed in whole or in part hereunder include or are to include facilities for the production of steam as a by-product, either the financing authority or a corporation, whether domestic or foreign, or other person owning, occupying or operating the facilities shall have the powers granted by section 12 of chapter 158 but the production and sale of the steam and the foregoing grant of powers shall not cause the corporation to be otherwise subject to chapter 158 or excluded from chapter 156 or chapter 156D or cause the corporation to be considered a heat or power company for the purposes of the corporation laws of the commonwealth.

SECTION 2. Section 30 of chapter 63 of the General Laws is hereby amended by striking out paragraphs 1 and 2, as amended by section 204 of chapter 26 of the acts of 2003, and inserting in place thereof the following paragraphs:-

1. "Domestic corporations", (i) a corporation organized under or subject to chapter 156, chapter 156A, chapter 156B, chapter 156D or chapter 180 w has privileges, powers, rights or immunities not possessed by individuals or partnerships; (ii) a mutual holding company subject to chapter 167H or sections 19F to 19W, inclusive, of chapter 175; or (iii) a limited liability company formed under chapter 156C which has more than 1 member which limited liability company is not classified for the taxable year as a partnership for federal income tax purposes or which has only 1 member and has elected for the taxable year to be classified for federal income tax purposes as a corporation separate from its member; provided, however, that said term shall not apply to a corporation organized under section 10 of chapter 157, a domestic manufacturing corporation as defined in section 38C, a corporation that qualifies as a regulated investment company under section 851 of the Code, as amended and in effect for the taxable year, nor to a corporation exempt from taxation under section 501 of the Code, as amended and in effect for the taxable year, nor to a corporation subject to section 2. A limited liability company having as its sole member a domestic corporation that is not a federal S corporation, as defined in section 1361 of the Code, as amended and in effect for the taxable year, which limited liability company is not treated as a separate taxable entity for federal income tax purposes, shall not be separately taxed under this chapter but shall be treated as a branch or division of its domestic corporation member; but any limited liability company or any other entity that makes a federal election to be disregarded as an entity separate from its sole member and has, as its sole member, an S corporation for federal income tax purposes, shall be separately taxed under this chapter as an S corporation.

2. "Foreign corporation", corporation, association, or organization established, organized or chartered under laws other than those of the commonwealth, for purposes for which domestic corporations may be organized under chapter 156, chapter 156A, chapter 156B, chapter 156D or section 19F to 19W, inclusive, of chapter 175, or chapter 180 which has privileges, powers, rights or immunities not possessed by individuals or partnerships; provided, however, that said term shall not apply to a corporation, association or organization without capital stock which is subject to taxation under section 18 of chapter 157, to a foreign manufacturing corporation as defined in section 42B, to a corporation, association or organization that qualifies as a regulated investment company under section 851 of the Code, as amended and in effect for the taxable year, to a corporation, association or organization which is exempt from taxation under section 501 of the Code, as amended and in effect for the taxable year, nor to a corporation, association or organization subject to tax under paragraph 1; provided, further, that the terms shall apply to a foreign limited liability company as defined in section 2 of chapter 156C, which has more than 1 member and is not classified for the taxable year as a partnership for federal income tax purposes or which has only 1 member and has elected to be classified as a corporation separate from its member for federal income tax purposes. A limited liability company having as its sole member a foreign corporation that is not a federal S corporation, as defined in section 1361 of the Code, as amended and in effect for the taxable year, which limited liability company is not treated as a separate taxable entity for federal income tax purposes, shall not be separately taxed under this chapter but shall be treated as a branch or division of its foreign corporation member; provided, however, that any foreign limited liability company or any other entity that makes a federal election to be disregarded as an entity separate from its sole member and has, as its sole member, an S corporation for federal income tax purposes, shall be separately taxed under this chapter as a foreign S corporation.

SECTION 3. Section 38C of said chapter 63 of the General Laws, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Every corporation organized under or subject to chapter 156D which is engaged in manufacturing, or in research and development of products capable of being manufactured in this commonwealth, shall for the purposes of this chapter be deemed to be a domestic manufacturing corporation, or a domestic research and development corporation.

SECTION 4. Paragraph (e) of section 1 of chapter 110D of the General Laws, as so appearing, is hereby amended by striking out the introductory paragraph and inserting in place thereof the following introductory paragraph:-

(e) "Issuing public corporation", a corporation to which paragraph (a) of section 17.01 of chapter 156D apply, a gas or electric company or combined gas and electric company to which section 3 of chapter 164 apply or an association or trust which pursuant to said section 3 of said chapter 164 owns beneficially a majority of the common stock of such a company; provided, however, that such issuing public corporation has:.

SECTION 5. Section 2 of chapter 110D of the General Laws, as so appearing, is hereby amended by striking out subsection (e) and inserting in place thereof the following subsection:-

(e) No amendment to the articles of organization adopted by a corporation pursuant to this section shall give any stockholder appraisal rights under section 13.02 of chapter 156D.

SECTION 6. Section 7 of said chapter 110D, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following 3 sentences:-

Unless otherwise expressly provided in an issuing public corporation's articles of organization or by-laws in effect at the time of a control share acquisition of shares of such corporation, if voting rights are authorized for shares acquired in such control share acquisition in accordance with the provisions of section 5 and, in such control share acquisition, the person making such control share acquisition has acquired beneficial ownership of shares that, when added to all other shares of such corporation beneficially owned by such person, entitle such person to vote, or direct the voting of, shares of such corporation having a majority or more of all voting power in the election of directors, each stockholder of record of such corporation, other than the person making such control share acquisition, who has not voted in favor of authorizing voting rights for the shares acquired in such control share acquisition may demand payment for his stock and an appraisal in accordance with the part 13 of chapter 156D, and such stockholder and such corporation shall have the rights and duties and follow the procedures set forth in that part as nearly as practicable. For purposes of said part 13, the corporate action shall be deemed to have become effective on the later of the date such voting rights are authorized or the date on which such control share acquisition is made. For purposes of this section, fair value shall be determined as of the date on which the stockholders authorize voting rights for the shares acquired in such control share acquisition, but in no event it shall be less than the highest price per share paid by the person who made such control share acquisition in such control share acquisition.

SECTION 7. Section 8 of chapter 110D, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

To the extent that this chapter is inconsistent with chapter 156D, 164 or 182, the provisions of this chapter shall govern.

SECTION 8. Paragraph (g) of section 2 of chapter 110F of the General Laws, as so appearing, is hereby amended by striking out clause (i), and inserting in place thereof the following clause:-

(i) a merger or consolidation of the corporation, except for a merger in respect of which, pursuant to section 11.05 of chapter 156D, no vote of the stockholders of the corporation is required;.

SECTION 9. Section 3 of said chapter 110F, as so appearing, is hereby amended by striking out paragraph (f), and inserting in place thereof the following paragraph:-

(f) "Corporation", a corporation to which the provisions of paragraph (1) of section 17.01 of chapter 156D apply, a gas or electric company or combined gas and electric company to which section 3 of chapter 164 applies or an association or trust which owns beneficially a majority of the common stock of such a company or a trust company to which the provisions of chapter 172 apply, a savings bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 34C of chapter 168, or a cooperative bank in stock form to which certain provisions of said chapter 172 apply pursuant to section 26C of chapter 170.

SECTION 10. The definition of "Control Transferor" of section 183 of chapter 149 of the General Laws, as so appearing, is hereby amended by striking out clause (i), and inserting in place thereof the following clause:-

(i) a corporation to which the provisions of paragraph (1) of section 17.01 of chapter 156D apply, a gas or electric company or combined gas and electric company to which section 3 of chapter 164 applies or an association or trust which pursuant to said section 3 of said chapter 164 owns beneficially a majority of the common stock of such a company or a trust company to which the provisions of chapter 172 apply, a savings bank to which certain provisions of said chapter 172 apply pursuant to section 34C of chapter 168, a cooperative bank in stock form to which certain provisions of chapter 172 apply pursuant to section 26C of chapter 170, or a national bank, federally chartered savings and loan association in stock form, or a federal savings bank in stock form; provided, however, that such corporation, trust company, savings bank, cooperative bank, national bank, federally chartered savings and loan association in stock form or a federal savings bank in stock form employs 50 or more full-time employees, or employees working aggregate hours equal to the sum of hours worked by 50 full-time employees, in the commonwealth at some point in the 12 calendar months before the transfer of control; and, provided further, that the term "control transferor" as defined in this clause (i) shall also be deemed to include any such trust company, savings bank, cooperative bank, national bank, federally chartered savings and loan association in stock form, or a federal savings bank in stock form if, immediately before the transfer of control, the control of such trust company, savings bank, cooperative bank, national bank, federally chartered savings and loan association in stock form, or a federal savings bank in stock form is held by such control transferor.

SECTION 11. Section 184 of said chapter 149 of the General Laws, as so appearing, is hereby further amended by striking out subsection (a) and inserting in place thereof the following subsection:-

(a) As used in this section, the following words, unless the context clearly requires otherwise, shall have the following meanings:

"Control transferor", the person or persons who exercise control, including the power to hire and fire, before a contested meeting date; provided, however, that such person or persons are a registered corporation subject to subsection (b) of section 8.06 of chapter 156D and are subject to a contested meeting.

"Registered corporation", any corporation subject to subsection (b) of section 8.06 of chapter 156D which has a class of voting stock registered under the Securities Exchange Act of 1934, as amended, hereinafter referred to as the "act"; provided, however, that if a corporation is subject to subsection (a) of such section 8.06 at the time it ceases to have any class of voting stock so registered, such corporation shall nonetheless be deemed to be a registered corporation for a period of 12 months following the date it ceased to have such stock so registered.

SECTION 12. Chapter 155 of the General Laws is hereby amended by striking out section 1, as so appearing, and inserting in place thereof the following section:-

Section 1. This chapter, unless expressly limited in its application, shall apply to all corporations created by or organized under the laws of the commonwealth, except incorporated domestic insurance companies, and except corporations subject to chapter 156A or corporations subject to chapter 156B or chapter 156D or chapter 164 or sections 1 through 11D of chapter 165 or chapter 180 except that section 2B of this chapter shall apply to all corporations subject to any of said chapters and except insofar as such provisions are inconsistent with other provisions of law relative to particular corporations or classes of corporations, and the provisions shall apply to all corporations created by or organized under laws other than those of the commonwealth so far as they are made applicable to them by reference in this or any other chapter. In this chapter, unless the context otherwise requires, "secretary" or "state secretary" means the secretary of the commonwealth.

SECTION 13. Chapter 156 of the General Laws is hereby amended by striking out section 2, as so appearing, and inserting in place thereof the following section:-

Section 2. Except as expressly made applicable by reference in other chapters, this chapter shall not apply to corporations subject to chapter 156A, chapter 156B or chapter 156D or to corporations organized for the purpose of carrying on the business of a bank, savings bank, co-operative bank, trust company, credit union, surety or indemnity company, or safe deposit company, or for the purpose of carrying on within the commonwealth the business of an insurance company, railroad, electric railroad, street railway or trolley motor company, telegraph or telephone company, gas, or electric company, canal, aqueduct or water company, cemetery or crematory company, or to any other corporations which now have or may hereafter have the right to take land within the commonwealth by eminent domain or to exercise franchises in public ways granted by the commonwealth or by any county, city or town; provided, however, that section 17 of this chapter shall remain available to all corporations which were subject to this chapter immediately before the effective date of chapter 156B; and provided, further, that any amendment to the articles of organization of any such corporation adopted before such date shall be effected by filing articles of amendment, and any rights of dissenting stockholders arising from the adoption of such amendment or from a vote of the stockholders to sell, lease or exchange all the property of any such corporation adopted prior to such date, shall be enforced, in accordance with the provisions of this chapter.

SECTION 14. Subsection (a) of section 13 of chapter 156A of the General Laws, as so appearing, is hereby further amended by striking out clause (3) and inserting in place thereof the following clause:-

(3) the corporation shall be merged into, consolidated with or changed by articles of amendment into a corporation organized pursuant to chapter 156D in accordance with section 14.

SECTION 15. Said chapter 156A is hereby amended by striking out section 14, as so appearing, and inserting in place thereof the following section:-

Section 14. A professional corporation which has ceased to render any professional services under this chapter or which is permitted to render professional services as a business corporation organized under chapter 156D may change its status by merging into or consolidating with such a business corporation or by filing articles of amendment to change its name, where necessary, and purposes to those of such a business corporation.

SECTION 16. Section 59 of chapter 156C of the General Laws, as so appearing, is hereby further amended by striking out subsection (a) and inserting in place thereof the following subsection:-

(a) As used in sections 59 to 63, inclusive, the phrase "other business entity" shall mean a corporation to which paragraph (a) of section 17.01 of chapter 156D applies, a professional corporation and a foreign professional corporation, as defined in section 2 of chapter 156A, a foreign corporation, as defined in section 1 of chapter 181, an association or a trust, as defined in section 1 of chapter 182, and as having filed a copy of its instrument or declaration with the state secretary in compliance with, chapter 182, a partnership whether general or limited and whether domestic or foreign, as defined, respectively, in section 6 of chapter 108A and section 1 of chapter 109, and a foreign limited liability company as defined in this chapter. `tuc New Massachusetts Business Corporation Act

SECTION 17. The General Laws are hereby amended by inserting after chapter 156C the following chapter:-CHAPTER 156D. BUSINESS CORPORATIONS.

PART 1
SUBDIVISION A.
SHORT TITLE AND RESERVATION OF POWER

Section 1.01. SHORT TITLE

This chapter shall be known and may be cited as the "Massachusetts Business Corporation Act".

Section 1.02. RESERVATION OF POWER TO AMEND OR REPEAL

The General Court of the commonwealth 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.

SUBDIVISION B.
FILING DOCUMENTS

Section 1.20. FILING REQUIREMENTS

(a) To be entitled to filing with the secretary of state, a document shall satisfy the requirements of this section, any other section of this chapter that adds to or varies from these requirements, any applicable forms or regulations promulgated by the secretary of state hereunder, and any other relevant laws or regulations of the commonwealth.

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

(c) The document shall contain the information required by this chapter. The document may contain other information as well that is relevant to the business or affairs of the corporation.

(d) The document shall be typewritten, printed or in such other form as the secretary of state shall prescribe.

(e) The document shall 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 shall be executed:

(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 the incorporator or incorporators; or

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

(g) The person executing the document shall sign it and state beneath or opposite his signature his name and the capacity in which he signs. The document may but need not contain any of: (1) the corporate seal, (2) an attestation, and (3) an acknowledgment or verification.

(h) The document shall be delivered to the office of the secretary of state for filing and shall be accompanied by one exact or conformed copy, except that no copy is required for filings under sections 5.02, 15.03, 15.08, 15.09 and 16.22, the correct filing fee and any payment or penalty required by this chapter or other law. The secretary of state may waive the requirement that an exact or conformed copy accompany any document submitted for filing, including documents submitted electronically.

(i) Electronic documents or transmissions may be filed with the secretary of state if and to the extent permitted by the secretary. The secretary of state may promulgate regulations regarding the procedures for electronic filings which shall supersede any inconsistent provisions of this chapter with respect to such filings.

Section 1.21. FORMS

(a) The secretary of state may prescribe and furnish on request forms for any documents to be filed under this chapter. If the secretary of state so requires, use of these forms is mandatory.

(b) The secretary of state may accept for filing a document that contains the information required by this chapter but that does not conform to a prescribed form, whether or not use of the form is mandatory.

Section 1.22. FILING, SERVICE AND COPYING FEES

The commissioner of administration shall issue regulations prescribing fees for the filing and copying of documents, the issuance of certificates and the handling of service of process under this Act.

Section 1.23. EFFECTIVE TIME AND DATE OF DOCUMENT

(a) Except as provided in subsection (b) and in subsection (c) of section 1.24, a document that is filed by the secretary of state pursuant to section 1.25 is effective:

(1) at the time and on the date when it was approved for filing by the secretary of state; or

(2) in the case of articles of organization, amendment or merger, at the time and on the date when the articles were received for filing by the secretary of state if the articles are not rejected by the secretary within such time after their filing as is specified in regulations promulgated by the secretary.

(b) A filed document may specify a delayed effective time and date, and if it does so the document will become 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 ninetieth day after the date when it is received for filing by the secretary of state.

Section 1.24. CORRECTING FILED DOCUMENT

(a) A domestic or foreign corporation may correct a document filed by the secretary of state if the document (1) contains a typographical error or an incorrect statement or (2) was defectively executed, attested, sealed, verified, or acknowledged.

(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 typographical error, the incorrect statement and the reason it is incorrect or the manner in which the execution was defective; and (iii) correct the typographical error, incorrect statement or defective execution; and

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

(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.

(d) Articles of correction cannot be used to change the effective date of a filed document; provided, however, that if a document has been filed with a delayed effective date, articles of correction may be filed prior to said date (1) to accelerate the effective date to a date not earlier than the date of the articles of correction, or (2) to abandon a merger or amendment to the articles of organization if authority to do so is granted by the merger agreement or the persons approving the amendment.

(e) If the secretary of state permits electronic filings, defects in the electronic recording or transmission of documents may be corrected under this section to the extent permitted by regulations promulgated by the secretary.

Section 1.25. FILING DUTY OF SECRETARY OF STATE

(a) Upon receipt of a document for filing, the secretary of state shall record the date and time of receipt on or with the document and, if the person submitting the document or his representative so requests, furnish evidence of the date and time of receipt to such person or his representative in such form as the secretary of state shall determine.

(b) The secretary of state shall examine each document received by him for filing. If he finds that the relevant provisions of law have been satisfied, he shall evidence his approval on or with the document. Upon such approval and the payment of the fee authorized by section 1.22, the document shall be deemed to be filed with the secretary of state.

(c) If the secretary of state refuses to file a document, he shall notify the person or his representative in writing of the refusal and his reasons therefor within 90 days after receipt in the case of annual reports under section 16.22 or within 5 days after receipt in the case of other documents.

(d) The secretary of state shall keep a record of each document received, of the date and time of its receipt for filing, and of the date and, if requested, the time of his approval for filing, and shall keep the document and such records on file in his office in a manner convenient for public inspection.

Section 1.26. APPEAL FROM SECRETARY OF STATE'S REFUSAL TO FILE DOCUMENT

If the secretary of state refuses to file a document delivered to his office for filing, the person attempting to file may appeal that refusal. Such an appeal must be commenced within 90 days after the return of the document to the superior court of the county where the corporation's principal office or, if none in the commonwealth, its registered office, is or will be located. Such an appeal is commenced by petitioning the court to compel the filing of the document and by attaching to the petition the document and the explanation of the secretary of state for his refusal to file.

Section 1.27. EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT

A certified 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.

Section 1.28. CERTIFICATES REGARDING CORPORATIONS

(a) Anyone may apply to the secretary of state to furnish a certificate of legal existence for a domestic corporation. A certificate of legal existence shall set forth:

(1) the corporate name;

(2) that the corporation was organized under the General Laws of the commonwealth and the date of its incorporation;

(3) that the corporation has legal existence so far as it appears of record with the secretary of state;

(4) if requested, a listing of all amendments to the articles of organization on file with the secretary of state; and

(5) if requested, that the corporation is in good standing with the secretary of state, meaning that the corporation has filed all annual reports required under section 16.22 and has paid all fees due with respect to the reports and that no proceedings are pending before the secretary of state to dissolve the corporation and no articles of dissolution have been filed with the secretary of state.

A certificate of legal existence issued by the secretary of state may be relied upon as conclusive evidence that the domestic corporation has legal existence in the commonwealth on the date of the certificate.

(b) The secretary of state shall issue, upon request, such other certificates regarding facts of record in his office concerning corporations upon payment of the fees as may be specified in regulations promulgated by the commissioner of administration, including without limitation, certificates of merger, certificates of dissolution, and certificates regarding the authority of a foreign corporation to do business in the commonwealth. The certificates may be relied upon as conclusive evidence of the facts stated herein.

Section 1.29. PENALTY FOR SIGNING FALSE DOCUMENT

(a) A person commits an offense if he signs a document that he knows is false in any material respect with intent that the document be delivered to the secretary of state for filing.

(b) The secretary of state shall refer to the attorney general for action evidence of offenses under this section.

SUBDIVISION C.
SECRETARY OF STATE

Section 1.30. POWERS

The secretary of state has the power reasonably necessary to perform the duties required of him by this chapter, including the power to promulgate regulations, prescribe forms and fees and adopt policies in order to implement this chapter.

SUBDIVISION D.
DEFINITIONS

Section 1.40. ACT DEFINITIONS

(a) As used in this chapter the following words shall have the following meanings, unless the context requires otherwise:

"Articles of organization", means the original and any amended and restated articles of organization and articles of merger, and special acts of incorporation, as amended from time to time by various articles and certificates provided for by this chapter.

"Authorized shares", means the shares of all classes a domestic or foreign corporation is authorized to issue.

"Conspicuous", written so that a reasonable person against whom the writing is to operate should have noticed it.

"Corporation", "domestic corporation" or "domestic business corporation", a corporation for profit, which is not a foreign corporation, incorporated under or subject to this chapter.

"Deliver", any method of delivery used in conventional commercial practice, including mailing, delivery by hand, messenger or delivery service and delivery by electronic transmission; however the secretary of state is not required to accept delivery of electronic documents or transmissions unless he adopts regulations authorizing this practice.

"Distribution", 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 includes a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness; and a distribution in voluntary or involuntary liquidation.

"Domestic other entity", an other entity organized under the laws of the commonwealth.

"Effective date of notice", as defined in section 1.41.

"Electronic document" or "electronic transmission", any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval and reproduction of information by the recipient.

"Employee", includes an officer but not a director. A director may accept duties that make him also an employee.

"Entity", a corporation and a foreign corporation; a nonprofit corporation; a profit and a nonprofit unincorporated association; a limited liability company; a business trust; an estate; a partnership; a registered limited liability partnership; a trust, and two or more persons having a joint or common economic interest; and a state, the United States, and a foreign government.

"Filing entity", an other entity that is of a type created by filing a public organic document.

"Foreign business corporation", a corporation for profit incorporated under a law other than the law of the commonwealth.

"Foreign corporation", a corporation for profit or a nonprofit corporation incorporated under a law other than the laws of the commonwealth.

"Foreign nonprofit corporation", a corporation incorporated under a law other than the laws of the commonwealth, which if incorporated under the laws of the commonwealth would be a nonprofit corporation.

"Foreign other entity", an other entity organized under a law other than the laws of the commonwealth.

"Governmental subdivision", includes authority, county, district, and municipality.

"Individual", includes the estate of an incompetent or deceased individual.

"Interest holder", a person who holds of record:

(i) a right to receive distributions from an other entity either in the ordinary course of business or upon liquidation, other than as an assignee; or

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

"Interests", the interests in an other entity held by its interest holders.

"Membership", the rights of a member in a nonprofit corporation.

"Nonfiling entity", an other entity that is of a type that is not created by filing a filed organizational document.

"Nonprofit corporation" or "domestic nonprofit corporation", a corporation incorporated under the laws of the commonwealth and subject to chapter 180.

"Notice", as defined in section 1.41.

"Organic document", a public organic document or a private organic document.

"Organic law", the law governing the internal affairs of an entity.

"Other entity", any association or entity other than a domestic or foreign business corporation, a domestic or foreign nonprofit corporation or a governmental or quasi-governmental organization. The term includes, without limitation, limited partnerships, general partnerships, limited liability partnerships, limited liability companies, joint ventures, joint stock companies, business trusts and profit and not-for-profit unincorporated associations.

"Owner liability", personal liability for a debt, obligation or liability of an entity that is imposed on a person:

(i) solely by reason of the person's status as a shareholder or interest holder; or

(ii) by the articles of organization, bylaws or an organic document under a provision of the organic law of an entity authorizing the articles of organization, 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.

"Person", includes individual and entity.

"Principal office", the office, within or without the commonwealth, so designated in the annual report where the principal executive offices of a domestic or foreign corporation are located.

"Private organic document", any document, other than the public organic document, if any, that determines the internal governance of an other entity.

