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                                 HOUSE AMENDED
        PRIOR PRINTER'S NOS. 1392, 1741, 2016,        PRINTER'S NO. 2174
        2066

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1157 Session of 1997


        INTRODUCED BY WENGER, HART, GREENLEAF, MADIGAN, SALVATORE,
           LEMMOND, O'PAKE, STOUT, RHOADES, WOZNIAK AND THOMPSON,
           OCTOBER 14, 1997

        AS REPORTED FROM COMMITTEE ON JUDICIARY, HOUSE OF
           REPRESENTATIVES, AS AMENDED, SEPTEMBER 29, 1998

                                     AN ACT

     1  Amending Titles 15 (Corporations and Unincorporated
     2     Associations) and 54 (Names) of the Pennsylvania Consolidated
     3     Statutes, relating to associations; making revisions,
     4     corrections and additions; and making repeals.

     5     The General Assembly of the Commonwealth of Pennsylvania
     6  hereby enacts as follows:
     7  Section 1.  Short title.
     8     This act shall be known and may be cited as the GAA
     9  Amendments Act of (in preparing this act for printing in the
    10  Laws of Pennsylvania, the Legislative Reference Bureau shall
    11  insert here, in lieu of this statement, the calendar year of
    12  enactment of this act).
    13  Section 2.  Amendment of Title 15.
    14     As much of Title 15 as is hereinafter set forth is amended or
    15  added to read:
    16  § 102.  Definitions.
    17     Subject to additional or inconsistent definitions contained

     1  in subsequent provisions of this title that are applicable to
     2  specific provisions of this title, the following words and
     3  phrases when used in this title shall have, unless the context
     4  clearly indicates otherwise, the meanings given to them in this
     5  section:
     6     * * *
     7     "Limited liability company."  A domestic or foreign limited
     8  liability company as defined in section 8903 (relating to
     9  definitions and index of definitions).
    10     "Profession."  Includes the performance of any type of
    11  personal service to the public that requires as a condition
    12  precedent to the performance of the service the obtaining of a
    13  license or admission to practice or other legal authorization
    14  from the Supreme Court of Pennsylvania or a licensing board or
    15  commission under the Bureau of Professional and Occupational
    16  Affairs in the Department of State. Except as otherwise
    17  expressly provided by law, this definition shall be applicable
    18  to this title only and shall not affect the interpretation of
    19  any other statute or any local zoning ordinance or other
    20  official document heretofore or hereafter enacted or
    21  promulgated.
    22     "Professional services."  Any type of services that may be
    23  rendered by a member of a profession within the purview of his
    24  profession.
    25     * * *
    26  § 134.  Docketing statement.
    27     (a)  General rule.--The Department of State may, but shall
    28  not be required to, prescribe by regulation one or more official
    29  docketing statement forms designed to elicit from a person
    30  effecting a filing under this title information that the
    19970S1157B2174                  - 2 -

     1  department has found to be necessary or desirable in connection
     2  with the processing of a filing. [A docketing statement
     3  submitted with the articles of incorporation or division of a
     4  proposed domestic corporation for profit or not-for-profit, the
     5  articles of domestication or application for a certificate of
     6  authority of a foreign corporation for profit or not-for-profit
     7  or the certificate of election of an electing partnership shall
     8  set forth, inter alia, the kind or kinds of business in which
     9  the association actually intends to engage in this Commonwealth
    10  within one year of the submission of the docketing statement. A
    11  docketing statement submitted with articles of incorporation,
    12  consolidation or division of a domestic corporation not-for-
    13  profit or an application for a certificate of authority of a
    14  foreign corporation not-for-profit shall set forth with respect
    15  to the new corporation or corporations resulting therefrom,
    16  inter alia, the statute by or under which it was incorporated,
    17  the date of incorporation, the names and residence addresses of
    18  its chief executive officer, secretary and treasurer, regardless
    19  of the names or titles by which they may be designated, the
    20  address of its principal place of business and the amount, if
    21  any, of its authorized and issued capital stock.] A form of
    22  docketing statement prescribed under this subsection:
    23         (1)  Shall be published in the Pennsylvania Code.
    24         (2)  Shall not be integrated into a single document
    25     covering the requirements of the filing and its related
    26     docketing statement.
    27         (3)  May be required by the department in connection with
    28     a filing only if notice of the requirement appears on the
    29     official format for the filing prescribed under section
    30     133(d) (relating to physical characteristics and copies of
    19970S1157B2174                  - 3 -

     1     documents).
     2         (4)  Shall not be required to be submitted on department-
     3     furnished forms.
     4         (5)  Shall not constitute a document filed in, with or by
     5     the department for the purposes of this title or any other
     6     provision of law except 18 Pa.C.S. § 4904 (relating to
     7     unsworn falsification to authorities).
     8     (b)  Transmission to Department of Revenue.--The department
     9  shall note on the docketing statement the fact and date of the
    10  filing [of articles of incorporation, consolidation, merger,
    11  division, conversion or domestication or certificate of election
    12  or issuance of the certificate of authority, as the case may be,
    13  upon the docketing statement] to which the docketing statement
    14  relates and shall transmit a copy of [it] the docketing
    15  statement or the information contained therein to the Department
    16  of Revenue. If a docketing statement is not required for a
    17  particular filing, the Department of State may transmit a copy
    18  of the filing or the information contained therein to the
    19  Department of Revenue at no cost to the person effecting the
    20  filing.
    21     (c)  Transmission to other agencies.--If the docketing
    22  statement delivered to the Department of State sets forth any
    23  kind of business in which a corporation, partnership or other
    24  association may not engage without the approval of or a license
    25  from any department, board or commission of the Commonwealth,
    26  the Department of State shall, upon [the filing of articles of
    27  incorporation, consolidation, division or domestication or
    28  certificate of election or issuance of the certificate of
    29  authority] processing the filing, promptly transmit a copy of
    30  the docketing statement or the information contained therein to
    19970S1157B2174                  - 4 -

     1  each such department, board or commission.
     2  § 135.  Requirements to be met by filed documents.
     3     * * *
     4     (e)  Distinguishable names.--A name shall not be considered
     5  distinguishable upon the records of the department from another
     6  name for purposes of this title and Title 54 (relating to names)
     7  solely because the names differ from each other in any or all of
     8  the following respects:
     9         (1)  the use of punctuation marks;
    10         (2)  the use of the definite or indefinite article; or
    11         (3)  the use of any of the following terms to designate
    12     the status of an association: "corporation," "company,"
    13     "incorporated," "limited," "association," "fund,"
    14     "syndicate," "limited partnership," "limited liability
    15     company," "trust" or "business trust" or abbreviations of any
    16     of the foregoing terms or words or abbreviations of like
    17     import in languages other than English.
    18  § 138.  Statement of correction.
    19     * * *
    20     (b)  Effect of filing.--
    21         * * *
    22         (2)  A filing under this section shall not have the
    23     effect of causing original articles of incorporation of a
    24     corporation or a similar type of document creating any other
    25     form of association to be stricken from the records of the
    26     department but the articles or other document may be
    27     corrected under this section.
    28         * * *
    29     (d)  Cross reference.--See section 135 (relating to
    30  requirements to be met by filed documents).
    19970S1157B2174                  - 5 -

     1  § 139.  Tax clearance of certain fundamental transactions.
     2     [A] (a)  General rule.--Except as provided in subsection (c),
     3  a domestic association shall not file articles or a certificate
     4  of merger or consolidation effecting a merger or consolidation
     5  into a nonqualified foreign association or articles or a
     6  certificate of dissolution or a statement of revival, a
     7  qualified foreign association shall not file an application for
     8  termination of authority or similar document in the Department
     9  of State and a domestic association shall not file articles or a
    10  certificate of division dividing solely into nonqualified
    11  foreign associations unless the articles, certificate,
    12  application or other document are accompanied by clearance
    13  certificates from the Department of Revenue and the Office of
    14  Employment Security of the Department of Labor and Industry,
    15  evidencing the payment by the association of all taxes and
    16  charges due the Commonwealth required by law.
    17     (b)  Tax clearance in judicial proceedings.--Until the
    18  clearance certificates described in subsection (a) have been
    19  filed with the court:
    20         (1)  The court shall not order the dissolution of a
    21     domestic business corporation, nonprofit corporation or
    22     business trust.
    23         (2)  The court shall not approve a final distribution of
    24     the assets of a domestic general partnership, limited
    25     partnership, electing partnership or limited liability
    26     company if the court is supervising the winding up of the
    27     association.
    28     (c)  Alternative provisions.--If clearance certificates are
    29  filed with the court as required under subsection (b), it shall
    30  not be necessary to file the clearance certificates with the
    19970S1157B2174                  - 6 -

     1  Department of State.
     2  § 153.  FEE SCHEDULE.                                             <--
     3     (A)  GENERAL RULE.--THE FEES OF THE CORPORATION BUREAU OF THE
     4  DEPARTMENT OF STATE, INCLUDING FEES FOR THE PUBLIC ACTS AND
     5  TRANSACTIONS OF THE SECRETARY OF THE COMMONWEALTH ADMINISTERED
     6  THROUGH THE BUREAU, AND OF COUNTY FILING OFFICERS UNDER TITLE 13
     7  (RELATING TO COMMERCIAL CODE), SHALL BE AS FOLLOWS:
     8         * * *
     9         (7)  TRADEMARKS, EMBLEMS, UNION LABELS,
    10     DESCRIPTION OF BOTTLES AND LIKE MATTERS:
    11             [(I)  REGISTRATION.....................            52
    12             (II)  EACH ANCILLARY TRANSACTION.......           52]
    13             (I)  TRADEMARK REGISTRATION............            25
    14             (II)  EACH ANCILLARY TRADEMARK
    15         TRANSACTION................................            25
    16             (III)  ANY OTHER REGISTRATION UNDER
    17         THIS PARAGRAPH.............................            52
    18             (IV)  ANY OTHER ANCILLARY TRANSACTION
    19         UNDER THIS PARAGRAPH.......................            52
    20         * * *
    21  § 161.  Domestication of certain alien associations.
    22     * * *
    23     (b)  Statement of domestication.--The statement of
    24  domestication shall be executed by the association and shall set
    25  forth in the English language:
    26         (1)  The name of the association. If the name is in a
    27     foreign language, it shall be set forth in Roman letters or
    28     characters or Arabic or Roman numerals. If the name is one
    29     that is rendered unavailable for use by a corporation by any
    30     provision of section 1303(b) or (c) (relating to corporate
    19970S1157B2174                  - 7 -

     1     name), the association shall adopt a new name, in accordance
     2     with any procedures for changing the name of the association
     3     that are applicable prior to the domestication of the
     4     association, and shall set forth the new name in the
     5     statement.
     6         (2)  The name of the jurisdiction under the laws of which
     7     and the date on which it was first formed, incorporated or
     8     otherwise came into being.
     9         (3)  The name of the jurisdiction that constituted the
    10     seat, siege social or principal place of business or control
    11     administration of the association, or any equivalent under
    12     applicable law, immediately prior to the filing of the
    13     statement.
    14         (4)  A statement [that upon domestication the association
    15     will be a domestic association under the laws of this
    16     Commonwealth] of the type of domestic association that the
    17     association will be upon domestication.
    18         (5)  A statement that the filing of the statement of
    19     domestication and, if desired, the renunciation of the prior
    20     domicile has been authorized (unless its charter or other
    21     organic documents require a greater vote) by a majority in
    22     interest of the shareholders, members or other proprietors of
    23     the association.
    24         (6)  If the association will be a type of domestic
    25     association that is created by a filing in the department,
    26     such other provisions as are required to be included in an
    27     initial filing to create that type of domestic association,
    28     except that it shall not be necessary to set forth the name
    29     of the person organizing the association.
    30         (7)  Any other provision that the association may choose
    19970S1157B2174                  - 8 -

     1     to insert unless this title prohibits the inclusion of such a
     2     provision in a filing that creates the type of domestic
     3     association that the association will be upon domestication.
     4     (c)  Execution.--The statement shall be signed on behalf of
     5  the association by any authorized person.
     6     (d)  Effect of domestication.--Upon the filing of the
     7  statement of domestication, the association shall be
     8  domesticated in this Commonwealth and the association shall
     9  thereafter be subject to any applicable provisions of this
    10  title[, except Subpart B of Part II (relating to business
    11  corporations),] and [to] any other provisions of law applicable
    12  to associations existing under the laws of this Commonwealth. If
    13  the association will be a type of domestic association that is
    14  created by a filing in the department, the statement of
    15  domestication shall constitute that filing. The domestication of
    16  any association in this Commonwealth pursuant to this section
    17  shall not be deemed to affect any obligations or liabilities of
    18  the association incurred prior to its domestication.
    19     (e)  Exclusion.--An association that can be domesticated
    20  under [section 4161 (relating to domestication) or 6161
    21  (relating to domestication)] any of the following sections shall
    22  not be domesticated under this section:
    23         Section 4161 (relating to domestication).
    24         Section 6161 (relating to domestication).
    25         Section 8590 (relating to domestication).
    26         Section 8982 (relating to domestication).
    27         Section 9501(a)(1)(ii) (relating to application and
    28     effect of chapter).
    29     (f)  Definition.--As used in this section, the term
    30  "association," except as restricted by subsection (e), includes
    19970S1157B2174                  - 9 -

     1  any alien incorporated organization, private law corporation
     2  (whether or not organized for business purposes), public law
     3  corporation, partnership, proprietorship, joint venture,
     4  foundation, trust, association or similar organization or entity
     5  existing under the laws of any jurisdiction other than this
     6  Commonwealth.
     7     (g)  Cross [reference] references.--See [section] sections
     8  134 (relating to docketing statement) and 135 (relating to
     9  requirements to be met by filed documents).
    10  § 162.  Contingent domestication of certain alien associations.
    11     * * *
    12     (c)  Statement of consummation of domestication.--At any time
    13  after the filing of a statement of contingent domestication, the
    14  association may file in the department a statement of
    15  consummation of domestication which shall be executed by the
    16  association and shall set forth:
    17         (1)  The name of the association[. If the name is in a
    18     foreign language, it shall be set forth in Roman letters or
    19     characters or Arabic or Roman numerals.] as set forth in its
    20     statement of contingent domestication.
    21         * * *
    22     (j)  Cross [reference] references.--See [section] sections
    23  134 (relating to docketing statement) and 135 (relating to
    24  requirements to be met by filed documents).
    25  § 524.  CERTAIN ACQUISITIONS AND PROPOSED ACQUISITIONS INVOLVING  <--
    26             BANKS, BANK AND TRUST COMPANIES, TRUST COMPANIES,
    27             NATIONAL BANKS AND BANK HOLDING COMPANIES.
    28     (A)  SCOPE.--THIS SECTION APPLIES TO ALL INSTITUTIONS AND
    29  HOLDING COMPANIES AS DEFINED IN SUBSECTION (M).
    30     (B)  REQUIREMENT OF PRIOR APPROVAL.--EXCEPT AS PROVIDED IN
    19970S1157B2174                 - 10 -

     1  SUBSECTION (I), IT SHALL BE UNLAWFUL, WITHOUT THE PRIOR WRITTEN
     2  APPROVAL OF THE DEPARTMENT UNDER THIS SECTION, FOR ANY PERSON:
     3         (1)  TO ACQUIRE, OR TO MAKE A PROPOSAL TO ACQUIRE, VOTING
     4     SHARES OF AN INSTITUTION OR VOTING SHARES OF A HOLDING
     5     COMPANY IF THE AGGREGATE NUMBER OF VOTING SHARES HELD AFTER
     6     SUCH ACQUISITION WOULD TOTAL MORE THAN 5% OF THE OUTSTANDING
     7     VOTING SHARES OF ANY CLASS OF SUCH INSTITUTION OR HOLDING
     8     COMPANY; OR
     9         (2)  TO ENTER INTO AN ACQUISITION TRANSACTION WITH AN
    10     INSTITUTION OR WITH A HOLDING COMPANY;
    11  WHETHER OR NOT ANY PRIOR ACQUISITION HAD BEEN APPROVED BY THE
    12  DEPARTMENT UNDER THIS SECTION.
    13     (C)  APPLICATION FOR APPROVAL.--IF THE APPROVAL OF THE
    14  DEPARTMENT IS REQUIRED UNDER SUBSECTION (B), A PERSON WHO
    15  INTENDS TO ACQUIRE, OR TO MAKE A PROPOSAL TO ACQUIRE, VOTING
    16  SHARES OF, OR TO ENTER INTO AN ACQUISITION TRANSACTION WITH, AN
    17  INSTITUTION OR A HOLDING COMPANY SHALL:
    18         (1)  FILE AN APPLICATION FOR APPROVAL IN SUCH FORM AS THE
    19     DEPARTMENT MAY PRESCRIBE;
    20         (2)  DELIVER TO THE DEPARTMENT FROM TIME TO TIME SUCH
    21     OTHER INFORMATION AS THE DEPARTMENT MAY REQUIRE WITH SUCH
    22     CERTIFICATION OF FINANCIAL INFORMATION AND SUCH VERIFICATION
    23     BY OATH OR AFFIRMATION OF OTHER DATA AS THE DEPARTMENT MAY
    24     SPECIFY;
    25         (3)  PAY SUCH INVESTIGATION FEE AS THE DEPARTMENT MAY
    26     SPECIFY; AND
    27         (4)  EXCEPT IN THE CASE OF AN APPLICANT WHICH IS A
    28     DOMESTIC CORPORATION OR A FOREIGN CORPORATION QUALIFIED TO DO
    29     BUSINESS IN PENNSYLVANIA, DELIVER TO THE DEPARTMENT A WRITTEN
    30     CONSENT TO SERVICE OF PROCESS IN ANY ACTION OR SUIT ARISING
    19970S1157B2174                 - 11 -

     1     OUT OF OR IN CONNECTION WITH THE PROPOSED ACQUISITION THROUGH
     2     SERVICE OF PROCESS ON THE SECRETARY OF BANKING.
     3     (D)  INVESTIGATION BY DEPARTMENT.--UPON RECEIPT OF AN
     4  APPLICATION FOR APPROVAL AND OTHER ITEMS REQUIRED UNDER
     5  SUBSECTION (C) THE DEPARTMENT SHALL CONDUCT AN INVESTIGATION TO
     6  DETERMINE WHETHER THE APPLICANT HAS DEMONSTRATED BY A
     7  PREPONDERANCE OF THE EVIDENCE THAT:
     8         (1)  THE ACQUISITION OF VOTING SHARES OR ACQUISITION
     9     TRANSACTION, ITS PURPOSES AND PROBABLE EFFECTS WOULD BE
    10     CONSISTENT WITH THE PURPOSES SET FORTH IN SECTION 103(A) OF
    11     THE BANKING CODE;
    12         (2)  THE APPLICANT, OR ITS DIRECTORS AND OFFICERS IN THE
    13     CASE OF A CORPORATION, AND ANY PROPOSED NEW OFFICERS OR
    14     DIRECTORS OF THE INSTITUTION INVOLVED WOULD SATISFY THE TEST
    15     FOR INCORPORATORS, DIRECTORS AND OFFICERS OF A NEW
    16     INSTITUTION UNDER SECTION 1007(A) OF THE BANKING CODE;
    17         (3)  THE PROPOSED ACQUISITION OF VOTING SHARES OR
    18     ACQUISITION TRANSACTION WOULD NOT BE PREJUDICIAL TO THE
    19     INTERESTS OF THE DEPOSITORS, CREDITORS, BENEFICIARIES OF
    20     FIDUCIARY ACCOUNTS OR SHAREHOLDERS OF THE INSTITUTION OR
    21     HOLDING COMPANY INVOLVED;
    22         (4)  THE PROPOSED ACQUISITION OF VOTING SHARES OR
    23     ACQUISITION TRANSACTION IS IN THE BEST INTERESTS OF THE
    24     INSTITUTION AND, IF APPLICABLE, THE HOLDING COMPANY OF SUCH
    25     INSTITUTION;
    26         (5)  COMPETITION AMONG INSTITUTIONS WILL NOT BE ADVERSELY
    27     AFFECTED AND PUBLIC CONVENIENCE AND ADVANTAGE WILL BE
    28     PROMOTED; AND
    29         (6)  THE APPLICANT HAS NOT BEEN PROTECTED BY THE
    30     DEPARTMENT FROM AN ACQUISITION TRANSACTION. THE DEPARTMENT
    19970S1157B2174                 - 12 -

     1     SHALL NOT APPROVE AN ACQUISITION TRANSACTION APPLICATION
     2     WHICH IS SUBMITTED BY AN APPLICANT WHICH HAS ITSELF BEEN THE
     3     TARGET OF A POTENTIAL ACQUISITION TRANSACTION AND BEEN
     4     PROTECTED FROM THE ACQUISITION BY THE DEPARTMENT.
     5  IN MAKING THE DETERMINATION UNDER PARAGRAPHS (4) AND (5), THE
     6  DEPARTMENT SHALL NOT APPROVE AN ACQUISITION OF VOTING SHARES OR
     7  ACQUISITION TRANSACTION UNLESS THE ACQUISITION OF VOTING SHARES
     8  OR ACQUISITION TRANSACTION IS CONSISTENT WITH THE CONVENIENCE
     9  AND NEEDS OF THE CUSTOMERS AND COMMUNITIES SERVED BY THE
    10  INSTITUTION AFTER TAKING INTO ACCOUNT, AMONG OTHER THINGS, THE
    11  RELATIVE RATINGS UNDER THE COMMUNITY REINVESTMENT ACT OF 1977
    12  (91 STAT. 1111, 12 U.S.C. § 2901 ET SEQ.), OF THE INSTITUTION
    13  AND THE APPLICANT, PROSPECTIVE BRANCH CLOSINGS AND PROSPECTIVE
    14  JOB LOSSES. IN MAKING THE DETERMINATION UNDER PARAGRAPHS (4) AND
    15  (5), THE DEPARTMENT SHALL CONSIDER, TO THE EXTENT IT DEEMS
    16  APPROPRIATE, ALL RELEVANT FACTORS, INCLUDING WITHOUT LIMITATION
    17  THE MATTERS SET FORTH IN SECTION 1715(A)(1), (2) AND (3)
    18  (RELATING TO EXERCISE OF POWERS GENERALLY), AND WHETHER THE
    19  APPLICANT HAS DEMONSTRATED THAT THE ACQUISITION OF VOTING SHARES
    20  OR ACQUISITION TRANSACTION WILL RESULT IN NET NEW BENEFITS.
    21     (E)  INFORMATION FURNISHED TO SUBJECT INSTITUTION OR HOLDING
    22  COMPANY.--AS PART OF ITS INVESTIGATION, THE DEPARTMENT SHALL
    23  TRANSMIT TO THE INSTITUTION OR THE HOLDING COMPANY WHOSE VOTING
    24  SHARES ARE PROPOSED TO BE ACQUIRED OR WHICH IS THE SUBJECT OF
    25  SUCH ACQUISITION TRANSACTION A COPY OF THE APPLICATION AND ALL
    26  OTHER INFORMATION RECEIVED FROM THE APPLICANT, EXCEPT SUCH
    27  INFORMATION WHICH THE DEPARTMENT DETERMINES SHOULD BE KEPT
    28  CONFIDENTIAL, FOR THE PURPOSE OF RECEIVING SUCH COMMENTS THEREON
    29  AS SUCH INSTITUTION OR HOLDING COMPANY SHALL TRANSMIT TO THE
    30  DEPARTMENT UPON ITS REQUEST.
    19970S1157B2174                 - 13 -

     1     (F)  ACTION BY DEPARTMENT.--WITHIN 60 DAYS AFTER RECEIPT OF
     2  AN APPLICATION UNDER SUBSECTION (C) OR WITHIN A LONGER PERIOD
     3  NOT IN EXCESS OF 30 DAYS AFTER RECEIPT FROM THE APPLICANT OF
     4  ADDITIONAL INFORMATION REQUIRED BY THE DEPARTMENT, THE
     5  DEPARTMENT SHALL APPROVE OR DISAPPROVE THE PROPOSED ACQUISITION
     6  OF VOTING SHARES OR ACQUISITION TRANSACTION AND GIVE WRITTEN
     7  NOTICE OF ITS DECISION TO THE APPLICANT AND THE INSTITUTION OR
     8  HOLDING COMPANY WHOSE VOTING SHARES ARE PROPOSED TO BE ACQUIRED
     9  OR THAT IS THE SUBJECT OF THE ACQUISITION TRANSACTION. IF THE
    10  DEPARTMENT APPROVES A PROPOSED ACQUISITION OF VOTING SHARES
    11  WHICH MAY RESULT IN A CHANGE OF CONTROL OR OWNERSHIP CHANGE OF
    12  SUCH INSTITUTION OR HOLDING COMPANY OR AN ACQUISITION
    13  TRANSACTION, IT MAY IMPOSE CONDITIONS TO BE OBSERVED AFTER SUCH
    14  ACQUISITION OF VOTING SHARES OR ACQUISITION TRANSACTION, WITH
    15  RESPECT TO TRANSACTIONS BETWEEN THE INSTITUTION INVOLVED AND THE
    16  APPLICANT OR AFFILIATE OF THE APPLICANT, WITH RESPECT TO
    17  DIVIDENDS OR DISTRIBUTIONS BY SUCH INSTITUTIONS, WITH RESPECT TO
    18  EMPLOYEE RELATIONS, WITH RESPECT TO REIMBURSEMENT FOR ANY LOSS
    19  OCCASIONED BY SUCH OWNERSHIP CHANGE OR WITH RESPECT TO SUCH
    20  OTHER MATTERS AS THE DEPARTMENT MAY DEEM ADVISABLE ON THE BASIS
    21  OF THE PURPOSES SET FORTH IN SECTION 103(A) OF THE BANKING CODE.
    22  IN MAKING THE DETERMINATION UNDER SUBSECTION (D)(5), THE
    23  DEPARTMENT SHALL CONSULT WITH THE ATTORNEY GENERAL. THE DECISION
    24  OF THE DEPARTMENT SHALL BE SUBJECT TO REVIEW BY THE COMMONWEALTH
    25  COURT IN THE MANNER PROVIDED BY LAW.
    26     (G)  PROHIBITION OF MISLEADING STATEMENTS.--IT SHALL BE
    27  UNLAWFUL FOR ANY PERSON DIRECTLY OR INDIRECTLY TO MAKE ANY
    28  UNTRUE STATEMENT OF A MATERIAL FACT OR TO OMIT TO STATE A
    29  MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE, IN
    30  LIGHT OF THE CIRCUMSTANCES IN WHICH THEY WERE MADE, NOT
    19970S1157B2174                 - 14 -

     1  MISLEADING IN CONNECTION WITH:
     2         (1)  ANY ACQUISITION OF, OR PROPOSAL TO ACQUIRE, VOTING
     3     SHARES THAT REQUIRES APPROVAL UNDER THIS SECTION;
     4         (2)  AN ACQUISITION TRANSACTION THAT REQUIRES APPROVAL
     5     UNDER THIS SECTION; OR
     6         (3)  ANY  APPLICATION OR SUBMISSION OF INFORMATION TO THE
     7     DEPARTMENT UNDER SUBSECTION (C).
     8     (H)  REGULATION BY DEPARTMENT.--THE ENFORCEMENT AND
     9  IMPLEMENTATION OF THIS SECTION SHALL BE SUBJECT TO REGULATION BY
    10  THE DEPARTMENT.
    11     (I)  EXEMPTIONS.--NO APPROVAL UNDER THIS SECTION SHALL BE
    12  REQUIRED FOR AN ACQUISITION OF OR PROPOSAL TO ACQUIRE VOTING
    13  SHARES OR FOR AN ACQUISITION TRANSACTION IN THE CASE OF EITHER:
    14         (1)  AN ACQUISITION OR PROPOSAL TO ACQUIRE VOTING SHARES
    15     BY THE ISSUER THEREOF OR AN ACQUISITION OR PROPOSAL TO
    16     ACQUIRE VOTING SHARES OF AN INSTITUTION BY ITS HOLDING
    17     COMPANY, OR AN ACQUISITION TRANSACTION BETWEEN AN INSTITUTION
    18     AND ITS HOLDING COMPANY OR ANY OTHER ENTITY WHICH IS
    19     CONTROLLED BY SUCH HOLDING COMPANY;
    20         (2)  A TRANSACTION BY A BROKER-DEALER WHO DOES NO MORE
    21     THAN PERFORM THE CUSTOMARY BROKER'S FUNCTION IN TRANSACTIONS
    22     ON A STOCK EXCHANGE OR IN THE OVER-THE-COUNTER MARKET, WHO
    23     RECEIVES NO MORE THAN THE CUSTOMARY BROKER'S COMMISSION AND
    24     WHO DOES NOT SOLICIT OR ARRANGE FOR THE SOLICITATION OF
    25     ORDERS;
    26         (3)  AN ACQUISITION OR PROPOSAL TO ACQUIRE VOTING SHARES
    27     OF, OR AN ACQUISITION TRANSACTION WITH, AN INSTITUTION OR
    28     HOLDING COMPANY BY ANY PERSON WHICH HAS BEEN APPROVED BY A
    29     MAJORITY OF THE BOARD OF DIRECTORS OF THE INSTITUTION OR
    30     HOLDING COMPANY, UNLESS AT THE TIME THE INSTITUTION OR
    19970S1157B2174                 - 15 -

     1     HOLDING COMPANY APPROVES THE ACQUISITION OF VOTING SHARES OR
     2     ACQUISITION TRANSACTION, 25% OR MORE OF THE INSTITUTION'S OR
     3     HOLDING COMPANY'S BOARD IS COMPOSED OF NOMINEES, AGENTS,
     4     AFFILIATES OF OR ANY OTHER PERSONS ACTING IN CONCERT WITH THE
     5     PERSON OR ENTITY SEEKING TO ACQUIRE VOTING SHARES OF, OR
     6     ENTER INTO AN ACQUISITION TRANSACTION WITH, THE INSTITUTION
     7     OR HOLDING COMPANY;
     8         (4)  AN ACQUISITION OR PROPOSAL TO ACQUIRE VOTING SHARES
     9     OF AN INSTITUTION OR HOLDING COMPANY BY ANY PERSON IF THE
    10     AGGREGATE NUMBER OF SHARES HELD BY SUCH PERSON AFTER SUCH
    11     ACQUISITION WOULD TOTAL LESS THAN 10% IN VOTING POWER OF THE
    12     OUTSTANDING SHARES OF SUCH INSTITUTION OR HOLDING COMPANY
    13     ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS AND
    14     SUCH PERSON IS NOT REQUIRED TO OBTAIN THE APPROVAL OF THE
    15     FEDERAL RESERVE BOARD UNDER THE BANK HOLDING COMPANY ACT OF
    16     1956 (70 STAT. 133, 12 U.S.C. § 1841 ET SEQ.) IN CONNECTION
    17     WITH SUCH ACQUISITION; OR
    18         (5)  A TRANSACTION OF A TYPE EXEMPTED BY REGULATION OF
    19     THE DEPARTMENT IN LIGHT OF THE PURPOSES SET FORTH IN SECTION
    20     103(A) OF THE BANKING CODE.
    21     (J)  CRIMINAL PENALTY FOR VIOLATION.--ANY PERSON WHO ACQUIRES
    22  OR PROPOSES TO ACQUIRE VOTING SHARES OF AN INSTITUTION OR OF A
    23  HOLDING COMPANY OR WHO ENGAGES IN AN ACQUISITION TRANSACTION IN
    24  VIOLATION OF THIS SECTION OR WHO VIOLATES SUBSECTION (G) SHALL
    25  BE GUILTY OF A MISDEMEANOR AND SHALL UPON CONVICTION THEREOF BE
    26  SUBJECT, IN THE CASE OF AN INDIVIDUAL, TO IMPRISONMENT FOR A
    27  PERIOD NOT EXCEEDING FIVE YEARS OR A FINE NOT EXCEEDING $5,000,
    28  OR BOTH, AND, IN THE CASE OF ANY OTHER PERSON, TO A FINE NOT
    29  EXCEEDING $50,000.
    30     (K)  CIVIL LIABILITY PENALTY FOR VIOLATION.--ANY PERSON WHO
    19970S1157B2174                 - 16 -

     1  VIOLATES ANY PROVISION OF THIS SECTION SHALL BE LIABLE TO ANY
     2  INSTITUTION OR HOLDING COMPANY OR SHAREHOLDER THEREOF DAMAGED
     3  THEREBY AND, IN THE DISCRETION OF THE COURT, FOR PUNITIVE
     4  DAMAGES. THE PROVISIONS OF THIS SECTION SHALL BE ENFORCEABLE IN
     5  ANY ACTION OR SUIT INSTITUTED BY THE DEPARTMENT OR BY ANY SUCH
     6  INSTITUTION, HOLDING COMPANY OR SHAREHOLDER TO ENJOIN OR
     7  RESTRAIN ANY VIOLATION OR THREATENED VIOLATION OF THIS SECTION.
     8     (L)  SEVERABILITY.--THE PROVISIONS OF THIS SECTION SHALL BE
     9  SEVERABLE. IF ANY PROVISION OF THIS SECTION OR THE APPLICATION
    10  THEREOF TO ANY PERSON OR CIRCUMSTANCE IS HELD INVALID, THE
    11  REMAINDER OF THIS SECTION, AND THE APPLICATION OF SUCH PROVISION
    12  TO OTHER PERSONS OR CIRCUMSTANCES, SHALL NOT BE AFFECTED
    13  THEREBY, UNLESS THE COURT FINDS THAT THE VALID PROVISIONS OF
    14  THIS SECTION ARE SO ESSENTIALLY AND INSEPARABLY CONNECTED WITH,
    15  AND SO DEPEND UPON, THE VOID PROVISION OR APPLICATION, THAT IT
    16  CANNOT BE PRESUMED THE GENERAL ASSEMBLY WOULD HAVE ENACTED THE
    17  REMAINING VALID PROVISIONS WITHOUT THE VOID ONE; OR UNLESS THE
    18  COURT FINDS THAT THE REMAINING VALID PROVISIONS, STANDING ALONE,
    19  ARE INCOMPLETE AND ARE INCAPABLE OF BEING EXECUTED IN ACCORDANCE
    20  WITH THE LEGISLATIVE INTENT.
    21     (M)  DEFINITIONS.--AS USED IN THIS SECTION, THE FOLLOWING
    22  WORDS AND PHRASES SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS
    23  SUBSECTION:
    24     "ACQUIRE."  OBTAINING LEGAL OR BENEFICIAL OWNERSHIP OF VOTING
    25  SHARES, WHETHER OBTAINED DIRECTLY OR INDIRECTLY, THROUGH AN
    26  INTERMEDIARY OR OTHERWISE; BENEFICIAL OWNERSHIP BY A PERSON
    27  SHALL BE DEEMED TO INCLUDE OWNERSHIP BY ANOTHER PERSON WHICH
    28  CONTROLS, IS CONTROLLED BY OR IS UNDER COMMON CONTROL WITH SUCH
    29  PERSON AND TO INCLUDE OWNERSHIP BY A SPOUSE OR MEMBER OF THE
    30  FAMILY OF SUCH PERSON; THE ACQUISITION OF OPTIONS, WARRANTS AND
    19970S1157B2174                 - 17 -

     1  RIGHTS TO SUBSCRIBE FOR, OR TO PURCHASE, VOTING SHARES AND THE
     2  ACQUISITION OF RIGHTS TO OBTAIN VOTING SHARES THROUGH CONVERSION
     3  OR EXCHANGE SHALL BE DEEMED AN ACQUISITION OF SUCH VOTING
     4  SHARES.
     5     "ACQUISITION TRANSACTION."  A MERGER, SALE OF ASSETS OR OTHER
     6  SIMILAR TRANSACTION INVOLVING AN INSTITUTION OR A HOLDING
     7  COMPANY FOLLOWING WHICH:
     8         (1)  PERSONS WHO ARE DIRECTORS OF SUCH INSTITUTION OR
     9     HOLDING COMPANY IMMEDIATELY PRIOR TO THE CONSUMMATION OF SUCH
    10     TRANSACTION SHALL NOT CONSTITUTE AT LEAST ONE-HALF OF THE
    11     DIRECTORS OF THE SURVIVING, SUCCESSOR OR TRANSFEREE
    12     INSTITUTION OR HOLDING COMPANY IMMEDIATELY FOLLOWING THE
    13     CONSUMMATION OF SUCH TRANSACTION; OR
    14         (2)  HOLDERS OF VOTING SHARES OF SUCH INSTITUTION OR
    15     HOLDING COMPANY IMMEDIATELY PRIOR TO THE CONSUMMATION OF SUCH
    16     TRANSACTION SHALL NOT BE HOLDERS OF AT LEAST ONE-HALF OF THE
    17     VOTING SHARES OF THE SURVIVING, SUCCESSOR OR TRANSFEREE
    18     INSTITUTION OR HOLDING COMPANY IMMEDIATELY FOLLOWING THE
    19     CONSUMMATION OF SUCH TRANSACTION.
    20     "BANKING CODE."  THE ACT OF NOVEMBER 30, 1965 (P.L.847,
    21  NO.356), KNOWN AS THE BANKING CODE OF 1965.
    22     "DEPARTMENT."  THE DEPARTMENT OF BANKING OF THE COMMONWEALTH.
    23     "HOLDING COMPANY."  A CORPORATION THAT HAS THE POWER TO
    24  ELECT, DIRECTLY OR INDIRECTLY, A MAJORITY OF THE BOARD OF
    25  DIRECTORS OF AN INSTITUTION.
    26     "INSTITUTION."  A BANK, BANK AND TRUST COMPANY, NATIONAL BANK
    27  OR STOCK SAVINGS BANK HAVING ITS MAIN OFFICE IN PENNSYLVANIA AND
    28  HAVING DEPOSITS IN EXCESS OF $10,000,000,000 AS OF DECEMBER 31,
    29  1997.
    30     "NET NEW BENEFITS."  INITIAL CAPITAL INVESTMENTS, JOB
    19970S1157B2174                 - 18 -

     1  CREATION PLANS, CONSUMER AND BUSINESS SERVICES, COMMITMENTS TO
     2  MAINTAIN AND OPEN BRANCH OFFICES WITHIN A BANKING INSTITUTION'S
     3  DELINEATED LOCAL COMMUNITY AND SUCH OTHER MATTERS AS THE
     4  DEPARTMENT MAY DEEM NECESSARY OR ADVISABLE.
     5     "OWNERSHIP CHANGE."  THE SAME MEANING AS IN SECTION 382 OF
     6  THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514, 26 U.S.C.
     7  § 1 ET SEQ.).
     8     "PROPOSAL TO ACQUIRE."  ANY OFFER OR ATTEMPT TO BUY OR
     9  SOLICITATION OF AN OFFER TO SELL OR OTHER ATTEMPT OR OFFER TO
    10  ACQUIRE BY ANY MEANS, DIRECTLY OR INDIRECTLY, THROUGH AN
    11  INTERMEDIARY OR OTHERWISE.
    12     "VOTING SHARES."  SHARES OF AN INSTITUTION OR HOLDING COMPANY
    13  ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS.
    14  § 1303.  Corporate name.
    15     * * *
    16     (b)  Duplicate use of names.--The corporate name shall [not
    17  be the same as or confusingly similar to] be distinguishable
    18  upon the records of the Department of State from:
    19         (1)  The name of any other domestic corporation for
    20     profit or not-for-profit which is either in existence or for
    21     which articles of incorporation have been filed but have not
    22     yet become effective, or of any foreign corporation for
    23     profit or not-for-profit which is either authorized to do
    24     business in this Commonwealth or for which an application for
    25     a certificate of authority has been filed but has not yet
    26     become effective, [or of any domestic or foreign limited
    27     partnership that has filed in the Department of State a
    28     certificate or qualified under Chapter 85 (relating to
    29     limited partnerships) or under corresponding provisions of
    30     prior law,] or the name of any association registered at any
    19970S1157B2174                 - 19 -

