Vale Ventures IA LLC v. Gray Jay Management Investments, LLC

majority opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

VALE VENTURES IA LLC, )

)

Plaintiff, )

)

v. ) C.A. No. 2022-1100-NAC

)

GRAY JAY MANAGEMENT

)

INVESTMENTS LLC,

)

Defendant. )

POST-TRIAL MEMORANDUM OPINION

Date Submitted: April 9, 2026

Date Decided: October 21, 2026

S. Mark Hurd, Elizabeth A. Mullin Stoffer, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware; Mike Stenglein, Matthew Vandenberg, King & Spalding LLP, Austin, Texas; Counsel for Plaintiff Vale Ventures IA LLC.

Andrew H. Sauder, Daniel S. Atlas, Matthew R. Conrad, Dailey LLP, Wilmington, Delaware; M. Scott Barnard, Matthew V. Lloyd, Shannon Glasscock, Akin Gump

Strauss Hauer & Feld LLP, Dallas, Texas; Counsel for Defendant Gray Jay

Management Investments, LLC.

COOK, V.C.

In 2019, a private equity firm purchased an oilfield saltwater disposal company

operating in the American southwest. Like many similar deals, the private equity

firm sought to ensure operational continuity and leverage prior management’s

expertise by retaining certain key executives. The private equity firm also asked

those executives to invest in the post-acquisition entity—which they agreed to do via

another entity formed for that purpose. Due to the transaction’s unique financing

structure, the sides committed to a staggered investment structure tied to the private

equity firm’s repayment of a seller note used to help fund the acquisition. The

document memorializing the investment agreement enumerates a series of

circumstances under which the executives’ obligation automatically terminates.

After the private equity acquisition, the saltwater disposal business struggled

due to a series of micro- and macroeconomic factors. As a result, the private equity

company risked defaulting on the loans it used to finance the transaction. Ultimately,

the private equity firm entered a new transaction whereby it exchanged the saltwater

disposal business for a minority stake in a competitor and the full repayment of the

maturing debt. Afterward, the private equity firm demanded that the executives

fulfill their remaining investment obligation. The executives refused, insisting that

the transaction the private equity firm used to pay its debt caused the investment

agreement’s termination or excused their performance. The private equity firm filed

this suit seeking to enforce the executives’ investment obligation, through the

executives’ investment entity. In this post-trial decision, the Court concludes that

the investment company breached its investment obligation and that its affirmative

defenses do not excuse its non-performance. Accordingly, the Court will enter

judgment for Plaintiff.

I. FACTUAL BACKGROUND

The facts discussed herein are drawn from the extensive post-trial record. 1

Having evaluated the trial evidence, the Court makes the following findings of fact. 2

A. The Parties, Relevant Non-Parties, And Vale’s Acquisition Of OWL

Plaintiff Vale Ventures IA LLC (“Vale”) is a Delaware limited liability company

(“LLC”) ultimately owned by non-party Instar Asset Management (“Instar”), a

Canadian private equity company. 3 Instar formed Vale in August 2019 to facilitate

its purchase (“Transaction”) of the membership interests of non-parties Owl Asset Co.

1, LLC, OWL Lea County LLC, and OWL WestWater LLC (collectively, “OWL”). 4

OWL operates in the saltwater disposal business, handling the toxic “brine” that is a

1 Citations to “Dkt.” refer to the docket in this matter. Citations to “JX” refer to the parties’ joint trial exhibits. Citations to “Tr.” refer to the Trial Transcript. See Dkt. 238; Dkt. 239; Dkt. 240. Citations to “PTO” refer to the parties’ joint Pre-Trial Order. See Dkt. 227.

2 See Stercula v. Wengert, 2025 WL 1881783, at *4–5 (Del. Ch. July 8, 2025) (“[I]n a

bench trial, the Court is the finder of fact and must weigh the credibility of each witness— fact and expert alike.”). Unless otherwise noted, the parties stipulated to the following facts or proved them by a preponderance of the evidence. See Buck v. Viking Hldg. Mgmt. Co. LLC, 2024 WL 4352368, at *7 (Del. Super. Sept. 30, 2024) (“In a bench trial, the judge . . . must assess the credibility of each witness and determine the weight given to the testimony. After reviewing all the evidence presented, the court in its discretion as the fact finder is free to accept or reject any and or all sworn testimony.” (internal quotation marks omitted)).

3 PTO ¶ 6; Tr. (Smith) at 251.

4 PTO ¶ 12; Tr. (Smith) at 11. See also JX005 (“Vale LLC Agreement”).

byproduct of extracting oil and natural gas via hydraulic fracturing. 5 Instar

indirectly owns Vale through its control of the non-party investment vehicle

Oceanides Holding (“Oceanides”). 6 After the Transaction, Vale controlled OWL

through Minerva Infrastructure (“Minerva”), a holding company that owns Horus

Infrastructure (“Horus”), the operating company that ran the business. 7

Defendant Gray Jay Management Investments, LLC (“Gray Jay”) is a

Delaware LLC whose members include former individual defendants Don N. Hines,

Royce Preston Carr, Jr., Thomas Christian Cooper, and Roger Johnson (collectively,

“Gray Jay Members”). 8 Cooper and Johnson founded OWL after selling a different

saltwater disposal company. 9 Prior to the Transaction, Cooper served as OWL’s CEO

and the other Gray Jay Members held key executive and operational roles. 10 The

Gray Jay Members formed Gray Jay to facilitate their investment in Vale as part of

5 Tr. (Cooper) at 435–38. Hydraulic fracturing is also referred to as “fracking.” Because the brine is “about five times saltier than seawater” and contains “chemicals, [] [] heavy metals, [] [and] hydrocarbons[,]” it needs to be injected “miles deep underneath the surface” by saltwater disposal wells, “beneath the fresh water aquifer.” Id. (Cooper) at 436– 37.

6 Id. (Smith) at 12–13 (“Oceanides is owned by a series of funds managed by Instar[.]”).

7 Id. (Smith) at 12–13; id. (Cooper) at 457.

8 PTO ¶¶ 7–11

9 Tr. (Cooper) at 438–45.

10 Id. (Cooper) at 469–70.

the Transaction. 11 Due to that investment, Gray Jay owns 1.4% of Vale’s membership

units and is the only other member besides Oceanides. 12

On September 6, 2019, Vale entered into the Transaction, agreeing to purchase

OWL for approximately $480 million. 13 That figure included cash, a $135 million

senior term loan from a third-party bank 14 secured by OWL’s assets (“Senior Debt

Agreement”), and a $93.4 million unsecured vendor promissory note (“VPN”). 15

The VPN matured April 25, 2023, six months after the Senior Debt

Agreement. 16 Under the VPN, Vale is “Borrower” and OWL AssetCo 1 Holdings, LLC

(“OWL Lender”) serves as the “Administrative Lender.” 17 OWL’s pre-Transaction

private equity partner, NGP, controlled the OWL Lender and had ultimate decision

11 Id. (Cooper) at 475–76. See also JX016 (“Gray Jay LLC Agreement”).

12 Tr. (Smith) at 17; id. (Cooper) 456–57.

13 PTO ¶ 12

Tr. (Johnson) at 672; JX018 (“Senior Debt Agreement”). The Senior Debt

Agreement also established a $45 million revolving credit facility. JX018.

15 JX020 (“VPN”). Vale originally sought to finance the entire Transaction cost without taking the VPN; yet Vale had to turn to the sellers when other financing fell through. Tr. (Cooper) at 458–59; id. (Johnson) at 670–72.

16 VPN §§ 1.01, 2.02; Senior Debt Agreement § 1.1 (defining “Term Loan Maturity

Date” as “October 25, 2022[.]”). Notably, the VPN was at the Vale level of the postTransaction enterprise, while the Senior Debt Agreement was at the Horus level as Horus held the OWL Assets securing the senior debt. See Senior Debt Agreement; VPN.

17 VPN at Preamble, § 1.01. Vale did not actually receive any funds under the VPN. Instead, the VPN constituted “seller financing” such that “it was part of the purchase price that was just unpaid.” Tr. (Cooper) at 623–24. Once the VPN was paid off, funds flowed from the OWL Lender to its three members, including OWL’s pre-Transaction private equity partner NGP and a group called Palo Alto SWD Investors LP. Id. (Cooper) at 445–48, 623– 24. Palo Alto SWD Investors LP had about 60 investors including Cooper and Johnson, such that when the VPN was repaid, they personally received funds. Id. (Cooper) at 624.

making authority for the lenders under the VPN. 18 Several provisions of the VPN

are central to the parties’ dispute. Section 2.03 governs Vale’s ability to prepay the

VPN. 19 Section 7.01 lists various circumstances that constitute an “Event of Default”

under the VPN, with several limiting Vale’s ability to dispose of OWL or its assets. 20

In turn, Section 7.02 details the lenders’ remedies if an event of default occurs,

including the ability to accelerate the VPN. 21

The parties memorialized the Transaction’s substantive terms in a

Membership Interest Purchase Agreement (“MIPA”). 22 The MIPA designated certain

OWL individuals, including Cooper, Johnson, Hines, and Carr, as “Key Employees” 23

whose post-Transaction employment was essential “to ensure continuity of

operations.” 24 Accordingly, the Gray Jay Members each executed materially identical

employment agreements on the same day the parties signed the MIPA (“Employment

18 Id. (Cooper) at 624–25

19 VPN § 2.03.

20 Id. § 7.01.

21 Id. § 7.02.

22 PTO ¶ 13; JX014 (“MIPA”).

23 MIPA at Schedule 1.1.

24 Tr. (Smith) at 35–37. The MIPA stated that Vale’s willingness to enter the Transaction was contingent upon the Key Employees’ employment. MIPA at Recitals; see Tr. (Smith) at 36–37.

Agreements”). 25 Under those Employment Agreements, Cooper served as OWL’s

post-Transaction CEO, with Johnson as Chief Commercial Officer. 26 The

Employment Agreements detail the various scenarios in which the Key Employee or

OWL can terminate employment. The employee can resign for “Good Reason” if there

is “a material diminution in [the individual’s] . . . compensation or [] authority, duties

and responsibilities with [OWL].” 27 Conversely, OWL can terminate for “Cause” if

the employee commits a “material breach of th[e] [Employment] Agreement or . . . an

act of gross negligence, willful misconduct, or breach of fiduciary duty[.]” 28

Beyond ensuring operational continuity through the Employment Agreements,

Instar sought to create “alignment” between itself and the Key Employees concerning

OWL’s post-Transaction operations. 29 Instar requested that the Key Employees

JX011 (Johnson’s Employment Agreement); JX012 (Cooper’s Employment

25 E.g.,

Agreement). Those agreements provide for three primary forms of compensation including “annual awards under [OWL’s] long-term incentive compensation plan[.]” E.g., JX011 § 3(c).

26 See id.; JX012; Tr. (Cooper) at 470.

27 JX011 §§ 5(b)(i), 14(j).

The employees could also quit “at any time and for any

reason, or no reason at all, upon thirty [] days’ advanced written notice to [OWL].” Id. § 5(b)(ii).

28 Id. §§ 5(c)(i), 14(d).

OWL could also terminate the Key Employees “for convenience

at any time and for any reason, or no reason at all, upon not less than thirty [] days’ written notice[.]” Id. § 5(c)(ii).

29 Tr. (Smith) at 47, 62, 76–77. Vale’s President, Greg Smith, testified that creating that “alignment [was] fundamental” to the Transaction’s long-term success to (1) ensure an “alignment of interest”; (2) leverage Key Employees’ “relationship . . . with key customers, suppliers, and regulators”; (3) promote “the continuity of the business”; and (4) prevent a “pump and dump” by the sellers. Id. (Smith) at 9, 63, 77.

make a significant equity investment in Vale. 30 The Gray Jay Members agreed and

formed Gray Jay to pool and facilitate their investment. 31 In the Gray Jay LLC

Agreement the Gray Jay Members agreed to make “[c]apital [c]ontributions . . . when

requested by the Managers [of Gray Jay] pursuant to a capital call notice” to fund

their investment in Vale. 32

The parties memorialized the commitment to invest in Vale in an Equity

Commitment Letter (“ECL”). 33 Critically, only Vale and Gray Jay signed the ECL;

the Gray Jay Members are not individual parties to that agreement. 34 The ECL’s

terms are central to the parties’ dispute. 35 Under the ECL, Gray Jay agreed to

purchase $10 million in Vale equity securities in a staggered investment “subject only

to the conditions set forth [t]herein[.]” 36 Specifically, Gray Jay committed to invest

30 Id. (Cooper) at 473–74.

31 Id. (Cooper) at 475–76. See also Gray Jay LLC Agreement.

32 Gray Jay LLC Agreement § 6.1(b).

33 See JX013 (“ECL”).

Vale and Gray Jay executed the ECL on September 6, 2019. Id.

at 1. The ECL has a Delaware choice of law and forum selection clause. Id. at 3–4.

34 Id. at Signatures.

35 See Dkt. 171 (“SAC”) ¶¶ 4–5, 7, 20–27, 43–45, 48–52, 57.

36 ECL at 1; PTO ¶¶ 16–17. The ECL allowed Gray Jay to buy Vale securities “at a cash purchase price equal to the purchase price [] [] at the [Transaction’s] Closing, unless [Vale] has more recently issued Securities at a more favorable purchase price and in such instance, [Gray Jay’s] purchase price shall be the lower of such amounts.” ECL at 1.

$2 million when the Transaction closed and up to $8 million following, and in

proportion to, Vale’s repayment of the VPN. 37

Recognizing that Vale’s business could change over time, Gray Jay secured

several protections in the ECL. 38 Namely, Gray Jay’s obligation to purchase

additional Vale securities:

will terminate automatically and immediately upon the valid

termination of the MIPA in accordance with its terms, the bankruptcy

or insolvency of [Vale], upon any default and acceleration of the [VPN]

or at such point as InstarAGF Asset Management Inc., together with

[Vale] and their respective affiliates, ceases to hold more than fifty

percent (50%) of the issued and outstanding [Vale] [s]ecurities. 39

Additionally, Vale agreed in the ECL that:

(a) no remedy, recourse or right or recovery hereunder . . . may be had

against any direct or indirect, prior, current or future securityholder,

partner, manager or affiliate of [Gray Jay] . . . whether by the

enforcement of any judgment or assessment or by any legal or equitable

proceeding . . . and (b) no personal liability whatsoever will attach to, be

imposed on or otherwise be incurred by any [such person] under this

letter agreement . . . or for any claim based on, in respect of or by reason

of such obligations or by their creation. 40

The ECL also states that:

(i) under no circumstances shall the maximum liability of [Gray Jay]

hereunder exceed [$10 million] . . . less any [purchase of Vale securities]

made by [Gray Jay] for any reason; and (ii) under no circumstances shall

37 ECL at 1; PTO ¶¶ 16–17.

38 See ECL at 2–3; Tr. (Johnson) at 685 (“[B]ecause they needed the [VPN], which

caused a delay in us getting paid, which further [] [] caused a delay in us putting money in, there was concern that our commitment today would not mirror, at the end of the day, what we were thinking we were getting into.”).

39 ECL at 2.

40 Id.

[Gray Jay] be liable for any special, incidental, consequential, indirect,

exemplary, or punitive damages. 41

In accordance with the ECL’s terms, Gray Jay purchased $2 million in Vale securities

after the Transaction closed. 42 On December 19, 2019, Gray Jay admitted more

investors and purchased an additional $2.875 million in Vale securities, bringing its

total investment under the ECL to $4.875 million. 43

B. The Post-Transaction Business

OWL underperformed in 2020 and 2021. 44 A variety of macroeconomic factors

contributed to OWL’s poor performance, including (1) the COVID-19 pandemic’s

disruption of global oil markets, (2) an OPEC price war which sent oil prices negative

for the first time in history, and (3) Texas winter storm Uri. 45 Vale and Instar also

ascribed OWL’s post-Transaction struggles to Cooper and Johnson’s poor

management. 46 Instar’s CEO, Greg Smith, testified that Cooper and Johnson (1)

were unable to retain OWL’s biggest client, Concho; (2) “dramatically overpaid” for a

series of acquisitions; (3) engaged in several “related-party transaction[s]”; and (4)

41 Id. at 2–3.

42 See JX017; JX214.

43 PTO ¶¶ 25, 30; see Dkt. 215 at 3.

44 See Tr. (Smith) at 50–52, 253–58; id. (Cooper) at 505–09; id. at (Johnson) 692–95.

45 See id. (Smith) at 253–58; id. (Cooper) at 505–09; id. (Johnson) at 692–95.

46 See, e.g., id. (Smith) at 50–52.

implemented a culture “of ‘bullying’ and ‘gaslighting’” other employees. 47

Unsurprisingly, Cooper and Johnson dispute those assertions. 48

In August 2021, a low-pressure event (“Madera Event”) occurred at the Madera

SWD Well #1 in New Mexico (“Madera Well”). 49 The low-pressure at the Madera Well

occurred contemporaneously with “a geyser spewing [brine] water” at a relatively

nearby “shallow, plugged, old water well.” 50 The Madera Event had an immediate

negative impact on OWL’s business, causing the Madera Well to shut down for

several months for repairs. 51 The extent of the Madera Event was not immediately

apparent; it was unclear whether all four of the Madera Well’s protective casing

layers failed and the brine wastewater being pumped deep underground via the well

had escaped the well and significantly contaminated the surrounding water table. 52

OWL reported the Madera Event to the New Mexico Oil Conservation Division

(“OCD”), a state regulatory body in charge of overseeing oil production and its

47 Id.

48 Cooper and Johnson insist (1) OWL and Instar jointly agreed not to pursue Concho’s

business, which required a $200 million payment; (2) there was no bullying or gaslighting and any evidence to the contrary was fabricated; and (3) all transactions they approved were in OWL’s best interest. See id. (Cooper) at 500–05, 508-10, 534–35; id. (Johnson) at 694–96, 715.

