Explaining the right of first refusal (ROFR) clause
Our stock purchase in each transaction is subject to the company's Right of First Refusal (ROFR), which, if exercised, will prevent the consummation of the stock purchase by the fund. In this case, any transferred investment of yours (held in escrow) would be immediately returned.
In short, the Right of First Refusal is the company's right to purchase the shares from the shareholder on the same terms as our offering. Typically, the company has about 30 days to make the decision upon us submitting our bona fide offer via a Transfer Notice (they may also waive their right, in which case we can proceed immediately).
Does the company need to waive its ROFR as part of the deal?
Yes, if the company has a ROFR, the ROFR would need to be waived, or the company would need not exercise its right to complete a share transfer.
What does the process look like if the company has a ROFR?
If we are conducting a share transfer and the company has a Right of First Refusal (ROFR), which is the company's right to purchase the shares from the shareholder on the same terms as our offering, we will work with the company to facilitate the transaction. The company will either decide to waive the ROFR, let it expire, or purchase the shares directly from you on the same terms. Typical ROFR periods are 30 days, but it is dependent on the company.
What happens to my investment in the event that the company exercises their right of first refusal (ROFR)?
In the event that we cannot close on your investment due to company ROFR, we will promptly return your principal investment and sales fee to you.