Hard Lock Up Agreement

When a private company begins the IPO process, large employees may receive reduced cash compensation in exchange for company shares. Many of these employees may want to exchange their shares as soon as possible after the company`s IPO. The prohibition period prevents the sale of shares immediately after the IPO when share prices may be artificially high and sensitive to extreme price fluctuations. CanniMed`s implementation of the shareholder rights plan was clearly a defensive tactic developed by CanniMed to protect the Newstrike proposal from an offer conditional on the abandonment of the transaction. The shareholder rights plan aims to avoid further blockages that, combined with authorized market acquisitions, could lead to Aurora`s success. Given that the shareholder rights plan was primarily tactically motivated to simultaneously protect the Newstrike agreement and oppose the Aurora offer, it was not possible to say in the first place that it gave the board time to conduct an auction or to allow time for higher bids. Such a function was a possibility as a secondary case, but there was no evidence that the ability to search for other transactions was used by CanniMed. The reorientation of the takeover bid regime by setting the minimum filing period of 105 days, the minimum period for the tender and the mandatory 10-day extension after meeting this condition provides sufficient protection for shareholder selection, when it is possible to submit bids and management to react in a reasonably predictable and impartial manner to these offers , is a legitimate and well-established feature of AM transaction planning in Canada. , and are even more important in planning a bidder after the acceptance of the changes to the tender offer, since the risks to the conclusion of a transaction have been increased by the extension of the period during which an offer must remain open and the minimum offer requirement cannot be waived by the bidder. If tactical shareholder rights plans could operate in general to avoid market blockages and purchases, the acquisition regime would be made much less predictable and the planning and conducting of transactions with shareholder value would unduly complicate or discourage the planning of transactions with the shareholder.

In general, tactical plans that replicate the characteristics of the acquisition regime, such as delay. B of 105 days, the minimum auction requirement and the 10-day extension, can be confusing for investors and market participants. Replicating these characteristics with variations in how requirements are to be met would create confusion and, in this case, would not serve any useful purpose. Similarly, these plans should not normally be used to designate a bidder to legitimately hold blocked shares if they are not considered common actors under existing regulations. It will be rare for a tactical plan to interfere with the established characteristics of the opaque referral system, such as the possibility for bidders and shareholders. B to decide, in their own interest, whether an offer should be made by entering into blocking agreements, as envisaged in this case.

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