Exercise of the Right of First Refusal. In the event the proposed transfer is deemed to be bona fide, the Company shall have the right to purchase all or a portion of the Transfer Shares at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Optionee of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The Company's exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in a Transfer Notice shall not affect the Company's ability to exercise the Right of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is issued by the Optionee or issued by a person other than the Optionee with respect to a proposed transfer to the same Proposed Transferee. If the Company exercises the Right of First Refusal, the Company and the Optionee shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date of the Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company. For purposes of the foregoing, cancellation of any indebtedness of the Optionee to any Participating Company shall be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest canceled.

Exercise of the Right of First Refusal. The Corporation shall, for a period of not less than 90 days following receipt of the Disposition Notice (the “First Refusal Period”), have the right to repurchase any or all of the Target Shares subject to the Disposition Notice upon the same terms as those specified therein or upon such other terms (not materially different from those specified in the Disposition Notice) to which the Owner consents. Such right shall be exercisable by delivery of written notice to the Owner prior to the expiration of the First Refusal Period. If such right is exercised with respect to all the Target Shares, then the closing date for any repurchase of shares by the Corporation pursuant to Section 10(d) shall be no later than the twentieth day following the end of the First Refusal Period. The Corporation’s purchase price for the Target Shares shall be the lesser of the Agreed Price and the applicable Valuation Price for the Target Shares. The Valuation Date applicable for purposes of Section 10(d) shall be the first day of the First Refusal Period.

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Exercise of the Right of First Refusal. (i) Should CGP decide to exercise its Right of First Refusal, the ROFR Exercise Notice shall indicate CGP’s acceptance of the offer to purchase the Offered Securities, at the price and upon the conditions set out in the ROFR Transfer Notice, it being specified that:

See more samples of Exercise of the Right of First Refusal

Exercise of the Right of First Refusal: Everything you need to know

The right of first refusal is a contract between two parties where the buyer has the contractual right to be the first one to accept or decline an offer put forward by the seller. Only after the buyer or holder has decided whether they wish to accept or refuse can the seller or grantor proceed further. Should the holder refuse, the grantor can seek other options.
A right of first refusal clause provides the holder with the first option to accept without an obligation to do so. Typically, such agreements are subject to a specific time duration. After the agreed period is over, the grantor is no longer obligated to come to the holder first with a proposal. A major industry where such clauses are a common occurrence is in the entertainment industry.

The key features of the right of first refusal
Right of first refusal vs the right of the first offer
How to structure a right of first refusal?
What are the advantages of a right of first refusal?
What are the disadvantages of a right of first refusal?
Right of first refusal in the context of the entertainment industry

The key features of the right of first refusal

There is a limitation on the duration for which the right of refusal will be active, and this duration is clearly stated in the contract.
All the parties involved must agree with who gets the benefits of the right of refusal clause. The other parties can, in turn, ask for additional clauses to be added to the contract during negotiations to safeguard their interests.
The right of first refusal can be negotiated against either cash or kind. There are no prefixed criteria for either.
During the negotiations wherein the details of the clause are finalized, the grantor and the holder can also agree to make the right transferable. In such a situation, if the holder sells or transfers their shares to another party during the contract term, the right of first refusal can also be transferred.
There can be exceptions to the right, which need to be stated clearly in the contract beforehand.

Right of first refusal vs the right of the first offer

The Right to First Refusal is a legally binding contractual right, albeit with a few constraints and exceptions, that ascertains that the holder of the right gets the first opportunity of accepting or refusing a deal. Only after the holder has refused or missed their deadline can the grantor accept another party's offer.

Whereas the Right of First Offer simply means that the first offer for a deal must be extended to the right holder, while the grantor is under no obligation to complete the deal with them. The holder can give their response in the form of a proposal, and it is entirely up to the grantor to accept the holder's proposal or take up a better alternative instead.

How to structure a right of first refusal?

The five most crucial things to consider while drafting or negotiating the terms of a right of first refusal clause are stated below.

Deadlines

The deadlines need to be preset and agreed upon by both parties as they apply to the holder as well as the grantor. The grantor must have a set deadline for how soon they need to make a proposal to the holder after deciding on a project, and the holder must have a deadline for responding to the same.

Definitions

The agreement must state clear definitions for the benefit of the holder and the grantor. The definitions will determine precisely what type of proposals the grantor is obligated to take to the holder first. There could be constraints of circumstance, payment mode, or type of proposal to this obligation that all need to be defined clearly beforehand.

