/* The conclusion of article 8 of the UCC on investment

securities follows. */

8-311. Effect of Unauthorized Indorsement or Instruction.

Unless the owner or pledgee has ratified an unauthorized

indorsement or instruction or is otherwise precluded from

asserting its ineffectiveness:

(a) he may assert its ineffectiveness against the issuer or

any purchaser, other than a purchaser for value and without

notice of adverse claims, who has in good faith received a new,

reissued, or re-registered certificated security on registration

of transfer or received an initial transaction statement

confirming the registration of transfer, pledge, or release of an

equivalent uncertificated security to him; and

(b) an issuer who registers the transfer of a certificated

security upon the unauthorized indorsement or who registers the

transfer, pledge, or release of an uncertificated security upon

the unauthorized instruction is subject to liability for improper

registration (Section 8-404).

8-312. Effect of Guaranteeing Signature, Indorsement or

Instruction.

(1) Any person guaranteeing a signature of an indorser of a

certificated security warrants that at the time of signing:

(a) the signature was genuine;

(b) the signer was an appropriate person to indorse

(Section 8-308); and

(c) the signer had legal capacity to sign.

(2) Any person guaranteeing a signature of the originator

of an instruction warrants that at the time of signing:

(a) the signature was genuine;

(b) the signer was an appropriate person to originate the

instruction (Section 8-308) if the person specified in the

instruction as the registered owner or registered pledgee of the

uncertificated security was, in fact, the registered owner or

registered pledgee of the security, as to which fact the

signature guarantor makes no warranty

(c) the signer had legal capacity to sign; and

(d) the taxpayer identification number, if any, appearing

on the instruction as that of the registered owner or registered

pledgee was the taxpayer identification number of the signer or

of the owner or pledgee for whom the signer was acting.

(3) Any person specially guaranteeing the signature of the

originator of an instruction makes not only the warranties of a

signature guarantor (subsection (2)) but also warrants that at the

time the instruction is presented to the issuer:

(a) the person specified in the instruction as the

registered owner or registered pledgee of the uncertificated

security will he the registered owner or registered pledgee; and

(b) the transfer, pledge, or release of the uncertificated

security requested in the instruction will be registered by the

issuer free from all liens, security interests, restrictions, and

claims other than those specified in the instruction.

(4) The guarantor under subsections (1) and (2) or the

special guarantor under subsection (3) does not otherwise warrant

the rightfulness of the particular transfer, pledge, or release.

(5) Any person guaranteeing an indorsement of a

certificated security makes not only the warranties of a

signature guarantor under subsection (1) but also warrants the

rightfulness of the particular transfer in all respects.

(6) Any person guaranteeing an instruction requesting the

transfer, pledge, or release of an uncertificated security makes

not only the warranties of a special signature guarantor under

subsection (3) but also warrants the rightfulness of the

particular transfer, pledge, or release in all respects.

(7) No issuer may require a special guarantee of signature

(subsection (3)), a guarantee of indorsement (subsection (5)),

or a guarantee of instruction (subsection (6)) as a condition to

registration of transfer, pledge, or release.

(8) The foregoing warranties are made to any person taking

or dealing with the security in reliance on the guarantee, and

the guarantor is liable to the person for any loss resulting from

breach of the warranties.

8-313. When Transfer to Purchaser Occurs; Financial

Intermediary as Bona Fide Purchaser; "Financial Intermediary".

(1) Transfer of a security or a limited interest (including

a security interest) therein to a purchaser occurs only:

(a) at the time he or a person designated by him acquires

possession of a certificated security;

(b) at the time the transfer, pledge, or release of an

uncertificated security is registered to him or a person

designated by him;

(c) at the time his financial intermediary acquires

possession of a certificated security specially indorsed to or

issued in the name of the purchaser;

(d) at the time a financial intermediary, not a clearing

corporation, sends him confirmation of the purchase and also by

book entry or otherwise identifies as belonging to the purchaser

(i) a specific certificated security in the financial

intermediary's possession;

(ii) a quantity of securities that constitute or are part of

a fungible bulk of certificated securities in the financial

intermediary's possession or of uncertificated securities

registered in the name of the financial intermediary; or

(iii) a quantity of securities that constitute or are part

of a fungible bulk of securities shown on the account of the

financial Intermediary on the books of another financial

intermediary;

