To repeal sections 400.1-105, 400.1-206, 400.2-512, 400.4-104, 400.5-102, 400.5-103, 400.5-104, 400.5-105, 400.5-106, 400.5-107, 400.5-108, 400.5-109, 400.5-110, 400.5-111, 400.5-112, 400.5-113, 400.5-114, 400.5-115, 400.5-116, 400.5-117, 400.8-102, 400.8-103, 400.8-104, 400.8-105, 400.8-106, 400.8-107, 400.8-108, 400.8-109, 400.8-201, 400.8-202, 400.8-203, 400.8-204, 400.8-205, 400.8-206, 400.8-207, 400.8-208, 400.8-301, 400.8-302, 400.8-303, 400.8-304, 400.8-305, 400.8-306, 400.8-307, 400.8-308, 400.8-309, 400.8-310, 400.8-311, 400.8-312, 400.8-313, 400.8-314, 400.8-315, 400.8-316, 400.8-317, 400.8-318, 400.8-319, 400.8-320, 400.8-321, 400.8-401, 400.8-402, 400.8-403, 400.8-404, 400.8-405, 400.8-406, 400.8-407, 400.8-408, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-309 and 400.9-312, RSMo 1994, and section 400.9-306, RSMo Supp. 1996, relating to the uniform commercial code, and to enact in lieu thereof eighty-five new sections relating to the same subject.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

     Section A. Sections 400.1-105, 400.1-206, 400.2-512, 400.4-104, 400.5-102, 400.5-103, 400.5-104, 400.5-105, 400.5-106, 400.5-107, 400.5-108, 400.5-109, 400.5-110, 400.5-111, 400.5-112, 400.5-113, 400.5-114, 400.5-115, 400.5-116, 400.5-117, 400.8-102, 400.8-103, 400.8-104, 400.8-105, 400.8-106, 400.8-107, 400.8-108, 400.8-109, 400.8-201, 400.8-202, 400.8-203, 400.8-204, 400.8-205, 400.8-206, 400.8-207, 400.8-208, 400.8-301, 400.8-302, 400.8-303, 400.8-304, 400.8-305, 400.8-306, 400.8-307, 400.8-308, 400.8-309, 400.8-310, 400.8-311, 400.8-312, 400.8-313, 400.8-314, 400.8-315, 400.8-316, 400.8-317, 400.8-318, 400.8-319, 400.8-320, 400.8-321, 400.8-401, 400.8-402, 400.8-403, 400.8-404, 400.8-405, 400.8-406, 400.8-407, 400.8-408, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-309 and 400.9-312, RSMo 1994, and section 400.9-306, RSMo Supp. 1996, are repealed and eighty-five new sections enacted in lieu thereof, to be known as sections 400.1-105, 400.1-206, 400.2-512, 400.4-104, 400.5-102, 400.5-103, 400.5-104, 400.5-105, 400.5-106, 400.5-107, 400.5-108, 400.5-109, 400.5-110, 400.5-111, 400.5-112, 400.5-113, 400.5-114, 400.5-115, 400.5-116, 400.5-117, 400.8-102, 400.8-103, 400.8-104, 400.8-105, 400.8-106, 400.8-107, 400.8-108, 400.8-109, 400.8-110, 400.8-111, 400.8-112, 400.8-113, 400.8-114, 400.8-115, 400.8-116, 400.8-201, 400.8-202, 400.8-203, 400.8-204, 400.8-205, 400.8-206, 400.8-207, 400.8-208, 400.8-209, 400.8-210, 400.8-301, 400.8-302, 400.8-303, 400.8-304, 400.8-305, 400.8-306, 400.8-307, 400.8-401, 400.8-402, 400.8-403, 400.8-404, 400.8-405, 400.8-406, 400.8-407, 400.8-501, 400.8-502, 400.8-503, 400.8-504, 400.8-505, 400.8-506, 400.8-507, 400.8-508, 400.8-509, 400.8-510, 400.8-511, 400.9-103, 400.9-104, 400.9-105, 400.9-106, 400.9-115, 400.9-116, 400.9-203, 400.9-301, 400.9-302, 400.9-303, 400.9-304, 400.9-305, 400.9-306, 400.9-309 and 400.9-312, to read as follows:

     400.1-105. (1) Except as provided hereafter in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties. Failing such agreement this chapter applies to transactions bearing an appropriate relation to this state.

     (2) Where one of the following provisions of this chapter specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law (including the conflict of laws rules) so specified:

     Rights of creditors against sold goods. Section 400.2-402.

     Applicability of the Article on Leases. Sections 400.2A-105 and 400.2A-106.

     Applicability of the Article on Bank Deposits and Collections. Section 400.4-102.

     Letter of credit. Section 400.5-116.

     Bulk transfers subject to the Article on Bulk Transfers. Section 400.6-102.

     Applicability of the Article on Investment Securities. Section [400.8-106] 400.8-110.

     Perfection provisions of the Article on Secured Transactions. Section 400.9-103.

     400.1-206. (1) Except in the cases described in subsection (2) of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond five thousand dollars in amount or value of remedy unless there is some writing which indicates that a contract for sale has been made between the parties at a defined or stated price, reasonably identifies the subject matter, and is signed by the party against whom enforcement is sought or by his authorized agent.

     (2) Subsection (1) of this section does not apply to contracts for the sale of goods (section 400.2-201) nor of securities (section [400.8-319] 400.8-113) nor to security agreements (section 400.9-203).

     400.2-512. (1) Where the contract requires payment before inspection nonconformity of the goods does not excuse the buyer from so making payment unless

     (a) the nonconformity appears without inspection; or

     (b) despite tender of the required documents the circumstances would justify injunction against honor under the provisions of this chapter (section [400.5-114] 400.5-109(b)).

     (2) Payment pursuant to subsection (1) does not constitute an acceptance of goods or impair the buyer's right to inspect or any of his remedies.

     400.4-104. (a) In this article unless the context otherwise requires:

     (1) "Account" means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;

     (2) "Afternoon" means the period of a day between noon and midnight;

     (3) "Banking day" means the part of a day on which a bank is open to the public for carrying on substantially all of its banking functions, but shall not include Saturday, Sunday or a legal holiday;

     (4) "Clearing house" means an association of banks or other payors regularly clearing items;

     (5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;

     (6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities (Section 400.8-102) or instructions for uncertificated securities (Section [400.8-308] 400.8-102), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;

     (7) "Draft" means a draft as defined in Section 400.3-104 or an item, other than an instrument, that is an order;

     (8) "Drawee" means a person ordered in a draft to make payment;

     (9) "Item" means an instrument or a promise or order to pay money handled by a bank for collection or payment. The term does not include a payment order governed by Article 4A or a credit or debit card slip;

     (10) "Midnight deadline" with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later;

     (11) "Settle" means to pay in cash, by clearing-house settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final;

     (12) "Suspends payments" with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business.

     (b) Other definitions applying to this article and the sections in which they appear are:

     "Agreement for electronic presentment". Section 400.4-110.

     "Bank". Section 400.4-105.

     "Collecting bank". Section 400.4-105.

     "Depositary bank". Section 400.4-105.

     "Intermediary bank". Section 400.4-105.

     "Payor bank". Section 400.4-105.

     "Presenting bank". Section 400.4-105.

     "Presentment notice". Section 400.4-110.

     (c) The following definitions in other articles apply to this article:

     "Acceptance". Section 400.3-409.

     "Alteration". Section 400.3-407.

     "Cashier's check". Section 400.3-104.

     "Certificate of deposit". Section 400.3-104.

     "Certified check". Section 400.3-409.

     "Check". Section 400.3-104.

     "Draft". Section 400.3-104.

     "Good faith". Section 400.3-103.

     "Holder in due course". Section 400.3-302.

     "Instrument". Section 400.3-104.

     "Notice of dishonor". Section 400.3-503.

     "Order". Section 400.3-103.

     "Ordinary care". Section 400.3-103.

     "Person entitled to enforce". Section 400.3-301.

     "Presentment". Section 400.3-501.

     "Promise". Section 400.3-103.

     "Prove". Section 400.3-103.

     "Teller's check". Section 400.3-104.

     "Unauthorized signature". Section 400.3-403.

     (d) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

     400.5-102. (a) In this article:

     (1) "Adviser" means a person who, at the request of the issuer, a confirmer or another adviser, notifies or requests another adviser to notify the beneficiary that a letter of credit has been issued, confirmed or amended;

     (2) "Applicant" means a person at whose request or for whose account a letter of credit is issued. The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer;

     (3) "Beneficiary" means a person who under the terms of a letter of credit is entitled to have the person's complying presentation honored. The term includes a person to whom drawing rights have been transferred under a transferable letter of credit;

     (4) "Confirmer" means a nominated person who undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another;

     (5) "Dishonor" of a letter of credit means failure to timely honor or to take an interim action, such as acceptance of a draft, that may be required by the letter of credit;

     (6) "Document" means a draft or other demand, document of title, investment security, certificate, invoice or other record, statement, or representation of fact, law, right or opinion:

     (i) Which is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in section 400.5-108(e); and

     (ii) Which is capable of being examined for compliance with the terms and conditions of the letter of credit. A document may not be oral;

     (7) "Good faith" means honesty in fact in the conduct or transaction concerned;

     (8) "Honor" of a letter of credit means performance of the issuer's undertaking in the letter of credit to pay or deliver an item of value. Unless the letter of credit otherwise provides, "honor" occurs:

     (i) Upon payment;

     (ii) If the letter of credit provides for acceptance, upon acceptance of a draft and, at maturity, its payment; or

     (iii) If the letter of credit provides for incurring a deferred obligation, upon incurring the obligation and, at maturity, its performance;

     (9) "Issuer" means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family or household purposes;

     (10) "Letter of credit" means a definite undertaking that satisfies the requirements of section 400.5-104 by an issuer to a beneficiary at the request or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value;

     (11) "Nominated person" means a person whom the issuer:

     (i) Designates or authorizes to pay, accept, negotiate or otherwise give value under a letter of credit; and

     (ii) Undertakes by agreement or custom and practice to reimburse;

     (12) "Presentation" means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit;

     (13) "Presenter" means a person making a presentation as or on behalf of a beneficiary or nominated person;

     (14) "Record" means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium and is retrievable in perceivable form;

     (15) "Successor of a beneficiary" means a person who succeeds to substantially all of the rights of a beneficiary by operation of law, including a corporation with or into which the beneficiary has been merged or consolidated, an administrator, executor, personal representative, trustee in bankruptcy, debtor in possession, liquidator and receiver.

     (b) Definitions in other articles of this chapter apply to this article and the section in which they appear are:

     "Accept" or "Acceptance". Section 400.3-409.

     "Value". Sections 400.3-303, 400.4-211.

     (c) Article 1 of this chapter contains certain additional general definitions and principles of construction and interpretation applicable throughout this article.

     400.5-103. (a) This article applies to letters of credit and to certain rights and obligations arising out of transactions involving letters of credit.

     (b) The statement of a rule in this article does not by itself require, imply or negate application of the same or a different rule to a situation not provided for, or to a person not specified, in this article.

     (c) With the exception of this subsection, subsections (a) and (d), sections 400.5-102(a)(9) and (10), 400.5-106(d) and 400.5-114(d), and except to the extent prohibited in sections 400.1-102(3) and 400.5-117(d), the effect of this article may be varied by agreement or by a provision stated or incorporated by reference in an undertaking. A term in an agreement or undertaking generally excusing liability or generally limiting remedies for failure to perform obligations is not sufficient to vary obligations prescribed by this article.

     (d) Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary.

     400.5-104. A letter of credit, confirmation, advice, transfer, amendment or cancellation may be issued in any form that is a record and is authenticated:

     (i) By a signature; or

     (ii) In accordance with the agreement of the parties or the standard practice referred to in section 400.5-108(e).

     400.5-105. Consideration is not required to issue, amend, transfer or cancel a letter of credit, advice or confirmation.

     400.5-106. (a) A letter of credit is issued and becomes enforceable according to its terms against the issuer when the issuer sends or otherwise transmits it to the person requested to advise or to the beneficiary. A letter of credit is revocable only if it so provides.

     (b) After a letter of credit is issued, rights and obligations of a beneficiary, applicant, confirmer and issuer are not affected by an amendment or cancellation to which that person has not consented except to the extent the letter of credit provides that it is revocable or that the issuer may amend or cancel the letter of credit without that consent.

     (c) If there is no stated expiration date or other provision that determines its duration, a letter of credit expires one year after its stated date of issuance or, if none is stated, after the date on which it is issued.

     (d) A letter of credit that states that it is perpetual expires five years after its stated date of issuance, or if none is stated, after the date on which it is issued.

     400.5-107. (a) A confirmer is directly obligated on a letter of credit and has the rights and obligations of an issuer to the extent of its confirmation. The confirmer also has rights against and obligations to the issuer as if the issuer were an applicant and the confirmer had issued the letter of credit at the request and for the account of the issuer.

     (b) A nominated person who is not a confirmer is not obligated to honor or otherwise give value for a presentation.

     (c) A person requested to advise may decline to act as an adviser. An adviser that is not a confirmer is not obligated to honor or give value for a presentation. An adviser undertakes to the issuer and to the beneficiary accurately to advise the terms of the letter of credit, confirmation, amendment or advice received by that person and undertakes to the beneficiary to check the apparent authenticity of the request to advise. Even if the advice is inaccurate, the letter of credit, confirmation, or amendment is enforceable as issued.

     (d) A person who notifies a transferee beneficiary of the terms of a letter of credit, confirmation, amendment or advice has the rights and obligations of an adviser under subsection (c). The terms in the notice to the transferee beneficiary may differ from the terms in any notice to the transferor beneficiary to the extent permitted by the letter of credit, confirmation, amendment or advice received by the person who so notifies.

     400.5-108. (a) Except as otherwise provided in section 400.5-109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in section 400.5-113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply.

     (b) An issuer has a reasonable time after presentation, but not beyond the end of the seventh business day of the issuer after the day of its receipt of documents:

     (1) To honor;

     (2) If the letter of credit provides for honor to be completed more than seven business days after presentation, to accept a draft or incur a deferred obligation; or

     (3) To give notice to the presenter of discrepancies in the presentation.

     (c) Except as otherwise provided in subsection (d), an issuer is precluded from asserting as a basis for dishonor any discrepancy if timely notice is not given, or any discrepancy not stated in the notice if timely notice is given.

     (d) Failure to give the notice specified in subsection (b) or to mention fraud, forgery or expiration in the notice does not preclude the issuer from asserting as a basis for dishonor, fraud or forgery as described in section 400.5-109(a) or expiration of the letter of credit before presentation.

     (e) An issuer shall observe standard practice of financial institutions that regularly issue letters of credit. Determination of the issuer's observance of the standard practice is a matter of interpretation for the court. The court shall offer the parties a reasonable opportunity to present evidence of the standard practice.

     (f) An issuer is not responsible for:

     (1) The performance or nonperformance of the underlying contract, arrangement or transaction;

     (2) An act or omission of others; or

     (3) Observance or knowledge of the usage of a particular trade other than the standard practice referred to in subsection (e).

     (g) If an undertaking constituting a letter of credit under section 400.5-102(a)(10) contains nondocumentary conditions, an issuer shall disregard the nondocumentary conditions and treat them as if they were not stated.

     (h) An issuer that has dishonored a presentation shall return the documents or hold them at the disposal of, and send advice to that effect to, the presenter.

     (i) An issuer that has honored a presentation as permitted or required by this article:

     (1) Is entitled to be reimbursed by the applicant in immediately available funds not later than the date of its payment of funds;

     (2) Takes the documents free of claims of the beneficiary or presenter;

     (3) Is precluded from asserting a right of recourse on a draft under sections 400.3-414 and 400.3-415;

     (4) Except as otherwise provided in sections 400.5-110 and 400.5-117, is precluded from restitution of money paid or other value given by mistake to the extent the mistake concerns discrepancies in the documents or tender which are apparent on the face of the presentation; and

     (5) Is discharged to the extent of its performance under the letter of credit unless the issuer honored a presentation in which a required signature of a beneficiary was forged.

     400.5-109. (a) If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant:

     (1) The issuer shall honor the presentation, if honor is demanded by:

     (i) A nominated person who has given value in good faith and without notice of forgery or material fraud;

     (ii) A confirmer who has honored its confirmation in good faith;

     (iii) A holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person; or

     (iv) An assignee of the issuer's or nominated person's deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and

     (2) The issuer, acting in good faith, may honor or dishonor the presentation in any other case.

     (b) If an applicant claims that a required document is forged or materially fraudulent or that honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the issuer from honoring a presentation or grant similar relief against the issuer or other persons only if the court finds that:

     (1) The relief is not prohibited under the law applicable to an accepted draft or deferred obligation incurred by the issuer;

     (2) A beneficiary, issuer or nominated person who may be adversely affected is adequately protected against loss that it may suffer because the relief is granted;

     (3) All of the conditions to entitle a person to the relief under the law of this state have been met; and

     (4) On the basis of the information submitted to the court, the applicant is more likely than not to succeed under its claim of forgery or material fraud and the person demanding honor does not qualify for protection under subsection (a)(1).

     400.5-110. (a) If its presentation is honored, the beneficiary warrants:

     (1) To the issuer, any other person to whom presentation is made, and the applicant that there is no fraud or forgery of the kind described in section 400.5-109(a); and

     (2) To the applicant that the drawing does not violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.

     (b) The warranties in subsection (a) are in addition to warranties arising under articles 3, 4, 7 and 8 of this chapter because of the presentation or transfer of documents covered by any of those articles.

     400.5-111. (a) If an issuer wrongfully dishonors or repudiates its obligation to pay money under a letter of credit before presentation, the beneficiary, successor or nominated person presenting on its own behalf may recover from the issuer the amount that is the subject of the dishonor or repudiation. If the issuer's obligation under the letter of credit is not for the payment of money, the claimant may obtain specific performance or, at the claimant's election, recover an amount equal to the value of performance from the issuer. In either case, the claimant may also recover incidental but not consequential damages. The claimant is not obligated to take action to avoid damages that might be due from the issuer under this subsection. If, although not obligated to do so, the claimant avoids damages, the claimant's recovery from the issuer must be reduced by the amount of damages avoided. The issuer has the burden of proving the amount of damages avoided. In the case of repudiation the claimant need not present any document.

     (b) If an issuer wrongfully dishonors a draft or demand presented under a letter of credit or honors a draft or demand in breach of its obligation to the applicant, the applicant may recover damages resulting from the breach, including incidental but no consequential damages, less any amount saved as a result of the breach.

     (c) If an adviser or nominated person other than a confirmer breaches an obligation under this article or an issuer breaches an obligation not covered in subsection (a) or (b), a person to whom the obligation is owed may recover damages resulting from the breach, including incidental but not consequential damages, less any amount saved as a result of the breach. To the extent of the confirmation, a confirmer has the liability of an issuer specified in this subsection and subsections (a) and (b).

     (d) An issuer, nominated person or adviser who is found liable under subsection (a), (b) or (c) shall pay interest on the amount owed thereunder from the date of wrongful dishonor or other appropriate date.

     (e) Reasonable attorney's fees and other expenses of litigation must be awarded to the prevailing party in an action in which a remedy is sought under this article.

     (f) Damages that would otherwise be payable by a party for breach of an obligation under this article may be liquidated by agreement or undertaking, but only in an amount or by a formula that is reasonable in light of the harm anticipated.

     400.5-112. (a) Except as otherwise provided in section 400.5-113, unless a letter of credit provides that it is transferable, the right of a beneficiary to draw or otherwise demand performance under a letter of credit may not be transferred.

     (b) Even if a letter of credit provides that it is transferable, the issuer may refuse to recognize or carry out a transfer if:

     (1) The transfer would violate applicable law; or

     (2) The transferor or transferee has failed to comply with any requirement stated in the letter of credit or any other requirement relating to transfer imposed by the issuer which is within the standard practice referred to in section 400.5-108(e) or is otherwise reasonable under the circumstances.

     400.5-113. (a) A successor of a beneficiary may consent to amendments, sign and present documents and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor.

     (b) A successor of a beneficiary may consent to amendments, sign and present documents and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in subsection (e), an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for its predecessor upon compliance with the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice referred to in section 400.5-108(e) or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer.

     (c) An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized.

     (d) Honor of a purported successor's apparently complying presentation under subsection (a) or (b) has the consequences specified in section 400.5-108(i) even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is neither the beneficiary nor the successor of the beneficiary are forged documents for the purposes of section 400.5-109.

     (e) An issuer whose rights of reimbursement are not covered by subsection (d) or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under subsection (b).

     (f) A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this section.

     400.5-114. (a) In this section, "proceeds of a letter of credit" means the cash, check, accepted draft or other item of value paid or delivered upon honor or giving of value by the issuer or any nominated person under the letter of credit. The term does not include a beneficiary's drawing rights or documents presented by the beneficiary.

