For the reasons described in the Original No-Action Request Letter dated April 12, 2006 undcr the caption "Qualification for Tier II RelieL" and because the shareholdii~ structure has changed significantly due to the Voluntary Tender Offer, the Offeror has beem unable to obtain reliable inforillation as to the nuinber or percentage of the reinailling approximately 7.6% of the Shares outstailding that were owled by U.S. holders (as detesnlined in accordancc with Rule 14d-1(d) ofthe Exchange Act).
The Put Rights
On July 31, 2006, the Offeror and Schcriilg entered into the Doillillation Agreement, pursuant to which Scheriilg agreed to submit itself to the direction of, and to transfer its entire profits to, the Offeror, and the Offeror agreed to conlpensate Schering for any aimual losses incurred during the tern1 of the Donlinatioil Agreement. Thc Doinination Agrccnlent was approvcd by the shareholders of Schering at an extraordinary general nlecting of Scheriilg shareholders held on September 13, 2006. Bayer, in its capacity as sole shareholder of the Offeror, has also consented to the Doillillation Agreement. The Doillination Agreement will beconle effective upon its registration in the Conlmercial Register (Handelsregister) of the Local Court (Amtsgericht) in Charlottcnburg, Berlin, which is where thc registered corporate office of Schering is located. Schei.ing subnlitted thc Domination Agrcenlent for registration in the Conlnlercial Register on September 14, 2006. However, in ccrtain circumstances dissenting shareholders have the right to institute proceedings challengillg the shareholders' resolution and, based 011 prior cases, Bayer expects that such proceediilgs will be instituted in respect of this resolution. Undcr Gerinan law and practice, this nlay lead to a delay in registration of as long as one year or even longer. It is thus impossible to deternline with cei-tainty when the Doillination Agreement will be registered.
Conlnlencing on the Effective Date of the Doillination Agreement, the Offeror will be obligated to purchase Shares at any unaffiliated shareholder's request pursuant to such sl~arel~olderP' ut Rights against payment of the Put Price in accordance with al~plicablc German law. According to the terms of the Doillination Agreement and in accordancc with applicable Gernlan law, the obligation of the Ofleror to purchase Shares at ally unaffiliated share1~oldei~r'cquest pursuant to the Put Rights is linlited to, but illust remaill available for, a period expiring two nlonths following the Registration Announcement Date. Howevcr, if any legal proceedings concerning the adequacy of the an~oulnof the Put Pricc or of the Guaranteed Dividcnd (S'7ruchverfahren) ase coillnleilced by shareholders of Schering, as is thcir right under the Stock Corporation Act and the Act on the Court Review of Shareholder Conlpensation (Spruchverfahrensgesdz, the "Review Act"), the obligation of the Offeror to ~ui-chasShares at any unaffiliated shareholder's request pursuant to the Put Rights nlust continue to cxist until the expiration of two illonths after the date on which public announcement is made of the resolution of the last such proceeding. This can and usually does take a very long time, in excess of a year in illost cases, and soine proceedings havc talcen in excess of five years. The Put Right nlust senlain in existence for all of this time. (These proceediilgs under the Review Act are separate fro111those referred to in the preceding paragraph and do not hinder registration of the Doillination Agreenlent in the Conlmercial Register, but instead lead to a leilgthening of the period in which the Put Rights senlain available.)