Tender Offer Support Agreement

(a) On the expiry date, the shareholder hereby agrees, subject to section 3.3, to deposit the relevant securities (collectively, the purchase shares) free and free of any lien no later than the tenth (10th) business day following the commencement of the offer or to cause such shareholder purchase shares to be tendered to the offer. If the shareholder purchases tender shares after the date of this press release and during the support period, the shareholder must file such offer shares no later than (a) five (5) business days following such acquisition and (b) one (1) business day before the expiration date. Because the provision quickly became a mainstay of Delaware`s mergers and acquisitions, this article examines a buyer`s ability under Delaware law to obtain security in two-stage mergers through support agreements with shareholders of the controlling target company. As used in this document, “support agreements” are agreements between a potential buyer and the shareholders of the controlling target company in which, upon signing a transaction, those shareholders agree to exchange or tender all or part of their shares from or shortly after the commencement of the first offer or exchange offer, thus giving a buyer the assurance that the merger will be significant and even substantial and even substantial. enjoys decisive support from shareholders. Fundamentally, just as in the period leading up to Section 251(h), a buyer must carefully structure such agreements to prevent an agreement from becoming an inappropriate fait accompli as a result of the Delaware Supreme Court`s longstanding decision in Omnicare v. NCS Healthcare, paying particular attention to the mechanisms for conducting a takeover bid or takeover bid. [2] Make offers, discussions or negotiations, (d) enter into a letter of intent, condition sheet, acquisition agreement, memorandum of understanding or similar agreement with respect to a tender offer or that can reasonably be expected to result in a tender offer, or (e) resolve, publicly propose or accept any of the above offers. The Shareholder will commence and commence its Controlled Affiliates and will use reasonable efforts to induce the Representatives of the Shareholder and its Controlled Affiliates acting on behalf of the Shareholders to refrain from any solicitation, encouragement, discussion, activity or negotiation with any person or group that has not yet been completed with respect to any proposed acquisition or investigation; to be discontinued and terminated immediately. Proposals, offers or solicitations relating to or reasonably expected to result in a tender offer. Notwithstanding anything to the contrary in this Agreement, the Shareholder and its affiliates will not be prohibited from (i) participating in any discussion or negotiation regarding any potential offer and any endorsement, vote or similar agreement in connection with a Proposed Acquisition if the Company is permitted to take the steps set forth in Section 5.4 of the Merger Agreement with respect to such Proposed Acquisition; or (ii) in connection with the Company`s termination of the merger agreement in accordance with its terms to enter into a specified agreement, enter into an offer and a support, voting or similar agreement with the person making the superior proposal. At first glance, a two-tier buyer might differentiate their offering from Omnicare by avoiding support contracts altogether.

Naturally, this was not the usual practice in Delaware two-stage mergers involving controlling shareholders, as a buyer in such contexts is likely to both increase the security of the transaction and signal support for the transaction to the market from the controlling party or parties. In fact, in a review of omnicare`s two-stage mergers, both before and under Section 251(h), in which the targets of Delaware public companies with 50% or more controlling shareholders participated [3], almost all (22 of 24 transactions) included controlling shareholder support agreements. Therefore, the predominant question for buyers in such transactions was apparently not whether they should enter into support agreements, but what those agreements should look like. The dominant response was the inclusion of a trustee in the merger agreement: in a large number of proxy transactions with support agreements (eight out of 22), controlling shareholders pledged the offer or exchange of all their shares, unless the merger agreement was terminated, the merger agreement contained a target termination right to accept a global offer. and such termination was the only way to reduce or terminate the tendering obligation in connection with the exercise of the fiduciary duties of a board of directors in relation to higher-level competing bids. While a trustee alone appears sufficient to circumvent Omnicare`s ban, in 13 other transactions, a trustee was one of two (or in some cases three) mechanisms that reduced bidding obligations under the applicable support agreement. In nine of these 13 transactions, the main recurring additional mechanism was a form of “tightening” of bidding obligations (e.B. bidding obligations were reduced to 34.99% for a specific event other than the termination of the merger agreement, completely suspended during the period of modification of the board`s recommendation or completely terminated if the board`s recommendation was changed). In the other four transactions (and two of the nine Ratchet transactions), the additional facility was an explicit cap on the actions subject to the support agreement, as the parties did not subject all their actions to the support agreement.

The caps were generally between 31.99% and 39.99%, with a transaction at 14.9%. However, the latter cap did not relate to Omnicare`s concerns, but to the previous restriction in Article 251(h) on transactions with interested shareholders [4], which, as mentioned above, has since been lifted. Finally, an agreement among the 22 controllers relating to support agreements made the tendering obligations of the controlling parties conditional on obtaining financing for the purchaser`s transaction as omnicare`s only obvious mechanism to prevent the agreement from becoming a fait accompli. 2.2 Restriction of transfer of voting rights. During the Support Period, shareholders will ensure that: (a) none of the securities in question are deposited or otherwise transferred to a voting trust; (b) no power of attorney, power of attorney, right of consent or other authorization is granted and no power of attorney agreement or similar agreement is entered into with respect to any of the securities set forth in this Agreement; and (c) no action has been taken or authorized that would limit, limit or otherwise impair the performance of shareholders` obligations under this Agreement or otherwise mislead or materially misrepresent any representation or warranty of the shareholder herein. 9.1 Adjustments. . . .