The Travis Texas Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the first opportunity to purchase additional shares or transferable interests in a company before they are offered to external parties. This clause ensures that existing shareholders have the right to maintain their proportionate ownership and control over the company. In Travis Texas, there are different types of Right of First Refusal Clauses that can be included in a Shareholders' Agreement: 1. Standard Right of First Refusal Clause: This type of clause gives existing shareholders the right, but not the obligation, to purchase additional shares or interests that are being offered for sale by a shareholder who wishes to sell. The existing shareholders are given a time frame within which they can exercise this right, usually by matching the terms of the external offer. 2. Right of First Offer Clause: Similar to the standard Right of First Refusal, this clause requires the selling shareholder to first offer the shares or interests to the existing shareholders at a specified price before seeking external buyers. However, the existing shareholders are only given the opportunity to make an offer and the selling shareholder has the flexibility to accept or reject it. 3. Tag-Along Right Clause: This clause is designed to protect minority shareholders. It enables minority shareholders to "tag-along" with a majority shareholder who intends to sell their shares to a third party. The minority shareholders have the right to sell their shares on the same terms as the majority shareholder. 4. Drag-Along Right Clause: This clause grants majority shareholders the power to "drag-along" minority shareholders when selling their shares to a third party. If a majority shareholder receives an offer from a third party, they can force the minority shareholders to also sell their shares on the same terms and conditions. The Travis Texas Right of First Refusal Clause for Shareholders' Agreement is an essential tool for maintaining stability and control within a company by providing existing shareholders with the opportunity to maintain their ownership in the face of potential share or interest transfers. It ensures fair treatment and safeguards the interests of both majority and minority shareholders.
Travis Texas Right of First Refusal Clause for Shareholders' Agreement
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FAQ
The right of first refusal is usually triggered when a third party offers to buy or lease the property owner's asset. Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
The right of first refusal (ROFR) is a contractual right that can impact your business and future opportunities. Simply put, the ROFR gives the holder of the right the option to enter into a transaction before anyone else.
People often talk about giving or getting a Right of First Refusal ("ROFR") in real estate transactions.
Most of us are familiar with the right of first refusal (ROFR) but not with the right of first offer (ROFO). Generally, a ROFR is advantageous to the purchaser and the ROFO is advantageous to the seller.
A Right of First Offer (ROFO) and a Right of First Refusal (ROFR) are both contractual obligations that often arise in the context of a lease arrangement or in connection with selling an asset (such as a piece of property).
In a buyer's market, when homes are plentiful and prices are low, right-of-first-refusal agreements can directly benefit sellers. Since this agreement is drafted before the home hits the market, the homeowner might be able to persuade the original interested party to pay more than the home's current value.
Seller hereby grants Purchaser a right of first refusal on the Property or any portion of the Property in accordance with the terms below (Right of First Refusal).
A ROFR is considered to favour those shareholders who intend to stay long-term (likely buyers); while a ROFO is seen to favour likely sellers. In a ROFR mechanism, the selling shareholder has to solicit an offer from a third party before offering its shares to the non-selling shareholders.
A right of first refusal keeps the person holding it from losing an essential asset. Many commercial tenants prefer to lease premises, but they would buy to prevent eviction by a new owner. A right of first refusal gives tenants a chance to buy and stay at their location.
The right of first refusal granted herein shall terminate (i)with respect to any particular First Refusal Space upon the failure by Tenant to exercise its right of first refusal with respect to the First Refusal Space so offered by Landlord pursuant to the terms of this Section1.
