2005 Texas Code - Business Corporation Act ARTICLE 6.01. VOLUNTARY DISSOLUTION BY INCORPORATORS OR DIRECTORS

Business Corporation Act

Part 5. 






Art. 5.01. Merger                                                             

A. A domestic corporation may adopt a plan of merger and one or more 
domestic corporations may merge with one or more domestic or 
foreign corporations or other entities if:

(1) the board of directors of each domestic corporation that is a 
party to the plan of merger acts upon and its shareholders (if 
required by Article 5.03 of this Act) approve the plan of merger in 
the manner prescribed in Article 5.03 of this Act;

(2) if one or more foreign corporations or other entities is a party 
to the merger or is to be created by the terms of the plan of merger, 
(a) the merger is permitted by the laws of the state or country 
under whose law each foreign corporation, if any, that is a party to 
the merger is incorporated, (b) the merger is either permitted by 
the laws under which each other entity that is a party to the merger 
is incorporated or organized or by the constituent documents of the 
other entity that are not inconsistent with such laws, and (c) each 
foreign corporation or other entity that is a party to the merger 
complies with such laws or documents in effecting the merger;  and

(3) no shareholder of a domestic corporation that is a party to the 
merger will, as a result of such merger, become personally liable, 
without his consent, for the liabilities or obligations of any 
other person or entity.

B. A plan of merger shall set forth:                                          

(1) the name of each domestic or foreign corporation or other entity 
that is a party to the merger and the name of each domestic or 
foreign corporation or other entity, if any, that shall survive the 
merger, which may be one or more of the domestic or foreign 
corporations or other entities party to the merger, and the name of 
each new domestic or foreign corporation or other entity, if any, 
that may be created by the terms of the plan of merger;

(2) the terms and conditions of the merger including, if more than 
one domestic or foreign corporation or other entity is to survive or 
to be created by the terms of the plan of merger, (a) the manner and 
basis of allocating and vesting the real estate and other property 
of each domestic or foreign corporation and of each other entity 
that is a party to the merger among one or more of the surviving or 
new domestic or foreign corporations and other entities, (b) the 
name of the surviving or new domestic or foreign corporation or 
other entity that is to be obligated for the payment of the fair 
value of any shares held by a shareholder of any domestic 
corporation that is a party to the merger who has complied with the 
requirements of Article 5.12 of this Act for the recovery of the 
fair value of his shares, and (c) the manner and basis of allocating 
all other liabilities and obligations of each domestic or foreign 
corporation and other entity that is a party to the merger (or 
making adequate provision for the payment and discharge thereof) 
among one or more of the surviving or new domestic or foreign 
corporations and other entities;

(3) the manner and basis of converting any of the shares or other 
evidences of ownership of each domestic or foreign corporation and 
other entity that is a party to the merger into shares, obligations, 
evidences of ownership, rights to purchase securities or other 
securities of one or more of the surviving or new domestic or 
foreign corporations or other entities, into cash or other 
property, including shares, obligations, evidences of ownership, 
rights to purchase securities or other securities of any other 
person or entity, or into any combination of the foregoing, and if 
any shares or other evidences of ownership of any holder of a class 
or series of shares or other evidence of ownership is to be 
converted in a manner or basis different than any other holder of 
shares of such class or series or other evidence of ownership, the 
manner and basis applicable to such holder;

(4) as an exhibit or attachment, the articles of incorporation of 
any new domestic corporation to be created by the terms of the plan 
of merger;  and

(5) the articles of incorporation or other organizational documents 
of each other entity that is a party to the merger and that is to 
survive the merger or is to be created by the terms of the plan of 
merger.

C. The plan of merger may set forth:                                          

(1) any amendments to the articles of incorporation of any 
surviving corporation;

(2) provisions relating to a share exchange;  and                             

(3) any other provisions relating to the merger, including a 
provision requiring that the plan of merger be submitted to 
shareholders regardless of whether the board of directors 
determines after adopting the resolution or making the 
determination required by Section B, Article 5.03 of this Act, that 
the plan of merger is not advisable and recommends that the 
shareholders reject it.

D. Upon the merger's taking effect, the surviving or new foreign 
corporation or other entity, if any, that is the sole surviving or 
new foreign corporation or other entity in the merger, or if more 
than one domestic or foreign corporation or other entity is to 
survive or to be created by the terms of the plan of merger, the 
surviving or new foreign corporation or other entity that is 
designated in the plan of merger to be the entity obligated for the 
payment of the fair value of any shares held by a shareholder who 
has complied with the requirements of Article 5.12 of this Act for 
the recovery of the fair value of his shares, is deemed:

(1) to appoint the Secretary of State in this State as its agent for 
service of process in a proceeding to enforce any obligation or the 
rights of dissenting shareholders of each domestic corporation that 
is a party to the merger;  and

(2) to agree that it will promptly pay to the dissenting 
shareholders of each domestic corporation that is a party to the 
merger the amount, if any, to which they are entitled under Article 
5.11 of this Act.

E. This Article does not limit the power of a domestic or foreign 
corporation or other entity to acquire all or part of the shares of 
one or more classes or series of a domestic corporation through a 
voluntary exchange or otherwise.

F. This Article does not limit the power of domestic or foreign 
corporations to merge pursuant to Article 5.16 of this Act.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1971, 62nd Leg., p. 1173, ch. 276, Sec. 2, eff. May 19, 1971;  
Acts 1983, 68th Leg., p. 1714, ch. 326, Sec. 1, eff. Aug. 29, 1983;  
Acts 1983, 68th Leg., p. 2569, ch. 442, Sec. 7, eff. Sept. 1, 1983;  
Acts 1989, 71st Leg., ch. 801, Sec. 26, eff. Aug. 28, 1989;  Acts 
1991, 72nd Leg., ch. 901, Sec. 25, eff. Aug. 26, 1991;  Acts 1997, 
75th Leg., ch. 375, Sec. 24, eff. Sept. 1, 1997.

Sec. C amended by Acts 2003, 78th Leg., ch. 238, Sec. 27, eff. Sept. 
1, 2003.






Art. 5.02. Share Exchange or Acquisition                                      

A. One or more domestic or foreign corporations or other entities 
may acquire all of the outstanding shares of one or more classes or 
series of one or more domestic corporations if:

(1) the board of directors of each domestic corporation that is a 
party to the plan of exchange acts on a plan of exchange in the 
manner prescribed by Article 5.03 of this Act and its shareholders 
(if required by Article 5.03 of this Act ) approve the plan of 
exchange;

(2) one or more foreign corporations or other entities is to issue 
shares or other interests as part of the plan of exchange, the 
issuance of such shares or interests is either permitted by the laws 
under which such foreign corporation or other entity is 
incorporated, organized, or not inconsistent with such laws;  and

(3) each acquiring domestic or foreign corporation or other entity 
takes all action that may be required by the laws of the state or 
country under which it was incorporated or organized and by its 
constituent documents to effect the exchange.

B. A plan of exchange must set forth:                                         

(1) the name of the corporation or corporations whose shares will be 
acquired and the name of each acquiring domestic or foreign 
corporation and other entity;

(2) the terms and conditions of the exchange including, if there is 
more than one acquiring domestic or foreign corporation or other 
entity, the shares to be acquired by each such corporation or other 
entity;  and

(3) the manner and basis of exchanging the shares to be acquired for 
shares, obligations, evidences of ownership, rights to purchase 
securities or other securities of one or more of the acquiring 
domestic or foreign corporations or other entities that is a party 
to the plan of exchange, or for cash or other property, including 
shares, obligations, evidences of ownership, rights to purchase 
securities or other securities of any other person or entity, or for 
any combination of the foregoing, and if any shares or other 
evidences of ownership of any holder of a class or series of shares 
or other evidence of ownership is to be exchanged in a manner or 
basis different than any other holder of shares of such class or 
series or other evidence of ownership, the manner and basis 
applicable to such holder.

C. The plan of exchange may set forth any other provisions relating 
to the exchange and may be contained in and be a part of a plan of 
merger, including a provision requiring that the plan of exchange 
be submitted to shareholders regardless of whether the board of 
directors determines after adopting the resolution or making the 
determination required by Section B, Article 5.03 of this Act, that 
the plan of exchange is not advisable and recommends that the 
shareholders reject it.

D. A plan of exchange may not be effected if any shareholder of a 
domestic corporation that is a party to the share exchange will, as 
a result of the share exchange, become personally liable, without 
his consent, for the liabilities or obligations of any other person 
or entity.

E. This Article does not limit the power of a domestic or foreign 
corporation or other entity to acquire all or part of the shares of 
one or more classes or series of a domestic corporation through a 
voluntary exchange or otherwise.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1971, 62nd Leg., p. 1173, ch. 276, Sec. 3, eff. May 19, 1971;  
Acts 1983, 68th Leg., p. 2570, ch. 442, Sec. 8, eff. Sept. 1, 1983;  
Acts 1989, 71st Leg., ch. 801, Sec. 27, eff. Aug. 28, 1989;  Acts 
1991, 72nd Leg., ch. 901, Sec. 26, eff. Aug. 26, 1991;  Acts 1997, 
75th Leg., ch. 375, Sec. 25, eff. Sept. 1, 1997.

Sec. C amended by Acts 2003, 78th Leg., ch. 238, Sec. 28, eff. Sept. 
1, 2003.






Art. 5.03. Action on Plan of Merger or Exchange                               

A. Except as provided by Sections G and H of this Article, after 
acting on a plan of merger or exchange in the manner prescribed by 
Subsection (1) of Section B of this Article, the board of directors 
of each domestic corporation that is a party to the merger, and the 
board of directors of each domestic corporation whose shares are to 
be acquired in the share exchange, shall submit the plan of merger 
or exchange for approval by its shareholders.  Unless the articles 
of incorporation otherwise require, no approval by shareholders of 
a plan of merger is required under this Article for any corporation 
that is a party to the plan of merger unless that corporation is 
also a party to the merger.

B. Except as provided by Sections G and H of this Article, for a plan 
of merger or exchange to be approved:

(1) the board of directors of the corporation shall adopt a 
resolution recommending that the plan of merger or exchange be 
approved by the shareholders of the corporation, unless the board 
of directors determines that for any reason it should not make that 
recommendation, in which case the board of directors shall adopt a 
resolution directing that the plan of merger or exchange be 
submitted to shareholders for approval without recommendation and, 
in connection with the submission, communicate the basis for its 
determination that the plan be submitted to shareholders without 
any recommendation;  and

(2) the shareholders entitled to vote on the plan of merger or 
exchange must approve the plan.

