Legal Question in Business Law in California

Re: No-shop

I would want to see the precise terms of your agreement, but it sounds to me like your prospective buyer is out of luck. If all you agreed to do was refrain from actively seeking a buyer and you upheld your end of that agreement, then the buyer has nothing to complain about.

Before you take any action, you should have a lawyer review the papers. There may be some language there that would lead to a different conclusion.

Re: No-shop

The answer depends on the terms of your no-shop agreement. What rights does the prospective buyer have, under the agreement, once an offer is disclosed? Does he need to match it, or does he have an option to buy at his price for a specified period of time? Before taking any action, have an attorney review all paperwork.

Mr. Franchise

Re: No-shop

Thank you for your posting.

I have to echo the words of my co-counsel here -- the terms of the agreement are going to control what your options are, as well as the strength, legally, of your position.

No-shop agreements are typically fairly simple and straightforward. Courts express principles of fairness in generally interpreting such agreements. In the out of state case of Miles v. Loon Mountain Recreation Corporation, No. 01-E-378 & 379, the Loon board agreed to a no-shop covenant after a long period of �shopping� the company in the relevant industry circles. Equally as important, the Loon board rejected a request that it agree to a no-listen covenant and insisted on including in the no-shop covenant a �fiduciary out,� that is, a provision allowing the company to terminate its no-shop commitment if presented with a superior proposal by another party. The court upheld the board�s decision, based on the substantial period of shopping the company and the board�s determination that the Booth Creek offer was financially fair, coupled with the board�s right to agree to a superior offer if one should present itself.

As you can see, the court interpreted what is most fair in determining the remedies to the parties. Consider that in your case.

I hope that this information helps, but if you want more information, have further questions, or feel that you need legal representation, please feel free to email me directly at [email protected]. It's my pleasure to assist you in any way that I can.