     1     time under 54 Pa.C.S. Ch. 5 (relating to corporate and other
     2     association names), unless[: (i)  where the name is the same
     3     or confusingly similar,] the other association:
     4                 [(A)] (i)  has stated that it is about to change
     5             its name, or to cease to do business, or is being
     6             wound up, or is a foreign association about to
     7             withdraw from doing business in this Commonwealth,
     8             and the statement and [the] a written consent [of the
     9             other association] to the adoption of the name
    10             executed by the other association is filed in the
    11             Department of State;
    12                 [(B)] (ii)  has filed with the Department of
    13             Revenue a certificate of out of existence, or has
    14             failed for a period of three successive years to file
    15             with the Department of Revenue a report or return
    16             required by law and the fact of such failure has been
    17             certified by the Department of Revenue to the
    18             Department of State;
    19                 [(C)] (iii)  has abandoned its name under the
    20             laws of its jurisdiction of incorporation, by
    21             amendment, merger, consolidation, division,
    22             expiration, dissolution or otherwise, without its
    23             name being adopted by a successor in a merger,
    24             consolidation, division or otherwise, and an official
    25             record of that fact, certified as provided by 42
    26             Pa.C.S. § 5328 (relating to proof of official
    27             records), is presented by any person to the
    28             department; or
    29                 [(D)] (iv)  has had the registration of its name
    30             under 54 Pa.C.S. Ch. 5 terminated and, if the
    19970S1157B2174                 - 20 -

     1             termination was effected by operation of 54 Pa.C.S. §
     2             504 (relating to effect of failure to make decennial
     3             filings), the application for the use of the name is
     4             accompanied by a verified statement stating that at
     5             least 30 days' written notice of intention to
     6             appropriate the name was given to the delinquent
     7             association at its [registered office] last known
     8             place of business and that, after diligent search by
     9             the affiant, the affiant believes the association to
    10             be out of existence.[; or
    11             (ii)  where the name is confusingly similar, the
    12         consent of the other association to the adoption of the
    13         name is filed in the Department of State.
    14     The consent of the association shall be evidenced by a
    15     statement to that effect executed by the association.]
    16         * * *
    17     (e)  Remedies for violation of section.--The use of a name in
    18  violation of this section shall not vitiate or otherwise affect
    19  the corporate existence but any court having jurisdiction may
    20  enjoin the corporation from using or continuing to use a name in
    21  violation of this section, upon the application of:
    22         (1)  the Attorney General, acting on his own motion or at
    23     the instance of any administrative department, board or
    24     commission of this Commonwealth; or
    25         (2)  any person adversely affected.[;
    26  may enjoin the corporation from using or continuing to use a
    27  name in violation of this section.]
    28     (f)  Cross references.--See sections 135(e) (relating to
    29  distinguishable names) and 1106(b)(2) (relating to uniform
    30  application of subpart).
    19970S1157B2174                 - 21 -

     1  § 1304.  Required name changes by senior corporations.
     2     * * *
     3     (b)  Enforcement of undertaking to release name.--If a
     4  corporation has used a name [the same as or confusingly similar
     5  to] that is not distinguishable upon the records of the
     6  Department of State from the name of another corporation or
     7  other association as permitted by section [1303(b)(1)(i)]
     8  1303(b)(1) (relating to duplicate use of names) and the other
     9  corporation or other association continues to use its name in
    10  this Commonwealth and does not change its name, cease to do
    11  business, be wound up or withdraw as it proposed to do in its
    12  consent or change its name as required by subsection (a), any
    13  court having jurisdiction may enjoin the other corporation or
    14  other association from continuing to use its name or a name that
    15  is not distinguishable therefrom, upon the application of:
    16         (1)  the Attorney General, acting on his own motion or at
    17     the instance of any administrative department, board or
    18     commission of this Commonwealth; or
    19         (2)  any person adversely affected.[;
    20  may enjoin the other corporation or other association from
    21  continuing to use its name or a confusingly similar name.]
    22  § 1311.  Filing of statement of summary of record by certain
    23             corporations.
    24     (a)  General rule.--Where any of the [valid] charter
    25  documents of a business corporation are not on file in the
    26  Department of State or there is an error in any such document as
    27  transferred to the department pursuant to section 140 (relating
    28  to custody and management of orphan corporate and business
    29  records), and the corporation desires to file any document in
    30  the department under any other provision of this subpart or the
    19970S1157B2174                 - 22 -

     1  corporation desires to secure from the department any
     2  certificate to the effect that the corporation is a corporation
     3  duly incorporated and existing under the laws of this
     4  Commonwealth or a certified copy of the articles of the
     5  corporation or the corporation desires to correct the text of
     6  its charter documents as on file in the department, the
     7  corporation shall file in the department a statement of summary
     8  of record which shall be executed by the corporation and shall
     9  set forth:
    10         (1)  The name of the corporation and, subject to section
    11     109 (relating to name of commercial registered office
    12     provider in lieu of registered address), the location,
    13     including street and number, if any, of its registered
    14     office.
    15         (2)  The statute by or under which the corporation was
    16     incorporated.
    17         (3)  The name under which, the manner in which and the
    18     date on which the corporation was originally incorporated,
    19     including the date when and the place where the original
    20     articles were recorded.
    21         (4)  The place or places, including volume and page
    22     numbers or their equivalent, where the documents
    23     [constituting the currently effective articles are] that are
    24     not on file in the department or that require correction in
    25     the records of the department were originally filed or
    26     recorded, the date or dates of each filing or recording and
    27     the correct text of the [currently effective articles.]
    28     documents. The information specified in this paragraph may be
    29     omitted in a statement of summary of record that is delivered
    30     to the department contemporaneously with amended and restated
    19970S1157B2174                 - 23 -

     1     articles of the corporation filed under this subpart.
     2         [(5)  Each name by which the corporation was known, if
     3     any, other than its original name and its current name, and
     4     the date or dates on which each change of name of the
     5     corporation became effective.
     6         (6)  In the case of any entity brought within the scope
     7     of Chapter 29 (relating to professional corporations) by or
     8     pursuant to section 2905 (relating to election of
     9     professional associations to become professional
    10     corporations), amended and restated articles of incorporation
    11     which shall include all of the information required to be set
    12     forth in restated articles of a professional corporation.
    13  A corporation shall be required to make only one filing under
    14  this subsection.]
    15     (b)  Validation of prior defects in incorporation.--Upon the
    16  filing of a statement by a corporation under this section or the
    17  transfer to the department of the records relating to a
    18  corporation pursuant to section 140, the corporation [named in
    19  the statement] shall be deemed to be a validly subsisting
    20  corporation to the same extent as if it had been duly
    21  incorporated and was existing under this subpart and the
    22  department shall so certify regardless of any absence of or
    23  defect in the prior proceedings relating to incorporation.
    24     (c)  Cross [reference] references.--See [section] sections
    25  134 (relating to docketing statement), 135 (relating to
    26  requirements to be met by filed documents) and 1106(b)(2)
    27  (relating to uniform application of subpart).
    28  § 1504.  Adoption, amendment and contents of bylaws.
    29     * * *
    30     (d)  Amendment of voting provisions.--
    19970S1157B2174                 - 24 -

     1         (1)  Unless otherwise provided in a bylaw adopted by the
     2     shareholders, whenever [the bylaws require] a bylaw adopted
     3     by the shareholders requires for the taking of any action by
     4     the shareholders or a class of shareholders a specific number
     5     or percentage of votes, the provision of the bylaws setting
     6     forth that requirement shall not be amended or repealed by
     7     any lesser number or percentage of votes of the shareholders
     8     or of the class of shareholders or only by action of the
     9     board of directors.
    10         (2)  Paragraph (1) shall not apply to a bylaw setting
    11     forth the right of shareholders to act by unanimous written
    12     consent as provided in section 1766(a) (relating to unanimous
    13     consent).
    14  § 1505.  Persons bound by bylaws.
    15     Except as otherwise provided by section 1713 (relating to
    16  personal liability of directors) or any similar provision of
    17  law, the bylaws of a business corporation shall operate only as
    18  regulations among the shareholders, directors and officers of
    19  the corporation and shall not affect contracts or other dealings
    20  with other persons unless those persons have actual knowledge of
    21  the bylaws.
    22  § 1508.  Corporate records; inspection by shareholders.
    23     (a)  Required records.--Every business corporation shall keep
    24  complete and accurate books and records of account, minutes of
    25  the proceedings of the incorporators, shareholders and directors
    26  and a share register giving the names and addresses of all
    27  shareholders and the number and class of shares held by each.
    28  The share register shall be kept at [either] any of the
    29  following locations:
    30         (1)  the registered office of the corporation in this
    19970S1157B2174                 - 25 -

     1     Commonwealth [or at its];
     2         (2)  the principal place of business of the corporation
     3     wherever situated;
     4         (3)  any actual business office of the corporation; or
     5     [at]
     6         (4)  the office of [its] the registrar or transfer agent
     7     of the corporation. [Any books, minutes or other records may
     8     be in written form or any other form capable of being
     9     converted into written form within a reasonable time.]
    10     (b)  Right of inspection by a shareholder.--Every shareholder
    11  shall, upon written verified demand stating the purpose thereof,
    12  have a right to examine, in person or by agent or attorney,
    13  during the usual hours for business for any proper purpose, the
    14  share register, books and records of account, and records of the
    15  proceedings of the incorporators, shareholders and directors and
    16  to make copies or extracts therefrom. A proper purpose shall
    17  mean a purpose reasonably related to the interest of the person
    18  as a shareholder. In every instance where an attorney or other
    19  agent is the person who seeks the right of inspection, the
    20  demand shall be accompanied by a verified power of attorney or
    21  other writing that authorizes the attorney or other agent to so
    22  act on behalf of the shareholder. The demand shall be directed
    23  to the corporation:
    24         (1)  at its registered office in this Commonwealth [or];
    25         (2)  at its principal place of business wherever
    26     situated; or
    27         (3)  in care of the person in charge of an actual
    28     business office of the corporation.
    29     (c)  Proceedings for the enforcement of inspection by a
    30  shareholder.--If the corporation, or an officer or agent
    19970S1157B2174                 - 26 -

     1  thereof, refuses to permit an inspection sought by a shareholder
     2  or attorney or other agent acting for the shareholder pursuant
     3  to subsection (b) or does not reply to the demand within five
     4  business days after the demand has been made, the shareholder
     5  may apply to the court for an order to compel the inspection.
     6  The court shall determine whether or not the person seeking
     7  inspection is entitled to the inspection sought. The court may
     8  summarily order the corporation to permit the shareholder to
     9  inspect the share register and the other books and records of
    10  the corporation and to make copies or extracts therefrom, or the
    11  court may order the corporation to furnish to the shareholder a
    12  list of its shareholders as of a specific date on condition that
    13  the shareholder first pay to the corporation the reasonable cost
    14  of obtaining and furnishing the list and on such other
    15  conditions as the court deems appropriate. Where the shareholder
    16  seeks to inspect the books and records of the corporation, other
    17  than its share register or list of shareholders, he shall first
    18  establish:
    19         (1)  That he has complied with the provisions of this
    20     section respecting the form and manner of making demand for
    21     inspection of the document.
    22         (2)  That the inspection he seeks is for a proper
    23     purpose.
    24  Where the shareholder seeks to inspect the share register or
    25  list of shareholders of the corporation and he has complied with
    26  the provisions of this section respecting the form and manner of
    27  making demand for inspection of the documents, the burden of
    28  proof shall be upon the corporation to establish that the
    29  inspection he seeks is for an improper purpose. The court may,
    30  in its discretion, prescribe any limitations or conditions with
    19970S1157B2174                 - 27 -

     1  reference to the inspection or award such other or further
     2  relief as the court deems just and proper. The court may order
     3  books, documents and records, pertinent extracts therefrom, or
     4  duly authenticated copies thereof, to be brought into this
     5  Commonwealth and kept in this Commonwealth upon such terms and
     6  conditions as the order may prescribe.
     7     (d)  Certain provisions of articles ineffective.--This
     8  section may not be relaxed by any provision of the articles.
     9     (e)  Cross [reference] references.--See [section] sections
    10  107 (relating to form of records), 1512 (relating to
    11  informational rights of a director) and 1763(c) (relating to
    12  certification by nominee).
    13  § 1512.  Informational rights of a director.
    14     (a)  General rule.--To the extent reasonably related to the
    15  performance of the duties of the director, including those
    16  arising from service as a member of a committee of the board of
    17  directors, a director of a business corporation is entitled:
    18         (1)  in person or by any attorney or other agent, at any
    19     reasonable time, to inspect and copy corporate books, records
    20     and documents and, in addition, to inspect, and receive
    21     information regarding, the assets, liabilities and operations
    22     of the corporation and any subsidiaries of the corporation
    23     incorporated or otherwise organized or created under the laws
    24     of this Commonwealth that are controlled directly or
    25     indirectly by the corporation; and
    26         (2)  to demand that the corporation exercise whatever
    27     rights it may have to obtain information regarding any other
    28     subsidiaries of the corporation.
    29     (b)  Proceedings for enforcement of inspection by a
    30  director.--If the corporation, or an officer or agent thereof,
    19970S1157B2174                 - 28 -

     1  refuses to permit an inspection or obtain or provide information
     2  sought by a director or attorney or other agent acting for the
     3  director pursuant to subsection (a) or does not reply to the
     4  request within two business days after the request has been
     5  made, the director may apply to the court for an order to compel
     6  the inspection or the obtaining or providing of the information.
     7  The court shall summarily order the corporation to permit the
     8  requested inspection or to obtain the information unless the
     9  corporation establishes that the information to be obtained by
    10  the exercise of the right is not reasonably related to the
    11  performance of the duties of the director or that the director
    12  or the attorney or agent of the director is likely to use the
    13  information in a manner that would violate the duty of the
    14  director to the corporation. The order of the court may contain
    15  provisions protecting the corporation from undue burden or
    16  expense and prohibiting the director from using the information
    17  in a manner that would violate the duty of the director to the
    18  corporation.
    19     (c)  Cross references.--See sections 107 (relating to form of
    20  records) and 1508 (relating to corporate records; inspection by
    21  shareholders) and 42 Pa.C.S. § 2503(7) (relating to right of
    22  participants to receive counsel fees).
    23  § 1521.  Authorized shares.
    24     * * *
    25     (b)  Provisions specifically authorized.--
    26         (1)  Without limiting the authority contained in
    27     subsection (a), a corporation, when so authorized in its
    28     articles, may issue classes or series of shares:
    29             (i)  Subject to the right or obligation of the
    30         corporation to redeem any of the shares for the
    19970S1157B2174                 - 29 -

     1         consideration, if any, fixed by or in the manner provided
     2         by the articles for the redemption thereof. Unless
     3         otherwise provided in the articles, any shares subject to
     4         redemption shall be redeemable only pro rata or by lot or
     5         by such other equitable method as may be selected by the
     6         corporation. [An amendment of the articles to add or
     7         amend a provision permitting the redemption of any shares
     8         by a method that is not pro rata nor by lot nor otherwise
     9         equitable may be effected only pursuant to section 1906
    10         (relating to special treatment of holders of shares of
    11         same class or series).]
    12             (ii)  Entitling the holders thereof to cumulative,
    13         noncumulative or partially cumulative dividends.
    14             (iii)  Having preference over any other shares as to
    15         dividends or assets or both.
    16             (iv)  Convertible into shares of any other class or
    17         series, or into obligations of the corporation.
    18         (2)  Any of the terms of a class or series of shares may
    19     be made dependent upon:
    20             (i)  Facts ascertainable outside of the articles if
    21         the manner in which the facts will operate upon the terms
    22         of the class or series is set forth in the articles. Such
    23         facts may include, without limitation, actions or events
    24         within the control of or determinations made by the
    25         corporation or a representative of the corporation.
    26             * * *
    27     (d)  Status and rights.--Shares of a business corporation
    28  shall be deemed personal property. Except as otherwise provided
    29  by the articles or, when so permitted by subsection (c), by one
    30  or more bylaws adopted by the shareholders, each share shall be
    19970S1157B2174                 - 30 -

     1  in all respects equal to every other share. See section
     2  1906(d)(4) (relating to special treatment of holders of shares
     3  of same class or series).
     4  § 1526.  Liability of [subscribers and] shareholders.
     5     [A subscriber to, or holder or owner of, shares of a business
     6  corporation shall not be under any liability to the corporation
     7  or any creditor thereof with respect to the shares other than
     8  the personal obligation of a shareholder who has acquired his
     9  shares by subscription to comply with the terms of the
    10  subscription.] (a)  General rule.--A shareholder of a business
    11  corporation shall not be liable, solely by reason of being a
    12  shareholder, under an order of a court or in any other manner
    13  for a debt, obligation or liability of the corporation of any
    14  kind or for the acts of any shareholder or representative of the
    15  corporation.
    16     (b)  Professional relationship unaffected.--Subsection (a)
    17  shall not afford the shareholders of a business corporation that
    18  is not a professional corporation, but that provides
    19  professional services, with greater immunity than is available
    20  to the officers, shareholders, employees or agents of a business
    21  corporation that is a professional corporation. See section 2925
    22  (relating to professional relationship retained).
    23     (c)  Disciplinary jurisdiction unaffected.--A business
    24  corporation providing professional services shall be subject to
    25  the applicable rules and regulations adopted by, and all the
    26  disciplinary powers of, the court, department, board, commission
    27  or other government unit regulating the profession in which the
    28  corporation is engaged. The court, department, board or other
    29  government unit may require that a corporation include in its
    30  articles provisions that conform to any rule or regulation
    19970S1157B2174                 - 31 -

     1  heretofore or hereafter promulgated for the purpose of enforcing
     2  the ethics of a profession. This subpart shall not affect or
     3  impair the disciplinary powers of the court, department, board,
     4  commission or other government unit over licensed persons or any
     5  law, rule or regulation pertaining to the standards for
     6  professional conduct of licensed persons or to the professional
     7  relationship between any licensed person rendering professional
     8  services and the person receiving professional services.
     9  § 1571.  Application and effect of subchapter.
    10     (a)  General rule.--Except as otherwise provided in
    11  subsection (b), any shareholder (as defined in section 1572
    12  (relating to definitions)) of a business corporation shall have
    13  the right to dissent from, and to obtain payment of the fair
    14  value of his shares in the event of, any corporate action, or to
    15  otherwise obtain fair value for his shares, only where this part
    16  expressly provides that a shareholder shall have the rights and
    17  remedies provided in this subchapter. See:
    18         Section 1906(c) (relating to dissenters rights upon
    19     special treatment).
    20         Section 1930 (relating to dissenters rights).
    21         Section 1931(d) (relating to dissenters rights in share
    22     exchanges).
    23         Section 1932(c) (relating to dissenters rights in asset
    24     transfers).
    25         Section 1952(d) (relating to dissenters rights in
    26     division).
    27         Section 1962(c) (relating to dissenters rights in
    28     conversion).
    29         Section 2104(b) (relating to procedure).
    30         Section 2324 (relating to corporation option where a
    19970S1157B2174                 - 32 -

     1     restriction on transfer of a security is held invalid).
     2         Section 2325(b) (relating to minimum vote requirement).
     3         Section 2704(c) (relating to dissenters rights upon
     4     election).
     5         Section 2705(d) (relating to dissenters rights upon
     6     renewal of election).
     7         Section 2904(b) (relating to procedure).
     8         Section 2907(a) (relating to proceedings to terminate
     9     breach of qualifying conditions).
    10         Section 7104(b)(3) (relating to procedure).
    11     (b)  Exceptions.--
    12         (1)  Except as otherwise provided in paragraph (2), the
    13     holders of the shares of any class or series of shares [that,
    14     at] shall not have the right to dissent and obtain payment of
    15     the fair value of the shares under this subchapter if, on the
    16     record date fixed to determine the shareholders entitled to
    17     notice of and to vote at the meeting at which a plan
    18     specified in any of section 1930, 1931(d), 1932(c) or 1952(d)
    19     is to be voted on, or on the date of the first public
    20     announcement that such a plan has been approved by the
    21     shareholders by written consent without a meeting, the shares
    22     are either:
    23             (i)  listed on a national securities exchange or
    24         designated as a national market system security on an
    25         interdealer quotation system by the National Association
    26         of Securities Dealers, Inc.; or
    27             (ii)  held beneficially or of record by more than
    28         2,000 [shareholders;
    29     shall not have the right to obtain payment of the fair value
    30     of any such shares under this subchapter.] persons.
    19970S1157B2174                 - 33 -

     1         (2)  Paragraph (1) shall not apply to and dissenters
     2     rights shall be available without regard to the exception
     3     provided in that paragraph in the case of:
     4             (i)  [Shares converted by a plan if the shares are
     5         not converted solely into shares of the acquiring,
     6         surviving, new or other corporation or solely into such
     7         shares and money in lieu of fractional shares.]
     8         (Repealed.)
     9             (ii)  Shares of any preferred or special class or
    10         series unless the articles, the plan or the terms of the
    11         transaction entitle all shareholders of the class or
    12         series to vote thereon and require for the adoption of
    13         the plan or the effectuation of the transaction the
    14         affirmative vote of a majority of the votes cast by all
    15         shareholders of the class or series.
    16             (iii)  Shares entitled to dissenters rights under
    17         section 1906(c) (relating to dissenters rights upon
    18         special treatment).
    19         (3)  The shareholders of a corporation that acquires by
    20     purchase, lease, exchange or other disposition all or
    21     substantially all of the shares, property or assets of
    22     another corporation by the issuance of shares, obligations or
    23     otherwise, with or without assuming the liabilities of the
    24     other corporation and with or without the intervention of
    25     another corporation or other person, shall not be entitled to
    26     the rights and remedies of dissenting shareholders provided
    27     in this subchapter regardless of the fact, if it be the case,
    28     that the acquisition was accomplished by the issuance of
    29     voting shares of the corporation to be outstanding
    30     immediately after the acquisition sufficient to elect a
    19970S1157B2174                 - 34 -

     1     majority or more of the directors of the corporation.
     2     * * *
     3     (g)  Computation of beneficial ownership.--For purposes of
     4  subsection (b)(1)(ii), shares that are held beneficially as
     5  joint tenants, tenants by the entireties, tenants in common or
     6  in trust by two or more persons, as fiduciaries or otherwise,
     7  shall be deemed to be held beneficially by one person.
     8     [(g)] (h)  Cross references.--See sections 1105 (relating to
     9  restriction on equitable relief), 1904 (relating to de facto
    10  transaction doctrine abolished), 1763(c) (relating to
    11  determination of shareholders of record) and 2512 (relating to
    12  dissenters rights procedure).
    13  § 1572.  Definitions.
    14     The following words and phrases when used in this subchapter
    15  shall have the meanings given to them in this section unless the
    16  context clearly indicates otherwise:
    17     "Corporation."  The issuer of the shares held or owned by the
    18  dissenter before the corporate action or the successor by
    19  merger, consolidation, division, conversion or otherwise of that
    20  issuer. A plan of division may designate which one or more of
    21  the resulting corporations is the successor corporation for the
    22  purposes of this subchapter. The designated successor
    23  corporation or corporations in a division shall have sole
    24  responsibility for payments to dissenters and other liabilities
    25  under this subchapter except as otherwise provided in the plan
    26  of division.
    27     "Dissenter."  A shareholder [or beneficial owner] who is
    28  entitled to and does assert dissenters rights under this
    29  subchapter and who has performed every act required up to the
    30  time involved for the assertion of those rights.
    19970S1157B2174                 - 35 -

     1     * * *
     2     "Shareholder."  A shareholder as defined in section 1103
     3  (relating to definitions), or an ultimate beneficial owner of
     4  shares, including without limitation a holder of depository
     5  receipts, where the beneficial interest owned includes an
     6  interest in the assets of the corporation upon dissolution.
     7  § 1704.  Place and notice of meetings of shareholders.
     8     (a)  Place.--Meetings of shareholders may be held at such
     9  place within or without this Commonwealth as may be provided in
    10  or fixed pursuant to the bylaws. Unless otherwise provided in or
    11  pursuant to the bylaws, all meetings of the shareholders shall
    12  be held [in this Commonwealth at the registered office of the
    13  corporation] at the executive office of the corporation wherever
    14  situated.
    15     * * *
    16  § 1709.  Conduct of shareholders meeting.
    17     (a)  Presiding officer.--There shall be a presiding officer
    18  at every meeting of the shareholders. The presiding officer
    19  shall be appointed in the manner provided in the bylaws or, in
    20  the absence of such provision, by the board of directors. If the
    21  bylaws are silent on the appointment of the presiding officer
    22  and the board fails to designate a presiding officer, the
    23  president shall be the presiding officer.
    24     (b)  Authority of the presiding officer.--Except as otherwise
    25  provided in the bylaws, the presiding officer shall determine
    26  the order of business and shall have the authority to establish
    27  rules for the conduct of the meeting.
    28     (c)  Procedural standard.--Any action by the presiding
    29  officer in adopting rules for, and in conducting, a meeting
    30  shall be fair to the shareholders.
    19970S1157B2174                 - 36 -

     1     (d)  Closing of the polls.--The presiding officer shall
     2  announce at the meeting when the polls close for each matter
     3  voted upon. If no announcement is made, the polls shall be
     4  deemed to have closed upon the final adjournment of the meeting.
     5  After the polls close, no ballots, proxies or votes, nor any
     6  revocations or changes thereto, may be accepted.
     7  § 1729.  Voting rights of directors.
     8     (a)  General rule.--Unless otherwise provided in a bylaw
     9  adopted by the shareholders, every director of a business
    10  corporation shall be entitled to one vote. Without limiting the
    11  generality of the foregoing, a bylaw adopted by the shareholders
    12  may provide that a class or other defined group of directors
    13  shall have multiple or fractional voting rights, or no right to
    14  vote, either generally or under specified circumstances.
    15     (b)  [Multiple and fractional voting] Application of
    16  procedural requirements.--Any requirement of this subpart for
    17  the presence of or vote or other action by a specified
    18  percentage of directors shall be satisfied by the presence of or
    19  vote or other action by directors entitled to cast the specified
    20  percentage of the votes that all voting directors in office are
    21  entitled to cast.
    22  § 1731.  Executive and other committees of the board.
    23     (a)  Establishment and powers.--Unless otherwise restricted
    24  in the bylaws:
    25         * * *
    26         (2)  Any committee, to the extent provided in the
    27     resolution of the board of directors or in the bylaws, shall
    28     have and may exercise all of the powers and authority of the
    29     board of directors except that a committee shall not have any
    30     power or authority as to the following:
    19970S1157B2174                 - 37 -

     1             (i)  The submission to shareholders of any action
     2         requiring approval of shareholders under this subpart.
     3             (ii)  The creation or filling of vacancies in the
     4         board of directors.
     5             (iii)  The adoption, amendment or repeal of the
     6         bylaws.
     7             (iv)  The amendment or repeal of any resolution of
     8         the board that by its terms is amendable or repealable
     9         only by the board.
    10             (v)  Action on matters committed by the bylaws or
    11         resolution of the board of directors exclusively to
    12         another committee of the board.
    13         * * *
    14  § 1745.  Advancing expenses.
    15     Expenses (including attorneys' fees) incurred in defending
    16  any action or proceeding referred to in this subchapter may be
    17  paid by a business corporation in advance of the final
    18  disposition of the action or proceeding upon receipt of an
    19  undertaking by or on behalf of the representative to repay the
    20  amount if it is ultimately determined that he is not entitled to
    21  be indemnified by the corporation as authorized in this
    22  subchapter or otherwise. Except as otherwise provided in the
    23  bylaws, advancement of expenses shall be authorized by the board
    24  of directors. Sections 1728 (relating to interested directors or
    25  officers; quorum) and 2538 (relating to approval of transactions
    26  with interested shareholders) shall not be applicable to the
    27  advancement of expenses under this section.
    28  § 1748.  Application to surviving or new corporations.
    29     [For] (a)  General rule.--Except as provided in subsection
    30  (b), for the purposes of this subchapter, references to "the
    19970S1157B2174                 - 38 -

     1  corporation" include all constituent corporations absorbed in a
     2  consolidation, merger or division, as well as the surviving or
     3  new corporations surviving or resulting therefrom, so that any
     4  person who is or was a representative of the constituent,
     5  surviving or new corporation, or is or was serving at the
     6  request of the constituent, surviving or new corporation as a
     7  representative of another domestic or foreign corporation for
     8  profit or not-for-profit, partnership, joint venture, trust or
     9  other enterprise, shall stand in the same position under the
    10  provisions of this subchapter with respect to the surviving or
    11  new corporation as he would if he had served the surviving or
    12  new corporation in the same capacity.
    13     (b)  Divisions.--Notwithstanding subsection (a), the
    14  obligations of a dividing corporation to indemnify and advance
    15  expenses to its representatives, whether arising under this
    16  subchapter or otherwise, may be allocated in a division in the
    17  same manner and with the same effect as any other liability of
    18  the dividing corporation.
    19  § 1756.  Quorum.
    20     (a)  General rule.--A meeting of shareholders of a business
    21  corporation duly called shall not be organized for the
    22  transaction of business unless a quorum is present. Unless
    23  otherwise provided in a bylaw adopted by the shareholders:
    24         * * *
    25         (4)  If a proxy casts a vote on behalf of a shareholder
    26     on any issue considered at a meeting of shareholders, the
    27     shareholder shall be deemed to be present during the entire
    28     meeting for purposes of determining whether a quorum is
    29     present for consideration of any other issue.
    30     * * *
    19970S1157B2174                 - 39 -

     1  § 1758.  Voting rights of shareholders.
     2     * * *
     3     (b)  Procedures for election of directors.--[If the bylaws
     4  provide a fair and reasonable procedure for the nomination of
     5  candidates for any office, only candidates who have been duly
     6  nominated in accordance therewith shall be eligible for
     7  election.] Unless otherwise restricted in the bylaws, in
     8  elections for directors, voting need not be by ballot unless
     9  required by vote of the shareholders before the voting for
    10  election of directors begins. The candidates for election as
    11  directors receiving the highest number of votes from each class
    12  or group of classes, if any, entitled to elect directors
    13  separately up to the number of directors to be elected by the
    14  class or group of classes shall be elected. If at any meeting of
    15  shareholders, directors of more than one class are to be
    16  elected, each class of directors shall be elected in a separate
    17  election.
    18     * * *
    19     (e)  Advance notice of nominations and other business.--If
    20  the bylaws provide a fair and reasonable procedure for the
    21  nomination of candidates for election as directors, only
    22  candidates who have been duly nominated in accordance therewith
    23  shall be eligible for election. If the bylaws impose a fair and
    24  reasonable requirement of advance notice of proposals to be made
    25  by a shareholder at the annual meeting of the shareholders, only
    26  proposals for which advance notice has been properly given may
    27  be acted upon at the meeting.
    28  § 1759.  Voting and other action by proxy.
    29     * * *
    30     (b)  Execution and filing.--Every proxy shall be executed [in
    19970S1157B2174                 - 40 -

     1  writing] or authenticated by the shareholder or by his duly
     2  authorized attorney-in-fact and filed with or transmitted to the
     3  secretary of the corporation or its designated agent. A
     4  shareholder or his duly authorized attorney-in-fact may execute
     5  or authenticate a writing or transmit an electronic message
     6  authorizing another person to act for him by proxy. A telegram,
     7  telex, cablegram, datagram or [similar] other means of
     8  electronic transmission from a shareholder or attorney-in-fact,
     9  or a photographic, facsimile or similar reproduction of a
    10  writing executed by a shareholder or attorney-in-fact:
    11         (1)  may be treated as properly executed or authenticated
    12     for purposes of this subsection; and
    13         (2)  shall be so treated if it sets forth or utilizes a
    14     confidential and unique identification number or other mark
    15     furnished by the corporation to the shareholder for the
    16     purposes of a particular meeting or transaction.
    17     (c)  Revocation.--A proxy, unless coupled with an interest,
    18  shall be revocable at will, notwithstanding any other agreement
    19  or any provision in the proxy to the contrary, but the
    20  revocation of a proxy shall not be effective until [written]
    21  notice thereof has been given to the secretary of the
    22  corporation or its designated agent in writing or by electronic
    23  transmission. An unrevoked proxy shall not be valid after three
    24  years from the date of its execution, authentication or
    25  transmission unless a longer time is expressly provided therein.
    26  A proxy shall not be revoked by the death or incapacity of the
    27  maker unless, before the vote is counted or the authority is
    28  exercised, written notice of the death or incapacity is given to
    29  the secretary of the corporation or its designated agent.
    30     * * *
    19970S1157B2174                 - 41 -

     1  § 1906.  Special treatment of holders of shares of same class or
     2             series.
     3     (a)  General rule.--Except as otherwise restricted in the
     4  articles, [an amendment or] a plan may contain a provision
     5  classifying the holders of shares of a class or series into one
     6  or more separate groups by reference to any facts or
     7  circumstances that are not manifestly unreasonable and providing
     8  mandatory treatment for shares of the class or series held by
     9  particular shareholders or groups of shareholders that differs
    10  materially from the treatment accorded other shareholders or
    11  groups of shareholders holding shares of the same class or
    12  series (including a provision modifying or rescinding rights
    13  previously created under this section) if:
    14         (1)  (i)  such provision is specifically authorized by a
    15         majority of the votes cast by all shareholders entitled
    16         to vote on the [amendment or] plan, as well as by a
    17         majority of the votes cast by any class or series of
    18         shares any of the shares of which are so classified into
    19         groups, whether or not such class or series would
    20         otherwise be entitled to vote on the [amendment or] plan;
    21         and
    22             (ii)  the provision voted on specifically enumerates
    23         the type and extent of the special treatment authorized;
    24         or
    25         (2)  under all the facts and circumstances, a court of
    26     competent jurisdiction finds such special treatment is
    27     undertaken in good faith, after reasonable deliberation and
    28     is in the best interest of the corporation.
    29     (b)  Statutory voting rights upon special treatment.--Except
    30  as provided in subsection (c), if [an amendment or] a plan
    19970S1157B2174                 - 42 -

     1  contains a provision for special treatment, each group of
     2  holders of any outstanding shares of a class or series who are
     3  to receive the same special treatment under the [amendment or]
     4  plan shall be entitled to vote as a special class in respect to
     5  the plan regardless of any limitations stated in the articles or
     6  bylaws on the voting rights of any class or series.
     7     (c)  Dissenters rights upon special treatment.--If any
     8  [amendment or] plan contains a provision for special treatment
     9  without requiring for the adoption of the [amendment or] plan
    10  the statutory class vote required by subsection (b), the holder
    11  of any outstanding shares the statutory class voting rights of
    12  which are so denied, who objects to the [amendment or] plan and
    13  complies with Subchapter D of Chapter 15 (relating to dissenters
    14  rights), shall be entitled to the rights and remedies of
    15  dissenting shareholders provided in that subchapter.
    16     (d)  Exceptions.--This section shall not apply to:
    17         (1)  The creation or issuance of securities, contracts,
    18     warrants or other instruments evidencing any shares, option
    19     rights, securities having conversion or option rights or
    20     obligations authorized by section 2513 (relating to disparate
    21     treatment of certain persons).
    22         (2)  A provision of [an amendment or] a plan that offers
    23     to all holders of shares of a class or series the same option
    24     to elect certain treatment.
    25         (3)  [An amendment or] A plan that contains an express
    26     provision that this section shall not apply or that fails to
    27     contain an express provision that this section shall apply.
    28     The shareholders of a corporation that proposes [an amendment
    29     or] a plan to which this section is not applicable by reason
    30     of this paragraph shall have the remedies contemplated by
    19970S1157B2174                 - 43 -

     1     section 1105 (relating to restriction on equitable relief).
     2         (4)  A provision of a plan that treats all of the holders
     3     of a particular class or series of shares differently from
     4     the holders of another class or series. A provision of a plan
     5     that treats the holders of a class or series of shares
     6     differently from the holders of another class or series of
     7     shares shall not constitute a violation of section 1521(d)
     8     (relating to authorized shares).
     9     (e)  Definition.--As used in this section, the term "plan"
    10  includes:
    11         (1)  an amendment of the articles that effects a
    12     reclassification of shares, whether or not the amendment is
    13     accompanied by a separate plan of reclassification; and
    14         (2)  a resolution recommending that the corporation
    15     dissolve voluntarily adopted under section 1972(a) (relating
    16     to proposal of voluntary dissolution).
    17  § 1912.  Proposal of amendments.
    18     * * *
    19     (c)  Terms of amendment.--The resolution or petition may set
    20  forth the manner and basis of reclassifying the shares of the
    21  corporation. Any of the terms of a plan of reclassification or
    22  other action contained in an amendment may be made dependent
    23  upon facts ascertainable outside of the amendment if the manner
    24  in which the facts will operate upon the terms of the amendment
    25  is set forth in the amendment. Such facts may include, without
    26  limitation, actions or events within the control of or
    27  determinations made by the corporation or a representative of
    28  the corporation.
    29  § 1914.  Adoption of amendments.
    30     * * *
    19970S1157B2174                 - 44 -

     1     (b)  Statutory voting rights.--Except as provided in this
     2  subpart, the holders of the outstanding shares of a class or
     3  series of shares shall be entitled to vote as a class in respect
     4  of a proposed amendment regardless of any limitations stated in
     5  the articles or bylaws on the voting rights of any class or
     6  series if [a proposed] the amendment would:
     7         (1)  authorize the board of directors to fix and
     8     determine the relative rights and preferences, as between
     9     series, of any preferred or special class;
    10         (2)  make any change in the preferences, limitations or
    11     special rights (other than preemptive rights or the right to
    12     vote cumulatively) of the shares of a class or series adverse
    13     to the class or series;
    14         (3)  authorize a new class or series of shares having a
    15     preference as to dividends or assets which is senior to the
    16     shares of a class or series; [or]
    17         (4)  increase the number of authorized shares of any
    18     class or series having a preference as to dividends or assets
    19     which is senior in any respect to the shares of a class or
    20     series; or
    21         (5)  make the outstanding shares of a class or series
    22     redeemable by a method that is not pro rata, by lot or
    23     otherwise equitable.
    24  [then the holders of the outstanding shares of the class or
    25  series shall be entitled to vote as a class in respect to the
    26  amendment regardless of any limitations stated in the articles
    27  or bylaws on the voting rights of any class or series.]
    28     (c)  Adoption by board of directors.--Unless otherwise
    29  restricted in the articles, an amendment of articles shall not
    30  require the approval of the shareholders of the corporation if:
    19970S1157B2174                 - 45 -