49 See, e.g., JX087; Tr. (Smith) at 258.Two Horus subsidiaries, non-parties OWL Madera SWD, LLC and OWL SWD Operating, LLC, own and operate the Madera Well, respectively. JX074 at Schedule 3.3(c). The Madera Well is in the Permian Basis, which is where OWL operates. E.g., Tr. (Cooper) at 436.

50 E.g., Tr. (Johnson) at 697.

51 See JX061; JX082; JX083; Tr. (Johnson) at 696.

52 See, e.g., JX087; JX212.

environmental impact. 53 Under OCD’s oversight, OWL investigated the Madera

Event and repaired the Madera Well, while also regularly discussing the matter

internally. 54 Notably, the contemporaneous record presented at trial does not

describe the Madera Event as a catastrophic or unprecedented environmental

disaster, or indeed as anything approaching such an event. 55

On January 18, 2022, the OCD cleared the Madera Well to resume

operations. 56 The Madera Event did not result in any further action, until late 2023

as described below. 57

Although the parties dispute their cause, OWL’s post-Transaction financial

difficulties prompted Vale to hire Greg Pollard in September 2021 to help address the

company’s debt and liquidity concerns. 58 Hiring Pollard exacerbated existing tension

between Cooper and Johnson on one hand and Instar and Vale on the other. 59 On

October 13, 2021, Cooper and Johnson each provided notice that Pollard’s supposed

usurpation of their roles at OWL gave them “good reason” to terminate their

53 See e.g., Tr. (Smith) at 193, 266; id. (Cooper) at 437–38.

JX070; JX080; JX081; JX084; JX086; JX087; JX088; JX090; JX091; JX092;

54 See

JX095; JX097; JX098; JX099; JX100.

JX070; JX080; JX084; JX086; JX087; JX090; JX091; JX092; JX095; JX097;

55 See

JX098; JX099; JX100.

56 See Tr. (Smith) at 193–97; JX114 (“Injecting 25K at Madera right now!”).

57 See, e.g., Tr. (Smith) at 195.

58 See JX082. The parties dispute whether Pollard’s role was liquidity consultant or chief restructuring officer. See Tr. at 242–44, 527–28, 587, 709–10.

59 See, e.g., id. (Smith) at 244–46; id. (Johnson) at 709–11; JX351; JX352.

employment. 60 Instead of invoking the 30-day cure period, 61 Vale purported to

terminate Cooper and Johnson for cause. 62 Ultimately, Cooper, Johnson, and Vale

settled on December 23, 2021, with Vale’s termination of Cooper and Johnson being

deemed termination for “convenience.” 63

C. The Pilot Transaction

The challenges discussed above left OWL financially distressed. 64 By August

2021, OWL was having difficulty paying vendors and was at risk of violating the

Senior Debt Agreement’s debt-to-equity ratio covenant. 65 While Vale negotiated for

additional headroom on the covenant, it faced a bigger problem—the soon-maturing

$270 million in debt from the Senior Debt Agreement and VPN. 66 Efforts to refinance

were unsuccessful as lenders felt OWL was overleveraged and did not want to extend

60 JX351; JX352.

61 E.g., JX011 § 5(b)(i).

62 See JX353.

63 JX103; see Tr. (Smith) at 43–44, 52–53; id. (Cooper) at 535–36.

Cooper and Johnson

received the same severance to which they would have been entitled if they resigned for “good reason” under the Employment Agreements. See, e.g., JX103.

64 See, e.g., JX059 (discussing OWL’s “[n]egative EBITDA” forecast, “increased cash

usage[,]” and “long-term risk to customer contracts[.]”); JX073 (highlighting micro and macro effects that “have led to a trough in EBITDA and covenant issues in the near term and [the] need to address maturing senior debt in the next twelve months.”).

65 JX059; JX073.

66 See, e.g., Tr. (Johnson) at 700–03 (“the senior debt was maturing at or less than 12

months out . . . and then we had the vendor loan note right behind that.”).

the Senior Debt Agreement’s maturity date beyond the VPN’s. 67 After failing to

extend the VPN’s maturity date, 68 Vale began exploring selling OWL as a means of

paying off the VPN and Senior Debt Agreement. 69 OWL’s deteriorating financial

condition caused the company to adopt a “merger or bust” strategy, believing that “[i]f

[they] didn’t get [a] merger done . . . OWL was going to be no more.” 70

Vale explored a variety of strategic alternatives to address its financial

problems. 71 Throughout the merger exploration process, Vale executives considered

how a potential deal could impact Gray Jay’s obligation to purchase securities under

the ECL. 72 Valuation disputes and potential acquirors’ concerns regarding OWL’s

debt killed most potential interest in a deal at the starting gate. 73

In March 2022, OWL discussed a potential deal with Pilot Travel Centers LLC

(“Pilot”), whereby Pilot’s saltwater disposal subsidiary, Pilot Water Solutions

67 See JX073; JX076; Tr. (Cooper) at 523–24; id. (Johnson) at 703–04.

68 See Tr. (Smith) at 278; id. (Johnson) at 704–05.

69 See, e.g., id. (Johnson) at 705–07.

70 Id. (Hines) at 807–08. See also id. (Hines) at 809 (“If [OWL] wouldn’t have got the

merger done . . . OWL would have defaulted on our debt. We were insolvent.”). In the first half of 2022 OWL’s financial condition continued to deteriorate, and by June it had less than $3 million cash on hand and owed over $9 million to vendors who were “calling every day.” Id. (Hines) at 807, 853–54.

71 E.g., id. (Cooper) at 524–26; id. (Johnson) at 705–06; JX115.

72 See JX117; JX118; JX157.

73 See Tr. (Cooper) at 526; id. (Johnson) at 706.

(“PWS”), would acquire OWL or its assets. 74 Critically, a deal with Pilot “didn’t

require refinancing[,]” making it the only viable option. 75 OWL vigorously pursued

the Pilot deal, using a “light-touch” in diligence, 76 being “very careful” with what it

told PWS, 77 and “pulling every lever [it] could to boost EBITDA[.]” 78 On April 27,

2022, Instar and OWL signed a letter of intent with Pilot detailing a potential

combination of PWS and OWL (“Pilot Transaction”). 79 Thereafter, the Pilot

Transaction parties began exchanging draft purchase agreements. 80

On August 26, 2022, Minerva, Horus, and PWS executed a Contribution

Agreement (“Contribution Agreement”) detailing the Pilot Transaction’s terms. 81

Under the Contribution Agreement, PWS received Minerva’s interest in OWL in

exchange for (1) providing Minerva a 20.5% passive interest in PWS and (2) agreeing

74 See, e.g., JX119.

75 See id. (Hines) at 835–36; JX119 (OWL noting Pilot “understands our refinancing

timeline and is working to get ahead of that.”); JX123 (emphasizing that “[r]efinancing debt is not a condition precedent to closing” a deal with PWS).

76 JX123.

77 E.g., Tr. (Hines) at 816–17.

Indeed, OWL’s general counsel told Hines, OWL’s thenpresident, that they did not need to inform PWS or Pilot about the Madera Event. See id. (Hines) at 817–19.

78 E.g., id. (Hines) at 808–09.

79 JX129.

80 See, e.g., JX134; JX135.PWS’s initial draft contemplated a transaction between PWS, Vale, and Vale’s Members. See JX134. Instar, however, pushed for the transaction to occur “downstream of Vale.” JX144. Doing so would ensure Instar “continue[d] to hold at least 50% of Vale’s outstanding units” such that “no change of control [] occurred per the ECL.” JX156.

81 See JX151 (“Contribution Agreement”).

to pay off the VPN. 82 Namely, “at the Closing Minerva agree[d] to contribute the

Contributed Interest to [PWS] . . . and [PWS] agree[d] to assume the [VPN], admit

Minerva as a member and issue Minerva a limited liability company interest in

[PWS].” 83 PWS would then pay off the VPN “by wire transfer of immediately

available funds” sent “[i]mmediately following the Closing[.]” 84

After signing the Contribution Agreement, Vale notified the OWL Lender’s

private equity sponsor, NGP, about the Pilot Transaction. 85 NGP informed Cooper

and Johnson about the Pilot Transaction and forwarded a draft payoff letter from

Vale. 86 On September 23, 2022, Vale sent a final repayment notice to the OWL

Lender (“Repayment Notice”) stating that:

(a) one or more Affiliates of [] [Vale] has entered into an agreement for

the disposition, directly or indirectly, of [Horus] [], and (b) [PWS], the

acquirer of [Horus], has agreed, concurrently with the consummation of

th[at] Transaction, to assume, without relieving the Borrower of any

liability thereunder, the Borrower's payment obligations under the

[VPN] and pay in full all outstanding principal and interest

thereunder. 87

The Repayment Notice included an attached “Payoff Letter” confirming that the VPN

would be considered repaid if PWS deposited $120,639,493 “by wire transfer in

82 See id. §§ 1.01–03, 1.05

83 Id. § 1.01.

84 Id. § 1.05(c).

85 See Tr. (Cooper) at 538–39; id. (Johnson) at 721–22.

86 JX155; JX280.

87 JX161.

immediately available funds” to the OWL Lender “by 3:00 P.M., Dallas, Texas time,

on September 30, 2022.” 88 On September 29, 2022, the OWL Lender sent Vale’s

counsel executed signature pages for the Repayment Notice and Payoff Letter, to be

released when the VPN was repaid. 89

On September 30, 2022, the Pilot Transaction closed. There is no dispute that

PWS repaid the VPN the same day, 90 but the parties vigorously dispute the timing

and sequence of events concerning the closing. 91 Vale’s deal counsel and counsel for

the OWL Lender exchanged emails throughout the day. 92 At 9:49 a.m., Vale’s counsel

emailed that “we had a few delays but just closed and understand wires are being

sent now. I will check for a FedWire reference and send when available.” 93 After the

OWL Lender’s counsel followed up, Vale’s deal counsel sent a further email at 4:31

p.m. CT attaching a wire transfer confirmation. 94 That confirmation states the

payment request was entered at 10:08 a.m. CT, approved at 2:06 p.m. CT, released

by PWS’s bank at 2:37 p.m. CT, received by OWL Lender’s bank at 2:37 p.m. CT, and

88 Id.

89 JX169.

90 PTO ¶¶ 33–34.

91 See, e.g., id. ¶ 34 (“The parties dispute whether the payment was deposited by wire

transfer in immediately available funds before the 3:00 P.M. Dallas, Texas time identified on the Payoff Letter.”).

92 JX350; see Tr. (Smith) at 208–12.

93 JX350.

94 See id.; JX187.

confirmed by OWL Lender’s bank at 3:32 p.m. CT. 95 Notwithstanding any contrary

suggestion in the documents, Instar’s CEO, Greg Smith, insisted at trial that “the

money flow[ed] first”—meaning PWS repaid the VPN before the Pilot Transaction

closed. 96 In any event, no one objected to PWS’s repayment of the VPN at the time. 97

D. Gray Jay Refuses To Purchase More Vale Securities And Madera

Resurfaces

With the VPN repaid, Vale sent Gray Jay a letter on October 3, 2022,

demanding that Gray Jay perform its obligation to purchase additional Vale

securities under the ECL. 98 Gray Jay responded two days later asserting that it had

no further obligations under the ECL. 99 Thereafter the parties exchanged a series of

letters taking various positions on whether Gray Jay was still obligated to perform

95 JX187. Plaintiff’s expert testified that “domestic transfer[s]” like the one used to pay off the VPN “would [use] the Fed wire system, which settles instantaneously,” and is “generally considered immediately available funds[.]” Tr. (Spindler) at 998–99; JX272. Gray Jay did not call an expert witness to rebut Spindler’s testimony or provide a competing expert report.

96 Tr. (Smith) at 120, 156, 211–20.

97 Id. (Cooper) at 478–79, 615; id. (Johnson) at 679, 754–57; id. (Hines) at 828.

98 JX179.

99 JX181. The speed, thoroughness, and unequivocal nature of Gray Jay’s welldeveloped response is consistent with Johnson’s testimony that Gray Jay was aware of the Pilot Transaction before it occurred and was discussing how to respond. See, e.g., Tr. (Johnson) at 780–82.

the ECL. 100 Ultimately, Gray Jay did not purchase additional Vale securities and

Gray Jay’s managers did not issue any related capital call. 101

Vale was relying on the anticipated capital infusion from selling Gray Jay

securities under the ECL to pay expenses like the Pilot Transaction’s closing costs. 102

After Gray Jay refused to perform, Vale secured covering performance via a relatedparty loan from Oceanides with a 13% annual interest rate memorialized in an

October 5, 2022, promissory note (“Promissory Note”). 103 On May 28, 2025, after over

two years with no repayment, Vale and Oceanides amended the Promissory Note to

raise the interest rate to 20%. 104

In August 2023, long after the Madera Well resumed operations, OCD sent a

letter to OWL initiating a further investigation of the Madera Event’s environmental

impact. 105 PWS, OWL’s owner post-Pilot Transaction, corresponded with ODC

100 See JX185; JX188; JX195; JX196.

101 PTO ¶¶ 41–42; see Tr. (Cooper) at 495–96, 556–57.

102 See, e.g., Tr. (Smith) at 177–81.

103 JX180. See also Tr. (Spindler) at 1003–05 (Plaintiff’s expert testifying that the Promissory Note’s interest rate was reasonable given the “difficult lending situation”).

104 JX278.

105 JX209. See also JX273 (suggesting the two-year lag-time was highly unusual). But see JX131 (suggesting that OCD may have been considering a follow-up investigation as early as May 2022). The trial testimony suggested that OCD reopened its investigation in response to “an anonymous complaint in early 2024[.]” Tr. (Smith) at 960–62. In the course of trial and post-trial argument, Vale alluded to the idea that the anonymous complaint came from Gray Jay or the Gray Jay Members and was made to further their litigation position. Of course, given such a complaint’s anonymous nature, the record lacks evidence that would enable the Court confidently to verify or dispel that suggestion.

concerning the follow-up investigation, 106 eventually submitting a “Ground Water

Assessment Workplan” in July 2025. 107 OCD’s follow-up investigation concerning the

Madera Event remains ongoing. 108

E. Procedural History

Vale initiated this action on November 29, 2022, and filed an amended

complaint in March 2023. 109 In January 2023, Gray Jay requested that Vale

implement a litigation hold for certain employees including Jonathan Stone, an

Instar partner and President of Vale at the time of the Transaction, and Noshir Irani,

a principal at Instar and member of the OWL board until the Pilot transaction

closed. 110 In March of that year, Defendants moved to dismiss Vale’s amended

complaint, 111 which the Court partially granted on November 7, 2023. 112 In that

106 See JX212.

107 JX282.

108 See, e.g., Tr. (Smith) at 963–64, 988–89.

109 See Dkt. 1; Dkt. 22.

110 JX201; Tr. (Smith) at 227; Tr. (Irani) at 878–880, 896. Notably, at the time of trial both Stone and Irani were no longer affiliated with Instar. It is not entirely clear why they left Instar. Vale’s counsel suggested at oral argument that, at least in Irani’s case, it had something to do with competence. Given Irani’s Swiss cheese memory at deposition—video excerpts of which were then played at trial—that may be the case. But the Court’s impression after trial is that it is at least equally likely that Smith may have been a difficult boss. In any event, the reason for Stone and Irani’s departure is extraneous to resolution of the parties’ dispute.

