Shareholder’s Refusal Clause

RIGHT OF FIRST REFUSAL CLAUSE FOR SHAREHOLDERS’ AGREEMENT

Clause No. _____.  Restrictions on Transfer of Shares. The parties hereto agree that they, each and severally, shall not transfer, sell, convey, exchange, or encumber shares owned in the Company, except as may be permitted by the terms of this Agreement, including the following:

1. In the event that a Shareholder wants to make a sale of stock owned in the Company, then the Shareholder shall provide notice of such intent, including the name, address and occupation of the proposed purchaser,  to the Treasurer in behalf of  the Company.  Upon receipt of such notice, the Company shall have thirty (30) days in which to elect to buy all of the proposed offer of stock.  In the event that the Company makes such an election, notice of such decision shall be provided by the Treasurer to the offering shareholder promptly and the sale shall be completed within sixty (60) days of the date that notice of the proposed sale was received from the Shareholder by the Company.

B. In the event that the Company elects not to purchase the stock offered by the Shareholder, notice of such decision shall be provided by the Treasurer to the offering Shareholder within thirty (30) days of the date that notice of the proposed sale was received from the Shareholder by the Company.  The sale, as initially proposed by the offering Shareholder, may then take place if completed within thirty (30) days from the date of receipt of such notice that the Company has elected not to purchase the offered shares.

C. If the sale and transfer contemplated by Clause _____ (B) immediately preceding does not take place within the time therein specified, then any other proposed sale of the offered stock shall be deemed subject to the time and notice restrictions imposed by this Clause and any subsections thereof and the timetable for all notices, whether by the offering Shareholder or the Company, shall begin and apply again as if no other notice had been given.

D. The above restrictions on transfer shall apply to the parties to this Agreement, except in the event of the death of a Shareholder.  In that event, the Company shall be deemed to have offered to buy the shares owned by the deceased Shareholder for the purchase amount set out and agreed to by the parties to this Agreement and the Personal Representative of the deceased Shareholder shall be deemed to accept such offer.

State Specific Partnership Forms

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Inside Shareholder’s Refusal Clause