C. The board of directors may condition its submission to 
shareholders of a plan of merger or exchange on any basis.  If, 
after the adoption of a resolution recommending that the plan of 
merger or exchange be approved or after a determination by the board 
of directors that a recommendation should not be made, the board of 
directors determines that the plan of merger or exchange is not 
advisable, the plan of merger or exchange may be submitted to the 
shareholders with a recommendation that the shareholders not 
approve the plan of merger or exchange.

D. The corporation shall notify each shareholder, whether or not 
entitled to vote, of the meeting of shareholders at which the plan 
of merger or exchange is to be submitted for approval in accordance 
with Article 2.25 of this Act.  The notice shall be given at least 20 
days before the meeting and shall state that the purpose, or one of 
the purposes, of the meeting is to consider the plan of merger or 
exchange and shall contain or be accompanied by a copy or summary of 
the plan.

E. Unless the board of directors (acting pursuant to Section C of 
this Article) requires a greater vote or a vote by class or series, 
the vote of shareholders required for approval of a plan of merger 
or exchange shall be the affirmative vote of the holders of at least 
two-thirds of the outstanding shares of each corporation entitled 
to vote thereon, unless any class or series of shares of any such 
corporation is entitled to vote as a class thereon, in which event 
the vote required for approval by the shareholders of such 
corporation shall be the affirmative vote of the holders of at least 
two-thirds of the outstanding shares within each class or series of 
shares entitled to vote thereon as a class and at least two-thirds 
of the outstanding shares otherwise entitled to vote thereon.  
Shares entitled to vote as a class shall be entitled to vote only as 
a class unless otherwise entitled to vote on each matter submitted 
to the shareholders generally or provided in the articles of 
incorporation.

F. Separate voting by a class or series of shares of a corporation 
shall be required:

(1) for approval of a plan of merger if (a) the plan contains a 
provision that if contained in a proposed amendment to the articles 
of incorporation would require approval by that class or series of 
shares under Article 4.03 of this Act, or (b) that class or series 
of shares is entitled under the articles of incorporation to vote as 
a class thereon;  and

(2) on a plan of exchange if (a) shares of that class or series are 
to be exchanged pursuant to the terms of the plan, or (b) that class 
or series is entitled under the articles of incorporation to vote as 
a class thereon.

G. Unless the articles of incorporation otherwise require, approval 
by the shareholders of a corporation on a plan of merger shall not 
be required and the provisions of Sections A, B, C, D, E, and F of 
this Article do not apply if:

(1) the corporation is the sole surviving corporation in the 
merger;        

(2) the articles of incorporation of the corporation will not 
differ from its articles of incorporation before the merger;

(3) each shareholder of the corporation whose shares were 
outstanding immediately before the effective date of the merger 
will hold the same number of shares, with identical designations, 
preferences, limitations, and relative rights, immediately after 
the effective date of the merger;

(4) the voting power of the number of voting shares outstanding 
immediately after the merger, plus the voting power of the number of 
voting shares issuable as a result of the merger (either by the 
conversion of securities issued pursuant to the merger or the 
exercise of rights to purchase securities issued pursuant to the 
merger), will not exceed by more than 20 percent the voting power of 
the total number of voting shares of the corporation outstanding 
immediately before the merger;

(5) the number of participating shares outstanding immediately 
after the merger, plus the number of participating shares issuable 
as a result of the merger (either by the conversion of securities 
issued pursuant to the merger or the exercise of rights to purchase 
securities issued pursuant to the merger), will not exceed by more 
than 20 percent the total number of participating shares of the 
corporation outstanding immediately before the merger;  and

(6) the board of directors of the corporation adopts a resolution 
approving the plan of merger.

H. Unless the articles of incorporation otherwise require, approval 
by the shareholders of a corporation of a plan of merger shall not 
be required and Sections A, B, C, D, E, and F of this Article do not 
apply if:

(1) the merger is a merger of the corporation with or into a direct 
or indirect wholly owned subsidiary of the corporation and after 
the merger the corporation or its successor is a direct or indirect 
wholly owned subsidiary of a holding company;

(2) the corporation and the direct or indirect wholly owned 
subsidiary of the corporation are the only parties to the merger;

(3) each share or a fraction of a share of stock of the corporation 
outstanding immediately prior to the effectiveness of the merger is 
converted in the merger into a share or fraction of share of capital 
stock of the holding company having the same designations, 
preferences, limitations, and relative rights as a share of stock 
of the corporation being converted in the merger;

(4) the holding company and the corporation are domestic 
corporations and the direct or indirect wholly owned subsidiary 
that is the other party to the merger is a domestic corporation or 
domestic limited liability company;

(5) the articles of incorporation and bylaws of the holding company 
immediately following the effective time of the merger contain 
provisions identical to the articles of incorporation and bylaws of 
the corporation immediately prior to the effective time of the 
merger (other than provisions, if any, regarding the incorporator 
or incorporators, the corporate name, the registered office and 
agent, the initial board of directors, and the initial subscribers 
of shares and such provisions contained in any amendment to the 
certificate as were necessary to effect a change, exchange, 
reclassification, or cancellation of shares, if such change, 
exchange, reclassification, or cancellation has become effective);

(6) the organizational documents or corresponding documents of the 
surviving entity immediately following the effective time of the 
merger contain provisions identical to the organizational 
documents or corresponding documents of the corporation 
immediately prior to the effective time of the merger (other than 
provisions, if any, regarding the incorporator or incorporators, 
the corporate or entity name, the registered office and agent, the 
initial board of directors, and the initial subscribers of shares, 
references to members rather than shareholders, references to 
interests, units, or similar property rather than stock or shares, 
references to managers, managing members, or other members of the 
governing body rather than directors, and such provisions contained 
in any amendment to the certificate as were necessary to effect a 
change, exchange, reclassification, or cancellation of shares, if 
such change, exchange, reclassification, or cancellation has 
become effective);  provided, however, that:

(a) if the organizational documents of the surviving entity do not 
contain the following provisions, they shall be amended in the 
merger to contain provisions requiring that:

(i) any act or transaction by or involving a surviving entity, other 
than the election or removal of directors or managers, managing 
members, or other members of the governing body of the surviving 
entity, that requires for its approval under this Act or its 
organizational documents the approval of shareholders or members of 
the surviving entity shall, by specific reference to this section, 
require the approval of the shareholders of the holding company (or 
any successor by merger) by the same vote as is required by this Act 
or by the organizational documents of the surviving entity;

(ii) a surviving entity that is not a corporation obtain the 
approval of the shareholders of the holding company for any act or 
transaction by or involving the surviving entity, other than the 
election or removal of directors or managers, managing members, or 
other members of the governing body of the surviving entity, that 
would require the approval of the shareholders of the surviving 
entity if the surviving entity were a corporation subject to this 
Act;

(iii) any amendment of the organizational documents of a surviving 
entity that is not a corporation, that would, if adopted by a 
corporation subject to this Act, be required to be included in the 
articles of incorporation of the corporation, shall also require, 
by specific reference to this section, the approval of the 
shareholders of the holding company, or any successor by merger, by 
the same vote as is required by this Act or by the organizational 
documents of the surviving entity;  and

(iv) the business affairs of a surviving entity that is not a 
corporation shall be managed by or under the direction of a board of 
directors, board of managers, or other governing body consisting of 
individuals who are subject to the same fiduciary duties applicable 
to directors of a corporation subject to this Act, and who are 
liable for breach of the duties to the same extent as directors of a 
corporation subject to this Act;

(b) the organizational documents of the surviving entity may be 
amended in the merger to change the classes and series of shares and 
the number of shares that the surviving entity is authorized to 
issue;  and

(c) Subsection (6)(a) of this section or a provision of a surviving 
entity's organizational documents required by Subdivision (a) may 
not be construed as requiring approval of the shareholders of the 
holding company to elect or remove directors, managers, managing 
members, or other members of the governing body of the surviving 
entity;

(7) the directors of the corporation become or remain directors of 
the holding company on the effective time of the merger;

(8) the shareholders of the corporation will not recognize gain or 
loss for United States federal income tax purposes as determined by 
the board of directors of the corporation;  and

(9) the board of directors of the corporation adopts a resolution 
approving the plan of merger.

H-1. The term "organizational documents," as used in Section H(6) 
of this article, means:

(1) in reference to a corporation, the articles of incorporation of 
the corporation;  or

(2) in reference to a limited liability company, the limited 
liability company agreement of the limited liability company.

I. As used in this Article:                                                   

(1) "Direct or indirect wholly owned subsidiary" means, with 
respect to any corporation, another corporation, all of the 
outstanding voting stock of which is owned by the corporation or by 
one or more other domestic or foreign corporations or other 
entities, all of the outstanding voting stock or interests of which 
is owned by the corporation or one or more of such other wholly 
owned domestic or foreign corporations or other entities.

(2) "Holding company" means a corporation which, from its 
incorporation until the effectiveness of a merger pursuant to 
Section H of this Article, was at all times a direct or indirect 
wholly owned subsidiary of the corporation and whose stock is 
issued in the merger permitted by Section H of this Article.

(3) "Participating shares" means shares that entitle the holders 
thereof to participate without limitation in distributions.

(4) "Party to the merger" means:                                              

(a) a domestic corporation that is to be divided into two or more 
new domestic corporations or into a surviving corporation and one 
or more new domestic or foreign corporations or other entities 
pursuant to a plan of merger;  or

(b) a domestic or foreign corporation or other entity that is to be 
combined with one or more domestic or foreign corporations or other 
entities pursuant to a plan of merger resulting in (i) one or more 
surviving domestic or foreign corporations or other entities, (ii) 
the creation of one or more new domestic or foreign corporations or 
other entities, or (iii) one or more surviving domestic or foreign 
corporations or other entities and the creation of one or more new 
domestic or foreign corporations or other entities.  A domestic or 
foreign corporation or other entity that is a party to a plan of 
merger that is not to be divided or combined into or with one or more 
domestic or foreign corporations or other entities is not 
considered to be a party to the merger even if shares, securities, 
or other property of such party is to be issued pursuant to the plan 
of merger.

(5) "Voting shares" means shares that entitle the holders thereof 
to vote unconditionally in elections of directors.

(6) "Shares" means, without limitation, a receipt or other 
instrument issued by a depositary representing an interest in one 
or more shares of stock, or fractions thereof, solely of a domestic 
or foreign corporation, which stock is deposited with a depositary.

J. To the extent the provisions contained in Part Thirteen of this 
Act apply to the corporation and its shareholders at the effective 
time of a merger pursuant to Section H of this Article, those 
provisions shall continue to apply to the holding company and its 
shareholders immediately after the effective time of the merger as 
though it were the corporation, and all shares of the holding 
company acquired in the merger shall, for purposes of Part 
Thirteen, be deemed to have been acquired at the time that the 
shares of stock of the corporation converted in the merger were 
acquired, and any shareholder who, immediately prior to the 
effective time of the merger, was not an affiliated shareholder 
within the meaning of Article 13.02 of this Act shall not solely by 
reason of the merger become an affiliated shareholder of the 
holding company.

