On December 23, 2015, the Delaware Supreme Court ruled that SIGA Technologies, Inc. could not help paying $113 million (more interest) to PharmAthene, Inc. if it violated an explicit agreement to negotiate a strategic license in good faith, in accordance with the terms set out in a schedule. The parties had expressly agreed to enter into a merger agreement in the event of a failure of the proposed merger. In a separate opinion issued in 2013, the Court found that: that SIGA violated its explicit agreement by proposing, after the end of the merger agreement on the end date, when the conditions for conclusion were not met, conditions radically different from the conditions described in the reference sheet, with an inadequate reason, after recent developments have suggested that the antiviral drug SIGA for the treatment of smallpox (ST-246) could be much more profitable than expected. In that decision, the Court expressly upheld the award of lump sum use damage and found that PharmAthene, because it had demonstrated the fact of the offence and that there would be prejudice (i.e. a loss of earnings) related to illegal conduct, did not have to determine the exact amount of the injury in order to obtain what it had negotiated. An unusual disagreement with the opinion argued that only damages should have been paid. SIGA II was the second complaint against a merger agreement between SIGA Technologies, Inc. and PharmAthene, Inc. The agreement provided that if the parties did not enter into the merger at any given time, the parties agree rather than a merger to negotiate a licensing agreement (the licensing agreement) in good faith, in accordance with the terms of the licence agreement sheet (LATS).
As a general rule, these interim agreements are not linked to a merger agreement as an alternative in the event of a failure of the merger. On the contrary, they are usually negotiated at the beginning of an agreement in the form of a provisional and non-binding letter of intent, in order to move in good faith towards a final agreement. Good faith negotiated agreements may also be included in confidentiality agreements before due diligence is used for a potential agreement. Nevertheless, the Court remanded in custody, according to instructions, investigation and an express finding of the parties` intention to be linked. The Court noted that the parties` application of the agreements constituted “powerful and simultaneous” evidence of an intention to engage and that the accolade of the parties after the signing constituted an “additional objective manifestation” of that intention. However, the Court recognized that there was evidence such as the substitute provisions and the design of the notation, which cut in the other direction. In that case, it was clearly a transaction that went beyond the work of a statute, and Siga`s provisions that included the licensing agreement contained a positive agreement to negotiate in good faith, which is often not found in legislation. In any event, the duty to negotiate in good faith is not a new law (although the finding of damages is).