Exceptions

The exceptions to the right of first refusal must be agreed upon by both parties and stated in the contract. The clause will, hence, define and state the situations wherein the grantor is not obligated to provide the right to the holder and is free to make their proposal to any interested third party.

Extinguishment

Should the holder either fail to respond to the grantor's proposal within the deadline or refuse the proposal altogether, the proposal made by the grantor to the holder shall be cancelled. This is known as an extinguishment. Once extinguishment occurs, the holder cannot demand or exercise any right concerning the proposal, and the grantor is free to move on to any other interested party.

Transferability

The transferability of the clause, that is, if the right can be transferred from one person to another, needs to be decided beforehand. In a situation like the demise of either of the two parties involved, it must be stated in the contract what the consequences for the clause will be. Another case where transferability may be applicable is if the holder wishes to sell their shares of the company and transfer the right along with it.

Here is an article for a more detailed reference of structuring the first refusal.

What are the advantages of a right of first refusal?

The following points state the advantages of a right of first refusal.

Negotiable terms: The terms of a right to first refusal clause are up for negotiation, and only after all the parties involved come to a mutual decision on what these terms should be, is the clause finalized and the contract signed.
Insurance for the holder: The holder gets an assurance that their interests will be insured whichever way the company progresses.
Blocking external competition: Typically for investors in a start-up, the right safeguards the interests of the investor by blocking out the external competition.
Preferential buyers: There could be buyers that are preferred by the seller, like family and friends in a family-owned company. They can be given preferential treatment via the right of first refusal.

What are the disadvantages of a right of first refusal?

The following points state the disadvantages of a right of first refusal.

Limits prospect for the grantor: While the seller could have sold to the highest bidder, they are forced by the contract to sell to the holder instead. This can negatively impact their potential profits.
Could impact share prices: Selling at a lower price can, in turn, harm the share prices.
Could cause lending issues: The low-profit generation can also impact the value of the company as collateral and subsequently hinder taking on loans for investment purposes.

Right of first refusal in the context of the entertainment industry

The most common example in the entertainment industry of the right to first refusal being exercised is when an author sells the rights to their novel or screenplay to a production house for a film adaptation. The contract may include a clause that prohibits the author from selling the rights related to the same story to another company.

However, the author can negotiate the terms of the contract and agree to a right of first refusal clause instead. The clause will enable them to look for other prospects should they decide to sell the rights to their story for another adaptation or sequel. Although the company, that is, the grantor in this situation, shall retain the right to be approached first with the proposal.

Only if the deal is extinguished with the company holding the contractual right can the author make a deal with a third party. The clause can, in such a case, mean denial of better prospects for the artist, which may or may not include financial gain. Some articles like this one further talk about the impact of this clause in the industry.

The right of refusal clause can protect investors to an extent by retaining their rights on a property (intellectual and otherwise). However, for the holder, this clause can be a bane, as they are obliged to approach the granter the next time.

More Samples of Exercise of the Right of First Refusal

Exercise of the Right of First Refusal. Participants shall abide by the NCPA Facilities Agreement in the exercise of any options by NCPA to purchase the underlying assets of the PPA as per the voting procedures of this Agreement outlined in Section 6. Participation in any such purchase shall be in accordance with the then existing Participation Percentages, unless such Participation Percentages are otherwise agreed upon by the Participants.

Exercise of the Right of First Refusal. If the Company desires to purchase some or all of the Offered Securities, then the Company must, within forty-five (45) days after its receipt of the ROFR Sale Notice (the “Offeree Refusal Period”), give written notice to the Selling Holder of the Company’s election to purchase a specified portion of such Offered Securities (the “Election Notice”); provided, that the Offeree Refusal Period shall be extended for each day that the Selling Holder is in breach of its obligation to furnish additional information to the Company pursuant to Section 9.3(a). The Right of First Refusal shall automatically expire at the end of the Offeree Refusal Period unless exercised prior the end of the Offeree Refusal Period.

Exercise of the Right of First Refusal. INSpire will exercise its right of first refusal granted pursuant to this Section, if at all, by delivering written notice thereof ("Exercise Notice") to such Customer within the fifteen (15) day period specified above. If INSpire timely delivers the Exercise Notice, then INSpire will implement the Additional Services on terms substantially the same as set forth in INSpire's amended Bid.