K. If the corporate name of a holding company immediately following 
the effective time of a merger pursuant to Section H of this Article 
is the same as the corporate name of the corporation immediately 
prior to the effective time of the merger, the shares of the holding 
company into which the shares of the corporation are converted in 
the merger shall be represented by the stock certificates that 
previously represented the shares of the corporation.

L.  After a merger or share exchange is approved, and at any time 
before the merger or share exchange has become effective, the plan 
of merger or share exchange may be abandoned (subject to any 
contractual rights) by any of the corporations that are a party to 
the merger, without shareholder action, in accordance with the 
procedures set forth in the plan of merger or exchange or, if no 
such procedures are set forth in the plan, in the manner determined 
by the board of directors.  If articles of merger or exchange have 
been filed with the Secretary of State but the merger or share 
exchange has not yet become effective, the merger or share exchange 
may be abandoned if a statement, executed on behalf of each domestic 
corporation and foreign corporation or other entity that is a party 
to the merger or share exchange by an officer or other duly 
authorized representative, stating that the plan of merger or 
exchange has been abandoned in accordance with applicable law is 
filed with the Secretary of State prior to the effectiveness of the 
merger or share exchange.  If the Secretary of State finds that such 
statement conforms to law, he shall, when all fees have been paid as 
required by law:

(1) Endorse on the original and each copy the word "Filed" and the 
month, day, and year the filing thereof.

(2) File the original in his office.                                          

(3) Issue a certificate of abandonment to each domestic or foreign 
corporation or other entity that is a party to the merger or 
exchange.

Upon the filing of such statement by the Secretary of State, the 
merger or share exchange shall be deemed abandoned and shall not 
become effective.

M. To the extent a shareholder of a corporation has standing to 
institute or maintain derivative litigation on behalf of the 
corporation immediately before a merger, nothing in this article 
may be construed to limit or extinguish the shareholder's standing.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1967, 60th Leg., p. 1720, ch. 657, Sec. 9, eff. June 17, 1967;  
Acts 1989, 71st Leg., ch. 801, Sec. 28, eff. Aug. 28, 1989;  Acts 
1991, 72nd Leg., ch. 901, Sec. 27, eff. Aug. 26, 1991;  Acts 1993, 
73rd Leg., ch. 215, Sec. 2.13, eff. Sept. 1, 1993;  Acts 1997, 75th 
Leg., ch. 375, Sec. 26, eff. Sept. 1, 1997.

Sec. C amended by Acts 2003, 78th Leg., ch. 238, Sec. 29, eff. Sept. 
1, 2003;  Sec. H amended by Acts 2003, 78th Leg., ch. 238, Sec. 29, 
eff. Sept. 1, 2003;  Sec. H-1 added by Acts 2003, 78th Leg., ch. 238, 
Sec. 29, eff. Sept. 1, 2003;  Sec. M added by Acts 2003, 78th Leg., 
ch. 238, Sec. 29, eff. Sept. 1, 2003.






Art. 5.04. Articles of Merger or Exchange                                     

A. If a plan of merger or exchange has been approved in accordance 
with Article 5.03 of this Act and has not been abandoned, or 
approved by the board of directors if shareholder approval is not 
required under that Article, articles of merger or exchange shall 
be executed on behalf of each domestic or foreign corporation or 
other entity that is a party to the merger or exchange by an officer 
or other duly authorized representative thereof and shall set 
forth:

(1) The plan of merger or exchange or statement certifying the 
following:   

(a) the name and state of incorporation or organization of each 
domestic or foreign corporation or other entity that is a party to 
the plan of merger or exchange or that is to be created thereby;

(b) that a plan of merger or exchange has been approved;                      

(c) in the case of a merger, such amendments or changes in the 
articles of incorporation of each domestic surviving corporation, 
or if no such amendments are desired to be effected by the merger, a 
statement to that effect;

(d) that the articles of incorporation of each new domestic 
corporation to be created pursuant to the terms of the plan of 
merger are being filed with the Secretary of State with the articles 
of merger or exchange;

(e) that an executed plan of merger or exchange is on file at the 
principal place of business of each surviving, acquiring, or new 
domestic or foreign corporation or other entity, stating the 
address thereof;  and

(f) that a copy of the plan of merger or exchange will be furnished 
by each surviving, acquiring, or new domestic or foreign 
corporation or other entity, on written request and without cost, 
to any shareholder of each domestic corporation that is a party to 
or created by the plan of merger or exchange and, in the case of a 
merger with multiple surviving domestic or foreign corporations or 
other entities, to any creditor or obligee of the parties to the 
merger at the time of the merger if such obligation is then 
outstanding.

(2) If shareholder approval is not required by Article 5.03 of this 
Act, a statement to that effect.

(3) As to each corporation the approval of whose shareholders is 
required, the number of shares outstanding, and, if the shares of 
any class or series are entitled to vote as a class, the designation 
and number of outstanding shares of each such class or series.

(4) As to each corporation the approval of whose shareholders is 
required, the number of shares, not entitled to vote only as a 
class, voted for and against the plan, respectively, and, if the 
shares of any class or series are entitled to vote as a class, the 
number of shares of each such class or series voted for and against 
the plan, respectively.

(5) As to each acquiring domestic or foreign corporation or other 
entity in a plan of exchange, a statement that the plan and 
performance of its terms were duly authorized by all action 
required by the laws under which it was incorporated or organized 
and by its constituent documents.

(6) As to each foreign corporation or other entity that is a party 
to the merger, a statement that the approval of the plan of merger 
was duly authorized by all action required by the laws under which 
it was incorporated or organized and by its constituent documents.

B. The original of the articles of merger or exchange, and such 
number of copies of the articles equal to the number of surviving, 
new, and acquiring domestic or foreign corporations and other 
entities that are a party to the merger or exchange or that will be 
created by the terms thereof, shall be delivered to the Secretary of 
State.  An equal number of copies of the articles of incorporation 
of each domestic corporation that is to be incorporated pursuant to 
the plan of merger shall also be delivered to the Secretary of State 
with the articles of merger.

C. If the Secretary of State finds that the articles of merger or 
exchange conform to law, he shall, when all fees and franchise taxes 
have been paid as required by law, or if the plan of merger or 
exchange (or statement provided in lieu thereof) provides that one 
or more of the surviving, new, or acquiring domestic or foreign 
corporations or other entities will be responsible for the payment 
of all such fees and franchise taxes and that all of such surviving, 
new, or acquiring domestic or foreign corporations and other 
entities will be obligated to pay such fees and franchise taxes if 
the same are not timely paid:

(1) Endorse on the original and each copy the word "Filed," and the 
month, day, and year of the filing thereof.

(2) File the original in his office.                                          

(3) Issue a certificate of merger or exchange, together with a copy 
of the articles affixed thereto, to each surviving, new, and 
acquiring domestic or foreign corporation or other entity that is a 
party to the merger or exchange or that is created thereby, or its 
or their respective representatives.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1979, 66th Leg., p. 228, ch. 120, Sec. 36, eff. May 9, 1979;  
Acts 1985, 69th Leg., ch. 128, Sec. 18, eff. May 20, 1985;  Acts 
1989, 71st Leg., ch. 801, Sec. 29, eff. Aug. 28, 1989;  Acts 1991, 
72nd Leg., ch. 901, Sec. 28, eff. Aug. 26, 1991;  Acts 1997, 75th 
Leg., ch. 375, Sec. 27, eff. Sept. 1, 1997.






Art. 5.05. Effective Date of Merger or Share Exchange                         

A. Except as otherwise provided by Article 10.03 of this Act, upon 
the issuance of the certificate of merger or exchange by the 
Secretary of State, the merger or share exchange shall be 
effective.

Acts 1955, 54th Leg., p. 236, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1989, 71st Leg., ch. 801, Sec. 30, eff. Sept. 1, 1989;  Acts 
1991, 72nd Leg., ch. 901, Sec. 29, eff. Aug. 26, 1991.






Art. 5.06. Effect of Merger or Share Exchange                                 

A. When a merger takes effect:                                                

(1) the separate existence of every domestic corporation that is a 
party to the merger, except any surviving or new domestic 
corporation, shall cease;

(2) all rights, title and interests to all real estate and other 
property owned by each domestic or foreign corporation and by each 
other entity that is a party to the merger shall be allocated to and 
vested in one or more of the surviving or new domestic or foreign 
corporations and other entities as provided in the plan of merger 
without reversion or impairment, without further act or deed, and 
without any transfer or assignment having occurred, but subject to 
any existing liens or other encumbrances thereon;

(3) all liabilities and obligations of each domestic or foreign 
corporation and other entity that is a party to the merger shall be 
allocated to one or more of the surviving or new domestic or foreign 
corporations and other entities in the manner set forth in the plan 
of merger, and each surviving or new domestic or foreign 
corporation, and each surviving or new other entity to which a 
liability or obligation shall have been allocated pursuant to the 
plan of merger, shall be the primary obligor therefor and, except as 
otherwise set forth in the plan of merger or as otherwise provided 
by law or contract, no other party to the merger, other than a 
surviving domestic or foreign corporation or other entity liable 
thereon at the time of the merger and no other new domestic or 
foreign corporation or other entity created thereby, shall be 
liable therefor;

(4) a proceeding pending by or against any domestic or foreign 
corporation or by or against any other entity that is a party to the 
merger may be continued as if the merger did not occur, or the 
surviving or new domestic or foreign corporation or corporations or 
the surviving or new other entity or other entities to which the 
liability, obligation, asset or right associated with such 
proceeding is allocated to and vested in pursuant to the plan of 
merger may be substituted in the proceeding;

(5) the articles of incorporation of each surviving corporation 
shall be amended to the extent provided in the plan of merger;

(6) each new domestic corporation, the articles of incorporation of 
which are set forth in the plan of merger pursuant to Article 5.01 
of this Act, shall be incorporated as a corporation under this Act;  
and each other entity to be incorporated or organized under the laws 
of this State, the organizational documents of which are set forth 
in the plan of merger shall, upon an executed copy of the articles 
of merger being delivered to or filed with any required 
governmental entity with which organizational documents of such 
other entity are required to be delivered or filed, and upon meeting 
such additional requirements, if any, of law for its incorporation 
or organization, shall be incorporated or organized as provided in 
the plan of merger;  and

(7) the shares of each domestic or foreign corporation and the 
shares or evidences of ownership in each other entity that is a 
party to the merger that are to be converted or exchanged, in whole 
or part, into shares, obligations, evidences of ownership, rights 
to purchase securities or other securities of one or more of the 
surviving or new domestic or foreign corporations or other 
entities, into cash or other property, including shares, 
obligations, evidences of ownership, rights to purchase securities 
or other securities of any other person or entity, or into any 
combination of the foregoing, shall be so converted and exchanged 
and the former holders of the shares of each domestic corporation 
that is a party to the merger shall be entitled only to the rights 
provided in the plan of merger or to their rights under Article 5.11 
of this Act.

