Meteora Capital Partners, LP v. Roadzen Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

METEORA CAPITAL PARTNERS, LP, )

METEORA SELECT TRADING )

OPPORTUNITIES MASTER, LP, and )

METEORA STRATEGIC CAPITAL LLC, )

)

Plaintiffs, )

)

v. ) C.A. No. 2025-0421-JTL

)

ROADZEN INC., )

)

Defendant. )

OPINION GRANTING SUMMARY JUDGMENT

Date Submitted: May 20, 2026

Date Decided: August 27, 2026

Ronald N. Brown, III, Daniel P. Klusman, DLA PIPER LLC, Wilmington, Delaware; Aaron T. Morris, Andrew W. Robertson, William Spruance, MORRIS KANDINOV LLP, New York, New York; Attorneys for Plaintiffs Meteora Capital Partners, LP, Meteora Select Trading Opportunities Master, LP, and Meteora Strategic Capital, LLC.

Alexandra D. Rogin, Paul S. Seward, ECKERT SEAMANS CHERIN & MELLOTT, LLC, Wilmington, Delaware; Richard E. Schrier, SHAYNE LAW GROUP, P.C., New York, New York; Attorneys for Defendant Roadzen Inc.

LASTER, V.C.

To facilitate a merger, the constituent companies entered into a side deal with

an asset manager. After the merger closed, the asset manager exercised its rights

under the agreements governing the side deal. The surviving company failed to

comply.

The asset manager filed this action against the surviving company for breach

of contract. The asset manager moved for partial summary judgment establishing

that its reading of the agreements is correct and seeking a decree of specific

performance enforcing the surviving company’s obligation to remove transfer

restrictions from shares that the asset manager holds.

This decision grants the asset manager’s motion for summary judgment. The

plain language of the agreement supports the asset manager’s reading. The

agreement contains the rights that that asset manager seeks to enforce. The

surviving company must remove the transfer restrictions.

I. FACTUAL BACKGROUND

The facts are drawn from the parties’ submissions on the motion for summary

judgment.1 At this procedural stage, the court must view the evidence in the light

most favorable to the non-movant.2

1 Citations in the form “Compl. Ex. ___ at ___” refer to exhibits filed with the

complaint. Dkt. 1. Citations in the form “PX ___ at ___” refer to exhibits attached to the affidavits the plaintiffs filed with their opening brief and reply brief. Dkts 4, 32. Citations in the form “DX ___ at ___” refer to exhibits attached to the affidavits the defendant filed with its answering brief. Dkt. 30.

2 Merrill v. Crothall-Am., Inc., 606 A.2d 96, 99 (Del. 1992) (citation omitted);

Brown v. Ocean Drilling & Expl. Co., 403 A.2d 1114, 1115 (Del. 1979). A. The Company, The SPAC, And The Merger

Roadzen Inc. (the “Company”) is a British Virgin Islands company focused on

using artificial intelligence to transform the global auto insurance market. Before the

events giving rise to this litigation, the Company was privately held.

Vahanna Tech Edge Acquisition I Corp. (the “SPAC”) was a special purpose

acquisition company. In November 2021, the SPAC issued approximately 20 million

shares in its initial public offering. After the IPO and a private placement of

warrants, the SPAC’s trust account held $197.5 million in cash. In addition, the SPAC

had approximately $935,000 on its balance sheet for total cash of $198.5 million.3

In February 2023, the SPAC and the Company entered into a merger

agreement that contemplated a standard de-SPAC transaction (the “Merger

Agreement”).4 The Company would merge with a SPAC subsidiary, the Company’s

common stock would be converted into shares of the SPAC’s common stock, and the

SPAC would change its name to Roadzen (the “Merger”). Through the Merger, the

Company would access the public markets and receive a slug of cash from the SPAC.

3 See PX 4 at F-4. Technically, the trust account contained around $204 million

in cash, but that amount included deferred commissions of $6,525,000 owed to the SPAC’s underwriters that would become payable if the SPAC completed a business combination. Those amounts were paid out once the de-SPAC transaction closed. For consistency, this decision deducts the deferred underwriter commissions when referring to amounts in the trust. For the parties, however, deferring the commissions was important, because the SPAC listed its shares on the Nasdaq Global Market. It requires net tangible assets of at least $200.1 million, and the higher figure of $204 million enabled the SPAC to clear that hurdle.

4 The Company and the SPAC amended the Merger Agreement as of June 29,

2023. The amendments are not relevant to this case.

2

The Merger Agreement required that the SPAC have at least $50 million

available at closing, after giving effect to any redemptions (the “Minimum Cash

Condition”). 5 After the Merger was announced, the SPAC’s public investors

submitted redemption requests for 15,670,446 Class A shares. With the redemption

price set at $10.76 per share, the aggregate redemptions would require paying out

$168.6 million. The SPAC’s cash would drop from $198.5 million to just $29.9 million,

causing the Minimum Cash Condition to fail.

B. The Meteora Transaction

The SPAC and the Company could have waived the Minimum Cash Condition.

Instead, they turned to Meteora. 6 Founded by Vikas Mittal in 2021, Meteora

specializes in event-driven investments with an emphasis on SPAC-related

instruments.

5 There were other financial requirements in play, but the Minimum Cash

Condition was the principal constraint on the parties’ ability to close. The SPAC’s pre-Merger articles of incorporation, for example, required that the SPAC have net tangible assets of at least $5,000,001 to close a business combination, but that requirement was never in jeopardy. The SPAC also chose to list on the Nasdaq Global Market, rather than the Nasdaq Capital Market where most SPACs list. To maintain its listing after the de-SPAC in November 2021, the post-Merger entity had to requalify for listing under IM-5101-2, which meant it had to satisfy Global Market Rule 54101(b). The clear path was Rule 5101(b)(3), which required a bid price of at least $4, a market value of listed securities of at least $75 million, and a market value of unrestricted publicly held shares of $20 million. Those requirements were not seriously at risk either.

6 Meteora participated in the transaction through three entities: Meteora Capital Partners, LP, Meteora Select Trading Opportunities Master, LP, and Meteora Strategic Capital LLC. The differences between the entities are not important for this decision, which refers to them collectively as “Meteora.”

3

The transaction with Meteora combined two components (together, the

“Meteora Transaction”). The first and more complex component was an OTC Equity

Prepaid Forward Transaction (the “Forward”). That element was governed by an

agreement dated August 25, 2023 (the “Forward Agreement”),7 which incorporated

by reference the ISDA 2002 Master Agreement (the “Master Agreement”). 8 The

second and simpler component involved Meteora committing to purchase newly

issued shares from the post-Merger entity (the “Subscription”). That element was

governed by a subscription agreement, also dated August 25, 2023 (the “Subscription

Agreement”).9 The Forward Agreement and the Subscription Agreement (jointly, the

“Transaction Agreements”) were executed together, referenced each other, and

comprised the unitary Meteora Transaction.

7 DX B (cited as “FA”). The Forward Agreement is styled as a confirmation of

a swap and defines itself as the “Confirmation,” as if it were the confirmation of a trade. It technically is, but it is also a lengthy and densely written contract. The term “Confirmation” is sufficiently inapt that this decision eschews it. Styling the Forward Agreement as a trade confirmation also results in the agreement looking like a multiple-page term sheet without the section numbers and paragraph designations used to navigate complex agreements. That makes it hard to cite. This decision uses the format “FA at [X], [Y]” where X is the page number and Y is the term-sheet-style label that appears opposite the operative language.

8 See PX 7 (cited as “MA”).

9 DX C (cited as “SA”). The Subscription Agreement, happily, has the look and

feel of a typical contract.

4

1. The Acquired Shares

Through the Meteora Transaction, Meteora committed to acquire 5 million

shares (the “Acquired Shares”).10 Meteora would obtain those shares in two ways.

Meteora would acquire some shares that had been submitted for redemption by

purchasing them from their third-party owners (the “Recycled Shares”). Meteora

would acquire other shares directly from the Company (the “Subscribed Shares”).

First, under the Forward Agreement, Meteora committed to buy at least 3.5

million Recycled Shares. Without that commitment, the SPAC would have to redeem

those shares at $10.76 per share for total proceeds of $168.6 million, leaving the SPAC

a cash balance of $29.9 million and causing the Minimum Cash Condition to fail.11

Assuming Meteora bought 3.5 million Recycled Shares, the SPAC would only have to

satisfy redemption requests totaling $130,940,000. The SPAC would therefore be left

with cash at closing of $67,560,000,12 sufficient to allow the Merger to close.

Second, under the Subscription Agreement, Meteora committed to acquire

enough Subscribed Shares directly from the SPAC to own a combined 5 million

10 The Forward Agreement does not use this term, which this decision uses for

convenience. The Forward Agreement instead uses the term “Maximum Number of Shares.” FA at 3, Maximum Number of Shares. In theory, Meteora would buy fewer shares if the purchase would result in Meteora owning greater than 9.9% of the SPAC’s common stock. Id. That was not a realistic possibility, but perhaps it was pertinent for other Meteora deals.

11$198.5 million in available cash minus $168.6 million in anticipated redemptions = $29.9 million in cash at closing.

12 $198,500,000 in available cash minus $130,940,000 in anticipated redemptions = $67,560,000 in cash at closing.

5

shares. Assuming Meteora purchased 3.5 million Recycled Shares, Meteora would

acquire 1.5 million Subscribed Shares.13 Meteora agreed to pay $10 per share for the

Subscribed Shares, so if Meteora bought 1.5 million Subscribed Shares, then Meteora

would owe the SPAC $15 million. It might seem that the $15 million would add to the

SPAC’s cash on hand at closing for the purpose of satisfying the Minimum Cash

Condition, but as discussed in the next section, Meteora never actually transferred

any funds to the SPAC for the Subscribed Shares.

Through these two mechanisms, Meteora would end up owning 5 million

Acquired Shares. If Meteora purchased more Recycled Shares, then it would purchase

fewer Subscribed Shares. The Forward Agreement initially defined the term

“Number of Shares” as the sum of the Recycled Shares and the Subscribed Shares,

then used that defined term (subject to adjustments) in later calculations.

2. The Prepayment

At first glance, the Meteora Transaction seemed to enable the Company to

emerge from the Merger with more cash. After all, Meteora’s purchase of Recycled

Shares negated the redemption of those shares and the outflow of cash that would

have caused. Meanwhile, the Subscription Agreement implied that Meteora would

pay the Company $10 for each Subscribed Share. But any near-term cash benefit to

the Company was a mirage.

13 SA at 1.

6

Under the Forward Agreement, the SPAC committed on behalf of the postMerger entity to wire Meteora a cash payment immediately after closing (the

“Prepayment”). The Prepayment was based on the Prepayment Amount, defined as

the full amount Meteora paid for the Subscribed Shares plus 99.5% of the redemption

price multiplied by the number of Recycled Shares.14 The Forward Agreement called

the 0.5% deduction the “Prepayment Shortfall.”15

By definition, the Prepayment wiped out 99.5% of any cash benefit the

Company otherwise received. Assuming 3.5 million Recycled Shares and 1.5 million

Subscribed Shares, the Prepayment Amount would be $52,471,700.16

14 The Forward Agreement defines the Prepayment Amount as follows: “A cash

amount equal to the (a) the sum of (i) the number of Recycled Shares multiplied by the Initial Price plus (ii) the number of Subscribed Shares multiplied by the Per Share Price (as defined in the [Subscription Agreement]) less (b) the Prepayment Shortfall.” FA at 4, Prepayment Amount. The Initial Price was the redemption price of $10.76 per share.

15 The Forward Agreement defines the Prepayment Shortfall as “[a]n amount

in USD equal to one-half percent (0.50%) of the product of (i) the Recycled Shares multiplied by (ii) the Initial Price, paid by Seller to Counterparty on the Prepayment Date (which amount shall be netted from the Prepayment Amount).” Id., Prepayment Shortfall.

16 The calculations are as follows:

Value of Recycled Shares component = 3.5 million Recycled Shares * $10.76 = $37,660,000.

Value of Subscribed Shares component = 1.5 million Subscribed Shares * 10.00 = $15,000.000.

Prepayment Shortfall = 0.5% * $37,660,000 = $188,300.

7

Meteora would not receive that much in cash. The Forward Agreement called

for netting out the amount Meteora committed to pay for the Subscribed Shares

against the Prepayment, so Meteora never had to pay any cash to the Company for

the Subscribed Shares. That deduction would reduce the Prepayment to

$37,471,700.17

And that was not all. The Forward Agreement also called for the Company

reimburse Meteora for legal fees of up to $50,000 and expenses of up to $0.07 per

Recycled Share. 18 With 3.5 million Recycled Shares, the maximum per-share

payment would be $245,000. Adding those amounts to the Prepayment, Meteora

would receive $37,766,700.19

Using the figures assumed so far, the Meteora Transaction would enable the

SPAC to reach closing with $67,560,000 million in cash. After wiring $37,766,700 to

Recycled Shares component + Subscribed Shares component – Prepayment Shortfall = $37,660,000 + $15,000,000 = $52,660,000 – $188,300 = $52,471,700.

17 Assuming again that Meteora purchased 1.5 million Subscribed Shares at

$10 per share, the calculation would be: Prepayment Amount – Calculated value of Subscribed Shares or $52,471,700 - $15,000,000 = $37,471,700.

