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TITLE 12. CORPORATIONS AND ASSOCIATIONS

CHAPTER 1. BUSINESS CORPORATION LAW

PART V. SHARES

12:51. Classes of shares; fractional shares

A. The shares of a corporation may be divided into classes, with such designations, voting powers, preferences, dividend or redemption rights, or other relative rights or restrictions, limitations or qualifications as may be provided in the articles. The corporation may issue shares with optional or conversion rights, according to the provisions of R.S. 12:56. The corporation may issue shares of any preferred or special class in series, with such designations of series, and such variations in the relative rights and preferences as between series, as fixed in the articles.

B. Any or all of the shares may have a par value, or have no par value, as provided in the articles.

C. Except as otherwise provided in R.S. 12:136, R.S. 12:140.12, in the articles, or in any right or option created and issued pursuant to R.S. 12:56(A), each share shall be in all respects equal to every other share. If the plan or resolution creating any such right or option provides that shares shall not be equal in all respects, a copy of the plan or resolution shall be filed with the secretary of state within thirty days of the adoption of such plan or resolution.

D. Except as otherwise provided in the articles, a corporation may, but shall not be obliged to, issue certificates for fractional shares, and by action of its board of directors may, but shall not be obliged to, issue, in lieu thereof, scrip in registered or bearer form, which may be void if not exchanged for full shares within a limited time stated therein, or may provide that after a limited time stated therein the aggregate shares represented by scrip will be sold for account of the holders thereof. The holder of fractional-share certificates or scrip shall be entitled to receive a certificate for a full share upon the surrender (within any limited time stated therein) of fractional-share certificates or scrip aggregating a full share. Unless otherwise provided in the articles, the holder of a fractional-share certificate shall, but the holder of scrip shall not, have all rights of a shareholder except voting rights.

12:52. Issuance of shares; consideration

A. Par value shares may be issued initially for such consideration expressed in dollars, not less than the par value thereof, as shall be fixed by the board of directors. Shares without par value may be issued from time to time for such consideration expressed in dollars as may be fixed by the board of directors or by the shareholders by a vote of a majority of the voting power present, if the articles reserve to the shareholders the right to fix the consideration; provided however, the consideration for such shares may be initially fixed by the incorporators. Treasury shares may be disposed of by the corporation for such consideration as may be fixed from time to time by the board of directors. All fully paid shares shall be nonassessable.

B. Shares issued (1) in payment of a stock dividend, (2) pursuant to exercise of conversion rights, (3) in exchange for, or in respect of, outstanding shares pursuant to a reclassification of stock, (4) in a merger or consolidation as provided in the merger or consolidation agreement, or (5) pursuant to the authority of R.S. 12:41(B)(9)(d) and (e) shall be considered as fully paid when so issued.

C. The consideration for shares issued otherwise than as stated in subsection B of this Section, shall be paid in cash or in corporeal or incorporeal property, or services actually rendered to the corporation, the fair value of which is not less than the dollar amount of the consideration fixed for the shares, before the shares are issued. Upon payment of the consideration fixed therefor, such shares shall be considered as fully paid. Cash consideration for shares may not be paid by the purchaser's note, secured or unsecured, or uncertified check; and in case of delivery of such a note or check in payment for shares, the shares shall not be issued until the note or check has been paid in full.

D. Solely for the purpose of determining whether shares have been paid for fully, the valuation placed by the shareholders or the directors, as the case may be, upon the consideration other than cash paid therefor shall be conclusive.

12:53. Reservation of shares

A. A corporation shall reserve from its authorized but unissued shares, or its treasury shares, sufficient shares to meet its issuance obligations under subscription rights, warrants, options and conversion privileges.

B. Shares issuable pursuant to any such rights, warrants, options or privileges, grant or issuance of which was approved by such vote of the shareholders as would have been required to amend the articles to increase the authorized number of the class of shares involved, shall, to the extent not available in the corporation's treasury, be issued notwithstanding the fact that the articles do not by their terms authorize such issuance.

12:54. Reclassification of stock

A. In case of a reclassification of stock, the articles of amendment or merger agreement shall state:

(1) The number of shares that have a par value and the par value thereof, and the number of shares that have no par value;

(2) If the shares are divided into classes, the number of shares of each class; the par value of the shares of each class or that such shares are without par value; the designation of each class, and in so far as fixed in the articles, each series of each preferred or special class; the preferences, limitations and relative rights of the shares of each class and the variations in relative rights and preferences as between series, in so far as fixed in the articles; and any authority vested in the board of directors to amend the articles to fix the relative rights, preferences and limitations of the shares of any class, and to establish, and fix variations in relative rights as between, series of any preferred or special class.

B. Following a reclassification of stock, the aggregate allocated value of the issued shares shall not exceed stated capital.

