Judge P. Kevin Castel
Vector Capital contemplated Delaware corporation Ness Technologies’ acquisition. Their March 16, 2011, exclusivity agreement placed three duties on Ness. On March 30, Citi Venture Capital International (CVCI) informed Ness of its interest in buying Ness. Ness “actively discussed” CVCI’s proposal on four occasions between March 31 and April 13, 2011. On June 10, Ness announced its acquisition by CVCI at a price exceeding Vector’s offer. Applying New York law the court dismissed Vector’s suit asserting Ness’ breach of the exclusivity agreement. If Ness had not discussed CVCI’s unsolicited proposal internally, it would have violated its duty under Delaware law to secure the highest sale value for its shareholders. A requirement that Ness disclose letters setting forth “material terms” “regarding an Alternative Transaction” did not require disclosure of an April 7 letter that set out “material terms” only by reference to a previous letter indicating CVCI’s interest in acquiring Ness for $7.75 per share. Observing that the agreement require that Vector accept, consider or facilitate an offer for sale, the court determined that Vector could not invoke the covenant of good faith and fair dealing to impose those requirements on Ness.