18 Id. at 5, Reimbursement of Legal Fees and Other Expenses (entitling Meteora to “an amount equal to (a) the reasonable and documented attorney fees and other reasonable out-of-pocket expenses related thereto actually incurred by Seller or its affiliates in connection with this Transaction, not to exceed $50,000 in the aggregate and (b) expenses actually incurred in connection with the acquisition of the Recycled Shares (other than Recycled Shares held by Seller as of the date hereof) in an amount not to exceed $0.07 per such Recycled Share.”).

19 $37,471,700 + $50,000 + $245,000 = $37,766,700.

8

Meteora immediately after closing, the Company would be left with net cash from the

SPAC of $29,793,300.

Ironically, the net amount of $29,793,300 in cash from the SPAC would be less

than the Minimum Cash Condition. It also would be less than the Company would

have received from the SPAC if the parties had simply waived the Minimum Cash

Condition. Without the Meteora Transaction, the Company would have emerged from

closing with $29,900,000 in cash. The $106,700 delta reflects the difference between

the legal fees and expense reimbursements of $50,000 and $245,000, respectively,

and the Prepayment Shortfall of $188,300.

If the Meteora Transaction had ended at this point, then the SPAC’s actions

could be analogized to an aspiring borrower applying for a bank loan who had to meet

a net worth requirement but who could not satisfy it because of a debt imminently

coming due. To solve the problem, the aspiring borrower enlists a friend who agrees

to pay the debt, but on the condition that the borrower repay the friend as soon as the

bank funds the loan. If the borrower did not explain to the bank what was going on,

the borrower would be committing bank fraud. If the borrower explained to the bank

what was going on, the bank would not do the deal.

Translated to the Merger, the SPAC is the borrower and Meteora is the friend.

The Company is the bank, because it could veto the Meteora Transaction by refusing

to proceed. For purposes of the Merger, all three knew everything that was planned.

Not only that, but they disclosed the details to the SPAC’s and the Company’s

stockholders. Yet everyone went through with the deal. Such is the magic of markets.

9

3. The Settlement Amount

Up to this point, the description of the Meteora Transaction has only covered

what would happen before and immediately after closing. So far, Meteora has made

out quite well. Immediately after closing, it would own 5 million shares and would

have received a payment of $37,766,700.

The Meteora Transaction did not stop there. After closing, the deal got better

for Meteora.

The principal commitment Meteora made in the Forward Agreement was to

pay the Company an amount in cash defined as the “Settlement Amount.”20 Meteora

would make the payment based on a future “Valuation Date,” scheduled by default to

occur 18 months after the Merger closed.21 The Forward Agreement gave Meteora the

right to accelerate the Valuation Date, either after specified acceleration events or

unilaterally in its “sole discretion.”22

20 See id. at 5, Settlement Amount.

21 See id. at 2, Valuation Date. The cash payment is not actually due on the

Valuation Date. Instead, the Valuation Date kicks off a “Valuation Period,” defined as the time required for 10% of the total volume traded—excluding any volumes traded during opening and closing auctions—to equal the Number of Shares less any Subscribed Shares that were not yet freely tradeable plus something called the “Estimated Maturity Shares.” Id. at 5–6, Valuation Period. The Forward Agreement never defines “Estimated Maturity Shares,” and it appears nowhere else in the contract, suggesting a mistaken carryover from another deal. Payment only becomes due on the Cash Settlement Payment Date, defined as the tenth local business day after the end of the Valuation Period. Id. at 6, Cash Settlement Payment Date. For simplicity, this decision ignores that complication.

22 See id. at 2, Valuation Date.

10

From the Company’s standpoint, the prospect of receiving the Settlement

Amount held out the possibility that the Company would get more cash on the

Valuation Date than it paid to Meteora in the Prepayment. In that happy scenario,

the Company could come out ahead. In reality, the Forward Agreement stacked the

deck in favor of Meteora, giving the Company only one narrow and highly improbable

path to upside.

The Forward Agreement defines the Settlement Amount as a cash payment

equal to a calculated price based on the Valuation Date (the “Settlement Price”)23

multiplied by the difference between the “Number of Shares” and the “Unregistered

Shares.” 24 The Settlement Price generally would be “the volume weighted daily

VWAP Price over the Valuation Period.” 25 The Forward defines “VWAP Price” as

“[f]or any scheduled trading day, the volume weighted average price per share as

reported on the relevant Bloomberg Screen.” 26 If Meteora exercises its right to

accelerate the Valuation Date unilaterally, without any acceleration event, the

Settlement Price would be the closing price on the trading day before the Valuation

Date.27

23 See id. at 5, Settlement Amount. The Forward Agreement does not contain

an analogous term, but having one is convenient.

24 See id.

25 Id.

26 Id. at 2, VWAP Price.

27 See id. at 5, Settlement Amount. The definition of Cash Settlement Payment

Date technically does not accommodate this scenario. See id. at 6, Cash Settlement

11

The VWAP Price formula inferably favors Meteora over a single-day pricing

mechanic. By using a valuation window, Meteora has the ability to affect the price

through market activities during the window, such as by selling shares. The VWAP

Price formula also excludes opening and closing auctions, where institutions are

active and much of the daily trading takes place. As defined, the VWAP Price formula

enables Meteora to affect the weighted average to a greater degree by selling during

quieter mid-trading-day periods.

The Number of Shares starts out as 5 million, reflecting all of the Acquired

Shares. Meteora could reduce the Number of Shares through the Early Termination

Option outlined below. The parties bargained for the Company to register all of

Meteora’s shares, so the number of Unregistered Shares was expected to be zero.

How might the Company come out ahead? Under the assumptions used to date,

the Company would wire $37,766,700 to Meteora immediately after closing. The

Company wired that amount based on Meteora owning 5 million shares, so the

payment represented value of $7.49 per share.28 If the Number of Shares never fell,

Payment Date. It seems likely that the Forward Agreement intends for payment to be due on the tenth local business day after the Valuation Date in this setting too.

28 Recall that the Prepayment includes legal fees and expenses and excludes

the value of the Subscribed Shares. The amount of the Prepayment attributable to the Recycled Shares is $37,471,700. The amount excluded for the Subscribed Shares is $15,000,000.

$37,471,700 / 5,000,000 = $7.49

Technically, the Prepayment and Settlement Amount are formula-based calculations. Using a per-share value nevertheless provides a convenient way to

12

and if the Settlement Amount resulted in a higher weighted average price, the

Company would benefit. The opposite is true for Meteora. Unfortunately for the

Company, Meteora’s rights under the Forward Agreement eliminated any realistic

possibility that the Company would benefit from meaningful upside.

For starters, the Forward Agreement calls for the Company to pay Meteora an

amount called the “Settlement Amount Adjustment,” defined as $1.25 multiplied by

the Number of Shares.29 The Settlement Amount Adjustment functions as a fee of

$1.25 paid to Meteora for each share remaining in the Number of Shares on the

Valuation Date. Assuming the Number of Shares remains at 5 million, Meteora would

receive $7.25 million.30

Notably, the formula for the Settlement Amount Adjustment does not exclude

Unregistered Shares. If there are Unregistered Shares, Meteora pays nothing for

them in the Settlement Amount, effectively getting them for free. Meteora still

perceive the economic substance of the trade and the Company’s give and get under the Forward.

29 FA at 5, Settlement Amount Adjustment. The formula for the Settlement

Amount Adjustment defines the payment as “[a] cash amount equal to the product of (1) (w) the Number of Shares as of the Valuation Date less (y) the number of Terminated Shares as of the Valuation Date less (y) the number of Shortfall Sale Shares, multiplied by (2) $1.25.” Id. This decision discusses Terminated Shares and Shortfall Sale Shares below. See infra, Part I.B.3.a (The Early Termination Option) & Part I.B.3.c (Shortfall Sales). The formula appears to contain an error in that the definition of Number of Shares already accounts for Terminated Shares, so technically the formula calls for deducting them twice. The illustrative calculations in this decision assume the parties intended a single deduction and accounts for that in the Number of Shares.

30 FA at 5, Settlement Amount Adjustment.

13

receives $1.25 per share for them in the Settlement Amount Adjustment. In effect,

the Company is paying Meteora, rather than Meteora paying the Company, to buy

those shares.31 Slick.

And there is more. Meteora possesses three additional rights that make it

realistically impossible for the Company to come out ahead. The only real question is

how much less Meteora will pay the Company than it received in the Prepayment.

a. The Early Termination Option

The Forward Agreement authorizes Meteora to designate shares as

“Terminated Shares” and remove them from the Number of Shares used to calculate

the Settlement Amount (the “Early Termination Option”).32 Meteora can exercise the

Early Termination Option at any time and from time to time. If Meteora exercises

the Early Termination Option, then Meteora must immediately pay the Company an

amount equal to the “reset price” for each share (the “Early Termination Obligation”).

31 The Forward Agreement achieves this result by treating the Settlement Amount Adjustment not as an adjustment to the Settlement Amount, but as a separate payment. The Forward Agreement does provide, however, that if the Settlement Amount Adjustment would result in the Company owing a net payment to Meteora, then no payment is due. The Settlement Amount Adjustment therefore cannot apply if the per share price used to calculate the Settlement Amount falls below $1.25. The Settlement Amount Adjustment also does not apply if the Meteora unilaterally accelerates the Valuation Date. Id.

32 Id. at 6, Optional Early Termination.

14

The reset price starts at the redemption price of $10.76 but adjusts downward if the

Company issues additional shares at a lower price.33

The Early Termination Option enables Meteora to capture all of the upside if

the Company’s shares trade above $10.76 per share. Assume (i) the reset price never

adjusts downward and (ii) the Company’s shares trade at $13.76. If Meteora

hypothetically sells 100,000 shares, it generates $13,760,000 in gross proceeds.

Meteora can exercise the Early Termination Option for those shares and pay the

Company $10,760,000, reflecting the Early Termination Obligation of $10.76 per

share. The Number of Shares declines by the number of Terminated Shares, so

Meteora will not have to pay for those shares on the Valuation Date. Meteora pockets

$3,000,000 (ignoring transaction costs).

As a practical matter, the Early Termination Option eliminates any possibility

that Meteora could pay the Company more than $10.76 per share on any Valuation

Date. If the Valuation Date does not accelerate, then Meteora can see it coming

months away. If the Valuation Date accelerates, then Meteora can pick when it will

occur. And Meteora can sell shares during the Valuation Period or engage in other

market activities (other than short sales)34 that affect the VWAP Price. If Meteora

thinks the Settlement Price will exceed $10.76, then Meteora can exercise the Early

33 Id. at 2, Reset Price. The price does not adjust upward if the Company issues

shares at a higher price. That asymmetry benefits Meteora.

34 See infra, Part II.D (explaining that after the Merger closed, the lone restriction on Meteora’s trading barred Meteora from engaging in short sales).

15

Termination Option and pay only $10.76 per share. If Meteora thinks the Settlement

Price will be less than $10.76, then Meteora can hold the shares through the

Valuation Date and pay the lower Settlement Price. In that setting, Meteora also

receives the Settlement Amount Adjustment of $1.25 per share.35

If Meteora acted rationally, then the best the Company could hope for would

be to receive $10.76 for as many shares as possible under the Early Termination

Option. After effectively paying Meteora $7.49 per share immediately after closing,

the Company would net $3.27 per share. If Meteora exercised the Early Termination

Option for all of the Acquired Shares, the Company would come out ahead in absolute

terms by $16,350,000. Those proceeds would likely only arrive after a Valuation Date

that occurred 18 months after closing, making the real return less because of the time

value of money.

b. Accelerating The Valuation Date

An equally important set of rights under the Forward Agreement gives

Meteora optionality around the Valuation Date. The Forward Agreement contains

triggers that allow Meteora to accelerate the Valuation Date without losing the

Settlement Amount Adjustment, including:

35 The Settlement Amount Adjustment does not apply if Meteora chooses to

accelerate the Valuation Date unilaterally and an acceleration trigger has not occurred. See FA at 2, Valuation Date (“In the event the Valuation Date is determined pursuant to clause (c), the Settlement Amount Adjustment will not apply in calculation of the Settlement Amount” and authorizing Meteora to accelerate the Valuation Date under that settling in its “sole discretion”).

16

• If the Company’s stock price trades below $1 per share for any thirty trading

days during a forty-five day trading window;

• If the Company’s stock is delisted;

• If the Company failed to register “all shares held by [Meteora]” in accordance

with the Forward Agreement” (a “Registration Failure”).36

Meteora can also accelerate the Valuation Date unilaterally, in its sole discretion, but

in that setting Meteora gives up the Settlement Amount Adjustment.37

Accelerating the Valuation Date potentially creates significant value for

Meteora. As a general matter, it closes the Forward earlier, increasing Meteora’s

internal rate of return. Specific to the Forward, the formula for the Settlement

Amount calls for deducting Unregistered Shares from the Number of Shares. The

Forward Agreement defines “Unregistered Shares” as any Acquired Shares that were

neither registered for resale under an effective registration statement nor eligible to

be resold freely under Section 144.38 As a practical matter, the Recycled Shares were

already freely tradable, so the definition only applies to the Subscribed Suares.

The deduction for Unregistered Shares means that Meteora would not have to

pay anything to the Company for the Subscribed Shares if they remained

Unregistered Shares on the Valuation Date. Meteora would get those shares for free.