"Proceeding", includes civil suit and criminal, administrative, and investigatory action.

"Public corporation", any corporation to which this chapter apply to, and which has a class of voting stock registered under the Securities Exchange Act of 1934, as amended; provided, that if a corporation is subject to paragraph (b) of section 8.06 at the time it ceases to have any class of voting stock so registered, such corporation shall nonetheless be deemed to be a public corporation for a period of twelve months following the date it ceased to have such stock registered.

"Public organic document", the document, if any, that is filed of public record to create an other entity, including amendments and restatements thereof.

"Record date", the date established under PART 6 or PART 7 hereof on which a corporation determines the identity of its shareholders for purposes of this chapter.

"Secretary", the corporate officer to whom the board of directors has delegated responsibility under subsection (c) of section 8.40 for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation, and includes a "clerk" appointed under chapter 156B unless the corporation has also appointed a "secretary" or the context otherwise requires.

"Secretary of state", the state secretary.

"Shares", the units into which the proprietary interests in a corporation are divided.

"Shareholder", 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.

"Sign" or "signature", includes any manual, facsimile, conformed or electronic signature.

"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.

"Subscriber", a person who subscribes for shares in a corporation, whether before or after incorporation.

"United States", includes a district, authority, bureau, commission, department, and any other agency of the United States.

"Voting group", all shares of one or more classes or series that under the articles of organization or this chapter are entitled to vote and to be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of organization or this chapter to vote generally on the matter are for that purpose a single voting group.

(b) In this chapter, use of the masculine gender includes the feminine gender or, where the context permits, an entity.

Section 1.41. NOTICE

(a) Notice under this chapter shall be in writing unless oral notice is reasonable under the circumstances. Notice by electronic transmission is written notice.

(b) Notice may be communicated in person; by telephone, voice mail, telegraph, teletype, or other electronic means; by mail; by electronic transmission; or by messenger or delivery service. If these forms of personal notice are impracticable, notice 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) Written notice, other than notice by electronic transmission, by a domestic or foreign corporation to any of its shareholders, if in a comprehensible form, is effective upon deposit in the United States mail, if mailed postpaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders.

(d) Written notice by electronic transmission by a domestic or foreign corporation to any of its shareholders, if in comprehensible form, is effective:

(1) if by facsimile telecommunication, when directed to a number furnished by the shareholder for the purpose;

(2) if by electronic mail, when directed to an electronic mail address furnished by the shareholder for the purpose;

(3) if by a posting on an electronic network together with separate notice to the shareholder of such specific posting, directed to an electronic mail address furnished by the shareholder for the purpose, upon the later of (i) such posting and (ii) the giving of such separate notice; and

(4) if by any other form of electronic transmission, when directed to the shareholder in such manner as the shareholder shall have specified to the corporation.

An affidavit of the secretary or an assistant secretary of the corporation, the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(e) Written notice, including notice by electronic transmission, to a domestic or foreign corporation, authorized to transact business in the commonwealth, may be addressed to its registered agent at its registered office or to 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 qualification.

(f) Except as provided in subsection (c), written notice, other than notice by electronic transmission, if in a comprehensible form, is effective at the earliest of the following:

(1) when received;

(2) five days after its deposit in the United States mail, if mailed postpaid and correctly addressed;

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

(4) on the date of publication if notice by publication is permitted.

(g) Oral notice is effective when communicated if communicated in a comprehensible manner.

(h) If this chapter or any other General Law prescribes notice requirements for particular circumstances, those requirements shall govern. If articles of organization or bylaws prescribe notice requirements, which are not inconsistent with this chapter, those requirements shall govern.

Section 1.42. NUMBER OF SHAREHOLDERS

(a) For purposes of this chapter, except as provided in subsection (c), 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 chapter, shareholders registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person.

(c) For purposes of this chapter, each beneficial owner of shares registered in the name of a nominee in a corporation's current record of shareholders constitutes one shareholder.

SUBDIVISION E.
INTERPRETATION

Section 1.50. INTERPRETATION OF ACT

In interpreting this chapter, in the absence of controlling Massachusetts precedent on any matter, consideration shall be given to the following:

Inasmuch as predictability is important in the conduct of the affairs of Massachusetts corporations and in their relations with corporations organized under the laws of other jurisdictions, significant weight shall be given to the interpretations of courts of other jurisdictions of substantially equivalent provisions of the corporate laws of such other jurisdictions.

PART 2

Section 2.01. INCORPORATORS

One or more persons may act as the incorporator or incorporators of a corporation by signing articles of organization and delivering them to the secretary of state for filing. Before the initial issuance of shares by the corporation, the incorporators may exercise all powers of shareholders and take any action required or permitted by law, the articles of organization or the bylaws to be taken by shareholders.

Section 2.02. ARTICLES OF ORGANIZATION

(a) The articles of organization shall 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, and any required description of additional classes or series of shares, in conformity with section 6.01; and

(3) the name and address of each incorporator.

(b) The articles of organization may set forth:

(1) 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 or any class thereof;

(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; or

(vi) the voluntary dissolution of the corporation; and

(2) any provision that under this chapter is required to be set forth in the articles of organization in order for the subject matter of the provision to be effective or is permitted to be set forth in such articles;

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

(4) a provision eliminating or limiting the personal liability of a director to the corporation for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability; but the provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for improper distributions under section 6.40, or (iv) for any transaction from which the director derived an improper personal benefit.

(d) The form on which articles of organization are filed shall also include the following supplemental information, which is not to be considered a part of the articles:

(1) the street address of the initial registered office of the corporation;

(2) the names and addresses of the individuals who will serve as the initial directors, president, treasurer and secretary of the corporation;

(3) the name of its initial registered agent at its registered office;

(4) the fiscal year of the corporation that is initially adopted; and

(5) such other supplemental information as the secretary of state may require, including (i) a brief description of the type of business in which the corporation intends to engage or its SIC code, and (ii) the federal tax identification number of the corporation.

Section 2.03. INCORPORATION

(a) Corporate existence begins when the articles of organization become effective pursuant to section 1.23.

(b) The filing of the articles of organization with the state secretary shall be conclusive evidence that the incorporators satisfied all conditions precedent to incorporation and that the corporation has been incorporated under this chapter, except in a proceeding by the commonwealth to challenge the validity of the corporation.

Section 2.04. LIABILITY FOR PRE-INCORPORATION TRANSACTIONS

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

Section 2.05. ORGANIZATION OF CORPORATION

(a) The organization of the corporation shall be completed as follows:

(1) The incorporator or incorporators may hold an organizational meeting before or after incorporation at the call of a majority of the incorporators at which by-laws shall be adopted and the initial directors, a president, treasurer and secretary, shall be elected.

(2) If no organizational meeting of the incorporators is held, the initial directors named in the articles of organization shall hold an organizational meeting after incorporation at the call of a majority of the directors at which by-laws shall be adopted and a president, treasurer and secretary shall be elected.

(3) At the organization meeting of the incorporators or the directors, additional officers may be appointed and any other business may be transacted which is properly brought before the meeting.

(b) Action required or permitted by this chapter 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.

Section 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 for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the articles of organization.

Section 2.07. EMERGENCY BYLAWS

(a) Unless the articles of organization 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) appointment of successors to any of the officers, directors, employees or agents;

(2) relocation of the principal office or designation of alternative officers;

(3) procedures for calling and giving notice of a meeting of the board of directors;

(4) quorum requirements for the meeting; and

(5) 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.

(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.

PART 3

Section 3.01. PURPOSES

Every corporation incorporated under this chapter has the purpose of engaging in any lawful business unless a more limited purpose is set forth in its articles of organization.

Section 3.02. GENERAL POWERS

(a) Unless its articles of organization provide otherwise, every corporation shall have 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 organization or with the laws of the commonwealth, for managing the business and regulating the affairs of the corporation;

(4) to purchase, receive, borrow, lease or otherwise acquire, to own, hold, lend, improve, use, transfer and otherwise deal with, and to sell, convey, mortgage, pledge, lease, exchange and otherwise dispose of, all or any part of its real or personal property, or any legal or equitable interest in such property, wherever located;

(5) to purchase, receive, borrow or otherwise acquire, to use, own, hold, sell, lend, transfer and otherwise dispose of, and to pledge, exchange and otherwise deal in and with, its own shares;

(6) to purchase, receive, subscribe for, or otherwise acquire, to 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 chapter within or without the commonwealth or the United States;

(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;

(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 the current or former directors, officers, employees, and agents of the corporation or any other corporation or entity in which it has an interest;

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

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

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

(b) Unless its articles of organization provide otherwise, a contract of guarantee or suretyship made by a corporation with respect to the obligation of another entity, (i) all of the equity interest in which is owned, directly or indirectly, by the contracting corporation, or (ii) which owns, directly or indirectly, all of the outstanding stock of the contracting corporation, or (iii) all of the equity interest in which is owned, directly or indirectly, by an entity which owns, directly or indirectly, all of the outstanding stock of the contracting corporation, shall be deemed necessary or convenient to carry out the business and affairs of the contracting corporation.

Section 3.03. EMERGENCY POWERS

(a) In anticipation of or during an emergency defined in subsection (d), unless emergency bylaws or other bylaws that specifically refer to this section provide otherwise, 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 or other bylaws that specifically refer to this section 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) those directors present may reduce the quorum requirement and/or treat one or more officers of the corporation present at such a meeting as 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.

Section 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.

PART 4

Section 4.01. CORPORATE NAME

(a) A corporate name:

(1) shall contain the word "corporation, "incorporated," "company," or "limited" or the abbreviation "corp.," "inc., 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 301. and its articles of organization.

(b) Except as authorized by subsections (c) and (d), a corporate name may not be the same as, or so similar that it is likely to be mistaken for:

(1) the corporate name or trade name of a corporation organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth;

(2) a corporate name reserved under section 4.02;

(3) the fictious name adopted by a foreign corporation or entity authorized to transact business or otherwise lawfully conducting business in the commonwealth because its real or trade name is unavailable;

(4) the corporate name or trade name of a not-for-profit corporation organized, authorized to conduct its activities or otherwise lawfully conducting its activities in the commonwealth;

(5) the name or trade name of a partnership, business trust or other entity organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth; or

(6) a trademark or service mark registered with the secretary of state under chapter 110B.

(c) A person may apply to the secretary of state for authorization to use a corporate name that does not comply with the requirements of subsection (b). The secretary of state shall authorize use of the name applied for if:

(1) the other user consents to the use in writing and, if required by the secretary of state, submits an undertaking in form satisfactory to the secretary of state to change its name or mark to a name or mark that is not the same as or so similar that it is likely to be mistaken for the name of the applicant; 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 the commonwealth.

(d) A corporation may use the name, including the fictitious name, or mark of another entity that is used in the commonwealth if the other entity is organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth and the proposed user corporation:

(1) has merged with the other entity; or

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

(3) has acquired all or substantially all of the assets, including the name and marks, of the other entity.

(e) Within 90 days after articles of organization or articles of amendment affecting a change in the name of a corporation are filed with the secretary of state, any person who is registered, qualified or carrying on business in the commonwealth at the time or who has reserved a name under section 4.02 may protest in writing to the secretary of state that the name assumed by the corporation is the same as or so similar that it is likely to be mistaken for the name of such person in violation of this section. In such event, if the secretary of state decides to conduct a hearing regarding the dispute, he shall give notice thereof as soon as possible to the protesting party and the corporation which assumed the name. If as a result of the hearing or otherwise, the secretary of state determines that the assumption of the corporate name violates this section, he shall file a statement withdrawing his approval of the articles of organization or articles of amendment insofar as they relate to the name assumed by the corporation and shall give written notice thereof to the protesting party and the corporation. The withdrawal of approval shall take effect on the date specified by the secretary of state, which shall be not later than 180 days after the filing which was protested. After the effective date of the withdrawal of approval, the corporation shall have no right to use its assumed name and may be enjoined from doing business under such name by the superior court upon application of any interested person.

Section 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 shall 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, he shall reserve the name for the applicant's exclusive use for a 60-day period and, upon the applicant's written request within the 60-day period, extend the reservation for an additional 60-day period.

(b) The holder 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.

PART 5

Section 5.01. REGISTERED OFFICE AND REGISTERED AGENT

Each corporation shall continuously maintain in the commonwealth:

(1) a registered office that may, but need not be, the same as any of its places of business; and

(2) a registered agent who may be any of the following individuals or entities whose business office is also the registered office of the corporation:

(i) an individual, including the secretary or another officer of the corporation;

(ii) a domestic corporation or not-for-profit domestic corporation; or

(iii) a foreign corporation or not-for-profit foreign corporation qualified to do business in this commonwealth.

Section 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 a registered agent changes the street address of his business office, he may change the street address of the registered office of any corporation for which he is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the secretary of state for filing a statement of change that complies with the requirements of subsection (a) and recites that corporation has been notified of the change. If the street addresses of more than one corporation are being changed at the same time, there may be included in a single statement the names of all corporations the street addresses of the registered office of which are being changed.

Section 5.03. RESIGNATION OF REGISTERED AGENT

(a) The registered agent of a corporation may resign his agency appointment by signing and delivering to the secretary of state for filing a statement of resignation. The registered agent shall furnish a copy of such statement to the corporation. The statement of resignation may include a statement that the registered office is also discontinued.

(b) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.

Section 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.

(b) Service on a corporation shall be effected and shall be perfected in accordance with the Massachusetts Rules of Civil Procedure and applicable provisions of the General Laws.

PART 6
SUBDIVISION A.
SHARES

Section 6.01. AUTHORIZED SHARES

(a) The articles of organization shall prescribe the total number of shares the corporation is authorized to issue. The articles of organization also shall, before the issuance of any shares of a class or series, prescribe the number of authorized shares of the class or series, the distinguishing designation thereof and the preferences, limitations and relative rights identical with those of other shares of the same class or series, except that if a class consists of more than 1 series, all shares of each series within the class shall have identical preferences, limitations and relative rights with those of other shares within such series and may, but need not, have some or all preferences, limitations and relative rights which are identical with those of shares of other series within the class or any other class.

(b) The articles of organization shall authorize 1 or more classes or series of shares that together have unlimited voting rights, and 1 or more classes or series of shares, which may be the same class or series or classes and series as those with voting rights, that together are entitled to receive the net assets of the corporation upon dissolution.

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

(2) are redeemable or convertible as specified in the articles of organization (i) at the option of the corporation, the shareholder, or another person or upon the occurrence of a designated event; (ii) for cash, indebtedness, securities, or other property; (iii) in a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;

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

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

(d) The description of the designations, preferences, limitations, and relative rights of share classes and series in subsection (c) is not exhaustive.

Section 6.02. DETERMINATION OF TERMS OF CLASS OR SERIES

(a) The number of authorized shares of any class or series, the distinguishing designation thereof and the preferences, limitations and relative rights applicable thereto shall be set forth in the articles of organization or any amendment thereto approved by the shareholders or, if the articles of organization so permit, by the board of directors, provided that the board of directors may not approve an aggregate number of authorized shares of all classes and series which exceeds the total number of authorized shares specified in the articles of organization approved by the shareholders. Any such action with respect to any class or series may be amended or rescinded by the shareholders or, if initially taken by it, by the board of directors at any time prior to, but, except as provided in the next following subsection with respect to unissued shares, not after, the initial issuance of shares of such class or series.

(b) At any time after the initial issuance of shares of any class or series the shareholders or, if the articles of organization so permit, the board of directors may reclassify any unissued shares of the class or series into 1 or more existing or new classes or series.

(c) Before issuing any shares of a class or series, the number, preferences, limitations or relative rights of which have been determined by the board of directors, the corporation must deliver to the secretary of state for filing articles of amendment, which are effective without shareholder action, that set forth:

(1) the name of the corporation;

(2) the text of the amendment determining the terms of the class or series of shares;

(3) the date it was adopted; and

(4) a statement that the amendment was duly adopted by the board of directors.

(d) If the shareholders or board of directors shall, before the issuance of any shares of any class or series of which the number, preferences, limitations or relative rights are contained in articles of amendment filed with the secretary of state pursuant to subsection (c), amend or rescind any terms applicable to such class or series, or if the shareholders or board of directors shall reclassify any unissued shares of any class or series pursuant to subsection (b), the corporation shall deliver to the secretary of state for filing articles of amendment, which in the case of any amendment effected by the board of directors are effective without shareholder action, reflecting such amendment, recision or reclassification and setting forth the information required by clauses (1) and (4) of subsection (c) and, in the case of an amendment, the text of the amendment or, in the case of a reclassification, the number and existing class or series of the shares to be reclassified and the text of the amendment determining the terms of any new class or classes or series into which the shares are to be reclassified.

Section 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 organization. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted or canceled.

(b) The reacquisition, redemption or conversion of outstanding shares is subject to the limitations of subsection (c) and to section 6.40.

(c) At all times that shares of the corporation are outstanding, 1 or more shares that together have unlimited voting rights and 1 or more shares that together are entitled to receive the net assets of the corporation upon dissolution shall be outstanding.

Section 6.04. FRACTIONAL SHARES

(a) A corporation may:

(1) issue fractions of a share or pay in money or property 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 subsection (b) of section 6.25.

(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.

SUBDIVISION B.
ISSUANCE OF SHARES

Section 6.20. SUBSCRIPTION FOR SHARES BEFORE INCORPORATION

(a) A subscription for shares entered into before incorporation is irrevocable for 6 months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation or extension. The subscription agreement shall not be binding on the corporation until it is accepted by the board of directors.

(b) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors shall 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 more than 20 days after the corporation sends written demand for payment to the subscriber. The rescission shall not affect the status of any shares theretofore issued pursuant thereto.

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

Section 6.21. ISSUANCE OF SHARES

(a) The powers granted in this section to the board of directors may be reserved to the shareholders, either exclusively or concurrently with the powers of the directors, by the articles of organization.

(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.

(d) The articles of organization may limit the type or specify the minimum amount of consideration for which the shares of any class or series may be issued. A reference in the articles of organization to par value shall not, by itself, be deemed to be a specification of the minimum amount.

(e) Notwithstanding subsection (d), when the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.

(f) 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 when due, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be canceled in whole or part.

Section 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 or specified in the subscription agreement.

(b) Unless otherwise provided in the articles of organization, a shareholder of a corporation shall not be 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.

Section 6.23. SHARE DIVIDENDS

(a) Unless the articles of organization provide otherwise, shares may be issued pro rata and without consideration to the corporation's shareholders or to the shareholders of 1 or more classes or series. An issuance of shares under this subsection is a share dividend.

(b) Shares of 1 class or series shall not be issued as a share dividend in respect of shares of another class or series unless (1) the articles of organization so authorized, (2) the holders of a majority of the outstanding shares of the class of series to be issued approve the issue, or (3) there are no outstanding shares of the class or series to be issued. In addition, shares of a class or series having preference over another class or series with respect to distributions, including dividends and distributions upon the dissolution of the corporation, shall not be issued as a share dividend in respect of shares of such other class or series if there are at the time any outstanding shares of any third class or series as to which the shares then to be issued have a right with respect to distribution which is prior, superior or substantially equal unless (1) the articles of organization so authorize, or (2) the holders of a majority of the outstanding shares of such third class or series approve the issue.

(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 authorized the share dividend.

Section 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 the terms upon which the rights, options, or warrants are issued and the terms, including the consideration, for which the shares or other securities are to be issued.

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

(1) preclude or limit the exercise, transfer or receipt of the rights, options or warrants by any person owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation or by any transferee of any person, or that preclude or limit the exercise, transfer or receipt based on such other factors, including the nature or identity of such persons, as the directors determine to be reasonable and in the best interests of the corporation, or

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

Section 6.25. FORM AND CONTENT OF CERTIFICATES

(a) Shares may but need not be represented by certificates. Unless this chapter 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 shall state on its face:

(1) the name of the issuing corporation and that it is organized under the laws of the commonwealth;

(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 then the variations in rights, preferences and limitations applicable to each class and series, and the authority of the board of directors to determine variations for any future class or 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 shall be signed, either manually or in facsimile, by 2 officers designated in the bylaws or by the board of directors and shall 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 shall be nevertheless valid.

Section 6.26. SHARES WITHOUT CERTIFICATES

(a) Unless the articles of organization 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 shall not affect shares already represented by certificates until they are surrendered to the corporation.

(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 subsections (b) and (c) of section 6.25, and, if applicable, section 6.27.

Section 6.27. RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES

(a) The articles of organization, 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 shall 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, or unless the restriction is set forth in an amendment to the articles of organization or bylaws approved by the holders of that percentage of each voting group of the outstanding shares required for the approval of an amendment of the articles of organization containing the restriction.

(b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transfer 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 formation statement required by subsection (b) of section 6.26. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.

(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 to transfer of shares may, without limitation:

(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.

SUBDIVISION C.
SUBSEQUENT ACQUISITION OF SHARES BY SHAREHOLDERS AND CORPORATION

Section 6.30. SHAREHOLDERS' PREEMPTIVE RIGHTS

(a) The shareholders of a corporation shall not have a preemptive right to acquire the corporation's unissued shares except to the extent the articles of organization or any contract to which the corporation is a party so provides.

(b) For purposes of this section, "share" includes a security convertible into or carrying a right to subscribe for or acquire shares.

Section 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 organization prohibit the reissue of acquired shares, the number of authorized shares is reduced by the number of shares acquired.

SUBDIVISION D.
DISTRIBUTIONS

Section 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 organization and the limitations in subsections (c) and (h).

(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.

(1) the corporation would not be able to pay its existing and reasonably foreseeable debts, liabilities and obligations, whether or not liquidated, matured, asserted or contingent, as they become due in the usual course of business; or

(2) the corporation's total assets would be less than the sum of its total liabilities plus, unless the articles or organization 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 made in accordance with 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 subsection (c) 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 than 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) No distribution in liquidation may be made by a corporation unless adequate provision has been made, after giving effect to the provisions of PART 14, to satisfy:

(1) the corporation's existing and reasonably foreseeable debts, liabilities and obligations, whether or not liquidated, matured, asserted or contingent, as they thereafter arise; and

(2) the preferential liquidation rights of shares whose preferential rights are superior to such rights of the shares which would receive the distribution.

A distribution in liquidation means a distribution made by a corporation in dissolution under PART 14, or a distribution, or 1 of a series of related distributions, of all or substantially all of the corporation's assets.

Section 6.41. LIABILITY FOR IMPROPER DISTRIBUTIONS

(a) A director who votes for or assents to a distribution, including a distribution in liquidation as described in subsection (h) of section 6.40, made in violation of this chapter or the articles of organization, is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this chapter or the articles of organization, if it is established that he did not perform his duties in compliance with section 8.30. In any proceeding under this section, a director has all of the defenses ordinarily available to a director.

(b) A director who pays the corporation on account of liability for an improper distribution under subsection (a) is entitled to:

(1) contribution from every other director who could be held liable under subsection (a) for the distribution;

(2) reimbursement from each shareholder who received the distribution knowing it was improper, for the amount that exceeded what could properly have been distributed to him; and

(3) reimbursement from each shareholder who received the distribution without knowing it was improper, to the extent determined appropriate in the circumstances by a court.

(c) Each shareholder who receives a distribution, including one in liquidation, knowing it was made in violation of this chapter or the articles of organization, shall be personally liable to the corporation for the amount of the distribution he received in excess of what could have been distributed to him without violating this chapter or the articles of organization.

(d) If a distribution in liquidation in violation of this chapter is made before 3 years after the effective date of the corporation's dissolution under PART 14, shareholders who receive the distribution without knowing it is improper are personally liable to the corporation on account of any claim against the corporation existing at the end of the 3-year period, to the extent of each shareholder's respective pro rata share of the claim, with pro ration to be determined by reference to the respective amounts distributed to shareholders in excess of what could properly have been distributed to them.

(e) Any shareholder's total liability for all claims under this section on account of distributions in liquidation may not exceed the total amount of assets distributed to the shareholder in liquidation.

