§ 622. Preemptive rights.

(a) As used in this section, the term:

(1) "Unlimited dividend rights" means the right without limitation as
to amount either to all or to a share of the balance of current or
liquidating dividends after the payment of dividends on any shares
entitled to a preference.

(2) "Equity shares" means shares of any class, whether or not
preferred as to dividends or assets, which have unlimited dividend
rights.

(3) "Voting rights" means the right to vote for the election of one or
more directors, excluding a right so to vote which is dependent on the
happening of an event specified in the certificate of incorporation
which would change the voting rights of any class of shares.

(4) "Voting shares" means shares of any class which have voting
rights, but does not include bonds on which voting rights are conferred
under section 518 (Corporate bonds).

(5) "Preemptive right" means the right to purchase shares or other
securities to be issued or subjected to rights or options to purchase,
as such right is defined in this section.

(b) (1) With respect to any corporation incorporated prior to the
effective date of subparagraph (2) of this paragraph, except as
otherwise provided in the certificate of incorporation, and except as
provided in this section, the holders of equity shares of any class, in
case of the proposed issuance by the corporation of, or the proposed
granting by the corporation of rights or options to purchase, its equity
shares of any class or any shares or other securities convertible into
or carrying rights or options to purchase its equity shares of any
class, shall, if the issuance of the equity shares proposed to be issued
or issuable upon exercise of such rights or options or upon conversion
of such other securities would adversely affect the unlimited dividend
rights of such holders, have the right during a reasonable time and on
reasonable conditions, both to be fixed by the board, to purchase such
shares or other securities in such proportions as shall be determined as
provided in this section.

(2) With respect to any corporation incorporated on or after the
effective date of this subparagraph, the holders of such shares shall
not have any preemptive right, except as otherwise expressly provided in
the certificate of incorporation.

(c) Except as otherwise provided in the certificate of incorporation,
and except as provided in this section, the holders of voting shares of
any class having any preemptive right under this paragraph on the date
immediately prior to the effective date of subparagraph (2) of paragraph
(b) of this section, in case of the proposed issuance by the corporation
of, or the proposed granting by the corporation of rights or options to
purchase, its voting shares of any class or any shares or other
securities convertible into or carrying rights or options to purchase
its voting shares of any class, shall, if the issuance of the voting
shares proposed to be issued or issuable upon exercise of such rights or
options or upon conversion of such other securities would adversely
affect the voting rights of such holders, have the right during a
reasonable time and on reasonable conditions, both to be fixed by the
board, to purchase such shares or other securities in such proportions
as shall be determined as provided in this section.

(d) The preemptive right provided for in paragraphs (b) and (c) shall
entitle shareholders having such rights to purchase the shares or other
securities to be offered or optioned for sale as nearly as practicable
in such proportions as would, if such preemptive right were exercised,
preserve the relative unlimited dividend rights and voting rights of
such holders and at a price or prices not less favorable than the price
or prices at which such shares or other securities are proposed to be
offered for sale to others, without deduction of such reasonable
expenses of and compensation for the sale, underwriting or purchase of
such shares or other securities by underwriters or dealers as may
lawfully be paid by the corporation. In case each of the shares
entitling the holders thereof to preemptive rights does not confer the
same unlimited dividend right or voting right, the board shall apportion
the shares or other securities to be offered or optioned for sale among
the shareholders having preemptive rights to purchase them in such
proportions as in the opinion of the board shall preserve as far as
practicable the relative unlimited dividend rights and voting rights of
the holders at the time of such offering. The apportionment made by the
board shall, in the absence of fraud or bad faith, be binding upon all
shareholders.

(e) Unless otherwise provided in the certificate of incorporation,
shares or other securities offered for sale or subjected to rights or
options to purchase shall not be subject to preemptive rights under
paragraph (b) or (c) of this section if they:

(1) Are to be issued by the board to effect a merger or consolidation
or offered or subjected to rights or options for consideration other
than cash;

(2) Are to be issued or subjected to rights or options under paragraph
(d) of section 505 (Rights and options to purchase shares; issue of
rights and options to directors, officers and employees);

(3) Are to be issued to satisfy conversion or option rights
theretofore granted by the corporation;

(4) Are treasury shares;

(5) Are part of the shares or other securities of the corporation
authorized in its original certificate of incorporation and are issued,
sold or optioned within two years from the date of filing such
certificate; or

(6) Are to be issued under a plan of reorganization approved in a
proceeding under any applicable act of congress relating to
reorganization of corporations.

(f) Shareholders of record entitled to preemptive rights on the record
date fixed by the board under section 604 (Fixing record date), or, if
no record date is fixed, then on the record date determined under
section 604, and no others shall be entitled to the right defined in
this section.

(g) The board shall cause to be given to each shareholder entitled to
purchase shares or other securities in accordance with this section, a
notice directed to him in the manner provided in section 605 (Notice of
meetings of shareholders) setting forth the time within which and the
terms and conditions upon which the shareholder may purchase such shares
or other securities and also the apportionment made of the right to
purchase among the shareholders entitled to preemptive rights. Such
notice shall be given personally or by mail at least fifteen days prior
to the expiration of the period during which the shareholder shall have
the right to purchase. All shareholders entitled to preemptive rights to
whom notice shall have been given as aforesaid shall be deemed
conclusively to have had a reasonable time in which to exercise their
preemptive rights.

(h) Shares or other securities which have been offered to shareholders
having preemptive rights to purchase and which have not been purchased
by them within the time fixed by the board may thereafter, for a period
of not exceeding one year following the expiration of the time during
which shareholders might have exercised such preemptive rights, be
issued, sold or subjected to rights or options to any other person or
persons at a price, without deduction of such reasonable expenses of and
compensation for the sale, underwriting or purchase of such shares by
underwriters or dealers as may lawfully be paid by the corporation, not
less than that at which they were offered to such shareholders. Any such
shares or other securities not so issued, sold or subjected to rights or
options to others during such one year period shall thereafter again be
subject to the preemptive rights of shareholders.

(i) Except as otherwise provided in the certificate of incorporation
and except as provided in this section, no holder of any shares of any
class shall as such holder have any preemptive right to purchase any
other shares or securities of any class which at any time may be sold or
offered for sale by the corporation. Unless otherwise provided in the
certificate of incorporation, holders of bonds on which voting rights
are conferred under section 518 shall have no preemptive rights.