Stephen Dalby v. David Kastner

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

STEPHEN DALBY and JANA DALBY, )
)
Plaintiffs, )
)
v. ) C.A. No. 2025-0136-NAC
)
DAVID KASTNER and JEFF MENDEZ, )
)
Defendants, )
)
)
and
)
)
GABB WIRELESS, INC., )
)
Nominal Defendant. )
________________________________________ )
)
AIM VENTURA CAPITAL FUND, LLC, )
AIM VENTURA CO-INVEST I, LLC and )
AIM VENTURA CO-INVEST II, LLC )
)
Intervenor-Plaintiffs, )
)
v. )
)
GABB WIRELESS, INC., )
)
Defendant-in-Intervention. )

MEMORANDUM OPINION

Date Submitted: July 21, 2025
Date Decided: August 29, 2025

Garrett B. Moritz, Eric D. Selden, Anthony M. Calvano, Thomas C. Mandracchia,
ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; Counsel for Plaintiffs
Stephen Dalby and Jana Dalby.

Todd C. Schiltz, Oderah C. Nwaeze, Renée M. Dudek, Angela Lam, FAEGRE
DRINKER BIDDLE & REATH LLP, Wilmington, Delaware; Stephanie S. Ohnona,
FAEGRE DRINKER BIDDLE & REATH LLP, Philadelphia, Pennsylvania; Counsel
for Defendants David Kastner and Jeff Mendez.
Rebecca L. Butcher, Jennifer L. Cree, Howard W. Roberston IV, LANDIS RATH &
COBB LLP, Wilmington, Delaware; Counsel for Nominal Defendant and Defendant-
in-Intervention Gabb, Wireless, Inc.

Travis J. Ferguson, Faith C. Johnson, McCARTER & ENGLISH, LLP, Wilmington,
Delaware; Counsel for Intervenor-Plaintiffs AIM Ventura Capital Fund, LLC, AIM
Ventura Co-Invest I, LLC, and AIM Ventura Co-Invest II, LLC.

COOK, V.C.
When Stephen Dalby, a father of eight and former seminary schoolteacher, set

out to buy his twelve-year-old son a phone, he could not find one that he felt

comfortable buying for a child. So he decided to make one. Dalby founded Gabb

Wireless, Inc. (“Gabb” or the “Company”), a technology company and cellular network

designed to provide safer cellular phone options for children.

Gabb was quickly successful. Two years after Dalby started the Company,

Gabb closed its “Series Seed” round of funding, led by AIM, a Utah-based growth

equity fund. A year later, Gabb closed its “Series A” round, led by another Utah-

based investment firm, Sandlot. Then things soured. That fall, AIM and Sandlot’s

board of director designees (the “Preferred Directors”) voted to remove Dalby as CEO.

Dalby sued. The parties settled. The settlement agreement provided Dalby with

certain protections: Until the Company raised a “Series B” round of funding, Dalby

would remain on the board of directors and could not be diluted. Dalby also had the

right to appoint two other directors.

Things did not get much better after the settlement agreement. Within months

of the settlement, Gabb’s management, which had strong ties to AIM, was already

thinking of ways to remove Dalby from the board of directors. At a board of directors

meeting, the Preferred Directors voted to remove Dalby from the board of directors.

Dalby and his director designees voted to remove the Company’s CFO. Both removals

violated the settlement agreement, and ultimately, Dalby, management and the

Preferred Directors worked things out for the sake of reaching a Series B round of

funding. When the Series B raise failed, everything went off the rails.
Dalby removed one of his two director designees and replaced him with his

wife, Jana Dalby. Management and the Preferred Directors tried to put pressure on

Dalby by asserting that the director’s removal and Jana Dalby’s appointment was a

breach of the Company’s agreement with a major lender. That plan backfired when

the lender actually demanded that Dalby undo his wife’s appointment and reinstate

the director he had removed. Dalby refused. The lender did not extend additional

credit to Gabb.

Because of the distrust between Dalby and management and the Preferred

Directors, the Company could not secure additional debt or equity to fix the hole in

its budget.

Behind the scenes, Gabb’s management and the Preferred Directors were

again secretly working to remove Dalby from the board of directors. To be fair, their

concerns were not entirely unfounded. The dysfunction at the board of directors had

gotten so bad that, so long as Dalby remained a director, the chances that the

company could obtain additional funding were slim to none. Perhaps even more

troubling was Dalby’s behavior.

In the summer of 2024, Gabb’s management heard from one of Dalby’s

neighbors that she had filed for a civil protection order against him for allegedly

stalking her family and minor children. When management hired an investigative

firm, the firm uncovered, among other things, several recent police reports

documenting Dalby’s erratic behavior. The police reports did not result in any

arrests, but, based on Dalby’s volatile behavior and past incidents, Gabb’s

2
management developed serious concerns over his continued involvement in the

Company.

Management and the Preferred Directors enlisted the help of Gabb’s outside

counsel to remove Dalby from the board of directors. The Company was invoiced for

all of the legal fees. The removal effort was no small cost for a Company that was

hemorrhaging money and was months away from not being able to make payroll. The

Dalbys were unaware that management and the Preferred Directors were secretly

using Company resources to further Dalby’s removal from the board of directors.

When, eventually, Dalby learned that a removal effort was in the works and asked if

Company resources were being used to fund the effort, management and the

Preferred Directors did not respond.

Outside counsel advised that AIM and Sandlot could not lead the removal

effort because of their past litigation with Dalby. So management handpicked a

stockholder to serve as the face of the removal effort. But that stockholder

contributed little more than its name. Gabb’s outside counsel drafted all the

documents for the removal, and Gabb’s management continued to spearhead the

effort. When Dalby’s removal was presented to Gabb’s stockholders, management

solicited stockholder votes and Gabb’s outside counsel kept the official tally.

At the same time that management and the Preferred Directors were planning

Dalby’s removal, the Company’s financial problems were coming to a head.

Management did not see bankruptcy as a viable solution because it would not get rid

of Dalby. Gabb’s outside counsel came up with a plan that would kill two birds with

3
one stone: AIM would elect to convert a note that it held and would also infuse the

company with an additional $1 million. The note conversion would then be declared

a Series B round of financing and the protections that Dalby had bargained for under

the settlement agreement would vanish. AIM could then effectively take over the

Company and try to save an investment that was threatening the success of its fund.

As soon as Gabb’s stockholders voted to remove Dalby, the Preferred Directors

approved the note conversion and adopted a resolution recommending that Gabb’s

stockholders vote to amend and restate the Company’s certificate of incorporation to

authorize the stock necessary for the conversion to proceed.

This litigation ensued. Stephen Dalby and Jana Dalby brought this action

challenging Dalby’s removal from Gabb’s board of directors. AIM intervened, seeking

an order of specific performance requiring Gabb to issue the necessary shares of stock

to AIM to effectuate the conversion.

After trial, I conclude that Dalby’s for cause removal was invalid. I also

conclude that the Company has breached the terms of AIM’s convertible note but AIM

is not entitled to specific performance.

I. FACTUAL BACKGROUND

The facts are drawn from the post-trial record, which includes 197 stipulations

of fact, over 900 exhibits, depositions from thirteen witnesses, and trial testimony

4
from nine witnesses.1 Having evaluated the credibility of the witnesses and weighed

the evidence, the Court makes the following findings.

A. The Company

In 2018, Plaintiff Stephen Dalby founded Gabb Wireless, Inc., a Delaware

corporation with its principal place of business in Lehi, Utah.2 Gabb is a technology

company and cellular network designed to provide safer cellular phone options for

children.3 The idea for the Company was born when Dalby, a father of eight4 and

former seminary schoolteacher,5 could not find a cell phone he felt comfortable buying

for his twelve-year-old son.6

B. The “Series Seed” and the Series A Financing Rounds

On March 9, 2020, Gabb closed its “Series Seed” round of funding with

Intervenor-Plaintiff AIM Ventura Capital Fund, LLC (“AIM Ventura”).7 AIM

1 Joint trial exhibits are cited as “JX ___,” trial testimony is cited as “TT ____
([Name]),” and depositions are cited as “([Name]) Dep. ____.” Pincites refer to internal
pagination. When discussing Stephen Dalby and Jana Dalby, the Court refers to Stephen
Dalby as “Dalby” and Jana Dalby as “Jana” for convenience and to avoid confusion. No
disrespect is intended.

2 Dkt. 147, Pre-Trial Stip. and Order (“Pre-Trial Stip.”) ¶¶ 2, 6. See generally JX 1
(Worth.com article about Gabb).

3 Pre-Trial Stip. ¶ 6.

4 E.g., TT 296:2–8 (Dalby).

5 JX 1 at 1; TT 204:13–205:10 (Dalby).

6 JX 1 at 1–2.

7 Pre-Trial Stip. ¶ 10.

5
Ventura is a Utah-based growth equity fund that “specializes in lower market

revenue generating companies,” and is associated with Adams Wealth Advisors.8

Gabb subsequently closed its “Series A1” financing round with two other entities

related to Adams Wealth Advisors: Intervenor-Plaintiffs AIM Ventura Co-Invest I,

LLC and AIM Ventura Co-Invest II, LLC (the “AIM Co-Invest Entities,” and together

with AIM Ventura, “AIM” or “Intervenor Plaintiffs”).9 Around the time of AIM’s

investment, Greg Cole became the Company’s CFO.10

Cole is “a co-founder of the AIM funds and holds a 50% interest in AIM Ventura

Capital Management Fund, which is the manager of the AIM funds.” 11 Cole is also

an investor in AIM Ventura, AIM Ventura Co-Invest I, LLC and other AIM entities.12

AIM’s website and its June and October 2024 quarterly investor updates list Cole as

a “Partner & Managing Director” or member of “Portfolio Management.”13 Cole

spends “about one day a week” working out of the Adams Wealth Advisors office. 14

About a year after its Series Seed round, on April 21, 2021, Gabb closed its

“Series A” round of funding with Sandlot Opportunity Partners Fund IV LLC, Sandlot

8 Pre-Trial Stip. ¶ 7.

9 Id. ¶¶ 8–10.

10 JX 800 at 2 (Cole’s LinkedIn Profile).

11 Pre-Trial Stip. ¶ 21; see also TT 388:18–392:2 (Cole).

12 Pre-Trial Stip. ¶ 21; see also TT 411:11–412:14 (Cole).

13 JX 798; JX 159 at 4; JX 349 at 2.

14 TT 413:13–24 (Cole).

6
Opportunity Partners Fund IX LLC, and Sandlot Partners Opportunity Fund XIV

(collectively, “Sandlot”).15

AIM holds 12,504,968 shares of Gabb’s preferred stock, and Sandlot holds

9,195,276 shares of Gabb’s preferred stock.16 Following its Series Seed and Series A

rounds, Gabb amended its certificate of incorporation to provide for a five-director

Board.17 Of the five director seats, Dalby could appoint three “Common Directors,”

and AIM and Sandlot could each appoint one “Preferred Director.”18

In March 2021, AIM Ventura designated Greg Cole as its Preferred Director

designee to the Board.19 In addition to Cole, at various points in time, AIM has

designated Craig Adams, David Kastner, and Cormac Murphy to its Board seat.20

Currently, Defendant David Kastner holds the seat. AIM’s June 2024 and October

2024 quarterly investor updates identify Kastner as part of AIM’s “Portfolio

Management.”21

15 Pre-Trial Stip. ¶ 18.

16 Id. ¶¶ 7–9, 15–17.

17 Id. ¶ 35.

18 Id.

19 Id. ¶ 12.

20 Id. ¶ 11.

21 JX 159 at 4; JX 349 at 2.

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Sandlot initially appointed Defendant Jeff Mendez to Sandlot’s Preferred

Director seat.22 On April 11, 2025, Sandlot replaced Mendez with Casey Baugh, a

Sandlot principal.23 At trial, Mendez testified that “my fiduciary [sic] is to Sandlot.”24

In connection with Gabb’s Series A round, Dalby, AIM Ventura, Sandlot, and

other investors in the Company executed an Investors’ Rights Agreement.25

C. The 2021 Action, the Settlement Agreement, and the Amended
and Restated Voting Agreement

After AIM and Sandlot’s investment, Dalby continued to serve as Gabb’s CEO

and as a director. At the time, Cole held AIM’s Preferred Director seat and Mendez

held Sandlot’s Preferred Director seat. The other Common Director seats remained

vacant.

On October 25, 2021, before Dalby was able to appoint two additional Common

Directors, Cole and Mendez voted to remove Dalby as CEO. Following his removal,

Dalby sued the Preferred Directors. The litigation was captioned Stephen R. Dalby

v. Greg Cole, et al., C.A. No. 2021-1068-PAF. On January 21, 2022, the Court entered

a Status Quo Order (the “SQO”).26 Among other things, the SQO enjoined the

22 Pre-Trial Stip. ¶ 36.

23 Id. ¶ 5.

24 TT 606:24–607:6 (Mendez).

25 JX 5 (Investors’ Rights Agreement).

26 Pre-Trial Stip. ¶ 40; see also JX 8.

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Company and the Board from “[a]uthorizing [or] issuing . . . any securities of the

Company (including without limitation any . . . options . . . ).”27

On June 2, 2022, the parties resolved the litigation through a Settlement

Agreement.28 Under the terms of Settlement Agreement, Dalby agreed to step down

as CEO in favor of Nathan Randle—AIM and Sandlot’s desired candidate.29 The

parties agreed that Randle would “serve in the CEO role through the initial closing

of Gabb Wireless’s next round of bona fide financing for the primary purpose of capital

. . . (the ‘Series B’).”30 The parties also agreed that Cole would step down from the

Board but would continue serving as the Company’s CFO until the Series B round

closed.31

Although Dalby was no longer the Company’s CEO, the Settlement Agreement

provided that he would serve as the “CEO Director” until the Series B round closed

or a new CEO was appointed.32 He could also continue to appoint two “professional

and experienced” Common Directors.33 The Settlement Agreement required that

27 JX 8 ¶ 3.c.

28 See JX 20.

29 Randle previously worked as the Chief Marketing Officer of Vivint Smart Home

where Mendez served as the Executive Vice President. TT 484:1–2 (Randle); TT 570:5–10
(Mendez).

30 JX 20 § 1.

31 Id. § 2.

32 Id. § 3(a).

33 Id. § 3(b).

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Dalby’s appointments to the Common Director seats “have the appropriate

professional background and experience necessary to fill the role” and “be interviewed

by one other member of the Board prior to being confirmed . . . to the applicable

Common Director seat.”34 Per the Agreement, Dalby was to appoint Thomas

Alexander and Jared Sine as two Common Directors.35 The Settlement Agreement

also provided that while Jeff Mendez would continue as Sandlot’s designee, Cole

would be replaced by Craig Adams as AIM’s designee.36

And the Settlement Agreement provided, in a provision entitled “No Additional

Dilution,” that “[i]f additional capital needs to be raised prior to a Series B round of

financing, any dilution shall be borne solely b[y] AIM Ventura and Sandlot and not

b[y] Dalby.”37 After the Settlement Agreement, Dalby remained the Company’s

largest stockholder. As Clayton testified, Dalby “owns almost 49 percent” of the

Company.38

As part of the Settlement Agreement the parties also agreed to a provision

entitled “Non-Disparagement,” which required the parties to refrain from making

34 Id.

35 Id.

36 Id. § 3(c).

37 Id. § 7.

38 TT 17:3–4 (Clayton) (“Mr. Dalby owns almost 49 percent, 48 point something
percent of the company.”); see also JX 702 (native) (Gabb Wireless, Inc. Detailed Cap Table)
(showing as of Jan. 14, 2025, Dalby owns 48.893% of the Company).

