Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 104-S.F.No. 578 
           An act relating to business corporations; regulating 
          the organization and operation of business 
          corporations; providing for indemnification; providing 
          voting rights; providing for the value, issuance, 
          pledging, and acquisition of shares; and providing for 
          payment on the return of shares; amending Minnesota 
          Statutes 1986, sections 300.08, subdivision 1; 
          300.083, subdivisions 1, 4, 8, and by adding a 
          subdivision; 302A.011, subdivision 40; 302A.111, 
          subdivisions 2 and 3; 302A.133; 302A.135, subdivision 
          4, and by adding a subdivision; 302A.137; 302A.139; 
          302A.141, by adding a subdivision; 302A.161, 
          subdivision 22; 302A.201, subdivision 2; 302A.255, 
          subdivision 1; 302A.401, subdivision 3; 302A.405, 
          subdivisions 1 and 2; 302A.409, subdivision 3; 
          302A.413, subdivision 5; 302A.433, subdivision 3; 
          302A.435, subdivision 2; 302A.437, subdivision 2; 
          302A.447, subdivision 7; 302A.455; 302A.457, 
          subdivisions 1 and 2; 302A.473, subdivisions 1, 5, 6, 
          and 7; 302A.501, subdivision 1; 302A.521, subdivisions 
          1, 4, and 8, and by adding a subdivision; 302A.553, 
          subdivision 1; 302A.727; 302A.729; 302A.733, 
          subdivisions 1 and 2; and 302A.781; proposing coding 
          for new law in Minnesota Statutes, chapter 302A.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 300.08, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ENUMERATED POWERS.] (a) A corporation 
formed under the provisions of this chapter may: 
    (1) be known by its corporate name for the time stated in 
its certificate of incorporation; 
    (2) sue and be sued in any court; 
    (3) have, use, and alter a common seal; 
    (4) acquire, by purchase or otherwise, and hold, enjoy, 
improve, lease, encumber, and convey all real and personal 
property necessary for the purposes of its organization, subject 
to the limitations hereafter declared; 
    (5) elect or appoint in any manner it determines all 
necessary or proper officers, agents, boards, and committees, to 
fix their compensation, and to define their powers and duties; 
    (6) make and amend consistently with law bylaws providing 
for the management of its property and the regulation and 
government of its affairs; and 
    (7) wind up and liquidate its business in the manner 
provided by law. 
    (b) A corporation formed under this chapter shall indemnify 
those persons identified in section 300.083 against certain 
expenses and liabilities only as provided in section 300.083 and 
may indemnify other persons. 
    Sec. 2.  Minnesota Statutes 1986, section 300.083, 
subdivision 1, is amended to read:  
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the terms defined in this subdivision have the meanings 
given them.  
    (b) "Corporation" includes a domestic or foreign 
corporation that was the predecessor of the corporation referred 
to in this section in a merger or other transaction in which the 
predecessor's existence ceased upon consummation of the 
transaction.  
    (c) "Official capacity" means (1) with respect to a 
director, the position of director in a corporation, (2) with 
respect to a person other than a director, the elective or 
appointive office or position held by an officer, member of a 
committee of the board, or the employment or agency relationship 
undertaken by an employee or agent of the corporation, and (3) 
with respect to a director, officer, or employee, or agent of 
the corporation who, while a director, officer, or employee, or 
agent of the corporation, is or was serving at the request of 
the corporation or whose duties in that position involve or 
involved service as a director, officer, partner, 
trustee, employee, or agent of another organization or employee 
benefit plan, the position of that person as a director, 
officer, partner, trustee, employee, or agent, as the case may 
be, of the other organization or employee benefit plan.  
    (d) "Proceeding" means a threatened, pending, or completed 
civil, criminal, administrative, arbitration, or investigative 
proceeding, including a proceeding by or in the right of the 
corporation.  
    (e) "Special legal counsel" means counsel who has not 
represented the corporation or a related corporation, or a 
director, officer, member of a committee or board, or employee, 
or agent whose indemnification is in issue. 
    Sec. 3.  Minnesota Statutes 1986, section 300.083, 
subdivision 4, is amended to read:  
    Subd. 4.  [PROHIBITION OR LIMIT ON INDEMNIFICATION OR 
ADVANCES.] The articles or bylaws either may prohibit 
indemnification or advances of expenses otherwise required by 
this section or may impose conditions on indemnification or 
advances of expenses in addition to the conditions contained in 
subdivisions 2 and 3 including, without limitation, monetary 
limits on indemnification or advances of expenses, if the 
conditions apply equally to all persons or to all persons within 
a given class.  A prohibition or limit on indemnification or 
advances may not apply to or affect the right of a person to 
indemnification or advances of expenses with respect to any acts 
or omissions of the person occurring prior to the effective date 
of a provision in the articles or the date of adoption of a 
provision in the bylaws establishing the prohibition or limit on 
indemnification or advances.  
    Sec. 4.  Minnesota Statutes 1986, section 300.083, 
subdivision 8, is amended to read:  
    Subd. 8.  [DISCLOSURE.] A corporation that indemnifies or 
advances expenses to a person in accordance with this section in 
connection with a proceeding by or on behalf of the corporation 
shall report to the shareholders in writing the amount of the 
indemnification or advance and to whom and on whose behalf it 
was paid to the shareholders in an annual report covering the 
period when the indemnification or advance was paid or accrued 
under the accounting method of the corporation not later than 
the next meeting of shareholders.  
    Sec. 5.  Minnesota Statutes 1986, section 300.083, is 
amended by adding a subdivision to read: 
    Subd. 10.  [INDEMNIFICATION OF OTHER PERSONS.] Nothing in 
this section shall be construed to limit the power of the 
corporation to indemnify other persons by contract or otherwise. 
    Sec. 6.  Minnesota Statutes 1986, section 302A.011, 
subdivision 40, is amended to read:  
    Subd. 40.  [PUBLICLY HELD CORPORATION.] "Publicly held 
corporation" means a corporation that has a class of equity 
securities registered pursuant to section 12, or is subject to 
section 15(d), of the Securities Exchange Act of 1934, as 
amended through December 31, 1984 1986. 