111 See Dkt. 23.

112 See Dkt. 47.

ruling, the Court dismissed Vale’s breach of contract and implied covenant claims

against the individual Defendants as well as its alter ego claim. 113

This matter then proceeded to discovery. While discovery was ongoing,

Defendants moved for sanctions against Vale for allegedly “refusing to collect and

preserve relevant information from current and former officers and employees.” 114

The Court deferred its ruling on the motion for sanctions until after trial. 115

Defendant renewed its request for sanctions post-trial, based on supposed spoliation

of documents and text messages held by Stone and Irani. 116

With leave of Court, the parties filed motions for partial summary judgment in

early 2025. 117 While briefing on the motions for summary judgment was ongoing,

Vale sought leave to file a Second Amended Verified Complaint. 118 The Court granted

113 See id. at 102.The Court also deferred ruling on “the question of whether the Court has personal jurisdiction over defendants Hines and Carr pending jurisdictional discovery on that issue.” Id. at 102–03. The parties later conducted that discovery and provided supplemental briefing on the personal jurisdiction issue. See Dkt. 79; Dkt. 83. Ultimately, the Court granted the motion and dismissed Defendants Hines and Carr pursuant to Rule 12(b)(2) for lack of personal jurisdiction on November 26, 2024. Dkt. 125; Dkt. 147.

114Dkt. 113. Specifically, Defendants argue Vale failed to preserve key nonrecoverable text messages concerning the Pilot Transaction and Madera Event and did not conduct custodian interviews for all relevant Vale officers and employees. See generally id.

115 See Dkt. 161; Dkt. 173.

116 See Post-Trial Opp’n Br. at 31–34; Tr. (Smith) at 395–98; id. (Irani) at 908–09, 918–

19; JX246.

117 See Dkt. 165; Dkt. 167.

118 See Dkt. 164.

that unopposed request and Vale filed its operative complaint on January 30, 2025. 119

That complaint advanced three causes of action: Count I – Breach of the ECL against

Gray Jay; Count II – Breach of the Covenant of Good Faith and Fair Dealing against

Gray Jay; and Count III – Unjust Enrichment alleged in the alternative against

Cooper and Johnson. 120

After Defendants answered the SAC, 121 Vale moved to strike portions of that

Answer, arguing Defendants improperly “substantially modified past defenses and

included entirely new defenses.” 122 On April 22, 2025, the Court held oral argument

on Vale’s motion to strike and the parties’ motions for partial summary judgment. 123

Through two separate rulings, the Court denied Vale’s motion to strike and granted

both partial motions for summary judgment. 124 In its summary judgment ruling, the

Court held that (1) the ECL’s “Release Provision” barred “plaintiff’s unjust

enrichment claim against the individual defendants”; 125 (2) Vale’s insolvency “must

119 See Dkt. 170; SAC. The SAC did not add new claims, but instead (1) removed allegations concerning previously dismissed Defendants Hines and Carr, (2) deleted the causes of actions that the Court dismissed in its ruling on Defendants’ motion to dismiss, and (3) withdrew allegations that Defendants breached the Gray Jay LLC Agreement. See SAC, Ex. A.

120 SAC ¶¶ 48–63.

121 Dkt. 176.

122 Dkt. 183 ¶ 7; see id. ¶¶ 9–19. Defendants opposed that motion to strike. See Dkt. 192.

123 See Dkt. 210 (“MSJ Tr. 1”).

124 See id. at 104; Dkt. 213 (“MSJ Tr. 2”) at 19.

125 MSJ Tr. 1 at 75–87.

be measured at or before the time of Gray Jay’s funding obligation”; 126 (3) the “ECL

requires both default and acceleration to [] terminat[e]” Gray Jay’s investment

obligation; 127 and (4) “Gray Jay’s possible remaining investment obligation to

plaintiff, if any, is no greater than $5.125 million[.]” 128

The Court conducted a three-day trial on the remaining disputed issues from

September 10 to September 12, 2025. 129 While the parties proffered four expert

witnesses only one testified at trial, with the parties agreeing to rely on the reports

of the remaining three. 130 After trial, the parties submitted post-trial briefing, 131 and

the Court heard post-trial oral argument on April 9, 2026. 132

126 Id. at 87–88.

127 Id. at 88–89.

128 MSJ Tr. 2 at 6–15, 19.

129 See generally Tr.

130 See Tr. at 990–1014; PTO ¶ 52 (“The Parties agree to rely on the expert reports for

the following experts, who will not be called either live or by deposition testimony: John Kondziolka[,] Alan Ratliff[,] Chad Kronkosky[.]”). The parties’ approach at trial to experts seems highly unusual, to say the least. To state the obvious, live expert testimony is important as it allows the Court to assess an expert’s qualifications, ask questions, and observe cross examination which often tests the basis on which the expert formed his or her opinions. Here, not only did three of the parties’ experts not appear at trial, there is no evidence in the record of any of them being deposed. Nevertheless, in the pre-trial order both parties agreed to rely on the reports of the experts who did not testify and both parties cite those reports in their post-trial briefing without any objection. PTO ¶ 52; see Dkt. 247 (“PostTrial Opening Br.”) at 2 (citing JX274); Dkt. 252 (“Post-Trial Opp’n Br.”) at 50 (citing JX273).

131 See Post-Trial Opening Br.; Post-Trial Opp’n Br.; Dkt. 257 (“Post-Trial Reply Br.”).

132 See Dkt. 265 (“OA Tr.”).

II. STANDARD OF DECISION

The party alleging a breach of contract or breach of the implied covenant of

good faith and fair dealing must prove the elements of each claim by a preponderance

of the evidence. 133 Conversely, the party advancing an affirmative defense must

prove that defense by a preponderance of the evidence. 134 A preponderance of the

evidence “means proof that something is more likely than not.” 135 In a bench trial

such as this, the Court “sits as both arbiter of law and factfinder[.]” 136 As factfinder,

the Court weighs the evidence, “judge[s] the credibility of the witnesses and assign[s]

the appropriate weight, if any, to their testimony.” 137

III. ANALYSIS

Vale claims that Gray Jay breached the ECL by failing to purchase Vale

securities after the VPN was repaid. To prevail on a breach of contract claim, the

plaintiff must prove “(1) the existence of a contract; (2) the breach of an obligation

133 E.g., Diekman v. Regency GP LP, 2021 WL 537325, at *18 (Del. Ch. Feb. 15, 2021)

(citations omitted).

Basho Techs. Holdco B, LLC v. Georgetown Basho Invs., LLC, 2018 WL

134 E.g.,

3326693, at *2 (Del. Ch. July 6, 2018), aff’d sub nom., Davenport v. Basho Techs. Holdco B, LLC, 221 A.3d 100 (Del. 2019).

135 In re Coinmint, LLC, 261 A.3d 867, 888 (Del. Ch. 2021) (internal quotation marks

omitted); see Martin v. Med-Dev Corp., 2015 WL 6472597, at *10 (Del. Ch. Oct. 27, 2015) (“By implication, the preponderance of the evidence standard also means that if the evidence is in equipoise, Plaintiffs lose.” (internal quotation marks omitted)).

136 Jackson v. State, 21 A.3d 27, 38 (Del. 2011).

137 Cruz v. State, 12 A.3d 1132, 1136 (Del. 2011).

imposed by the contract; and (3) damages suffered because of the breach.” 138 Gray

Jay does not dispute that the ECL is a valid contract that requires it to purchase Vale

securities after the VPN is repaid. 139 Gray Jay admits it “declined to invest” after

PWS repaid the VPN. 140 It is axiomatic that the “non-payment of amounts due under

[a] contract” constitutes damages. 141 Indeed, Gray Jay offers no response to Vale’s

extensive argument that Gray Jay breached the ECL by not fulfilling its investment

obligation. 142 Accordingly, the Court concludes it is undisputed that Vale has proved

that Gray Jay failed to perform under the ECL.

Gray Jay argues it was not obligated to purchase additional Vale securities

under the ECL because (1) its obligation under the ECL terminated before PWS

138 Zayo Gp., LLC v. Latisys Hldgs., LLC, 2018 WL 6177174, at *10 (Del. Ch. Nov. 26,

2018).

139 See Post-Trial Opp’n Br. at 8 (“Gray Jay’s commitment under the ECL was simple:

Gray Jay would purchase an initial $2 million in Vale securities at the close of the OWL Transaction, and thereafter would purchase up to an additional $8 million [] no later than, and in proportion to, principal payments made on the V[P]N.”).

140 Id. at 29.

141 Delta Eta Corp. v. Univ. of Del., 2 A.3d 73, 2010 WL 2949632, at *1 (Del. 2010)

(TABLE).

142 Compare Post-Trial Opening Br. at 11–18 (“the evidence shows Gray Jay breached

the ECL[.]”), with Post-Trial Opp’n Br. (not responding to Vale’s breach argument). See also Raj and Sonal Abhyanker Family Tr. v. Blake, 2021 WL 2477025, at *4 n.24 (Del. Ch. June 17, 2021) (“Because [Defendant] failed to respond to th[at] argument in its answering brief, any response is deemed waived.” (citing Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999))).

repaid the VPN; and (2) its performance should be excused. 143 The Court evaluates

each argument in turn.

A. The ECL Did Not Terminate Before Gray Jay’s Obligation To Purchase

Additional Vale Securities Was Triggered

Gray Jay argues the ECL terminated under its terms before its obligation to

purchase additional Vale securities was triggered. 144 The ECL states that:

[Gray Jay’s] obligation to . . . purchase the [Vale] Securities under this

letter agreement will terminate automatically and immediately upon

the valid termination of the MIPA in accordance with its terms, the

bankruptcy or insolvency of [Vale], upon any default and acceleration of

the [VPN] or at such point as InstarAGF . . . together with [Vale] and

their respective affiliates, ceases to hold more than fifty percent (50%)

of the issued and outstanding Securities. 145

Based on that language, Gray Jay asserts that the ECL terminated because (1) Vale

defaulted under the VPN, which was then accelerated; and (2) Vale was insolvent at

the time of the Pilot Transaction. 146

“Condition-laden contracts . . . complicate the burden allocation.” 147

In disputes over contractual conditions, the Restatement (Second) of

Contracts instructs courts to look to the nature of the condition at issue.

If a condition must be satisfied before a duty of performance arises

(formerly known as a condition precedent), then the burden of proof

rests with the party seeking to enforce the obligation. If a condition

would extinguish a party’s duty of performance (formerly known as a

143 Post-Trial Opp’n Br. at 35–57.

144 Id. at 35–51.

145 ECL at 2.

146 Post-Trial Opp’n Br. at 35–51.

147 Desktop Metal, Inc. v. Nano Dimension Ltd., 2025 WL 904521, at *22 (Del. Ch. Mar.

24, 2025).

condition subsequent), then the burden of proof rests with the party

seeking to avoid the obligation. 148

The occurrence of any of the two conditions in the ECL on which Gray Jay focuses

would extinguish Gray Jay’s obligation to purchase additional Vale securities. As a

result, to prevail, Gray Jay bears the burden of proving either that a default and

acceleration under the VPN occurred or that Vale was insolvent at the time of the

Pilot Transaction.

While evaluating each argument, the Court applies well-settled principles of

contract interpretation. 149 Caselaw also suggests that the Court should strictly

enforce the terms under which an agreement “automatically and immediately

terminate[s].” 150

1. Gray Jay Did Not Carry Its Burden of Proving That A Default

And Acceleration Terminated The ECL

Gray Jay insists that its obligation to purchase Vale securities terminated

automatically upon a default and acceleration of the VPN. To prevail on that

argument “Gray Jay must establish [] the satisfaction or excuse of both conditions

that (i) there was a default under the [VPN], and that (ii) the [VPN] was accelerated,

148 Id. (quoting AB Stable VIII, LLC v. Maps Hotels and Resorts One LLC, 2020 WL

7024929, at *49 (Del. Ch. Nov. 30, 2020)) (internal quotation marks omitted).

149 See, e.g., BitGo Hldgs., Inc. v. Galaxy Digital Hldgs., Ltd., 319 A.3d 310, 322–23

(Del. 2024).

150 Realogy Hldgs. Corp. v. SIRVA Worldwide, 2020 WL 4559519, at *7–9 (Del. Ch.

Aug. 7, 2020); accord Advent Int’l, L.P. v. Servicios Funerarios GG S.A. de C.V., 2024 WL 4598884, at *10–12 (Del. Ch. Oct. 29, 2024).

at or before the time that such investment obligation arose under the ECL.” 151

Therefore, Gray Jay must prove there was a default and acceleration of the VPN

before it was repaid as part of the Pilot Transaction.

The VPN contains several provisions relevant to the question of whether there

was a default and acceleration thereunder. “Default” is an “Event of Default,” 152

which occurs when (1) “[Vale] [] fail[s] to perform or observe any term, covenant,

condition, or agreement contained in . . . Section 6.02, 153 or Section 6.03(a)[;]” 154 (2)

“[a] Change in Control [] occur[s][;]” 155 or (3) “a Fundamental Change [] occur[s].” 156

Upon an Event of Default, “the [OWL] Lender[] may by notice to [Vale] declare th[e]

[VPN] . . . to be due and payable in whole . . . and thereupon the [amounts] so

151 Dkt 207 ¶ 2(b).

152 VPN § 1.01.

153 The negative covenants in Section 6.02 include that “[Vale] will not, and will not

permit [Minerva] to . . . sell, transfer, lease, or otherwise dispose of . . . all or substantially all of its property or assets” and “[Vale] will not, and will not permit [Minerva] to, directly or indirectly sell, assign, transfer, lease, convey, or otherwise dispose of any asset or property.” Id. §§ 6.02(b)–(c).

154 Id. § 7.01(d).Section 6.03(a) reads: “Until a Repayment Event, [Vale] covenants and agrees that it will furnish to the Administrative Lender . . . [a]s soon as possible and in any event within five (5) Business Days after the occurrence of each Default, a written notice detailing such Default.” Id. § 6.03(a).

155 Id. § 7.01(j).“Change in Control” means in part when “[Minerva] shall cease (i) to be the owner of all the Capital Stock of [Horus] or (ii) to Control [Horus].” Id. § 1.01. “Control” means “the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract, or otherwise.” Id.

156 Id. § 7.01(k). “Fundamental Change” means, in part, when “[Horus and its subsidiaries] . . . dispose of or agree to . . . dispose of all or substantially all of their assets[.]” Id. § 1.01.

declared . . . shall become due and payable immediately[.]” 157 Notably, “in the case

of an Event of Default described in Section 7.01(f) . . . all of the [] amounts payable by

[Vale] hereunder, shall automatically and immediately become due and payable,

without presentment, demand . . . or other notice of any kind, all of which are hereby

waived by [Vale].” 158

Based on that language, Gray Jay argues Vale defaulted under the VPN by “(i)

permitting Minerva to merge Horus into PWS; (ii) effecting a Change of Control by

causing Minerva to give up control of Horus; (iii) effecting a Fundamental Change by

allowing Minerva and Horus to agree to dispose of all their assets; and (iv) failing to

timely report any such defaults.” 159 Importantly, none of those arguments invoke

§ 7.01(f). 160 Vale insists there was no default because “the [Pilot] [T]ransaction was

structured and executed so the VPN was paid before any change-of-control[.]” 161

Thus, the dispute concerning a possible default largely turns on whether the Pilot

157 Id. § 7.02.

158 Id. That the parties agreed to forgo any notice to accelerate the VPN in the event

of a default under § 7.01(f), but not for other types of default, suggests that the notice requirement was a material part of the parties’ bargain. See Genworth Fin., Inc. v. AIG Specialty Ins. Co., 2025 WL 688987, at *9, n.124 (Del. Super. Feb. 21, 2025) (citing City of Lewes v. Nepa, 212 A.3d 270, 279, n.37 (Del. 2019)) (endorsing the meaningful variation canon); Benchmark Invs. LLC v. Pacer Advisors, Inc., --- A.3d ---, 2026 WL 1179508, at *6 (Del. Apr. 30, 2026) (“[T]he use of different language in different sections of a contract suggests the difference is intentional[.]” (quoting Soleimani v. Hakkak, 2024 WL 1593923, at *6 n.75 (Del. Ch. Apr. 12, 2024), aff’d, 327 A.3d 1060 (Del. 2024))).

159 Post-Trial Opp’n Br. at 35–47.

160 See VPN § 7.01(f) (stating it is an Event of Default if “[Vale], [Minerva], or [Horus]

or any subsidiary of [Horus] . . . shall become subject to a Bankruptcy Event[.]”).

161 Post-Trial Reply Br. at 13–14; see also Post-Trial Opening Br. at 30–35.

Transaction closed before PWS repaid the VPN. 162 Indeed, Vale seems to

acknowledge that conclusion in its post-trial briefing. 163

The evidence is mixed concerning whether PWS repaid the VPN before the

Pilot Transaction closed. The Contribution Agreement’s text suggests that PWS

repaid the VPN “[i]mmediately following the Closing[.]” 164 Emails between Vale’s

Pilot Transaction counsel and the OWL Lender support that suggestion. 165 Yet

Smith, who was not a member of the deal team, 166 testified that based on his prior

experience “[t]he money flow[ed] first.” 167 Vale focuses on evidence suggesting that

PWS repaid the VPN before the 3:00 p.m. Dallas time deadline in the Repayment

Notice. 168 True, the weight of trial evidence indicates that PWS repaid the VPN

162 Namely, if the Pilot Transaction closed before PWS repaid the VPN, (1) Minerva

ceased to “Control” Horus; and (2) Vale allowed Minerva to dispose of assets, its membership interest in Horus.