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statements disparaging, demeaning, or discrediting another party to the Settlement

Agreement—including through posting on any website or social media platform.39

On September 15, 2022, after the action was dismissed by stipulation, the

parties executed an Amended and Restated Voting Agreement.40 Consistent with the

terms of the Settlement Agreement, under the Amended and Restated Voting

Agreement, Dalby has the right to designate two Common Directors and hold the

third Common Director Seat as “CEO Director.”41 In a provision entitled

“Disqualified Designee,” Dalby, AIM, and Sandlot agreed they would not knowingly

appoint a director who was a “bad actor” per Rule 506(d)(1)(i)–(viii) of the Securities

Act of 1933 and to remove such a director if appointed.42 The Voting Agreement also

contains an “Irrevocable Proxy and Power of Attorney” provision.43 In brief, the text

provides that if a party to the agreement votes its shares in a manner inconsistent

with the Voting Agreement, that stockholder grants the CEO an irrevocable proxy

and power of attorney to vote the shares instead.44 As in the Settlement Agreement,

many of the protections afforded Dalby by the Amended and Restated Voting

Agreement terminate upon the “Next Equity Financing,” which is defined as “the

39 JX 20 § 21.

40 JX 27.

41 Id. § 1.2(c).

42 Id. § 5.3.

43 Id. § 4.2.

44 Id.

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initial closing of the Company’s next bona fide equity financing for the primary

purpose of raising capital.”45

On the same day that Amended and Restated Voting Agreement was executed,

the Board amended and restated Gabb’s Bylaws.46 Gabb’s Amended and Restated

Bylaws provide: “At all meetings of the Board, a majority of the total number of

directors then serving on the Board shall constitute a quorum for the transaction of

business.”47

D. The LinkedIn Post

In June 2022, after the Settlement Agreement was signed, Dalby published a

LinkedIn post that, in part, discussed how Cole and Mendez had removed him as

CEO (without identifying the two Preferred Directors by name).48 The post included

statements that “I was fired from the very company that I started” after “[t]wo big

investors . . . planned and executed the perfect coup” and “did it in a pathetically

dishonest, and illegal way – feel free [to] look up the lawsuit ;)[.]” But the post was

otherwise largely a positive message about moving on after life’s challenges, “[g]oing

from 60 to 0 mph[,]” “[m]ore fishing with my boys[,]” and “[l]et[ing] it go.” Dalby wrote

“please no sympathy comments, I’ve never been happier :)” and encouraged others

45 Id. § 1.2(c).

46 JX 29.

47 Id. § 2.9.

48 Pre-Trial Stip. ¶ 43; see also JX 26.

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facing similar challenges to “[l]earn from it, improve, start again.”49 Dalby

hashtagged the post “#thankyou” and included a photo of himself standing waist-deep

in a stream, smiling and holding a fish.50 The post received more than 700 comments

and shares.51 When the Company pursued venture capital firms for its Series B

round, some firms reportedly cited the post when declining to invest.52

Several months after the post, on November 7, 2022, an attorney for Cole and

Mendez sent a cease-and-desist letter stating that the post violated the Settlement

Agreement’s Non-Disparagement provision and threatening legal action over the post

as well as other alleged breaches of the Settlement Agreement.53 Dalby’s attorney

responded, countering with allegations that, in March 2022, Cole and Mendez had

issued significant option grants in a self-dealing transaction.54 Cole and Mendez did

not pursue legal action against Dalby.55

49 JX 26 at 1.

50 Id. at 1–2.

51 JX 44.

52 See JX 1125; TT 405:5–406:15 (Cole).

53 JX 44.

54 JX 45.

55 See TT 405:5–406:15 (Cole) (explaining that Cole and Mendez ultimately
determined it was best not to proceed with legal action and instead focus on the Series B).

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E. Dispute Over March 2022 Options

During negotiations over the Settlement Agreement, Cole confirmed to Dalby’s

personal counsel, Kirkland & Ellis LLP, that “[t]here will be no refreshing of the

option pool prior to the [S]eries B [financing].”56 Any option grants in March of 2022

would have also violated the SQO’s prohibition on “[a]uthorizing [or] issuing . . . any

. . . options.”57

But, after the Settlement Agreement was reached, Dalby learned for the first

time that Cole, Randle and Mendez claimed to have issued themselves millions of

options at a March 24, 2022 Board meeting, later ratifying the grants in an “executive

session” at the end of a Board meeting on March 31, 2022.58

What actually transpired at the March 24 and March 31 Board meetings

remains unclear. Yet the record is certain on one point: the Board did not approve

option grants on March 24.59 The claim that the Board approved option grants at the

meeting is contradicted by the fact that on March 25, Gabb’s outside counsel, Jeff

Bowman circulated a unanimous written consent for the Board to “approve[ ] the

stock options discussed at yesterday’s meeting.”60

56 JX 11.

57 JX 8 ¶ 3.c.

58 (Stephen Dalby) Dep. 278:8-280:8; see also JX 47 (Dalby’s audio recording of
conversation with Common Director Anne Butler and her husband Bill Butler discussing the
options).

59 See JX 40.

60 JX 40 at 7 (emphasis added).

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Dalby did not oppose the March 2022 option grants as to line-level employees.61

But he continues to dispute Randle, Cole, and Mendez’s claims that they granted

millions of options to themselves in March 2022. This issue has proved to be an

ongoing source of tension between Dalby and the Preferred Directors and Company

management. And Dalby’s concerns were not entirely unfounded: When discussing

Gabb’s Series B with Cormac and counsel, Kastner wrote, “Back to the employee

options. It is currently 19.97% of pre-money outstanding, which is at least 2x of what

you would expect of a company of this size.”62

F. The First Removal Effort

In the fall of 2022, Cole—apparently summarizing a conversation—wrote

about Randle taking the CEO Director Board seat.63

The rest of the notebook page included ideas for how to take the CEO Director seat—

for instance, by informing Dalby that the No Additional Dilution provision was no

longer in effect because Dalby had “damaged [the] chances of Series B with his

[LinkedIn] post.”64

61 E.g., JX 47.

62 JX 644 at 1.

63 JX 17 at 9.

64 Id.

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Indeed, Cole was not only interested in removing Dalby from the CEO Director seat

but also wanted to eliminate Dalby’s right to designate the two other Common

Directors.65

And other members of the Company’s leadership were exploring eliminating

Dalby’s rights under the Settlement Agreement and Voting Agreement too.66 Mendez

confirmed at trial the Preferred Directors were “for sure out to get [Dalby] in his role

as a board member of Gabb.”67 In another notebook entry where Cole seemed to be

memorializing what Mendez said at an executive meeting, Cole wrote: “#1 goal

removal” and “get 3 seats.”68

65 JX 17 at 14.

66 See TT 592:22–593:1 (Mendez) (“Q: And the brainstorming to remove Mr. Dalby
from the board, you said, occurred as early as 2023; correct? A. Or even before then, 2022.”).

67 TT 604:14–605:14 (Mendez).

68 JX 17 at 22; see also TT 419:1–10.

16
So, within months of signing the Settlement Agreement, the Preferred

Directors and Company management had resumed their campaign to remove Dalby

from the Company.

1. “Project Kingdom of Heaven”

Gabb’s Preferred Directors and management grew increasingly desperate to

remove Dalby. As memorialized in Cole’s notebook, among other concerns they

worried that, with Dalby still on the Board, the Company would not be able to attract

serious investors for the Series B round because of the “founder drama.”69

Additionally, the Preferred Directors and management thought that Dalby was

making things difficult by, among other things, routinely requesting status updates

from Randle but never appearing for the scheduled call.70

And they were also concerned about Dalby’s pattern of appointing and firing

directors.71 Between March 2022 and December 2022, Dalby had appointed five

69 JX 17 at 14.

70 JX 1144 at 2–3.

71 JX 1124 at 2 (“One of the trust issues between [Dalby] and the rest of the board,

and Gabb’s management has been [Dalby’s] impact on board stability . . . . There is an ask
from the rest of the board and management for Stephen to commit to board stability and
enable Gabb to attract investors at the maximum valuation possible. An unstable and
dysfunctional board harms Gabb’s ability to operate and hurts its valuation.”); JX 56 at 3; JX
815; TT 207:21–219:14 (Dalby); see also JX 74 (Dalby’s audio recording of the August 3, 2023

17
Common Directors and fired three of them.72 Dalby expected his appointees to vote

with him;73 if they did not, he would fire them or ask them to resign.74

In early May 2023, Pascal Brochier, who was appointed as a Common Director

by Dalby in December 2022, conveyed to Dalby that the other directors and Gabb’s

management had serious concerns about Board instability.75 In response, Dalby

acknowledged that “the lack of board stability” “may be a factor” in Gabb’s failure to

attract investors at the maximum valuation, but largely blamed Gabb’s management

team and the efforts to shut him out of Company decision-making.76 Three weeks

later, on May 28, 2023, Dalby removed Brochier from the Board and replaced him

with Steve Zolman.77

Board meeting where Mendez identified the “musical chairs” “at the Board level” as the
“number one obstacle” to the Company securing a Series B round of financing). On the
Exhibit List, Defendants challenged the admissibility of JX 74 on hearsay grounds under
D.R.E. 802. But Defendants did not address the merits of the objection in post-trial briefing
as required by the Pre-Trial Stip. See Pre-Trial Stip. ¶ 223. I therefore deem the objection
waived.

72 See JX 56 at 3; JX 815; TT 207:21–219:14 (Dalby).

73 JX 549 at 2 (text messages from Common Director Mike Hammond to Kastner
writing: “I was told to give [Dalby] my word to vote a certain way or he had to do something.
I am not playing that game.”); TT 244:33–345:4 (Dalby) (“If you had started a company and
I invited you to be part of the board and you didn’t feel comfortable with something, the very
first time you said that, I would respect that.”); see also JX 47 (recording of Dalby arguing
with then-Common Director Anne Butler about her disagreeing with him on his vision for
the Company and him not getting “buy-in” from her).

74 See TT 207:21–219:14 (Dalby).

75 JX 1124.

76 Id. at 1.

77 JX 53.

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After his removal, Brochier stayed in touch with Gabb’s other directors and

management. On June 7, 2023, Brochier emailed Cole, Mendez, and then-Preferred

Director Adams, attaching a document titled “Project Kingdom of Heaven.”78 In the

cover email, Brochier wrote, “Why Kingdom of Heaven you probably wonder? It is

allegedly a great movie that has been ruined by bad acting . . . I have been exploring

the ‘bad actor’ case and believe there might be a strong case to remove Dalby with

cause. See attached.”79

The attached document was partly generated by Brochier’s prompting

ChatGPT with: “What are some of the actions and behaviors of a bad actor that may

constitute ground for termination for cause of a company director in Delaware law?”80

In response, ChatGPT generated “some general information about grounds for

termination for cause of a company director based on Delaware law.”81 Brochier also

put together a timeline of “[s]pecific actions observed and documented” that he

thought might be grounds for Dalby’s removal based on ChatGPT’s response.82 Those

actions included, among others, Dalby’s “showing up uninvited at Gabb Christmas

78 Pre-Trial Stip. ¶ 89; JX 56–57.

79 JX 56 at 1.

80 Id. at 2.

81 Id.

82 Id. at 3–4.

19
party in defiance of legal order not to have direct contacts [sic] with employees” in

December 2022 and ignoring a Board meeting invitation sent in April 2023.83

Gabb’s management and the Preferred Directors continued discussing the plan

to remove Dalby throughout the summer but thought that they would give Dalby one

last chance before removing him. On July 20, 2023, Randle emailed Kastner, Mendez,

Cole and others about setting up a meeting with Dalby, in which they could compel

his cooperation in the Series B process.84 The goal was to have Dalby “sign[ ] an

agreement that he will approve term sheet(s) that fall within an agreed-upon

multiple range and valuation range.”85 Randle wrote that without such an agreement

from Dalby, he “w[ould] not pitch the company” and that if Dalby was not willing to

meet to discuss the Series B, “we go full force on preparing for a stockholder

vote/removal.”86 He also stressed the urgency of the situation, writing: “We need to

move on this quickly because I’d like to have clarity by no later than October 1. By

then we should either be in Series B prep mode with an [investment bank] that we

have selected or we should have already voted Dalby out.”87

83 Id. at 3–4.

84 JX 67.

85 Id.

86 Id.

87 Id.

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Randle and the Preferred Directors went back and forth on proposed draft

emails to Dalby asking to meet about the Series B.88 Kastner believed that the email

needed to “convey[ ] that this proposed meeting is well thought out,” for it to “be

obvious to [Dalby] that this is a serious request,” and to appear “of a professional

nature if it is presented to a judge.”89

On July 27, 2023, management and the Preferred Directors finally set the plan

into action. Randle emailed Dalby the text that Kastner had drafted, asking to set

up an “open and honest conversation regarding [Gabb’s] current position and the next

steps required for a necessary Series B funding round.”90 Randle wrote that he

envisioned the conversation as an “informal discussion” between Dalby, Mendez,

Kastner and himself.91 After the parties had fixed a time for the discussion, Dalby

suggested that the informal discussion be replaced with a Board meeting “so that we

can . . . have the flexibility to make actions steps [sic] necessary to help further the

company’s vision and maximize its potential.”92 Dropping Dalby off the thread and

adding Cole instead, Randle emailed Kastner and Mendez, writing: “Here we go. . . .

This is one more reason we need to get rid of this guy. We schedule a meeting well

88 See e.g., JX 72.

89 Id. at 4.

90 JX 73 at 2–3.

91 Id. at 3.

92 Id. at 1–2.

21
in advance to proactively discuss our next round of funding and we can’t even make

that happen.”93 Randle suggested that Kastner or Mendez reply letting Dalby know

either that they are not available for a Board meeting, or that there is already a

meeting scheduled at the exact same time to specifically discuss the Series B.94

2. The August 3, 2023 Board Meeting

On August 3, 2023, shortly before the scheduled Board meeting, Dalby

executed a stockholder consent removing David Packer from Gabb’s Board, and

appointing his wife, Jana Hawke Dalby in Packer’s place.95 Less than thirty minutes

before the scheduled Board meeting, Dalby emailed the other Board members, letting

them know that Jana had joined the Board.96 Dalby did not attach the stockholder

consent to this email.

Dalby, Jana, Zolman, Kastner, Mendez, Randle, and Bowman attended the

Board meeting.97 Without Randle, Kastner, Mendez, and Bowman’s knowledge,

Dalby recorded the entire meeting.98 At the start of the meeting, each of the

Company’s directors agreed that Gabb’s number one priority was securing a Series B

93 Id. at 1.

94 Id.

95 JX 75 at 4–5; see also JX 76 (email from Dalby to other directors letting them know

that Jana Dalby has joined the Board).

96 JX 76.

97 Pre-Trial Stip. ¶ 55; see also JX 74.

98 See JX 74.

22
round of financing.99 But the meeting quickly devolved into what Dalby described as

the “wild, wild west.”100

The Preferred Directors accused Dalby of jeopardizing the Series B by creating

Board instability through his “musical chairs” approach to the Common Director

seats.101 Kastner and Mendez stressed that the instability made the Company

unattractive to potential investors and threatened the Series B effort.102 Dalby

responded by blaming the Company’s inability to secure the next round of financing

on management’s poor performance and the lack of unity and respect between the

management team and himself. He singled out Cole as the greatest barrier to re-

establishing trust between himself and the management team and motioned for

Cole’s removal from the CFO role.103 When the motion was put to a vote, the three

Common Directors voted for Cole’s removal and the two Preferred Directors voted

against it.104 After the vote, the Preferred Directors objected that the vote was invalid

99 Id.

100 JX 122 at 3.

101 JX 74.

102 Id.

103 Id.

104 Id.

23
because, among other reasons, Zolman and Jana were not duly elected members of

the Board at the time of the meeting.105

Kastner then motioned to remove Dalby from the Board on account of his

breaches of fiduciary duty.106 The Preferred Directors purported to vote for Dalby’s

removal, and the Common Directors voted against it.107 After purportedly voting to

remove Dalby, the Preferred Directors voted to elect Randle as a member of the Board

and Executive Chairman, to fill the vacancies created by Dalby’s removal.108

After the meeting, both sides insisted that their actions were valid.109 Yet,

Cole remained CFO and Dalby remained the CEO Director and Chairman. And the

Preferred Directors and management scrambled to confirm whether Dalby could

actually amass the stockholder support needed to validly remove Cole without

violating the Settlement Agreement.110 Randle texted in a group chat with Cole and

Kastner, sharing that he had heard that Dalby did not have the support of an

105 Id.; see also JX 77 at 1–2 (email from Bowman to Dalby’s counsel, writing: “First

the Company is both confident and firm in its position expressed at the August 3, 2023
meeting of the Board of Directors . . . . Steve Zolman and Jana Hawke Dalby were not duly
elected members of the Board at the time of the August 3 Board meeting. Among other issues,
no actions by written consent compliant with Section 228 of the [DGCL] relating to the
election of either Steve Zolman or Jana Hawke Dalby were delivered to the Company . . . .”).

106 JX 74.

107 Id.; JX 77 at 1–2; Pre-Trial Stip. ¶ 55.

108 JX 74; JX 77.

109 See e.g., JX 77.

110 See JX 79 at 2.

24
important stockholder.111 Among other things, Randle shared that the stockholder

“[h]asn’t talked to Dalby since May,” that “Dalby texted him asking if they were still

friends,” and that “[Dalby and the stockholder] never got together.”112 Kastner

replied: “That’s great news that Stephen [Dalby] has no friends!”113 Randle “liked”

Kastner’s message.114

G. The Financing Facilitation Agreement

To stabilize the Board and attract investors for the Series B round, the

Preferred Directors and management wanted Dalby to sign a Financing Facilitation

Agreement (the “FFA”).115 Among other things, the FFA contained a “drag-along”

provision requiring Dalby to vote in favor of a financing round if it was at a pre-money

valuation of at least $200 million, had a secondary offering in which Dalby could sell

at least $12 million worth of common stock, and was approved by the Board.116

Gabb’s management also wanted Dalby to agree in the FFA to replace Jana as one of

his Common Director designees with Spencer Tall.117

111 Id.

112 Id.

113 Id.

114 Id.

115 TT 219:23–220:12 (Dalby).

116 JX 97.

117 E.g. JX 83 at 1 (email from Cole, providing [Mendez, Kastner, and I] are “very firm

on the point that Spence Tall takes the other board seat. The only other option is to have
Nate Randle take the CEO/Director seat.”).