    Sec. 7.  Minnesota Statutes 1986, section 302A.111, 
subdivision 2, is amended to read:  
    Subd. 2.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY 
IN ARTICLES.] The following provisions govern a corporation 
unless modified in the articles:  
    (a) A corporation has general business purposes (section 
302A.101);  
    (b) A corporation has perpetual existence and certain 
powers (section 302A.161);  
    (c) The power to adopt, amend, or repeal the bylaws is 
vested in the board (section 302A.181);  
    (d) A corporation must allow cumulative voting for 
directors (section 302A.215);  
    (e) The affirmative vote of a majority of directors present 
is required for an action of the board (section 302A.237);  
    (f) A written action by the board taken without a meeting 
must be signed by all directors (section 302A.239);  
    (g) The board may authorize the issuance of securities and 
rights to purchase securities (section 302A.401, subdivision 1); 
    (h) All shares are common shares entitled to vote and are 
of one class and one series (section 302A.401, subdivision 2, 
clauses (a) and (b));  
    (i) All shares have equal rights and preferences in all 
matters not otherwise provided for by the board (section 
302A.401, subdivision 2, clause (b));  
    (j) The par value of shares is fixed at one cent per share 
for certain purposes and may be fixed by the board for certain 
other purposes (section 302A.401, subdivision 2, clause (c));  
    (k) The board or the shareholders may issue shares for any 
consideration or for no consideration to effectuate share 
dividends or splits, and determine the value of nonmonetary 
consideration (section 302A.405, subdivision 1);  
    (l) Shares of a class or series must not be issued to 
holders of shares of another class or series to effectuate share 
dividends or splits, unless authorized by a majority of the 
voting power of the shares of the same class or series as the 
shares to be issued (section 302A.405, subdivision 1);  
    (m) A corporation may issue rights to purchase securities 
whose terms, provisions, and conditions are fixed by the board 
(section 302A.409);  
    (n) A shareholder has certain preemptive rights, unless 
otherwise provided by the board (section 302A.413);  
    (o) The affirmative vote of the holders of a majority of 
the voting power of the shares present and entitled to vote at a 
duly held meeting is required for an action of the shareholders, 
except where this chapter requires the affirmative vote of a 
majority of the voting power of all shares entitled to vote 
(section 302A.437, subdivision 1);  
    (p) Shares of a corporation acquired by the corporation may 
be reissued (section 302A.553, subdivision 1);  
    (q) An exchange need not be approved by shareholders of the 
acquiring corporation unless the outstanding shares entitled to 
vote of that corporation will be increased by more than 20 
percent immediately after the exchange (section 302A.613, 
subdivision 3, clause (c));  
    (r) An exchange need not be approved by shareholders of the 
acquiring corporation unless the outstanding participating 
shares of that corporation will be increased by more than 20 
percent immediately after the exchange (section 302A.613, 
subdivision 3, clause (d)); and 
    (s) Each share has one vote unless otherwise provided in 
the terms of the share (section 302A.445, subdivision 3); and 
    (t) A corporation may issue shares for a consideration less 
than the par value, if any, of the shares (section 302A.405, 
subdivision 2).  
    Sec. 8.  Minnesota Statutes 1986, section 302A.111, 
subdivision 3, is amended to read:  
    Subd. 3.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED EITHER 
IN ARTICLES OR IN BYLAWS.] The following provisions govern a 
corporation unless modified either in the articles or in the 
bylaws:  
    (a) Directors serve for an indefinite term that expires at 
the next regular meeting of shareholders (section 302A.207);  
    (b) The compensation of directors is fixed by the board 
(section 302A.211);  
    (c) A certain method must be used for removal of directors 
(section 302A.223);  
    (d) A certain method must be used for filling board 
vacancies (section 302A.225);  
    (e) If the board fails to select a place for a board 
meeting, it must be held at the principal executive office 
(section 302A.231, subdivision 1);  
    (f) A director may call a board meeting, and the notice of 
the meeting need not state the purpose of the meeting (section 
302A.231, subdivision 3);  
    (g) A majority of the board is a quorum for a board meeting 
(section 302A.235);  
    (h) A committee shall consist of one or more persons, who 
need not be directors, appointed by affirmative vote of a 
majority of the directors present (section 302A.241, subdivision 
2);  
    (i) A majority of a committee is a quorum for a committee 
meeting, unless otherwise provided by a resolution of the board 
(section 302A.241, subdivision 3);  
    (j) The board may establish a committee of disinterested 
persons (section 302A.243);  
    (k) (j) The chief executive officer and chief financial 
officer have specified duties, until the board determines 
otherwise (section 302A.305);  
    (l) (k) Officers may delegate some or all of their duties 
and powers, if not prohibited by the board from doing so 
(section 302A.351);  
    (m) (l) The board may establish uncertificated shares 
(section 302A.417, subdivision 7);  
    (n) (m) Regular meetings of shareholders need not be held, 
unless demanded by a shareholder under certain conditions 
(section 302A.431);  
    (o) (n) In all instances where a specific minimum notice 
period has not otherwise been fixed by law, not less than 
10-days nor more than 60-days notice is required for a meeting 
of shareholders (section 302A.435, subdivision 2);  
    (p) (o) The number of shares required for a quorum at a 
shareholders' meeting is a majority of the voting power of the 
shares entitled to vote at the meeting (section 302A.443);  
    (q) (p) The board may fix a date up to 60 days before the 
date of a shareholders' meeting as the date for the 
determination of the holders of shares entitled to notice of and 
entitled to vote at the meeting (section 302A.445, subdivision 
1); 
    (r) (q) Indemnification of certain persons is required 
(section 302A.521); and 
    (s) (r) The board may authorize, and the corporation may 
make, distributions not prohibited, limited, or restricted by an 
agreement (section 302A.551, subdivision 1).  
     Sec. 9.  Minnesota Statutes 1986, section 302A.133, is 
amended to read:  
    302A.133 [PROCEDURE FOR AMENDMENT BEFORE ISSUANCE OF 
SHARES.] 
    Before the issuance of shares by a corporation, the 
articles may be amended pursuant to section 302A.171 by the 
incorporators or by the board.  The articles may be amended by 
the board to change a statement pursuant to section 302A.401, 
subdivision 3, establishing or fixing the rights and preferences 
of a class or series of shares before the issuance of any shares 
of that class or series.  