     1         (1)  shares have not been issued;
     2         (2)  the amendment is restricted to [any] one or more of
     3     the following:
     4             (i)  changing the corporate name;
     5             (ii)  providing for perpetual existence;
     6             (iii)  reflecting a reduction in authorized shares
     7         effected by operation of section 1552(a) (relating to
     8         power of corporation to acquire its own shares) and, if
     9         appropriate, deleting all references to a class or series
    10         of shares that is no longer outstanding; [or]
    11             (iv)  adding or deleting a provision authorized by
    12         section 1528(f) (relating to uncertificated shares)[.];
    13         or
    14             (v)  adding, changing or eliminating the par value of
    15         any class or series of shares if the par value of that
    16         class or series does not have any substantive effect
    17         under the terms of that or any other class or series of
    18         shares;
    19         (3)  (i)  the corporation has only one class or series of
    20         voting shares outstanding;
    21             (ii)  the corporation does not have any class or
    22         series of shares outstanding that is:
    23                 (A)  convertible into those voting shares;
    24                 (B)  junior in any way to those voting shares; or
    25                 (C)  entitled to participate on any basis in
    26             distributions with those voting shares; and
    27             (iii)  the amendment is effective solely to
    28         accomplish one of the following purposes with respect to
    29         those voting shares:
    30             [(i)]  (A)  in connection with effectuating a stock
    19970S1157B2174                 - 46 -

     1         dividend of voting shares on the voting shares, to
     2         increase the number of authorized shares [to the extent
     3         necessary to permit the board of directors to effectuate
     4         a stock dividend in the shares of the corporation] of the
     5         voting shares in the same proportion that the voting
     6         shares to be distributed in the stock dividend increase
     7         the issued voting shares; or
     8             [(ii)  effectuate a]  (B)  to split the voting shares
     9         and, if desired, increase the number of authorized shares
    10         of the voting shares or change the par value of [the
    11         authorized] the voting shares, or both, in proportion
    12         thereto;
    13         (4)  to the extent the amendment has not been approved by
    14     the shareholders, it restates without change all of the
    15     operative provisions of the articles as theretofore amended
    16     or as amended thereby; or
    17         (5)  the amendment accomplishes any combination of
    18     purposes specified in this subsection.
    19  Whenever a provision of this subpart authorizes the board of
    20  directors to take any action without the approval of the
    21  shareholders and provides that a statement, certificate, plan or
    22  other document relating to such action shall be filed in the
    23  Department of State and shall operate as an amendment of the
    24  articles, the board upon taking such action may, in lieu of
    25  filing the statement, certificate, plan or other document, amend
    26  the articles under this subsection without the approval of the
    27  shareholders to reflect the taking of such action. An amendment
    28  of articles under this subsection shall be deemed adopted by the
    29  corporation when it has been adopted by the board of directors
    30  pursuant to section 1912 (relating to proposal of amendments).
    19970S1157B2174                 - 47 -

     1     * * *
     2     (f)  Definition.--As used in this section, the term "voting
     3  shares" has the meaning specified in section 2552 (relating to
     4  definitions).
     5  § 1922.  Plan of merger or consolidation.
     6     (a)  Preparation of plan.--A plan of merger or consolidation,
     7  as the case may be, shall be prepared, setting forth:
     8         * * *
     9         (5)  Such other provisions as are deemed desirable.
    10  [Any of the terms of the plan may be made dependent upon facts
    11  ascertainable outside of the plan if the manner in which the
    12  facts will operate upon the terms of the plan is set forth in
    13  the plan.]
    14     (b)  Post-adoption amendment.--A plan of merger or
    15  consolidation may contain a provision that the boards of
    16  directors of the constituent corporations may amend the plan at
    17  any time prior to its effective date, except that an amendment
    18  made subsequent to the adoption of the plan by the shareholders
    19  of any constituent domestic business corporation shall not
    20  change:
    21         (1)  The amount or kind of shares, obligations, cash,
    22     property or rights to be received in exchange for or on
    23     conversion of all or any of the shares of the constituent
    24     domestic business corporation adversely to the holders of
    25     those shares.
    26         (2)  Any [term] provision of the articles of the
    27     surviving or new corporation [to be effected by] as it is to
    28     be in effect immediately following consummation of the merger
    29     or consolidation, except provisions that may be amended
    30     without the approval of the shareholders under section
    19970S1157B2174                 - 48 -

     1     1914(c)(2) (relating to adoption of amendments).
     2         (3)  Any of the other terms and conditions of the plan if
     3     the change would adversely affect the holders of any shares
     4     of the constituent domestic business corporation.
     5     (c)  Proposal.--[Every] Except where the approval of the
     6  board of directors is unnecessary under this subchapter, every
     7  merger or consolidation shall be proposed in the case of each
     8  domestic business corporation by the adoption by the board of
     9  directors of a resolution approving the plan of merger or
    10  consolidation. Except where the approval of the shareholders is
    11  unnecessary under this subchapter, the board of directors shall
    12  direct that the plan be submitted to a vote of the shareholders
    13  entitled to vote thereon at a regular or special meeting of the
    14  shareholders.
    15     * * *
    16     (e)  Reference to outside facts.--Any of the terms of a plan
    17  of merger or consolidation may be made dependent upon facts
    18  ascertainable outside of the plan if the manner in which the
    19  facts will operate upon the terms of the plan is set forth in
    20  the plan. Such facts may include, without limitation, actions or
    21  events within the control of or determinations made by a party
    22  to the plan or a representative of a party to the plan.
    23  § 1923.  Notice of meeting of shareholders.
    24     (a)  General rule.--Written notice of the meeting of
    25  shareholders that will act on the proposed plan shall be given
    26  to each shareholder of record, whether or not entitled to vote
    27  thereon, of each domestic business corporation that is a party
    28  to the merger or consolidation. There shall be included in, or
    29  enclosed with, the notice a copy of the proposed plan or a
    30  summary thereof and, if Subchapter D of Chapter 15 (relating to
    19970S1157B2174                 - 49 -

     1  dissenters rights) is applicable to the holders of shares of any
     2  class or series, a copy of that subchapter and of section 1930
     3  (relating to dissenters rights) shall be furnished to the
     4  holders of shares of that class or series. The notice shall
     5  state that a copy of the bylaws of the surviving or new
     6  corporation will be furnished to any shareholder on request and
     7  without cost.
     8     * * *
     9  § 1924.  Adoption of plan.
    10     * * *
    11     (b)  Adoption by board of directors.--
    12         (1)  Unless otherwise required by its bylaws, a plan of
    13     merger or consolidation shall not require the approval of the
    14     shareholders of a constituent domestic business corporation
    15     if:
    16             * * *
    17             (ii)  immediately prior to the adoption of the plan
    18         and at all times thereafter prior to its effective date,
    19         another corporation that is a party to the [merger or
    20         consolidation] plan owns directly or indirectly 80% or
    21         more of the outstanding shares of each class of the
    22         constituent corporation; or
    23             * * *
    24         (3)  If a merger or consolidation of a subsidiary
    25     corporation with a parent corporation is effected pursuant to
    26     paragraph (1)(ii), the plan of merger or consolidation shall
    27     be deemed adopted by the subsidiary corporation when it has
    28     been adopted by the board of the parent corporation and
    29     neither approval of the plan by the board of directors of the
    30     subsidiary corporation nor execution of articles of merger or
    19970S1157B2174                 - 50 -

     1     consolidation by the subsidiary corporation shall [not] be
     2     necessary.
     3         (4)  (i)  Unless other required by its bylaws, a plan of
     4         merger or consolidation providing for the merger or
     5         consolidation of a domestic business corporation
     6         (referred to in this paragraph as the "constituent
     7         corporation") with or into a single indirect wholly owned
     8         subsidiary (referred to in this paragraph as the
     9         "subsidiary corporation") of the constituent corporation
    10         shall not require the approval of the shareholders of
    11         either the constituent corporation or the subsidiary
    12         corporation if all of the provisions of this paragraph
    13         are satisfied.
    14             (ii)  A merger or consolidation under this paragraph
    15         shall satisfy the following conditions:
    16                 (A)  The constituent corporation and the
    17             subsidiary corporation are the only parties to the
    18             merger or consolidation, other than the resulting
    19             corporation, if any, in a consolidation (the
    20             corporation that survives or results from the merger
    21             or consolidation is referred to in this paragraph as
    22             the "resulting subsidiary").
    23                 (B)  Each share or fraction of a share of the
    24             capital stock of the constituent corporation
    25             outstanding immediately prior to the effective time
    26             of the merger or consolidation is converted in the
    27             merger or consolidation into a share or equal
    28             fraction of a share of capital stock of a holding
    29             company having the same designations, rights, powers
    30             and preferences and the qualifications, limitations
    19970S1157B2174                 - 51 -

     1             and restrictions as the share of stock of the
     2             constituent corporation being converted in the merger
     3             or consolidation.
     4                 (C)  The holding company and the resulting
     5             subsidiary are each domestic business corporations.
     6                 (D)  Immediately following the effective time of
     7             the merger or consolidation, the articles of
     8             incorporation and bylaws of the holding company are
     9             identical to the articles of incorporation and bylaws
    10             of the constituent corporation immediately before the
    11             effective time of the merger or consolidation, except
    12             for changes that could be made without shareholder
    13             approval under section 1914(c) (relating to adoption
    14             by board of directors).
    15                 (E)  Immediately following the effective time of
    16             the merger or consolidation, the resulting subsidiary
    17             is a direct or indirect wholly owned subsidiary of
    18             the holding company.
    19                 (F)  The directors of the constituent corporation
    20             become or remain the directors of the holding company
    21             upon the effective time of the merger or
    22             consolidation.
    23                 (G)  The board of directors of the constituent
    24             corporation has made a good faith determination that
    25             the shareholders of the constituent corporation will
    26             not recognize gain or loss for United States Federal
    27             Income Tax purposes.
    28             (iii)  As used in this paragraph only, the term
    29         "holding company" means a corporation that, from its
    30         incorporation until consummation of the merger or
    19970S1157B2174                 - 52 -

     1         consolidation governed by this paragraph, was at all
     2         times a direct wholly owned subsidiary of the constituent
     3         corporation and whose capital stock is issued in the
     4         merger or consolidation.
     5             (iv)  If the holding company is a registered
     6         corporation, the shares of the holding company issued in
     7         connection with the merger or consolidation shall be
     8         deemed to have been acquired at the time that the shares
     9         of the constituent corporation converted in the merger or
    10         consolidation were acquired.
    11         (5)  A plan of merger or consolidation adopted by the
    12     board of directors under this subsection without the approval
    13     of the shareholders shall not, by itself, create or impair
    14     any rights or obligations on the part of any person under
    15     section 2538 (relating to approval of transactions with
    16     interested shareholders) or under Subchapters E (relating to
    17     control transactions), F (relating to business combinations),
    18     G (relating to control-share acquisitions), H (relating to
    19     disgorgement by certain controlling shareholders following
    20     attempts to acquire control), I (relating to severance
    21     compensation for employees terminated following certain
    22     control-share acquisitions) and J (relating to business
    23     combination transactions - labor contracts) of Chapter 25,
    24     nor shall it change the standard of care applicable to the
    25     directors under Subchapter B of Chapter 17 (relating to
    26     fiduciary duty).
    27             * * *
    28  § 1929.  Effect of merger or consolidation.
    29     * * *
    30     (b)  Property rights.--All the property, real, personal and
    19970S1157B2174                 - 53 -

     1  mixed, and franchises of each of the corporations parties to the
     2  merger or consolidation, and all debts due on whatever account
     3  to any of them, including subscriptions for shares and other
     4  choses in action belonging to any of them, shall be deemed to be
     5  [transferred to and] vested in and shall belong to the surviving
     6  or new corporation, as the case may be, without further action,
     7  and the title to any real estate, or any interest therein,
     8  vested in any of the corporations shall not revert or be in any
     9  way impaired by reason of the merger or consolidation. The
    10  surviving or new corporation shall thenceforth be responsible
    11  for all the liabilities of each of the corporations so merged or
    12  consolidated. Liens upon the property of the merging or
    13  consolidating corporations shall not be impaired by the merger
    14  or consolidation and any claim existing or action or proceeding
    15  pending by or against any of the corporations may be prosecuted
    16  to judgment as if the merger or consolidation had not taken
    17  place or the surviving or new corporation may be proceeded
    18  against or substituted in its place.
    19     * * *
    20  § 1930.  Dissenters rights.
    21     * * *
    22     (b)  Plans adopted by directors only.--Except as otherwise
    23  provided pursuant to section 1571(c) (relating to grant of
    24  optional dissenters rights), Subchapter D of Chapter 15 shall
    25  not apply to any of the shares of a corporation that is a party
    26  to a merger or consolidation pursuant to section 1924(b)(1)(i)
    27  or (4) (relating to adoption by board of directors).
    28     * * *
    29  § 1931.  Share exchanges.
    30     (a)  General rule.--All the outstanding shares of one or more
    19970S1157B2174                 - 54 -

     1  classes or series of a domestic business corporation, designated
     2  in this section as the exchanging corporation, may, in the
     3  manner provided in this section, be acquired by any person,
     4  designated in this section as the acquiring person, through an
     5  exchange of all the shares pursuant to a plan of exchange. The
     6  plan of exchange may also provide for the conversion of any
     7  other shares of the exchanging corporation into shares, other
     8  securities or obligations of any person or cash, property or
     9  rights. The procedure authorized by this section shall not be
    10  deemed to limit the power of any person to acquire all or part
    11  of the shares or other securities of any class or series of a
    12  corporation through a voluntary exchange or otherwise by
    13  agreement with the holders of the shares or other securities.
    14     (b)  Plan of exchange.--A plan of exchange shall be prepared,
    15  setting forth:
    16         (1)  The terms and conditions of the exchange.
    17         (2)  The manner and basis of exchanging or converting the
    18     shares of the exchanging corporation into shares or other
    19     securities or obligations of the acquiring person, and, if
    20     any of the shares of the exchanging corporation are not to be
    21     exchanged or converted solely into shares or other securities
    22     or obligations of the acquiring person, the shares or other
    23     securities or obligations of any other person or cash,
    24     property or rights that the holders of the shares of the
    25     exchanging corporation are to receive in exchange for, or
    26     upon conversion of, the shares and the surrender of any
    27     certificates evidencing them, which securities or
    28     obligations, if any, of any other person or cash, property
    29     and rights may be in addition to or in lieu of the shares or
    30     other securities or obligations of the acquiring person.
    19970S1157B2174                 - 55 -

     1         (3)  Any changes desired to be made in the articles of
     2     the exchanging corporation, which may include a restatement
     3     of the articles.
     4         (4)  Any provisions desired providing special treatment
     5     of shares held by any shareholder or group of shareholders as
     6     authorized by, and subject to the provisions of, section 1906
     7     (relating to special treatment of holders of shares of same
     8     class or series). Notwithstanding subsection (a), a plan that
     9     provides special treatment may affect less than all of the
    10     outstanding shares of a class or series.
    11         (5)  Such other provisions as are deemed desirable.
    12  [Any of the terms of the plan may be made dependent upon facts
    13  ascertainable outside of the plan if the manner in which the
    14  facts will operate upon the terms of the plan is set forth in
    15  the plan.]
    16     (c)  Proposal and adoption.--The plan of exchange shall be
    17  proposed and adopted and may be amended after its adoption and
    18  terminated by the exchanging corporation in the manner provided
    19  by this subchapter for the proposal, adoption, amendment and
    20  termination of a plan of merger except section 1924(b) (relating
    21  to adoption by board of directors). There shall be included in,
    22  or enclosed with, the notice of the meeting of shareholders to
    23  act on the plan a copy or a summary of the plan and, if
    24  Subchapter D of Chapter 15 (relating to dissenters rights) is
    25  applicable, a copy of the subchapter and of subsection (d). The
    26  holders of any class of shares to be [acquired] exchanged or
    27  converted pursuant to the plan of exchange shall be entitled to
    28  vote as a class on the plan if they would have been entitled to
    29  vote on a plan of merger that affects the class in substantially
    30  the same manner as the plan of exchange.
    19970S1157B2174                 - 56 -

     1     (d)  Dissenters rights in share exchanges.--Any holder of
     2  shares that are to be [acquired] exchanged or converted pursuant
     3  to a plan of exchange who objects to the plan and complies with
     4  the provisions of Subchapter D of Chapter 15 shall be entitled
     5  to the rights and remedies of dissenting shareholders therein
     6  provided, if any. See section 1906(c) (relating to dissenter
     7  rights upon special treatment).
     8     (e)  Articles of exchange.--Upon adoption of a plan of
     9  exchange, as provided in this section, articles of exchange
    10  shall be executed by the exchanging corporation and shall set
    11  forth:
    12         (1)  The name and, subject to section 109 (relating to
    13     name of commercial registered office provider in lieu of
    14     registered address), the location of the registered office,
    15     including street and number, if any, of the exchanging
    16     corporation.
    17         (2)  If the plan is to be effective on a specified date,
    18     the hour, if any, and the month, day and year of the
    19     effective date.
    20         (3)  The manner in which the plan was adopted by the
    21     exchanging corporation.
    22         (4)  Except as provided in section 1901 (relating to
    23     omission of certain provisions from filed plans), the plan of
    24     exchange.
    25  The articles of exchange shall be filed in the Department of
    26  State. See [section] sections 134 (relating to docketing
    27  statement) and 135 (relating to requirements to be met by filed
    28  documents.
    29     * * *
    30     (i)  Reference to outside facts.--Any of the terms of a plan
    19970S1157B2174                 - 57 -

     1  of exchange may be made dependent upon facts ascertainable
     2  outside of the plan if the manner in which the facts will
     3  operate upon the terms of the plan is set forth in the plan.
     4  Such facts may include, without limitation, actions or events
     5  within the control of or determinations made by a party to the
     6  plan or a representative of a party to the plan.
     7  § 1932.  Voluntary transfer of corporate assets.
     8     * * *
     9     (b)  Shareholder approval required.--
    10         (1)  A sale, lease, exchange or other disposition of all,
    11     or substantially all, the property and assets, with or
    12     without the goodwill, of a business corporation, if not made
    13     pursuant to subsection (a) or (d) or to section 1551
    14     (relating to distributions to shareholders) or Subchapter D
    15     (relating to division), may be made only pursuant to a plan
    16     of asset transfer[.] in the manner provided in this
    17     subsection. A corporation selling, leasing or otherwise
    18     disposing of all, or substantially all, its property and
    19     assets is referred to in this subsection and in subsection
    20     (c) as the "transferring corporation."
    21         (2)  The property or assets of a direct or indirect
    22     subsidiary corporation that is controlled by a parent
    23     corporation shall also be deemed the property or assets of
    24     the parent corporation for the purposes of this subsection
    25     and of subsection (c). A merger or consolidation to which
    26     such a subsidiary corporation is a party and in which a third
    27     party acquires direct or indirect ownership of the property
    28     or assets of the subsidiary corporation constitutes an "other
    29     disposition" of the property or assets of the parent
    30     corporation within the meaning of that term as used in this
    19970S1157B2174                 - 58 -

     1     section.
     2         (3)  The plan of asset transfer shall set forth the terms
     3     and conditions of the sale, lease, exchange or other
     4     disposition or may authorize the board of directors to fix
     5     any or all of the terms and conditions, including the
     6     consideration to be received by the corporation therefor. The
     7     plan may provide for the distribution to the shareholders of
     8     some or all of the consideration to be received by the
     9     corporation, including provisions for special treatment of
    10     shares held by any shareholder or group of shareholders as
    11     authorized by, and subject to the provisions of, section 1906
    12     (relating to special treatment of holders of shares of same
    13     class or series). It shall not be necessary for the person
    14     acquiring the property or assets of the transferring
    15     corporation to be a party to the plan. Any of the terms of
    16     the plan may be made dependent upon facts ascertainable
    17     outside of the plan if the manner in which the facts will
    18     operate upon the terms of the plan is set forth in the plan.
    19     Such facts may include, without limitation, actions or events
    20     within the control of or determinations made by the
    21     corporation or a representative of the corporation.
    22         (4)  The plan of asset transfer shall be proposed and
    23     adopted, and may be amended after its adoption and
    24     terminated, by [a business] the transferring corporation in
    25     the manner provided in this subchapter for the proposal,
    26     adoption, amendment and termination of a plan of merger,
    27     except section 1924(b) (relating to adoption by board of
    28     directors). The procedures of this subchapter shall not be
    29     applicable to the person acquiring the property or assets of
    30     the transferring corporation. There shall be included in, or
    19970S1157B2174                 - 59 -

     1     enclosed with, the notice of the meeting of the shareholders
     2     of the transferring corporation to act on the plan a copy or
     3     a summary of the plan and, if Subchapter D of Chapter 15
     4     (relating to dissenters rights) is applicable, a copy of the
     5     subchapter and of subsection (c).
     6         (5)  In order to make effective the plan of asset
     7     transfer so adopted, it shall not be necessary to file any
     8     articles or other documents in the Department of State.
     9     (c)  Dissenters rights in asset transfers.--
    10         (1)  If a shareholder of a transferring corporation that
    11     adopts a plan of asset transfer objects to the plan and
    12     complies with Subchapter D of Chapter 15, the shareholder
    13     shall be entitled to the rights and remedies of dissenting
    14     shareholders therein provided, if any.
    15         (2)  Paragraph (1) shall not apply to a sale pursuant to
    16     an order of court having jurisdiction in the premises or a
    17     sale [for money on terms requiring] pursuant to a plan of
    18     asset transfer that requires that all or substantially all of
    19     the net proceeds of sale be distributed to the shareholders
    20     in accordance with their respective interests within one year
    21     after the date of sale or to a liquidating trust.
    22         * * *
    23  § 1952.  Proposal and adoption of plan of division.
    24     (a)  Preparation of plan.--A plan of division shall be
    25  prepared, setting forth:
    26         (1)  The terms and conditions of the division, including
    27     the manner and basis of:
    28             (i)  The reclassification of the shares of the
    29         surviving corporation, if there be one, and, if any of
    30         the shares of the dividing corporation are not to be
    19970S1157B2174                 - 60 -

     1         converted solely into shares or other securities or
     2         obligations of one or more of the resulting corporations,
     3         the shares or other securities or obligations of any
     4         other person, or cash, property or rights that the
     5         holders of such shares are to receive in exchange for or
     6         upon conversion of such shares, and the surrender of any
     7         certificates evidencing them, which securities or
     8         obligations, if any, of any other person or cash,
     9         property or rights may be in addition to or in lieu of
    10         shares or other securities or obligations of one or more
    11         of the resulting corporations.
    12             (ii)  The disposition of the shares and other
    13         securities or obligations, if any, of the new corporation
    14         or corporations resulting from the division.
    15         (2)  A statement that the dividing corporation will, or
    16     will not, survive the division.
    17         (3)  Any changes desired to be made in the articles of
    18     the surviving corporation, if there be one, including a
    19     restatement of the articles.
    20         (4)  The articles of incorporation required by subsection
    21     (b).
    22         (5)  Any provisions desired providing special treatment
    23     of shares held by any shareholder or group of shareholders as
    24     authorized by, and subject to the provisions of, section 1906
    25     (relating to special treatment of holders of shares of same
    26     class or series).
    27         (6)  Such other provisions as are deemed desirable.
    28  [Any of the terms of the plan may be made dependent upon facts
    29  ascertainable outside of the plan if the manner in which the
    30  facts will operate upon the terms of the plan is set forth in
    19970S1157B2174                 - 61 -

     1  the plan.]
     2     * * *
     3     (g)  [Action by] Rights of holders of indebtedness.--[Unless
     4  otherwise provided by an indenture or other contract by which
     5  the dividing corporation is bound, a plan of division shall not
     6  require the approval of the holders of any debt securities or
     7  other obligations of the dividing corporation or of any
     8  representative of the holders, if the transfer of assets
     9  effected by the division, if effected by means of a sale, lease,
    10  exchange or other disposition, and any related distribution,
    11  would not require the approval of the holders or representatives
    12  thereof.] If any debt securities, notes or similar evidences of
    13  indebtedness for money borrowed, whether secured or unsecured,
    14  indentures or other contracts were issued, incurred or executed
    15  by the dividing corporation before (the Legislative Reference
    16  Bureau shall insert here the effective date of the amendments of
    17  this section) and have not been amended subsequent to that date,
    18  the liability of the dividing corporation thereunder shall not
    19  be affected by the division nor shall the rights of the obligees
    20  thereunder be impaired by the division, and each of the
    21  resulting corporations may be proceeded against or substituted
    22  in place of the dividing corporation as joint and several
    23  obligors on such liability, regardless of any provision of the
    24  plan of division apportioning the liabilities of the dividing
    25  corporations.
    26     * * *
    27     (i)  Reference to outside facts.--Any of the terms of a plan
    28  of division may be made dependent upon facts ascertainable
    29  outside of the plan if the manner in which the facts will
    30  operate upon the terms of the plan is set forth in the plan.
    19970S1157B2174                 - 62 -

     1  Such facts may include, without limitation, actions or events
     2  within the control of or determinations made by the dividing
     3  corporation or a representative of the dividing corporation.
     4  § 1953.  Division without shareholder approval.
     5     (a)  General rule.--Unless otherwise restricted by its bylaws
     6  or required by section 1952(f) (relating to action by holders of
     7  preferred or special shares), a plan of division that does not
     8  alter the state of incorporation of a business corporation,
     9  provide for special treatment nor amend in any respect the
    10  provisions of its articles (except amendments which under
    11  section 1914(c) (relating to adoption by board of directors) may
    12  be made without shareholder action) shall not require the
    13  approval of the shareholders of the corporation if:
    14         (1)  the dividing corporation has only one class of
    15     shares outstanding and the shares and other securities, if
    16     any, of each corporation resulting from the plan are
    17     distributed pro rata to the shareholders of the dividing
    18     corporation;
    19         (2)  the dividing corporation survives the division and
    20     all the shares and other securities and obligations, if any,
    21     of all new corporations resulting from the plan are owned
    22     solely by the surviving corporation; or
    23         (3)  the [transfers] allocation of assets among the
    24     resulting corporations effected by the division, if effected
    25     by means of a sale, lease, exchange or other disposition,
    26     would not require the approval of shareholders under section
    27     1932(b) (relating to shareholder approval required).
    28     (b)  Limitation.--A plan of division adopted by the board of
    29  directors under this section without the approval of the
    30  shareholders shall not, by itself, create or impair any rights
    19970S1157B2174                 - 63 -

     1  or obligations on the part of any person under section 2538
     2  (relating to approval of transactions with interested
     3  shareholders) or under Subchapters E (relating to control
     4  transactions), F (relating to business combinations), G
     5  (relating to control-share acquisitions), H (relating to
     6  disgorgement by certain controlling shareholders following
     7  attempts to acquire control), I (relating to severance
     8  compensation for employees terminated following certain control-
     9  share acquisitions) and J (relating to business combination
    10  transactions - labor contracts) of Chapter 25, nor shall it
    11  change the standard of care applicable to the directors under
    12  Subchapter B of Chapter 17 (relating to fiduciary duty).
    13  § 1955.  Filing of articles of division.
    14     (a)  General rule.--The articles of division, and the
    15  certificates or statement, if any, required by section 139
    16  (relating to tax clearance of certain fundamental transactions)
    17  shall be filed in the Department of State.
    18     (b)  Cross [reference] references.--See [section] sections
    19  134 (relating to docketing statement) and 135 (relating to
    20  requirements to be met by filed documents).
    21  § 1957.  Effect of division.
    22     * * *
    23     (b)  Property rights; allocations of assets and
    24  liabilities.--
    25         (1)  (i)  All the property, real, personal and mixed, and
    26         franchises of the dividing corporation, and all debts due
    27         on whatever account to it, including subscriptions for
    28         shares and other choses in action belonging to it, shall
    29         (except as otherwise provided in paragraph (2)), to the
    30         extent [transfers] allocations of assets are contemplated
    19970S1157B2174                 - 64 -

     1         by the plan of division, be deemed without further action
     2         to be [transferred] allocated to and vested in the
     3         resulting corporations on such a manner and basis and
     4         with such effect as is specified in the plan, or per
     5         capita among the resulting corporations, as tenants in
     6         common, if no specification is made in the plan, and the
     7         title to any real estate, or interest therein, vested in
     8         any of the corporations shall not revert or be in any way
     9         impaired by reason of the division.
    10             (ii)  Upon the division becoming effective, the
    11         resulting corporations shall each thenceforth be
    12         responsible as separate and distinct corporations only
    13         for such liabilities as each corporation may undertake or
    14         incur in its own name but shall be liable for the
    15         liabilities of the dividing corporation in the manner and
    16         on the basis provided in subparagraphs (iv) and (v).
    17             (iii)  Liens upon the property of the dividing
    18         corporation shall not be impaired by the division.
    19             (iv)  [One] To the extent allocations of liabilities
    20         are contemplated by the plan of division, the liabilities
    21         of the dividing corporation shall be deemed without
    22         further action to be allocated to and become the
    23         liabilities of the resulting corporations on such a
    24         manner and basis and with such effect as is specified in
    25         the plan; and one or more, but less than all, of the
    26         resulting corporations shall be free of the liabilities
    27         of the dividing corporation to the extent, if any,
    28         specified in the plan, if in either case:
    29                 (A)  no fraud [of corporate creditors, or of] on
    30             minority shareholders or shareholders without voting
    19970S1157B2174                 - 65 -

     1             rights or violation of law shall be effected thereby,
     2             and [if applicable provisions of law are complied
     3             with.]
     4                 (B)  the plan does not constitute a fraudulent
     5             transfer under 12 Pa.C.S. Ch. 51 (relating to
     6             fraudulent transfers).
     7             (v)  If the conditions in subparagraph (iv) for
     8         freeing one or more of the resulting corporations from
     9         the liabilities of the dividing corporation, or for
    10         allocating some or all of the liabilities of the dividing
    11         corporation, are not satisfied, the liabilities of the
    12         dividing corporation as to which those conditions are not
    13         satisfied shall not be affected by the division nor shall
    14         the rights of creditors [thereof or of any person dealing
    15         with the corporation] thereunder be impaired by the
    16         division and any claim existing or action or proceeding
    17         pending by or against the corporation with respect to
    18         those liabilities may be prosecuted to judgment as if the
    19         division had not taken place, or the resulting
    20         corporations may be proceeded against or substituted in
    21         [its] place of the dividing corporation as joint and
    22         several obligors on [such liability] those liabilities,
    23         regardless of any provision of the plan of division
    24         apportioning the liabilities of the dividing corporation.
    25             (vi)  The conditions in subparagraph (iv) for freeing
    26         one or more of the resulting corporations from the
    27         liabilities of the dividing corporation and for
    28         allocating some or all of the liabilities of the dividing
    29         corporation shall be conclusively deemed to have been
    30         satisfied if the plan of division has been approved by
    19970S1157B2174                 - 66 -

     1         the Department of Banking, the Insurance Department or
     2         the Pennsylvania Public Utility Commission in a final
     3         order issued after (the Legislative Reference Bureau
     4         shall insert here the effective date of the amendments of
     5         this section) that has become not subject to further
     6         appeal.
     7         (2)  (i)  The [transfer] allocation of any fee or
     8         freehold interest or leasehold having a remaining term of
     9         30 years or more in any tract or parcel of real property
    10         situate in this Commonwealth owned by a dividing
    11         corporation (including property owned by a foreign
    12         business corporation dividing solely under the law of
    13         another jurisdiction) to a new corporation resulting from
    14         the division shall not be effective until one of the
    15         following documents is filed in the office for the
    16         recording of deeds of the county, or each of them, in
    17         which the tract or parcel is situated:
    18                 (A)  A deed, lease or other instrument of
    19             confirmation describing the tract or parcel.
    20                 (B)  A duly executed duplicate original copy of
    21             the articles of division.
    22                 (C)  A copy of the articles of division certified
    23             by the Department of State.
    24                 (D)  A declaration of acquisition setting forth
    25             the value of real estate holdings in such county of
    26             the corporation as an acquired company.
    27             (ii)  The provisions of 75 Pa.C.S. § 1114 (relating
    28         to transfer of vehicle by operation of law) shall not be
    29         applicable to [a transfer] an allocation of ownership of
    30         any motor vehicle, trailer or semitrailer [from a
    19970S1157B2174                 - 67 -

     1         dividing corporation] to a new corporation under this
     2         section or under a similar law of any other jurisdiction
     3         but any such [transfer] allocation shall be effective
     4         only upon compliance with the requirements of 75 Pa.C.S.
     5         § 1116 (relating to issuance of new certificate following
     6         transfer).
     7         (3)  It shall not be necessary for a plan of division to
     8     list each individual asset or liability of the dividing
     9     corporation to be allocated to a new corporation so long as
    10     those assets and liabilities are described in a reasonable
    11     manner.
    12         (4)  Each new corporation shall hold any assets and
    13     liabilities allocated to it as the successor to the dividing
    14     corporation, and those assets and liabilities shall not be
    15     deemed to have been assigned to the new corporation in any
    16     manner, whether directly or indirectly or by operation of
    17     law.
    18     * * *
    19     (h)  Conflict of laws.--It is the intent of the General
    20  Assembly that:
    21         (1)  The effect of a division of a domestic business
    22     corporation shall be governed solely by the laws of this
    23     Commonwealth and any other jurisdiction under the laws of
    24     which any of the resulting corporations is incorporated.
    25         (2)  The effect of a division on the assets and
    26     liabilities of the dividing corporation shall be governed
    27     solely by the laws of this Commonwealth and any other
    28     jurisdiction under the laws of which any of the resulting
    29     corporations is incorporated.
    30         (3)  The validity of any allocations of assets or
    19970S1157B2174                 - 68 -

     1     liabilities by a plan of division of a domestic business
     2     corporation, regardless of whether or not any of the new
     3     corporations is a foreign business corporation, shall be
     4     governed solely by the laws of this Commonwealth.
     5         (4)  In addition to the express provisions of this
     6     subsection, this subchapter shall otherwise generally be
     7     granted the protection of full faith and credit under the
     8     Constitution of the United States.
     9  § 1962.  Proposal and adoption of plan of conversion.
    10     (a)  Preparation of plan.--A plan of conversion shall be
    11  prepared, setting forth:
    12         (1)  The terms and conditions of the conversion.
    13         (2)  A restatement of the articles of the resulting
    14     corporation, which articles shall comply with the
    15     requirements of this part relating to nonprofit corporations.
    16         (3)  Any provisions desired providing special treatment
    17     of shares held by any shareholder or group of shareholders as
    18     authorized by, and subject to the provisions of, section 1906
    19     (relating to special treatment of holders of shares of same
    20     class or series).
    21         (4)  Such other provisions as are deemed desirable.
    22  [Any of the terms of the plan may be made dependent upon facts
    23  ascertainable outside of the plan if the manner in which the
    24  facts will operate upon the terms of the plan is set forth in
    25  the plan.]
    26     * * *
    27     (d)  Reference to outside facts.--Any of the terms of a plan
    28  of conversion may be made dependent upon facts ascertainable
    29  outside of the plan if the manner in which the facts will
    30  operate upon the terms of the plan is set forth in the plan.
    19970S1157B2174                 - 69 -

     1  Such facts may include, without limitation, actions or events
     2  within the control of or determinations made by the corporation
     3  or a representative of the corporation.
     4  § 1972.  Proposal of voluntary dissolution.
     5     (a)  General rule.--Any business corporation that has
     6  commenced business may dissolve voluntarily in the manner
     7  provided in this subchapter and wind up its affairs in the
     8  manner provided in section 1975 (relating to predissolution
     9  provision for liabilities) or Subchapter H (relating to
    10  postdissolution provision for liabilities). Voluntary
    11  dissolution shall be proposed by the adoption by the board of
    12  directors of a resolution recommending that the corporation be
    13  dissolved voluntarily. The resolution shall contain a statement
    14  either that the dissolution shall proceed under section 1975 or
    15  that the dissolution shall proceed under Subchapter H. The
    16  resolution may set forth provisions for the distribution to
    17  shareholders of any surplus remaining after paying or providing
    18  for all liabilities of the corporation, including provisions for
    19  special treatment of shares held by any shareholder or group of
    20  shareholders as authorized by, and subject to the provisions of,
    21  section 1906 (relating to special treatment of holders of shares
    22  of same class or series).
    23     (b)  Submission to shareholders.--The board of directors
    24  shall direct that the [question of] resolution recommending
    25  dissolution be submitted to a vote of the shareholders of the
    26  corporation entitled to vote thereon at a regular or special
    27  meeting of the shareholders.
    28     * * *
    29  § 1973.  Notice of meeting of shareholders.
    30     (a)  General rule.--Written notice of the meeting of
    19970S1157B2174                 - 70 -

     1  shareholders that will consider the [advisability of voluntarily
     2  dissolving a] resolution recommending dissolution of the
     3  business corporation shall be given to each shareholder of
     4  record entitled to vote thereon and the purpose shall be
     5  included in the notice of the meeting.
     6     * * *
     7  § 1975.  Predissolution provision for liabilities.
     8     (a)  Powers of board.--The board of directors of a business
     9  corporation that has elected to proceed under this section shall
    10  have full power to wind up and settle the affairs of [a
    11  business] the corporation in accordance with this section prior
    12  to filing articles of dissolution in accordance with section
    13  1977 (relating to articles of dissolution).
    14     (b)  Notice to creditors and taxing authorities.--After the
    15  approval by the shareholders of the [proposal] resolution
    16  recommending that the corporation dissolve voluntarily, the
    17  corporation shall immediately cause notice of the winding up
    18  proceedings to be officially published and to be mailed by
    19  certified or registered mail to each known creditor and claimant
    20  and to each municipal corporation in which [its registered
    21  office or principal] it has a place of business in this
    22  Commonwealth [is located].
    23     (c)  Winding up and distribution.--The corporation shall, as
    24  speedily as possible, proceed to collect all sums due it,
    25  convert into cash all corporate assets the conversion of which
    26  into cash is required to discharge its liabilities and, out of
    27  the assets of the corporation, discharge or make adequate
    28  provision for the discharge of all liabilities of the
    29  corporation, according to their respective priorities. Any
    30  surplus remaining after paying or providing for all liabilities
    19970S1157B2174                 - 71 -