25
Dalby did not sign the FFA as quickly as the Preferred Directors and

management would have liked.118 Having failed both to persuade Dalby and to

purportedly vote him off the Board, the Preferred Directors and management decided

to change tack and trick him.

1. Cole Asks Blue Diamond to Send a “Maturity Notice” Letter to
Pressure Dalby

The Company had an outstanding $10 million loan from one of its stockholders,

Blue Diamond.119 The loan was poised to mature on October 6, 2023.120 But, the

approaching maturity date had not been a cause for great concern. Earlier in the

summer, on June 16, 2023, Brendan Ball, a representative for Blue Diamond

confirmed for Cole and the Company’s auditors that Blue Diamond would “work out

an extension” with Gabb “to facilitate the Series B raise.”121

On September 20, 2023—as Dalby continued to drag his feet on signing the

FFA—Ball wrote internally at Blue Diamond that Gabb management wanted to

118 E.g., JX 83.

119 Pre-Trial Stip. ¶ 53; JX 92. “Blue Diamond” refers to Bingham Family Alaska,
LLC, Blue Diamond Capital, LLC, and Blue WCS, LLC. Bingham Family Alaska, LLC is a
Utah limited liability corporation with its principal office located in Provo, Utah. Pre-Trial
Stip. ¶ 31. It holds 470,741 shares of Gabb’s preferred stock. Id. Blue Diamond Capital,
LLC is a Utah limited liability corporation with its principal office located in Provo, Utah.
Id. ¶ 32. Blue Diamond Capital is the manager of Bingham Family Alaska, LLC. Id. Blue
WCS, LLC is a Utah limited liability corporation with its principal office located in Provo,
Utah. Id. ¶ 33. It holds 470,741 shares of Gabb’s preferred stock. Id.

120 E.g., JX 92.

121 JX 60; TT 329:2–20 (Ball); see also JX 83 (August 22, 2023 email from Cole to

counsel, writing “Blue Diamond is supportive of what we are doing and has agreed to
extend”).

26
discuss “some strategies” that “relate[ ] to their efforts to deal with the problematic

founder Stephen Dalby.”122 Ball explained that Gabb “[m]ight have us get more

aggressive on our loan for the sake of getting Dalby to play ball on the company

strategy.”123 Two days later, Ball ran a draft “maturity notice” letter by the Blue

Diamond team, explaining, “we are trying to apply some pressure to Stephen Dalby

to perform on his outstanding agreement with Gabb that basically creates a drag

along agreement to Series B if they can achieve a $200M+ valuation.”124 Providing

additional background, Ball wrote “Stephen [Dalby] has held up many of the business

progress [sic] and in particularly [sic] the [Series B] raise effort.”125

That same day, Ball shared the draft “maturity notice” letter with Cole.126

When Cole received the letter, he sent it around to Kastner and Gabb’s new General

Counsel, Vanessa Clayton, writing “[l]et me know what you think…”127 Clayton had

just joined Gabb the month before.128 Before joining Gabb, Clayton had served as

122 JX 88.

123 Id.

124 JX 89.

125 Id.

126 JX 90; see JX 89 (email from Ball to other members of the Blue Diamond team

asking for comments on the draft letter and stating “I’ll shoot it to [G]reg [Cole] for his
agreement before putting it on official letterhead”).

127 JX 90.

128 TT 19:15–18 (Clayton).

27
General Counsel for seven years at Homie, another AIM portfolio company where

Cole was also a board member.129

On October 2, 2023, Randle circulated Blue Diamond’s “maturity notice” letter

to the Board. In the cover email, Randle flagged that “[t]he loan matures this Friday,

October 6” and requested an in-person Board meeting on Thursday.130 Randle wrote:

“I know there have been several conversations regarding a financing facilitation

agreement, but because it has not been finalized – Blue Diamond will not extend our

debt.”131

Earlier that same day, Ball had warned his team that he expected Dalby or

Jana to call Blue Diamond’s front desk wanting to speak with him. He indicated that

he had talked to Cole, who suggested that Blue Diamond ignore the Dalbys, since, in

Cole’s experience Jana would just “go[ ] on a rant forever and is a waste of time.”132

Ball also explained that Gabb management was prepared for the loan to go into

default if Dalby refused to sign the FFA.133

129 Pre-Trial Stip. ¶ 21; TT 18:15–19:4 (Clayton); TT 413:7–10 (Cole).

130 JX 92.

131 Id.

132 JX 91.

133 Id. (“I’m aware the loan matures this week and so is Gabb. They basically are

planning on some default interest (hopefully only a few days) unless Stephen [Dalby] will
sign the agreed upon exit strategy documents.”).

28
Under pressure and seeking to avoid a default, Dalby accepted the demanded

terms.134

2. The Parties Sign the FFA

On October 5, 2023, the day before the Blue Diamond loan was set to mature,

Dalby, AIM, Sandlot, and Gabb entered into the Financing Facilitation Agreement

(“FFA”).135 In addition to the “drag-along” provision,136 the FFA provided that Tall

would replace Jana as a Common Director designee and be appointed Chairman but

that the composition of the Board would otherwise remain the same.137 The parties

also agreed that for the term of the FFA, no director could be removed from the board

without the unanimous approval of the other four directors.138 The FFA would

terminate when the Company raised a Series B round or, if no Series B round was

raised, then on March 31, 2024—approximately six months after it was signed.139

134 E.g. TT 175:10–23 (Dalby) (“[W]hat was presented to me is that Blue Diamond was

going to call their note, which was going to become a situation for default for the company.
And the only way that they would extend the note is if they could control who the director
would be and take control of the Board. And Spencer[ ] [Tall’s] been a friendly on that side
for a long time. And so that’s what happened.”).

135 JX 95–97; Pre-Trial Stip. ¶ 56.

136 JX 95 § 2.

137 Id. § 1.

138 Id. § 1(b).

139 Id. § 4.

29
H. The Telespire LSA

On November 1, 2023, Gabb entered a Loan and Security Agreement (“LSA”)

with Zefcom LLC d/b/a Telispire PCA (“Telispire”).140 The Telispire LSA provided

Gabb with a $5 million revolving line of credit,141 along with the right to “request” an

increase to the credit limit by up to $3 million.142 Telispire had “sole and absolute

discretion” in determining whether to approve the credit limit increase and had no

“obligation to do so.”143

The Telespire LSA also limited Gabb’s ability to take on new debt144 and

restricted the Company from changing its senior management, Board structure, or

ownership without Telispire’s prior approval.145 In the event of a default, the LSA

required that Gabb “promptly” give Telispire written notice of the default.146

140 Pre-Trial Stip. ¶ 62; JX 107 (“Telispire LSA”).

141 Pre-Trial Stip. ¶ 63; Telispire LSA § 2.1.

142 Pre-Trial Stip. ¶ 64; Telispire LSA § 2.2.

143 Pre-Trial Stip. ¶ 64; Telispire LSA § 2.2.

144Pre-Trial Stip. ¶ 65; Telispire LSA § 6.1 (“Except with respect to Permitted
Indebtedness, the Borrower shall not issue evidence of or create, assume, become
contingently liable for, or suffer to exist, any other Indebtedness.”)

145 Pre-Trial Stip. ¶ 66; Telispire LSA § 6.9 (“The Borrower shall not permit any
changes in its senior management, Board structure or ownership without first consulting
[Telispire] prior to any proposed changes and obtaining the [Telispire]’s approval.”).

146 Pre-Trial Stip. ¶ 67; Telispire LSA § 7.2.

30
I. The Attempted Series B Raise

On November 4, 2023, Gabb engaged Moelis & Company (“Moelis”) as its

investment banker to help secure its Series B round of financing.147 Over the five

months after the FFA was signed, Moelis targeted over 100 potential bidders. 148

1. The Capitalization Table Dispute

During this period, the dispute between Dalby and the Preferred Directors and

management over the March 2022 options came to a head, as the fundraising process

required the Company to have a settled capitalization table.149 Throughout the

dispute, Tall would strategize with management and the Preferred Directors and

then act as the go between with Dalby.150 For instance, on February 23, 2024, Tall

texted Randle, Cole, and Kastner about a conversation he had had with Dalby,

writing, “Dalby didn’t take it well. I might have raised my voice.”151 Cole and Kastner

replied thanking Tall for “being willing to deal” with Dalby, with Kastner using an

expletive to describe Dalby.152

147 Pre-Trial Stip. ¶ 58; JX 1131 (Moelis Engagement Letter); see also JX 98 (Oct. 2023

slide deck on Moelis’s proposed scope of engagement).

148 JX 116 (Moelis company list).

149 TT 128:25–136:8 (Kastner).

150 TT 127:15–128:14 (Kastner).

151 JX 125 at 1.

152 Id.

31
Two days later, Kastner sent Tall, Randle, Cole, and Mendez a screenshot of

an email from Dalby asking to “circle up [r]e cap table.”153 Randle responded:

“Constant games. We are receiving due diligence questions so we are now within a

day or two of these groups asking for cap table, etc. He’s playing with fire.” 154 Tall

wrote back, “I think we need to be prepared for basically DEFCON one here guys. . .

. We are going to have to disclose to our potential investors, or at least to our bankers,

that the ca[p] table is in dispute.”155 He noted that “[s]hutting down the process is

the only thing that scares [Dalby.]”156

In contemplating next steps, Kastner suggested that they needed to “weigh

carefully whether disclosing [the cap table is in dispute] will kill the series B.”157 He

advised that “[i]f we think it’s likely, we have a responsibility to do whatever we can

to fix this if Dalby won’t sign.”158 Tall responded: “So Dalby gets what he wants. No

options really granted until financing is completed. Screws everyone on strike

price.”159

153 JX 127 at 5.

154 Id. at 2.

155 Id.at 3.

156 Id.

157 Id. at 4.

158 Id.

159 Id.

32
On March 6, 2023, Dalby made a compromise proposal: approving all of the

disputed grants while “simply amend[ing] the vesting schedules for [Randle], [Cole]

and [Mendez] so that their options would fully vest upon the closing of the Series B

financing.”160 After reading Dalby’s proposal, Mendez texted in a group chat with

Cole and Randle: “Why don’t I see anything wrong with Dalby’s proposal?”161 Cole

responded: “If Dalby messes anything up along the way and we don’t get the [Series]

B, then we don’t get options.”162 Ultimately, Tall emailed Dalby back, writing that

he could not support the proposal because “it will cause us both audit and logistical

problems that are too cumbersome to overcome by changing vesting schedules” and

“[i]t would be patently unfair to both [Cole] and [Randle] to require revest of these

options.”163

2. Dalby’s Fundraising Effort

Under its agreement with Moelis, Gabb was not permitted to directly contact

potential Series B investors without Moelis’s prior approval.164 Nonetheless, the

Dalbys frequently circumvented Moelis and solicited prospective investors,165 risking

160 JX 134 at 1.

161 JX 135 at 1.

162 Id.

163 Id.

JX 1131 § 4(d); see also JX 322 (text from Cole stating: “We can’t breach our
164

agreement with Moelis. Allowing Dalby to pitch would do that.”).

165 See JX 143; JX 1114; JX 321; JX 817; JX 1100.

33
violations of securities laws.166 On September 16 2024, Clayton sent Dalby a letter

instructing him to cease all outreach to potential investors.167 The Company did not

secure a Series B round of financing.168 The FFA expired on March 31, 2024.169

J. Dalby Replaces Tall with Jana

On Friday May 3, 2024, over a month after the FFA’s termination date, Dalby

sent Clayton a written consent removing Tall from the Board and appointing Jana.170

Dalby also blocked Tall’s phone number.171 The next Monday morning, Randle

alerted each of the Company’s directors other than Dalby, writing “[Dalby] is making

yet another attempt to remove a board member in order to replace with his wife, Jana.

166 See JX 339 (Cease and Desist Letter) (“Several weeks ago, when the Company got

you involved the process that needed to be followed was clearly outlined to you and the
Company directed you to follow that process. . . . One such instruction you were given is that
prior to speaking to an investor, you needed to notify Moelis and provide Moelis with the
potential investors[‘] name and other relevant information so Moelis could confirm the
potential investor was accredited or an otherwise qualified investor. You were also informed
that failure to comply with applicable securities laws can place the Company at risk.”).

167 Id. (“You are directed to immediately cease all discussions with any and all parties

you have contacted with regards to financing and are unauthorized to initiate any future
discussions.”); see also JX 900 (Moelis’s feedback on Clayton’s draft Cease and Desist Letter).

168 Pre-Trial Stip. ¶ 59.

169 Id. ¶ 60.After the FFA expired, two potential investors, Cellular South, Inc. d/b/a
C Spire (“C Spire”) and SilverBox Capital (“SilverBox”) expressed interest in Gabb’s Series B
round. Id. ¶¶ 78–84. Ultimately, Gabb did not move forward with either C Spire or
SilverBox. JX 305 at 1; Pre-Trial Stip. ¶ 84.

170 Pre Trial Stip. ¶ 68; JX 146 at 2 (Written Consent).
Zolman had interviewed Jana
when he first joined the Board (JX 78) but by May 7, 2024, explained “I would not make the
same recommendation today.” JX 1321; JX 816.

171 See JX 223 (July 4, 2024 email from Tall to Dalby, writing “You say you’re happy

to talk with me and yet you still have me blocked. Both text and calling. That is not the way
a serious business person or fiduciary operates.”)

34
This time it is our Chairman, Spencer.”172 Explaining his concern, Randle added

“[o]ne of the key parts of our pitch has been that we now have a stable board that is

ready to review term sheet(s).”173

That evening, Bowman sent Randle, Cole, and Clayton his initial thoughts on

Tall’s removal and Jana’s appointment.174 Bowman wrote: “Given the stockholder

consent . . . and the fact that the Financing Facilitation Agreement has expired, it

would be difficult to successfully argue that Tall has not been removed from the

board.”175 But, Bowman shared that Jana’s appointment was “likely improper”

because, among other things, Jana “lack[ed] the proper qualifications” so “her

appointment to the board would be a violation of the Voting Agreement.”176

The next day, Tall texted Randle: “David Kastner called me tonight. Suggested

that the [Telispire LSA] has a requirement that no changes in management or board

structure can take place without their approval. That might be the ultimate

leverage.”177 A little later, Randle wrote to Tall: “Isn’t board structure different than

172 JX 147 at 1.

173 Id. at 2.

174 JX 148 at 1–2.

175 Id. at 2.

176 Id.

177 JX 149 at 1. When testifying, Kastner could not “confirm or deny” if he came up
with the idea. TT 143:8–16 (Kastner).

35
board members? I see structure as going from 5 to 7 or 5 to 3. Or changing common

to preferred, etc.”178

Later that day, Bowman emailed Neal Bakare,179 another attorney at Gabb’s

outside law firm, Foley & Lardner LLP (“Foley”), who specializes in loan security

agreements and was involved in the Telispire LSA negotiations.180 Bowman asked if

Tall’s “purported removal and replacement” would violate Section 6.9 of the Telispire

LSA, “which prohibits Gabb from permitting any changes to its ‘Board structure’

without first consulting [Telispire] and obtaining [Telispire’s] approval.”181 Bakare

replied, writing that Section 6.9 was “not a hot topic in the negotiation” and that he

“d[idn’t] recall specifically discussing this provision with [Telespire’s counsel].” 182 In

Bakare’s view, Tall’s removal “would violate 6.9 as a technical matter only under the

most strained reading” since the provision “says ‘structure’ not ‘membership.’”183

Bakare explained that “there is a distinction among practitioners between so-called

178 JX 149 at 2.

179 JX 918.

180 TT 619:10–16 (Bowman); see JX 920.

181 JX 920 at 2; see also JX 107 § 6.9.

182 Id..

183 Id. (emphasis in original); see also JX 921 at 2 (“Section 6.9 speaks to ‘structure’

and not ‘membership.’ An argument can be made that a change to the ‘Board structure’ is
something more significant than simply removing and replacing a director (e.g., increasing
or decreasing the number of board members or the manner in which they are elected).”).

36
technical defaults and payment defaults with payment defaults being considered

more real.”184

Nevertheless, Bowman did see “potential strategic advantage in taking the

position in conversations with Dalby that his actions constitute, or could constitute,

an event of default (as this could, perhaps, cause him to reconsider his current

course).”185 Approximately two weeks later, that is exactly what Kastner did over an

email exchange with Dalby’s attorney, Dan Harris.186 When Harris wrote to Kastner

that Section 6.9 did not “provide Telispire a consent right over changes in director

composition on the Board,”187 Kastner responded, stating “[i]t seems that there are

differing view on ‘changes in board structure’—which is not surprising given the lack

of specificity.”188 Then, seemingly in contradiction to what Bakere had told Bowman

just a few weeks ago, Kastner wrote: “What’s concerning is that Telispire stated in

the extension process that their intent included a change in the composition of the

board, and that it is included because of the previous instability of the board.”189

184 JX 920 at 2.

185 JX 921 at 2–3.

186 See JX 155.

187 Id. at 2.

188 Id at 1.

189 Compare JX 920 (email from Bakare, the attorney involved in the Telispire LSA

negotiations stating Section 6.9 was “not a hot topic in the negation” and “I don’t recall
specifically discussing this provision with [Telispire’s counsel”) with JX 155 (email from
Kastner to Dalby’s counsel, expressing that “Telispire stated in the extension process that
their intent included a change in the composition of the board”).

