2005 California Corporations Code Sections 400-423 CHAPTER 4. SHARES AND SHARE CERTIFICATES

CORPORATIONS CODE
SECTION 400-423

400.  (a) A corporation may issue one or more classes or series of
shares or both, with full, limited or no voting rights and with such
other rights, preferences, privileges and restrictions as are stated
or authorized in its articles.  No denial or limitation of voting
rights shall be effective unless at the time one or more classes or
series of outstanding shares or debt securities, singly or in the
aggregate, are entitled to full voting rights; and no denial or
limitation of dividend or liquidation rights shall be effective
unless at the time one or more classes or series of outstanding
shares, singly or in the aggregate, are entitled to unlimited
dividend and liquidation rights.
   (b) All shares of any one class shall have the same voting,
conversion and redemption rights and other rights, preferences,
privileges and restrictions, unless the class is divided into series.
  If a class is divided into series, all the shares of any one series
shall have the same voting, conversion and redemption rights and
other rights, preferences, privileges and restrictions.
401.  (a) Before any corporation issues any shares of any class or
series of which the rights, preferences, privileges, and
restrictions, or any of them, or the number of shares constituting
any series or the designation of the series, are not set forth in its
articles but are fixed in a resolution adopted by the board pursuant
to authority given by its articles, an officers' certificate  shall
be executed and filed, setting forth:  (1) a copy of the resolution;
(2) the number of shares of the class or series; and (3) that none of
the shares of the class or series has been issued.
   (b) After any certificate of determination has been filed, but
before the corporation issues any shares of the class or series
covered thereby, the board may alter or revoke any right, preference,
privilege, or restriction fixed or determined by the resolution set
forth therein by the adoption of another resolution appropriate for
that purpose and the execution and filing of an officers' certificate
setting forth a copy of the resolution, and stating that none of the
shares of the class or the series affected has been issued.
   (c) After any certificate of determination has been filed, the
board may, if authorized in the articles pursuant to subdivision (e)
of Section 202, increase or decrease the number of shares
constituting any series, by the adoption of another resolution
appropriate for that purpose and the execution and filing of an
officers' certificate setting forth a copy of the resolution, the
number of shares of the series then outstanding and the increase or
decrease in the number of shares constituting the series.  If any
certificate of determination has been incorporated in restated
articles filed pursuant to Section 910, the action authorized by this
subdivision may, notwithstanding Section 902, be accomplished by an
amendment of the articles approved by the board alone.
   (d) After shares of a class or series have been issued, the
provisions of the resolution set forth in a certificate of
determination may be amended only by the adoption and approval of an
amendment in accordance with Section 902, 903, or 904 and the filing
of a certificate of amendment in accordance with Sections 905 and
908.  Notwithstanding the preceding sentence, a certificate to
increase or decrease the number of shares of a series also may be
filed as permitted by subdivision (c).
   (e) A provision in a certificate of determination being amended
pursuant to subdivision (b), (c), or (d) shall be identified in the
amendment in accordance with subdivision (a) of Section 907.
   (f) If a certificate is filed pursuant to subdivision (c) to
decrease the number of shares of a series to zero, the certificate of
determination whereby the series was established is thereupon no
longer in force and the series is no longer an authorized series of
the corporation.
   (g) If the rights, preferences, privileges, and restrictions of
the class or series contain a supermajority vote provision, as
defined in subdivision (b) of Section 710, subject to Section 710,
the officers' certificate shall also state that the provision has
been approved by the shareholders in accordance with subdivision (c)
of Section 710.
402.  (a) A corporation may provide in its articles for one or more
classes or series of shares which are redeemable, in whole or in
part, (1) at the option of the  corporation or (2) to the extent and
upon the happening of one or more specified events, and not otherwise
except as herein provided.  A corporation may provide in its
articles for one or more classes or series of preferred shares which
are redeemable, in whole or in part, (1) as specified above, (2) at
the option of the holder, or (3) upon the vote of at least a majority
of the outstanding shares of the class or series to be redeemed.  An
open end investment company registered under the United States
Investment Company Act of 1940 may, if its articles so provide, issue
shares which are redeemable at the option of the holder at a price
approximately equal to the shares' proportionate interest in the net
assets of the corporation and a shareholder may compel redemption of
such shares in accordance with their terms.