163 See Post-Trial Opening Br. at 40 (“[E]ven if there was any technical default . . . .”).

164 Contribution Agreement § 1.05(c).

165 JX350 (“[J]ust closed and understand wires are being sent now.”).

At trial, Instar’s

CEO explained that email as a “misstate[ment]” from a “junior attorney[,]” but did not offer contrary documentary evidence or testimony from someone with firsthand knowledge of the Pilot Transaction’s closing timeline. Tr. (Smith) at 362–63.

166 See Tr. (Smith) at 285, 417–18. Indeed, the only member of the Pilot Transaction

deal team that testified was Nosh Irani—who did not recall most of the details and did not come off as a credible witness. Tr. (Irani) at 878–919.

167 See Tr. (Smith) at 117–22, 142–46, 154.

168 See Post-Trial Opening Br. at 33–35; Post-Trial Reply Br. at 13–14.

before the 3:00 p.m. deadline. 169 Yet, whether PWS met the deadline does not inform

whether it repaid the VPN before the Pilot Transaction closed. The Court need not

resolve that factual question, however, because even if a default occurred there was

no acceleration.

Gray Jay asserts that the ECL’s acceleration condition was fulfilled for two

reasons. 170 First, Gray Jay argues the “ECL’s acceleration condition was satisfied

when the Payoff Letter effectively advanced maturity of the V[P]N.” 171 Second, Gray

Jay contends that “the ECL’s acceleration condition is excused because Vale induced

the [OWL] Lender not to act.” 172 Both arguments fail.

The Payoff Letter did not accelerate the VPN because it was a prepayment not

an acceleration. Section 2.03 of the VPN concerns “[p]repayments” and states that:

[Vale] may, from time to time upon the delivery of an irrevocable

Repayment Notice (stating the proposed date of repayment . . . and the

aggregate principal amount of the repayment) to the Administrative

Lender by no later than 3:00 p.m. (Dallas, Texas, time) at least five []

169 The wire transfer summary shows that payment was “Entered” at 10:08 AM, “Approved” at 2:06 PM, “Released” at 2:37 PM, and “Received” at 2:37 PM. JX187. Plaintiff’s expert James Spindler opined that PWS’s repayment occurred over “the Fed wire system, which settles instantaneously [and is] generally considered immediately available funds, as opposed to something like a check . . . or ACH transactions, which take[] days to settle.” Tr. (Spindler) at 998–99; see JX272. Although Johnson testified there was “zero” “question in [his] mind that the money on September 30 came in after 3:00 PM,” he admitted that belief was not based on first-hand knowledge. Tr. (Johnson) at 732–47.

170 See Post-Trial Opp’n Br. at 39–47.

171 Id. at 39–42.

172 Post-Trial Opp’n Br. at 42–47.

Business Day’s prior to such proposed repayment date, repay all or any

portion of the outstanding aggregate principal[.] 173

Section 7.02(a) covers accelerations and reads in relevant part that:

[i]n the case of an Event of Default other than one described in Section

7.01(f) . . . the Lenders may by notice to [Vale] declare this Note and the

Advances then outstanding to be due and payable in whole . . . and

thereupon the principal of the Advances so declared to be due and

payable . . . shall be come due and payable immediately[.] 174

That the VPN uses “acceleration” and “prepayment” separately shows that the

parties intended those terms to have separate meanings. 175 Indeed, Plaintiff’s expert

credibly testified that there are important practical differences between a

prepayment and acceleration. 176

The VPN and ECL do not define “acceleration” or “prepayment.” “Delaware

courts look to dictionaries for assistance in determining the plain meaning of terms

which are not defined in a contract.” 177 Black’s Law Dictionary defines a

173 VPN § 2.03(a).

174 Id. § 7.02(a) (emphasis added).

175 See, e.g., Williams Cos. Inc. v. Energy Transfer LP, 2020 WL 3581095, at *12 n.123

(Del. Ch. July 2, 2020). Gray Jay makes a passing argument that “from the perspective of the ECL parties, there is no practical difference between a V[P]N default coupled with either [a] notice of acceleration, or [] any other pre-maturity payoff.” Post-Trial Opp’n Br. at 40–41. Perhaps, but it is the contract’s language that controls meaning, not the parties’ unexpressed, subjective intent. See, e.g., In re Alexion Pharms., Inc. Ins. Appeals, 339 A.3d 694, 702 (Del. 2025).

176 See, e.g., Tr. (Spindler) at 997–98 (“[I]f prepayment and refinancing were equal to

acceleration, pretty much every M&A transaction that has a refinancing element to it would be unwound. It would be busted up. You’d have accelerations, cross-accelerations, everybody would be going into bankruptcy, and you wouldn’t be able to do corporate deals anymore.”).

177 Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 738 (Del. 2006).

“prepayment clause” as a “provision that permits a borrower to satisfy a debt before

its due date.” 178 Conversely, “acceleration” means “[t]he advancing of a loan

agreement’s maturity date so that payment of the entire debt is due immediately.” 179

Thus, an acceleration requires advancing the loan’s maturity date—i.e., declaring it

“due and payable.” 180 That understanding is consistent with § 7.02(a), which allows

the OWL “Lender[] [] by notice to [Vale] [to] declare th[e] [VPN] . . . to be due and

payable in whole[.]” 181 Thus, acceleration is a lender protection 182 that requires

advancing the loan’s maturity date, while prepayment is a borrower right that does

not affect the maturity date.

Based on that understanding, PWS’s repayment of the VPN was a prepayment

under § 2.03(a). On September 23, 2022, Vale sent the Repayment Notice to the OWL

Lender stating that the VPN would be repaid in full seven days later. 183 The

Repayment Notice did not purport to alter the VPN’s maturity date. Gray Jay argues

the Repayment Notice was not “irrevocable notice” of repayment as § 2.03(a)

requires, 184 but ignores that the notice was explicitly “irrevocabl[e]” upon completion

178 Prepayment Clause, BLACK’S LAW DICTIONARY (12th ed. 2024).

179 Acceleration, BLACK’S LAW DICTIONARY (12th ed. 2024).

180 JX272 at 12; see In re AMR Corp., 730 F.3d 88, 99 n.13 (2d Cir. 2013).

181 VPN § 7.02(a) (emphasis added).

182 Jeffery v. Seven Seventeen Corp., 461 A.2d 1009, 1010 (Del. 1983) (“The purpose of

an acceleration clause is solely to protect the lender.”).

183 JX161.

184 See Gray Jay Opp’n Br. at 41–42.

of the Pilot Transaction. 185 Moreover, after the Pilot Transaction occurred and PWS

repaid the VPN, the OWL Lender signed the Payoff Letter confirming receipt of the

payment without any objection or reservation of rights. 186 Critically, there is no

dispute that the OWL Lender never gave any notice advancing the VPN’s maturity

date. 187 Accordingly, PWS’s repayment of the VPN for Vale’s benefit as detailed in

the Repayment Notice was a repayment under § 2.03(a), not acceleration pursuant to

§ 7.02(a). 188

Notwithstanding § 7.02(a)’s notice requirement, Gray Jay invokes the

prevention doctrine to argue that the Court should not credit the lack of any

affirmative declaration of acceleration. Under the prevention doctrine, a party cannot

rely on the failure of a condition precedent “where the party wrongfully prevented

performance of that condition precedent.” 189 The doctrine only applies where the

185 JX161.

186 JX169; see Tr. (Johnson) at 731–33.

187 See, e.g., Tr. (Cooper) at 620. As noted, Gray Jay does not argue that there was a

default under § 7.01(f) the VPN such that the requirement to provide notice of acceleration is waived.

188 Gray Jay argues that only Vale, not a party acting on its behalf, can prepay under

§ 2.03. Post-Trial Opp’n Br. at 41–42. Gray Jay relies on § 2.03(a)’s language that “[Vale] may, from time to time . . . repay all or a portion of the outstanding aggregate principal amount of the Advances[.]” VPN § 2.03(a). Although not used in § 2.03, the VPN defines a “Repayment Event” as “the payment in full in cash of the [VPN] . . . by or on behalf of the Borrower,” and nothing in the VPN explicitly prohibits a prepayment by a party acting on Vale’s behalf. VPN § 1.01. Moreover, the OWL Administrative Lender signed the Payoff Letter and accepted payment from PWS without any objection. JX169.

189 BitGo, 319 A.3d at 333 (internal quotation marks omitted); see Chordia v. Lee, 2024

WL 49850, at *37 (Del. Ch. Jan. 4, 2024) (“‘[W]here a party’s breach by non-performance

preventing act “constitutes a breach of a duty imposed by the terms of the

agreement[.]” 190 The question is whether that breach “contribute[d] materially to the

non-occurrence of a condition.” 191

Gray Jay argues Vale prevented acceleration by (1) only disclosing the Pilot

Transaction after executing the Contribution Agreement, (2) sending notice of the

Pilot Transaction to NGP, instead of the OWL Lender, and (3) promising in the

Repayment Notice that the VPN would be paid off within weeks. 192 None of those

arguments show that Vale wrongfully prevented an acceleration.

First, Gray Jay does not explain why the promise to promptly repay the VPN

prevented an acceleration. Gray Jay just cites testimony that the OWL Lender

“simply wanted their money,” suggesting it would not accelerate the VPN and risk

nonpayment. 193 Indeed, Johnson testified that leading up to the Pilot Transaction he

contributes materially to the non-occurrence of a condition of one of his duties, the nonoccurrence is excused.’” (quoting Restatement (Second) of Contracts § 245 (1981))).

190 Snow Phipps Gp., LLC v. KCake Acq., Inc., 2021 WL 1714202, at *53 n.576 (Del.

Ch. Apr. 30, 2021) (internal quotation marks omitted).

191 Id. at *53 (internal quotation marks omitted). The preventing act need not make the occurrence of the condition precedent impossible, it is enough that “the conduct made satisfaction of a condition less likely.” Id. at *52 (internal quotation marks omitted). Delaware recognizes an “assumption of risk exception to the prevention doctrine . . . when contract terms condition the consummation of a[n] [act] upon the approval of the other party, or subject one party to the discretion . . . of the other party[.]” Murphy Marine Servs. of Del., Inc. v. GT USA Wilm., LLC, 2022 WL 4296495, at *13 (Del. Ch. Sept. 19, 2022) (internal quotation marks omitted).

192 Post-Trial Opp’n Br. at 44.

193 Tr. at (Johnson) 778–79, 784–85; see Post-Trial Opp’n Br. at 44 (“Even though NGP

was concerned about the lack of disclosure, it was told full payment was imminent.”).

and NGP discussed how to respond, including whether to declare a default, but did

not object because they “d[idn’t] want to rock the boat too much . . . [they] want[ed]

to keep the pressure on [Vale] to give [the OWL Lender] [its] money back.” 194 That

the OWL Lender prioritized repayment instead of the “drastic remedy” of

acceleration 195 does not suggest that Vale prevented acceleration. Instead, if

anything, it strongly suggests the OWL Lender would never choose to accelerate in

these circumstances—and jeopardize the imminent repayment of the VPN—even if

the OWL Lender received all the notice Gray Jay says was missing. Of course, it is

well-settled that “if [a] condition would not have occurred regardless of the other

party’s actions, the prevention doctrine does not apply.” 196

Second, Gray Jay points to no contractual provision that required Vale to

disclose the Pilot Transaction’s terms. 197 Johnson admitted he “d[id]n’t think there’s

a notice obligation in the documents” concerning the Pilot Transaction. 198 The

194 Tr. (Johnson) at 780–85. Johnson was empowered to sign on behalf of the OWL Lender, and when discussing the Pilot Transaction with NGP he would “have [his] lender hat on . . . not Gray Jay.” Id. (Johnson) at 778.

195 JX272 at 8–9, 12 (“[A]cceleration is a drastic remedy that threatens to send the

borrower into bankruptcy and . . . imperil the ability of the lender to recover its unpaid principal and interest.”).

196 Twin Willows, LLC v. Pritzkur, 2022 WL 3039775, at *8 n.115 (Del. Ch. Aug. 2,

2022).

197 See Post-Trial Opp’n Br. at 44.

No provision of the ECL or VPN obviously creates

such an obligation. See ECL; VPN. The VPN requires Vale to provide notice of any default thereunder, but after a default occurs not before. VPN §§ 6.03(a), 7.01(e).

198 Tr. (Johnson) at 781. Even if such an obligation did exist, Gray Jay would have to

overcome the fact that Cooper, Johnson, and NGP had actual notice that Vale “entered in[to] a transaction that w[ould] result in the full repayment of the V[P]N” on September 2, 2022,

prevention doctrine only applies when the preventing act breached the preventing

party’s obligations. 199 Thus, Vale’s non-disclosure of the Pilot Transaction’s terms

does not support applying the prevention doctrine.

Finally, Section 2.03(a) requires Vale to provide notice of any prepayment “at

least five [] Business Day’s prior to such proposed repayment date[.]” 200 Vale fulfilled

that requirement by sending the Repayment Notice on September 23, 2022. 201

Defendants note that Vale also sent a draft repayment notice to NGP three weeks

earlier—which Cooper and Johnson received from NGP. 202 But, that Vale provided

extra notice does not mean it breached the notice requirement. 203

but did not inquire further. JX280; see Trifecta Multimedia Hldgs. Inc. v. WCG Clinical Servs. LLC, 318 A.3d 450, 472 (Del. Ch. 2024) (“Delaware law is concerned with actual notice, rather than technicalities that elevate form over substance.”).

199 See, e.g., Snow Phipps, 2021 WL 1714202, at *53 n.576; S’holder Rep. Servs. LLC

v. Alexion Pharms., Inc., 341 A.3d 513, 549–50 (Del. Ch. 2025).

200 VPN § 2.03(a).

201 JX161.

202 JX280. That Vale gave NGP notice makes sense given that Gray Jay admits “NGP controlled the Administrative Lender and had ultimate decision-making authority over accelerating the V[P]N.” Post-Trial Opp’n Br. at 28 (citing Tr. (Cooper) at 624–26).

203 JX161. Grasping at straws, Gray Jay also quibbles with whether Vale addressed the Repayment Notice in strict conformity with the VPN’s notice provision. See Post-Trial Opp’n Br. at 27 & n.155, 44 (citing JX280; JX350; JX161). But, as noted in the text above, Vale circulated the draft repayment notice and associated payoff letter weeks earlier. Cooper and Johnson both received the draft at that time and had the opportunity to comment; and no one, including OWL Lender, objected. See, e.g., JX155; JX280. Quite to the contrary, following Vale’s circulation of timely notice on September 23, OWL Lender returned signed copies of both the Repayment Notice and Payoff Letter on September 29, which expressly state that Vale provided notice to OWL Lender. JX169.003 (Repayment Notice) (“Borrower hereby irrevocably gives written notice to the Administrative Lender”); JX169.006 (Payoff Letter) (“Reference is also made to the Repayment Notice delivered by the Borrower to the Administrative Lender on September 23, 2022[,] and acknowledged and agreed to by the

In sum, Gray Jay has not proven that Vale breached an obligation which

hindered the OWL Lender’s ability to accelerate the VPN. Instead, the evidence

suggests Cooper and Johnson discussed whether to declare a default and accelerate

the VPN with NGP, which controlled the OWL Lender, and NGP opted to prioritize

repayment. 204 Thus, the prevention doctrine does not excuse the fact that the OWL

Lender never accelerated the VPN. Therefore, Gray Jay’s obligations under the ECL

did not terminate due to a prior default and acceleration of the VPN.

2. Gray Jay Did Not Carry Its Burden Of Showing That Vale Was

Insolvent At The Time Of The Pilot Transaction

Gray Jay also argues its obligations under the ECL terminated upon Vale’s

insolvency. 205 To prevail on that argument, “Gray Jay must establish that Vale was

insolvent at or before the time that such investment obligation arose under the

ECL” 206—i.e., when PWS repaid the VPN. Generally, a party can show insolvency

through “either the ‘balance sheet’ test or the ‘cash flow’ test.” 207 Gray Jay argues

Administrative Lender on the date hereof[.]”). What is more, Johnson signed both documents as an “Authorized Person” on behalf of OWL Lender. JX169. Thus, for a multitude of reasons, Defendants’ quibble with the notice must be rejected. Trifecta Multimedia Hldgs., 318 A.3d at 472 (“Delaware law is concerned with actual notice[.]”).

