REM OA Holdings, LLC v. Northern Gold Holdings, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

REM OA HOLDINGS, LLC and )
SIFT FIXED US002, LLC, )
)
Plaintiffs and )
Counterclaim-Defendants, )
)
v. ) C.A. No. 2022-0582-LWW
)
NORTHERN GOLD HOLDINGS, )
LLC, )
)
Defendant and )
Counterclaim-Plaintiff, )
)
and )
)
REM EQ HOLDINGS, LLC, )
)
Nominal Defendant. )

MEMORANDUM OPINION

Date Submitted: June 20, 2023
Date Decided: September 20, 2023

Thomas W. Briggs, Jr. & Alexandra Cumings, MORRIS, NICHOLS, ARSHT &
TUNNELL LLP, Wilmington, Delaware; Michael C. Holmes, Jeffrey Crough &
Thomas Mitsch, VINSON & ELKINS LLP, Dallas, Texas; Matthew R. Freidenberg,
VINSON & ELKINS LLP, New York, NY; Counsel for Plaintiff REM OA Holdings,
LLC

Scott B. Czerwonka & D. Charles Vavala, III, WILKS LAW, LLC, Wilmington,
Delaware; Counsel for Plaintiff SIFT Fixed US002, LLC
Martin S. Lessner, Elisabeth S. Bradley & M. Paige Valeski, YOUNG CONAWAY
STARGATT & TAYLOR LLP, Wilmington, Delaware; Counsel for Defendant
Northern Gold Holdings, LLC

John D. Hendershot, Matthew W. Murphy & Angela Lam, RICHARDS, LAYTON
& FINGER, P.A., Wilmington, Delaware; Counsel for Nominal Defendant REM EQ
Holdings, LLC

WILL, Vice Chancellor
In 2020, America’s oldest gun maker—the Remington Outdoor Company—

went bankrupt. Richmond Italia and Scott Soura jointly submitted the winning bid

for its assets, which were later transferred to REM EQ Holdings, LLC. Italia

(through Northern Gold Holdings, LLC) and Soura (through REM OA Holdings,

LLC) each held 50% of the company’s membership interests and shared decision-

making authority. Italia ran the company’s day-to-day matters while Soura handled

legal and financial undertakings.

It was almost immediately apparent that the company would require

significant capital to restore operations. Traditional financing proved unattainable.

With the company burning cash, Soura pursued a loan from a Hong Kong entity

called SIFT Capital Limited Partners during the spring of 2021. For a time, Italia

was kept in the dark.

Soura and SIFT Capital finalized a term sheet that contemplated a $10 million

loan in exchange for a warrant to purchase 2.5% of the company’s membership

interests. Four days later, Soura emailed Italia a series of documents. Soura included

a draft written consent authorizing any member or officer of the company to execute

the term sheet and all documents related to the term sheet without further approval.

The written consent referenced the term sheet multiple times. The term sheet was

not, however, sent to Italia.

1
Italia reviewed the written consent and understood that it contemplated a loan

from SIFT Capital. He sent the documents to his accountant and counsel for review.

Multiple calls and discussions with Soura and the company’s counsel about the

documents followed. But Italia did not ask about or request a copy of the term sheet

referenced in the written consent. Nor did he propose any changes to the written

consent. Instead, after two weeks of review, he signed it.

Soura and the company’s officers then negotiated definitive loan

documentation with SIFT Capital’s assignee SIFT Fixed US002, LLC. The loan

transaction closed in January 2022. The company received $10 million and SIFT

Fixed received a warrant.

SIFT Fixed exercised its warrant in March 2022. Soura told Italia about the

exercise within days. Italia expressed surprise, refusing to accept that Northern Gold

was no longer a 50% member of the company.

SIFT Fixed and REM OA filed this action to confirm SIFT Fixed’s

membership. Given Italia’s express authorization of the loan transaction, the matter

seems straightforward. The parties have made it anything but.

Northern Gold raised numerous collateral attacks on the transaction ranging

from invalidity to voidness. It questions whether SIFT Capital is real, the relevant

agreements are forged, and SIFT Fixed’s representative at trial was a paid actor.

2
REM OA spun illogical stories to excuse its underhandedness. To make matters

worse, trial presented competing narratives from Soura and Italia.