   (b) Any such redemption shall be effected at such price or prices,
within such time and upon such terms and conditions as are stated in
the articles.  When the articles permit partial redemption of a
class or series of shares, the articles shall prescribe the method of
selecting the shares to be redeemed, which may be pro rata, by lot,
at the discretion of, or in a manner approved by, the board or upon
such other terms as are specified in the articles.
   (c) No redeemable common shares, other than (1) shares issued by
an open end investment company registered under the United States
Investment Company Act of 1940, (2) shares of a corporation which has
a license or franchise from a governmental agency to conduct its
business or is a member corporation of a national securities exchange
registered under the United States Securities Exchange Act of 1934,
which license, franchise or membership is conditioned upon some or
all of  the holders of its stock possessing prescribed
qualifications, to the extent necessary to prevent the loss of such
license, franchise or membership or to reinstate it, or (3) shares of
a professional corporation, as defined in Part 4 (commencing with
Section 13400) of Division 3 of Title 1, shall be issued or redeemed
unless the corporation at the time has outstanding a class of common
shares that is not subject to redemption.
   (d) Any redemption by a corporation of its shares shall be subject
to the provisions of Chapter 5 (commencing with Section 500).
Nothing in this section shall prevent a corporation from creating a
sinking fund or similar provision for, or entering into an agreement
for, the redemption or purchase of its shares to the extent permitted
by Chapter 5, but unless such purchase or redemption is permitted
under Chapter 5, the holder of shares to be so purchased or redeemed
shall not become a creditor of the corporation.
402.5.  The rights, preferences, privileges, and restrictions
granted to or imposed upon a class or series of preferred shares
(Section 176) the designation of which includes either the word
"preferred" or the word "preference" may:
   (a) Notwithstanding paragraph (9) of subdivision (a) of Section
204, include a provision requiring a vote of a specified percentage
or proportion of the outstanding shares of the class or series that
is less than a majority of the class or series to approve any
corporate action, except where the vote of a majority or greater
proportion of the class or series is required by this division,
regardless of restrictions or limitations on the voting rights
thereof.
   (b) Notwithstanding paragraph (5) of subdivision (a) of Section
204, provide that in addition to the requirement of subdivision (a)
of Section 1900 the corporation may voluntarily wind up and dissolve
only upon the vote of a specified percentage (which shall not exceed
662/3 percent) of such class or series.
   (c) Provide that Section 502 or 503 not apply in whole or in part
with respect to distributions on shares junior to the class or
series.
403.  (a) When so provided in the articles, a corporation may issue
shares convertible within the time or upon the happening of one or
more specified events and upon the terms and conditions that are
stated in the articles if any of the following conditions apply:
   (1) At the option of the holder or automatically upon either the
vote of at least a majority of the outstanding shares of the class or
series to be converted or upon the happening of one or more
specified events, into shares of any class or series.
   (2) If it is a corporation which has a license or franchise from a
governmental agency to conduct its business or a member corporation
of a national securities exchange registered under the United States
Securities Exchange Act of 1934, the license, franchise or membership
of which is conditioned upon some or all of the holders of its stock
possessing prescribed qualifications, to the extent necessary to
prevent the loss of such license, franchise or membership or to
reinstate it, at the option of the corporation, into shares of any
class or series or into any other security of the corporation.
   (3) If the corporation is a "listed corporation" as defined in
subdivision (d) of Section 301.5, both at the time of the original
issuance of the convertible shares and at the time of the conversion,
at the option of the corporation into shares of any class or series
or into any other security of the corporation, provided that any such
securities received upon conversion are listed or qualified for
trading on a stock exchange or market system defined in subdivision
(d) of Section 301.5.
   (b) Unless otherwise provided in the articles, a corporation may
issue its debt securities convertible into other debt securities or
into shares of the corporation within such time or upon the happening
of one or more specified events and upon such terms and conditions
as are fixed by the board.
404.  Either in connection with the issue, subscription or sale of
any of its shares, bonds, debentures, notes or other securities or
independently thereof, a corporation may grant options to purchase or
subscribe for shares of any class or series upon such terms and
conditions as may be deemed expedient. Option rights may be
transferable or nontransferable and separable or inseparable from
other securities of the corporation.
