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.
Nevada Right of First Refusal and Co-Sale Agreement: A Comprehensive Overview In Nevada, Right of First Refusal (ROAR) and Co-Sale Agreements are legal mechanisms often utilized in business and real estate transactions. These agreements afford parties certain rights and protections when it comes to purchasing or transferring ownership interests in a particular asset or property. Let's delve into the intricacies of these agreements, exploring their purpose, key provisions, and potential variations. The Nevada Right of First Refusal (ROAR) gives an individual or entity the priority option to purchase a property or asset before it can be sold to a third party. Essentially, when an owner decides to sell their interest in a property, they must first offer it to the holder of the ROAR on the same terms and conditions offered by the prospective third-party buyer. This provision ensures that the holder retains the opportunity to acquire the asset, preventing unwanted dilution of ownership or the entry of unknown parties. Under Nevada law, there are two primary types of ROAR agreements: 1. First Refusal Right: This type of ROAR agreement gives the holder the exclusive right to purchase the asset at the offered price and conditions within a specified time frame. The owner is legally obligated to present the holder with the offer, but the holder has the option to either accept or decline the opportunity to purchase. If the holder declines the offer, the owner can proceed to sell the asset to a third party, but must abide by any remaining contractual obligations. 2. Right of First Negotiation: In this agreement, the ROAR holder has the first opportunity to negotiate with the owner before they can entertain offers from other potential buyers. The owner must enter into negotiations with the holder in good faith, but there is no obligation for the holder to purchase the asset. This type of ROAR provides more flexibility to the holder, allowing them to assess the terms and conditions before making a final decision. Nevada Co-Sale Agreements, on the other hand, work in conjunction with ROAR clauses to protect the interests of minority shareholders or stakeholders in a business or investment venture. In this scenario, when a significant shareholder intends to sell their stock or ownership interest, the Co-Sale Agreement grants minority shareholders the right to sell their shares under the same terms and conditions as the majority shareholder. This provision ensures that minority shareholders have an opportunity to liquidate their holdings rather than being left behind in a potentially unfavorable ownership structure. It is worth noting that each ROAR and Co-Sale Agreement is unique, tailored to suit the specific requirements of the parties involved. These agreements will typically contain provisions related to the duration of the ROAR, notice requirements, valuation methods, financing options, dispute resolution mechanisms, and confidentiality clauses. It is crucial for all parties to seek legal counsel when drafting or entering into these agreements to protect their interests and ensure compliance with Nevada laws and regulations. Overall, the Nevada Right of First Refusal and Co-Sale Agreement serve as vital tools in protecting the rights and financial interests of parties involved in property and business transactions. These agreements enable individuals and entities to exercise control over the ownership and sale of assets, allowing for efficient and equitable transactions within the state's legal framework.
