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.
Tennessee Right of First Refusal and Co-Sale Agreement can be defined as a legal arrangement that grants certain rights to existing shareholders or investors within a company or business. This agreement ensures that current shareholders have the first opportunity to purchase any additional shares of stock or ownership interest that may become available before they can be offered to third parties. In the state of Tennessee, there are various types of Right of First Refusal and Co-Sale Agreements that can be tailored to meet the specific needs and requirements of the parties involved. Some common types include: 1. Right of First Refusal: This type of agreement grants existing shareholders the right, but not the obligation, to purchase any additional shares of stock or ownership interest that another shareholder intends to sell. Before the shares can be sold to a third party, the shareholder with the right of first refusal must be given the opportunity to purchase them on the same terms and conditions as the offer received from the potential third-party buyer. 2. Co-Sale Agreement: In a co-sale agreement, existing shareholders are given the right to sell their shares along with a majority shareholder or founder who intends to sell their stake in the company. This agreement ensures that all shareholders have the opportunity to participate in the sale and receive proportional benefits from the transaction. 3. Tag-Along Rights: Also known as "Piggyback Rights," tag-along rights are provisions included in a co-sale agreement that allow minority shareholders to join in the sale of shares initiated by a majority shareholder. These rights protect minority shareholders by granting them the ability to sell their shares on the same terms and conditions as the majority shareholder. 4. Drag-Along Rights: Drag-along rights, on the other hand, enable majority shareholders to force minority shareholders to sell their shares in the event of a sale to a third party. This provision ensures that a potential buyer can acquire all the shares of a company and facilitates a more streamlined transaction process. 5. Standstill Agreement: A standstill agreement is sometimes included in a Tennessee Right of First Refusal and Co-Sale Agreement. This agreement prevents existing shareholders from selling their shares without first offering them to other shareholders as per the terms of the agreement. It provides stability and control over share transfers, ensuring that the rights and interests of each shareholder are respected. It's important to note that these descriptions are general and each Tennessee Right of First Refusal and Co-Sale Agreement can be tailored to meet the specific needs and preferences of the parties involved. Consulting with a legal professional experienced in shareholder agreements is crucial to ensure compliance with Tennessee state laws and the unique circumstances of the business.