(f) A proceeding by or on behalf of the corporation under this section is barred unless it is commenced by:

(1) in the case of a distribution not in liquidation, 2 years after the date on which the effect of the challenged distribution was measured under subsection (e) or (g) of section 6.40;

(2) in the case of a distribution in liquidation by a corporation in dissolution under PART 14, the later of the time specified in the preceding clause (1) and 6 months after the end of the two-year period referred to in subsection (d); or

(3) in the case of a distribution in liquidation by a corporation not in dissolution, as described in the second clause in the last sentence of subsection (h) of section 6.40, three years after the date on which the effect of the challenged distribution was measured under subsection (e) or (g) of section 6.40.

(g) A proceeding under subsection (b) against a director for contribution or against a shareholder for reimbursement is barred unless it is commenced by the later of (1) two years after the date on which the effect of the challenged distribution was measured under subsection (e) or (g) of section 6.40, and (2) 6 months after payment to the corporation on account of liability under subsection (a) of this section by the party seeking contribution or reimbursement.

PART 7
SUBDIVISION A.
MEETINGS

Section 7.01. ANNUAL MEETING

(a) A corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.

(b) Except as otherwise permitted by section 7.08, annual shareholders' meetings may be held within or without the commonwealth 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 shall not affect the validity of any corporate action.

(d) Unless otherwise provided in the articles of organization, an annual meeting shall be held for the purpose of electing directors and such other purposes as are specified in the notice of the meeting, and only business within such purposes may be conducted at the meeting.

Section 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 authorized to do so by the articles of organization or bylaws; or

(2) in the case of a corporation other than a public corporation, if the holders of at least 10 per cent, or such lesser percentage as the articles of organization permit, of all the votes entitled to be cast on any issue to be considered at the proposed special meeting sign, date, and deliver to the corporation's secretary one or more written demands for the meeting describing the purpose for which it is to be held; or

(3) in the case of a public corporation, unless otherwise provided in the articles of organization or bylaws, if the holders of at least 40 per cent of all the votes entitled to be cast on any issue to be considered at the proposed special meeting sign, date, and deliver to the corporation's secretary one or more written demands for the meeting describing the purposes for which it is to be held.

(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) Except for meetings held as permitted by section 7.08, special shareholders' meetings may be held in or out of the commonwealth 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 subsection (a) of section 7.05 may be conducted at a special shareholders' meeting.

(e) In the event an annual meeting is not held at the time stated in or fixed in accordance with the bylaws or the time for an annual meeting is not fixed in accordance with the bylaws to be held within 13 months after the last annual meeting was held, the corporation may designate a special meeting held thereafter in accordance with this section 7.02 as a special meeting in lieu of the annual meeting, and the meeting shall have all of the effect of an annual meeting.

Section 7.03. COURT-ORDERED MEETING

(a) The superior court of the county where a corporation's principal office or, if none in the commonwealth, 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 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 within such further time as the court may order under the circumstances; 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 voting groups entitled to participate in the meeting, specify a record date 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.

Section 7.04. ACTION WITHOUT MEETING

(a) Action required or permitted by this chapter to be taken at a shareholders' meeting may be taken without a meeting if the action is taken either: (1) by all shareholders entitled to vote on the action; or (2) to the extent permitted by the articles of organization, by shareholders having not less than the minimum number of votes necessary to take the action at a meeting at which all shareholders entitled to vote on the action are present and voting. The action shall be evidenced by 1 or more written consents that describe the action taken, are signed by shareholders having the requisite votes, bear the date of the signatures of such shareholders, and are delivered to the corporation for inclusion with the records of meetings within 60 days of the earliest dated consent delivered to the corporation as required by this section.

(b) If not otherwise fixed under section 7.03 or 7.07, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent under subsection (a).

(c) A consent signed under this section has the effect of a vote at a meeting and may be described as such in any document, except that if action is taken by the consent of less than all shareholders entitled to vote on the action, any document required to be filed under this chapter with respect to such action shall state that the action was taken by consent of the required number of shareholders and that any required notice has been given to other shareholders.

(d) If action is to be taken pursuant to the consent of voting shareholders without a meeting, the corporation, at least 7 days before the action pursuant to the consent is taken, shall give notice, which complies in form with the requirements of section 7.05, of the action (1) to nonvoting shareholders in any case where this Act would require such notice if the action is to be taken pursuant to a vote by voting shareholders at a meeting, and (2) if the action is to be taken pursuant to the consent of less than all the shareholders entitled to vote on the matter, to all shareholders entitled to vote who did not consent to the action. The notice shall contain, or be accompanied by, the same material that, under this chapter, would have been required to be sent to shareholders in or with the notice of a meeting at which the action would have been submitted to the shareholders for approval.

Section 7.05. NOTICE OF MEETING

(a) A written notice of the date, time, and place of each annual and special shareholders' meeting describing the purposes of the meeting shall be given to shareholders no fewer than 7 nor more than 60 days before the meeting date. Unless this chapter or the articles of organization require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.

(b) Unless the bylaws require otherwise, if an annual or special meeting of shareholders 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, if any, is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or shall be fixed under section 7.07, however, notice of the adjourned meeting shall be given under this section to persons who are shareholders as of the new record date.

Section 7.06. WAIVER OF NOTICE

(a) A shareholder may waive any notice required by this chapter, the articles of organization, or the bylaws before or after the date and time stated in the notice. The waiver shall be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion with the records of the meeting.

(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; and

(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.

Section 7.07. RECORD DATE

(a) Except as otherwise provided in section 7.03, the bylaws may fix or provide the manner of fixing the record date 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. If a record date for a specific action is not fixed by the bylaws or the board of directors, and is not supplied by the section of this chapter dealing with that action, the record date shall be the close of business either on the day before the first notice is sent to shareholders, or, if no notice is sent, on the day before the meeting.

(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, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.

(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 continues in effect or it may fix a new record date.

Section 7.08. MEETINGS BY REMOTE COMMUNICATIONS; REMOTE PARTICIPATION IN MEETINGS

Unless otherwise provided in the articles of organization or bylaws, if authorized by the board of directors: any annual or special meeting of shareholders need not be held at any place but may instead be held solely by means of remote communication, unless the corporation is a public corporation; and subject to such guidelines and procedures as the board of directors may adopt, shareholders and proxyholders not physically present at a meeting of shareholders may, by means of remote communications:

(1) participate in a meeting of shareholders; and

(2) be deemed present in person and vote at a meeting of shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that:

(i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder;

(ii) the corporation shall implement reasonable measures to provide such shareholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and

(iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

SUBDIVISION B.
VOTING

Section 7.20. SHAREHOLDERS LIST FOR MEETING

(a) After fixing a record date for a shareholders' meeting, a corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the meeting. The list shall 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, but need not include an electronic mail address or other electronic contact information for any shareholder.

(b) The shareholders list shall be available for inspection by any shareholder, beginning 2 business days after notice is given of the meeting for which the list was prepared and continuing through the meeting:

(1) at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held; or

(2) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting.

If the meeting is to be held solely by means of remote communication, the list shall be made available on an electronic network. In the event the corporation determines or is required to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to shareholders of the corporation.

(c) A shareholder, his agent, or attorney is entitled on written demand to inspect and, subject to the requirements of section 16.02(c), to copy the list, during regular business hours and at his expense, during the period it is available for inspection.

(d) The corporation shall make the shareholders list available at the meeting, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.

(e) If the corporation refuses to allow a shareholder or his agent or attorney to inspect the shareholders list before or at the meeting, or copy the list as permitted by subsection (b), the superior court of the county where a corporation's principal office or, if none in the commonwealth, 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.

(f) Refusal or failure to prepare or make available the shareholders list shall not affect the validity of action taken at the meeting.

Section 7.21. VOTING ENTITLEMENT OF SHARES

(a) Except as provided in subsections (b) and (c) or unless the articles of organization provide otherwise, each outstanding share, regardless of class, is entitled to 1 vote on each matter voted on at a shareholders' meeting. Pursuant to subsection (c) of section 6.04 each fractional share is entitled to a proportional vote. 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 another entity of which the corporation owns, directly or indirectly, a majority of the voting interests.

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

(d) Unless the articles of organization provide otherwise, redeemable shares are not entitled to vote after notice of redemption is given 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 upon surrender of the shares.

Section 7.22. PROXIES

(a) A shareholder may vote his shares in person or by proxy.

(b) A shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in-fact.

(c) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. Unless otherwise provided in the appointment form, an appointment is valid for a period of 11 months from the date the shareholder signed the form or, if it is undated, from the date of its receipt by the officer or agent, or for such shorter period as may be specified in the bylaws.

(d) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include, without limitation, the appointment of:

(1) a secured party;

(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;

(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 shall 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 his 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 he did not know of its existence when he acquired 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 appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment.

Section 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 will be recognized by the corporation as the shareholder, to the extent provided 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) a requirement for the certification by the nominee of the beneficial holders;

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

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

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

Section 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, conservator or other fiduciary representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented;

(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;

(4) the name signed purports to be that of a secured party, 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;

(5) two or more persons are the shareholder as co-owners, demutualization 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; or

(6) the corporation otherwise has a reasonable basis for believing that the signatory is, or has authority to sign for, the shareholder.

(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 doubting the validity of the signature on it or 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 shall not be liable to the shareholder for damages resulting from the acceptance or rejection.

(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.

Section 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 otherwise provided in this Act, or in the articles of organization, the bylaws or a resolution of the board of directors, as permitted by subsection (a) of section 7.27, 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) A share once represented for any purpose at a meeting is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless:

(1) the shareholder attends solely to object to lack of notice, defective notice, or the conduct of the meeting on other grounds, and does not vote the shares or otherwise consent that they are to be deemed present; or

(2) in the case of an adjournment, a new record date is or shall be set for that adjourned meeting.

(c) If a quorum of a voting group exists, favorable action on a matter, other than the election of directors, is taken by a voting group if the votes cast within the group favoring the action exceed the votes cast opposing the action, unless either this chapter, or the articles of organization, the bylaws or a resolution of the board of directors, as permitted by subsection (a) of section 7.27, requires a greater number of affirmative votes.

(d) An amendment of the articles of organization or the bylaws affecting the quorum or voting requirement for a voting group is governed by section 7.27 or section 10.21 respectively.

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

Section 7.26. ACTION BY SINGLE AND MULTIPLE VOTING GROUPS

(a) When a matter is to be voted upon by a single voting group, action on that matter is taken when voted upon by that voting group as provided in section 7.25.

(b) When a matter is to be voted upon by two or more voting groups, favorable action on that matter is taken only by the required vote of 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.

Section 7.27. GREATER OR LESSER QUORUM OR VOTING REQUIREMENTS FOR SHAREHOLDERS

(a) The articles of organization, or a bylaw adopted in conformity to section 10.21, may provide for a greater or lesser quorum requirement for action by any voting group, or for a greater affirmative vote requirement, including additional separate voting groups, than is provided for by this chapter. Whenever authorized by this chapter, the board of directors may require for the approval of a matter submitted to a vote of the shareholders satisfaction of a greater quorum requirement for any voting group, or receipt of a greater affirmative vote of the shareholders, including more separate voting groups, than is required by this chapter or the articles or bylaws.

(b) If any provision of this chapter requires the affirmative vote of more than a majority of the shares in any voting group, the articles of organization may provide that favorable action may be taken by vote of a lesser proportion of shares than the chapter specifies, but not less than a majority of all the shares in the voting group eligible to vote on the matter.

(c) Action to approve an amendment to the articles of organization or bylaws that changes or deletes a quorum or voting requirement for action by shareholders must satisfy both the quorum and voting requirements then applicable for amendment of the articles or bylaws, as the case may be, and also the quorum and voting requirements sought to be changed or deleted.

Section 7.28. VOTING FOR DIRECTORS; CUMULATIVE VOTING

(a) Unless otherwise provided in the articles of organization or bylaws, 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 organization so provide.

(c) A statement included in the articles of organization that "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.

Section 7.29. FORM OF SHAREHOLDER ACTION

(a) Any vote, consent, waiver, proxy appointment or other action by a shareholder or by the proxy or other agent of any shareholder pursuant to any section of this chapter shall be considered given in writing, dated and signed as required by this chapter if, in lieu of any other means permitted by this chapter, it consists of an electronic transmission that sets forth or is delivered with information from which the corporation can determine (i) that the electronic transmission was transmitted by the shareholder, proxy or agent or by a person authorized to act for the shareholder, proxy or agent; and (ii) the date on which such shareholder, proxy, agent or authorized person transmitted the electronic transmission. The date on which the electronic transmission is transmitted shall be considered to be the date on which it was signed. The electronic transmission shall be considered received by the corporation if it has been sent to any address specified by the corporation for the purpose or, if no address has been specified, to the principal office of the corporation, addressed to the secretary or other officer or agent having custody of the records of proceedings of shareholders.

(b) Any copy, facsimile or other reliable reproduction of a vote, consent, waiver, proxy appointment or other action by a shareholder or by the proxy or other agent of any shareholder may be substituted or used in lieu of the original writing for any purpose for which the original writing could be used, but the copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

SUBDIVISION C.
VOTING TRUSTS AND AGREEMENTS

Section 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. The trustee shall also sign the voting trust agreement and the shares transferred shall be registered in the name of the trustee. Promptly thereafter, 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 the period as is specified in the trust agreement.

(c) All or some of the parties to a voting trust may extend it for additional terms by signing an extension agreement and obtaining the voting trustee's written consent to the extension. An extension is valid for such period as is specified in the extension agreement. The voting trustee shall 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.

Section 7.31. VOTING AGREEMENTS

(a) An agreement between 2 or more shareholders or between 1 or more shareholders and 1 or more other persons, if in writing and signed by the parties to the agreement, whether or not the parties include all of the shareholders of the corporation, may provide for the manner in which the parties who are shareholders will vote their shares. A voting agreement created under this section is not subject to section 7.30.

(b) A voting agreement is valid for such period as is specified in the agreement or in any extension agreement entered into by all or some of the parties to it. An extension agreement binds only those parties signing it.

Section 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 1 or more other sections of this chapter 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 1 or more shareholders or other persons all or part of the authority to exercise 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 1 or more of the shareholders or upon the occurrence of a specified event or contingency; or

(8) otherwise governs exercise of the corporate powers or 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) set forth (i) in the articles of organization or bylaws and approved by all persons who are shareholders at the time of the agreement or (ii) 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

(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 subsection (b) of section 6.26. 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 does 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 is entitled to rescission of the purchase. A purchaser is considered 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 shall be commenced within the earlier of 90 days after discovery of the existence of the agreement or 2 years after the time of purchase of the shares.

(d) An agreement authorized by this section automatically terminates when shares of the corporation are listed on a national securities exchange or are regularly traded in a market maintained by 1 or more members of a national or affiliated securities association. If the agreement so terminates or otherwise ceases to be effective, the board of directors may, if the agreement is contained or referred to in the corporation's articles of organization or bylaws, adopt an amendment to the articles of organization or bylaws, without shareholder action, to delete the agreement and any references to it.

(e) To the extent that an agreement authorized by this section limits the discretion or powers of the board of directors, liability for acts or omissions otherwise imposed by law on directors shall be imposed instead upon the person or persons in whom the discretion or powers are vested.

(f) If an agreement is authorized by this section, shareholders shall not be personally liable for the acts or debts of the corporation on the ground that the agreement or its performance treats the corporation as if it were a partnership or results in a failure to observe corporate formalities that would otherwise apply.

(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.

(h) Nothing contained in this section shall be construed to limit the effectiveness of any agreement or arrangement permitted by or not inconsistent with any other provision of this chapter.

SUBDIVISION D.
DERIVATIVE PROCEEDINGS

Section 7.40. SUBCHAPTER DEFINITIONS

In this SUBDIVISION the following words shall have the following meanings unless the context requires otherwise:

"Derivative proceeding", 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.

"Shareholder" includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner's behalf.

Section 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.

Section 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 elapsed from the date the demand was made, or, if the decision whether to reject such demand has been duly submitted to a vote of the shareholders, not including the holders of those shares referred to in section 7.44(b)(3), within 60 days from the date when demand was made , 120 days have elapsed from the date the demand was made, unless in either case the shareholder has earlier been notified that the demand has been rejected by the corporation or irreparable injury to the corporation would result by waiting for the expiration of such 90-day or 120-day period.

Section 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 a period as the court considers appropriate.

Section 7.44. DISMISSAL

(a) A derivative proceeding commenced after rejection of a demand shall be dismissed by the court on motion by the corporation if the court finds that either: (1) 1 of the groups specified in subsections (b)(1) or (f) has determined in good faith after conducting a reasonable inquiry upon which its conclusions are based that the maintenance of the derivative proceeding is not in the best interests of the corporation; or (2) shareholders specified in subsection (b)(3) have determined that the maintenance of the derivative proceeding is not in the best interests of the corporation.

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

(1) a majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum;

(2) a majority vote of a committee consisting of 2 or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not the independent directors constituted a quorum; or

(3) the vote of the holders of a majority of the outstanding shares entitled to vote, not including shares owned by or voted under the control of a shareholder or related person who has or had a beneficial financial interest in the act or omission complained of or other interest therein that would reasonably be expected to exert an influence on that shareholder's or related person's judgment if called upon to vote in the determination.

(c) None of the following shall by itself cause a director to be considered not independent for the purposes of this section:

(1) the nomination or election of the director by a person who is a defendant in the derivative proceeding or against whom action is demanded;

(2) the naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded; or

(3) the approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.

(d) If the corporation moves to dismiss the derivative suit, it shall make a written filing with the court setting forth facts to show (1) whether a majority of the board of directors was independent at the time of the determination by the independent directors and (2) that the independent directors made the determination in good faith after conducting a reasonable inquiry upon which their conclusions are based. Unless otherwise required by subsection (a), the court shall dismiss the suit unless the plaintiff has alleged with particularity facts rebutting the corporation's filing in its complaint or an amended complaint or in a written filing with the court. All discovery proceedings shall be stayed upon the filing by the corporation of the motion to dismiss and the filing required by this subsection until the notice of entry of the order ruling on the motion; but the court, on motion and after a hearing and for good cause shown, may order that specified discovery be conducted.

(e) If a majority of the board of directors does not consist of independent directors at the time the determination by independent directors is made, the corporation shall have the burden of proving that the requirements of subsection (a) have been met. If a majority of the board of directors consists of independent directors at the time the determination is made or if the determination is made by shareholders pursuant to clause (3) of subsection (b) or is made pursuant to subsection (f), the plaintiff shall have the burden of proving that the requirements of subsection (a) have not been met.

(f) The court may appoint a panel of 1 or more independent persons upon motion by the corporation 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.

Section 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 to be given to the shareholders affected.

Section 7.46. PAYMENT OF EXPENSES

On termination of the derivative proceeding the court may:

(1) order the corporation to pay the plaintiff's reasonable expenses, including counsel fees, incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation; or

(2) order the plaintiff to pay any defendant's reasonable expenses, including counsel fees, incurred in defending the proceeding if it finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose.

Section 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 section 7.43, 7.45 and 7.46.

PART 8
SUBDIVISION A.
BOARD OF DIRECTORS

Section 8.01. REQUIREMENT FOR AND DUTIES OF BOARD OF DIRECTORS

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

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

Section 8.02. QUALIFICATIONS OF DIRECTORS

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

Section 8.03. NUMBER AND ELECTION OF DIRECTORS

(a) A board of directors shall consist of 1 or more individuals, with the number specified in or fixed in accordance with the articles of organization or bylaws, but, unless otherwise provided in the articles of organization, if the corporation has more than 1 shareholder, the number of directors shall not be less than 3, except that whenever there shall be only 2 shareholders, the number of directors shall not be less than 2.

(b) If a board of directors has power to fix or change the number of directors, the board may increase or decrease the number of directors last approved by the shareholders.

(c) The articles of organization or bylaws may establish a variable range for the size of the board of directors by fixing a minimum and maximum number of directors. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the shareholders or the board of directors. After shares are issued, only the shareholders may change the range for the size of the board or change from a fixed or a variable-range size board to the other.

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

Section 8.04. ELECTION OF DIRECTORS BY CERTAIN CLASSES OF SHAREHOLDERS

If the articles of organization authorize dividing the shares into classes or series, the articles may also authorize the election of all or a specified number of directors by the holders of 1 or more authorized classes or series of shares. A class or series of shares entitled to elect 1 or more directors is a separate voting group for purposes of the election of directors.

Section 8.05. TERMS OF DIRECTORS GENERALLY

(a) The terms of the initial directors of a corporation shall expire at the first shareholders' meeting at which directors are elected.

(b) The terms of all directors shall expire at the next annual shareholders' meeting following their election unless their terms are staggered under section 8.06.

(d) Unless otherwise provided in the articles of organization or a bylaw adopted by shareholders or required by section 8.06(e), the term of a director elected to fill a vacancy shall expire at the next shareholders' meeting at which directors are elected.

(e) Despite the expiration of a director's term, he shall continue to serve until his successor is elected and qualified or until there is a decrease in the number of directors.

Section 8.06. STAGGERED TERMS FOR DIRECTORS

(a) The articles of organization may provide for staggering the terms of directors by dividing the total number of directors into 2 or 3 groups, with each group containing 1/2 or 1/3 of the total, as near as may be. 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 2 years or 3 years, as the case may be, to succeed those whose terms expire.

(b) Except as provided in subsection (c) and notwithstanding anything to the contrary in this chapter or in the articles of organization or bylaws of any public corporation, the terms of the directors of a public corporation shall be staggered by dividing the number of directors into 3 groups, as nearly equal in number as possible; the term of office of those of the first group, "Class I Directors", to continue until the first annual meeting following the date such public corporation becomes subject to this subsection and until their successors are elected and qualified; the term of office of those of the second group, "Class II Directors", to continue until the second annual meeting following the date the public corporation becomes subject to this subsection and until their successors are elected and qualified; and the term of office of those of the third group, "Class III Directors", to continue until the third annual meeting following the date such public corporation becomes subject to this subsection and until their successors are elected and qualified. At each annual meeting of a public corporation subject to this subsection, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term continuing until the annual meeting held in the third year following the year of their election and until their successors are elected and qualified. On or before the date on which a public corporation first convenes an annual meeting following the time at which the public corporation becomes subject to this subsection, the board of directors of the public corporation shall adopt a vote designating, from among its members, directors to serve as Class I Directors, Class II Directors and Class III Directors. Notwithstanding this subsection, the articles of organization may confer upon holders of any class or series of preference or preferred stock the right to elect 1 or more directors who shall serve for such term, and have such voting powers, as shall be stated in the articles of organization; provided, however, that no such provision of the articles of organization which confers upon such holders any such right and which is filed with the state secretary after the effective date of this chapter shall become effective unless before its adoption it was approved by a vote of a majority in number of the directors of the public corporation.

(c)(1) Subsection (b) shall apply to every public corporation, whether or not notice of an annual meeting of the public corporation has been given on or prior to the effective date of this chapter, unless the board of directors of the public corporation, or the shareholders of the corporation by a vote of two-thirds of each class of stock outstanding at a meeting duly called for the purpose of the vote, shall adopt a vote providing that the corporation elects to be exempt from the provisions of subsection (b). Upon adoption of the vote, subsection (b) shall, unless otherwise provided in the vote, shall become immediately ineffective with respect to such public corporation and the provisions of section 8.05 shall become immediately effective with respect to the corporation as soon as subsection (b) of this section is no longer effective.

(2) In the event that any public corporation shall so elect by vote of the board of directors to be exempt pursuant to clause (1) the public corporation may at any time thereafter adopt a vote of its board of directors electing to be subject to subsection (b). In the event that any public corporation shall so elect by vote of two-thirds of the shareholders to be exempt pursuant to clause (1) of this subsection the public corporation may at any time thereafter by vote of two-thirds of the shareholders elect to be subject to the provisions of subsection (b). Upon adoption of the vote, subsection (b), unless otherwise provided in the vote, shall immediately become effective.

(3) If a corporation is subject to subsection (b) at the time it ceases to be a public corporation, the corporation shall nonetheless be considered to be a public corporation for purposes of this section for a period of 12 months following the date it ceased to be a public corporation.