405.  (a) If at the time of granting option or conversion rights or
at any later time the corporation is not authorized by its articles
to issue all the shares required for the satisfaction of the rights,
if and when exercised, the additional number of shares required to be
issued upon the exercise of such option or conversion rights shall
be authorized by an amendment to the articles.
   (b) If a corporation has obtained approval of the outstanding
shares (Section 152) for the issue of options to purchase shares or
of securities convertible into shares of the corporation, the board
may, without further approval of the outstanding shares (Section
152), amend the articles to increase the authorized shares of any
class or series to such number as will be sufficient from time to
time, when added to the previously authorized but unissued shares of
such class or series, to satisfy any such option or conversion
rights.
406.  Unless the articles provide otherwise, the board may issue
shares, options or securities having conversion or option rights
without first offering them to shareholders of any class.
407.  A corporation may, but is not required to, issue fractions of
a share originally or upon transfer.  If it does not issue fractions
of a share, it shall in connection with any original issuance of
shares (a) arrange for the disposition of fractional interests by
those entitled thereto, (b) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive those
fractions are determined or (c) issue scrip or warrants in registered
form, as certificated securities or uncertificated securities, or
bearer form as certificated securities, which shall entitle the
holder to receive a certificate for a full share upon the surrender
of the scrip or warrants aggregating a full share; provided, however,
that if the fraction of a share that any person would otherwise be
entitled to receive in a merger, conversion, or reorganization is
less than one-half of 1 percent of the total shares that person is
entitled to receive, a merger, conversion, or reorganization
agreement may provide that fractions of a share will be disregarded
or that shares issuable in the merger or conversion will be rounded
off to the nearest whole share; and provided, further, that a
corporation may not pay cash for fractional shares if that action
would result in the cancellation of more than 10 percent of the
outstanding shares of any class.  A determination by the board of the
fair value of fractions of a share shall be conclusive in the
absence of fraud.  A certificate for a fractional share shall, but
scrip or warrants shall not unless otherwise provided therein,
entitle the holder to exercise voting rights, to receive dividends
thereon and to participate in any of the assets of the corporation in
the event of liquidation.  The board may cause scrip or warrants to
be issued subject to the condition that they shall become void if not
exchanged for full shares before a specified date or that the shares
for which scrip or warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holder of the
scrip or warrants or any other condition that the board may impose.
408.  (a) A corporation may adopt and carry out a stock purchase
plan or agreement or stock option plan or agreement providing for the
issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to
one or more of the employees or directors of the corporation or of a
subsidiary or parent thereof or to a trustee on their behalf and for
the payment for such shares in installments or at one time, and may
provide for aiding any such persons in paying for such shares by
compensation for services rendered, promissory notes or otherwise.
   (b) A stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of
eligibility for participation therein, the class and price of shares
to be issued or sold under the plan or agreement, the number of
shares which may be subscribed for, the method of payment therefor,
the reservation of title until full payment therefor, the effect of
the termination of employment, an option or obligation on the part of
the corporation to repurchase the shares upon termination of
employment, subject to the provisions of Chapter 5, restrictions upon
transfer of the shares and the time limits of and termination of the
plan.
   (c) Sections 406 and 407 of the Labor Code shall not apply to
shares issued by any foreign or domestic corporation to the following
persons:
   (1) Any employee of the corporation or of any parent or subsidiary
thereof, pursuant to a stock purchase plan or agreement or stock
option plan or agreement provided for in subdivision (a).
   (2) In any transaction in connection with securing employment, to
a person who is or is about to become an officer of the corporation
or of any parent or subsidiary thereof.
409.  (a) Shares may be issued:
   (1) For such consideration as is determined from time to time by
the board, or by the shareholders if the articles so provide,
consisting of any or all of the following:  money paid; labor done;
services actually rendered to the corporation or for its benefit or
in its formation or reorganization; debts or securities canceled; and
tangible or intangible property actually received either by the
issuing corporation or by a wholly owned subsidiary; but neither
promissory notes of the purchaser (unless adequately secured by
collateral other than the shares  acquired or unless permitted by
Section 408) nor future services shall constitute payment or part
payment for shares of the corporation; or
   (2) As a share dividend or upon a stock split, reverse stock
split, reclassification of outstanding shares into shares of another
class, conversion of outstanding shares into shares of another class,
exchange of outstanding shares for shares of another class or other
change affecting outstanding shares.