    Sec. 10.  Minnesota Statutes 1986, section 302A.135, 
subdivision 4, is amended to read:  
    Subd. 4.  [APPROVAL BY SHAREHOLDERS.] (a) The proposed 
amendment is adopted when approved by the affirmative vote of 
the holders of a majority of the voting power of the shares 
present and entitled to vote, except as provided in paragraphs 
(b) and (c) and subdivision 5. 
    (b) For a closely held corporation, if the articles provide 
for a specified proportion or number equal to or larger than the 
majority necessary to transact a specified type of business at a 
meeting, or if it is proposed to amend the articles to provide 
for a specified proportion or number equal to or larger than the 
majority necessary to transact a specified type of business at a 
meeting, the affirmative vote necessary to add the provision to, 
or to amend an existing provision in, the articles is the larger 
of: 
    (1) The specified proportion or number or, in the absence 
of a specific provision, the affirmative vote necessary to 
transact the type of business described in the proposed 
amendment at a meeting immediately before the effectiveness of 
the proposed amendment; or 
    (2) The specified proportion or number that would, upon 
effectiveness of the proposed amendment, be necessary to 
transact the specified type of business at a meeting. 
    (c) For corporations other than closely held corporations, 
if the articles provide for a larger proportion or number to 
transact a specified type of business at a meeting, the 
affirmative vote of that larger proportion or number is 
necessary to amend the articles to decrease the proportion or 
number necessary to transact the business.  
    Sec. 11.  Minnesota Statutes 1986, section 302A.135, is 
amended by adding a subdivision to read: 
    Subd. 5.  [CERTAIN RESTATEMENTS.] An amendment that merely 
restates the existing articles, as amended, may be authorized by 
a resolution approved by the board and may, but need not, be 
submitted to and approved by the shareholders as provided in 
subdivisions 2, 3, and 4. 
    Sec. 12.  Minnesota Statutes 1986, section 302A.137, is 
amended to read:  
    302A.137 [CLASS OR SERIES VOTING ON AMENDMENTS.] 
    The holders of the outstanding shares of a class or series 
are entitled to vote as a class or series upon a proposed 
amendment, whether or not entitled to vote thereon by the 
provisions of the articles, if the amendment would:  
    (a) Increase or decrease the aggregate number of authorized 
shares of the class or series;  
    (b) Increase or decrease the par value of the shares of the 
class or series;  
    (c) Effect an exchange, reclassification, or cancellation 
of all or part of the shares of the class or series;  
    (d) (c) Effect an exchange, or create a right of exchange, 
of all or any part of the shares of another class or series for 
the shares of the class or series;  
    (e) (d) Change the rights or preferences of the shares of 
the class or series;  
    (f) (e) Change the shares of the class or series, whether 
with or without par value, into the same or a different number 
of shares, either with or without par value, of the same or 
another class or series;  
    (g) (f) Create a new class or series of shares having 
rights and preferences prior and superior to the shares of that 
class or series, or increase the rights and preferences or the 
number of authorized shares, of a class or series having rights 
and preferences prior or superior to the shares of that class or 
series;  
    (h) (g) Divide the shares of the class into series and 
determine the designation of each series and the variations in 
the relative rights and preferences between the shares of each 
series, or authorize the board to do so;  
    (i) (h) Limit or deny any existing preemptive rights of the 
shares of the class or series; or 
    (j) (i) Cancel or otherwise affect distributions on the 
shares of the class or series that have accrued but have not 
been declared.  
    Sec. 13.  Minnesota Statutes 1986, section 302A.139, is 
amended to read:  
    302A.139 [ARTICLES OF AMENDMENT.] 
    When an amendment has been adopted, articles of amendment 
shall be prepared that contain:  
    (a) The name of the corporation;  
    (b) The amendment adopted;  
    (c) The date of the adoption of the amendment by the 
shareholders, or by the incorporators or the board where no 
shares have been issued; or the date of adoption of the 
amendment by the board if: 
    (1) the amendment merely restates the existing articles, as 
amended, and the amendment was not submitted to and approved by 
the shareholders, in which case the articles of amendment must 
contain a statement that the amendment restating the articles 
correctly sets forth without change the corresponding provisions 
of the articles as previously amended; or 
    (2) the amendment is to a statement establishing or fixing 
the rights and preferences of a class or series of shares before 
the issuance of shares of that class or series;  
    (d) If the amendment provides for but does not establish 
the manner for effecting an exchange, reclassification, or 
cancellation of issued shares, a statement of the manner in 
which it will be effected; and 
    (e) If the amendment restates the articles in their 
entirety, a statement that the restated articles supersede the 
original articles and all amendments to them.  
    Sec. 14.  Minnesota Statutes 1986, section 302A.141, is 
amended by adding a subdivision to read: 
    Subd. 3.  [EFFECT OF AMENDMENTS RESTATING ARTICLES.] When 
effective under section 302A.153, an amendment restating the 
articles in their entirety supersedes the original articles and 
all amendments to the original articles. 
    Sec. 15.  Minnesota Statutes 1986, section 302A.161, 
subdivision 22, is amended to read:  
    Subd. 22.  [INDEMNIFICATION.] A corporation shall indemnify 
those persons identified in section 302A.521 against certain 
expenses and liabilities only as provided in section 
302A.521 and may indemnify other persons.  
    Sec. 16.  Minnesota Statutes 1986, section 302A.201, 
subdivision 2, is amended to read:  
    Subd. 2.  [SHAREHOLDER MANAGEMENT.] The holders of the 
shares entitled to vote for directors of the corporation may, by 
unanimous affirmative vote, take any action that this chapter 
requires or permits the board to take or the shareholders to 
take after action or approval of the board.  As to an action 
taken by the shareholders in that manner: 
    (a) The directors have no duties, liabilities, or 
responsibilities as directors under this chapter with respect to 
or arising from the action; 
    (b) The shareholders collectively and individually have all 
of the duties, liabilities, and responsibilities of directors 
under this chapter with respect to and arising from the action; 
    (c) If the action relates to a matter required or permitted 
by this chapter or by any other law to be approved or adopted by 
the board, either with or without approval or adoption by the 
shareholders, the action is deemed to have been approved or 
adopted by the board; and 
    (d) A requirement that an instrument filed with a 
governmental agency contain a statement that the action has been 
approved and adopted by the board is satisfied by a statement 
that the shareholders have taken the action under this 
subdivision. 