Exercise of the Right of First Refusal. For a period of thirty (30) days after its receipt of the written Company Offer (the "Company Offer Period"), the Company or a nominee of the Company shall have the option (the "Company Right of First Refusal") to accept the Company Offer as to any or all of the Offered Shares. The Company Right of First Refusal shall be exercisable by written notice given within the Company Offer Period by the Company to the Selling Shareholder (the "Company Acceptance Notice") setting forth the number of Offered Shares to be purchased by the Company. Copies of the Company Acceptance Notice shall be promptly delivered by the Company to the each Offeree Shareholder. The failure of the Company to deliver a Company Acceptance Notice to the Selling Shareholder prior to the expiration of the Company Offer Period shall be deemed an election by the Company not to exercise the Company Right of First Refusal to purchase any of the Offered Shares. If the Company designates a nominee to purchase the Shares, the Company shall be deemed to have guaranteed unconditionally the obligations of the nominee with respect to such purchase.

Exercise of the Right of First Refusal. If Tenant accepts Landlord’s Offer, then Tenant shall do so by forwarding written notice of acceptance to Landlord, in accordance with the Notices provision of the Lease, as amended herein (Tenant’s “Acceptance Notice”), no later than seven (7) business days following Tenant’s receipt of Landlord’s Offer. If Tenant accepts Landlord’s Offer, then Landlord and Tenant shall execute a further amendment to the Lease documenting the addition of the Proposed Space to the Leased Premises in accordance with the terms of Landlord’s Offer for the remaining unexpired Term of the Lease existing as of the effective date of the expansion of the Leased Premises to include the Proposed Space (the “Expansion Amendment”). Unless set forth to the contrary in the Expansion Amendment, Tenant’s obligation for the payment of Rent for the Proposed Space, subject to any abated rent provision applicable to such space, shall commence ninety (90) days after the full execution of a lease amendment documenting the expansion of the Leased Premises to include the Proposed Space and Landlord’s delivery of the Proposed Space to Tenant for the construction of improvements. The Proposed Space shall be delivered by Landlord to Tenant in its then existing “as is” condition; Landlord shall have no obligation to improve or otherwise modify the Proposed Space for Tenant’s occupancy; provided, however, that Landlord shall construct any common area corridor required as a result of the lease of the Proposed Space to Tenant and demise the Proposed Space from any remaining space on such floor, and Tenant shall reimburse Landlord for one-half (1/2) of all of costs incurred by Landlord in connection with such construction within thirty (30) days after Tenant’s receipt of Landlord’s invoice for such amount. If Tenant does not provide its Acceptance Notice within such seven (7) business day period, then Tenant shall be deemed to have rejected the Proposed Space, and Landlord shall thereafter be entitled to lease the Proposed Space to the Proposed Tenant upon the terms and conditions set forth in the Proposed Offer. If Landlord and the Proposed Tenant enter into a lease for the Proposed Space, then such Proposed Space shall be excluded from the Refusal Space during the term of such lease, as the same may be extended from time to time; however, if such Proposed Space should again become available to be leased during the Refusal Term, such Proposed Space shall, once again, become part of the Refusal Space. If...

Exercise of the Right of First Refusal. The Parties contemplate that NCPA may exercise an option to purchase the underlying assets of the Amended PPA as per the voting procedures of this Agreement outlined in Section 6. Participation in any such purchase shall be in accordance with the then existing Participation Percentages, unless such Participation Percentages are otherwise agreed upon by the Participants. At such time as NCPA exercises its right of first refusal, this Agreement shall be amended to reflect the purchase of the underlying assets and the Project. If any Participant elects not to participate in the purchase of the Project, then this Agreement shall terminate as to such Participant, subject to the Participant not being a Defaulting Party under any of its obligations of this Agreement.

Exercise of the Right of First Refusal. In the event the proposed transfer is deemed to be bona fide, the Company shall have the right to purchase all or none of the Transfer Shares at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Optionee of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. If the Board has reasonably requested additional assurances of the bona fide nature of the proposed transfer, the period for the Company's exercise of its Right of First Refusal shall be extended for a period ending five (5) business days after the Company has received such additional assurances. If the Company exercises the Right of First Refusal, the Company and the Optionee shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice; provided, however, in the event the Transfer Notice provides for the payment for the Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Board. For purposes of the foregoing, cancellation of any promissory note from the Optionee to the Company shall be treated as payment to the Optionee in cash to the extent of the unpaid principal and any accrued interest cancelled. If no price is specified in the Transfer Notice, then the purchase price shall be the fair market value of the Transfer Shares as determined by the Board in good faith.

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