   (b) Except as provided in subdivision (d), shares issued as
provided in this section or Section 408 shall be declared and taken
to be fully paid stock and not liable to any further call nor shall
the holder thereof be liable for any further payments under the
provisions of this division.  In the absence of fraud in the
transaction, the judgment of the directors as to the value of the
consideration for shares shall be conclusive.
   (c) If the articles reserve to the shareholders the right to
determine the consideration for the issue of any shares, such
determination shall be made by approval of the outstanding shares
(Section 152).
   (d) A corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the
consideration to be paid therefor.  On the certificate issued to
represent any such partly paid shares or, for uncertificated
securities, on the initial transaction statement for such partly paid
shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.  Upon the declaration of
any dividend on fully paid shares, the corporation shall declare a
dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
   (e) The board shall state by resolution its determination of the
fair value to the corporation in monetary terms of any consideration
other than money for which shares are issued.  This subdivision does
not affect the accounting treatment of any transaction, which shall
be in conformity with generally accepted accounting principles.
410.  (a) Every subscriber to shares and every person to whom shares
are originally issued is liable to the corporation for the full
consideration agreed to be paid for the shares.
   (b) The full agreed consideration for shares shall be paid prior
to or concurrently with the issuance thereof, unless the shares are
issued as partly paid pursuant to subdivision (d) of Section 409, in
which case the consideration shall be paid in accordance with the
agreement of subscription or purchase.
411.  A transferee of shares for which the full agreed consideration
has not been paid to the issuing corporation, who acquired them in
good faith, without knowledge that they were not paid in full or to
the extent stated on the certificate representing them or, in the
case of uncertificated securities, on the applicable initial
transaction statement, is liable only for the amount shown by the
certificate or statement to be unpaid on the shares represented
thereby, until the transferee transfers the shares to one who becomes
liable therefor; provided that the transferor shall remain
personally liable if so provided on the certificate or statement or
agreed upon in writing.  The liability of any holder of such shares
who derives title through such a transferee and who is not a party to
any fraud affecting the issue of the shares is the same as that of
the transferee through whom title is derived.
412.  Every transferee of partly paid shares who acquired them under
a certificate or initial transaction statement showing the fact of
part payment, and every transferee of such shares (other than a
transferee who derives title through a holder in good faith without
knowledge and who is not a party to any fraud affecting the issue of
such shares) who acquired them with actual knowledge that the full
agreed consideration had not been paid to the extent stated on the
certificate or initial transaction statement, is personally liable to
the corporation for installments of the amount unpaid becoming due
until the shares are transferred to one who becomes liable therefor;
provided that the transferor shall remain personally liable if so
provided on the certificate, initial transaction statement, or
written statement, or agreed upon in writing.
413.  A person holding shares as pledgee, executor, administrator,
guardian, conservator, trustee, receiver or in any representative or
fiduciary capacity is not personally liable for any unpaid balance of
the subscription price of the shares because the shares are so held
but the estate and funds in the hands of such fiduciary or
representative are liable and the shares are subject to sale
therefor.
414.  (a) No action shall be brought by or on behalf of any creditor
to reach and apply the liability, if any, of a shareholder to the
corporation to pay the amount due on such shareholder's shares unless
final judgment has been rendered in favor of the creditor against
the corporation and execution has been returned unsatisfied in whole
or in part or unless such proceedings would be useless.
   (b) All creditors of the corporation, with or without reducing
their claims to judgment, may intervene in any such creditor's action
to reach and apply unpaid subscriptions and any or all shareholders
who hold partly paid shares may be joined in such action.  Several
judgments may be rendered for and against the parties to the action
or in favor of a receiver for the benefit of the respective parties
thereto.
   (c) All amounts paid by any shareholder in any such action shall
be credited on the unpaid balance due the corporation upon such
shareholder's shares.