Northern Gold’s frustration is understandable. Soura is not blameless and

should have been upfront with his business partner. But ultimately, Italia authorized

the SIFT transaction when he willingly signed the written consent. Italia—an

experienced businessperson represented by counsel—had every chance to ask about

the term sheet during weeks of review and negotiation. He opted not to.

Northern Gold does not get a do over for its failed diligence. Delaware law

holds sophisticated parties to their contracts. SIFT Fixed was a 2.5% member of the

company when this action was filed. Judgment is entered for the plaintiffs.

I. FACTUAL BACKGROUND

Unless otherwise noted, the following facts were stipulated to by the parties

or proven by a preponderance of the evidence at trial.1 The trial record includes

1,903 exhibits and 5 deposition transcripts.2 Trial was conducted over two days

during which five fact witnesses testified.3

1
Joint Pre-trial Stipulation and Order (Dkt. 160) (“PTO”).
2
Facts drawn from exhibits jointly submitted by the parties are referred to by the numbers
provided on the parties’ joint exhibit list and cited as “JX __” unless otherwise defined.
Deposition transcripts are cited as “[Name] Dep.” See Dkt. 166.
3
Trial testimony is cited as “[Name] Tr.” See Dkts. 174-75.
3
A. Witness Credibility

Before recounting the factual record, I pause to provide essential framing. The

testimony given by the two primary witnesses at trial—Scott Soura, the principal of

plaintiff REM OA Holdings, LLC, and Richmond Italia, the principal of defendant

Northern Gold Holdings, LLC—was irreconcilable. It is obvious that one or both

repeatedly lied under oath.4 I have relied on documentary evidence where it is

available and made careful credibility assessments of oral testimony where it is not.5

B. Remington Outdoor’s Bankruptcy
On July 27, 2020, firearms manufacturer Remington Outdoor Company, Inc.

and twelve of its affiliates filed for bankruptcy.6 Remington Outdoor was set to be

broken up and sold.7 Remington Outdoor’s Chief Executive Officer Ken D’Arcy

approached Richmond Italia about submitting a bid for the assets.8 Italia was a

4
Ascertaining the truth is complicated by Soura and Italia’s mudslinging. Their personal
attacks on the other range from the troubling to the bizarre. See, e.g., infra notes 205-13,
215 and accompanying text; JX 3; Soura Tr. 124-25. Suffice it to say that the credibility
of these witnesses leaves much to be desired.
5
Northern Gold raised numerous authenticity objections to certain documentary exhibits.
See Dkt. 166. Later in this decision, I conclude that the challenged exhibits are admissible
under Delaware Rule of Evidence 901. See infra Section II.C.1 (resolving authenticity
objections).
6
PTO ¶ 21.
7
Id.
8
Soura Tr. 7; Italia Tr. 304; Soura Tr. 6-7; PTO ¶ 22. I generally found D’Arcy to be a
credible witness. Although he developed a distaste for Italia (see JX 787; D’Arcy Tr. 597;
Soura Tr. 103-04; Italia Tr. 435), he seemed motivated by a desire to protect the Company.
See, e.g., D’Arcy Tr. 586-90.
4
successful businessperson who had founded and sold two paintball companies.9

Before becoming Remington Outdoor’s CEO, D’Arcy had served in that role at one

of Italia’s companies.10

Italia was interested in Remington Outdoor but lacked the funds to meet the

bidding requirement of $30 million in liquid assets.11 Italia reached out to Scott

Soura, a social acquaintance, about submitting a joint bid.12 Soura was also a

successful businessperson who had owned and operated several companies.13

In October 2020, Soura’s wholly-owned entity Roundhill Group, LLC

submitted the winning bid of $13 million for Remington Outdoor’s firearm division

assets.14 REM EQ Holdings, LLC (the “Company”)—the nominal defendant in this

action—was formed on October 2 to house the assets.15 Italia and Soura agreed that

they would each contribute half of the bid in exchange for equal 50% ownership of

the Company.16 They also agreed that “[a]ny future investment of capital or equity

9
Italia Tr. 300-04 (testifying that his companies were sold for tens of millions of dollars in
profit).
10
Id. at 305-06; D’Arcy Tr. 568; D’Arcy Dep. 41-44.
11
Italia Tr. 311; Soura Tr. 7.
12
Italia Tr. 311; Soura Tr. 7.
13
See Italia Dep. 66-67.
14
Italia Tr. 312; Soura Tr. 8; JX 26. The bid included $2 million in escrowed funds, which
were later returned to Soura. Soura Tr. 8; Italia Tr. 312. The assets were eventually
transferred to the Company. See infra note 31 and accompanying text.
15
JX 239; PTO ¶ 17.
16
JX 26.
5
may dilute [Italia’s] 50% ownership percentage along with Roundhill’s (or