     1  of the corporation shall be distributed to the shareholders
     2  according to their respective rights and preferences. See
     3  section 1972(a) (relating to proposal of voluntary dissolution).
     4  § 1976.  Judicial supervision of proceedings.
     5     A business corporation that has elected to proceed under
     6  section 1975 (relating to predissolution provision for
     7  liabilities), at any time during the winding up proceedings, may
     8  apply to the court to have the proceedings continued under the
     9  supervision of the court and thereafter the proceedings shall
    10  continue under the supervision of the court as provided in
    11  Subchapter G (relating to involuntary liquidation and
    12  dissolution).
    13  § 1977.  Articles of dissolution.
    14     (a)  General rule.--Articles of dissolution and the
    15  certificates or statement required by section 139 (relating to
    16  tax clearance of certain fundamental transactions) shall be
    17  filed in the Department of State when:
    18         (1)  all liabilities of the business corporation have
    19     been discharged, or adequate provision has been made
    20     therefor, in accordance with section 1975 (relating to
    21     predissolution provision for liabilities), and all of the
    22     remaining assets of the corporation have been distributed as
    23     provided in section 1975 (or in case its assets are not
    24     sufficient to discharge its liabilities, when all the assets
    25     have been fairly and equitably applied, as far as they will
    26     go, to the payment of such liabilities); or
    27         (2)  an election to proceed under Subchapter H (relating
    28     to postdissolution provision for liabilities) has been made.
    29  [See section 134 (relating to docketing statement).]
    30     (b)  Contents of articles.--The articles of dissolution shall
    19970S1157B2174                 - 72 -

     1  be executed by the corporation and shall set forth:
     2         * * *
     3         (5)  A statement that:
     4             (i)  [that] all liabilities of the corporation have
     5         been discharged or that adequate provision has been made
     6         therefor; [or]
     7             (ii)  [that] the assets of the corporation are not
     8         sufficient to discharge its liabilities, and that all the
     9         assets of the corporation have been fairly and equitably
    10         applied, as far as they will go, to the payment of such
    11         liabilities[. An election by]; or
    12             (iii) the corporation has elected to proceed under
    13         Subchapter H [shall constitute the making of adequate
    14         provision for the liabilities of the corporation,
    15         including any judgment or decree that may be obtained
    16         against the corporation in any pending action or
    17         proceeding].
    18         * * *
    19         (7)  [A] In the case of a corporation that has not
    20     elected to proceed under Subchapter H, a statement that no
    21     actions or proceedings are pending against the corporation in
    22     any court, or that adequate provision has been made for the
    23     satisfaction of any judgment or decree that may be obtained
    24     against the corporation in each pending action or proceeding.
    25         (8)  [A] In the case of a corporation that has not
    26     elected to proceed under Subchapter H, a statement that
    27     notice of the winding-up proceedings of the corporation was
    28     mailed by certified or registered mail to each known creditor
    29     and claimant and to each municipal corporation in which the
    30     [registered office or principal place of business of the]
    19970S1157B2174                 - 73 -

     1     corporation has a place of business in this Commonwealth [is
     2     located].
     3     * * *
     4     (d)  Cross references.--See sections 134 (relating to
     5  docketing statement) and 135 (relating to requirements to be met
     6  by filed documents).
     7  § 1978.  Winding up of corporation after dissolution.
     8     * * *
     9     (b)  Standard of care of directors and officers.--The
    10  dissolution of the corporation shall not subject its directors
    11  or officers to standards of conduct different from those
    12  prescribed by or pursuant to Chapter 17 (relating to officers,
    13  directors and shareholders). Directors of a dissolved
    14  corporation who have complied with section 1975 (relating to
    15  predissolution provision for liabilities) or Subchapter H
    16  (relating to postdissolution provision for liabilities) shall
    17  not be personally liable to the creditors of the dissolved
    18  corporation.
    19  § 1979.  Survival of remedies and rights after dissolution.
    20     (a)  General rule.--The dissolution of a business
    21  corporation, either under this subchapter or under Subchapter G
    22  (relating to involuntary liquidation and dissolution) or by
    23  expiration of its period of duration or otherwise, shall not
    24  eliminate nor impair any remedy available to or against the
    25  corporation or its directors, officers or shareholders for any
    26  right or claim existing, or liability incurred, prior to the
    27  dissolution, if an action or proceeding thereon is brought on
    28  behalf of:
    29         (1)  the corporation within the time otherwise limited by
    30     law; or
    19970S1157B2174                 - 74 -

     1         (2)  any other person before or within two years after
     2     the date of the dissolution or within the time otherwise
     3     limited by this subpart or other provision of law, whichever
     4     is less. See sections 1987 (relating to proof of claims),
     5     1993 (relating to acceptance or rejection of matured claims)
     6     and 1994 (relating to disposition of unmatured claims).
     7  [The actions or proceedings may be prosecuted against and
     8  defended by the corporation in its corporate name.]
     9     * * *
    10     (e)  Conduct of actions.--An action or proceeding may be
    11  prosecuted against and defended by a dissolved corporation in
    12  its corporate name.
    13  § 1980.  Dissolution by domestication.
    14     Whenever a domestic business corporation has domesticated
    15  itself under the laws of another jurisdiction by action similar
    16  to that provided by section 4161 (relating to domestication) and
    17  has authorized that action by the vote required by this
    18  subchapter for the approval of a proposal that the corporation
    19  dissolve voluntarily, the corporation may surrender its charter
    20  under the laws of this Commonwealth by filing in the Department
    21  of State articles of dissolution under this subchapter
    22  containing the statement specified by section [1977(a)(1)]
    23  1977(b)(1) through (4) (relating to [preparation of articles).]
    24  articles of dissolution). If the corporation as domesticated in
    25  the other jurisdiction qualifies to do business in this
    26  Commonwealth either prior to or simultaneously with the filing
    27  of the articles of dissolution under this section, the
    28  corporation shall not be required to file with the articles of
    29  dissolution the tax clearance certificates that would otherwise
    30  be required by section 139 (relating to tax clearance of certain
    19970S1157B2174                 - 75 -

     1  fundamental transactions).
     2  § 1989.  Articles of involuntary dissolution.
     3     (a)  General rule.--In a proceeding under this subchapter,
     4  the court shall enter an order dissolving the business
     5  corporation when the costs and expenses of the proceeding and
     6  all liabilities of the corporation have been discharged, and all
     7  of its remaining assets have been distributed to its
     8  shareholders or, in case its assets are not sufficient to
     9  discharge such costs, expenses and liabilities, when all the
    10  assets have been applied, as far as they will go, to the payment
    11  of such costs, expenses and liabilities. See section 139(b)
    12  (relating to tax clearance in judicial proceedings).
    13     (b)  Filing.--After entry of an order of dissolution, the
    14  office of the clerk of the court of common pleas shall prepare
    15  and execute articles of dissolution substantially in the form
    16  provided by section 1977 (relating to articles of dissolution),
    17  attach thereto a certified copy of the order and transmit the
    18  articles and attached order to the Department of State. [A
    19  certificate or statement provided for by section 139 (relating
    20  to tax clearance of certain fundamental transactions) shall not
    21  be required, and the] The department shall not charge a fee in
    22  connection with the filing of articles of dissolution under this
    23  section. See [section] sections 134 (relating to docketing
    24  statement) and 135 (relating to requirements to be met by filed
    25  documents).
    26     * * *
    27  § 1991.1.  Authority of board of directors.
    28     (a)  General rule.--The board of directors of a business
    29  corporation that has elected to proceed under this subchapter
    30  shall have full power to wind up and settle the affairs of the
    19970S1157B2174                 - 76 -

     1  corporation in accordance with this subchapter both prior to and
     2  after the filing of articles of dissolution in accordance with
     3  section 1977 (relating to articles of dissolution).
     4     (b)  Winding up.--The corporation shall, as speedily as
     5  possible, proceed to comply with the requirements of this
     6  subchapter while simultaneously collecting all sums due it and
     7  converting into cash all corporate assets, the conversion of
     8  which into cash is required to make adequate provision for its
     9  liabilities.
    10  § 1992.  Notice to claimants.
    11     * * *
    12     (c)  Publication and service of notices.--
    13         (1)  The notices required by this section shall be
    14     officially published at least once a week for two consecutive
    15     weeks and, in the case of a corporation having $10,000,000 or
    16     more in total assets at the time of its dissolution, at least
    17     once in all editions of a daily newspaper with a national
    18     circulation.
    19         (2)  Concurrently with or preceding the publication, the
    20     corporation or successor entity shall send a copy of the
    21     notice by certified or registered mail, return receipt
    22     requested, to each:
    23             (i)  known creditor or claimant;
    24             (ii)  holder of a claim described in subsection (b);
    25         and
    26             (iii)  municipal corporation in which [the registered
    27         office or principal] a place of business of the
    28         corporation in this Commonwealth was located at the time
    29         of filing the articles of dissolution in the department.
    30     * * *
    19970S1157B2174                 - 77 -

     1  § 1997.  Payments and distributions.
     2     * * *
     3     (b)  Disposition.--The claims and liabilities shall be paid
     4  in full and any provision for payment shall be made in full if
     5  there are sufficient assets. If there are insufficient assets,
     6  the claims and liabilities shall be paid or provided for in
     7  order of their priority, and, among claims of equal priority,
     8  ratably to the extent of funds legally available therefor. Any
     9  remaining assets shall be distributed to the shareholders of the
    10  corporation according to their respective rights and
    11  preferences, except that the distribution shall not be made less
    12  than 60 days after the last notice of rejection, if any, was
    13  given under section 1993 (relating to acceptance or rejection of
    14  matured claims). See section 1972(a) (relating to proposal of
    15  voluntary dissolution).
    16     * * *
    17     [(d)  Liability of directors.--Directors of a dissolved
    18  corporation or governing persons of a successor entity that has
    19  complied with this section shall not be personally liable to the
    20  claimants of the dissolved corporation.]
    21  § 2524.  CONSENT OF SHAREHOLDERS IN LIEU OF MEETING.              <--
    22     (A)  GENERAL RULE.--AN ACTION MAY BE AUTHORIZED BY THE
    23  SHAREHOLDERS OF A REGISTERED CORPORATION WITHOUT A MEETING BY
    24  LESS THAN UNANIMOUS WRITTEN CONSENT ONLY IF ALL OF THE FOLLOWING
    25  PARAGRAPHS APPLY:
    26         (1)  THE ACTION IS PERMITTED BY ITS ARTICLES.
    27         (2)  ANY OF THE FOLLOWING SUBPARAGRAPHS APPLY:
    28             (I)  THE ACTION HAS BEEN APPROVED BY THE BOARD OF
    29         DIRECTORS.
    30             (II)  THERE IS NOT, AT THE TIME THE ACTION IS PENDING
    19970S1157B2174                 - 78 -

     1         FOR AUTHORIZATION BY THE SHAREHOLDERS, A "CONTROLLING
     2         PERSON OR GROUP," AS DEFINED IN SECTION 2573 (RELATING TO
     3         DEFINITIONS), THAT IS POTENTIALLY SUBJECT TO PROFIT
     4         RECOVERY UNDER SECTION 2575 (RELATING TO OWNERSHIP BY
     5         CORPORATION OF PROFITS RESULTING FROM CERTAIN
     6         TRANSACTIONS), REGARDLESS OF WHETHER THAT CONTROLLING
     7         PERSON OR GROUP, AT THAT TIME, OWNS ANY EQUITY SECURITY
     8         OF THE CORPORATION.
     9             (III)  THE ACTION WAS EFFECTIVE PRIOR TO SEPTEMBER
    10         29, 1998.
    11     THIS PARAGRAPH SHALL EXPIRE 12 MONTHS FROM THE DATE THIS
    12     PARAGRAPH TAKES EFFECT.
    13     * * *
    14  § 2902.  Definitions and index of definitions.
    15     (a)  Definitions.--The following words and phrases when used
    16  in this chapter shall have the meanings given to them in this
    17  section unless the context clearly indicates otherwise:
    18     "Disqualified person."  [A] The term "disqualified person" as
    19  used in this chapter means a licensed person who for any reason
    20  is or becomes legally disqualified (temporarily or permanently)
    21  to render the same professional services that the particular
    22  professional corporation of which he is an officer, director,
    23  shareholder or employee is or was rendering.
    24     ["Licensed person."  Any natural person who is duly licensed
    25  or admitted to practice his profession by a court, department,
    26  board, commission or other agency of this Commonwealth or
    27  another jurisdiction to render a professional service that is or
    28  will be rendered by the professional corporation of which he is,
    29  or intends to become, an officer, director, shareholder,
    30  employee or agent.
    19970S1157B2174                 - 79 -

     1     "Profession."  Includes the performance of any type of
     2  personal service to the public that requires as a condition
     3  precedent to the performance of the service the obtaining of a
     4  license or admission to practice or other legal authorization,
     5  including all personal services that prior to the enactment of
     6  the act of July 9, 1970 (P.L.461, No.160), known as the
     7  Professional Corporation Law, could not lawfully be rendered by
     8  means of a corporation. By way of example, and without limiting
     9  the generality of the foregoing, the term includes for the
    10  purposes of this chapter personal services rendered as an
    11  architect, chiropractor, dentist, funeral director, osteopath,
    12  podiatrist, physician, professional engineer, veterinarian,
    13  certified public accountant or surgeon and, except as otherwise
    14  prescribed by general rules, an attorney at law. Except as
    15  otherwise expressly provided by law, the definition specified in
    16  this paragraph shall be applicable to this chapter only and
    17  shall not affect the interpretation of any other statute or any
    18  local zoning ordinance or other official document heretofore or
    19  hereafter enacted or promulgated.
    20     "Professional services."  Any type of services that may be
    21  rendered by the member of any profession within the purview of
    22  his profession.]
    23     (b)  Index of other definitions.--Other definitions applying
    24  to this chapter and the sections in which they appear are:
    25     "Licensed person."  Section 102 (relating to definitions).
    26     "Profession."  Section 102.
    27     "Professional services."  Section 102.
    28  § 2904.  Election of an existing business corporation to become
    29             a professional corporation.
    30     * * *
    19970S1157B2174                 - 80 -

     1     (b)  Procedure.--The amendment shall be adopted in accordance
     2  with the requirements of Subchapter B of Chapter 19 (relating to
     3  amendment of articles) [except that the amendment must be
     4  approved by the unanimous consent of all shareholders of the
     5  corporation regardless of any limitations on voting rights
     6  stated in the articles or bylaws]. If any shareholder of a
     7  business corporation that proposes to amend its articles to
     8  become a professional corporation objects to that amendment and
     9  complies with the provisions of Subchapter D of Chapter 15
    10  (relating to dissenters rights), the shareholder shall be
    11  entitled to the rights and remedies of dissenting shareholders
    12  therein provided, if any.
    13  § 2922.  Stated purposes.
    14     * * *
    15     (b)  Additional powers.--A professional corporation may be [a
    16  partner in or a shareholder] an equity owner of a partnership
    17  [or], limited liability company, corporation or other
    18  association engaged in the business of rendering the
    19  professional service or services for which the professional
    20  corporation was incorporated.
    21  § 2923.  Issuance and retention of shares.
    22     (a)  General rule.--Except as otherwise provided by a
    23  statute, rule or regulation applicable to a particular
    24  profession, all of the ultimate beneficial owners of shares in a
    25  professional corporation [may be beneficially owned, directly or
    26  indirectly, only by one or more] shall be licensed persons and
    27  any issuance or transfer of shares in violation of this
    28  restriction shall be void. A shareholder of a professional
    29  corporation shall not enter into a voting trust, proxy or any
    30  other arrangement vesting another person (other than [another
    19970S1157B2174                 - 81 -

     1  licensed] a person who is qualified to be a direct or indirect
     2  shareholder of the same corporation) with the authority to
     3  exercise the voting power of any or all of his shares, and any
     4  such purported voting trust, proxy or other arrangement shall be
     5  void.
     6     (b)  Ownership by estate.--Unless a lesser period of time is
     7  provided in a bylaw [of the corporation] adopted by the
     8  shareholders or in a written agreement among the shareholders of
     9  the corporation, the estate of a deceased shareholder may
    10  continue to hold shares of the professional corporation for a
    11  reasonable period of administration of the estate, but the
    12  personal representative of the estate shall not by reason of the
    13  retention of shares be authorized to participate in any
    14  decisions concerning the rendering of professional service.
    15     * * *
    16  § 3133.  Notice of meetings of members of mutual insurance
    17             companies.
    18     (a)  General rule.--Unless otherwise restricted in the
    19  bylaws, persons authorized or required to give notice of an
    20  annual meeting of members of a mutual insurance company for the
    21  election of directors or of a meeting of members of a mutual
    22  insurance company called for the purpose of considering [an]
    23  amendment of the articles or bylaws, or both, of the corporation
    24  may, in lieu of any written notice of meeting of members
    25  required to be given by this subpart, give notice of such
    26  meeting by causing notice of such meeting to be officially
    27  published. Such notice shall be published each week for at
    28  least:
    29         (1)  Three successive weeks, in the case of an annual
    30     meeting.
    19970S1157B2174                 - 82 -

     1         (2)  Four successive weeks, in the case of a meeting to
     2     consider [an] amendment of the articles or bylaws, or both.
     3     * * *
     4  § 4123.  Requirements for foreign corporation names.
     5     * * *
     6     (b)  Exceptions.--
     7         (1)  The provisions of section 1303(b) (relating to
     8     duplicate use of names) shall not prevent the issuance of a
     9     certificate of authority to a foreign business corporation
    10     setting forth a name that is [confusingly similar to] not
    11     distinguishable upon the records of the department from the
    12     name of any other domestic or foreign corporation for profit
    13     or corporation not-for-profit, [or of any domestic or foreign
    14     limited partnership that has filed a certificate or qualified
    15     under Chapter 85 (relating to limited partnerships) or
    16     corresponding provisions of prior law,] or of any corporation
    17     or other association then registered under 54 Pa.C.S. Ch. 5
    18     (relating to corporate and other association names) or to any
    19     name reserved or registered as provided in this part, if the
    20     foreign business corporation applying for a certificate of
    21     authority files in the department [one of the following:
    22             (i)  A] a resolution of its board of directors
    23         adopting a fictitious name for use in transacting
    24         business in this Commonwealth, which fictitious name is
    25         [not confusingly similar to] distinguishable upon the
    26         records of the department from the name of the other
    27         corporation or other association or [to] from any name
    28         reserved or registered as provided in this part and that
    29         is otherwise available for use by a domestic business
    30         corporation.
    19970S1157B2174                 - 83 -

     1             [(ii)  The written consent of the other corporation
     2         or other association or holder of a reserved or
     3         registered name to use the same or confusingly similar
     4         name and one or more words are added to make the name
     5         applied for distinguishable from the other name.]
     6         * * *
     7  § 4126.  Amended certificate of authority.
     8     (a)  General rule.--After receiving a certificate of
     9  authority, a qualified foreign business corporation may, subject
    10  to the provisions of this subchapter, change [the name under
    11  which it is authorized to transact business in this
    12  Commonwealth] or correct any of the information set forth in its
    13  application for a certificate of authority or previous filings
    14  under this section by filing in the Department of State an
    15  application for an amended certificate of authority. The
    16  application shall be executed by the corporation and shall
    17  state:
    18         (1)  The name under which the applicant corporation
    19     currently holds a certificate of authority to do business in
    20     this Commonwealth.
    21         [(2)  The name of the jurisdiction under the laws of
    22     which the corporation is incorporated.
    23         (3)  The address, including street and number, if any, of
    24     its principal office under the laws of the jurisdiction in
    25     which it is incorporated.
    26         (4)] (2)  Subject to section 109 (relating to name of
    27     commercial registered office provider in lieu of registered
    28     address), the address, including street and number, if any,
    29     of its registered office in this Commonwealth.[, which may
    30     constitute a change in the address of its registered office.
    19970S1157B2174                 - 84 -

     1         (5)  The new name of the corporation and]
     2         (3)  The information to be changed or corrected.
     3         (4)  If the application reflects a change in the name of
     4     the corporation, the application shall include a statement
     5     that either:
     6             (i)  the change of name reflects a change effected in
     7         the jurisdiction of incorporation; or
     8             (ii)  documents complying with section 4123(b)
     9         (relating to exception; name) accompany the application.
    10     (b)  Issuance of amended certificate of authority.--Upon the
    11  filing of the application, the applicant corporation shall be
    12  deemed to hold an amended certificate of authority.
    13     (c)  Cross reference.--See section 134 (relating to docketing
    14  statement).
    15  § 4146.  Provisions applicable to all foreign corporations.
    16     The following provisions of this subpart shall, except as
    17  otherwise provided in this section, be applicable to every
    18  foreign corporation for profit, whether or not required to
    19  procure a certificate of authority under this chapter:
    20         Section 1503 (relating to defense of ultra vires), as to
    21     contracts and conveyances [made in] governed by the laws of
    22     this Commonwealth and conveyances affecting real property
    23     situated in this Commonwealth.
    24         Section 1506 (relating to form of execution of
    25     instruments), as to instruments or other documents [made or
    26     to be performed in] governed by the laws of this Commonwealth
    27     or affecting real property situated in this Commonwealth.
    28         Section 1510 (relating to certain specifically authorized
    29     debt terms), as to obligations (as defined in the section)
    30     [executed or effected in] governed by the laws of this
    19970S1157B2174                 - 85 -

     1     Commonwealth or affecting real property situated in this
     2     Commonwealth.
     3         * * *
     4  § 4161.  Domestication.
     5     * * *
     6     (b)  Articles of domestication.--The articles of
     7  domestication shall be executed by the corporation and shall set
     8  forth in the English language:
     9         (1)  The name of the corporation. If the name is in a
    10     foreign language, it shall be set forth in Roman letters or
    11     characters or Arabic or Roman numerals. If the name is one
    12     that is rendered unavailable by any provision of section
    13     1303(b) or (c) (relating to corporate name), the corporation
    14     shall adopt, in accordance with any procedures for changing
    15     the name of the corporation that are applicable prior to the
    16     domestication of the corporation, and shall set forth in the
    17     articles of domestication an available name.
    18         * * *
    19     (c)  Cross [reference] references.--See [section] sections
    20  134 (relating to docketing statement) and 135 (relating to
    21  requirements to be met by filed documents).
    22  § 4162.  Effect of domestication.
    23     (a)  General rule.--As a domestic business corporation, the
    24  domesticated corporation shall no longer be a foreign business
    25  corporation for the purposes of this subpart and shall [have],
    26  instead, be a domestic business corporation with all the powers
    27  and privileges and [be subject to] all the duties and
    28  limitations granted and imposed upon domestic business
    29  corporations. [The property, franchises, debts, liens, estates,
    30  taxes, penalties and public accounts due the Commonwealth shall
    19970S1157B2174                 - 86 -

     1  continue to be vested in and imposed upon the corporation to the
     2  same extent as if it were the successor by merger of the
     3  domesticating corporation with and into a domestic business
     4  corporation under Subchapter C of Chapter 19 (relating to
     5  merger, consolidation, share exchanges and sale of assets).] In
     6  all other respects, the domesticated corporation shall be deemed
     7  to be the same corporation as it was prior to the domestication
     8  without any change in or effect on its existence. Without
     9  limiting the generality of the previous sentence, the
    10  domestication shall not be deemed to have affected in any way:
    11         (1)  the right and title of the corporation in and to its
    12     assets, property, franchises, estates and choses in action;
    13         (2)  the liability of the corporation for its debts,
    14     obligations, penalties and public accounts due the
    15     Commonwealth;
    16         (3)  any liens or other encumbrances on the property or
    17     assets of the corporation; or
    18         (4)  any contract, license or other agreement to which
    19     the corporation is a party or under which it has any rights
    20     or obligations.
    21     (b)  Reclassification of shares.--The shares of the
    22  domesticated corporation shall be unaffected by the
    23  domestication except to the extent, if any, reclassified in the
    24  articles of domestication.
    25  § 5303.  Corporate name.
    26     * * *
    27     (b)  Duplicate use of names.--The corporate name shall [not
    28  be the same as or confusingly similar to] be distinguishable
    29  upon the records of the Department of State from:
    30         (1)  The name of any other domestic corporation for
    19970S1157B2174                 - 87 -

     1     profit or not-for-profit which is either in existence or for
     2     which articles of incorporation have been filed but have not
     3     yet become effective, or of any foreign corporation for
     4     profit or not-for-profit which is either authorized to do
     5     business in this Commonwealth or for which an application for
     6     a certificate of authority has been filed but which has not
     7     yet become effective, [or of any domestic or foreign limited
     8     partnership that has filed in the Department of State a
     9     certificate or qualified under Chapter 85 (relating to
    10     limited partnerships) or under corresponding provisions of
    11     prior law,] or the name of any association registered at any
    12     time under 54 Pa.C.S. Ch. 5 (relating to corporate and other
    13     association names), unless[:
    14             (i)  where the name is the same or confusingly
    15         similar,] the other association:
    16                 [(A)] (i)  has stated that it is about to change
    17             its name, or to cease to do business, or is being
    18             wound up, or is a foreign association about to
    19             withdraw from doing business in this Commonwealth,
    20             and the statement and [the] a written consent [of the
    21             other association] to the adoption of the name
    22             executed by the other association is filed in the
    23             Department of State;
    24                 [(B)] (ii)  has filed with the Department of
    25             Revenue a certificate of out of existence, or has
    26             failed for a period of three successive years to file
    27             with the Department of Revenue a report or return
    28             required by law and the fact of such failure has been
    29             certified by the Department of Revenue to the
    30             Department of State;
    19970S1157B2174                 - 88 -

     1                 [(C)] (iii)  has abandoned its name under the
     2             laws of its jurisdiction of incorporation, by
     3             amendment, merger, consolidation, division,
     4             expiration, dissolution or otherwise, without its
     5             name being adopted by a successor in a merger,
     6             consolidation, division or otherwise, and an official
     7             record of that fact, certified as provided by 42
     8             Pa.C.S. § 5328 (relating to proof of official
     9             records), is presented by any person to the
    10             department; or
    11                 [(D)] (iv)  has had the registration of its name
    12             under 54 Pa.C.S. Ch. 5 terminated and, if the
    13             termination was effected by operation of 54 Pa.C.S. §
    14             504 (relating to effect of failure to make decennial
    15             filings), the application for the use of the name is
    16             accompanied by a verified statement stating that at
    17             least 30 days' written notice of intention to
    18             appropriate the name was given to the delinquent
    19             association at its [registered office] last known
    20             place of business and that, after diligent search by
    21             the affiant, the affiant believes the association to
    22             be out of existence.[; or
    23             (ii)  where the name is confusingly similar, the
    24         consent of the other association to the adoption of the
    25         name is filed in the Department of State.
    26     The consent of the association shall be evidenced by a
    27     statement to that effect executed by the association.]
    28         * * *
    29     (e)  Remedies for violation of section.--The use of a name in
    30  violation of this section shall not vitiate or otherwise affect
    19970S1157B2174                 - 89 -

     1  the corporate existence but any court having jurisdiction may
     2  enjoin the corporation from using or continuing to use a name in
     3  violation of this section, upon the application of:
     4         (1)  the Attorney General, acting on his own motion or at
     5     the instance of any administrative department, board or
     6     commission of this Commonwealth; or
     7         (2)  any person adversely affected.[;
     8  may enjoin the corporation from using or continuing to use a
     9  name in violation of this section.]
    10     (f)  Cross references.--See sections 135(e) (relating to
    11  distinguishable names) and 5106(b)(2) (relating to limited
    12  uniform application of subpart).
    13  § 5304.  Required name changes by senior corporations.
    14     (a)  Adoption of new name upon reactivation.--Where a
    15  corporate name is made available on the basis that the
    16  corporation or [nonprofit unincorporated] other association
    17  [which] that formerly registered [such] the name has failed to
    18  file with the Department of Revenue [or in the Department of
    19  State] a report or a return required by law or where the
    20  corporation or [nonprofit unincorporated] other association has
    21  filed with the Department of Revenue a certificate of out of
    22  existence, [such] the corporation or other association shall
    23  cease to have by virtue of its prior registration any right to
    24  the use of [such] the name[, and such]. The corporation or other
    25  association, upon withdrawal of the certificate of out of
    26  existence or upon the removal of its delinquency in the filing
    27  of the required reports or returns, shall make inquiry with the
    28  Department of State with regard to the availability of its
    29  name[,] and, if [such] the name has been made available to
    30  another domestic or foreign corporation for profit or not-for-
    19970S1157B2174                 - 90 -

     1  profit or other association by virtue of [the above] these
     2  conditions, shall adopt a new name in accordance with law before
     3  resuming its activities.
     4     (b)  Enforcement of undertaking to release name.--If a
     5  corporation has used a name [the same as, or deceptively similar
     6  to,] that is not distinguishable upon the records of the
     7  Department of State from the name of another corporation or
     8  [nonprofit unincorporated] other association as permitted by
     9  section 5303(b)(1)[(i)] (relating to duplicate use of names) and
    10  the other corporation or [nonprofit unincorporated] other
    11  association continues to use its name in this Commonwealth and
    12  does not change its name, cease to do business, be wound up, or
    13  withdraw as it proposed to do in its consent or change its name
    14  as required by subsection (a), any court [of competent] having
    15  jurisdiction may enjoin the other corporation or other
    16  association from continuing to use its name or a name that is
    17  not distinguishable therefrom, upon the application of:
    18         (1)  the Attorney General, acting on his own motion or at
    19     the instance of any administrative department, board or
    20     commission of this Commonwealth[,]; or
    21         (2)  upon the application of any person adversely
    22     affected[, may enjoin the other corporation or association
    23     from continuing to use its name or a name deceptively similar
    24     thereto].
    25  § 5311.  Filing of statement of summary of record by certain
    26             corporations.
    27     (a)  General rule.--Where any of the [valid] charter
    28  documents of a nonprofit corporation are not on file in the
    29  Department of State or there is an error in any such document as
    30  transferred to the department pursuant to section 140 (relating
    19970S1157B2174                 - 91 -

     1  to custody and management of orphan corporate and business
     2  records), and the corporation desires to file any document in
     3  the department under any other provision of this [article]
     4  subpart or the corporation desires to secure from the department
     5  any certificate to the effect that the corporation is a
     6  corporation duly incorporated and existing under the laws of
     7  this Commonwealth or a certified copy of the articles of the
     8  corporation or the corporation desires to correct the text of
     9  its charter documents as on file in the department, the
    10  corporation shall file in the department a statement of summary
    11  of record which shall be executed by the corporation and shall
    12  set forth:
    13         (1)  The name of the corporation and, subject to section
    14     109 (relating to name of commercial registered office
    15     provides in lieu of registered address), the location,
    16     including street and number, if any, of its registered
    17     office.
    18         (2)  The statute by or under which the corporation was
    19     incorporated.
    20         (3)  The name under which, the manner in which and the
    21     date on which the corporation was originally incorporated,
    22     including the date when and the place where the original
    23     articles were recorded.
    24         (4)  The place or places, including volume and page
    25     numbers or their equivalent, where the documents
    26     [constituting the currently effective articles are] that are
    27     not on file in the department or that require correction in
    28     the records of the department were originally filed or
    29     recorded, the date or dates of each [such] filing or
    30     recording and the correct text of [such currently effective
    19970S1157B2174                 - 92 -

     1     articles] the documents. The information specified in this
     2     paragraph may be omitted in a statement of summary of record
     3     that is delivered to the department contemporaneously with
     4     amended and restated articles of the corporation filed under
     5     this subpart.
     6         [(5)  Each name by which the corporation was known, if
     7     any, other than its original name and its current name, and
     8     the date or dates on which each change of name of the
     9     corporation became effective.
    10  A corporation shall be required to make only one filing under
    11  this subsection.]
    12     (b)  Validation of prior defects in incorporation.--Upon the
    13  filing of a statement by a corporation under this section or the
    14  transfer to the department of the records relating to a
    15  corporation pursuant to section 140, the corporation [named in
    16  the statement] shall be deemed to be a validly subsisting
    17  corporation to the same extent as if it had been duly
    18  incorporated and was existing under this subpart and the
    19  department shall so certify regardless of any absence of or
    20  defect in the prior proceedings relating to incorporation.
    21     (c)  Cross [reference] references.--See [section] sections
    22  134 (relating to docketing statement), 135 (relating to
    23  requirements to be met by filed documents) and 5106(b)(2)
    24  (relating to uniform application of subpart).
    25  § 5503.  Defense of ultra vires.
    26     (a)  General rule.--[No] A limitation upon the business,
    27  [purpose or] purposes[,] or powers of a nonprofit corporation,
    28  expressed or implied in its articles or bylaws or implied by
    29  law, shall not be asserted in order to defend any action at law
    30  or in equity between the corporation and a third person, or
    19970S1157B2174                 - 93 -

     1  between a member and a third person, involving any contract to
     2  which the corporation is a party or any right of property or any
     3  alleged liability of [whatsoever] whatever nature[; but such],
     4  but the limitation may be asserted:
     5         (1)  In an action by a member against the corporation to
     6     enjoin the doing of unauthorized acts or the transaction or
     7     continuation of unauthorized business. If the unauthorized
     8     acts or business sought to be enjoined are being transacted
     9     pursuant to any contract to which the corporation is a party,
    10     the court may, if all of the parties to the contract are
    11     parties to the action[,] and if it deems [such action] the
    12     result to be equitable, set aside and enjoin the performance
    13     of [such] the contract, and in so doing shall allow to the
    14     corporation, or to the other parties to the contract, as the
    15     case may be, such compensation as may be [equitable]
    16     appropriate for the loss or damage sustained by any of them
    17     from the action of the court in setting aside and enjoining
    18     the performance of [such] the contract, but anticipated
    19     profits to be derived from the performance of the contract
    20     shall not be awarded by the court as a loss or damage
    21     sustained.
    22         (2)  In any action by or in the right of the corporation
    23     to procure a judgment in its favor against an incumbent or
    24     former officer, director or member of an other body of the
    25     corporation for loss or damage due to his unauthorized acts.
    26         (3)  In a proceeding by the Commonwealth under section
    27     503 (relating to actions to revoke corporate franchises)[,]
    28     or in a proceeding by the Commonwealth to enjoin the
    29     corporation from the doing of unauthorized or unlawful
    30     business.
    19970S1157B2174                 - 94 -

     1     (b)  Conveyances of property by or to a corporation.--[No] A
     2  conveyance or transfer by or to a nonprofit corporation of
     3  property, real or personal, of any kind or description, shall
     4  not be invalid or fail because in making [such] the conveyance
     5  or transfer, or in acquiring the property, real or personal,
     6  [the board of directors or other body or any of the officers]
     7  any representative of the corporation acting within the scope of
     8  the actual or apparent authority given to [them] him by the
     9  [board of directors or other body, have] corporation has
    10  exceeded any of the purposes or powers of the corporation.
    11     (c)  [Nonqualified foreign corporations.--The provisions of
    12  this section shall extend to contracts and conveyances made by
    13  nonqualified foreign corporations in this Commonwealth and to
    14  conveyances by nonqualified foreign corporations of real
    15  property situated in this Commonwealth.] Cross reference.--See
    16  section 6146 (relating to provisions applicable to all foreign
    17  corporations).
    18  § 5505.  Persons bound by bylaws.
    19     Except as otherwise provided by section 5713 (relating to
    20  personal liability of directors) or any similar provision of
    21  law, bylaws of a nonprofit corporation shall operate only as
    22  regulations among the members, directors, members of an other
    23  body and officers of the corporation, and shall not affect
    24  contracts or other dealings with other persons, unless those
    25  persons have actual knowledge of the bylaws.
    26  § 5506.  Form of execution of instruments.
    27     (a)  General rule.--Any form of execution provided in the
    28  articles or bylaws to the contrary notwithstanding, any note,
    29  mortgage, evidence of indebtedness, contract[,] or other
    30  [instrument in writing] document, or any assignment or
    19970S1157B2174                 - 95 -

     1  endorsement thereof, executed or entered into between any
     2  nonprofit corporation and any other person, when signed by one
     3  or more officers or agents having actual or apparent authority
     4  to sign it, or by the president or vice-president and secretary
     5  or assistant secretary or treasurer or assistant treasurer of
     6  [such] the corporation, shall be held to have been properly
     7  executed for and in behalf of the corporation.
     8     (b)  Seal unnecessary.--[Except as otherwise required by
     9  statute, the] The affixation of the corporate seal shall not be
    10  necessary to the valid execution, assignment or endorsement by a
    11  corporation of any instrument [in writing] or other document.
    12     (c)  [Nonqualified foreign corporations.--The provisions of
    13  this section shall extend to instruments in writing made or to
    14  be performed in this Commonwealth by a nonqualified foreign
    15  corporation and to instruments executed by nonqualified foreign
    16  corporations affecting real property situated in this
    17  Commonwealth.] Cross reference.--See section 6146 (relating to
    18  provisions applicable to all foreign corporations).
    19  § 5508.  Corporate records; inspection by members.
    20     (a)  Required records.--Every nonprofit corporation shall
    21  keep [an original or duplicate record] minutes of the
    22  proceedings of the members [and], the directors[,] and [of] any
    23  other body [exercising powers or performing duties which under
    24  this article may be exercised or performed by such other body,
    25  the original or a copy of its bylaws, including all amendments
    26  thereto to date, certified by the secretary of the corporation],
    27  and [an original or] a [duplicate] membership register, giving
    28  the names [of the members, and showing their respective] and
    29  addresses of all members and the class and other details of the
    30  membership of each. [Every such] The corporation shall also keep
    19970S1157B2174                 - 96 -

     1  appropriate, complete and accurate books or records of account.
     2  The records provided for in this subsection shall be kept at
     3  [either] any of the following locations:
     4         (1)  the registered office of the corporation in this
     5     Commonwealth [or at its];
     6         (2)  the principal place of business wherever
     7     situated[.]; or
     8         (3)  any actual business office of the corporation.
     9     (b)  Right of inspection by a member.--Every member shall,
    10  upon written verified demand [under oath] stating the purpose
    11  thereof, have a right to examine, in person or by agent or
    12  attorney, during the usual hours for business for any proper
    13  purpose, the membership register, books and records of account,
    14  and records of the proceedings of the members, directors and
    15  [such] any other body, and to make copies or extracts therefrom.
    16  A proper purpose shall mean a purpose reasonably related to the
    17  interest of [such] the person as a member. In every instance
    18  where an attorney or other agent [shall be] is the person who
    19  seeks the right [to] of inspection, the demand [under oath]
    20  shall be accompanied by a verified power of attorney or [such]
    21  other writing [which] that authorizes the attorney or other
    22  agent to so act on behalf of the member. The demand [under oath]
    23  shall be directed to the corporation:
    24         (1)  at its registered office in this Commonwealth [or];
    25         (2)  at its principal place of business wherever
    26     situated[.]; or
    27         (3)  in care of the person in charge of an actual
    28     business office of the corporation.
    29     (c)  Proceedings for the enforcement of inspection by a
    30  member.--If the corporation, or an officer or agent thereof,
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     1  refuses to permit an inspection sought by a member or attorney
     2  or other agent acting for the member pursuant to subsection (b)
     3  [of this section] or does not reply to the demand within five
     4  business days after the demand has been made, the member may
     5  apply to the court for an order to compel [such] the inspection.
     6  The court shall determine whether or not the person seeking
     7  inspection is entitled to the inspection sought. The court may
     8  summarily order the corporation to permit the member to inspect
     9  the membership register and the other books and records of the
    10  corporation and to make copies or extracts therefrom; or the
    11  court may order the corporation to furnish to the member a list
    12  of its members as of a specific date on condition that the
    13  member first pay to the corporation the reasonable cost of
    14  obtaining and furnishing [such] the list and on such other
    15  conditions as the court deems appropriate. Where the member
    16  seeks to inspect the books and records of the corporation, other
    17  than its membership register or list of members, he shall first
    18  establish:
    19         (1)  that he has complied with the provisions of this
    20     section respecting the form and manner of making demand for
    21     inspection of such document; and
    22         (2)  that the inspection he seeks is for a proper
    23     purpose.
    24  Where the member seeks to inspect the membership register or
    25  list of members of the corporation and he has complied with the
    26  provisions of this section respecting the form and manner of
    27  making demand for inspection of [such] the documents, the burden
    28  of proof shall be upon the corporation to establish that the
    29  inspection he seeks is for an improper purpose. The court may,
    30  in its discretion, prescribe any limitations or conditions with
    19970S1157B2174                 - 98 -