415.  Nothing in this division shall be construed as a derogation of
any rights or remedies which any creditor or shareholder may have
against any promoter, shareholder, director, officer or the
corporation because of participation in any fraud or illegality
practiced upon such creditor or shareholder by any such person or by
the corporation in connection with the issue or sale of shares or
other securities or in derogation of any rights which the corporation
may have by rescission, cancellation or otherwise because of any
fraud or illegality practiced on it by any such person in connection
with the issue or sale of shares or other securities.
416.  (a) Every holder of shares in a corporation shall be entitled
to have a certificate signed in the name of the corporation by the
chairman or vice chairman of the board or the president or a vice
president and by the chief financial  officer or an assistant
treasurer or the secretary or any assistant secretary, certifying the
number of shares and the class or series of shares owned by the
shareholder.  Any or all of the signatures on the certificate may be
facsimile.  In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
   (b) Notwithstanding subdivision (a), a corporation may adopt a
system of issuance, recordation and transfer of its shares by
electronic or other means not involving any issuance of certificates,
including provisions for notice to purchasers in substitution for
the required statements on certificates under Sections 417, 418, and
1302, and as may be required by the commissioner in administering the
Corporate Securities Law of 1968, which system (1) has been approved
by the United States Securities and Exchange Commission, (2) is
authorized in any statute of the United States, or (3) is in
accordance with Division 8 (commencing with Section 8101) of the
Commercial Code.  Any system so adopted shall not become effective as
to issued and outstanding certificated securities until the
certificates therefor have been surrendered to the corporation.
417.  If the shares of the corporation are classified or if any
class of shares has two or more series, there shall appear on the
certificate or, in the case  of uncertificated securities, the
initial transaction statement and written statements, one of the
following:
   (a) A statement of the rights, preferences, privileges and
restrictions granted to or imposed upon each class or series of
shares authorized to be issued and upon the holders thereof.
   (b) A summary of such rights, preferences, privileges and
restrictions with reference to the provisions of the articles and any
certificates of determination establishing the same.
   (c) A statement setting forth the office or agency of the
corporation from which shareholders may obtain, upon request and
without charge, a copy of the statement referred to in subdivision
(a).
418.  (a) There shall also appear on the certificate, the initial
transaction statement, and written statements (unless stated or
summarized under subdivision (a) or (b) of Section 417) the
statements required by all of the following clauses to the extent
applicable:
   (1) The fact that the shares are subject to restrictions upon
transfer.
   (2) If the shares are assessable or are not fully paid, a
statement that they are assessable or the statements required by
subdivision (d) of Section 409 if they are not fully paid.
   (3) The fact that the shares are subject to a voting agreement
under subdivision (a) of Section 706 or an irrevocable proxy under
subdivision (e) of Section 705 or restrictions upon voting rights
contractually imposed by the corporation.
   (4) The fact that the shares are redeemable.
   (5) The fact that the shares are convertible and the period for
conversion.
   Any such statement or reference thereto (Section 174) on the face
of the certificate, the initial transaction statement, and written
statements required by paragraph (1) or (2) shall be conspicuous.
   (b) Unless stated on the certificate, the initial transaction
statement, and written statements as required by subdivision (a), no
restriction upon transfer, no right of redemption and no voting
agreement under subdivision (a) of Section 706, no irrevocable proxy
under subdivision (e) of Section 705, and no voting restriction
imposed by the corporation shall be enforceable against a transferee
of the shares without actual knowledge of such restriction, right,
agreement or proxy.  With regard only to liability to assessment or
for the unpaid portion of the subscription price, unless stated on
the certificate as required by subdivision (a), that liability shall
not be enforceable against a transferee of the shares.  For the
purpose of this subdivision, "transferee" includes a purchaser from
the corporation.
   (c) All certificates representing shares of a close corporation
shall contain in addition to any other statements required by this
section, the following conspicuous legend on the face thereof:  "This
corporation is a close corporation.  The number of holders of record
of its shares of all classes cannot exceed ____ (a number not in
excess of 35).  Any attempted voluntary inter vivos transfer which
would violate this requirement is void.  Refer to the articles,
bylaws and any agreements on file with the secretary of the
corporation for further restrictions."
