§ 6022 — Procedure to enforce stockholder's right to receive payment for shares

§ 6022. Procedure to enforce stockholder's right to receive payment\nfor shares. 1. A stockholder intending to enforce his right under a\nsection of this chapter to receive payment for his shares if the\nproposed corporate action referred to therein is taken shall file with\nthe corporation, before the meeting of stockholders at which the action\nis submitted to a vote, or at such meeting but before the vote, written\nobjection to the action. The objection shall include a statement that he\nintends to demand payment for his shares if the action is taken. Such\nobjection is not required from any stockholder to whom the corporation\ndid not give notice of such meeting in accordance with this chapter or\nwhere the proposed action is authorized by written consent of\nstockholders without a meeting.\n 2. Within ten days after the stockholders' authorization date, which\nterm as used in this section means the date on which the stockholders'\nvote authorizing such action was taken, or the date on which such\nconsent without a meeting was obtained from the requisite stockholders,\nthe corporation shall give written notice of such authorization or\nconsent by registered mail to each stockholder who filed written\nobjection or from whom written objection was not required, excepting any\nwho voted for or consented in writing to the proposed action.\n 3. Within twenty days after the giving of notice to him, any\nstockholder to whom the corporation was required to give such notice and\nwho elects to dissent shall file with the corporation a written notice\nof such election, stating his name and residence address, the number and\nclasses of shares as to which he dissents and a demand for payment of\nthe fair value of his shares.\n 4. A stockholder may not dissent as to less than all of the shares,\nheld by him of record, that he owns beneficially. A nominee or fiduciary\nmay not dissent on behalf of any beneficial owner as to less than all of\nthe shares of such owner held of record by such nominee or fiduciary.\n 5. Upon filing a notice of election to dissent, the stockholder shall\ncease to have any of the rights of a stockholder except the right to be\npaid the fair value of his shares and any other rights under this\nsection. Withdrawal of a notice of election shall require the written\nconsent of the corporation. If a notice of election is withdrawn, or the\nproposed corporate action is abandoned or rescinded, or a court shall\ndetermine that the stockholder is not entitled to receive payment for\nhis shares, or the stockholder shall otherwise lose his dissenter's\nrights, he shall not have the right to receive payment for his shares\nand he shall be reinstated to all his rights as a stockholder as of the\nfiling of his notice of election, including any intervening preemptive\nrights and the right to payment of any intervening dividend or other\ndistribution or, if any such rights have expired or any such dividend or\ndistribution other than in cash has been completed, in lieu thereof, at\nthe election of the corporation, the fair value thereof in cash as\ndetermined by the board as of the time of such expiration or completion,\nbut without prejudice otherwise to any corporate proceedings that may\nhave been taken in the interim.\n 6. At the time of filing the notice of election to dissent or within\none month thereafter the stockholder shall submit the certificates\nrepresenting his shares to the corporation, or to its transfer agent,\nwhich shall forthwith note conspicuously thereon that a notice of\nelection has been filed and shall return the certificates to the\nstockholder or other person who submitted them on his behalf. Any\nstockholder who fails to submit his certificates for such notation as\nherein specified shall, at the option of the corporation exercised by\nwritten notice to him within forty-five days from the date of filing of\nsuch notice of election to dissent, lose his dissenter's rights unless a\ncourt, for good cause shown, shall otherwise direct. Upon transfer of a\ncertificate bearing such notation, each new certificate issued therefor\nshall bear a similar notation together with the name of the original\ndissenting holder of the shares and a transferee shall acquire no rights\nin the corporation except those which the original dissenting\nstockholder had after filing his notice of election.\n 7. Within seven days after the expiration of the period within which\nstockholders may file their notices of election to dissent, or within\nseven days after the proposed corporate action is consummated, whichever\nis later, the corporation or, in the case of a merger, the receiving\ncorporation, shall make a written offer by registered mail to each\nstockholder who has filed such notice of election to pay for his shares\nat a specified price which the corporation considers to be their fair\nvalue. Such offer shall be made at the same price per share to all\ndissenting stockholders of the same class, or if divided into series, of\nthe same series and shall be accompanied by a balance sheet of the\ncorporation whose shares the dissenting stockholder holds as of the\nlatest available date, which shall not be earlier than twelve months\nbefore the making of such offer, and a profit and loss statement or\nstatements for not less than a twelve month period ended on the date of\nsuch balance sheet or, if the corporation was not in existence\nthroughout such twelve month period, for the portion thereof during\nwhich it was in existence. If within thirty days after the making of\nsuch offer, the corporation making the offer and any stockholder agree\nupon the price to be paid for his shares, payment therefor shall be made\nwithin sixty days after the making of such offer upon the surrender of\nthe certificates representing such shares.