New Jersey § 14a:7-12

§ 14a:7-12.

(1) The shares of a corporation shall be personal property and shall be transferable

in accordance with the provisions of Chapter 8 of the Uniform Commercial Code ( N.J.S. 12A:8-101 et seq. ), as amended from time to time, except as otherwise provided in this act. (2) Any reasonable restriction on the transfer or registration of transfer of shares,

or other securities having conversion or option rights, may be enforced against the

holder of the restricted securities and any successor or transferee of the holder,

including any fiduciary entrusted with responsibility for the person or property of

the holder. Such restriction shall be valid only if imposed by the certificate of incorporation

or by-laws or by the provisions of an employee benefit plan permitted by Chapter 8

of this act, or by a written agreement among any number of shareholders or among such

holders and the corporation. No restriction shall be valid with respect to any securities issued prior to the

imposition of the restriction unless their holders shall have voted in favor of the

imposition of the restriction or are parties to the agreement imposing it. Unless noted conspicuously on the security or contained in the information statement required by subsection 14A:7-11(6) , a restriction shall not be valid against a person who becomes the holder of the

security without actual knowledge of the restriction. (3) In particular and without limitation of the generality of the power granted by

subsection 14A:7-12(2) to impose restrictions, a restriction on the transfer or registration

of transfer of shares, or other securities having conversion or option rights, may

be enforced as provided in subsection 14A:7-12(2), if it: (a) Obligates the holder of the restricted securities to offer to the corporation

or to any other holders of securities of the corporation or to any other person or

to any combination of the foregoing, a prior opportunity, to be exercised within a

reasonable time, to acquire the restricted securities; (b) Obligates the corporation or any holder of securities of the corporation or any

other person or any combination of the foregoing, to purchase the securities which

are the subject of an agreement respecting the purchase and sale of the restricted

securities; (c) Requires the corporation or the holders of any class or series of securities of

the corporation to consent to any proposed transfer of the restricted securities or

to approve the proposed transferee of the restricted securities; (d) Prohibits the transfer of the restricted securities to designated persons or classes

of persons, and such designation is not manifestly unreasonable; or (e) Exists for the purpose of maintaining the status of the corporation as an electing

small business corporation under subchapter S of the United States Internal Revenue

Code. 1 (4) If a restriction on transfer of shares or other securities having conversion or

option rights is held not to be authorized by the law of this State, the corporation

shall nevertheless have an option for a period of 30 days after the judgment setting

aside the restriction becomes final, to acquire the restricted securities at a price

to be agreed upon by the parties, or if no agreement is reached as to price, then

at their fair value as determined by any court having jurisdiction. In order to determine fair value, the court may appoint an appraiser to receive

evidence and report to the court his findings and recommendations as to fair value. The appraiser shall have such powers and shall proceed so far as applicable, in

the same manner as an appraiser appointed under section 14A:11-8 . 1

26 U.S.C.A. § 1361 et seq.