     1  reference to the inspection, or award such other or further
     2  relief as the court [may deem] deems just and proper. The court
     3  may order books, documents and records, pertinent extracts
     4  therefrom, or duly authenticated copies thereof, to be brought
     5  [within] into this Commonwealth and kept in this Commonwealth
     6  upon such terms and conditions as the order may prescribe.
     7     (d)  Cross references.--See sections 107 (relating to form of
     8  records) and 5512 (relating to informational rights of a
     9  director).
    10  § 5510.  [(Reserved).] Certain specifically authorized debt
    11             terms.
    12     (a)  Interest rates.--A nonprofit corporation shall not plead
    13  or set up usury, or the taking of more than the lawful rate of
    14  interest, or the taking of any finance, service or default
    15  charge in excess of any maximum rate therefor provided or
    16  prescribed by law, as a defense to any action or proceeding
    17  brought against it to recover damages on, or to enforce payment
    18  of, or to enforce any other remedy on, any obligation executed
    19  or effected by the corporation.
    20     (b)  Yield maintenance premiums.--A prepayment premium
    21  determined by reference to the approximate spread between the
    22  yield at issuance, or at the date of amendment of any of the
    23  terms, of an obligation of a corporation and the yield at or
    24  about such date of an interest rate index of independent
    25  significance and contingent upon a change in the ownership of or
    26  memberships in the corporation or a default by or other change
    27  in the condition or prospects of the corporation or any
    28  affiliate of the corporation shall be deemed liquidated damages
    29  and shall not constitute a penalty.
    30     (c)  Definitions.--As used in this section, the following
    19970S1157B2174                 - 99 -

     1  words and phrases shall have the meanings given to them in this
     2  subsection:
     3     "Affiliate."  An affiliate or associate as defined in section
     4  2552 (relating to definitions).
     5     "Obligation."  Includes an installment sale contract.
     6     (d)  Cross reference.--See section 6146 (relating to
     7  provisions applicable to all foreign corporations).
     8  § 5512.  Informational rights of a director.
     9     (a)  General rule.--To the extent reasonably related to the
    10  performance of the duties of the director, including those
    11  arising from service as a member of a committee of the board of
    12  directors, a director of a nonprofit corporation is entitled:
    13         (1)  in person or by any attorney or other agent, at any
    14     reasonable time, to inspect and copy corporate books, records
    15     and documents and, in addition, to inspect, and receive
    16     information regarding, the assets, liabilities and operations
    17     of the corporation and any subsidiaries of the corporation
    18     incorporated or otherwise organized or created under the laws
    19     of this Commonwealth that are controlled directly or
    20     indirectly by the corporation; and
    21         (2)  to demand that the corporation exercise whatever
    22     rights it may have to obtain information regarding any other
    23     subsidiaries of the corporation.
    24     (b)  Proceedings for the enforcement of inspection by a
    25  director.--If the corporation, or an officer or agent thereof,
    26  refuses to permit an inspection or obtain or provide information
    27  sought by a director or attorney or other agent acting for the
    28  director pursuant to subsection (a) or does not reply to the
    29  request within two business days after the request has been
    30  made, the director may apply to the court for an order to compel
    19970S1157B2174                 - 100 -

     1  the inspection or the obtaining or providing of the information.
     2  The court shall summarily order the corporation to permit the
     3  requested inspection or to obtain the information unless the
     4  corporation establishes that the information to be obtained by
     5  the exercise of the right is not reasonably related to the
     6  performance of the duties of the director or that the director
     7  or the attorney or agent of the director is likely to use the
     8  information in a manner that would violate the duty of the
     9  director to the corporation. The order of the court may contain
    10  provisions protecting the corporation from undue burden or
    11  expense and prohibiting the director from using the information
    12  in a manner that would violate the duty of the director to the
    13  corporation.
    14     (c)  Cross references.--See sections 107 (relating to form of
    15  records), 5508 (relating to corporate records; inspection by
    16  members) and 42 Pa.C.S. § 2503(7) (relating to right of
    17  participants to receive counsel fees).
    18  § 5545.  Income from corporate activities.
    19     (a)  General rule.--A nonprofit corporation whose lawful
    20  activities involve among other things the charging of fees or
    21  prices for its services or products, shall have the right to
    22  receive [such] that income and, in so doing, may make [an
    23  incidental] a profit. All [such incidental] profits shall be
    24  applied to the maintenance and operation of the lawful
    25  activities of the corporation, or any of its subordinate units
    26  or of any not-for-profit association to which it is subordinate,
    27  and [in no case] shall otherwise not be divided or distributed
    28  in any manner whatsoever among the members, directors, members
    29  of an other body or officers of the corporation. [As used in
    30  this section the terms fees or prices do not include rates of
    19970S1157B2174                 - 101 -

     1  contribution, fees or dues levied under an insurance certificate
     2  issued by a fraternal benefit society, so long as the
     3  distribution of profits arising from said fees or prices is
     4  limited to the purposes set forth in this section and section
     5  5551 (relating to dividends prohibited; compensation and certain
     6  payments authorized).]
     7     (b)  Cross references.--See sections 5511 (relating to
     8  establishment of subordinate units) and 5551(relating to
     9  dividends prohibited; compensation and certain payments
    10  authorized).
    11  § 5546.  Purchase, sale[, mortgage] and lease of [real]
    12             property.
    13     [Except for an industrial development corporation whose
    14  articles or bylaws otherwise provide, no purchase of real
    15  property shall be made by a nonprofit corporation and no
    16  corporation shall sell, mortgage, lease away or otherwise
    17  dispose of its real property, unless authorized by the vote of
    18  two-thirds of the members in office of the board of directors or
    19  other body, except that if there are 21 or more directors or
    20  members of such other body, the vote of a majority of the
    21  members in office shall be sufficient. No application to or
    22  confirmation of any court shall be required and, unless
    23  otherwise restricted in the bylaws, no vote or consent of the
    24  members shall be required to make effective such action by the
    25  board or other body. If the real property is subject to a trust
    26  the conveyance away shall be free of trust and the trust shall
    27  be impinged upon the proceeds of such conveyance.] Except as
    28  otherwise provided in this subpart and unless otherwise provided
    29  in the bylaws, no application to or confirmation of any court
    30  shall be required for the purchase by or the sale, lease or
    19970S1157B2174                 - 102 -

     1  other disposition of the real or personal property, or any part
     2  thereof, of a nonprofit corporation, and, unless otherwise
     3  restricted in section 5930 (relating to voluntary transfer of
     4  corporate assets) or in the bylaws, no vote or consent of the
     5  members shall be required to make effective such action by the
     6  board or other body. If the property is subject to a trust, the
     7  conveyance away shall be free of trust, and the trust shall be
     8  impinged upon the proceeds of the conveyance.
     9  § 5547.  Authority to take and hold trust property.
    10     (a)  General rule.--Every nonprofit corporation incorporated
    11  for a charitable purpose or purposes may take, receive and hold
    12  such real and personal property as may be given, devised to[,]
    13  or otherwise vested in [such] the corporation, in trust or
    14  otherwise, for the purpose or purposes set forth in its
    15  articles.
    16     (b)  Standard of conduct.--The board of directors or other
    17  body of the corporation shall, as trustees of [such] trust
    18  property, be held to the same degree of responsibility and
    19  accountability as if not incorporated, unless:
    20         (1)  a less degree or a particular degree of
    21     responsibility and accountability is prescribed in the trust
    22     instrument, or [unless]
    23         (2)  the board of directors or such other body remain
    24     under the control of the members of the corporation or third
    25     persons who retain the right to direct, and do direct, the
    26     actions of the board or other body as to the use of the trust
    27     property from time to time.
    28     [(b)] (c)  Nondiversion of certain property.--[Property
    29  committed to charitable purposes] Trust property shall not, by
    30  any proceeding under Chapter 59 (relating to fundamental
    19970S1157B2174                 - 103 -

     1  changes) or otherwise, be diverted from the objects to which it
     2  was donated, granted or devised, unless and until the [board of
     3  directors or other body] corporation obtains from the court an
     4  order under 20 Pa.C.S. Ch. 61 (relating to estates) specifying
     5  the disposition of the property.
     6  § 5551.  Dividends prohibited; compensation and certain payments
     7             authorized.
     8     (a)  General rule.--[A] Except as provided in section 5545
     9  (relating to income from corporate activities), a nonprofit
    10  corporation shall not pay dividends or distribute any part of
    11  its net income or profits to its members, directors, members of
    12  an other body or officers. [Nothing herein contained shall
    13  prohibit a fraternal benefit society operating under the
    14  insurance laws of Pennsylvania from paying dividends or refunds
    15  by whatever name known pursuant to the terms of its insurance
    16  contracts.] A contribution by a corporation to a not-for-profit
    17  association made on or after February 13, 1973, shall not be
    18  deemed a dividend or distribution for purposes of this subpart.
    19     (b)  Reasonable compensation for services.--A [nonprofit]
    20  corporation may pay compensation in a reasonable amount to
    21  members, directors, members of an other body or officers for
    22  services rendered.
    23     (c)  Certain payments authorized.--A [nonprofit] corporation
    24  may confer monetary or other benefits upon members or nonmembers
    25  in conformity with its purposes, may repay capital
    26  contributions, and may redeem its [subvention certificates or
    27  evidences of indebtedness] subventions or obligations, as
    28  authorized by this [article, except when the corporation is
    29  currently insolvent or would thereby be made insolvent or
    30  rendered unable to carry on its corporate purposes, or when the
    19970S1157B2174                 - 104 -

     1  fair value of the assets of the corporation remaining after such
     2  conferring of benefits, payment or redemption would be
     3  insufficient to meet its liabilities.] subpart unless, after
     4  giving effect thereto, the corporation would be unable to pay
     5  its debts as they become due in the usual course of its
     6  business. A [nonprofit] corporation may make distributions of
     7  cash or property to members upon dissolution or final
     8  liquidation as permitted by this article.
     9  § 5552.  Liabilities of members.
    10     (a)  General rule.--[The members of a nonprofit corporation
    11  shall not be personally liable for the debts, liabilities or
    12  obligations of the corporation.] A member of a nonprofit
    13  corporation shall not be liable, solely by reason of being a
    14  member, under an order of a court or in any other manner for a
    15  debt, obligation or liability of the corporation of any kind or
    16  for the acts of any member or representative of the corporation.
    17     (b)  Obligations of member to corporation.--A member shall be
    18  liable to the corporation only to the extent of any unpaid
    19  portion of the capital contributions, membership dues or
    20  assessments which the corporation may have lawfully imposed upon
    21  him, or for any other indebtedness owed by him to the
    22  corporation. No action shall be brought by any creditor of the
    23  corporation to reach and apply any such liability to any debt of
    24  the corporation until after:
    25         (1)  final judgment [shall have] has been rendered
    26     against the corporation in favor of the creditor and
    27     execution thereon returned unsatisfied[, or the corporation
    28     shall have been adjudged bankrupt, or];
    29         (2)  a case involving the corporation has been brought
    30     under 11 U.S.C. Ch. 7 (relating to liquidation) and a
    19970S1157B2174                 - 105 -

     1     distribution has been made and the case closed or a notice of
     2     no assets has been issued; or
     3         (3)  a receiver [shall have] has been appointed with
     4     power to collect debts, and [which] the receiver, on demand
     5     of a creditor to bring an action thereon, has refused to sue
     6     for [such] the unpaid amount, or the corporation [shall have]
     7     has been dissolved or ceased its activities leaving debts
     8     unpaid.
     9     [No such] (c)  Action by a creditor.--An action by a creditor
    10  under subsection (b) shall not be brought more than three years
    11  after the happening of [any one of such events.] the first to
    12  occur of the events listed in subsection (b)(1) through (3).
    13  § 5709.  Conduct of members meeting.
    14     (a)  Presiding officer.--There shall be a presiding officer
    15  at every meeting of the members. The presiding officer shall be
    16  appointed in the manner provided in the bylaws or, in the
    17  absence of such provision, by the board of directors. If the
    18  bylaws are silent on the appointment of the presiding officer
    19  and the board fails to designate a presiding officer, the
    20  president shall be the presiding officer.
    21     (b)  Authority of the presiding officer.--Except as otherwise
    22  provided in the bylaws, the presiding officer shall determine
    23  the order of business and shall have the authority to establish
    24  rules for the conduct of the meeting.
    25     (c)  Procedural standard.--Any action by the presiding
    26  officer in adopting rules for, and in conducting, a meeting
    27  shall be fair to the members.
    28     (d)  Closing of the polls.--The presiding officer shall
    29  announce at the meeting when the polls close for each matter
    30  voted upon. If no announcement is made, the polls shall be
    19970S1157B2174                 - 106 -

     1  deemed to have closed upon the final adjournment of the meeting.
     2  After the polls close, no ballots, proxies or votes, nor any
     3  revocations or changes thereto, may be accepted.
     4  § 5729.  Voting rights of directors.
     5     (a)  General rule.--Unless otherwise provided in a bylaw
     6  adopted by the members, every director of a nonprofit
     7  corporation shall be entitled to one vote. Without limiting the
     8  generality of the foregoing, a bylaw adopted by the members may
     9  provide that a class or other defined group of directors shall
    10  have multiple or fractional voting rights, or no right to vote,
    11  either generally or under specified circumstances.
    12     (b)  [Multiple and fractional voting.--The requirement of
    13  this article] Application of procedural requirements.--Any
    14  requirement of this subpart for the presence of or vote or other
    15  action by a specified percentage of directors shall be satisfied
    16  by the presence of or vote or other action by directors entitled
    17  to cast [such] the specified percentage of the votes [which all]
    18  that all voting directors in office are entitled to cast.
    19  § 5731.  Executive and other committees of the board.
    20     (a)  Establishment and powers.--Unless otherwise restricted
    21  in the bylaws:
    22         (1)  The board of directors may, by resolution adopted by
    23     a majority of the directors in office, establish one or more
    24     committees to consist of one or more directors of the
    25     corporation.
    26         (2)  Any [such] committee, to the extent provided in the
    27     resolution of the board of directors or in the bylaws, shall
    28     have and may exercise all of the powers and authority of the
    29     board of directors, except that [no such] a committee shall
    30     not have any power or authority as to the following:
    19970S1157B2174                 - 107 -

     1             (i)  The submission to members of any action
     2         requiring approval of members under this [article]
     3         subpart.
     4             (ii)  The creation or filling of vacancies in the
     5         board of directors.
     6             (iii)  The adoption, amendment or repeal of the
     7         bylaws.
     8             (iv)  The amendment or repeal of any resolution of
     9         the board that by its terms is amendable or repealable
    10         only by the board.
    11             (v)  Action on matters committed by the bylaws or a
    12         resolution of the board of directors exclusively to
    13         another committee of the board.
    14         [(2)] (3)  The board may designate one or more directors
    15     as alternate members of any committee, who may replace any
    16     absent or disqualified member at any meeting of the
    17     committee. In the absence or disqualification of a member of
    18     a committee, the member or members thereof present at any
    19     meeting and not disqualified from voting, whether or not he
    20     or they constitute a quorum, may unanimously appoint another
    21     director to act at the meeting in the place of any [such]
    22     absent or disqualified member.
    23     (b)  Term.--Each committee of the board shall serve at the
    24  pleasure of the board.
    25  § 5745.  Advancing expenses.
    26     Expenses (including attorneys' fees) incurred in defending
    27  any action or proceeding referred to in this subchapter may be
    28  paid by a nonprofit corporation in advance of the final
    29  disposition of the action or proceeding upon receipt of an
    30  undertaking by or on behalf of the representative to repay the
    19970S1157B2174                 - 108 -

     1  amount if it is ultimately determined that he is not entitled to
     2  be indemnified by the corporation as authorized in this
     3  subchapter or otherwise. Except as otherwise provided in the
     4  bylaws, advancement of expenses shall be authorized by the board
     5  of directors. Section 5728 (relating to interested members,
     6  directors or officers; quorum) shall not be applicable to the
     7  advancement of expenses under this section.
     8  § 5748.  Application to surviving or new corporations.
     9     [For] (a)  General rule.--Except as provided in subsection
    10  (b), for the purposes of this subchapter, references to "the
    11  corporation" include all constituent corporations absorbed in a
    12  consolidation, merger or division, as well as the surviving or
    13  new corporations surviving or resulting therefrom, so that any
    14  person who is or was a representative of the constituent,
    15  surviving or new corporation, or is or was serving at the
    16  request of the constituent, surviving or new corporation as a
    17  representative of another domestic or foreign corporation for
    18  profit or not-for-profit, partnership, joint venture, trust or
    19  other enterprise, shall stand in the same position under the
    20  provisions of this subchapter with respect to the surviving or
    21  new corporation as he would if he had served the surviving or
    22  new corporation in the same capacity.
    23     (b)  Divisions.--Notwithstanding subsection (a), the
    24  obligations of a dividing corporation to indemnify and advance
    25  expenses of its representatives, whether arising under this
    26  subchapter or otherwise, may be allocated in a division in the
    27  same manner and with the same effect as any other liability of
    28  the dividing corporation.
    29  § 5758.  Voting rights of members.
    30     (a)  General rule.--Unless otherwise provided in a bylaw
    19970S1157B2174                 - 109 -

     1  adopted by the members, every member of a nonprofit corporation
     2  shall be entitled to one vote.
     3     (b)  Procedures.--The manner of voting on any matter,
     4  including changes in the articles or bylaws, may be by ballot,
     5  mail or any reasonable means provided in a bylaw adopted by the
     6  members. If a bylaw adopted by the members provides a fair and
     7  reasonable procedure for the nomination of candidates for any
     8  office, only candidates who have been duly nominated in
     9  accordance therewith shall be eligible for election. Unless
    10  otherwise provided in such a bylaw, in elections for directors,
    11  voting shall be by ballot, and the candidates receiving the
    12  highest number of votes from each class or group of classes, if
    13  any, of members entitled to elect directors separately up to the
    14  number of directors to be elected by such class or group of
    15  classes shall be elected. If at any meeting of members directors
    16  of more than one class are to be elected, each class of
    17  directors shall be elected in a separate election.
    18     (c)  Cumulative voting.--[The members of a nonprofit
    19  corporation shall have the right to cumulate their votes for the
    20  election of directors only if and to the extent a bylaw adopted
    21  by the members so provides.] If a bylaw adopted by the members
    22  so provides, in each election of directors of a nonprofit
    23  corporation every member entitled to vote shall have the right
    24  to multiply the number of votes to which he may be entitled by
    25  the total number of directors to be elected in the same election
    26  by the members or the class of members to which he belongs and
    27  he may cast the whole number of his votes for one candidate or
    28  he may distribute them among any two or more candidates.
    29     (d)  Sale of votes.--No member shall sell his vote or issue a
    30  proxy for money or anything of value.
    19970S1157B2174                 - 110 -

     1     (e)  Voting lists.--Upon request of a member, the books or
     2  records of membership shall be produced at any regular or
     3  special meeting of the corporation. If at any meeting the right
     4  of a person to vote is challenged, the presiding officer shall
     5  require [such] the books or records to be produced as evidence
     6  of the right of the person challenged to vote, and all persons
     7  who appear by [such] the books or records to be members entitled
     8  to vote may vote. See section 6145 (relating to applicability of
     9  certain safeguards to foreign corporations).
    10  § 5782.  Actions against directors, members of an other body and
    11             officers.
    12     (a)  General rule.--Except as provided in subsection (b), in
    13  any action or proceeding brought to enforce a secondary right on
    14  the part of one or more members of a nonprofit corporation
    15  against any present or former officer, director or member of an
    16  other body of the corporation because the corporation refuses to
    17  enforce rights that may properly be asserted by it, each
    18  plaintiff must aver and it must be made to appear that each
    19  plaintiff was a member of the corporation at the time of the
    20  transaction of which he complains.
    21     (b)  Exception.--Any member who, except for the provisions of
    22  subsection (a), would be entitled to maintain the action or
    23  proceeding and who does not meet such requirements may,
    24  nevertheless in the discretion of the court, be allowed to
    25  maintain the action or proceeding on preliminary showing to the
    26  court, by application and upon such verified statements and
    27  depositions as may be required by the court, that there is a
    28  strong prima facie case in favor of the claim asserted on behalf
    29  of the corporation and that without the action serious injustice
    30  will result.
    19970S1157B2174                 - 111 -

     1     (c)  Security for costs.--In any action or proceeding
     2  instituted or maintained by less than the smaller of 50 members
     3  of any class or 5% of the members of any class of the
     4  corporation, the corporation in whose right the action or
     5  proceeding is brought shall be entitled at any stage of the
     6  proceedings to require the plaintiffs to give security for the
     7  reasonable expenses, including attorney fees, that may be
     8  incurred by it in connection therewith or for which it may
     9  become liable pursuant to section 5743 (relating to mandatory
    10  indemnification), but only insofar as relates to actions by or
    11  in the right of the corporation, to which security the
    12  corporation shall have recourse in such amount as the court
    13  determines upon the termination of the action or proceeding. The
    14  amount of security may, from time to time, be increased or
    15  decreased in the discretion of the court upon showing that the
    16  security provided has or may become inadequate or excessive. The
    17  security may be denied or limited in the discretion of the court
    18  upon preliminary showing to the court, by application and upon
    19  such verified statements and depositions as may be required by
    20  the court, establishing prima facie that the requirement of full
    21  or partial security would impose undue hardship on plaintiffs
    22  and serious injustice would result.
    23     (d)  Cross reference.--See section 6146 (relating to
    24  provisions applicable to all foreign corporations).
    25  § 5903.  Bankruptcy or insolvency proceedings.
    26     (a)  General rule.--[Whenever] Unless otherwise provided in
    27  the bylaws, whenever a nonprofit corporation is insolvent or in
    28  financial difficulty, the board of directors may, by resolution
    29  and without the consent of the members, authorize and designate
    30  the officers of the corporation to execute a deed of assignment
    19970S1157B2174                 - 112 -

     1  for the benefit of creditors, or file a voluntary petition in
     2  bankruptcy, or file an answer consenting to the appointment of a
     3  receiver upon a complaint in the nature of an equity action
     4  filed by creditors or members, or, if insolvent, file an answer
     5  to an involuntary petition in bankruptcy admitting the
     6  insolvency of the corporation and its willingness to be adjudged
     7  a debtor on that ground.
     8     (b)  Bankruptcy proceedings.--[A] If authorized pursuant to
     9  subsection (a), a nonprofit corporation may participate in
    10  proceedings under and in the manner provided by Title 11 of the
    11  United States Code (relating to bankruptcy) notwithstanding any
    12  contrary provision of its articles or bylaws or this subpart,
    13  other than [section] sections 103 (relating to subordination of
    14  title to regulatory laws) and 5107 (relating to subordination of
    15  subpart to canon law). The corporation shall have full power and
    16  authority to put into effect and carry out a plan of
    17  reorganization or arrangement and the decrees and orders of the
    18  court, or judge or referee relative thereto, and may take any
    19  proceeding and do any act provided in the plan or arrangement or
    20  directed by such decrees and orders, without further action by
    21  its directors or members. Such power and authority may be
    22  exercised, and such proceedings and acts may be taken, as may be
    23  directed by such decrees or orders, by the trustees or receivers
    24  of the corporation appointed in the bankruptcy proceedings, or a
    25  majority thereof, or, if none be appointed and acting, by
    26  designated officers of the corporation, or by a master or other
    27  representative appointed by the court or judge or referee, with
    28  the effect as if exercised and taken by unanimous action of the
    29  directors and members of the corporation. Without limiting the
    30  generality or effect of the foregoing, the corporation may:
    19970S1157B2174                 - 113 -

     1         * * *
     2  § 5912.  Proposal of amendments.
     3     (a)  General rule.--Every amendment [to] of the articles of a
     4  nonprofit corporation shall be proposed [by]:
     5         (1)  by the adoption by the board of directors or other
     6     body of a resolution setting forth the proposed amendment;
     7         (2)  unless otherwise provided in the articles, by
     8     petition of members entitled to cast at least 10% of the
     9     votes [which] that all members are entitled to cast thereon,
    10     setting forth the proposed amendment, which petition shall be
    11     directed to the board of directors and filed with the
    12     secretary of the corporation; or
    13         (3)  by such other method as may be provided in the
    14     bylaws.
    15     [The] (b)  Submission to members.--Except where the approval
    16  of the members is unnecessary under this subchapter, the board
    17  of directors or other body [or the petitioning members] shall
    18  direct that the proposed amendment be submitted to a vote of the
    19  members entitled to vote thereon at a regular or special meeting
    20  of the members.
    21     [(b)] (c)  Form of amendment.--[The resolution or petition
    22  shall contain the language of the proposed amendment to the
    23  articles by providing that the articles shall be amended so as
    24  to read as therein set forth in full, or that any provision
    25  thereof be amended so as to read as therein set forth in full,
    26  or that the matter stated in the resolution or petition be added
    27  to or stricken from the articles. The resolution or petition may
    28  set forth the manner and basis of reclassifying the shares of
    29  the corporation.] The resolution or petition shall contain the
    30  language of the proposed amendment of the articles:
    19970S1157B2174                 - 114 -

     1         (1)  by setting forth the existing text of the articles
     2     or the provision thereof that is proposed to be amended, with
     3     brackets around language that is to be deleted and
     4     underscoring under language that is to be added; or
     5         (2)  by providing that the articles shall be amended so
     6     as to read as therein set forth in full, or that any
     7     provision thereof be amended so as to read as therein set
     8     forth in full, or that the matter stated in the resolution or
     9     petition be added to or stricken from the articles.
    10     (d)  Terms of amendment.--The resolution or petition may set
    11  forth the manner and basis of reclassifying the memberships in
    12  or shares of the corporation. Any of the terms of a plan of
    13  reclassification or other action contained in an amendment may
    14  be made dependent upon facts ascertainable outside of the
    15  amendment if the manner in which the facts will operate upon the
    16  terms of the amendment is set forth in the amendment. Such facts
    17  may include, without limitation, actions or events within the
    18  control of or determinations made by the corporation or a
    19  representative of the corporation.
    20  § 5922.  Plan of merger or consolidation.
    21     (a)  Preparation of plan.--A plan of merger or consolidation,
    22  as the case may be, shall be prepared, setting forth:
    23         (1)  The terms and conditions of the merger or
    24     consolidation.
    25         [(2)  The mode of carrying the merger or consolidation
    26     into effect.
    27         (3)] (2)  If the surviving or new corporation is or is to
    28     be a domestic nonprofit corporation:
    29             (i)  any changes desired to be made in the articles,
    30         which may include a restatement of the articles in the
    19970S1157B2174                 - 115 -

     1         case of a merger; or
     2             (ii)  in the case of a consolidation, all of the
     3         statements required by this [article] subpart to be set
     4         forth in restated articles.
     5         [(4)] (3)  Such other [details and] provisions as are
     6     deemed desirable.
     7     (b)  Post-adoption amendment.--A plan of merger or
     8  consolidation may contain a provision that the boards of
     9  directors or other bodies of the constituent corporations may
    10  amend the plan at any time prior to its effective date, except
    11  that an amendment made subsequent to the adoption of the plan by
    12  the members of any constituent corporation shall not change:
    13         (1)  The term of memberships or the amount or kind of
    14     securities, obligations, cash, property or rights to be
    15     received in exchange for or on conversion of all or any of
    16     the memberships in the constituent corporation.
    17         (2)  Any term of the articles of the surviving or new
    18     corporation to be effected by the merger or consolidation.
    19         (3)  Any of the terms and conditions of the plan if the
    20     change would adversely affect the members of the constituent
    21     corporation.
    22     [(b)] (c)  Proposal.--Every merger or consolidation shall be
    23  proposed in the case of each domestic nonprofit corporation
    24  [by]:
    25         (1)  by the adoption by the board of directors or other
    26     body of a resolution approving the plan of merger or
    27     consolidation;
    28         (2)  unless otherwise provided in the articles, by
    29     petition of members entitled to cast at least 10% of the
    30     votes [which] that all members are entitled to cast thereon,
    19970S1157B2174                 - 116 -

     1     setting forth the proposed plan of merger or consolidation,
     2     which petition shall be directed to the board of directors
     3     and filed with the secretary of the corporation; or
     4         (3)  by such other method as may be provided in the
     5     bylaws.
     6     [The] (d)  Submission to members.--Except where the
     7  corporation has no members entitled to vote thereon, the board
     8  of directors or other body [or the petitioning members] shall
     9  direct that the plan be submitted to a vote of the members
    10  entitled to vote thereon at a regular or special meeting of the
    11  members.
    12     (e)  Party to plan or transaction.--A corporation,
    13  partnership, business trust or other association that approves a
    14  plan in its capacity as a member or creditor of a merging or
    15  consolidating corporation, or that furnishes all or a part of
    16  the consideration contemplated by a plan, does not thereby
    17  become a party to the plan or the merger or consolidation for
    18  the purposes of this subchapter.
    19     (f)  Reference to outside facts.--Any of the terms of a plan
    20  of merger or consolidation may be made dependent upon facts
    21  ascertainable outside of the plan if the manner in which the
    22  facts will operate upon the terms of the plan is set forth in
    23  the plan. Such facts may include, without limitation, actions or
    24  events within the control of or determinations made by a party
    25  to the plan or a representative of a party to the plan.
    26  § 5923.  Notice of meeting of members.
    27     (a)  General rule.--Written notice of the meeting of members
    28  that will act on the proposed plan shall[, not less than ten
    29  days before the meeting of members called for the purpose of
    30  considering the proposed plan,] be given to each member of
    19970S1157B2174                 - 117 -

     1  record, whether or not entitled to vote thereon, of each
     2  domestic nonprofit corporation that is a party to the merger or
     3  consolidation. There shall be included in, or enclosed with,
     4  [such] the notice a copy of the proposed plan or a summary
     5  thereof. The notice shall state that a copy of the bylaws of the
     6  surviving or new corporation will be furnished to any member on
     7  request and without cost.
     8     (b)  Cross reference.--See Subchapter A of Chapter 57
     9  (relating to notice and meetings generally).
    10  § 5929.  Effect of merger or consolidation.
    11     (a)  Single surviving or new corporation.--Upon the merger or
    12  consolidation becoming effective, the several corporations
    13  parties to the [plan of] merger or consolidation shall be a
    14  single corporation which, in the case of a merger, shall be
    15  [that] the corporation designated in the plan of merger as the
    16  surviving corporation[,] and, in the case of a consolidation,
    17  shall be the new corporation provided for in the plan of
    18  consolidation. The separate existence of all corporations
    19  parties to the [plan of] merger or consolidation shall cease,
    20  except that of the surviving corporation, in the case of a
    21  merger. The surviving or new corporation, as the case may be, if
    22  it is a domestic nonprofit corporation, shall not thereby
    23  acquire authority to engage in any business or exercise any
    24  right [which] that a corporation may not be incorporated under
    25  this [article] subpart to engage in or exercise.
    26     (b)  Property rights.--Except as otherwise provided by order,
    27  if any, obtained pursuant to section [5547(b)] 5547(c) (relating
    28  to nondiversion of certain property), all the property, real,
    29  personal[,] and mixed, and franchises of each of the
    30  corporations parties to the [plan of] merger or consolidation,
    19970S1157B2174                 - 118 -

     1  and all debts due on whatever account to any of them, including
     2  subscriptions for membership and other choses in action
     3  belonging to any of them, shall be [taken and] deemed to be
     4  [transferred to and] vested in and shall belong to the surviving
     5  or new corporation, as the case may be, without further [act or
     6  deed] action, and the title to any real estate, or any interest
     7  therein, vested in any of the corporations shall not revert or
     8  be in any way impaired by reason of the merger or consolidation.
     9  The surviving or new corporation shall thenceforth be
    10  responsible for all the liabilities [and obligations] of each of
    11  the corporations so merged or consolidated. [No liens] Liens
    12  upon the property of the merging or consolidating corporations
    13  shall not be impaired by [such] the merger or consolidation, and
    14  any claim existing or action or proceeding pending by or against
    15  any of [such] the corporations may be prosecuted to judgment as
    16  if [such] the merger or consolidation had not taken place, or
    17  the surviving or new corporation may be proceeded against or
    18  substituted in its place. Any devise, gift or grant contained in
    19  any will or other instrument, in trust or otherwise, made before
    20  or after such merger or consolidation, to or for any of the
    21  constituent corporations, shall inure to the surviving or new
    22  corporation, as the case may be, subject to compliance with the
    23  requirements of section 5550 (relating to devises, bequests and
    24  gifts after certain fundamental changes).
    25     (c)  Taxes.--Any taxes, penalties and public accounts of the
    26  Commonwealth, claimed against any of the merging or
    27  consolidating corporations, but not settled, assessed or
    28  determined prior to [such] the merger or consolidation, shall be
    29  settled, assessed or determined against the surviving or new
    30  corporation[,] and, together with interest thereon, shall be a
    19970S1157B2174                 - 119 -

     1  lien against the franchises and property, both real and
     2  personal, of the surviving or new corporation.
     3     (d)  Articles of incorporation.--In the case of a merger, the
     4  articles of incorporation of the surviving domestic nonprofit
     5  corporation, if any, shall be deemed to be amended to the
     6  extent, if any, that changes in its articles are stated in the
     7  plan of merger[; and in]. In the case of a consolidation into a
     8  domestic nonprofit corporation, the statements [which] that are
     9  set forth in the plan of consolidation, or articles of
    10  incorporation set forth therein, shall be deemed to be the
    11  articles of incorporation of the new corporation.
    12  § 5952.  Proposal and adoption of plan of division.
    13     (a)  Preparation of plan.--A plan of division shall be
    14  prepared, setting forth:
    15         (1)  The terms and conditions of the division, including
    16     the manner and basis of:
    17             (i)  [the] The reclassification of the membership
    18         interests or shares [or obligations] of the surviving
    19         corporation, if there be one[; and].
    20             (ii)  [the] The disposition of the membership
    21         interests or shares [and] or obligations, if any, of the
    22         new corporation or corporations resulting from the
    23         division.
    24         [(2)  The mode of carrying the division into effect.
    25         (3)] (2)  A statement that the dividing nonprofit
    26     corporation will, or will not, survive the division.
    27         [(4)] (3)  Any changes desired to be made in the articles
    28     of the surviving corporation, if there be one, including a
    29     restatement of the articles.
    30         [(5)] (4)  The articles of incorporation required by
    19970S1157B2174                 - 120 -

     1     subsection (b) [of this section].
     2         [(6)] (5)  Such other [details and] provisions as are
     3     deemed desirable.
     4     (b)  Articles of new corporations.--There shall be included
     5  in or annexed to the plan of division:
     6         (1)  Articles of incorporation, which shall contain all
     7     of the statements required by this [article] subpart to be
     8     set forth in restated articles, for each of the new domestic
     9     nonprofit corporations, if any, resulting from the division.
    10         (2)  Articles of incorporation, certificates of
    11     incorporation[,] or other charter documents for each of the
    12     new foreign nonprofit corporations [not-for-profit], if any,
    13     resulting from the division.
    14     (c)  Proposal and adoption.--[The] Except as otherwise
    15  provided in section 5953 (relating to division without member
    16  approval), the plan of division shall be proposed and adopted,
    17  and may be amended after its adoption and terminated, by a
    18  domestic nonprofit corporation in the manner provided for the
    19  proposal, adoption, amendment and termination of a plan of
    20  merger in Subchapter C (relating to merger, consolidation and
    21  sale of assets) or, if the dividing corporation is a foreign
    22  nonprofit corporation [not-for-profit], in accordance with the
    23  laws of the jurisdiction in which it is incorporated[.] and, in
    24  the case of a foreign domiciliary corporation, the provisions of
    25  this subpart to the extent provided by section 6145 (relating to
    26  applicability of certain safeguards to foreign corporations).
    27  There shall be included in or enclosed with the notice of the
    28  meeting of members that will act on the plan a copy or summary
    29  of the plan.
    30     (d)  Special requirements.--If any provision of the bylaws of
    19970S1157B2174                 - 121 -

     1  a dividing domestic nonprofit corporation adopted before January
     2  1, 1972 shall require for the adoption of a plan of merger or
     3  consolidation or a plan involving the sale, lease or exchange of
     4  all or substantially all of the property and assets of the
     5  corporation a specific number or percentage of votes of
     6  directors, members, or members of an other body or other special
     7  procedures, the plan of division shall not be adopted without
     8  such number or percentage of votes or compliance with such other
     9  special procedures.
    10     (e)  Financial status of resulting corporations.--Unless the
    11  plan of division provides that the dividing corporation shall
    12  survive the division and that all membership interests or shares
    13  or obligations, if any, of all new corporations resulting from
    14  the plan shall be owned solely by the surviving corporation, no
    15  plan of division may be made effective at a time when the
    16  dividing corporation is insolvent or when the division would
    17  render any of the resulting corporations insolvent.
    18     (f)  Rights of holders of indebtedness.--If any debt
    19  securities, notes or similar evidences of indebtedness for money
    20  borrowed, whether secured or unsecured, indentures or other
    21  contracts were issued, incurred or executed by the dividing
    22  corporation before January 1, 1972, and have not been amended
    23  subsequent to that date, the liability of the dividing
    24  corporation thereunder shall not be affected by the division nor
    25  shall the rights of the obligees thereunder be impaired by the
    26  division, and each of the resulting corporations may be
    27  proceeded against or substituted in place of the dividing
    28  corporation as joint and several obligors on such liability,
    29  regardless of any provision of the plan of division apportioning
    30  the liabilities of the dividing corporation.
    19970S1157B2174                 - 122 -