(d) Notwithstanding anything to the contrary in this chapter or in the articles of organization or bylaws of any public corporation, in the case of directors of a public corporation whose terms are staggered pursuant to subsection (b), shareholders may effect, by the affirmative vote of a majority of the shares outstanding and entitled to vote in the election of directors, the removal of any director or directors or the entire board of directors only for cause.

(e) Notwithstanding anything to the contrary in this chapter or in the articles of organization or bylaws of any public corporation, in the case of directors of a public corporation whose terms are staggered pursuant to subsection (b):

(1) vacancies and newly created directorships, whether resulting from an increase in the size of the board of directors, from the death, resignation, disqualification or removal of a director or otherwise, shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the board of directors;

(2) any director elected in accordance with clause (1) shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred or the new directorship was created and until the director's successor shall have been elected and qualified;

(3) no decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director; and

(4) the number of directors of a public corporation subject to subsection (b) shall be fixed only by vote of its board of directors.

(f) As used in subsections (b) to (g), inclusive, the following words shall have the following meanings:

(1) "Annual meeting", any annual meeting of shareholders and any special meeting of shareholders in lieu of an annual meeting provided for by law, the articles of organization, bylaws or otherwise.

(2) "Cause", with respect to the removal of any director of a public corporation, only (i) conviction of a felony, (ii) declaration of unsound mind by order of court, (iii) gross dereliction of duty, (iv) commission of an action involving moral turpitude, or (v) commission of an action which constitutes intentional misconduct or a knowing violation of law if such action in either event results both in an improper substantial personal benefit and a material injury to the public corporation.

(g) Nothing elsewhere in this section shall be considered to amend, modify or otherwise effect the validity of any of the articles of organization or bylaws of any corporation during any period that it elects not to be subject to subsection (b), whether or not currently in effect, providing for staggering the terms of directors as contemplated by subsection (a). No provision of the articles of organization or bylaws of any public corporation that is subject to subsection (b), whether or not currently in effect, shall render inapplicable any provision of subsections (b) to (g), inclusive, or require the board of directors of the corporation to adopt any vote pursuant to subsection (c). No vote adopted by a board of directors electing not to be subject to subsection (b) shall render invalid, or prevent adoption of, any amendment to the corporation's articles of organization as contemplated by section 8.05.

Section 8.07. RESIGNATION OF DIRECTORS

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

(b) A resignation is effective when the notice is delivered unless the notice specifies a later effective date.

Section 8.08. REMOVAL OF DIRECTORS

(a) Subject to subsection (b) of section 8.06 and except as otherwise provided in the articles of organization or bylaws, the shareholders may remove 1 or more directors with or without 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 him.

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

(d) A director may be removed for cause by the directors by vote of the greater of (1) a majority of the directors then in office or (2) the number of directors required by the articles of organization or bylaws to take action under section 8.24, but, if a director is elected by a voting group of shareholders, only the directors elected by that voting group may participate in the vote to remove him.

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

Section 8.10. VACANCY ON BOARD

(a) Unless the articles of organization or section 8.06 provide otherwise, if a vacancy occurs on a 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 or, unless the articles of organization or by-laws provide otherwise, the directors elected by that voting group are entitled to vote to fill the vacancy.

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

Section 8.11. COMPENSATION OF DIRECTORS

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

SUBDIVISION B.
MEETINGS AND ACTION OF THE BOARD

Section 8.20 MEETINGS

(a) The board of directors may hold regular or special meetings within or without the commonwealth.

(b) Unless the articles of organization 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 considered to be present in person at the meeting.

Section 8.21. ACTION WITHOUT MEETING

(a) Unless the articles of organization or bylaws provide that action required or permitted by this chapter to be taken by the directors may be taken only at a meeting, the action may be taken without a meeting if the action is taken by the unanimous consent of the members of the board of directors. The action must be evidenced by 1 or more consents describing the action taken, in writing, signed by each director, or delivered to the corporation by electronic transmission, to the address specified by the corporation for the purpose or, if no address has been specified, to the principal office of the corporation, addressed to the secretary or other officer or agent having custody of the records of proceedings of directors, and included in the minutes or filed with the corporate records reflecting the action taken.

(b) Action taken under this section is effective when the last director signs or delivers the consent, unless the consent specifies a different effective date.

(c) A consent signed or delivered under this section has the effect of a meeting vote and may be described as such in any document.

Section 8.22. NOTICE OF MEETING

(a) Unless the articles of organization 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 organization or bylaws otherwise provide, special meetings of the board of directors must be preceded by at least 2 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 organization or bylaws.

Section 8.23. WAIVER OF NOTICE

(a) A director may waive any notice required by this chapter, the articles of organization or the bylaws before or after the date and time of the meeting. Except as provided by subsection (b), the waiver shall be in writing, signed by the director entitled to the notice, or in the form of an electronic transmission by the director to the corporation, and filed with the minutes or corporate records.

(b) A director's attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting, or promptly upon his 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.

Section 8.24. QUORUM AND VOTING

(a) Subject to subsection (b), unless the articles of organization or bylaws otherwise provide or unless otherwise specifically provided in this chapter, a quorum of a board of directors consists of:

(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 organization or bylaws may authorize a quorum of a board of directors to consist of no fewer than:

(1) one-third of the fixed or prescribed number of directors determined under subsection (a); or

(2) a majority of the directors then in office, without regard to the number of directors determined under subsection (a) of this section.

(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 organization 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 considered to have assented to the action taken unless: (1) he objects at the beginning of the meeting, or promptly upon his arrival, to holding it or transacting business at the meeting; (2) his dissent or abstention from the action taken is entered in the minutes of the meeting; or (3) he delivers written notice of his 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.

Section 8.25. COMMITTEES

(a) Unless the articles of organization or bylaws provide otherwise, a board of directors may create 1 or more committees and appoint members of the board of directors to serve on them. Each committee may have 1 or more members, who serve at the pleasure of the board of directors.

(b) 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 organization or bylaws to take action under section 8.24.

(c) Sections 8.20 through 8.24, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board of directors, shall apply to committees and their members.

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

(e) A committee may not, however:

(1) authorize distributions;

(2) approve or propose to shareholders action that this chapter requires be approved by shareholders;

(3) change the number of the board of directors, remove directors from office or fill vacancies on the board of directors;

(4) amend articles of organization pursuant to section 10.02;

(5) adopt, amend or repeal bylaws; or

(6) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors.

(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.

SUBDIVISION C.
STANDARDS OF CONDUCT

Section 8.30. GENERAL STANDARDS FOR DIRECTORS

(a) A director shall discharge his duties as a director, including his duties as a member of a committee:

(1) in good faith;

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

(3) in a manner the director reasonably believes to be in the best interests of the corporation. In determining what the director reasonably believes to be in the best interests of the corporation, a director may consider the interests of the corporation's employees, suppliers, creditors and customers, the economy of the state, the region and the nation, community and societal considerations, and the long-term and short-term interests of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation.

(b) In discharging his 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, if prepared or presented by:

(1) one or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent with respect to the information, opinions, reports or statements presented;

(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.

(c) A director is not liable for any action taken as a director, or any failure to take any action, if he performed the duties of his office in compliance with this section.

Section 8.31. DIRECTOR CONFLICT OF INTEREST

(a) A conflict of interest transaction is a transaction with the corporation in which a director of the corporation has a material direct or indirect interest. A conflict of interest transaction is not voidable by the corporation solely because of the director's interest in the transaction if any one of the following is true:

(1) the material facts of the transaction and the director's interest were disclosed or known to the board of directors or a committee of the board of directors and the board of directors or committee authorized, approved, or ratified the transaction;

(2) the material facts of the transaction and the director's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction; or

(3) the transaction was fair to the corporation.

(b) For purposes of this section, and without limiting the interests that may create conflict of interest transactions, a director of the corporation has an indirect interest in a transaction if: (1) another entity in which he has a material financial interest or in which he is a general partner is a party to the transaction; or (2) another entity of which he is a director, officer, or trustee or in which he holds another position is a party to the transaction and the transaction is or should be considered by the board of directors of the corporation.

(c) For purposes of clause (1) of subsection (a), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board of directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under clause (1) of subsection (a) if the transaction is otherwise authorized, approved, or ratified as provided in that subsection.

(d) For purposes of clause (2) of subsection (a), a conflict of interest transaction is authorized, approved, or ratified if it receives the vote of a majority of the shares entitled to be counted under this subsection. Shares owned by or voted under the control of a director who has a direct or indirect interest in the transaction, and shares owned by or voted under the control of an entity described in clause (1) of subsection (b), may not be counted in a vote of shareholders to determine whether to authorize, approve, or ratify a conflict of interest transaction under clause (2) of subsection (a). The vote of those shares, however, is counted in determining whether the transaction is approved under other sections of this chapter. A majority of the shares, whether or not present, that are entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.

Section 8.32. LOANS TO DIRECTORS

(a) Except as provided by subsection (c), a corporation may not lend money to, or guarantee the obligation of a director of, the corporation unless:

(1) the specific loan or guarantee is approved by a majority of the votes represented by the outstanding voting shares of all classes, voting as a single voting group, except the votes of shares owned by or voted under the control of the benefited director; or

(2) the corporation's board of directors determines that the loan or guarantee benefits the corporation and either approves the specific loan or guarantee or a general plan authorizing loans and guarantees.

(b) The fact that a loan or guarantee is made in violation of this section shall not affect the borrower's liability on the loan.

(c) This section shall not apply to loans and guarantees authorized by statute regulating any special class of corporations.

SUBDIVISION D.
OFFICERS

Section 8.40. REQUIRED OFFICERS

(a) A corporation shall have a president, a treasurer and a secretary and such other officers described in its bylaws or appointed by the board of directors in accordance with the bylaws.

(b) A duly appointed officer may appoint 1 or more officers or assistant officers if authorized by the bylaws or the board of directors.

(c) Unless the bylaws or the board of directors shall designate another officer, the secretary or an assistant secretary shall have responsibility for preparing minutes of the directors' and shareholders' meetings and for authenticating records of the corporation.

(d) The same individual may simultaneously hold more than 1 office in a corporation.

Section 8.41. DUTIES OF OFFICERS

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

Section 8.42. STANDARDS OF CONDUCT FOR OFFICERS

(a) An officer shall discharge his duties:

(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) In discharging his duties an officer, 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, if prepared or presented by:

(1) one or more officers or employees of the corporation whom the officer reasonably believes to be reliable and competent with respect to the information, opinions, reports or statements presented; or

(2) 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.

(c) An officer shall not be liable to the corporation or its shareholders for any decision to take or not to take any action taken, or any failure to take any action, as an officer, if the duties of the officer are performed in compliance with this section.

Section 8.43. RESIGNATION AND REMOVAL OF OFFICERS

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

(b) A board of directors may remove any officer at any time with or without cause.

Section 8.44. CONTRACT RIGHTS OF OFFICERS

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

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

Section 8.45. CERTIFICATE OF CHANGE IN OFFICERS OR DIRECTORS

Whenever any change is made in the directors or in the president, treasurer or secretary of a corporation, the corporation shall forthwith file in the office of the state secretary a certificate of the change signed under the penalties of perjury by the clerk or an assistant clerk. If a corporation fails or refuses to file such a certificate within the 30-day period following a change in the directors or in the officers, any director or officer involved in the change, or the personal representative of any deceased director or office so involved, may evidence the change by filing a certificate thereof with the office of the state secretary, signed under the penalties or perjury, including a statement that a copy of the certificate has been delivered to the corporation or has been mailed to the principal office of the corporation, postage prepaid.

Section 8.46. INSTRUMENTS AFFECTING REAL ESTATE

Any recordable instrument purporting to affect an interest in real estate, executed in the name of a corporation by the president or a vice president and the treasurer or an assistant treasurer, who may be one and the same person, shall be binding on the corporation in favor of a purchaser or other person relying in good faith on the instrument notwithstanding any inconsistent provisions of the articles of organization or bylaws of the corporation, any special act of incorporation governing the corporation or any vote or other action by the shareholders or directors of the corporation.

SUBDIVISION E.
INDEMNIFICATION

Section 8.50. SUBCHAPTER DEFINITIONS

In this SUBDIVISION the following words shall have the following meanings unless the context requires otherwise:

"Corporation", includes any domestic or foreign predecessor entity of a corporation in a merger.

"Director" or "officer", 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, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity. A director or officer is considered to be serving an employee benefit plan at the corporation's request if his duties to the corporation also impose duties on, or otherwise involve services by, him 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.

"Disinterested director", a director who, at the time of a vote referred to in subsection (c) of section 8.53 or a vote or selection referred to in subsection (b) or (c) of section 8.55, is not (i) a party to the proceeding, or (ii) an individual having a familial, financial, professional, or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director's judgment when voting on the decision being made.

"Expenses", includes counsel fees.

"Liability", 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.

"Party", an individual who was, is, or is threatened to be made, a defendant or respondent in a proceeding.

"Proceeding", any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal.

Section 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 he is a director against liability incurred in the proceeding if:

(1)(i) he conducted himself in good faith; and

(ii) he reasonably believed that his conduct was in the best interests of the corporation or that his conduct was at least not opposed to the best interests of the corporation; and

(iii) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful; or

(2) he engaged in conduct for which he shall not be liable under a provision of the articles of organization authorized by clause (4) of subsection (b) of section 2.02.

(b) A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement that his conduct was at least not opposed to the best interests of the corporation.

(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 clause (3) of subsection (a) of section 8.54, a corporation may not indemnify a director under this section if his conduct did not satisfy the standards set forth in subsection (a) or subsection (b).

Section 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 he was a party because he was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.

Section 8.53. ADVANCE FOR EXPENSES

(a) A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding because he is a director if he delivers to the corporation:

(1) a written affirmation of his good faith belief that he has met the relevant standard of conduct described in section 8.51 or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of organization as authorized by clause (4) of subsection (b) of section 2.02; and

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

(b) The undertaking required by clause (2) of subsection (a) 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.

(1) by the board of directors;

(i) if there are 2 or more disinterested directors, by a majority vote of all the disinterested 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 disinterested directors appointed by the vote; or

(ii) if there are fewer than 2 disinterested directors, by the vote necessary for action by the board in accordance with subsection (c) of section 8.24, in which authorization directors who do not qualify as disinterested directors may participate; or

(2) by the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the authorization; or

(3) as otherwise permitted by law.

Section 8.54. COURT-ORDERED INDEMNIFICATION AND ADVANCE FOR EXPENSES

(a) A director who is a party to a proceeding because he 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 subsection (a) of section 8.58; or

(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 pursuant to section 8.51, or

(ii) to advance expenses to the director, even if he has not met the relevant standard of conduct set forth in subsection (a) or (b) of sections 8.51 or 8.51 or failed to comply with section 8.53.

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

Section 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 of the director is permissible because he has met the relevant standard of conduct set forth in said section 8.51.

(b) The determination shall be made:

(1) if there are 2 or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors, a majority of whom shall for such purpose constitute a quorum, or by a majority of the members of a committee of 2 or more disinterested directors appointed by vote;

(2) by special legal counsel

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

(ii) if there are fewer than two disinterested directors, selected by the board of directors, in which selection directors who do not qualify as disinterested directors may participate; or

(3) by the shareholders, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested 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 disinterested directors, authorization of indemnification shall be made by those entitled under subclause (ii) of clause (2) of subsection (b) to select special legal counsel.

Section 8.56. 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 is an officer of the corporation.

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

(2) if he is an officer but not a director, to such further extent as may be provided by the articles of organization, the bylaws, a resolution of the board of directors, or contract except for liability arising out of acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law.

(b) Clause (2) of subsection (a) shall apply to an officer who is also a director if the basis on which he 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 under those provisions.

Section 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 him in that capacity or arising from his status as a director or officer, whether or not the corporation would have power to indemnify or advance expenses to him against the same liability under this subdivision.

Section 8.58. VARIATION BY CORPORATE ACTION; APPLICATION OF SUBCHAPTER

(a) A corporation may, by its articles of organization 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 section 8.56 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 subsection (c) of section 8.53 and in subsection (c) of section 8.55. Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be considered 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) 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 clause (3) of subsection (a) of section 11.06.

(c) A corporation in its articles of organization may, limit any of the rights to indemnification or advance for expenses created by or pursuant to this subchapter.

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

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

Section 8.59. EXCLUSIVITY OF SUBCHAPTER

The indemnification and advancement of expenses provided by, or granted pursuant to, this subdivision shall not be considered exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled.

PART 9
SUBDIVISION A.
DOMESTICATION

Section 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. The laws of the commonwealth shall govern the effect of domesticating in the commonwealth pursuant to this subdivision.

(b) A domestic business corporation may become a foreign business corporation only 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 subdivision. The laws of the foreign jurisdiction shall govern the effect of domesticating in that jurisdiction.

(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 into other shares or other securities, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing; and

(4) any amendments to the articles of organization of the corporation following its domestication that may be desired.

The plan of domestication may include any other provisions relating to the domestication that may be desired.

(d) The plan of domestication may also include a provision that the plan may be amended before filing the document required by the laws of the commonwealth or the other jurisdiction to consummate the domestication, except that subsequent to the 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 organization as they will be in effect immediately following the domestication, except for changes permitted by section 10.05 or by comparable 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.

Section 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 shall be adopted by the board of directors.

(2) After adopting the plan of domestication the board of directors shall submit the plan to the shareholders for their approval.

(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 shall 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 shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and shall contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy or a summary of the articles of organization as they will be in effect immediately after the domestication.

(5) Unless (1) a greater percentage vote, or one or more additional separate voting groups, is required by the articles of organization, pursuant to subsection (a) of section 7.27, by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to paragraph (3), or (2) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the plan of domestication requires approval by two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares in any voting group entitled to vote separately on the matter by this Act, by the articles, by the bylaws, or by action of the board of directors pursuant to subsection (c) of section 9.21.

(6) Separate voting by voting groups is required by each class or series of shares that:

(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) would be entitled to vote as a separate group on a provision of the plan that, if contained in a proposed amendment to articles of organization, would require action by separate voting groups under section 10.04; or

(iii) is entitled under the articles of organization to vote as a voting group to approve an amendment of the articles.

(7) If the articles of organization, bylaws or an agreement to which any of the directors or shareholders are parties, adopted or entered into before the effective date of this chapter, contains a provision applying to a merger of the corporation that 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.

Section 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 executed 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 the commonwealth 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 the commonwealth was duly authorized as required by the laws of the jurisdiction in which the corporation was incorporated immediately before its domestication in the commonwealth.

(b) The articles of domestication shall either contain all of the provisions that subsection (a) of section 2.02 requires to be set forth in articles of organization and other desired provisions that subsection (b) of section 2.02 permits to be included in articles of organization, or shall have attached articles of organization, except that, in either case, provisions that would not be required to be included in restated articles of organization may be omitted.

(c) The articles of domestication shall be delivered by the corporation to the secretary of state for filing and shall take effect at the effective time provided in section 1.23.

(d) The corporation shall file a copy of the articles of domestication certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of the corporation is situated. The domestication shall not be affected by this requirement.

(e) If the foreign corporation is authorized to transact business in the commonwealth under chapter 15, its authority shall be cancelled automatically on the effective date of its domestication.

Section 9.23. SURRENDER OF CHARTER UPON DOMESTICATION

(a) Whenever a domestic business corporation has adopted and approved, in the manner required by this chapter, a plan of domestication providing for the corporation to be domesticated in a foreign jurisdiction, articles of charter surrender shall be executed 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 chapter and the articles of organization; and

(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.

Section 9.24. EFFECT OF DOMESTICATION

(a) When a domestication of a foreign business corporation in the commonwealth 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;

(4) the articles of domestication, or the articles of organization attached to the articles of domestication, constitute the articles of organization of the corporation;

(5) the shares of the corporation are reclassified into other shares, other securities, obligations, rights to acquire shares or other securities of the corporation or into cash or other property in accordance with the terms of the domestication as approved under the laws of the foreign jurisdiction, and the shareholders are entitled only to the rights provided by those terms and under those laws; and

(6) the corporation is considered to:

(i) be incorporated under the laws of the commonwealth for all purposes;

(ii) be the same corporation without interruption as the corporation that existed under the laws of the foreign jurisdiction; and

(iii) have been incorporated on the date it was originally incorporated in the foreign jurisdiction.

(b) When a domestication of a domestic business corporation in a foreign jurisdiction becomes effective, the foreign business corporation is considered 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 PART 13.

(c) The owner liability of a shareholder in a foreign corporation that is domesticated in the commonwealth shall be as follows:

(1) The domestication shall not discharge any owner liability under the laws of the foreign jurisdiction to the extent the 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 laws of the foreign jurisdiction shall continue to apply to the collection or discharge of any owner liability preserved by clause (1), as if the domestication had not occurred and the corporation were still incorporated under the laws of the foreign jurisdiction.

(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 clause (1), as if the domestication had not occurred and the corporation were still incorporated under the laws of that jurisdiction.

(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 the commonwealth shall be personally liable only for those debts, obligations or liabilities of the corporation that arise after the effective time of the articles of domestication.

Section 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 subdivision, 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, executed 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 into the commonwealth 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, executed 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.

SUBDIVISION B.
NONPROFIT CONVERSION

Section 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 domestic business corporation of a plan of nonprofit conversion in the manner provided in this subchapter. The laws of the foreign jurisdiction govern the effect of the foreign nonprofit conversion.

(1) the terms and conditions of the conversion;

(2) the manner and basis of reclassifying the shares of the corporation 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 organization of the corporation following its conversion; and

(4) if the domestic business corporation is to be converted into a foreign nonprofit corporation, a statement of the jurisdiction in which the corporation will be incorporated after the conversion.

The plan of nonprofit conversion may include any other provisions relating to the conversion that may be desired.

(d) The plan of nonprofit conversion may also include a provision that the plan may be amended before filing articles of nonprofit conversion, except that subsequent to approval of the plan by the shareholders it 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 organization as they will be in effect immediately following consummation of 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.

Section 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 shall be adopted by the board of directors.

(2) After adopting the plan of nonprofit conversion, the board of directors shall submit the plan to the shareholders for their approval. The board of directors shall also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall transmit to the shareholders the basis for that determination.

(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 shall notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan of nonprofit conversion 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 plan and shall 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 organization as they will be in effect immediately after the nonprofit conversion.

(5) Unless (1) a greater percentage vote, or one or more additional separate voting groups, is required by the articles of organization, pursuant to section 7.27(a), by the bylaws, pursuant to section 10.22, or by the board of directors, acting pursuant to paragraph (3), or (2) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the plan of domestication requires approval by two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares in any voting group entitled to vote separately on the matter by this chapter, by the articles, by the bylaws, or by action of the board of directors pursuant to section 9.31(c).

(6) Separate voting by voting groups is required by each class or series of shares that:

(i) would have a right to vote as a separate group on a provision in the plan that, if contained in a proposed amendment to articles of organization, would require action by separate voting groups under section 10.04; or

(ii) is entitled under the articles of organization to vote as a voting group to approve a plan of merger or amendment of articles.

(7) If any provision of the articles of organization, bylaws or an agreement to which any of the directors or shareholders are parties, adopted or entered into before the effective date of this chapter, applies to a merger of the corporation and 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.

Section 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 chapter, articles of nonprofit conversion shall be executed on 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 chapter 180 or the corporation desires to change its name in connection with the conversion, a name that satisfies the requirements of said chapter 180; and

(2) a statement that the plan of nonprofit conversion 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 organization.

(b) The articles of nonprofit conversion shall either contain all of the provisions that chapter 180 requires to be set forth in articles of organization of a domestic nonprofit corporation and any other desired provisions permitted by said chapter 180, or shall have attached articles of organization that satisfy the requirements of said chapter 180, except that in either case provisions that would not be required to be included in restated articles of organization 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.

