Texas 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 Texas Right of First Refusal Clause for Shareholders' Agreement is a provision designed to protect the rights of existing shareholders in a corporation when new shares are issued or when existing shares are transferred. It gives the existing shareholders the first opportunity to purchase the newly issued or transferred shares before they can be offered to others. Under the Texas Right of First Refusal Clause, if a shareholder intends to sell or transfer their shares, they must first offer them to the existing shareholders at a price and on terms no less favorable than what they have agreed upon with a potential buyer. The existing shareholders then have the right to either accept the offer and purchase the shares or waive their right, allowing the shareholder to proceed with the transfer to the potential buyer. The purpose of this clause is to maintain the control and stability of the corporation by ensuring that existing shareholders have the opportunity to maintain their ownership percentage and prevent unwanted or unknown shareholders from gaining control. There are different variations of the Texas Right of First Refusal Clause that can be included in a Shareholders' Agreement: 1. Basic Right of First Refusal: This clause grants existing shareholders the right to purchase newly issued or transferred shares on the same terms as offered to an outside party, providing them with the first opportunity to increase their ownership stake. 2. Right of First Offer: This clause requires a shareholder who intends to sell their shares to first offer them to existing shareholders at a specified price before seeking buyers elsewhere. However, unlike the basic right of first refusal, existing shareholders are not obligated to match or exceed the offer; they simply have the first opportunity to make an offer. 3. Right of First Negotiation: This clause requires the shareholder intending to sell their shares to engage in negotiations with existing shareholders before offering them to outside parties. The goal is to facilitate discussions and give existing shareholders the chance to present a competitive offer. 4. Right of First Refusal with Tag-Along and Drag-Along Rights: This clause not only grants existing shareholders the right of first refusal but also includes additional provisions that allow minority shareholders to "tag along" and sell their shares along with the majority seller or "drag along" the minority shareholders to sell their shares along with the majority seller to a third party. This helps maintain the harmony and control of the corporation during share transfers. 5. Right of First Refusal with Prorate Allocation: This clause ensures that existing shareholders can participate in new share offerings on a pro rata basis, based on their existing ownership percentage. This way, they have the right to maintain their proportionate ownership stake. In summary, the Texas Right of First Refusal Clause for Shareholders' Agreement grants existing shareholders the first opportunity to purchase newly issued or transferred shares, protecting their ownership interests and providing stability to the corporation. Different variations of this clause can be included in a Shareholders' Agreement, depending on the specific preferences and needs of the shareholders involved.

The Texas Right of First Refusal Clause for Shareholders' Agreement is a provision designed to protect the rights of existing shareholders in a corporation when new shares are issued or when existing shares are transferred. It gives the existing shareholders the first opportunity to purchase the newly issued or transferred shares before they can be offered to others. Under the Texas Right of First Refusal Clause, if a shareholder intends to sell or transfer their shares, they must first offer them to the existing shareholders at a price and on terms no less favorable than what they have agreed upon with a potential buyer. The existing shareholders then have the right to either accept the offer and purchase the shares or waive their right, allowing the shareholder to proceed with the transfer to the potential buyer. The purpose of this clause is to maintain the control and stability of the corporation by ensuring that existing shareholders have the opportunity to maintain their ownership percentage and prevent unwanted or unknown shareholders from gaining control. There are different variations of the Texas Right of First Refusal Clause that can be included in a Shareholders' Agreement: 1. Basic Right of First Refusal: This clause grants existing shareholders the right to purchase newly issued or transferred shares on the same terms as offered to an outside party, providing them with the first opportunity to increase their ownership stake. 2. Right of First Offer: This clause requires a shareholder who intends to sell their shares to first offer them to existing shareholders at a specified price before seeking buyers elsewhere. However, unlike the basic right of first refusal, existing shareholders are not obligated to match or exceed the offer; they simply have the first opportunity to make an offer. 3. Right of First Negotiation: This clause requires the shareholder intending to sell their shares to engage in negotiations with existing shareholders before offering them to outside parties. The goal is to facilitate discussions and give existing shareholders the chance to present a competitive offer. 4. Right of First Refusal with Tag-Along and Drag-Along Rights: This clause not only grants existing shareholders the right of first refusal but also includes additional provisions that allow minority shareholders to "tag along" and sell their shares along with the majority seller or "drag along" the minority shareholders to sell their shares along with the majority seller to a third party. This helps maintain the harmony and control of the corporation during share transfers. 5. Right of First Refusal with Prorate Allocation: This clause ensures that existing shareholders can participate in new share offerings on a pro rata basis, based on their existing ownership percentage. This way, they have the right to maintain their proportionate ownership stake. In summary, the Texas Right of First Refusal Clause for Shareholders' Agreement grants existing shareholders the first opportunity to purchase newly issued or transferred shares, protecting their ownership interests and providing stability to the corporation. Different variations of this clause can be included in a Shareholders' Agreement, depending on the specific preferences and needs of the shareholders involved.