This is a "Right of First Refusal and Co-Sale Agreement." It is entered into by the corporation and the purchasers of preferred stock. It gives the company and the purchasers of preferred stock certain rights of refusal and options upon the transfer of stock.
Georgia Right of First Refusal and Co-Sale Agreement: An In-depth Overview In Georgia, the Right of First Refusal and Co-Sale Agreement is a legal contract that offers certain rights and protections to shareholders of a company. This agreement ensures that the existing shareholders have the opportunity to maintain their ownership positions in the company before new shares are offered or sold to external parties. The Right of First Refusal, commonly known as ROAR, is a provision that grants existing shareholders the first opportunity to purchase additional shares of a company before those shares can be offered to outside investors. It basically allows existing shareholders to match the purchase terms and conditions set by a potential buyer. This right can be exercised when a shareholder intends to sell their shares or when the company decides to issue additional shares. By giving shareholders the option to acquire more shares, the agreement aims to protect their ownership interests and preserve the existing shareholder structure. On the other hand, the Co-Sale Agreement, also referred to as the Tag-Along provision, is designed to provide protection to minority shareholders in case majority shareholders decide to sell their shares. This agreement ensures that minority stakeholders will have the opportunity to sell their shares in the same proportion and under the same terms and conditions as the majority shareholders. In simpler terms, if a majority shareholder intends to sell their shares, the minority shareholder(s) have the option to join the sale and sell their own shares proportionately. The Georgia Right of First Refusal and Co-Sale Agreement can be customized based on the specific needs and preferences of the contracting parties. Some variations of this agreement may include: 1. Right of First Refusal for New Share Issuance: This type of agreement focuses primarily on the right of existing shareholders to purchase new shares issued by the company. It ensures that before any external investor is allowed to acquire shares, the company must first offer those shares to existing shareholders. 2. Right of First Refusal for Share Transfer: This type of agreement grants existing shareholders the right to purchase shares when one of their fellow shareholders intends to sell their stake in the company. It provides the opportunity for shareholders to maintain their proportional ownership and prevent unwanted outside investors from entering the company. 3. Right of First Refusal with Time Limitations: In some cases, the Right of First Refusal provision may have time limitations. This means that the existing shareholders must exercise their right within a specified timeframe, failing which, the right may be extended to other parties. 4. Co-Sale Agreement with Drag-Along Provision: This type of agreement not only protects minority shareholders but also empowers majority shareholders. It allows majority shareholders to force minority shareholders to join the sale of their shares if they receive an offer that meets predefined conditions. This provision is often included to facilitate a complete sale of the company or ensure majority control in certain circumstances. In summary, the Georgia Right of First Refusal and Co-Sale Agreement is a crucial legal instrument that safeguards the interests of shareholders in a company. By offering them the right to purchase additional shares or sell their shares proportionally, this agreement aims to maintain the existing shareholder structure, prevent undue dilution, and promote fairness in transactions involving share ownership.