(e) with respect to an identified certificated security to

be delivered while still in the possession of a third person, not

a financial intermediary, at the time that person acknowledges

that he holds for the purchaser;

(f) with respect to a specific uncertificated security the

pledge or transfer of which has been registered to a third

person, not a financial intermediary, at the time that person

acknowledges that he holds for the purchaser;

(g) at the time appropriate entries to the account of the

purchaser or a person designated by him on the books of a

clearing corporation are made under Section 8-320;

(h) with respect to the transfer of a security interest

where the debtor has signed a security agreement containing a

description of the security, at the time a written notification,

which, in the case of the creation of the security interest, is

signed by the debtor (which may be a copy of the security

agreement) or which, in the case of the release or assignment of

the security Interest created pursuant to this paragraph, is

signed by the secured party, is received by

(i) a financial intermediary on whose books the interest of

the transferor in the security appears;

(ii) a third person, not a financial intermediary, in

possession of the security, if it is certificated;

(iii) a third person, not a financial intermediary, who is

the registered owner of the security, if it is uncertificated and

nut subject to a registered pledge; or

(iv) a third person, not a financial intermediary, who is

the registered pledgee of the security, if it s uncertificated

and subject to a registered pledge;

(i) with respect to the transfer of a security interest

where the transferor has signed a security agreement containing a

description of the security, at the time new value is given by

the secured party; or

(j) with respect to the transfer of a security interest

where the secured party is a financial intermediary and the

security has already been transferred to the financial

intermediary under paragraphs (a), (b), (c), (d), or

(g), at the time the transferor has signed a security agreement

containing a description of the security and value is given by

the secured party.

(2) The purchaser is the owner of a security held for him

by a financial intermediary, but cannot be a bona fide purchaser

of a security so held except in the circumstances specified in

paragraphs (c), (d)(i), and (g) of subsection (1). If a security

so held is part of a fungible bulk, as in the circumstances

specified in paragraphs (d)(ii) and (d)(iii) of subsection (1),

the purchaser is the owner of a proportionate property interest

in the fungible bulk.

(3) Notice of an adverse claim received by the financial

intermediary or by the purchaser after the financial intermediary

takes delivery of a certificated security as a holder for value

or after the transfer, pledge, or release of an uncertificated

security has been registered free of the claim to a financial

intermediary who has given value is not effective either as to

the financial intermediary or as to the purchaser. However, as

between the financial intermediary and the purchaser the

purchaser may demand transfer of an equivalent security as to

which no notice of adverse claim has been received.

(4) A "financial intermediary" is a bank, broker, clearing

corporation, or other person (or the nominee of any of them)

which in the ordinary course of its business maintains security

accounts for its customers and is acting in that capacity. A

financial intermediary may have a security interest in securities

held in account for its customer.

8-314. Duty to Transfer, When Completed

(1) Unless otherwise agreed, if a sale of a security is

made on an exchange or otherwise through brokers:

(a) the selling customer fulfills his duty to transfer at

the time he:

(i) places a certificated security in the possession of the

selling broker or a person designated by the broker;

(ii) causes an uncertificated security to be registered in

the name of the selling broker or a person designated by the

broker;

(iii) if requested, causes an acknowledgment to be made to

the selling broker that a certificated or uncertificated security

is held for the broker; or

(iv) places in the possession of the selling broker or of a

person designated by the broker a transfer instruction for an

uncertificated security, providing the issuer does not refuse to

register the requested transfer if the instruction is presented

to the issuer for registration within 30 days thereafter; and

(b) the selling broker, including a correspondent broker

acting for a selling customer, fulfills his duty to transfer at

the time he:

(i) places a certificated security in the possession of the

buying broker or a person designated by the buying broker;

(ii) causes an uncertificated security to be registered in

the name of the buying broker or a person designated by the

buying broker;

(iii) places in the possession of the buying broker or of a

person designated by the buying broker a transfer instruction for

an uncertificated security, providing the issuer does not refuse

to register the requested transfer if the instruction is

presented to the issuer for registration within 30 days

thereafter; or

(iv) effects clearance of the sale in accordance with the

rules of the exchange on which the transaction took place.