36 See FA at 2, Valuation Date.

37 See id. Also, the price used to calculate the Settlement Payment in that

scenario is the prior trading day’s closing price, rather than the VWAP Price. Id. As discussed previously, the VWAP Price likely favors Meteora.

38 See id. at 5, Settlement Amount.

17

But as noted previously, the same shares remain in the calculation for purposes of

the Settlement Amount Adjustment, so the Company pays Meteora $1.25 for each

Unregistered Share.

The Forward Agreement contains requirements making it likely that Meteora

could declare a Registration Failure and accelerate the Valuation Date.39 In a fiveparagraph, 1,898-word section titled “Share Registration,” the Forward Agreement

established two different registration requirements.40 The first was prominent and

required notice from Meteora (the “Notice-Based Registration Requirement”). The

other was buried later in the provision and required registration based on specific

post-closing deadlines (the “Time-Based Registration Requirement”).

The Notice-Based Registration Requirement appears in the first sentence of

the first paragraph of the section titled “Share Registration.” It requires the Company

to use commercially reasonable efforts to file a registration statement at its sole cost

and expense “[w]ithin 30 days after receipt of a written request” from Meteora.41

The Time-Based Registration Requirement does not appear until midway

through the 551-word second paragraph of that same section. That four-sentence

paragraph starts by prohibiting the Company from identifying Meteora as a statutory

39 See id. at 2, Valuation Date (defining “Valuation Date” as the earlier of 18

months after closing or the date specified by Meteora in a written notice following the occurrence of, among other things, “a Registration Failure”).

40 See id. at 9–12, Share Registration.

41 Id. at 9.

18

underwriter, next gives Meteora the option to remove its shares from the registration

statement if the SEC requires it, and next addresses the Company’s obligation to keep

the registration statement in effect. Then comes a 432-word third sentence. Nestled

in that linguistic monstrosity are two provisos. The second states:

[P]rovided further, that it shall be a “Registration Failure” if (a) the

Registration Statement covering all of the shares described above in this

section is not declared effective after the 90th calendar day (or 120th

calendar day if the Commission notifies the Counterparty that it will

“review” the Registration Statement) after the Trade Date (provided

however, that in the event the Commission issues any written rules

related to special purpose acquisition companies that would reasonably

effect [sic] the timing of the effectiveness of the Registration Statement

and such rules become effective following the date hereof and prior to

the effectiveness of the Registration Statement such number of calendar

days in this subsection (i) shall be changed to the 120th calendar day) (or

180th calendar day if the Commission notifies the [Company] that it will

“review” the effectiveness of the Registration Statement) . . . .42

That easily missed obligation required an effective registration statement by the 90th

day after the Trade Date of August 25, 2023, resulting in a deadline November 23,

2023. The final sentence of that paragraph introduces a qualifier that states:

“Notwithstanding the foregoing, no Registration Failure will be deemed to have

occurred with respect to any Shares that may be transferred at such time under Rule

144 . . . .”43

For a successor to a SPAC like the Company, previously unregistered shares

like the Subscribed Shares remain restricted and cannot be transferred under Rule

42 Id. at 10.

43 Id.

19

144 until at least one year after the Merger closes.44 It was thus highly likely that

Meteora would be able to declare a Registration Failure unless the Company beat the

deadlines for the Time-Based Registration Requirement. Sneaky.

c. Shortfall Sales

A final and less significant means by which Meteora could secure value

involves “Shortfall Sales.” 45 This mechanism allows Meteora to recapture the

Prepayment Shortfall through open market sales.

Starting on the 180th day after the Trade Date of August 25, 2023, the Forward

Agreement allows Meteora to sell shares in the open market, without paying any

amount to the Company, up to the point where the total proceeds equal the

Prepayment Shortfall. 46 The Forward Agreement requires Meteora to notify the

Company when it has exercised that right (“Shortfall Sale Shares”).47

Under the assumptions used to date, the Prepayment Shortfall would be

$188,300. Starting on February 21, 2024, Meteora could engage in Shortfall Sales to

recover that amount. The higher (lower) the price, the fewer (more) shares Meteora

could sell.

44 See 17 C.F.R. § 240.144(i)(2) (setting a one year holding requirement for

unregistered securities in companies that were previously business-combinationrelated shell companies to be eligible for transfer under Rule 144).

45 FA at 4, Prepayment Shortfall Consideration; id. at 6, Shortfall Sales.

46 Id. at 4, Prepayment Shortfall Consideration.

47 Id. at 6, Shortfall Sales.

20

Meteora argues that Shortfall Sales reduce the Number of Shares, 48 but

nothing in the Forward Agreement calls for that result. Shortfall Sale Shares are

deducted from the Settlement Amount Adjustment, but not from the Number of

Shares or the Settlement Amount.

The authorization for Shortfall Sales has two principal effects. First, it ensures

that the Prepayment Shortfall only looks like a detriment to Meteora. Although

deducted from the Prepayment, Meteora can make up that amount through Shortfall

Sales.

Second, the provision governing Shortfall Sales creates an opportunity for

Meteora to receive more shares. The Company covenanted that until the later of 60

days after closing and Meteora’s recapture of 100% of the Prepayment Shortfall, it

would not “offer or agree to sell” any shares or securities convertible into shares (the

“No-New-Issuance Covenant”). 49 If the Company breached the No-New-Issuance

Covenant, then the Company had to deliver to Meteora a make-whole amount to

compensate for any declines in the price at which Meteora subsequently sold Shortfall

48 Dkt. 4 at 11.

49 See FA at 7, Shortfall Sales. The covenant contains exceptions, generally for

issuances unrelated to raising capital. The one exception for raising capital authorizes the Company to sell “any Shares issuable pursuant to any convertible offering (or series of convertible offerings) by the Counterparty up to $50,000,000 in the aggregate that is entered into within two (2) months following the consummation of the [Merger].” Id.

21

Shares.50 The Company could pay the amount in cash or in additional shares valued

at 90% of the VWAP Price.51

Recall that the Time-Based Registration Requirement obligates the Company

to register the Subscribed Shares within 120 days or risk a Registration Failure. That

deadline would run before Meteora could begin executing Shortfall Sales. If the

Company hustled to file a registration statement that complied with the Time-Based

Registration Requirement but offered to sell new shares of its own in addition to the

Subscribed Shares, then the Company would trip the No-New-Issuance Covenant and

have to issue more shares to Meteora. Devious.

4. Summing Up

As this description shows, the Meteora Transaction is highly favorable to

Meteora. At its core, the structure operates like a synthetic long put option. That type

of trade mimics the returns achieved by selling shares short while protecting against

a rising stock price with a call option (usually at-the-money) to buy the stock back at

a strike price. The trade makes money on the short leg if the stock falls. The trade

avoids losses on the short leg and captures value through the call option if the stock

price rises above the strike price.

The combination of the Prepayment and the Early Termination Option work

together to create the same dynamic. Meteora makes money based on the difference

50 That is the basic idea. The formula is exceedingly complex, and greater detail

is not warranted.

51 FA at 7, Shortfall Sales.

22

between the Prepayment and the Settlement Amount. The difference grows, and

Meteora makes more money, as the Settlement Price falls. That leg of the trade is

economically equivalent to shorting the Acquired Shares. The Early Termination

Option operates like a call option with a strike price of $10.76 per share. It caps any

loss Meteora would suffer on the short leg at prices above the strike price and enables

Meteora to capture the upside for itself.

For Meteora, the Forward Agreement is far better than a long put option.

When building a long put option, a trader has to pay fees to borrow the shares to

short, and then to acquire the call options. In an efficient market, a trader should not

be able to make significant profits. Any value discrepancy that enables the trade to

work will quickly be arbitraged away.

The Forward Agreement is a magically good alternative. Meteora does not have

to borrow shares for the short leg: After the Prepayment it holds the 5 million

Acquired Shares. Meteora also does not have to pay for call options. It gets the Early

Termination Option for free under the Forward Agreement. Instead of paying fees,

Meteora receives a fee of $1.25 per share in the form of the Settlement Amount

Adjustment. Meteora’s only capital at risk is the Prepayment Shortfall, and Meteora

can recapture that small amount through Shortfall Sales.

The Forward Agreement then layers on other benefits. The strike price of

$10.76 per share ratchets down if the Company issues shares or equity convertible

23

into shares at a lower price, increasing the value of the option.52 In a garden-variety

option, the strike price does not move. Meteora can also accelerate the Valuation

Date, capturing value sooner and increasing its internal rate of return. Declaring a

Registration Failure is the most likely path, and any failure to register the Subscribed

Shares allows Meteora to deduct them from the Number of Shares, pay nothing for

them in the Settlement Amount, while still receiving $1.25 for each Unregistered

Share in the Settlement Amount Adjustment.

That is an amazing deal for Meteora. In exchange, the SPAC and the Company

would get to close the Merger without waiving the Minimum Cash Condition,

although the Company would end up with less cash immediately after closing than if

the parties had simply waived it. The Company would have a path to capture

$16,350,000, but the road would be a narrow one beset by Meteora’s contract rights.

Of course, the Company would get a public listing, but it could have gotten that

simply by waiving the Minimum Cash Condition.

C. The Meteora Transaction Unfolds.

All of the risks of the Meteora Transaction were plain from the Transaction

Documents. To demonstrate that point, the preceding discussion has outlined how

the Meteora Transaction would work based on the minimum number of Recycled

Shares that Meteora committed to buy and the corresponding number of Subscribed

52 See id. at 2, Dilutive Offering Reset.

24

Shares that Meteora would purchase. Two major law firms advised the Company on

the Merger and the Meteora Transaction. All the Company had to do was map it out.

As events actually transpired, Meteora did even better.

1. The Merger Closes.

The Merger closed on September 20, 2023. Before closing, Meteora purchased

4,297,745 Recycled Shares at undisclosed prices, but inferably below both the

Redemption Price of $10.76 per share and the price of $10 per share for Subscribed

Shares. 53 The fact that Meteora purchased 797,745 more Recycled Shares than

required supports that inference, because otherwise Meteora would have preferred to

buy the maximum number of Subscribed Shares at $10 per share. Meteora purchased

only 702,255 Subscribed Shares at $10 per share.54

For purposes of the Prepayment Amount, the value of the Recycled Shares was

$46,243,736.20. The value of the Prepayment Shortfall was $231,218.68. The cost of

53 The record contains conflicting figures. The above-the-line figures appear in

the Company’s preliminary S-1 from April 2024. PX 9 at F-52. A June 2024 email from Meteora confirming the number of Shortfall Share Sales uses the same number of Subscribed Shares. So does a letter from Meteora’s counsel. See PX 14. But Meteora’s actual pricing date notice designates 4,300,930 Recycled Shares and 699,070 Subscribed Shares. PX 8. An email from early 2024 uses the figures in the pricing date notice. DX G. So does a March 2025 letter from Meteora. Compl. Ex. J. A higher number of Recycled Shares benefits Meteora by increasing the size of the Prepayment. It is unclear how this discrepancy came about or which set of numbers is correct. That factual uncertainty, however, is not material to the legal issues presented by Meteora’s motion for summary judgment.

54 In correspondence with the Company, Meteora later claimed that nearly 99%

of the SPAC’s shares were submitted for redemption. See PX 14 at 3. That could not be true, because in that case the Minimum Cash Condition would have failed even with the Meteora Transaction.

25

the Subscribed Shares was $7,022,550. The Prepayment Amount was therefore

$53,035,067.52. Netting out the payment of $7,022,550 for the Subscribed Shares

resulted in a Prepayment of $46,012,517.52. Meteora also inferably received

reimbursement of $50,000 for legal expenses plus $0.07 per Recycled Share for a total

of $350,842.55

Immediately after closing, therefore, the Company wired Meteora

$46,363,359.52. At that point, Meteora also owned the 5 million Acquired Shares. The

Company effectively paid Meteora $9.27 per share, higher than the effective value of

$7.49 per share used to illustrate how the Meteora Transaction would work because

of the larger number of Recycled Shares. 56 The higher effective value benefits

Meteora because it is a function of a higher Prepayment. The higher effective value

also narrows the spread where the Company can come out ahead.

At that point, Meteora had set up its synthetic long put. Meteora had received

the Prepayment and would benefit from any Settlement Price below the Early

Termination Option strike price of $10.76 per share (with the potential for that price

to ratchet downward). The more the Company’s stock price fell, the more Meteora

55 The Forward Agreement authorizes Meteora to receive “expenses actually

incurred in connection with the acquisition of the Recycled Shares (other than Recycled Shares held by Seller as of the date hereof) in an amount not to exceed $0.07 per such Recycled Share.” FA at 5, Reimbursement of Legal Fees and Other Expenses. The “date hereof” is August 25, 2023. Id. at 1. For purposes of summary judgment, the court infers that Meteora acquired all of the Recycled Shares after the date of the Forward Agreement.

56 $9.27 = $46,363,359.52 / 5,000,000.

26

would gain. In substance, Meteora was short the Acquired Shares. If the stock traded

higher, then Meteora could exercise the Early Termination Option and force the

Company to take $10.76 per share. Meteora could also engage in Shortfall Sales to

recover the Prepayment Shortfall, the only capital that Meteora had at risk.

2. Initial Post-Merger Events

After the Merger closed, the Company’s stock traded up and reached a high of

$17 per share. Then the price began to fall. By December 2023, it had dropped below

$10 per share.