37
On June 6 and June 10, 2024, Randle held calls with Telispire to provide

updates on “potential changes to [Gabb’s] Board of Directors” and to “consult with

Telispire on what Section 6.9 . . . requires.”190 On June 11, after the calls with Randle,

a Telispire representative sent Randle an email, writing:

As a current lender to Gabb we are highly focused on the business plan
that we have agreed upon . . . . Following this business plan will ensure
that we are properly repaid by the maturity date of our loan. . . .A change
in the Board at this point, without further understanding the effects of
the change on the plans we have agreed to, would likely be viewed by
[Telispire] as an event of default. Boards rarely change composition
with a goal of maintaining a current business plan.191

It is unclear what Randle communicated to Telispire on the calls and whether he

pushed Telispire to declare a default to put pressure on Dalby as Cole had with Blue

Diamond just seven months before. In any event, when Gabb sought to access

additional funds under the LSA “to . . . cover inventory for the upcoming sales

season,”192 Telispire demanded that Gabb’s Board “[1] Reinstate the board as it was

with Spencer Tall as Chairman, [2] Agree to no longer remove common board

members through the end of the NRTC/Telispire debt terms, [and] [3] Unanimously

approve the additional debt to be used for back-to-school inventory that was already

190 JX 167 at 3.

191 Id.

192 JX 175.

38
approved by the board last fall.”193 Dalby refused to reinstate Tall, and Telispire did

not lend Gabb additional funds.194

K. “Project Exitus”

On July 8, 2024, Bowman sent Randle, Cole, and Clayton a document titled

“Gabb - Project Exitus - Strategic Plan & Roadmap - Confidential” (“Project

Exitus”).195 The document set forth a “Strategic Plan & Roadmap” consisting of

“various potential actions Gabb Wireless, Inc. . . . under the direction of the Executive

Committee and the Company’s management team, may be able to take to help

mitigate and/or resolve certain long-standing disputes between the Company and its

founder, Stephen Dalby . . . which involve ongoing disruptive behavior and actions by

[Dalby] that are irreparably harming the Company.”196 The actions described in the

Project Exitus Strategic Plan & Roadmap included, among other things: (1)

establishing an “Executive Committee” of the Board; (2) removing Dalby from the

Board for cause by vote of the stockholders; (3) enforcing a $25,000 loan made by the

Company to Dalby; and (4) helping former Common Director Anne Butler enforce an

approximately $400,000 loan against Dalby.197

193 Pre-Trial Stip. ¶ 69.

194 E.g., JX 309 at 2.

195 Pre-Trial Stip. ¶ 94; JX 237.

196 JX 237 at 3.

197 Id. 3–8.

39
The document also included “Comments” and “Next Steps” for each of the

actions.198 Regarding Jana’s appointment to the Board, the Project Exitus roadmap

included the following “Comment[]”:

Thus far, Gabb has taken the position that it does not recognize
Stephen’s purported appointment of Jana to the Board on May 3, 2024.
. . . We have discussed Gabb’s position with [Delaware Corporate
Counsel] who was recently engaged as the Company’s Delaware counsel.
We are looking into whether continuing to dispute Jana’s purposed [sic]
appointment is a viable option, even if only to distract Stephen while
other aspects of the Plan are implemented.

The “Comments” section next to establishing an Executive Committee read:

“This has been implemented. The Executive Committee was approved by a majority

of the Board at the July 2, 2024 Board meeting.”199

Foley billed all work relating to Project Exitus and Dalby’s removal—and,

later, AIM’s note conversion—to Gabb.200

1. The July 2, 2024 Board Meeting

Approximately two weeks before circulating the Project Exitus Strategic Plan

& Roadmap, Foley had contacted Delaware Corporate Counsel (“DCC”) to serve as

Gabb’s counsel for Delaware law matters related to Dalby.201 On June 25, 2024, Foley

asked DCC to provide “a sense of the timing and an estimate of fees” for “[h]elping

198 Id.

199 Id. at 3.

200 Pre-Trial Stip. ¶¶ 141–146; JX 313; JX 334; JX 356; JX 398; JX 501; JX 608; JX

609.

201 Pre-Trial Stip. ¶ 90; see also JX 180 (June 24, 2024 email from Foley describing

“Gabb” as Foley’s client and Dalby and Jana as “Adverse Parties.”).

40
the company prepare and run a stockholder consent solicitation process for the

purposes of removing a director.”202 That same day, Foley also emailed DCC

background on Gabb and Dalby and a list of objectives.203 In the background section,

Foley wrote, among other things, that the Series B had stalled “primarily due to

Dalby’s erratic and chaotic behavior,” and that Dalby had, without notice, removed

Tall, the Company’s Chairman, during the Series B raise, and sought to appoint his

wife, who “has no qualifications to be a director” in Tall’s place.204 The list of

objectives included: removing Dalby per Section 1.4(a) of the Voting Agreement, suing

Dalby for breach of fiduciary duty and breach of the Settlement Agreement,

conducting a campaign to obtain majority stockholder approval to remove Dalby from

the Board, and conducting a raise from insiders to dilute Dalby.205

On the morning of July 1, 2024, Randle texted in a group chat with Mendez,

Kastner, and Zolman, writing that “we unfortunately need to call an emergency board

meeting for tomorrow to secure replacement debt because Dalby has blocked the

Telispire option.”206 There was, in fact, an emergency. Two weeks before, Randle had

202 JX 184 at 1.

203 JX 186.

204 Id. at 1.

205 Id. at 2.

206 JX 194 at 2.When Dalby accused Randle of notifying the other directors a week in
advance of the Board meeting, Randle misleadingly replied: “All board members were notified
at the same time by an email that was sent by me on Monday July 1 @ 12:07pm (MT).” JX
225.

41
emailed Dalby flagging that, without the additional Telispire debt, the Company’s

“cash balance will go negative on July 3rd.”207 Randle asked Mendez, Kastner, and

Zolman their availability for a Board meeting on July 2 before inviting Dalby.208

After confirming that the Preferred Directors and Zolman could attend, Randle

emailed the full Board a notice of an “urgent” July 2, 2024 Board meeting “to

immediately address” Gabb’s “current debt position.”209 Randle stated: “I am inviting

Jeff Mendez, David Kastner, Steve Zolman, and Stephen Dalby as official board

members.”210 He explained, “[w]e have stated in writing that we do not acknowledge

Jana Dalby as an official board member . . . . Jana is welcome to attend as a guest, if

interested.”211 Randle’s notice of the Board meeting did not mention establishing an

Executive Committee.212

Soon afterward, Foley emailed DCC: “We spoke with Gabb and they would like

to formally engage you.”213 Foley also indicated that “Gabb noticed a board meeting

207 JX 225 at 3.

208 JX 194 at 2.

209 JX 193; Pre-Trial Stip. ¶ 91.

210 JX 193.

211 Id.

212 Pre-Trial Stip. ¶ 92.

213 JX 195 at 1.

42
for tomorrow” and sought to touch base with DCC for guidance on a few points in

advance of the meeting.214 All of DCC’s work was billed to Gabb.215

a. Zolman, Kastner, and Mendez Secretly Establish an
Executive Committee

Shortly before the scheduled Board meeting, Clayton emailed the Preferred

Directors, Randle, and Cole stating: “I just got off a call with Foley regarding the

executive committee.”216 Clayton attached a draft Board resolution to create an

Executive Committee of the Board.217 Per the resolution, Zolman, Mendez, and

Kastner would comprise the Executive Committee.218 No one sent the resolution to

the Dalbys.

The Board met via GoogleMeet.219 The Dalbys had not advised the Board or

Gabb’s management that they would be traveling to Hawaii for a pre-planned family

trip.220 Both Stephen and Jana joined the Board meeting for approximately twelve

214 Id.

215 Pre-Trial Stip. ¶¶ 147–148, 150, 156, 158–59; JX 583; JX 806; JX 594; JX 771–72.

216 JX 204 at 1.

217 Id at 2.

218 Id..

219 JX 245 at 3 (Draft July 2, 2024 Board Meeting Minutes).

220 Pre-Trial Stip. ¶ 93; see also JX 216 at 1 (July 2, 2024 email from Dalby stating

“my family and I are in the air as we already had travel plans arranged”); JX 225 at 1 (July
5, 2024 email from Randle to Dalby, writing, “When you received the email – if you would
have let the board know that you had travel plans – we would have made an adjustment to
accommodate your schedule. You did not notify us until shortly before the meeting.”).

43
minutes from their flight to Hawaii until a flight attendant required them to

disconnect.221 Draft Board meeting minutes prepared by Foley, but never sent to the

Dalbys, stated that Zolman, Mendez, and Kastner established the Executive

Committee after the Dalbys left the meeting.222 No one told the Dalbys about the

Executive Committee.223 That was deliberate.224

b. Kastner and Mendez Approve the Original AIM Note

Although Randle did not let the Dalbys know that the Board would consider

forming an Executive Committee at the July 2, 2024 Board meeting, he did send

notice that Gabb’s “current debt position” would be discussed at the meeting.225 And

Randle shared draft bridge notes with Dalby shortly before the meeting, explaining

“[t]he business has immediate financial obligations that need to be met this week.”226

221 Pre-Trial Stip. ¶ 93.

222 JX 245 at 5 (“Executive Committee. Mr. Kastner next discussed the creation of an
Executive Committee of the Board (“Executive Committee”). The Board discussed the
disruptive, erratic and antagonistic actions of the Company’s founder and current member of
the Board, Stephen Dalby, which have impeded the Board form performing its necessary
functions and are irreparably harming the Company. The Board discussed the benefit of
creating the Committee and providing it with the authority to meet, discuss and take any
and all actions allowed under Delaware law. . . .Upon motion duly made by Mr. Zolman and
Seconded by Mr. Mendez, the Board approved by a majority the resolutions [creating the
Executive Committee], with Messrs. Kastner, Mendez and Zolman, constituting all of the
directors then in attendance at the meeting, voting in favor.” (emphasis in original)).

223TT 34:17–19 (Clayton); TT 136:14–17 (Kastner); TT 522:10–13 (Randle); TT
597:10–13 (Mendez); TT 616:2–17, 617:1–19 (Bowman).

224 TT 616:2–17, 617:1–19 (Bowman); TT 136:14–17 (Kastner).

225 JX 193.

226 JX 214 (email from Randle to the Board attaching drafts of the notes).

44
After the Dalbys dropped off the call, Kastner, Mendez, and Zolman voted to

approve $4 million in AIM and Sandlot convertible notes, at a 22% interest rate.227

The notes were characterized as “bridge financing” and a “bridge loan.”228

Later that day, Kastner texted Cole: “It doesn’t do us any good to have the

conversion component of the debt deal. We would simply [be] diluting ourselves for

the most part. Essentially getting nothing in return for the investment.”229 What

Kastner was concerned about was the Settlement Agreement’s No Additional

Dilution provision.230

So the next day, Kastner, Mendez, and Zolman—acting as the Executive

Committee—voted to adjust the terms by removing the conversion feature and agreed

to a $1.5 million AIM promissory note (the “AIM Note”) instead of the original AIM

and Sandlot convertible notes.231

On July 5, 2024, Randle emailed Kastner and Cormac Murphy—a member of

AIM’s investment committee who has sole investment decision-making authority for

the AIM funds and negotiated the note on behalf of AIM.232 Randle wrote: “Sending

227 Pre-Trial Stip. ¶ 70; JX 421 at 35—37.

228 JX 421 at 15.

229 JX 203 at 2.

230 Id. (“[W]e cannot come in with a non-[Series B] round, or we just dilute ourselves,

per the settlement agreement.”).

231 Pre-Trial Stip. ¶ 72; JX 224.

232 JX 1324.

45
a big THANK YOU for stepping in to help us make the inventory payment his week.

After exhausting all other options, we were in a tough spot and I sincerely appreciate

the support.”233

c. The Board Approves the Revised AIM Note

On July 26, 2024, Telispire sent Gabb a reservation of rights letter asserting

that the AIM Note was “prohibit[ed]” under Section 6.1 of the LSA and demanding

that it be subordinated to Telispire’s loan.234 The next day, Randle circulated

Telispire’s letter to the Board and asked the Board to approve a subordinated version

of the AIM Note that added the conversion feature back in.235

On July 31, 2024, following a discussion with Murphy and Kastner, the Dalbys

agreed to approve the AIM Note as revised.236 Murphy subsequently emailed the

Dalbys, Randle, Cole, Mendez, and counsel a draft of the amended AIM Note and

explained the note’s key terms, including what the conversion process would look

like.237

233 Id.

234 Pre-Trial Stip. ¶ 73; JX 254 at 5–8.

235 Pre-Trial Stip. ¶ 74; JX 272.

236 Pre-Trial Stip. ¶ 75; JX 272 at 1 (“Jana and I agreed to the terms of the convertible

note that was put forth to us earlier today on our call with AIM (Cormac and David). We do
not agree that the company should go into default.”).

237 JX 291 at 1 (Murphy explained how a conversion under 2(a) would work, stating:

“Basically, the $1.5M Note will be convertible at a maximum valuation of $80 million with
an option to purchase an additional $1M at the same price upon conversion. The note also
grants the option AIM Co-Invest to convert any convertible notes at the same terms unless

46
The revised AIM Note provides for two options for conversion: Section 2(a) and

Section 2(b).238 Section 2(a) allows AIM Ventura to elect to convert in its “sole

discretion” after thirty days. Once AIM Ventura elects to convert, the AIM Note

provides that “the Company shall convert the outstanding principal amount of [the

AIM Note] and all accrued and unpaid interest . . . into that number of shares of

Optional Conversion Preferred Stock of the Company . . . with a further optional

conversion to common at a ratio of 1:2.”239 Upon conversion, AIM Ventura can also

elect to purchase up to $1 million worth of additional shares, and Gabb is required to

offer the AIM Co-Invest Entities the option to convert as well.240 If the AIM Co-Invest

Entities exercise their option to convert, all other debt holders can convert at the

same terms.241 Section 2(b) allows AIM to convert following a Series B round of

financing.242

Section 2(c) of the AIM Note lays out the procedure for conversion.243 In the

case of a conversion under Section 2(a), the Company is “not required to issue or

it is part of an equity round. While the option is granted to AIM Co-Invest, all applicable
convertible debt could participate, not just AIM’s portion.”).

238 JX 226 § 2.

239 Id. § 2(a).

240 Id.

241 Id.

242 Id. § 2(b).

243 Id.

47
deliver the capital stock” until “the Company has taken all corporate action required

to be taken by the Board and the Company’s stockholders, including, without

limitation, the filing of an amended certificate of incorporation with the Delaware

Secretary of State authorizing the Optional Conversion Preferred Stock.”244 The AIM

Note defines “Optional Conversion Preferred Stock” as “shares of preferred stock of

the Company styled ‘Series B Preferred Stock’ issued to [AIM] having the identical

rights, privileges, preferences and restrictions as shares of the Company’s Series A

Preferred stock . . . .”245 If the Company fails to issue the Optional Conversion

Preferred Stock within fifteen days of receiving notice of AIM’s election to convert, a

“Default Interest Trigger Event” results.246 In that case, the interest rate of the AIM

Note increases from 22% per annum to 30% per annum.247

At trial, Murphy testified that he wanted Dalby to understand the two

conversion options under Sections 2(a) and 2(b) of the AIM Note.248 Murphy testified

that he explained how the conversion would work in detail, including that conversion

244 Id. § 2(c).

245 Id. § 5(q)(x).

246 Id. § 2(c).

247 Id. at 1.

248 TT 460:7–20 (Murphy).

48
under Section 2(a) was a “more dilutive path, triggering the Series B by itself.”249

Nothing in the record supports Murphy’s testimony.

The Board executed an action by written consent to ratify the amended and

restated version of the AIM Note, and Dalby, along with AIM and Sandlot approved

the AIM Note on behalf of a majority of Gabb’s stockholders. 250 Both the Board

consent and the stockholder consent included language acknowledging that Cole,

Kastner, and Mendez “may personally benefit from the Company entering into the

[AIM Note].”251

2. Gabb Management Green Lights Removing Dalby for Cause

On July 8, 2024, the same day as Bowman shared the Project Exitus Strategic

Plan & Road Map with Gabb’s management, Foley emailed DCC: “[w]e have the green

light from Gabb to proceed with the stockholder consent solicitation to remove

Stephen [Dalby] for cause.”252 The email further noted “Gabb wants to proceed with

this action as soon as possible.”253

249 TT 459:18–460:20 (Murphy). But see JX 642 (Jan. 17, 2025 email from Jana,
writing: “I am confused why no one will answer questions about how the conversion will honor
the Settlement Agreement’s anti-dilution provision that Gabb, AIM, Sandlot, and [Cole] all
agreed to.”) and JX 624 at 2.