B. When a share exchange takes effect, the shares of each acquired 
corporation shall be deemed to have been exchanged as provided in 
the plan of exchange, and the former holders of the shares exchanged 
pursuant to the plan of exchange shall be entitled only to the 
exchange rights provided in the articles of exchange or to their 
rights under Article 5.11 of this Act and the acquiring domestic or 
foreign corporation or corporations and the acquiring other entity 
or other entities of the shares to be acquired and exchanged in the 
share exchange shall be entitled to all rights, title, and 
interests with respect to the shares so acquired and exchanged 
subject to the provisions in the articles of exchange.

C. If the plan of merger shall fail to provide for the allocation 
and vesting of the right, title, and interest in any particular item 
of real estate or other property or for the allocation of any 
liability or obligation of any party to the merger, such item of 
real estate or other property shall be owned in undivided interest 
by, or such liability or obligation shall be the joint and several 
liability and obligation of, each of the surviving and new domestic 
and foreign corporations and other entities, pro rata to the total 
number of surviving and new domestic and foreign corporations and 
other entities resulting from the merger.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1967, 60th Leg., p. 1729, ch. 657, Sec. 19, eff. June 17, 1967;  
Acts 1987, 70th Leg., ch. 93, Sec. 24, eff. Aug. 31, 1987;  Acts 
1989, 71st Leg., ch. 801, Sec. 31, eff. Aug. 28, 1989;  Acts 1991, 
72nd Leg., ch. 901, Sec. 30, eff. Aug. 26, 1991.

Sec. A amended by Acts 2003, 78th Leg., ch. 238, Sec. 30, eff. Sept. 
1, 2003.






Art. 5.08. Conveyance by Corporation                                          

A. Any corporation may convey land by deed, with or without the seal 
of the corporation, signed by an officer or attorney in fact of the 
corporation when authorized by appropriate resolution of the board 
of directors.  Such deed, when acknowledged by such officer or 
attorney in fact to be the act of the corporation, or proved in the 
manner prescribed for other conveyances of lands, may be recorded 
in like manner and with the same effect as other deeds.  Any such 
deed when recorded, if signed by an officer of the corporation, 
shall constitute prima facie evidence that such resolution of the 
board of directors was duly adopted.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1989, 71st Leg., ch. 801, Sec. 33, eff. Aug. 28, 1989.






Art. 5.09. Disposition of Assets Authorized by Board of Directors             

A. Except as otherwise provided in the articles of incorporation 
and except as provided in the next sentence of this section, the 
sale, lease, exchange or other disposition of all, or substantially 
all, the property and assets of a corporation, when made in the 
usual and regular course of the business of the corporation, may be 
made upon such terms and conditions and for such considerations, 
which may consist in whole or in part of money or property, real or 
personal, including shares of any other corporation, domestic or 
foreign, as shall be authorized by its board of directors, without 
authorization or consent of the shareholders.  Except as otherwise 
provided in the articles of incorporation, the board of directors 
may authorize any pledge, mortgage, deed of trust or trust 
indenture and no authorization or consent of the shareholders shall 
be required for the validity thereof or for any sale pursuant to the 
terms thereof.

B. A transaction referred to in this Article and in Article 5.10 of 
this Act shall be in the usual and regular course of business if the 
corporation shall, directly or indirectly, either continue to 
engage in one or more businesses or apply a portion of the 
consideration received in connection with the transaction to the 
conduct of a business in which it engages following the 
transaction.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1957, 55th Leg., p. 111, ch. 54, Sec. 8;  Acts 1987, 70th Leg., 
ch. 93, Sec. 25, eff. Aug. 31, 1987;  Acts 1993, 73rd Leg., ch. 215, 
Sec. 2.14, eff. Sept. 1, 1993.






Art. 5.10. Disposition of Assets Requiring Special Authorization of 
Shareholders;  Effect of Disposition Requiring or Not Requiring 
Authorization;  Liability of Acquiring Corporation

A. A sale, lease, exchange, or other disposition (not including any 
pledge, mortgage, deed of trust or trust indenture unless otherwise 
provided in the articles of incorporation) of all, or substantially 
all, the property and assets, with or without the good will of a 
corporation, if not made in the usual and regular course of its 
business, may be made upon such terms and conditions and for such 
consideration, which may consist in whole or in part of money or 
property, real or personal, including shares of any corporation, 
domestic or foreign, as may be authorized in the following manner:

(1) The board of directors may adopt a resolution recommending that 
such sale, lease, exchange, or other disposition be approved by 
shareholders of the corporation, unless the board of directors 
determines that for any reason it should not make the 
recommendation in which case the board of directors may adopt a 
resolution directing that such sale, lease, exchange, or other 
disposition be submitted to shareholders without recommendation 
and, in connection with the submission, communicate the basis for 
its determination that the sale, lease, exchange or other 
disposition be submitted without recommendation.

(2) The board of directors may submit the proposed sale, lease, 
exchange or other disposition for authorization by the 
corporation's shareholders at a meeting of shareholders, which may 
be either an annual or a special meeting.

(3) Written or printed notice shall be given to each shareholder of 
record entitled to vote at such meeting within the time and in the 
manner provided for in this Act for the giving of notice of meetings 
of shareholders, and, whether the meeting be an annual or a special 
meeting shall state that the purpose, or one of the purposes, of 
such meeting is to consider the proposed sale, lease, exchange, or 
other disposition.

(4) At such meeting, the shareholders may authorize such sale, 
lease, exchange or other disposition and may fix, or may authorize 
the board of directors to fix, any or all of the terms and 
conditions thereof and the consideration to be received by the 
corporation therefor.  Such authorization shall require the 
affirmative vote of the holders of at least two-thirds of the 
outstanding shares of the corporation entitled to vote thereon, 
unless any class or series of shares of the corporation is entitled 
to vote as a class thereon, in which event the vote required for 
authorization by the shareholders shall be the affirmative vote of 
the holders of at least two-thirds of the outstanding shares within 
each such class or series entitled to vote thereon as a class and at 
least two-thirds of the outstanding shares otherwise entitled to 
vote thereon.  Shares entitled to vote as a class shall be entitled 
to vote only as a class unless otherwise entitled to vote on each 
matter submitted to the shareholders generally or provided in the 
articles of incorporation.

(5) After such authorization by vote of shareholders, the board of 
directors, nevertheless, in its discretion, may abandon such sale, 
lease, exchange or other disposition of assets, subject to the 
rights of third parties under any contracts relating thereto, 
without further action or approval by shareholders.

B. A disposition of any, all, or substantially all, of the property 
and assets of a corporation, whether or not it requires the special 
authorization of the shareholders of the corporation, effected 
under Section A of this article or under Article 5.09 of this Act or 
otherwise:

(1) is not considered to be a merger or conversion pursuant to this 
Act or otherwise;  and

(2) except as otherwise expressly provided by another statute, does 
not make the acquiring corporation, foreign corporation, or other 
entity responsible or liable for any liability or obligation of the 
selling corporation that the acquiring corporation, foreign 
corporation, or other entity did not expressly assume.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1957, 55th Leg., p. 111, ch. 54, Sec. 9;  Acts 1967, 60th Leg., 
p. 1720, ch. 657, Sec. 11, eff. June 17, 1967;  Acts 1979, 66th Leg., 
p. 422, ch. 194, Sec. 1, eff. May 17, 1979;  Acts 1987, 70th Leg., 
ch. 93, Sec. 26, eff. Aug. 31, 1987;  Acts 1991, 72nd Leg., ch. 901, 
Sec. 31, eff. Aug. 26, 1991;  Acts 1993, 73rd Leg., ch. 215, Sec. 
2.15, eff. Sept. 1, 1993;  Acts 1997, 75th Leg., ch. 375, Sec. 28, 
eff. Sept. 1, 1997.






Art. 5.11. Rights of Dissenting Shareholders in the Event of 
Certain Corporate Actions

A. Any shareholder of a domestic corporation shall have the right to 
dissent from any of the following corporate actions:

(1) Any plan of merger to which the corporation is a party if 
shareholder approval is required by Article 5.03 or 5.16 of this Act 
and the shareholder holds shares of a class or series that was 
entitled to vote thereon as a class or otherwise;

(2) Any sale, lease, exchange or other disposition (not including 
any pledge, mortgage, deed of trust or trust indenture unless 
otherwise provided in the articles of incorporation) of all, or 
substantially all, the property and assets, with or without good 
will, of a corporation if special authorization of the shareholders 
is required by this Act and the shareholders hold shares of a class 
or series that was entitled to vote thereon as a class or otherwise;

(3) Any plan of exchange pursuant to Article 5.02 of this Act in 
which the shares of the corporation of the class or series held by 
the shareholder are to be acquired.

B. Notwithstanding the provisions of Section A of this Article, a 
shareholder shall not have the right to dissent from any plan of 
merger in which there is a single surviving or new domestic or 
foreign corporation, or from any plan of exchange, if:

(1) the shares, or depository receipts in respect of the shares, 
held by the shareholder are part of a class or series, shares, or 
depository receipts in respect of the shares, of which are on the 
record date fixed to determine the shareholders entitled to vote on 
the plan of merger or plan of exchange:

(a) listed on a national securities exchange;                                 

(b) listed on the Nasdaq Stock Market (or successor quotation 
system) or designated as a national market security on an 
interdealer quotation system by the National Association of 
Securities Dealers, Inc., or successor entity;  or

(c) held of record by not less than 2,000 holders;                            

(2) the shareholder is not required by the terms of the plan of 
merger or plan of exchange to accept for the shareholder's shares 
any consideration that is different than the consideration (other 
than cash in lieu of fractional shares that the shareholder would 
otherwise be entitled to receive) to be provided to any other holder 
of shares of the same class or series of shares held by such 
shareholder;  and

(3) the shareholder is not required by the terms of the plan of 
merger or the plan of exchange to accept for the shareholder's 
shares any consideration other than:

(a) shares, or depository receipts in respect of the shares, of a 
domestic or foreign corporation that, immediately after the 
effective time of the merger or exchange, will be part of a class or 
series, shares, or depository receipts in respect of the shares, of 
which are:

(i) listed, or authorized for listing upon official notice of 
issuance, on a national securities exchange;

(ii) approved for quotation as a national market security on an 
interdealer quotation system by the National Association of 
Securities Dealers, Inc., or successor entity;  or

(iii) held of record by not less than 2,000 holders;                          

(b) cash in lieu of fractional shares otherwise entitled to be 
received;  or

(c) any combination of the securities and cash described in 
Subdivisions (a) and (b) of this subsection.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1957, 55th Leg., p. 111, ch. 54, Sec. 10;  Acts 1973, 63rd Leg., 
p. 1508, ch. 545, Sec. 36, eff. Aug. 27, 1973;  Acts 1989, 71st Leg., 
ch. 801, Sec. 34, eff. Aug. 28, 1989;  Acts 1991, 72nd Leg., ch. 901, 
Sec. 32, eff. Aug. 26, 1991;  Acts 1997, 75th Leg., ch. 375, Sec. 29, 
eff. Sept. 1, 1997.