     (b) A beneficiary may assign its right to part or all of the proceeds of a letter of credit. The beneficiary may do so before presentation as a present assignment of its right to receive proceeds contingent upon its compliance with the terms and conditions of the letter of credit.

     (c) An issuer or nominated person need not recognize an assignment of proceeds of a letter of credit until it consents to the assignment.

     (d) An issuer or nominated person has no obligation to give or withhold its consent to an assignment of proceeds, but consent may not be unreasonably withheld if the assignee possesses and exhibits the letter of credit and presentation of the letter of credit is a condition to honor.

     (e) Rights of a transferee beneficiary or nominated person are independent of the beneficiary's assignment of the proceeds of a letter of credit and are superior to the assignee's right to the proceeds.

     (f) Neither the rights recognized by this section between an assignee and an issuer, transferee beneficiary or nominated person nor the issuer's or nominated person's payment of proceeds to an assignee or a third person do not affect the rights between the assignee and any person other than the issuer, transferee beneficiary or nominated person. The mode of creating and perfecting a security interest in or granting an assignment of a beneficiary's rights to proceeds is governed by article 9 of this chapter or other law. Against persons other than the issuer, transferee beneficiary, or nominated person, the rights and obligations arising upon the creation of a security interest or other assignment of a beneficiary's right to proceeds and its perfection are governed by article 9 of this chapter or other law.

     400.5-115. An action to enforce a right or obligation arising under this article must be commenced within one year after the expiration date of the relevant letter of credit or one year after the cause of action accrues, whichever occurs later. A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach.

     400.5-116. (a) The liability of an issuer, nominated person or adviser for action or omission is governed by the law of the jurisdiction chosen by an agreement in the form of a record signed or otherwise authenticated by the affected parties in the manner provided in section 400.5-104 or by a provision in the person's letter of credit, confirmation or other undertaking. The jurisdiction whose law is chosen need not bear any relation to the transaction.

     (b) Unless subsection (a) applies, the liability of an issuer, nominated person or adviser for action or omission is governed by the law of the jurisdiction in which the person is located. The person is considered to be located at the address indicated in the person's undertaking. If more than one address is indicated, the person is considered to be located at the address from which the person's undertaking was issued. For the purpose of jurisdiction, choice of law and recognition of interbranch letters of credit, but not enforcement of a judgment, all branches of a bank are considered separate juridical entities and a bank is considered to be located at the place where its relevant branch is considered to be located under this subsection.

     (c) Except as otherwise provided in this subsection, the liability of an issuer, nominated person or adviser is governed by any rules of custom or practice, such as the Uniform Customs and Practice for Documentary Credits, to which the letter of credit, confirmation or other undertaking is expressly made subject. If:

     (i) This article would govern the liability of an issuer, nominated person or adviser under subsection (a) or (b);

     (ii) The relevant undertaking incorporates rules of custom or practice; and

     (iii) There is a conflict between this article and those rules as applied to that undertaking, those rules govern except to the extent of any conflict with the nonvariable provisions specified in section 400.5-103(c).

     (d) If there is conflict between this article and article 3, 4, 4A or 9 of this chapter, this article governs.

     (e) The forum for settling disputes arising out of an undertaking within this article may be chosen in the manner and with the binding effect that governing law may be chosen in accordance with subsection (a).

     400.5-117. (a) An issuer that honors a beneficiary's presentation is subrogated to the rights of the beneficiary to the same extent as if the issuer were a secondary obligor of the underlying obligation owed to the beneficiary and of the applicant to the same extent as if the issuer were the secondary obligor of the underlying obligation owed to the applicant.

     (b) An applicant that reimburses an issuer is subrogated to the rights of the issuer against any beneficiary, presenter or nominated person to the same extent as if the applicant were the secondary obligor of the obligations owed to the issuer and has the rights of subrogation of the issuer to the rights of the beneficiary stated in subsection (a).

     (c) A nominated person who pays or gives value against a draft or demand presented under a letter of credit is subrogated to the rights of:

     (1) The issuer against the applicant to the same extent as if the nominated person were a secondary obligor of the obligation owed to the issuer by the applicant;

     (2) The beneficiary to the same extent as if the nominated person were a secondary obligor of the underlying obligation owed to the beneficiary; and

     (3) The applicant to the same extent as if the nominated person were the secondary obligor of the underlying obligation owed to the applicant.

     (d) Notwithstanding any agreement or term to the contrary, the rights of subrogation stated in subsections (a) and (b) do not arise until the issuer honors the letter of credit or otherwise pays and the rights in subsection (c) do not arise until the nominated person pays or otherwise gives value. Until then, the issuer, nominated person, and the applicant do not derive under this section present or prospective rights forming the basis of a claim, defense or excuse.

     400.8-102. (a) In this article:

     (1) "Adverse claim" means a claim that a claimant has a property interest in a financial asset and that it is a violation of the rights of the claimant for another person to hold, transfer or deal with the financial asset;

     (2) "Bearer form", as applied to a certificated security, means a form in which the security is payable to the bearer of the security certificate according to its terms but not by reason of an indorsement;

     (3) "Broker" means a person defined as a broker or dealer under the federal securities laws, but without excluding a bank acting in that capacity;

     (4) "Certificated security" means a security that is represented by a certificate;

     (5) "Clearing corporation" means:

     (i) A person that is registered as a "clearing agency" under the federal securities laws;

     (ii) A federal reserve bank; or

     (iii) Any other person that provides clearance or settlement services with respect to financial assets that would require it to register as a clearing agency under the federal securities laws but for an exclusion or exemption from the registration requirement, if its activities as a clearing corporation, including promulgation of rules, are subject to regulation by a federal or state governmental authority;

     (6) "Communicate" means to:

     (i) Send a signed writing; or

     (ii) Transmit information by any mechanism agreed upon by the persons transmitting and receiving the information;

     (7) "Entitlement holder" means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. If a person acquires a security entitlement by virtue of section 400.8-501(b)(2) or (3), that person is the entitlement holder;

     (8) "Entitlement order" means a notification communicated to a securities intermediary directing transfer or redemption of a financial asset to which the entitlement holder has a security entitlement;

     (9) "Financial asset", except as otherwise provided in section 400.8-103, means:

     (i) A security;

     (ii) An obligation of a person or a share, participation or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or

     (iii) Any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this article.

As context requires, the term means either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated security, a security certificate or a security entitlement;

     (10) "Good faith", for purposes of the obligation of good faith in the performance or enforcement of contracts or duties within this article, means honesty in fact and the observance of reasonable commercial standards of fair dealing;

     (11) "Indorsement" means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring or redeeming the security or granting a power to assign, transfer or redeem it;

     (12) "Instruction" means a notification communicated to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed;

     (13) "Registered form", as applied to a certificated security, means a form in which:

     (i) The security certificate specifies a person entitled to the security; and

     (ii) A transfer of the security may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security certificate so states;

     (14) "Securities intermediary" means:

     (i) A clearing corporation; or

     (ii) A person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity;

     (15) "Security", except as otherwise provided in section 400.8-103, means an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer:

     (i) Which is represented by a security certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;

     (ii) Which is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests or obligations; and

     (iii) Which:

     (A) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or

     (B) Is a medium for investment and by its terms expressly provides that it is a security governed by this article;

     (16) "Security certificate" means a certificate representing a security;

     (17) "Security entitlement" means the rights and property interest of an entitlement holder with respect to a financial asset specified in sections 400.8-501 to 400.8-510;

     (18) "Uncertificated security" means a security that is not represented by a certificate.

     (b) Other definitions applying to this article and the sections in which they appear are:

     "Appropriate person". Section 400.8-107.

     "Control". Section 400.8-106.

     "Delivery". Section 400.8-301.

     "Investment company security". Section 400.8-103.

     "Issuer". Section 400.8-201.

     "Overissue". Section 400.8-210.

     "Protected purchaser". Section 400.8-303.

     "Securities account". Section 400.8-501.

     (c) In addition, article 1 of this chapter contains general definitions and principles of construction and interpretation applicable throughout this article.

     (d) The characterization of a person, business, or transaction for purposes of this article does not determine the characterization of the person, business or transaction for purposes of any other law, regulation or rule.

     400.8-103. (a) A share or similar equity interest issued by a corporation, business trust, joint stock company or similar entity is a security.

     (b) An "investment company security" is a security. "Investment company security" means a share or similar equity interest issued by an entity that is registered as an investment company under the federal investment company laws, an interest in a unit investment trust that is so registered, or a face-amount certificate issued by a face-amount certificate company that is so registered. Investment company security does not include an insurance policy or endowment policy or annuity contract issued by an insurance company.

     (c) An interest in a partnership or limited liability company is not a security unless it is dealt in or traded on securities exchanges or in securities markets, its terms expressly provide that it is a security governed by this article, or it is an investment company security. However, an interest in a partnership or limited liability company is a financial asset if it is held in a securities account.

     (d) A writing that is a security certificate is governed by this article and not by article 3 of this chapter, even though it also meets the requirements of that article. However, a negotiable instrument governed by article 3 of this chapter is a financial asset if it is held in a securities account.

     (e) An option or similar obligation issued by a clearing corporation to its participants is not a security, but is a financial asset.

     (f) A commodity contract, as defined in section 400.9-115, is not a security or a financial asset.

     400.8-104. (a) A person acquires a security or an interest therein, under this article, if:

     (1) The person is a purchaser to whom a security is delivered pursuant to section 400.8-301; or

     (2) The person acquires a security entitlement to the security pursuant to section 400.8-501.

     (b) A person acquires a financial asset, other than a security, or an interest therein, under this article, if the person acquires a security entitlement to the financial asset.

     (c) A person who acquires a security entitlement to a security or other financial asset has the rights specified in sections 400.8-501 to 400.8-510, but is a purchaser of any security, security entitlement or other financial asset held by the securities intermediary only to the extent provided in section 400.8-503.

     (d) Unless the context shows that a different meaning is intended, a person who is required by other law, regulation, rule or agreement to transfer, deliver, present, surrender, exchange or otherwise put in the possession of another person a security or financial asset satisfies that requirement by causing the other person to acquire an interest in the security or financial asset pursuant to subsection (a) or (b).

     400.8-105. (a) A person has notice of an adverse claim if:

     (1) The person knows of the adverse claim;

     (2) The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or

     (3) The person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim;

     (b) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim;

     (c) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than:

     (1) One year after a date set for presentment or surrender for redemption or exchange; or

     (2) Six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date;

     (d) A purchaser of a certificated security has notice of an adverse claim if the security certificate:

     (1) Whether in bearer or registered form, has been indorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or

     (2) Is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement;

     (e) Filing of a financing statement under article 9 of this chapter is not notice of an adverse claim to a financial asset.

     400.8-106. (a) A purchaser has "control" of a certificated security in bearer form if the certificated security is delivered to the purchaser.

     (b) A purchaser has "control" of a certificated security in registered form if the certificated security is delivered to the purchaser, and:

     (1) The certificate is indorsed to the purchaser or in blank by an effective indorsement; or

     (2) The certificate is registered in the name of the purchaser, upon original issue or registration of transfer by the issuer.

     (c) A purchaser has "control" of an uncertificated security if:

     (1) The uncertificated security is delivered to the purchaser; or

     (2) The issuer has agreed that it will comply with instructions originated by the purchaser without further consent by the registered owner.

     (d) A purchaser has "control" of a security entitlement if:

     (1) The purchaser becomes the entitlement holder; or

     (2) The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder.

     (e) If an interest in a security entitlement is granted by the entitlement holder to the entitlement holder's own securities intermediary, the securities intermediary has control.

     (f) A purchaser who has satisfied the requirements of subsection (c)(2) or (d)(2) has control even if the registered owner in the case of subsection (c)(2) or the entitlement holder in the case of subsection (d)(2) retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary, or otherwise to deal with the uncertificated security or security entitlement.

     (g) An issuer or a securities intermediary may not enter into an agreement of the kind described in subsection (c)(2) or (d)(2) without the consent of the registered owner or entitlement holder, but an issuer or a securities intermediary is not required to enter into such an agreement even though the registered owner or entitlement holder so directs. An issuer or securities intermediary that has entered into such an agreement is not required to confirm the existence of the agreement to another party unless requested to do so by the registered owner or entitlement holder.

     400.8-107. (a) "Appropriate person" means:

     (1) With respect to an indorsement, the person specified by a security certificate or by an effective special indorsement to be entitled to the security;

     (2) With respect to an instruction, the registered owner of an uncertificated security;

     (3) With respect to an entitlement order, the entitlement holder;

     (4) If the person designated in paragraph (1), (2) or (3) is deceased, the designated person's successor taking under other law or the designated person's personal representative acting for the estate of the decedent; or

     (5) If the person designated in paragraph (1), (2) or (3) lacks capacity, the designated person's guardian, conservator or other similar representative who has power under other law to transfer the security or financial asset.

     (b) An indorsement, instruction or entitlement order is effective if:

     (1) It is made by the appropriate person;

     (2) It is made by a person who has power under the law of agency to transfer the security or financial asset on behalf of the appropriate person, including, in the case of an instruction or entitlement order, a person who has control under section 400.8-106(c)(2) or (d)(2); or

     (3) The appropriate person has ratified it or is otherwise precluded from asserting its ineffectiveness.

     (c) An indorsement, instruction or entitlement order made by a representative is effective even if:

     (1) The representative has failed to comply with a controlling instrument or with the law of the state having jurisdiction of the representative relationship, including any law requiring the representative to obtain court approval of the transaction; or

     (2) The representative's action in making the indorsement, instruction or entitlement order or using the proceeds of the transaction is otherwise a breach of duty.

     (d) If a security is registered in the name of or specially indorsed to a person described as a representative, or if a securities account is maintained in the name of a person described as a representative, an indorsement, instruction or entitlement order made by the person is effective even though the person is no longer serving in the described capacity.

     (e) Effectiveness of an indorsement, instruction or entitlement order is determined as of the date the indorsement, instruction or entitlement order is made, and an indorsement, instruction or entitlement order does not become ineffective by reason of any later change of circumstances.

     400.8-108. (a) A person who transfers a certificated security to a purchaser for value warrants to the purchaser, and an indorser, if the transfer is by indorsement, warrants to any subsequent purchaser, that:

     (1) The certificate is genuine and has not been materially altered;

     (2) The transferor or indorser does not know of any fact that might impair the validity of the security;

     (3) There is no adverse claim to the security;

     (4) The transfer does not violate any restriction on transfer;

     (5) If the transfer is by indorsement, the indorsement is made by an appropriate person, or if the indorsement is by an agent, the agent has actual authority to act on behalf of the appropriate person; and

     (6) The transfer is otherwise effective and rightful.

     (b) A person who originates an instruction for registration of transfer of an uncertificated security to a purchaser for value warrants to the purchaser that:

     (1) The instruction is made by an appropriate person, or if the instruction is by an agent, the agent has actual authority to act on behalf of the appropriate person;

     (2) The security is valid;

     (3) There is no adverse claim to the security; and

     (4) At the time the instruction is presented to the issuer:

     (i) The purchaser will be entitled to the registration of transfer;

     (ii) The transfer will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction;

     (iii) The transfer will not violate any restriction on transfer; and

     (iv) The requested transfer will otherwise be effective and rightful.

     (c) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants that:

     (1) The uncertificated security is valid;

     (2) There is no adverse claim to the security;

     (3) The transfer does not violate any restriction on transfer; and

     (4) The transfer is otherwise effective and rightful.

     (d) A person who indorses a security certificate warrants to the issuer that:

     (1) There is no adverse claim to the security; and

     (2) The indorsement is effective.

     (e) A person who originates an instruction for registration of transfer of an uncertificated security warrants to the issuer that:

     (1) The instruction is effective; and

     (2) At the time the instruction is presented to the issuer the purchaser will be entitled to the registration of transfer.

     (f) A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, but a purchaser for value and without notice of adverse claims to whom transfer is registered warrants only that the person has no knowledge of an unauthorized signature in a necessary indorsement.

     (g) If a person acts as agent of another in delivering a certificated security to a purchaser, the identity of the principal was known to the person to whom the certificate was delivered, and the certificate delivered by the agent was received by the agent from the principal or received by the agent from another person at the direction of the principal, the person delivering the security certificate warrants only that the delivering person has authority to act for the principal and does not know of any adverse claim to the certificated security.

     (h) A secured party who redelivers a security certificate received, or after payment and on order of the debtor delivers the security certificate to another person, makes only the warranties of an agent under subsection (g).

     (i) Except as otherwise provided in subsection (g), a broker acting for a customer makes to the issuer and a purchaser the warranties provided in subsections (a) through (f). A broker that delivers a security certificate to its customer, or causes its customer to be registered as the owner of an uncertificated security, makes to the customer the warranties provided in subsection (a) or (b), and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of the customer.

     400.8-109. (a) A person who originates an entitlement order to a securities intermediary warrants to the securities intermediary that:

     (1) The entitlement order is made by an appropriate person, or if the entitlement order is by an agent, the agent has actual authority to act on behalf of the appropriate person; and

     (2) There is no adverse claim to the security entitlement.

     (b) A person who delivers a security certificate to a securities intermediary for credit to a securities account or originates an instruction with respect to an uncertificated security directing that the uncertificated security be credited to a securities account makes to the securities intermediary the warranties specified in section 400.8-108(a) or (b).

     (c) If a securities intermediary delivers a security certificate to its entitlement holder or causes its entitlement holder to be registered as the owner of an uncertificated security, the securities intermediary makes to the entitlement holder the warranties specified in section 400.8-108(a) or (b).

     400.8-110. (a) The local law of the issuer's jurisdiction, as specified in subsection (d), governs:

     (1) The validity of a security;

     (2) The rights and duties of the issuer with respect to registration of transfer;

     (3) The effectiveness of registration of transfer by the issuer;

     (4) Whether the issuer owes any duties to an adverse claimant to a security; and

     (5) Whether an adverse claim can be asserted against a person to whom transfer of a certificated or uncertificated security is registered or a person who obtains control of an uncertificated security.

     (b) The local law of the securities intermediary's jurisdiction, as specified in subsection (e), governs:

     (1) Acquisition of a security entitlement from the securities intermediary;

     (2) The rights and duties of the securities intermediary and entitlement holder arising out of a security entitlement;

     (3) Whether the securities intermediary owes any duties to an adverse claimant to a security entitlement; and

     (4) Whether an adverse claim can be asserted against a person who acquires a security entitlement from the securities intermediary or a person who purchases a security entitlement or interest therein from an entitlement holder.

     (c) The local law of the jurisdiction in which a security certificate is located at the time of delivery governs whether an adverse claim can be asserted against a person to whom the security certificate is delivered.

     (d) "Issuer's jurisdiction" means the jurisdiction under which the issuer of the security is organized or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the issuer. An issuer organized under the law of this state may specify the law of another jurisdiction as the law governing the matters specified in subsection (a)(2) through (5).

     (e) The following rules determine a "securities intermediary's jurisdiction" for purposes of this section:

     (1) If an agreement between the securities intermediary and its entitlement holder specifies that it is governed by the law of a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

     (2) If an agreement between the securities intermediary and its entitlement holder does not specify the governing law as provided in paragraph (1), but expressly specified that the securities account is maintained at an office in a particular jurisdiction, that jurisdiction is the securities intermediary's jurisdiction;

     (3) If an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (1) or (2), the securities intermediary's jurisdiction is the jurisdiction in which is located the office identified in an account statement as the office serving the entitlement holder's account.

     (4) If an agreement between the securities intermediary and its entitlement holder does not specify a jurisdiction as provided in paragraph (1) or (2) and an account statement does not identify an office serving the entitlement holder's account as provided in paragraph (3), the securities intermediary's jurisdiction is the jurisdiction in which is located the chief executive office of the securities intermediary.

     (f) A securities intermediary's jurisdiction is not determined by the physical location of certificates representing financial assets, or by the jurisdiction in which is organized the issuer of the financial asset with respect to which an entitlement holder has a security entitlement, or by the location of facilities for data processing or other record keeping concerning the account.

     400.8-111. A rule adopted by a clearing corporation governing rights and obligations among the clearing corporation and its participants in the clearing corporation is effective even if the rule conflicts with this chapter and affects another party who does not consent to the rule.

     400.8-112. (a) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in subsection (d). However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer.

     (b) The interest of a debtor in an uncertificated security may be reached by a creditor only by legal process upon the issuer at its chief executive office in the United States, except as otherwise provided in subsection (d).

     (c) The interest of a debtor in a security entitlement may be reached by a creditor only by legal process upon the securities intermediary with whom the debtor's securities account is maintained, except as otherwise provided in subsection (d).

     (d) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party, or in an uncertificated security registered in the name of a secured party, or a security entitlement maintained in the name of a secured party, may be reached by a creditor by legal process upon the secured party.