Roundhill’s designated entity) 50% ownership proportionately.”17 The bankruptcy

sale of assets to Roundhill closed on October 12.18

C. The Company’s Governance
After the asset purchase closed, Soura and Italia began formalizing the

Company’s governance. On March 24, 2021, Soura sent Italia an initial REM EQ

Limited Liability Company Agreement (the “LLC Agreement”), dated as of

January 15, 2021.19 Soura told Italia that the LLC Agreement was intended to be a

“placeholder[] to get the accounts open” to secure a Paycheck Protection Program

(PPP) loan and could be revised “to a proper detailed agreement with all the tax,

controls and other terms over the next week or two.”20

The LLC Agreement was executed on March 25, 2021 by Soura on behalf of

REM OA Holdings, LLC and by Italia on behalf of Northern Gold Holdings, LLC.21

REM OA is a Delaware limited liability company managed by Belum Ventures,

17
Id.
18
PTO ¶ 25; JX 195.
19
JX 131; JX 137.
20
JX 131.
21
JX 137.
6
LLC, which is managed by Soura.22 Northern Gold is a Delaware limited liability

company; Italia is its sole member and manager.23

The LLC Agreement established that REM OA and Northern Gold each held

a 50% membership interest in the Company.24 It listed Soura as the Company’s

manager.25 This designation was in name only. Soura told Italia on March 24 that

he was “listed as the manager of EQ Holdings for now so that [he] c[ould] execute

the documents [for the PPP loan] over the next week.”26 On the day Italia signed the

LLC Agreement, Soura sent Italia a letter resigning as manager of the Company,

effective April 2, 2021.27

Soura and Italia decided to divide responsibilities, with Soura handling

financial and legal matters and Italia handling day-to-day operations.28 D’Arcy was

22
Verified Compl. (Dkt. 1) (“Compl.”) ¶ 3.
23
Answer to Verified Compl., Affirmative Defenses, and Verified Countercl. (Dkt. 18)
(“Answer and Countercl.”) ¶ 5.
24
PTO ¶ 27; JX 137; JX 1642 (“LLC Agreement” dated Jan. 15, 2021) at Ex. A. The initial
LLC Agreement called ownership interests “Membership Interest[s].” LLC Agreement
§ 1.2. Subsequent amendments called the membership interests “Units.” See infra note
143.
25
PTO ¶ 27; LLC Agreement at 9.
26
JX 131 (explaining that they could change the manager designation the “next week if
[Italia] want[ed]”).
27
PTO ¶ 28; JXs 139-40.
28
JX 32 at 3 (Italia asking Soura: “Do u want me to deal with the day to day and let u deal
with the big picture stuff, no need for both of us to stress over the little things”); JX 69 at
1 (Italia stating that Soura’s “responsibilities amongst others are handling financial and
7
hired as the Company’s Chief Executive Officer.29 Melissa Anderson, who had