250 Pre-Trial Stip. ¶¶ 76–77; JX 284 (July 2024 Unanimous Board Consent); JX 286

(July 2024 Stockholder Consent).

251 JX 284 at 1; JX 286 at 1–2.

252 JX 238 at 2.

253 Id. at 4.

49
About a month later, on August 7, 2024, DCC emailed Foley a draft

Confidential Information Statement (“CIS”).254 In the draft, “the bases for the ‘for

cause’ removal had been left blank.”255 DCC noted in the cover email that “[a]

stockholder of the company, as opposed to the company, should circulate the

information statement and solicit consents from other stockholders. The company

should be careful in its discussions with the soliciting stockholder.”256

On August 16, 2024, Foley emailed Gabb’s Delaware litigation counsel, Landis,

Rath & Cobb LLP (“LRC”), attaching so-called “Project Exitus Important

Documents.”257 These documents included, among other things, the Company’s

formation documents and the November 7, 2022 letter detailing Dalby’s breaches of

the Settlement Agreement and his fiduciary duties.258 Gabb was billed for all of

LRC’s work.259

A few days later, on September 12, 2024, Foley emailed DCC and LRC a draft

“written consent” for Dalby’s removal that “[Foley] had started preparing a while

back.”260 In the cover email, Foley outlined the “Reasons for Removal,” which

254 JX 306; Pre-Trial Stip. ¶ 96.

255 JX 306.

256 Id. at 1.

257 Pre-Trial Stip. ¶ 98; JX 314.

258 JX 314.

259 Pre-Trial Stip. ¶¶ 149, 151, 152, 157, 159; JX 588; JX 403; JX 495; JX 617; JX 772.

260 JX 335 at 1.

50
included, among others, causing Gabb to breach the Telispire LSA, refusing to

approve an amendment to the Telispire LSA that would have allowed the Company

to access additional funds, and breaching the Settlement Agreement.261

In late September, Clayton presented a slide deck to the Executive Committee

entitled “Legal Strategy.”262 The first slide read: “Preferred Path: [John] Rampton

buys out 80% of existing Dalby shares.”263 The third slide was titled “Legal Strategy

– Strategy Questions.”264 There were three questions listed on the page. First: “Do

we tell Dalby we’re doing stockholder consent in x days to push secondary?”265

Second: “AIM Ventura note diluting Dalby?”266 And, third: “Who else may be willing

to exercise options?”267

On October 3, 2024, DCC emailed Foley and LRC a draft proxy for a

stockholder solicitation for Dalby’s removal.268 Approximately two weeks later, DCC

circulated a draft of the alleged reasons for Dalby’s removal to be included in a CIS

261 Id.

262 TT 46:24–47:7 (Clayton); Pre-Trial Stip. ¶ 100; JX 344.

263 JX 344 at 1.

264 Id. at 3.

265 Id.

266 Id.

267 Id.

268 Pre-Trial Stip. ¶ 102; JX 350.

51
to LRC and Clayton.269 This draft similarly referenced, among other things, breaches

of the Telispire LSA and the Settlement Agreement, as well as violations of Moelis’s

procedures.270

3. Clayton Hires KRDL to Investigate the Dalbys

In October 2024, Clayton, on behalf of the Company, engaged KRDL Group

LLC (“KRDL”) to investigate the Dalbys.271 KRDL invoiced Gabb for the

investigation.272 Clayton testified that the Company hired KRDL after the Dalbys’

neighbor in Rexburg, Idaho, emailed the Company about a protection order she had

sought against Dalby for allegedly stalking her family and minor children. 273 She

described stalking and other unnerving behavior, as well as an incident at her church

where Dalby accosted her husband and lunged at him before being pulled away by

Jana and his daughter.274 In part because of the altercation, The Church of Jesus

Christ of Latter-day Saints prohibited Dalby from setting foot on church property or

269 Pre-Trial Stip. ¶ 105; JX 367 at 11–12.

270 JX 367 at 11–12.

271 Pre-Trial Stip. ¶ 101; see also JX 352 (Oct. 4, 2024 email attaching KRDL’s form

NDA).

272 Pre-Trial Stip. ¶¶ 152, 154–55; JX 357; JX 400; JX 418.

TT 9:10–17 (Clayton) (“The company had received an email from a concerned
273

mother saying … that they had sought a protective order against Mr. Dalby for her four minor
children and herself for stalking and threats.”); JX 1108 (neighbor’s email to Gabb); see also
JX 385 at 5–11 (protection order dated Aug. 12, 2024).

274 JX 1108; see also JX 246 (text exchange between Gabb’s VP of Marketing, Lance

Black, and Gabb employee about the incident).

52
contacting church officials for a minimum of one year.275 According to the neighbor’s

email, she had reached out to Gabb after Dalby’s counsel led her to believe that the

Company would sue her in retaliation.276 The neighbor also expressed concern that

“the founder of a company that pushes safety for children is the center of so much

chaos and risk of safety for my family.”277 She explained:

[A]s I read Gabb’s stated mission and some of the aims: (1) protect kids;
(2) connect families; and (3) empower parents, I was alarmed by the
disconnect between your founder and what it seems the company stands
for and wonder how many other families in this small town feel similarly
disillusioned after concerning experiences with Dalby?278

Randle forwarded the neighbor’s email to Tall.279 Tall wrote back: “Honestly,

this is much less concerning than I thought it would be. It is a personal dispute

275 JX 1108 (“My understanding is that the legal counsel for our church took
independent action against Dalby to prohibit his attendance, not only because of what
happened to our family alone, though I am not apprised fully of all the details. I know only
that I was affirmatively notified that I did not need to worry that Dalby would be in our
church building again after the incident where he verbally assaulted my husband and
physically lunged towards us as he did.”); JX 1107 (July 19, 2024 letter from The Church of
Jesus Christ of Latter-day Saints). The letter from The Church of Jesus Christ of Latter-day
Saints provided after “a minimum of twelve months” Dalby could “discuss” “potentially lifting
some or all of the restrictions.” JX 1107. Seemingly, Gabb’s management and other directors
did not receive a copy of the letter until early December, when the letter was anonymously
“dropped off” at Cole’s doorstep. JX 471 at 4. On an email thread with Cole and Clayton,
Randle responded to the letter, writing: “Religions rarely ban someone. They reprimand and
then immediately let the individual return to seek improvement or forgiveness. In this case,
it’s very clear. Don’t call us . . . we’ll call you. For it to get to this point means he did
something or several things that were of serious concern.” JX 471 at 3–4.

276 JX 1108.

277 Id. at 4.

278 Id.

279 JX 330.

53
between neighbors and him invoking the name of Gabb requires the company to say

he doesn’t represent the company. This . . . doesn’t give us much to act on.”280 Tall

advised Randle to focus on having Rampton acquire Dalby’s Gabb shares instead,

stating:

Let’s keep our focus on that getting completed. I am in no way
discounting [the neighbor’s] terror or frustration. We all know who this
guy is. However, . . . nothing he has done rises to anything beyond
harassment. He’s a creep and a weirdo, but we already knew all of
that.281

On November 4, 2024, Clayton emailed Randle and Cole KRDL’s “preliminary”

report (the “Preliminary Report”).282 The Preliminary Report tied the Dalbys to

disparaging reviews of the Company published on Glassdoor.283 The Preliminary

Report also identified several domestic incidents that required intervention by the

police.284 In particular, the Preliminary Report highlighted several publicly available

police reports which described “sheriff’s deputies . . . frequent[ing] the Dalby home”

280 Id.

281 Id.

282 Pre-Trial Stip. ¶ 106; JX 382.

283 JX 382 at 3–12.

284 Id. at 19–27.

54
and “officers visit[ing] the property at all hours of the night several times a week in

June and July.”285 None of the police reports resulted in arrests.286

The Preliminary Report was caveated, and included disclaimers, such as: “The

information provided herein is intended solely for general informational purposes and

should not be construed as legal, forensic, or adjudicatory advice.”287

4. The Stockholder Solicitation

On November 7, 2024, Kastner emailed Dalby, stating that he was providing

“formal notice that Gabb . . . and its principal stockholders are initiating the process

to remove you from the Company’s Board . . . for cause.”288 The email was signed by

both Kastner and Mendez and included an attachment titled “RECITATION OF

REASONS FOR THE REMOVAL OF STEPHEN DALBY AS A DIRECTOR FOR

CAUSE.”289 The stated reasons for removing Dalby fell into five categories: (1)

“Brand Reputation Damage”; (2) “Board Instability”; (3) “Breaches of Telispire Credit

285 JX 1108 at 2; JX 382. Plaintiffs argue that police reports are, for evidence purposes,

considered unreliable and hearsay. Dkt. 156, Pls. Post-Trial Opening Brief (“Pls.’ OB”) at 63.
Because I need not reach the parties’ disputes over the substance of the reports, I do not rely
on them for purposes of this ruling.

286 TT 649:13–24 (Jana).

287 JX 382 at 4.

288 Pre-Trial Stip. ¶ 109; JX 394 at 1.

289 JX 394 at 3.

55
Facility”; (4) “Recklessness and Malfeasance in Performance of Duty”; and (5) “Other

Breaches of Settlement Agreement and also the [Investors’ Rights Agreement].”290

Six days after receiving the notice, on November 13, 2024, Dalby replied,

challenging Kastner’s statement that “‘Gabb . . . [is] initiating the process to remove’”

him from the Board.291 Dalby explained that Kastner’s email “reflect[ed] a

misunderstanding of Gabb’s governance” since “Gabb’s business and affairs are

managed by its Board of Directors,” and “the Board can only take action (1) at a

Board meeting or (2) if all Board members consent in writing . . . .”292 Dalby requested

“any good-faith basis for asserting that Gabb has been validly authorized to send any

solicitation to stockholders in an effort to remove” him.293

Foley sought both DCC and LRC’s feedback on Kastner’s response.294 The next

day, DCC drafted a reply to Dalby’s email.295 DCC recommended that Kastner

reiterate that there would be a stockholder solicitation for Dalby’s for cause removal

and the deadline for Dalby to submit his prepared response. 296 LRC weighed in as

well, advising that Dalby’s email was a “set up” and an attempt to establish that “the

290 Id. at 3–5.

291 JX 410 at 3 (alteration in original); Pre-Trial Stip. ¶ 110.

292 JX 410 at 3 (emphasis in original).

293 Id. at 4.

294 JX 404 at 4.

295 Id. at 3.

296 Id.

56
process being pursued is illegitimate to create a claim that the Board and other

directors are acting in bad faith.”297 In response, DCC suggested that perhaps

Kastner explain that the Preferred Directors are acting as an Executive Committee

of the Board, but noted that “I know that we omitted reference to the Executive

Committee to avoid telling him about the committee.”298 Ultimately, when Kastner

replied to Dalby, he did not reference the Executive Committee.299 Three days later,

on November 17, 2024, Dalby responded, writing:

I understand from this correspondence that you now agree that Gabb is
not soliciting my removal, and you will not be representing that Gabb is
soliciting my removal or that Gabb has a view on the matter – and will
not be using Gabb resources (including Company counsel) to do so. If
that is not right, please let me know immediately.300

No one responded to Dalby or otherwise informed him that Company resources had

in fact been, continued to, and would continue to be used for his removal.301

On November 15, 2024, Dalby’s Idaho counsel emailed Foley about the

neighbor’s protective order being cited as one of the reasons for Dalby’s removal.302

The attorney explained that because the protective order had been stipulated to, it

evinced “no admission of wrongdoing by Mr. Dalby” and was based on “allegations”

297 Id. at 2.

298 Id. at 1.

299 JX 410 at 2.

300 Id. at 1 (emphasis in original).

301 TT 108:23–109:1, 147:10–148:19 (Kastner); (Clayton) Dep. 193:4–195:24.

302 JX 408.

57
that “would have been rejected” if adjudicated.303 The attorney advised that he would

view the inclusion of information relating to the protective order in the CIS as

“extortion” under Delaware and Idaho law.304 Ultimately, information about Dalby’s

dispute with his neighbor was not shared with stockholders to justify his removal.305

5. Management Asks Blue Diamond to Be the “Nominal Sender”

On November 14, 2024, the day after Dalby flagged that the Company could

not solicit his removal, DCC emailed Gabb management, Foley, and LRC: “We will

need to confirm that Blue Diamond will be the nominal sender of the solicitation

statement.”306 Five days later, after speaking with Cole,307 Ball provided an internal

status update at Blue Diamond, writing Gabb’s “founder issues are coming to a head”

and that AIM and Sandlot “are looking to send out a shareholder consent/agreement

request to remove Stephen Dalby from the board.”308 Ball added that it “sounds like

[Dalby] has some police issues up in Idaho and other damaging items happening.”309

303 Id. at 1.

304 Id. at 2.

305 TT 57:4–10 (Clayton); see JX 630 (the CIS sent to stockholders).

306 JX 407 at 1.

307 TT 363:3–367:21 (Ball) (explaining that all of the updates contained in the email

are from a conversation with Greg Cole).

308 JX 417 at 1.

309 Id.

58
He also informed the Blue Diamond team that AIM and Sandlot had asked

Blue Diamond to take the lead on the effort to remove Dalby from the Board since

Gabb’s Delaware counsel had recommended “hav[ing] a separate shareholder be the

lead on the consent/agreement to remove Dalby from the board.”310 Ball explained,

“[r]eally just they’ll say Blue Diamond is who is initiating this action instead of AIM

or Sandlot so it’s a separate party showing sufficient frustration at the situation as

to take an action instead of the ones that have already previously made motions

against [Dalby].”311

In the same email, Ball also provided an update on the plan to dilute Dalby

using convertible notes, writing: “The intent . . . is to dilute Dalby sufficiently to be

able to remove him from the board and render him as just another common

stockholder [sic] he’d be diluted to low 20%’s.”312 He explained that Preferred

Directors and management “acknowledge” that the note conversion would also dilute

all non-participating stockholders but stated it “needs to be done both for the Dalby

situation and the [Company’s] need for bridge cash.”313

310 Id.

311 Id.

312 Id.

313 Id.

59
On December 2, 2024, Clayton emailed DCC and LRC: “It looks like we/Blue

Diamond are going to go forward with the stockholder consent.” 314 Four days later,

Clayton emailed Gabb’s management and outside counsel, confirming that “[a]fter

lots of internal discussion, and advice from our advisors, Blue Diamond is ready to

move forward with the shareholder consent to remove Dalby.”315 She added, “We’d

like to proceed asap.”316

The next week, on December 9, 2024, DCC emailed Foley stating that Randle

and Clayton had a call with Blue Diamond confirming that Blue Diamond would send

Dalby a statement of purported reasons for removal.317 That same day, DCC emailed

Gabb management, Foley, and LRC “clean and marked copies of the information

statement.”318 This CIS listed “Blue Diamond” as the soliciting stockholder.319 DCC

circulated multiple iterations of the draft CIS that day.320 And Clayton shared a draft

email, that was reviewed by Gabb’s counsel, for Blue Diamond to send to Dalby.321

314 JX 450.

315 JX 467 at 1.

316 Id.

317 Pre-Trial Stip. ¶113; JX 471 at 1 (“[Randle and Clayton] had a call with Blue
Diamond and Blue Diamond is going to send Dalby the reasons section and give him 48 hours
to prepare a response statement and see what Dalby says.”).

318 JX 477 at 1.

319 Id. at 3.

320 E.g., JX 478.

321 JX 470; JX 472; JX 474; JX 479.

60
The next day, Ball sent the email to Dalby.322 In the email, Ball wrote: “Per

Mr. Kastner’s email dated November 7, 2024 Bingham Family Alaska LLC is

initiating your removal for cause.”323 Attached to the email was a document drafted

by Gabb’s counsel, that listed the “LEGAL BASES FOR A ‘FOR CAUSE’ REMOVAL

OF STEPHEN DALBY.”324 Ball gave Dalby forty eight hours to respond so that his

“statement may be included in the stockholder solicitation materials.”325

In the meantime, Gabb’s counsel continued working on the CIS and looking for

feedback from Company management.326 The day after Ball notified Dalby that Blue

Diamond was seeking his removal, DCC advised that “[t]he only open item is a

contact e-mail or number ideally from Blue Diamond who the stockholders could call

with questions.”327 DCC explained, “it is just better from an optics and litigation

322 JX 481.

323 Id. at 1.

324 Id. at 2; Pre-Trial Stip. ¶ 115.

325 JX 481 at 1.

326 E.g., JX 493.

327 Id. at 1.

61
perspective if the contact is from Blue Diamond.”328 In the next draft, DCC

“eliminated a reference to the executive committee.”329

6. The Final KRDL Report

On November 10, 2024, Clayton received KRDL’s “final” report and invoice.330

The attached report was just several pages long and indicated that “[f]urther

investigative efforts would be required in order to establish sure connection between

subjects and areas of interest.”331 The report noted that “[a]ll current findings are

circumstantial at best” and “at this time we cannot validate all aspects of the

investigation.”332 Finally, based on its findings—presumably the police reports—

KRDL “advise[d] physical security measures and precautions to ensure safety for all

associated parties.”333

Indeed, about a month later, Randle sent an email “asking this board to stop

requesting in-person board meetings with an unhinged founder” because he had

328Id.; see also JX 488 at 1 (“We think that it would be a good idea to include a
name/phone/e-mail of a representative of Blue Diamond for optics and settlement agreement
purposes.”).