(2) Except as provided in this section or unless otherwise

agreed, a transferor's duty to transfer a security under a

contract of purchase is not fulfilled until he:

(a) places a certificated security in form to be negotiated

by the purchaser in the possession of the purchaser or of a

person designated by the purchaser;

causes an uncertificated security to be registered in the

name of the purchaser or a person designated by the purchaser; or

(c) if the purchaser requests, causes an acknowledgment to

be made to the purchaser that a certificated or uncertificated

security is held for the purchaser.

(3) Unless made on an exchange, a sale to a broker

purchasing for his own account is within subsection (2) and not

within subsection (1).

8-315. Action Against Transferee Based Upon Wrongful

Transfer.

(1) Any person against whom the transfer of a security is

wrongful for any reason, including his incapacity, as against

anyone except a bona fide purchaser, may:

(a) reclaim possession of the certificated security

wrongfully transferred;

(b) obtain possession of any new certificated security

representing all or part of the same rights;

(c) compel the origination of an instruction to transfer to

him or a person designated by him an uncertificated security

constituting all or part of the same rights; or

(d) have damages.

(2) If the transfer is wrongful because of an unauthorized

indorsement of a certificated security, the owner may also

reclaim or obtain possession of the security or a new

certificated security, even from a bona fide purchaser, if the

ineffectiveness of the purported indorsement can be assented

against him under the provisions of this Article on unauthorized

indorsements (Section 8-311).

(3) The right to obtain or reclaim possession of a

certificated security or to compel the origination of a transfer

instruction may be specifically enforced and the transfer of a

certificated or uncertificated security enjoined and a

certificated security impounded pending the litigation.

8-316. Purchaser's Right to Requisites for Registration of

Transfer, Pledge, Release on Books.

Unless otherwise agreed, the transferor of a certificated

security or the transferor, pledgor, or pledgee of an

uncertificated security on due demand must supply his purchaser

with any proof of his authority to transfer, pledge, or release

or with any other requisite necessary to obtain registration of

the transfer, pledge, or release of the security; but if the

transfer, pledge, or release is not for value, a transferor,

pledgor, or pledgee need not do so unless the purchaser furnishes

the necessary expenses. Failure within a reasonable time to

comply with a demand made gives the purchaser the right to reject

or rescind the transfer, pledge, or release.

8-317. Creditors' Rights.

(1) Subject to the exceptions in subsections (3) and (4),

no attachment or levy upon a certificated security or any share

or other interest represented thereby which is outstanding is

valid until the security is actually seized by the officer making

the attachment or levy, but a certificated security which has

been surrendered to the issuer may be reached by a creditor by

legal process at the issuer's chief executive office in the

United States.

(2) An uncentificated security registered in the name of

the debtor may not be reached by a creditor except by legal

process at the issuer's chief executive office in the United

States.

(3) The interest of a debtor in a certificated security

that is in the possession of a secured party not a financial

intermediary or in an uncertificated security registered in the

name of a secured party not a financial intermediary (or in the

name of a nominee of the secured party) may be reached by a

creditor by legal process upon the secured party.

(4) The interest of a debtor in a certificated security

that is in the possession of or registered in the name of a

financial intermediary or in an uncertificated security

registered in the name of a financial intermediary may be reached

by a creditor by legal process upon the financial intermediary on

whose books the interest of the debtor appears.

(5) Unless otherwise provided by law, a creditor's lien

upon the interest of a debtor in a security obtained pursuant to

subsection (3) or (4) is not a restraint on the transfer of the

security, free of the lien, to a third party for new value; but

in the event of a transfer, the lien applies to the proceeds of

the transfer in the hands of the secured party or financial

intermediary, subject to any claims having priority.

(6) A creditor whose debtor is the owner of a security is

entitled to aid from courts of appropriate jurisdiction, by

injunction or otherwise, in reaching the security or in

satisfying the claim by means allowed at law or in equity in

regard to property that cannot readily be reached by ordinary

legal process.

/* This sub-section stresses the need for physical possession of

the stock certificate itself. */

8-318. No Conversion by Good Faith Conduct.

An agent or bailee who in good faith (including observance

of reasonable commercial standards if he is in the business of

buying, selling, or otherwise dealing with securities) has

received certificated securities and sold, pledged, or delivered

them or has sold or caused the transfer or pledge of

uncertificated securities over which he had control according to

the instructions of his principal, is not liable for conversion

or for participation in breach of fiduciary duty although the

principal had no right so to deal with the securities.

8-319. Statute of Frauds.

