Ch. 92

1996 LAWS OF MARYLAND

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

(2)     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

(3)     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, IN ACCORDANCE
WITH 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) OF THIS SUBSECTION 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 § 8-205 OF THIS SUBTITLE, 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 IN
ACCORDANCE WITH 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

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