Selectica Decision: Delaware Court Upholds 4.99 Percent Trigger Rights Plan to Protect Corporate Assets

March 2010
John M. Reiss, Oliver C. Brahmst

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In a case of first impression in Delaware, the Delaware Court of Chancery was asked to determine whether the actions of Selectica, Inc.'s Board of Directors and special committee in adopting and implementing a shareholder rights plan with a 4.99 percent trigger and adopting a reloaded NOL pill in order to protect the value of Selectica's net operating losses ("NOLs") was valid and proper. On February 26, 2010, the Court resolved this issue in Selectica's favor. Applying the Unocal test, the Court held that "the protection of company NOLs may be an appropriate corporate policy meriting a defensive response when threatened."

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