329 JX 493 at 1; see also id. at 20 (redline showing reference to Executive committee

was deleted).

330 JX 399.

331 Id. at 2.

332 Id.

333 Id.

62
“legitimate[ ] . . . concerns for [his] safety and the safety of [his] family.”334 Randle

did not send the email to the Dalbys, but included Dalby’s most recent Common

Director designee, Michael Hammond,335 on the thread.336 Randle continued, writing:

I walk to my car every night checking to see if he is in the parking lot. I
constantly check the perimeter of my house to see if he is stalking us.
My wife will not leave our kids home alone for any extended period due
to her real concerns about Stephen [Dalby]. We have hired undercover
security to sit in our office lobby on multiple occasions because he has
threatened to show up. After the shooting in NYC this past weekend, it
weighed heavily on my mind that he could very well do the same thing
to me or someone in my family. We all know he hired a private
investigator to follow me for a period of time until I found out about it
and called the agency. Here I am at 4:30 am in the middle of the night,
sending an email because I can’t sleep due to all of this absurdity.337

Although Randle did not copy Dalby or Jana on the email, Dalby soon learned about

it. He texted Jana the next day, writing in shocking fashion:

334 JX 473 at 3; see also TT 393:12–394:18 (Randle) (“[W]hen I started at Gabb, again,

there for a very short period of time Mr. Dalby, when referencing Bill Brady, who was a
former employee, he said to me on at least two occasions, I’m going to crush Bill Brady’s skull
and I’m going to bury his kids six feet under. Even as a couple of weeks ago, I was at a
business opening event for a friend and one of our investors on the Gabb cap table was there
and came up to me and said, I’ve never said this out loud before, but I want you to know,
Stephen Dalby used to consistently tell me that he wanted to kill Landon Ainge and his
kids.”). Randle also expressed concerns for the safety of his family in September 2024,
sharing with Tall that “Dalby is calling my phone back to back . . . . He is becoming more
sporadic and aggressive.” JX 331 at 1.

335 Dalby designated Michael Hammond to the Board as a Common Director on
November 13, 2024. Pre-Trial Stip. ¶ 24. Hammond filled the vacancy created by the
resignation of Steven Zolman, who resigned from the Board on July 22, 2024. Id.; JX 402;
see also JX 443 (texts from Kastner describing Hammond as “seemingly a genuinely good-
intentioned and qualified board member who knows Dalby’s craziness, but also recognizes
his rights as a shareholder . . . .”) .

336 JX 473 at 2.

337 Id. at 3.

63
[N]ate [Randle] sent them all an email saying that he’s afraid for his life
. . . After the ceo shooting in [N]YC haha what a puss[.] He says that
every night he goes to his car and is afraid that I’m in the parking lot . .
. These guys are painting me like I’m some [k]ind of psycho[.]338

In the meantime, Clayton had asked KRDL to investigate the Dalbys further,

to “get [Gabb’s management] to a point where [it] would feel comfortable using the

results if this ever went to court and were litigated.”339 On December 5, 2024, KRDL

provided Clayton with an update.340 Following the update, Clayton let Gabb

management and the preferred directors know: “[We] now feel confident that Stephen

[Dalby] posted false reviews that we can substantiate. There is one review in

particular they feel like they have an open and shut case on-IP addresses, device

addresses and meta data that are connected to Stephen’s home directly.”341 That

review was posted on Glassdoor by an anonymous user and was titled “Gabb Ships

Junk Tech.”342 Clayton included a screenshot of the review with her update.343

338 JX 476 at 2–4.

339 JX 460 at 2; see also JX 433 (email from Randle to Ball, stating: “We have a group

that is working on taking the negative reviews from substantial evidence to definitive.”).

340 JX 460 at 1.

341 Id. at 2.

342 Id.

343 Id.

64
In her update, Clayton wrote: “With these results I would feel comfortable taking this

before any judge or jury. . . I imagine [Dalby] would have a huge uphill battle to show

an alternative explanation.”344

At trial, Clayton and Randle referred to a document titled “KRDL SERVICES

UPDATE” as KRDL’s “final report.”345 The “final report” indicated that “[s]ecure

string Ids demonstrate positively that client devices from IP-addresses posted

multiple reviews on website[,]”346 but also included disclaimers similar to the ones

found in the Preliminary Report.347 The “Gabb Ships Junk Tech” review was included

in the CIS.348

344 Id. at 4.

345 JX 1145; see TT 11:20–12:22 (Clayton); TT 559:16–23 (Randle).

346 JX 1145 at 10.

347 Id. at 11.

348 JX 619 at 5. Plaintiffs point out that the KRDL reports were “prepared by nameless

person(s) who did not attend trial and would not even respond to a subpoena” and that
“Defendants did not validate KRDL’s methodology or findings” at trial. Pls.’ OB at 1, 58.
Because I need not reach the parties’ disputes over the substance of the reports, I do not rely
on them for purposes of this ruling.

65
7. Blue Diamond Negotiates with Dalby

On December 11, 2024, Ball met with the Dalbys.349 When Clayton learned

that Ball’s meeting was set for Gabb’s office, she helped arrange a new location for

the meeting behind the scenes because “Gabb has several employees who are fearful

of Mr. Dalby.”350

About a week later, Ball followed up with Dalby over text and email but did

not hear back.351 So Ball emailed the Dalbys, the Preferred Directors, and

management a video and a memorandum summarizing his meeting with the Dalbys

and offering a “Proposal.” The Proposal aimed to provide a “path forward” for Dalby

and provided in relevant part:

We would like Blue Diamond Capital to be named as a board member
(replacing Jana) for as long as our debt is outstanding. This would
eliminate any potential risk of board instability, would bring a qualified
member to the board, and would improve relationships with outside
lenders and potential capital investors. You (Stephen [Dalby]) would
remain on the board and I would invite Jana to continue attending board
meetings. I have no problem with her having access to the information
(presumably you’re sharing it anyway offline) but there is a significant
issue of her being a direct official representative on the board. . . . [P]art
of our commitment to you would be to improve the cadence of board
meetings. I believe the board should be meeting basically twice monthly
until further notice and at a minimum once quarterly in person. I would
also commit to meet with you directly as frequently as you needed to
talk though frustrations, questions, or anything ese that would need to
be addressed. We could meet informally directly after each board
meeting if you would like to debrief and I could walk through the

349 TT 373:15–18 (Ball).

350 (Clayton) Dep. 356:13–357:23.

351 JX 507 at 1; JX 914.

66
business decisions and votes in additional detail. I’d even commit to
visit you in person in Boise quarterly if that is helpful.352

Ball also cautioned that “fighting and legal battles” would “result[ ] in downward

value for [Dalby] and all of the stakeholders in Gabb.”353 When he made this proposal,

Ball was aware of all the reasons for Dalby’s removal.354 That same day, Foley sent

Clayton a draft “amended and restated [V]oting [A]greement” that would put Ball on

the Board as one of the Common Directors.355

Three days later, Ball texted Cole, Randle, and Clayton, writing, “Dalby says

he’ll remove Jana and name somebody (not me but a qualified person) and remove

his ability to remove that person. Thoughts?”356 Cole responded: “We don’t like the

idea.”357

Meanwhile, Gabb’s management and Delaware counsel worried that Ball’s

proposal jeopardized Blue Diamond’s ability to solicit Dalby’s removal. On December

18, 2024, Clayton texted Cole:

352 JX 507 at 5–6.

353 Id. at 6.

354 JX 480; TT 376:20–377:19 (Ball).

355 JX 511 at 1–3.

356 JX 535.

357 Id.

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[LRC] says Brandon [Ball]/Blue Diamond can’t be the one to send.
[DCC] didn’t put it that bluntly. Both say they need to watch the video.
[LRC] is worried that it might help Dalby with his claims in litigation.358

Cole and Clayton discussed who else might be the sender, floating Lance Black,

Gabb’s VP of Communications, and Tall as alternatives.359 But Black was not a viable

option and Tall did not own any Gabb stock.360 So that Tall would own Gabb stock,

Cole suggested that Tall exercise an option for one share and pay using Venmo.361

Company counsel prepared a draft stockholder communication stating that “[t]he

[CIS] is being sent on behalf of Spencer Tall.”362 Ultimately, on December 20, 2024,

Ball emailed Dalby that Blue Diamond would proceed with the removal

solicitation.363

8. The AIM Note Conversion

On December 22, 2024, Randle called a Board meeting for the next day to

address the Company’s precarious financial position and a potential path forward: an

inside Series B financing round.364 Gabb had cash flow issues and could not cover

358 JX 515.

359 Id.

360 Id. (“[LRC] thinks that if its [Black] it might as well be Gabb[.]”).

361 Id.

362 JX 513 at 2.

363 JX 530.

364 JX 546.

68
operating expenses and payments to major vendors, including Samsung. 365 In fact,

in early December, the Company had missed a payment to Samsung in order to have

cash to pay another vendor, Foxconn, at the end of the month.366 And the Company’s

costs had ballooned over the course of the year. For instance, in October 2024, a

Moelis managing director advising Gabb internally emailed his colleagues at Moelis:

“Why did they increase opex by $18m this year[?]”367 A Moelis VP responded:

August 2024E payroll was up 60%+ YoY. They have hired [a] bunch of
people. A bunch of engineers, new finance people, etc. Increases in
every department excluding customer service, which they are largely
outsourcing now. It’s very difficult to understand given the cash
constraints, but it has been a conscious choice on the company’s part.368

That fall, Gabb had tried to secure a $20 million loan from Celtic Bank.369 But

the effort went nowhere because Celtic required unanimous approval of their non-

binding proposed term sheet to move forward with basic due diligence and sought a

personal guaranty from Dalby, as the only holder of more than 25% of the Company’s

shares.370 Dalby did not sign the non-binding term sheet needed to proceed with due

365 JX 465 at 1.

366 JX 453 at 2.

367 JX 351 at 1.

368 Id.

369 E.g., JX 422.

370 E.g., JX 424 at 11–14; see also TT 149:6–13 (Kastner) (describing the proposed

terms of the Celtic loan as “totally vulture”).

69
diligence. Now, Gabb was “out of money.”371 Between the end of November and early

December, Clayton was taking notes on how a Chapter 11 reorganization would

impact the Company.372 She wrote that a bankruptcy would not “get rid of Dalby”

since it “would be unusual for [a] court to interfere [with a] voting agreement.”373

The Company’s financial position was so dire that, in a text exchange, Kastner shared

that he was also “finding [himself] brushing up on restructur[ing] reg[ulations].”374

The day of the December 23, 2024 Board meeting, Hammond resigned from the

Board.375 Hammond stepped down because Dalby “wanted [him] to vote a certain

371 JX 554 at 2.

372 JX 812 at 43–44.

373 Id. at 43. Indeed, getting rid of Dalby, rather than saving the company, was
management’s number one goal. See JX 644 (Jan. 17, 2025 email from Kastner, stating that
getting rid of Dalby is the “Exec team’s seemingly more important goal than saving the
company.”).

374 JX 554 at 2.

375 JX 544.

70
way.”376 Just three days earlier, Dalby himself had temporarily relinquished his

Board seat “for personal reasons,” and so could not attend the meeting.377 Hammond

intended to vote in favor of the inside Series B, against Dalby’s wishes.378 Dalby

appointed Jana’s brother, Jason Hawke, in Hammond’s place. 379

The next day, Baugh texted Mendez: “Stephen removed another [B]oard

member? Put his wife’s brother on.”380 Mendez replied: “Bruh,”381 meaning

“[u]nbelievable[.]”382 Baugh replied, referring to Dalby as a “psychopath.”383 Mendez

then texted: “Dropping all the bombs on him on 12/26[.]384 He laid out the plan: (1)

“converting”;385 (2) initiating the Series B; (3) replacing Dalby with Randle as the

376 JX 549 at 2; TT 308:8–19 (Dalby); see also JX 554 (text to Kastner, explaining “Mike

quit due to him feeling like he had no autonomy to act in the best interest of the company[.]”).

377 JX 541.Dalby temporarily stepped down from the Board under Section 1.4(e) of
the Voting Agreement. Id. In his deposition, Dalby cited “some pains that were troubling”
as the reason why he stepped down. (Dalby) Dep. 459:23–460:10.

378 TT 492:24–493:6 (Dalby).

379 Pre-Trial Stip. ¶¶ 24–25; JX 552.

380 JX 553 at 2.

381 Id.

382 (Mendez) Dep. 351:17–18.

383 JX 553 at 2.

384 Id.

385 TT 606:16–23 (Mendez) (“Q. And ‘converting’ refers to the note conversion at issue
in this case; is that correct? A. That is correct. Q. And the note conversion was part of the
strategy against Mr. Dalby that you’re describing to Mr. Baugh because it would Dilute Mr.
Dalby; correct? A. That is correct.”).

71
CEO Director; and (4) suing Dalby.386 Three days later, on December 27, 2024, then-

Preferred Director Murphy emailed Gabb counsel and others stating: “We are

preparing to move forward with the conversion.”387

Gabb’s Delaware counsel had reservations about the plan. As early as

November, LRC commented: “I am not sure I understand how the conversion that

dilutes Dalby does not violate the Settlement Agreement. I keep getting stuck on the

phrase ‘no action will be taken that will have the effect of diluting Dalby’s rights as a

shareholder.’”388 And DCC described the position that the note conversion could

qualify as a “Series B financing” as a “stretch.”389 Aware that the AIM Note

conversion might not stand up in court, AIM and Sandlot nevertheless decided to

proceed with the conversion.390

On December 31, 2024, Bowman emailed Gabb management and counsel

detailing steps for the conversion.391 Cole forwarded the email to Murphy and

386 JX 533 at 2.

387 JX 563 at 1.

388 JX 416 at 1; see also JX 573 (email from LRC discussing the likelihood that the

Delaware Court of Chancery would enjoin the Series B).

389 JX 396 at 2.

390 JX 573 (email from Cole, stating “[w]e talked to the Sandlot team and they are good

to proceed raising the Series B even though there are risks. They feel it is the best path and
puts Dalby on his heels.”).

391 JX 574; JX 576.

72
Kastner, writing “fyi[.]”392 In the email, Bowman laid out two options.393 The first

option included converting the $1.5 million AIM Note under Section 2(a) into Optional

Conversion Preferred Stock, or what Bowman referred to as “Series B Preferred

Stock.”394 The AIM Co-Invest Entities, as well as other noteholders, would have the

option to convert into Optional Conversion Preferred Stock too. In addition to

converting, AIM would also purchase another $1 million worth of Optional

Conversion Preferred Stock,395 infusing the Company with “desperately need[ed]”

cash.”396 The conversion would then be declared the “Series B” funding round, as

defined in the Settlement Agreement and the “Next Equity Financing” as defined in

the Amended and Restated Voting Agreement.397 This would be used to claim

satisfaction of the first of two triggers for Dalby to lose the CEO Director seat under

the Amended and Restated Voting Agreement and Settlement Agreement and

terminate Dalby’s anti-dilution protection under the Settlement Agreement.398 And

Bowman explained that Dalby could then be replaced as the “CEO Director” by

392 JX 576.

393 JX 574.

394 Id. at 1.

395 JX 575 at 1.

396 JX 670 (Jan. 21, 2025 email from Cole, sharing an overdraft notice and writing:

“We are overdrawn by $137k. . . . I know AIM has $1 million ready to wire in once the
conversion agreement is signed. We desperately need this money.”); TT 481:11–20 (Murphy).

397 JX 574 at 2.

398 See id.

73
Randle.399 But this all hinged on the Company’s Board and stockholders approving

an amendment to the Company’s charter to create the new class of Optional

Conversion Preferred Stock.400

The second option kicked in if the Board and stockholders did not approve the

charter amendment.401 In that case, the noteholders would convert their notes to

common stock instead of Optional Conversion Preferred Stock.402 The other parts of

the plan remained largely the same.403 In late December and early January, Bowman

prepared a model of how the conversion would dilute Dalby and other stockholders

and shared it with Gabb’s management.404 Cole forwarded Bowman’s December

email about the model to Murphy, writing, “I’ll stop by shortly to discuss[.]”405

On January 3, 2025, AIM Ventura provided Gabb notice of its election to

convert under Section 2(a) of the Convertible Note and purchase an additional $1

399 Id.

400 Id. at 1–2.

401 Id. at 2.

402 Id. at 2.

403 See id. at 2–3.

404 JX 560 (noting that conversion plus additional investment would dilute Dalby to

25.13% ownership and 31.09% voting rights); JX 578 (revising calculation to 25.11%
ownership and 28.94% voting rights). At the time, Murphy was still AIM’s designee to Gabb’s
Board. Pre-Trial Stip. ¶ 14. Murphy was replaced by Kastner as AIM’s designee on January
19, 2025. Id.