    Sec. 17.  Minnesota Statutes 1986, section 302A.255, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CONFLICT; PROCEDURE WHEN CONFLICT ARISES.] 
A contract or other transaction between a corporation and one or 
more of its directors, or between a corporation and an 
organization in or of which one or more of its directors are 
directors, officers, or legal representatives or have a material 
financial interest, is not void or voidable because the director 
or directors or the other organizations are parties or because 
the director or directors are present at the meeting of the 
shareholders or the board or a committee at which the contract 
or transaction is authorized, approved, or ratified, if:  
    (a) The contract or transaction was, and the person 
asserting the validity of the contract or transaction sustains 
the burden of establishing that the contract or transaction was, 
fair and reasonable as to the corporation at the time it was 
authorized, approved, or ratified;  
    (b) The material facts as to the contract or transaction 
and as to the director's or directors' interest are fully 
disclosed or known to the shareholders and the contract or 
transaction is approved in good faith by (1) the holders of a 
majority two-thirds of the outstanding shares, but shares owned 
by the interested director or directors shall not be counted in 
determining the presence of a quorum and shall not be 
voted voting power of the shares entitled to vote which are 
owned by persons other than the interested director or 
directors, or (2) the unanimous affirmative vote of the holders 
of all outstanding shares, whether or not entitled to vote;  
    (c) The material facts as to the contract or transaction 
and as to the director's or directors' interest are fully 
disclosed or known to the board or a committee, and the board or 
committee authorizes, approves, or ratifies the contract or 
transaction in good faith by a majority of the board or 
committee, but the interested director or directors shall not be 
counted in determining the presence of a quorum and shall not 
vote; or 
    (d) The contract or transaction is a distribution described 
in section 302A.551, subdivision 1, or a merger or exchange 
described in section 302A.601, subdivision 1 or 2.  
     Sec. 18.  Minnesota Statutes 1986, section 302A.401, 
subdivision 3, is amended to read:  
    Subd. 3.  [PROCEDURE FOR FIXING TERMS.] (a) Subject to any 
restrictions in the articles, the power granted in subdivision 2 
may be exercised by a resolution approved by the affirmative 
vote of a majority of the directors present establishing a class 
or series, setting forth the designation of the class or series, 
and fixing the relative rights and preferences of the class or 
series.  
    (b) A statement setting forth the name of the corporation 
and the text of the resolution and certifying the adoption of 
the resolution and the date of adoption shall be filed with the 
secretary of state before the issuance of any shares for which 
the resolution creates rights or preferences not set forth in 
the articles; provided, however, where the shareholders have 
received notice of the creation of shares with rights or 
preferences not set forth in the articles before the issuance of 
the shares, the statement may be filed any time within one year 
after the issuance of the shares.  The resolution is effective 
when the statement has been filed with the secretary of state; 
or, if it is not required to be filed with the secretary of 
state before the issuance of shares, on the date of its adoption 
by the directors. 
    Sec. 19.  Minnesota Statutes 1986, section 302A.405, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CONSIDERATION; PROCEDURE.] Subject to any 
restrictions in the articles: 
    (a) Shares may be issued for any consideration, including, 
without limitation, money or other tangible or intangible 
property received by the corporation or to be received by the 
corporation under a written agreement, or services rendered to 
the corporation or to be rendered to the corporation under a 
written agreement, as authorized by resolution approved by the 
affirmative vote of a majority of the directors present, or 
approved by the affirmative vote of the holders of a majority of 
the voting power of the shares present, valuing all nonmonetary 
consideration and establishing a price in money or other 
consideration, or a minimum price, or a general formula or 
method by which the price will be determined; and 
    (b) Upon authorization by resolution approved by the 
affirmative vote of a majority of the directors present or 
approved by the affirmative vote of the holders of a majority of 
the voting power of the shares present, the corporation may, 
without any new or additional consideration, issue its own 
shares in exchange for or in conversion of its outstanding 
shares, or issue its own shares pro rata to its shareholders or 
the shareholders of one or more classes or series, to effectuate 
share dividends or splits, including reverse share splits.  No 
shares of a class or series, shares of which are then 
outstanding, shall be issued to the holders of shares of another 
class or series (except in exchange for or in conversion of 
outstanding shares of the other class or series), unless the 
issuance either is expressly provided for in the articles or is 
approved at a meeting by the affirmative vote of the holders of 
a majority of the voting power of all shares of the same class 
or series as the shares to be issued. 
    Sec. 20.  Minnesota Statutes 1986, section 302A.405, 
subdivision 2, is amended to read:  
    Subd. 2.  [VALUE; LIABILITY.] The determinations of the 
board or the shareholders as to the amount or fair value or the 
fairness to the corporation of the consideration received or to 
be received by the corporation for its shares or the terms of 
payment, as well as the agreement to issue shares for that 
consideration, are presumed to be proper if they are made in 
good faith and on the basis of accounting methods, or a fair 
valuation or other method, reasonable in the circumstances, and, 
unless otherwise required by the articles, the consideration may 
be less than the par value, if any, of the shares.  Directors or 
shareholders who are present and entitled to vote, and who, 
intentionally or without reasonable investigation, fail to vote 
against approving an issue of shares for a consideration that is 
unfair to the corporation, or overvalue property or services 
received or to be received by the corporation as consideration 
for shares issued, are jointly and severally liable to the 
corporation for the benefit of the then shareholders who did not 
consent to and are damaged by the action, to the extent of the 
damages of those shareholders.  A director or shareholder 
against whom a claim is asserted pursuant to this subdivision, 
except in case of knowing participation in a deliberate fraud, 
is entitled to contribution on an equitable basis from other 
directors or shareholders who are liable under this section.  