A contract for the sale of securities is nor enforceable by

way of action or defense unless:

(a) there is some writing signed by the party against whom

enforcement is sought or by his authorized agent or broker,

sufficient to indicate that a contract has been made for sale of

a stated quantity of described securities at a defined or stated

price;

(b) delivery of a certificated security or transfer

instruction has been accepted, or transfer of an uncertificated

security has been registered and the transferee has failed to

send written objection to the issuer within 10 days after receipt

of the initial transaction statement confirming the registration,

or payment has been made, but the contract is enforceable under

this provision only to the extent of the delivery, registration,

or payment;

(c) within a reasonable time a writing in confirmation of

the sale or purchase and sufficient against the sender under

paragraph (a) has been received by the party against whom

enforcement is sought and he has failed to send written objection

to its contents within 10 days after its receipt; or

/* Unlike other portions of the UCC, the obligation to object is

placed on both a merchant and non-merchant to object to notice of

a securities transaction */.

(d) the party against whom enforcement is sought admits in

his pleading, testimony, or otherwise in court that a contract

was made for the sale of a stated quantity of described

securities at a defined or stated price.

8-320. Transfer or Pledge Within Central Depository System.

(1) In addition to other methods, a transfer, pledge, or

release of a security or any interest therein may be effected by

the making of appropriate entries on the books of a clearing

corporation reducing the account of the transferor, pledgor, or

pledgee and increasing the account of the transferee, pledgee, or

pledgor by the amount of the obligation or the number of shares

or rights transferred, pledged, or released, if the security is

shown on the account of a transferor, pledgor, or pledgee on the

books of the clearing corporation; is subject to the control of

the clearing corporation; and

(a) if certificated,

(i) is in the custody of the clearing corporation, another

clearing corporation, a custodian bank, or a nominee of any of

them; and

(ii) is in bearer form or indorsed in blank by an

appropriate person or registered in the name of the clearing

corporation, a custodian bank, or a nominee of any of them; or

(b) if uncertificated, is registered in the name of the

clearing corporation, another clearing corporation, a custodian

bank, or a nominee of any of them.

(2) Under this section entries may be made with respect to

like securities or interests therein as a part of a fungible bulk

and may refer merely to a quantity of a particular security

without reference to the name of the registered owner,

certificate or bond number, or the like, and, in appropriate

cases, may be on a net basis taking into account other transfers,

pledges, or releases of the same security.

(3) A transfer under this section is effective (Section 8-

313) and the purchaser acquires the rights of the transferor

(Section 8-301). A pledge or release under this section is the

transfer of a limited interest. If a pledge or the creation of a

security interest is intended, the security interest is perfected

at the time when both value is given by the pledgee and the

appropriate entries are made (Section 8-321). A transferee or

pledgee under this section may be a bona fide purchaser (Section

8-302).

(4) A transfer or pledge under this section is not a

registration of transfer under Part 4.

(5) That entries made on the books of the clearing

corporation as provided in subsection (1) are not appropriate

does not affect the validity or effect of the entries or the

liabilities or obligations of the clearing corporation to any

person adversely affected thereby.

8-321. Enforceability, Attachment, Perfection and

Termination of Security Interests.

(1) A security interest in a security is enforceable and

can attach only if it is transferred to the secured party or a

person designated by him pursuant to a provision of section 8-

313(1).

(2) A security interest so transferred pursuant to

agreement by a transferor who has rights in the security to a

transferee who has given value is a perfected security interest,

but a security interest that has been transferred solely under

paragraph (i) of Section 8-313(1) becomes unperfected after 21

days unless, within that time, the requirements for transfer

under any other provision of Section 8-313(1) are satisfied.

(3) A security interest in a security is subject to the

provisions of Article 9, but:

(a) no filing is required to perfect the security interest;

and

(b) no written security agreement signed by the debtor is

necessary to make the security interest enforceable, except as

provided in paragraph (h), (i), or (j) of Section 8-313(1). The

secured party has the rights and duties provided under Section

9-207, to the extent they are applicable, whether or not the

security is certificated, and, if certificated, whether or not it

is in his possession.

(4) Unless otherwise agreed, a security interest in a

security is terminated by transfer to the debtor or a person

designated by him pursuant to a provision of Section 8- 313(1).

