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.
Utah Right of First Refusal and Co-Sale Agreement: Explained with Key Terms Introduction: The Utah Right of First Refusal and Co-Sale Agreement is a legal document that sets out the rights and obligations of parties involved in a particular transaction or agreement. It primarily focuses on scenarios related to the sale or transfer of a particular asset, typically shares in a company or real estate. In Utah, there are different types of Right of First Refusal and Co-Sale Agreements, each serving a specific purpose. This article aims to provide a detailed description of these agreements, outlining their key terms and variations. Key Terms: 1. Right of First Refusal: The Right of First Refusal is a contractual provision that grants a party or group of parties the option to purchase a specific asset or shares before it is offered to any other potential buyer. This right usually applies when a shareholder or property owner decides to sell their interest in a company or property. It grants the holder the opportunity to match any offer from a third party and purchase the asset on the same terms. 2. Co-Sale Agreement: A Co-Sale Agreement, also known as a "Tag-Along" provision, ensures that minority shareholders or individual owners have the opportunity to sell their interest in a company when a majority shareholder or a particular group of shareholders decides to sell. This provision allows minority shareholders to "tag-along" with the majority sale, selling their shares on the same terms and conditions. Types of Utah Right of First Refusal and Co-Sale Agreements: 1. Right of First Refusal Agreement: This type of agreement provides a specific party or group of parties with the exclusive right to purchase an asset, shares, or property before it is offered to any other potential buyer. It is a common provision in shareholder agreements, aimed at giving existing shareholders priority in acquiring additional shares or interests when they become available. 2. Right of First Refusal and Co-Sale Agreement (Combined): This variation combines the rights mentioned above into a single agreement. It not only grants certain parties the right of first refusal when selling their shares or property but also ensures minority shareholders have the opportunity to sell alongside majority shareholders. This combined agreement simplifies the negotiations and safeguards the interests of all parties involved. 3. Modified Right of First Refusal Agreement: The modified version of the right of first refusal agreement allows parties involved to negotiate specific terms, conditions, and limitations regarding the exercise of the right. For example, the agreement may specify a specific timeframe within which the right must be exercised or determine the valuation method to determine the purchase price. 4. Open Market Right of First Refusal Agreement: This type of agreement grants the right of first refusal to multiple parties in a specific order. If the initial party does not exercise its right, it passes to the next party in line until a buyer comes forward. This type of agreement is often used to maintain a certain level of control within a company or property ownership structure. Conclusion: The Utah Right of First Refusal and Co-Sale Agreement is a legal tool designed to protect parties' rights in the sale or transfer of assets, particularly shares or real estate. Understanding the key terms and variations of these agreements is crucial to establish clear guidelines and protect the interests of all parties involved. Whether it be a Right of First Refusal Agreement, a Right of First Refusal and Co-Sale Agreement, or a modified or open market version, these agreements play a vital role in maintaining fairness and efficient asset transactions.
