New York Laws
Article 6 - Shareholders
623 - Procedure to Enforce Shareholder's Right to Receive Payment for Shares.

(a) A shareholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate
action referred to therein is taken shall file with the corporation,
before the meeting of shareholders at which the action is submitted to a
vote, or at such meeting but before the vote, written objection to the
action. The objection shall include a notice of his election to dissent,
his name and residence address, the number and classes of shares as to
which he dissents and a demand for payment of the fair value of his
shares if the action is taken. Such objection is not required from any
shareholder to whom the corporation did not give notice of such meeting
in accordance with this chapter or where the proposed action is
authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date, which
term as used in this section means the date on which the shareholders'
vote authorizing such action was taken, or the date on which such
consent without a meeting was obtained from the requisite shareholders,
the corporation shall give written notice of such authorization or
consent by registered mail to each shareholder who filed written
objection or from whom written objection was not required, excepting any
shareholder who voted for or consented in writing to the proposed action
and who thereby is deemed to have elected not to enforce his right to
receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects
to dissent shall file with the corporation a written notice of such
election, stating his name and residence address, the number and classes
of shares as to which he dissents and a demand for payment of the fair
value of his shares. Any shareholder who elects to dissent from a merger
under section 905 (Merger of subsidiary corporation) or paragraph (c) of
section 907 (Merger or consolidation of domestic and foreign
corporations) or from a share exchange under paragraph (g) of section
913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan
of merger or exchange or an outline of the material features thereof
under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the shares,
as to which he has a right to dissent, held by him of record, that he
owns beneficially. A nominee or fiduciary may not dissent on behalf of
any beneficial owner as to less than all of the shares of such owner, as
to which such nominee or fiduciary has a right to dissent, held of
record by such nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall
cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this
section. A notice of election may be withdrawn by the shareholder at any
time prior to his acceptance in writing of an offer made by the
corporation, as provided in paragraph (g), but in no case later than
sixty days from the date of consummation of the corporate action except
that if the corporation fails to make a timely offer, as provided in
paragraph (g), the time for withdrawing a notice of election shall be
extended until sixty days from the date an offer is made. Upon
expiration of such time, withdrawal of a notice of election shall
require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder
as provided in paragraph (g). If a notice of election is withdrawn, or

the corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenters' rights, he shall not
have the right to receive payment for his shares and he shall be
reinstated to all his rights as a shareholder as of the consummation of
the corporate action, including any intervening preemptive rights and
the right to payment of any intervening dividend or other distribution
or, if any such rights have expired or any such dividend or distribution
other than in cash has been completed, in lieu thereof, at the election
of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within
one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing his shares to
the corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted
them on his behalf. Any shareholder of shares represented by
certificates who fails to submit his certificates for such notation as
herein specified shall, at the option of the corporation exercised by
written notice to him within forty-five days from the date of filing of
such notice of election to dissent, lose his dissenter's rights unless a
court, for good cause shown, shall otherwise direct. Upon transfer of a
certificate bearing such notation, each new certificate issued therefor
shall bear a similar notation together with the name of the original
dissenting holder of the shares and a transferee shall acquire no rights
in the corporation except those which the original dissenting
shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or
within fifteen days after the proposed corporate action is consummated,
whichever is later (but in no case later than ninety days from the
shareholders' authorization date), the corporation or, in the case of a
merger or consolidation, the surviving or new corporation, shall make a
written offer by registered mail to each shareholder who has filed such
notice of election to pay for his shares at a specified price which the
corporation considers to be their fair value. Such offer shall be
accompanied by a statement setting forth the aggregate number of shares
with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate
action has been consummated, such offer shall also be accompanied by (1)
advance payment to each such shareholder who has submitted the
certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of
such offer, or (2) as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an amount equal
to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of
the offer, such advance payment or statement as to advance payment shall
be sent to each shareholder entitled thereto forthwith upon consummation
of the corporate action. Every advance payment or statement as to
advance payment shall include advice to the shareholder to the effect
that acceptance of such payment does not constitute a waiver of any
dissenters' rights. If the corporate action has not been consummated
upon the expiration of the ninety day period after the shareholders'