405 JX 1308 at 1.

74
million in Series B Preferred Stock.406 Foley—despite being Gabb’s counsel—“took

the primary pen” in drafting the paperwork for AIM’s Note Conversion, including the

notice that AIM Ventura sent to the Company.407 Murphy testified that as AIM

Ventura’s sole decision-maker, he was responsible for AIM Ventura’s election to

convert.408 He explained that the decision was motivated by Gabb’s urgent needs for

cash.409 Bankruptcy at Gabb would result in major financial consequences for AIM

and potentially its investors.410

The next day, Randle emailed the Board to let it know that AIM had elected to

convert the AIM Note into preferred shares and would be providing an additional $1

million which would “help [the Company] immediately start to pay . . . outstanding

invoices with key suppliers.”411 Randle shared that Sandlot and Blue Diamond had

406 JX 589.

407 TT 634:4–23 (Bowman).

408 TT 444:18–445:2, 481:6–20 (Murphy).

409 TT 481:10–20 (Murphy). But see JX 447 (Dec. 2, 2024 text from Kastner, writing:
“After listening to [Cole’s] logic on how Gabb is going to navigate issues with Dalby’s [sic] and
managing cash/debt, we should NOT consider converting anything off of the debt stack.”).

410 TT 480:14–481:5 (“AIM has returned roughly 50 percent of committed capital to its

LPs, so it has another 50 percent to go for [carried interest] to apply. Honestly, it basically
almost entirely hinges on the financial performance of Gabb.”); see also JX 554 at 3 (text
message from Kastner, writing: “If Gabb goes, it might be tough to run the fund as-is. A wind
down is expensive.”).

411 JX 596 at 1.

75
also elected to convert.412 He called a Board meeting for the following Monday to

“discuss next steps on creating the preferred shares to allow them to convert.”413

On January 8, 2024, after Jana let Randle know that she could not attend the

Monday Board meeting,414 Randle emailed the Board again, urging “[w]e really need

to meet ASAP.”415 He explained:

The need for a board meeting is procedural at this point. The decision
to take AIMs money in early July (that as a reminder both Jana and
Stephen [Dalby] agreed to) came with obligations. Among those
obligations is that the company is required to convert the note to equity
upon AIMs election . . . The board has the responsibility to keep the
company out of default.416

9. Gabb’s Stockholders Vote to Remove Dalby

On January 14, 2025, Dalby exercised his right under Section 1.4(e) of the

Amended and Restated Voting Agreement to return to the Board.417 Later that day,

DCC updated the CIS,418 and Foley distributed the CIS to Gabb’s stockholders via

412 Id. From Cole’s perspective, the contemplated conversion by AIM Ventura, the
AIM Co-Invest Entities, Sandlot, and Blue Diamond would eliminate approximately $14
million in principal debt (not including interest). TT 408:22-410:17 (Cole).

413 JX 596 at 1.

414 JX 605 at 3.

415 JX 613 at 1.

416 Id.

417 JX 627.

418 JX 628.

76
DocuSign.419 The CIS stated that one of the Blue Diamond entities, Bingham Family

Alaska LLC, is “sending this Confidential Information Statement to the stockholders

of Gabb Wireless, Inc. . . . to solicit proxies in favor of the removal for cause of director

Stephen Dalby . . . .”420 The CIS explained that Blue Diamond was “taking this

extraordinary action because we believe that the actions of Dalby have been so

egregious, so offensive and so damaging to the Company’s business that it will suffer

imminent irreparable harm if Dalby is not removed.”421 Black subsequently emailed

Gabb’s stockholders to alert them of the stockholder solicitation to remove Dalby.422

The Preferred Directors and Gabb management scrambled to contact

stockholders to advocate for Dalby’s removal.423 It was “all hands on deck,”424 with

Gabb’s management even enlisting Butler and Tall—two of Dalby’s former Common

Director designees—to persuade stockholders to vote for Dalby’s removal.425 The

mentality was “[i]f Dalby is talking to [stockholders] we need to be talking to them

419 JX 629; see JX 610.

420 JX 619 at 1.

421 Id.

422 JX 629; JX 630; see also JX 633 (text messages from Black to Gabb stockholder,

explaining: “You should have received two emails tonight. One from Foley, Gabb’s law firm,
and one from me explaining the Foley email.”).

423 JX 702; JX 577 at 3 (Jan. 19, 2025 text from Randle, stating:
“We have been on the
phone non stop since the info went out.”); TT 530:12–534:24 (Randle); see also JX 819 (Gabb
Cap Table with notes on which stockholders Cole and Black will reach out to).

424 JX 577 at 3.

425 See id.

77
10x more.”426 On January 27, 2025, Dalby emailed stockholders stating, “I believe

the best approach is for anyone who genuinely wants to hear my side of the story and

make an informed decision to reach out to me directly.”427 Dalby sought to have

private meetings with stockholders to “create a more comfortable environment for

any questions” and “allow for some level of anonymity if desired.”428 Referring to

Dalby’s meeting with stockholders, Randle texted Ball, stating “we’re going to let him

lie/fumble on the call tonight.” 429 When it looked like stockholders weren’t receiving

a Zoom link to meet with Dalby, Randle followed up, writing, “I think [Dalby] knows

several people are going to record [the meeting] and he can’t not lie so the conundrum

is real.”430

As they sought stockholder votes in favor of Dalby’s removal, Gabb’s

management was also closely monitoring the tally.431 Blue Diamond did not tally the

votes.432 Given Dalby’s stock holdings, the margin in favor of removal was narrow,

426 Id. at 3.

427 JX 1119.

428 Id.

429 JX 693.

430 Id.

431 JX 681 at 2; JX 702.

432 TT 384:9–17 (Ball); TT 16:14–22 (Clayton).

78
with Clayton’s tracking spreadsheet showing 50.081% voting for removal.433 But, out

of the all the stockholders that voted, only Dalby and two other stockholders voted

against Dalby’s removal.434

On January 28, 2025, Clayton emailed Ball stating: “We’re planning on

alerting Stephen today that he has been removed.”435 Clayton added that “[w]e’re

hoping to include a letter from you as well sharing the news” and attached a draft

letter for Ball’s review.436 Clayton sent the letter to Ball via DocuSign for

execution.437

Later that day, Randle notified Dalby that the majority of stockholders had

voted for Dalby’s removal.438 Black subsequently emailed Gabb stockholders that

“[s]tockholders holding at least a majority of the outstanding voting power of the

capital stock have acted to remove Dalby for cause.”439

433 JX 702. According to Clayton’s spreadsheet, Dalby’s stockholdings represented
48.893% outstanding stock. Id.

434 Id.; see also TT 16:23–28 (Clayton) (“Mr. Dalby owns almost 49 percent, 48 point

something percent of the company. So that meant that over 50 percent of the stockholders
would need to vote, which meant that basically every single other shareholder would need to
vote in favor of his removal, which was something like 80 shareholders.”).

435 JX 701 at 1.

436 Id. at 2.

437 See id.; JX 699 at 7.

438 JX 711.

439 JX 699 at 5.

79
10. Kastner and Mendez Approve the AIM Note Conversion

Shortly after Randle notified Dalby of his removal, he sent an email requesting

that Dalby remove Hawke from Gabb’s Board because of Hawke’s status as a

“Disqualified Designee” under the Voting Agreement.440 The attached letter provided

that “[s]ince his election, the Company raised concerns regarding Mr. Hawke’s

trading history and whether his election violated the terms of the Voting

Agreement.”441 Indeed, about a month earlier, when Dalby first appointed Hawke to

the Board, Murphy emailed Gabb management, Mendez, Kastner, and AIM’s counsel,

writing, “I question how appropriate it is to allow Jason Hawke on the Board.”

Murphy shared a link to the Securities and Exchange Commission’s website and

explained that “in [Hawke’s] Investment Advisor Public Disclosures, he has 13

disclosures, many of which resulted in termination from his firm and/or settlements

with clients. We would not hire someone with a compliance record like this at Adams

Wealth . . . .”442 When Randle confronted Hawke about his trading history, Hawke

tried to explain away the disclosures by stating:

[W]hen you manage as much wealth as I do, their [sic] is a low life group
of attorneys chasing ambulances that are mainly back east that are
fishing for clients, and because they can’t market to individuals they do
commercials and google search jargons that attract special people (all

440 JX 715 at 1–3; see JX 27 § 5.3.

441 JX 715 at 2.

442 JX 545 at 1.

80
losers in my opinion). None of these marketing attempts have any merit
and no one has attempted to use these scumbags.443

Foley also investigated Hawke444 and discussed Hawke’s removal from the

Board with Delaware counsel.445 After the two Common Directors voted Hawke

Chairman, the urgency to remove him increased.446 As Randle explained,

management and the Preferred Directors felt that they “[c]an’t have him as chair or

with due diligence [sic]” because “no one outside [G]abb will invest (debt and/or

equity) if they find out about his SEC breaches/fines.”447 But ultimately Randle

decided to wait until Dalby was removed before removing Hawke.448 The new plan

was to either convince Dalby to remove Hawke or, if Dalby refused, for the Company

use the Irrevocable Proxy and Power of Attorney contained in the Amended and

Restated Voting Agreement to remove him.449

On January 30, 2025, shortly before the first Board meeting scheduled

following Dalby’s removal, Randle circulated a written consent to remove Hawke as

a director stating he was exercising the CEO’s proxy under the Irrevocable Proxy and

443 JX 659 at 5; JX 563 at 1.

444 See JX 561.

445 See JX 565.

446 JX 606.

447 JX 659 at 9.

448 Id. at 2.

449 See id. at 1–2.

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Power of Attorney provision of the Amended and Restated Voting Agreement to vote

Dalby’s shares to remove a “Disqualified Designee.”450

Kastner and Mendez went forward with the Board meeting.451 Mendez,

Kastner, Cole, Clayton, and Bowman attended the meeting.452 At the meeting,

Kastner and Mendez passed resolutions approving the AIM Note conversion.453

Kastner and Mendez also passed a resolution recommending that the Company’s

stockholders approve and adopt an Amended and Restated Certificate of

Incorporation authorizing Series B Preferred Stock by written consent.454 As of trial,

the Company’s stockholders had not approved the Amended and Restated Certificate

of Incorporation.

The day before the meeting, Murphy and Adams had texted about AIM’s plans

for the company once AIM’s Note conversion was approved. 455 Murphy summarized

the plan, writing:

Take over the board [sic] force cost cuts. Suspend all bonuses.
Immediately approve another round of equity financing. Once they have
budget to pay someone good, move [Cole] to COO and hire a new CFO.

450 Pre-Trial Stip. ¶ 27; JX 731. On February 6, 2025, Hawke’s regulatory compliance
counsel sent Foley a letter asserting the claimed removal of Hawke was improper and that
Hawke “remains a registered investment adviser in good standing.” JX 766 at 2–3.

451 JX 744 at 1.

452 Id.

453 JX 472 (Resolutions Approved at the January 30, 2025 Board Meeting).

454 Id.

455 JX 716.

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The CFO will have a fitting resume for a CEO and if [Randle] and [Cole]
can [sic] get their sh*t together we’ll send them packing[.]456

Murphy explained that they “[n]eed this clown car to stay on the road until we

wrangle enough power to fix it[.]”457 Because the Company would not have enough

money to cover AIM’s legal fees, Murphy planned to “take what we want from the

company too[.]”458

L. This Litigation

On February 10, 2025, Plaintiffs filed their Complaint.459 Ten days later, AIM

filed its Complaint-in-Intervention.460 On February 25, 2025, Plaintiffs filed a

counterclaim.461 Gabb filed a response of no position to both AIM’s Complaint-in-

Intervention462 and Plaintiffs counterclaim.463

456 Id. at 2 (profanity edited).

457 Id.

458 Id..

459 Pre-Trial Stip. ¶ 171.

460 Id. ¶ 172.

461 Dkt. 29.

462 Dkt. 33.

463 Dkt. 79.

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On April 2, 2025, Plaintiffs filed a Motion to Compel.464 Following a hearing,

I granted the motion.465 Two days later, on April 4, 2025, AIM filed its own Motion

to Compel.466 The parties agreed to a resolution of AIM’s motion.467

I held a two-day trial on May 8 and May 9. Following full briefing, I heard

post-trial argument on July 21, 2025.

II. ANALYSIS

In Count I of their Complaint, Plaintiffs seek a declaration under 8 Del. C. §

225 that the “for cause” removal of Dalby was invalid.468 The Dalbys, as Plaintiffs in

the Section 225 action, bear the burden of proving by a preponderance of the evidence

that they are entitled to relief.469 They have met that burden.470

In Count I of their Complaint-in-Intervention, Intervenor Plaintiffs allege that

the Company breached the terms of the AIM Note. As relief, Intervenor Plaintiffs

seek an order of specific performance requiring the Company to convert the principal

464 Dkt. 93.

465 Dkt. 121; Dkt. 128, Tr. of Apr. 4, 2024 Oral Arg. and Rulings of the Court on Pls.

Mot. to Compel.

466 Dkt. 102.

467 Dkt. 115; Dkt. 119.

468 Dkt. 1, Compl. ¶¶ 111–119.

469 See In re IAC/InterActive Corp., 948 A.2d 471, 493 (Del. Ch. 2008).

470 This decision does not address Plaintiffs’ claim for contractual fee-shifting, which

is Count II of Plaintiffs’ Complaint. See Pls.’ OB at 93 (requesting the opportunity to submit
a fee application should the Court enter judgment for the Dalbys).

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and interest amounts into Optional Conversion Preferred Stock, as defined in the

AIM Note. In Count II, Intervenor Plaintiffs seek declaratory relief that the

Company must issue shares of Optional Conversion Preferred Stock to AIM Ventura

and the AIM Co-Invest Entities, among other declaratory relief.

Intervenor Plaintiffs must prove their breach of contract claim and declaratory

judgment claims by a preponderance of the evidence.471 As for Intervenor Plaintiffs’

request for an order of specific performance in connection with Count I, the burden is

higher: They must prove by clear and convincing evidence that they are entitled to

specific performance.472 Intervenor Plaintiffs have met their burden on proving their

breach of contract claim but have not met their burden on establishing that they are

entitled to specific performance.

Finally, it is worth noting that Plaintiffs, Defendants, and Intervenor Plaintiffs

put forth a host of arguments that I do not address for the sake of brevity. I only

address the subset of arguments necessary to reach a decision in this case.

471 See Revolution Retail Sys., LLC v. Sentinel Techs., Inc., 2015 WL 6611601, at *9

(Del. Ch. Oct. 30, 2015); Osborn v. Kemp, 2009 WL 2586783, at *4 (Del. Ch. Aug. 20, 2009)
(“Typically, in a post-trial opinion, the court evaluates the parties’ claims using a
preponderance of the evidence standard. Under that standard, . . . a claimant asserting a
breach of contract must prove the elements of its claim by a preponderance of the evidence.”),
aff’d, 991 A.2d 1153 (Del. 2010).

472 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1154, 1158 (Del. 2010) (“Osborne II”)

(citing United Rentals Inc. v. RAM Hldgs. Inc., 937 A.3d 810, 834 n.112 (Del. Ch. 2007)).

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A. Dalby’s “For Cause” Removal Is Invalid

Because stockholders were unaware that the removal effort was spearheaded

by one faction of the Board and management and that Blue Diamond had offered

Dalby a proposal that would have allowed him to stay on the Board, Dalby’s removal

is invalid.

Plaintiffs advance a host of other arguments for why the CIS shared with

Gabb’s stockholders was incomplete.473 But, because I conclude that the CIS was

materially deficient in at least two ways, I need not reach these arguments.

Likewise, I need not reach whether the substantive allegations about Dalby

contained in the CIS were materially false or misleading or whether the allegations

against Dalby met the high bar of “for cause” removal under Delaware law. But a

disclaimer is perhaps necessary: My findings in favor of Plaintiffs on Count I should

in no way be taken as an endorsement of Dalby’s behavior and actions.

A stockholder vote “procured by the use of materially false and misleading

proxy materials” should be set aside.474 “An omitted fact is material if there is a

substantial likelihood that a reasonable stockholder would consider it important in

deciding how to vote.”475

473 See Pls.’ OB at 81–83.

474 Millenco L.P. v. meVC Draper Fisher Jurvetson Fund I, Inc., 824 A.2d 11 (Del. Ch.

2002).

475 Rosenblatt v. Getty Oil Co., 493 A. 2d 939, 944 (Del. 1984) (quoting TCS Indus.,

Indus., Inc. v. Northway, Inc., 426 U.S. 438, 499 (1976)). Given management and the
Preferred Directors’ extensive involvement in Dalby’s removal effort and the use of Company

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As already discussed, the CIS was materially omissive for at least two reasons.

First, the CIS did not disclose that Blue Diamond was merely a “nominal sender.”