   (d) Any attempted voluntary inter vivos transfer of the shares of
a close corporation which would result in the number of holders of
record of its shares exceeding the maximum number specified in its
articles is void if the certificate contains the legend required by
subdivision (c).
419.  (a) A domestic or foreign corporation may issue a new share
certificate or a new certificate for any other security in the place
of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the corporation may require the owner
of the lost, stolen or destroyed certificate or the owner's legal
representative to give the corporation a bond (or other adequate
security) sufficient to indemnify it against any claim that may be
made against it (including any expense or liability) on account of
the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
   (b) If a corporation refuses to issue a new share certificate or
other certificate in place of one theretofore issued by it, or by any
corporation of which it is the lawful successor, alleged to have
been lost, stolen or destroyed, the owner of the lost, stolen or
destroyed certificate or the owner's legal representative may bring
an action in the superior court of the proper county for an order
requiring the corporation to issue a new certificate in place of the
one lost, stolen or destroyed.
   (c) If the court is satisfied that the plaintiff is the lawful
owner of the number of shares or other securities, or any part
thereof, described in the complaint and that the certificate therefor
has been lost, stolen or destroyed, and no sufficient cause has been
shown why a new certifcate should not be issued in place thereof, it
shall make an order requiring the corporation to issue and deliver
to the plaintiff a new certificate for such shares or other
securities.  In its order the court shall direct that, prior to the
issuance and delivery to the plaintiff of such new certificate, the
plaintiff give the corporation a bond (or other adequate security) as
to the court appears sufficient to indemnify the corporation against
any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
420.  Neither a domestic nor foreign corporation nor its transfer
agent or registrar is liable:
   (a) For transferring or causing to be transferred on the books of
the corporation to the surviving joint tenant or tenants any share or
shares or other securities issued to two or more persons in joint
tenancy, whether or not the transfer is made with actual or
constructive knowledge of the existence of any understanding,
agreement, condition or evidence that the shares or securities were
held other than in joint tenancy or of a breach of trust by any joint
tenant.
   (b) To a minor or incompetent person in whose name shares or other
securities are of record on its books or to any transferee of or
transferor to either for transferring the shares or other securities
on its books at the instance of or to the minor or incompetent or for
the recognition of or dealing with the minor or incompetent as a
shareholder or security holder, whether or not the corporation,
transfer agent or registrar had notice, actual or constructive, of
the nonage or incompetency, unless a guardian or conservator of the
property of the minor or incompetent has been appointed and the
corporation, transfer agent or registrar has received written notice
thereof.
   (c) To any married person or to any transferee of such person for
transferring shares or other securities on its books at the instance
of the person in whose name they are registered, without the
signature of such person's spouse and regardless of whether the
registration indicates that the shares or other securities are
community property, in the same manner as if such person were
unmarried.
   (d) For transferring or causing to be transferred on the books of
the corporation shares or other securities pursuant to a judgment or
order of a court which has been set aside, modified or reversed
unless, prior to the registration of the transfer on the books of the
corporation, written notice is served upon the corporation or its
transfer agent in the manner provided by law for the service of a
summons in a civil action, stating that an appeal or other further
court proceeding has been or is to be taken from or with regard to
such judgment or order.  After the service of such notice neither the
corporation nor its transfer agent has any duty to register the
requested transfer until the corporation or its transfer agent has
received a certificate of the clerk of the court in which the
judgment or order was entered or made, showing that the judgment or
order has become final.
   (e) The Commercial Code shall not affect the limitations of
liability set forth in this section.  Section 1100 of the Family Code
shall be subject to the provisions of this section and shall not be
construed to prevent transfers, or result in liability to the
corporation, transfer agent or registrar permitting or effecting
transfers, which comply with this section.
421.  Each holder of shares of a close corporation, whether original
or subsequent, by accepting the certificates for the shares which
contain the legend required by subdivision (c) of Section 418 agrees
and consents that such holder cannot make any transfer of shares
which would violate the provisions of subdivision (d) of Section 418
and waives any right which such holder might otherwise have under any
other law to sell such shares to a greater number of purchasers or
to demand any registration thereof under the Securities Act of 1933,
as now or hereafter amended, or as provided in any statute adopted in
substitution therefor, or otherwise, so long as the corporation is a
close corporation.
