A "Grant of Right of First Offer" clause provides a party the opportunity to negotiate a specific transaction with the issuing party before others are given the chance. This clause does not obligate the initiating party to finalize the transaction with the right holder, but ensures that they are the first to be approached with an offer.
Grant of Right of First Offer. At the time, if any, within 365 days after Landlord’s receipt of an Interest Notice that Landlord first intends to market or to negotiate with one or more third parties to lease an Expansion Space that Landlord determines in good faith to be consistent with the Parameters, other than marketing or negotiation regarding a lease arrangement with the existing lessee who would be renewing or extending its occupancy of such space (whether or not pursuant to a contractual right to do so), or with a lessee that holds a prior expansion right, Landlord shall give Tenant written notice (“Landlord’s Communication”) of the financial consideration and other terms upon which Landlord is willing to lease such portion of the Expansion Space to Tenant; Landlord is not obligated to offer the same portion of the Expansion Space to Tenant more than once during the period covered by a single Interest Notice. Landlord’s Communication shall constitute an offer to Tenant to lease such portion of the Expansion Space on the terms set forth in Landlord’s Communication and otherwise on the terms set forth in this Lease. Tenant specifically acknowledges that Landlord may offer such portion of the Expansion Space as part of a larger space and on terms that require Tenant to lease the entirety of the larger space. Tenant further acknowledges that Landlord may offer such portion of the Expansion Space for a length of term that is different than the Lease Term as to the Premises or one or more parts of the Premises. However, if a Landlord’s Communication is given prior to the first anniversary of the Fifth Expansion Commencement Date, then such portion of the Expansion Space described in such Landlord’s Communication shall be offered (i) for a term expiring on the same date as the Fifth Expansion Term, (ii) at the same per rentable square foot Base Rent rates as apply to the Fifth Expansion Premises from time to time, and (iii) with the same Allowance per rentable square foot as applies to the Fifth Expansion Premises prorated in a ratio of the number of months in the Lease Term as to such portion of the Expansion Space divided by 96.
Grant of Right of First Offer. Provided no Default then exists either at the time of delivery of the ROFO Notice and at the time of Sublandlord’s delivery of the ROFO Space (as such capitalized terms are defined herein) to Subtenant, Sublandlord shall, prior to offering any space in the Building to any party, first offer to lease to Subtenant the entirety (and not a portion) of the Building in an “AS-IS” condition by delivering notice of such offer (“ROFO Notice”) to Subtenant (the “Right of First Offer”). “ROFO Space” means all of the area in the Building which is not part of the original Subleased Premises which is being leased to Subtenant pursuant to this Sublease. Subtenant shall notify Sublandlord in writing whether Subtenant elects to lease the entire ROFO Space within seven (7) business days after Sublandlord delivers to Subtenant the ROFO Notice, TIME BEING OF THE ESSENCE with respect to Subtenant’s notice. If Subtenant fails or is unable to timely exercise its right hereunder with respect to the ROFO Space, then such right shall lapse, TIME BEING OF THE ESSENCE with respect to the exercise thereof, and Sublandlord may lease all or a portion of the ROFO Space to third parties on such terms as Sublandlord may elect (subject to Section 31, below). However, notwithstanding the terms of the preceding sentence, if the economic terms change by 10% or more, the size of the ROFO Space stated in the ROFO Notice changes by 10% or more, or there are material changes in the non-economic terms, then Sublandlord covenants and agrees to again offer such ROFO Space to Subtenant with the revised terms. Additionally, if Sublandlord has not leased any such ROFO Space within six (6) months following the date of the ROFO Notice, then such ROFO Space shall again be subject to Subtenant’s Right of First Offer. Except as otherwise set forth in this Section 30 to the contrary, Subtenant’s lease of the entire Building shall be on all of the terms and conditions of this Sublease. The ROFO Space is deemed to contain 56,158 rentable square feet for purposes of calculating Sublease Base Rent, but the ROFO Space will also include the remaining portions of the Building currently leased by Sublandlord pursuant to the terms of the Prime Lease. Accordingly, upon exercising the Right of First Offer pursuant to the terms hereof, Subtenant will lease from Sublandlord, and Sublandlord will lease to Subtenant, the Building.
Grant of Right of First Offer. Subject to the terms and conditions of this Exhibit J , Landlord hereby grants to Tenant a right of first offer to lease space in the Building that is contiguous and adjacent to the Premises (the “First Offer Space”). Notwithstanding the foregoing, such first offer right of Tenant: (a) shall commence only following the expiration or earlier termination of the initial lease (or leases, as the case may be) of the First Offer Space, regardless of whether any such lease is executed prior to or after the date of the Lease, including the expiration of any renewal, extension or expansion rights set forth in any such lease, regardless of whether such renewal, extension or expansion rights are effected strictly in accordance with their terms, or pursuant to a lease amendment or a new lease; and (b) shall be subject and subordinate to the rights granted to any other third-party prior to the Effective Date (the “Superior Right Holder”) to lease such First Offer Space. Tenant’s right of first offer shall be on the terms and conditions set forth in this Exhibit J.
A Grant of Right of First Offer (ROFO) is a contractual agreement that gives a party the opportunity to negotiate a deal before the owner can offer the same terms to third parties. This right obligates the owner to negotiate in good faith with the holder of the ROFO before entertaining any other outside offers. Unlike the Right of First Refusal (ROFR), where the holder has the right to match an offer already made by a third party, ROFO gives the holder the chance to make the first offer.
A Grant of Right of First Offer is typically used in situations where one party wants to have priority access to an asset or opportunity before others. This could be beneficial in scenarios such as:
Using a ROFO can prevent competitive bidding wars and ensure that both parties have a clear understanding of their negotiation priorities and methodologies.
Crafting a Grant of Right of First Offer requires clear language and specific terms. A carefully written ROFO clause should include the following elements:
Example clause:
“Upon deciding to sell [Asset], the Seller shall notify the Holder in writing of its intention. The Holder shall have [number of days] to make an offer to purchase. The Seller and Holder agree to negotiate in good faith. If no agreement is reached within [negotiation period], the Seller may proceed to offer the [Asset] to third parties.”
Grants of Right of First Offer can be found in a variety of contracts, including but not limited to:
Contracts with ROFO clauses aim to provide certainty and a framework for handling future sales, purchases, or leases involving specific assets or interest.
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