(d) The resulting or surviving corporation shall file a copy of the articles of nonprofit conversion certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of the corporation is situated. The conversion shall be valid and effective in accordance with the terms of the plan of nonprofit conversion and the articles of nonprofit conversion delivered to the secretary of state pursuant to subsection (c) of section 9.32, notwithstanding any failure to make the filing.

Section 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 subdivision, a plan of nonprofit conversion providing for the corporation to be converted to a foreign nonprofit corporation, articles of charter surrender shall be executed 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 and, if voting by any separate voting group was required, by each such separate voting group, in the manner required by this chapter and the articles of organization; and

(4) the corporation's new jurisdiction of incorporation.

Section 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 nonprofit conversion, or the articles of organization attached to the articles of nonprofit conversion, constitute the articles of organization of the corporation;

(5) the shares of the corporation are reclassified into memberships, securities, obligations, rights to acquire memberships or securities of the corporation 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 PART 13; and

(6) the corporation is considered to:

(i) be a domestic nonprofit corporation for all purposes;

(ii) be the same corporation without interruption as the corporation that existed before 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 considered 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 PART 13.

(c) The owner liability of a shareholder in a domestic business corporation that converts to a domestic nonprofit corporation shall be as follows:

(1) The conversion does not discharge any owner liability of the shareholder with respect to the business corporation to the extent any such owner liability arose before the effective date 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 date of the articles of nonprofit conversion.

(3) The laws of the commonwealth 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 were still a business corporation.

(4) The shareholder shall have whatever rights of contribution from other shareholders are provided by the laws of the commonwealth 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 be personally liable only for those debts, obligations or liabilities of the nonprofit corporation that arise after the effective time of the articles of nonprofit conversion.

Section 9.35. ABANDONMENT OF A NONPROFIT CONVERSION

(a) 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 chapter, 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.

(b) 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, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state for filing before 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.

SUBDIVISION D.
FOREIGN NONPROFIT DOMESTICATION AND CONVERSION

Section 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. The laws of the commonwealth shall govern the effect of converting to a domestic business corporation pursuant to this subchapter.

Section 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 executed 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 the commonwealth 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 the commonwealth was duly authorized as required by the laws of the jurisdiction in which the corporation was incorporated immediately before its domestication and conversion in the commonwealth.

(b) The articles of domestication and conversion shall either contain all of the provisions that subsection (a) of section 2.02 requires to be set forth in articles of organization and any other desired provisions that subsection (b) of section 2.02 permits to be included in articles of organization, or shall have attached articles of organization. In either case, provisions that would not be required to be included in restated articles of organization may be omitted.

(c) The articles of domestication and conversion shall be delivered by the corporation to the secretary of state for filing and shall take effect at the effective time provided in section 1.23.

(d) The corporation shall file a copy of the articles of domestication and conversion certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of the corporation is situated. The domestication and conversion shall be valid and effective in accordance with the terms of the plan of domestication and conversion and the articles of domestication and conversion delivered to the secretary of state pursuant to subsection (c), notwithstanding any failure to make the filing.

(e) If the foreign nonprofit corporation is authorized to transact business in the commonwealth under this chapter, its authority shall be cancelled automatically on the effective date of its domestication and conversion.

Section 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;

(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 organization attached to the articles of domestication and conversion, constitute the articles of organization 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 considered to:

(i) be a domestic corporation for all purposes;

(ii) be the same corporation without interruption as the corporation that existed under the laws of the jurisdiction in which it was formerly domiciled; and

(iii) have been incorporated on the date it was originally incorporated in the former jurisdiction.

(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 and the corporation were still incorporated under the laws of the foreign jurisdiction.

(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 and the corporation were still incorporated under the laws of that jurisdiction.

(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 the commonwealth shall be personally liable only for those debts, obligations or liabilities of the corporation that arise after the effective time of the articles of domestication and conversion.

Section 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, executed 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.

SUBDIVISION E.

ENTITY CONVERSION

Section 9.50. ENTITY CONVERSION AUTHORIZED; DEFINITIONS

(a) A domestic business corporation may become a domestic other entity pursuant to a plan of entity conversion. If the organic law of the other entity does not provide for such a conversion, section 9.55 governs the effect of converting to that form of entity.

(b) A domestic business corporation may become a foreign other entity only if the entity conversion is permitted by the laws of the foreign jurisdiction. The laws of the foreign jurisdiction governs the effect of converting to an other entity organized in that jurisdiction.

(c) A domestic other entity may become a domestic business corporation. Section 9.55 governs the effect of converting to a domestic business corporation. If the organic law of a domestic other 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 other entity and its interest holders shall be entitled to appraisal rights if appraisal rights are available upon any type of merger under the organic law of the other entity. If the organic law of a domestic other 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 subdivision and PART 13. Without limiting the provisions of this subsection, a domestic other entity whose organic law does not provide procedures for the approval of an entity conversion shall be subject to subsection (e) of this section and clause (7) of section 9.52. For purposes of applying this subdivision and PART 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 organization, 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.

(d) A foreign other entity may become a domestic business corporation if the organic law of the foreign other entity authorizes it to become a corporation in another jurisdiction. The laws of the commonwealth shall govern the effect of converting to a domestic business corporation pursuant to this subdivision.

(e) As used in this SUBDIVISION the following words shall have the following meanings unless the context requires otherwise.

"Converting entity", the domestic business corporation or domestic other entity that adopts a plan of entity conversion or the foreign other entity converting to a domestic business corporation.

"Surviving entity", the corporation or other entity that is in existence immediately after consummation of an entity conversion pursuant to this subdivision.

Section 9.51. PLAN OF ENTITY CONVERSION

(a) A plan of entity conversion shall include:

(1) a statement of the type of 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) if the surviving entity will be an other entity, the manner and basis of converting the shares of the domestic business corporation into interests or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of the foregoing; and

(4) if the surviving entity will be a domestic business corporation, the manner and basis of converting the interests in the other entity into shares of the domestic business corporation, if any, or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of the foregoing; and

(5) the full text of the organic documents of the surviving entity, as they will be in effect immediately after consummation of the conversion.

The plan of entity conversion may include any other provisions relating to the conversion that may be desired.

(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 or by the holders of voting interests in the other entity the plan may not be amended to change:

(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 by the shareholders or interest holders under the plan;

(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 or the interest holders in any material respect.

Section 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 other entity:

(1) The plan of entity conversion shall be adopted by the board of directors.

(2) After adopting the plan of entity conversion, the board of directors shall submit the plan to the shareholders for their approval.

(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 shall 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 shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and shall contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy or summary of the organizational documents as they will be in effect immediately after the entity conversion.

(5) Unless (i) a greater percentage vote, or one or more additional separate voting groups, is required by the articles of organization, pursuant to section 7.27(a), by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to paragraph (3), or (ii) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the plan of domestication requires approval by two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares in any voting group entitled to vote separately on the matter by this chapter, by the articles, by the bylaws, or by action of the board of directors pursuant to subsection (c) of this section.

(6) Separate voting by voting groups is required by each class or series of shares that:

(1) would have a right to vote as a separate voting group on a provision in the plan that, if contained in a proposed amendment to articles of organization, would require action by separate voting groups under section 10.04; or

(2) is entitled under the articles of organization to vote as a voting group to approve a plan of merger.

(7) If the articles of organization, bylaws or an agreement to which any of the directors or shareholders are parties, adopted or entered into before the effective date of this chapter, 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 subsequently amended.

(8) 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 execution, by each such shareholder who does not assert appraisal rights, of a separate written consent to become subject to such owner liability.

Section 9.53. ARTICLES OF ENTITY CONVERSION

(a) After the conversion of a domestic business corporation to a domestic other entity has been adopted and approved as required by this chapter, articles of entity conversion shall be executed 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 other entity that the surviving entity will be;

(3) set forth a statement that the plan of entity conversion 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 chapter and the articles of organization;

(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 other entity to a domestic business corporation has been adopted and approved as required by the organic laws of the other entity, articles of entity conversion shall be executed on behalf of the other entity by any officer or other duly authorized representative. The articles shall:

(1) set forth the name of the other entity immediately before the filing of the articles of entity conversion and the name to which the name of the other 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 other entity;

(3) either contain all of the provisions that subsection (a) of section 2.02 requires to be set forth in articles of organization and any other desired provisions that section 2.02 subsection (b) of permits to be included in articles of organization, or have attached articles of organization, except that, in either case, provisions that would not be required to be included in restated articles of organization of a domestic business corporation may be omitted.

(c) After the conversion of a foreign other entity to a domestic business corporation has been authorized as required by the laws of the foreign jurisdiction, articles of entity conversion shall be executed on behalf of the foreign other entity by any officer or other duly authorized representative. The articles shall:

(2) set forth the jurisdiction under the laws of which the other entity was organized immediately before the filing of the articles of entity conversion and the date on which the other entity was organized in that jurisdiction;

(3) set forth a statement that the conversion of the other entity was duly approved in the manner required by its organic law; and

(4) either contain all of the provisions that subsection (a) of section 2.02 requires to be set forth in articles of organization and any other desired provisions that subsection (b) of section 2.02 permits to be included in articles of organizations, or have attached articles of organization, except that, in either case, provisions that would not be required to be included in restated articles of organization 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.

(e) The corporation shall file a copy of the articles of entity conversion certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of the corporation is situated. The entity conversion shall be valid and effective in accordance with the terms of the plan of entity conversion and the articles of entity conversion delivered to the secretary of state pursuant to subsection (d) of section 9.53, notwithstanding any failure to make the filing.

(f) If the converting entity is a foreign other entity that is authorized to transact business in the commonwealth under a provision of law similar to PART 15, its authority or other type of foreign qualification shall be cancelled automatically on the effective date of its conversion.

Section 9.54. SURRENDER OF CHARTER UPON CONVERSION

(a) Whenever a domestic business corporation has adopted and approved, in the manner required by this subdivision, a plan of entity conversion providing for the corporation to be converted to a foreign other entity, articles of charter surrender shall be executed 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 other entity;

(3) a statement that the conversion 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 chapter and the articles of organization;

(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.

Section 9.55. EFFECT OF ENTITY CONVERSION

(a) When a conversion under this subchapter in which the surviving entity is a domestic business corporation or domestic other entity 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, the articles of conversion, or the articles of organization or public organic document attached to the articles of conversion, constitute the articles of organization or public organic document of the surviving entity;

(5) in the case of a surviving entity that is a nonfiling entity, the private organizational document provided for in the plan of conversion constitutes the private organizational document of the surviving entity;

(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 of the surviving entity 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 in the plan of conversion or, in the case of a converting entity that is a domestic business corporation, to any rights they may have under PART 13; and

(7) the surviving entity is considered to:

(i) be a domestic business corporation or other entity for all purposes;

(ii) be the same corporation or other entity without interruption as the converting entity that existed prior to the conversion; 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 considered 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 PART 13.

(c) A shareholder who becomes subject to owner liability for some or all of the debts, obligations or liabilities of the surviving entity as a result of an entity conversion 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 other 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 other entity to the extent any such owner liability arose before the effective time of the articles of entity conversion.

(2) The interest holder shall not have owner liability under the organic law of the other 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 other 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 and the surviving entity were still the converting entity.

(4) The interest holder shall have whatever rights of contribution from other interest holders are provided by the organic law of the other entity with respect to any owner liability preserved by paragraph (1), as if the conversion had not occurred and the surviving entity were still the converting entity.

Section 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 chapter, 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, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state for filing before the effective date of the entity conversion. Upon filing, the statement shall take effect and the entity conversion shall be considered abandoned and shall not become effective.

PART 10.
SUBDIVISION A.
AMENDMENT OF ARTICLES OF ORGANIZATION

Section 10.01. AUTHORITY TO AMEND

(a) A corporation may amend its articles of organization at any time to add or change a provision that is required or permitted in the articles of organization as of the effective date of the amendment or to delete a provision not required in the articles of organization.

(b) A shareholder of the corporation shall not have a vested property right resulting from any provision in the articles of organization, including provisions relating to management, control, capital structure, dividend entitlement, or purpose or duration of the corporation.

Section 10.02. AMENDMENT BEFORE ISSUANCE OF SHARES

If a corporation has not yet issued shares, its board of directors, or its incorporators if it has no board of directors, may adopt one or more amendments to the corporation's articles of organization.

Section 10.03. AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS; EXCEPTION

If a corporation has issued shares, an amendment to the articles of organization 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 14.34, after adopting the proposed amendment the board of directors shall submit the amendment to the shareholders for their approval.

(d) If the amendment is required to be approved by the shareholders, and 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 amendment 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 amendment and shall contain or be accompanied by a copy or a summary of the amendment.

(e) Unless (1) a greater percentage vote, or action by 1 or more additional separate voting groups, is required by the articles of organization, pursuant to subsection (a) of section 7.27, by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to subsection (c) of section 10.03, or (2) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the amendment requires:

(1) except as otherwise provided in clause (2), the affirmative vote of two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares of any voting group entitled to vote separately on the matter by the chapter, by the articles, by the bylaws, or by action of the board of directors pursuant to subsection (c) of section 10.03, or

(2) if the amendment relates solely to (A) an increase or reduction in the corporation's capital stock of any class or series then authorized, (B) a change in its authorized shares into a different number of shares or the exchange thereof pro rata for a different number of shares of the same class or series, or (C) a change of its corporate name, the required vote shall be a majority rather than two-thirds, except that if the vote of a separate voting group is required under section 10.04, the required vote of that voting group shall remain two-thirds.

If the amendment to the articles of organization changes a quorum or voting requirement for action by the shareholders, approval by the shareholders shall satisfy not only the quorum and voting requirement then applicable for amendment of the articles but also the particular quorum or voting requirement being changed.

(f) The articles of organization of any corporation, a plan of reorganization of which, pursuant to any applicable statute of the United States relating to reorganizations of corporations, has been or shall be confirmed by the decree or order of a court of competent jurisdiction may be amended as provided in section 14.34, notwithstanding the terms of this section.

Section 10.04. VOTING ON AMENDMENTS BY VOTING GROUPS

(a) The holders of the outstanding shares of a class or of a series of a class are entitled to vote as a separate voting group, whether or not shareholder voting is otherwise required by this chapter, on a proposed amendment to the articles of organization if the amendment would:

(1) increase or decrease the aggregate number of authorized shares of the class or the series;

(2) authorize an exchange or effect a reclassification of all or part of the shares of the class or series into shares of another class or series;

(3) authorize an exchange or create a right of exchange, or effect a reclassification, of all or part of the outstanding shares of another class or series into shares of the class or series;

(4) change the designation, or the stated rights, preferences or limitations of all or part of the shares of the class or the series;

(5) change all or part of the shares of the class or series into a different number of shares of the same class or series;

(6) increase the voting rights of the outstanding shares of another class or series relative to the voting rights of the subject class or series;

(7) increase directly the stated rights or preferences of the outstanding shares of another class or series with respect to distributions or to dissolution, to make them prior, superior, or substantially equal to the rights or preferences of the subject class or series, or do so indirectly by way of implementing an exchange or reclassification of the outstanding shares of the other class or series into shares of a third class or series;

(8) limit or deny an existing preemptive right of all or part of the outstanding shares of the class or series; or

(9) cancel or otherwise affect interests in distributions or dividends that have accumulated but not yet been declared on all or part of the outstanding shares of the class or series.

(b) If a proposed amendment that entitles the holders of 2 or more classes or series of shares to vote as separate voting groups under this section would affect those 2 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 shall vote together as a single voting group on the proposed amendment, unless otherwise provided in the articles of organization or required by the board of directors.

(c) A class or series of shares is entitled to the voting rights granted by this section although the articles of organization provide that the shares are nonvoting shares.

Section 10.05. AMENDMENT BY BOARD OF DIRECTORS

Unless the articles of organization provide otherwise, a corporation's board of directors may adopt amendments to the corporation's articles of organization 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) 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;

(3) 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;

(4) to reflect a reduction in authorized shares, as a result of the operation of subsection (b) of section 6.31, when the corporation has acquired its own shares and the articles of organization prohibit the reissue of the acquired shares;

(5) to delete a class or series of shares from the articles of organization, as a result of the operation of subsection (b) of section 6.31 or of the conversion of the shares, when there are no remaining shares of the class or series because the corporation has acquired all shares of the class or series, or all shares of the class or series have been converted into other securities, and the articles of organization prohibit the reissue of the acquired or converted shares; or

(6) to make any change expressly permitted by section 6.02 to be made without shareholder approval.

Section 10.06. ARTICLES OF AMENDMENT

After an amendment to the articles of organization has been adopted and approved in the manner required by the chapter and by the articles of organization, the corporation 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 adopted;

(3) if an amendment authorizes an exchange, or effects a reclassification or cancellation, of issued shares, provisions for implementing that action unless contained in the amendment itself;

(4) the date of each amendment's adoption;

(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 chapter and by the articles of organization.

Section 10.07. RESTATED ARTICLES OF ORGANIZATION

(a) A corporation's board of directors may restate its articles of organization 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 organization 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 organization together with a certificate which states that the restated articles consolidate all amendments 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 organization supersede the original articles of organization and all amendments thereto.

(e) The secretary of state may certify restated articles of organization as the articles of organization currently in effect, without including the certificate information required by subsection (c).

Section 10.08. EFFECT OF AMENDMENT

An amendment to the articles of organization shall 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 shall not abate a proceeding brought by or against the corporation in its former name.

SUBDIVISION B.
AMENDMENT OF BYLAWS

Section 10.20. AMENDMENT BY BOARD OF DIRECTORS OR SHAREHOLDERS

(a) The power to make, amend or repeal bylaws shall be in the shareholders. If authorized by the articles of organization, or by the bylaws pursuant to authorization in the articles, the board of directors may also make, amend or repeal bylaws in whole or in part, except with respect to any provision thereof which by virtue of an express provision in this chapter, the articles of organization, or the bylaws, requires action by the shareholders.

(b) Not later than the time of giving notice of the meeting of shareholders next following the making, amending or repealing by the board of directors of any bylaw, notice stating the substance of the action taken by the board of directors shall be given to all shareholders entitled to vote on amending the bylaws. Any action taken by the board of directors with respect to the bylaws may be amended or repealed by the shareholders.

Section 10.21. BYLAW DEALING WITH QUORUM OR VOTING REQUIREMENTS FOR SHAREHOLDERS

(a) If authorized by the articles of organization, the initial bylaws or a bylaw subsequently adopted by shareholders may provide for a greater or lesser quorum requirement for action by any voting group of shareholders, or for a greater affirmative vote requirement, including additional separate voting groups, than is provided for by this chapter.

(b) Approval of an amendment to the bylaws that changes or deletes a quorum or voting requirement for action by shareholders must satisfy both the applicable quorum and voting requirements for action by shareholders with respect to amendment of the bylaws and also the particular quorum and voting requirements sought to be changed or deleted.

(c) A bylaw dealing with quorum or voting requirements for shareholders, including additional voting groups, may not be adopted, amended or repealed by the board of directors.

Section 10.22. BYLAW DEALING WITH QUORUM OR VOTING REQUIREMENTS FOR BOARD OF DIRECTORS

(a) A bylaw that fixes a greater or lesser quorum requirement for action by the board of directors, or a greater voting requirement, than provided for by this Act may be adopted in the initial bylaws, or thereafter by the shareholders pursuant to subsection (a) of section 10.20, or by the board of directors if authorized by subsection (a) of section 10.20.

(b) A bylaw authorized by subsection (a) may be amended or repealed by the shareholders, or by the board of directors if authorized by subsection (a) of section 10.20;

(c) A bylaw adopted or amended by the shareholders pursuant to subsection (a) may provide that it may be amended or repealed only by a specified vote of the shareholders, or by a specified vote of the board of directors if the board is authorized to act by both subsection (a) of section 10.20 and subsection (b) of this section.

(d) If the board of directors is authorized to amend the bylaws by subsection (a) of section 10.20, approval by the board of directors of an amendment to the bylaws that changes or deletes a quorum or voting requirement for action by the board of directors must satisfy both the applicable quorum and voting requirements for action by the board of directors with respect to amendment of the bylaws, and also the particular quorum and voting requirements sought to be changed or deleted.

PART 11

Section 11.01. DEFINITIONS

As used in this PART:

"Interests", includes any form of membership in a domestic or foreign nonprofit corporation.

"Merger", a business combination pursuant to section 11.02.

"Other entity", includes a domestic or foreign nonprofit corporation.

"Party to a merger" or "party to a share exchange", any domestic or foreign corporation or other entity that will either:

(1) merger under a plan of merger;

(2) acquire shares or interests of another corporation or an other entity in a share exchange; or

(3) have all of its shares or interests or all of one or more classes or series of its shares or interests acquired in a share exchange.

"Share exchange", a business combination pursuant to section 11.03.

"Survivor", in a merger, the corporation or other entity into which one or more other corporations or other entities are merged. A survivor of a merger may preexist the merger or be created by the merger.

Section 11.02. MERGER

One or more domestic corporations may merge with a domestic or foreign corporation or other entity pursuant to a plan of merger.

(a) A foreign corporation, or a foreign other entity, may be a party to the merger, or may be created by the terms of the plan of merger, only if:

(1) the merger is permitted by the laws under which the corporation or other entity is organized or by which it is governed; and

(2) in effecting the merger, the corporation or other entity complies with such laws and with its articles of organization or organizational documents.

(b) If the law under which a domestic other entity is organized does not provide procedures for the approval of a merger, a plan of merger may be adopted and approved, and the merger effectuated, by the other entity in accordance with the procedures in this PART and PART 13 applicable to domestic business corporations, and for the purposes of applying this chapter:

(1) the other entity, its interest holders, interests and filed organizational document, if any, shall be considered to be a domestic business corporation, shareholders, shares and articles of organization, respectively; and

(2) if the affairs of the other entity are managed by a group of persons that is not identical to the interest holders, that group shall be considered to be the board of directors.

(1) the name of each corporation or other entity that will merge and the name of the corporation or other 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 corporation and interests of each merging other entity into shares or other securities, interests, obligations, rights to acquire shares or other securities, rights to acquire interests, cash, other property, or any combination of the foregoing;

(4) the articles of organization of any corporation, or the organizational documents of any other entity, to be created by the merger, or if a new corporation or other entity is not to be created by the merger, any amendments to the survivor's articles of organization or organizational 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 organization or organizational documents of any such party.

(d) The plan of merger may set forth:

(1) to the extent not inconsistent with contractual rights, the manner and basis of converting rights to acquire shares of each corporation into rights to acquire shares, obligations or other securities of the surviving or any other corporation or into cash or other property in whole or in part; and

(2) other provisions relating to the merger.

(e) The plan of merger may also include a provision that the plan may be amended before filing the articles of merger with the secretary of state; 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 shall provide that subsequent to approval of the plan by the shareholders the plan may not be amended to:

(1) change the amount or kind of shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, or other property to be received by the shareholders of or owners of interests in any party to the merger upon conversion of their shares or interests under the plan;

(2) change the articles of organization of any corporation, or the organizational documents of any other 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 laws under which the foreign corporation or other entity is organized or governed; or

(3) change any of the other terms or conditions of the plan if the change would adversely affect such shareholders in any material respect.

Section 11.03. SHARE EXCHANGE

(a) Through a share exchange:

(1) a domestic corporation may acquire all of the shares of 1 or more classes or series of shares of another domestic or foreign corporation, or all of the interests of 1 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 1 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) If the law under which a domestic other entity is organized 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 law under which a domestic other entity is organized 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, and the share exchange effectuated, by the other entity in accordance with the procedures in this chapter and chapter 13 applicable to domestic business corporations; and for the purposes of applying this PART and PART 13:

(2) if the affairs of the other entity are managed by a group of persons that it is not identical to the interest holders, that group shall be considered to be the board of directors.

(1) the share exchange is permitted by the laws under which the corporation or other entity is organized or by which it is governed; and

(2) in effecting the share exchange, the corporation or other entity complies with such laws and with its articles of organization or organizational documents.

(d) The plan of share exchange shall 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 or other securities, rights to acquire 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 organization or organizational documents of any such party.