previously served as Remington Outdoor’s Vice President of FP&A, IT and Internal

Financial Reporting, was hired as the Company’s Chief Financial Officer.30

The purchased assets were eventually transferred from Roundhill to the

Company and the Company’s subsidiaries through agreements dated June 2, 2021.31

D. The Company’s Financing Needs

The Remington Outdoor firearm assets were not operational, and the

Company had negative cashflow upon its formation.32 Italia and Soura recognized

that the Company needed substantial capital to restart operations and become

competitive.33 They estimated the Company’s long-term funding needs to exceed

legal affairs of remarms”); JX 615 (“As agreed I’m [Italia] staying out of the legal stuff.”);
Soura Tr. 14-15; Italia Tr. 316-17, 477-78; D’Arcy Tr. 572.
29
D’Arcy Tr. 566.
30
Anderson Dep. 28, 235. D’Arcy and Anderson were initially hired as CEO and CFO of
RemArms LLC, a subsidiary of the Company. Id. at 223; Anderson Tr. 611. Later,
pursuant to a May 14, 2021 written consent, D’Arcy and Anderson were designated as the
Company’s CEO and CFO. See D’Arcy Dep. 223; Anderson Tr. 611; see infra note 113
and accompanying text. I found Anderson to be a highly credible witness. See supra note
8 (discussing D’Arcy).
31
PTO ¶ 25; see infra note 142 and accompanying text.
32
Soura Tr. 11-12; Italia Tr. 318-19, 471-72; Italia Dep. 83; Anderson Tr. 614-15.
33
JX 14 at 2 (Italia texting on September 28, 2020: “Budget to rebuild Remington to its
glory is 25-40m over and above purchase price of 13m usd”); JX 32 at 3 (Italia texting on
October 14, 2020: “We knew its [sic] was going [] to take 25.m to get this going”); Soura
Tr. 11-12; Italia Tr. 317-18 (testifying that $10 million was needed to reach a “break-even
point” but that $30 to $40 million was needed “to [make the Company] a real competitor”);
see D’Arcy Tr. 570.
8
the $13 million purchase price by $25 million to $40 million.34 D’Arcy and

Anderson concurred.35

Soura led the Company’s financing efforts, consistent with the division of

labor he and Italia had agreed upon. On January 21, 2021, Soura told Italia that he

was “working on raising $25-30 m[illion]” structured “as a combination of preferred

and common equity with a non-controlling stake.”36 Italia replied with a thumbs up

emoji.37 At the same time, Soura (with Anderson’s assistance) worked towards

securing the PPP loan.38 Italia approved of Soura’s efforts to close the PPP loan but

did not involve himself in the process.39

The Company received $10 million from the PPP loan on March 29, 2021 but

needed additional capital to execute on its plans and meet its financing goals.40 The

At trial, Italia testified that he believed that the Company was “monetarily . . . pretty
solid in the early months” due to sales of equipment and inventory and a cash infusion from
the consortium that the Company joined as part of the Remington Outdoor auction. Italia
Tr. 318. This belief is belied by contemporaneous documentary evidence. For example,
cash flow projections prepared by Anderson showed that, without additional financing, the
Company would run out of cash before May 2021. See JX 119; see also JX 1902; JX 125;
JX 128.
34
See supra note 33.
35
D’Arcy Tr. 570-73; Anderson Tr. 614-16.
36
JX 71.
37
Id.; see Italia Tr. 483-84.
38
JXs 1658-59; Soura Tr. 16.
39
Italia Tr. 478, 481-82; Soura Tr. 19; see supra notes 26-27 and accompanying text.
40
Anderson Tr. 612; D’Arcy Tr. 573-74; JX 1661 at 1.
9
Company was also burning through cash at an alarming rate.41 A March 2021 cash

flow projection prepared by Anderson estimated that, without the PPP loan, the

Company would have run out of cash by the end of April.42 That same projection

estimated that the Company would deplete $5 million of the remaining PPP funds

by the end of May.43 Italia grew concerned about the Company’s cash burn,

remarking to D’Arcy and Soura on July 6 that the “funds in the bank [we]re

diminishing” and that “[a]t this rate we will need another round of funding very

soon.”44

The Company’s financing needs were partly driven by plans to relocate its

headquarters.45 In October 2020, Italia had begun exploring incentives to open a

manufacturing facility in the State of Georgia.46 About a year later, around October

41
Cash flow projections prepared by Anderson reflected the Company’s high cash burn.
See JX 1902 (native); JX 119 (native); JX 125 (native); JX 128 (native); JX 142 (native);
JX 1737 (native); JX 150 (native); JX 1780; JX 1903; JX 666; JX 761; JXs 1719-21; JX
912.
42
JX 142 (native).
43
Id. The projections for March 2021 through February 2022 reflect the $10 million cash
injection from the PPP loan but show that the Company would go through the funds
quickly. See supra note 41 (citing exhibits). Anderson’s credible testimony at trial further
supports a finding that the Company began using the PPP loan funds before the fall of
2021. Anderson Tr. 628 ( “I knew that we were depleting through the money. . . .”). Her
deposition testimony is consistent. Anderson Dep. 63.
44
JX 635; see Italia Tr. 485-88; see also JX 627 (Italia texting Soura on June 17, 2021 and
expressing alarm that the Company’s bank “[a]ccount [wa]s going down scary fast”).
45
Soura Tr. 293-94; Italia Tr. 464-65.
46
PTO ¶ 37; see JX 24; JXs 41-42; JXs 47-48. These discussions continued through the
end of 2020 and into 2021. See JX 54; JX 56; JXs 86-88; JX 91; JX 126; JX 623; JX 1703
10
2021, the Company committed to relocating to LaGrange, Georgia.47 It expected to

incur significant expenses from building the facility.48

Italia, Soura, and D’Arcy understood that traditional bank loans were not a

viable option given the Company’s financial struggles and involvement in the

firearms industry.49 The Company approached traditional lenders but was turned

away.50 Consequently, Soura searched for alternative sources of funding.