    Sec. 21.  Minnesota Statutes 1986, section 302A.409, 
subdivision 3, is amended to read:  
    Subd. 3.  [ISSUANCE PERMITTED.] A corporation may issue 
rights to purchase if:  
    (a) Shares issuable upon the exercise of all outstanding 
rights to purchase, including the rights to purchase that are to 
be issued, are authorized under section 302A.111, subdivision 1, 
and are unissued; and 
    (b) after the terms, provisions, and conditions of the 
rights to purchase to be issued, including the conversion basis 
or the price at which securities may be purchased or subscribed 
for, are fixed by the board, subject to any restrictions in the 
articles.  
    Sec. 22.  Minnesota Statutes 1986, section 302A.413, 
subdivision 5, is amended to read:  
    Subd. 5.  [FRACTION TO BE ACQUIRED.] The fraction of the 
new issue that each shareholder may acquire by exercise of a 
preemptive right is the ratio that the number of shares of that 
class or series owned by the shareholder before the new issue 
bears to the total number of shares of that class or series 
issued and outstanding before the new issue.  For purposes of 
determining pursuant to this subdivision the total number of 
shares of a class or series issued and outstanding at a 
particular time, all shares of that class or series issuable 
upon a conversion or exchange or upon the exercise of rights to 
purchase are considered issued and outstanding at that time.  
    Sec. 23.  Minnesota Statutes 1986, section 302A.433, 
subdivision 3, is amended to read:  
    Subd. 3.  [TIME; PLACE.] Special meetings shall be held on 
the date and at the time and place fixed by the chief executive 
officer, the chief financial officer, the board, or a person 
authorized by the articles or bylaws to call a meeting, except 
that a special meeting called by or at the demand of a 
shareholder or shareholders pursuant to subdivision 2 shall be 
held in the county where the principal executive office is 
located.  
    Sec. 24.  Minnesota Statutes 1986, section 302A.435, 
subdivision 2, is amended to read:  
    Subd. 2.  [WHEN GIVEN.] In all instances where a specific 
minimum notice period has not otherwise been fixed by law, the 
notice shall be given at least ten days before the date of the 
meeting, or a shorter time provided in the articles or bylaws, 
and not more than 60 days before the date of the meeting.  
    Sec. 25.  Minnesota Statutes 1986, section 302A.437, 
subdivision 2, is amended to read:  
    Subd. 2.  [VOTING BY CLASS.] In any case where a class or 
series of shares is entitled by this chapter, the articles, the 
bylaws, or the terms of the shares to vote as a class or series, 
the matter being voted upon must also receive the affirmative 
vote of the holders of the same proportion of the shares present 
of that class or series, or of the total outstanding shares of 
that class or series, as is the proportion required pursuant to 
subdivision 1, unless the articles require a larger proportion. 
Unless otherwise stated in the articles or bylaws in the case of 
voting as a class, the minimum percentage of the total number of 
shares of the class or series which must be present shall be 
equal to the minimum percentage of all outstanding shares 
entitled to vote required to be present under section 302A.443.  
    Sec. 26.  Minnesota Statutes 1986, section 302A.447, 
subdivision 7, is amended to read:  
    Subd. 7.  [PLEDGED SHARES.] A shareholder whose shares are 
pledged may vote those shares until the shares are registered in 
the name of the pledgee.  If the corporation pledges its own 
shares under section 302A.553, subdivision 1, the corporation 
shall not be entitled to vote the shares at a meeting or 
otherwise.  
    Sec. 27.  Minnesota Statutes 1986, section 302A.455, is 
amended to read:  
    302A.455 [SHAREHOLDER VOTING AGREEMENTS.] 
    A written agreement solely among persons who are then 
shareholders or subscribers for shares to be issued, relating to 
the voting of their shares, is valid and specifically 
enforceable by and against the parties to the agreement.  The 
agreement may override the provisions of section 302A.449 
regarding proxies and is not subject to the provisions of 
section 302A.453 regarding voting trusts. 
    Sec. 28.  Minnesota Statutes 1986, section 302A.457, 
subdivision 1, is amended to read:  
    Subdivision 1.  [AUTHORIZED.] A written agreement solely 
among the shareholders of a corporation and the subscribers for 
shares to be issued, relating to the control of any phase of the 
business and affairs of the corporation, its liquidation and 
dissolution, or the relations among shareholders of or 
subscribers to shares of the corporation is valid and 
specifically enforceable as provided in subdivision 2. 
    Sec. 29.  Minnesota Statutes 1986, section 302A.457, 
subdivision 2, is amended to read:  
    Subd. 2.  [METHOD OF APPROVAL; ENFORCEABILITY; COPIES.] (a) 
A written agreement solely among persons described in 
subdivision 1 that relates to the control of or the liquidation 
and dissolution of the corporation, the relations among them, or 
any phase of the business and affairs of the corporation, 
including, without limitation, the management of its business, 
the declaration and payment of distributions, the election of 
directors or officers, the employment of shareholders by the 
corporation, or the arbitration of disputes, is valid and 
specifically enforceable, if the agreement is signed by all 
persons who are then the shareholders of the corporation, 
whether or not the shareholders all have voting shares, and the 
subscribers for shares, whether or not voting shares, to be 
issued. 
    (b) The agreement is enforceable by the persons described 
in subdivision 1 who are parties to it and is binding upon and 
enforceable against only those persons and other persons having 
knowledge of the existence of the agreement.  A copy of the 
agreement shall be filed with the corporation.  The existence 
and location of a copy of the agreement shall be noted 
conspicuously on the face or back of each certificate for shares 
issued by the corporation and on each transaction statement. 
    (c) A shareholder, a beneficial owner of shares, or another 
person having a security interest in shares has the right upon 
written demand to obtain a copy of the agreement from the 
corporation at the expense of the corporation. 
    Sec. 30.  Minnesota Statutes 1986, section 302A.473, 
subdivision 1, is amended to read:  
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the terms defined in this subdivision have the meanings 
given them.  
    (b) "Corporation" means the issuer of the shares held by a 
dissenter before the corporate action referred to in section 
302A.471, subdivision 1 or the successor by merger of that 
issuer.  
    (c) "Fair value of the shares" means the value of the 
shares of a corporation immediately before the effective date of 
the corporate action referred to in section 302A.471, 
subdivision 1.  
    (d) "Interest" means interest from commencing five days 
after the effective date of the corporate action referred to in 
section 302A.471, subdivision 1 until up to and including the 
date of payment, calculated at the rate provided in section 
549.09 for interest on verdicts and judgments.  