Sec. B amended by Acts 2003, 78th Leg., ch. 238, Sec. 31, eff. Sept. 
1, 2003.






Art. 5.12. Procedure for Dissent by Shareholders as to Said 
Corporate Actions

A. Any shareholder of any domestic corporation who has the right to 
dissent from any of the corporate actions referred to in Article 
5.11 of this Act may exercise that right to dissent only by 
complying with the following procedures:

(1)(a) With respect to proposed corporate action that is submitted 
to a vote of shareholders at a meeting, the shareholder shall file 
with the corporation, prior to the meeting, a written objection to 
the action, setting out that the shareholder's right to dissent 
will be exercised if the action is effective and giving the 
shareholder's address, to which notice thereof shall be delivered 
or mailed in that event.  If the action is effected and the 
shareholder shall not have voted in favor of the action, the 
corporation, in the case of action other than a merger, or the 
surviving or new corporation (foreign or domestic) or other entity 
that is liable to discharge the shareholder's right of dissent, in 
the case of a merger, shall, within ten (10) days after the action 
is effected, deliver or mail to the shareholder written notice that 
the action has been effected, and the shareholder may, within ten 
(10) days from the delivery or mailing of the notice, make written 
demand on the existing, surviving, or new corporation (foreign or 
domestic) or other entity, as the case may be, for payment of the 
fair value of the shareholder's shares.  The fair value of the 
shares shall be the value thereof as of the day immediately 
preceding the meeting, excluding any appreciation or depreciation 
in anticipation of the proposed action.  The demand shall state the 
number and class of the shares owned by the shareholder and the fair 
value of the shares as estimated by the shareholder.  Any 
shareholder failing to make demand within the ten (10) day period 
shall be bound by the action.

(b) With respect to proposed corporate action that is approved 
pursuant to Section A of Article 9.10 of this Act, the corporation, 
in the case of action other than a merger, and the surviving or new 
corporation (foreign or domestic) or other entity that is liable to 
discharge the shareholder's right of dissent, in the case of a 
merger, shall, within ten (10) days after the date the action is 
effected, mail to each shareholder of record as of the effective 
date of the action notice of the fact and date of the action and that 
the shareholder may exercise the shareholder's right to dissent 
from the action.  The notice shall be accompanied by a copy of this 
Article and any articles or documents filed by the corporation with 
the Secretary of State to effect the action.  If the shareholder 
shall not have consented to the taking of the action, the 
shareholder may, within twenty (20) days after the mailing of the 
notice, make written demand on the existing, surviving, or new 
corporation (foreign or domestic) or other entity, as the case may 
be, for payment of the fair value of the shareholder's shares.  The 
fair value of the shares shall be the value thereof as of the date 
the written consent authorizing the action was delivered to the 
corporation pursuant to Section A of Article 9.10 of this Act, 
excluding any appreciation or depreciation in anticipation of the 
action.  The demand shall state the number and class of shares owned 
by the dissenting shareholder and the fair value of the shares as 
estimated by the shareholder.  Any shareholder failing to make 
demand within the twenty (20) day period shall be bound by the 
action.

(2) Within twenty (20) days after receipt by the existing, 
surviving, or new corporation (foreign or domestic) or other 
entity, as the case may be, of a demand for payment made by a 
dissenting shareholder in accordance with Subsection (1) of this 
Section, the corporation (foreign or domestic) or other entity 
shall deliver or mail to the shareholder a written notice that shall 
either set out that the corporation (foreign or domestic) or other 
entity accepts the amount claimed in the demand and agrees to pay 
that amount within ninety (90) days after the date on which the 
action was effected, and, in the case of shares represented by 
certificates, upon the surrender of the certificates duly endorsed, 
or shall contain an estimate by the corporation (foreign or 
domestic) or other entity of the fair value of the shares, together 
with an offer to pay the amount of that estimate within ninety (90) 
days after the date on which the action was effected, upon receipt 
of notice within sixty (60) days after that date from the 
shareholder that the shareholder agrees to accept that amount and, 
in the case of shares represented by certificates, upon the 
surrender of the certificates duly endorsed.

(3) If, within sixty (60) days after the date on which the corporate 
action was effected, the value of the shares is agreed upon between 
the shareholder and the existing, surviving, or new corporation 
(foreign or domestic) or other entity, as the case may be, payment 
for the shares shall be made within ninety (90) days after the date 
on which the action was effected and, in the case of shares 
represented by certificates, upon surrender of the certificates 
duly endorsed.  Upon payment of the agreed value, the shareholder 
shall cease to have any interest in the shares or in the 
corporation.

B. If, within the period of sixty (60) days after the date on which 
the corporate action was effected, the shareholder and the 
existing, surviving, or new corporation (foreign or domestic) or 
other entity, as the case may be, do not so agree, then the 
shareholder or the corporation (foreign or domestic) or other 
entity may, within sixty (60) days after the expiration of the sixty 
(60) day period, file a petition in any court of competent 
jurisdiction in the county in which the principal office of the 
domestic corporation is located, asking for a finding and 
determination of the fair value of the shareholder's shares.  Upon 
the filing of any such petition by the shareholder, service of a 
copy thereof shall be made upon the corporation (foreign or 
domestic) or other entity, which shall, within ten (10) days after 
service, file in the office of the clerk of the court in which the 
petition was filed a list containing the names and addresses of all 
shareholders of the domestic corporation who have demanded payment 
for their shares and with whom agreements as to the value of their 
shares have not been reached by the corporation (foreign or 
domestic) or other entity.  If the petition shall be filed by the 
corporation (foreign or domestic) or other entity, the petition 
shall be accompanied by such a list.  The clerk of the court shall 
give notice of the time and place fixed for the hearing of the 
petition by registered mail to the corporation (foreign or 
domestic) or other entity and to the shareholders named on the list 
at the addresses therein stated.  The forms of the notices by mail 
shall be approved by the court.  All shareholders thus notified and 
the corporation (foreign or domestic) or other entity shall 
thereafter be bound by the final judgment of the court.

C. After the hearing of the petition, the court shall determine the 
shareholders who have complied with the provisions of this Article 
and have become entitled to the valuation of and payment for their 
shares, and shall appoint one or more qualified appraisers to 
determine that value.  The appraisers shall have power to examine 
any of the books and records of the corporation the shares of which 
they are charged with the duty of valuing, and they shall make a 
determination of the fair value of the shares upon such 
investigation as to them may seem proper.  The appraisers shall also 
afford a reasonable opportunity to the parties interested to submit 
to them pertinent evidence as to the value of the shares.  The 
appraisers shall also have such power and authority as may be 
conferred on Masters in Chancery by the Rules of Civil Procedure or 
by the order of their appointment.

D. The appraisers shall determine the fair value of the shares of 
the shareholders adjudged by the court to be entitled to payment for 
their shares and shall file their report of that value in the office 
of the clerk of the court.  Notice of the filing of the report shall 
be given by the clerk to the parties in interest.  The report shall 
be subject to exceptions to be heard before the court both upon the 
law and the facts.  The court shall by its judgment determine the 
fair value of the shares of the shareholders entitled to payment for 
their shares and shall direct the payment of that value by the 
existing, surviving, or new corporation (foreign or domestic) or 
other entity, together with interest thereon, beginning 91 days 
after the date on which the applicable corporate action from which 
the shareholder elected to dissent was effected to the date of such 
judgment, to the shareholders entitled to payment.  The judgment 
shall be payable to the holders of uncertificated shares 
immediately but to the holders of shares represented by 
certificates only upon, and simultaneously with, the surrender to 
the existing, surviving, or new corporation (foreign or domestic) 
or other entity, as the case may be, of duly endorsed certificates 
for those shares.  Upon payment of the judgment, the dissenting 
shareholders shall cease to have any interest in those shares or in 
the corporation.  The court shall allow the appraisers a reasonable 
fee as court costs, and all court costs shall be allotted between 
the parties in the manner that the court determines to be fair and 
equitable.

E. Shares acquired by the existing, surviving, or new corporation 
(foreign or domestic) or other entity, as the case may be, pursuant 
to the payment of the agreed value of the shares or pursuant to 
payment of the judgment entered for the value of the shares, as in 
this Article provided, shall, in the case of a merger, be treated as 
provided in the plan of merger and, in all other cases, may be held 
and disposed of by the corporation as in the case of other treasury 
shares.

F. The provisions of this Article shall not apply to a merger if, on 
the date of the filing of the articles of merger, the surviving 
corporation is the owner of all the outstanding shares of the other 
corporations, domestic or foreign, that are parties to the merger.

G. In the absence of fraud in the transaction, the remedy provided 
by this Article to a shareholder objecting to any corporate action 
referred to in Article 5.11 of this Act is the exclusive remedy for 
the recovery of the value of his shares or money damages to the 
shareholder with respect to the action.  If the existing, 
surviving, or new corporation (foreign or domestic) or other 
entity, as the case may be, complies with the requirements of this 
Article, any shareholder who fails to comply with the requirements 
of this Article shall not be entitled to bring suit for the recovery 
of the value of his shares or money damages to the shareholder with 
respect to the action.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1967, 60th Leg., p. 1721, ch. 657, Sec. 12, eff. June 17, 1967;  
Acts 1983, 68th Leg., p. 2570, ch. 442, Sec. 9, eff. Sept. 1, 1983;  
Acts 1987, 70th Leg., ch. 93, Sec. 27, eff. Aug. 31, 1987;  Acts 
1989, 71st Leg., ch. 801, Sec. 35, eff. Aug. 28, 1989;  Acts 1993, 
73rd Leg., ch. 215, Sec. 2.16, eff. Sept. 1, 1993.






