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Form #1563

Option to corporation to purchase stock from stockholder

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Option to corporation to purchase stock from stockholder


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Option to corporation to purchase stock from stockholder.

This Right of First Refusal Agreement (this "Agreement") is entered into on _________[date], between Y Corp., a _________[state] corporation ("Y Corp."), and Z, L.P., a _________[state] limited partnership ("ZLP").

1. ZLP is the owner of _________[number] shares of Y Corp. common stock (the "Subject Shares") which are evidenced by Certificate No. _________, a copy of which is attached to this Agreement as Exhibit "A".

2. Y Corp. presently contemplates the sale of its interests in A Co., a Delaware corporation ("A Co.") and B Co., a Delaware corporation ("B Co."), to C Co., a Delaware corporation ("C Co."). A Co. and B Co. are the Managing General Partner and Special General Partner, respectively, of ZLP.

3. To induce Y Co. to sell its interests in ZLP's General Partners as noted above, ZLP now desires to grant Y Co. a preferential purchase right (the "Right of First Refusal") as to the Subject Shares.

AGREEMENT

Now, Therefore, in consideration of the premises and of the mutual covenants contained in this Agreement, the parties agree as follows:

1. Restrictions on Transfer and Issuance. ZLP shall not sell, assign, transfer, give, devote, pledge, deposit, deviate, bequeath, devise or otherwise encumber or dispose of in any way or manner, any of the Subject Shares except as expressly provided within this Agreement.

2. Limited Right of ZLP to Sell the Subject Shares.

(a). Receipt of Bona Fide Offer. If ZLP at any time shall receive a bona fide monetary offer in writing from an unrelated third party (the "Offer") for the purchase of any or all of the Subject Shares, setting forth the proposed price per share and any other terms upon which the purchase is to be made (including the name and address of the prospective purchaser), ZLP, if it wishes to accept the Offer, shall (i) transmit a copy of the Offer to the Secretary of Y Corp. within seven days of its receipt of the Offer; and (ii) offer in writing to sell the number of Subject Shares to which the Offer pertains to Y Corp. on the terms and conditions set forth within the Offer.

(b). Option of Y Corp. Y Corp. shall have 30 days following its receipt of the notice from ZLP specified in Section 2(a)(i) above (the "Notice Date") to notify ZLP in writing of its election to exercise its option to purchase all of the Subject Shares to which the Offer pertains on the same terms and conditions set forth within the Offer. If Y Corp. does not notify ZLP of its election to exercise its Right of First Refusal prior to the expiration of 30 days from the Notice Date, ZLP shall have the right, subject to Section 4 of this Agreement, to sell the Subject Shares to which the Offer pertains on the terms and conditions set forth in the Offer. The Right of First Refusal granted to Y Corp. by this Section 2(b) shall not obligate Y Corp. to purchase any or all of the Subject Shares to which any Offer relates.

(c). Closing Under Right of First Refusal. If Y Corp. shall have issued written notice to ZLP of its election to exercise its Right of First Refusal in accordance with Section 2(b) of this Agreement, the closing of the purchase of the Subject Shares to which the Offer relates shall take place in ZLP's offices at _________[address], no later than 120 days from the Notice Date (the "Closing Date"). If the Closing Date shall not have occurred within that 120 day period, the election of Y Corp. to exercise its Right of First Refusal shall be rendered void and of no further force or effect and ZLP shall have the right to accept the Offer as previously related to Y Corp.

(d). Payment of Purchase Price: Delivery of Share Certificates. The purchase price payable shall be in the form and amount specified within the Offer. All payments by Y Corp. of monies are to be made in the legal tender of the United States in immediately available funds unless the Offer expressly provides otherwise.

Payment of the applicable purchase price shall be paid against delivery of the Subject Shares to Y Corp. At the Closing, ZLP shall deliver to Y Corp. such stock powers or certificates, endorsed in blank, evidencing the Subject Shares purchased under the Right of First Refusal as counsel for Y Corp. shall reasonably deem necessary to evidence the transfer of the Subject Shares to Y Corp.

3. Insolvency or Legal Proceedings. If any of the following events shall occur with respect to ZLP: (a) the filing by or against ZLP of a petition in bankruptcy; (b) the making by ZLP of an assignment for the benefit of creditors; (c) the appointment of a receiver of ZLP's property; or (d) the receipt by Y Corp. of notice of a public, private or judicial sale of all or any part of the Subject Shares, then upon the occurrence of any one of the above-described events, Y Corp. shall have the option, but not the obligation, subject to compliance with applicable law, to exercise its Right of First Refusal under the provisions of Section 2 of this Agreement as to either all of the Subject Shares held by ZLP or as to any Subject Shares as to which the occurrences set forth within Section 3(a) through (d) above specifically relate. The terms, conditions and purchase price of any purchase of the Subject Shares by Y Corp. under this Section 3 shall be those offered by any third party or creditor, or if the Subject Shares are not offered for sale and/or if no Offer is received, then at a purchase price equal to the "Market Value".

