This Right of First Refusal and Co-Sale Agreement (the “Agreement”) is made as of by and among ACME Resources LLC, a TX LLC (the “Company”), the holders of Preferred Stock listed on Schedule A (the “Investors”), and the holders of Common Stock listed on Schedule B (the “Key Holders” or “Founders”).
“Transfer” means any sale, assignment, pledge, encumbrance, or other disposition of Capital Stock. “Proposed Transfer” means any Transfer of Capital Stock by a Key Holder that is not a Permitted Transfer. “Proposed Transfer Notice” means written notice from a Key Holder describing the number of shares, the proposed price per share, and the identity of the prospective transferee.
(a) Company Right. Before a Key Holder may consummate a Proposed Transfer, the Key Holder must deliver a Proposed Transfer Notice to the Company and the Investors. The Company will have a first right to purchase all or any portion of the offered shares at the price and on the terms set forth in the Proposed Transfer Notice by giving written notice within days after receipt of the Proposed Transfer Notice.
(b) Investor Secondary Right. To the extent the Company does not exercise its right in full, each Investor will have a secondary right of first refusal to purchase its pro rata share (and, by over-allotment, any portion not taken by other Investors) of the remaining offered shares on the same terms by giving written notice within days after the Company’s right expires. An Investor’s pro rata share equals the ratio of the shares of Common Stock issuable on conversion of the Preferred Stock it holds to the total such shares held by all Investors.
(c) Closing of Refusal. If the Company and the Investors collectively exercise their rights with respect to all of the offered shares, the purchase will close within days. If they do not exercise with respect to all of the offered shares, then, subject to the co-sale right below, the Key Holder may transfer the remaining shares to the prospective transferee at the same price and on the same terms within days, after which the shares again become subject to this Agreement.
To the extent the Company and the Investors do not exercise their rights of first refusal as to all of the offered shares, each Investor that notifies the Key Holder within the Investor refusal period (a “Participating Investor”) will have the right to participate in the Proposed Transfer on the same terms by selling up to its pro rata portion of the shares to be sold. A Participating Investor’s pro rata portion equals the number of shares to be transferred multiplied by a fraction, the numerator of which is the number of shares of Common Stock (on an as-converted basis) owned by the Participating Investor, and the denominator of which is the total number of such shares owned by the Key Holder and all Participating Investors. The number of shares the Key Holder may sell will be correspondingly reduced.
The rights of first refusal and co-sale do not apply to a “Permitted Transfer”, which means a Transfer by a Key Holder: (a) to such Key Holder’s ancestors, descendants, spouse, or domestic partner, or to a trust for their benefit, for bona fide estate-planning purposes; (b) on death by will or intestacy; or (c) of up to of the Key Holder’s shares in a single transaction approved by the Board; provided, in each case, that the transferee agrees in writing to be bound by this Agreement and the Voting Agreement.
Any Transfer of Capital Stock by a Key Holder in violation of this Agreement is void and will not be recorded on the Company’s books. If a Key Holder purports to effect a prohibited Transfer, the Investors may, at their option, require the Key Holder to sell to the Investors shares equal to those wrongfully transferred, on the same terms, in addition to any other remedy.
Each certificate or book-entry notation representing shares subject to this Agreement will bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND AMONG THE STOCKHOLDER, THE COMPANY, AND CERTAIN HOLDERS OF STOCK OF THE COMPANY, A COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES.
This Agreement terminates upon the earliest of (a) the closing of a qualified initial public offering, (b) a Sale of the Company, or (c) years from the date of this Agreement.
This Agreement may be amended or waived only with the written consent of the Company, the holders of a majority of the Preferred Stock, and the holders of a majority of the Common Stock held by the Key Holders. This Agreement is governed by the laws of the State of TX and may be executed in counterparts, including by electronic signature.
By: Michael Yuan
Title: General Manager
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