The Time-Based Registration Requirement in the Forward Agreement

required the Company to have a registration statement declared effective for the

Subscribed Shares by the 90th day after the Trade Date. That deadline passed on

November 23, 2023. The Company did not meet that deadline or any subsequent

deadlines in the Forward Agreement.

The Subscription Agreement had registration-related deadlines of its own. As

explained in the Legal Analysis, the Company had to file a registration statement by

October 20, 2023, then obtain an effective registration statement by December 19,

2023.57 The Company did not meet those or any other deadlines in the Subscription

Agreement.

On April 16, 2024, the Company filed a Form S-1 registration statement for

the issuance and sale of new shares, but excluded the Subscribed Shares. By offering

57 See SA §5(a).

27

to sell new shares, the Company breached the No-New-Issuance Covenant and

opened itself up to owing a make-whole amount to Meteora, payable in cash or in

additional shares valued at a discount to the VWAP Price. The Company later

withdrew the Form S-1, suggesting that any breach of the No-New-Issuance Clause

was a technical one at worst.

On May 29, 2024, Meteora asked the Company by email for an update on

registering the Subscribed Shares.58 Meteora’s email did not mention the Time-Based

Registration Requirement and related Registration Failure under the Forward

Agreement, the No-New-Issuance Covenant and potential make-whole amount under

the Forward Agreement, or the registration-related deadlines in the Subscription

Agreement.

That same day, the Company’s General Counsel responded: “I believe that we

need to finalize our year-end numbers before we can file another registration

statement. We expect to file our 10-K in the second half of June and then work on a

registration statement.” 59 That response did not mention the Time-Based

Registration Requirement and related Registration Failure or the No-New-Issuance

Covenant and potential make-whole amount. The Company’s silence and its inferable

58 See PX 11 (“We wanted to check on the timing of registration of the FPA

Subscribed Shares. It would be great to have them registered soon to maximize the value of the FPA upon share price movements.”).

59 Id.

28

lack of urgency suggest it was not focused on those requirements or their

implications.

The Company filed its Form 10-K on July 1, 2024. After completing that filing,

the Company did not begin work on a registration statement for the Subscribed

Shares. The Company’s lack of activity again suggests it was not focused on the

Transaction Agreements’ requirements or their implications.

On July 3, 2024, Meteora notified the Company that Meteora had sold 880,610

Shortfall Shares, thereby satisfying the Prepayment Shortfall. 60 It is not clear

whether Meteora believed at this point it was entitled to a make-whole amount based

on the technical breach of the No-New-Issuance Covenant.

3. Meteora Declares A Registration Failure.

On July 9, 2024, Meteora sent the Company a Formal Notice of Acceleration of

Valuation Date due to Registration Failure (the “Failure Notice”). Meteora asserted

that the Company’s failure to comply with the Time-Based Registration Requirement

constituted a Registration Failure and that Meteora was exercising its right to

commence the Valuation Period effective July 8, 2024. Meteora asserted that because

of the Registration Failure, the Settlement Amount would not contain any amount

for the Subscribed Shares.61

60 See PX 18.

61 See PX 12.

29

On September 26, 2024, the Subscribed Shares became eligible for public

resale under Rule 144 of the Securities Act of 1933.62 At that point. Meteora no longer

needed the Company to register the Subscribed Shares, only to lift the trading

restrictions on them.

One month later, on October 31, 2024, the Company notified Meteora by email

that it intended to file a shelf registration statement and asked Meteora to identify

any shares it wanted to include and complete a questionnaire.63 That communication

and its irrelevance to Meteora’s situation suggests that the Company either did not

fully comprehend or was ignoring the terms of the Transaction Agreements.

On November 6, 2024, Meteora responded to the Company’s email. Meteora

noted that it was not seeking to have the Subscribed Shares registered and that those

shares were eligible for sale under Rule 144.64 Meteora asked the Company to confirm

that it would instruct its transfer agent to remove any restrictions on the Subscribed

Shares.65 The Company did not respond.

62 17 C.F.R. § 240.144.

63 See PX 13.

64 Id.

65 Id.

30

4. The Company Disputes Meteora’s Rights.

In December 2024 and again in March 2025, the Company disputed the

validity of the Failure Notice and contested the rights that Meteora claimed to have.66

Among other objections, the Company claimed that Meteora breached the Forward

Agreement by selling Recycled Shares without designating them as either Shortfall

Shares or Terminated Shares. The Company contended that Meteora could only sell

shares either through Shortfall Sales or under the Early Termination Option. The

Company agreed that Meteora properly engaged in Shortfall Sales but argued that

Meteora’s Schedule 13F showed that it sold another 2,639,499 shares without

designating them as Terminated Shares.67

Meteora argued that the Forward Agreement authorized three types of sales.

• First, it could engage in Shortfall Sales. Under that mechanism, Meteora could

keep all of the proceeds but had to notify the Company so that the Shortfall

Sale Shares would be removed from the Number of Shares used for the

Settlement Payment calculation.68

• Second, it could exercise the Early Termination Option. Under that

mechanism, Meteora could identify Terminated Shares, pay the Company

$10.76 per share, and give notice to the Company so the Terminated Shares

would be removed from the Number of Shares used for the Settlement Payment

calculation. Meteora did not have to sell the Terminated Shares, only give

notice to the Company and pay $10.76 per Terminated Share.

66 See Compl. Exs. G, I.

67 See DX F.

68 That is what Meteora asserted. The Forward Agreement does not appear to

call for deducting the Shortfall Sale Shares from the Number of Shares used for the Settlement Payment calculation. It calls for deducting them for purposes of the Settlement Payment Adjustment.

31

• Third, Meteora could simply sell shares without any notice or payment to the

Company, but without reducing the Number of Shares. Meteora would still owe

the Company for those shares as part of the Settlement Payment calculation.

Meteora argued that it properly sold the 2,639,499 shares under the third path.69

5. Meteora Calculates The Settlement Amount

The Valuation Period that the Failure Notice initiated came to an end on

December 24, 2024. The VWAP Price for the Valuation Period was $1.8094 per

share.70

Meteora calculated that on the Valuation Date, the Number of Shares was

3,906,622. Meteora submitted the following calculation:

69 See PX 14 at 2–3; Compl. Ex. J at 4.

70 See PX 14, Ex. A at 2.

32

The formula for the Settlement Amount calls for deducting Unregistered

Shares from the Number of Shares, then multiplying that figure times the Settlement

Price of $1.8094 per share. The resulting Settlement Amount was $5,798,054.03.71

The formula for the Settlement Amount Adjustment does not call for deducting

Unregistered Shares. Meteora applied the Settlement Amount Adjustment of $1.25

per share across the entire Number of Shares. The resulting total Settlement Amount

Adjustment was $4,888,327.50.72

The Forward Agreement calls for netting the two payments and for Meteora to

pay the Company any positive amount. The difference between the Settlement

Amount and the Settlement Amount Adjustment was $914,726.53.73

For comparison, the Company wired Meteora a Prepayment of $46,012,517.52

plus expense reimbursement of $350,842, for a total of $46,363,359.52. Subtracting

71 Id. at 3. $5,798,054.03 = $1.8094 * 3,204,407. As this decision has observed,

the formula for the Settlement Amount does not call for deducting the Shortfall Shares from the Number of Shares. Only the formula for the Settlement Amount Adjustment does. See FA at 5, Settlement Amount and Settlement Amount Adjustment; see also id. at 19, Transaction by Seller in the Shares (“Any Recycled Shares that are not Shortfall Sale Shares and [Subscribed] Shares sold by Seller during the term of the Transaction and included on [Termination Notice] will cease to be included in the Number of Shares.”). In performing its calculations, Meteora used the “Ending Recycled Shares” to calculate the Settlement Amount. That number deducted both the Terminated Shares and the Shortfall Shares. Meteora thus excluded the Shortfall Sales from its Settlement Amount calculation, even though the Forward Agreement does not provide for that. For purposes of summary judgment, this decision uses Meteora’s calculations. The parties will have to address this issue before the court awards any amount of damages to Meteora.

72 Id. at 2. $4,888,327.50 = $1.25 * 3,906,662.

73 See PX 14 at 1.

33

Meteora’s proposed Settlement Amount of $914,726.53 leaves Meteora with a net

gain on the Forward of $45,097,790.99. That amount ignores the additional profits

Meteora inferably generated by acquiring the Recycled Shares at prices below $10.76

per share, by selling 2,639,499 shares in the market for inferably more than $10.76

per share, and by selling 212,728 Terminated Shares in the market for inferably more

than the $10.76 per share paid to the Company under the Early Termination Option.

Contrast that with what the Company received. If the parties had waived the

Minimum Cash Condition and closed, the Company would have emerged from closing

with $29,900,000 in cash. With the Meteora Transaction, the SPAC paid out

$122,370,262.76 in redemptions 74 and reached closing with net cash of

$76,129,737.24. 75 Immediately after closing, the Company wired Meteora

$46,363,359.52 in cash, leaving the Company with $29,766,377.72 in cash from the

SPAC, $133,622.28 less than what the Company would have had if the parties had

waived the Minimum Closing Condition. With the Settlement Amount of $914,726.53,

the Company benefited in absolute terms by $781,104.25. Meteora did not offer to pay

the Settlement Amount until fifteen months after closing, and discounting that

amount by the Company’s weighted average cost of capital would made the difference

far less.

74 SPAC stockholders tendered 15,670,446 Class A shares for redemption. Meteora acquired 4,297,745 tendered shares in the market. That left 11,372,701 shares tendered for redemption at $10.76 per share.

75 Pre-redemption cash of $198,500,000 minus $122,370,262.76 in redemptions

equals $76,129,737.24.

34

The Company’s stockholders bore the real cost. Without the Meteora

Transaction, the SPAC would have redeemed shares, reducing the public float. And

the Company would not have diluted the public float by issuing the Subscribed

Shares, which Meteora received for zero consideration under its calculation of the

Settlement Amount due to the Registration Failure. The dilution suffered by the

Company’s stockholders funded Meteora’s profits.

D. The Amended Forward

Effective January 30, 2024, the parties amended the Forward Agreement (the

“Forward Amendment”). 76 Unlike the original Forward Agreement, the Forward

Amendment was a straightforward, though expensive, means for the Company to

obtain capital.

The Forward Amendment authorized the Company to make up to ten separate

draws, each in the amount of $500,000. Once Meteora funded a request, it could

designate the amount as Prepayment Shortfall and recover 117% of its value by

engaging in Shortfall Sales. Meteora could effectively capture $85,000 in profit for

each $500,000 tranche. Otherwise, the Forward Agreement’s mechanisms remained

the same.

The Forward Amendment was a backdoor way for the Company to raise capital

by issuing shares. Meteora served as the middleman in return for its 17% fee. The

76 See PX 16.

35

Company’s stockholders bore the dilution and any decline in the stock price caused

by Meteora’s sales.

E. Litigation Ensues

On April 17, 2025, the Company sued Meteora in Florida state court claiming

breach of contract and breach of the implied covenant of good faith and fair dealing.

The Company demanded $72 million in damages.

Meteora responded the next day by filing this action against the Company. The

Complaint contains two counts. Count I seeks a declaratory judgment that (i) Meteora

performed all of its obligations under the Forward Agreement and Subscription

Agreement; (ii) the Company failed to register the Subscribed Shares, resulting in a

Registration Failure under the Forward Agreement; and (iii) the Valuation Period

expired and Meteora’s payment obligation to the Company is $914,726.53. Count II

asserts that the Company breached the Subscription Agreement by failing to register

the Subscribed Shares or make them available for resale under Rule 144. Meteora

seeks a decree of specific performance requiring the Company to remove the transfer

restrictions on the Subscribed Shares.

One month later, on May 14, 2025, Meteora moved for summary judgment.

That motion seeks declarations that (i) Meteora complied with its obligations under

the Transaction Agreements, (ii) Meteora did not breach the Forward Agreement

when selling Recycled Shares, and (iii) the Company breached the Subscription

Agreement by failing to register the Subscribed Shares or make them available for

resale. In its motion, Meteora seeks a decree of specific performance requiring the

Company to make the Subscribed Shares eligible for resale.

36

The Company tried to remove this action to federal court.77 The federal court

granted Meteora’s motion to remand.78

After remand, the Company failed to file a timely response to the complaint.

Meteora moved for a default judgment.

With Meteora’s motion for default judgment pending, the Company’s counsel

withdrew. The Company then hired New York counsel to file a new lawsuit in the

United States District Court of the Southern District of New York (respectively, the

“New York Action” and the “New York Court”). The New York Action named as

defendants not only Meteora but also its employees. The Company asserted claims

for breach of the Forward Agreement, fraud, federal securities law violations, and

RICO violations. After filing the New York Action, Meteora dismissed the Florida

action.

After securing new Delaware counsel, the Company answered the complaint

and raised eleven affirmative defenses. 79 The Company also opposed Meteora’s

motion for default judgment.80 The court denied that motion on November 6, 2025.81

The parties then completed briefing Meteora’s motion for summary judgment.

77 Dkt. 8.

78 Dkt. 12.

79 Dkt. 20 at 28–30.

80 Dkts. 20–21.

81 Dkt. 25.

37

On July 9, 2026, the New York Court issued a decision granting the defendants

motion to dismiss that case (the “New York Decision”). 82 The parties dispute the

relevance of the New York Decision to this case.