If a security is thus transferred, the security interest, if not

terminated, becomes unperfected unless the security is

certificated and is delivered to the debtor for the purpose of

ultimate sale or exchange or presentation, collection, renewal,

or registration of transfer. In that case, the security interest

becomes unperfected after 21 days unless, within that time, the

security (or securities for which it has been exchanged) is

transferred to the secured party or a person designated by him

pursuant to a provision of Section 8-313(1).

PART 4

REGISTRATION

8-401. Duty of Issuer to Register Transfer, Pledge, or

Release.

(1) If a certificated security in registered form is

presented to the issuer with a request to register transfer or an

instruction is presented to the issuer with a request to register

transfer, pledge, or release, the issuer shall register the

transfer, pledge, or release as requested if:

(a) the security is indorsed or the instruction was

originated by the appropriate person or persons (Section 8-308);

(b) reasonable assurance is given that those indorsements

or instructions are genuine and effective (Section 8-402);

(c) the issuer has no duty as to adverse claims or has

discharged the duty (Section 8-403);

(d) any applicable law relating to the collection of taxes

has been complied with; and

(e) the transfer, pledge, or release is in fact rightful or

is to a bona fide purchaser.

(2) If an issuer is under a duty to register a transfer,

pledge, or release of a security, the issuer is also liable to

the person presenting a certificated security or an instruction

for registration or his principal for loss resulting from any

unreasonable delay in registration or from failure or refusal to

register the transfer, pledge, or release.

8-402. Assurance That Indorsements and Instructions Are

Effective.

(1) The issuer may require the following assurance that

each necessary indorsement of a certificated security or each

instruction (Section 8-308) is genuine and effective:

(a) in all cases, a guarantee of the signature (Section 8-

312(1) or (2)) of the person indorsing a certificated security

or originating an instruction including, in the case of an

instruction, a warranty of the taxpayer identification number or,

in the absence thereof, other reasonable assurance of identity;

(b) if the indorsement is made or the instruction is

originated by an agent, appropriate assurance of authority to

sign;

(c) if the indorsement is made or the instruction is

originated by a fiduciary, appropriate evidence of appointment or

incumbency;

(d) if there is more than one fiduciary, reasonable

assurance that all who are required to sign have done so; and

(e) if the indorsement is made or the instruction is

originated by a person not covered by any of the foregoing,

assurance appropriate to the case corresponding as nearly as may

be to the foregoing.

(2) A "guarantee of the signature" in subsection (1) means

a guarantee signed by or on behalf of a person reasonably

believed by the issuer to be responsible. The issuer may adopt

standards with respect to responsibility if they are not

manifestly unreasonable.

(3) Appropriate evidence of appointment or incumbency" in

subsection (1) means:

(a) in the case of a fiduciary appointed or qualified by a

court, a certificate issued by or under the direction or

supervision of that court or an officer thereof and dated within

60 days before the date of presentation for transfer, pledge, or

release; or

(b) in any other case, a copy of a document showing the

appointment or a certificate issued by or on behalf of a person

reasonably believed by the issuer to be responsible or, in the

absence of that document or certificate, other evidence

reasonably deemed by the issuer to be appropriate. The issuer may

adopt standards with respect to the evidence if they are not

manifestly unreasonable. The issuer is not charged with notice of

the contents of any document obtained pursuant to this paragraph

(b) except to the extent that the contents relate directly to the

appointment or incumbency.

(4) The issuer may elect to require reasonable assurance

beyond that specified in this section, but if it does so and, for

a purpose other than that specified in subsection (3)(b), both

requires and obtains a copy of a will, trust, indenture, articles

of copartnership, by-laws, or other controlling instrument, it

is charged with notice of all matters contained therein affecting

the transfer, pledge, or release.

8-403. Issuer's Duty as to Adverse Claims.

(1) An issuer to whom a certificated security is presented

for registration shall inquire into adverse claims if:

(a) a written notification of an adverse claim is received

at a time and in a manner affording the issuer a reasonable

opportunity to act on it prior to the issuance of a new,

reissued, or re-registered certificated security, and the

notification identifies the claimant, the registered owner, and

the issue of which the security is a part, and provides an

address for communications directed to the claimant; or

(b) the issuer is charged with notice of an adverse claim

from a controlling Instrument it has elected to require under

Section 8-402(4).

