District of Columbia Right of First Refusal Clause for Shareholders' Agreement

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-01770
• Format: Word; Rich Text

Description

This is a model clause for a shareholder's agreement addressing Right of First Refusal. If a shareholder wishes to sell shares, the company will be given notice and has the right to buy the shares during a certain limited time period. Adapt to fit your circumstances. The District of Columbia Right of First Refusal Clause is an important provision included in a Shareholders' Agreement that outlines the rights and obligations of shareholders in the District of Columbia. This clause grants existing shareholders the first opportunity to purchase any shares being sold by another shareholder before they are offered to external parties. In the District of Columbia, there are several types of right of first refusal clauses that can be incorporated into a Shareholders' Agreement, each serving a different purpose. These include: 1. General Right of First Refusal: This clause grants existing shareholders the right to purchase shares being sold by another shareholder on the same terms and conditions as a third-party offer. The selling shareholder is obligated to provide a notice to the existing shareholders, allowing them to exercise their right of first refusal within a specified time frame. 2. Right of First Offer: This type of clause requires the selling shareholder to first offer their shares to existing shareholders before seeking external buyers. However, the offer by the selling shareholder does not necessarily have to match the terms and conditions of any third-party offer. 3. Right of Co-Sale: The right of co-sale clause enables existing shareholders to participate in the sale of shares by another shareholder. If a selling shareholder receives an offer from a third party, existing shareholders have the right to join the transaction and sell a proportionate number of their own shares on the same terms. 4. Right of First Negotiation: This clause gives existing shareholders the right to negotiate and finalize a purchase price and terms with the selling shareholder before any external offers are considered. If no agreement is reached within a specified timeframe, the selling shareholder may then pursue external buyers. The District of Columbia Right of First Refusal Clause is crucial for protecting the interests of existing shareholders and maintaining the stability and control of a company. By providing shareholders with an opportunity to purchase shares before they are offered to outside parties, it ensures that the ownership structure remains in the hands of those already invested in the company.

The District of Columbia Right of First Refusal Clause is an important provision included in a Shareholders' Agreement that outlines the rights and obligations of shareholders in the District of Columbia. This clause grants existing shareholders the first opportunity to purchase any shares being sold by another shareholder before they are offered to external parties. In the District of Columbia, there are several types of right of first refusal clauses that can be incorporated into a Shareholders' Agreement, each serving a different purpose. These include: 1. General Right of First Refusal: This clause grants existing shareholders the right to purchase shares being sold by another shareholder on the same terms and conditions as a third-party offer. The selling shareholder is obligated to provide a notice to the existing shareholders, allowing them to exercise their right of first refusal within a specified time frame. 2. Right of First Offer: This type of clause requires the selling shareholder to first offer their shares to existing shareholders before seeking external buyers. However, the offer by the selling shareholder does not necessarily have to match the terms and conditions of any third-party offer. 3. Right of Co-Sale: The right of co-sale clause enables existing shareholders to participate in the sale of shares by another shareholder. If a selling shareholder receives an offer from a third party, existing shareholders have the right to join the transaction and sell a proportionate number of their own shares on the same terms. 4. Right of First Negotiation: This clause gives existing shareholders the right to negotiate and finalize a purchase price and terms with the selling shareholder before any external offers are considered. If no agreement is reached within a specified timeframe, the selling shareholder may then pursue external buyers. The District of Columbia Right of First Refusal Clause is crucial for protecting the interests of existing shareholders and maintaining the stability and control of a company. By providing shareholders with an opportunity to purchase shares before they are offered to outside parties, it ensures that the ownership structure remains in the hands of those already invested in the company.