    Sec. 31.  Minnesota Statutes 1986, section 302A.473, 
subdivision 5, is amended to read:  
    Subd. 5.  [PAYMENT; RETURN OF SHARES.] (a) After the 
corporate action takes effect, or after the corporation receives 
a valid demand for payment, whichever is later, the corporation 
shall remit to each dissenting shareholder who has complied with 
subdivisions 3 and 4 the amount the corporation estimates to be 
the fair value of the shares, with plus interest, if any, 
accompanied by:  
    (1) The corporation's closing balance sheet and statement 
of income for a fiscal year ending not more than 16 months 
before the effective date of the corporate action, together with 
the latest available interim financial statements;  
    (2) An estimate by the corporation of the fair value of the 
shares and a brief description of the method used to reach the 
estimate; and 
    (3) A copy of section 302A.471 and this section, and a 
brief description of the procedure to be followed in demanding 
supplemental payment.  
    (b) The corporation may withhold the remittance described 
in paragraph (a) from a person who was not a shareholder on the 
date the action dissented from was first announced to the public 
or who is dissenting on behalf of a person who was not a 
beneficial owner on that date.  If the dissenter has complied 
with subdivisions 3 and 4, the corporation shall forward to the 
dissenter the materials described in paragraph (a), a statement 
of the reason for withholding the remittance, and an offer to 
pay to the dissenter the amount listed in the materials if the 
dissenter agrees to accept that amount in full satisfaction.  
The dissenter may decline the offer and demand payment under 
subdivision 6.  Failure to do so entitles the dissenter only to 
the amount offered.  If the dissenter makes demand, subdivisions 
7 and 8 apply.  
    (c) If the corporation fails to remit payment within 60 
days of the deposit of certificates or the imposition of 
transfer restrictions on uncertificated shares, it shall return 
all deposited certificates and cancel all transfer 
restrictions.  However, the corporation may again give notice 
under subdivision 4 and require deposit or restrict transfer at 
a later time.  
    Sec. 32.  Minnesota Statutes 1986, section 302A.473, 
subdivision 6, is amended to read:  
    Subd. 6.  [SUPPLEMENTAL PAYMENT; DEMAND.] If a dissenter 
believes that the amount remitted under subdivision 5 is less 
than the fair value of the shares with plus interest if any,, 
the dissenter may give written notice to the corporation of the 
dissenter's own estimate of the fair value of the shares, with 
plus interest, if any, within 30 days after the corporation 
mails the remittance under subdivision 5, and demand payment of 
the difference.  Otherwise, a dissenter is entitled only to the 
amount remitted by the corporation.  
    Sec. 33.  Minnesota Statutes 1986, section 302A.473, 
subdivision 7, is amended to read:  
    Subd. 7.  [PETITION; DETERMINATION.] If the corporation 
receives a demand under subdivision 6, it shall, within 60 days 
after receiving the demand, either pay to the dissenter the 
amount demanded or agreed to by the dissenter after discussion 
with the corporation or file in court a petition requesting that 
the court determine the fair value of the shares, with plus 
interest, if any.  The petition shall be filed in the county in 
which the registered office of the corporation is located, 
except that a surviving foreign corporation that receives a 
demand relating to the shares of a constituent domestic 
corporation shall file the petition in the county in this state 
in which the last registered office of the constituent 
corporation was located.  The petition shall name as parties all 
dissenters who have demanded payment under subdivision 6 and who 
have not reached agreement with the corporation.  The 
jurisdiction of the court is plenary and exclusive.  The court 
may appoint appraisers, with powers and authorities the court 
deems proper, to receive evidence on and recommend the amount of 
the fair value of the shares.  The court shall determine whether 
the shareholder or shareholders in question have fully complied 
with the requirements of this section, and shall determine the 
fair value of the shares, taking into account any and all 
factors the court finds relevant, computed by any method or 
combination of methods that the court, in its discretion, sees 
fit to use, whether or not used by the corporation or by a 
dissenter.  The fair value of the shares as determined by the 
court is binding on all shareholders, wherever located.  A 
dissenter is entitled to judgment for the amount by which the 
fair value of the shares as determined by the court, plus 
interest, exceeds the amount, if any, remitted under subdivision 
5, but shall not be liable to the corporation for the amount, if 
any, by which the amount, if any, remitted to the dissenter 
under subdivision 5 exceeds the fair value of the shares as 
determined by the court, plus interest.  
    Sec. 34.  Minnesota Statutes 1986, section 302A.501, 
subdivision 1, is amended to read:  
    Subdivision 1.  [PREREQUISITES.] A corporation may lend 
money to, guarantee an obligation of, become a surety for, or 
otherwise financially assist a person, if the transaction, or a 
class of transactions to which the transaction belongs, is 
approved by the affirmative vote of a majority of the directors 
present and:  
    (a) Is in the usual and regular course of business of the 
corporation;  
    (b) Is with, or for the benefit of, a related corporation, 
an organization in which the corporation has a financial 
interest, an organization with which the corporation has a 
business relationship, or an organization to which the 
corporation has the power to make donations;  
    (c) Is with, or for the benefit of, an officer or other 
employee of the corporation or a subsidiary, including an 
officer or employee who is a director of the corporation or a 
subsidiary, and may reasonably be expected, in the judgment of 
the board, to benefit the corporation; or 
    (d) Has been approved by (1) the affirmative vote of the 
holders of two-thirds of the outstanding shares of the voting 
power of the shares entitled to vote which are owned by persons 
other than the interested person or persons, or (2) the 
unanimous affirmative vote of the holders of all outstanding 
shares, whether or not entitled to vote.  
    Sec. 35.  Minnesota Statutes 1986, section 302A.521, 
subdivision 1, is amended to read:  
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the terms defined in this subdivision have the meanings 
given them.  
    (b) "Corporation" includes a domestic or foreign 
corporation that was the predecessor of the corporation referred 
to in this section in a merger or other transaction in which the 
predecessor's existence ceased upon consummation of the 
transaction.  