(2) The issuer may discharge any duty of inquiry by any

reasonable means including notifying an adverse claimant by

registered or certified mail at the address' furnished by him or,

if there be no such address, at his residence or regular place of

business that the certificated security has been presented for

registration of transfer by a named person, and that the transfer

will be registered unless within 30 days from the date of mailing

the notification, either:

(a) an appropriate restraining order, injunction, or other

process issues from a count of competent jurisdiction; or

(b) there is filed with the issuer an idemnity bond,

sufficient in the issuer's judgment to protect the issuer and any

transfer agent, registrar, or other agent of the issuer involved

from any loss it or they may suffer by complying with the adverse

claim.

(3) Unless an issuer is charged with notice of an adverse

claim from a controlling instrument which it has elected to

require under Section 8-402(4) or receives notification of an

adverse claim under subsection (1), if a certificated security

presented for registration is indorsed by the appropriate person

or persons the issuer is under no duty to inquire into adverse

claims. In particular:

(a) an issuer registering a certificated security in the

name of a person who is a fiduciary or who is described as a

fiduciary is not bound to inquire into the existence, extent, or

correct description of the fiduciary relationship; and thereafter

the issuer may assume without inquiry that the newly registered

owner continues to be the fiduciary until the issuer receives

written notice that the fiduciary is no longer acting as such

with respect to the particular security;

(b) an issuer registering transfer on an indorsement by a

fiduciary is not bound to inquire whether the transfer is made in

compliance with a controlling instrument or with the law of the

state having jurisdiction of the fiduciary relationship,

including any law requiring the fiduciary to obtain court

approval of the transfer; and

(c) the issuer is not charged with notice of the contents

of any court record or file or other recorded or unrecorded

document even though the document is in its possession and even

though the transfer is made on the indorsement of a fiduciary to

the fiduciary himself or to his nominee.

/* The point here is that even if a court order specifying that

someone is a fiduciary the issuer does not have to verify that a

a transaction is within the fiduciaries rights. This section

cannot be read literally, because a literal reading of this

section might mean that the issuer is not bound by the contents

of a court order directing it to do something. */

(4) An issuer is under no duty as to adverse claims with

respect to an uncertificated security except:

(a) claims embodied in a restraining order, injunction, or

other legal process served upon the issuer if the process was

served at a time and in a manner affording the issuer a

reasonable opportunity to act on it in accordance with the

requirements of subsection (5);

(b) claims of which the issuer has received a written

notification from the registered owner or the registered pledgee

if the notification was received at a time and in a manner

affording the issuer a reasonable opportunity to act on it in

accordance with the requirements of subsection (5);

(c) claims (including restrictions on transfer not imposed

by the issuer) to which the registration of transfer to the

present registered owner was subject and were so noted in the

initial transaction statement sent to him; and

(d) claims as to which an issuer is charged with notice

from a controlling mstrument it has elected to require under

Section 8-402(4).

(5) If the issuer of an uncertificated security is under a

duty as to an adverse claim, he discharges that duty by:

(a) including a notation of the claim in any statements

sent with respect to the security under Sections SAOS(3), (6),

and (7); and

(b) refusing to register the transfer or pledge of the

security unless the nature of the claim does not preclude

transfer or pledge subject thereto.

(6) If the transfer or pledge of the security is registered

subject to an adverse claim, a notation of the claim must be

included in the initial transaction statement and all subsequent

statements sent to the transferee and pledgee under Section 8-

408.

(7) Notwithstanding subsections (4) and (5), if an

uncertificated security was subject to a registered pledge at the

time the issuer first came under a duty as to a particular

adverse claim, the issuer has no duty as to that claim if

transfer of the security is requested by the registered pledgee

or an appropriate person acting for the registered pledgee

unless:

(a) the claim was embodied in legal process which expressly

provides otherwise

(b) the claim was asserted in a written notification from

the registered pledgee;

(c) the claim was one as to which the issuer was charged

with notice from a controlling instrument it required under

Section 8-402(4) in connection with the pledgee's request for

transfer; or

(d) the transfer requested is to the registered owner.

8-404. Liability and Non-liability for Registration.

(1) Except as provided in any law relating to the

collection of taxes, the issuer is not liable to the owner,

pledgee, or any other person suffering loss as a result of the

registration of a transfer, pledge, or release of a security if:

(a) there were on or with a certificated security the

necessary indorsements or the issuer had received an instruction

originated by an appropriate person (Section 8-308); and

(b) the issuer had no duty as to adverse claims or has

discharged the duty (Section 8-403).