(e) The terms described in clauses (2) and (3) of subsection (d) may be made dependent on facts ascertainable outside the plan of share exchange, provided that those facts are objectively ascertainable. The term "facts" shall include, but shall not limited to, the occurrence of any event, including a determination or action by any person or body, including the corporation or other entity.

(f) The plan of share exchange may also include a provision that the plan may be amended prior to filing of the articles of share exchange with the secretary of state, provided that 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 shall provide that subsequent to approval of the plan by such shareholders the plan may not be amended to:

(1) change the amount or kind of shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, or other property to be issued by the corporation or to be received by the shareholders of or owners of interests in any party to the share exchange in exchange for their shares or interests under the plan; or

(2) change any of the terms or conditions of the plan if the change would adversely affect such shareholders in any material respect.

(g) This section shall 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.

Section 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:

(1) The plan of merger or share exchange shall be adopted by the board of directors.

(2) Except as provided in clause (7) 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.

(3) The board of directors may condition its submission of the plan of merger or share exchange to the shareholders on any basis.

(4) 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 shall 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 shall state that the purpose, or one of the purposes, of the meeting is to consider the plan and shall 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 organization 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 organization or organizational documents of the new corporation or other entity.

(5) Unless (i) a greater percentage vote, or one or more additional separate voting groups, is required by the articles of organization, pursuant to subsection (a) of section 7.27, by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to clause (3) of this section, or (ii) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the plan of merger or share exchange requires approval by two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares in any voting group entitled to vote separately on the matter by the Act, by the articles, by the bylaws, or by action of the board of directors pursuant to subsection (c) of section 11.04.

(6) Except as otherwise expressly provided in the article of organization, voting by a class or series of shares as a separate voting group is required on a plan of merger or share exchange if the plan contains a provision that, if contained in a proposed amendment to articles of organization, would entitle such class or series to vote as a separate voting group on the proposed amendment under section 10.04; provided however, that (i) receipt of shares of a class or series of shares in exchange for shares pursuant to a plan of merger or share exchange involving each outstanding class and series shall not, in and of itself, entitle holders of the exchanged class or series to vote as a separate voting group, and (ii) if the proposed provision would, as an amendment, entitle two or more classes or series of shares to vote separately but would affect those classes or series in the same or a substantially similar way, the shares of all such classes or series shall, unless the articles of organization provide otherwise, vote together as a single voting group on the plan.

(7) Unless the articles of organization otherwise provide, approval by the corporation's shareholders of a plan of merger or share exchange is not required if:

(i) the corporation will survive the merger or is the acquiring corporation in a share exchange;

(ii) except for amendments permitted by section 10.05, its articles of organization will not be changed;

(iii) each shareholder of the corporation whose shares were outstanding immediately 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

(iv) the shares of any class or series of stock of such corporation to be issued or delivered pursuant to the plan of merger does not exceed 20 per cent of the shares of such corporation of the same class or series outstanding immediately before the effective date of the merger.

(8) If as a result of a merger or share exchange 1 or more shareholders of a domestic corporation would become subject to owner liability for the obligations or liabilities of any other person or entity, approval of the plan of merger shall require the execution, by each such shareholder, of a separate written consent to become subject to such owner liability.

Section 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 per cent 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 organization 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 a merger has become effective.

(c) Except as provided in subsections (a) and (b), a merger between a parent and subsidiary shall be governed by PART 11 applicable to mergers generally.

Section 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 chapter, articles of merger or share exchange shall be executed 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 and the date on which the merger or share exchange occurred or is to be effective;

(2) if the articles of organization 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 survivor's articles of organization or the articles of organization 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 chapter and the articles of organization;

(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 and each other entity that was a party to the merger or share exchange, a statement that the participation of the foreign corporation or other entity was duly authorized by the laws under which the corporation or other entity is organized or by which it is governed and by all action required by such laws, and by its articles of organization or other organizational documents.

(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.

(c) The survivor of the merger or share exchange shall file a copy of the articles of merger or share exchange certified by the state secretary in the registry of deeds in each district within the commonwealth in which real property of any constituent corporation is situated, except that no filing need be made with respect to real property of a constituent corporation which is the survivor. The effectiveness of the merger or share exchange shall not be affected by this requirement.

Section 11.07. EFFECT OF MERGER OR SHARE EXCHANGE

(a) When a merger becomes effective:

(1) the corporation or other 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 other entity that is merged into the survivor ceases;

(3) all property owned by, and every contract right possessed by each corporation or other entity that merges into the survivor is vested in the survivor without reversion or impairment;

(4) all liabilities of each corporation or other 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;

(6) the articles of organization or organizational documents of the survivor are amended to the extent provided in the plan of merger;

(7) the articles of organization or organizational 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 other entity that is a party to a merger, that are to be converted under the plan of merger into shares, interests, obligations, rights to acquire securities, other securities, cash, other property, or any combination of the foregoing, are converted, and the former holders of such shares or interests are entitled only to the rights provided to them in the plan of merger or to any rights they may have under PART 13.

(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 PART 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 other entity, that is the survivor of the merger is deemed:

(1) unless, in the case of a foreign corporation, it is qualified as a foreign corporation under PART 15 after the effectiveness of the merger, to revoke the authority of its registered agent to accept service on its behalf and appoint 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 the commonwealth and to 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) to agree that it will promptly pay the amount, if any, to which such shareholders are entitled under PART 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 plan of 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.

(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 before 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 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.

Section 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 corporation or a domestic or foreign other 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 any party thereto without action by the party's shareholders or owners of interests, 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 of a corporation, or the managers of an other entity, 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, executed 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.

PART 12

Section 12.01. SALE OF ASSETS IN REGULAR COURSE OF BUSINESS AND MORTGAGE OF ASSETS

(a) A corporation may, on the terms and conditions and for the consideration determined by the board of directors:

(1) sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of business;

(2) mortgage, pledge, including any sale upon foreclosure of such pledge, dedicate to the repayment of indebtedness, whether with or without recourse, or otherwise encumber all or substantially all of its property whether or not in the usual and regular course of business;

(3) transfer all, or substantially all, of its property to another corporation all of the shares of which are owned, directly or indirectly, by the corporation; or

(4) distribute assets pro rata to the holders of 1 or more classes or series of the corporation's shares.

(b) Unless the articles of organization require it, approval by the shareholders of a transaction described in subsection (a) is not required.

Section 12.02. SALE OF ASSETS OTHER THAN IN REGULAR COURSE OF BUSINESS

(a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property, otherwise than in the usual and regular course of business, on the terms and conditions and for the consideration determined by the corporation's board of directors, if the board of directors proposes and the shareholders entitled to vote approve the proposed transaction.

(b) The board of directors may condition its submission of the proposed transaction to the shareholders on any basis.

(c) When seeking the approval of the shareholders, the corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with section 7.05. The notice shall also state that the purpose, or 1 of the purposes, of the meeting is to consider the sale, lease, exchange or other disposition, as the case may be, of all, or substantially all, the property of the corporation, otherwise than in the usual and regular course of business, and shall contain or be accompanied by a description of the proposed transaction.

(d) The shareholders may approve the terms and conditions of the proposed transaction, and the consideration to be received by the corporation, as previously determined by the board of directors or may fix, or authorize the board of directors to fix, the terms and conditions of the proposed transaction and the consideration to be received by the corporation.

(e) Unless (1) a greater percentage vote, or one or more additional separate voting groups, is required by the articles of organization, pursuant to subsection (a) of section 7.27, by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to subsection (c) of section 12.02, or (2) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, approval of the transaction requires the affirmative vote of two-thirds of all the shares entitled generally to vote on the matter by the articles of organization, and in addition two-thirds of the shares in any voting group entitled to vote separately on the matter by the articles, by the bylaws, or by action of the board of directors pursuant to subsection (c) of section 12.02.

(f) After such a transaction is approved by shareholders, but before it has been consummated, it may be abandoned by the corporation without further shareholder action, subject to any contractual rights which may have arisen.

(g) A transaction that constitutes a pro rata distribution of the corporation's property to its shareholders is governed by section 6.40 and not by this section.

PART 13
SUBDIVISION A.
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES

Section 13.01. DEFINITIONS

In this PART the following words shall have the following meanings unless the context requires otherwise:

"Affiliate", any person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control of or with another person.

"Beneficial shareholder", the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder.

"Corporation", the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in sections 13.22 to 13.31, inclusive, includes the surviving entity in a merger.

"Fair value", with respect to shares being appraised, the value of the shares immediately before the effective date of the corporate action to which the shareholder demanding appraisal objects, excluding any element of value arising from the expectation or accomplishment of the proposed corporate action unless exclusion would be inequitable.

"Interest", interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances.

"Marketable securities", securities held of record by, or by financial intermediaries or depositories on behalf of, at least 1,000 persons and which were

(a) listed on a national securities exchange,

(b) designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or

(c) listed on a regional securities exchange or traded in an interdealer quotation system or other trading system and had at least 250,000 outstanding shares, exclusive of shares held by officers, directors and affiliates, which have a market value of at least $5,000,000.

"Officer", the chief executive officer, president, chief operating officer, chief financial officer, and any vice president in charge of a principal business unit or function of the issuer.

"Person", any individual, corporation, partnership, unincorporated association or other entity.

"Record shareholder", 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.

"Shareholder", the record shareholder or the beneficial shareholder.

Section 13.02. RIGHT TO APPRAISAL

(a) A shareholder is entitled to appraisal rights, and obtain payment of the fair value of his shares in the event of, any of the following corporate or other actions:

(1) consummation of a plan of merger to which the corporation is a party if shareholder approval is required for the merger by section 11.04 or the articles of organization or if the corporation is a subsidiary that is merged with its parent under section 11.05, unless, in either case, (A) all shareholders are to receive only cash for their shares in amounts equal to what they would receive upon a dissolution of the corporation or, in the case of shareholders already holding marketable securities in the merging corporation, only marketable securities of the surviving corporation and/or cash and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the merger other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the merging or the surviving corporation or of any affiliate of the surviving corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate;

(2) consummation of a plan of share exchange in which his shares are included unless: (A) both his existing shares and the shares, obligations or other securities to be acquired are marketable securities; and (B) no director, officer or controlling shareholder has a direct or indirect material financial interest in the share exchange other than in his capacity as (i) a shareholder of the corporation whose shares are to be exchanged, (ii) a director, officer, employee or consultant of either the corporation whose shares are to be exchanged or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation whose shares are to be exchanged in the aggregate;

(3) consummation of a sale or exchange of all, or substantially all, of the property of the corporation if the sale or exchange is subject to section 12.02, or a sale or exchange of all, or substantially all, of the property of a corporation in dissolution, unless:

(i) his shares are then redeemable by the corporation at a price not greater than the cash to be received in exchange for his shares; or

(ii) the sale or exchange is pursuant to court order; or

(iii) in the case of a sale or exchange of all or substantially all the property of the corporation subject to section 12.02, approval of shareholders for the sale or exchange is conditioned upon the dissolution of the corporation and the distribution in cash or, if his shares are marketable securities, in marketable securities and/or cash, of substantially all of its net assets, in excess of a reasonable amount reserved to meet unknown claims under section 14.07, to the shareholders in accordance with their respective interests within one year after the sale or exchange and no director, officer or controlling shareholder has a direct or indirect material financial interest in the sale or exchange other than in his capacity as (i) a shareholder of the corporation, (ii) a director, officer, employee or consultant of either the corporation or the acquiring corporation or of any affiliate of the acquiring corporation if his financial interest is pursuant to bona fide arrangements with either corporation or any such affiliate, or (iii) in any other capacity so long as the shareholder owns not more than five percent of the voting shares of all classes and series of the corporation in the aggregate;

(4) an amendment of the articles of organization that materially and adversely affects rights in respect of a shareholder's shares because it:

(i) creates, alters or abolishes the stated rights or preferences of the shares with respect to distributions or to dissolution, including making non-cumulative in whole or in part a dividend theretofore stated as cumulative;

(ii) creates, alters or abolishes a stated right in respect of conversion or redemption, including any provision relating to any sinking fund or purchase, of the shares;

(iii) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;

(iv) excludes or limits the right of the holder of the shares to vote on any matter, or to cumulate votes, except as such right may be limited by voting rights given to new shares then being authorized of an existing or new class; or

(v) reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under section 6.04;

(5) an amendment of the articles of organization or of the bylaws or the entering into by the corporation of any agreement to which the shareholder is not a party that adds restrictions on the transfer or registration or any outstanding shares held by the shareholder or amends any pre-existing restrictions on the transfer or registration of his shares in a manner which is materially adverse to the ability of the shareholder to transfer his shares;

(6) any corporate action taken pursuant to a shareholder vote to the extent the articles of organization, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to appraisal;

(7) consummation of a conversion of the corporation to nonprofit status pursuant to subdivision B of PART 9; or

(8) consummation of a conversion of the corporation into a form of other entity pursuant to subdivision D of PART 9.

(b) Except as otherwise provided in subsection (a) of section 13.03, in the event of corporate action specified in clauses (1), (2), (3), (7) or (8) of subsection (a), a shareholder may assert appraisal rights only if he seeks them with respect to all of his shares of whatever class or series.

(c) Except as otherwise provided in subsection (a) of section 13.03, in the event of an amendment to the articles of organization specified in clause (4) of subsection (a) or in the event of an amendment of the articles of organization or the bylaws or an agreement to which the shareholder is not a party specified in clause (5) of subsection (a), a shareholder may assert appraisal rights with respect to those shares adversely affected by the amendment or agreement only if he seeks them as to all of such shares and, in the case of an amendment to the articles of organization or the bylaws, has not voted any of his shares of any class or series in favor of the proposed amendment.

(d) The shareholder's right to obtain payment of the fair value of his shares shall terminate upon the occurrence of any of the following events:

(i) the proposed action is abandoned or rescinded; or

(ii) a court having jurisdiction permanently enjoins or sets aside the action; or

(iii) the shareholder's demand for payment is withdrawn with the written consent of the corporation.

(e) A shareholder entitled to appraisal rights under this chapter may not challenge the action creating his entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.

Section 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 subclause (ii) of clause (2) of subsection (b) of section 13.22; and

(2) does so with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder.

SUBDIVISION B.
PROCEDURE FOR EXERCISE OF APPRAISAL RIGHTS

Section 13.20. NOTICE OF APPRAISAL RIGHTS

(a) If proposed corporate action described in subsection (a) of section 13.02 is to be submitted to a vote at a shareholders' meeting or through the solicitation of written consents, the meeting notice or solicitation of consents shall state that the corporation has concluded that shareholders are, are not or may be entitled to assert appraisal rights under this chapter and refer to the necessity of the shareholder delivering, before the vote is taken, written notice of his intent to demand payment and to the requirement that he not vote his shares in favor of the proposed action. If the corporation concludes that appraisal rights are or may be available, a copy of this chapter shall 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 shall notify in writing all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice shall be sent within 10 days after the corporate action became effective and include the materials described in section 13.22.

Section 13.21. NOTICE OF INTENT TO DEMAND PAYMENT

(a) If proposed corporate action requiring appraisal rights under section 13.02 is submitted to vote at a shareholders' meeting, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares:

(1) shall 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) shall not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed action.

(b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to payment under this chapter.

Section 13.22. APPRAISAL NOTICE AND FORM

(a) If proposed corporate action requiring appraisal rights under subsection (a) of section 13.02 becomes effective, the corporation shall deliver a written appraisal notice and form required by clause (1) of subsection (b) to all shareholders who satisfied the requirements of section 13.21 or, if the action was taken by written consent, did not consent. In the case of a merger under section 11.05, the parent shall deliver a written appraisal notice and form to all record shareholders who may be entitled to assert appraisal rights.

(b) The appraisal notice shall be sent no earlier than the date the corporate action became effective and no later than 10 days after such date and must:

(1) supply a form that specifies the date of the first announcement to shareholders of the principal terms of the proposed corporate action and requires the shareholder asserting appraisal rights to certify (A) whether or not beneficial ownership of those shares for which appraisal rights are asserted was acquired before that date and (B) that the shareholder did not vote for the transaction;

(2) state:

(i) where the form shall be sent and where certificates for certificated shares shall be deposited and the date by which those certificates shall be deposited, which date may not be earlier than the date for receiving the required form under subclause (ii);

(ii) a date by which the corporation shall receive the form which date may not be fewer than 40 nor more than 60 days after the date the subsection (a) appraisal notice and form are 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;

(iv) that, if requested in writing, the corporation will provide, to the shareholder so requesting, within 10 days after the date specified in clause (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 shall be received, which date shall be within 20 days after the date specified in subclause (ii) of this subsection; and

(3) be accompanied by a copy of this chapter.

Section 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 shall certify on the form sent by the corporation whether the beneficial owner of the shares acquired beneficial ownership of the shares before the date required to be set forth in the notice pursuant to clause (1) of subsection (b) of section 13.22. 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. In addition, a shareholder who wishes to exercise appraisal rights shall execute and return the form 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 subclause (ii) of clause (2) of subsection (b) of section 13.22. Once a shareholder deposits that shareholder's certificates or, in the case of uncertificated shares, returns the executed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to said 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 subclause (v) of clause (2) of subsection (b) of section 13.22. 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 execute 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 subsection (b) of section 13.22, shall not be entitled to payment under this chapter.

Section 13.24. PAYMENT

(a) Except as provided in section 13.25, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, the corporation shall pay in cash to those shareholders who complied with subsection (a) of section 13.23 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) shall be accompanied by:

(1) financial statements of the corporation that issued the shares to be appraised, consisting of a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders' equity for that year, and the latest available interim financial statements, if any;

(2) a statement of the corporation's estimate of the fair value of the shares, which estimate shall equal or exceed the corporation's estimate given pursuant to subclause (iii) of clause (2) of subsection (b) of section 13.22; and

(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 the payment in full satisfaction of the corporation's obligations under this chapter.

Section 13.25. AFTER-ACQUIRED SHARES

(a) A corporation may elect to withhold payment required by section 13.24 from any shareholder who 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 clause (1) of subsection (b) of section 13.22.

(b) If the corporation elected to withhold payment under subsection (a), it must, within 30 days after the form required by subclause (ii) of clause (2) of subsection (b) of section 13.22 is due, notify all shareholders who are described in subsection (a):

(1) of the information required by clause (1) of subsection (b) of section 13.24;

(2) of the corporation's estimate of fair value pursuant to clause (2) of subsection (b) of said section 13.24;

(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 the offer shall 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.

(c) Within 10 days after receiving the shareholder's acceptance pursuant to subsection(b), the corporation shall pay in cash the amount it offered under clause (2) of subsection (b) 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 if offered to pay under clause (2) of subsection (b) to each shareholder deserved in clause (5) of subsection (b).

Section 13.26. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER

(a) A shareholder paid pursuant to section 13.24 who is dissatisfied with the amount of the payment shall 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 shall reject the offer and demand payment of the shareholder's stated estimate of the fair value of the shares plus interest.

(b) 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.

SUBDIVISION C.
JUDICIAL APPRAISAL OF SHARES

Section 13.30. COURT ACTION

(a) If a shareholder makes demand for payment under section 13.26 which remains unsettled, the corporation shall commence an equitable 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 the commonwealth is located. If the corporation is a foreign corporation without a registered office in the commonwealth, it shall commence the proceeding in the county in the commonwealth where the principal office or registered office of the domestic corporation merged with the foreign corporation was located at the time of the transaction.

(c) The corporation shall make all shareholders, whether or not residents of the commonwealth, whose demands remain unsettled parties to the proceeding as an action against their shares, and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law or otherwise as ordered by the court.

(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint 1 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.

(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.

Section 13.31. COURT COSTS AND COUNSEL FEES

(a) The court in an appraisal proceeding commenced under section 13.30 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess cost against all or some of the shareholders demanding appraisal, in amounts 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 fees and expenses of counsel and experts for 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 that the party against whom the fees and 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 services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to such counsel reasonable fees to 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 costs and expenses of the suit, including counsel fees.

PART 14
SUBDIVISION A.
VOLUNTARY DISSOLUTION

Section 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.

Section 14.02. DISSOLUTION BY BOARD OF DIRECTORS AND SHAREHOLDERS, OR OTHERWISE IN ACCORDANCE WITH ARTICLES OF ORGANIZATION

(a) A corporation may voluntarily authorize dissolution by any method or procedure specified in its articles of organization. The articles of organization may condition the availability of the method or procedure on any basis. Notwithstanding anything else contained in this subsection, any provision in the articles of organization adopted pursuant to this subsection shall cease to be effective when shares of the corporation are listed on a national securities exchange or regularly traded in a market maintained by 1 or more members of a national or affiliated securities association. If a provision of the articles of organization ceases to be effective for any reason, the board of directors may, without shareholder action, adopt an amendment to the articles of organization, and, if appropriate, to the bylaws of the corporation, to delete such a provision and any references to it.

(b) In the absence of any specified methods or procedures in the articles of organization, and in addition to any methods or procedures so specified unless the articles of organization state that the specified methods or procedures are exclusive, a corporation may voluntarily authorize dissolution as follows:

(1) the board of directors shall submit a proposal for and terms of the proposed dissolution to the shareholders; and

(2) the shareholders entitled to vote shall approve the dissolution as provided in subsection (e).

(c) The board of directors may condition any submission to the shareholders of a proposal for dissolution under subsection (b) on any basis.

(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting, in connection with any submission of a proposal for dissolution under subsection (b), in accordance with section 7.05. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.

(e) Unless (1) a greater percentage vote, or the vote of one or more additional separate voting groups, is required by the articles of organization, pursuant to subsection (a) of section 7.27, by the bylaws, pursuant to section 10.21, or by the board of directors, acting pursuant to subsection (c) of this section, or (2) the articles provide for a lesser percentage vote, in accordance with subsection (b) of section 7.27, and subject, except as otherwise permitted by subsection (a) of this section, to the requirement that such lesser percentage be not less than a majority of all the votes entitled to be cast on the proposal, adoption of the proposal to dissolve requires approval by two-thirds of all the votes entitled generally to be cast on the matter by the articles of organization.

Section 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;

(3) if dissolution was approved by the shareholders under subsection (b) of section 14.02:

(i) the number of votes entitled to be cast on the proposal to dissolve; and

(ii) either the total number of votes cast for and against dissolution or the total number of undisputed votes cast for dissolution and a statement that the number cast for dissolution was sufficient for approval.

(4) If voting by voting groups was required on a dissolution proposal under subsection (b) of section 14.02, the information required by subparagraph (3) of this section shall be separately provided for each voting group entitled to vote separately on the proposal to dissolve.

(5) If dissolution was authorized by a method or procedure specified in the articles of organization pursuant to subsection (a) of section 14.02, the articles of dissolution shall set forth such method or procedure, together with sufficient information to establish that the corporation has complied therewith.

(b) A corporation is dissolved upon the effective date of its articles of dissolution.

Section 14.04. REVOCATION OF DISSOLUTION

(a) A corporation may revoke its dissolution within 120 days of its effective date.

(b) Revocation of a dissolution under subsection (b) of section 14.02 shall 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. Revocation of a dissolution under subsection (a) of section 14.02 may be authorized only as specifically contemplated by the articles of organization.

(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:

(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 under subsection (b) of section 14.02, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization;

(6) if shareholder action was required under subsection (b) of section 14.02 to revoke the dissolution, the information required by clauses (3) or (4) of subsection (a) of section 14.03; and

(7) if the dissolution being revoked was authorized under subsection (a) of section 14.02, sufficient information to establish that the corporation has complied with the provisions of its articles of organization governing such revocation.

(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.

Section 14.05. EFFECT OF DISSOLUTION

(a) A dissolved corporation continues its corporate existence but may not carry on any business except such as is necessary in connection with winding up and liquidating 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) making adequate provision, by payment or otherwise, and after giving effect to the provisions of sections 14.06, 14.07 and 14.08, for all of the corporation's existing and reasonably foreseeable debts, liabilities, and obligations, whether or not liquidated, matured, asserted, or contingent;

(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 shall not:

(1) transfer title to the corporation's property;

(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 PART 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.

