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did not accept as shareholders representing a majority of NMG’s
issued and outstanding shares. The letter of intent was just
that, a letter of intent. It did not bind WCP to purchase the
stock and stock warrants, and it did not bind NMG’s stockholders
and warrantholders to sell their stock and warrants.
Nevertheless, respondent argues that the letter of intent
triggered certain provisions of the NMG stock warrants, which, in
turn, gave rise to a legally binding obligation to sell on the
part of the donees. First, respondent contends that the letter
of intent triggered NMG’s right of first refusal under the terms
of the NMG warrant. We cannot agree that the right of first
refusal was triggered by the letter of intent. The right of
first refusal arose under the warrant only in the case of a “bona
fide offer” for the purchase of warrants which is received by the
warrantholder. The letter of intent from WCP was not a bona fide
offer for the purchase of the warrants. Further, it was not
received by petitioners or the donees16 but was instead addressed
to and accepted by the officers and the chairman of the board of
NMG. NMG, in turn, was the party in whose favor the right of
16Even if we were to assume the letter of intent was a bona
fide offer to purchase the warrants, a right of first refusal is
generally not triggered until the owner’s receipt of an offer and
his good-faith decision to accept it. 3 Corbin, Corbin on
Contracts, sec. 11.3, at 470-471 (rev. ed. 1996). In this case,
neither Arbeit’s nor the charitable donees’ willingness to enter
into a sale agreement with WCP was expressed until after the
assignments of the warrants.
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