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Aug. 14 — Narrowing down the issues left to be resolved in a lawsuit alleging that an Al Jazeera subsidiary improperly withheld $65 million in escrow from its purchase of Current TV cable network, the Delaware Chancery Court Aug. 13 held that certain claims for indemnification had not facially complied with the merger agreement.
In a letter opinion, Vice Chancellor Sam Glasscock III declined to revisit a June 3 bench ruling where he determined that an indemnification claim certificate was defective because it stated that Al Jazeera believed it “may” incur damages.
In that bench ruling, Glasscock found that by using the word “may,” the claim did not comply with the clear language of the merger agreement's indemnification provision requiring the company to state that it either incurred or reasonably believed it “will incur or pay damages.” In doing so, he concluded that “may” and “will” are substantially different terms.
However, the court declined to grant the plaintiffs' motion for judgment on the pleadings to allow further factual developments as to whether the defect is material.
In denying Al Jazeera's motion for re-argument on this issue, the court Aug. 13 clarified that a claim for indemnification against the escrow account must comply with the unambiguous language of the provision regardless of whether it involves a third party claim and that other provisions of the agreement did not create an ambiguity as to the “may/will” issue.
The court also concluded that certain other indemnification claims were not permitted under a reasonable interpretation of the merger agreement because they were based on a statement for open-ended damages.
The agreement “unequivocally requires some concrete Damages figure, paid, incurred or projected,” Glasscock wrote.
In the lawsuit, filed last year, former members of Current Media LLC—including former U.S. Vice President Al Gore and Joel Hyatt—sued Al Jazeera over the funds held back as part of the $500 million deal.
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The opinion is available at http://www.bloomberglaw.com/public/document/ALBERT_A_GORE_ET_AL_V_AL_JAZEERA_AMERICA_HOLDINGS_I_INC_No_10040V
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