authorization date, the offer may be conditioned upon the consummation
of such action. Such offer shall be made at the same price per share to
all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet
of the corporation whose shares the dissenting shareholder holds as of
the latest available date, which shall not be earlier than twelve months
before the making of such offer, and a profit and loss statement or
statements for not less than a twelve month period ended on the date of
such balance sheet or, if the corporation was not in existence
throughout such twelve month period, for the portion thereof during
which it was in existence. Notwithstanding the foregoing, the
corporation shall not be required to furnish a balance sheet or profit
and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders'
authorization for or consent to the proposed corporate action the
shareholders were furnished with a proxy or information statement, which
included financial statements, pursuant to Regulation 14A or Regulation
14C of the United States Securities and Exchange Commission. If within
thirty days after the making of such offer, the corporation making the
offer and any shareholder agree upon the price to be paid for his
shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate
action, whichever is later, upon the surrender of the certificates for
any such shares represented by certificates.
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the
offer and any dissenting shareholder or shareholders fail to agree with
it within the period of thirty days thereafter upon the price to be paid
for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in
which the office of the corporation is located to determine the rights
of dissenting shareholders and to fix the fair value of their shares.
If, in the case of merger or consolidation, the surviving or new
corporation is a foreign corporation without an office in this state,
such proceeding shall be brought in the county where the office of the
domestic corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not
instituted within such thirty day period, all dissenter's rights shall
be lost unless the supreme court, for good cause shown, shall otherwise
direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be
paid for their shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against their shares.
The corporation shall serve a copy of the petition in such proceeding
upon each dissenting shareholder who is a resident of this state in the
manner provided by law for the service of a summons, and upon each
nonresident dissenting shareholder either by registered mail and
publication, or in such other manner as is permitted by law. The
jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination,

is entitled to receive payment for his shares. If the corporation does
not request any such determination or if the court finds that any
dissenting shareholder is so entitled, it shall proceed to fix the value
of the shares, which, for the purposes of this section, shall be the
fair value as of the close of business on the day prior to the
shareholders' authorization date. In fixing the fair value of the
shares, the court shall consider the nature of the transaction giving
rise to the shareholder's right to receive payment for shares and its
effects on the corporation and its shareholders, the concepts and
methods then customary in the relevant securities and financial markets
for determining fair value of shares of a corporation engaging in a
similar transaction under comparable circumstances and all other
relevant factors. The court shall determine the fair value of the shares
without a jury and without referral to an appraiser or referee. Upon
application by the corporation or by any shareholder who is a party to
the proceeding, the court may, in its discretion, permit pretrial
disclosure, including, but not limited to, disclosure of any expert's
reports relating to the fair value of the shares whether or not intended
for use at the trial in the proceeding and notwithstanding subdivision
(d) of section 3101 of the civil practice law and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to
the proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate
of interest, the court shall consider all relevant factors, including
the rate of interest which the corporation would have had to pay to
borrow money during the pendency of the proceeding. If the court finds
that the refusal of any shareholder to accept the corporate offer of
payment for his shares was arbitrary, vexatious or otherwise not in good
faith, no interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by the corporation against any or all of the
dissenting shareholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in paragraph
(e), if the court finds that their refusal to accept the corporate offer
was arbitrary, vexatious or otherwise not in good faith. The court may,
in its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by any or all of the dissenting shareholders
who are parties to the proceeding against the corporation if the court
finds any of the following: (A) that the fair value of the shares as
determined materially exceeds the amount which the corporation offered
to pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action
of the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may
consider the dollar amount or the percentage, or both, by which the fair
value of the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to

be due him, upon surrender of the certificates for any such shares
represented by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided
in this section, shall become treasury shares or be cancelled as
provided in section 515 (Reacquired shares), except that, in the case of
a merger or consolidation, they may be held and disposed of as the plan
of merger or consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment
would make it insolvent. In such event, the dissenting shareholder
shall, at his option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting
shareholders, and if it is not liquidated, retain his right to be paid
for his shares, which right the corporation shall be obliged to satisfy
when the restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice
that payment for his shares cannot be made because of the restrictions
of this paragraph. If the dissenting shareholder fails to exercise such
option as provided, the corporation shall exercise the option by written
notice given to him within twenty days after the expiration of such
period of thirty days.
(k) The enforcement by a shareholder of his right to receive payment
for his shares in the manner provided herein shall exclude the
enforcement by such shareholder of any other right to which he might
otherwise be entitled by virtue of share ownership, except as provided
in paragraph (e), and except that this section shall not exclude the
right of such shareholder to bring or maintain an appropriate action to
obtain relief on the ground that such corporate action will be or is
unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice
to be given by a corporation to a shareholder under this section shall
be given in the manner provided in section 605 (Notice of meetings of
shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e) (2) of section 907 (Merger or consolidation
of domestic and foreign corporations).