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.
A Vermont Right of First Refusal (ROAR) and Co-Sale Agreement is a legal arrangement commonly used in business transactions, specifically in the context of sales or transfers of company shares. This agreement gives certain individuals or entities the right to purchase shares of a company before they are sold to any third parties. By exercising this right, the holder of the ROAR can match the offer made by the potential buyer and acquire the shares. In Vermont, there are primarily two types of Right of First Refusal and Co-Sale Agreements commonly encountered: 1. Standalone Right of First Refusal Agreement: This agreement establishes the specific terms and conditions under which a shareholder or a group of shareholders will have the right to purchase shares before any other person or entity. Such right is triggered when the company's shares are proposed to be sold by a shareholder to a third party. The ROAR holder typically has a specified timeframe to notify the selling shareholder of their intention to exercise the right and must complete the purchase within another predetermined timeframe. 2. ROAR as part of a broader Shareholders' Agreement: In certain cases, the Right of First Refusal is included as a clause within a more comprehensive Shareholders' Agreement. This agreement covers various aspects of shareholder rights and responsibilities, providing a framework for governance, decision-making, and ownership transfers within the company. In such situations, the ROAR clause will be included alongside other provisions relating to voting, board representation, and other shareholder rights. Both types of agreements aim to protect existing shareholders' interests by allowing them to maintain control over the sale of shares in the company. This mechanism prevents unwanted or unknown third parties from acquiring ownership and potentially disrupting the company's operations or dynamics. While the specific terms and conditions may vary between agreements, some typical inclusions are the process for the exercise of the right, the purchase price calculation, the required method of notice to the selling shareholder, and any stipulations regarding the transfer of voting rights or other associated privileges. In conclusion, a Vermont Right of First Refusal and Co-Sale Agreement is a legally binding contract that safeguards existing shareholders' rights by granting them the option to purchase shares before they are sold to external parties. These agreements are designed to provide stability and control within a company's ownership structure and can take the form of standalone ROAR agreements or be incorporated into broader Shareholders' Agreements.
