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.
Connecticut Right of First Refusal and Co-Sale Agreements are legal provisions that aim to protect the interests of shareholders or members in a Connecticut corporation or limited liability company (LLC) when it comes to selling their ownership interest. The Right of First Refusal (ROAR) is a contractual right that gives existing shareholders or members the opportunity to purchase the ownership interest of another shareholder or member before it is sold to a third party. This provision allows shareholders or members to maintain control over who becomes a shareholder or member of the company. In Connecticut, there are two main types of Right of First Refusal agreements: 1. Direct Right of First Refusal: — This typroarerFR allows existing shareholders or members to match the terms of a third-party offer made to a shareholder or member looking to sell their ownership interest. If the existing shareholders or members decide to exercise their right, they can purchase the interest on the same terms and conditions as the third-party offer. — The purpose of a direcROARFR is to provide existing shareholders or members with the opportunity to maintain their proportionate ownership in the company and prevent dilution of their ownership interest. 2. Indirect Right of First Refusal: — An indirecROARFR entitles existing shareholders or members to be offered the ownership interest for sale at the same price as a bona fide offer received by a shareholder or member. However, the existing shareholders or members do not have the right to match the terms of the offer. — The purpose of an indirecROARFR is to ensure that existing shareholders or members have the opportunity to consider whether they want to exercise their right to purchase the ownership interest, even if they are not willing to match the terms of the offer. Co-Sale Agreements, also known as tag-along rights, generally accompany Right of First Refusal provisions. These agreements protect minority shareholders or members when a majority shareholder or member intends to sell their ownership interest. It allows the minority shareholders or members to sell their shares or interest on the same terms and conditions as the majority shareholder or member. The Connecticut Right of First Refusal and Co-Sale Agreements ensure that existing shareholders or members have the opportunity to maintain their ownership interest and prevent the company's ownership structure from changing without their consent. These provisions protect the rights and interests of all parties involved and maintain a fair and equitable environment within the corporation or LLC. Keywords: Connecticut, Right of First Refusal, Co-Sale Agreement, shareholders, members, ownership interest, corporation, limited liability company, ROAR, direct ROAR, indirect ROAR, tag-along rights, minority shareholders, majority shareholders, minority members, majority members, offer, sale.
