§254. Convertible securities and stock-purchase rights

A. Unless the articles provide otherwise and with prior notice to the commissioner, the board of directors of a state bank shall have authority, whether or not in connection with the issuance and sale of any of its shares or other securities, to create and issue rights and options in any form, granting to the holders thereof:

(1) The right to convert, upon such terms and conditions as the state bank may deem expedient, shares or obligations into shares of any class; or

(2) The right or option to purchase, upon such terms and conditions as it may deem expedient, shares of any class.

B. No shares shall be issued pursuant to the exercise of option rights created independently of issuance and sale of shares or other securities unless the creation of such rights shall have been either:

(1) Authorized or approved by the stockholders; or

(2) If the optionee is neither a director nor the holder, directly or indirectly, of record or beneficially or both, of more than ten percent of the total voting power, authorized by vote of at least two-thirds of the directors in office.

C. Such conversion or option rights shall be exercisable at such price as determined by the board of directors or by the stockholders by vote of a majority of the voting power present if the articles reserve to the stockholders the right to fix the consideration for issuance of the shares.

D. Converted shares shall be cancelled.

Acts 1984, No. 719, §1, eff. Jan. 1, 1985; Acts 1997, No. 965, §1; Acts 2001, No. 915, §1, eff. June 26, 2001.