II. LEGAL ANALYSIS

Court of Chancery Rule 56(a) permits the entry of summary judgment when

“there is no genuine issue as to any material fact” and “the moving party is entitled

to a judgment as a matter of law.”83 Summary judgment “may be rendered on the

issues of liability alone although there is a genuine issue as to the amount of damages,

or some other matter.”84

A. The Company’s Rule 56(d) Argument

The Company strives to head off summary judgment by invoking former Rule

56(f), now Rule 56(d). The rule currently states:

If a nonmovant shows by affidavit that, for specified reasons, it cannot

present facts essential to justify its opposition [to a motion for summary

judgment], the Court may: (1) defer considering the motion or deny it;

(2) allow time to obtain affidavits or to take discovery; or (3) issue any

other appropriate order.85

The Company contends that it needs discovery to present facts essential to its

opposition.

82 Dkt. 45.

83 Del. Ct. Ch. R. 56(a).

84 Chamison v. Healthtrust, Inc.-Hosp. Co., 1997 WL 695576, at *2 (Del. Ch.

Oct. 29, 1997).

85 Id. R. 56(d).

38

New Rule 56(d) conformed the language of old Rule 56(f) to Federal Rule of

Civil Procedure 56(d), thereby facilitating reliance on federal decisions as persuasive

authority. It did not make any substantive change in the law. When invoking the new

rule, as under the old rule, the “non-moving party shoulders the onus to state with

some degree of specificity, the additional facts sought by the requested discovery.” 86

A party is not entitled to discovery under the rule as of right; the rule’s application

“is necessarily circumscribed by the discretion of the trial court.”87

The court can reject the Company’s Rule 56(d) request as to the interpretation

of Transaction Agreements because those documents are unambiguous. When that is

the case, a court need not “open the door to discovery simply because the parties

disagree about the meaning of . . . unambiguous terms.” 88 The Company has not

“demonstrated a need for further particularized discovery . . . [because] the issue is

one of law turning upon interpretation” of the Transaction Agreements. 89 The

affidavit fails to identify any factual issues that are material to interpreting the

86 Archlight Cap. P’rs, LLC v. Lexington Ins. Co., 2026 WL 1383078, at *15

(Del. Super. May 18, 2026) (citation omitted).

87 Advent Int’l L.P. v. Servicios Funerarios GG S.A. DE C.V., 2026 WL 1328460,

at *3 (Del. Ch. May 12, 2026).

88 In re Verizon Ins. Coverage Appeals, 222 A.3d 566, 572 (Del. 2019).

89 Mann v. Oppenheimer & Co., 1985 WL 11555, at *1 (Del. Ch. Apr. 4, 1985).

39

governing agreements. 90 The Transaction Agreements are complex, and they take

time to read and explain, but their meaning is clear.

The Company also requests discovery pertaining to its affirmative defenses,

but that request falls short on multiple grounds. First, the affirmative defenses are

conclusory and fail on that basis.91 Conclusory defenses are not a path to discovery.92

90 Fisher v. Del. River and Bay Auth., 2020 WL 1150208, at *3 (Del. Super.

Mar. 9, 2020).

91 See Ch. Ct. R. 8(c)(3) (“Supporting an Affirmative Defense. The pleading

must provide a short and plain statement of the basis for the affirmative defense.”); Cypress Assocs., LLC v. Sunnyside Cogeneration Assocs. Project, 2007 WL 148754, at *18 (Del. Ch. Jan. 17, 2007) (affirmative defenses must be supported by plead facts); Westerly Winds USA, Inc. v. Kuhl, 2026 WL 1481702, at *3 (Del. Super. May 20, 2026) (“[C]onclusory, single-sentence boilerplate recitations of affirmative defenses are insufficient to defeat an otherwise well-supported motion for judgment on the pleadings.”); Faraday, Inc. v. Ideal Image Dev. Corp., 2026 WL 883220, at *3 (Del. Super. Mar. 30, 2026) (“The Court further concludes that the identified affirmative defenses are, as pled, insufficient under Rule 12(f) because they are unsupported by factual allegations tied to the dispute, are conclusory, or otherwise are not germane as framed to the breach of contract claim as pled in this action.”); see also, e.g., Tygon Peak Cap. Mgmt., LLC v. Mobile Invs. Investco, LLC, 2023 WL 4857281, at *6–7 (Del. Ch. July 31, 2023) (striking affirmative defenses of estoppel and acquiescence as conclusory where the defendant failed to plead reliance), aff’d 315 A.3d 445 (Del. 2024); Leaf Invenergy Co. v. Invenergy Wind LLC, 2016 WL 3566365, at *3 (Del. Ch. June 30, 2016) (holding that a conclusory affirmative defense was insufficient to warrant denial of motion for judgment on the pleadings); Di Loreto v. Tiber Hldg. Corp., 1999 WL 1261450, at *4 n.9 (Del. Ch. June 29, 1999) (dismissing conclusory affirmative defenses); Wellgistics, LLC v. Welgo, Inc., 2024 WL 113967, at *8–9 (Del. Super. Jan. 9, 2024) (striking conclusory affirmative defenses of fraud and estoppel).

92 Kurz v. Holbrook, 2009 WL 4682622, at *6 (Del. Ch. Dec. 1, 2009) (dismissing

an unclean hands defense because it was alleged “in conclusory fashion without providing any supporting allegations,” and holding that “[t]he rote recitation of an unclean hands defense is not a free pass to conduct discovery”).

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Second, the affirmative defenses of laches,93 ripeness,94 lack of subject matter

jurisdiction,95 dismissal in deference to the now-dismissed Florida action,96 and for

failure to establish any damages97 would fail on the pleadings as a matter of law.

Others depend on contractual arguments that are inherently part of the claims for

93 Ans., First Affirmative Defense (“Plaintiffs’ claims are barred pursuant to

the equitable doctrine[] of laches.”). The complaint demonstrates on its face that the action is timely.

94 Id., Eighth Affirmative Defense (“Plaintiffs’ Complaint . . . is not yet ripe and

payment is not yet due to Plaintiffs under the terms of the applicable agreements.”). The complaint demonstrates on its face that the dispute is ripe.

95 Id., Seventh Affirmative Defense (“Jurisdiction . . . in the Delaware Court of

Chancery is improper because the Complaint seeks monetary relief disguised as injunctive relief.”). The complaint demonstrates on its face that Meteora has properly requested equitable relief, giving this court jurisdiction.

96 Id., Seventh Affirmative Defense (“[V]enue in the Delaware Court of Chancery is improper because . . . while the [FA] includes a New York choice of law provision, it does not include a venue provision establishing jurisdiction in this Court, and an action has already been filed in Florida related to the interpretation of that agreement.”). The Company has dismissed the Florida action. The Subscription Agreement chooses the courts of Delaware as the exclusive forum for disputes. See SA § 8(q).

97 Id., Tenth Affirmative Defense (“Plaintiffs’ claims fail in whole or in part due

to the failure to establish any damages.”). Unless a party seeks special damages, damages can be pled generally. Bamford v. Penfold, L.P., 2020 WL 967942, at *21 (Del. Ch. Feb. 28, 2020). Meteora has stated that it plans to seek damages, and the Company can oppose that relief.

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breach of contract and the analysis this decision must conduct.98 One is nonsensical.99

In the interest of brevity, the court has not addressed these defenses in greater

detail.100

Third, the New York Decision dismissed versions of the affirmative defenses

that the Company advanced as affirmative claims, supported by allegations in a

complaint. The New York Decision is not preclusive, because the court dismissed the

complaint with leave to replead as to one claim for breach of contract. Only a final

judgment has preclusive effect.101 An order dismissing some claims with prejudice

98 Id., Third Affirmative Defense (“Plaintiffs’ causes of action are barred because all conditions precedent have not yet occurred.”); id., Fourth Affirmative Defense (“Defendant has not materially breached any provision of the applicable agreements.”), id., Sixth Affirmative Defense (“Plaintiffs’ claims may be barred in whole or in part due to Plaintiffs’ material breaches and failures to materially comply with the terms of the applicable agreements.”); id., Eighth Affirmative Defense (“Plaintiffs’ Complaint . . . is not yet ripe and payment is not yet due to Plaintiffs under the terms of the applicable agreements.”); id., Tenth Affirmative Defense (“Plaintiffs’ claims fail in whole or in part due to the failure to establish any damages.”).

99 Id., Eighth Affirmative Defense (“Plaintiffs’ Complaint is premature given

the existence of additional claims asserted by Defendant against Plaintiffs[.]”).

100 To be clear, in conducting this analysis, the court is not striking the affirmative defenses sua sponte. The court is ruling on the Company’s argument under Rule 56(d) and explaining why the affirmative defenses are insufficient to support either denying Meteora’s motion for summary judgment or deferring a ruling on it so that the Company can conduct discovery.

101 See St. Pierre v. Dyer, 208 F.3d 394, 399 (2d Cir. 2000) (“[A] final judgment

on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” (citation omitted)); In re Teltronics Servs., Inc., 762 F.2d 185, 190 (2d Cir. 1985) (explaining that preclusion requires “(1) a final judgment on the merits, (2) by a court of competent jurisdiction,

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remains interlocutory as long as the case continues as to other claims.102 The parties

have not informed the court whether the Company repled its contract claim, but for

purposes of Meteora’s motion for summary judgment, the court infers that it did.103

(3) in a case involving the same parties or their privies, and (4) involving the same cause of action”).

102 See Doe v. Columbia Univ., 2022 WL 16856158, at *2 (S.D.N.Y. Nov. 10,

2022) (“A partial dismissal is a quintessentially nonfinal order.”); accord Gortat v. Capala Bros., Inc., 2009 WL 10706563, at *2 (E.D.N.Y. May 4, 2009) (“When a district court dismisses some but not all of the claims in a case, the order of dismissal is not a final decision[.]”); see also Oriental Art Printing Inc. v. GS Printing Corp., 34 F. App’x 401, 402 (2d Cir. 2002) (“[A]n order that adjudicates fewer than all of the claims remaining in the action, or adjudicates the rights and liabilities of fewer than all of the remaining parties, is not a final order unless the court directs entry of final judgment as to the dismissed claims or parties upon an express determination that there is no just reason for delay.” (citation omitted)). A dismissal with leave to amend is also not a final order. See Whitfield v. Johnson, 763 F. App’x 106, 107 (2d Cir. 2019) (“A dismissal with leave to amend is a non-final order and not appealable.” (citation omitted)); Spinelli v. Nat’l Football League, 2015 WL 4869898, at *2 (S.D.N.Y. Aug. 13, 2015) (“It is well established in this Circuit that a district court’s order dismissing a complaint with leave to replead is not final and therefore not appealable.”).

Meteora moved to provide supplemental briefing on preclusion. Dkt. 47. This decision renders that motion moot, and the court will deny the motion on that basis. This decision has not ruled on the Company’s affirmative defenses beyond holding that they do not warrant discovery under Rule 56(d). If Meteora wishes to move for summary judgment on those affirmative defenses, including on the basis of preclusion, it has that arrow in its quiver. The court offers no opinion on the merits of any future motion.

103 Deciding not to amend or letting the deadline for amendment pass can turn

an otherwise non-final dismissal into a final and appealable order. See Fay v. Barbera, 2025 WL 1554491, at *1 n.1 (2d Cir. June 2, 2025) (“A dismissal with leave to amend is a non-final order and not appealable. However, an appellant can render such a non-final order ‘final’ and appealable by disclaiming any intent to amend.”(citation omitted)); Whitfield, 763 F. App’x at 107 (“However, we will treat a premature appeal from a judgment granting leave to amend as an appeal from a final judgment if the deadline for amendment has passed.”). If further motion practice

43

The New York Decision nevertheless remains persuasive on the question of

whether the Company’s affirmative defenses warrant discovery. The New York

Decision dismissed the New York Action in its entirety. That ruling, based on

allegations in a complaint, indicates that the Company cannot rely on Rule 56(d)

based on a conclusory defense of unclean hands that cites the “wrongful and improper

conduct as set forth in [the] NY Complaint.”104

The New York Decision dismissed

• Claims for fraud, fraud in the inducement, and misrepresentation.105

• Claims for stock manipulation in violation of the federal securities laws.106

• Claims for RICO violations.107

ensues on the preclusion issue, the parties must clarify the status of the New York Decision.

104 Ans., Ninth Affirmative Defense (“Plaintiffs are barred from pursuing this

action against Defendant due to the doctrine of unclean hands, in that, among other things, Plaintiffs have engaged in wrongful and improper conduct as set forth in Defendant’s FL Complaint and NY Complaint attached as Exhibit A, including without limitation, upon information and belief: 1) fraud/fraudulent inducement; 2) misrepresentation; 3) breach of contract; 4) breach of covenant of good faith and fair dealing; 5) violation of 18 U.S.C. § 1961-1968 (RICO); 6) violation of 15 U.S.C. § 77q(a) (securities fraud); 7) violation of 15 U.S.C. § 78(j) and 17 U.S.C. §§ 240.10b-5 and 240.10(b) (stock manipulation); and 8) unjust enrichment.”).