422.  (a) When the articles are amended in any way affecting the
statements contained in the certificates for outstanding shares, or
it becomes desirable for any reason, in the discretion of the board,
to cancel any outstanding certificate for shares and issue a new
certificate therefor conforming to the rights of the holder, the
board may order any holders of outstanding certificates for shares to
surrender and exchange them for new certificates within a reasonable
time to be fixed by the board.
   (b) The order may provide that a holder of any certificates so
ordered to be surrendered is not entitled to vote or to receive
dividends or exercise any of the other rights of shareholders until
the holder has complied with the order, but such order operates to
suspend such rights only after notice and until compliance.  The duty
of surrender of any outstanding certificates may also be enforced
by civil action.
   (c) When the articles are amended in any way affecting the
statements contained in the initial transaction statement or other
written statements for outstanding uncertificated securities, or it
becomes desirable for any reason, in the discretion of the board, to
amend, revise, or supersede outstanding initial transaction
statements or written statements, the board may order the issuance
and delivery to holders of record of amended, revised, or superseding
initial transaction statements or written statements.
423.  (a) Shares are not assessable except as provided in this
section or as otherwise provided by a statute other than this
division.  If the articles expresssly confer such authority upon the
corporation or the board, and subject to any limitations therein
contained, the board may in its discretion levy and collect
assessments upon all shares of any or all classes made subject to
assessment by the articles.  This authority is in addition to the
right of the corporation to recover the unpaid subscription price of
shares or the remainder of the consideration to be paid therefor.
   (b) Every levy of an assessment shall:  specify the amount thereof
and to whom and where it is payable; fix, or if proceedings or
filings with any governmental or other agency for any qualification,
permit, registration or exemption therefrom are required as a
condition precedent to the levy or payment of an assessment provide
for the establishment of, a date on which the assessment is payable;
fix a date, not less than 30 nor more than 60 days from the date on
which the assessment is payable, on which such assessment becomes
delinquent if not paid; and fix a date, not less than 15 nor more
than 60 days from the date on which the  unpaid assessment becomes
delinquent, for the sale of delinquent shares.  The levy also shall
fix the hour and place of sale, which place shall be in the county
where the corporation is required to keep a copy of its bylaws
pursuant to Section 213, or if there is no such county, in
Sacramento.
   (c) On or before the date an assessment is payable, the secretary
of the corporation shall give notice thereof in substantially the
following form:
   (Name of corporation in full.  Location of principal executive
office.)
   Notice is hereby given that the board of directors on (date) has
levied an assessment of (amount) per share upon the (name or
designation of class or series of shares) of the corporation payable
(to whom and where).  Any shares upon which this assessment remains
unpaid on (date fixed) will be delinquent. Unless payment is made
prior to delinquency, the said shares, or as many of them as may be
necessary, will be sold at (particular place) on (date) at (hour) of
such date, to pay the delinquent assessment, together with a penalty
of 5 percent of the amount of the assessment on such shares, or be
forfeited to the corporation.  (Name of secretary with location of
office.)
   (d) The notice shall be served personally upon each holder of
record of shares assessed; provided, however, that in lieu of
personal service the notice may be mailed to each such shareholder
addressed to the last address of the shareholder appearing on the
books of the corporation or given by the shareholder to the
corporation for the purpose of notice, or if no such address appears
or is given, at the place where the principal executive office of the
corporation is located, and published once in some newspaper of
general circulation in the county in which the principal executive
office of the corporation is located.  If there is no such newspaper
in such county, the publication shall be made in some newspaper of
general circulation in an adjoining county.
   (e) The assessment is a lien upon the shares assessed from the
time of personal service or the publication of the notice of
assessment, unless the articles provide for such lien from the time
of the levy.  Unless otherwise provided by law, a transfer of the
shares on the books of the corporation after the lien of an
assessment has attached is a waiver of the lien unless a conspicuous
legend is placed on the face of any certificate issued upon such
transfer or, in the case of uncertificated securities, on the initial
transaction statement, setting forth the information contained in
the notice required by subdivision (c).  Such legend shall be removed
if the assessment on the shares evidenced by the certificate is paid
or if the shares are sold to pay the assessment or forfeited for
nonpayment.