    (c) "Official capacity" means (1) with respect to a 
director, the position of director in a corporation, (2) with 
respect to a person other than a director, the elective or 
appointive office or position held by an officer, member of a 
committee of the board, or the employment or agency relationship 
undertaken by an employee or agent of the corporation, and (3) 
with respect to a director, officer, or employee, or agent of 
the corporation who, while a director, officer, or employee, or 
agent of the corporation, is or was serving at the request of 
the corporation or whose duties in that position involve or 
involved service as a director, officer, partner, 
trustee, employee, or agent of another organization or employee 
benefit plan, the position of that person as a director, 
officer, partner, trustee, employee, or agent, as the case may 
be, of the other organization or employee benefit plan.  
    (d) "Proceeding" means a threatened, pending, or completed 
civil, criminal, administrative, arbitration, or investigative 
proceeding, including a proceeding by or in the right of the 
corporation.  
    (e) "Special legal counsel" means counsel who has not 
represented the corporation or a related corporation, or a 
director, officer, member of a committee of the board, or 
employee, or agent whose indemnification is in issue.  
     Sec. 36.  Minnesota Statutes 1986, section 302A.521, 
subdivision 4, is amended to read:  
    Subd. 4.  [PROHIBITION OR LIMIT ON INDEMNIFICATION OR 
ADVANCES.] The articles or bylaws either may prohibit 
indemnification or advances of expenses otherwise required by 
this section or may impose conditions on indemnification or 
advances of expenses in addition to the conditions contained in 
subdivisions 2 and 3 including, without limitation, monetary 
limits on indemnification or advances of expenses, if the 
conditions apply equally to all persons or to all persons within 
a given class.  A prohibition or limit on indemnification or 
advances may not apply to or affect the right of a person to 
indemnification or advances of expenses with respect to any acts 
or omissions of the person occurring prior to the effective date 
of a provision in the articles or the date of adoption of a 
provision in the by-laws establishing the prohibition or limit 
on indemnification or advances. 
    Sec. 37.  Minnesota Statutes 1986, section 302A.521, 
subdivision 8, is amended to read:  
    Subd. 8.  [DISCLOSURE.] A corporation that indemnifies or 
advances expenses to a person in accordance with this section in 
connection with a proceeding by or on behalf of the corporation 
shall report to the shareholders in writing the amount of the 
indemnification or advance and to whom and on whose behalf it 
was paid as part of the annual financial statements furnished to 
shareholders pursuant to section 302A.463 covering the period 
when the indemnification or advance was paid or accrued under 
the accounting method of the corporation reflected in the 
financial statements not later than the next meeting of 
shareholders.  
    Sec. 38.  Minnesota Statutes 1986, section 302A.521, is 
amended by adding a subdivision to read: 
    Subd. 9.  [INDEMNIFICATION OF OTHER PERSONS.] Nothing in 
this section shall be construed to limit the power of the 
corporation to indemnify other persons by contract or otherwise. 
    Sec. 39.  Minnesota Statutes 1986, section 302A.553, 
subdivision 1, is amended to read:  
    Subdivision 1.  [WHEN PERMITTED; STATUS OF SHARES.] A 
corporation may acquire its own shares, subject to section 
302A.551.  If the corporation pledges the shares to secure 
payment of the redemption price thereof, then the corporation 
shall not be deemed to have acquired the shares for the purposes 
of this subdivision until the pledge is released.  Shares so 
acquired by a corporation constitute authorized but unissued 
shares of the corporation, unless the articles provide that they 
shall not be reissued, in which case the number of authorized 
shares is reduced by the number of shares acquired. 
    Sec. 40.  Minnesota Statutes 1986, section 302A.727, is 
amended to read:  
    302A.727 [NOTICE TO CREDITORS AND CLAIMANTS.] 
    Subdivision 1.  [WHEN PERMITTED; HOW GIVEN.] When a notice 
of intent to dissolve has been filed with the secretary of 
state, the corporation may give notice of the filing to 
each known creditor of and claimant against the corporation at 
the last known address of each known or unknown, present, or 
future, or and contingent claimant or non-contingent.  The 
corporation may give published notice to known creditors or 
claimants whose address is unknown and to unknown present, 
future, or contingent creditors and claimants, If notice to 
creditors and claimants is given, it must be given by publishing 
the notice once each week for four successive weeks in a legal 
newspaper in the county or counties where the registered office 
and the principal executive office of the corporation are 
located and by giving written notice to known creditors and 
claimants pursuant to section 302A.011, subdivision 17. 
    Subd. 2.  [CONTENTS.] The notice to creditors and claimants 
shall contain:  
    (a) A statement that the corporation is in the process of 
dissolving;  
    (b) A statement that the corporation has filed with the 
secretary of state a notice of intent to dissolve;  
    (c) The date of filing the notice of intent to dissolve;  
    (d) The address of the office to which written claims 
against the corporation must be presented; and 
    (e) The date by which all the claims must be received, 
which shall be the later of 90 days after the notice of intent 
to dissolve was filed with the secretary of state published 
notice or, with respect to a particular known creditor or 
claimant, 90 days after the date on which written notice was 
given to that creditor or claimant.  Published notice is deemed 
given on the date of first publication for the purpose of 
determining this date.  
    Sec. 41.  Minnesota Statutes 1986, section 302A.729, is 
amended to read:  
    302A.729 [CLAIMS IN DISSOLUTION.] 
    Subdivision 1.  [PROCEDURE.] If the corporation gives 
proper notice to creditors and claimants pursuant to section 
302A.727:  
    (a) The claim of a creditor or claimant to whom notice is 
given who fails to file a claim according to the procedures set 
forth by the corporation on or before the date set forth in the 
notice is subject to the provisions of section 302A.781;  
    (b) The corporation has 30 days from the receipt of each 
claim filed according to the procedures set forth by the 
corporation on or before the date set forth in the notice to 
accept or reject the claim by giving written notice to the 
person submitting it; a claim not expressly rejected in this 
manner is deemed accepted; and 
    (c) (b) A creditor or claimant to whom notice is given and 
whose claim is rejected by the corporation has 60 days from the 
date of rejection, or 180 days from the date the corporation 
filed with the secretary of state the notice of intent to 
dissolve, or 90 days after the date on which notice was given to 
the creditor or claimant, whichever is longer, to pursue any 
other remedies with respect to the claim.  If the creditor or 
claimant does not initiate legal, administrative, or arbitration 
proceedings with respect to the claim during that period, the 
claim is subject to the provisions of section 302A.781.  
