(a) Unless the charter otherwise provides, a corporation, by its directors, may grant rights, options or warrants to subscribe for or to purchase shares of any authorized class, at the times and on the terms that are set forth in such rights, options or warrants, or in the contracts, warrants or instruments that evidence such rights, options or warrants, which contracts, warrants or instruments may be transferable or nontransferable and may be separable or inseparable from such rights, options or warrants upon the following conditions:

lawyer at desk

Ask a business law question, get an answer ASAP!
Thousands of highly rated, verified business lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Tennessee Code 48-16-205

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • board of directors: means the governing board of a corporation, whether denominated the board of directors or otherwise, except that no person or group of persons is the board of directors because of powers delegated to that person or group pursuant to §. See Tennessee Code 48-51-201
  • Charter: includes amended and restated charters and articles of merger. See Tennessee Code 48-11-201
  • Class: when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC. See Tennessee Code 48-202-101
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Directors: means natural persons, designated in the charter or bylaws or elected or appointed by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which such persons are described. See Tennessee Code 48-51-201
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Share: means the unit into which the proprietary interests in a corporation are divided. See Tennessee Code 48-11-201
  • Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Tennessee Code 48-11-201
(1) If the shares are subject to preemptive rights and if the rights, options or warrants are not granted to shareholders in satisfaction of their preemptive rights, the granting of the rights, options or warrants must be authorized by the vote or consent of the shareholders or holders of shares of particular classes that then would be required to waive or release such preemptive rights; the vote or consent shall release the preemptive rights to the shares required to satisfy the rights, options or warrants if and when exercised; and
(2) If at the time of granting the rights, options or warrants the corporation does not have authorized and unissued shares sufficient to satisfy the rights, options or warrants if and when exercised, the granting of the rights, options or warrants must be authorized by the vote of the shareholders or holders of shares of particular classes that then would be required to adopt an amendment to the charter for the purpose of increasing the authorized number of such shares, and the shares required to be issued upon the exercise of the rights, options or warrants shall be provided by an amendment concurrently or thereafter adopted by the shareholders or the directors.
(b)

(1) The securities, contracts, warrants or instruments that evidence the rights, options or warrants may contain any terms not repugnant to law, including, but not limited to, the following:

(A) Restrictions upon the authorization or issuance of additional shares;
(B) Provisions for the adjustment of the exercise price;
(C) Provisions concerning rights in the event of reorganization, merger, share exchange or sale of the entire assets of the corporation;
(D) Provisions for the reservation of authorized but unissued shares to satisfy the rights, options or warrants;
(E) Restrictions upon the declaration of payment of dividends or distributions; or
(F) Conditions on the exercise of the rights, options or warrants, including, subject to the limitation specified in subdivision (b)(2), conditions that preclude a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(2) The express or implied authority conferred by subdivision (b)(1) or any other section of this chapter for securities, contracts, warrants, or instruments that evidence such rights, options or warrants to contain a condition on the exercise of such rights, options or warrants that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising rights, options or warrants, shall apply only to:

(A) A corporation that has issued and has outstanding shares listed on a national securities exchange or is regularly quoted in an over-the-counter market by one (1) or more members of a national or affiliated securities association; or
(B) A corporation that has adopted a shareholder‘s agreement pursuant to which rights, options or warrants are granted, if the securities, contracts, warrants or instruments that evidence the rights, options or warrants contain a condition that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(c) Subject to the conditions set forth in subsection (a), the board of directors may authorize one (1) or more officers to designate the recipients of rights, options, warrants or other equity compensation awards that involve the issuance of shares and determine, within an amount and subject to any other limitations established by the board and, if applicable, the stockholders, the number of such rights, options, warrants or other equity compensation awards and the terms thereof to be received by the recipients; provided, that no officer shall use such authority to designate either such officer or such other persons as the board of directors may specify as a recipient of such rights, options, warrants or other equity compensation awards.
(d) As used in this section, “securities” includes obligations and shares of the corporation.
(e) This section shall apply to any rights, options or warrants, or any contracts, warrants, or instruments that evidence such rights, options or warrants which were issued subsequent to January 1, 1985.
  Previous section
Next section  
 Part 2 Contents