204 See Tr. (Johnson) at 778–82.

205 Post-Trial Opp’n Br. at 47–51.

206 Dkt 207 ¶ 2(a).

207 Quadrant Structured Prods Co., Ltd. v. Vertin, 102 A.3d 155, 176 (Del. Ch. 2014).

Vale was insolvent under both tests. 208 As discussed above, Gray Jay has the burden

of proving Vale was insolvent at the time of the Pilot Transaction. 209

a. Gray Jay Did Not Prove That Vale Was Balance Sheet

Insolvent

Under a balance sheet test, “an entity is insolvent if it has liabilities in excess

of a reasonable market value of assets held.” 210 A company’s balance sheet alone is

not determinative of whether it is balance sheet solvent. 211 Rather, the “test also

requires a deficiency of assets below liabilities with no reasonable prospect that the

business can be successfully continued in the face thereof.” 212 At bottom, to determine

whether a company is balance sheet solvent, the “‘court should ask: What would a

buyer be willing to pay for the debtor’s entire package of assets and liabilities? If the

price is positive, the firm is solvent; if negative, insolvent.’” 213

Applying that test here shows that Gray Jay failed to carry its burden to prove

that Vale was balance sheet insolvent at the time of the Pilot Transaction. Gray Jay

strangely does not cite Vale’s financials to support its balance sheet insolvency

208 Post-Trial Opp’n Br. at 47–51.

209 Desktop Metal, 2025 WL 904521, at *22.

210 Quadrant, 102 A.3d at 176 (internal quotation marks omitted).

211 Quadrant Structured Prods. Co., Ltd. v. Vertin, 115 A.3d 535, 560 n.31 (Del. Ch.

2015).

212 In re Geneius Biotechnology, Inc., 2017 WL 6209593, at *8 (Del. Ch. Dec. 8, 2017)

(emphasis in original) (internal quotation marks omitted).

213 Quadrant Structured Prods. Co., Ltd. v. Vertin, 2015 WL 6157759, at *16 (Del. Ch.

Oct. 20, 2015) (quoting Covey v. Commercial Nat’l Bank of Peoria, 960 F.2d 657, 660 (7th Cir. 1992) (Easterbrook, J.)).

argument. Nor did Gray Jay introduce any financial expert report or testimony to

support its assertion that Vale was balance sheet insolvent.

Instead, the sole document Gray Jay cites is an internal Instar slide deck from

mid-July 2022 discussing the potential transaction with PWS, six weeks before the

parties signed the Contribution Agreement and two-and-a-half months before the

Pilot Transaction closed. 214 Gray Jay offers no context for the document or discussion

of its preparation in its post-trial briefing. But, on slide 4, text in the lower left-hand

corner of the slide provides that the “Deal Team [was] seeking Advisory Board and

Investment Committee approval to enter into definitive legal agreements” for a

merger. 215 So I surmise that is what the document concerns.

As proof of insolvency, Gray Jay points out that one slide at the beginning of

the deck states that “OWL’s Fair Market Value as of June 30, 2022 is $263 million”

and another slide, 16 pages later in a different context, states that “OWL has $278

million of consolidated debt[.]” 216 But that is a far cry from proving that Vale was

balance sheet insolvent. As Vale points out, Gray Jay seems to be incorrectly

comparing debt (a liability) with an estimate of the amount a “buyer [would] be

willing to pay for the [] entire package of assets and liabilities” of the OWL

214 See Post-Trial Opp’n Br. at 48–49 (citing JX145).

215 JX 145; see also Tr. (Smith) at 283–90.

216 JX145; Post Trial Opp’n Br. at 17, 48–49 (citing JX145) (“OWL had a fair market

value of only $263 million compared to debt of $278 million.”).

enterprise. 217 Yet, as Quadrant explained, if the latter amount “is positive, the firm

is solvent.” 218 This is all the more head-scratching when one sees that, immediately

preceding the $263 million fair market value figure, the slide also reports two

separate transaction offers with implied nine-figure equity values for OWL, including

PWS’s at significantly over $200 million (after accounting for consolidated debt). 219

Gray Jay’s sparse evidence and conclusory assertion of insolvency stand in

stark contrast to the robust evidence Vale cites to show it was balance sheet solvent

at the time of the Pilot Transaction. Vale’s 2021 audited consolidated financials show

that on December 31, 2021, it had total assets of just over $574 million and total

liabilities of around $291 million, meaning its net assets were $283 million. 220 Vale’s

2022 Q1 unaudited financials, prepared as part of the Pilot Transaction diligence,

217 Quadrant, 2015 WL 6157759, at *16 (internal quotation marks omitted) (emphasis

added); Post-Trial Reply Br. at 16; see DFC Glob. Corp. v. Muirfield Value P’rs, L.P., 172 A.3d 346, 368 (Del. 2017) (“[T]he fair market value of a company is what it would sell for when there is a willing buyer and willing seller without any compulsion to buy.”).

218 Quadrant 2015 WL 6157759, at *16 (internal quotation marks omitted).

219 JX 145.008; JX145.011 (incorporating “OWL Revolving Credit Facility[,] “OWL Term Loan[,]” and “OWL Vendor Loan Note” in calculating implied equity value); Quadrant 2015 WL 6157759, at *17 (“The fact that Merced paid money for Athilon’s equity in a market transaction is powerful evidence that the equity actually had value.”). Gray Jay fails to engage in any meaningful way with the details of the slide deck, including the $263 million “Fair Market Value” figure. But it seems worth noting that, given the references in the slide deck to an “OWL” revolving credit facility, term loan, and VPN (e.g., JX145.011), the slide deck seems to lump the various entities within the enterprise together as “OWL.” Indeed, it seems that the only references to Horus, Minerva, and Vale in the 49-page deck appear on two “Transaction Structure” slides. The first slide reflects the “OWL Current Structure” with an extensive organizational chart labelled “OWL Structure Diagram[,]” JX145.019, and the second slide lays out a potential post-transaction “Pro Forma Structure Diagram[.]” JX145.020.

220 JX203. These financials include OWL’s assets and debt. Id. (“[T]he consolidated financial statements of Vale . . . and subsidiaries[.]”).

also show assets exceeding liabilities. 221 Based on those financials, Vale’s expert,

Alan Ratliff, issued an unrebutted report concluding that “there is no evidence that

would support a determination that Vale was bankrupt or insolvent for accounting

purposes pursuant to GAAP . . . at the time of the [Pilot Transaction].” 222 Although

the Court can reject uncontradicted expert testimony, 223 Gray Jay’s failure to proffer

its own expert to rebut Ratliff’s conclusion severely undermines its insolvency

argument. 224

Gray Jay instead relies on testimony from the Gray Jay Members suggesting

Vale “could have been insolvent.” 225 For example, Hines testified that “if we wouldn’t

have got the [Pilot Transaction] done . . . OWL would have defaulted on our debt. We

221 JX130. In terms of other contemporaneous evidence, beyond the financial statements already discussed, Gray Jay relies on Vale’s September 2021 hiring of Greg Pollard to work at OWL. See Post-Trial Opp’n Br. at 13–17; Tr. (Smith) at 242–45; id. (Cooper) at 527; id. (Johnson) at 709. As discussed, the parties dispute whether Pollard was a “consultant” or a “chief restructuring argument.” Compare id. (Smith) at 242–45 (insisting Instar “hired Greg Pollard as a consultant), and id. at 922–24 (same), with id. (Cooper) at 527–28 (testifying that Pollard was a “chief restructuring officer.”), and id. (Johnson) at 709 (testifying that “Instar brought in what they refer to as a chief restructuring officer, which was Greg Pollard.”). But regardless of his title, Pollard’s hiring does not prove that Vale was insolvent. Indeed, Cooper testified that he did not “think that a chief restructuring officer was necessary at OWL,” which, if anything, suggests Vale was solvent. Tr. (Cooper) at 529– 30.

222 JX274 ¶ 20.

223 E.g. Williams v. White Oak Builders, Inc., 2006 WL 1668348, at *8 n.103 (Del. Ch.

June 6, 2006).

224 See, e.g., In re Appraisal of Jarden Corp., 2019 WL 3244085, at *26–31 (Del. Ch.

July 19, 2019).

225 See, e.g., Tr. (Cooper) at 564.

Notably, the non-expert testimony on Vale’s solvency

was contradicting. See id. (Smith) at 204–05 (testifying that Grant Thorton issued Vale a “clean opinion,” showing Vale was “[n]ot insolvent.”); id. (Johnson) at 760 (Johnson testifying that he was “not certain” whether Vale was insolvent at the time of the Pilot Transaction).

were insolvent.” 226 Yet, that testimony does not overcome the contemporaneous

financial documents or Vale’s unrebutted expert report. The Court did not find Hines

credible on that point. 227 Generally “after-the-fact testimony” from interested

individuals “is not as credible as contemporaneous documentary evidence.” 228 The

Gray Jay Members seem highly motivated to say Vale was insolvent at the time of

the Pilot Transaction, 229 and as discussed the extremely limited contemporaneous

evidence Gray Jay cites does not support their testimony.

Perhaps recognizing that the contemporaneous documents do not support its

balance sheet insolvency argument, 230 Gray Jay asserts that possible, yet-to-beincurred remediation costs from the Madera Event “likely pushed Vale over the line

of being balance sheet insolvent.” 231 Assuming such costs would flow up to Vale, 232

226 Id. (Hines) at 809.

227 For one, Hines seemingly contradicted himself by testifying that he was not “aware

of any finding that Vale was insolvent[.]” Id. (Hines) at 854–55.

228 Golden Rule Fin. Corp. v. S’holder Rep. Servs. LLC, 2026 WL 1182159, at *21 (Del.

Ch. Apr. 30, 2026) (citation modified); see also Triple H Fam. Ltd. P’ship. v. Neal, 2018 WL 3650242, at *2 (Del. Ch. July 31, 2018).

229 See ECL at 2 (“[Gray Jay’s] obligation to . . . purchase the [Vale] [s]ecurities under

th[e] [ECL] will terminate automatically and immediately upon . . . the bankruptcy or insolvency of [Vale].”).

230See Post-Trial Opp’n Br. at 48–49 (“Vale was on the brink of balance-sheet insolvency in July 2022[.]”).

231 Id.

232 To be clear, that point is highly disputed. Vale invokes principles of corporate separateness and points out that “the Madera Well is owned and operated by two companies several corporate layers removed from Vale,” such that it is not clear that Vale would be liable for any remediation cost imposed by OCD. Post-Trial Reply Br. at 23; see JX74 at Schedule 3.3(c). See also In re Aearo Techs. LLC, 346 A.3d 584, 596 (Del. 2025) (“[W]e respect the separateness of distinct legal entities.”). Gray Jay does not respond to that argument. Although Delaware of course respects the separateness of distinct entities, Vale’s argument is not as cut and dry as the briefing suggests. For one, Vale had no other assets apart from

Gray Jay did not prove that it is proper to account for any uncertain, contingent

Madera Event liability or that doing so would make Vale balance sheet insolvent.

The parties’ briefs do not squarely address how Delaware law accounts for possible

contingent liabilities for purposes of an insolvency analysis. At post-trial oral

argument, Plaintiff’s counsel suggested that GAAP’s “probable and reasonably

estimable” standard applies. 233 Rankin’s expert report similarly states that:

[u]nder the U.S. Accounting Standards Codified . . . a lost contingency

event . . . must be recognized by a charge to income for accounting

purposes [] only if . . . (a) [] it is probable that that a liability has been

incurred or an asset has been impaired as of [the] relevant date, and (2)

the amount of loss can be reasonably estimated. 234

To be “probable” such that a contingent event should be recorded, practice under

GAAP suggests that the event should have “a 75% or greater likelihood” of

occurring. 235 Gray Jay did not oppose that standard at oral argument or submit any

contrary expert report. Nor did Gray Jay offer a competing framework for evaluating

the effect of the Madera Event on Vale’s balance sheet in their post-trial briefing.

OWL. Thus, it seems reasonable to believe that a decrease in the value of the OWL assets at the subsidiary level due to environmental remediation costs could cause Vale to be insolvent. See JX203 (Vale’s 2021 consolidated financials, including assets and liabilities at the subsidiary level). Regardless, the Court need not resolve the parties’ dispute on this point because, for the reasons to be discussed, Gray Jay did not prove that the Madera Event made Vale balance sheet insolvent at the time of the Pilot Transaction even assuming remediation costs could affect Vale’s balance sheet.

233 OA Tr. at 19–28.

234 JX274 ¶ 30.

235 Id. (“While a formal numeric standard does not exist, ‘practice generally considers

an event that has a 75% or greater likelihood of occurrence to be probable.’” (quoting PriceWaterhouseCoopers US IFRS & US GAAP guide, Chapter 9, 9.2 Recognition of provisions (Nov. 30, 2022))).

Accordingly, for purposes of this decision, the Court adopts the probable and

reasonably estimable standard.

Under that standard, the evidence does not suggest that any potential Madera

Event liability was probable or reasonably estimable at the time of the Pilot

Transaction. 236 When the Pilot Transaction occurred the OCD had cleared the

Madera Well to resume operations without suggesting any massive environmental

catastrophe occurred or imposing commensurate sanctions. 237 Similarly,

contemporaneous OWL documents do not describe the Madera Event as anything like

a catastrophic environmental disaster. 238 Those documents extensively discuss the

Madera Event, its impact on OWL, and the company’s remediation efforts, yet do not

suggest that anyone at the time—including the Gray Jay Members serving as OWL

management—considered the Madera Event an environmental catastrophe. 239

236 Indeed, Gray Jay admits that “it is difficult to estimate the additional balancesheet impact of the Madera Breach given OCD’s ongoing investigation.” Post-Trial Opp’n Br. at 49. To reiterate, Gray Jay bears the burden here. Yet, even if one assumes for the purpose of argument that Gray Jay proved Madera Event liability was sufficiently probable, Gray Jay still points to no evidence—or frankly, numbers—that would enable the Court, with any remote degree of confidence, to estimate or to reasonably estimate the extent of that liability. Basically, Gray Jay seems to suggest, via speculative litigation-driven testimony by interested parties, that the liability exposure must have been “big” and that is enough. This is post-trial. That is not enough.

237 JX110; JX113; JX114.

238 See JX080; JX086; JX088; JX090; JX091; JX092; JX095; JX097; JX098; JX099;

JX100.

239 See JX080; JX086; JX088; JX090; JX091; JX092; JX095; JX097; JX098; JX099;

JX100.

The Gray Jay Members’ testimony at trial in support of Gray Jay’s insolvency

defense was starkly different. They claimed the Madera Event was an immense

environmental disaster that they knew occurred on their watch and, in turn, rendered

Vale insolvent. But, if true, they apparently remained knowingly silent, failing to

alert authorities as to the scale of the claimed disaster. It is also hard to believe that

OWL personnel—including several Gray Jay Members—oversaw “the largest . . .

freshwater contamination caused by produced water in U.S. history” without sending

a single email or creating a single document to that effect. 240

To support its argument that the Madera event rendered Vale balance sheet

insolvent, Gray Jay points to documents associated with OCD’s ongoing follow-up

investigation. The relevance of that evidence is questionable given that the OCD did

not reopen its investigation until August 2023. That is well after PWS’s repayment

of the VPN as part of the Pilot Transaction triggered Gray Jay’s obligations under

the ECL. 241

Nevertheless, the facts do not support Gray Jay’s argument. Gray Jay

primarily relies on a June 2024 analysis prepared by Lonquist Sequestration LLC at

non-party PWS’s request to inform PWS’s response to the OCD’s reopened

240 Tr. (Cooper) at 578; see, e.g., Camaisa v. Pharm. Res. Assocs., Inc., 2025 WL 3049891, at *11 (Del. Ch. Oct. 28, 2025) (“Just as glaring is the lack of contemporaneous record evidence one would expect if . . . the alleged” events occurred).

241 JX209; Tr. (Smith) at 960–62. Although a single email suggests that the OCD may have been considering a follow-up investigation in May 2022, there is no dispute that any such investigation did not begin until August 2023. See JX131; JX209.

investigation. 242 Lonquist’s report analyzes whether a plume of brine from the

Madera Well could reach any other nearby wells, including the capped well that first

alerted OWL and OCD to the possibility of a leak. 243 Notably, Lonquist assumes a

complete breach of the Madera Well casing and substantial leak that continued for

three months. 244 To be clear, whether any of that occurred—and, if so, to what

extent—was heavily disputed at trial. 245 But, even assuming a hole through all of

the well’s casing layers, and using parameters that produced “the largest . . . brine

contamination plume,” Lonquist concluded any leak “remains far away from any

nearby water wells.” 246

Despite the illustrative nature of Lonquist’s analysis, Gray Jay submitted an

expert report criticizing Lonquist’s model as overly conservative. 247 Vale submitted

242JX227. PWS led the response to the OCD’s renewed investigation because

ownership of the Madera Well and any Madera Event liability passed to PWS as part of the Pilot Transaction. See, e.g., Tr. (Smith) at 963–64, 988–89; JX282.

243 The report expressly “[a]ssum[ed]” that “[b]rine is leaking through a 3’ hole” that

penetrated all layers of the Madera Well’s casing and that the “leak continue[d] for 3 months.” JX227; see also Tr. (Johnson) at 763–66; Tr. (Cooper) at 607.

