48-16-205 - Options to subscribe for or purchase shares Instruments evidencing options Authority to grant.
48-16-205. Options to subscribe for or purchase shares Instruments evidencing options Authority to grant.
(a) Unless the charter otherwise provides, a corporation, by its directors, may grant rights, options or warrants to subscribe for or to purchase shares of any authorized class, at the times and on the terms that are set forth in such rights, options or warrants, or in the contracts, warrants or instruments that evidence such rights, options or warrants, which contracts, warrants or instruments may be transferable or non-transferable and may be separable or inseparable from such rights, options or warrants upon the following conditions:
(1) If the shares are subject to preemptive rights and if the rights, options or warrants are not granted to shareholders in satisfaction of their preemptive rights, the granting of the rights, options or warrants must be authorized by the vote or consent of the shareholders or holders of shares of particular classes that then would be required to waive or release such preemptive rights; the vote or consent shall release the preemptive rights to the shares required to satisfy the rights, options or warrants if and when exercised; and
(2) If at the time of granting the rights, options or warrants the corporation does not have authorized and unissued shares sufficient to satisfy the rights, options or warrants if and when exercised, the granting of the rights, options or warrants must be authorized by the vote of the shareholders or holders of shares of particular classes that then would be required to adopt an amendment to the charter for the purpose of increasing the authorized number of such shares, and the shares required to be issued upon the exercise of the rights, options or warrants shall be provided by an amendment concurrently or thereafter adopted by the shareholders or the directors.
(b) (1) The securities, contracts, warrants or instruments that evidence the rights, options or warrants may contain any terms not repugnant to law, including, but not limited to, the following:
(A) Restrictions upon the authorization or issuance of additional shares;
(B) Provisions for the adjustment of the exercise price;
(C) Provisions concerning rights in the event of reorganization, merger, share exchange or sale of the entire assets of the corporation;
(D) Provisions for the reservation of authorized but unissued shares to satisfy the rights, options or warrants;
(E) Restrictions upon the declaration of payment of dividends or distributions; or
(F) Conditions on the exercise of the rights, options or warrants, including, subject to the limitation specified in subdivision (b)(2), conditions that preclude a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(2) The express or implied authority conferred by subdivision (b)(1) or any other section of this chapter for securities, contracts, warrants, or instruments that evidence such rights, options or warrants to contain a condition on the exercise of such rights, options or warrants that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising rights, options or warrants, shall apply only to:
(A) A corporation that has issued and has outstanding shares listed on a national securities exchange or is regularly quoted in an over-the-counter market by one (1) or more members of a national or affiliated securities association; or
(B) A corporation that has adopted a shareholder's agreement pursuant to which rights, options or warrants are granted, if the securities, contracts, warrants or instruments that evidence the rights, options or warrants contain a condition that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(c) As used in this section, securities includes obligations and shares of the corporation.
(d) The provisions of this section shall apply to any rights, options or warrants, or any contracts, warrants, or instruments that evidence such rights, options or warrants which were issued subsequent to January 1, 1985.
[Acts 1986, ch. 887, § 6.24; 1989, ch. 451, § 7.]