(2) If an issuer has registered a transfer of a

certificated security to a person not entitled to it, the issuer

on demand shall deliver a like security to the true owner unless:

(a) the registration was pursuant to subsection (1);

(b) the owner is precluded from asserting any claim for

registering the transfer under Section 8-405(1); or

(c) the delivery would result in overissue, in which case

the issuer's liability is governed by Section 8-104.

(3) If an issuer has improperly registered a transfer,

pledge, or release of an uncertificated security, the issuer on

demand from the injured party shall restore the records as to the

injured party to the condition that would have obtained if the

improper registration had not been made unless:

(a) the registration was pursuant to subsection (1); or

(b) the registration would result in overissue, in which

case the issuer's liability is governed by Section 8-104.

8-40S. Lost, Destroyed, and Stolen Certificated

Securities.

(1) If a certificated security has been lost, apparently

destroyed, or wrongfully taken, and the owner fails to notify the

issuer of that fact within a reasonable time after he has notice

of it and the issuer registers a transfer of the security before

receivIng notification, the owner is precluded from asserting

against the issuer any claim for registering the transfer under

Section 8-404 or any claim to a new security under this section.

(2) If the owner of a certificated security claims that the

security has been lost, destroyed, or wrongfully taken, the

issuer shall issue a new certificated security or, at the option

of the issuer, an equivalent uncentificated security in place of

the original security if the owner:

(a) so requests before the issuer has notice that the

security has been acquired by a bona fide purchaser;

(b) files with the issuer a sufficient indemnity bond; and

(c) satisfies any other reasonable requirements imposed by

the issuer.

(3) If, after the issue of a new certificated or

uncertificated security, a bona fide purchaser of the original

certificated security presents it for registration of transfer,

the issuer shall register the transfer unless registration would

result in overissue, in which event the issuer's liability is

governed by Section 8-104. In addition to any rights on the

indemnity bond, the issuer may recover the new certificated

security from the person to whom it was issued or any person

taking under him except a bona fide purchaser or may cancel the

Uncertificated security unless a bona fide purchaser or any

person taking under a bona fide purchaser is then the registered

owner or registered pledgee thereof.

8-406. Duty of Authenticating Trustee, Transfer Agent, or

Registrar.

(1) if a person acts as authenticating trustee, transfer

agent, registrar, or other agent for an issuer in the

registration of transfers of its certificated securities or in

the registration of transfers, pledges, and releases of its

uncertificated securities, in the issue of new securities, or in

the cancellation of surrendered securities:

(a) he is under a duty to the issuer to exercise good faith

and due diligence in performing his functions; and

(b) with regard to the particular functions he performs, he

has the same obligation to the holder or owner of a certificated

security or to the owner or pledgee of an uncertificated security

and has the same rights and privileges as the issuer has in

regard to those functions.

(2) Notice to an authenticating trustee, transfer agent,

registrar or other agent is notice to the issuer with respect to

the functions performed by the agent.

8-407. Exchangeability of Securities.

(1) No issuer is subject to the requirements of this

section unless it regularly maintains a system for issuing the

class of securities involved under which both certificated and

uncertificated securities are regularly issued to the category of

owners, which mcludes the person in whose name the new security

is to be registered.

(2) Upon surrender of a certificated security with all

necessary indorsements and presentation of a written request by

the person surrendering the security, the issuer, if he has no

duty as to adverse claims or has discharged the duty (Section

8403), shall issue to the person or a person designated by him an

equivalent uncertificated security subject to all liens,

restrictions, and claims that were noted on the certificated

security.

(3) Upon receipt of a transfer instruction originated by an

appropriate person who so requests, the issuer of an

uncertificated security shall cancel the uncertificated security

and issue an equivalent certificated security on which must be

noted conspicuously any liens and restrictions of the issuer and

any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificated security was

subject. The certificated security shall be registered in the

name of and delivered to:

(a) the registered owner, if the uncertificated security

was not subject to a registered pledge; or

(b) the registered pledgee, if the uncertificated security

was subject to a registered pledge.

8-408. Statements of Uncertificated Securities.

