Pennsylvania 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 Pennsylvania 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 outside parties. This clause is designed to safeguard the ownership structure of a company and maintain the control and interests of existing shareholders. Here are the different types of Pennsylvania Right of First Refusal Clauses commonly found in Shareholders' Agreements: 1. Basic Right of First Refusal: This clause grants existing shareholders the right to purchase any additional shares that are being offered for sale by another shareholder. Before selling to an external party, the shareholder intending to sell must first offer the shares to existing shareholders at the same terms and conditions. 2. Enhanced Right of First Refusal: This variation of the clause provides existing shareholders with an expanded right to purchase shares beyond their pro rata ownership percentage. It allows them to acquire a greater portion of the newly offered shares, reducing the dilution of their ownership stake. 3. Right of First Offer: This clause requires a shareholder intending to sell their shares to inform the existing shareholders of their intention, giving them the first opportunity to make an offer to purchase the shares. If an acceptable offer is made, the selling shareholder must sell to the existing shareholders rather than seeking external buyers. 4. Right of Last Refusal: This clause allows existing shareholders to match any offer made by an external party to purchase shares from a selling shareholder. If an external party presents a binding offer to purchase shares, the existing shareholders have the right to purchase the shares on the same terms and conditions. 5. Drag-Along Right: This provision permits a majority shareholder to force minority shareholders to sell their shares along with them in the event of a sale to a third party. The minority shareholders are obligated to sell their shares on the same terms and conditions offered to the majority shareholder. In summary, the Pennsylvania Right of First Refusal Clause for Shareholders' Agreement is a crucial tool to protect the interests of existing shareholders. It ensures that shareholders have the opportunity to maintain their proportional ownership and participate in any future share issuance before the shares are offered to external parties.

The Pennsylvania 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 outside parties. This clause is designed to safeguard the ownership structure of a company and maintain the control and interests of existing shareholders. Here are the different types of Pennsylvania Right of First Refusal Clauses commonly found in Shareholders' Agreements: 1. Basic Right of First Refusal: This clause grants existing shareholders the right to purchase any additional shares that are being offered for sale by another shareholder. Before selling to an external party, the shareholder intending to sell must first offer the shares to existing shareholders at the same terms and conditions. 2. Enhanced Right of First Refusal: This variation of the clause provides existing shareholders with an expanded right to purchase shares beyond their pro rata ownership percentage. It allows them to acquire a greater portion of the newly offered shares, reducing the dilution of their ownership stake. 3. Right of First Offer: This clause requires a shareholder intending to sell their shares to inform the existing shareholders of their intention, giving them the first opportunity to make an offer to purchase the shares. If an acceptable offer is made, the selling shareholder must sell to the existing shareholders rather than seeking external buyers. 4. Right of Last Refusal: This clause allows existing shareholders to match any offer made by an external party to purchase shares from a selling shareholder. If an external party presents a binding offer to purchase shares, the existing shareholders have the right to purchase the shares on the same terms and conditions. 5. Drag-Along Right: This provision permits a majority shareholder to force minority shareholders to sell their shares along with them in the event of a sale to a third party. The minority shareholders are obligated to sell their shares on the same terms and conditions offered to the majority shareholder. In summary, the Pennsylvania Right of First Refusal Clause for Shareholders' Agreement is a crucial tool to protect the interests of existing shareholders. It ensures that shareholders have the opportunity to maintain their proportional ownership and participate in any future share issuance before the shares are offered to external parties.