Offer To Purchase Shares Agreement

These agreements may also include provisions that encourage a selling shareholder to solicit third-party offers on shares of companies until all or part of the roFR or ROFO deadlines expire. The selling shareholder can only sell if all prerogatives are refused. These types of provisions obviously limit the marketing of shares while they are in effect by increasing the time frame for each deal and increasing the uncertainty of a successful transaction to a non-shareholder of a third party who wishes to buy shares. This lack of marketing can have an impact on gift and inheritance taxes. It also often leads to better value, if and when the shares are sold to a third party, since the company is entitled to the last appearance or last offer, and may match the offer (if the company can at that time invite its own third parties to the agreement, is often implied by the provisions of ROLO, but should be treated specifically in the document). There are a number of considerations when drawing up or negotiating a shareholders` pact, not just: the parties may have enormous leeway to choose trigger provisions and whether a triggering event will simply require a review of the situation, a mandatory withdrawal or other measures. For example, the death of a shareholder may not require a mandatory repayment, but may provide that the estate has other financing options (as a result, these are often referred to as “shareholder agreements” and are not only referred to as “purchase contracts,” since the circumstances under which the provisions may apply may vary). Another example could be a divorce in which the divorced shareholder can no longer be an eligible shareholder, but the shares must be retained for estate planning or other reasons. At this point, the company may require the use of different fiduciary structures to hold the shares, define a repayment program to be implemented over time, or require the outgoing shareholder or seller to give a voting contract on the shares. A similar result may occur in the event of a bankruptcy or creditor issue, in which the entity buys the shares and gives the assignee the opportunity to repurchase the shares from the public treasury for a specified period of time.