Delaware Law On Confidentiality Agreements

In the development of the NDA, Martin Marietta`s General Counsel used an NDA from an earlier transaction with Vulcan and expanded the scope of the limited information and limited the authorized uses and disclosures of protected information. The NDA provided that the parties could only use or disclose the other`s non-public material for “the valuation of a transaction.” A transaction was defined as a possible commercial transaction between Martin Marietta and Vulcan. The NDA also prohibited the parties from disclosing that there had been or had discussions about a transaction in the absence of an agreed transaction. The NDA authorized the disclosure of evaluation documents where disclosure was “legally necessary.” Disclosure is required by law where there is an “external request.” Prior to the disclosure of an external claim, the NDA asked the diviulatory party to disclose to the other party and to have the opportunity to comment on any disclosure. The parties joined the JDA to exchange information on cartel and abuse of dominance issues related to the transaction. The confidentiality agreements did not contain any status quo clause. – 80% of the agreements studied contain non-compliance clauses. The duration of the status quo varied considerably, from 45 days to three years. The most common term was twelve months. In this case, this was the first request for books and records in accordance with Section 220 in December 2014. The main issue was the scope and duration of a confidentiality agreement required by the company.

A second Section 220 request was submitted in February 2017 and, once again, the parties failed to reach an agreement on the terms of a confidentiality agreement. In October 2017, a complaint was filed with the Court of Chancery requesting access to books and records on the basis of an amended application in May 2017. The main point of contention between the parties was always the extent of the confidentiality obligations that the company imposes on its issue production. Although the shareholder also requested non-confidential documents, the company was outraged. 2. the exercise of care in the documentation of consultations. Given the ambiguity of some of the basic contractual languages reviewed by the Court, Chancellor Strine has often used the verification of extrinsious evidence, including advisory documents, internal briefs, handwritten notes and banker presentations. These documents ultimately led him to conclude that, when the confidentiality agreements were concluded, the parties – in particular Martin Marietta`s – intended to strictly limit their ability to disclose confidential information. Some of these materials also show that Martin Marietta and his advisers were concerned about the possible legal impact of the language of the contract before the introduction of the hostile offer. This view is merely a reminder of the great diligence that Dealmaker and his advisors should bring to document their internal and external thinking and potential legal issues. The Supreme Court rejected Martin Marietta`s assertion that Vulcan did not demonstrate irreparable harm and found that the parties had foreseen irreparable harm in the event of a breach of confidentiality agreements and that Vulcan had provided evidence that he was “at stake” at the wrong time and that his employees and senior managers had been distracted by Martin Marietta`s actions.

The Supreme Court also rejected Martin Marietta`s attacks on the scope of the injunction. Martin Marietta said the four-month injunction was inappropriate because it would effectively delay the proxy contest by a year. However, as recognized by the Supreme Court and the Court of Chancery, Martin Marietta would not have been able to disclose information for a proxy contest until 2013, if it had been followed by the NDA because of the May 3 expiration date and Vulcan`s prior announcement. Thus, the Supreme Court found that the Court of Chancery was not abusing its discretion in granting a four-month injunction.

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