     1     (g)  Reference to outside facts.--Any of the terms of a plan
     2  of division may be made dependent upon facts ascertainable
     3  outside of the plan if the manner in which the facts will
     4  operate upon the terms of the plan is set forth in the plan.
     5  Such facts may include, without limitation, actions or events
     6  within the control of or determinations made by the dividing
     7  corporation or a representative of the dividing corporation.
     8  § 5953.  [(Reserved).]  Division without member approval.
     9     Unless otherwise required by its bylaws or by section 5952
    10  (relating to proposal and adoption of plan of division), a plan
    11  of division that does not alter the state of incorporation of a
    12  nonprofit corporation nor amend in any respect the provisions of
    13  its articles, except amendments that under section 5914(b)
    14  (relating to adoption in absence of voting members) may be made
    15  without member action, shall not require the approval of the
    16  members of the corporation if the transfers of assets effected
    17  by the division, if effected by means of a sale, lease, exchange
    18  or other disposition, would not require the approval of members
    19  under section 5930 (relating to voluntary transfer of corporate
    20  assets).
    21  § 5957.  Effect of division.
    22     (a)  Multiple resulting corporations.--Upon the division
    23  becoming effective, the dividing corporation shall be subdivided
    24  into the distinct and independent resulting corporations named
    25  in the plan of division and, if the dividing corporation is not
    26  to survive the division, the existence of the dividing
    27  corporation shall cease. The resulting corporations, if they are
    28  domestic nonprofit corporations, shall not thereby acquire
    29  authority to engage in any business or exercise any right
    30  [which] that a corporation may not be incorporated under this
    19970S1157B2174                 - 123 -

     1  [article] subpart to engage in or exercise. Any resulting
     2  foreign nonprofit corporation [which] that is stated in the
     3  articles of division to be a qualified foreign nonprofit
     4  corporation shall be a qualified foreign nonprofit corporation
     5  under [this subpart] Article C (relating to foreign nonprofit
     6  corporations), and the articles of division shall be deemed to
     7  be the application for a certificate of authority and the
     8  certificate of authority issued thereon of [such] the
     9  corporation.
    10     (b)  Property rights; allocations of assets and
    11  liabilities.--
    12         (1)  Except as otherwise provided by order, if any,
    13     obtained pursuant to section [5547(b)] 5547(c) (relating to
    14     nondiversion of certain property)[, all]:
    15             (i)  All the property, real, personal[,] and mixed,
    16         and franchises of the dividing corporation, and all debts
    17         due on whatever account to it, including subscriptions
    18         for membership and other choses in action belonging to
    19         it, shall, to the extent allocations of assets are
    20         contemplated by the plan of division, be [taken and]
    21         deemed without further [act or deed] action to be
    22         [transferred] allocated to and vested in the resulting
    23         corporations on such a manner and basis and with such
    24         effect as is specified in the plan [of division], or per
    25         capita among the resulting corporations, as tenants in
    26         common, if no [such] specification is made in the plan[.
    27         The], and the title to any real estate, or interest
    28         therein, vested in any of the corporations shall not
    29         revert or be in any way impaired by reason of the
    30         division.
    19970S1157B2174                 - 124 -

     1             (ii)  Upon the division becoming effective, the
     2         resulting corporations shall each thenceforth be
     3         responsible as separate and distinct corporations only
     4         for such liabilities [and obligations] as each
     5         corporation may undertake or incur in its own name, but
     6         shall be liable [inter se] for the [debts and]
     7         liabilities of the dividing corporation in the manner and
     8         on the basis [specified in the plan of division. No
     9         liens] provided in paragraphs (4) and (5).
    10             (iii)  Liens upon the property of the dividing
    11         corporation shall not be impaired by the division.
    12             [One] (iv)  To the extent allocations of liabilities
    13         are contemplated by the plan of division, the liabilities
    14         of the dividing corporation shall be deemed without
    15         further action to be allocated to and become the
    16         liabilities of the resulting corporations on such a
    17         manner and basis and with such effect as is specified in
    18         the plan; and one or more, but less than all, of the
    19         resulting corporations shall be free of [all] the
    20         liabilities [and obligations] of the dividing corporation
    21         to the extent, if any, specified in the plan, if in
    22         either case:
    23                 (A)  no fraud [of corporate creditors or] on
    24             members without voting rights [and if no] or
    25             violation of law shall be effected thereby[,]; and
    26             [if applicable provisions of law are complied with.
    27             Otherwise, the liability]
    28                 (B)  the plan does not constitute a fraudulent
    29             transfer under 12 Pa.C.S. Ch. 51 (relating to
    30             fraudulent transfers).
    19970S1157B2174                 - 125 -

     1             (v)  If the conditions in subparagraph (iv) for
     2         freeing one or more of the resulting corporations from
     3         the liabilities of the dividing corporation, or for
     4         allocating some or all of the liabilities of the dividing
     5         corporation, are not satisfied, the liabilities of the
     6         dividing corporation[, or of its members, directors, or
     7         officers,] as to which those conditions are not satisfied
     8         shall not be affected by the division[,] nor shall the
     9         rights of [the] creditors [thereof or of any person
    10         dealing with such corporation] thereunder be impaired by
    11         [such] the division[,] and[, except as otherwise provided
    12         in this section,] any claim existing or action or
    13         proceeding pending by or against [such] the corporation
    14         with respect to those liabilities may be prosecuted to
    15         judgment as if [such] the division had not taken place,
    16         or the resulting corporations may be proceeded against or
    17         substituted in [its] place of the dividing corporation as
    18         joint and several obligors on [such liability] those
    19         liabilities, regardless of any provision of the plan of
    20         division apportioning the [debts and] liabilities of the
    21         dividing corporation.
    22         (2)  It shall not be necessary for a plan of division to
    23     list each individual asset or liability of the dividing
    24     corporation to be allocated to a new corporation so long as
    25     those assets and liabilities are described in a reasonable
    26     manner.
    27         (3)  Each new corporation shall hold any assets and
    28     liabilities allocated to it as the successor to the dividing
    29     corporation, and those assets and liabilities shall not be
    30     deemed to have been assigned to the new corporation in any
    19970S1157B2174                 - 126 -

     1     manner, whether directly or indirectly or by operation of
     2     law.
     3     (c)  Taxes.--Any taxes, penalties and public accounts of the
     4  Commonwealth, claimed against the dividing corporation, but not
     5  settled, assessed or determined prior to [such] the division,
     6  shall be settled, assessed or determined against any of the
     7  resulting corporations[,] and, together with interest thereon,
     8  shall be a lien against the franchises and property, both real
     9  and personal, of all [such] the corporations. [The] Upon the
    10  application of the dividing corporation, the Department of
    11  Revenue [may, upon the application of the dividing corporation],
    12  with the concurrence of the Office of Employment Security of the
    13  Department of Labor and Industry, shall release one or more, but
    14  less than all, of the resulting corporations from liability and
    15  liens for all taxes, penalties and public accounts of the
    16  dividing corporation due the Commonwealth [or any other taxing
    17  authority] for periods prior to the effective date of the
    18  division, if [the Department of Revenue is] those departments
    19  are satisfied that the public revenues will be adequately
    20  secured.
    21     (d)  Articles of surviving corporation.--The articles of
    22  incorporation of the surviving corporation, if there be one,
    23  shall be deemed to be amended to the extent, if any, that
    24  changes in its articles are stated in the plan of division.
    25     (e)  Articles of new corporations.--The statements [which]
    26  that are set forth in the plan of division with respect to each
    27  new domestic nonprofit corporation and [which] that are required
    28  or permitted to be set forth in restated articles of
    29  incorporation of corporations incorporated under this [article]
    30  subpart, or the articles of incorporation of each new
    19970S1157B2174                 - 127 -

     1  corporation set forth therein, shall be deemed to be the
     2  articles of incorporation of each [such] new corporation.
     3     (f)  Directors and officers.--Unless otherwise provided in
     4  the plan, the directors and officers of the dividing corporation
     5  shall be the initial directors and officers of each of the
     6  resulting corporations.
     7     (g)  Disposition of memberships.--Unless otherwise provided
     8  in the plan, the memberships and other securities or
     9  obligations, if any, of each new corporation resulting from the
    10  division shall be distributable to:
    11         (1)  the surviving corporation, if the dividing
    12     corporation survives the division; or
    13         (2)  the members of the dividing corporation pro rata, in
    14     any other case.
    15     (h)  Conflict of laws.--It is the intent of the General
    16  Assembly that:
    17         (1)  The effect of a division of a domestic business
    18     corporation shall be governed solely by the laws of this
    19     Commonwealth and any other jurisdiction under the laws of
    20     which any of the resulting corporations is incorporated.
    21         (2)  The effect of a division on the assets and
    22     liabilities of the dividing corporation shall be governed
    23     solely by the laws of this Commonwealth and any other
    24     jurisdiction under the laws of which any of the resulting
    25     corporations is incorporated.
    26         (3)  The validity of any allocations of assets or
    27     liabilities by a plan of division of a domestic business
    28     corporation, regardless of whether or not any of the new
    29     corporations is a foreign business corporation, shall be
    30     governed solely by the laws of this Commonwealth.
    19970S1157B2174                 - 128 -

     1         (4)  In addition to the express provisions of this
     2     subsection, this subchapter shall otherwise generally be
     3     granted the protection of full faith and credit under the
     4     Constitution of the United States.
     5  § 5961.  Conversion authorized.
     6     (a)  General rule.--Any nonprofit corporation may, in the
     7  manner provided in this subchapter, be converted into a business
     8  corporation, [hereinafter] designated in this subchapter as the
     9  resulting corporation.
    10     (b)  Exceptions.--
    11         (1)  This subchapter shall not authorize any conversion
    12     involving:
    13             [(i)  A cooperative corporation.
    14             (ii)] (i)  Beneficial, benevolent, fraternal or
    15         fraternal benefit societies having a lodge system and a
    16         representative form of government, or transacting any
    17         type of insurance whatsoever.
    18             [(iii)] (ii)  Any corporation [which] that by the
    19         laws of this Commonwealth is subject to the supervision
    20         of the Department of Banking, the Insurance Department or
    21         the Pennsylvania Public Utility Commission, unless the
    22         agency expressly approves the transaction in writing.
    23         (2)  [Paragraph (1) of this subsection] Subsection (a)
    24     shall not be construed as repealing any statute [which] that
    25     provides a procedure for the conversion of a nonprofit
    26     corporation into an insurance corporation.
    27  § 5962.  Proposal and adoption of plan of conversion.
    28     (a)  Preparation of plan.--A plan of conversion shall be
    29  prepared, setting forth:
    30         (1)  The terms and conditions of the conversion.
    19970S1157B2174                 - 129 -

     1         [(2)  The mode of carrying the conversion into effect.
     2         (3)] (2)  A restatement of the articles of the resulting
     3     corporation, which articles shall comply with the
     4     requirements of [Subpart B of Part II (relating to business
     5     corporations)] this part relating to business corporations.
     6         [(4)] (3)  Such other [details and] provisions as are
     7     deemed desirable.
     8     (b)  Proposal and adoption.--The plan of conversion shall be
     9  proposed and adopted, and may be amended after its adoption and
    10  terminated, by the nonprofit corporation in the manner provided
    11  for the proposal, adoption, amendment and termination of a plan
    12  of merger in Subchapter C (relating to merger, consolidation and
    13  sale of assets). There shall be included in or enclosed with the
    14  notice of meeting of members of the nonprofit corporation that
    15  will act upon the plan a copy or a summary of the plan.
    16     (c)  Reference to outside facts.--Any of the terms of a plan
    17  of conversion may be made dependent upon facts ascertainable
    18  outside of the plan if the manner in which the facts will
    19  operate upon the terms of the plan is set forth in the plan.
    20  Such facts may include, without limitation, actions or events
    21  within the control of or determinations made by the corporation
    22  or a representative of the corporation.
    23  § 5964.  Filing of articles of conversion.
    24     (a)  General rule.--The articles of conversion shall be filed
    25  in the Department of State.
    26     (b)  Cross [reference.--See section] references.--See
    27  sections 134 (relating to docketing statement) and 135 (relating
    28  to requirements to be met by filed documents).
    29  § 5965.  Effective date of conversion.
    30     Upon the filing of articles of conversion in the Department
    19970S1157B2174                 - 130 -

     1  of State[,] or upon the effective date specified in the plan of
     2  conversion, whichever is later, the conversion shall become
     3  effective.
     4  § 5966.  Effect of conversion.
     5     Upon the conversion becoming effective, the converting
     6  nonprofit corporation shall be deemed to be a business
     7  corporation subject to the provisions of this part relating to
     8  business corporations for all purposes, shall cease to be a
     9  nonprofit corporation[,] and may thereafter operate for a
    10  purpose or purposes resulting in pecuniary profit, incidental or
    11  otherwise, to its members or shareholders. [The] Unless the
    12  shares of the corporation are to be uncertificated, the
    13  corporation shall issue share certificates to each shareholder
    14  entitled thereto. The corporation shall remain liable for all
    15  existing obligations, public [and] or private, and taxes due the
    16  Commonwealth or any other taxing authority for periods prior to
    17  the effective date of the conversion, and, as [such] a business
    18  corporation, it shall continue to be entitled to all assets
    19  theretofore pertaining to it as a nonprofit corporation except
    20  as otherwise provided by order, if any, obtained pursuant to
    21  section 5547(b) (relating to nondiversion of certain property).
    22  § 5975.  Predissolution provision for liabilities.
    23     (a)  Powers of board.--The board of directors or other body
    24  of a nonprofit corporation that has elected to proceed under
    25  this section shall have full power to wind up and settle the
    26  affairs of [a nonprofit] the corporation in accordance with this
    27  section prior to filing articles of dissolution in accordance
    28  with section 5977 (relating to articles of dissolution).
    29     (b)  Notice to creditors and taxing authorities.--After the
    30  approval by the members or the board of directors or other body
    19970S1157B2174                 - 131 -

     1  pursuant to section 5974(b) (relating to adoption in absence of
     2  voting members) that the corporation dissolve voluntarily, the
     3  corporation shall immediately cause notice of the winding up
     4  proceedings to be officially published and to be mailed by
     5  certified or registered mail to each known creditor and claimant
     6  and to each municipal corporation in which [its registered
     7  office or principal] it has a place of business in this
     8  Commonwealth [is located].
     9     (c)  Winding up and distribution.--The corporation shall, as
    10  speedily as possible, proceed to collect all sums due it,
    11  convert into cash all corporate assets the conversion of which
    12  into cash is required to discharge its liabilities and, out of
    13  the assets of the corporation, discharge or make adequate
    14  provision for the discharge of all liabilities of the
    15  corporation, according to their respective priorities. Except as
    16  otherwise provided in a bylaw adopted by the members or in this
    17  subpart or by any other provision of law, any surplus remaining
    18  after paying or providing for all liabilities of the corporation
    19  shall be distributed to the shareholders, if any, pro rata, or
    20  if there be no shareholders, among the members per capita. See
    21  section 1972(a) (relating to proposal of voluntary dissolution).
    22  § 5976.  Judicial supervision of proceedings.
    23     (a)  General rule.--A nonprofit corporation that has elected
    24  to proceed under section 1975 (relating to predissolution
    25  provision for liabilities), at any time during the winding up
    26  proceedings, may apply to the court to have the proceedings
    27  continued under the supervision of the court and thereafter the
    28  proceedings shall continue under the supervision of the court as
    29  provided in Subchapter G (relating to involuntary liquidation
    30  and dissolution).
    19970S1157B2174                 - 132 -

     1     * * *
     2  § 5977.  Articles of dissolution.
     3     * * *
     4     (b)  Contents of articles.--The articles of dissolution shall
     5  be executed by the corporation and shall set forth:
     6         * * *
     7         (5)  A statement that:
     8             (i)  [that] all liabilities of the corporation have
     9         been discharged or that adequate provision has been made
    10         therefor; [or]
    11             (ii)  [that] the assets of the corporation are not
    12         sufficient to discharge its liabilities, and that all the
    13         assets of the corporation have been fairly and equitably
    14         applied, as far as they will go, to the payment of such
    15         liabilities[. An election by]; or
    16             (iii)  the corporation has elected to proceed under
    17         Subchapter H [shall constitute the making of adequate
    18         provision for the liabilities of the corporation,
    19         including any judgment or decree that may be obtained
    20         against the corporation in any pending action or
    21         proceeding].
    22         * * *
    23         (7)  [A] In the case of a corporation that has not
    24     elected to proceed under Subchapter H, a statement that no
    25     actions or proceedings are pending against the corporation in
    26     any court, or that adequate provision has been made for the
    27     satisfaction of any judgment or decree that may be obtained
    28     against the corporation in each pending action or proceeding.
    29         (8)  [A] In the case of a corporation that has not
    30     elected to proceed under Subchapter H, a statement that
    19970S1157B2174                 - 133 -

     1     notice of the winding-up proceedings of the corporation was
     2     mailed by certified or registered mail to each known creditor
     3     and claimant and to each municipal corporation in which the
     4     [registered office or principal place of business of the]
     5     corporation has a place of business in this Commonwealth [is
     6     located].
     7     * * *
     8     (d)  Cross references.--See sections 134 (relating to
     9  docketing statement) and 135 (relating to requirements to be met
    10  by filed documents).
    11  § 5989.  Articles of involuntary dissolution.
    12     (a)  General rule.--In a proceeding under this subchapter,
    13  the court shall enter an order dissolving the nonprofit
    14  corporation when the order, if any, obtained pursuant to section
    15  5547(b) (relating to nondiversion of certain property) has been
    16  entered and when the costs and expenses of the proceeding, and
    17  all liabilities of the corporation have been discharged, and all
    18  of its remaining assets have been distributed to the persons
    19  entitled thereto, or, in case its assets are not sufficient to
    20  discharge such costs, expenses and liabilities, when all the
    21  assets have been applied, as far as they will go, to the payment
    22  of such costs, expenses and liabilities. See section 139(b)
    23  (relating to tax clearance in judicial proceedings).
    24     (b)  Filing.--After entry of an order of dissolution, the
    25  office of the clerk of the court of common pleas shall prepare
    26  and execute articles of dissolution substantially in the form
    27  provided by section 5977 (relating to articles of dissolution),
    28  attach thereto a certified copy of the order and transmit the
    29  articles and attached order to the Department of State. [A
    30  certificate or statement provided for by section 139 (relating
    19970S1157B2174                 - 134 -

     1  to tax clearance of certain fundamental transactions) shall not
     2  be required, and the] The department shall not charge a fee in
     3  connection with the filing of articles of dissolution under this
     4  section. See [section] sections 134 (relating to docketing
     5  statement) and 135 (relating to requirements to be met by filed
     6  documents).
     7     * * *
     8  § 5991.1.  Authority of board of directors.
     9     (a)  General rule.--The board of directors or other body of a
    10  nonprofit corporation that has elected to proceed under this
    11  subchapter shall have full power to wind up and settle the
    12  affairs of the corporation in accordance with this subchapter
    13  both prior to and after the filing of articles of dissolution in
    14  accordance with section 5977 (relating to articles of
    15  dissolution).
    16     (b)  Winding up.--The corporation shall, as speedily as
    17  possible, proceed to comply with the requirements of this
    18  subchapter while simultaneously collecting all sums due it and
    19  converting into cash all corporate assets, the conversion of
    20  which into cash is required to make adequate provision for its
    21  liabilities.
    22  § 6126.  Amended certificate of authority.
    23     (a)  General rule.--After receiving a certificate of
    24  authority, a qualified foreign nonprofit corporation may,
    25  subject to the provisions of this subchapter, change [the name
    26  under which it is authorized to transact business in this
    27  Commonwealth] or correct any of the information set forth in its
    28  application for a certificate of authority or previous filings
    29  under this section by filing in the Department of State an
    30  application for an amended certificate of authority. The
    19970S1157B2174                 - 135 -

     1  application shall be executed by the corporation and shall
     2  state:
     3         (1)  The name under which the applicant corporation
     4     currently holds a certificate of authority to do business in
     5     this Commonwealth.
     6         [(2)  The name of the jurisdiction under the laws of
     7     which the corporation is incorporated.
     8         (3)  The address, including street and number, if any, of
     9     its principal office under the laws of the jurisdiction in
    10     which it is incorporated.
    11         (4)] (2)  Subject to section 109 (relating to name of
    12     commercial registered office provider in lieu of registered
    13     address), the address, including street and number, if any,
    14     of its registered office in this Commonwealth. [which may
    15     constitute a change in the address of its registered office.
    16         (5)  The new name of the corporation and]
    17         (3)  The information to be changed or corrected.
    18         (4)  If the application reflects a change in the name of
    19     the corporation, the application shall include a statement
    20     that either:
    21             (i)  the change of name reflects a change effected in
    22         the jurisdiction of incorporation; or
    23             (ii)  documents complying with section 6123(b)
    24         (relating to exceptions) accompany the application.
    25     (b)  Issuance of amended certificate of authority.--Upon the
    26  filing of the application, the applicant corporation shall be
    27  deemed to hold an amended certificate of authority.
    28     (c)  Cross reference.--See section 134 (relating to docketing
    29  statement).
    30  § 6146.  Provisions applicable to all foreign corporations.
    19970S1157B2174                 - 136 -

     1     The following provisions of this subpart shall, except as
     2  otherwise provided in this section, be applicable to every
     3  foreign corporation not-for-profit, whether or not required to
     4  procure a certificate of authority under this chapter:
     5         Section 5503 (relating to defense of ultra vires), as to
     6     contracts and conveyances governed by the laws of this
     7     Commonwealth and conveyances affecting real property situated
     8     in this Commonwealth.
     9         Section 5506 (relating to form of execution of
    10     instruments), as to instruments or other documents governed
    11     by the laws of this Commonwealth or affecting real property
    12     situated in this Commonwealth.
    13         Section 5510 (relating to certain specifically authorized
    14     debt terms), as to obligations (as defined in the section)
    15     governed by the laws of this Commonwealth or affecting real
    16     property situated in this Commonwealth.
    17         Section 5782 (relating to actions against directors,
    18     members of an other body and officers), as to any action or
    19     proceeding brought in a court of this Commonwealth.
    20  § 8105.  Ownership of certain professional partnerships.
    21     Except as otherwise provided by statute, rule or regulation
    22  applicable to a particular profession, all of the [partners in]
    23  ultimate beneficial owners of the partnership interests in a
    24  partnership that renders one or more restricted professional
    25  services shall be licensed persons.  As used in this section,
    26  the term "restricted professional services" shall have the
    27  meaning specified in section 8903 (relating to definitions and
    28  index of definitions).
    29  § 8201.  Scope.
    30     * * *
    19970S1157B2174                 - 137 -

     1     (e)  Prohibited termination.--A registration under this
     2  subchapter may not be terminated while the partnership is a
     3  bankrupt as that term is defined in section 8903 (relating to
     4  definitions and index of definitions). See section 8221(f)
     5  (relating to annual registration).
     6     (f)  Alternative procedure.--In lieu of filing a statement of
     7  registration as provided in subsection (a), a limited
     8  partnership may register as a registered limited liability
     9  partnership by including in its certificate of limited
    10  partnership, either originally or by amendment, the statements
    11  required by subsection (a)(3) and (4). To terminate its
    12  registration, a limited partnership that uses the procedure
    13  authorized by this subsection shall amend its certificate of
    14  limited partnership to delete the statements required by this
    15  subsection.
    16     (g)  Constructive notice.--Filing under this section shall
    17  constitute constructive notice that the partnership is a
    18  registered limited liability partnership and that the partners
    19  are entitled to the protections from liability provided by this
    20  subchapter.
    21     [(e)] (h)  Cross references.--See sections 134 (relating to
    22  docketing statement) and 135 (relating to requirements to be met
    23  by filed documents).
    24  § 8202.  Definitions.
    25     The following words and phrases when used in this chapter
    26  shall have the meanings given to them in this section unless the
    27  context clearly indicates otherwise:
    28     * * *
    29     "Partner."  Includes a person who is or was a partner in a
    30  registered limited liability partnership at any time while the
    19970S1157B2174                 - 138 -

     1  registration of the partnership under this subchapter is or was
     2  in effect.
     3     * * *
     4  § 8204.  Limitation on liability of partners.
     5     (a)  General rule.--Except as provided in subsection (b), a
     6  partner in a registered limited liability partnership shall not
     7  be individually liable directly or indirectly, whether by way of
     8  indemnification, contribution or otherwise, for debts and
     9  obligations of, or chargeable to, the partnership, whether
    10  sounding in contract or tort or otherwise, that arise from any
    11  negligent or wrongful acts or misconduct committed by another
    12  partner or other representative of the partnership while the
    13  registration of the partnership under this subchapter is in
    14  effect.
    15     (b)  Exceptions.--
    16         (1)  [Subsection (a) shall not apply to any debt or
    17     obligation with respect to which the partnership is not in
    18     compliance with section 8206(a) (relating to insurance).]
    19     (Repealed).
    20         * * *
    21         (3)  Subsection (a) shall not affect in any way:
    22             (i)  the liability of the partnership itself for all
    23         its debts and obligations; [or]
    24             (ii)  the availability of the entire assets of the
    25         partnership to satisfy its debts and obligations; or
    26             (iii)  any obligation undertaken by a partner in
    27         writing to individually indemnify another partner of the
    28         partnership or to individually contribute toward a
    29         liability of another partner.
    30     * * *
    19970S1157B2174                 - 139 -

     1  § 8205.  Liability of withdrawing partner.
     2     * * *
     3     (b)  Exceptions.--Subsection (a) shall not affect the
     4  liability of a partner:
     5         * * *
     6         (7)  For any obligation undertaken by a partner in
     7     writing to individually indemnify another partner of the
     8     partnership or to individually contribute toward a liability
     9     of another partner.
    10     * * *
    11     (e)  Permissive filing.--Filing under this section is
    12  permissive, and failure to make a filing under this section by a
    13  partner entitled to do so shall not affect the right of that
    14  partner to the limitation on liability provided by section 8204
    15  (relating to limitation on liability of partners).
    16     (f)  Constructive notice.--Filing under this section shall
    17  constitute constructive notice that the partner has withdrawn
    18  from the partnership and is entitled to the protection from
    19  liability provided by this section.
    20     (g)  Variation of section.--A written provision of the
    21  partnership agreement may restrict or condition the application
    22  of this section to some or all of the partners of the
    23  partnership.
    24     (h)  Application of section.--A partner in a foreign
    25  registered limited liability partnership, regardless of whether
    26  or not it has registered to do business in this Commonwealth
    27  under section 8211 (relating to foreign registered limited
    28  liability partnerships), shall not be entitled to make a filing
    29  under this section with regard to that partnership.
    30     [(e)] (i)  Cross references.--See sections 134 (relating to
    19970S1157B2174                 - 140 -

     1  docketing statement) and 135 (relating to requirements to be met
     2  by filed documents).
     3  § 8211.  Foreign registered limited liability partnerships.
     4     (a)  Governing law.--Subject to the Constitution of
     5  Pennsylvania:
     6         (1)  The laws of the jurisdiction under which a foreign
     7     registered limited liability partnership is organized govern
     8     its organization and internal affairs and the liability of
     9     its partners, except as provided in subsection (c).
    10         (2)  A foreign registered limited liability partnership
    11     may not be denied registration by reason of any difference
    12     between those laws and the laws of this Commonwealth.
    13     (b)  Registration to do business.--A foreign registered
    14  limited liability partnership, regardless of whether or not it
    15  is also a foreign limited partnership, shall be subject to
    16  Subchapter K of Chapter 85 (relating to foreign limited
    17  partnerships) as if it were a foreign limited partnership,
    18  except that [the]:
    19         (1)  Its application for registration shall state that it
    20     is a registered limited liability partnership.
    21         (2)  The name under which [the foreign registered limited
    22     liability partnership] it registers and conducts business in
    23     this Commonwealth shall comply with the requirements of
    24     section 8203 (relating to name).
    25         (3)  Section 8582(a)(5) and (6) (relating to
    26     registration) shall not be applicable to the application for
    27     registration of a foreign limited liability partnership that
    28     is not a foreign limited partnership.
    29     (c)  Exception.--The liability of the partners in a foreign
    30  registered limited liability partnership shall be governed by
    19970S1157B2174                 - 141 -

     1  the laws of the jurisdiction under which it is organized, except
     2  that the partners shall not be entitled to greater protection
     3  from liability than is available to the partners in a domestic
     4  registered limited liability partnership.
     5  § 8221.  Annual registration.
     6     * * *
     7     (e)  [Annual fee to be lien] Failure to pay annual fee.--
     8         (1)  Failure to [pay the annual registration fee imposed]
     9     file the certificate of annual registration required by this
    10     section [shall not affect the existence or] for five
    11     consecutive years shall result in the automatic termination
    12     of the status of the registered limited liability partnership
    13     as such[, but the]. In addition, any annual registration fee
    14     that is not paid when due shall be a lien in the manner
    15     provided in this subsection from the time the annual
    16     registration fee is due and payable [upon]. If a certificate
    17     of annual registration is not filed within 30 days after the
    18     date on which it is due, the department shall assess a
    19     penalty of $500 against the partnership, which shall also be
    20     a lien in the manner provided in this subsection. The
    21     imposition of that penalty shall not be construed to relieve
    22     the partnership from liability for any other penalty or
    23     interest provided for under other applicable law.
    24         (2)  If the annual registration fee paid by a registered
    25     limited liability partnership is subsequently determined to
    26     be less than should have been paid because it was based on an
    27     incorrect number of general partners or was otherwise
    28     incorrectly computed, that fact shall not affect the
    29     existence or status of the registered limited liability
    30     partnership as such, but the amount of the additional annual
    19970S1157B2174                 - 142 -

     1     registration fee that should have been paid shall be a lien
     2     in the manner provided in this subsection from the time the
     3     incorrect payment is discovered by the department.
     4         (3)  The annual registration fee shall bear simple
     5     interest from the date that it becomes due and payable until
     6     paid. The interest rate shall be that provided for in section
     7     806 of the act of April 9, 1929 (P.L.343, No.176), known as
     8     The Fiscal Code, with respect to unpaid taxes. The penalty
     9     provided for in paragraph (1) shall not bear interest. The
    10     payment of interest shall not relieve the registered limited
    11     liability partnership from liability for any other penalty or
    12     interest provided for under other applicable law.
    13         (4)  The lien created by this subsection shall attach to
    14     all of the property and proceeds thereof of the registered
    15     limited liability partnership in which a security interest
    16     can be perfected in whole or in part by filing in the
    17     department under 13 Pa.C.S. Div. 9 (relating to secured
    18     transactions; sales of accounts, contract rights and chattel
    19     paper), whether the property and proceeds are owned by the
    20     partnership at the time the annual registration fee or any
    21     penalty or interest becomes due and payable or whether the
    22     property and proceeds are acquired thereafter. Except as
    23     otherwise provided by statute, the lien created by this
    24     subsection shall have priority over all other liens, security
    25     interests or other charges, except liens for taxes or other
    26     charges due the Commonwealth. The lien created by this
    27     subsection shall be entered on the records of the department
    28     and indexed in the same manner as a financing statement filed
    29     under 13 Pa.C.S. Div. 9. At the time an annual registration
    30     fee, penalty or interest that has resulted in the creation of
    19970S1157B2174                 - 143 -

     1     a lien under this subsection is paid, the department shall
     2     terminate the lien with respect to that annual registration
     3     fee, penalty or interest without requiring a separate filing
     4     by the partnership for that purpose.
     5         (5)  If the annual registration fee paid by a registered
     6     limited liability partnership is subsequently determined to
     7     be more than should have been paid for any reason, no refund
     8     of the additional fee shall be made.
     9         (6)  Termination of the status of a registered limited
    10     liability partnership as such, whether voluntarily or
    11     involuntarily, shall not release it from the obligation to
    12     pay any accrued fees, penalties and interest and shall not
    13     release the lien created by this subsection.
    14     (f)  Exception for bankrupt partnerships.--A partnership that
    15  would otherwise be required to pay the annual registration fee
    16  set forth in subsection (b) shall not be required to pay that
    17  fee with respect to any year during any part of which the
    18  partnership is a bankrupt as defined in section 8903 (relating
    19  to definitions and index of definitions). The partnership shall,
    20  instead, indicate on its certificate of annual registration for
    21  that year that it is exempt from payment of the annual
    22  registration fee pursuant to this subsection. If the partnership
    23  fails to file timely a certificate of annual registration, a
    24  lien shall be entered on the records of the department pursuant
    25  to subsection (e) which shall not be removed until the
    26  partnership files a certificate of annual registration
    27  indicating its entitlement to an exemption from payment of the
    28  annual registration fee as provided in this subsection. See
    29  section 8201(e) (relating to scope).
    30  § 8359.  Right to wind up affairs.
    19970S1157B2174                 - 144 -

     1     Unless otherwise agreed, the partners who have not wrongfully
     2  dissolved the partnership, or the legal representative of the
     3  last surviving partner, not bankrupt, has the right to wind up
     4  the partnership affairs except that any partner, his legal
     5  representative or his assignee, upon cause shown, may obtain
     6  winding up by the court. See section 139(b) (relating to tax
     7  clearance in judicial proceedings).
     8  § 8503.  Definitions and index of definitions.
     9     (a)  Definitions.--The following words and phrases when used
    10  in this chapter shall have the meanings given to them in this
    11  section unless the context clearly indicates otherwise:
    12     "Certificate of limited partnership."  The certificate
    13  referred to in section 8511 (relating to certificate of limited
    14  partnership) and the certificate as amended. The term includes
    15  any other statements or certificates permitted or required to be
    16  filed in the Department of State by sections 108 (relating to
    17  change in location or status of registered office provided by
    18  agent) and 138 (relating to statement of correction) or this
    19  part. If an amendment of the certificate of limited partnership
    20  or a certificate of merger or division made in the manner
    21  permitted by this chapter restates the certificate in its
    22  entirety or if there is a certificate of consolidation,
    23  thenceforth the "certificate of limited partnership" shall not
    24  include any prior documents and any certificate issued by the
    25  department with respect thereto shall so state.
    26     * * *
    27     "Court."  Subject to any inconsistent general rule prescribed
    28  by the Supreme Court of Pennsylvania:
    29         (1)  the court of common pleas of the judicial district
    30     embracing the county where the registered office of the
    19970S1157B2174                 - 145 -

     1     limited partnership is or is to be located; or
     2         (2)  where a limited partnership results from a merger,
     3     consolidation, division or other transaction without
     4     establishing a registered office in this Commonwealth or
     5     withdraws as a foreign limited partnership, the court of
     6     common pleas in which venue would have been laid immediately
     7     prior to the transaction or withdrawal.
     8     ["Department."  The Department of State of the Commonwealth.]
     9     * * *
    10     "Partnership agreement."  Any agreement, written or oral, of
    11  the partners as to the affairs of a limited partnership and the
    12  conduct of its business. [A written partnership agreement:
    13         (1)  May provide that a person shall be admitted as a
    14     limited partner, or shall become an assignee of a partnership
    15     interest or other rights or powers of a limited partner to
    16     the extent assigned, and shall become bound by the
    17     partnership agreement:
    18             (i)  if such person (or a representative authorized
    19         by such person orally, in writing or by other action such
    20         as payment for a partnership interest) executes the
    21         partnership agreement or any other writing evidencing the
    22         intent of such person to become a limited partner or
    23         assignee; or
    24             (ii)  without such execution, if such person (or a
    25         representative authorized by such person orally, in
    26         writing or by other action such as payment for a
    27         partnership interest) complies with the conditions for
    28         becoming a limited partner or assignee as set forth in
    29         the partnership agreement or any other writing and
    30         requests (orally, in writing or by other action such as
    19970S1157B2174                 - 146 -

     1         payment for a partnership interest) that the records of
     2         the limited partnership reflect such admission or
     3         assignment.
     4         (2)  Shall not be unenforceable by reason of its not
     5     having been signed by a person being admitted as a limited
     6     partner or becoming an assignee as provided in paragraph (1)
     7     or by reason of its having been signed by a representative as
     8     provided in section 8514(b) (relating to attorney-in-fact).
     9         (3)  May provide that, whenever a provision of this
    10     chapter requires the vote or consent of a specified number or
    11     percentage of partners or of a class of partners for the
    12     taking of any action, a higher number or percentage of votes
    13     or consents shall be required for the action. Except as
    14     otherwise provided in the partnership agreement, whenever the
    15     partnership agreement requires for the taking of any action
    16     by the partners or a class of partners a specific number or
    17     percentage of votes or consents, the provision of the
    18     partnership agreement setting forth that requirement shall
    19     not be amended or repealed by any lesser number or percentage
    20     of votes or consents of the partners or the class of
    21     partners.]
    22     * * *
    23     "Relax."  When used with respect to a provision of the
    24  certificate of limited partnership or partnership agreement,
    25  means to provide lesser rights for an affected representative or
    26  partner.
    27     (b)  Index of definitions.--Other definitions applying to
    28  this chapter and the sections in which they appear are:
    29     "Act" or "action."  Section 102.
    30     "Department."  Section 102.
    19970S1157B2174                 - 147 -

     1     "Licensed person."  Section 102.
     2     "Professional services."  Section 102.
     3  § 8510.  Indemnification.
     4     * * *
     5     (b)  When indemnification is not to be made.--Indemnification
     6  pursuant to subsection (a) shall not be made in any case where
     7  the act [or failure to act] giving rise to the claim for
     8  indemnification is determined by a court to have constituted
     9  willful misconduct or recklessness. The certificate of limited
    10  partnership or partnership agreement may not provide for
    11  indemnification in the case of willful misconduct or
    12  recklessness.
    13     * * *
    14     (f)  Mandatory indemnification.--Without regard to whether
    15  indemnification or advancement of expenses is provided under
    16  subsections (a) and (d), a limited partnership shall be subject
    17  to section 8331(2) (relating to rules determining rights and
    18  duties of partners).
    19                            SUBCHAPTER B
    20          FORMATION[; CERTIFICATE OF LIMITED PARTNERSHIP]
    21  § 8511.  Certificate of limited partnership.
    22     (a)  General rule.--In order to form a limited partnership, a
    23  certificate of limited partnership must be executed and filed in
    24  the Department of State. The certificate shall set forth:
    25         (1)  The name of the limited partnership.
    26         (2)  Subject to section 109 (relating to name of
    27     commercial registered office provider in lieu of registered
    28     address), the address, including street and number, if any,
    29     of its registered office.
    30         (3)  The name and business address of each general
    19970S1157B2174                 - 148 -

     1     partner.
     2         (4)  If a partner's interest in the limited partnership
     3     is to be evidenced by a certificate of partnership interest,
     4     a statement to that effect.
     5         (5)  Any other [matters the partners determine to include
     6     therein. A provision included in the certificate of limited
     7     partnership pursuant to this paragraph shall be deemed to be
     8     a provision of the partnership agreement for purposes of any
     9     provision of this chapter that refers to a rule as set forth
    10     in the partnership agreement.] provision, whether or not
    11     specifically authorized by or in contravention of this
    12     chapter, that the partners elect to set out in the
    13     certificate of limited partnership for the regulation of the
    14     internal affairs of the limited partnership, except where a
    15     provision of this chapter expressly provides that the
    16     certificate of limited partnership shall not relax or
    17     contravene any provision on a specified subject.
    18     (b)  Effective date of formation.--A limited partnership is
    19  formed at the time of the filing of the certificate of limited
    20  partnership in the department or at any later time specified in
    21  the certificate of limited partnership if, in either case, there
    22  has been substantial compliance with the requirements of this
    23  section or the corresponding provisions of prior law.
    24     (c)  [Duties of recorders of deeds.--Each recorder of deeds
    25  shall continue to keep open for public inspection the record of
    26  limited partnership certificates recorded under the statutes
    27  supplied by this chapter and by prior law the custody of which
    28  has not been transferred to the department pursuant to section
    29  140 (relating to custody and management of orphan corporate and
    30  business records).] (Repealed).
    19970S1157B2174                 - 149 -

