Legal Preference Right Document

Legal Preference Right Document

This Preference Right Agreement (the Agreement) is made and entered into on Effective Date: by and between Grantor Name: and Holder Name: .

RECITALS

WHEREAS, Grantor is the legal owner of certain equity, membership interests, or other transferable ownership interests (the "Interests") in the business or entity described below; and

WHEREAS, Holder desires to obtain and Grantor is willing to grant a preferential right to acquire, or to be offered the opportunity to acquire, all or a portion of such Interests on the terms set forth herein to protect Holder's ownership position and economic rights; and

WHEREAS, the parties desire to set forth their respective rights and obligations with respect to transfers of the Interests.

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below.

"Interests" means the ownership units, shares, membership interests, partnership interests, or other equity or profit participation interests identified as:

"Offered Transfer" means any proposed sale, assignment, encumbrance, or other transfer of an Interest by Grantor, whether voluntary or involuntary, other than a Permitted Transfer as defined in Section 5.

2. GRANT OF PREFERENCE RIGHT

Grantor hereby grants to Holder a preferential right to acquire the Interests upon the terms and conditions set forth below. The type of preference right shall be (select one or more as applicable):

Right of First Refusal Right of First Offer Preemptive Right to Subscribe

3. EXERCISE PROCEDURE

3.1 Notice of Proposed Transfer. Prior to effecting any Offered Transfer, Grantor shall deliver to Holder a written notice (the Notice) containing the material terms of the proposed transfer, including the identity of any proposed transferee, the number and type of Interests proposed to be transferred, and the proposed purchase price and payment terms.

3.2 Exercise Period. Holder shall have days from receipt of the Notice to elect in writing to exercise its preference right by delivering a signed notice of acceptance to Grantor (Exercise Notice). If Holder fails to timely deliver the Exercise Notice, its rights with respect to that Notice shall terminate and Grantor may proceed with the transfer to the proposed transferee on the terms described in the Notice.

3.3 Matching and Closing. If Holder elects to exercise the preference right, the parties shall close the purchase and sale of the Interests on terms no less favorable to the transferee than those set forth in the Notice. Closing shall occur within days of delivery of the Exercise Notice, subject to reasonable closing conditions customary for transactions of this nature.

4. PURCHASE PRICE AND VALUATION

4.1 Method of Determination. The Purchase Price for Interests subject to the preference right shall be:

Fair Market Value (as determined by mutual agreement of Grantor and Holder or, failing agreement within 30 days, by an independent appraiser selected pursuant to the agreed appraisal procedure) Specified Price:

4.2 Payment Terms. Payment shall be made in cash or immediately available funds at closing unless otherwise agreed in writing. Any deferred payment shall bear interest at the rate of per annum and shall be secured as agreed by the parties.

5. TRANSFER RESTRICTIONS; PERMITTED TRANSFERS

5.1 Restriction. Except as set forth in Section 5.2, Grantor shall not effect any transfer of Interests except in strict compliance with this Agreement.

5.2 Permitted Transfers. Notwithstanding Section 5.1, the following transfers shall be Permitted Transfers and not subject to the preference right:

(a) transfers to a direct or indirect affiliate of Grantor; (b) transfers by testamentary disposition or by operation of law upon death, if the transferee agrees in writing to be bound by the terms of this Agreement; and (c) transfers approved in writing by Holder.

6. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants to the other that: (a) it has full power and authority to enter into and perform this Agreement; (b) this Agreement constitutes a valid and binding obligation enforceable in accordance with its terms; and (c) the execution, delivery and performance of this Agreement do not and will not violate any material agreement, law, or obligation applicable to such party.

7. REMEDIES

The parties acknowledge that a breach of this Agreement will cause irreparable harm for which monetary damages may be an inadequate remedy. Accordingly, in addition to all other remedies available at law or in equity, the non-breaching party shall be entitled to injunctive relief to prevent breaches of this Agreement and to specifically enforce its terms. Remedies under this Agreement are cumulative.

8. TERM AND TERMINATION

This Agreement shall commence on the Effective Date and shall remain in effect until the earlier of: (a) the expiration of years; (b) termination by written agreement of the parties; or (c) such time as all Interests are lawfully transferred free of this Agreement.

9. ASSIGNMENT

Neither party may assign its rights or delegate its obligations hereunder without the prior written consent of the other party, except that Holder may assign its rights to an affiliate or to a permitted successor of Holder provided that the assignee agrees in writing to be bound by the terms of this Agreement.

10. NOTICES

All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be delivered personally, by certified mail (return receipt requested), nationally recognized overnight courier, or by electronic delivery with confirmation, to the parties at the addresses set forth below or to such other address as a party may designate by notice:

11. GOVERNING LAW; VENUE

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of laws principles. The parties agree that the state and federal courts located within that State shall have exclusive jurisdiction and venue over any dispute arising out of or relating to this Agreement.

12. ENTIRE AGREEMENT; AMENDMENTS; WAIVER

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, both written and oral, between the parties. This Agreement may be amended only by a written instrument signed by both parties. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom enforcement is sought.

13. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and the parties shall endeavor in good faith to replace the invalid provision with a valid provision that achieves, to the extent possible, the economic, legal and commercial objectives of the invalid provision.

14. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered by electronic transmission or other facsimile means shall be deemed original signatures.

15. MISCELLANEOUS

The headings in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. The parties acknowledge that each has had the opportunity to review this Agreement with counsel of its choice.

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