     (e) A creditor whose debtor is the owner of a certificated security, uncertificated security, or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process.

     400.8-113. A contract or modification of a contract for the sale or purchase of a security is enforceable whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the contract or modification is not capable of performance within one year of its making.

     400.8-114. The following rules apply in an action on a certificated security against the issuer:

     (1) Unless specifically denied in the pleadings, each signature on a security certificate or in a necessary indorsement is admitted;

     (2) If the effectiveness of a signature is put in issue, the burden of establishing effectiveness is on the party claiming under the signature, but the signature is presumed to be genuine or authorized;

     (3) If signatures on a security certificate are admitted or established, production of the certificate entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security;

     (4) If it is shown that a defense or defect exists, the plaintiff has the burden of establishing that the plaintiff or some person under whom the plaintiff claims is a person against whom the defense or defect cannot be asserted.

     400.8-115. A securities intermediary that has transferred a financial asset pursuant to an effective entitlement order, or a broker or other agent or bailee that has dealt with a financial asset at the direction of its customer or principal, is not liable to a person having an adverse claim to the financial asset, unless the securities intermediary, or broker or other agent or bailee:

     (1) Took the action after it had been served with an injunction, restraining order or other legal process enjoining it from doing so, issued by a court of competent jurisdiction, and had a reasonable opportunity to act on the injunction, restraining order or other legal process; or

     (2) Acted in collusion with the wrongdoer in violating the rights of the adverse claimant; or

     (3) In the case of a security certificate that has been stolen, acted with notice of the adverse claim.

     400.8-116. A securities intermediary that receives a financial asset and establishes a security entitlement to the financial asset in favor of an entitlement holder is a purchaser for value of the financial asset. A securities intermediary that acquires a security entitlement to a financial asset from another securities intermediary acquires the security entitlement for value if the securities intermediary acquiring the security entitlement establishes a security entitlement to the financial asset in favor of an entitlement holder.

     400.8-201. (a) With respect to an obligation on or a defense to a security, an "issuer" includes a person that:

     (1) Places or authorizes the placing of its name on a security certificate, other than as authenticating trustee, registrar, transfer agent or the like, to evidence a share, participation or other interest in its property or in an enterprise, or to evidence its duty to perform an obligation represented by the certificate;

     (2) Creates a share, participation or other interest in its property or in an enterprise, or undertakes an obligation, that is an uncertificated security;

     (3) Directly or indirectly creates a fractional interest in its rights or property, if the fractional interest is represented by a security certificate; or

     (4) Becomes responsible for, or in place of, another person described as an issuer in this section.

     (b) With respect to an obligation on or defense to a security, a guarantor is an issuer to the extent of its guaranty, whether or not its obligation is noted on a security certificate.

     (c) With respect to a registration of a transfer, issuer means a person on whose behalf transfer books are maintained.

     400.8-202. (a) Even against a purchaser for value and without notice, the terms of a certificated security include terms stated on the certificate and terms made part of the security by reference on the certificate to another instrument, indenture or document or to a constitution, statute, ordinance, rule, regulation, order or the like, to the extent the terms referred to do not conflict with terms stated on the certificate. A reference under this subsection does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even if the certificate expressly states that a person accepting it admits notice. The terms of an uncertificated security include those stated in any instrument, indenture or document or in a constitution, statute, ordinance, rule, regulation, order or the like, pursuant to which the security is issued.

     (b) The following rules apply if an issuer asserts that a security is not valid:

     (1) A security other than one issued by a government or governmental subdivision, agency or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue;

     (2) Paragraph (1) applies to an issuer that is a government or governmental subdivision, agency or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security.

     (c) Except as otherwise provided in section 400.8-205, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.

     (d) All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense.

     (e) This section does not affect the right of a party to cancel a contract for a security "when, as and if issued" or "when distributed" in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement pursuant to which the security is to be issued or distributed.

     (f) If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert any defense that the issuer could not assert if the entitlement holder held the security directly.

     400.8-203. After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer, if the act or event:

     (1) Requires the payment of money, the delivery of a certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

     (2) Is not covered by paragraph (1) and the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which performance became due.

     400.8-204. A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without knowledge of the restriction unless:

     (1) The security is certificated and the restriction is noted conspicuously on the security certificate; or

     (2) The security is uncertificated and the registered owner has been notified of the restriction.

     400.8-205. An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by:

     (1) An authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or

     (2) An employee of the issuer, or of any of the persons listed in paragraph (1), entrusted with responsible handling of the security certificate.

     400.8-206. (a) If a security certificate contains the signatures necessary to its issue or transfer but is incomplete in any other respect:

     (1) Any person may complete it by filling in the blanks as authorized; and

     (2) Even if the blanks are incorrectly filled in, the security certificate as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

     (b) A complete security certificate that has been improperly altered, even if fraudulently, remains enforceable, but only according to its original terms.

     400.8-207. (a) Before due presentment for registration of transfer of a certificated security in registered form or of an instruction requesting registration of transfer of an uncertificated security, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, receive notifications and otherwise exercise all the rights and powers of an owner.

     (b) This article does not affect the liability of the registered owner of a security for a call, assessment or the like.

     400.8-208. (a) A person signing a security certificate as authenticating trustee, registrar, transfer agent or the like, warrants to a purchaser for value of the certificated security, if the purchaser is without notice of a particular defect, that:

     (1) The certificate is genuine;

     (2) The person's own participation in the issue of the security is within the person's capacity and within the scope of the authority received by the person from the issuer; and

     (3) The person has reasonable grounds to believe that the certificated security is in the form and within the amount the issuer is authorized to issue.

     (b) Unless otherwise agreed, a person signing under subsection (a) does not assume responsibility for the validity of the security in other respects.

     400.8-209. A lien in favor of an issuer upon a certificated security is valid against a purchaser only if the right of the issuer to the lien is noted conspicuously on the security certificate.

     400.8-210. (a) In this section, "overissue" means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue.

     (b) Except as otherwise provided in subsections (c) and (d), the provisions of this article which validate a security or compel its issue or reissue do not apply to the extent that validation, issue or reissue would result in overissue.

     (c) If an identical security not constituting an overissue is reasonably available for purchase, a person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds.

     (d) If a security is not reasonably available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person's demand.

     400.8-301. (a) Delivery of a certificated security to a purchaser occurs when:

     (1) The purchaser acquires possession of the security certificate;

     (2) Another person, other than a securities intermediary, either acquires possession of the security certificate on behalf of the purchaser or, having previously acquired possession of the certificate, acknowledges that it holds for the purchaser; or

     (3) A securities intermediary acting on behalf of the purchaser acquires possession of the security certificate, only if the certificate is in registered form and has been specially indorsed to the purchaser by an effective indorsement.

     (b) Delivery of an uncertificated security to a purchaser occurs when:

     (1) The issuer registers the purchaser as the registered owner, upon original issue or registration of transfer; or

     (2) Another person, other than a securities intermediary, either becomes the registered owner of the uncertificated security on behalf of the purchaser or, having previously become the registered owner, acknowledges that it holds for the purchaser.

     400.8-302. (a) Except as otherwise provided in subsections (b) and (c), upon delivery of a certificated or uncertificated security to a purchaser, the purchaser acquires all rights in the security that the transferor had or had power to transfer.

     (b) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

     (c) A purchaser of a certificated security who as a previous holder had notice of an adverse claim does not improve its position by taking from a protected purchaser.

     400.8-303. (a) "Protected purchaser" means a purchaser of a certificated or uncertificated security, or of an interest therein, who:

     (1) Gives value;

     (2) Does not have notice of any adverse claim to the security; and

     (3) Obtains control of the certificated or uncertificated security.

     (b) In addition to acquiring the rights of a purchaser, a protected purchaser also acquires its interest in the security free of any adverse claim.

     400.8-304. (a) An indorsement may be in blank or special. An indorsement in blank includes an indorsement to bearer. A special indorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank indorsement to a special indorsement.

     (b) An indorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the indorsement.

     (c) An indorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the indorsement is on a separate document, until delivery of both the document and the certificate.

     (d) If a security certificate in registered form has been delivered to a purchaser without a necessary indorsement, the purchaser may become a protected purchaser only when the indorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary indorsement supplied.

     (e) An indorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses.

     (f) Unless otherwise agreed, a person making an indorsement assumes only the obligations provided in section 400.8-108 and not an obligation that the security will be honored by the issuer.

     400.8-305. (a) If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed, even though it has been completed incorrectly.

     (b) Unless otherwise agreed, a person initiating an instruction assumes only the obligations imposed by section 400.8-108 and not an obligation that the security will be honored by the issuer.

     400.8-306. (a) A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing:

     (1) The signature was genuine;

     (2) The signer was an appropriate person to indorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

     (3) The signer had legal capacity to sign.

     (b) A person who guarantees a signature of the originator of an instruction warrants that at the time of signing:

     (1) The signature was genuine;

     (2) The signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and

     (3) The signer had legal capacity to sign.

     (c) A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under subsection (b) and also warrants that at the time the instruction is presented to the issuer:

     (1) The person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

     (2) The transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions and claims other than those specified in the instruction.

     (d) A guarantor under subsections (a) and (b) or a special guarantor under subsection (c) does not otherwise warrant the rightfulness of the transfer.

     (e) A person who guarantees an indorsement of a security certificate makes the warranties of a signature guarantor under subsection (a) and also warrants the rightfulness of the transfer in all respects.

     (f) A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under subsection (c) and also warrants the rightfulness of the transfer in all respects.

     (g) An issuer may not require a special guaranty of signature, a guaranty of indorsement, or a guaranty of instruction as a condition to registration of transfer.

     (h) The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An indorser or originator of an instruction whose signature, indorsement or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor.

     400.8-307. Unless otherwise agreed, the transferor of a security on due demand shall supply the purchaser with proof of authority to transfer or with any other requisite necessary to obtain registration of the transfer of the security, but if the transfer is not for value, a transferor need not comply unless the purchaser pays the necessary expenses. If the transferor fails within a reasonable time to comply with the demand, the purchaser may reject or rescind the transfer.

     400.8-401. (a) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security, the issuer shall register the transfer as requested if:

     (1) Under the terms of the security the person seeking registration of transfer is eligible to have the security registered in its name;

     (2) The indorsement or instruction is made by the appropriate person or by an agent who has actual authority to act on behalf of the appropriate person;

     (3) Reasonable assurance is given that the indorsement or instruction is genuine and authorized (section 400.8-402);

     (4) Any applicable law relating to the collection of taxes has been complied with;

     (5) The transfer does not violate any restriction on transfer imposed by the issuer in accordance with section 400.8-204;

     (6) A demand that the issuer not register transfer has not become effective under section 400.8-403, or the issuer has complied with section 400.8-403(b) but no legal process or indemnity bond is obtained as provided in section 400.8-403(d); and

     (7) The transfer is in fact rightful or is to a protected purchaser.

     (b) If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or an instruction for registration or to the person's principal for loss resulting from unreasonable delay in registration or failure or refusal to register the transfer.

     400.8-402. (a) An issuer may require the following assurance that each necessary indorsement or each instruction is genuine and authorized:

     (1) In all cases, a guaranty of the signature of the person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;

     (2) If the indorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;

     (3) If the indorsement is made or the instruction is originated by a fiduciary pursuant to section 400.8-107(a)(4) or (a)(5), appropriate evidence of appointment or incumbency;

     (4) If there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

     (5) If the indorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.

     (b) An issuer may elect to require reasonable assurance beyond that specified in this section.

     (c) In this section:

     (1) "Guaranty of the signature" means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable;

     (2) "Appropriate evidence of appointment or incumbency" means:

     (i) In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within sixty days before the date of presentation for transfer; or

     (ii) In any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considers appropriate.

     400.8-403. (a) A person who is an appropriate person to make an indorsement or originate an instruction may demand that the issuer not register transfer of a security by communicating to the issuer a notification that identifies the registered owner and the issue of which the security is a part and provides an address for communications directed to the person making the demand. The demand is effective only if it is received by the issuer at a time and in a manner affording the issuer reasonable opportunity to act on it.

     (b) If a certificated security in registered form is presented to an issuer with a request to register transfer or an instruction is presented to an issuer with a request to register transfer of an uncertificated security after a demand that the issuer not register transfer has become effective, the issuer shall promptly communicate to:

     (i) The person who initiated the demand at the address provided in the demand; and

     (ii) The person who presented the security for registration of transfer or initiated the instruction requesting registration of transfer a notification stating that:

     (1) The certificated security has been presented for registration of transfer or the instruction for registration of transfer of the uncertificated security has been received;

     (2) A demand that the issuer not register transfer had previously been received; and

     (3) The issuer will withhold registration of transfer for a period of time stated in the notification in order to provide the person who initiated the demand an opportunity to obtain legal process or an indemnity bond.

     (c) The period described in subsection (b)(3) may not exceed thirty days after the date of communication of the notification. A shorter period may be specified by the issuer if it is not manifestly unreasonable.

     (d) An issuer is not liable to a person who initiated a demand that the issuer not register transfer for any loss the person suffers as a result of registration of a transfer pursuant to an effective indorsement or instruction if the person who initiated the demand does not, within the time stated in the issuer's communication, either:

     (1) Obtain an appropriate restraining order, injunction or other process from a court of competent jurisdiction enjoining the issuer from registering the transfer; or

     (2) File with the issuer an indemnity bond, sufficient in the issuer's judgment to protect the issuer and any transfer agent, registrar or other agent of the issuer involved from any loss it or they may suffer by refusing to register the transfer.

     (e) This section does not relieve an issuer from liability for registering transfer pursuant to an indorsement or instruction that was not effective.

     400.8-404. (a) Except as otherwise provided in section 400.8-406, an issuer is liable for wrongful registration of transfer if the issuer has registered a transfer of a security to a person not entitled to it, and the transfer was registered:

     (1) Pursuant to an ineffective indorsement or instruction;

     (2) After a demand that the issuer not register transfer became effective under section 400.8-403(a) and the issuer did not comply with section 400.8-403(b);

     (3) After the issuer had been served with an injunction, restraining order or other legal process enjoining it from registering the transfer, issued by a court of competent jurisdiction, and the issuer had a reasonable opportunity to act on the injunction, restraining order or other legal process; or

     (4) By an issuer acting in collusion with the wrongdoer.

     (b) An issuer that is liable for wrongful registration of transfer under subsection (a) on demand shall provide the person entitled to the security with a like certificated or uncertificated security, and any payments or distributions that the person did not receive as a result of the wrongful registration. If an overissue would result, the issuer's liability to provide the person with a like security is governed by section 400.8-210.

     (c) Except as otherwise provided in subsection (a) or in a law relating to the collection of taxes, an issuer is not liable to an owner or other person suffering loss as a result of the registration of a transfer of a security if registration was made pursuant to an effective indorsement or instruction.

     400.8-405. (a) If an owner of a certificated security, whether in registered or bearer form, claims that the certificate has been lost, destroyed or wrongfully taken, the issuer shall issue a new certificate if the owner:

     (1) So requests before the issuer has notice that the certificate has been acquired by a protected purchaser;

     (2) Files with the issuer a sufficient indemnity bond; and

     (3) Satisfies other reasonable requirements imposed by the issuer.

     (b) If, after the issue of a new security certificate, a protected purchaser of the original certificate presents it for registration of transfer, the issuer shall register the transfer unless an overissue would result. In that case, the issuer's liability is governed by section 400.8-210. In addition to any rights on the indemnity bond, an issuer may recover the new certificate from a person to whom it was issued or any person taking under that person, except a protected purchaser.

     400.8-406. If a security certificate has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after the owner has notice of it and the issuer registers a transfer of the security before receiving notification, the owner may not assert against the issuer a claim for registering the transfer under section 400.8-404 or a claim to a new security certificate under section 400.8-405.

     400.8-407. A person acting as authenticating trustee, transfer agent, registrar or other agent for an issuer in the registration of a transfer of its securities, in the issue of new security certificates or uncertificated securities, or in the cancellation of surrendered security certificates has the same obligation to the holder or owner of a certificated or uncertificated security with regard to the particular functions performed as the issuer has in regard to those functions.

     400.8-501. (a) "Securities account" means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.

     (b) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary:

     (1) Indicates by book entry that a financial asset has been credited to the person's securities account;

     (2) Receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person's securities account; or

     (3) Becomes obligated under other law, regulation, or rule to credit a financial asset to the person's securities account.

     (c) If a condition of subsection (b) has been met, a person has a security entitlement even though the securities intermediary does not itself hold the financial asset.

     (d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially indorsed to the other person, and has not been indorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset.

     (e) Issuance of a security is not establishment of a security entitlement.

     400.8-502. An action based on an adverse claim to a financial asset, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who acquires a security entitlement under section 400.8-501 for value and without notice of the adverse claim.

     400.8-503. (a) To the extent necessary for a securities intermediary to satisfy all security entitlements with respect to a particular financial asset, all interests in that financial asset held by the securities intermediary are held by the securities intermediary for the entitlement holders, are not property of the securities intermediary, and are not subject to claims of creditors of the securities intermediary, except as otherwise provided in section 400.8-511.

     (b) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) is a pro rata property interest in all interests in that financial asset held by the securities intermediary, without regard to the time the entitlement holder acquired the security entitlement or the time the securities intermediary acquired the interest in that financial asset.

     (c) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced against the securities intermediary only by exercise of the entitlement holder's rights under sections 400.8-505 through 400.8-508.

     (d) An entitlement holder's property interest with respect to a particular financial asset under subsection (a) may be enforced against a purchaser of the financial asset or interest therein only if:

     (1) Insolvency proceedings have been initiated by or against the securities intermediary;

     (2) The securities intermediary does not have sufficient interests in the financial asset to satisfy the security entitlements of all of its entitlement holders to that financial asset;

     (3) The securities intermediary violated its obligations under section 400.8-504 by transferring the financial asset or interest therein to the purchaser; and

     (4) The purchaser is not protected under subsection (e).

The trustee or other liquidator, acting on behalf of all entitlement holders having security entitlements with respect to a particular financial asset, may recover the financial asset, or interest therein, from the purchaser. If the trustee or other liquidator elects not to pursue that right, an entitlement holder whose security entitlement remains unsatisfied has the right to recover its interest in the financial asset from the purchaser.

     (e) An action based on the entitlement holder's property interest with respect to a particular financial asset under subsection (a), whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against any purchaser of a financial asset or interest therein who gives value, obtains control, and does not act in collusion with the securities intermediary in violating the securities intermediary's obligations under section 400.8-504.

     400.8-504. (a) A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities intermediaries.

     (b) Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain pursuant to subsection (a).

     (c) A securities intermediary satisfies the duty in subsection (a) if:

     (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

     (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.

     (d) This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements.

     400.8-505. (a) A securities intermediary shall take action to obtain a payment or distribution made by the issuer of a financial asset. A securities intermediary satisfies the duty if:

     (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

     (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to attempt to obtain the payment or distribution.

     (b) A securities intermediary is obligated to its entitlement holder for a payment or distribution made by the issuer of a financial asset if the payment or distribution is received by the securities intermediary.

     400.8-506. A securities intermediary shall exercise rights with respect to a financial asset if directed to do so by an entitlement holder. A securities intermediary satisfies the duty if:

     (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

     (2) In the absence of agreement, the securities intermediary either places the entitlement holder in a position to exercise the rights directly or exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

     400.8-507. (a) A securities intermediary shall comply with an entitlement order if the entitlement order is originated by the appropriate person, the securities intermediary has had reasonable opportunity to assure itself that the entitlement order is genuine and authorized, and the securities intermediary has had reasonable opportunity to comply with the entitlement order. A securities intermediary satisfies the duty if:

     (1) The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or

     (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to comply with the entitlement order.

     (b) If a securities intermediary transfers a financial asset pursuant to an ineffective entitlement order, the securities intermediary shall reestablish a security entitlement in favor of the person entitled to it, and pay or credit any payments or distributions that the person did not receive as a result of the wrongful transfer. If the securities intermediary does not reestablish a security entitlement, the securities intermediary is liable to the entitlement holder for damages.

     400.8-508. A securities intermediary shall act at the direction of an entitlement holder to change a security entitlement into another available form of holding for which the entitlement holder is eligible, or to cause the financial asset to be transferred to a securities account of the entitlement holder with another securities intermediary. A securities intermediary satisfies the duty if:

     (1) The securities intermediary acts as agreed upon by the entitlement holder and the securities intermediary; or

     (2) In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to follow the direction of the entitlement holder.

     400.8-509. (a) If the substance of a duty imposed upon a securities intermediary by sections 400.8-504 through 400.8-508 is the subject of other statute, regulation or rule, compliance with that statute, regulation or rule satisfies the duty.