Section 14.06. KNOWN NON-CONTINGENT CLAIMS AGAINST DISSOLVED CORPORATION

(a) With respect to any non-contingent claim against the corporation, whether or not matured, known to the corporation at any time prior to the end of the 3-year period specified in clause (3) of subsection (b) of section 14.07, to the extent that the corporation in good faith disputes the claim, a dissolved corporation may, subject to paragraph (f), limit the assets out of which the claim may be satisfied to the assets retained by the corporation plus, to the extent provided in section 6.41, any assets distributed to its shareholders within 3 years after the effective date of the corporation's dissolution, by following the procedure described in this section.

(b) The dissolved corporation may send notice in writing of the dissolution at any time after its effective date to any known claimant whose claim the corporation disputes in whole or in part. The written notice shall:

(1) include a copy or a summary of this section;

(2) state the amount of the claim that is disputed;

(3) state that the assets out of which the claim may be satisfied shall be limited as provided in subsection (c) unless a statement of the claim is received within the deadline specified in the notice by which the dissolved corporation shall receive the statement of the claim, which deadline may not be earlier than 3 years after the effective date of the corporation's dissolution or 120 days after the effective date of the written notice, whichever is later;

(4) describe the information that shall be included in the statement of the claim; and

(5) provide the mailing address to which the statement shall be sent.

(c) To the extent that the corporation in good faith disputes any non-contingent claim against the corporation, whether or not matured, known to the corporation at any time before the end of the 3-year period specified in clause (3) of subsection (b) of section 14.07, and if written notice of the claim was given under subsection (b), the assets out of which the claim may be satisfied shall be limited, except as provided in subsection (a) of section 14.09, to the assets retained by the corporation plus, to the extent provided in section 6.41, any assets distributed to its shareholders within 3 years after the effective date of the corporation's dissolution:

(1) if a claimant does not deliver a statement of the claim to the dissolved corporation by the specified deadline; or

(2) if a claimant, who has delivered a statement of the claim to the dissolved corporation and the claim was rejected in writing by the dissolved corporation, does not furnish notice to the corporation by the later of the specified deadline and 90 days from the effective date of the rejection notice that the holder intends to commence a proceeding to enforce the claim, and does not actually commence the proceeding by the later of the specified deadline and 270 days from the effective date of the rejection notice.

(d) If a claim described in subsection (a) has not been asserted against the dissolved corporation and the corporation has reason to believe that the claimant is unaware of the claim, the claim shall be considered to be unknown and subject to section 14.07 rather than section 14.06, unless the notice described in subsection (b) contains a reasonable description of the claim the corporation believes the claimant may have.

(e) The giving of notice by the dissolved corporation pursuant to section 14.06 is not evidence or admission of the existence or validity of any claim or amount.

Section 14.07. UNKNOWN CLAIMS AGAINST DISSOLVED CORPORATION

(a) With respect to any unknown claim against the corporation, including unknown contingent claims, a dissolved corporation may limit the assets out of which the claim may be satisfied to the assets retained by the corporation plus, to the extent provided in section 6.41, any assets distributed to its shareholders within three years after the effective date of the corporation's dissolution, by following the procedure described in this section.

(b) The dissolved corporation may publish notice of the dissolution at any time after its effective date, and request that any person with a claim against the corporation send a statement of it in accordance with the notice. The notice shall:

(1) be published 1 time in a newspaper of general circulation in the city, town or county where the dissolved corporation's principal office, or, if none in the state, its registered office, is or was last located and, if such dissolved corporation then has a website, posting the notice on the website until the earlier to occur of 30 days or the discontinuance of such website, and, if the dissolved corporation at the time of its dissolution had a class of securities registered under the Securities Exchange Act of 1934, as amended, in addition at least once in a daily newspaper with national circulation;

(2) describe the information that shall be included in the statement of the claim and provide a mailing address where the statement is to be sent; and

(3) state that the assets out of which any unknown claim against the corporation, including unknown contingent claims, may be satisfied will be limited as provided in subsection (c) unless a statement of the claim is received within three years after the publication of the notice.

(c) If the dissolved corporation follows the procedure in subsection (b), except as provided in subsection (a) of section 14.09,

(1) the assets out of which any unknown claim described in paragraph (a) may be satisfied will be limited to the assets retained by the corporation plus, to the extent provided in section 6.41, any assets distributed to its shareholders within three years after the effective date of the corporation's dissolution, if a statement of the claim is not presented to the corporation within the three-year period specified in clause (3) of subsection (b), and

(2) the assets out of which any previously unknown non-contingent claim which has been presented to the corporation and rejected in writing may be satisfied will be limited as provided in clause (1) of subsection (c) if the claimant does not furnish notice to the corporation by the later of the deadline specified in clause (1) of subsection (c) and 90 days from the effective date of the rejection notice that the holder intends to commence a proceeding to enforce the claim, and does not actually commence the proceeding by the later of the specified deadline and 270 days from the effective date of the rejection notice.

Section 14.08. CREATION OF RESERVES AS ADEQUATE PROVISION FOR UNASSERTED PRODUCT LIABILITY CLAIMS AND KNOWN CONTINGENT CLAIMS AGAINST DISSOLVED CORPORATION

(a) At any time after the end of the 3-year period specified in clause (3) of subsection (b) of section 14.07, it shall constitute adequate provision by a dissolved corporation under subsection (h) of section 6.40 and clause (3) of subsection (a) of section 14.05:

(1) for all unasserted claims for personal injury, wrongful death, loss of consortium or property damage based upon products or services provided by the corporation which may thereafter be asserted against the corporation, if the corporation

(i) sets aside in a reserve a reasonable amount of its assets, including by purchasing paid-up insurance or obtaining an assumption of liability by a responsible third party, to cover such claims, in compliance with subsection (b), and

(ii) publishes a notice as described in clause (1) of subsection (b) of section 14.07 stating that the corporation has complied with this section 14.08; and

(2) for all remaining known but still contingent claims against the corporation, if it

(i) creates a separate reserve in accordance with subclause (i) of clause (1) of subsection (a) to cover such claims or increases by a reasonable amount the assets set aside in a reserve for unasserted liability claims specified in clause (1) of subsection (a) and makes such reserve also applicable to known but contingent claims, and

(ii) sends written notice to each holder of a known but still contingent claim against the corporation stating that, pursuant to this section 14.08, if such claim thereafter becomes due and payable and is not paid by the corporation, the assets out of which such claim may be satisfied will be limited as provided in subsection (c).

(b) To meet the requirement of subsection (a) that the amount of assets set aside in a reserve be reasonable, the directors or those acting in their place must comply with the applicable standards of conduct under section 8.30 in determining the amount needed to provide for payment of the category or categories of claims to which such reserve is directed, after taking into account any other claims against the corporation for which the assets in such reserve might be reached because of the lack of other adequate provision.

(c) With respect to any claims described in clause (1) and (2) of subsection (a) not paid by the corporation, upon compliance by the dissolved corporation with subsections (a) and (b), except as provided in section 14.09(a), the assets out of which the claims may be satisfied will be limited to the assets retained by the corporation, including the applicable reserve created pursuant to subsection (a), plus, to the extent provided in section 6.41, any assets distributed to shareholders within 3 years after the effective date of the corporation's dissolution.

Section 14.09. ENFORCEMENT OF CLAIMS AGAINST DISSOLVED CORPORATION

(a) A claim against a dissolved corporation described in sections 14.06, 14.07 or 14.08, and which is not barred under the applicable statute of limitations, may be enforced against the dissolved corporation to the extent of any undistributed assets, including any available assets in a reserve created under section 14.08, any available proceeds under an insurance policy, and any applicable assumption of the dissolved corporation's liabilities by a third party.

(b) The giving of notice and/or the setting aside of any reserve hereunder or otherwise by the dissolved corporation is not an admission of the existence or validity of any claim or amount.

(d) No liability shall be imposed upon the dissolved corporation's shareholders or directors, or those acting in their place, under section 6.41 or otherwise with respect to any claim described in sections 14.06, 14.07 or 14.08 if the procedures described in those sections are followed.

SUBDIVISION B.
ADMINISTRATIVE DISSOLUTION

Section 14.20. GROUNDS FOR ADMINISTRATIVE DISSOLUTION

The secretary of state may commence a proceeding under section 14.21 to dissolve a corporation administratively if:

(a) the corporation has failed to comply with the provisions of law requiring the filing of reports with the secretary of state or the filing of any tax returns or the payment of any taxes under the General Laws for 2 or more consecutive years; or

(b) the secretary of state is satisfied that the corporation has become inactive and that its dissolution would be in the public interest.

Section 14.21. PROCEDURE FOR AND EFFECT OF ADMINISTRATIVE DISSOLUTION

(a) If the secretary of state determines that 1 or more grounds exist under section 14.20 for dissolving a corporation, he shall serve the corporation with written notice of his 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 90 days after service of the notice is perfected under section 5.04, the secretary of state shall administratively dissolve the corporation.

(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, 14.07 and 14.08.

(d) The administrative dissolution of a corporation does not terminate the authority of its registered agent.

Section 14.22. REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION

(a) A corporation administratively dissolved under section 14.21 may apply to the secretary of state for reinstatement at any time. The application shall:

(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 department of revenue reciting that all corporate excise taxes owed by the corporation, and any related penalties, 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, he shall reinstate the corporation.

(c) The secretary of state may subject the reinstatement to such terms and conditions, including the payment of reasonable fees, as in his judgment the public interest may require. He may in his discretion make the reinstatement effective for all purposes or for any specified purpose or purposes, in each case with or without limitation of time. When the reinstatement is effective, if by its terms it is effective for all purposes or if the secretary of state specifies that it shall be effective for purposes of this sentence, then the reinstatement 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, with all its original powers and duties and with liability, for all contracts, acts, matters and things made, done or performed in its name and on its behalf prior to reinstatement, as if the administrative dissolution had never occurred, and with all acts and proceedings of its officers, directors and shareholders, acting or purporting to act as such, which would have been legal and valid but for such dissolution, standing ratified and confirmed, in each case except as otherwise specified by the secretary of state.

(d) The certificate of reinstatement, or other equivalent public record, filed by the secretary of state pursuant to this section shall constitute an amendment of the articles of organization of the corporation, effective when filed. Any specification in the certificate of the purpose or purposes of reinstatement, or of a limitation of the time thereof, may, by further certificate filed as aforesaid, be amended by the secretary of state for cause shown to his satisfaction.

Section 14.23. APPEAL FROM DENIAL OF REINSTATEMENT

(a) If the secretary of state denies a corporation's application for reinstatement following administrative dissolution, he 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 superior court for Suffolk county 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, or other public record, 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 dissolved corporation or may take other action the court considers appropriate.

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

SUBDIVISION C.
JUDICIAL DISSOLUTION

Section 14.30. GROUNDS FOR JUDICIAL DISSOLUTION

The superior court located in the county set forth in section 14.31 may dissolve a corporation:

(1) in a proceeding by the attorney general if it is established that:

(i) the corporation obtained its articles of organization through fraud; or

(ii) the corporation has continued to exceed or abuse the authority conferred upon it by law;

(2) upon a petition filed by the shareholders holding not less than 40 per cent of the total combined voting power of all the shares of the corporation's stock outstanding and entitled to vote on the question of dissolution, 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

(ii) the shareholders are deadlocked in voting power and have failed, for a period that includes at least 2 consecutive annual meeting dates, to elect successors to directors whose terms have expired, or would have expired upon the election of their successors, and irreparable injury to the corporation is threatened or being suffered;

(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.

Section 14.31. PROCEDURE FOR JUDICIAL DISSOLUTION

(a) Venue for a proceeding by the attorney general to dissolve a corporation lies in Suffolk county. Venue for a proceeding brought by any other party named in section 14.30 lies in the county where a corporation's principal office, or, if none in the commonwealth, 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.

Section 14.32. RECEIVERSHIP OR CUSTODIANSHIP

(a) A court in a judicial proceeding brought to dissolve a corporation may appoint 1 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 exclusive 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 the commonwealth, 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 own name as receiver of the corporation in all courts of the commonwealth;

(2) the custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, 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 expense disbursements or reimbursements made to the receiver or custodian and his counsel from the assets of the corporation or proceeds from the sale of the assets.

Section 14.33. DECREE OF DISSOLUTION

(a) If after a hearing the court determines that 1 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 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, to the extent not theretofore completed, the notification of claimants in accordance with sections 14.06 and 14.07.

Section 14.34. REORGANIZATION UNDER A STATUTE OF THE UNITED STATES: EFFECTUATION

(a) Any corporation, a plan of reorganization of which, pursuant to any applicable statute of the United States relating to reorganizations of corporations, has been or shall be confirmed by the decree or order of a court of competent jurisdiction, may put into effect and carry out the plan and the decrees and orders of the court or judge relative thereto and may take any proceeding and do any act provided in the plan or directed by the decrees and orders, without further action by its directors or shareholders. The power and authority may be exercised, and the proceedings and acts may be taken, as may be directed by the decrees or orders, by the trustee or trustees of the corporation appointed in the reorganization proceedings, or a majority thereof, or if none be appointed and acting, by designated officers of the corporation, or by a master or other representative appointed by the court or judge, with like effect as if exercised and taken by unanimous action of the directors and shareholders of the corporation.

(b) The corporation may, in the manner provided in subsection (a), but without limiting the generality or effect of the foregoing, alter, amend, or repeal its bylaws; constitute or reconstitute and classify or reclassify its board of directors, and name, constitute or appoint directors and officers in place of or in addition to all or some of the directors or officers then in office; amend its articles of organization, and make any change in its capital or capital stock, or any other amendment, change, or alteration, or provision, authorized by this chapter; be dissolved; sell or otherwise transfer all or part of its assets, merge or consolidate as permitted by this chapter, in any of which cases, however, no shareholder shall have any statutory right of appraisal of his shares pursuant to section 13.02; change the location of its registered office, change its registered agent, and remove or appoint any agent to receive service of process; authorize, fix the terms, manner and conditions of the issuance of, and issue bonds, debentures or other obligations, whether or not convertible into shares of any class or series, or bearing warrants or other evidences of optional rights to purchase or subscribe for shares of any class or series; or lease its property and franchises to any corporation or other party, if permitted by law.

(c) Articles of amendment, merger, share exchange or dissolution effected by the corporation pursuant to the foregoing provisions shall be filed with the secretary of state, and shall become effective, all in accordance with this chapter. The articles shall be made, executed and acknowledged, as may be directed by the decrees or orders, by the trustee or trustees appointed in the reorganization proceedings, or a majority thereof, or, if none be appointed and acting, by the officers of the corporation, or by a master or other representative appointed by the court or judge, and shall certify that provision for the making and filing of the articles is contained in a decree or order of a court or judge having jurisdiction of a proceeding under the applicable statute of the United States for the reorganization of the corporation.

(d) This section shall cease to apply to the corporation upon the entry of a final decree in the reorganization proceedings closing the case and discharging the trustee or trustees, if any.

(e) On filing any articles or other instrument made or executed pursuant to this section, there shall be paid to the secretary of state the same fees as are payable by corporations not in reorganization upon the filing of like articles or instruments.

SUBDIVISION D.
MISCELLANEOUS

Section 14.40. DEPOSIT WITH TREASURER OF THE COMMONWEALTH

Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the treasurer of the commonwealth or other appropriate official of the commonwealth for safekeeping. When the creditor, claimant, or shareholder furnishes satisfactory proof of entitlement to the amount deposited, the treasurer or other appropriate official of the commonwealth shall pay him or his representative that amount.

PART 15
SUBDIVISION A.
REQUIREMENTS FOR AUTHORITY TO TRANSACT BUSINESS

Section 15.01. AUTHORITY TO TRANSACT BUSINESS REQUIRED

(a) A foreign corporation that transacts business or has a usual place of business in the commonwealth shall deliver the certificate required by section 15.03 to the secretary of state for filing.

(b) The following activities, among others, do constitute transacting business within the meaning of subsection (a):

(1) the ownership or leasing of real estate in the commonwealth;

(2) engaging in the construction, alteration or repair of any structure, railway or road; or

(3) engaging in any other activity requiring the performance of labor.

(c) The following activities, among others, without more, 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 corporations own securities or maintaining trustees or depositories 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 the commonwealth 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) conducting an isolated transaction that is not one in the course of repeated transactions of a like nature;

(10) transacting business in interstate commerce; or

(11) performing activities subject to regulation under chapter 167 or chapter 175, if the foreign corporation has complied with applicable chapter.

(d) The list of activities in subsections (b) and (c) is not exhaustive.

Section 15.02. CONSEQUENCES OF TRANSACTING BUSINESS WITHOUT AUTHORITY

(a) A foreign corporation transacting business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03 shall not maintain a proceeding in any court in the commonwealth until the certificate is delivered and filed.

(b) The successor to a foreign corporation that transacted business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03 and the assignee of a cause of action arising out of that business shall not maintain a proceeding based on that cause of action in any court in the commonwealth until the foreign corporation or its successor delivers the certificate and it is filed.

(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 is required to deliver to the secretary of state for filing the certificate required by section 15.03. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor delivers the certificate and it is filed.

(d) A foreign corporation is liable to the commonwealth for the years or parts of years during which it transacted business in the commonwealth without delivering to the secretary of state for filing the certificate required by section 15.03, in an amount equal to (1) all late fees which would have been imposed by law had it duly delivered the certificate and (2) all interest and penalties imposed by law for failure to pay the fees. A foreign corporation is further liable to the commonwealth, for each month or part thereof during which it transacted business without delivering the certificate, in an amount determined by the secretary of state, which amount shall in no event exceed the amount established by the commissioner of administration under section 3B of chapter 7, except that a foreign corporation which has delivered such certificate shall not be liable for such monthly penalty for the first 10 days during which it transacted business without delivering such certificate. Such fees and penalties may be levied by the secretary of state. The attorney general may bring an action necessary to recover amounts due to the commonwealth under this subsection including an action to restrain a foreign corporation against which fees and penalties have been imposed pursuant to this subsection from transacting business in the commonwealth until the fees and penalties have been paid.

(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to deliver to the secretary of state for filing the certificate required by section 15.03 shall not impair the validity of its corporate acts or prevent it from defending any proceeding in the commonwealth, or affect the validity of any contract entered into by the foreign corporation.

Section 15.03. DELIVERING CERTIFICATE BY FOREIGN CORPORATION

(a) A foreign corporation shall, not later than 10 days after it commences transacting business in the commonwealth, deliver to the secretary of state for filing a certificate setting forth:

(1) the name of the foreign corporation or, if its name is unavailable for use in the commonwealth, 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 the commonwealth, the name of its registered agent at that office and the agents written consent, either on the certificate or attached to it, to its appointment as agent;

(6) its fiscal year;

(7) a brief description of the activities to be conducted by the foreign corporation in the commonwealth; and

(8) the names and usual business addresses of its current directors and officers.

(b) The foreign corporation shall deliver with the completed certificate 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.

(c) The secretary of state shall examine and endorse his approval on the certificate delivered by the foreign corporation if the business of the foreign corporation is not prohibited by law to a corporation formed under the laws of the commonwealth and if the secretary of state determines that the certificate complies with this section. Upon such approval and payment of the required fee, the certificate shall be filed by the secretary of state and the foreign corporation shall be considered to be registered to transact business in the commonwealth.

Section 15.04. AMENDED CERTIFICATE

(a) A foreign corporation that has delivered to the secretary of state for filing the certificate required by section 15.03 shall deliver an amendment to the certificate if it changes:

(1) its corporate name;

(2) the period of its duration;

(3) the state or country of its incorporation;

(4) the street address of its principal office;

(5) its fiscal year; or

(6) the activities conducted by the foreign corporation in the commonwealth.

(b) A foreign corporation that changes its corporate name or the state or country of its incorporation shall deliver with the completed amendment a certificate evidencing the changes 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.

(c) A foreign corporation that has delivered to the secretary of state for filing the certificate required by section 15.03 may deliver an amendment to the certificate for any other reason.

(d) The requirements of section 15.03 for delivering to the secretary of state for filing an original certificate apply to delivering any amendment thereto under this section, except that an amendment need not contain any of the information the original certificate that is not being changed and the certificate required by subsection (b) of this section need be delivered only in the circumstances set forth in said subsection (b).

Section 15.05. EFFECT OF FILING OF CERTIFICATE

(a) The delivering by the foreign corporation to the secretary of state for filing of the certificate required by section 15.03 authorizes the foreign corporation to transact business in the commonwealth subject, however, to the right of the commonwealth to revoke the authority as provided in this chapter.

(b) A foreign corporation authorized to do business in the commonwealth has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by this chapter is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.

(c) Subject to the constitution of the commonwealth, a foreign corporations organization and internal affairs and the liability of its stockholders and directors shall be governed by the laws of the jurisdiction under which it is organized. A foreign corporation may not be denied the authority to transact business in the commonwealth by reason of any difference between such laws and the laws of the commonwealth.

Section 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 the commonwealth:

(1) may add the word "corporation", "incorporated", "company", or "limited", or the abbreviation "corp.", "inc.", "co.", or "ltd.", to its corporate name for use in the commonwealth; or

(2) may use a fictitious name to transact business in the commonwealth if its real name is unavailable and it delivers to the secretary of state for filing a copy of the 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 may not be the same as, or so similar that it is likely to be mistaken for:

(1) the corporate name or trade name of a corporation organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth;

(2) a corporate name reserved under section 4.02;

(3) the fictitious name of another foreign corporation or entity authorized to transact business or otherwise lawfully conducting business in the commonwealth because its real or trade name is unavailable;

(4) the corporate name or trade name of a not-for-profit corporation organized, authorized to conduct its activities or otherwise lawfully conducting its activities in the commonwealth;

(5) the name or trade name of a partnership, business trust or other entity organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth; or

(6) a trademark or service mark registered with the secretary of state under chapter 110B.

(c) A foreign corporation may apply to the secretary of state for authorization to use a corporate name that does not comply with the requirements of 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, if required by the secretary of state, submits an undertaking in form satisfactory to the secretary of state to change its name to a name that is not the same as or so similar that it is likely to be mistaken for the name of the applicant; 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 applicants right to use the name applied for in the commonwealth.

(d) A foreign corporation may use the name, including the fictitious name, or mark of another entity that is used in the commonwealth if the other entity is organized, authorized to transact business or otherwise lawfully conducting business in the commonwealth and the foreign corporation:

(1) has merged with the other entity;

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

(3) has acquired all or substantially all of the assets, including the name and marks, of the other entity.

(e) If a foreign corporation authorized to transact business in the commonwealth changes its corporate name to one that does not satisfy the requirements of section 4.01, it may not transact business in the commonwealth under the changed name until it adopts a name satisfying the requirements of section 4.01 and files with the secretary of state, under section 15.04, an amendment to the certificate required to be filed by it under section 15.03.

(f) Within 90 days after the delivery to the secretary of state for filing of a certificate under section 15.03, or of an amendment to such certificate under section 15.04 that effects an amendment reflecting a change in the name of a foreign corporation used in the commonwealth, any person who is registered, qualified or carrying on business in the commonwealth at that time or who has reserved or registered a name under sections 4.02, 15.03 or 15.04 may protest in writing to the secretary of state that the name used by the foreign corporation in the commonwealth is the same as or so similar that it is likely to be mistaken for the name of such person in violation of this section. In that event, if the secretary of state decides to conduct a hearing regarding the dispute, he shall give notice thereof as soon as possible to the protesting party and the foreign corporation using the name in the commonwealth. If as a result of the hearing or otherwise, the secretary of state determines that the use in the commonwealth of the corporate name violates this section, he shall file a statement withdrawing his approval of the amendment insofar as it relates to the name used by the foreign corporation and shall give written notice thereof to the protesting party and the foreign corporation. The withdrawal of approval shall take effect on the date specified by the secretary of state, which shall be not later than 180 days after the date of the filing which was protested. After the effective date of the withdrawal of approval, the foreign corporation shall have no right to use the name in the commonwealth and may be enjoined from doing business under the name by the superior court upon application of any interested person.

