Right of First Refusal and Co-Sale Agreement (Updated October 2024) (NVCA)
This agreement grants the Company and its Investors rights of first refusal and co-sale over shares held by Key Holders. It ensures that if a Key Holder proposes to sell their shares, the Company and then the Investors have the option to purchase them first, or to participate in the sale alongside the Key Holder. The document also includes provisions for lock-up periods, exempt transfers, and limitations for foreign person investors.
This sample document is the work product of a national coalition of attorneys who specialize in venture capital financings, working under the auspices of the NVCA. This document is intended to serve as a starting point only and should be tailored to meet your specific requirements. This document should not be construed as legal advice for any particular facts or circumstances. Note that this sample document presents an array of (often mutually exclusive) options with respect to particular deal provisions.
For convenience of review, for those who will redline this against prior NVCA versions, the drafters specifically labeled footnotes that are new, and those that contain substantive revisions to the prior footnote.
[AMENDED AND RESTATED] RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
THIS [AMENDED AND RESTATED] RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT (this “Agreement”), is made as of [________], 20[__], by and among [____________], a Delaware corporation (the “Company”), the Investors (as defined below) and the Key Holders¹ (as defined below).
¹ In most cases, investors will want the term “Key Holders” to include holders a significant number of shares of common stock (or options to purchase a significant number of shares of common stock) in addition to the individuals who actually founded the Company.
RECITALS²
³
² Recitals have been further simplified and conformed across documents; update as required to reflect the specific terms of the particular transaction.
³ This second set of recitals assumes that a preexisting co-sale agreement is being superseded. It contemplates two different series of preferred stock. Appropriate modifications to the form will be required based on the actual series of preferred stock outstanding and the relative rights of such series.
WHEREAS, each Key Holder is the beneficial owner of shares of Capital Stock, or of options to purchase Common Stock; [and]
[WHEREAS, the Company, [certain of] the Key Holders (the “Existing Key Holders”) and [certain of] the Investors (the “Existing Investors”) previously entered into [a][an] [Amended and Restated] Right of First Refusal and Co-Sale Agreement, dated [_____ , 20_] (the “Prior Agreement”), in connection with the purchase of shares of Series [__] Preferred Stock of the Company, par value $__ per share (“Series [__] Preferred Stock”); and]
WHEREAS, the Key Holders, the Existing Investors and the Company desire to induce [certain of] the Investors to purchase shares of Series [__] Preferred Stock of the Company, par value $___ per share (“Series [___] Preferred Stock”), pursuant to that certain Series [__] Preferred Stock Purchase Agreement dated as of the date hereof by and among the Company and such Investors (the “Purchase Agreement”) [by amending and restating the Prior Agreement in its entirety and] entering into this Agreement to provide the Investors with the rights and privileges as set forth herein.]
NOW, THEREFORE, the parties agree as follows:
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