     (b) To the extent that specific standards for the performance of the duties of a securities intermediary or the exercise of the rights of an entitlement holder are not specified by other statute, regulation or rule or by agreement between the securities intermediary and entitlement holder, the securities intermediary shall perform its duties and the entitlement holder shall exercise its rights in a commercially reasonable manner.

     (c) The obligation of a securities intermediary to perform the duties imposed by sections 400.8-504 through 400.8-508 is subject to:

     (1) Rights of the securities intermediary arising out of a security interest under a security agreement with the entitlement holder or otherwise; and

     (2) Rights of the securities intermediary under other law, regulation, rule or agreement to withhold performance of its duties as a result of unfulfilled obligations of the entitlement holder to the securities intermediary.

     (d) Sections 400.8-504 through 400.8-508 do not require a securities intermediary to take any action that is prohibited by other statute, regulation or rule.

     400.8-510. (a) An action based on an adverse claim to a financial asset or security entitlement, whether framed in conversion, replevin, constructive trust, equitable lien or other theory, may not be asserted against a person who purchases a security entitlement, or an interest therein, from an entitlement holder if the purchaser gives value, does not have notice of the adverse claim, and obtains control.

     (b) If an adverse claim could not have been asserted against an entitlement holder under section 400.8-502, the adverse claim cannot be asserted against a person who purchases a security entitlement, or an interest therein, from the entitlement holder.

     (c) In a case not covered by the priority rules in article 9 of this chapter, a purchaser for value of a security entitlement, or an interest therein, who obtains control has priority over a purchaser of a security entitlement, or an interest therein, who does not obtain control. Purchasers who have control rank equally, except that a securities intermediary as purchaser has priority over a conflicting purchaser who has control unless otherwise agreed by the securities intermediary.

     400.8-511. (a) Except as otherwise provided in subsections (b) and (c), if a securities intermediary does not have sufficient interests in a particular financial asset to satisfy both its obligations to entitlement holders who have security entitlements to that financial asset and its obligation to a creditor of the securities intermediary who has a security interest in that financial asset, the claims of entitlement holders, other than the creditor, have priority over the claim of the creditor.

     (b) A claim of a creditor of a securities intermediary who has a security interest in a financial asset held by a securities intermediary has priority over claims of the securities intermediary's entitlement holders who have security entitlements with respect to that financial asset if the creditor has control over the financial asset.

     (c) If a clearing corporation does not have sufficient financial assets to satisfy both its obligations to entitlement holders who have security entitlements with respect to a financial asset and its obligation to a creditor of the clearing corporation who has a security interest in that financial asset, the claim of the creditor has priority over the claims of entitlement holders.

     400.9-103. (1) Documents, instruments, letters of credit, and ordinary goods.

     (a) This subsection applies to documents and instruments, rights to proceeds of written letters of credit, and to goods other than those covered by a certificate of title described in subsection (2), mobile goods described in subsection (3), and minerals described in subsection (5).

     (b) Except as otherwise provided in this subsection, perfection and the effect of perfection or non-perfection of a security interest in collateral are governed by the law of the jurisdiction where the collateral is when the last event occurs on which is based the assertion that the security interest is perfected or unperfected.

     (c) If the parties to a transaction creating a purchase money security interest in goods in one jurisdiction understand at the time that the security interest attaches that the goods will be kept in another jurisdiction, then the law of the other jurisdiction governs the perfection and the effect of perfection or non-perfection of the security interest from the time it attaches until thirty days after the debtor receives possession of the goods and thereafter if the goods are taken to the other jurisdiction before the end of the thirty-day period.

     (d) When collateral is brought into and kept in this state while subject to a security interest perfected under the law of the jurisdiction from which the collateral was removed, the security interest remains perfected, but if action is required by Part 3 of this Article to perfect the security interest,

     (i) if the action is not taken before the expiration of the period of perfection in the other jurisdiction or the end of four months after the collateral is brought into this state, whichever period first expires, the security interest becomes unperfected at the end of that period and is thereafter deemed to have been unperfected as against a person who became a purchaser after removal;

     (ii) if the action is taken before the expiration of the period specified in subparagraph (i), the security interest continues perfected thereafter;

     (iii) for the purpose of priority over a buyer of consumer goods (subsection (2) of section 400.9-307), the period of the effectiveness of a filing in the jurisdiction from which the collateral is removed is governed by the rules with respect to perfection in subparagraphs (i) and (ii).

     (2) Certificate of title.

     (a) This subsection applies to goods covered by a certificate of title issued under a statute of this state or of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection.

     (b) Except as otherwise provided in this subsection, perfection and the effect of perfection or non-perfection of the security interest are governed by the law (including the conflict of laws rules) of the jurisdiction issuing the certificate until four months after the goods are removed from that jurisdiction and thereafter until the goods are registered in another jurisdiction, but in any event not beyond surrender of the certificate. After the expiration of that period, the goods are not covered by the certificate of title within the meaning of this section.

     (c) Except with respect to the rights of a buyer described in the next paragraph, a security interest, perfected in another jurisdiction otherwise than by notation on a certificate of title, in goods brought into this state and thereafter covered by a certificate of title issued by this state is subject to the rules stated in paragraph (d) of subsection (1).

     (d) If goods are brought into this state while a security interest therein is perfected in any manner under the law of the jurisdiction from which the goods are removed and a certificate of title is issued by this state and the certificate does not show that the goods are subject to the security interest or that they may be subject to security interests not shown on the certificate, the security interest is subordinate to the rights of a buyer of the goods who is not in the business of selling goods of that kind to the extent that he gives value and receives delivery of the goods after issuance of the certificate and without knowledge of the security interest.

     (3) Accounts, general intangibles and mobile goods.

     (a) This subsection applies to accounts (other than an account described in subsection (5) on minerals) and general intangibles (other than uncertificated securities) and to goods which are mobile and which are of a type normally used in more than one jurisdiction, such as motor vehicles, trailers, rolling stock, airplanes, shipping containers, road building and construction machinery and commercial harvesting machinery and the like, if the goods are equipment or are inventory leased or held for lease by the debtor to others, and are not covered by a certificate of title described in subsection (2).

     (b) The law (including the conflict of laws rules) of the jurisdiction in which the debtor is located governs the perfection and the effect of perfection or non-perfection of the security interest.

     (c) If, however, the debtor is located in a jurisdiction which is not a part of the United States, and which does not provide for perfection of the security interest by filing or recording in that jurisdiction, the law of the jurisdiction in the United States in which the debtor has its major executive office in the United States governs the perfection and the effect of perfection or non-perfection of the security interest through filing. In the alternative, if the debtor is located in a jurisdiction which is not a part of the United States or Canada and the collateral is accounts or general intangibles for money due or to become due, the security interest may be perfected by notification to the account debtor. As used in this paragraph, "United States" includes its territories and possessions and the Commonwealth of Puerto Rico.

     (d) A debtor shall be deemed located at his place of business if he has one, at his chief executive office if he has more than one place of business, otherwise at his residence. If, however, the debtor is a foreign air carrier under the Federal Aviation Act of 1958, as amended, it shall be deemed located at the designated office of the agent upon whom service of process may be made on behalf of the foreign air carrier.

     (e) A security interest perfected under the law of the jurisdiction of the location of the debtor is perfected until the expiration of four months after a change of the debtor's location to another jurisdiction, or until perfection would have ceased by the law of the first jurisdiction, whichever period first expires. Unless perfected in the new jurisdiction before the end of that period, it becomes unperfected thereafter and is deemed to have been unperfected as against a person who became a purchaser after the change.

     (4) Chattel paper.

     The rules stated for goods in subsection (1) apply to a possessory security interest in chattel paper. The rules stated for accounts in subsection (3) apply to a non-possessory security interest in chattel paper, but the security interest may not be perfected by notification to the account debtor.

     (5) Minerals.

     Perfection and the effect of perfection or non-perfection of a security interest which is created by a debtor who has an interest in minerals or the like (including oil and gas) before extraction and which attaches thereto as extracted, or which attaches to an account resulting from the sale thereof at the wellhead or minehead or governed by the law (including the conflict of laws rules) of the jurisdiction wherein the wellhead or minehead is located.

     (6) [Uncertificated securities] Investment property.

     [The law (including the conflict of laws rules) of the jurisdiction of the organization of the issuer governs the perfection and the effect of perfection or non-perfection of a security interest in uncertificated securities.]

     (a) This subsection applies to investment property.

     (b) Except as otherwise provided in paragraph (f), during the time that a security certificate is located in a jurisdiction, perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in the certificated security represented thereby are governed by the local law of that jurisdiction.

     (c) Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in an uncertificated security are governed by the local law of the issuer's jurisdiction as specified in section 400.8-110(d).

     (d) Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in a security entitlement or securities account are governed by the local law of the securities intermediary's jurisdiction as specified in section 400.8-110(e).

     (e) Except as otherwise provided in paragraph (f), perfection of a security interest, the effect of perfection or non-perfection, and the priority of a security interest in a commodity contract or commodity account are governed by the local law of the commodity intermediary's jurisdiction. The following rules determine a "commodity intermediary's jurisdiction" for purposes of this paragraph:

     (i) If an agreement between the commodity intermediary and commodity customer specifies that it is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

     (ii) If an agreement between the commodity intermediary and commodity customer does not specify the governing law as provided in subparagraph (i), but expressly specifies that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.

     (iii) If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraphs (i) or (ii), the commodity intermediary's jurisdiction is the jurisdiction in which is located the office identified in an account statement as the office serving the commodity customer's account.

     (iv) If an agreement between the commodity intermediary and commodity customer does not specify a jurisdiction as provided in subparagraphs (i) or (ii) and an account statement does not identify an office serving the commodity customer's account as provided in subparagraph (iii), the commodity intermediary's jurisdiction is the jurisdiction in which is located the chief executive office of the commodity intermediary.

     (f) Perfection of a security interest by filing, automatic perfection of a security interest in investment property granted by a broker or securities intermediary, and automatic perfection of a security interest in a commodity contract or commodity account granted by a commodity intermediary are governed by the local law of the jurisdiction in which the debtor is located.

     400.9-104. This article does not apply

     (a) to a security interest subject to any statute of the United States to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property; or

     (b) to a landlord's lien; or

     (c) to a lien given by statute or other rule of law for services or materials except as provided in section 400.9-310 on priority of such liens; or

     (d) to a transfer of a claim for wages, salary or other compensation of an employee; or

     (e) to a transfer by a government or governmental subdivision or agency; or

     (f) to a sale of accounts or chattel paper as part of a sale of the business out of which they arose, or an assignment of accounts or chattel paper which is for the purpose of collection only, or a transfer of a right to payment under a contract to an assignee who is also to do the performance under the contract or a transfer of a single account to an assignee in whole or partial satisfaction of a preexisting indebtedness; or

     (g) to a transfer of an interest or claim in or under any policy of insurance, except as provided with respect to proceeds (section 400.9-306) and priorities and proceeds (section 400.9-312); or

     (h) to a right represented by a judgment (other than a judgment taken on a right to payment which was collateral); or

     (i) to any right of setoff; or

     (j) except to the extent that provision is made for fixtures in section 400.9-313, to the creation or transfer of an interest in or lien on real estate, including a lease or rents thereunder; or

     (k) to a transfer in whole or in part of any claim arising out of tort; or

     (l) to a transfer of an interest in any deposit account (subsection (1) of section 400.9-105), except as provided with respect to proceeds (section 400.9-306) and priorities and proceeds (section 400.9-312)[.]; or

     (m) to a transfer of an interest in a letter of credit other than the rights to proceeds of a written letter of credit.

     400.9-105. (1) In this Article unless the context otherwise requires:

     (a) "Account debtor" means the person who is obligated on an account, chattel paper or general intangible;

     (b) "Chattel paper" means a writing or writings which evidence both a monetary obligation and a security interest in or a lease of specific goods, but a charter or other contract involving the use or hire of a vessel is not chattel paper. When a transaction is evidenced both by such a security agreement or a lease and by an instrument or a series of instruments, the group of writings taken together constitutes chattel paper;

     (c) "Collateral" means the property subject to a security interest, and includes accounts and chattel paper which have been sold;

     (d) "Debtor" means the person who owes payment or other performance of the obligation secured, whether or not he owns or has rights in the collateral, and includes the seller of accounts or chattel paper. Where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision of the article dealing with the collateral, the obligor in any provision dealing with the obligation, and may include both where the context so requires;

     (e) "Deposit account" means a demand, time, savings, passbook or like account maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a certificate of deposit;

     (f) "Document" means document of title as defined in the general definitions of article 1 (section 400.1-201), and a receipt of the kind described in subsection (2) of section 400.7-201;

     (g) "Encumbrance" includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests;

     (h) "Goods" includes all things which are movable at the time the security interest attaches or which are fixtures (section 400.9-313), but does not include money, documents, instruments, investment property, accounts, chattel paper, general intangibles, or minerals or the like (including oil and gas) before extraction. "Goods" also includes standing timber which is to be cut and removed under a conveyance or contract for sale, the unborn young of animals and growing crops;

     (i) "Instrument" means a negotiable instrument (defined in section 400.3-104), [or a certificated security (defined in section 400.8-102)] or any other writing which evidences a right to the payment of money and is not itself a security agreement or lease and is of a type which is in ordinary course of business transferred by delivery with any necessary endorsement or assignment. The term does not include investment property;

     (j) "Mortgage" means a consensual interest created by a real estate mortgage, a deed of trust on real estate, or the like;

     (k) An advance is made "pursuant to commitment" if the secured party has bound himself to make it, whether or not a subsequent event of default or other event not within his control has relieved or may relieve him from his obligation;

     (l) "Security agreement" means an agreement which creates or provides for a security interest;

     (m) "Secured party" means a lender, seller or other person in whose favor there is a security interest including a person to whom accounts or chattel paper have been sold. When the holders of obligations issued under an indenture of trust, equipment trust agreement or the like are represented by a trustee or other person, the representative is the secured party;

     (n) "Transmitting utility" means any person primarily engaged in the railroad, street railway or trolly bus business, the electric or electronics communications transmission business, the transmission of goods by pipeline, or the transmission or the production and transmission of electricity, steam, gas or water, or the provision of sewer service;

     (2) Other definitions applying to this Article and the sections in which they appear are:

     "Account". Section 400.9-106.

     "Attach". Section 400.9-203.

     "Commodity contract". Section 400.9-115.

     "Commodity customer". Section 400.9-115.

     "Commodity intermediary". Section 400.9-115.

     "Construction mortgage". Section 400.9-313(1).

     "Consumer goods". Section 400.9-109(1).

     "Control". Section 400.9-115.

     "Equipment". Section 400.9-109(2).

     "Farm products". Section 400.9-109(3).

     "Fixture". Section 400.9-313.

     "Fixture filing". Section 400.9-313.

     "General intangibles". Section 400.9-106.

     "Inventory". Section 400.9-109(4).

     "Investment property". Section 400.9-115.

     "Letter of credit". Section 400.5-102.

     "Lien creditor". Section 400.9-301(3).

     "Proceeds". Section 400.9-306(1).

     "Purchase money security interest". Section 400.9-107.

     "Rights to proceeds of a written letter of credit". Section 400.5-114(a).

     "United States". Section 400.9-103.

     (3) The following definitions in other articles apply to this article:

     "Broker". Section 400.8-102.

     "Certificated security". Section 400.8-102.

     "Check". Section 400.3-104.

     "Clearing corporation". Section 400.8-102.

     "Contract for sale". Section 400.2-106.

     "Control". Section 400.8-106.

     "Delivery". Section 400.8-301.

     "Entitlement holder". Section 400.8-102.

     "Financial asset". Section 400.8-102.

     "Holder in due course". Section 400.3-302.

     "Note". Section 400.3-104.

     "Sale". Section 400.2-106.

     "Securities intermediary". Section 400.8-102.

     "Security". Section 400.8-102.

     "Security certificate". Section 400.8-102.

     "Security entitlement". Section 400.8-102.

     "Uncertificated security". Section 400.8-102.

     (4) In addition article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.

     400.9-106. "Account" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. "General intangibles" means any personal property (including things in action) other than goods, accounts, chattel paper, documents, investment property, instruments, rights to proceeds of written letters of credit, and money. All rights to payment earned or unearned under a charter or other contract involving the use or hire of a vessel and all rights incident to the charter or contract are accounts.

     400.9-115. (1) In this article:

     (a) "Commodity account" means an account maintained by a commodity intermediary in which a commodity contract is carried for commodity customers;

     (b) "Commodity contract" means a commodity futures contract, an option on a commodity futures contract, a commodity option, or other contract that, in each case, is:

     (i) Traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws; or

     (ii) Traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a commodity intermediary for a commodity customer;

     (c) "Commodity customer" means a person for whom a commodity intermediary carries a commodity contract on its books;

     (d) "Commodity intermediary" means:

     (i) A person who is registered as a futures commission merchant under the federal commodities laws; or

     (ii) A person who in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to the federal commodities laws;

     (e) "Control" with respect to a certificated security, uncertificated security, or security entitlement has the meaning specified in section 400.8-106. A secured party has control over a commodity contract if by agreement among the commodity customer, the commodity intermediary, and the secured party, the commodity intermediary has agreed that it will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. If a commodity customer grants a security interest in a commodity contract to its own commodity intermediary, the commodity intermediary as secured party has control. A secured party has control over a securities account or commodity account if the secured party has control over all security entitlements or commodity contracts carried in the securities account or commodity account;

     (f) "Investment property" means:

     (i) A security, whether certificated or uncertificated;

     (ii) A security entitlement;

     (iii) A securities account;

     (iv) A commodity contract; or

     (v) A commodity account.

     (2) Attachment or perfection of a security interest in a securities account is also attachment or perfection of a security interest in all security entitlements carried in the securities account. Attachment or perfection of a security interest in a commodity account is also attachment or perfection of a security interest in all commodity contracts carried in the commodity account.

     (3) A description of collateral in a security agreement or financing statement is sufficient to create or perfect a security interest in a certificated security, uncertificated security, security entitlement, securities account, commodity contract, or commodity account whether it describes the collateral by those terms, or as investment property, or by description of the underlying security, financial asset, or commodity contract. A description of investment property collateral in a security agreement or financing statement is sufficient if it identifies the collateral by specific listing, by category, by quantity, by a computational or allocational formula or procedure, or by any other method, if the identity of the collateral is objectively determinable.

     (4) Perfection of a security interest in investment property is governed by the following rules:

     (a) A security interest in investment property may be perfected by control;

     (b) Except as otherwise provided in paragraphs (c) and (d), a security interest in investment property may be perfected by filing;

     (c) If the debtor is a broker or securities intermediary, a security interest in investment property is perfected when it attaches. The filing of a financing statement with respect to a security interest in investment property granted by a broker or securities intermediary has no effect for purposes of perfection or priority with respect to that security interest;

     (d) If a debtor is a commodity intermediary, a security interest in a commodity contract or a commodity account is perfected when it attaches. The filing of a financing statement with respect to a security interest in a commodity contract or a commodity account granted by a commodity intermediary has no effect for purposes of perfection or priority with respect to that security interest.

     (5) Priority between conflicting security interests in the same investment property is governed by the following rules:

     (a) A security interest of a secured party who has control over investment property has priority over a security interest of a secured party who does not have control over the investment property;

     (b) Except as otherwise provided in paragraphs (c) and (d), conflicting security interest of secured parties each of whom has control rank equally;

     (c) Except as otherwise agreed by the securities intermediary, a security interest in a security entitlement or a securities account granted to the debtor's own securities intermediary has priority over any security interest granted by the debtor to another secured party;

     (d) Except as otherwise agreed by the commodity intermediary, a security interest in a commodity contract or a commodity account granted to the debtor's own commodity intermediary has priority over any security interest granted by the debtor to another secured party;

     (e) Conflicting security interests granted by a broker, a securities intermediary, or a commodity intermediary which are perfected without control rank equally;

     (f) In all other cases, priority between conflicting security interest in investment property is governed by section 400.9-312(5), (6), and (7). Section 400.9-312(4) does not apply to investment property.

     (6) If a security certificate in registered form is delivered to a secured party pursuant to agreement, a written security agreement is not required for attachment or enforceability of the security interest, delivery suffices for perfection of the security interest, and the security interest has priority over a conflicting security interest perfected by means other than control, even if a necessary indorsement is lacking.

     400.9-116. (1) If a person buys a financial asset through a securities intermediary in a transaction in which the buyer is obligated to pay the purchase price to the securities intermediary at the time of the purchase, and the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary, the securities intermediary has a security interest in the buyer's security entitlement securing the buyer's obligation to pay. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

     (2) If a certificated security, or other financial asset represented by a writing which in the ordinary course of business is transferred by delivery with any necessary indorsement or assignment is delivered pursuant to an agreement between persons in the business of dealing with such securities or financial assets and the agreement calls for delivery versus payment, the person delivering the certificate or other financial asset has a security interest in the certificated security or other financial asset securing the seller's right to receive payment. A security agreement is not required for attachment or enforceability of the security interest, and the security interest is automatically perfected.