(1) Within 2 business days after the transfer of an

uncertificated security has been registered, the issuer shall

send to the new registered owner and, if the security has been

transferred subject to a registered pledge, to the registered

pledgee a written statement containing:

(a) a description of the issue of which the uncertificated

security is a part;

(b) the number of shares or units transferred;

(c) the name and address and any taxpayer identification

number of the new registered owner and, if the security has been

transferred subject to a registered pledge, the name and address

and any taxpayer identification number of the registered pledgee;

(d) a notation of any liens and restrictions of the issuer

and any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificated security is or may

be subject at the time of registration or a statement that there

are none of those liens, restrictions, or adverse claims; and

(e) the date the transfer was registered.

(2) Within 2 business days after the pledge of an

uncertificated security has been registered, the issuer shall

send to the registered owner and the registered pledgee a written

statement containing:

(a) a description of the issue of which the uncertificated

security is a part;

(b) the number of shares or units pledged;

(c) the name and address and any taxpayer identification

number of the registered owner and the registered pledgee;

(d) a notation of any liens and restrictions of the issuer

and any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificared security is or may

be subject at the time of registration or a statement that there

are none of those liens, restrictions, or adverse claims; and

(e) the date the pledge was registered.

(3) Within 2 business days after the release from pledge of

an uncertificated security has been registered, the issuer shall

send to the registered owner and the pledgee whose interest was

released a written statement containing:

(a) a description of the issue of which the uncertificated

security is a plan;

(b) the number of shares or units released from pledge;

(c) the name and address and any taxpayer identification

number of the registered owner and the pledgee whose interest

was released;

(d) a notation of any liens and restrictions of the issuer

and any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificated security is or

may be subject at the time of registration or a statement that

there are none of those liens, restrictions, or adverse claims;

and

(e) the date the release was registered.

(4) An "initial transaction statement" is the statement

sent to:

(a) the new registered owner and, if applicable, to the

registered pledgee pursuant to subsection (1);

(b) the registered pledgee pursuant to subsection (2); or

(c) the registered owner pursuant to subsection (3).

Each initial transaction statement shall be signed by or on

behalf of the issuer and must be identified as "Initial

Transaction Statement".

(5) Within 2 business days after the transfer of an

uncertificated security has been registered, the issuer shall

send to the former registered owner and the former registered

pledgee, if any, a written statement containing:

(a) a description of the issue of which the uncertificated

security is a part;

(b) the number of shares or units transferred;

(c) the name and address and any taxpayer identification

number of the former registered owner and of any former

registered pledgee; and

(d) the date the transfer was registered.

(6) At periodic intervals no less frequent than annually

and at any time upon the reasonable written request of the

registered owner, the issuer shall send to the registered

owner of each uncertificated security a dated written statement

containing:

(a) a description of the issue of which the uncertificated

security is a part;

(b) the name and address and any taxpayer identification

number of the registered owner;

(c) the number of shares or units of the uncertificated

security registered in the name of the registered owner on the

date of the statement.

(d) the name and address and any taxpayer identification

number of any registered pledgee and the number of shares or

units subject to the pledge; and

(e) a notation of any liens and restrictions of the issuer

and any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificated security is or

may be subject or a statement that there are none of those liens,

restrictions, or adverse claims.

(7) At periodic intervals no less frequent than annually

and at any time upon the reasonable written request of the

registered pledgee, the issuer shall send to the registered

pledgee of each uncertificated security a dated written statement

containing:

(a) a description of the issue of which the uncertificated

security is a part;

(b) the name and address and any taxpayer identification

number of the registered owner;

(c) the name and address and any taxpayer identification

number of the registered pledgee;

(d) the number of shares or units subject to the pledge;

and

(e) a notation of any liens and restrictions of the issuer

and any adverse claims (as to which the issuer has a duty under

Section 8-403(4)) to which the uncertificated security is or may

be subject or a statement that there are none of those liens,

restrictions, or adverse claims.

(8) lf the issuer sends the statements described in

subsections (6) and (7) at periodic intervals no less frequent

than quarterly, the issuer is not obliged to send additional

statements upon request unless the owner or pledgee requesting

them pays to the issuer the reasonable cost of furnishing them.

(9) Each statement sent pursuant to this section must bear

a conspicuous legend reading substantially as follows: "This

statement is merely a record of the rights of the addressee as of

the time of its issuance. Delivery of this statement, of itself,

confers no rights on the recipient. This statement is neither a

negotiable instrument nor a security."

/* This section defines the duties for the increasing number of

shares which are represented solely by computer book entries. */