244 JX227.

245 The parties put forward significant competing witness testimony at trial. As to documents, a September 2023 email from OCD to PWS suggests a leak breached all the Madera Well’s protective casing layers. JX212 (“While OWL may not visually detect a release, however the C-103 submissions . . . indicate that the injection created a hole and continued to do so through all casing strings around this depth.”). But other contemporaneous emails from when the Madera Event was ongoing suggest that any leak did not penetrate all four of the Madera Well’s protective layers. JX067; see Tr. (Smith) at 185–88.

246 JX227.

247 See JX273 (expert report of Chad Kronkosky).

a rebuttal expert report identifying a host of problems with the Gray Jay expert

report. The Court does not rely on the Gray Jay report. 248

Thus, the evidence simply does not support the conclusion that, at the time of

the Pilot Transaction, the Madera Event was a massive environmental catastrophe

sufficient to make Vale balance sheet insolvent under the probable and reasonably

estimable standard. Therefore, Gray Jay has not carried its burden of showing that

Vale was balance sheet insolvent such that the ECL automatically terminated before

Gray Jay’s obligation to purchase Vale securities was triggered.

b. Gray Jay Did Not Prove That Vale Was Cash Flow

Insolvent

Separately, Gray Jay argues that Vale was cash flow insolvent at the time of

the Pilot Transaction. An entity is “cash-flow insolvent” if it is “unable to pay its

debts as they come due.” 249 A sufficiently certain showing that an entity will be

“unable to timely meet maturing obligations in the ordinary course of business” can

248 See Kruse v. Synapse Wireless, Inc., 2020 WL 3969386, at *8 (Del. Ch. July 14,

2020) (“The court’s fact-finding role allows it to consider reliable and credible expert testimony and to reject unreliable or incredible expert testimony.”). Kronkosky primarily challenges Lonquist’s assumptions and proposes his own models to suggest that the Madera Event did cause a massive contamination of freshwater with toxic brine. See JX273. Yet, Vale’s rebuttal exert, John Kondziolka insists that Kronkosky’s “model was flawed in multiple respects . . . [his] results are inconsistent with observations . . . [his] conclusions have no basis . . . [and] [his] report has internal inconsistencies and is unreliable.” JX275 (“Mr. Kronkosky’s model is inconsistent with the available data because the volume that he assumes leaked from the well exceeds the volume injected at the well.”). Indeed, Kondziolka insists that Kronkosky “arbitrarily ma[d]e up model inputs without any basis,” which necessarily “produce[s] inaccurate model results.” Id. Kronkosky did not appear at trial or, it seems, sit for a deposition. Thus, Kondziolka’s sharp criticism of Kronkosky’s model and methodology is unrebutted, and I do not give Kronkosky’s opinions any weight.

249 TCV VI, L.P. v. TradingScreen Inc., 2015 WL 1598045, at *4 (Del. Ch. Feb. 26,

2015).

support a finding of cash flow insolvency. 250 But a company is not cash flow insolvent

if there is “no evidence that [it] [] defaulted on any . . . obligations; . . . no evidence

that [it] has any judgment against it for any payables; [] [] no evidence of any liens

on the [c]ompany’s assets; and [] [] no evidence that it would be impossible for [the

company] to raise capital in the future.” 251

Under that standard, Gray Jay did not carry its burden to prove by a

preponderance of the evidence that OWL was cash flow insolvent. True, the record

shows OWL was experiencing financial difficulties in 2021–2022 and had $9 million

in accounts payable. 252 Hines testified that those accounts payable were “past due

[to] vendors” who were “calling every day,” and that OWL could “not . . . keep up with

interest payments.” 253 Yet, Gray Jay points to no contemporaneous evidence

supporting this testimony. For example Gray Jay cites no evidence that OWL missed

any payments, such as a creditor demand letter or liens on OWL’s assets—which one

would expect if OWL was cash flow insolvent. 254 Instead the record shows OWL was

250 NEC Fund VI HE Lender, LLC v. Hecate Hldgs. LLC, 2026 WL 527007, at *11 (Del.

Ch. Feb. 25, 2026).

251 Geneius, 2017 WL 6209593, at *10.

JX062 (OWL’s Q2 2021 “Operations Committee Report”); JX145. But see

252 E.g.,

JX145 (“OWL’s liquidity situation has significantly improved, with AP decreasing from approximately $12.5 million in 4Q21 to $9.2 million in July 2022.”).

253 Tr. (Hines) at 809, 853–54.

e.g., Camaisa, 2025 WL 3049891, at *11 (“Just as glaring is the lack of

254 See,

contemporaneous record evidence one would expect if . . . the alleged” events occurred).

actively exploring different ways of paying its debts—including by hiring Pollard. 255

Gray Jay points out that OWL also had “over $270 million [in] . . . maturing [debt]

from the Senior Debt Agreement and V[P]N,” which it could not refinance. 256 While

that debt caused management to adopt a “merger or bust” strategy, 257 OWL repaid

its debts via the Pilot Transaction. 258 Thus, while OWL was in a financially

precarious position in early 2022, the preponderance of trial evidence does not show

it was cash flow insolvent.

In conclusion, Gray Jay did not carry its burden to prove that Vale was

insolvent at the time of the Pilot Transaction such that the ECL automatically

terminated. As discussed, Gray Jay relies on a smattering of questionable documents

and self-serving testimony from the Gray Jay Members. Gray Jay did not offer any

financial expert to challenge Ratliff’s conclusion, based on Vale’s audited financials,

that Vale was not insolvent at the time of the Pilot Transaction. Accordingly, the

Court concludes that Gray Jay did not carry its burden to prove by a preponderance

255 The record does suggest that OWL was organizing and prioritizing its bills based

on how “critical” each creditor was to its operations and negotiating extensions with other, less critical creditors. JX062. But the fact that management is “negotiating in good faith with creditors for the benefit of the company” while making a “bona fide effort to overcome [OWL’s] current financial difficulty” is not, without more, sufficient to show cash flow insolvency. Geneius, 2017 WL 6209593, at *11.

256 Post-Trial Opp’n Br. at 48; see Tr. (Cooper) at 523–24; id. (Johnson) at 700–04;

JX073; JX076.

257 Tr. (Hines) at 807–08.

258 E.g., JX161.

of the evidence that Vale was insolvent under either a cash-flow or balance-sheet test.

Thus, Gray Jay’s insolvency defense does not justify its non-performance of the ECL.

B. Gray Jay’s Performance Under The ECL Was Not Excused

Gray Jay also insists that, even if the ECL remained in effect, its performance

should be excused because (1) Vale committed a prior material breach of the implied

covenant; and (2) the ECL’s purpose was frustrated. 259 The Court considers each

argument.

1. The Implied Covenant Does Not Excuse Gray Jay’s Performance

Under The ECL

Gray Jay argues its performance of the ECL should be excused because Vale

committed a prior material breach of the implied covenant of good faith and fair

dealing. 260 The implied covenant “inheres in every contract and ensures that neither

party acts arbitrarily or unreasonably to frustrate the fruits of their bargain.” 261 “The

implied covenant operates in two primary ways.” 262 First, it “functions as a limited

gap-filler” to address “circumstances that the[] [parties] could not foresee and did not

address in their written agreement[.]” 263 The gap-filler implied covenant (1) cannot

“be used to rewrite or contradict express terms”; 264 (2) “only applie[s] to

259 Post-Trial Opp’n Br. at 51–57.

260 Id. at 51–56.

261 Johnson & Johnson v. Fortis Advisors LLC, 352 A.3d 229, 253 (Del. 2026).

262 Id.

263 Id. at 251 (internal quotation marks omitted).

264 Id.

‘developments that could not be anticipated, not developments that the parties simply

failed to consider”; 265 and (3) “cannot be invoked when the contract addresses the

conduct at issue.” 266 The second form of the implied covenant applies when the

agreement “allocates discretionary authority to one party over a central aspect of the

contract” and that party “exploits that discretion in a manner that defeats the

overarching purpose of the bargain[.]” 267

In its briefing, Gray Jay only invokes the gap-filler version of the implied

covenant. 268 But Gray Jay pivoted at post-trial oral argument, asserting that its

implied covenant argument “has to be [the] discretion” variety. 269 Thus, it is not clear

that any implied covenant gap-filler argument is before the Court. Regardless, any

such argument fails because Gray Jay has not identified any valid gap in the ECL or

VPN for the implied covenant to fill.

Gray Jay argues the ECL has a “gap” that allowed Vale to structure the Pilot

Transaction to avoid a default, because “[n]o party to the ECL anticipated that Vale

at 254 (quoting Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010)). “If a

265 Id.

development could have been anticipated, even if it was unlikely to occur, the implied covenant cannot be invoked to provide protections that ‘easily could have been drafted’ at the bargaining table.” Id. at 257 (quoting Nationwide Emerging Mgrs., LLC v. NorthPointe Hldgs., LLC, 112 A.3d 878, 897 (Del. 2015)).

266 Glaxo Gp. Ltd. v. DRIT LP, 248 A.3d 911, 919–20 (Del. 2021) (internal quotation

marks omitted); accord Cincinnati SMSA Ltd. P’ship v. Cincinnati Bell Cellular Sys. Co., 708 A.2d 989, 992 (Del. 1998).

267 Johnson & Johnson, 352 A.3d at 253–54 (internal quotation marks omitted).

268 Post-Trial Opp’n Br. at 51–56.

269 OA Tr. at 74–75, 130, 138.

would secure a third-party’s payment of the V[P]N via a transaction to which Vale

was not a party and technically offered no consideration.” 270 Yet, the ECL specifically

enumerates circumstances under which Gray Jay’s obligations thereunder terminate,

including a default and acceleration of the VPN. 271 The VPN contains numerous

restrictions on Vale’s ability to dispose of OWL or its assets—the same restrictions

Gray Jay invokes in its default and acceleration defense. Thus, the contracts are not

silent regarding the types of transactions Vale could enter; they simply do not

prohibit a deal like the Pilot Transaction. As such, adopting Gray Jay’s position

“would be to grant [] [], by judicial fiat, contractual protections that [Gray Jay] failed

to secure for [itself] at the bargaining table.” 272 That is not a proper application of

the implied covenant’s gap-filler role. 273 Thus, to the extent it remains a live issue,

Gray Jay’s gap-filler implied covenant argument falls flat.

270 Post-Trial Opp’n Br. at 54–55.

271 ECL at 2.

272 Aspen Advisors LLC v. United Artists Theatre Co., 843 A.2d 697, 707 (Del. Ch.

2004).

273 See Winshall v. Viacom Int’l., Inc., 76 A.3d 808, 816 (Del. 2013); accord Johnson &

Johnson, 352 A.3d at 257. Gray Jay’s reliance on Dieckman v. Regency GP LP does not compel ruling otherwise. 155 A.3d 358 (Del. 2017). The Dieckman court explained that an implied term should be so “obvious and provocative” that “the parties must have intended [it] and [] only failed to express [it] because [it] [was] too obvious to need expression.” Id. at 368 (internal quotation marks omitted). Here, Gray Jay does not seek to add a term to the ECL or VPN that is similarly obvious and provocative—rather it seeks to extend the existing restrictions to cover situations the parties “could [have] [] anticipated, . . . [but] simply failed to consider,” or did not agree to prohibit in the VPN. Johnson & Johnson, 352 A.3d at 254. That is not a proper application of the implied covenant.

Gray Jay’s discretion-based implied covenant argument also fails for several

reasons. First, as Gray Jay admitted at oral argument, it did not make any

“discretion” argument in its post-trial brief. 274 “[A]n issue not raised in post-trial

briefing has been waived[.]” 275 Thus, that Gray Jay’s post-trial brief did not discuss

the discretion-based implied covenant is sufficient to reject that argument.

But even if Gray Jay properly raised the issue, the discretion version of the

implied covenant does not apply. The ECL does not give Vale any discretionary right,

and the VPN references discretion once in an irrelevant provision. 276 The discretion

variant of the implied covenant only applies where the contract affirmatively gives a

party “discretion to act as to a certain subject[.]” 277 Gray Jay does not identify any

provision in the ECL or VPN that grants Vale a discretionary right that it supposedly

exercised in bad faith. Instead, Gray Jay seemingly argues that because the VPN

restricts Vale’s ability to dispose of the OWL assets, any deal designed to avoid those

274 Post-Trial OA at 138–39.

275 Oxbow Carbon & Mins. Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 202 A.3d 482,

502 n.77 (Del. 2019); accord Menn v. ConMed Corp., 2022 WL 2387802, at *22 n.308 (Del. Ch. June 20, 2022).

276 See ECL; VPN § 8.05 (“In addition, upon any assignment of this Note pursuant to

Section 8.05 by a Lender then acting as the Administrative Lender, such Lender may in its discretion resign as the Administrative Lender on behalf of such assignee[.]”).

277 SerVaas v. Ford Smart Mobility LLC, 2021 WL 3779559, at *10 (Del. Ch. Aug. 25,

2021) (internal quotation marks omitted); accord Policemen’s Annuity and Benefit Fund of Chicago v. DV Realty Advisors LLC, 2012 WL 3548206, at *12 (Del. Ch. Aug. 16, 2012); Zync, Inc. v. Porsche Inv. Mgmt., S.A., --- A.3d ---, 2026 WL 1507812, at *20 (Del. Ch. May 29, 2026); Guilbeau v. Footprint Int’l Holdco, Inc., 358 A.3d 248, 275–76 (Del. Ch. 2026). Of course, a contract need not use the word “discretion” to create a discretionary right. See, e.g., Zync, 2026 WL 1507812, at *19–20.

restrictions violates the implied covenant. In essence, Gray Jay tries to use the

implied covenant to apply a freestanding good faith gloss on Vale’s ability to take

actions the VPN and ECL do not prohibit. That is not a proper application of the

implied covenant, 278 and Gray Jay’s failure to identify a specific discretionary

contractual right Vale exercised in bad faith defeats its discretion-based implied

covenant defense. 279

2. The Frustration of Purpose Doctrine Does Not Excuse Gray

Jay’s Performance Of The ECL

Gray Jay also invokes the frustration of purpose doctrine to excuse its nonperformance of the ECL. 280 The frustration of purpose doctrine “excuses future

performance under a contract: ‘[w]here, after a contract is made, a party’s principal

purpose is substantially frustrated without his fault by the occurrence of an event the

non-occurrence of which was a basic assumption on which the contract was

278 See, e.g., Priveterra Cap., Mgmt., LLC v. Pixium Vision, LLC, 2026 WL 940227, at

*6 (Del. Super. Apr. 7, 2026) (“[Plaintiff] doesn’t point to an implied, breached obligation. Instead, [Plaintiff] vaguely suggests that the Defendants breached the good-faith covenant by entering into safeguard proceedings when there were other options on the table. That’s not enough. General allegations of bad-faith conduct are insufficient[.]”).

279 Even if Gray Jay’s textually untethered discretion argument was cognizable, a preponderance of the evidence does not show that Vale acted in bad faith. The record does not show anything “unreasonable or nefarious about” the Pilot Transaction. Star Am. Rail HoldCo, LLC v. Cathcart, 2024 WL 5239938, at *9 (Del. Ch. Dec. 17, 2024). True, the evidence suggests that Vale intentionally structured the Pilot Transaction to avoid triggering a default under the VPN that would eliminate Gray Jay’s obligations under the ECL. See, e.g., JX48; JX118; JX135. But even assuming that is true, it does not evidence bad faith. Sophisticated parties routinely structure transactions around contractual restrictions, and “[i]n the abstract, efforts to structure a transaction to avoid tripping the terms of an indenture are perfectly permissible.” Wilm. Sav. Fund Soc’y, FSB v. Foresight Energy LLC, 2015 WL 7889552, at *9 (Del. Ch. Dec. 4, 2015).

280 Post-Trial Opp’n Br. at 56–57.

made[.]’” 281 The frustrated purpose “must be so completely the basis of the contract

that . . . without it the transaction would make little sense.” 282 The doctrine is “very

difficult to invoke,” because “Delaware courts are extremely reluctant to allow parties

to disavow obligations that they have agreed to.” 283 It “is generally limited to cases

where a virtually cataclysmic, wholly unforeseeable event renders the contract

valueless to one party.” 284 The doctrine does not apply if the non-performing party

“assumed the risk” that the frustrating event would occur 285 or if the frustrating

event “was reasonably foreseeable, and could . . . have been anticipated by the parties

and provided for in the contract.” 286

A frustration of purpose analysis logically starts with ascertaining the at-issue

contract’s purpose. Gray Jay argues “it was a basic assumption of the ECL that Vale

would either manage the OWL assets . . . or Gray Jay would be relieved of its

investment obligations” such that the Pilot Transaction “frustrated the parties’

281 Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 901 A.2d 106, 113 (Del. 2006) (quoting

Restatement (Second) of Contracts § 265 (1981)); accord Level 4 Yoga, LLC v. CorePower Yoga, LLC, 2022 WL 601862, at *26 (Del. Ch. Mar. 1, 2022).

