Drag Along, Tag Along Clause for Shareholder Agreement

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									This document is a provision in a shareholder agreement that enables a majority
shareholder to force minority shareholders to join in the sale of a company. The
majority owner must give the minority shareholders the same price, terms, and
conditions as any other seller. This is designed to protect majority shareholders
because it gives buyers complete control of a company by eliminating minority owners
and sells 100% of a company's securities to the buyer. Drag along rights are fairly
standard terms in a stock purchase agreement.
    DRAG ALONG or TAG ALONG CLAUSE FOR SHAREHOLDER AGREEMENT

[Instruction: This clause is commonly used to assure that if the majority shareholder sells his
stake, minority holders are forced to join the deal, and should be tailored to fit your particular
Shareholder Agreement]

If an offering party makes an offer pursuant to Section ___, each notified party shall have the right,
at such notified party's option, in lieu of accepting the offer to require that all of the Shares held by
such notified party be included in any sale to a person together with the offered securities on terms
not more favorable to such person than the terms on which the offered securities are sold to such
person by the offering party. If a notified party wishes to exercise the right granted in this Section
_____, then it shall do so by notice received by the offering party within (but not after) ________
(____) calendar days of such notified party's receipt of the offer. The foregoing shall be subject for
a period of ____ (___) days in addition to the period provided for in Section ____ above to the right
of each of the other notified parties to purchase the additional Shares as if they had originally been
part of the offered securities and same shall be deemed to be part of the offered securities.
In the event that a Shareholder (the “Selling Shareholder”) desires to sell all of its Shares to an
arm’s length person (the “New Shareholder”), and that the notified Parties refuse or are deemed
to have refused to purchase the offered securities pursuant to Section ____ hereof or do not wish
to exercise their tag along right pursuant to Section _____ hereof, the Selling Shareholder has the
right to compel the notified parties to sell all but not less than all their Shares to the New
Shareholder for the same price, terms and conditions as the bona fide offer as to the Shares (and
not for less than their redemption value as to the preferred Shares held by such notified parties),
except that, if required by a notified party, the price must be paid in full in cash upon transfer to
the notified party that so requires. A New Shareholder may acquire the Shares held by the
notified parties by sending a notice (the “New Shareholder Notice”) to the notified parties stating
that:
                  (i)       the Shareholder is required to transfer its Shares to the New
                            Shareholder for a price and at terms and conditions
                            corresponding to the bona fide offer as to the Shares held by
                            such Shareholder or for cash as stated above; and
                  (ii)      specifying the place, date, time and modalities of execution of
                            such transfer as determined herein.

                  (iii)     on a date, time and at a place chosen by the New Shareholder, being
                            respectively:
                                     -         no later than _______ (___) days after the New
                                               Shareholder sends the new shareholder notice,
                                     -         during normal business hours, and
                                     -         at the registered office of the Company, and upon the
                                               payment by the New Shareholder to the notified parties
                                               so notified of the price mentioned, such notified parties
                                               shall deliver to the New Shareholder certificates of all



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                                               their Shares and duly endorsed for transfer to the New
                                               Shareholder.




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