Art. 5.13. Provisions Affecting Remedies of Dissenting 
Shareholders         

A. Any shareholder who has demanded payment for his shares in 
accordance with either Article 5.12 or 5.16 of this Act shall not 
thereafter be entitled to vote or exercise any other rights of a 
shareholder except the right to receive payment for his shares 
pursuant to the provisions of those articles and the right to 
maintain an appropriate action to obtain relief on the ground that 
the corporate action would be or was fraudulent, and the respective 
shares for which payment has been demanded shall not thereafter be 
considered outstanding for the purposes of any subsequent vote of 
shareholders.

B. Upon receiving a demand for payment from any dissenting 
shareholder, the corporation shall make an appropriate notation 
thereof in its shareholder records.  Within twenty (20) days after 
demanding payment for his shares in accordance with either Article 
5.12 or 5.16 of this Act, each holder of certificates representing 
shares so demanding payment shall submit such certificates to the 
corporation for notation thereon that such demand has been made.  
The failure of holders of certificated shares to do so shall, at the 
option of the corporation, terminate such shareholder's rights 
under Articles 5.12 and 5.16 of this Act unless a court of competent 
jurisdiction for good and sufficient cause shown shall otherwise 
direct.  If uncertificated shares for which payment has been 
demanded or shares represented by a certificate on which notation 
has been so made shall be transferred, any new certificate issued 
therefor shall bear similar notation together with the name of the 
original dissenting holder of such shares and a transferee of such 
shares shall acquire by such transfer no rights in the corporation 
other than those which the original dissenting shareholder had 
after making demand for payment of the fair value thereof.

C. Any shareholder who has demanded payment for his shares in 
accordance with either Article 5.12 or 5.16 of this Act may withdraw 
such demand at any time before payment for his shares or before any 
petition has been filed pursuant to Article 5.12 or 5.16 of this Act 
asking for a finding and determination of the fair value of such 
shares, but no such demand may be withdrawn after such payment has 
been made or, unless the corporation shall consent thereto, after 
any such petition has been filed.  If, however, such demand shall be 
withdrawn as hereinbefore provided, or if pursuant to Section B of 
this Article the corporation shall terminate the shareholder's 
rights under Article 5.12 or 5.16 of this Act, as the case may be, or 
if no petition asking for a finding and determination of fair value 
of such shares by a court shall have been filed within the time 
provided in Article 5.12 or 5.16 of this Act, as the case may be, or 
if after the hearing of a petition filed pursuant to Article 5.12 or 
5.16, the court shall determine that such shareholder is not 
entitled to the relief provided by those articles, then, in any such 
case, such shareholder and all persons claiming under him shall be 
conclusively presumed to have approved and ratified the corporate 
action from which he dissented and shall be bound thereby, the right 
of such shareholder to be paid the fair value of his shares shall 
cease, and his status as a shareholder shall be restored without 
prejudice to any corporate proceedings which may have been taken 
during the interim, and such shareholder shall be entitled to 
receive any dividends or other distributions made to shareholders 
in the interim.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1967, 60th Leg., p. 1723, ch. 657, Sec. 13, eff. June 17, 1967;  
Acts 1983, 68th Leg., p. 2573, ch. 442, Sec. 10, eff. Sept. 1, 1983;  
Acts 1993, 73rd Leg., ch. 215, Sec. 2.17, eff. Sept. 1, 1993.






Art. 5.14. Derivative Proceedings                                             

A. Certain Definitions. For purposes of this Article:                         

(1) "Derivative proceeding" means a civil suit in the right of a 
domestic corporation or, to the extent provided in Section K of this 
Article, in the right of a foreign corporation.

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

B. 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 by operation of law 
from a person that was a shareholder at that time;  and

(2) fairly and adequately represents the interests of the 
corporation in enforcing the right of the corporation.

C. Demand. No shareholder may commence a derivative proceeding 
until:       

(1) a written demand is filed with the corporation setting forth 
with particularity the act, omission, or other matter that is the 
subject of the claim or challenge and requesting that the 
corporation take suitable action;  and

(2) 90 days have expired from the date the demand was made, unless 
the shareholder has earlier been notified that the demand has been 
rejected by the corporation or unless irreparable injury to the 
corporation is being suffered or would result by waiting for the 
expiration of the 90-day period.

D. Stay;  Discovery. (1) If the domestic or foreign corporation 
commences an inquiry into the allegations made in a demand or 
petition and the person or group described in Section H of this 
Article is conducting an active review of the allegations in good 
faith, the court shall stay a derivative proceeding until the 
review is completed and a determination is made by the person or 
group as to what further action, if any, should be taken.  To obtain 
a stay, the domestic or foreign corporation must provide the court 
with a written statement containing an undertaking to advise the 
court and the shareholder making the demand of the determination 
promptly on the completion of the review of the matter.  A stay 
shall, on motion, be reviewed as to its continued necessity every 60 
days thereafter.  If the review and determination by the person or 
group described in Section H of this Article is not completed within 
60 days, the stay may be renewed for one or more additional 60-day 
periods on the domestic or foreign corporation providing the court 
and the shareholder making the demand with a written statement of 
the status of the review and the reasons a continued extension of 
the stay is necessary.

(2) If a domestic or foreign corporation proposes to dismiss a 
derivative proceeding pursuant to Section F of this Article, 
discovery by a shareholder following the filing of the derivative 
proceeding in accordance with the provisions of this Article shall 
be limited to facts relating to whether the person or group 
described in Section H of this Article is independent and 
disinterested, the good faith of the inquiry and review by such 
person or group, and the reasonableness of the procedures followed 
by such person or group in conducting its review and will not extend 
to any facts or substantive matters with respect to the act, 
omission, or other matter that is the subject matter of the action 
in the derivative proceeding.  The scope of discovery may be 
expanded if the court determines after notice and hearing that a 
good faith review of the allegations for purposes of Section F of 
this Article has not been made by an independent and disinterested 
person or group in accordance with Section F of this Article.

E. Tolling of the Statute of Limitations. A written demand filed 
with the corporation under Section C of this Article tolls the 
statute of limitations on the claim on which demand is made until 
the earlier of (1) 90 days or (2) 30 days after the corporation 
advises the shareholder that the demand has been rejected or the 
review has been completed.

F. Dismissal of Derivative Proceeding. A court shall dismiss a 
derivative proceeding on a motion by the corporation if the person 
or group described in Section H of this Article determines in good 
faith, after conducting a reasonable inquiry and based on the 
factors as the person or group deems appropriate under the 
circumstances, that the continuation of the derivative proceeding 
is not in the best interests of the corporation.  In determining 
whether the requirements of the previous sentence have been met, 
the burden of proof shall be on:

(1) the plaintiff shareholder, if a majority of the board of 
directors consists of independent and disinterested directors at 
the time the determination is made or if the determination is made 
by a panel of one or more independent and disinterested persons 
appointed under Section H(3) of this Article;  or

(2) the corporation, in all other circumstances;  provided that if 
the corporation presents prima facie evidence that demonstrates 
that the directors appointed pursuant to Section H(2) of this 
Article are independent and disinterested, the burden of proof is 
on the plaintiff shareholder.

G. Commencement of Proceeding After Rejection of Demand. If a 
derivative proceeding is commenced after a demand is rejected, the 
petition must allege with particularity facts that establish that 
the rejection was not made in accordance with the requirements of 
Sections F and H of this Article.

H. Determination by Directors or Independent Persons. The 
determination described in Section F of this Article must be made 
by:

(1) a majority vote of independent and disinterested directors 
present at a meeting of the board of directors at which interested 
directors are not present (at the time of the vote) if the 
independent and disinterested directors constitute a quorum of the 
board of directors;

(2) a majority vote of a committee consisting of two or more 
independent and disinterested directors appointed by a majority 
vote of one or more independent and disinterested directors present 
at a meeting of the board of directors, whether or not the 
independent and disinterested directors so acting constitute a 
quorum of the board of directors;  or

(3) a panel of one or more independent and disinterested persons 
appointed by the court on a motion by the corporation setting forth 
the names of the persons to be so appointed together with a 
statement that to the best of its knowledge the persons so proposed 
are disinterested persons and qualified to make the determinations 
contemplated by Section F of this Article.  Such panel shall be 
appointed if the court finds that such persons are independent and 
disinterested persons and are otherwise qualified in regard to 
expertise, experience, independent judgment, and other factors 
deemed appropriate by the court under the circumstances to make 
such determinations.  Persons appointed by the court shall have no 
liability to the corporation or its shareholders for any action or 
omission taken by them in that capacity, absent fraud or wilful 
misconduct.

I. Discontinuance or Settlement. A derivative proceeding may not be 
discontinued or settled without the approval of the court.  If the 
court determines that a proposed discontinuance or settlement may 
substantially affect the interest of other shareholders, it shall 
direct that notice be given to the affected shareholders.

J. Payment of Expenses. (1) On termination of a derivative 
proceeding, the court may order:

(a) the domestic or foreign corporation to pay the expenses of the 
plaintiff incurred in the proceeding if it finds that the 
proceeding has resulted in a substantial benefit to the domestic or 
foreign corporation;

(b) the plaintiff to pay the expenses of the domestic or foreign 
corporation or any defendant incurred in investigating and 
defending the proceeding if it finds that the proceeding was 
commenced or maintained without reasonable cause or for an improper 
purpose;  or

(c) a party to pay the expenses incurred by another party (including 
the domestic or foreign corporation) because of the filing of a 
pleading, motion, or other paper, if it finds that the pleading, 
motion, or other paper (i) was not well grounded in fact after 
reasonable inquiry, (ii) was not warranted by existing law or a good 
faith argument for the extension, modification, or reversal of 
existing law, or (iii) was interposed for an improper purpose, such 
as to harass or to cause unnecessary delay or needless increase in 
the cost of litigation.

(2) For purposes of this section, "expenses" mean reasonable 
expenses incurred in the defense of a derivative proceeding, 
including without limitation:

(a) attorney's fees;                                                          

(b) costs in pursuing an investigation of the matter that was the 
subject of the derivative proceeding;  and

(c) expenses for which the domestic or foreign corporation or a 
corporate defendant may be required to indemnify another person.

K. Application to Foreign Corporations. In any derivative 
proceeding brought in the right of a foreign corporation, the 
matters covered by this Article are governed by the laws of the 
jurisdiction of incorporation of the foreign corporation, except 
for Sections D, I, and J of this Article, which are procedural and 
not matters relating to the internal affairs of the foreign 
corporation.  In the case of matters relating to a foreign 
corporation under Section D of this Article, references to a person 
or group described in Section H of this Article are to be deemed to 
refer to a person or group entitled under the laws of the 
jurisdiction of incorporation of the foreign corporation to review 
and dispose of a derivative proceeding, and the standard of review 
of a decision by the person or group to dismiss the derivative 
proceeding is to be governed by the laws of the jurisdiction of 
incorporation of the foreign corporation.