282 Restatement (Second) of Contracts § 265, cmt. a (1981).

283 Promise Easy Ltd. v. Moon, 2023 WL 5152173, at *19 (Del. Ch. Aug. 10, 2023)

(internal quotation marks omitted).

284 McReynolds v. Trilantic Cap. P’rs IV L.P., 2010 WL 3721865, at *4 (Del. Ch. Sept.

23, 2010) (internal quotation marks omitted); accord Bardy Diagnostics, Inc. v. Hill-Rom, Inc., 2021 WL 2886188, at *40 (Del. Ch. July 9, 2021).

285 McReynolds, 2010 WL 3721865, at *4 (citation omitted).

286 Wal-Mart, 2005 WL 5757652, at *6 (Del. Ch. Apr. 1, 2005), aff’d, 901 A.2d 106 (Del.

2006).

expectations.” 287 Yet, that “basic assumption” seems less like the ECL’s primary

purpose and more like one of several assumptions Gray Jay made to support its

decision to enter into the ECL. As Vale points out, the ECL’s text simply

memorializes Gray Jay’s investment in Vale—a necessary component of the broader

Transaction of which the ECL was only one part. 288 The ECL itself does not require

Vale to control OWL or its assets. Instead, those restrictions are imposed via the

ECL’s reference to the VPN—further confirming that the ECL must be viewed as a

component of the broader Transaction. 289 When viewed in that way, the most natural

reading of the ECL shows its purpose was to facilitate Gray Jay’s investment in Vale

as part of the Transaction in which the Gray Jay Members received a substantial

payout. Having enjoyed the benefits of the broader transaction, they cannot now seek

to redefine the ECL’s purpose to advance a litigation strategy.

But even if Gray Jay’s articulation of the ECL’s primary purpose is correct, the

frustration of purpose doctrine does not apply because the parties implicitly allocated

287 Post-Trial Opp’n Br. at 56–57.

288 Post-Trial Reply Br. at 26; see ECL at 1 ((“This letter agreement will confirm the

agreement and irrevocable commitment of [Gray Jay] to and in favor of Vale . . . to purchase, subject only to the conditions set forth herein, (a) $2,000,000 in equity securities of [Vale] [] simultaneous to the [Transaction] and (b) . . . an additional $8,000,000 in [s]ecurities . . . following receipt of . . . payment . . . [of] the [VPN].”). See also Ashland LLC v. Samuel J. Heyman 1981 Cont. Tr. For Heyman, 2017 WL 1224506, at *6 (Del. Super. Mar. 30, 2017) (“Delaware law allows for agreements related to the same business transaction and subject matter, and entered into in close temporal proximity of one another, to be read together as one overall agreement.”); Benchmark, 2026 WL 1179508, at *7 (“When interpreting contracts, it is important to read the relevant provisions in the context of the business relationship reflected in the Agreement.”).

289 See ECL at 2.

the risk of the Pilot Transaction. As discussed, the ECL conditions Gray Jay’s

investment obligation on the lack of a default and acceleration under the VPN. 290

The VPN in turn contains numerous restrictions on Vale’s ability to dispose of OWL

or its assets. 291 That indicates the parties were aware of the risk that Vale would

dispose of the OWL assets and could have addressed transactions like the Pilot

Transaction. 292 The fact that the parties did not squarely prohibit the Pilot

Transaction in the VPN suggests that they allocated “by omission” the risk of it

occurring to Gray Jay. 293 To the extent the VPN’s prohibitions do address the Pilot

Transaction, the ECL only alleviates Gray Jay of its investment obligations upon a

default and acceleration. 294 Thus, the parties expressly conditioned the VPN’s

protections on the OWL Lender declaring a default, which as discussed, did not occur

and was unlikely given the OWL Lender’s preference for repayment of the VPN.

Therefore, adopting Gray Jay’s position would reallocate a foreseeable risk that the

parties could have accounted for during negotiations, and that is not a proper

application of the frustration of purpose doctrine. 295 Accordingly, Gray Jay has not

290 ECL at 2.

291 See VPN § 7.01.

292 Wilmington Savings, 2015 WL 7889552, at *9 (“sophisticated parties can anticipate

efforts to evade the terms of an agreement” and can address those efforts “through provisions triggered by efforts to evade the literal terms.”).

293 Aspen Advisors, 843 A.2d at 707.

294 ECL at 2.

295 Wal-Mart, 2005 WL 5757652, at *6; McReynolds, 2010 WL 3721865, at *4.

carried its heavy burden to show that this is one of the rare cases where the

frustration of purpose doctrine relieves a party of its prior contractual obligation.

To bolster its frustration of purpose argument, Gray Jay invokes its pending

motion for sanctions, which seeks “an inference that Vale intentionally structured the

Pilot Transaction in an effort to frustrate the purpose of the ECL and avoid the ECL’s

Conditions, and such actions constituted bad faith.” 296 But granting Gray Jay’s

requested inference would not alter the analysis. The evidence in the record already

indicates that Vale did structure the Pilot Transaction to avoid the ECL’s termination

conditions. 297 Indeed, Vale does not dispute that fact. 298 But the fact that Vale

designed the Pilot Transaction around the ECL’s conditions does not evidence bad

faith or support applying the frustration of purpose doctrine. Generally, “efforts to

structure a transaction to avoid tripping the terms of an [agreement] are perfectly

permissible,” 299 and a party “do[es] not breach [its] contractual obligations by

structuring transactions to avoid triggering [protections] . . . in favor of [a

counterparty]. 300 This Court will not redraft a contract’s terms simply because one

296 Post-Trial Opp’n Br. at 66; see Dkt. 113.

297 See, e.g., JX042; JX048.

298 Post-Trial Opening Br. at 38 (“The record confirms that the Pilot Transaction was

deliberately structured to ensure the VPN was paid off before any change in control or asset transfer occurred.”).

299 Wilmington Savings, 2015 WL 7889552, at *9.

300 Law Debenture Trust Co. of New York v. Petrohawk Energy Corp., 2007 WL 2248150, at *7 (Del. Ch. Aug. 1, 2007); accord Concord Real Estate CDO 2006–1, Ltd. v. Bank of Am. N.A., 996 A.2d 324, 339 (Del. Ch. 2010).

party structured a transaction through a “loophole” the parties could have addressed

at the bargaining table. 301 Similarly, Gray Jay cannot use its motion for sanctions as

a means to prop-up its deficient frustration of purpose defense—especially given that

Gray Jay could have negotiated for a term in the VPN or ECL that prohibited the

Pilot Transaction but failed to do so. Thus, the Court denies the request for an

adverse inference contained in Gray Jay’s motion for sanctions as moot. 302

In sum, Gray Jay did not prove that its performance of the ECL should be

excused under either theory it advances. Because the Cout rejects the affirmative

defenses, Gray Jay remains liable for its proven breach of the ECL.

301 See Mangano v. Pericor Therapeutics, Inc., 2009 WL 4345149, at *5 & n.49 (Del.

Ch. Dec. 1, 2009).

302 Gray Jay’s request for attorney’s fees incurred in connection with its motion for

sanctions, however, is granted. “An affirmative duty to preserve evidence attaches upon the discovery of facts and circumstances that would lead to a conclusion that litigation is imminent or should otherwise be expected.” ATG Cap. Opportunities Fund LP v. Lane, 2026 WL 2592407, at *2 (Del. Ch. Sept. 2, 2026) (quoting Triton Const. Co. v. E. Shore Elec. Servs., Inc., 2009 WL 1387115, at *8 (Del. Ch. May 18, 2009)). The record suggests Vale was aware that it needed to preserve text messages held by Stone and Irani in advance of filing this action in November 2022, and Vale was certainly aware by the time Gray Jay requested that Vale implement a litigation hold for these individuals in January 2023. JX201. The record shows that Vale made negligible efforts to collect text messages from either Stone or Irani when they left Instar. Moreover, the record suggests that Vale made no effort to prevent Irani from engaging in a practice of routinely deleting text messages between 2020 and 2023. JX246; Tr. (Smith) at 400. While a far cry from the most egregious failures to preserve ESI seen by this Court, this conduct was, at a minimum, negligent. Negligence is sufficient to support the imposition of monetary sanctions. Beard Rsch., Inc. v. Kates, 981 A.2d 1175, 1194 (Del. Ch. 2009); ATG, 2026 WL 2592407, at *3. As a result of Vale’s failure to preserve evidence, Gray Jay unduly incurred attorney’s fees bringing a motion for sanctions.

C. Vale’s Implied Covenant Claim Fails

In addition to breach of contract, Vale also pled a claim for breach of the

implied covenant of good faith and fair dealing. 303 Yet, Vale’s opening post-trial brief

does not mention or address its implied covenant claim. 304 Although Vale’s reply brief

addresses the implied covenant claim in a single-page argument, 305 the failure to

raise the issue in its opening brief “constitutes a waiver of the claim.” 306 But even

absent any waiver, Vale’s implied covenant claim fails.

Vale argues the implied covenant fills any “gap” in the ECL concerning Gray

Jay’s obligation to invest “even if [Vale’s] equity value declined.” 307 “It is a basic

principle of Delaware law that the implied covenant cannot be invoked where the

contract itself expressly covers the subject at issue.” 308 The ECL details “[Gray Jay’s]

303 PTO ¶ 4.

304 See generally Post-Trial Opening Br.

305 Post-Trial Reply Br. at 29. It seems highly questionable that this one-page argument, which cites no record evidence, could be sufficient to carry Vale’s burden of proof on its implied convent claim. Post-trial a “plaintiff[] must present [its] claims in a cogent and persuasive manner, supported by admissible evidence[.]” Ruggerio v. Estate of Poppiti, 2005 WL 2622716, at *6 (Del. Ch. Oct. 5, 2005); see Roca v. E.I. du Pont de Nemours and Co., 842 A.2d 1238, 1242 n.12 (Del. 2004) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived[.]”).

306 Brown v. State, 198 A.3d 176, 2018 WL 6181657, at *2 n.9 (Del. Nov. 26, 2018)

(TABLE); In re IBP, Inc. S’holders Litig., 789 A.2d 14, 62 (Del. Ch. 2001).

307 Post-Trial Reply Br. at 29.

308 Mrs. Fields Brand, Inc. v. Interbake Foods LLC, 2017 WL 2729860, at *32 n.307

(Del. Ch. June 26, 2017) (internal quotation marks omitted); Johnson & Johnson, 352 A.3d at 253 (“[T]he covenant is a narrow gap-filling tool of last resort. Used properly, the implied covenant functions like a scalpel, not a brush.”).

obligation to . . . purchase [Vale] Securities,” including the limitations on that

obligation. 309 It also provides that Gray Jay can purchase Vale’s securities “at a cash

purchase price equal to the [] price of [Vale] Securities at the [time of the

Transaction], unless [Vale] has more recently issued Securities at a more favorable

purchase price and in such instance, [Gray Jay’s] purchase price shall be the lower of

such amounts.” 310 Thus, the ECL addresses Gray Jay’s requirement to purchase Vale

securities if Vale’s value declines—the exact issue at the heart of Vale’s implied

covenant claim. There is no gap for the implied covenant to fill. Accordingly, even if

fairly raised, Vale’s implied covenant claim fails.

D. Vale’s Available Remedy

Having found that Gray Jay breached the ECL and its performance was not

excused, the Court must determine Vale’s available remedy. Vale seeks (1) an order

“directing Gray Jay to specifically perform its obligations under the ECL and

purchase the [Vale] securities . . . necessary to fulfill its [] [] investment obligation”;

(2) an order directing Gray Jay to specifically perform a capital call under the Gray

Jay LLC Agreement to fund the investment obligation; (3) damages associated with

securing substitute performance; (4) its litigation costs; and (5) its attorneys’ fees. 311

309 ECL at 1.

310 Id.

311 Post-Trial Opening Br. at 52.

The Court previously held that “Gray Jay’s possible remaining investment

obligation to [Vale], if any, is no greater than $5.125 million.” 312 With that in mind,

the Court evaluates Vale’s relief requests.

1. Vale Is Entitled To An Order Directing Gray Jay To Specifically

Perform Its Obligations Under The ECL, But Not An Order

Directing Gray Jay To Issue A Capital Call.

Specific performance “is an extraordinary remedy” that “departs from the

ordinary contractual remedy of money damages.” 313 As such, “[i]f damages would

provide adequate relief, then specific performance is not available.” 314 The party

seeking specific performance must prove by “clear and convincing evidence” that “a

valid contract exists, [] he is ready, willing, and able to perform, and [] that the

balance of equities tips in favor of the party seeking performance.” 315 Whether to

order specific performance “rests in the sound discretion of the court.” 316

312 Dkt. 215 at 3.

313 26 Cap. Acq. Corp. v. Tiger Resort Asia Ltd., 309 A.3d 434, 438 (Del. Ch. 2023).

314 Id. at 464 (citing Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010)).

315 Snow Phipps, 2021 WL 1714202, at *51, 55 (internal quotation marks omitted).

The considerations the court balances include (1) “the complexity of the undertaking and the associated difficulty of providing meaningful judicial oversight”; (2) “whether the order can be enforced”; (3) if “performance of the contract by the defendant is possible”; (4) if the party seeking specific performance engaged in “inequitable conduct”; and (5) whether the agreement has a “specific performance provision.” 26 Cap., 309 A.3d at 465–74 (internal quotation marks omitted).

316 Peden v. Gray, 886 A.2d 1278, 2005 WL 2622746, at *3 (Del. Oct. 14, 2005) (TABLE).

Vale makes two specific performance requests. 317 First, Vale requests an order

“directing Gray Jay to specifically perform its obligations under the ECL and

purchase the [Vale] securities . . . necessary to fulfill its [remaining] investment

obligation[.]” 318 Gray Jay does not respond to that argument in its opposition brief,

despite specifically opposing Vale’s other specific performance request. 319 It is wellestablished that “[i]ssues not briefed are deemed waived,” 320 such that where a party

“failed to address [an] argument in [an] answering brief, [] any response is []

waived.” 321 Thus, Gray Jay waived any opposition to Vale’s first specific performance

request. The Court grants Vale’s first specific performance request and orders Gray

Jay to fulfill its remaining $5.125 million investment obligation. 322

317 See Post-Trial Opening Br. at 53–55.

318 Id. at 52. See also id. at53 (arguing that “the ECL is a valid and enforceable contract between Vale and Gray Jay. Vale has been and remains ready, willing, and able to perform its obligations thereunder. . . . Equity favors performance because Gray Jay bargained for the right to defer its investment, in accordance with the ECL’s terms, and assumed the risk that its capital would be required upon VPN [p]ayouts.”).

319 See Post-Trial Opp’n Br. at 61–62.

320 Emerald P’rs, 726 A.2d at 1224.

321 E.g., Rust v. Rust, 2025 WL 752325, at *6 (Del. Ch. Mar. 10, 2025).

322 See ATR-Kim Eng Fin. Corp. v. Araneta, 2006 WL 3783520, at *22 (Del. Ch. Dec.

21, 2006) (“[Plaintiff] requested monthly compounding in their opening brief. The defendants did not respond to this request . . . . Suffice it to say, the defendants are therefore in no position to quibble about the interest rate I now award, having forsaken their chance to respond.”). Vale has a strong argument in support of its first specific performance request. “This court has recognized that specific performance of a stock purchase is appropriate in situations where the stock in not available in the market, is unique, or has unique value to the purchaser[.]” Gildor v. Optical Solutions, Inc., 2006 WL 4782348, at *11 n.33 (Del. Ch. June 5, 2006) (citing Amaysing Techs. Corp. v. Cyberair Commc’ns, Inc., 2004 WL 1192602, at *3 (Del. Ch. May 28, 2004)). In the case of a privately held entity like Vale, “[s]pecific performance [is] justified . . . because of the difficulty in ascertaining the stock’s value.”

Vale also seeks an order “directing Gray Jay . . . to issue a capital call to its

members to ensure that Gray Jay has the ability to and actually fulfills its investment

obligations.” 323 Under the Gray Jay LLC Agreement, only Gray Jay’s “Managers”—

Cooper and Johnson—have the authority to issue a capital call. 324 The ECL provides

that “[n]o remedy, recourse or right of recovery hereunder . . . may be had against

any direct or indirect, prior, current or future security holder, partner, manager or

affiliate of [Gray Jay] . . . whether by the enforcement of any judgment or assessment

or by any legal or equitable proceeding[.]” 325 Thus, the ECL seemingly disclaims

Vale’s capital-call specific performance request. Just as the Court credits when “the

parties contract[] for specific performance,” 326 a contractual provision barring specific

performance is strong evidence that such a remedy is improper. 327

In addition, the capital call request seeks to dictate how Gray Jay fulfills its

investment obligation by requiring performance under a contract to which Vale is not

Manchester v. Narragansett Cap., Inc., 1989 WL 125190, at *5 (Del. Ch. Oct. 19, 1989) (citing U.S. Dimension Products, Inc. v. Tassette, Inc., 290 A.2d 634, 635 (Del. 1972)); see Darby Emerging Mkts. Fund, L.P. v. Ryan, 2013 WL 6401131, at *5 n.17 (Del. Ch. Nov. 27, 2013) (“[S]pecific performance can be an appropriate remedy in cases such as this where it would be difficult to ascertain [the] stock’s value.”). So too here. An award of money damages, instead of an order requiring Gray Jay to purchase Vale securities, would seem to require, among other things, undertaking a valuation of Vale.

