Full 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 2 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”). 3 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. 4 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 14 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 post- Transaction 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. 5 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. 6 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. 7 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. 8 $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. 9 [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. 10 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. 11 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. 12 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.”). 13 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. 14 (“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 then- president, 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”). 15 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. 16 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. 17 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 well- developed 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. 18 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 related- party 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. 19 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. 20 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 non- recoverable 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. 21 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. 22 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) “Gra