\n 8. The following procedure shall apply if the corporation fails to\nmake such offer within such period of seven days, or if it makes the\noffer and any dissenting stockholder or stockholders fail to agree with\nit within the period of thirty days thereafter upon the price to be paid\nfor their shares:\n (a) The corporation or, in the case of a merger, the receiving\ncorporation shall, within twenty days after the expiration of whichever\nis applicable of the two periods last mentioned, institute a special\nproceeding in the supreme court in the judicial district in which the\noffice of the corporation is located to determine the rights of\ndissenting stockholders and to fix the fair value of their shares.\n (b) If the corporation fails to institute such proceeding within such\nperiod of twenty days, any dissenting stockholder may institute such\nproceeding for the same purpose not later than thirty days after the\nexpiration of such twenty day period. If such proceeding is not\ninstituted within such thirty day period, all dissenter's rights shall\nbe lost unless the supreme court, for good cause shown, shall otherwise\ndirect.\n (c) All dissenting stockholders, excepting those who, as provided in\nsubdivision seven, have agreed with the corporation upon the price to be\npaid for their shares, shall be made parties to such proceeding, which\nshall have the effect of an action quasi in rem against their shares.\nThe corporation shall serve a copy of the petition in such proceeding\nupon each dissenting stockholder who is a resident of this state in the\nmanner provided by law for the service of a summons, and upon each\nnonresident dissenting stockholder either by registered mail and\npublication, or in such other manner as is permitted by law. The\njurisdiction of the court shall be plenary and exclusive.\n (d) The court shall determine whether each dissenting stockholder, as\nto whom the corporation requests the court to make such determination,\nis entitled to receive payment for his shares. If the corporation does\nnot request any such determination or if the court finds that any\ndissenting stockholder is so entitled, it shall proceed to fix the value\nof the shares, which, for the purposes of this section, shall be the\nfair value as of the close of business on the day prior to the\nstockholders' authorization date, excluding any appreciation or\ndepreciation directly or indirectly induced by such corporate action or\nits proposal. The court may, if it so elects, appoint an appraiser to\nreceive evidence and recommend a decision on the question of fair value.\nSuch appraiser shall have the power, authority and duties specified in\nthe order appointing him, or any amendment thereof.\n (e) The final order in the proceeding shall be entered against the\ncorporation in favor of each dissenting stockholder who is a party to\nthe proceeding and is entitled thereto for the value of his shares so\ndetermined.\n (f) The final order shall include an allowance for interest at such\nrate as the court finds to be equitable, from the stockholders'\nauthorization date to the date of payment. If the court finds that the\nrefusal of any stockholder to accept the corporate offer of payment for\nhis shares was arbitrary, vexatious or otherwise not in good faith, no\ninterest shall be allowed to him.\n (g) The costs and expenses of such proceeding shall be determined by\nthe court and shall be assessed against the corporation, or, in the case\nof a merger, the receiving corporation, except that all or any part of\nsuch costs and expenses may be apportioned and assessed, as the court\nmay determine, against any or all of the dissenting stockholders who are\nparties to the proceeding if the court finds that their refusal to\naccept the corporate offer was arbitrary, vexatious or otherwise not in\ngood faith. Such expenses shall include reasonable compensation for and\nthe reasonable expenses of the appraiser, but shall exclude the fees and\nexpenses of counsel for and experts employed by any party unless the\ncourt, in its discretion, awards such fees and expenses. In exercising\nsuch discretion, the court shall consider any of the following: (A)\nthat the fair value of the shares as determined materially exceeds the\namount which such corporation offered to pay; (B) that no offer was made\nby such corporation; and (C) that such corporation failed to institute\nthe special proceeding within the period specified therefor.\n (h) Within sixty days after final determination of the proceeding, the\ncorporation or, in the case of a merger, the receiving corporation shall\npay to each dissenting stockholder the amount found to be due him, upon\nsurrender of the certificates representing his shares.\n 9. Shares acquired by the corporation upon the payment of the agreed\nvalue therefor or of the amount due under the final order, as provided\nin this section, shall be dealt with as provided in section five\nthousand fourteen, except that, in the case of a merger, they shall be\ndisposed of as provided in the plan of merger or consolidation.\n 10. The enforcement by a stockholder of his right to receive payment\nfor his shares in the manner provided herein shall exclude the\nenforcement by such stockholder of any other right to which he might\notherwise be entitled by virtue of share ownership, except as provided\nin subdivision five, and except that this section shall not exclude the\nright of such stockholder to bring or maintain an appropriate action to\nobtain relief on the ground that such corporate action will be or is\nillegal or fraudulent as to him.\n 11. Except as otherwise expressly provided in this section, any notice\nto be given by a corporation to a stockholder under this section shall\nbe given in the manner provided in section six thousand five.\n