     400.9-203. (1) Subject to the provisions of section 400.4-208 on the security interest of a collecting bank, [section 400.8-321 on security interests in securities] sections 400.9-115 and 400.9-116 on security interests in investment property, and section 400.9-113 on a security interest arising under the article on sales, a security interest is not enforceable against the debtor or third parties with respect to the collateral and does not attach unless:

     (a) the collateral is in the possession of the secured party pursuant to agreement, the collateral is investment property and the secured party has control pursuant to agreement, or the debtor has signed a security agreement which contains a description of the collateral and in addition, when the security interest covers crops growing or to be grown or timber to be cut, a description of the land concerned;

     (b) value has been given; and

     (c) the debtor has rights in the collateral.

     (2) A security interest attaches when it becomes enforceable against the debtor with respect to the collateral. Attachment occurs as soon as all of the events specified in subsection (1) have taken place unless explicit agreement postpones the time of attaching.

     (3) Unless otherwise agreed a security agreement gives the secured party the rights to proceeds provided by section 400.9-306.

     (4) A transaction, although subject to this article, is also subject to sections 365.010 to 365.160, RSMo, and sections 408.100 to 408.562, RSMo, and in the case of conflict between the provisions of this article and any such statute, the provisions of such statute control. Failure to comply with any applicable statute has only the effect which is specified therein.

     400.9-301. (1) Except as otherwise provided in subsection (2), an unperfected security interest is subordinate to the rights of

     (a) persons entitled to priority under section 400.9-312;

     (b) a person who becomes a lien creditor before the security interest is perfected;

     (c) in the case of goods, instruments, documents, and chattel paper, a person who is not a secured party and who is a transferee in bulk or other buyer not in ordinary course of business to the extent that he gives value and receives delivery of the collateral without knowledge of the security interest and before it is perfected;

     (d) in the case of accounts [and], general intangibles, and investment property, a person who is not a secured party and who is a transferee to the extent that he gives value without knowledge of the security interest and before it is perfected.

     (2) If the secured party files with respect to a purchase money security interest before or within twenty days after the debtor receives possession of the collateral, he takes priority over the rights of a transferee in bulk or of a lien creditor which arise between the time the security interest attaches and the time of filing.

     (3) A "lien creditor" means a creditor who has acquired a lien on the property involved by attachment, levy or the like and includes an assignee for benefit of creditors from the time of assignment, and a trustee in bankruptcy from the date of the filing of the petition or a receiver in equity from the time of appointment.

     (4) A person who becomes a lien creditor while a security interest is perfected takes subject to the security interest only to the extent that it secures advances made before he becomes a lien creditor or within forty-five days thereafter or made without knowledge of the lien or pursuant to a commitment entered into without knowledge of the lien.

     400.9-302. (1) A financing statement must be filed to perfect all security interests except the following:

     (a) a security interest in collateral in possession of the secured party under section 400.9-305;

     (b) a security interest temporarily perfected in instruments, certificated securities, or documents without delivery under section 400.9-304 or in proceeds for a ten-day period under section 400.9-306;

     (c) a security interest created by an assignment of a beneficial interest in a trust or a decedent's estate;

     (d) a purchase money security interest in consumer goods; but filing is required for a motor vehicle required to be registered; and fixture filing is required for priority over conflicting interests in fixtures to the extent provided in section 400.9-313;

     (e) an assignment of accounts which does not alone or in conjunction with other assignments to the same assignee transfer a significant part of the outstanding accounts of the assignor;

     (f) a security interest of a collecting bank (section 400.4-208) or in securities (section 400.8-321) or arising under the article on sales (see section 400.9-113) or covered in subsection (3) of this section;

     (g) an assignment for the benefit of all the creditors of the transferor, and subsequent transfers by the assignee thereunder[.];

     (h) a security interest in investment property which is perfected without filing under section 400.9-115 or section 400.9-116.

     (2) If a secured party assigns a perfected security interest, no filing under this article is required in order to continue the perfected status of the security interest against creditors of and transferees from the original debtor.

     (3) The filing of a financing statement otherwise required by this article is not necessary or effective to perfect a security interest in property subject to

     (a) a statute or treaty of the United States which provides for a national or international registration or a national or international certificate of title or which specifies a place of filing different from that specified in this article for filing of the security interests; or

     (b) section 301.190, RSMo, or section 306.400, RSMo; but during any period in which collateral is inventory held for sale by a person who is in the business of selling goods of that kind, the filing provisions of this article (part 4) apply to a security interest in that collateral created by him as debtor; or

     (c) a certificate of title statute of another jurisdiction under the law of which indication of a security interest on the certificate is required as a condition of perfection (subsection (2) of section 400.9-103).

     (4) Compliance with a statute or treaty described in subsection (3) is equivalent to the filing of a financing statement under this article, and a security interest in property subject to the statute or treaty can be perfected only by compliance therewith, except as provided in section 400.9-103 on multiple state transactions. Duration and renewal of perfection of a security interest perfected by compliance with the statute or treaty or governed by the provisions of the statute or treaty; in other respects the security interest is subject to this article.

     400.9-303. (1) A security interest is perfected when it has attached and when all of the applicable steps required for perfection have been taken. Such steps are specified in sections 400.9-115, 400.9-302, 400.9-304, 400.9-305 and 400.9-306. If such steps are taken before the security interest attaches, it is perfected at the time when it attaches.

     (2) If a security interest is originally perfected in any way permitted under this article and is subsequently perfected in some other way under this article, without an intermediate period when it was unperfected, the security interest shall be deemed to be perfected continuously for the purposes of this article.

     400.9-304. (1) A security interest in chattel paper or negotiable documents may be perfected by filing. A security interest in the rights to proceeds of a written letter of credit can be perfected only by the secured party's taking possession of the letter of credit. A security interest in money or instruments (other than [certificated securities or] instruments which constitute part of chattel paper) can be perfected only by the secured party's taking possession, except as provided in subsections (4) and (5) of this section and subsections (2) and (3) of section 400.9-306 on proceeds.

     (2) During the period that goods are in the possession of the issuer of a negotiable document therefor, a security interest in the goods is perfected by perfecting a security interest in the document, and any security interest in the goods otherwise perfected during such period is subject thereto.

     (3) A security interest in goods in the possession of a bailee other than one who has issued a negotiable document therefor is perfected by issuance of a document in the name of the secured party or by the bailee's receipt of notification of the secured party's interest or by filing as to the goods.

     (4) A security interest in instruments [(other than certificated securities)], certificated securities, or negotiable documents is perfected without filing or the taking of possession for a period of twenty-one days from the time it attaches to the extent that it arises for new value given under a written security agreement.

     (5) A security interest remains perfected for a period of twenty-one days without filing where a secured party having a perfected security interest in an instrument [(other than a certificated security)], a certificated security, a negotiable document or goods in possession of a bailee other than one who has issued a negotiable document therefor:

     (a) makes available to the debtor the goods or documents representing the goods for the purpose of ultimate sale or exchange or for the purpose of loading, unloading, storing, shipping, transshipping, manufacturing, processing or otherwise dealing with them in a manner preliminary to their sale or exchange, but priority between conflicting security interests in the goods is subject to subsection (3) of section 400.9-312; or

     (b) delivers the instrument or certificated security to the debtor for the purpose of ultimate sale or exchange or of presentation, collection, renewal, or registration of transfer.

     (6) After the twenty-one day period in subsections (4) and (5) perfection depends upon compliance with applicable provisions of this article.

     400.9-305. A security interest in letters of credit and advices of credit (subsection (2)(a) of section 400.5-116), goods, instruments [(other than certificated securities)], money, negotiable documents, or chattel paper may be perfected by the secured party's taking possession of the collateral. A security interest in the right to proceeds of a written letter of credit may be perfected by the secured party's taking possession of the letter of credit. If such collateral other than goods covered by a negotiable document is held by a bailee, the secured party is deemed to have possession from the time the bailee receives notification of the secured party's interest. A security interest is perfected by possession from the time possession is taken without relation back and continues only so long as possession is retained, unless otherwise specified in this article. The security interest may be otherwise perfected as provided in this article before or after the period of possession by the secured party.

     400.9-306. (1) "Proceeds" includes whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds. Insurance payable by reason of loss or damage to the collateral is proceeds, except to the extent that it is payable to a person other than a party to the security agreement. Any payments or distributions made with respect to investment property collateral are proceeds. Money, checks, deposit accounts and the like are "cash proceeds". All other proceeds are "non-cash proceeds".

     (2) Except where this article otherwise provides, a security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise provided the creditor agrees in writing, and also continues in any identifiable proceeds including collections received by the debtor.

     (3) The security interest in proceeds is a continuously perfected security interest if the interest in the original collateral was perfected but it ceases to be a perfected security interest and becomes unperfected ten days after receipt of the proceeds by the debtor unless

     (a) a filed financing statement covers the original collateral and the proceeds are collateral in which a security interest may be perfected by filing in the office or offices where the financing statement has been filed and, if the proceeds are acquired with cash proceeds, the description of collateral in the financing statement indicates the types of property constituting the proceeds; [or]

     (b) a filed financing statement covers the original collateral and the proceeds are identifiable cash proceeds; [or]

     (c) the original collateral was investment property and the proceeds are identifiable cash proceeds; or

     [(c)] (d) the security interest in the proceeds is perfected before the expiration of the ten-day period. Except as provided in this section, a security interest in proceeds can be perfected only by the methods or under the circumstances permitted in this article for original collateral of the same type.

     (4) In the event of insolvency proceedings instituted by or against a debtor, a secured party with a perfected security interest in proceeds has a perfected security interest only in the following proceeds:

     (a) in identifiable noncash proceeds and in separate deposit accounts containing only proceeds;

     (b) in identifiable cash proceeds in the form of money which is neither commingled with other money nor deposited in a deposit account prior to the insolvency proceedings;

     (c) in identifiable cash proceeds in the form of checks and the like which are not deposited in a deposit account prior to the insolvency proceedings; and

     (d) in all cash and deposit accounts of the debtor in which proceeds have been commingled with other funds, but the perfected security interest under this paragraph (d) is

     (i) subject to any right of setoff; and

     (ii) limited to an amount not greater than the amount of any cash proceeds received by the debtor within ten days before the institution of the insolvency proceedings less the sum of (I) the payments to the secured party on account of cash proceeds received by the debtor during such period and (II) the cash proceeds received by the debtor during such period to which the secured party is entitled under paragraphs (a) through (c) of this subsection (4).

     (5) If a sale of goods results in an account or chattel paper which is transferred by the seller to a secured party, and if the goods are returned to or are repossessed by the seller or the secured party, the following rules determine priorities:

     (a) If the goods were collateral at the time of sale, for an indebtedness of the seller which is still unpaid, the original security interest attaches again to the goods and continues as a perfected security interest if it was perfected at the time when the goods were sold. If the security interest was originally perfected by a filing which is still effective, nothing further is required to continue the perfected status; in any other case, the secured party must take possession of the returned or repossessed goods or must file.

     (b) An unpaid transferee of the chattel paper has a security interest in the goods against the transferor. Such security interest is prior to a security interest asserted under paragraph (a) to the extent that the transferee of the chattel paper was entitled to priority under section 400.9-308.

     (c) An unpaid transferee of the account has a security interest in the goods against the transferor. Such security interest is subordinate to a security interest asserted under paragraph (a).

     (d) A security interest of an unpaid transferee asserted under paragraph (b) or (c) must be perfected for protection against creditors of the transferor and purchasers of the returned or repossessed goods.

     400.9-309. Nothing in this article limits the rights of a holder in due course of a negotiable instrument (section 400.3-302) or a holder to whom a negotiable document of title has been duly negotiated (section 400.7-501) or a [bona fide] protected purchaser of a security (section [400.8-302] 400.8-303) and such holders or purchasers take priority over an earlier security interest even though perfected. Filing under this article does not constitute notice of the security interest to such holders or purchasers.

     400.9-312. (1) The rules of priority stated in other sections of this part and in the following sections shall govern when applicable: section [400.4-208] 400.4-210, with respect to the security interests of collecting banks in items being collected, accompanying documents and proceeds; section 400.9-103 on security interests related to other jurisdictions; section 400.9-114 on consignments; section 400.9-115 on security interests in investment property.

     (2) A perfected security interest in crops for new value given to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise takes priority over an earlier perfected security interest to the extent that such earlier interest secures obligations due more than six months before the crops become growing crops by planting or otherwise, even though the person giving new value had knowledge of the earlier security interest.

     (3) A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds received on or before the delivery of the inventory to a buyer if

     (a) the purchase money security interest is perfected at the time the debtor receives possession of the inventory; and

     (b) the purchase money secured party gives notification in writing to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory (i) before the date of the filing made by the purchase money secured party, or (ii) before the beginning of the twenty-one-day period where the purchase money security interest is temporarily perfected without filing or possession (subsection (5) of section 400.9-304); and

     (c) the holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and

     (d) the notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type.

     (4) A purchase money security interest in collateral other than inventory has priority over a conflicting security interest in the same collateral or its proceeds if the purchase money security interest is perfected at the time the debtor receives possession of the collateral or within twenty days thereafter.

     (5) In all cases not governed by other rules stated in this section (including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (3) and (4) of this section), priority between conflicting security interests in the same collateral shall be determined according to the following rules:

     (a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided that there is no period thereafter when there is neither filing nor perfection.

     (b) So long as conflicting security interests are unperfected, the first to attach has priority.

     (6) For the purposes of subsection (5) a date of filing or perfection as to collateral is also a date of filing or perfection as to proceeds.

     (7) If future advances are made while a security interest is perfected by filing, the taking of possession, or under section [400.8-321 on securities] 400.9-115 or section 400.9-116 on investment property, the security interest has the same priority for the purposes of subsection (5) or section 400.9-115(5) with respect to the future advances as it does with respect to the first advance. If a commitment is made before or while the security interest is so perfected, the security interest has the same priority with respect to advances made pursuant thereto. In other cases a perfected security interest has priority from the date the advance is made.

     [400.5-102. (1) Except as otherwise provided in subsection (4) of this section, this article applies

     (a) to a credit issued by a bank if the credit requires a documentary draft or a documentary demand for payment; and

     (b) to a credit issued by a person other than a bank if the credit requires that the draft or demand for payment be accompanied by a document of title; and

     (c) to a credit issued by a bank or other person if the credit is not within subparagraphs (a) or (b) but conspicuously states that it is a letter of credit or is conspicuously so entitled.

     (2) Unless the engagement meets the requirements of subsection (1), this article does not apply to engagements to make advances or to honor drafts or demands for payment, to authorities to pay or purchase, to guarantees or to general agreements.

     (3) This article deals with some but not all of the rules and concepts of letters of credit as such rules or concepts have developed prior to this chapter or may hereafter develop. The fact that this article states a rule does not by itself require, imply or negate application of the same or converse rule to a situation not provided for or to a person not specified by this article.

     (4) Unless otherwise agreed, this article 5 does not apply to a letter of credit or a credit if by its terms or by agreement, course of dealing or usage of trade such letter of credit or credit is subject in whole or in part to the "uniform customs and practice for commercial documentary credits" fixed by the thirteenth or by any subsequent congress of the international chamber of commerce.]

     [400.5-103. (1) In this article unless the context otherwise requires

     (a) "Credit" or "letter of credit" means an engagement by a bank or other person made at the request of a customer and of a kind within the scope of this article (section 400.5-102) that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. A credit may be either revocable or irrevocable. The engagement may be either an agreement to honor or a statement that the bank or other person is authorized to honor.

     (b) A "documentary draft" or a "documentary demand for payment" is one honor of which is conditioned upon the presentation of a document or documents. "Document" means any paper including document of title, security, invoice, certificate, notice of default and the like.

     (c) An "issuer" is a bank or other person issuing a credit.

     (d) A "beneficiary" of a credit is a person who is entitled under its terms to draw or demand payment.

     (e) An "advising bank" is a bank which gives notification of the issuance of a credit by another bank.

     (f) A "confirming bank" is a bank which engages either that it will itself honor a credit already issued by another bank or that such a credit will be honored by the issuer or a third bank.

     (g) A "customer" is a buyer or other person who causes an issuer to issue a credit. The term also includes a bank which procures issuance or confirmation on behalf of that bank's customer.

     (2) Other definitions applying to this article and the sections in which they appear are:

     "Notation of credit". Section 400.5-108.

     "Presenter". Section 400.5-112(3).

     (3) Definitions in other articles applying to this article and the sections in which they appear are:

     "Accept" or "Acceptance". Section 400.3-410.

     "Contract for sale". Section 400.2-106.

     "Draft". Section 400.3-104.

     "Holder in due course". Section 400.3-302.

     "Midnight deadline". Section 400.4-104.

     "Security". Section 400.8-102.

     (4) In addition, article 1 contains general definitions and principles of construction and interpretation applicable throughout this article.]

     [400.5-104. (1) Except as otherwise required in subsection (1)(c) of section 400.5-102 on scope, no particular form of phrasing is required for a credit. A credit must be in writing and signed by the issuer and a confirmation must be in writing and signed by the confirming bank. A modification of the terms of a credit or confirmation must be signed by the issuer or confirming bank.

     (2) A telegram may be a sufficient signed writing if it identifies its sender by an authorized authentication. The authentication may be in code and the authorized naming of the issuer in an advice of credit is a sufficient signing.]

     [400.5-105. No consideration is necessary to establish a credit or to enlarge or otherwise modify its terms.]

     [400.5-106. (1) Unless otherwise agreed a credit is established

     (a) as regards the customer as soon as a letter of credit is sent to him or the letter of credit or an authorized written advice of its issuance is sent to the beneficiary; and

     (b) as regards the beneficiary when he receives a letter of credit or an authorized written advice of its issuance.

     (2) Unless otherwise agreed once an irrevocable credit is established as regards the customer it can be modified or revoked only with the consent of the customer and once it is established as regards the beneficiary it can be modified or revoked only with his consent.

     (3) Unless otherwise agreed after a revocable credit is established it may be modified or revoked by the issuer without notice to or consent from the customer or beneficiary.

     (4) Notwithstanding any modification or revocation of a revocable credit any person authorized to honor or negotiate under the terms of the original credit is entitled to reimbursement for or honor of any draft or demand for payment duly honored or negotiated before receipt of notice of the modification or revocation and the issuer in turn is entitled to reimbursement from its customer.]

     [400.5-107. (1) Unless otherwise specified an advising bank by advising a credit issued by another bank does not assume any obligation to honor drafts drawn or demands for payment made under the credit but it does assume obligation for the accuracy of its own statement.

     (2) A confirming bank by confirming a credit becomes directly obligated on the credit to the extent of its confirmation as though it were its issuer and acquires the rights of an issuer.

     (3) Even though an advising bank incorrectly advises the terms of a credit it has been authorized to advise the credit is established as against the issuer to the extent of its original terms.

     (4) Unless otherwise specified the customer bears as against the issuer all risks of transmission and reasonable translation or interpretation of any message relating to a credit.]

     [400.5-108. (1) A credit which specifies that any person purchasing or paying drafts drawn or demands for payment made under it must note the amount of the draft or demand on the letter or advice of credit is a "notation credit".

     (2) Under a notation credit

     (a) a person paying the beneficiary or purchasing a draft or demand for payment from him acquires a right to honor only if the appropriate notation is made and by transferring or forwarding for honor the documents under the credit such a person warrants to the issuer that the notation has been made; and

     (b) unless the credit or a signed statement that an appropriate notation has been made accompanies the draft or demand for payment the issuer may delay honor until evidence of notation has been procured which is satisfactory to it but its obligation and that of its customer continue for a reasonable time not exceeding thirty days to obtain such evidence.

     (3) If the credit is not a notation credit

     (a) the issuer may honor complying drafts or demands for payment presented to it in the order in which they are presented and is discharged pro tanto by honor of any such draft or demand;

     (b) as between competing good faith purchasers of complying drafts or demands the person first purchasing has priority over a subsequent purchaser even though the later purchased draft or demand has been first honored.]

     [400.5-109. (1) An issuer's obligation to its customer includes good faith and observance of any general banking usage but unless otherwise agreed does not include liability or responsibility

     (a) for performance of the underlying contract for sale or other transaction between the customer and the beneficiary; or

     (b) for any act or omission of any person other than itself or its own branch or for loss or destruction of a draft, demand or document in transit or in the possession of others; or

     (c) based on knowledge or lack of knowledge of any usage of any particular trade.

     (2) An issuer must examine documents with care so as to ascertain that on their face they appear to comply with the terms of the credit but unless otherwise agreed assumes no liability or responsibility for the genuineness, falsification or effect of any document which appears on such examination to be regular on its face.

     (3) A non-bank issuer is not bound by any banking usage of which it has no knowledge.]

