Lizard Technology Partners v. Qinetiq North America, 114 A.3d 193

Buyer acquired Cyveillance for $40M plus an earn-out up to $40M conditioned on post-closing revenue targets.
Merger Agreement §5.4 prohibited the buyer from “tak[ing] any action to divert or defer [revenue] with the intent of reducing or limiting the Earn‑Out Payment.”
Earn‑out targets were not met at the end of the earn‑out period; seller sued for breach of §5.4 and breach of the implied covenant of good faith and fair dealing.
Seller alleged buyer took business decisions (including conduct affecting Basic Chems. Co.) that knowingly or foreseeably reduced the earn‑out; sought to treat §5.4 as a knowledge‑based restraint or to invoke the implied covenant to impose broader post‑closing duties.
Court of Chancery held §5.4 unambiguous: it bars only intentional acts motivated (at least in part) to reduce or avoid the earn‑out; the implied covenant does not impose broader obligations when parties expressly negotiated and rejected affirmative post‑closing covenants.
On appeal, the Supreme Court affirmed, giving deference to the bench ruling and rejecting seller’s attempts to rewrite the bargained allocation of post‑closing risk.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Meaning of §5.4: intent vs knowledge standard	§5.4 should bar any buyer conduct it knew would impair earn‑out (knowledge standard).	§5.4’s plain language requires intent to reduce or limit the earn‑out (purposeful motivation).	§5.4 unambiguous: bars actions taken with intent to reduce/limit the earn‑out, not mere knowledge of likely effect.
Scope of implied covenant of good faith and fair dealing	Implied covenant should prevent conduct that foreseeably frustrates earn‑out even if not intentional.	Parties negotiated and rejected broader affirmative post‑closing obligations; implied covenant cannot rewrite the contract.	Implied covenant cannot be used to impose protections the seller rejected; it only reaches conduct intended to deprive the seller of the earn‑out (if at all).
Evidentiary sufficiency of trial court’s factual findings	Bench ruling was concise and therefore findings deserve no deference.	Bench opinion addressed key facts and intent issues; findings are supported and entitled to deference.	Supreme Court defers to Chancery’s factual findings; bench opinion was adequate and persuasive.
Remedy / ability to rewrite the bargain	Seller seeks judicially implied duties to achieve earn‑out.	Enforce the contract as written; courts should not rewrite bargained terms.	Court will not rewrite contract; seller cannot obtain additional contractual protections via judicial implication.

Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728 (Del. 2006) (courts give clear contractual language its plain meaning to effectuate parties’ intent)
Nemec v. Shrader, 991 A.2d 1120 (Del. 2010) (limits on implied covenant; courts should infer terms only to fill unanticipated gaps and not to rewrite bargains)
Cincinnati SMSA Ltd. P’ship v. Cincinnati Bell Cellular Sys. Co., 708 A.2d 989 (Del. 1998) (courts should not rewrite or supply omitted contract provisions)
United States v. Falstaff Brewing Corp., 410 U.S. 526 (1973) (law presumes a person intends the natural and probable consequences of his acts)