Section 15.07. REGISTERED OFFICE AND REGISTERED AGENT OF FOREIGN CORPORATION

Each foreign corporation authorized to transact business in the commonwealth shall continuously maintain in the commonwealth:

(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 the commonwealth and whose business office is identical with the registered office;

(ii) a domestic corporation, not-for-profit domestic corporation or domestic limited liability company whose business office is identical with the registered office; or

(iii) a foreign corporation, foreign not-for-profit corporation or foreign limited liability company authorized to transact business in the commonwealth whose business office is identical with the registered office.

Section 15.08. CHANGE OF REGISTERED OFFICE OR REGISTERED AGENT OF FOREIGN CORPORATION

(a) A foreign corporation authorized to transact business in the commonwealth 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.

(b) If a registered agent changes the street address of his business office, he may change the street address of the registered office of any foreign corporation for which he is the registered agent by notifying the foreign corporation in writing of the change and signing, either manually or in facsimile, 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 foreign corporation has been notified of the change. If the street addresses of more than one foreign corporation are being changed at the same time, there may be included in a single statement the names of all foreign corporations the street addresses of the registered office of which are being changed.

Section 15.09. RESIGNATION OF REGISTERED AGENT OF FOREIGN CORPORATION

(a) The registered agent of a foreign corporation may resign his agency appointment by signing and delivering to the secretary of state for filing a statement of resignation. The registered agent shall furnish a copy of the statement to the foreign corporation. The statement of resignation may include a statement that the registered office is also discontinued.

(b) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.

Section 15.10. LIABILITY TO BE SUED; SERVICE ON FOREIGN CORPORATION

(a) Foreign corporations shall be liable to be sued and to have their property attached in the same manner and to the same extent as individuals who are residents of other states.

(b) Every foreign corporation doing business in the commonwealth which has not complied with section 15.03 and every foreign corporation which has complied with said section 15.03 but whose resident agent cannot, after a diligent search by an officer authorized to serve legal process, be found at the business address of such resident agent stated in its most recent certificate filed with the secretary of state pursuant to this chapter or its most recent annual report filed with the secretary of state pursuant to section 16.22 and every foreign corporation whose resident agent refuses to act as such, shall be deemed to have appointed the secretary of state and his successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding may be served so long as any liability incurred in the commonwealth while it was doing business shall remain outstanding.

(c) Service of process in all actions and proceedings in the commonwealth against such a foreign corporation may be made upon the secretary of state. Service of process in all actions and proceedings in the commonwealth against a foreign corporation formerly doing business in the commonwealth that has not complied with the provision of section 15.03, or against a foreign corporation formerly doing business in the commonwealth that has withdrawn from the commonwealth pursuant to this chapter, may be made upon the secretary of state if the action or proceeding involves a liability alleged to have been incurred by the foreign corporation while it was doing business in the commonwealth.

(d) When lawful process in any action or proceeding against any foreign corporation which pursuant to this section may be made upon the secretary of state is served upon the secretary of state, the secretary of state shall immediately forward the process by mail, postage prepaid, directed to such foreign corporation at its last known principal office or, in the case of a foreign corporation established in a foreign country, to the resident manager, if any, in the United States. A fee of $10 shall be paid by the plaintiff to the secretary of state at the time of the service and the fees shall be taxed in his costs, if he prevails in the suit. The secretary of state shall keep a record of all such processes, which shall show the day of service.

(e) In the case of service of process on a foreign corporation that has not complied with section 15.03, the notice herein provided for shall be mailed by the secretary of state to the proper address of the foreign corporation furnished to him by the plaintiff or his attorney.

(f) Service of process upon a foreign corporation for violation of any criminal law of the commonwealth may be made in the manner hereinabove provided except that no fee shall be paid to the secretary of state.

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

Section 15.11. FALSE REPORTS OR STATEMENTS

(a) An officer of a foreign corporation who signs any statement or report required by this chapter which is false in any material representation and that he knows or has reason to know to be false shall be liable to a creditor of the foreign corporation who has relied upon the false representation to the extent of the actual damage sustained by him by reason of such reliance; but the officer signing the statement or report shall not be liable to creditors for debts contracted or contracts entered into after the filing of a statement or report or a corrected statement or report that is not false in any material representation.

(b) No liability shall be imposed under this section upon any director or officer who shall have discharged the duties of his position in good faith and with the degree of diligence, care and skill that prudent men would ordinarily exercise under similar circumstances in a like position. In discharging his duties the person, when acting in good faith shall be entitled to rely upon the books of account of the foreign corporation or upon written reports made to the foreign corporation by any of its officers, other than such person, or by an independent public accountant.

(c) Any director or officer who pays on a judgment rendered on a claim asserted under this section shall be entitled to contribution from the other directors and officers against whom judgment has been entered on the same claim or who shall be ascertained to be liable to the plaintiff upon the same claim.

(d) Whoever knowingly makes, executes, delivers or publishes any report or statement required by law to be made, executed, filed or published by a foreign corporation in the commonwealth, or whoever causes the same to be done, which report or statement is false in any material representation, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than 3 years, or both.

(e) Whoever knowingly makes, executes, delivers or publishes any report or statement required by the law of another state or country to be made, executed, or published by a foreign corporation, or whoever causes the same to be done, within the commonwealth, which report or statement is false in any material representation, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than 3 years, or both.

SUBDIVISION B.
WITHDRAWAL OR TRANSFER OF AUTHORITY

Section 15.20. WITHDRAWAL OF FOREIGN CORPORATION

(a) A foreign corporation authorized to transact business in the commonwealth may not withdraw from the commonwealth until it obtains the consent of the secretary of state.

(b) A foreign corporation authorized to transact business in the commonwealth may apply for withdrawal by delivering an application to the secretary of state for filing. The application shall 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 the commonwealth and that it surrenders its authority to transact business in the commonwealth;

(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 the commonwealth;

(4) a mailing address to which the secretary of state may mail a copy of any process served on him under clause (3);

(5) a commitment to notify the secretary of state in the future of any change in its mailing address; and

(6) a certification that all taxes known to the corporation to be due to the commonwealth have been paid or provided for.

(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).

Section 15.21. AUTOMATIC WITHDRAWAL UPON CERTAIN CONVERSIONS

A foreign business corporation authorized to transact business in the commonwealth that converts into a domestic nonprofit corporation or any form of domestic filing entity shall be considered to have withdrawn on the effective date of the conversion.

Section 15.22. WITHDRAWAL UPON CONVERSION TO A NONFILING ENTITY

(a) A foreign corporation authorized to transact business in the commonwealth that converts into a form of domestic or foreign nonfiling entity shall apply for withdrawal by delivering an application to the secretary of state for filing. The application shall set forth:

(1) the name of the foreign business 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 the commonwealth as a foreign business corporation;

(3) the type of other entity into which it has been converted and the jurisdiction whose laws govern its internal affairs;

(4) if it has been converted into a foreign other 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 the commonwealth;

(ii) a mailing address to which the secretary of state may mail a copy of any process served on him under subclause (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 into a foreign other entity is effective, service of process on the secretary of state is service on the foreign other entity. Upon receipt of process, the secretary of state shall mail a copy of the process to the foreign other entity at the mailing address set forth under clause (4) of subsection (a).

(c) After the withdrawal under this section of a corporation that has converted into a domestic other entity is effective, service of process shall be made on the other entity in accordance with the regular procedures for service of process on the form of other entity into which the corporation was converted.

Section 15.23. TRANSFER OF AUTHORITY

(a) A foreign business corporation authorized to transact business in the commonwealth that converts into a foreign nonprofit corporation or into any form of foreign other entity that is required to deliver for filing an application for authority to transact business in the commonwealth or make a similar type of delivery with the secretary of state if it transacts business in the commonwealth shall deliver to the secretary of state for filing an application for transfer of authority executed by any officer or other duly authorized representative. The application shall set forth:

(1) the name of the corporation;

(2) the type of other entity into which it has been converted and the jurisdiction whose laws govern its internal affairs;

(3) any other information that would be required in a filing under the laws of the commonwealth by an other entity of the type the corporation has become seeking authority to transact business in the commonwealth.

(b) The application for transfer of authority shall be delivered to the secretary of state for filing and shall take effect on the effective date 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 the commonwealth shall be transferred without interruption to the other entity which shall thereafter hold such authority subject to the provisions of the laws of the commonwealth applicable to that type of other entity.

SUBDIVISION C.
REVOCATION OF AUTHORITY TO TRANSACT BUSINESS

Section 15.30. GROUNDS FOR REVOCATION

The secretary of state may commence a proceeding under section 15.31 to revoke the authority of a foreign corporation to transact business in the commonwealth if the foreign corporation has failed to comply with laws requiring the filing of reports with the secretary of state or the filing of any tax returns or the payment of any taxes under chapter 62C or chapter 63 for 2 or more consecutive years.

Section 15.31. PROCEDURE FOR AND EFFECT OF REVOCATION

(a) If the secretary of state determines that 1 or more grounds exist under section 15.30 for revocation of the authority of a foreign corporation to transact business in the commonwealth, he shall serve the foreign corporation with written notice of his determination, by mail addressed to its principal office as stated in the certificate required to be filed pursuant to section 15.03 or it most recent annual report.

(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 90 days after the notice is given, the secretary of state may revoke the foreign corporations authority to transact business in the commonwealth. The secretary of state shall note the fact of revocation on his records, including the effective date thereof.

(c) The authority of a foreign corporation to transact business in the commonwealth ceases on the date on which the secretary of state makes revocation of such authority effective.

(d) Revocation of a foreign corporations authority to transact business in the commonwealth does not terminate the authority of the registered agent of the corporation until the registered agent resigns his agency pursuant to section 15.09.

Section 15.32. APPEAL FROM REVOCATION

(a) A foreign corporation the authority to transact business in the commonwealth of which has been revoked under section 15.30 may apply to the secretary of state for reinstatement of such authority at any time. The application shall:

(1) recite the name of the foreign corporation and the effective date of the revocation;

(2) state that the ground or grounds for revocation either did not exist or have been eliminated;

(3) state that the foreign corporations name satisfies the requirements of sections 4.01 and 15.06; and

(4) contain a certificate from the department of revenue reciting that all tax returns required to be filed by the foreign corporation under chapters 62C and 63 have been filed and all taxes shown due on such returns and any related penalties 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, he shall reinstate the authority of the foreign corporation to transact business in the commonwealth and shall note the fact of reinstatement on his records and the effective date of reinstatement.

(c) The secretary of state may subject such reinstatement to such terms and conditions, including the payment of reasonable fees, as in his judgment the public interest may require. He may in his discretion make the reinstatement effective for all purposes or for any specified purpose or purposes, in each case with or without limitation of time. When the reinstatement is effective, if by its terms it is effective for all purposes or if the secretary of state specifies that it shall be effective for purposes of this sentence, then the reinstatement relates back to and takes effect as of the effective date of the revocation of authority and the corporation resumes carrying on its business as if the revocation of authority had never occurred, with all its original powers and duties and with liability, for all contracts, acts, matters and things made, done or performed in its name and on its behalf before reinstatement, as if the revocation of authority had never occurred, except as otherwise specified by the secretary of state.

(d) Any limitation in the reinstatement relative to the purpose or purposes of reinstatement, or of a limitation of the time thereof, may be amended by the secretary of state for cause shown to his satisfaction.

PART 16
SUBDIVISION A.
RECORDS

Section 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 written form or in another form capable of conversion into written form within a reasonable time.

(e) A corporation shall keep within the commonwealth a copy of the following records at its principal office or an office of its transfer agent or of its secretary or assistant secretary or of its registered agent:

(1) its articles or restated articles of organization and all amendments to them currently in effect;

(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;

(4) the minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past 3 years;

(5) all written communications to shareholders generally within the past 3 years, including the financial statements furnished under section 16.20 for the past 3 years;

(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 16.22.

Section 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 office where they are maintained pursuant to subsection (e) of section 16.01, copies of any of the records of the corporation described in said subsection (e) of said section 16.01 if he gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy.

(b) 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 (c) and gives the corporation written notice of his demand at least 5 business days before the date on which he wishes to inspect and copy:

(1) excerpts from minutes reflecting action taken at any meeting of the board of directors, records of any action of 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 or board of directors without a meeting, to the extent not subject to inspection under subsection (a) of section 16.02;

(2) accounting records of the corporation, but if the financial statements of the corporation are audited by a certified public accountant, inspection shall be limited to the financial statements and the supporting schedules reasonably necessary to verify any line item on those statements; and

(3) the record of shareholders described in section 16.01(c).

(1) his demand is made in good faith and for a proper purpose;

(2) he describes with reasonable particularity his purpose and the records he desires to inspect;

(3) the records are directly connected with his purpose; and

(4) the corporation shall not have determined in good faith that disclosure of the records sought would adversely affect the corporation in the conduct of its business or, in the case of a public corporation, constitute material non-public information at the time when the shareholder's notice of demand to inspect and copy is received by the corporation.

(d) The right of inspection granted by this section may not be abolished or limited by a corporation's articles of organization or bylaws.

(e) This section shall 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 chapter, to compel the production of corporate records for examination, provided that, in the case of production of records described in subsection (b) at the request of a shareholder, the shareholder has met the requirements of subsection (c).

(f) For purposes of this section, "shareholder" includes a beneficial owner whose shares are held in a voting trust or by a nominee on his behalf.

Section 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 corporation may, if reasonable, satisfy the right of a shareholder to copy records under section 16.02 by furnishing to the shareholder copies by photocopy or other means chosen by the corporation including copies furnished through an electronic transmission.

(c) The corporation may impose a reasonable charge, covering the costs of labor, material, transmission and delivery, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of production, reproduction, transmission or delivery of the records.

(d) The corporation may comply at its expense, with a shareholder's demand to inspect the record of shareholders under clause (3) of subsection (b) of section 16.02 by providing the shareholder with a list of shareholders that was compiled no earlier than the date of the shareholder's demand.

(e) The corporation may impose reasonable restrictions on the use or distribution of records by the demanding shareholder.

Section 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 superior court of the county where the corporation's principal office or, if none in the commonwealth, 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 subsections (b) and (c) of section 16.02 may apply to the superior court in the county where the corporation's principal office or, if none in the commonwealth, 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 under section 16.02, it shall also order the corporation to pay the shareholder's costs, including reasonable counsel fees, 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; and the court may order the corporation to pay the shareholder's costs if it orders inspection and copying of records other than under section 16.02.

(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.

Section 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) If a corporation does not allow a director who purports to be entitled thereto pursuant to subsection (a) of section 16.05 to inspect and copy any books, records or documents required by that subsection to be available for inspection, the superior court of the county where the corporation's principal office or, if none in the commonwealth, its registered office is located may order inspection and copying of the books, records and documents demanded at the corporation's expense upon application of the director, 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 the court orders inspection and copying of the books, records and documents demanded, it 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 corporation, and may also order the corporation to pay the director's costs, including reasonable counsel fees, incurred in connection with the application.

Section 16.06 EXCEPTION TO NOTICE REQUIREMENT; CONSEQUENCES OF INABILITY TO DELIVER NOTICE

(a) Whenever notice is required to be given under any provision of this chapter to any shareholder, the notice shall not be required to be given if:

(1) notice of 2 consecutive annual meetings, and all notices of meetings during the period between the 2 consecutive annual meetings, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned undeliverable; or

(2) all, but not less than 2, payments of dividends on securities during a 12-month period, or 2 consecutive payments of dividends on securities during a period of more than 12 months, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned undeliverable.

(b) If the shareholder shall deliver to the corporation a written notice setting forth the shareholder's then-current address, the requirement that notice be given to the shareholder shall be reinstated.

(c) If the corporation is unable to deliver notice to any shareholder to an address furnished by the shareholder for the purpose and the inability becomes known to the secretary or an assistant secretary of the corporation, the transfer agent or other person responsible for the giving of notice, the corporation shall take such action as shall be reasonable in the circumstances to inform the shareholder of the inability and to request the shareholder to furnish a new address for the receipt of notices. Attempting to contact the shareholder at such other address, if any, as the corporation may have for the shareholder is deemed reasonable. The corporation may continue to rely on the address last furnished by the shareholder for notice until it is furnished in writing a new address for notice. The failure of the corporation to take the action required by this subsection shall not invalidate any meeting or other action.

SUBDIVISION B.
REPORTS

Section 16.20. FINANCIAL STATEMENTS FOR SHAREHOLDERS

(a) A corporation shall furnish to its shareholders upon request annual financial statements, which may be consolidated or combined statements of the corporation and 1 or more of its subsidiaries, as appropriate, that include a balance sheet as at the end of the fiscal year, an income statement for that year and, if available, a statement of changes in shareholder equity for that year unless that information appears elsewhere in the financial statements. If prepared by the corporation, the corporation shall also furnish a statement of cash flows for that year. If financial statements are prepared by the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. For purposes of this subsection, financial statements may consist of copies of federal tax returns or other comparable information which is reasonable under the circumstances in the case where the corporation does not prepare financial statements as described above.

(b) If the annual financial statements are reported upon by a public accountant, his report shall accompany those statements. If not, those statements shall be accompanied by a certificate of the president or the person responsible for the corporation's accounting records:

(1) stating his reasonable belief whether the statements were prepared in accordance with generally accepted accounting principles or, if not, describing the basis of preparation; and

(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) A corporation shall deliver the annual financial statements, or a written notice of their availability, to each shareholder before the earlier to occur of the annual meeting of shareholders or 120 days after the close of the fiscal year. Thereafter, the corporation shall deliver its most recent financial statements upon the written request of any shareholder to whom the statements were not delivered.

(d) A corporation shall not be required to furnish its annual financial statements to a shareholder if it can demonstrate a proper corporate purpose for withholding information contained in those statements from that shareholder.

Section 16.21. BY-LAW AMENDMENTS

If the board of directors of a corporation makes, amends or repeals any bylaw, the corporation shall report in writing the substance of the change to the shareholders entitled to vote on amending the bylaws, with or before the notice of the next shareholders meeting. Any bylaw adopted by the board of directors may be amended or repealed by the shareholders.

Section 16.22. ANNUAL REPORT FOR SECRETARY OF STATE

(a) Each domestic corporation, and each foreign corporation authorized to transact business in the commonwealth, 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 the commonwealth;

(3) the address of its principal office;

(4) the names and business addresses of its directors, officers required by section 8.40(a), and chief executive officer and chief financial officer, if different;

(5) a brief description of any change in the nature of its business;

(6) the total number of authorized shares, itemized by class and series, if any, within each class;

(7) the total number of issued and outstanding shares, itemized by class and series, if any, within each class; and

(8) any change in the fiscal year of the corporation.

(b) Information in the annual report shall be current as of the date the annual report is executed on behalf of the corporation.

(c) The annual report shall be delivered to the secretary of state within 2 1/2 months after the end of the fiscal year of the corporation.

(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 writing and return the report to it for correction.

PART 17
TRANSITION PROVISIONS

Section 17.01. APPLICATION TO EXISTING DOMESTIC CORPORATIONS

Except so far as such application may be inconsistent with (i) provisions still in force of any special acts of incorporation, enacted before March 11, 1831, and not subject to amendment, alteration or repeal by the general court, or (ii) chapter 156A applicable to professional corporations incorporated thereunder, this chapter shall apply to:

(1) all domestic corporations having capital stock whether established before or after the effective date of this chapter, either by general or special law, for the purpose of carrying on business for profit except corporations organized for the purpose of carrying on the business of a bank, savings bank, co-operative bank, trust company, credit union, surety or indemnity company, or safe deposit company, or for the purpose of carrying on within the commonwealth the business of an insurance company, railroad, electric railroad, street railway or trolley motor company, telegraph or telephone company, gas or electric light, heat or power company, canal, aqueduct or water company, cemetery or crematory company, any other corporations which on October 1, 1965 have or may thereafter have the right to take land within the commonwealth by eminent domain or to exercise franchises in public ways granted by the commonwealth or by any county, city or town, and corporations subject to chapter 157 and corporations subject to chapter 157A; and

(2) notwithstanding anything to the contrary in clause (1), all other corporations to which this chapter is made applicable by the express provisions of any other general or special law to the extent provided thereby.

Section 17.02. APPLICATION TO QUALIFIED FOREIGN CORPORATIONS

A foreign corporation authorized to transact business in the commonwealth on the effective date of this chapter is subject to this chapter but is not required to apply for new authority to transact business under this chapter.

Section 17.03. SAVING PROVISIONS

(a) Except as provided in subsection (b), the repeal of chapter 181 shall not affect:

(1) the operation of said chapter 181 or any action taken under it before its repeal;

(2) any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under said chapter 181 before its repeal;

(3) any violation of said chapter 181, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal; or

(4) any proceeding commenced under said chapter 181 before its repeal, and the proceeding may be completed in accordance with said chapter 181 as if it had not been repealed.

(b) If a penalty or punishment imposed for a violation of said chapter 181 is reduced by chapter 156D, the penalty or punishment if not already imposed shall be imposed in accordance with this chapter.

Section 17.04. SEVERABILITY

If any provision of this chapter or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity shall not affect other provisions or applications of the chapter that can be given effect without the invalid provision or application, and to this end the provisions of the chapter are severable.

SECTION 18. Section 3 of chapter 157A of the General Laws, as so appearing, is hereby further amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Any corporation organized under chapter 156D may elect to be governed as an employee cooperative under this chapter, by so stating in its articles of organization or articles of amendment filed in accordance with chapter 156B.

SECTION 19. Section 19E of chapter 175 of the General Laws, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

Upon compliance with the requirements and completion of the proceedings prescribed by this section, a domestic mutual life insurance company may (i) convert into a domestic stock life insurance company or (ii) so convert as part of a plan of reorganization in which a majority or all of the common shares of the domestic stock life insurance company is acquired by a parent corporation or another corporation which may be, but need not be, a corporation organized for such purposes and may be a subsidiary or other affiliate of such domestic mutual life insurance company prior to such acquisition, and, in either case, may merge as part of the plan of demutualization with a domestic stock life insurance company or a corporation organized under chapter 156D and the consideration to be provided in such merger may be shares of the resulting or surviving corporation or any other corporation, cash, or other consideration. Any such merger shall be authorized under this section and approved as provided under paragraph (2) and not pursuant to section 19A.

SECTION 20. Section 37 of chapter 223 of the General Laws, as so appearing, is hereby further amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

In an action against a domestic corporation other than one mentioned in the preceding paragraph, service shall be made upon the president, treasurer, clerk, resident agent appointed pursuant to section 49 of chapter 156D, cashier, secretary, agent or other officer in charge of its business, or, if no such officer is found within the county, upon any member of the corporation. If an officer authorized to serve legal process makes a return on such process that, after diligent search, he can find no one upon whom he can lawfully make service as aforesaid, the court to which such process is returned may upon application issue an order of notice to such corporation, directing it to appear and answer within a designated period.

SECTION 21. The first paragraph of section 14 of chapter 224 of the General Laws, as so appearing, is hereby amended by striking out the fifth sentence and inserting in place thereof the following 2 sentences:-

If the debtor is a corporation, service shall be made by delivery in hand to, or by leaving a copy at a business office of, the president, treasurer, clerk, resident agent appointed pursuant to chapter 5 of chapter 156D, cashier, secretary, agent or other officer in charge of its business, or, if no such officer is found within the county, any member of the corporation. If the debtor is a trust with transferable shares, service shall be made in the same manner on any trustee.

SECTION 22. Chapter 156D of the General Laws, as established by this act, shall apply to domestic corporations having capital stock as were established before July 1, 2004 and which were, on June 30, 2004, subject to chapter 156B of the General Laws.

SECTION 23. Any reference contained in the General Laws to chapter 156B or to any section of chapter 156B which has been superseded and replaced by this act shall be considered a reference to chapter 156D.

SECTION 24. This act shall take effect on July 1, 2004.

Approved November 26, 2003.

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Chapter 127

AN ACT ESTABLISHING A NEW BUSINESS CORPORATION ACT.

Chapter 127

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AN ACT ESTABLISHING A NEW BUSINESS CORPORATION ACT.