L. Closely Held Corporations. (1) The provisions of Sections B 
through H of this Article are not applicable to a closely held 
corporation.  If justice requires:

(a) a derivative proceeding brought by a shareholder of a closely 
held corporation may be treated by a court as a direct action 
brought by the shareholder for his own benefit;  and

(b) a recovery in a direct or derivative proceeding by a shareholder 
may be paid either directly to the plaintiff or to the corporation 
if necessary to protect the interests of creditors or other 
shareholders of the corporation.

(2) For purposes of this section, a "closely held corporation" 
means a corporation:

(a) with less than 35 shareholders;  and                                      

(b) that has no shares listed on a national securities exchange or 
regularly quoted in an over-the-counter market by one or more 
members of a national securities association. 

Added by Acts 1965, 59th Leg., p. 698, ch. 332, Sec. 1.  Amended by 
Acts 1973, 63rd Leg., p. 1508, ch. 545, Sec. 37, eff. Aug. 27, 1973;  
Acts 1997, 75th Leg., ch. 375, Sec. 30, eff. Sept. 1, 1997.






Art. 5.15. Antitrust Laws;  Creditors                                         

Nothing contained in Part 5 of this Act shall ever be construed as 
affecting, nullifying or repealing the Anti-trust laws or as 
abridging any right or rights of any creditor under existing laws.

Acts 1955, 54th Leg., p. 239, ch. 64, art. 5.14, eff. Sept. 6, 1955.  
Renumbered as art. 5.15 by Acts 1965, 59th Leg., p. 699, ch. 332, 
Sec. 2.  Amended by Acts 1989, 71st Leg., ch. 801, Sec. 36, eff. Aug. 
28, 1989.






Art. 5.16. Merger with Subsidiary Entities                                    

A. In any case in which at least ninety (90%) per cent of the 
outstanding shares of each class and series of shares, membership 
interests, or other ownership interests of one or more domestic or 
foreign corporations or other entities, other than a corporation 
that has in its articles of incorporation the provision required by 
Article 5.03(H)(6)(a) of this Act, of which there are outstanding 
shares that would be entitled to vote on the merger absent this 
section, is owned by another domestic or foreign corporation or 
other entity, and at least one of the parent or subsidiary entities 
is a domestic corporation and the other or others are domestic 
corporations, foreign corporations, or other entities organized 
under the laws of a jurisdiction that permit such a merger or whose 
organizational documents or other constituent documents not 
inconsistent with those laws permit such a merger, the corporation 
or other entity may enter into a merger:

(a) in the event that the corporation or other entity having at 
least 90 percent ownership will be a surviving entity in the merger, 
by executing and filing articles of merger in accordance with 
Section B of this Article;  or

(b) in the event that the corporation or other entity having at 
least 90 percent ownership will not be a surviving entity in the 
merger, by the entity having such ownership adopting a plan of 
merger in the manner required by the laws of its jurisdiction of 
organization or formation and its organizational or other 
constituent documents, except that no action under Section 5.03 
shall be required to be taken by the corporation or corporations 
whose shares are so owned, and executing and filing articles of 
merger in accordance with Section B of this Article.

B. The articles of merger shall be signed on behalf of the parent 
entity by an officer or other duly authorized representative of the 
parent entity and shall set forth:

(1) The name of the parent entity and the name of each subsidiary 
entity and the type of entity and respective jurisdiction under 
which each subsidiary entity is organized.

(2) The total number or percentage of outstanding shares, 
membership interests, or other ownership interests, identified by 
class, series, or group, and the number or percentage of shares, 
membership interests, or other ownership interests in each class, 
series, or group owned by the parent entity.

(3) A copy of the resolution or merger adopted by the parent entity 
in accordance with the laws of its jurisdiction of organization or 
formation and its organizational or other constituent documents 
together with a statement that the resolution was so adopted and the 
date of the adoption thereof.  If the parent entity does not own all 
the outstanding shares, membership interests, or other ownership 
interests of each class of each subsidiary entity that is a party to 
the merger, the resolution shall state the terms and conditions of 
the merger, including the cash or other property, including shares, 
obligations, evidences of ownership, rights to purchase 
securities, or other securities of any person or entity or any 
combination of the shares, obligations, evidences of ownership, 
rights, or other securities, to be used, paid or delivered by the 
surviving entity upon surrender of each share, membership interest, 
or other ownership interest of the subsidiary entity or entities 
not owned by the parent entity.

(4) If the surviving entity is a foreign corporation or other 
entity, the address, including street number if any, of its 
registered or principal office in the jurisdiction under whose laws 
it is governed.  If the surviving entity is a foreign corporation or 
other entity, on the merger taking effect the surviving entity is 
deemed to (a) appoint the Secretary of State of this state as its 
agent for service of process to enforce an obligation or the rights 
of dissenting shareholders of each domestic corporation that is a 
party to the merger, and (b) agree that it will promptly pay to the 
dissenting shareholders of each domestic corporation that is a 
party to the merger the amount, if any, to which they are entitled 
under this Article.

(5) If a plan of merger is required by Section A of this Article to 
be adopted in the manner required by Article 5.03 of this Act, the 
information required by Section A of Article 5.04 of this Act.

C. The articles of merger shall be delivered to the Secretary of 
State and filed as provided by Sections B and C of Article 5.04 of 
this Act.

D. The effective date and the effect of such merger shall be the 
same as provided in Articles 5.05 and 5.06 of this Act if the 
surviving entity is a domestic corporation.  If the surviving 
entity is a foreign corporation or other entity, the effective date 
and the effect of such merger shall be the same as in the case of the 
merger of domestic corporations except in so far as the laws of such 
other jurisdiction provide otherwise.

E. In the event all of the shares of a subsidiary domestic 
corporation that is a party to a merger effected under this Article 
are not owned by the parent entity immediately prior to the merger, 
the surviving parent entity shall, within ten (10) days after the 
effective date of the merger, mail to each shareholder of record of 
each subsidiary domestic corporation a copy of the articles of 
merger and notify the shareholder that the merger has become 
effective.  Any such shareholder who holds shares of a class or 
series that would have been entitled to vote on the merger if it had 
been effected pursuant to Article 5.03 of this Act shall have the 
right to dissent from the merger and demand payment of the fair 
value for the shareholder's shares in lieu of the cash or other 
property to be used, paid or delivered to such shareholder upon the 
surrender of such shareholder's shares pursuant to the terms and 
conditions of the merger, with the following procedure:

(1) Such shareholder shall within twenty (20) days after the 
mailing of the notice and copy of the articles of merger make 
written demand on the surviving parent entity for payment of the 
fair value of the shareholder's shares.  The fair value of the 
shares shall be the value thereof as of the day before the effective 
date of the merger, excluding any appreciation or depreciation in 
anticipation of such act.  The demand shall state the number and 
class of the shares owned by the dissenting shareholder and the fair 
value of such shares as estimated by the shareholder. Any 
shareholder failing to make demand within the twenty (20) day 
period shall be bound by the corporate action.

(2) Within ten (10) days after receipt by the surviving entity of a 
demand for payment by the dissenting shareholder of the fair value 
of the shareholder's shares in accordance with Subsection (1) of 
this section, the surviving entity shall deliver or mail to the 
dissenting shareholder a written notice which shall either set out 
that the surviving entity accepts the amount claimed in the demand 
and agrees to pay such amount within ninety (90) days after the date 
on which the corporate action was effected and, in the case of 
shares represented by certificates, upon the surrender of the 
shares certificates duly endorsed, or shall contain an estimate by 
the surviving parent entity of the fair value of such shares, 
together with an offer to pay the amount of that estimate within 
ninety (90) days after the date on which such corporate action was 
effected, upon receipt of notice within sixty (60) days after that 
date from the shareholder that the shareholder agrees to accept 
that amount and, in the case of shares represented by certificates, 
upon the surrender of the shares certificates duly endorsed.

(3) If, within sixty (60) days after the date on which the corporate 
action was effected, the value of the shares is agreed upon between 
the dissenting shareholder and the surviving entity, payment for 
the shares shall be made within ninety (90) days after the date on 
which the corporate action was effected and, in the case of shares 
represented by certificates, upon surrender of the certificate or 
certificates representing such shares.  Upon payment of the agreed 
value, the dissenting shareholder shall cease to have any interest 
in such shares or in the corporation.

(4) If, within sixty (60) days after the date on which such 
corporate action was effected, the shareholder and the surviving 
entity do not so agree, then the dissenting shareholder or the 
surviving entity may, within sixty (60) days after the expiration 
of the sixty (60) day period, file a petition in any court of 
competent jurisdiction in the county in which the principal office 
of the corporation is located, asking for a finding and 
determination of the fair value of the shareholder's shares as 
provided in Section B of Article 5.12 of this Act and thereupon the 
parties shall have the rights and duties and follow the procedure 
set forth in Sections B to D inclusive of Article 5.12.

(5) In the absence of fraud in the transaction, the remedy provided 
by this Article to a shareholder objecting to the corporate action 
is the exclusive remedy for the recovery of the value of the 
shareholder's shares or money damages to the shareholder with 
respect to the corporate action.  If the surviving entity complies 
with the requirements of this Article, any such shareholder who 
fails to comply with the requirements of this Article shall not be 
entitled to bring suit for the recovery of the value of the 
shareholder's shares or money damages to such shareholder with 
respect to such corporate action.

F. If a plan of merger is required by Section A of this Article to be 
adopted in the manner required by Article 5.03 of this Act, the 
provisions of Articles 5.11 and 5.12 of this Act shall apply to the 
rights of the shareholders of a parent corporation to dissent from 
such merger.  Except as otherwise provided in this Article, the 
provisions of Articles 5.11 and 5.12 of this Act shall not be 
applicable to a merger effected under the provisions of this 
Article.  The provisions of Article 5.13 of this Act shall be 
applicable to any merger effected under the provisions of this 
Article to the extent provided in Article 5.13 of this Act.