   (f) The date of sale of delinquent shares fixed in any levy of an
assessment may be extended from time to time for not more than 30
days at a time by order of the board entered on the records of the
corporation, or when the sale is restrained by order of a court.
Notice of such extension shall be given by announcement by the
secretary, or other person authorized to conduct the sale, made at
the time and place of sale last theretofore fixed.
   If a date of sale of delinquent shares is extended for more than
five days the corporation shall cause a notice to be mailed to the
shareholder or shareholders whose shares are to be the subject of
such sale setting forth the date and time to which the date of sale
has been extended.
   (g) If payment is made after delinquency and before the sale, the
shareholder shall pay a penalty of 5 percent of the amount of the
assessment on the shares in addition to the assessment.
   (h) At the place and time appointed in the notice of levy any
officer or an agent of the corporation, shall, unless otherwise
ordered by the board, sell or cause to be sold to the highest bidder
for cash as many shares of each delinquent  holder of the assessed
shares as may be necessary to pay the assessment and charges thereon
according to the notice.
   The person offering at the sale to pay the assessment and penalty
for the smallest number of shares is the highest bidder.  The shares
purchased shall be transferred to the highest bidder on the share
register of the corporation on the payment of the assessment and
penalty and a new certificate or initial transaction statement
therefor issued to such highest bidder.
   A corporation is not required to accept an offer for a fraction of
a share.
   (i) If no bidder offers to pay the amount due on the shares,
together with the penalty of 5 percent thereof, the shares shall be
forfeited to the corporation in satisfaction of the assessment and
penalty thereon.
   (j) After a sale or forfeiture of shares for nonpayment of an
assessment, the holder or owner of delinquent shares shall, if they
are certificated securities, surrender the certificate for such
shares to the corporation for cancellation or, if they are
uncertificated securities, have no further rights with respect to
such shares.  This duty may be enforced by order or decree of court
and such holder or owner shall be liable for damages to the
corporation for failure to surrender the certificate for cancellation
upon demand without good cause or excuse.
   Any certificate not so surrendered forthwith becomes null and void
and ceases to be evidence of the right or title of the holder or any
transferee to the shares purporting to be represented thereby, and
neither the corporation nor the purchaser of such shares incurs any
liability thereon to any such transferee.
   The purchaser of any shares, at a sale for delinquent assessments
thereon, whenever made, is entitled to the issue of a new certificate
representing the shares so purchased.
   (k) The certificate of the secretary or assistant secretary of the
corporation is prima facie evidence of the time and place of sale
and any postponement thereof, of the quantity and particular
description of the shares sold, to whom, for what price, and of the
fact of payment of the purchase money.  The certificate  shall be
filed in the office of the corporation, and copies of the
certificate,  certified by the secretary or an assistant secretary of
the corporation, are prima facie evidence of the facts therein
stated.
   (l) An assessment is not invalidated by a failure to publish the
notice of assessment, nor by the nonperformance of any act required
in order to enforce the payment of the assessment; but in case of any
substantial error or omission in the course of proceedings for
collection of an assessment on any shares, all previous proceedings,
except the levy of the assessment, are void as to such shares, and
shall be taken anew.
   (m) No action shall be maintained to recover shares sold for
delinquent assessments, upon the ground of irregularity in the
assessment, irregularity or defect of the notice of sale, or defect
or irregularity in the sale, unless the party seeking to maintain the
action first pays or tenders to the corporation, or the party
holding the shares sold, the sum for which the shares were sold,
together with all subsequent assessments which may have been paid
thereon and interest on such sums from the time they were paid.  No
such action shall be maintained unless it is commenced by the filing
of a complaint and the issuing of a summons thereon within six months
after the sale was made.
   (n) The only remedy for the collection of an assessment on fully
paid shares is sale or forfeiture of the shares unless (1) remedy by
action is expressly authorized in the original articles or by an
amendment of the articles adopted before August 21, 1933, or by an
amendment adopted on or after August 21, 1933, by unanimous consent
of the shareholders, and (2) unless a statement of such remedy
appears on the face of any share certificate issued on or after
August 21, 1933.


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