N.Y. Business Corporation Law § 503: Subscription for shares; time of payment, forfeiture for default

§ 503. Subscription for shares; time of payment, forfeiture for default.

(a) Unless otherwise provided by the terms of the subscription, a

subscription for shares of a corporation to be formed shall be

irrevocable, except with the consent of all other subscribers or the

corporation, for a period of three months from its date.

(b) A subscription, whether made before or after the formation of a

corporation, shall not be enforceable unless in writing and signed by

the subscriber.

(c) Unless otherwise provided by the terms of the subscription,

subscriptions for shares, whether made before or after the formation of

a corporation, shall be paid in full at such time, or in such

installments and at such times, as shall be determined by the board.

Any call made by the board for payment on subscriptions shall be uniform

as to all shares of the same class or of the same series. If a receiver

of the corporation has been appointed, all unpaid subscriptions shall be

paid at such times and in such installments as such receiver or the

court may direct.

(d) In the event of default in the payment of any installment or call

when due, the corporation may proceed to collect the amount due in the

same manner as any debt due the corporation or the board may declare a

forfeiture of the subscriptions. The subscription agreement may

prescribe other penalties, not amounting to forfeiture, for failure to

pay installments or calls that may become due. No forfeiture of the

subscription shall be declared as against any subscriber unless the

amount due thereon shall remain unpaid for a period of thirty days after

written demand has been made therefor. If mailed, such written demand

shall be deemed to be made when deposited in the United States mail in a

sealed envelope addressed to the subscriber at his last post office

address known to the corporation, with postage thereon prepaid. Upon

forfeiture of the subscription, if at least fifty percent of the

subscription price has been paid, the shares subscribed for shall be

offered for sale for cash or a binding obligation to pay cash at a price

at least sufficient to pay the full balance owed by the delinquent

subscriber plus the expenses incidental to such sale, and any excess of

net proceeds realized over the amount owed on such shares shall be paid

to the delinquent subscriber or to his legal representative. If no

prospective purchaser offers a cash price or a binding obligation to pay

cash sufficient to pay the full balance owed by the delinquent

subscriber plus the expenses incidental to such sale, or if less than

fifty percent of the subscription price has been paid, the shares

subscribed for shall be cancelled and restored to the status of

authorized but unissued shares and all previous payments thereon shall

be forfeited to the corporation and transferred to surplus.

(e) Notwithstanding the provisions of paragraph (d) of this section,

in the event of default in payment or other performance under the

instrument evidencing a subscriber's binding obligation to pay a portion

of the subscription price or perform services, the corporation may

pursue such remedies as are provided in such instrument or a related

agreement or under law.