     [400.5-110. (1) Unless otherwise specified a credit may be used in portions in the discretion of the beneficiary.

     (2) Unless otherwise specified a person by presenting a documentary draft or demand for payment under a credit relinquishes upon its honor all claims to the documents and a person by transferring such draft or demand or causing such presentment authorizes such relinquishment. An explicit reservation of claim makes the draft or demand noncomplying.]

     [400.5-111. (1) Unless otherwise agreed the beneficiary by transferring or presenting a documentary draft or demand for payment warrants to all interested parties that the necessary conditions of the credit have been complied with. This is in addition to any warranties arising under articles 3, 4, 7 and 8.

     (2) Unless otherwise agreed a negotiating, advising, confirming, collecting or issuing bank presenting or transferring a draft or demand for payment under a credit warrants only the matters warranted by a collecting bank under article 4 and any such bank transferring a document warrants only the matters warranted by an intermediary under articles 7 and 8.]

     [400.5-112. (1) A bank to which a documentary draft or demand for payment is presented under a credit may without dishonor of the draft, demand or credit

     (a) defer honor until the close of the third banking day following receipt of the documents; and

     (b) further defer honor if the presenter has expressly or impliedly consented thereto. Failure to honor within the time here specified constitutes dishonor of the draft or demand and of the credit.

     (2) Upon dishonor the bank may unless otherwise instructed fulfill its duty to return the draft or demand and the documents by holding them at the disposal of the presenter and sending him an advice to that effect.

     (3) "Presenter" means any person presenting a draft or demand for payment for honor under a credit even though that person is a confirming bank or other correspondent which is acting under an issuer's authorization.]

     [400.5-113. (1) A bank seeking to obtain (whether for itself or another) honor, negotiation or reimbursement under a credit may give an indemnity to induce such honor, negotiation or reimbursement.

     (2) An indemnity agreement inducing honor, negotiation or reimbursement

     (a) unless otherwise explicitly agreed applies to defects in the documents but not in the goods; and

     (b) unless a longer time is explicitly agreed expires at the end of ten business days following receipt of the documents by the ultimate customer unless notice of objection is sent before such expiration date. The ultimate customer may send notice of objection to the person from whom he received the documents and any bank receiving such notice is under a duty to send notice to its transferor before its midnight deadline.]

     [400.5-114. (1) An issuer must honor a draft or demand for payment which complies with the terms of the relevant credit regardless of whether the goods or documents conform to the underlying contract for sale or other contract between the customer and the beneficiary. The issuer is not excused from honor of such a draft or demand by reason of an additional general term that all documents must be satisfactory to the issuer, but an issuer may require that specified documents must be satisfactory to it.

     (2) Unless otherwise agreed when documents appear on their face to comply with the terms of a credit but a required document does not in fact conform to the warranties made on negotiation or transfer of a document of title (section 400.7-507) or of a certificated security (section 400.8-306) or is forged or fraudulent or there is fraud in the transaction:

     (a) the issuer must honor the draft or demand for payment if honor is demanded by a negotiating bank or other holder of the draft or demand which has taken the draft or demand under the credit and under circumstances which would make it a holder in due course (section 400.3-302) and in an appropriate case would make it a person to whom a document of title has been duly negotiated (section 400.7-502) or a bona fide purchaser of a certificated security (section 400.8-302); and

     (b) in all other cases as against its customer, an issuer acting in good faith may honor the draft or demand for payment despite notification from the customer of fraud, forgery or other defect not apparent on the face of the documents but a court of appropriate jurisdiction may enjoin such honor.

     (3) Unless otherwise agreed an issuer which has duly honored a draft or demand for payment is entitled to immediate reimbursement of any payment made under the credit and to be put in effectively available funds not later than the day before maturity of any acceptance made under the credit.]

     [400.5-115. (1) When an issuer wrongfully dishonors a draft or demand for payment presented under a credit the person entitled to honor has with respect to any documents the rights of a person in the position of a seller (section 400.2-707) and may recover from the issuer the face amount of the draft or demand together with incidental damages under section 400.2-710 on seller's incidental damages{ and interest but less any amount realized by resale or other use or disposition of the subject matter of the transaction. In the event no resale or other utilization is made the documents, goods or other subject matter involved in the transaction must be turned over to the issuer on payment of judgment.

     (2) When an issuer wrongfully cancels or otherwise repudiates a credit before presentment of a draft or demand for payment drawn under it the beneficiary has the rights of a seller after anticipatory repudiation by the buyer under section 400.2-610 if he learns of the repudiation in time reasonably to avoid procurement of the required documents. Otherwise the beneficiary has an immediate right of action for wrongful dishonor.]

     [400.5-116. (1) The right to draw under a credit can be transferred or assigned only when the credit is expressly designated as transferable or assignable.

     (2) Even though the credit specifically states that it is nontransferable or nonassignable the beneficiary may before performance of the conditions of the credit assign his right to proceeds. Such an assignment is an assignment of an account under article 9 on secured transactions and is governed by that article except that

     (a) the assignment is ineffective until the letter of credit or advice of credit is delivered to the assignee which delivery constitutes perfection of the security interest under article 9; and

     (b) the issuer may honor drafts or demands for payment drawn under the credit until it receives a notification of the assignment signed by the beneficiary which reasonably identifies the credit involved in the assignment and contains a request to pay the assignee; and

     (c) after what reasonably appears to be such a notification has been received the issuer may without dishonor refuse to accept or pay even to a person otherwise entitled to honor until the letter of credit or advice of credit is exhibited to the issuer.

     (3) Except where the beneficiary has effectively assigned his right to draw or his right to proceeds, nothing in this section limits his right to transfer or negotiate drafts or demands drawn under the credit.]

     [400.5-117. (1) Where an issuer or an advising or confirming bank or a bank which has for a customer procured issuance of a credit by another bank becomes insolvent before final payment under the credit and the credit is one to which this article is made applicable by paragraph (a) or (b) of section 400.5-102(1) on scope, the receipt or allocation of funds or collateral to secure or meet obligations under the credit shall have the following results:

     (a) to the extent of any funds or collateral turned over after or before the insolvency as indemnity against or specifically for the purpose of payment of drafts or demands for payment drawn under the designated credit, the drafts or demands are entitled to payment in preference over depositors or other general creditors of the issuer or bank; and

     (b) on expiration of the credit or surrender of the beneficiary's rights under it unused any person who has given such funds or collateral is similarly entitled to return thereof; and

     (c) a charge to a general or current account with a bank if specifically consented to for the purpose of indemnity against or payment of drafts or demands for payment drawn under the designated credit falls under the same rules as if the funds had been drawn out in cash and then turned over with specific instructions.

     (2) After honor or reimbursement under this section the customer or other person for whose account the insolvent bank has acted is entitled to receive the documents involved.]

     [400.8-102. (1) In this Article unless the context otherwise requires:

     (a) A "certificated security" is a share, participation, or other interest in property of or an enterprise of the issuer or an obligation of the issuer which is

     (i) represented by an instrument issued in bearer or registered form;

     (ii) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment; and

     (iii) either one of a class or series or by its terms divisible into a class or series of shares, participations, interests, or obligations.

     (b) An "uncertificated security" is a share, participation, or other interest in property or an enterprise of the issuer or an obligation of the issuer which is

     (i) not represented by an instrument and the transfer of which is registered upon books maintained for that purpose by or on behalf of the issuer;

     (ii) of a type commonly dealt in on securities exchanges or markets; and

     (iii) either one of a class or series or by its terms divisible into a class or series of shares, participations, interests, or obligations.

     (c) A "security" is either a certificated or an uncertificated security. If a security is certificated, the terms "security" and "certificated security" may mean either the intangible interest, the instrument representing that interest, or both, as the context requires. A writing that is a certificated security is governed by this Article and not by Article 3, even though it also meets the requirements of that article. This article does not apply to money. If a certificated security has been retained by or surrendered to the issuer or its transfer agent for reasons other than registration of transfer, other temporary purpose, payment, exchange, or acquisition by the issuer, that security shall be treated as an uncertificated security for purposes of this Article.

     (d) A certificated security is in "registered form" if

     (i) it specifies a person entitled to the security or to the rights it represents, and

     (ii) its transfer may be registered upon books maintained for that purpose by or on behalf of the issuer, or the security so states.

     (e) A certificated security is in "bearer form" if it runs to bearer according to its terms and not by reason of any endorsement.

     (2) A "subsequent purchaser" is a person who takes other than by original issue.

     (3) A "clearing corporation" is a corporation registered as a "clearing agency" under the federal securities laws or a corporation:

     (a) at least ninety percent of whose capital stock is held by or for one or more organizations, none of which, other than a national securities exchange or association, holds in excess of twenty percent of the capital stock of the corporation, and each of which is

     (i) subject to supervision or regulation pursuant to the provisions of federal or state banking laws or state insurance laws,

     (ii) a broker or dealer or investment company registered under the federal securities laws, or

     (iii) a national securities exchange or association registered under the federal securities laws; and

     (b) any remaining capital stock of which is held by individuals who have purchased it at or prior to the time of their taking office as directors of the corporation, and who have purchased only so much of such capital stock as is necessary to permit them to qualify as directors.

     (4) A "custodian bank" is a bank or trust company that is supervised and examined by state or federal authority having supervision over banks and is acting as custodian for a clearing corporation.

     (5) Other definitions applying to this article or to specified Parts thereof and the sections in which they appear are:

     "Adverse claim". Section 400.8-302.

     "Bona fide purchaser". Section 400.8-302.

     "Broker". Section 400.8-303.

     "Debtor". Section 400.9-105.

     "Financial intermediary". Section 400.8-313.

     "Guarantee of the signature". Section 400.8-402.

     "Initial transaction statement". Section 400.8-408.

     "Instruction". Section 400.8-308.

     "Intermediary Bank". Section 400.4-105.

     "Issuer". Section 400.8-201.

     "Overissue". Section 400.8-104.

     "Secured Party". Section 400.9-105.

     "Security Agreement". Section 400.9-105.

     (6) In addition Article 1 contains general definitions and principles of construction and interpretation applicable throughout this Article.]

     [400.8-103. A lien upon a security in favor of an issuer thereof is valid against a purchaser only if:

     (a) the security is certificated and the right of the issuer to the lien is noted conspicuously thereon; or

     (b) the security is uncertificated and a notation of the right of the issuer to the lien is contained in the initial transaction statement sent to the purchaser or, if his interest is transferred to him other than by registration of transfer, pledge, or release, the initial transaction statement sent to the registered owner or the registered pledgee.]

     [400.8-104. (1) The provisions of this Article which validate a security or compel its issue or reissue do not apply to the extent that validation, issue or reissue would result in overissue; but if:

     (a) an identical security which does not constitute an overissue is reasonably available for purchase, the person entitled to issue or validation may compel the issuer to purchase the security for him and either to deliver a certificated security or to register the transfer of an uncertificated security to him, against surrender of any certificated security he holds; or

     (b) a security is not so available for purchase, the person entitled to issue or validation may recover from the issuer the price he or the last purchaser for value paid for it with interest from the date of his demand.

     (2) "Overissue" means the issue of securities in excess of the amount the issuer has corporate power to issue.]

     [400.8-105. (1) Certificated securities governed by this Article are negotiable instruments.

     (2) Statements (section 400.8-408), notices, or the like, sent by the issuer of uncertificated securities and instructions (section 400.8-308) are neither negotiable instruments nor certificated securities.

     (3) In any action on a security:

     (a) unless specifically denied in the pleadings, each signature on a certificated security, in a necessary endorsement, on an initial transaction statement, or on an instruction, is admitted;

     (b) if the effectiveness of a signature is put in issue, the burden of establishing it is on the party claiming under the signature, but the signature is presumed to be genuine or authorized;

     (c) if signatures on a certificated security are admitted or established, production of the security entitles a holder to recover on it unless the defendant establishes a defense or a defect going to the validity of the security;

     (d) if signatures on an initial transaction statement are admitted or established, the facts stated in the statement are presumed to be true as of the time of its issuance; and

     (e) after it is shown that a defense or defect exists, the plaintiff has the burden of establishing that he or some person under whom he claims is a person against whom the defense or defect is ineffective (section 400.8-202).]

     [400.8-106. The law (including the conflict of laws rules) of the jurisdiction of organization of the issuer governs the validity of a security, the effectiveness of registration by the issuer, and the rights and duties of the issuer with respect to:

     (a) registration of transfer of a certificated security;

     (b) registration of transfer, pledge, or release of an uncertificated security; and

     (c) sending of statements of uncertificated securities.]

     [400.8-107. (1) Unless otherwise agreed and subject to any applicable law or regulation respecting short sales, a person obligated to transfer securities may transfer any certificated security of the specified issue in bearer form or registered in the name of the transferee, or endorsed to him or in blank, or he may transfer an equivalent uncertificated security to the transferee or a person designated by the transferee.

     (2) If the buyer fails to pay the price as it comes due under a contract of sale, the seller may recover the price of:

     (a) certificated securities accepted by the buyer;

     (b) uncertificated securities that have been transferred to the buyer or a person designated by the buyer; and

     (c) other securities if efforts at their resale would be unduly burdensome or if there is no readily available market for their resale.]

     [400.8-108. A security interest in an uncertificated security may be evidenced by the registration of pledge to the secured party or a person designated by him. There can be no more than one registered pledge of an uncertificated security at any time. The registered owner of an uncertificated security is the person in whose name the security is registered, even if the security is subject to a registered pledge. The rights of a registered pledgee of an uncertificated security under this article are terminated by the registration of release.]

     [400.8-109. 1. Notwithstanding any other provision of law, any fiduciary holding securities in its fiduciary capacity and any insurance company with respect to its general account or separate accounts, any bank or trust company holding securities as a custodian or managing agent, and any bank or trust company holding securities as custodian for a fiduciary or insurance company is authorized to deposit or arrange for the deposit of such securities in a clearing corporation, or in a federal reserve bank under book-entry system. When such securities are so deposited with a clearing corporation, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of such clearing corporation by any person, regardless of the ownership of such securities, and certificates of small denomination may be merged into one or more certificates of larger denomination. The records of such fiduciary and the records of such bank or trust company acting as custodian, as managing agent, or as custodian for a fiduciary or insurance company shall at all times show the name of the party for whose account the securities are so deposited. Title to such securities may be transferred by bookkeeping entry on the books of such clearing corporation or federal reserve bank without physical delivery of certificates or documents representing such securities. A bank or trust company so depositing securities pursuant to this section shall be subject to such rules and regulations as the director of the division of finance, and, in the case of national banking associations, the comptroller of the currency, may from time to time issue. An insurance company depositing securities pursuant to this section shall be subject to such rules and regulations as the director of the department of insurance may from time to time issue. A bank or trust company acting as custodian for a fiduciary or insurance company shall, on demand by the fiduciary or insurance company, certify in writing to the fiduciary or insurance company the securities so deposited by such bank or trust company in such clearing corporation or federal reserve bank for the account of such fiduciary or insurance company. A fiduciary shall, on demand by any party to a judicial proceeding, or on demand by the attorney for such party, certify in writing to such party the securities deposited by such fiduciary in such clearing corporation or federal reserve bank for its account as such fiduciary. This section shall apply to any fiduciary holding securities in its fiduciary capacity, any insurance company with respect to its general account or separate accounts, and to any bank or trust company holding securities as a custodian, managing agent, or custodian for a fiduciary, or insurance company, acting on September 28, 1979, or who, thereafter, may act regardless of the date of the agreement, instrument, or court order by which it is appointed, and regardless of whether or not such fiduciary, insurance company, custodian, managing agent, or custodian for a fiduciary owns capital stock of such clearing corporation.

     2. Notwithstanding any other provision of law, the state treasurer may permit bonds standing as security for moneys deposited by him in banking institutions under the provisions of chapter 30, RSMo, to be deposited in book-entry collateral accounts maintained in a federal reserve bank or other clearing corporation as defined in section 400.8-102, or deposited with a banking institution in safekeeping for the state treasurer under procedures agreed upon by the governor, state auditor and state treasurer. The governor, state auditor and state treasurer shall also agree upon procedures to verify that the bonds are actually recorded in a book-entry collateral account or actually held in safekeeping.

     3. Securities, of the kind and type in which insurance companies are permitted to invest their funds, deposited in a clearing corporation or in book-entry accounts maintained in a federal reserve bank by an insurance company shall be eligible for deposit under any and all provisions of the insurance laws of this state relating to deposit of securities with the director of the department of insurance. The director shall establish procedures to verify that the securities are actually recorded in a book-entry account or actually held in safekeeping by a clearing corporation. Such procedures shall also provide that said securities on deposit with the department of insurance cannot be withdrawn by the insurance company without the approval of the director.]

     [400.8-201. (1) With respect to obligations on or defenses to a security, "issuer" includes a person who:

     (a) places or authorizes the placing of his name on a certificated security (otherwise than as authenticating trustee, registrar, transfer agent, or the like) to evidence that it represents a share, participation, or other interest in his property or in an enterprise, or to evidence his duty to perform an obligation represented by the certificated security;

     (b) creates shares, participations or other interests in his property or in an enterprise or undertakes obligations, which shares, participations, interests, or obligations are uncertificated securities;

     (c) directly or indirectly creates fractional interests in his rights or property which fractional interests are represented by certificated securities; or

     (d) becomes responsible for or in place of any other person described as an issuer in this section.

     (2) With respect to obligations on or defenses to a security, a guarantor is an issuer to the extent of his guaranty, whether or not his obligation is noted on a certificated security or on statements of uncertificated securities sent pursuant to section 400.8-408.

     (3) With respect to registration of transfer, pledge, or release (Part 4 of this Article), "issuer" means a person on whose behalf transfer books are maintained.]

     [400.8-202. (1) Even against a purchaser for value and without notice, the terms of a security include:

     (a) if the security is certificated, those stated on the security;

     (b) if the security is uncertificated, those contained in the initial transaction statement sent to such purchaser, or if his interest is transferred to him other than by registration of transfer, pledge, or release, the initial transaction statement sent to the registered owner or registered pledgee; and

     (c) those made part of the security by reference, on the certificated security or in the initial transaction statement, to another instrument, indenture, or document or to a constitution, statute, ordinance, rule, regulation, order or the like, to the extent that the terms referred to do not conflict with the terms stated on the certificated security or contained in the statement. A reference under this paragraph does not of itself charge a purchaser for value with notice of a defect going to the validity of the security, even though the certificated security or statement expressly states that a person accepting it admits notice.

     (2) A certificated security in the hands of a purchaser for value or an uncertificated security as to which an initial transaction statement has been sent to a purchaser for value, other than a security issued by a government or governmental agency or unit, even though issued with a defect going to its validity, is valid with respect to the purchaser if he is without notice of the particular defect unless the defect involves a violation of constitutional provisions, in which case the security is valid with respect to a subsequent purchaser for value and without notice of the defect. This subsection applies to an issuer that is a government or governmental agency or unit only if either there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security.

     (3) Except as provided in the case of certain unauthorized signatures on issue (section 400.8-205), lack of genuineness of a certificated security or an initial transaction statement is a complete defense, even against a purchaser for value and without notice.

     (4) All other defenses of the issuer of a certificated or uncertificated security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken without notice of the particular defense.

     (5) Nothing in this section shall be construed to affect the right of a party to a "when, as and if issued" or a "when distributed" contract to cancel the contract in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement pursuant to which the security is to be issued or distributed.]

     [400.8-203. (1) After an act or event creating a right to immediate performance of the principal obligation represented by a certificated security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer if:

     (a) the act or event is one requiring the payment of money, the delivery of certificated securities, the registration of transfer of uncertificated securities, or any of these on presentation or surrender of the certificated security, the funds or securities are available on the date set for payment or exchange, and he takes the security more than one year after that date; and

     (b) the act or event is not covered by paragraph (a) and he takes the security more than two years after the date set for surrender or presentation or the date on which performance became due.

     (2) A call that has been revoked is not within subsection (1).]

     [400.8-204. A restriction on transfer of a security imposed by the issuer, even though otherwise lawful, is ineffective against any person without actual knowledge of it unless:

     (a) the security is certificated and the restriction is noted conspicuously thereon; or

     (b) the security is uncertificated and a notation of the restriction is contained in the initial transaction statement sent to the person or, if his interest is transferred to him other than by registration of transfer, pledge, or release, the initial transaction statement sent to the registered owner or the registered pledgee.]

     [400.8-205. An unauthorized signature placed on a certificated security prior to or in the course of issue or placed on an initial transaction statement is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security or a purchaser for value of an uncertificated security, to whom such initial transaction statement has been sent, if the purchaser is without notice of the lack of authority and the signing has been done by:

     (a) an authenticating trustee, registrar, transfer agent, or other person entrusted by the issuer with the signing of the security, of similar securities, or of initial transaction statements or the immediate preparation for signing any of them; or

     (b) an employee of the issuer, or of any of the foregoing, entrusted with responsible handling of the security or initial transaction statement.]