105 New York Decision at 13–14.

106 Id. at 17–18.

107 Id. at 20.

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Those rulings, based on allegations in a complaint, indicate that the Company cannot

rely on Rule 56(d) based on a conclusory defense that “[t]he agreements relied upon

by Plaintiffs are void or voidable as being procured by fraud.”108

The New York Decision also dismissed a set of breach of contract claims,

including:

• A claim that Meteora and the Company entered into a binding term sheet, that

its terms were incorporated into the Transaction Agreements, and that

Meteora’s conduct breached those terms.109

• A claim that Meteora failed to provide funds to the Company under the

Forward Amendment.110

• A claim that Meteora sent the Failure Notice in bad faith to drive down the

Settlement Price and without providing the Company with a 30-day cure

period.111

• A claim that Meteora breached the Forward Agreement by failing to give notice

the Company when it sold shares.112

• A claim for breach of the implied covenant of good faith and fair dealing

grounded on the assertion that Meteora “engag[ed] in transactions that drove

down the market price of [Company] shares and further failed to conduct

themselves and itself consistent with the terms of the [Forward

Agreement].”113

108 Ans., Second Affirmative Defense.

109 New York Decision at 8.

110 Id. at 10.

111 Id.

112 Id. at 11.

113 Id. at 16.

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Those rulings, based on allegations in a complaint, indicate that the Company cannot

rely on Rule 56(d) to defer or defeat summary judgment based on conclusory

assertions of waiver, ratification, and estoppel 114 or antecedent breach.115 Nothing

about the Meteora Transaction suggests mutual mistake.116

The purported need for discovery into either Meteora’s claims under the

Transaction Agreements or the Company’s affirmative defenses does not warrant

denying or deferring a ruling on Meteora’s motion. The Company has not made the

requisite showing under Rule 56(d).

B. Governing Legal Principles

Meteora’s motion for summary judgment seeks determinations under the

Forward Agreement and the Subscription Agreement. Those issues present questions

of contract interpretation.

114 Ans., First Affirmative Defense (“Plaintiffs’ claims are barred pursuant to

the equitable doctrines of . . . waiver, ratification, and estoppel.”)

115 Id., Sixth Affirmative Defense (“Plaintiffs’ claims may be barred in whole or

in part due to Plaintiffs’ material breaches and failures to materially comply with the terms of the applicable agreements.”).

116 Id., Fifth Affirmative Defense (“Plaintiffs’ claims may be barred in whole or

in part due to a mutual mistake.”). At a minimum, Meteora knew exactly what it was doing. The Company and its sophisticated lawyers should have known.

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New York law governs the Forward Agreement.117 Delaware law governs the

Subscription Agreement.118 Fortunately, “New York and Delaware law are generally

harmonious in their approach to contract interpretation.”119 “Both [states] enforce the

plain meaning of agreements, apply similar principles of contract interpretation, and

only look to extrinsic evidence in the event of ambiguity.”120 The parties have chosen

to cite only Delaware cases. This decision follows their lead.

Under Delaware law, the role of a court when interpreting a contract is “to

effectuate the parties’ intent.”121 In upholding the intentions of the parties, a court

must “must give effect to all terms of the instrument, must read the instrument as a

whole, and, if possible, reconcile all the provisions of the instrument.” 122 “[T]he

meaning which arises from a particular portion of an agreement cannot control the

117 FA at 16, Governing Law (designating New York law as the governing law).

118 SA at §8(o) (“This Subscription Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware . . . .”).

119 Rohe v. Reliance Training Network, Inc., 2000 WL 1038190, at *8 (Del. Ch.

July 21, 2000) (citations omitted) (“[E]ach state emphasizes the interpretive primacy of giving effect to the parties’ intention as expressed by the written words of their agreements.”).

120 Finger Lakes Cap. P’rs, LLC v. Honeoye Lake Acq., LLC, 2015 WL 6455367,

at *14 n.4 (Del. Ch. Oct. 26, 2015).

121 Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006).

122 Id.

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meaning of the entire agreement where such inference runs counter to the

agreement’s overall scheme or plan.”123

Absent ambiguity, the court “will give priority to the parties’ intentions as

reflected in the four corners of the agreement, construing the agreement as a whole

and giving effect to all its provisions.”124 “Unless there is ambiguity, Delaware courts

interpret contract terms according to their plain, ordinary meaning.” 125 “Contract

language is not ambiguous merely because the parties dispute what it means.”126 “To

be ambiguous, a disputed contract term must be fairly or reasonably susceptible to

more than one meaning.” 127 “Delaware courts will not destroy or twist [contract]

language under the guise of construing it.”128 “If a writing is plain and clear on its

face, i.e., its language conveys an unmistakable meaning, the writing itself is the sole

123 Elliott Assocs., L.P. v. Avatex Corp., 715 A.2d 843, 854 (Del. 1998).

124 In re Viking Pump, Inc., 148 A.3d 633, 648 (Del. 2016) (citations omitted).

125 Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012) (citations

omitted).

126 Id. at 385; accord Manti Hldgs., LLC v. Authentix Acq. Co., Inc., 261 A.3d

1199, 1208 (Del. 2021) (“The parties’ steadfast disagreement over interpretation will not, alone, render the contract ambiguous.” (internal quotation marks omitted)).

127 Alta Berkeley, 41 A.3d at 385; see Rhone-Poulenc Basic Chems. Co. v. Am.

Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992).

128 Rhone-Poulenc, 616 A.2d at 1195.

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source for gaining an understanding of intent.” 129 This court will enter summary

judgment as to a claim for breach of contract when the contract provision at issue is

unambiguous and there are no genuine fact disputes requiring a trial.130

C. Breach of the Subscription Agreement

The record establishes that the Company breached its obligations under the

Subscription Agreement, initially by failing to register the Subscribed Shares and

later by failing to make them available for resale under Rule 144. The Company’s

arguments to the contrary are unavailing. A decree of specific performance will issue

requiring that the Company make the Subscribed Shares available for resale.

1. Summary Judgment On The Issue Of Breach

To prevail on a breach of contract claim, the claimant must prove “(i) a

contractual obligation, (ii) a breach of that obligation by the defendant, and (iii) a

129 City Inv. Co. Liquid. Tr. v. Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993);

accord E.I. du Pont de Nemours & Co., Inc. v. Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985).

130 See, e.g., Jernigan Cap. Operating Co., LLC v. Storage P’rs of KOP, LLC,

2020 WL 7861334, at *7 (Del. Ch. Dec. 31, 2020) (“When the issue being presented for summary judgment is one of contractual interpretation, summary judgment is appropriate where the dispute centers on the proper interpretation of an unambiguous contract”); Comet Sys., Inc. S’holders’ Agent v. MIVA, Inc., 980 A.2d 1024, 1030 (Del. Ch. 2008) (“Summary judgment is an appropriate process for the enforcement of unambiguous contracts because there is no material dispute of fact for the court to resolve.”); Gildor v. Optical Sols., Inc., 2006 WL 4782348, at *9 (Del. Ch. June 5, 2006) (granting summary judgment motion when the defendant corporation “breach[ed] a clear provision of the [contract]”); FT Trading v. Chantal Pharms. Corp., 1997 WL 33173288, at *1 (Del. Ch. Sept. 9, 1997) (granting motion for summary judgment for breaching contract when there was “no evidence [] presented that raise[d] a material issue” and there did not “appear to be any ambiguity in the wording of [the] contract”).

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causally related injury that warrants a remedy, such as damages . . . .”131 There are

no disputes of material fact on the issue of breach. Meteora is entitled to judgment as

a matter of law.

The Subscription Agreement obligated the Company to file a registration

statement for the Subscribed Shares (the “Registration Obligation”). Under its terms,

the Company agreed that

within thirty calendar days following the Closing Date, the Company

will file with the Commission (at the Company’s sole cost and expense)

a registration statement registering the resale of the Subscribed Shares

(the “Registration Statement”), and the Company shall use its

commercially reasonable efforts to have the Registration Statement

declared effective as soon as practicable after the filing thereof, but in

any event no later than ninety calendar days after the Closing Date (the

“Effectiveness Deadline”); provided, that the Effectiveness Deadline

shall be extended to one hundred twenty calendar days after the Closing

Date if the Registration Statement is reviewed by, and comments

thereto are provided from, the Commission.132

The Closing Date was September 20, 2023, the date the Merger closed. 133 The

deadline for filing the Registration Statement for the Subscribed Shares was October

20, 2023. The deadline for obtaining an effective Registration Statement was

December 19, 2023. The Company did not file a Registration Statement for the

131 AB Stable VIII LLC v. Maps Hotels and Resorts One LLC, 2020 WL 7024929, at *47 (Del. Ch. Nov. 30, 2020), aff’d, 268 A.3d 198 (Del. 2021).

132 SA § 5(a).

133 See id. § 2(a).

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Subscribed Shares, and the Registration Statement never became effective. The

Company therefore breached the Registration Obligation.134

The Subscription Agreement separately obligated the Company to take steps

to remove any transfer restrictions once the Subject Shares could be sold under Rule

144 (the “Restriction Obligation”). Under its terms, the Company agreed to

use its commercially reasonable efforts to . . . (B) at the reasonable

request of Subscriber, deliver all the necessary documentation to cause

the Company’s transfer agent to remove all restrictive legends from any

Subscribed Shares being sold . . . pursuant to Rule 144 at the time of

sale of the Subscribed Shares, or that may be sold by Subscriber without

restriction under Rule 144, including without limitation, any volume

and manner of sale restrictions, and (C) cause its legal counsel to deliver

to the transfer agent the necessary legal opinions required by the

transfer agent, if any, in connection with the instruction under clause

(B) upon the receipt of Subscriber representation letters and such other

customary supporting documentation as requested by (and in a form

reasonably acceptable to) such counsel.135

On September 26, 2024, the Subscribed Shares became eligible for public resale under

Rule 144.136 On November 6, Meteora asked the Company to confirm that it would

instruct its transfer agent to remove any restrictions on the Subscribed Shares. The

Company has not submitted any evidence indicating that it made any effort to deliver

the documentation necessary to cause its transfer agent to remove any restrictive

134 As discussed above, the Time-Based Registration Requirement in the Forward Agreement required that the Company secure an effective Form S-1 within 90 days after August 25, 2023, or by November 23, 2023. The Company breached that obligation as well.

135 SA § 5(b).

136 17 C.F.R. § 240.144.

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legends from the Subscribed Shares. The Company therefore breached the Restriction

Obligation as well.

The Company argues in response that the Subscription Agreement and the

Forward Agreement impose conflicting obligations to register the shares. The

Company relies on McAnulla Electrical, where the Delaware Superior Court denied

summary judgment because of the “apparently conflicting provisions.”137 Here, the

provisions do not conflict. They impose serial obligations that the Company had to

meet.

The Company also suggest that Meteora’s request for registration did not

trigger the Restriction Obligation because Meteora sent it by email. Under the

Subscription Agreement, email is sufficient.138

The Company further argues that the Master Agreement provides for a 30-day

cure period and the Forward Agreement incorporates its terms by reference.139 The

137 McAnulla Elect. Const., Inc. v. Radius Techs., LLC, 2010 WL 3792129, at

*5, *8 (Del. Super. Sept. 24, 2010).

138 See SA § 8(a) (“Any notice, request, demand, claim, or other communication

hereunder shall be deemed duly given . . . when sent by electronic mail, with no mail undeliverable or other rejection notice, on the date of transmission to such recipient, if sent on a Business Day prior to 5:00 p.m. New York City time, or on the Business Day following the date of transmission, if sent on a day that is not a Business Day or after 5:00 p.m. New York City time on a Business Day”).

139 MA § 5(a)(ii)(1) (providing that an “event of default” has occurred upon

“[f]ailure by the party to comply with or perform any agreement or obligation . . . to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied within 30 days after notice of such failure is given to the party . . .”).

52

Company asserts that Meteora did not give an opportunity to cure before issuing the

Failure Notice. For starters, Meteora claims a breach of the Subscription Agreement,

not the Forward Agreement. Setting that aside, the Registration Obligation in the

Subscription Agreement did not require notice; it was a time-based deadline to file a

registration statement by October 20, 2023, and have it declared effective by

December 19, 2023. Meteora followed up regarding the registration obligation in May

and June 2024. Meteora then waited over a month before issuing the Failure Notice.

The Company never made any effort to cure its registration failure. Any cure period

is inapplicable.

The same is true for the Restriction Obligation. The Subscribed Shares became

eligible for public resale on September 26, 2024. Meteora asked the Company on

November 6 to confirm that it would instruct its transfer agent to remove any

restrictions on the Subscribed Shares. Two years later, the Company still has not

made any effort to cure its breach. Any cure period is again inapplicable.

The Company next argues that Meteora waived its registration right by

instructing the Company not to file a registration statement. To create a dispute of

fact, the Company cites an email exchange in which Meteora stated, “[P]er our

understanding [the Company] to date has not issued a registration statement [for the

Subscribed Shares] per our instructions and as required under the [Forward].”140 The

Company hangs its hat on “per our instruction,” but that phrase does not suggest that

140 DX G at 54–55.

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Meteora instructed the Company not to register the shares. It conveys that Meteora

had instructed the Company to register the shares, yet the Company had not done

so. The plain language of the email cannot support the Company’s interpretation.141

The Company also argues that Meteora failed to provide the Company with

information to submit to the SEC for registration of the shares. The Company did not

ask Meteora for any information until well after the October and December 2023

deadlines had passed. The Company did not request information to facilitate

registration until October 2024, when it did so through a generic email rather than a

request tailored to Meteora’s rights. At that point, Meteora told the Company that

registration was no longer necessary and asked the Company to comply with the

Restriction Obligation. The Company never complied with that obligation. Any

failure to provide information is irrelevant to breach of the Restriction Obligation.