     1     (d)  Transitional provision.--A limited partnership formed
     2  under prior law shall not be required to set forth in its
     3  certificate of limited partnership a registered office or the
     4  business address of each general partner until such time as it
     5  first amends its certificate of limited partnership under this
     6  chapter.
     7     (e)  Effect of provisions.--A provision of the certificate of
     8  limited partnership shall be deemed to be a provision of the
     9  partnership agreement for purposes of any provision of this
    10  chapter that refers to a rule as set forth in the partnership
    11  agreement.
    12     [(e)] (f)  Cross references.--See sections 134 (relating to
    13  docketing statement), 135 (relating to requirements to be met by
    14  filed documents) and 8514 (relating to execution of
    15  certificates).
    16  § 8517.  Notice.
    17     The fact that a certificate of limited partnership is on file
    18  in the Department of State is not notice of any fact other than:
    19         (1)  that the partnership is a limited partnership and
    20     that all partners are limited partners except the persons
    21     designated therein as general partners[, but it is not notice
    22     of any other fact]; and
    23         (2)  if it is registered under Chapter 82 (relating to
    24     registered limited liability partnerships), that it is also a
    25     registered limited liability partnership.
    26  § 8519.  Filing of certificate of summary of record by limited
    27             partnerships formed prior to 1976.
    28     (a)  General rule.--[Any limited partnership that was not
    29  formed under this chapter, has never made any filing under this
    30  section or corresponding provisions of prior law and] Where any
    19970S1157B2174                 - 150 -

     1  of the organic documents of a limited partnership are not on
     2  file in the Department of State or there is an error in any such
     3  document as transferred to the department pursuant to section
     4  140 (relating to custody and management of orphan corporate and
     5  business records), and the limited partnership desires to file
     6  any document in the [Department of State] department under any
     7  other provision of this chapter or [that desires] to secure from
     8  the department a certified copy of the certificate of limited
     9  partnership or to correct the text of its organic documents as
    10  on file in the department, the limited partnership shall file in
    11  the department a certificate of summary of record which shall
    12  set forth:
    13         (1)  The name of the limited partnership.
    14         (2)  Subject to section 109 (relating to name of
    15     commercial registered office provider in lieu of registered
    16     address), the address, including street and number, if any,
    17     of its registered office.
    18         (3)  The statute under which the limited partnership was
    19     formed.
    20         (4)  The name under which, and the date on which, the
    21     limited partnership was originally formed, including the date
    22     when and the place where the original certificate was
    23     recorded.
    24         (5)  The place or places, including the volume and page
    25     numbers or their equivalent, where the documents
    26     [constituting the currently effective certificate are] that
    27     are not on file in the department or that require correction
    28     in the records of the department where originally recorded,
    29     the date or dates of each recording and the correct text of
    30     the [currently effective certificate] documents. The
    19970S1157B2174                 - 151 -

     1     information specified in this paragraph may be omitted in a
     2     certificate of summary of record that is delivered to the
     3     department contemporaneously with an amended certificate
     4     filed under this chapter that restates the certificate in its
     5     entirety.
     6         [(6)  Each name by which the limited partnership was
     7     known, if any, other than its original name and its current
     8     name and the date or dates on which each change of name of
     9     the partnership became effective.]
    10     (b)  Cross references.--See sections 134 (relating to
    11  docketing statement), 135 (relating to requirements to be met by
    12  filed documents) and 8514 (relating to execution of
    13  certificates).
    14  § 8520.  Partnership agreement.
    15     (a)  Admission of limited partners.--A partnership agreement
    16  may provide in writing that a person shall be admitted as a
    17  limited partner, or shall become an assignee of a partnership
    18  interest or other rights or powers of a limited partner to the
    19  extent assigned, and shall become bound by the partnership
    20  agreement:
    21         (1)  if such person (or a representative authorized by
    22     such person orally, in writing or by other action such as
    23     payment for a partnership interest) executes the partnership
    24     agreement or any other writing evidencing the intent of such
    25     person to become a limited partner or assignee; or
    26         (2)  without such execution, if such person (or a
    27     representative authorized by such person orally, in writing
    28     or by other action such as payment for a partnership
    29     interest) complies with the conditions for becoming a limited
    30     partner or assignee as set forth in the partnership agreement
    19970S1157B2174                 - 152 -

     1     or any other writing and requests (orally, in writing or by
     2     other action such as payment for a partnership interest) that
     3     the records of the limited partnership reflect such admission
     4     or assignment.
     5     (b)  Signature by limited partners.--A written partnership
     6  agreement shall not be unenforceable by reason of its not having
     7  been signed by a person being admitted as a limited partner or
     8  becoming an assignee as provided in subsection (a) or by reason
     9  of its having been signed by a representative as provided in
    10  section 8514(b) (relating to attorney-in-fact).
    11     (c)  Voting requirements.--A partnership agreement may
    12  provide in writing that, whenever a provision of this chapter
    13  requires the vote or consent of a specified number or percentage
    14  of partners or of a class of partners for the taking of any
    15  action, a higher number or percentage of votes or consents shall
    16  be required for the action. Except as otherwise provided in the
    17  partnership agreement, whenever the partnership agreement
    18  requires for the taking of any action by the partners or a class
    19  of partners a specific number or percentage of votes or
    20  consents, the provision of the partnership agreement setting
    21  forth that requirement shall not be amended or repealed by any
    22  lesser number or percentage of votes or consents of the partners
    23  or the class of partners.
    24     (d)  Freedom of contract.--A written partnership agreement
    25  may contain any provision for the regulation of the internal
    26  affairs of the limited partnership agreed to by the partners,
    27  whether or not specifically authorized by or in contravention of
    28  this chapter, except where this chapter:
    29         (1)  refers only to a rule as set forth in the
    30     certificate of limited partnership; or
    19970S1157B2174                 - 153 -

     1         (2)  expressly provides that the partnership agreement
     2     shall not relax or contravene any provision on a specified
     3     subject.
     4     (e)  Oral provisions.--A partnership agreement may provide in
     5  writing that it cannot be amended or modified except in writing,
     6  in which case an oral agreement, amendment or modification shall
     7  not be enforceable.
     8     (f)  Cross reference.--See section 8511(a)(5) (relating to
     9  certificate of limited partnership).
    10  § 8523.  Liability of limited partners to third parties.
    11     (a)  General rule.--A limited partner is not liable [for the
    12  obligations of a limited partnership unless he is also a general
    13  partner or, in addition to the exercise of his rights and powers
    14  as a limited partner, he participates in the control of the
    15  business. However, if the limited partner participates in the
    16  control of the business, he is liable only to persons who
    17  transact business with the limited partnership reasonably
    18  believing, based upon the conduct of the limited partner, that
    19  the limited partner is a general partner.], solely by reason of
    20  being a limited partner, under an order of a court or in any
    21  other manner, for a debt, obligation or liability of the limited
    22  partnership of any kind or for the acts of any partner, agent or
    23  employee of the limited partnership.
    24     (b)  [Activities compatible with limited partner status.--A
    25  limited partner does not participate in the control of the
    26  business within the meaning of subsection (a) solely by doing
    27  one or more of the following:
    28         (1)  Being a contractor for, or an agent or employee of
    29     the limited partnership or of a general partner, or being an
    30     officer, director, trustee, partner or shareholder of a
    19970S1157B2174                 - 154 -

     1     general partner.
     2         (2)  Consulting with and advising a general partner with
     3     respect to any matter, including, without limitation, the
     4     business of the limited partnership.
     5         (3)  (i)  Acting as surety for the limited partnership,
     6         or guaranteeing, endorsing or assuming one or more
     7         specific obligations of the limited partnership, or a
     8         general partner.
     9             (ii)  Borrowing money from the limited partnership or
    10         a general partner.
    11             (iii)  Lending money to the limited partnership or a
    12         general partner.
    13             (iv)  Providing collateral for the limited
    14         partnership or a general partner.
    15         (4)  Taking any action required or permitted by law to
    16     bring, pursue or settle or otherwise terminate a derivative
    17     action in the right of the limited partnership.
    18         (5)  Requesting or attending a meeting of partners.
    19         (6)  Acting or causing the taking or refraining from the
    20     taking of any action, including, without limitation, by
    21     proposing, approving, consenting or disapproving, by voting
    22     or otherwise, with respect to one or more of the following
    23     matters:
    24             (i)  The dissolution and winding up of the limited
    25         partnership, or an election to continue the limited
    26         partnership or the business of the limited partnership.
    27             (ii)  The sale, exchange, lease, mortgage, pledge or
    28         other transfer of, or the grant of a security interest
    29         in, any asset or assets of the limited partnership.
    30             (iii)  The incurrence, renewal, refinancing or
    19970S1157B2174                 - 155 -

     1         payment or other discharge of indebtedness by the limited
     2         partnership.
     3             (iv)  A change in the nature of the business.
     4             (v)  The admission or removal of a general partner.
     5             (vi)  The admission or removal of a limited partner.
     6             (vii)  A transaction involving an actual or potential
     7         conflict of interest between a general partner and the
     8         limited partnership or the limited partners.
     9             (viii)  An amendment to the partnership agreement or
    10         certificate of limited partnership.
    11             (ix)  The merger or consolidation of the limited
    12         partnership.
    13             (x)  The indemnification of any partner or other
    14         person.
    15             (xi)  Matters related to the business of the limited
    16         partnership not otherwise enumerated in this subsection,
    17         which the partnership agreement states in writing may be
    18         subject to the approval or disapproval of limited
    19         partners.
    20         (7)  Applying for dissolution of the partnership pursuant
    21     to section 8572 (relating to judicial dissolution).
    22         (8)  Winding up the limited partnership pursuant to
    23     section 8573 (relating to winding up).
    24         (9)  In the case of a registered investment company,
    25     voting on one or more of the following matters:
    26             (i)  The approval or termination of investment
    27         advisory or underwriting contracts.
    28             (ii)  The approval of auditors.
    29             (iii)  Any other matter that by reason of the
    30         Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. §
    19970S1157B2174                 - 156 -

     1         80a-1 et seq.) the general partners consider to be a
     2         proper matter for the vote of the holders of voting
     3         securities or beneficial interests in the limited
     4         partnership.
     5         (10)  Serving on a committee of the limited partnership
     6     or the limited partners.
     7         (11)  Exercising any right or power permitted to limited
     8     partners under this chapter and not specifically enumerated
     9     in this subsection.
    10         (12)  Exercising any other right or power stated in the
    11     partnership agreement.] (Repealed).
    12     (c)  [Enumeration nonexclusive.--The enumeration in
    13  subsection (b) does not mean that the possession or exercise of
    14  any other powers, or having or acting in other capacities, by a
    15  limited partner constitutes participation by him in the control
    16  of the business of the limited partnership.] (Repealed).
    17     (d)  Use of name of limited partner.--A limited partner does
    18  not [participate in the control of the business within the
    19  meaning of subsection (a)] become liable for the obligations of
    20  a limited partnership by reason of the fact that all or any part
    21  of the name of the limited partner is included in the name of
    22  the limited partnership.
    23     (e)  [Effect of section.--This section does not create rights
    24  or powers of limited partners. Such rights and powers may be
    25  created only by the certificate of limited partnership,
    26  partnership agreement or any other agreement or other provisions
    27  of this chapter.] (Repealed).
    28     * * *
    29  § 8546.  Approval of merger or consolidation.
    30     (a)  Preparation of plan of merger or consolidation.--A plan
    19970S1157B2174                 - 157 -

     1  of merger or consolidation, as the case may be, shall be
     2  prepared, setting forth:
     3         * * *
     4         (3)  The manner and basis of converting the partnership
     5     interests of each limited partnership into partnership
     6     interests, securities or obligations of the surviving or new
     7     limited partnership, as the case may be, and, if any of the
     8     partnership interests of any of the limited partnerships that
     9     are parties to the [plan] merger or consolidation are not to
    10     be converted solely into partnership interests, securities or
    11     obligations of the surviving or new limited partnership, the
    12     partnership interests, securities or obligations of any other
    13     person or cash, property or rights that the holders of such
    14     partnership interests are to receive in exchange for, or upon
    15     conversion of, such partnership interests, and the surrender
    16     of any certificates evidencing them, which securities or
    17     obligations, if any, of any other person or cash, property or
    18     rights may be in addition to or in lieu of the partnership
    19     interests, securities or obligations of the surviving or new
    20     limited partnership.
    21         (4)  Such other provisions as are deemed desirable.
    22  [Any of the terms of the plan may be made dependent upon facts
    23  ascertainable outside of the plan if the manner in which the
    24  facts will operate upon the terms of the plan is set forth in
    25  the plan.]
    26     (b)  Post-adoption amendment of plan of merger or
    27  consolidation.--A plan of merger or consolidation may contain a
    28  provision that the general partners of the constituent limited
    29  partnerships may amend the plan at any time prior to its
    30  effective date, except that an amendment made subsequent to any
    19970S1157B2174                 - 158 -

     1  adoption of the plan by the limited partners of any constituent
     2  domestic limited partnership shall not change:
     3         (1)  The amount or kind of partnership interests,
     4     obligations, cash, property or rights to be received in
     5     exchange for or on conversion of all or any of the
     6     partnership interests of the constituent domestic limited
     7     partnership adversely to the holders of those partnership
     8     interests.
     9         (2)  Any term of the certificate of limited partnership
    10     or partnership agreement of the surviving or new limited
    11     partnership [to be effected by] as it is to be in effect
    12     immediately following consummation of the merger or
    13     consolidation except provisions that may be amended without
    14     the approval of the limited partners.
    15         (3)  Any of the other terms and conditions of the plan if
    16     the change would adversely affect the holders of any
    17     partnership interests of the constituent domestic limited
    18     partnership.
    19     * * *
    20     (d)  Party to plan.--[A limited partnership] An association
    21  that approves a plan in its capacity as a partner or creditor of
    22  a merging or consolidating limited partnership, or that
    23  furnishes all or a part of the consideration contemplated by a
    24  plan, does not thereby become a party to the [plan] merger or
    25  consolidation for the purposes of this subchapter.
    26     (e)  Notice of meeting of limited partners.--Notwithstanding
    27  any other provision of the partnership agreement, written notice
    28  of the meeting of limited partners called for the purpose of
    29  considering the proposed plan shall be given to each limited
    30  partner of record, whether or not entitled to vote thereon, of
    19970S1157B2174                 - 159 -

     1  each domestic limited partnership that is a party to the [plan]
     2  proposed merger or consolidation. There shall be included in, or
     3  enclosed with, the notice a copy of the proposed plan or a
     4  summary thereof. The provisions of this subsection may not be
     5  relaxed by the certificate of limited partnership or partnership
     6  agreement.
     7     (f)  Adoption of plan by limited partners.--The plan of
     8  merger or consolidation shall be adopted upon receiving a
     9  majority of the votes cast by all limited partners, if any,
    10  entitled to vote thereon of each of the domestic limited
    11  partnerships that is a party to the [plan] proposed merger or
    12  consolidation and, if any class of limited partners is entitled
    13  to vote thereon as a class, a majority of the votes cast in each
    14  class vote. A proposed plan of merger or consolidation shall not
    15  be deemed to have been adopted by the limited partnership unless
    16  it has also been approved by the general partners, regardless of
    17  the fact that the general partners have directed or suffered the
    18  submission of the plan to the limited partners for action.
    19     * * *
    20     (h)  Termination of plan.--Prior to the time when a merger or
    21  consolidation becomes effective, the merger or consolidation may
    22  be terminated pursuant to provisions therefor, if any, set forth
    23  in the plan. If a certificate of merger or consolidation has
    24  been filed in the department prior to the termination, a
    25  certificate of termination executed by each limited partnership
    26  that is a party to the [plan] merger or consolidation, unless
    27  the plan permits termination by less than all of the limited
    28  partnerships, in which case the certificate shall be executed on
    29  behalf of the limited partnership exercising the right to
    30  terminate, shall be filed in the department. The certificate of
    19970S1157B2174                 - 160 -

     1  termination shall set forth:
     2         (1)  A copy of the certificate of merger or consolidation
     3     relating to the plan that is terminated.
     4         (2)  A statement that the plan has been terminated in
     5     accordance with the provisions therefor set forth therein.
     6  See sections 134 (relating to docketing statement), 135
     7  (relating to requirements to be met by filed documents), 138
     8  (relating to statement of correction) and 8514 (relating to
     9  execution of certificates).
    10     * * *
    11     (j)  Reference to outside facts.--Any of the terms of a plan
    12  of merger or consolidation may be made dependent upon facts
    13  ascertainable outside of the plan if the manner in which the
    14  facts will operate upon the terms of the plan is set forth in
    15  the plan. Such facts may include, without limitation, actions or
    16  events within the control of or determinations made by a party
    17  to the plan or a representative of a party to the plan.
    18  § 8553.  Voluntary withdrawal of limited partner.
    19     (a)  General rule.--A limited partner may withdraw from a
    20  limited partnership only at the time or upon the happening of
    21  events specified in writing in the partnership agreement. [If
    22  the partnership agreement does not specify in writing the time
    23  or the events upon the happening of which a limited partner may
    24  withdraw or a definite time for the dissolution and winding up
    25  of the limited partnership, a limited partner may withdraw upon
    26  not less than six months' prior written notice to each general
    27  partner at his address on the books of the limited partnership.]
    28     (b)  [Prohibition of withdrawal.--The partnership agreement
    29  may provide that a limited partner may not withdraw from the
    30  limited partnership or assign a partnership interest in the
    19970S1157B2174                 - 161 -

     1  limited partnership prior to the dissolution and winding up of
     2  the limited partnership.] (Repealed).
     3     (c)  Transitional rule.--This section applies to all limited
     4  partnerships formed on or after January 1, 1999. If the
     5  partnership agreement of a limited partnership formed before
     6  January 1, 1999, did not on December 31, 1998, specify in
     7  writing the time or the events upon the happening of which a
     8  limited partner could withdraw or a definite time for the
     9  dissolution and winding up of the limited partnership, the
    10  provisions of this section that were in effect prior to January
    11  1, 1999, shall apply until such time, if any, as the partnership
    12  agreement is amended in writing after January 1, 1999, to
    13  specify:
    14         (1)  a time or the events upon the happening of which a
    15     limited partner may withdraw;
    16         (2)  a definite time for the dissolution and winding up
    17     of the limited partnership; or
    18         (3)  that this section as effective January 1, 1999,
    19     shall apply to the limited partnership.
    20  § 8557.  [Limitations on distribution.] Distributions and
    21             allocation of profits and losses.
    22     [A partner may not receive a distribution from a limited
    23  partnership to the extent that, after giving effect to the
    24  distribution, all liabilities of the limited partnership, other
    25  than liabilities to partners on account of their partnership
    26  interests and liabilities as to which recourse of creditors is
    27  limited to specified property of the limited partnership, exceed
    28  the fair value of the partnership assets. The fair value of any
    29  property that is subject to a liability as to which recourse of
    30  creditors is so limited shall be included in the partnership
    19970S1157B2174                 - 162 -

     1  assets only to the extent that the fair value of the property
     2  exceeds that liability.] A limited partnership may from time to
     3  time make distributions and allocate the profits and losses of
     4  its business to the partners upon the basis stipulated in the
     5  partnership agreement or, if not stipulated in the partnership
     6  agreement, per capita. The allocation of losses pursuant to this
     7  section shall not affect the limitation on liability of limited
     8  partners as provided in section 8523 (relating to liability of
     9  limited partners to third parties).
    10  § 8558.  Liability upon return of contribution.
    11     * * *
    12     (c)  Determination of return of contribution.--A partner
    13  receives a return of his contribution to the extent that a
    14  distribution to him reduces his share of the fair value of the
    15  net assets of the limited partnership[, as determined under
    16  section 8557 (relating to limitations on distribution),] below
    17  the value (as stated or determined in the manner provided in the
    18  partnership agreement, if stated or provided for therein) of his
    19  contribution (to the extent it has been received by the limited
    20  partnership) that has not been distributed to him, and otherwise
    21  to the extent of the fair value of the distribution.
    22     (d)  Fair value of net assets.--For purposes of computing the
    23  fair value of the net assets of the limited partnership under
    24  subsection (c):
    25         (1)  liabilities of the limited partnership to partners
    26     on account of their partnership interests and liabilities as
    27     to which recourse of creditors is limited to specified
    28     property of the limited partnership shall not be considered;
    29     and
    30         (2)  the fair value of property that is subject to a
    19970S1157B2174                 - 163 -

     1     liability as to which recourse of creditors is so limited
     2     shall be included in the partnership assets only to the
     3     extent that the fair value of the property exceeds that
     4     liability.
     5  § 8571.  Nonjudicial dissolution.
     6     (a)  General rule.--A limited partnership is dissolved and
     7  its affairs shall be wound up upon the happening of the first to
     8  occur of the following:
     9         (1)  At the time or upon the happening of events
    10     specified in the certificate of limited partnership.
    11         (2)  At the time or upon the happening of events
    12     specified in writing in the partnership agreement.
    13         (3)  Written consent of all partners.
    14         (4)  An event of withdrawal of a general partner unless
    15     at the time there is at least one other general partner and
    16     the written provisions of the partnership agreement permit
    17     the business of the limited partnership to be carried on by
    18     the remaining general partner and that partner does so. The
    19     limited partnership is not dissolved and is not required to
    20     be wound up by reason of any event of withdrawal if, within
    21     180 days after the withdrawal, [all] a majority in interest,
    22     or such greater number as shall be provided in writing in the
    23     partnership agreement, of the partners agree in writing to
    24     continue the business of the limited partnership or to the
    25     appointment of one or more replacement general partners.
    26         (5)  Entry of an order of judicial dissolution under
    27     section 8572 (relating to judicial dissolution).
    28     * * *
    29     (c)  Dissolution by domestication.--Whenever a domestic
    30  limited partnership has domesticated itself under the laws of
    19970S1157B2174                 - 164 -

     1  another jurisdiction by action similar to that provided by
     2  section 8590 (relating to domestication) and has authorized that
     3  action in the manner required by this subchapter for the
     4  approval of a proposal that the partnership dissolve
     5  voluntarily, the partnership may surrender its certificate of
     6  limited partnership under the laws of this Commonwealth by
     7  filing in the department a certificate of cancellation under
     8  section 8513 (relating to cancellation of certificate). If the
     9  partnership, as domesticated in the other jurisdiction,
    10  registers to do business in this Commonwealth either prior to or
    11  simultaneously with the filing of the certificate of
    12  cancellation under this subsection, the partnership shall not be
    13  required to file with the certificate of cancellation the tax
    14  clearance certificates that would otherwise be required by
    15  section 139 (relating to tax clearance of certain fundamental
    16  transactions).
    17     [(c)] (d)  Cross [references] reference.--See [sections 8103
    18  (relating to continuation of certain limited partnerships) and]
    19  section 8512(b) (relating to events requiring amendment).
    20  § 8573.  Winding up.
    21     Except as otherwise provided in the partnership agreement,
    22  the general partners who have not wrongfully dissolved a limited
    23  partnership or, if none, the limited partners, or a person
    24  approved by the limited partners or, if there is more than one
    25  class or group of limited partners, by each class or group of
    26  limited partners, in either case by a majority in interest of
    27  the limited partners in each class or group, may wind up the
    28  affairs of the limited partnership, but the court may wind up
    29  the affairs of the limited partnership upon application of any
    30  partner, his legal representative or assignee, and in connection
    19970S1157B2174                 - 165 -

     1  therewith, may appoint a liquidating trustee. See section 139(b)
     2  (relating to tax clearance in judicial proceedings).
     3  § 8577.  Proposal and adoption of plan of division.
     4     * * *
     5     (b)  Reference to outside facts.--Any of the terms of the
     6  plan may be made dependent upon facts ascertainable outside of
     7  the plan if the manner in which the facts will operate upon the
     8  terms of the plan is set forth in the plan. Such facts may
     9  include, without limitation, actions or events within the
    10  control of or determinations made by the dividing limited
    11  partnership or a representative of the dividing limited
    12  partnership.
    13     * * *
    14     (e)  [Restrictions on certain distributions.--A plan of
    15  division may not be made effective if the effect of the plan is
    16  to make a distribution to the holders of any class or series of
    17  partnership interests of the dividing limited partnership unless
    18  the distribution is permitted by section 8557 (relating to
    19  limitations on distribution.] (Repealed).
    20     (f)  [Action by] Rights of holders of indebtedness.--[Unless
    21  otherwise provided by an indenture or other contract by which
    22  the dividing limited partnership is bound, a plan of division
    23  shall not require the approval of the holders of any debt
    24  securities or other obligations of the dividing limited
    25  partnership or of any representative of the holders if the
    26  transfer of assets effected by the division, if effected by
    27  means of a sale, lease, exchange or other disposition, and any
    28  related distribution would not require the approval of the
    29  holders or representatives thereof.] If any such debt
    30  securities, notes, similar evidences of indebtedness, indentures
    19970S1157B2174                 - 166 -

     1  or other contracts were issued, incurred or executed by the
     2  dividing limited partnership before (the Legislative Reference
     3  Bureau shall insert here the effective date of the amendments of
     4  this section) and have not been amended subsequent to that date,
     5  the liability of the dividing limited partnership thereunder
     6  shall not be affected by the division nor shall the rights of
     7  the obligees thereunder be impaired by the division, and each of
     8  the resulting limited partnerships may be proceeded against or
     9  substituted in place of the dividing limited partnership as
    10  joint and several obligors on such liability, regardless of any
    11  provision of the plan of division apportioning the liabilities
    12  of the dividing limited partnership.
    13     * * *
    14  § 8580.  Effect of division.
    15     * * *
    16     (b)  Property rights; allocations of assets and
    17  liabilities.--
    18         (1)  (i)  All the property, real, personal and mixed, of
    19         the dividing limited partnership, and all debts due on
    20         whatever account to it, including subscriptions for
    21         partnership interests or other causes of action belonging
    22         to it, shall, except as otherwise provided in paragraph
    23         (2), to the extent [transfers] allocations of assets are
    24         contemplated by the plan of division, be deemed without
    25         further action to be [transferred] allocated to and
    26         vested in the resulting limited partnerships on such a
    27         manner and basis and with such effect as is specified in
    28         the plan, or per capita among the resulting limited
    29         partnerships, as tenants in common, if no specification
    30         is made in the plan, and the title to any real estate or
    19970S1157B2174                 - 167 -

     1         interest therein vested in any of the limited
     2         partnerships shall not revert or be in any way impaired
     3         by reason of the division.
     4             (ii)  Upon the division becoming effective, the
     5         resulting limited partnerships shall each thenceforth be
     6         responsible as separate and distinct limited partnerships
     7         only for such liabilities as each limited partnership may
     8         undertake or incur in its own name but shall be liable
     9         for the liabilities of the dividing limited partnership
    10         in the manner and on the basis provided in subparagraphs
    11         (iv) and (v).
    12             (iii)  Liens upon the property of the dividing
    13         limited partnership shall not be impaired by the
    14         division.
    15             (iv)  [One] To the extent allocations of liabilities
    16         are contemplated by the plan of division, the liabilities
    17         of the dividing limited partnership shall be deemed
    18         without further action to be allocated to and become the
    19         liabilities of the resulting limited partnerships on such
    20         a manner and basis and with such effect as is specified
    21         in the plan; and one or more but less than all of the
    22         resulting limited partnerships shall be free of the
    23         liabilities of the dividing limited partnership to the
    24         extent, if any, specified in the plan [if no fraud of
    25         creditors or partners or violation of law shall be
    26         effected thereby and if all applicable provisions of law
    27         are complied with.], if in either case:
    28                 (A)  no fraud of partners or violation of law
    29             shall be effected thereby; and
    30                 (B)  the plan does not constitute a fraudulent
    19970S1157B2174                 - 168 -

     1             transfer under 12 Pa.C.S. Ch. 51 (relating to
     2             fraudulent transfers).
     3             (v)  If the conditions in subparagraph (iv) for
     4         freeing one or more of the resulting limited partnerships
     5         from the liabilities of the dividing limited partnership,
     6         or for allocating some or all of the liabilities of the
     7         dividing limited partnership, are not satisfied, the
     8         liabilities of the dividing limited partnership as to
     9         which those conditions are not satisfied shall not be
    10         affected by the division nor shall the rights of
    11         creditors [thereof] thereunder or of any person dealing
    12         with the limited partnership be impaired by the division,
    13         and any claim existing or action or proceeding pending by
    14         or against the limited partnership with respect to those
    15         liabilities may be prosecuted to judgment as if the
    16         division had not taken place, or the resulting limited
    17         partnerships may be proceeded against or substituted in
    18         [its] place of the dividing limited partnership as joint
    19         and several obligors on [such liability] those
    20         liabilities, regardless of any provision of the plan of
    21         division apportioning the liabilities of the dividing
    22         limited partnership.
    23             (vi)  The conditions in subparagraph (iv) for freeing
    24         one or more of the resulting limited partnerships from
    25         the liabilities of the dividing limited partnership and
    26         for allocating some or all of the liabilities of the
    27         dividing limited partnership shall be conclusively deemed
    28         to have been satisfied if the plan of division has been
    29         approved by the Pennsylvania Public Utility Commission in
    30         a final order issued after (the Legislative Reference
    19970S1157B2174                 - 169 -

     1         Bureau shall insert here the effective date of the
     2         amendments of this section) that has become not subject
     3         to further appeal.
     4         (2)  (i)  The [transfer] allocation of any fee or
     5         freehold interest or leasehold having a remaining term of
     6         30 years or more in any tract or parcel of real property
     7         situate in this Commonwealth owned by a dividing limited
     8         partnership (including property owned by a foreign
     9         limited partnership dividing solely under the law of
    10         another jurisdiction) to a new limited partnership
    11         resulting from the division shall not be effective until
    12         one of the following documents is filed in the office for
    13         the recording of deeds of the county, or each of them, in
    14         which the tract or parcel is situated:
    15                 (A)  A deed, lease or other instrument of
    16             confirmation describing the tract or parcel.
    17                 (B)  A duly executed duplicate original copy of
    18             the certificate of division.
    19                 (C)  A copy of the certificate of division
    20             certified by the Department of State.
    21                 (D)  A declaration of acquisition setting forth
    22             the value of real estate holdings in the county of
    23             the limited partnership as an acquired company.
    24             (ii)  The provisions of 75 Pa.C.S. § 1114 (relating
    25         to transfer of vehicle by operation of law) shall not be
    26         applicable to [a transfer] an allocation of ownership of
    27         any motor vehicle, trailer or semitrailer [from a
    28         dividing limited partnership] to a new limited
    29         partnership under this section or under a similar law of
    30         any other jurisdiction, but any such [transfer]
    19970S1157B2174                 - 170 -

     1         allocation shall be effective only upon compliance with
     2         the requirements of 75 Pa.C.S. § 1116 (relating to
     3         issuance of new certificate following transfer).
     4         (3)  It shall not be necessary for a plan of division to
     5     list each individual asset or liability of the dividing
     6     limited partnership to be allocated to a new limited
     7     partnership so long as those assets and liabilities are
     8     described in a reasonable and customary manner.
     9         (4)  Each new limited partnership shall hold any assets
    10     and liabilities allocated to it as the successor to the
    11     dividing limited partnership, and those assets and
    12     liabilities shall not be deemed to have been assigned to the
    13     new limited partnership in any manner, whether directly or
    14     indirectly or by operation of law.
    15     * * *
    16     (g)  Conflict of laws.--It is the intent of the General
    17  Assembly that:
    18         (1)  The effect of a division of a domestic limited
    19     partnership shall be governed solely by the laws of this
    20     Commonwealth and any other jurisdiction under the laws of
    21     which any of the resulting limited partnerships is organized.
    22         (2)  The effect of a division on the assets and
    23     liabilities of the dividing limited partnership shall be
    24     governed solely by the laws of this Commonwealth and any
    25     other jurisdiction under the laws of which any of the
    26     resulting limited partnerships is organized.
    27         (3)  The validity of any allocations of assets or
    28     liabilities by a plan of division of a domestic limited
    29     partnership, regardless of whether or not any of the new
    30     limited partnerships is a foreign limited partnership, shall
    19970S1157B2174                 - 171 -

     1     be governed solely by the laws of this Commonwealth.
     2         (4)  In addition to the express provisions of this
     3     subsection, this subchapter shall otherwise generally be
     4     granted the protection of full faith and credit under the
     5     Constitution of the United States.
     6  § 8590.  Domestication.
     7     * * *
     8     (b)  Certificate of domestication.--The certificate of
     9  domestication shall be executed by the limited partnership and
    10  shall set forth in the English language:
    11         (1)  The name of the limited partnership. If the name is
    12     in a foreign language, it shall be set forth in Roman letters
    13     or characters or Arabic or Roman numerals. If the name is one
    14     that is rendered unavailable for use by any provision of
    15     section 8505 (relating to name), the limited partnership
    16     shall adopt, in accordance with any procedures for changing
    17     the name of the limited partnership that are applicable prior
    18     to the domestication of the limited partnership, and shall
    19     set forth in the certificate of domestication an available
    20     name.
    21         * * *
    22     (c)  Effect of domestication.--
    23         (1)  As a domestic limited partnership, the domesticated
    24     limited partnership shall no longer be a foreign limited
    25     partnership for the purposes of this chapter and shall [have]
    26     instead be a domestic limited partnership with all the powers
    27     and privileges and [be subject to] all the duties and
    28     limitations granted and imposed upon domestic limited
    29     partnerships. [The property, debts, liens, estates, taxes,
    30     penalties and public accounts due the Commonwealth shall
    19970S1157B2174                 - 172 -

     1     continue to be vested in and imposed upon the limited
     2     partnership to the same extent as if it were the successor by
     3     merger of the domesticating limited partnership with and into
     4     a domestic limited partnership under Subchapter F (relating
     5     to merger and consolidation).] In all other respects, the
     6     domesticated limited partnership shall be deemed to be the
     7     same limited partnership as it was prior to the domestication
     8     without any change in or affect on its existence. Without
     9     limiting the generality of the previous sentence, the
    10     domestication shall not be deemed to have dissolved the
    11     limited partnership or to have affected in any way:
    12             (i)  the right and title of the limited partnership
    13         in and to its assets, property, franchises, estates and
    14         choses in action;
    15             (ii)  the liability of the limited partnership for
    16         its debts, obligations, penalties and public accounts due
    17         the Commonwealth;
    18             (iii)  any liens or other encumbrances on the
    19         property or assets of the limited partnership; or
    20             (iv)  any contract, license or other agreement to
    21         which the limited partnership is a party or under which
    22         it has any rights or obligations.
    23         (2)  The partnership interests in the domesticated
    24     limited partnership shall be unaffected by the domestication
    25     except to the extent, if any, reclassified in the certificate
    26     of domestication.
    27  § 8903.  Definitions and index of definitions.
    28     (a)  Definitions.--The following words and phrases when used
    29  in this chapter shall have the meanings given to them in this
    30  section unless the context clearly indicates otherwise:
    19970S1157B2174                 - 173 -

     1     * * *
     2     ["Department."  The Department of State of the Commonwealth.]
     3     * * *
     4     "Event of dissociation."  An event that causes a person to
     5  cease to be a member of a limited liability company.  See
     6  section [8971(a)(4)] 8971(4) (relating to dissolution).
     7     * * *
     8     ["Licensed person."  A natural person who is duly licensed or
     9  admitted to practice his profession by a court, department,
    10  board, commission or other agency of this Commonwealth or
    11  another jurisdiction to render a professional service that is or
    12  will be rendered by the professional company of which he is or
    13  intends to become a manager, member, employee or agent.]
    14     "Limited liability company," "domestic limited liability
    15  company" or "company."  An association that is a limited
    16  liability company organized and existing under this chapter.
    17     * * *
    18     "Operating agreement."  Any [agreement of the members as to]
    19  rules or procedures adopted for the regulation and governance of
    20  the affairs of a limited liability company and the conduct of
    21  its business. [The operating agreement need not be in writing
    22  except where this chapter refers to a written provision of the
    23  operating agreement. The operating agreement may contain any
    24  provision for the regulation of the internal affairs of the
    25  company agreed to by the members, whether or not specifically
    26  authorized by or in contravention of this chapter, except where
    27  this chapter:
    28         (1)  refers only to a rule as set forth in the
    29     certificate of organization; or
    30         (2)  expressly provides that the operating agreement
    19970S1157B2174                 - 174 -

     1     shall not relax or contravene any provision on a specified
     2     subject. See sections 8913(8) (relating to certificate of
     3     organization) and 8915 (relating to modification by
     4     agreement).]
     5     * * *
     6     ["Professional services."  The term shall have the meaning
     7  specified in section 2902 (relating to definitions).]
     8     * * *
     9     (b)  Index of other definitions.--Other definitions applying
    10  to this chapter and the sections in which they appear are:
    11     "Act" or "action."  Section 102.
    12     "Department."  Section 102.
    13     "Licensed person."  Section 102.
    14     "Professional services."  Section 102.
    15                            SUBCHAPTER B
    16            ORGANIZATION[; CERTIFICATE OF ORGANIZATION]
    17  § 8915.  Modification by agreement.
    18     The provisions of this chapter are intended to permit a
    19  limited liability company to qualify for taxation as an entity
    20  that is not an association taxable as a corporation under the
    21  Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
    22  et seq.). Notwithstanding the limitations in [the definition of
    23  "operating agreement" in section 8903 (relating to definitions)
    24  and the limitations in section] sections 8913(8) (relating to
    25  certificate of organization) and 8916(b) (relating to operating
    26  agreement), the certificate of organization and operating
    27  agreement may effect any change in the form of organization of
    28  the company, in addition to or in contravention of the
    29  provisions of this chapter, that may be necessary to accomplish
    30  that purpose.
    19970S1157B2174                 - 175 -

     1  § 8916.  Operating agreement.
     2     (a)  General rule.--The operating agreement of a limited
     3  liability company need not be in writing except where this
     4  chapter refers to a written provision of the operating
     5  agreement. If a written operating agreement provides that it
     6  cannot be amended or modified except in writing, an oral
     7  agreement, amendment or modification shall not be enforceable.
     8     (b)  Freedom of contract.--An operating agreement may contain
     9  any provision for the regulation of the internal affairs of a
    10  limited liability company adopted by the members, whether or not
    11  specifically authorized by or in contravention of this chapter,
    12  except where this chapter:
    13         (1)  refers only to a rule as set forth in the
    14     certificate of organization; or
    15         (2)  expressly provides that the operating agreement
    16     shall not relax or contravene any provision on a specified
    17     subject.
    18     (c)  Cross references.--See sections 8913(8) (relating to
    19  certificate of organization) and 8915 (relating to modification
    20  by agreement).
    21  § 8922.  Liability of members [and managers].
    22     (a)  General rule.--[Neither] Except as provided in
    23  subsection (e), the members of a limited liability company [nor
    24  the managers of a company managed by one or more managers are]
    25  shall not be liable, solely by reason of being a member [or a
    26  manager], under an order of a court or in any other manner for a
    27  debt, obligation or liability of the company of any kind or for
    28  the acts [or omissions] of any [other] member, manager, agent or
    29  employee of the company.
    30     (b)  Professional relationship unaffected.--Subsection (a)
    19970S1157B2174                 - 176 -

