Richards Layton & Finger

Paying for the Privilege of Independence: Termination Fees Triggered by "Naked No Votes"

September 2007

The Delaware Chancery Court has never given clear guidance on the use of termination fees triggered by “naked no votes.” These occur when a target’s stockholders reject a merger agreement in the absence of an alternative or superior transaction. The Court has, however, made some statements that are instructive.