Second, the CIS did not disclose that just weeks before Foley circulated the CIS to

stockholders, Blue Diamond had proposed that Dalby could stay on the board so long

as he removed Jana and appointed Ball in her place.

1. The CIS Failed to Disclose that Blue Diamond Was Just a
“Nominal Sender”

The CIS received by stockholders presented the removal effort as Blue

Diamond’s solicitation. The CIS explicitly stated that one of the Blue Diamond

entities, Bingham Family Alaska LLC, is “sending this Confidential Information

Statement to the stockholders of Gabb Wireless, Inc. . . . to solicit proxies in favor of

the removal for cause of director Stephen Dalby . . . .”476

But Blue Diamond was merely the “nominal sender.”477 The CIS omits that

the solicitation was developed, prepared, and carried out by one faction of the Board

and their management allies using Company resources. A reasonable Gabb

stockholder would certainly have regarded the omitted information as material in

deciding how to vote. Even if Blue Diamond truly believed that Dalby should be

removed for cause (more on this later), given the substantial degree of the Preferred

resources for the effort, this case stands in stark contrast to Kerbawy v. McDonnell, 2015 WL
4929198, at *14–16 (Del. Ch. Aug. 18, 2015).

476 JX 619 at 3.

477 JX 407 at 1.

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Directors’ and management’s involvement in the solicitation effort, their role should

have been disclosed.

In fact, the totality of the evidence convinces me that that the primary goal

behind management asking Blue Diamond to be the face of the removal effort was to

make Dalby’s removal more palatable to Gabb’s stockholders. The Preferred

Directors and management wanted to show that a “separate party” not previously

involved in litigation with Dalby “was showing sufficient frustration at the situation

as to take an action instead of the ones that have already previously made motions

against [Dalby],” namely, AIM and Sandlot.478 Taking the record created at trial as

a whole, the conclusion that management and the Preferred Directors thought that

stockholders were more likely to support Dalby’s removal if the solicitation came from

an independent stockholder rather than from AIM and Sandlot is inescapable. All

the more so given the past litigation between Dalby, AIM, and Sandlot.

And references to management and the Preferred Directors’ involvement in the

removal effort were not omitted accidentally, but by deliberate choice. For instance,

when drafting the CIS, Gabb’s Delaware counsel pushed for Blue Diamond’s contact

information to be included on the CIS as opposed to contact information for Randle

or another member of the management team.479 Delaware counsel explained that

including Blue Diamond’s contact information on the CIS was “just better from an

478 JX 417 at 1.

479 JX 493 at 1; JX 488 at 1.

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optics and litigation perspective.”480 The concern over the “optics” of management’s

involvement in the effort demonstrates that fact too was plainly material: The

“optics” would be bad if management’s role in the removal effort was clear, and

stockholders might not have voted for Dalby’s removal.

In trying to explain why the Preferred Director’s role in the removal effort was

omitted from the CIS, Defendants assert that “if the CIS had said more about the

Board supporting the endeavor, Plaintiffs could just as easily complain about the

Board ‘piling on’ to Dalby.”481 But, as Plaintiffs ably explain, the question is whether

the CIS was materially incomplete, not what the Plaintiffs could “complain about.”482

Defendants also argue that I can “deem the vote ratified based on the record that

Dalby reached out directly to stockholders in an unsuccessful attempt to persuade

them to change their votes—and instead they reaffirmed (albeit informally) that they

were maintaining their votes in favor of removal.”483 But, as Plaintiffs point out,

before discovery, Dalby might have believed, but could not confirm, that Blue

Diamond was just a “nominal sender.”484 And Dalby’s advocacy against his removal

480 JX 493 at 1; see also JX 488 at 1 (“We think that it would be a good idea to include

a name/phone/e-mail of a representative of Blue Diamond for optics and settlement
agreement purposes.”).

481 Dkt. 158, Defs.’ Answering Post-Trial Brief (“Defs.’ AB”) at 39–40.

482 Dkt. 161, Pls.’ Combined Post-Trial Reply Brief and Answering Brief on AIM’s

Claim-in-Intervention (“Pls.’ RB/AB”) at 13.

483 Defs.’ AB at 45.

484 Pls.’ RB/AB at 13, 17.

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does not somehow change the fact that the CIS was materially incomplete. Notably,

only 50.081% of stockholders voted for Dalby’s removal. It would be a fallacy to

suppose that a stockholder who succeeds in obtaining enough votes to remove a

director “for cause” through a materially false and misleading proxy would

necessarily obtain the requisite number of votes if it had distributed complete proxy

materials to stockholders.485 All the more so here where the removal effort succeeded

by only a slim margin. Nevertheless, there is “no requirement to show a substantial

likelihood that disclosure of the omitted fact would have caused the reasonable

investor to change his vote.”486

2. The CIS Failed to Disclose that Blue Diamond Offered Dalby a
Proposal that Allowed Dalby to Remain on the Board

The CIS also stated that Blue Diamond “believe[d] that the actions of Dalby

have been so egregious, so offensive and so damaging to the Company’s business that

it will suffer imminent irreparable harm if Dalby is not removed.” 487 Yet, just a few

weeks before the CIS was sent to stockholders, Ball had suggested that Dalby could

stay on the Board if he agreed to substitute Jana with a Blue Diamond designee.488

485 C.f. Superwire.com, Inc. v. Hampton, 805 A.2d 904, 912 (Del. Ch. 2022) (“[I]t is a

fallacy to suppose that a stockholder who succeeds in obtaining enough consents to remove a
director ‘for cause’ without affording the director notice and an opportunity to be heard would
necessarily obtain the requisite number of consents if it complies with the law . . . .”).

486 Red Oak Fund, L.P. v. Digirad Corp., 2013 WL 5740103, at *10 (Del. Ch. Oct. 23,

2013) (citation modified).

487 JX 619 at 1.

488 See JX 507 at 5.

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Knowing all the information contained in the CIS, Blue Diamond was agreeable to

Dalby staying on the Board. This would support a conclusion that Dalby’s presence

on the Board was not as imminently and irreparably harmful as the CIS claimed.

Certainly, that is a fact that a reasonable stockholder would consider in deciding how

to vote.

Moreover, the CIS omitted references to Ball’s negotiations with Dalby and his

proposal entirely. The record shows that management and counsel were worried

about the optics of the proposal, even questioning whether Blue Diamond should

continue to lead the solicitation effort.489 Delaware counsel expressed concern that

if Blue Diamond’s name remained on the CIS “it might help Dalby with his claims in

litigation.”490 After the proposal, management weighed substituting Blue Diamond

with another stockholder to front the solicitation effort.491 So the proposal was a

material fact that a reasonable stockholder would consider in deciding whether to

vote for Dalby’s removal and, thus, material.

In sum, because the CIS was materially omissive, the stockholder vote for

Dalby’s removal must be set aside.492

489 JX 515 at 1; JX 535.

490 JX 515 at 1.

491Id.

492 Because I conclude that Dalby was improperly removed, it necessarily follows that

the January 30, 2025 Board meeting lacked a quorum. See also Dkt. 169, Tr. of Post-Trial
Oral Argument at 62:16–63:3 (“I would agree that if the January 30, 2025, meeting is held to

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B. The Company Breached the Terms of the AIM Note by Failing to
Satisfy Its Mandatory Obligation to Convert

To prevail on a breach of contract claim, a Plaintiff must prove “(i) a contractual

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

injury that warrants a remedy, such as damages or in an appropriate case, specific

performance.”493 In construing a contract, Delaware courts endeavor to give effect to

the intent of the parties.494 “Delaware adheres to the ‘objective’ theory of contracts,

i.e. a contract’s construction should be that which would be understood by an

objective, reasonable third party.”495 The Court will read the contract as a whole and

“enforce the plain meaning of clear and unambiguous language.”496

At the outset, it bears mentioning that no party challenges the validity of the

AIM Note or the approval of the AIM Note. Gabb’s Board (including the Dalbys), and

a majority of Gabb’s stockholders (including Dalby), approved the AIM Note.

be invalid for lack of a quorum, based on Mr. Dalby . . . remain[ing] a board member, then I
do think in this particular case, that request is moot.”).

493 Kaye v. Fantasea Resorts Grp., Inc., 2025 WL 1157217, at *3 (Del. Ch. Apr. 17,

2025) (citation omitted).

494 Weinberg v. Waystar, Inc., 294 A.3d 1039, 1044 (Del. 2023) (citing Salamone v.

Gorman, 106 A.3d 354, 368 (Del. 2014)).

495 Id. (quoting Osborn II, 991 A.2d 1153 at 1159).

496 Id. (quoting Manti Hldgs, LLC v. Authentix Acquisition Co., Inc., 261 A.3d 1199,

1209 (Del. 2021)).

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Section 2(a) of the AIM Note provides AIM Ventura may elect to convert “in its

sole discretion” after 30 days.497 Upon AIM Ventura’s election, the AIM Note provides

that “the Company shall convert the outstanding principal amount of the [AIM Note]

and all accrued and unpaid interest thereon into the equivalent number of shares of

Optional Conversion Preferred Stock of the Company . . . with a further optional

conversion to common at a ratio of 1:2.”498 Delaware courts construe the term “shall”

as creating a mandatory obligation.499

Here, the use of “shall” in Section 2(a) establishes a mandatory obligation for

Gabb to convert the outstanding principal and interest on the AIM Note into Optional

Conversion Preferred Stock, with a further optional conversion to common stock,

after AIM Ventura’s election. Because the Company has not satisfied its mandatory

obligation, it has breached the terms of the AIM Note.

Plaintiffs argue that there can be no breach because Section 2(c), entitled

“Procedure for Conversion,” provides that “[t]he Company shall not be required to

issue or deliver the capital stock into which [the AIM Note] may convert until . . . the

Company has taken all corporate action required to be taken by the Board and the

Company’s stockholders, including, without limitation, the filing of an amended

497 JX 226 § 2(a).

498 Id.

499 E.g., Giesecke+Devrient Mobile Sec. Am., Inc. v. Nxt-ID, Inc., 2021 WL 982597, at

*11 (Del. Ch. Mar. 16, 2021), judgment entered sub nom. Giesecke+Devrient Mobile Sec. Am.,
Inc. v. NXT-ID, Inc. (Del. Ch. 2021).

93
certificate of incorporation with the Delaware Secretary of State authorizing the

Optional Conversion Preferred Stock.”500 But the Delaware Supreme Court has

instructed that “[c]ontracts are to be interpreted in a way that does not render any

provisions ‘illusory or meaningless.’”501

Reading Section 2(c) to relieve Gabb of its mandatory obligation under Section

2(a) would render Section 2(a) “illusory and meaningless.” As Intervenor Plaintiffs

explain, Section 2(c) is not a path for Gabb to avoid its mandatory obligation to

convert the AIM Note. Rather, Section 2(c) acknowledges that action by the Board

and stockholders is required to authorize Optional Conversion Preferred Stock and

prevents the delivery of unauthorized shares. And there is an incentive for the Board

and stockholders to take that action quickly: If Gabb does not issue the shares within

fifteen days of AIM Ventura’s notice of conversion, that constitutes a “Default Interest

Trigger Event” and the interest rate on the AIM Note increases from 22% to 30%.502

500 JX 226 § 2(c). See Pls.’ AB/RB at 43–44.

501 O’Brien v. Progressive N. Ins. Co., 785 A.2d 281, 287 (Del. 2001) (footnote omitted);

Kuhn Const., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010) (“We will
read a contract as a whole and will give each provision and term effect, so as not to render
any part of the contract mere surplusage.”) (citing Energy P’rs, Ltd. v. Stone Energy Corp.,
2006 WL 294783, at *13 (Del. Ch. Oct. 11, 2006)).

502 JX 226 § 2(c).By way of contrast, reading Section 2(c) in this way does not render
the provision illusory because the provision operates as an incentive for Gabb to deliver the
Optional Conversion Preferred Stock quickly.

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Gabb breached the terms of the AIM Note by failing to satisfy its obligation to

convert the outstanding principal amount and interest on the AIM Note into Optional

Conversion Preferred Stock.

C. AIM Is Not Entitled to Specific Performance

Intervenor Plaintiffs request an order of specific performance requiring Gabb

to issue shares of Optional Conversion Preferred Stock to AIM. As counterclaimants,

the Dalbys seek declaratory judgments that the increased interest rate following a

Default Trigger Event is a liquidated damages provision and that Gabb’s failure to

deliver Optional Conversion Preferred Stock is an efficient breach.

“A party seeking specific performance must establish that (1) a valid contract

exists, (2) he or she is ready, willing, and able to perform, and (3) that the balance of

equities tips in favor of the party seeking performance.”503 A party seeking specific

performance must also demonstrate by clear and convincing evidence that she would

have no adequate legal remedy.504 As already discussed, the AIM Note is a valid

contract. And AIM has already performed under the contract by providing Gabb the

$1.5 million loan and delivering notice of its election to convert and required

documentation. What remains to be resolved is whether the balance of the equities

tips in AIM’s favor and whether damages would provide AIM adequate relief.

503 Snow Phipps Grp., LLC v. KCAKE Acquisition, Inc., 2021 WL 1714202 (Del. Ch.

Apr. 30, 2020) (quoting Osborn II, 991 A.2d 1153 at 1158).

504 Osborn II, 991 A.2d 1153 at 1158.

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At the outset, it bears mentioning that AIM could have negotiated a voting

agreement requiring Dalby and other stockholders to vote to amend the Company’s

certificate of incorporation to authorize Optional Conversion Preferred Stock or

negotiated different terms for the note. AIM did not. As Plaintiffs point out, AIM is

asking the Court to order specific performance of a stockholder vote.505 Plaintiffs also

point out that AIM did not cite a single case to support such an order. 506 And AIM

did not identify such a case in its reply brief.507 That alone could be reason enough

for me to decline to grant specific performance here. But I do not need to decide that

question. Although Dalby’s behavior certainly does not tip the scales of equity in his

favor, I also cannot say that the equities clearly and convincingly favor AIM.

Intervenor Plaintiffs have failed to meet their burden.

“To say that Delaware prides itself on the contractarian nature of its law risks

understatement.”508 And yet this Court will not order specific performance if the

equities do not favor that outcome clearly and convincingly.

To level-set, it should first be noted that this is not a circumstance implicating

a straightforward exercise of business judgment by independent and unconflicted

directors and management. Instead, conflicts, and furtive acts, abound. Indeed, the

505 Pls.’ RB/AB at 46.

506 Id.

507 See AIM’s RB.

508 26 Cap. Acquisition Corp. v. Tiger Resort Asia Ltd., 309 A.3d 434, 473 (Del. Ch.

2023) (quoting New Enter Assocs. 14, L.P. v. Rich, 295 A.3d 520, 565 (Del. Ch. 2023)).

96
AIM Note conversion reflects the culmination of a long-running effort by non-neutral

management, working with AIM, to vitiate Dalby’s bargained-for rights under the

Settlement Agreement and Amended and Restated Voting Agreement and thereby

“get rid” of the Company’s founder and controller.

AIM incredibly says that Murphy explained to Dalby that the conversion would

qualify as a “Series B” or “Next Equity Financing.” But nothing other than Murphy’s

self-interested testimony supports such a conclusion. In the Settlement Agreement

and the Amended and Restated Voting Agreement, the parties agreed that Dalby

would continue to enjoy certain rights until the Company’s “next” “bona fide”

“financing for the primary purpose of raising capital.”509 The record unequivocally

demonstrates that the AIM Note conversion is anything but. Rather, the conversion’s

primary purpose was to extinguish the rights created by the very agreements that

impose this “primary purpose” test.

Intervenor Plaintiffs also ask me to believe that AIM Ventura’s election to

convert was entirely unrelated to any effort to vitiate Dalby’s rights. But, again,

nothing in the record other than Murphy’s self-serving testimony supports such a

conclusion. To the contrary, AIM’s Preferred Director designee was tuned into the

plan since September 2024. And Cole, the Company’s CFO, was a central figure and,

being an AIM insider, kept Murphy and Kastner apprised.510

509 JX 20 at 1; JX 27 at 1.2(c).

510 See, e.g., JX 1308; JX 576; Tr. of Post-Trial Oral Argument at 150:4–151:23.

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Having sat through trial and considered the record, I conclude AIM presents a

narrative that is at odds with the record. As such, I am compelled to conclude that

Intervenor Plaintiffs have failed to show that the balance of the equities clearly and

convincingly tips in AIM’s favor.

AIM’s request for specific performance is denied. Likewise, the relief that AIM

seeks in Count II of its Complaint is denied. I need not reach Plaintiffs’ arguments

that the increased interest rate following a Default Trigger Event is a liquidated

damages provision and that Gabb’s failure to deliver Optional Conversion Preferred

Stock is an efficient breach.

III. CONCLUSION

Plaintiffs have proved that Dalby’s removal from the Board was invalid.

Intervenor Plaintiffs have proved that Gabb breached the terms of the AIM Note, but

they are not entitled to specific performance.

The parties are asked to submit a stipulated form of order implementing this

decision within five business days and to submit a joint letter advising the Court of

any issues that may remain to be addressed.

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