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.
Indiana Right of First Refusal and Co-Sale Agreement: A Comprehensive Overview The Indiana Right of First Refusal and Co-Sale Agreement is a contractual arrangement that grants certain rights to shareholders or investors in Indiana-based companies. This agreement serves as a protective measure while facilitating the sale or transfer of shares between shareholders. The Right of First Refusal (ROAR) clause in the Indiana Right of First Refusal and Co-Sale Agreement ensures that existing shareholders have the first opportunity to purchase additional shares before they are offered to outside parties. This provision acts as a safeguard to maintain the ownership structure within a company and protects existing shareholders from dilution caused by the entry of new shareholders. The co-sale agreement, also known as a tag-along provision, is an integral part of this agreement. It allows minority shareholders the right to sell their shares alongside a majority shareholder who has received a bona fide offer from a third party. By exercising this provision, minority shareholders are ensured the opportunity to sell their shares under the same terms and conditions as the majority shareholder, hence protecting their interests and ensuring fair treatment. It is worth noting that Indiana Right of First Refusal and Co-Sale Agreements can vary depending on the specific needs of the company and preferences of the shareholders involved. Some common variations or additional elements that may be included in these agreements are: 1. Right to Pro Rata Participation: This provision allows existing shareholders to purchase additional shares on a pro rata basis, maintaining their proportionate ownership stake in the company. 2. Time Limitations: The agreement could set a specific time limit within which the existing shareholders must exercise their right of first refusal or tag-along right. This ensures timely decision-making and avoids unnecessary delays. 3. Notification Procedures: The agreement may outline specific requirements for the communication and notification process when a majority shareholder intends to sell a portion or all of their shares. This allows the existing shareholders to be promptly informed and exercise their rights accordingly. 4. Transfer Restrictions: Certain restrictions on the transfer of shares may be mentioned in the agreement, such as limitations on selling shares to competitors or requiring the consent of other shareholders before any transfer takes place. Management teams, investors, and shareholders alike find Indiana Right of First Refusal and Co-Sale Agreements beneficial as they provide a clear structure for share transfers and protect the interests of all parties involved. These agreements help promote stability, transparency, and fairness within Indiana-based companies. In conclusion, the Indiana Right of First Refusal and Co-Sale Agreement is a crucial component of shareholder agreements in Indiana. It ensures existing shareholders have the opportunity to maintain their ownership stakes and participate in share sales or transfers. With its various provisions, this agreement plays a pivotal role in maintaining a balanced and fair business environment while facilitating the growth and development of Indiana-based companies.
