New Jersey § 14a:7-14

§ 14a:7-14.

(1) “ Distribution ” means a direct or indirect transfer of money or other property (except its own shares)

or incurrence of indebtedness by a corporation to or for the benefit of its shareholders

in respect of any of its shares. A distribution may be in the form of a dividend, a purchase, redemption or other

acquisition of its shares, or otherwise. (2) A corporation may not make a distribution if, after giving effect thereto, either: (a) The corporation would be unable to pay its debts as they become due in the usual

course of its business; or (b) The corporation's total assets would be less than its total liabilities. (3) Determinations under paragraph 14A:7-14.1(2)(b) may be based upon (i) financial

statements prepared on the basis of generally accepted accounting principles, (ii)

financial statements prepared on the basis of other accounting practices and principles

that are reasonable in the circumstances, or (iii) a fair valuation or other method

that is reasonable in the circumstances. (4) In the case of a purchase, redemption or other acquisition by a corporation of

its own shares, the effect of a distribution shall be measured as of the earlier of

(i) the date money or other property is transferred or debt is incurred by the corporation,

or (ii) the date the shareholder ceases to be a shareholder with respect to the acquired

shares. In all other cases, the effect of a distribution shall be measured (i) as of the

date of its authorization if payment occurs 120 days or less following the date of

authorization, or (ii) as of the date of payment if payment occurs more than 120 days

following the date of authorization. (5) A corporation's indebtedness to a shareholder incurred by reason of a distribution

made in accordance with this section shall not be subordinated to the corporation's

indebtedness to its general, unsecured creditors except to the extent subordinated

by agreement.