For purposes of this Agreement, "Market Value" shall mean the purchase price per share of the Subject Shares as is agreed upon by the parties to this Agreement, or if they cannot agree on a price, the closing price per share of the common stock of Y Corp. on the _________ Stock Exchange as of the last business day preceding the occurrence of an event set forth in Section 3(a) through (d) above.

4. Void Transfers. If any Subject Shares are transferred, sold or otherwise disposed of in a manner which is not in full accordance with the terms of this Agreement, the Securities Act of 1933 and any applicable state securities laws, such sale, transfer or disposition shall be void.

5. Miscellaneous Provisions.

(a). After Acquired Shares. All of the provisions of this Agreement shall apply to all of the Y Corp. common stock now owned or subsequently issued or transferred to ZLP as a consequence of any additional issuance, purchase, exchange or reclassification of the Subject Shares, corporate reorganization, merger, stock split, or stock dividend, or which are acquired by ZLP in any other manner.

(b). Legend. The certificate(s) representing the Subject Shares at any time shall bear a conspicuous legend in such form as Y Corp. may determine, stating (among other things) that the Subject Shares are subject to this Agreement and the restrictions contained in this Agreement.

(c). Specific Performance. Because the Subject Shares constitute a major block of the stock of Y Corp., irreparable damage would result if this Agreement is not specifically enforced. As such, in view of the inadequacy of money damages, if ZLP or other persons shall fail to comply with the provisions of this Agreement, Y Corp. shall be entitled to injunctive relief in the case of the violation, or attempted or threatened violation, by ZLP or other persons of any of the provisions of this Agreement, or to a decree compelling specific performance by ZLP or other persons of any of such provisions, or of any other remedy legally allowed to them.

(d). Notices. All notices, offers, requests, consents, and communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been duly given or made when received.

If to Y Corp.: _________[Address of Y Corp.]

With a copy to: _________[Name and address of counsel for Y Corp.]

If to ZLP: _________[Address of ZLP]

With a copy to: _________[Name and address of counsel for ZLP]

(e). Amendment. This Agreement may be amended only by a written instrument signed by Y Corp. and ZLP.

(f). Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions of this Agreement, and it shall be construed in all respect as if the invalid or unenforceable provisions were omitted.

(g). Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement.

(h). Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute a single instrument.

(i). Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of each party and is not intended to confer upon any person, other than the parties and their permitted successors and assigns, any rights or remedies under this Agreement.

(j). Applicable Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of _________, without giving effect to principles of conflict of laws of that state.

(k). Captions. The captions to this Agreement are for convenience of reference only and shall not affect its interpretation in any respect.

In Witness, this Right of First Refusal Agreement has been executed on _________[date].

[Signatures]

Contributed by
AIG Legal
 
Total Forms Contributed 75
 

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Terms Of Use

Submissions to this site, including any legal or business forms, posts, responses to questions or other communications by contributors are not intended as and should not be construed as legal advice. You are strongly encouraged to consult competent legal council before engaging in any action based upon content contained on this site.

These downloadable forms are only for personal use. Retransmission, redistribution, or any other commercial use is prohibited. This includes reposting forms from this site to another site offering free legal or other document forms for download.

Please note that the donator may have included different usage terms regarding this form, and you agree to abide by these terms. It is highly recommended that you have a licensed attorney review any legal documents for which you are searching in order to make sure that your needs are being properly and completely satisfied.

Your use of this site constitutes your acceptance of our terms of use and your agreement to hold this site, its officers, employees and any contributors to this site harmless for any damage you might incur from your use of any submissions contained on this site. If you do not agree to the above terms, please do not proceed.

These forms are provided to assist business owners and others in understanding important points to consider in different transactions. They are offered with the understanding that no legal advice, accounting, or other professional service is being offered by these documents or on this website. Laws vary in the different states. Agreements acceptable in one state may not be enforced the same way under the laws of another state. Also, agreements should relate specifically to the particular facts of each situation. Therefore, it is important to consult legal counsel whenever utilizing these forms. The Forms are not a substitute for legal advice YourFreeLegalForms.com is not engaged in recommending or referring members on the site or making claims about the competence, character or qualifications of its participating members.
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Keywords: Option to corporation, purchase stock

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