Drag-Along Transactions Clause Samples
A Drag-Along Transactions clause allows majority shareholders to compel minority shareholders to join in the sale of a company on the same terms and conditions as the majority. In practice, if a certain threshold of shareholders agrees to sell their shares to a third party, all remaining shareholders are required to participate in the transaction and sell their shares as well. This clause ensures that potential buyers can acquire 100% ownership without being hindered by holdout minority shareholders, thereby facilitating smoother and more attractive sale processes.
Drag-Along Transactions. (i) If Apollo has received (or has been deemed to have received) an GHK Refusal Notice, Apollo shall be entitled, within 120 days thereafter, in connection with entering into a definitive agreement pursuant to Section 4(a)(v), to deliver to the Company and the Non-Apollo Holders notice of a bona fide offer made by a third party to purchase all but not less than all of the Equity Securities held by the Investor Group and the other Non-Apollo Holders for cash consideration (the “Drag-Along Transaction”), which notice shall include the name of the parties to the proposed Drag-Along Transaction, a summary of the material terms and conditions of the proposed Drag-Along Transaction negotiated by Apollo, the proposed cash purchase price and the material terms and conditions of payment of such cash purchase price contemplated by the proposed Drag-Along Transaction, and shall state that it desires the Company and all Non-Apollo Holders, as applicable, to enter into definitive agreements with such bona fide third party or parties (the “Proposed Drag-Along Purchaser”) in connection with such Drag-Along Transaction. Following receipt of such notice, (A) all Non-Apollo Holders and the Company (as applicable) shall consent to and raise no objections against the Drag-Along Transaction and (B) if the Drag-Along Transaction is structured as (1) an amalgamation, merger or consolidation of the Company, all Non-Apollo Holders shall vote in favor of such amalgamation, merger or consolidation, waive any dissenter’s rights, appraisal rights or similar rights in connection with such amalgamation, merger or consolidation and instruct the Board to vote in favor of such Drag-Along Transaction and (2) if the Drag-Along Transaction is structured as a sale or issuance of shares of capital stock, all Non-Apollo Holders shall sell their respective Equity Securities on the terms and conditions of the Drag-Along Transaction as set out in the notice and waive preemptive or other rights with respect thereto. All Non-Apollo Holders shall take all necessary and desirable actions in connection with the consummation of the Drag-Along Transaction, including the execution of such agreements and such instruments and other actions reasonably necessary to (1) provide the representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Drag-Along Transaction that have been negotiated by Apollo (subject to the terms of this Agreemen...