Document: Comet Systems, Inc., et al. v. MIVA, Inc., C.A. No. 2793-VCL, Lamb, V.C. (Del. Ch. Oct. 22, 2008)

In calculating an earnout as part of a merger agreement, the Court found that an employee bonus plan which paid out solely in the event of an acquisition or similar event was not the same as other bonuses to employees and thus constituted a “one time non-recurring” expense as stated in the agreement, and therefore should have been excluded from the merger agreement revenue performance calculation.  The shareholders were therefore granted summary judgment, and paid the proper amount as re-calculated under the revenue goal of the agreement. Also, the Court ruled that the defendant owed the plaintiffs interest on the original payment because they failed to pay the amount in a reasonable amount of time (i.e. 90 days), where the right to payment vested in March of 2005 and payment did not occur until June of 2006.