The Company’s request for information came too late to serve as a defense to its

breach of the Registration Obligation.

Summary judgment is therefore granted in Meteora’s favor as to the

Company’s obligations under the Subscription Agreement and the fact of breach.

141 Meteora points out that the Subscription Agreement requires a written instrument signed by both parties to waive any rights under the agreement. See SA § 8(h). Parties can waive a non-waiver provision, including by conduct. See Pepsi-Cola Bottling Co. of Asbury Park v. Pepsico, Inc., 297 A.2d 28, 33 (Del. 1972) (“The prohibition against amendment except by written change may be waived or modified in the same way in which any other provision of a written agreement may be waived or modified, including a change in the provisions of the written agreement by the course of conduct of the parties.”). Because the Company has failed to submit evidence creating a material dispute of fact as to waiver, the court need not reach this issue.

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2. The Remedy Of Specific Performance

As a remedy, Meteora seeks a decree of specific performance enforcing the

Company’s obligation to remove the transfer restrictions on the Subscribed Shares.

To obtain that remedy, Meteora must show that it lacks an adequate remedy at law.

Meteora also must show that the balance of equities tips in favor of specific

performance. The other requirements for a decree of specific performance are not in

dispute.

a. An Adequate Remedy At Law

Meteora must show initially that a legal remedy enforcing the Company’s

obligation to remove the transfer restrictions on the Subscribed Shares would be

inadequate. If damages provide an adequate remedy, a court will not order specific

performance.142

Parties can agree on appropriate remedies, and Delaware courts generally

respect their choices, including when they agree on specific performance.143 That said,

142 26 Cap. Acq. Corp. v. Tiger Resort Asia Ltd., 309 A.3d 434, 464 (Del. Ch.

2023).

143 Williams Cos., Inc. v. Energy Transfer Equity, L.P., 2016 WL 3576682, at *2

(Del. Ch. June 24, 2016), aff’d, 159 A.3d 264 (Del. 2017) (“Delaware is strongly contractarian, and the presence of a provision in favor of specific performance in case of breach, as the parties contracted for here, must be respected.”); ATP III GP, Ltd. v. Rigmora Biotech Inv. One LP, 2025 WL 3496987, at * 27 (Del. Ch. Dec. 5, 2025) (“[A] contractual provision stipulating the parties’ preference of specific performance favors granting specific performance.”); L-5 Healthcare P’rs, LLC v. Alphatec Hldgs., Inc., 2024 WL 3888696, at *10 n.72 (Del. Ch. Aug. 21, 2024) (“The presence of a specific performance provision, showing the parties’ clear intentions, pushes the equities heavily toward enforcing the parties’ intentions and expectations as set forth in the [contract].”); Gildor v. Optical Sols., Inc., 2006 WL 4782348, at *11 (Del. Ch. June 5, 2006) (“[I]n the absence of some countervailing public policy interest, courts

55

a provision calling for specific performance does not bind the court, and a court is not

required to enforce it.”144 “Because specific performance is an equitable remedy, its

application must be warranted on the facts and consistent with equitable

principles.” 145 “[S]pecific performance is a matter of grace that rests in the sound

discretion of the court.” 146 “But when a party has agreed to [a] provision like the

Specific Performance Clause, the party must establish a persuasive case-specific why

the clause should not be respected.”147 Respecting that type of remedial agreement is

all the more warranted when sophisticated parties have bargained for it at arm’s

length.148

should respect the parties’ bargain [for a remedy of specific performance.]”); see, e.g., Hexion Specialty Chems., Inc. v. Huntsman Corp., 965 A.2d 715, 762–63 (Del. Ch. 2008) (enforcing contractual stipulation to specific performance); see also 71 Am. Jur. 2d Specific Performance § 11, Westlaw (database updated Aug. 2026).

144 Am. Healthcare Admin. Servs., Inc. v. Aizen, 285 A.3d 461, 495 (Del. Ch.

2022) (“That said, a court is not required to enforce a specific performance provision.”); accord 26 Cap., 309 A.3d at 465 (“The existence of such a provision is sufficient to support a decree of specific performance but does not mandate its issuance.”); see Godwin v. Collins, 3 Del. Ch. 189, 200 (Ch. 1868) (“It is the established rule that a specific performance of a contract of sale is not a matter of course, but rests entirely in the discretion of the court upon a view of all the circumstances.” (cleaned up)).

145 26 Cap., 309 A.3d at 464.

146 Peden v. Gray, 886 A.2d 1278, (Del. 2005) (TABLE).

147 Am. Healthcare, 285 A.3d at 495; accord Fortis Advisors, LLC v. Krafton,

Inc., 354 A.3d 906, 948 (Del. Ch. 2026).

148 See ATP III GP, Ltd., 2025 WL 3496987, at *27 (noting that enforcing a

remedial provision is “even more” warranted “when the agreement is between sophisticated [parties] that bargained at arm’s length”).

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Parties also can agree contractually “to the existence of irreparable harm in

the event of a party’s breach.”149 The parties’ agreement is “typically sufficient to

demonstrate irreparable harm” and satisfy that requirement.150 As with a specific

performance provision, an irreparable harm provision does not bind the court, so the

court can disregard it when irreparable harm plainly does not exist.151

149 Martin Marietta Mat’ls, Inc. v. Vulcan Mat’ls Co., 56 A.3d 1072, 1145 (Del.

Ch. 2012) (footnotes omitted), aff’d, 68 A.3d 1208 (Del. 2012).

150 Id.; see Kan. City S. v. Grupo TMM, S.A., 2003 WL 22659332, at *5 (Del.

Ch. Nov. 4, 2003) (holding that contractual provision was sufficient to establish irreparable harm); True N. Commc’ns Inc. v. Publicis S.A., 711 A.2d 34, 44 (Del. Ch. 1997) (finding that stipulation of irreparable harm was capable of supporting a preliminary injunction); Vitalink Pharm. Servs., Inc. v. Grancare, Inc., 1997 WL 458494, at *9 (Del. Ch. Aug. 7, 1997) (“[Irreparable harm] is established by [defendant’s] stipulation in the Non–Competition Agreement, that ‘ . . . Vitalink will suffer substantial and irreparable harm in the event [of a breach of the noncompetition provision.]’ That alone suffices to establish the element of irreparable harm, and [defendant] cannot be heard to contend otherwise.”); SLC Beverages, Inc. v. Burnup & Sims, Inc., 1987 WL 16035, at *2 (Del. Ch. Aug. 20, 1987) (“Defendant next claims that plaintiff will not suffer any irreparable harm if a preliminary injunction is not granted. Unfortunately for defendant, this argument is precluded by the Agreement itself which provides that a breach of the Agreement would cause irreparable harm to the non-breaching party and gives the non-breaching party the right to specifically enforce the Agreement.”).

151 See H.B. Next LLC v. Goodman, 2025 WL 3174629, at *5 (Del. Ch. Oct. 31,

2025) (“Although this Court will consider contractual stipulations of irreparable harm in connection with exercising its discretion to award injunctive relief, parties do not have the authority to confer subject matter jurisdiction upon this Court through such an agreement . . . . If the facts as pled plainly do not warrant a finding of irreparable harm, this Court is not required to ignore those facts.” (cleaned up) (citations omitted)); S’holder Rep. Servs. LLC v. Renesas Elec. Corp., 2024 WL 5192070, at *21 (Del. Ch. Dec. 3, 2024) (“The line of cases considering the effect of a contractual provision establishing irreparable harm notes that such a provision does not require the Court to ignore facts that ‘plainly do not warrant a finding of irreparable harm” because ‘parties cannot confer subject matter jurisdiction upon a court.’ Stated succinctly: ‘The existence of such a provision is sufficient to support a decree of specific performance but does not mandate its issuance.’” (citations omitted)); Del.

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The Subscription Agreement both calls for specific performance as a remedy in

the event of breach and provides that a breach gives rise to irreparable harm. It

states:

The parties hereto acknowledge and agree that irreparable damage

would occur in the event that any of the provisions of this Subscription

Agreement were not performed in accordance with their specific terms

or were otherwise breached and that money or other legal remedies

would not be an adequate remedy for such damage. It is accordingly

agreed that the parties shall be entitled to equitable relief, including in

the form of an injunction or injunctions to prevent breaches or

threatened breaches of this Subscription Agreement and to enforce

specifically the terms and provisions of this Subscription Agreement,

this being in addition to any other remedy to which such party is entitled

at law, in equity, in contract, in tort or otherwise . . . .152

The Company and Meteora are sophisticated parties who were represented by

counsel during the negotiation and drafting of the Subscription Agreement. That

provision is sufficient to support the existence of irreparable harm and a decree of

specific performance. There are also no reasons to disregard the parties’ choice. As

discussed in the next section, Meteora faces the loss of a unique right that gives rise

to irreparable harm and warrants specific performance in any event.

Elevator, Inc. v. Williams, 2011 WL 1005181, at *15 (Del. Ch. Mar. 16, 2011) (“In Delaware, a contractual stipulation to irreparable harm does not force the Court’s hand but is sufficient to support injunctive relief.”); Endowment Rsch. Gp., LLC v. Wildcat Venture P’rs, LLC, 2021 WL 841049, at *8 (Del. Ch. Mar. 5, 2021) (“Delaware courts give some presumptive weight to contractual stipulations of irreparable harm and typically require that a party seeking to avoid the force of the stipulation demonstrate that the facts plainly do not warrant such a finding.” (citation omitted)).

152 SA § 8(k).

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b. Balancing The Equities

Despite the presence of a provision calling for specific performance, a court can

decline to award that remedy if there are supervening equities or other considerations

that warrant its denial. 153 Delaware courts “will only order specific performance

where the balance of equities tips in favor of specific performance.”154 When balancing

the equities, the court “must be convinced that ‘specific enforcement of a validly

formed contract would [not] cause even greater harm than it would prevent.’”155 This

factor “reflect[s] the traditional concern of a court of equity that its special processes

not be used in a way that unjustifiably increases human suffering.”156

No countervailing equities exist in this case. As a general rule, the equities

“weigh against the breaching party, which only need do what it agreed to do in the

first place.” 157 That is the case here: The Company breached the Subscription

153 See 26 Cap., 309 A.3d at 465 (“Here, after weighing the evidence and balancing multiple considerations, the court exercises its discretion against awarding specific performance.”).

154 Osborn v. Kemp, 991 A.2d 1153, 1161 (Del. 2010).

155 Global Cap. P’rs LLC v. Green Sapphire Hldgs., Inc., 355 A.3d 120, 181 (Del.

Ch. 2026) (citing Hastings Funeral Home, Inc. v. Hastings, 2022 WL 16921785, at *8 (Del. Ch. Nov. 14, 2022)).

156 O’Connor v. Beachy Keen Servs., LLC, 2025 WL 801165, at *4 (Del. Ch. Mar.

13, 2025 (quoting Morabito v. Harris, 2002 WL 550117, at *2 (Del. Ch. Mar. 26, 2002)).

157 Global

Cap. P’rs, 355 A.3d at 181; see also, e.g., Level 4 Yoga, LLC v.

CorePower Yoga, LLC, 2022 WL 601862, at *30 (Del. Ch. Mar. 1, 2022) (“[A]s CorePower breached the APA . . . the balance of equities decidedly favors Level 4.”);

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Agreement and need only do what it agreed to do. Nor does the obligation Meteora

seeks to enforce impose a meaningful burden. The Company can easily comply with

its obligations to make the Subscribed Shares available for resale under Rule 144.

By failing to fulfill its obligations, the Company has frustrated a central

purpose of the contract. Meteora bargained for the right to sell the Subscribed Shares

either under a registration statement or in compliance with Rule 144. Meteora has

already lost the ability to sell the Subscribed Shares under a registration statement

filed in compliance with the Subscription Agreement. The Company is now

preventing Meteora from selling the Subscribed Shares in compliance with Rule 144.

The Subscribed Shares could be sold under Rule 144 starting on September 26,

2024, nearly two years ago. Specific performance therefore will not be a complete

remedy, but it will enable Meteora to exercise its sale rights going forward. Meteora

has made clear that it will seek damages for the delay.

Without specific performance, Meteora will lose the benefit of its bargain. An

award of specific performance simply requires the Company to follow through on

what it agreed to. The equities therefore weigh against the Company and in favor of

Meteora. The court will enter an order requiring the Company to comply with the

Restriction Obligation.

Hastings Funeral Home, 2022 WL 16921785, at *8 (“I find that the equities tip in HFH’s favor since it has not breached the Agreement . . . .”).

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D. Compliance With The Forward Agreement And The Subscription

Agreement

Meteora separately seeks a declaratory judgment that it has not breached the

terms of the Forward Agreement and the Subscription Agreement. At a minimum,

the court can adjudicate the ripe disputes between the parties over Meteora’s

obligations when selling shares. Meteora is entitled to summary judgment on those

issues.

The only dispute between the parties concerns whether Meteora can sell shares

freely, without exercising the Early Termination Option or designating the sales as

Shortfall Sales. The Company views those options as exclusive. Meteora maintains

that it can sell shares by any method it chooses, but that if it sells shares other than

through one of those methods, then there is no change in the Number of Shares for

purposes of the Settlement Payment.