     [400.8-206. (1) If a certificated security contains the signatures necessary to its issue or transfer but is incomplete in any other respect:

     (a) any person may complete it by filling in the blanks as authorized; and

     (b) even though the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

     (2) A complete certificated security that has been improperly altered, even though fraudulently, remains enforceable, but only according to its original terms.

     (3) If an initial transaction statement contains the signatures necessary to its validity, but is incomplete in any other respect:

     (a) any person may complete it by filling in the blanks as authorized; and

     (b) even though the blanks are incorrectly filled in, the statement as completed is effective in favor of the person to whom it is sent if he purchased the security referred to therein for value and without notice of the incorrectness.

     (4) A complete initial transaction statement that has been improperly altered, even though fraudulently, is effective in favor of a purchaser to whom it has been sent, but only according to its original terms.]

     [400.8-207. (1) Prior to due presentment for registration of transfer of a certificated security in registered form, the issuer or indenture trustee may treat the registered owner as the person exclusively entitled to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.

     (2) Subject to the provisions of subsections (3), (4), and (6), the issuer or indenture trustee may treat the registered owner of an uncertificated security as the person exclusively entitled to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.

     (3) The registered owner of an uncertificated security that is subject to a registered pledge is not entitled to registration of transfer prior to the due presentment to the issuer of a release instruction. The exercise of conversion rights with respect to a convertible uncertificated security is a transfer within the meaning of this section.

     (4) Upon due presentment of a transfer instruction from the registered pledgee of an uncertificated security, the issuer shall:

     (a) register the transfer of the security to the new owner free of pledge, if the instruction specifies a new owner (who may be the registered pledgee) and does not specify a pledgee;

     (b) register the transfer of the security to the new owner subject to the interest of the existing pledgee, if the instruction specifies a new owner and the existing pledgee; or

     (c) register the release of the security from the existing pledge and register the pledge of the security to the other pledgee, if the instruction specifies the existing owner and another pledgee.

     (5) Continuity of perfection of a security interest is not broken by registration of transfer under subsection (4)(b) or by registration of release and pledge under subsection (4)(c), if the security interest is assigned.

     (6) If an uncertificated security is subject to a registered pledge:

     (a) any uncertificated securities issued in exchange for or distributed with respect to the pledged security shall be registered subject to the pledge;

     (b) any certificated securities issued in exchange for or distributed with respect to the pledged security shall be delivered to the registered pledgee; and

     (c) any money paid in exchange for or in redemption of part or all of the security shall be paid to the registered pledgee.

     (7) Nothing in this Article shall be construed to affect the liability of the registered owner of a security for calls, assessments, or the like.]

     [400.8-208. (1) A person placing his signature upon a certificated security or an initial transaction statement as authenticating trustee, registrar, transfer agent, or the like, warrants to a purchaser for value of the certificated security or a purchaser for value of an uncertificated security to whom the initial transaction statement has been sent, if the purchaser is without notice of the particular defect, that:

     (a) the certificated security or initial transaction statement is genuine;

     (b) his own participation in the issue or registration of the transfer, pledge, or release of the security is within his capacity and within the scope of the authority received by him from the issuer; and

     (c) he has reasonable grounds to believe that the security is in the form and within the amount the issuer is authorized to issue.

     (2) Unless otherwise agreed, a person by so placing his signature does not assume responsibility for the validity of the security in other respects.]

     [400.8-301. (1) Upon transfer of a security to a purchaser (section 400.8-313), the purchaser acquires the rights in the security which his transferor had or had actual authority to convey unless the purchaser's rights are limited by section 400.8-302(4).

     (2) A transferee of a limited interest acquires rights only to the extent of the interest transferred. The creation or release of a security interest in a security is the transfer of a limited interest in that security.]

     [400.8-302. (1) A "bona fide purchaser" is a purchaser for value in good faith and without notice of any adverse claim:

     (a) who takes delivery of a certificated security in bearer form or in registered form, issued or endorsed to him or in blank;

     (b) to whom the transfer, pledge or release of an uncertificated security is registered on the books of the issuer; or

     (c) to whom a security is transferred under the provisions of paragraph (c), (d)(i), or (g) of section 400.8-313(1).

     (2) "Adverse claim" includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in the security.

     (3) A bona fide purchaser in addition to acquiring the rights of a purchaser (section 400.8-301) also acquires his interest in the security free of any adverse claim.

     (4) Notwithstanding section 400.8-301(1), the transferee of a particular certificated security who has been a party to any fraud or illegality affecting the security, or who as a prior holder of that certificated security had notice of an adverse claim, cannot improve his position by taking from a bona fide purchaser.]

     [400.8-303. "Broker" means a person engaged for all or part of his time in the business of buying and selling securities, who in the transaction concerned acts for, buys a security from, or sells a security to, a customer. Nothing in this article determines the capacity in which a person acts for purposes of any other statute or rule to which the person is subject.]

     [400.8-304. (1) A purchaser (including a broker for the seller or buyer, but excluding an intermediary bank) of a certificated security is charged with notice of adverse claims if:

     (a) the security, whether in bearer or registered form, has been endorsed "for collection" or "for surrender" or for some other purpose not involving transfer; or

     (b) the security is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor. The mere writing of a name on a security is not such a statement.

     (2) A purchaser (including a broker for the seller or buyer, but excluding an intermediary bank) to whom the transfer, pledge, or release of an uncertificated security is registered is charged with notice of adverse claims as to which the issuer has a duty under section 400.8-403(4) at the time of registration and which are noted in the initial transaction statement sent to the purchaser or, if his interest is transferred to him other than by registration of transfer, pledge, or release, the initial transaction statement sent to the registered owner or the registered pledgee.

     (3) The fact that the purchaser (including a broker for the seller or buyer) of a certificated or uncertificated security has notice that the security is held for a third person or is registered in the name of or endorsed by a fiduciary does not create a duty of inquiry into the rightfulness of the transfer or constitute constructive notice of adverse claims. However, if the purchaser (excluding an intermediary bank) has knowledge that the proceeds are being used or the transaction is for the individual benefit of the fiduciary or otherwise in breach of duty, the purchaser is charged with notice of adverse claims.]

     [400.8-305. An act or event that creates a right to immediate performance of the principal obligation represented by a certificated security or which sets a date on or after which the security is to be presented or surrendered for redemption or exchange does not itself constitute any notice of adverse claims except in the case of a transfer:

     (a) after one year from any date set for presentment or surrender for redemption or exchange; or

     (b) after six months from any date set for payment of money against presentation or surrender of the security if funds are available for payment on that date.]

     [400.8-306. (1) A person who presents a certificated security for registration of transfer or for payment or exchange warrants to the issuer that he is entitled to the registration, payment, or exchange. But, a purchaser for value and without notice of adverse claims who receives a new, reissued, or reregistered certificated security on registration of transfer or receives an initial transaction statement confirming the registration of transfer of an equivalent uncertificated security to him warrants only that he has no knowledge of any unauthorized signature (section 400.8-311) in a necessary endorsement.

     (2) A person by transferring a certificated security to a purchaser for value warrants only that:

     (a) his transfer is effective and rightful;

     (b) the security is genuine and has not been materially altered; and

     (c) he knows of no fact which might impair the validity of the security.

     (3) If a certificated security is delivered by an intermediary known to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim against delivery, the intermediary by delivery warrants only his own good faith and authority, even though he has purchased or made advances against the claim to be collected against the delivery.

     (4) A pledgee or other holder for security who redelivers a certificated security received, or after payment and on order of the debtor delivers that security to a third person, makes only the warranties of an intermediary under subsection (3).

     (5) A person who originates an instruction warrants to the issuer that:

     (a) he is an appropriate person to originate the instruction; and

     (b) at the time the instruction is presented to the issuer he will be entitled to the registration of transfer, pledge, or release.

     (6) A person who originates an instruction warrants to any person specially guaranteeing his signature (subsection 400.8-312(3)) that:

     (a) he is an appropriate person to originate the instruction; and

     (b) at the time the instruction is presented to the issuer

     (i) he will be entitled to the registration of transfer, pledge, or release; and

     (ii) the transfer, pledge, or release requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.

     (7) A person who originates an instruction warrants to a purchaser for value and to any person guaranteeing the instruction (section 400.8-312(6)) that:

     (a) he is an appropriate person to originate the instruction;

     (b) the uncertificated security referred to therein is valid; and

     (c) at the time the instruction is presented to the issuer

     (i) the transferor will be entitled to the registration of transfer, pledge, or release;

     (ii) the transfer, pledge, or release requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction; and

     (iii) the requested transfer, pledge, or release will be rightful.

     (8) If a secured party is the registered pledgee or the registered owner of an uncertificated security, a person who originates an instruction of release or transfer to the debtor or, after payment and on order of the debtor, a transfer instruction to a third person, warrants to the debtor or the third person only that he is an appropriate person to originate the instruction and at the time the instruction is presented to the issuer, the transferor will be entitled to the registration of release or transfer. If a transfer instruction to a third person who is a purchaser for value is originated on order of the debtor, the debtor makes to the purchaser the warranties of paragraphs (b), (c)(ii) and (c)(iii) of subsection (7).

     (9) A person who transfers an uncertificated security to a purchaser for value and does not originate an instruction in connection with the transfer warrants only that:

     (a) his transfer is effective and rightful; and

     (b) the uncertificated security is valid.

     (10) A broker gives to his customer and to the issuer and a purchaser the applicable warranties provided in this section and has the rights and privileges of a purchaser under this section. The warranties of and in favor of the broker acting as an agent are in addition to applicable warranties given by and in favor of his customer.]

     [400.8-307. If a certificated security in registered form has been delivered to a purchaser without a necessary endorsement he may become a bona fide purchaser only as of the time the endorsement is supplied; but against the transferor, the transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.]

     [400.8-308. (1) An endorsement of a certificated security in registered form is made when an appropriate person signs on it or on a separate document an assignment or transfer of the security or a power to assign or transfer it or his signature is written without more upon the back of the security.

     (2) An endorsement may be in blank or special. An endorsement in blank includes an endorsement to bearer. A special endorsement specifies to whom the security is to be transferred, or who has power to transfer it. A holder may convert a blank endorsement into a special endorsement.

     (3) An endorsement purporting to be only of part of a certificated security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

     (4) An "instruction" is an order to the issuer of an uncertificated security requesting that the transfer, pledge, or release from pledge of the uncertificated security specified therein be registered.

     (5) An instruction originated by an appropriate person is:

     (a) a writing signed by an appropriate person; or

     (b) a communication to the issuer in any form agreed upon in a writing signed by the issuer and an appropriate person.

     If an instruction has been originated by an appropriate person but is incomplete in any other respect, any person may complete it as authorized and the issuer may rely on it as completed even though it has been completed incorrectly.

     (6) "An appropriate person" in subsection (1) means the person specified by the certificated security or by special endorsement to be entitled to the security.

     (7) "An appropriate person" in subsection (5) means:

     (a) for an instruction to transfer or pledge an uncertificated security which is then not subject to a registered pledge, the registered owner; or

     (b) for an instruction to transfer or release an uncertificated security which is then subject to a registered pledge, the registered pledgee.

     (8) In addition to the persons designated in subsections (6) and (7), "an appropriate person" in subsections (1) and (5) includes:

     (a) if the person designated is described as a fiduciary but is no longer serving in the described capacity, either that person or his successor;

     (b) if the persons designated are described as more than one person as fiduciaries and one or more are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

     (c) if the person designated is an individual and is without legal capacity to act by virtue of death, disability, infancy, or otherwise, his personal representative, conservator, or like fiduciary;

     (d) if the persons designated are described as more than one person as tenants by the entirety or with right of survivorship and by reason of death all cannot sign, the survivor or survivors;

     (e) a person having power to sign under applicable law or controlling instrument; and

     (f) to the extent that the person designated or any of the foregoing persons may act through an agent, his authorized agent.

     (9) Unless otherwise agreed, the endorser of a certificated security by his endorsement or the originator of an instruction by his origination assumes no obligation that the security will be honored by the issuer but only the obligations provided in section 400.8-306.

     (10) Whether the person signing is appropriate is determined as of the date of signing and an endorsement made by or an instruction originated by him does not become unauthorized for the purposes of this article by virtue of any subsequent change of circumstances.

     (11) Failure of a fiduciary to comply with a controlling instrument or with the law of the state having jurisdiction of the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of the transfer, pledge, or release does not render his endorsement or an instruction originated by him unauthorized for the purposes of this Article.]

     [400.8-309. An endorsement of a certificated security, whether special or in blank, does not constitute a transfer until delivery of the certificated security on which it appears or, if the endorsement is on a separate document, until delivery of both the document and the certificated security.]

     [400.8-310. An endorsement of a certificated security in bearer form may give notice of adverse claims (section 400.8-304) but does not otherwise affect any right to registration the holder possesses.]

     [400.8-311. Unless the owner or pledgee has ratified an unauthorized endorsement or instruction or is otherwise precluded from asserting its ineffectiveness:

     (a) he may assert its ineffectiveness against the issuer or any purchaser, other than a purchaser for value and without notice of adverse claims, who has in good faith received a new, reissued, or reregistered certificated security on registration of transfer or received an initial transaction statement confirming the registration of transfer, pledge, or release of an equivalent uncertificated security to him; and

     (b) an issuer who registers the transfer of a certificated security upon the unauthorized endorsement or who registers the transfer, pledge, or release of an uncertificated security upon the unauthorized instruction is subject to liability for improper registration (section 400.8-404).]

     [400.8-312. (1) Any person guaranteeing a signature of an endorser of a certificated security warrants that at the time of signing:

     (a) the signature was genuine;

     (b) the signer was an appropriate person to endorse (section 400.8-308); and

     (c) the signer had legal capacity to sign.

     (2) Any person guaranteeing a signature of the originator of an instruction warrants that at the time of signing:

     (a) the signature was genuine;

     (b) the signer was an appropriate person to originate the instruction (section 400.8-308) if the person specified in the instruction as the registered owner or registered pledgee of the uncertificated security was, in fact, the registered owner or registered pledgee of such security, as to which fact the signature guarantor makes no warranty;

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

     (d) the taxpayer identification number, if any, appearing on the instruction as that of the registered owner or registered pledgee was the taxpayer identification number of the signer or of the owner or pledgee for whom the signer was acting.

     (3) Any person specially guaranteeing the signature of the originator of an instruction makes not only the warranties of a signature guarantor (subsection (2)) but also warrants that at the time the instruction is presented to the issuer:

     (a) the person specified in the instruction as the registered owner or registered pledgee of the uncertificated security will be the registered owner or registered pledgee; and

     (b) the transfer, pledge, or release of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.

     (4) The guarantor under subsections (1) and (2) or the special guarantor under subsection (3) does not otherwise warrant the rightfulness of the particular transfer, pledge, or release.

     (5) Any person guaranteeing an endorsement of a certificated security makes not only the warranties of a signature guarantor under subsection (1) but also warrants the rightfulness of the particular transfer in all respects.

     (6) Any person guaranteeing an instruction requesting the transfer, pledge, or release of an uncertificated security makes not only the warranties of a special signature guarantor under subsection (3) but also warrants the rightfulness of the particular transfer, pledge, or release in all respects.

     (7) No issuer may require a special guarantee of signature (subsection (3)), a guarantee of endorsement (subsection (5)), or a guarantee of instruction (subsection (6)) as a condition to registration of transfer, pledge, or release.

     (8) The foregoing warranties are made to any person taking or dealing with the security in reliance on the guarantee, and the guarantor is liable to the person for any loss resulting from breach of the warranties.]

     [400.8-313. (1) Transfer of a security or a limited interest (including a security interest) therein to a purchaser occurs only:

     (a) at the time he or a person designated by him acquires possession of a certificated security;

     (b) at the time the transfer, pledge, or release of an uncertificated security is registered to him or a person designated by him;

     (c) at the time his financial intermediary acquires possession of a certificated security specially endorsed to or issued in the name of the purchaser;

     (d) at the time a financial intermediary, not a clearing corporation, sends him confirmation of the purchase and also by book entry or otherwise identifies as belonging to the purchaser

     (i) a specific certificated security in the financial intermediary's possession;

     (ii) a quantity of securities that constitute or are part of a fungible bulk of certificated securities in the financial intermediary's possession or of uncertificated securities registered in the name of the financial intermediary; or

     (iii) a quantity of securities that constitute or are part of a fungible bulk of securities shown on the account of the financial intermediary on the books of another financial intermediary;

     (e) with respect to an identified certificated security to be delivered while still in the possession of a third person, not a financial intermediary, at the time that person acknowledges that he holds for the purchaser;

     (f) with respect to a specific uncertificated security the pledge or transfer of which has been registered to a third person, not a financial intermediary, at the time that person acknowledges that he holds for the purchaser;

     (g) at the time appropriate entries to the account of the purchaser or a person designated by him on the books of a clearing corporation are made under section 400.8-320;

     (h) with respect to the transfer of a security interest where the debtor has signed a security agreement containing a description of the security, at the time a written notification, which, in the case of the creation of the security interest, is signed by the debtor (which may be a copy of the security agreement) or which, in the case of the release or assignment of the security interest created pursuant to this paragraph, is signed by the secured party, is received by

     (i) a financial intermediary on whose books the interest of the transferor in the security appears;

     (ii) a third person, not a financial intermediary, in possession of the security, if it is certificated;

     (iii) a third person, not a financial intermediary, who is the registered owner of the security, if it is uncertificated and not subject to a registered pledge; or

     (iv) a third person, not a financial intermediary, who is the registered pledgee of the security, if it is uncertificated and subject to a registered pledge;

     (i) with respect to the transfer of a security interest where the transferor has signed a security agreement containing a description of the security, at the time new value is given by the secured party; or

     (j) with respect to the transfer of a security interest where the secured party is a financial intermediary and the security has already been transferred to the financial intermediary under paragraphs (a), (b), (c), (d), or (g), at the time the transferor has signed a security agreement containing a description of the security and value is given by the secured party.

     (2) The purchaser is the owner of a security held for him by a financial intermediary, but cannot be a bona fide purchaser of a security so held except in the circumstances specified in paragraphs (c), (d)(i), and (g) of subsection (1). If a security so held is part of a fungible bulk as in the circumstances specified in paragraphs (d)(ii) and (d)(iii) of subsection (1), the purchaser is the owner of a proportionate property interest in the fungible bulk.

     (3) Notice of an adverse claim received by the financial intermediary or by the purchaser after the financial intermediary takes delivery of a certificated security as a holder for value or after the transfer, pledge, or release of an uncertificated security has been registered free of the claim to a financial intermediary who has given value is not effective either as to the financial intermediary or as to the purchaser. However, as between the financial intermediary and the purchaser the purchaser may demand transfer of an equivalent security as to which no notice of adverse claim has been received.

     (4) A "financial intermediary" is a bank, broker, clearing corporation or other person (or the nominee of any of them) which in the ordinary course of its business maintains security accounts for its customers and is acting in that capacity. A financial intermediary may have a security interest in securities held in account for its customer.]

     [400.8-314. (1) Unless otherwise agreed, if a sale of a security is made on an exchange or otherwise through brokers:

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

     (i) places a certificated security in the possession of the selling broker or of a person designated by the broker;

     (ii) causes an uncertificated security to be registered in the name of the selling broker or a person designated by the broker;

     (iii) if requested, causes an acknowledgment to be made to the selling broker that a certificated or uncertificated security is held for the broker; or

     (iv) places in the possession of the selling broker or of a person designated by the broker a transfer instruction for an uncertificated security, providing the issuer does not refuse to register the requested transfer if the instruction is presented to the issuer for registration within thirty days thereafter; and

     (b) the selling broker, including a correspondent broker acting for a selling customer, fulfills his duty to transfer at the time he:

     (i) places a certificated security in the possession of the buying broker or a person designated by the buying broker;

     (ii) causes an uncertificated security to be registered in the name of the buying broker or a person designated by the buying broker;

     (iii) places in the possession of the buying broker or of a person designated by the buying broker a transfer instruction for an uncertificated security, providing the issuer does not refuse to register the requested transfer if the instruction is presented to the issuer for registration within thirty days thereafter; or

     (iv) effects clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

     (2) Except as provided in this section and unless otherwise agreed, a transferor's duty to transfer a security under a contract of purchase is not fulfilled until he:

     (a) places a certificated security in form to be negotiated by the purchaser in the possession of the purchaser or of a person designated by the purchaser;

     (b) causes an uncertificated security to be registered in the name of the purchaser or a person designated by the purchaser; or

     (c) if the purchaser requests, causes an acknowledgment to be made to the purchaser that a certificated or uncertificated security is held for the purchaser.

     (3) Unless made on an exchange, a sale to a broker purchasing for his own account is within subsection (2) and not within subsection (1).]