    Subd. 2.  [STATUTE OF LIMITATIONS.] The claim of a creditor 
or claimant to whom notice is not given and for whom payment of 
any debt is not made or provided for and who does not initiate 
legal, administrative, or arbitration proceedings concerning the 
claim within two years after the date of filing the notice of 
intent to dissolve is thereafter subject to the provisions of 
302A.781.  
    Sec. 42.  [302A.730] [STATUTE OF LIMITATIONS.] 
    Subdivision 1.  [CORPORATIONS THAT GIVE NOTICE.] If the 
corporation gives notice to creditors and claimants pursuant to 
section 302A.727:  
    (1) the claim of a creditor or claimant to whom notice is 
given who fails to file a claim according to the procedures set 
forth by the corporation on or before the date set forth in the 
notice is subject to the provisions of section 302A.781; 
    (2) the claim of a creditor or claimant that is rejected by 
the corporation in accordance with section 302A.729 is subject 
to the provisions of section 302A.781 if the creditor or 
claimant does not initiate legal, administrative, or arbitration 
proceedings with respect to the claim during the period set 
forth in section 302A.729, clause (b). 
    Subd. 2.  [OTHER CORPORATIONS.] If the corporation does not 
give notice to creditors and claimants pursuant to section 
302A.727, the claim of a creditor or claimant who does not 
initiate legal, administrative, or arbitration proceedings 
concerning the claim within two years after the date of filing 
the notice of intent to dissolve is subject to the provisions of 
section 302A.781. 
    Sec. 43.  Minnesota Statutes 1986, section 302A.733, 
subdivision 1, is amended to read:  
    Subdivision 1.  [ARTICLES; WHEN FILED.] Articles of 
dissolution for a corporation dissolving pursuant to section 
302A.721 shall be filed with the secretary of state after:  
    (a) The payment of claims of all known creditors and 
claimants has been made or provided for;  
    (b) The longer of the periods described in section 
302A.729, subdivision 1, clause (c) has expired, if the 
corporation has given notice to creditors and claimants of the 
corporation in the manner described in section 302A.727; or, in 
all other cases, If the corporation has given notice to 
creditors and claimants in the manner provided in section 
302A.727:  (1) the 90-day period in section 302A.727, 
subdivision 2, clause (e), has expired and the payment of claims 
of all creditors and claimants filing a claim within that period 
has been made or provided for; or (2) the longer of the periods 
described in section 302A.729, clause (b), has expired; or, in 
all other cases, 
    (c) The two year period described in section 302A.729, 
subdivision 2 42 has expired.  
    Sec. 44.  Minnesota Statutes 1986, section 302A.733, 
subdivision 2, is amended to read:  
    Subd. 2.  [CONTENTS OF ARTICLES.] The articles of 
dissolution shall state:  
    (a) Whether notice has been given to all creditors and 
claimants of the corporation in the manner provided in section 
302A.727, and, if notice has been given, the last date on which 
the notice was given and:  (1) that the payment of all creditors 
and claimants filing a claim within the 90-day period set forth 
in section 302A.727, subdivision 2, clause (e), has been made or 
provided for; or (2) the date on which the longer of the periods 
described in section 302A.729, subdivision 1, clause (c) (b), 
expired; or 
    (b) If notice was not given and articles of dissolution are 
being filed pursuant to section 302A.733, subdivision 1, clause 
(a), that all debts, obligations, and liabilities of the 
corporation have been paid and discharged or that adequate 
provisions have been made therefor; and 
    (c) That the remaining property, assets, and claims of the 
corporation have been distributed among its shareholders in 
accordance with section 302A.551, subdivision 4, or that 
adequate provision has been made for that distribution; and 
    (d) That there are no pending legal, administrative, or 
arbitration proceedings by or against the corporation, or that 
adequate provision has been made for the satisfaction of any 
judgment, order, or decree that may be entered against it in a 
pending proceeding, and that all other claims are barred under 
section 302A.781.  
    Sec. 45.  Minnesota Statutes 1986, section 302A.781, is 
amended to read:  
    302A.781 [CLAIMS BARRED; EXCEPTIONS.] 
    Subdivision 1.  [CLAIMS BARRED.] A person who is or becomes 
a creditor or claimant at any time before, during, or following 
the conclusion of dissolution proceedings, who does not file a 
claim or pursue a remedy in a legal, administrative, or 
arbitration proceeding within the time provided in section 
302A.729 42, 302A.741, 302A.751, or 302A.759, or has not 
initiated a legal, administrative, or arbitration proceeding 
before the commencement of the dissolution proceedings, and all 
those claiming through or under the creditor or claimant, are 
forever barred from suing on that claim or otherwise realizing 
upon or enforcing it, except as provided in this section.  
    Subd. 2.  [CLAIMS REOPENED.] At any time within one year 
after articles of dissolution have been filed with the secretary 
of state pursuant to section 302A.733, subdivision 1, clause (b) 
or (c), or a decree of dissolution has been entered, a creditor 
or claimant who shows good cause for not having previously filed 
the claim may apply to a court in this state to allow a claim:  
    (a) Against the corporation to the extent of undistributed 
assets; or 
    (b) If the undistributed assets are not sufficient to 
satisfy the claim, against a shareholder, whose liability shall 
be limited to a portion of the claim that is equal to the 
portion of the distributions to shareholders in liquidation or 
dissolution received by the shareholder.  
    Subd. 3.  [CLAIMS PERMITTED.] All debts, obligations, and 
liabilities incurred during dissolution proceedings shall be 
paid or provided for by the corporation before the distribution 
of assets to a shareholder.  A person to whom this kind of debt, 
obligation, or liability is owed but not paid may pursue any 
remedy against the officers, directors, and shareholders of the 
corporation before the expiration of the applicable statute of 
limitations.  This subdivision does not apply to dissolution 
under the supervision or order of a court.  
    Sec. 46.  [EFFECTIVE DATE.] 
    Notwithstanding Minnesota Statutes, section 645.21, section 
18 is effective retroactive to January 1, 1984. 
    Approved May 13, 1987