323 Post-Trial Opening Br. at 52.

324 Gray Jay LLC Agreement § 6.1, Ex. B.

325 ECL at 2 (emphasis added).

326 Fortis Advisors, LLC v. Krafton, Inc., 354 A.3d 906, 948 (Del. Ch. Mar. 16, 2026).

327 See, e.g., Snow Phipps, 2021 WL 1714202, at *51–52.

a party. Generally, parties have discretion regarding how they fulfill a judgment and

the Court “will not intervene to deploy coercive remedies on the claimant’s behalf.” 328

While the Gray Jay LLC Agreement describes Gray Jay’s purpose as facilitating the

Gray Jay Members’ investment in Vale, 329 it could fulfill that obligation by issuing a

capital call, taking a loan, or any other manner of performance. The Court will not

limit it to Vale’s preferred method. 330 That is especially true given that Vale is not a

party to the Gray Jay LLC Agreement and “only a party to a contract has standing to

enforce it.” 331 For these reasons, the Court concludes that ordering Gray Jay to

specifically perform a capital call is not proper.

328 Gandhi-Kapoor v. Hone Capital LLC, 305 A.3d 707, 715 (Del. Ch. 2023); see Chambers v. Delaware Dept. of Correction, 2010 WL 847802, at *1 (Del. Super. Mar. 11, 2010) (“[W]hile [the court] may compel performance of a duty, it may not dictate the manner of performance of any particular result.”).

329 Gray Jay LLC Agreement § 3.1. The Gray Jay LLC Agreement contemplates a capital call as one method of performance. Id. § 6.1. But as discussed, only Gray Jay’s Managers can issue a capital call. Vale did not argue that it is a “creditor” of Gray Jay such that 6 Del. C. § 18-502(b) might apply. See Hassanein v. NTO Fund I, --- A.3d ---, 2026 WL 2240127, at *25 (Del. Ch. Aug. 4, 2026).

330 To the extent Vale suggests that an order requiring Gray Jay to perform its investment obligation, without also requiring it to issue a capital call, would be toothless, that is not the case. It is axiomatic that “[n]o person may with impunity disregard an order of the court[.]”) Eagle Force Hldgs., LLC v. Campbell, 187 A.3d 1209, 1240 (Del. 2018) (internal quotation marks omitted); see Schmidt v. Schmidt, 610 A.2d 1374, 1377 (Del. 1992) (“A litigant who displays defiance to a court by refusing to comply with its order should not be permitted to appeal that order while persisting in his defiance. . . . A litigant is not free to determine to what extent he will comply with the law.”).

331 Florida Chem. Co., LLC v. Flotek Indus., Inc., 262 A.3d 1066, 1084 (Del. Ch. 2021).

Vale does not invoke any of the recognized exceptions to that well-established principle.

2. Vale Is Not Entitled To Money Damages Associated With The

Oceanides Promissory Note

In addition to specific performance, Vale seeks damages associated with

interest paid on the Oceanides Promissory Note it used “to cover costs [Gray Jay’s

investment] was supposed to fund.” 332 Vale insists that sum constitutes reasonable

“[e]xpectation damages [that] put Vale where it would have been absent Gray Jay’s

breach.” 333 Gray Jay argues Vale’s requested monetary damages are consequential

damages which the ECL disclaims. 334 Gray Jay also asserts that the ECL’s damages

cap precludes any monetary damage award. 335

Delaware law distinguishes “between general (or direct) damages and

consequential (or special) damages.” 336 “General damages are those that flow directly

and immediately from the [breach] . . . while consequential damages do not flow

directly from the breach but result from its consequences.” 337 Academic sources also

332 Post-Trial Opening Br. at 55–56.

Vale maintains the note’s interest rates—“first

13%, then 20%—were reasonable and appropriate given the company’s risk profile and the nature of the financing.” Id.

333 Id.; see Siga Techs., Inc. v. PharmAthene, Inc., 132 A.3d 1108, 1131 (Del. 2015).

334 Post-Trial Opp’n Br. at 58.

335 Id. at 58–59; see Dkt. 215 at 3; ECL at 2–3.

336 Byborg Enters. S.A. v. Vertex, Inc., 2025 WL 1911338, at *3 (Del. Super. July 11,

2025); accord WSFS Fin. Corp. v. Great Am. Ins. Co., 2019 WL 2323839, at *4–5 (Del. Super. May 1, 2019).

337 Byborg, 2025 WL 1911338, at *3; accord WSFS Fin., 2019 WL 2323839, at *4–5

(“Direct damages are the necessary and usual result of the defendant’s wrongful act; they flow naturally and necessarily from the wrong. . . . Consequential damages, also known as special damages, are those that result naturally but not necessarily from the wrongful act, because they require the existence of some other contract or relationship.”).

recognize that distinction. 338 “The distinction between direct and consequential

damages is the degree to which the damages are a foreseeable and highly probable

consequence of a breach.” 339

Under that standard, Gray Jay seemingly has a strong argument that Vale’s

requested Oceanides Promissory Note Interest damages are consequential damages

precluded by the ECL’s text. 340 Those damages do not flow necessarily from Gray

Jay’s breach of the ECL—i.e., Gray Jay could have breached the ECL without Vale

entering into the Oceanides Promissory Note and incurring related damages. 341

Instead, damages associated with the Oceanides Promissory Note are based on a

separate contractual relationship necessitated by Vale’s special circumstances—the

need to cover the Pilot Transaction’s closing costs. 342 Thus, those damages seem to

be consequential because they did not flow directly from Gray Jay’s breach, but rather

338 Glenn D. West, Consequential Damages Redux: An Updated Study of the

Ubiquitous and Problematic ‘Excluded Losses’ Provision in Private Company Acquisition Agreements, 70 Bus. Law. 971, 985 (2015) (“[C]onsequential damages [are] damages that do not flow directly and immediately from the injurious act, but that result indirectly from the act.” (internal quotation marks omitted)). Consequential damages “can include losses directly caused by the breach, and that are the probable result of the breach . . . , but that are nevertheless beyond the ordinary course of events normally expected from a breach of this type of contract.” Id. at 986 (internal quotation marks omitted).

339 WSFS Fin., 2019 WL 2323839, at *5; see West, supra n.338, at 986–87.

340 ECL at 3 (“[U]nder no circumstances shall [Gray Jay] be liable for any special,

incidental, consequential, indirect, exemplary or punitive damages.”); eCommerce Indus., Inc. v. MWA Intelligence, Inc., 2013 WL 5621678, at *45 (Del. Ch. Sept. 30, 2013) (“[L]imitation on liability clauses that preclude various types of damages, such as consequential damages, are typically enforceable.”).

341 See West, supra n.338, at 986–87.

342 See JX180; JX278; Tr. (Smith) at 177–82.

its consequences. Yet, the Court need not conclude whether Vale’s requested

monetary damages are direct or consequential because the ECL’s damages cap bars

their recovery either way. 343

Delaware courts routinely enforce contractual damages caps. 344 Gray Jay

specifically invokes the ECL’s damages cap in its opposition brief, but Vale did not

respond to that argument. 345 That alone defeats Vale’s request. 346 Indeed, Vale’s

insistence that its damages are direct belies any argument that the ECL’s damage

cap does not apply. The Court will order Gray Jay to purchase the Vale securities

needed to fulfill its full investment obligation of $10 million—which under the ECL

constitutes Gray Jay’s “maximum liability . . . for any reason[.]” 347 Thus, even absent

waiver there is no room left under the damages cap to award Vale’s requested

damages.

343 See ECL at 2–3 (“[U]nder no circumstances shall the maximum liability of [Gray

Jay] hereunder exceed the Investor Vendor Note Equity Commitment Cap less any Investor Equity Commitment Payments made by Investor for any reason.”).

344 See, e.g., LG Elecs. Inc. v. Invention Inv. Fund I, L.P., 362 A.3d 1266, 1282–88 (Del.

2026).

345 See Post-Trial Opp’n Br. at 58–59; Post-Trial Reply Br. at 30–33.

346 Robinson v. Darbeau, 2021 WL 776226, at *10 n.114 (Del. Ch. Mar. 1, 2021) (“[A]

failure to brief an argument constitutes a waiver of the argument.” (citing Emerald P’rs, 726 A.2d at 1224)).

347 ECL at 2–3.

3. Vale Is Entitled To Its Costs, But Not Its Attorneys’ Fees;

Supplemental Briefing Is Needed On Interest

Vale requests its litigation costs. 348 Gray Jay waived any opposition to Vale’s

request for costs by not opposing that ask in its post-trial brief or at oral argument. 349

Regardless, the Court awards the prevailing party its costs as a matter of right. 350

Accordingly, Vale is entitled to its costs.

Vale also seeks pre- and post-judgment interest. 351 Although Vale seeks

interest in the context of its unsuccessful request for monetary damages, this Court

has granted prejudgment interest in the context of an order to fulfill a purchase

requirement. 352 The decision to do so is rooted in the idea that “an order of specific

performance ‘seldom results in performance within the time the contract requires’”

and “damages for the delay will usually be appropriate.” 353 Yet, the Court has also

recognized that strict contractual limitations on the types of recoverable damages or

caps on the amount of damages might support declining to grant such an interest

348 Post-Trial Opening Br. at 56–57.

349 See Post-Trial Opp’n Br. at 63–66; Emerald P’rs, 726 A.2d at 1224.

350 10 Del. C. § 5106 (“The Court of Chancery shall make such order concerning costs

in every case as is agreeable to equity.”); see Mack Bros. v. Keypoint Intelligence, LLC, 2025 WL 3041804, at *14 (Del. Ch. Oct. 29, 2025) (citing Ct. Ch. R. 54(d)).

351 Post-Trial Opening Br. at 56–57.

352 See, e.g., Osborn v. Kemp, 2009 WL 2586783, at *12 (Del. Ch. Aug. 20, 2009), aff’d,

991 A.2d 1153 (Del. 2010).

353Snow Phipps, 2021 WL 1714202, at *55 (quoting Restatement (Second) of

Contracts § 358 cmt. c).

award. 354 On the other hand, Delaware courts have awarded prejudgment interest

in cases involving a monetary damages cap. 355 The parties did not address how the

specific language of the ECL’s damages cap affects Vale’s request for pre- and postjudgment interest in either post-trial briefing or oral argument. Accordingly, the

parties will confer on and file a schedule to provide supplemental submissions

addressing that narrow issue.

That leaves Vale’s request for Attorneys’ fees. Delaware follows “the American

Rule, where the prevailing party ordinarily pays its own fees and costs.” 356 An

exception exists “where the losing party has acted in bad faith, vexatiously, wantonly,

or for oppressive reasons. 357 “Invoking the bad faith exception is exceedingly

rare[.]” 358 This Court has awarded attorney’s fees under the bad faith exception

when, for example, “parties have unnecessarily prolonged or delayed litigation,

354 Id. at *55–56 (ordering supplemental briefing on the issue of prejudgment interest

where stock purchase agreement limited available remedies to either specific performance or a termination fee).

355 See, e.g., LG Elecs., 362 A.3d at 1288 (directing “entry of judgment in LG’s favor in

the amount of [the damages cap]” and “remand[ing] with instructions to award prejudgment interest to LG.”); River Valley Ingredients, LLC v. Am. Proteins, Inc., 2025 WL 3094942, at *6, 20 (Del. Super. Nov. 5, 2025) (finding damages sufficient to “trigger the indemnification cap of $55 million” and that “[i]nterest must be added to the damage calculation.”).

356 Trematerra v. Affinity Project, Inc., 2025 WL 3706541, at *12 (Del. Ch. Dec. 22,

2025).

357 Kaung v. Cole Nat. Corp., 884 A.2d 500, 506 (Del. 2005) (internal quotation marks

omitted).

358 Trematerra, 2025 WL 3706541, at *12.

falsified records or knowingly asserted frivolous claims.” 359 That both sides

“prevailed on portions of [a] case” suggests that fee shifting is not justified. 360

Vale has not met the high burden to show that it is entitled to its attorneys’

fees under the bad faith exception. 361 For one, Gray Jay (1) secured a dismissal of

several claims and the prior individual defendants 362 and (2) enforced the ECL’s

damages cap to reduce the amount in controversy. 363 Additionally, Vale’s factual

arguments in support of fee shifting do not show that Gray Jay litigated in bad

faith. 364 The evidence does not show that Gray Jay, “for no legally valid reason,

refuse[d] to honor a clear legal obligation and force[d] . . . litigation for the sole

purpose of causing delay.” 365 Instead, Gray Jay advanced several cognizable defenses

359 Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 546 (Del. 1998).

360 Trematerra, 2025 WL 3706541, at *12.

361 In its reply brief, Vale asserts that the “ECL permits recovery of enforcement costs

upon breach.” Post-Trial Reply Br. at 35–36. But that the ECL does not preclude an award of attorneys’ fees is very different from a contract that affirmatively creates a right to fee shifting.

362 See Dkt. 47; Dkt. 147.

363 Dkt. 215.

364 Post-Trial Opening Br. at 56–62 (arguing Gray Jay’s conduct generally constitutes

bad faith because its “refusal to perform was deliberate, strategic, and entirely unsupported by the contract or record.”).

365 Abex Inc. v. Koll Real Estate Gp., Inc., 1994 WL 728827, at *21 (Del. Ch. Dec. 22,

1994).

to defend its non-performance of the ECL. That trial disproved those defenses does

not mean Gray Jay litigated in bad faith. 366

Vale specifically challenges Gray Jay’s Madera Event insolvency argument,

which it characterizes as “manufactured after the fact” and unsupported by the

evidence. 367 That argument has some merit. As discussed, (1) no contemporaneous

documents describe the Madera Event as a massive environmental disaster; (2) the

Madera Well had resumed operation at the time of the Pilot Transaction; and (3) Gray

Jay relied on a 2024 hypothetical report which supports the conclusion that the

Madera Event did not contaminate the freshwater aquifer. 368 But Gray Jay’s Madera

Event insolvency argument was not entirely frivolous given OWL’s precarious

financial position in 2022. 369 Moreover, this Court has recognized that a party’s own

misconduct can support denying a request to shift fees under the bad faith

exception. 370 Vale’s incomplete document collection was troubling. This was a hardfought litigation where both sides advanced several arguments with varying degrees

of success, each winning intermediate victories along the way. Accordingly, the Court

366 E.g., Brown v. Wiltbank, 2012 WL 5503832, at *1 (Del. Ch. Nov. 14, 2012) (“The

fact that [a party] did not succeed on the merits . . . does not necessarily mean that she acted in bad faith or vexatiously.”).

367 Post-Trial Opening Br. at 59–62; see Post-Trial Reply Br. at 36–37.

368 See, e.g., JX227.

369 See, e.g., JX145.

370 See, e.g., Auriga Cap. Corp. v. Gatz Properties, 40 A.3d 839, 880–82 (Del. Ch. 2012).

See also POSCO Energy Co., Ltd. v. FuelCell Energy, Inc., 2020 WL 6194693, at *3, n.23 (Del. Ch. Oct. 22, 2020) (“An unwarranted motion for fee shifting under the bad faith exception can itself justify a finding of bad faith and fee shifting.” (internal quotation marks omitted)).

concludes that Vale has not made the difficult showing that fee shifting is warranted

under the bad faith exception.

IV. CONCLUSION

For the reasons discussed, Vale proved that Gray Jay breached its obligation

to purchase Vale securities under the ECL, but not its implied covenant claim. Gray

Jay’s defenses to excuse its non-performance fail. Vale is entitled to an order

requiring Gray Jay to specifically perform its investment obligation, but not an order

requiring Gray Jay’s Managers to issue a capital call. Moreover, Vale is not entitled

to its requested monetary damages or attorneys’ fees. The parties are instructed to

submit a proposed implementing order consistent with this opinion within ten

business days. Gray Jay will file a Rule 88 affidavit detailing the reasonable fees and

expenses incurred in bringing the spoliation motion. Additionally, the parties will

promptly confer and file a schedule for the submission of supplemental briefing on

whether Vale is entitled to pre- and post-judgment interest.

Vale Ventures IA LLC v. Gray Jay Management Investments, LLC

Authorities cited

Opinion · public domain