Under the plain language of the Forward Agreement, the Early Termination

Option and Shortfall Sales are not exclusive. The Forward Agreement generally

authorizes Meteora to sell shares as it wishes. To that end, the Forward Agreement

states:

[S]ubject to any restrictions set forth in [the Forward Agreement,

Meteora] may sell or otherwise transfer, loan or dispose of any of the

Shares or any other shares or securities of the [Company] in one or more

public or private transactions at any time, . . . . provided that [Meteora]

complies with all of its other obligations hereunder nothing contained

herein shall limit any of [Meteora’s] purchases and sales of Shares.158

158 FA at 19, Transactions by Seller in the Shares.

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Next, the Forward Agreement implicitly recognizes Meteora’s general right to sell by

stating: “Unless specified in an [Early Termination] Notice (or Shortfall Sale Notice

pursuant to the section entitled Shortfall Sales), no sale of Shares by [Meteora] shall

terminate all or any portion of this [Forward Agreement.]”159 The difference is that

exercising the Early Termination Option reduces the Number of Shares. Meteora can

otherwise trade freely in the Company’s shares (except for engaging in short sales).

The only consequence is that other trades do not alter the Number of Shares for

purposes of the Settlement Amount.

The Company emphasizes the “subject to any restrictions set forth in this

[agreement]” language and argues that the Shortfall Sales and the Early Termination

Option are “restrictions” that impose obligations on Meteora when selling. It is true

that Meteora must comply with the restrictions on Shortfall Sales and the Early

Termination Option when exercising those rights. But the restrictions that apply to

those rights do not apply more generally.

The Forward Agreement only imposes two limitations on Meteora’s ability to

sell. First, Meteora could not submit any SPAC shares for redemption in connection

with the Merger.160 Second, Meteora could not engage in short sales.161

159 Id.

160 Id. (“Seller hereby waives the redemption rights (‘Redemption Rights’) set

forth in the Articles of Association in connection with the Business Combination with respect to the Recycled Shares and the Subscribed Shares only during the term of this Confirmation.”).

161 Id. at 12, Short Selling (“Seller represents that with respect to the securities

of [the Company], it has not engaged in any Short Sales in respect of the Shares prior

62

The Company argues that the Early Termination Option requires that Meteora

issue an Early Termination Notice whenever it sells shares. The Early Termination

Option only applies when Meteora invokes it, and it does not require that Meteora

sell shares. Meteora can exercise the Early Termination Option and remove

Terminated Shares from the Number of Shares as long as it gives notice to the

Company and pays the Company $10.76 per Terminated Share. It is economically

rational to Meteora to minimize its risk by selling the Terminated Shares, but

Meteora could hedge its market risk in other ways. Meteora could also simply sell

shares into the market without issuing an Early Termination Notice and wait until

the Cash Settlement Payment Date to pay the Settlement Amount. At that point,

Meteora would have to pay the Settlement Price for any shares it sold (other than

Terminated Shares) even though Meteora no longer owned them. Meteora thus could

owe the Company a Settlement Payment based on more shares than Meteora actually

owned on the Cash Settlement Payment Date.162 The Early Termination Option is

to the date hereof and covenants that it shall not engage in any such Short Sales in respect of the Shares whatsoever at any time through the Valuation Date. ‘Short Sales’ means all ‘short sales’ as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act.”); id., at 19, Representations, Warranties and Covenants, (“Shorting. Seller agrees not to effect any Short Sales in respect of the Shares prior to the earlier of (i) the Valuation Date and (ii) the cancellation of the Transaction. ‘Short Sales’ means all ‘short sales’ as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act.”). Those provisions carry considerable irony, since the Forward operates as a synthetic long put option that replicates the economics of Meteora shorting the Acquired Shares. The prohibitions do prevent Meteora from double-dipping on the downside by shorting the Acquired Shares in addition to its synthetic short exposure.

162 Even then, for Meteora to net a loss, the value-weighted per share price

during the Valuation Period would have to exceed the per share price Meteora

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available to Meteora to reduce the Number of Shares. Meteora can also use Shortfall

Sales to recover the Prepayment Shortfall. Neither imposes any restriction on

Meteora’s ability to trade.

The Company’s real objection seems to be that the Meteora Transaction is

extraordinarily favorable to Meteora. That is true. For the reasons outlined

previously, the Meteora Transaction looks like a crazy-good deal for Meteora and a

terrible deal for the Company. But “it is not this court’s job to relieve sophisticated

parties of the burdens of contracts they wish they had drafted differently.”163 “Parties

have a right to enter into both good and bad contracts, the law enforces both.”164

The Company also argues that Meteora’s reading of the Forward Agreement is

absurd. The Company maintains that the Forward Agreement was intended to

facilitate the Company’s ability to raise capital so it could grow and expand the

business. According to the Company, it cannot be true that Meteora could sell shares

and drive down the market price to benefit from a low Settlement Price at the end of

a Valuation Period. Driving the market price down would inhibit the Company’s

ability to raise capital.

received by enough to offset the cash payment Meteora received at closing plus the Settlement Amount Adjustment. That is extremely unlikely.

163 Soleimani v. Hakkak, 2024 WL 1593923, at *10 (Del. Ch. Apr. 12, 2024),

aff’d, 327 A.3d 1060 (Del. 2024) (TABLE).

164 Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010).

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The Company might have believed the original Forward Agreement was a

device for raising capital, but there was only one Panglossian scenario in which that

could happen. If Company’s stock traded at prices so far above $10.76 per share that

the VWAP Price formula triggered at the Valuation Date would generate a

Settlement Price above $10.76 as well, even with Meteora engaging in selling and

other market activities to drive it down, then the Company could come out ahead. In

that scenario, Meteora would exercise the Early Termination Option for all of its

shares to capture the upside above $10.76 per share. The Company would capture

the delta between $10.76 and the effective price per share the Company paid Meteora

based on the cash wired to Meteora after closing.

For purposes of the Meteora Transaction as it actually played out, the

Company paid Meteora an effective price of $9.27 per share in the Forward.165 In the

starry-eyed upside case, the Company could capture $1.49 multiplied by the number

of Terminated Shares. With 5 million shares, the Company could receive a maximum

gain on the Forward of $7.45 million.

Note that the $7.45 million is a true gain. It is not a payment from Meteora

that must be netted against the amounts the Company paid immediately after closing

to see how the Company fared. But that gain would not arrive until 18 months after

the Merger closed. It was also highly unlikely given Meteora’s rights under the

165 Prepayment of $46,012,517.52 + Expense Reimbursement of $350,842 = $46,363,359.52.

$46,363,359.52. / 5,000,000 = $9.27

65

Forward Agreement. The original Forward Agreement could not reasonably be

viewed as a device to raise capital.

The Forward Amendment, by contrast, was a means for the Company to

generate near-term capital. It authorized the Company to make draws of $500,000

each from Meteora, and it enabled Meteora to recapture 117% of each draw through

Shortfall Sales. The Forward Amendment provided expensive capital that was highly

dilutive to the Company’s stockholders, but it was capital. The evidence does not

create a dispute of material fact regarding Meteora’s compliance with the Forward

Amendment.

Given those realities, it is the Company’s position, not Meteora’s, that could be

viewed as absurd. The Company’s understanding is so at odds with the Forward

Agreement as to suggest that the Company executed the transaction without reading

the documents or understanding their implications.

It also suggests naïveté. Meteora specializes in event-driven investments,

primarily involving SPACs. Meteora is not a supportive supplier of patient capital,

and the Meteora Transaction was never a long-term or strategic investment. Meteora

bridged the Minimum Cash Condition in exchange for rights that would turn Gordon

Gekko green with envy. Meteora wielded its rights in its own interest to maximize its

return, while inferably creating additional positive value for itself through other,

related transactions.

66

The act of contracting is presumptively a cooperative endeavor intended to

create and allocate joint surplus.166 Parties to a contract are not fiduciaries for each

other and are therefore free to act in their own interests, but they have nonetheless

committed themselves to act together in a joint effort.167 A legal regime reduces that

surplus when it forces parties to be perpetually on their guard against opportunistic

actions by their counterparties.168

166 See AMPAT/Midwest, Inc. v. Ill. Tool Works Inc., 896 F.2d 1035, 1041 (7th

Cir. 1990) (Posner, J.) (“The parties to a contract are embarked on a cooperative venture, and a minimum of cooperativeness in the event unforeseen problems arise at the performance stage is required even if not an explicit duty of the contract.”); Contrarian Funds L.L.C. v. Westpoint Int’l, Inc., C.A. No. 2617-CC, at 6 (Del. Ch. Nov. 3, 2010) (TRANSCRIPT) (“[C]ontracts are entered into for the benefit of all parties to the contract.”); 1 Williston On Contracts, § 1:1 (4th ed. 2023), Westlaw (database updated May 2026) (“Contract law is designed to protect the expectations of the contracting parties. It is intended to enforce the expectancy interests created by the parties’ promises so that they can allocate risks and costs during their bargaining. The goal of contract law is to hold parties to their agreements so that they receive the benefits of their bargains.”); Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract Law, 113 Yale L.J. 541, 552–54 (2003) (“Bargaining power . . . is exercised in the division of the surplus . . . . Parties jointly choose the contract terms so as to maximize the surplus . . . .”).

167 ArchKey Intermediate Hldgs. Inc. v. Mona, 302 A.3d 975, 1005 (Del. Ch.

2023); see Libeau v. Fox, 880 A.2d 1049, 1056–57 (Del. Ch. 2005) (alluding to the “wealth-creating and peace-inducing effects of civil contracts”), aff’d in part, rev’d in part on other grounds, 892 A.2d 1068 (Del. 2006). See Schwartz & Scott, supra, at 544 (“[C]ontract law should facilitate the efforts of contracting parties to maximize the joint gains (the ‘contractual surplus’) from transactions.”); Gerrit De Geest, N Problems Require N Instruments, 35 Int’l Rev. L. & Econ. 42, 46 (2013) (“[T]he fundamental goal of contract law [is] to maximize the joint surplus of the parties . . . .”); Jeffrey L. Harrison, A Case for Loss Sharing, 56 S. Cal. L. Rev. 573, 594 (1983) (“Partnership law and contract law are both designed to foster the sharing of a jointly created surplus.”).

168 See Mkt. St. Assocs. Ltd. P’ship v. Frey, 941 F.2d 588, 594 (7th Cir. 1991)

(Posner, J.) (“Before the contract is signed, the parties confront each other with a natural wariness. Neither expects the other to be particularly forthcoming, and

67

For this reason, as a matter of black-letter law, “[e]very contract imposes upon

each party a duty of good faith and fair dealing in its performance and its

enforcement.”169 Delaware law likewise recognizes that an implied covenant of good

faith and fair dealing “attaches to every contract.” 170 That covenant applies even

when a party possesses a discretionary right: “A party has wide discretion within

which to wield a discretionary right consistent with the parties’ understandings from

their original bargaining positions. A party obviously can wield a discretionary right

to promote contractual goals and create joint surplus. Just as obviously, a party can

wield a discretionary contractual right to protect its own interests.”171 “But a party

cannot wield a discretionary contractual right like a mafia gangster by using it to

inflict harm on the counterparty unless the counterparty does what it wants.”172

therefore there is no deception when one is not. Afterwards the situation is different. The parties are now in a cooperative relationship the costs of which will be considerably reduced by a measure of trust.”); id. at 595 (“The parties want to minimize the costs of performance. To the extent that a doctrine of good faith designed to do this by reducing defensive expenditures is a reasonable measure to this end, interpolating it into the contract advances the parties’ joint goal.”).

169 Restatement (Second) of Contracts § 205 (A.L.I. 1981), Westlaw (database

updated Oct. 2024).

170 Dunlap v. State Farm Fire & Cas. Co., 878 A.2d 434, 442 (Del. 2005).

171 Guilbeau v. Footprint Int’l Holdco, Inc., 358 A.3d 248, 279–80 (Del. Ch.

2026).

172 Calumet Cap. P’rs LLC v. Victory Park Cap. Advisors, LLC, 35 A.3d 88, 131

(Del. Ch. 2026).

68

Some contracts, however, are zero sum. The implied covenant still applies to

those contracts (and to be clear, the implied covenant is not at issue in this motion),

but the nature of the contract matters for purposes of a party’s reasonable

expectations.

Through the Transaction Agreements, the Company entered into a zero-sum

relationship with Meteora. A frog must account for a scorpion’s character,

particularly when the frog has sophisticated lawyers and the scorpion lays out what

it can do in detailed agreements.

The Company cannot escape the Forward Agreement’s clear and unambiguous

terms by claiming that the outcome is absurd. Impressively one-sided, yes. Absurd,

no. Meteora is entitled to a declaratory judgment that it did not breach the Forward

Agreement by selling shares by means other than Shortfall Sales or the Early

Termination Option.

III. CONCLUSION

Meteora’s motion for summary judgment is granted. The Company breached

the Subscription Agreement by failing to register the Subscribed Shares or make

them available for resale under Rule 144. Meteora is entitled to a decree of specific

performance directing the Company to make the Subscribed Shares available for

resale under Rule 144. Meteora did not breach the Forward Agreement by selling

shares outside of a Shortfall Sale or the Early Termination Option.

69