Covenant Regarding Acquisition Proposal Clause Samples
A Covenant Regarding Acquisition Proposal is a contractual provision that restricts one party, typically the seller, from soliciting or entertaining acquisition offers from third parties during a specified period, usually while a transaction is pending. This clause often requires the seller to notify the buyer if any unsolicited proposals are received and may obligate the seller to reject such proposals outright. Its core practical function is to protect the buyer’s interests by ensuring exclusivity and reducing the risk of the deal being disrupted by competing offers.
Covenant Regarding Acquisition Proposal. (a) Subject to Section 7.3 or unless expressly permitted pursuant to this Section 7.2, Cardiome agrees that it shall not, and shall not authorize or permit any of its Representatives, directly or indirectly, to:
(i) make, solicit, initiate, entertain, encourage, promote or facilitate, (including by way of furnishing information, permitting any visit to its facilities or properties or entering into any form of agreement, arrangement or understanding) any inquiries or the making of any proposals regarding an Acquisition Proposal or that may be reasonably be expected to lead to an Acquisition Proposal;
(ii) participate, directly or indirectly, in any discussions or negotiations regarding, or furnish to any Person any information or otherwise co-operate with, respond to, assist or participate in any Acquisition Proposal or potential Acquisition Proposal, provided however that Cardiome may communicate and participate in discussions with a third party for the purpose of (A) clarifying the terms of any proposal in order to determine if it may reasonably be expected to lead to a Superior Proposal; and (B) advising such third party that an Acquisition Proposal does not constitute a Superior Proposal and cannot reasonably be expected to result in a Superior Proposal;
(iii) remain neutral with respect to, or agree to, approve or recommend any, Acquisition Proposal or potential Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect to an Acquisition Proposal until five (5) Business Days following formal announcement of such Acquisition Proposal shall not be considered to be a violation of this Subsection 7.2(a)(iii);
(iv) withdraw, modify, qualify or change in a manner adverse to Cipher, or publicly propose to or publicly state that it intends to withdraw, modify, qualify or change in a manner adverse to Cipher, the approval, recommendation or declaration of advisability of its Board or any committee thereof of this Agreement or the Arrangement (a “Change in Recommendation”) (it being understood that failing to affirm the approval or recommendation of its Board of this Agreement or the Arrangement within five (5) Business Days after an Acquisition Proposal has been publicly announced shall be considered to be an adverse modification);
(v) enter into any agreement, arrangement or understanding related to any Acquisition Proposal or requiring it to abandon, terminate or fail to consummate the Arrangement or providin...