     1  shall not afford members [and managers] of a professional
     2  company with greater immunity than is available to the officers,
     3  shareholders, employees or agents of a professional corporation.
     4  See section 2925 (relating to professional relationship
     5  retained).
     6     * * *
     7     (d)  Conflict of laws.--The personal liability of a member of
     8  a company to any person or in any action or proceeding for the
     9  debts, obligations or liabilities of the company or for the acts
    10  [or omissions] of other members, managers, employees or agents
    11  of the company shall be governed solely and exclusively by this
    12  chapter and the laws of this Commonwealth. Whenever a conflict
    13  arises between the laws of this Commonwealth and the laws of any
    14  other state with regard to the liability of members of a company
    15  organized and existing under this chapter for the debts,
    16  obligations and liabilities of the company or for the acts [or
    17  omissions] of the other members, managers, employees or agents
    18  of the company, the laws of this Commonwealth shall govern in
    19  determining such liability.
    20     (e)  Expansion of liability.--The certificate of organization
    21  may provide that some or all of the members shall be liable for
    22  some or all of the debts, obligations and liabilities of the
    23  company to the extent and under the circumstances provided in
    24  the certificate.
    25     (f)  Medical professional liability.--A professional company
    26  shall be deemed to be a partnership for purposes of section 811
    27  of the act of October 15, 1975 (P.L.390, No.111), known as the
    28  Health Care Services Malpractice Act.
    29     [(e)] (g)  Cross reference.--See section 8904(b) (relating to
    30  rules for cases not provided for in this chapter).
    19970S1157B2174                 - 177 -

     1  § 8924.  Limited transferability of membership interest.
     2     (a)  General rule.--The interest of a member in a limited
     3  liability company constitutes the personal estate of the member
     4  and may be transferred or assigned as provided in writing in the
     5  operating agreement.  Unless otherwise provided in writing in
     6  the operating agreement, if all of the other members of the
     7  company other than the member proposing to dispose of his
     8  interest do not approve of the proposed transfer or assignment
     9  by unanimous vote or written consent, which approval may be
    10  unreasonably withheld by any of the other members, the
    11  transferee of the interest of the member shall have no right to
    12  participate in the management of the business and affairs of the
    13  company or to become a member. The transferee shall only be
    14  entitled to receive the distributions and the return of
    15  contributions to which that member would otherwise be entitled.
    16     (b)  Certificate of membership interest.--The certificate of
    17  organization may provide that a member's interest in a company
    18  may be evidenced by a certificate of membership interest issued
    19  by the company [and]. If such provision is made for the issuance
    20  of certificates of membership interest, the operating agreement
    21  may [also] provide for the assignment or transfer of any
    22  membership interest represented by such a certificate and make
    23  other provisions with respect to such certificates. [See 13
    24  Pa.C.S. § 8102 (relating to definitions and index of
    25  definitions).]
    26  § 8932.  Distributions and allocation of profits and losses.
    27     A limited liability company may from time to time [divide]
    28  make distributions and allocate the profits and losses of its
    29  business [and distribute the same] to [and allocate any losses
    30  among] the members of the company upon the basis stipulated in
    19970S1157B2174                 - 178 -

     1  the operating agreement or, if not stipulated in the operating
     2  agreement, per capita. The allocation of losses pursuant to this
     3  section shall not affect the limitation on liability of members
     4  as provided in section 8922 (relating to liability of members).
     5  § 8942.  Voting.
     6     * * *
     7     (c)  Exception.--An amendment of the certificate of
     8  organization that:
     9         (1)  restates without change all of the operative
    10     provisions of the certificate of organization as theretofore
    11     in effect;
    12         (2)  changes the name or registered office of the
    13     company; or
    14         (3)  accomplishes any combination of the foregoing
    15     purposes;
    16  is not an amendment of the certificate of organization for the
    17  purposes of subsection (b). Unless otherwise provided in writing
    18  in the operating agreement, an amendment described in this
    19  subsection may be made by the affirmative vote of a majority of
    20  the managers or, in the case of a company that is not managed by
    21  one or more managers, of a majority of the members.
    22     * * *
    23  § 8943.  Duties of managers and members.
    24     * * *
    25     (b)  Companies with managers.--If the certificate of
    26  organization provides that the company shall be managed by one
    27  or more managers:
    28         (1)  [Unless otherwise provided in writing in the
    29     operating agreement, the provisions of Subchapter B of
    30     Chapter 17 (relating to officers, directors and
    19970S1157B2174                 - 179 -

     1     shareholders)] Sections 1711 (relating to alternative
     2     provisions) through 1717 (relating to limitation on standing)
     3     shall be applicable to representatives of the company. A
     4     written provision of the operating agreement may increase,
     5     but not relax, the duties of representatives of the company
     6     to its members under those sections. For purposes of applying
     7     the provisions of those sections, references to the "articles
     8     of incorporation," "bylaws," "directors" and "shareholders"
     9     shall mean the certificate of organization, operating
    10     agreement, managers and members, respectively.
    11         (2)  A member who is not a manager shall have no duties
    12     to the company or to the other members solely by reason of
    13     acting in his capacity as a member.
    14  § 8944.  [Classes of members.]  Members.
    15     (a)  General rule.--A limited liability company may have one
    16  or more members.
    17     (b)  Classes of members.--An operating agreement may provide
    18  for:
    19         (1)  classes or groups of members having such relative
    20     rights, powers and duties as the operating agreement may
    21     provide;
    22         (2)  the future creation in the manner provided in the
    23     operating agreement of additional classes or groups of
    24     members having such relative rights, powers and duties as may
    25     from time to time be established, including rights, powers
    26     and duties senior to existing classes and groups of members;
    27     and
    28         (3)  the taking of an action, including, without
    29     limitation, amendment of the certificate of organization or
    30     operating agreement or creation of a class or group of
    19970S1157B2174                 - 180 -

     1     interests in the limited liability company that was not
     2     previously outstanding, without the vote or approval of any
     3     member or class or group of members.
     4     [(b)] (c)  Class voting.--The operating agreement may grant
     5  to all or certain identified members or a specified class or
     6  group of members the right to vote (on a per capita or other
     7  basis), separately or with all or any class or group of members,
     8  upon any matter.
     9  § 8945.  Indemnification.
    10     * * *
    11     (f)  Mandatory indemnification.--Without regard to whether
    12  indemnification or advancement of expenses is provided under
    13  subsections (a) and (d), a limited liability company shall be
    14  subject to section 8331(2) (relating to rules determining rights
    15  and duties of partners) and both the members and the managers,
    16  if any, shall be deemed to be general partners for purposes of
    17  applying that section.
    18  § 8948.  [Dissociation of member limited.] Limitation on
    19             dissociation or assignment of membership interest.
    20     Notwithstanding anything to the contrary set forth in this
    21  part, an operating agreement may provide that a member may not
    22  voluntarily dissociate from the limited liability company or
    23  assign his membership interest prior to the dissolution and
    24  winding-up of the company, and an attempt by a member to
    25  dissociate voluntarily from the company or to assign his
    26  membership interest in violation of the operating agreement
    27  shall be ineffective.
    28  § 8957.  Approval of merger or consolidation.
    29     * * *
    30     (b)  Reference to outside facts.--Any of the terms of the
    19970S1157B2174                 - 181 -

     1  plan may be made dependent upon facts ascertainable outside of
     2  the plan if the manner in which the facts will operate upon the
     3  terms of the plan is set forth in the plan. Such facts may
     4  include, without limitation, actions or events within the
     5  control of or determinations made by a party to the plan or a
     6  representative of a party to the plan.
     7     (c)  [Postadoption] Post-adoption amendment of plan of merger
     8  or consolidation.--A plan of merger or consolidation may contain
     9  a provision that the managers, if any, of the constituent
    10  companies may amend the plan at any time prior to its effective
    11  date, except that an amendment made subsequent to any adoption
    12  of the plan by the members of any constituent domestic company
    13  shall not, without the approval of the members, change:
    14         (1)  The amount or kind of membership interests,
    15     obligations, cash, property or rights to be received in
    16     exchange for or on conversion of all or any of the membership
    17     interests of the constituent domestic company adversely to
    18     the holders of those membership interests.
    19         (2)  Any [term] provision of the certificate of
    20     organization or operating agreement of the surviving or new
    21     company [to be effected by] as it is to be in effect
    22     immediately following consummation of the merger or
    23     consolidation except provisions that may be amended without
    24     the approval of the members.
    25         (3)  Any of the other terms and conditions of the plan if
    26     the change would adversely affect the holders of any
    27     membership interests of the constituent domestic company.
    28     * * *
    29     (e)  Party to plan.--An association that approves a plan in
    30  its capacity as a member or creditor of a merging or
    19970S1157B2174                 - 182 -

     1  consolidating company or that furnishes all or a part of the
     2  consideration contemplated by a plan does not thereby become a
     3  party to the [plan or the] merger or consolidation for the
     4  purposes of this subchapter.
     5     * * *
     6     (i)  Termination of plan.--Prior to the time when a merger or
     7  consolidation becomes effective, the merger or consolidation may
     8  be terminated pursuant to provisions therefor, if any, set forth
     9  in the plan. If a certificate of merger or consolidation has
    10  been filed in the department prior to the termination, a
    11  certificate of termination executed by each company that is a
    12  party to the merger or consolidation, unless the plan permits
    13  termination by less than all of the companies, in which case the
    14  certificate shall be executed on behalf of the company
    15  exercising the right to terminate, shall be filed in the
    16  department. The certificate of termination shall set forth:
    17         (1)  A copy of the certificate of merger or consolidation
    18     relating to the plan that is terminated.
    19         (2)  A statement that the plan has been terminated in
    20     accordance with the provisions therefor set forth therein.
    21  See sections 134 (relating to docketing statement), 135
    22  (relating to requirements to be met by filed documents), 138
    23  (relating to statement of correction) and 8907 (relating to
    24  execution of documents).
    25     * * *
    26  § 8962.  Proposal and adoption of plan of division.
    27     * * *
    28     (b)  Reference to outside facts.--Any of the terms of the
    29  plan may be made dependent upon facts ascertainable outside of
    30  the plan if the manner in which the facts will operate upon the
    19970S1157B2174                 - 183 -

     1  terms of the plan is set forth in the plan. Such facts may
     2  include, without limitation, actions or events within the
     3  control of or determinations made by the dividing limited
     4  liability company or a representative of the dividing limited
     5  liability company.
     6     * * *
     7     (e)  [Action by holders of indebtedness.--Unless otherwise
     8  provided by an indenture or other contract by which the dividing
     9  limited liability company is bound, a plan of division shall not
    10  require the approval of the holders of any debt securities or
    11  other obligations of the dividing company or of any
    12  representative of the holders if the transfer of assets effected
    13  by the division, if effected by means of a sale, lease, exchange
    14  or other disposition, and any related distribution would not
    15  require the approval of the holders or representatives thereof.]
    16  (Repealed).
    17  § 8965.  Effect of division.
    18     * * *
    19     (b)  Property rights; allocations of assets and
    20  liabilities.--
    21         (1)  (i)  All the property, real, personal and mixed, of
    22         the dividing company and all debts due on whatever
    23         account to it, including subscriptions for membership
    24         interests and other causes of action belonging to it,
    25         shall, except as otherwise provided in paragraph (2), to
    26         the extent [transfers] allocations of assets are
    27         contemplated by the plan of division, be deemed without
    28         further action to be [transferred] allocated to and
    29         vested in the resulting companies on such a manner and
    30         basis and with such effect as is specified in the plan,
    19970S1157B2174                 - 184 -

     1         or per capita among the resulting companies as tenants in
     2         common if no specification is made in the plan, and the
     3         title to any real estate or interest therein vested in
     4         any of the companies shall not revert or be in any way
     5         impaired by reason of the division.
     6             (ii)  Upon the division becoming effective, the
     7         resulting companies shall each thenceforth be responsible
     8         as separate and distinct companies only for such
     9         liabilities as each company may undertake or incur in its
    10         own name but shall be liable for the liabilities of the
    11         dividing company in the manner and on the basis provided
    12         in subparagraphs (iv) and (v).
    13             (iii)  Liens upon the property of the dividing
    14         company shall not be impaired by the division.
    15             (iv)  [One] To the extent allocations of liabilities
    16         are contemplated by the plan of division, the liabilities
    17         of the dividing company shall be deemed without further
    18         action to be allocated to and become the liabilities of
    19         the resulting companies on such a manner and basis and
    20         with such effect as is specified in the plan; and one or
    21         more, but less than all, of the resulting companies shall
    22         be free of the liabilities of the dividing company to the
    23         extent, if any, specified in the plan [if no fraud of
    24         creditors or members or violation of law shall be
    25         effected thereby and if all applicable provisions of law
    26         are complied with.], if in either case:
    27                 (A)  no fraud on members or violation of law
    28             shall be effected thereby; and
    29                 (B)  the plan does not constitute a fraudulent
    30             transfer under 12 Pa.C.S. Ch. 51 (relating to
    19970S1157B2174                 - 185 -

     1             fraudulent transfers).
     2             (v)  If the conditions in subparagraph (iv) for
     3         freeing one or more of the resulting companies from the
     4         liabilities of the dividing company, or for allocating
     5         some or all of the liabilities of the dividing company,
     6         are not satisfied, the liabilities of the dividing
     7         company as to which those conditions are not satisfied
     8         shall not be affected by the division nor shall the
     9         rights of creditors [thereof] thereunder or of any person
    10         dealing with the company be impaired by the division, and
    11         any claim existing or action or proceeding pending by or
    12         against the company with respect to those liabilities may
    13         be prosecuted to judgment as if the division had not
    14         taken place, or the resulting companies may be proceeded
    15         against or substituted in [its] place of the dividing
    16         company as joint and several obligors on [such liability]
    17         those liabilities, regardless of any provision of the
    18         plan of division apportioning the liabilities of the
    19         dividing company.
    20             (vi)  The conditions in subparagraph (iv) for freeing
    21         one or more of the resulting companies from the
    22         liabilities of the dividing company and for allocating
    23         some or all of the liabilities of the dividing company
    24         shall be conclusively deemed to have been satisfied if
    25         the plan of division has been approved by the
    26         Pennsylvania Public Utility Commission in a final order
    27         issued after (the Legislative Reference Bureau shall
    28         insert here the effective date of the amendments of this
    29         section) that has become not subject to further appeal.
    30         (2)  (i)  The [transfer] allocation of any fee or
    19970S1157B2174                 - 186 -

     1         freehold interest or leasehold having a remaining term of
     2         30 years or more in any tract or parcel of real property
     3         situate in this Commonwealth owned by a dividing company
     4         (including property owned by a foreign limited liability
     5         company dividing solely under the law of another
     6         jurisdiction) to a new company resulting from the
     7         division shall not be effective until one of the
     8         following documents is filed in the office for the
     9         recording of deeds of the county, or each of them, in
    10         which the tract or parcel is situated:
    11                 (A)  A deed, lease or other instrument of
    12             confirmation describing the tract or parcel.
    13                 (B)  A duly executed duplicate original copy of
    14             the certificate of division.
    15                 (C)  A copy of the certificate of division
    16             certified by the Department of State.
    17                 (D)  A declaration of acquisition setting forth
    18             the value of real estate holdings in such county of
    19             the company as an acquired company.
    20             (ii)  The provisions of 75 Pa.C.S. § 1114 (relating
    21         to transfer of vehicle by operation of law) shall not be
    22         applicable to [a transfer] an allocation of ownership of
    23         any motor vehicle, trailer or semitrailer [from a
    24         dividing company] to a new company under this section or
    25         under a similar law of any other jurisdiction but any
    26         such [transfer] allocation shall be effective only upon
    27         compliance with the requirements of 75 Pa.C.S. § 1116
    28         (relating to issuance of new certificate following
    29         transfer).
    30         (3)  It shall not be necessary for a plan of division to
    19970S1157B2174                 - 187 -

     1     list each individual asset or liability of the dividing
     2     company to be allocated to a new company so long as those
     3     assets and liabilities are described in a reasonable and
     4     customary manner.
     5         (4)  Each new company shall hold any assets and
     6     liabilities allocated to it as the successor to the dividing
     7     company, and those assets and liabilities shall not be deemed
     8     to have been assigned to the new company in any manner,
     9     whether directly or indirectly or by operation of law.
    10     * * *
    11     (h)  Conflict of laws.--It is the intent of the General
    12  Assembly that:
    13         (1)  The effect of a division of a domestic limited
    14     liability company shall be governed by the laws of this
    15     Commonwealth and any other jurisdiction under the laws of
    16     which any of the resulting companies is organized.
    17         (2)  The effect of a division on the assets and
    18     liabilities of the dividing company shall be governed solely
    19     by the laws of this Commonwealth and any other jurisdiction
    20     under the laws of which any of the resulting companies is
    21     organized.
    22         (3)  The validity of any allocation of assets or
    23     liabilities by a plan of division of a domestic limited
    24     liability company, regardless of whether or not any of the
    25     new companies is a foreign limited liability company, shall
    26     be governed solely by the laws of this Commonwealth.
    27         (4)  In addition to the express provisions of this
    28     subsection, this subchapter shall otherwise generally be
    29     granted the protection of full faith and credit under the
    30     Constitution of the United States.
    19970S1157B2174                 - 188 -

     1  § 8971.  Dissolution.
     2     [(a)  General rule.--]A limited liability company is
     3  dissolved and its affairs shall be wound up upon the happening
     4  of the first to occur of the following events:
     5         (1)  At the time or upon the happening of events
     6     specified in the certificate of organization.
     7         (2)  At the time or upon the happening of events
     8     specified in writing in the operating agreement.
     9         (3)  By the unanimous written agreement or consent of all
    10     members.
    11         (4)  [Upon] Except as otherwise provided in writing in
    12     the operating agreement, upon a member becoming a bankrupt or
    13     executing an assignment for the benefit of creditors or the
    14     death, retirement, insanity, resignation, expulsion or
    15     dissolution of a member or the occurrence of any other event
    16     that terminates the continued membership of a member in the
    17     company unless the business of the company is continued by
    18     the vote or consent of [all] a majority in interest, or such
    19     greater number as shall be provided in writing in the
    20     operating agreement, of the remaining members given within
    21     [90] 180 days following such event [or under a right to do so
    22     stated in the operating agreement].
    23         (5)  Entry of an order of judicial dissolution under
    24     section 8972 (relating to judicial dissolution).
    25     [(b)  Cross reference.--See section 8103 (relating to
    26  continuation of certain limited partnerships and limited
    27  liability companies).]
    28  § 8973.  Winding up.
    29     * * *
    30     (b)  Judicial supervision.--The court may wind up the affairs
    19970S1157B2174                 - 189 -

     1  of the company upon application of any member, his legal
     2  representative or assignee and, in connection therewith, may
     3  appoint a liquidating trustee. See section 139(b) (relating to
     4  tax clearance in judicial proceedings).
     5  § 8974.  Distribution of assets upon dissolution.
     6     (a)  General rule.--In settling accounts after dissolution,
     7  the liabilities of the limited liability company shall be
     8  entitled to payment in the following order:
     9         (1)  Those to creditors, including members or managers
    10     who are creditors, in the order of priority as provided by
    11     law, in satisfaction of the liabilities of the company,
    12     whether by payment or the making of reasonable provision for
    13     payment thereof, other than liabilities for distributions to
    14     members under section 8932 (relating to distributions and
    15     allocation of profits and losses) or 8933 (relating to
    16     distributions upon an event of dissociation).
    17         (2)  Unless otherwise provided in the operating
    18     agreement, to members and former members in satisfaction of
    19     liabilities for distributions under section 8932 or 8933.
    20         (3)  Unless otherwise provided in the operating
    21     agreement, to members in respect of:
    22             (i)  Their contributions to capital.
    23             (ii)  Their share of the profits and other
    24         compensation by way of income on their contributions.
    25     * * *
    26  § 8978.  Dissolution by domestication.
    27     Whenever a domestic limited liability company has
    28  domesticated itself under the laws of another jurisdiction by
    29  action similar to that provided by section 8982 (relating to
    30  domestication) and has authorized that action by the vote
    19970S1157B2174                 - 190 -

     1  required by this subchapter for the approval of a proposal that
     2  the company dissolve voluntarily, the company may surrender its
     3  certificate of organization under the laws of this Commonwealth
     4  by filing in the Department of State a certificate of
     5  dissolution under section 8975 (relating to certificate of
     6  dissolution). In lieu of the statements required by section
     7  8975(a)(2) through (4), the certificate of dissolution shall set
     8  forth a statement that the company has domesticated itself under
     9  the laws of another jurisdiction. If the company, as
    10  domesticated in the other jurisdiction, registers to do business
    11  in this Commonwealth either prior to or simultaneously with the
    12  filing of the certificate of dissolution under this section, the
    13  company shall not be required to file with the certificate of
    14  dissolution the tax clearance certificates that would otherwise
    15  be required by section 139 (relating to tax clearance of certain
    16  fundamental transactions).
    17  § 8982.  Domestication.
    18     * * *
    19     (b)  Certificate of domestication.--The certificate of
    20  domestication shall be executed by the company and shall set
    21  forth in the English language:
    22         (1)  The name of the company. If the name is in a foreign
    23     language, it shall be set forth in Roman letters or
    24     characters or Arabic or Roman numerals. If the name is one
    25     that is rendered unavailable for use by any provision of
    26     section 8905 (relating to name), the company shall adopt, in
    27     accordance with any procedures for changing the name of the
    28     company that are applicable prior to the domestication of the
    29     company, and shall set forth in the certificate of
    30     domestication, an available name.
    19970S1157B2174                 - 191 -

     1         * * *
     2     (c)  Effect of domestication.--
     3         (1)  As a domestic limited liability company, the
     4     domesticated company shall no longer be a foreign limited
     5     liability company for the purposes of this chapter and shall
     6     [have] instead be a domestic limited liability company with
     7     all the powers and privileges and [be subject to] all the
     8     duties and limitations granted and imposed upon domestic
     9     limited liability companies. [The property, debts, liens,
    10     estates, taxes, penalties and public accounts due the
    11     Commonwealth shall continue to be vested in and imposed upon
    12     the company to the same extent as if it were the successor by
    13     merger of the domesticating company with and into a domestic
    14     limited liability company under Subchapter G (relating to
    15     mergers and consolidations).] In all other respects, the
    16     domesticated limited liability company shall be deemed to be
    17     the same limited liability company as it was prior to the
    18     domestication without any change in or affect on its
    19     existence. Without limiting the generality of the previous
    20     sentence, the domestication shall not be deemed to have
    21     dissolved the company or to have affected in any way:
    22             (i)  the right and title of the company in and to its
    23         assets, property, franchises, estates and choses in
    24         action;
    25             (ii)  the liability of the company for its debts,
    26         obligations, penalties and public accounts due the
    27         Commonwealth;
    28             (iii)  any liens or other encumbrances on the
    29         property or assets of the company; or
    30             (iv)  any contract, license or other agreement to
    19970S1157B2174                 - 192 -

     1         which the company is a party or under which it has any
     2         rights or obligations.
     3         (2)  The [shares of] membership interests in the
     4     domesticated company shall be unaffected by the domestication
     5     except to the extent, if any, reclassified in the certificate
     6     of domestication.
     7  § 8996.  Restrictions.
     8     * * *
     9     (b)  Ownership and governance of restricted professional
    10  companies.--Except as otherwise provided by a statute, rule or
    11  regulation applicable to a particular profession, all of the
    12  [members] ultimate beneficial owners of membership interests in
    13  and all of the managers, if any, of a restricted professional
    14  company shall be licensed persons.
    15     * * *
    16     (d)  Application.--For purposes of applying subsection (a):
    17         * * *
    18         (3)  The practice of the restricted professional service
    19     of law shall be deemed to include:
    20             (i)  serving as an attorney-in-fact, guardian,
    21         custodian, executor, personal representative, trustee or
    22         fiduciary;
    23             (ii)  serving as a director or trustee of a
    24         corporation for profit or not-for-profit, manager of a
    25         limited liability company or a similar position with any
    26         other form of association;
    27             (iii)  testifying, teaching, lecturing or writing
    28         about any topic related to the law;
    29             (iv)  serving as a master, receiver, arbitrator or
    30         similar official;
    19970S1157B2174                 - 193 -

     1             (v)  providing actuarial, insurance, investment,
     2         estate and trust administration, tax return preparation,
     3         financial and other similar services and advice;
     4             (vi)  conducting intellectual property and other real
     5         and personal property title searches and providing other
     6         title insurance agency services; and
     7             (vii)  engaging in any activity incidental to any of
     8         the foregoing.
     9  § 8998.  Annual registration.
    10     * * *
    11     (f)  Annual fee to be lien.--
    12         (1)  Failure to [pay the annual registration fee imposed]
    13     file the certificate of annual registration required by this
    14     section shall not affect the existence or status of the
    15     restricted professional company as such, but the annual
    16     registration fee that would have been payable shall be a lien
    17     in the manner provided in this subsection from the time the
    18     annual registration fee is due and payable [upon]. If a
    19     certificate of annual registration is not filed within 30
    20     days after the date on which it is due, the department shall
    21     assess a penalty of $500 against the company, which shall
    22     also be a lien in the manner provided in this subsection. The
    23     imposition of that penalty shall not be construed to relieve
    24     the company from liability for any other penalty or interest
    25     provided for under other applicable law.
    26         (2)  If the annual registration fee paid by a restricted
    27     professional company is subsequently determined to be less
    28     than should have been paid because it was based on an
    29     incorrect number of members or was otherwise incorrectly
    30     computed, that fact shall not affect the existence or status
    19970S1157B2174                 - 194 -

     1     of the restricted professional company as such, but the
     2     amount of the additional annual registration fee that should
     3     have been paid shall be a lien in the manner provided in this
     4     subsection from the time the incorrect payment is discovered
     5     by the department.
     6         (3)  The annual registration fee shall bear simple
     7     interest from the date that it becomes due and payable until
     8     paid. The interest rate shall be that provided for in section
     9     806 of the act of April 9, 1929 (P.L.343, No.176), known as
    10     The Fiscal Code, with respect to unpaid taxes. The penalty
    11     provided for in paragraph (1) shall not bear interest. The
    12     payment of interest shall not relieve the restricted
    13     professional company from liability for any other penalty or
    14     interest provided for under other applicable law.
    15         (4)  The lien created by this subsection shall attach to
    16     all of the property and proceeds thereof of the restricted
    17     professional company in which a security interest can be
    18     perfected, in whole or in part, by filing in the department
    19     under 13 Pa.C.S. Div. 9 (relating to secured transactions;
    20     sales of accounts, contract rights and chattel paper),
    21     whether the property and proceeds are owned by the company at
    22     the time the annual registration fee or any penalty or
    23     interest becomes due and payable or whether the property and
    24     proceeds are acquired thereafter. Except as otherwise
    25     provided by statute, the lien created by this subsection
    26     shall have priority over all other liens, security interests
    27     or other charges, except liens for taxes or other charges due
    28     the Commonwealth. The lien created by this subsection shall
    29     be entered on the records of the department and indexed in
    30     the same manner as a financing statement filed under 13
    19970S1157B2174                 - 195 -

     1     Pa.C.S. Div. 9. At the time an annual registration fee,
     2     penalty or interest that has resulted in the creation of
     3     [the] a lien under this subsection is paid, the department
     4     shall terminate the lien with respect to that annual
     5     registration fee, penalty or interest without requiring a
     6     separate filing by the company for that purpose.
     7         (5)  If the annual registration fee paid by a restricted
     8     professional company is subsequently determined to be more
     9     than should have been paid for any reason, no refund of the
    10     additional fee shall be made.
    11     * * *
    12  § 9502.  Creation, status and termination of business trusts.
    13     (a)  Creation.--A business trust may be created in real or
    14  personal property, or both, with power in the trustee [or a
    15  majority of the trustees]:
    16         (1)  To receive title to, hold, buy, sell, exchange,
    17     transfer and convey real and personal property for the use of
    18     the business trust.
    19         (2)  To take, receive, invest or disburse the receipts,
    20     earnings, rents, profits or returns from the trust estate.
    21         (3)  To carry on and conduct any lawful business
    22     designated in the deed or other instrument of trust, and
    23     generally to do any lawful act in relation to such trust
    24     property that any individual owning the same absolutely might
    25     do.
    26         (4)  To merge with another business trust or other
    27     association, to divide or to engage in any other fundamental
    28     or other transaction contemplated by the deed or other
    29     instrument of trust.
    30     (b)  Term.--Except as otherwise provided in the instrument, a
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     1  business trust shall have perpetual existence.
     2     (c)  Separate entity.--A business trust is a separate legal
     3  entity. Except as otherwise provided in the instrument, title to
     4  real and personal property may be held in the name of the trust,
     5  without in any manner diminishing the rights, powers and duties
     6  of the trustees as provided in subsection (a).
     7     (d)  Termination.--Except as otherwise provided in the
     8  instrument:
     9         (1)  The business trust may not be terminated, dissolved
    10     or revoked by a beneficial owner or other person.
    11         (2)  The death, incapacity, dissolution, termination or
    12     bankruptcy of a beneficial owner or a trustee shall not
    13     result in the termination, dissolution or revocation of the
    14     business trust.
    15     (e)  Contents of instrument.--The instrument may contain any
    16  provision for the regulation of the internal affairs of the
    17  business trust included in the instrument by the settlor, the
    18  trustee or the beneficiaries in accordance with the applicable
    19  procedures for the adoption or amendment of the instrument.
    20  § 9503.  Documentation of trust.
    21     (a)  General rule.--A business trust shall not be valid
    22  unless created by deed of trust or other written instrument
    23  subscribed by one or more individuals, associations or other
    24  entities. The trustees of a business trust shall promptly cause
    25  the instrument or any amendment thereof, except an amendment
    26  solely effecting or reflecting the substitution of or other
    27  change in the trustees, to be filed in the Department of State.
    28  [The failure to effect the filing shall not affect the validity
    29  of a business trust. A trustee who violates the requirements of
    30  this subsection shall be liable for a civil penalty in the
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     1  amount of $1,000 payable to the department.]
     2     * * *
     3  § 9505.  [Succession of trustees.] Trustees.
     4     (a)  Succession of trustees.--An instrument may provide for
     5  the succession of title to [the] any trust property not titled
     6  in the name of the trust to a successor trustee, in case of the
     7  death, resignation, removal or incapacity of any trustee. In the
     8  case of any such succession, the title to [the] such trust
     9  property shall at once vest in the succeeding trustee.
    10     (b)  Nature of service.--Service as the trustee of a business
    11  trust by an association that is not a banking institution shall
    12  not be deemed to constitute acting as a fiduciary for purposes
    13  of the act of November 30, 1965 (P.L.847, No.356), known as the
    14  Banking Code of 1965.
    15  § 9506.  Liability of trustees and beneficiaries.
    16     (a)  General rule.--[Liability to third parties for any act,
    17  omission or obligation of a trustee of a business trust when
    18  acting in such capacity shall extend to so much of the trust
    19  estate as may be necessary to discharge such liability, but
    20  personal liability shall not attach to the trustee or the
    21  beneficiaries of the trust for any such act, omission or
    22  liability.]
    23         (1)  Except as otherwise provided in the instrument, the
    24     beneficiaries of a business trust shall be entitled to the
    25     same limitation of personal liability as is extended to
    26     shareholders in a domestic business corporation.
    27         (2)  Except as otherwise provided in the instrument, the
    28     trustees of a trust, when acting in that capacity, shall not
    29     be personally liable to any person other than the trust or a
    30     beneficiary for any act or obligation of the trust or any
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     1     trustee.
     2         (3)  An obligation of a trust based upon a writing may be
     3     limited to a specific fund or other identified pool or group
     4     of assets of the trust.
     5     * * *
     6     (f)  Permissible beneficiaries.--Except as otherwise provided
     7  by a statute, rule or regulation applicable to a particular
     8  profession, all of the [beneficiaries of] ultimate beneficial
     9  owners of interests in a business trust that renders one or more
    10  restricted professional services shall be licensed persons. As
    11  used in this subsection, the term "restricted professional
    12  services" shall have the meaning specified in section 8903
    13  (relating to definitions and index of definitions).
    14     * * *
    15     (h)  Medical professional liability.--A business trust shall
    16  be deemed to be a professional corporation for purposes of
    17  section 811 of the act of October 15, 1975 (P.L.390, No.111),
    18  known as the Health Care Services Malpractice Act.
    19  Section 3.  Amendment of Title 54.
    20     As much of Title 54 as is hereinafter set forth is amended or
    21  added to read:
    22  § 302.  Definitions.
    23     The following words and phrases when used in this chapter
    24  shall have, unless the context clearly indicates otherwise, the
    25  meanings given to them in this section:
    26     "Business."  Any commercial or professional activity.
    27     "Entity."  Any individual[,] or any corporation, association,
    28  partnership, joint-stock company, business trust, syndicate,
    29  joint adventureship or other combination or group of persons,
    30  regardless of whether it is organized or formed under the laws
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     1  of this Commonwealth or any other jurisdiction.
     2     "Fictitious name."  Any assumed or fictitious name, style or
     3  designation other than the proper name of the entity using such
     4  name. The term includes [the], without limitation, any name [of
     5  any association,] assumed by any general partnership, [business
     6  trust,] syndicate, joint adventureship or similar combination or
     7  group of persons.
     8     "Proper name."  When used with respect to an entity of a type
     9  listed in the following paragraphs, the term means the name set
    10  forth in:
    11         (1)  the articles of incorporation, if it is a
    12     corporation;
    13         (2)  the statement of registration, if it is a limited
    14     liability partnership;
    15         (3)  the certificate of limited partnership, if it is a
    16     limited partnership;
    17         (4)  the statement of election, if it is an electing
    18     partnership;
    19         (5)  the certificate of organization, if it is a limited
    20     liability company;
    21         (6)  the articles of association, if it is a professional
    22     association;
    23         (7)  the deed of trust or other instrument, if it is a
    24     business trust; or
    25         (8)  a publicly filed document of a type listed in any of
    26     the foregoing paragraphs even though the document is referred
    27     to by a different title under the laws of any other
    28     jurisdiction.
    29  § 303.  Scope of chapter.
    30     * * *
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     1     (b)  Mandatory registration.--
     2         * * *
     3         (2)  Paragraph (1) shall not apply to any:
     4             (i)  Nonprofit or professional activities.
     5             (ii)  Activities [which] that are expressly or
     6         impliedly prohibited by law from being carried on under a
     7         fictitious name.
     8             (iii)  [Limited partnership which is registered in
     9         the department pursuant to 15 Pa.C.S. Ch. 85 (relating to
    10         limited partnerships) or under corresponding provisions
    11         of prior law. The preceding sentence shall not apply to
    12         any entity which includes the limited partnership as a
    13         participant unless the entity is itself such a limited
    14         partnership.] (Repealed).
    15             (iv)  Unincorporated nonprofit association.
    16             (v)  [Electing partnership existing under 15 Pa.C.S.
    17         Ch. 87 (relating to electing partnerships).] (Repealed).
    18             (vi)  [Limited liability company which is registered
    19         in the department pursuant to 15 Pa.C.S. Ch. 89 (relating
    20         to limited liability companies).] (Repealed).
    21             (vii)  [Registered limited liability partnership
    22         which is registered in the department pursuant to 15
    23         Pa.C.S. Ch. 82 (relating to registered limited liability
    24         partnerships).] (Repealed).
    25             (viii)  [Business trust which is registered in the
    26         department pursuant to 15 Pa.C.S. Ch. 95 (relating to
    27         business trusts).] (Repealed).
    28     * * *
    29  § 311.  Registration.
    30     * * *
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     1     (e)  Duplicate use of names.--The fictitious name shall not
     2  be the same as or confusingly similar to:
     3         (1)  The name of any domestic corporation, or any foreign
     4     corporation authorized to do business in this Commonwealth,
     5     or the name of any corporation or other association
     6     registered at any time under Chapter 5 (relating to corporate
     7     and other association names) unless such name is available or
     8     is made available for use under the provisions or procedures
     9     of 15 Pa.C.S. § [5303(b)(1)(i) or (ii)] 5303(b)(1) (relating
    10     to duplicate use of names) or the equivalent.
    11         (2)  [The name of any limited partnership organized under
    12     15 Pa.C.S. Ch. 85 (relating to limited partnerships).]
    13     (Repealed).
    14         (3)  The name of any administrative department, board or
    15     commission or other agency of this Commonwealth.
    16         (4)  A name the exclusive right to which is at the time
    17     reserved by any other person whatsoever in the manner
    18     provided by statute.
    19     * * *
    20  § 502.  Certain additions to register.
    21     * * *
    22     (c)  Limitation on names which may be registered.--
    23  Notwithstanding subsections (a) and (b), no new name shall be
    24  registered or deemed to be registered under this section [which
    25  is the same as or confusingly similar to] that is not
    26  distinguishable upon the records of the department from any
    27  other name then registered or deemed to be registered under this
    28  chapter, without the consent of the senior registrant.
    29     * * *
    30  Section 4.  Repeals.
    19970S1157B2174                 - 202 -

     1     The following acts and parts of acts are repealed:
     2     Section 32 of the act of June 1, 1889 (P.L.420, No.332),
     3  entitled "A further supplement to an act entitled 'An act to
     4  provide revenue by taxation,' approved the seventh day of June,
     5  Anno Domini one thousand eight hundred and seventy-nine," to the
     6  extent that it applies to the judicial dissolution of an
     7  association under 15 Pa.C.S.
     8     As much as reads ", and act as the attorney-in-fact and
     9  authorized agent of such corporations for the service of process
    10  thereon" in section 806 of the act of April 9, 1929 (P.L.177,
    11  No.175), known as The Administrative Code of 1929.
    12     Section 404(b) of the act of December 19, 1990 (P.L.834,
    13  No.198), known as the GAA Amendments Act of 1990, insofar as it
    14  applies to 15 Pa.C.S. §§ 1745 and 5745.
    15     15 Pa.C.S. §§ 5543.1, 5546.1, 5764.1, 8103 and 8206.
    16  Section 5.  Effective date.
    17     This act shall take effect in 60 days.                         <--
    18     THIS ACT SHALL TAKE EFFECT AS FOLLOWS:                         <--
    19         (1)  THE ADDITION OF 15 PA.C.S. § 524 SHALL TAKE EFFECT
    20     IMMEDIATELY.
    21         (2)  THIS SECTION SHALL TAKE EFFECT IMMEDIATELY.
    22         (3)  THE REMAINDER OF THIS ACT SHALL TAKE EFFECT IN 60
    23     DAYS.





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