The New York Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the first opportunity to purchase additional shares before they are offered to outsiders. This clause is widely used in the state of New York to protect the interests of current shareholders and maintain the control and ownership structure of a corporation. Under this clause, if a shareholder intends to sell or transfer their shares, they must first offer them to the other existing shareholders before seeking external buyers. The purpose of this clause is to ensure that existing shareholders have the chance to maintain or increase their ownership stake in the company, preventing the dilution of their shares and potential loss of control. The New York Right of First Refusal Clause for Shareholders' Agreement can be customized to suit the specific needs and preferences of the shareholders involved. There are several variations or types of Right of First Refusal Clauses that can be included in a Shareholders' Agreement: 1. Basic Right of First Refusal: Under this type, if a shareholder receives an offer from an external party to purchase their shares, they must first offer those shares to the other existing shareholders at the same price and terms. The existing shareholders then have the option to accept or decline the offer. 2. Proportional Right of First Refusal: In this variation, existing shareholders have the right to purchase shares proportionate to their existing ownership percentage. For example, if a shareholder owns 15% of the company's shares, they would have the right to purchase 15% of the shares being offered by another shareholder. 3. Tag-Along Right of First Refusal: This type grants minority shareholders the right to include their shares in an offer made by a majority shareholder to an external party. If a majority shareholder intends to sell their shares, the minority shareholders have the option to join the sale and offer their shares as well. 4. Drag-Along Right of First Refusal: This clause empowers majority shareholders to force minority shareholders to sell their shares along with theirs in case of a third-party offer. This right is typically exercised when the majority shareholder wants to sell the entire company and ensure that all shareholders are on the same page. It is important for shareholders to consult with their legal advisors when drafting a Shareholders' Agreement to ensure that the Right of First Refusal Clause aligns with their specific needs and objectives. By having this clause in place, shareholders can have peace of mind knowing that they have a fair opportunity to maintain or increase their ownership in the company before external parties are considered.
New York Right of First Refusal Clause for Shareholders' Agreement
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How to fill out New York Right Of First Refusal Clause For Shareholders' Agreement?
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FAQ
The right of first refusal is usually triggered when a third party offers to buy or lease the property owner's asset. Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
Right of first refusal (ROFR), also known as first right of refusal, is a contractual right to enter into a business transaction with a person or company before anyone else can. If the party with this right declines to enter into a transaction, the obligor is free to entertain other offers.
Rights of first refusal clauses are similar to options contracts as the holder has the right, but not the obligation, to enter into a transaction that generally involves an asset. The person with this right has the opportunity to establish a contract or an agreement on an asset before others can.
When some of the shareholders wish to sell their share, a clause in the shareholder's agreement should state that the shareholders who wish to sell their shares have to show the right to match an offer received from a third party. This is known as the right of first refusal.
Once that is done the ROFR holder has the option of purchasing the property instead or waiving their ROFR and allowing another sale to go through. To get to closing, a title company has to have a signed Waiver of Right of First Refusal document in the file before funding can occur.
Written agreement that allowed a right of first refusal to be assigned only with the written con- sent of the grantor, a college). 49 31111 2d 620,203 NE2d 411 (1964). At the other extreme, the parties' contract might expressly de- clare that the right of first refusal is personal, and courts will usually agree.
A "right of first refusal" is a contractual right on the part of a potential buyer to purchase real property within a specified period of time after another potential purchaser submits a purchase offer.
When you have a first right of refusal the seller must contact you and let you potentially move forward with a purchase before an offer can be accepted from another party. The first right of refusal can be put together either before a home is listed for sale or during the time it is on the market.
To be enforceable, options and rights of first refusal must usually be in writing, signed, contain an adequate description of the property, and be supported by consideration. They may be included in lease contracts, or they may be drafted as standalone agreements.
A right of first refusal is a fairly common clause in some business contracts that essentially gives a party the first crack at making an offer on a particular transaction. In real estate terms, the phrase right of first refusal operates similarly.