     [400.8-315. (1) Any person against whom the transfer of a security is wrongful for any reason, including his incapacity, as against anyone except a bona fide purchaser, may:

     (a) reclaim possession of the certificated security wrongfully transferred;

     (b) obtain possession of any new certificated security representing all or part of the same rights;

     (c) compel the origination of an instruction to transfer to him or a person designated by him an uncertificated security constituting all or part of the same rights; or

     (d) have damages.

     (2) If the transfer is wrongful because of an unauthorized endorsement of a certificated security, the owner may also reclaim or obtain possession of the security or a new certificated security, even from a bona fide purchaser, if the ineffectiveness of the purported endorsement can be asserted against him under the provisions of this article on unauthorized endorsements (section 400.8-311).

     (3) The right to obtain or reclaim possession of a certificated security or to compel the origination of a transfer instruction may be specifically enforced and the transfer of a certificated or uncertificated security enjoined and a certificated security impounded pending the litigation.]

     [400.8-316. Unless otherwise agreed, the transferor of a certificated security or the transferor, pledgor, or pledgee of an uncertificated security on due demand must supply his purchaser with any proof of his authority to transfer, pledge, or release or with any other requisite necessary to obtain registration of the transfer, pledge, or release of the security; but if the transfer, pledge, or release is not for value, a transferor, pledgor, or pledgee need not do so unless the purchaser furnishes the necessary expenses. Failure within a reasonable time to comply with a demand made gives the purchaser the right to reject or rescind the transfer, pledge, or release.]

     [400.8-317. (1) Subject to the exceptions in subsections (3) and (4), no attachment or levy upon a certificated security or any share or other interest represented thereby which is outstanding is valid until the security is actually seized by the officer making the attachment or levy, but a certificated security which has been surrendered to the issuer may be reached by a creditor by legal process at the issuer's chief executive office in the United States.

     (2) An uncertificated security registered in the name of the debtor may not be reached by a creditor except by legal process at the issuer's chief executive office in the United States.

     (3) The interest of a debtor in a certificated security that is in the possession of a secured party not a financial intermediary or in an uncertificated security registered in the name of a secured party not a financial intermediary (or in the name of a nominee of the secured party) may be reached by a creditor by legal process upon the secured party.

     (4) The interest of a debtor in a certificated security that is in the possession of or registered in the name of a financial intermediary or in an uncertificated security registered in the name of a financial intermediary may be reached by a creditor by legal process upon the financial intermediary on whose books the interest of the debtor appears.

     (5) Unless otherwise provided by law, a creditor's lien upon the interest of a debtor in a security obtained pursuant to subsection (3) or (4) is not a restraint on the transfer of the security, free of the lien, to a third party for new value; but in the event of a transfer, the lien applies to the proceeds of the transfer in the hands of the secured party or financial intermediary, subject to any claims having priority.

     (6) A creditor whose debtor is the owner of a security is entitled to aid from courts of appropriate jurisdiction, by injunction or otherwise, in reaching the security or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by ordinary legal process.]

     [400.8-318. An agent or bailee who in good faith (including observance of reasonable commercial standards if he is in the business of buying, selling, or otherwise dealing with securities) has received certificated securities and sold, pledged, or delivered them or has sold or caused the transfer or pledge of uncertificated securities over which he had control according to the instructions of his principal, is not liable for conversion or for participation in breach of fiduciary duty although the principal had no right so to deal with the securities.]

     [400.8-319. A contract for the sale of securities is not enforceable by way of action or defense unless:

     (a) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker, sufficient to indicate that a contract has been made for sale of a stated quantity of described securities at a defined or stated price;

     (b) delivery of a certificated security or transfer instruction has been accepted, or transfer of an uncertificated security has been registered and the transferee has failed to send written objection to the issuer within ten days after receipt of the initial transaction statement confirming the registration, or payment has been made, but the contract is enforceable under this provision only to the extent of the delivery, registration, or payment;

     (c) within a reasonable time a writing in confirmation of the sale or purchase and sufficient against the sender under paragraph (a) has been received by the party against whom enforcement is sought and he has failed to send written objection to its contents within ten days after its receipt; or

     (d) the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a contract was made for the sale of a stated quantity of described securities at a defined or stated price.]

     [400.8-320. (1) In addition to other methods, a transfer, pledge, or release of a security or any interest therein may be effected by the making of appropriate entries on the books of a clearing corporation reducing the account of the transferor, pledgor, or pledgee and increasing the account of the transferee, pledgee, or pledgor by the amount of the obligation, or the number of shares or rights transferred, pledged, or released, if the security is shown on the account of a transferor, pledgor, or pledgee on the books of the clearing corporation; is subject to the control of the clearing corporation; and

     (a) if certificated,

     (i) is in the custody of the clearing corporation, another clearing corporation, a custodian bank or a nominee of any of them; and

     (ii) is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing corporation, a custodian bank, or a nominee of any of them; or

     (b) if uncertificated, is registered in the name of the clearing corporation, another clearing corporation, a custodian bank, or a nominee of any of them.

     (2) Under this section entries may be made with respect to like securities or interests therein as a part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number, or the like, and, in appropriate cases, may be on a net basis taking into account other transfers, pledges, or releases of the same security.

     (3) A transfer under this section is effective (section 400.8-313) and the purchaser acquires the rights of the transferor (section 400.8-301). A pledge or release under this section is the transfer of a limited interest. If a pledge or the creation of a security interest is intended, the security interest is perfected at the time when both value is given by the pledgee and the appropriate entries are made (section 400.8-321). A transferee or pledgee under this section may be a bona fide purchaser (section 400.8-302).

     (4) A transfer or pledge under this section is not a registration of transfer under Part 4 of this Article.

     (5) That entries made on the books of the clearing corporation as provided in subsection (1) are not appropriate does not affect the validity or effect of the entries or the liabilities or obligations of the clearing corporation to any person adversely affected thereby.]

     [400.8-321. (1) A security interest in a security is enforceable and can attach only if it is transferred to the secured party or a person designated by him pursuant to a provision of section 400.8-313(1).

     (2) A security interest so transferred pursuant to agreement by a transferor who has rights in the security to a transferee who has given value is a perfected security interest, but a security interest that has been transferred solely under paragraph (i) of section 400.8-313(1) becomes unperfected after twenty-one days unless, within that time, the requirements for transfer under any other provision of section 400.8-313(1) are satisfied.

     (3) A security interest in a security is subject to the provisions of Article 9, but:

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

     (b) no written security agreement signed by the debtor is necessary to make the security interest enforceable, except as otherwise provided in paragraph (h), (i), or (j) of section 400.8-313(1). The secured party has the rights and duties provided under section 400.9-207, to the extent they are applicable, whether or not the security is certificated, and, if certificated, whether or not it is in his possession.

     (4) Unless otherwise agreed, a security interest in a security is terminated by transfer to the debtor or a person designated by him pursuant to a provision of section 400.8-313(1). If a security is thus transferred, the security interest, if not terminated, becomes unperfected unless the security is certificated and is delivered to the debtor for the purpose of ultimate sale or exchange or presentation, collection, renewal, or registration of transfer. In that case, the security interest becomes unperfected after twenty-one days unless, within that time, the security (or securities for which it has been exchanged) is transferred to the secured party or a person designated by him pursuant to a provision of section 400.8-313(1).]

     [400.8-401. (1) If a certificated security in registered form is presented to the issuer with a request to register transfer or an instruction is presented to the issuer with a request to register transfer, pledge, or release, the issuer shall register the transfer, pledge, or release as requested if:

     (a) the security is endorsed or the instruction was originated by the appropriate person or persons (section 400.8-308);

     (b) reasonable assurance is given that those endorsements or instructions are genuine and effective (section 400.8-402);

     (c) the issuer has no duty as to adverse claims or has discharged the duty (section 400.8-403);

     (d) any applicable law relating to the collection of taxes has been complied with; and

     (e) the transfer, pledge, or release is in fact rightful or is to a bona fide purchaser.

     (2) If an issuer is under a duty to register a transfer, pledge, or release of a security, the issuer is also liable to the person presenting a certificated security or an instruction for registration or his principal for loss resulting from any unreasonable delay in registration or from failure or refusal to register the transfer, pledge, or release.]

     [400.8-402. (1) The issuer may require the following assurance that each necessary endorsement of a certificated security or each instruction (section 400.8-308) is genuine and effective:

     (a) in all cases, a guarantee of the signature (section 400.8-312(1) or (2)) of the person endorsing a certificated security or originating an instruction including, in the case of an instruction, a warranty of the taxpayer identification number or, in the absence thereof, other reasonable assurance of identity;

     (b) if the endorsement is made or the instruction is originated by an agent, appropriate assurance of authority to sign;

     (c) if the endorsement is made or the instruction is originated by a fiduciary, appropriate evidence of appointment or incumbency;

     (d) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

     (e) if the endorsement is made or the instruction is originated by a person not covered by any of the foregoing, assurance appropriate to the case corresponding as nearly as may be to the foregoing.

     (2) A "guarantee of the signature" in subsection (1) means a guarantee signed by or on behalf of a person reasonably believed by the issuer to be responsible. The issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.

     (3) "Appropriate evidence of appointment or incumbency" in subsection (1) means:

     (a) in the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of that court or an officer thereof and dated within sixty days before the date of presentation for transfer, pledge, or release; or

     (b) in any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by the issuer to be responsible or, in the absence of that document or certificate, other evidence reasonably deemed by the issuer to be appropriate. The issuer may adopt standards with respect to the evidence if they are not manifestly unreasonable. The issuer is not charged with notice of the contents of any document obtained pursuant to this paragraph (b) except to the extent that the contents relate directly to the appointment or incumbency.

     (4) The issuer may elect to require reasonable assurance beyond that specified in this section, but if it does so and, for a purpose other than that specified in subsection 3(b), both requires and obtains a copy of a will, trust, indenture, articles of copartnership, bylaws, or other controlling instrument, it is charged with notice of all matters contained therein affecting the transfer, pledge, or release.]

     [400.8-403. (1) An issuer to whom a certificated security is presented for registration shall inquire into adverse claims if:

     (a) a written notification of an adverse claim is received at a time and in a manner affording the issuer a reasonable opportunity to act on it prior to the issuance of a new, reissued, or reregistered certificated security, and the notification identifies the claimant, the registered owner, and the issue of which the security is a part, and provides an address for communications directed to the claimant; or

     (b) the issuer is charged with notice of an adverse claim from a controlling instrument it has elected to require under section 400.8-402(4).

     (2) The issuer may discharge any duty of inquiry by any reasonable means, including notifying an adverse claimant by registered or certified mail at the address furnished by him or, if there be no such address, at his residence or regular place of business that the certificated security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notification, either:

     (a) an appropriate restraining order, injunction or other process issues from a court of competent jurisdiction; or

     (b) there is filed with the issuer an indemnity bond, sufficient in the issuer's judgment to protect the issuer and any transfer agent, registrar, or other agent of the issuer involved from any loss it or they may suffer by complying with the adverse claim.

     (3) Unless an issuer is charged with notice of an adverse claim from a controlling instrument which it has elected to require under section 400.8-402(4) or receives notification of an adverse claim under subsection (1), if a certificated security presented for registration is endorsed by the appropriate person or persons the issuer is under no duty to inquire into adverse claims. In particular:

     (a) an issuer registering a certificated security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent, or correct description of the fiduciary relationship; and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

     (b) an issuer registering transfer on an endorsement by a fiduciary is not bound to inquire whether the transfer is made in compliance with a controlling instrument or with the law of the state having jurisdiction of the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of the transfer; and

     (c) the issuer is not charged with notice of the contents of any court record or file or other recorded or unrecorded document even though the document is in its possession and even though the transfer is made on the endorsement of a fiduciary to the fiduciary himself or to his nominee.

     (4) An issuer is under no duty as to adverse claims with respect to an uncertificated security except:

     (a) claims embodied in a restraining order, injunction, or other legal process served upon the issuer if the process was served at a time and in a manner affording the issuer a reasonable opportunity to act on it in accordance with the requirements of subsection (5);

     (b) claims of which the issuer has received a written notification from the registered owner or the registered pledgee if the notification was received at a time and in a manner affording the issuer a reasonable opportunity to act on it in accordance with the requirements of subsection (5);

     (c) claims (including restrictions on transfer not imposed by the issuer) to which the registration of transfer to the present registered owner was subject and were so noted in the initial transaction statement sent to him; and

     (d) claims as to which an issuer is charged with notice from a controlling instrument it has elected to require under section 400.8-402(4).

     (5) If the issuer of an uncertificated security is under a duty as to an adverse claim, he discharges that duty by:

     (a) including a notation of the claim in any statements sent with respect to the security under section 400.8-408(3), (6), and (7); and

     (b) refusing to register the transfer or pledge of the security unless the nature of the claim does not preclude transfer or pledge subject thereto.

     (6) If the transfer or pledge of the security is registered subject to an adverse claim, a notation of the claim must be included in the initial transaction statement and all subsequent statements sent to the transferee and pledgee under section 400.8-408.

     (7) Notwithstanding subsections (4) and (5), if an uncertificated security was subject to a registered pledge at the time the issuer first came under a duty as to a particular adverse claim, the issuer has no duty as to that claim if transfer of the security is requested by the registered pledgee or an appropriate person acting for the registered pledgee unless:

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

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

     (c) the claim was one as to which the issuer was charged with notice from a controlling instrument it required under section 400.8-402(4) in connection with the pledgee's request for transfer; or

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

     [400.8-404. (1) Except as provided in any law relating to the collection of taxes, the issuer is not liable to the owner, pledgee, or any other person suffering loss as a result of the registration of a transfer, pledge, or release of a security if:

     (a) there were on or with a certificated security the necessary endorsements or the issuer had received an instruction originated by an appropriate person (section 400.8-308); and

     (b) the issuer had no duty as to adverse claims or has discharged the duty (section 400.8-403).

     (2) If an issuer has registered a transfer of a certificated security to a person not entitled to it, the issuer on demand shall deliver a like security to the true owner unless:

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

     (b) the owner is precluded from asserting any claim for registering the transfer under section 400.8-405(1); or

     (c) the delivery would result in overissue, in which case issuer's liability is governed by section 400.8-104.

     (3) If an issuer has improperly registered a transfer, pledge, or release of an uncertificated security, the issuer on demand from the injured party shall restore the records as to the injured party to the condition that would have obtained if the improper registration had not been made unless:

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

     (b) the registration would result in overissue, in which case the issuer's liability is governed by section 400.8-104.]

     [400.8-405. (1) If a certificated security has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after he has notice of it and the issuer registers a transfer of the security before receiving notification, the owner is precluded from asserting against the issuer any claim for registering the transfer under section 400.8-404 or any claim to a new security under this section.

     (2) If the owner of a certificated security claims that the security has been lost, destroyed, or wrongfully taken, the issuer shall issue a new certificated security or, at the option of the issuer, an equivalent uncertificated security in place of the original security if the owner:

     (a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;

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

     (c) satisfies any other reasonable requirements imposed by the issuer.

     (3) If, after the issue of a new certificated or uncertificated security, a bona fide purchaser of the original certificated security presents it for registration of transfer, the issuer shall register the transfer unless registration would result in overissue, in which event the issuer's liability is governed by section 400.8-104. In addition to any rights on the indemnity bond, the issuer may recover the new certificated security from the person to whom it was issued or any person taking under him except a bona fide purchaser or may cancel the uncertificated security unless a bona fide purchaser or any person taking under a bona fide purchaser is then the registered owner or registered pledgee thereof.]

     [400.8-406. (1) If a person acts as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of transfers of its certificated securities or in the registration of transfers, pledges, and releases of its uncertificated securities, in the issue of new securities, or in the cancellation of surrendered securities:

     (a) he is under a duty to the issuer to exercise good faith and due diligence in performing his functions; and

     (b) with regard to the particular functions he performs, he has the same obligation to the holder or owner of a certificated security or to the owner or pledgee of an uncertificated security and has the same rights and privileges as the issuer has in regard to those functions.

     (2) Notice to an authenticating trustee, transfer agent, registrar or other agent is notice to the issuer with respect to the functions performed by the agent.]

     [400.8-407. (1) No issuer is subject to the requirements of this section unless it regularly maintains a system for issuing the class of securities involved under which both certificated and uncertificated securities are regularly issued to the category of owners, which includes the person in whose name the new security is to be registered.

     (2) Upon surrender of a certificated security with all necessary endorsements and presentation of a written request by the person surrendering the security, the issuer, if he has no duty as to adverse claims or has discharged the duty (section 400.8-403), shall issue to the person or a person designated by him an equivalent uncertificated security subject to all liens, restrictions, and claims that were noted on the certificated security.

     (3) Upon receipt of a transfer instruction originated by an appropriate person who so requests, the issuer of an uncertificated security shall cancel the uncertificated security and issue an equivalent certificated security on which must be noted conspicuously any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security was subject. The certificated security shall be registered in the name of and delivered to:

     (a) the registered owner, if the uncertificated security was not subject to a registered pledge; or

     (b) the registered pledgee, if the uncertificated security was subject to a registered pledge.]

     [400.8-408. (1) Within two business days after the transfer of an uncertificated security has been registered, the issuer shall send to the new registered owner and, if the security has been transferred subject to a registered pledge, to the registered pledgee a written statement containing:

     (a) a description of the issue of which the uncertificated security is a party;

     (b) the number of shares or units transferred;

     (c) the name and address and any taxpayer identification number of the new registered owner and, if the security has been transferred subject to a registered pledge, the name and address and any taxpayer identification number of the registered pledgee;

     (d) a notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions, or adverse claims; and

     (e) the date the pledge was registered.

     (2) Within two business days after the pledge of an uncertificated security has been registered, the issuer shall send to the registered owner and the registered pledgee a written statement containing:

     (a) a description of the issue of which the uncertificated security is a part;

     (b) the number of shares or units pledged;

     (c) the name and address and any taxpayer identification number of the registered owner and the registered pledgee;

     (d) a notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions or adverse claims; and

     (e) the date the pledge was registered.

     (3) Within two business days after the release from pledge of an uncertificated security has been registered, the issuer shall send to the registered owner and the pledgee whose interest was released a written statement containing:

     (a) a description of the issue of which the uncertificated security is a part;

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

     (c) the name and address and any taxpayer identification number of the registered owner and the pledgee whose interest was released;

     (d) a notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security is or may be subject at the time of registration or a statement that there are none of those liens, restrictions or adverse claims; and

     (e) the date the release was registered.

     (4) An "initial transaction statement" is the statement sent to:

     (a) the new registered owner and, if applicable, to the registered pledgee pursuant to subsection (1);

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

     (c) the registered owner pursuant to subsection (3). Each initial transaction statement shall be signed by or on behalf of the issuer and must be identified as "Initial Transaction Statement".

     (5) Within two business days after the transfer of an uncertificated security has been registered, the issuer shall send to the former registered owner and the former registered pledgee, if any, a written statement containing:

     (a) a description of the issue of which the uncertificated security is a part;

     (b) the number of shares or units transferred;

     (c) the name and address and any taxpayer identification number of the former registered owner and of any former registered pledgee; and

     (d) the date the transfer was registered.

     (6) At periodic intervals no less frequent than annually and at any time upon the reasonable written request of the registered owner, the issuer shall send to the registered owner of each uncertificated security a dated written statement containing:

     (a) a description of the issue of which the uncertificated security is a part;

     (b) the name and address and any taxpayer identification number of the registered owner;

     (c) the number of shares or units of the uncertificated security registered in the name of the registered owner on the date of the statement;

     (d) the name and address and any taxpayer identification number of any registered pledgee and the number of shares or units subject to the pledge; and

     (e) a notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security is or may be subject or a statement that there are none of those liens, restrictions, or adverse claims.

     (7) At periodic intervals no less frequent than annually and at any time upon the reasonable written request of the registered pledgee, the issuer shall send to the registered pledgee of each uncertificated security a dated written statement containing:

     (a) a description of the issue of which the uncertificated security is a part;

     (b) the name and address and any taxpayer identification number of the registered owner;

     (c) the name and address and any taxpayer identification number of the registered pledgee;

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

     (e) a notation of any liens and restrictions of the issuer and any adverse claims (as to which the issuer has a duty under section 400.8-403(4)) to which the uncertificated security is or may be subject or a statement that there are none of those liens, restrictions, or adverse claims.

     (8) If the issuer sends the statements described in subsections (6) and (7) at periodic intervals no less frequent than quarterly, the issuer is not obliged to send additional statements upon request unless the owner or pledgee requesting them pays to the issuer the reasonable cost of furnishing them.

     (9) Each statement sent pursuant to this section must bear a conspicuous legend reading substantially as follows: "This statement is merely a record of the rights of the addressee as of the time of its issuance. Delivery of this statement, of itself, confers no rights on the recipient. This statement is neither a negotiable instrument nor a security."]