Court Of Chancery Validates Top Up Options

Posted on February 21, 2011 by Edward M. McNally

Olson v. ev3, Inc., C.A. 5583-VCL (February 21, 2011)

In recent years, top up options have been frequently used to speed up a merger by avoiding the time-consuming and expensive process of soliciting proxies to approve a merger after a successful tender offer.  This decision explains how such an option works and why they are permitted under Delaware law.

The decision is also important is pointing out certain perils in the way top up option rights are structured.  The option needs to comply with the provisions of the DGCL  governing stock options.

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