Law360, New York ( May 15, 2015, 6:04 PM EDT) -- A recent Delaware Supreme Court case authored by Chief Justice Leo Strine upholds the literal meaning of an earnout provision that limited the buyer from taking action "intended to reduce or limit an earn-out payment." The court rejected the argument that the buyer's actions, which it likely knew would reduce the likelihood of an earnout payment, met the intent-based standard the parties had agreed on in lieu of various affirmative post-closing covenants that had been rejected by the buyer. The court also rejected the seller's argument that it could rely on the implied covenant of good faith and fair dealing to impose an objective standard and thereby avoid the burden to prove that the buyer intentionally violated such provision. The case has implications for buyers' and seller's negotiating strategies around post-closing operations covenants related to earnouts and as to the impact of such covenants on the interpretation of the implied covenant of good faith and fair dealing. The case is Lazard Technology Partners LLC v. Qinetiq North America Operations LLC, April 23, 2015, Strine, L., and it can be found here....