Section 8--108. Warranties in Direct Holding

(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
  any 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.