12:55. Redemption, purchase and cancellation of shares

A. A corporation shall not purchase or redeem its shares when it is insolvent, or when such purchase or redemption would render it insolvent, or at a price, in the case of shares subject to redemption, exceeding the redemption price thereof, or when its net assets are less than, or such purchase or redemption would reduce its net assets below, the aggregate amount payable on liquidation upon any issued shares, which have a preferential right to participate in the assets in event of liquidation, remaining after the purchase or redemption and cancellation of any shares in connection therewith. Subject to the provisions of this subsection, a corporation may purchase its own shares, or redeem its shares subject to redemption, as provided in the following subsections of this Section.

B. Subject to the provisions of R.S. 12:62(B), a corporation may purchase its own shares, or redeem its shares subject to redemption, out of surplus or, as permitted by R.S. 12:55(C) out of stated capital.

C. A corporation may purchase or may redeem its shares subject to redemption out of stated capital only to the extent that stated capital is not thereby reduced below the aggregate allocated value of the issued shares remaining after the purchase or redemption and cancellation of any shares in connection therewith.

D. Shares which are cancelled are thereby restored to the status of authorized and unissued shares, unless the articles provided otherwise; however, shares purchased out of stated capital for the purpose of paying dissenting shareholders entitled to payment for their shares under the provisions of this Chapter shall be cancelled.

E. [Repealed by Acts 1989 RS, No. 175, Section 2.]

F. [Repealed by Acts 1989 RS, No. 175, Section 2.]

G. [Repealed by Acts 1989 RS, No. 175, Section 2.]

12:56. Convertible securities and stock-purchase rights

A. Unless the articles provide otherwise, a corporation shall have authority, whether or not in connection with the issuance and sale of any of its shares or other securities, to create and issue rights and options in any form, granting to the holders thereof:

(1) The right to convert, upon such terms and conditions as the corporation may deem expedient, shares or obligations into shares of any class; or

(2) The right or option to purchase, upon such terms and conditions as it may deem expedient, shares of any class.

B. Unless the articles provide otherwise, such authority shall be exercised by vote of the board of directors.

C. Such conversion or option rights shall be exercisable at such price as determined by the board of directors (or by the shareholders by vote of a majority of the voting power present, if the articles reserve to the shareholders the right to fix the consideration for issuance of the shares), except that if the shares in respect of which option or debt conversion rights are issued have a par value and are not treasury shares, then such conversion or option rights shall be exercisable at not less than the par value of such shares.

D. Shares shall not be converted into par-value shares (other than treasury shares) having a greater aggregate par value than the aggregate allocated value, at the time of conversion, of the shares to be converted.

E. Converted shares shall be cancelled.

12:57. Certificates of stock

A. Every shareholder shall be entitled to a certificate of stock signed by the president and secretary, or by such other officer or officers of the corporation as the articles or by-laws may provide. When the certificate is countersigned by a transfer agent or by a registrar, other than the corporation itself or an employee of the corporation, the signatures of the president and secretary or other officers may be facsimile. No certificate shall be invalid by reason of the fact that any officer whose real or facsimile signature appears thereon, ceased to be an officer of the corporation before the certificate was issued.

B. Every certificate of stock shall state:

(1) The name of the corporation;

(2) That the corporation is incorporated under the laws of this State;

(3) The name of the registered holder of the shares represented thereby;

(4) The number and class, and designation of series, if any, of shares represented thereby; and

(5) The par value of the shares represented thereby, or a statement that such shares have no par value.

C. Each certificate representing shares issued by a corporation which is authorized to issue shares of more than one class, shall set forth on the certificate, or shall state that the corporation will furnish to any shareholder upon request and without charge, a summary of the designations, relative rights, preferences and limitations of the shares of each class and of each series of each preferred or special class, so far as the same have been fixed, and the authority of the board to establish other series and to fix the relative rights, preferences and limitations of the shares of any class or series by amendment of the articles.

D. A certificate for shares having no par value shall not state any par value, nor any value thereof in money, except as to liquidation preference or redemption price, nor any rate of dividend to which such shares shall be entitled in terms of a percentage of any par or other value.

E. If fractional shares represented by a certificate are subject to any limitations or restrictions other than on voting rights, these restrictions or limitations shall appear on the certificate.

F. (1) No by-law or other restriction on the transfer of shares, (2) no provision for compulsory offer of shares of its own stock for purchase by, or sale to, the corporation, (3) no agreement among shareholders binding on others than the parties signatory thereto, and (4) no lien or privilege in favor of a corporation on shares of its own stock, shall be recognized or enforced, unless such restriction, provision or agreement, or the right of the corporation to such lien or privilege, is set forth or summarized, or a reference thereto and information as to where the same may be inspected is contained, in the certificates representing the corporation's shares.

12:58. Transfer of shares

A. The transfer of certificates of stock and the shares represented thereby, may be regulated by by-laws not inconsistent with the provisions of the articles or Part II of Chapter 6 of this Title.

B. A corporation may open a share register in any state of the United States. It may employ a transfer agent to keep this register and to record transfers of shares therein, and acts of the agent shall be binding on the corporation. The duties and liabilities of the agent shall be such as may be agreed to by the corporation.