Added by Acts 1969, 61st Leg., p. 844, ch. 280, Sec. 1, eff. May 22, 
1969.  Amended by Acts 1979, 66th Leg., p. 228, ch. 120, Sec. 37, 
eff. May 9, 1979;  Acts 1979, 66th Leg., p. 423, ch. 194, Sec. 2, 
eff. May 17, 1979;  Acts 1983, 68th Leg., p. 2573, ch. 442, Sec. 11, 
eff. Sept. 1, 1983;  Acts 1985, 69th Leg., ch. 128, Sec. 19, eff. May 
20, 1985;  Acts 1987, 70th Leg., ch. 93, Sec. 28, eff. Aug. 31, 1987;  
Acts 1989, 71st Leg., ch. 801, Sec. 37, eff. Aug. 28, 1989;  Acts 
1991, 72nd Leg., ch. 901, Sec. 33, eff. Aug. 26, 1991;  Acts 1993, 
73rd Leg., ch. 215, Sec. 2.18, eff. Sept. 1, 1993;  Acts 1997, 75th 
Leg., ch. 375, Sec. 31, eff. Sept. 1, 1997.

Sec. A amended by Acts 2003, 78th Leg., ch. 238, Sec. 32, eff. Sept. 
1, 2003.






Art. 5.17. Conversion                                                         

A. A domestic corporation may adopt a plan of conversion and convert 
to a foreign corporation or any other entity if:

(1) the converting entity acts on and its shareholders approve a 
plan of conversion in the manner prescribed by Article 5.03 of this 
Act as if the conversion were a merger to which the converting 
entity were a party and not the survivor;

(2) the conversion (a) is permitted by, or not inconsistent with, 
the laws of the state or country in which the converted entity is to 
be incorporated, formed, or organized, and (b) the incorporation, 
formation, or organization of the converted entity is effected in 
compliance with such laws;

(3) at the time the conversion becomes effective, each shareholder 
of the converting entity (other than those who receive payment of 
their shares under Article 5.12 of this Act) will, unless otherwise 
agreed to by that shareholder, own an equity interest or other 
ownership or security interest in, and be a shareholder, partner, 
member, owner, or other security holder of, the converted entity;

(4) no shareholder of the domestic corporation will, as a result of 
the conversion, become personally liable, without the 
shareholder's consent, for the liabilities or obligations of the 
converted entity;  and

(5) the converted entity shall be incorporated, formed, or 
organized as part of or pursuant to the plan of conversion.

B. Any foreign corporation or other entity may adopt a plan of 
conversion and convert to a domestic corporation if:

(1) the conversion is permitted by the laws of the state or country 
in which the foreign corporation is incorporated, if a foreign 
corporation is converting;

(2) the conversion is either permitted by the laws under which the 
other entity is formed or organized or by the constituent documents 
of the other entity that are not inconsistent with the laws of the 
state or country in which the other entity is formed or organized, 
if another entity is converting;  and

(3) the converting entity takes all action that may be required by 
the laws of the state or country under which it is incorporated, 
formed, or organized and by its constituent documents to effect the 
conversion.

C. A plan of conversion shall set forth:                                      

(1) the name of the converting entity and the converted entity;               

(2) a statement that the converting entity is continuing its 
existence in the organizational form of the converted entity;

(3) a statement as to the type of entity that the converted entity 
is to be and the state or country under the laws of which the 
converted entity is to be incorporated, formed, or organized;

(4) the manner and basis of converting the shares or other evidences 
of ownership of the converting entity into shares or other 
evidences of ownership or securities of the converted entity, or 
any combination thereof;

(5) in an attachment or exhibit, the articles of incorporation of 
the domestic corporation, if the converted entity is a domestic 
corporation;  and

(6) in an attachment or exhibit, the articles of incorporation or 
other organizational documents of the converted entity, if the 
converted entity is not a domestic corporation.

D. A plan of conversion may set forth such other provisions relating 
to the conversion not inconsistent with law, including the initial 
bylaws and officers of the converted entity.

E. After a conversion of a corporation is approved, and at any time 
before the conversion has become effective, the plan of conversion 
may be abandoned (subject to any contractual rights) by the 
converting entity, without shareholder action, in accordance with 
the procedures set forth in the plan of conversion or, if any such 
procedures are not set forth in the plan, in the manner determined 
by the board of directors.  If articles of conversion have been 
filed with the Secretary of State but the conversion has not become 
effective, the conversion may be abandoned if a statement, executed 
on behalf of the converting entity by an officer or other duly 
authorized representative and stating that the plan of conversion 
has been abandoned in accordance with applicable law, is filed with 
the Secretary of State prior to the effectiveness of the 
conversion.  If the Secretary of State finds that such statement 
conforms to law, the Secretary of State shall, when all fees have 
been paid as required by law:

(1) endorse on the original and each copy the word "Filed" and the 
month, day, and year of the filing;

(2) file the original in his office;  and                                     

(3) issue a certificate of abandonment to the converting entity or 
its representatives.

F. On the filing of the statement described by Section E of this 
Article by the Secretary of State, the conversion shall be deemed 
abandoned and shall not become effective.

Added by Acts 1997, 75th Leg., ch. 375, Sec. 32, eff. Sept. 1, 1997.          






Art. 5.18. Articles of Conversion                                             

A. If a plan of conversion has been approved in accordance with 
Article 5.17 of this Act and has not been abandoned, articles of 
conversion shall be executed by the converting entity by an officer 
or other duly authorized representative and shall set forth:

(1) the plan of conversion or a statement certifying the following:           

(a) the name, state or country of incorporation, formation, and 
organization of the converting entity, and organizational form of 
the converting entity;

(b) that a plan of conversion has been approved;                              

(c) that an executed plan of conversion is on file at the principal 
place of business of the converting entity, stating the address 
thereof, and that an executed plan of conversion will be on file, 
from and after the conversion, at the principal place of business of 
the converted entity, stating the address thereof;  and

(d) that a copy of the plan of conversion will be furnished by the 
converting entity (prior to the conversion) or the converted entity 
(after the conversion), on written request and without cost, to any 
shareholder of the converting entity or the converted entity;

(2) if the converting entity is a domestic corporation, the number 
of shares outstanding and, if the shares of any class or series are 
entitled to vote as a class, the designation and number of 
outstanding shares of each such class or series;

(3) if the converting entity is a domestic corporation, the number 
of outstanding shares, not entitled to vote only as a class, voted 
for and against the plan, respectively, and, if the shares of any 
class or series are entitled to vote as a class, the number of 
shares of each such class or series voted for and against the plan, 
respectively;  and

(4) if the converting entity is a foreign corporation or other 
entity, a statement that the approval of the plan of conversion was 
duly authorized by all action required by the laws under which it 
was incorporated, formed, or organized and by its constituent 
documents.

B. The original and one copy of the articles of conversion shall be 
delivered to the Secretary of State.  Two copies of the articles of 
incorporation of the domestic corporation, if the converted entity 
is a domestic corporation, shall also be delivered to the Secretary 
of State with the articles of conversion.

C. If the Secretary of State finds that the articles of conversion 
conform to law, has received all filings required to be received, 
and has issued all certificates required to be issued in connection 
with the incorporation, formation, or organization of the converted 
entity, if any, the Secretary of State shall, when all fees and 
franchise taxes have been paid as required by law or if the articles 
of conversion provide that the converted entity will be liable for 
the payment of all such fees and franchise taxes:

(1) endorse on the original and each copy the word "Filed" and the 
month, day, and year of the filing;

(2) file the original in his office;  and                                     

(3) issue a certificate of conversion, together with a copy of the 
articles affixed thereto, to the converted entity or its 
representatives.

Added by Acts 1997, 75th Leg., ch. 375, Sec. 32, eff. Sept. 1, 1997.          






Art. 5.19. Effective Date of Conversion                                       

A. Except as otherwise provided by Article 10.03 of this Act, on the 
issuance of the certificate of conversion by the Secretary of 
State, the conversion of a converting entity shall be effective.

Added by Acts 1997, 75th Leg., ch. 375, Sec. 32, eff. Sept. 1, 1997.          






Art. 5.20. Effect of Conversion                                               

A. When a conversion of a converting entity takes effect:                     

(1) the converting entity shall continue to exist, without 
interruption, but in the organizational form of the converted 
entity rather than in its prior organizational form;

(2) all rights, title, and interests to all real estate and other 
property owned by the converting entity shall continue to be owned 
by the converted entity in its new organizational form without 
reversion or impairment, without further act or deed, and without 
any transfer or assignment having occurred, but subject to any 
existing liens or other encumbrances thereon;

(3) all liabilities and obligations of the converting entity shall 
continue to be liabilities and obligations of the converted entity 
in its new organizational form without impairment or diminution by 
reason of the conversion;

(4) all rights of creditors or other parties with respect to or 
against the prior interest holders or other owners of the 
converting entity in their capacities as such in existence as of the 
effective time of the conversion will continue in existence as to 
those liabilities and obligations and may be pursued by such 
creditors and obligees as if the conversion had not occurred;

(5) a proceeding pending by or against the converting entity or by 
or against any of the converting entity's interest holders or 
owners in their capacities as such may be continued by or against 
the converted entity in its new organizational form and by or 
against the prior interest holders or owners, as the case may be, 
without any need for substitution of parties;

(6) the shares and other evidences of ownership in the converting 
entity that are to be converted into shares, evidences of 
ownership, or other securities in the converted entity as provided 
in the plan of conversion shall be so converted, and if the 
converting entity is a domestic corporation, the former holders of 
shares in the domestic corporation shall be entitled only to the 
rights provided in the plan of conversion or to their rights under 
Article 5.11 of this Act;

(7) if, after the effectiveness of the conversion, a shareholder, 
partner, member, or other owner of the converted entity would be 
liable under applicable law, in such capacity, for the debts or 
obligations of the converted entity, such shareholder, partner, 
member, or other owner of the converted entity shall be liable for 
the debts and obligations of the converting entity that existed 
before the conversion takes effect only to the extent that such 
shareholder, partner, member, or other owner:  (a) agreed in 
writing to be liable for such debts or obligations, (b) was liable 
under applicable law, prior to the effectiveness of the conversion, 
for such debts or obligations, or (c) by becoming a shareholder, 
partner, member, or other owner of the converted entity, becomes 
liable under applicable law for existing debts and obligations of 
the converted entity;

(8) if the converted entity is a foreign corporation or other 
entity, such converted entity shall be deemed to:  (a) appoint the 
Secretary of State in this state as its agent for service of process 
in a proceeding to enforce any obligation or the rights of 
dissenting shareholders of the converting domestic corporation, 
and (b) agree that it will promptly pay the dissenting shareholders 
of the converting domestic corporation the amount, if any, to which 
they are entitled under Article 5.11 of this Act;  and

(9) if the converting corporation is a domestic corporation, the 
provisions of Articles 5.11, 5.12, and 5.13 of this Act shall apply 
as if the converted entity were the survivor of a merger with the 
converting entity.

Added by Acts 1997, 75th Leg., ch. 375, Sec. 32, eff. Sept. 1, 1997.