E. The Potential SIFT Transaction

In late March 2021, Soura mentioned the Company’s financing challenges to

an attorney assisting him with an unrelated matter.51 The attorney introduced him

to SIFT Capital Limited Partners, a Hong Kong company.52 SIFT Capital is an asset

¶¶ 24-27. In February 2021, D’Arcy took over the negotiations at Italia and Soura’s
request. JX 1703 ¶ 24.
47
PTO ¶¶ 38-40; JX 707. On November 8, 2021, the Governor of Georgia announced the
relocation. JX 707.
48
JX 1817; JX 1703 ¶¶ 34-35; cf. infra note 240 and accompanying text.
49
D’Arcy Tr. 574 (“[R]aising funds through traditional banking is a huge challenge for a
firearms company. Now add the layer on where you’re a startup company with no positive
cash flow, with debt, . . . and it’s next to impossible to get any funding.”); Italia Dep. 93-
95; Soura Tr. 21, 204. D’Arcy explained that in early 2022, the Company was in a better
position to “start having conversations” with traditional lenders. D’Arcy Dep. 164-67. But
there is no credible evidence that the Company could have obtained a standard, asset-
backed loan at this time.
50
D’Arcy Tr. 575; Italia Dep. 94-95; Soura Tr. 21, 204; cf. JX 1825.
51
Soura Tr. 21-24.
52
Id. At trial, Soura testified about what the attorney told him during this conversation.
Northern Gold objected to the testimony under Delaware Rules of Evidence 602 and 802.
Id. at 22. The testimony is inadmissible because the declarant (Soura’s attorney) did not
testify at trial and Soura’s testimony about her statements is hearsay. The testimony does
11
manager licensed by Hong Kong and Chinese regulators.53 A phone call was

arranged between Soura and SIFT Capital’s Chief Executive Officer, Zhe Zhang.54

During the introductory call between Soura and Zhang, Zhang described SIFT

Capital, its investment criteria, and the types of loans it typically provided.55 Soura

told Zhang that the Company “was looking for a [$]10 to $15 million loan” with “a

five-year maturity that would be interest only and would subordinate to a senior bank

facility that [it] intended to get in the near future.”56 After the call, Soura researched

Zhang and SIFT Capital by reviewing SIFT Capital’s website and regulatory

filings.57

not—as REM OA argues—fall within the state of mind exception in Rule 803(3). First,
the declarant’s statements do not go to her “then-existing state of mind (such as motive,
intent, or plan) or [her] emotional, sensory, or physical condition (such as mental feeling,
pain, or bodily health).” D.R.E. 803(3). Second, Soura’s testimony cannot be used to
prove facts purportedly remembered by Soura’s attorney. See Soura Tr. 23. The state of
mind exception does not apply to the declarant’s “statement[s] of ‘memory.’” Capano v.
State, 781 A.2d 556, 608 (Del. 2001); D.R.E. 803(3) (excluding “statement[s] of memory
or belief to prove the fact remembered or believed” from the state of mind exception).
53
JXs 1677-78; see also JX 1679 at 8.
54
Soura Tr. 24.
55
Id. This testimony recounting Zhang’s statements is not being offered for the truth of
the matter asserted. Rather, the statements are being used to prove that the conversation
between Soura and Zhang occurred. Later, I address Northern Gold’s argument that there
is no evidence SIFT Capital and its principals exist. See infra notes 301-07 and
accompanying text.
56
Soura Tr. 24.
57
Id. at 25-27.
12
Soura and SIFT Capital continued their discussions through April 2021.58

SIFT Capital requested due diligence from the Company and opened a data room to

facilitate the exchange of documents.59 According to Soura, the data room was

controlled by SIFT Capital and accessible through its website.60

By the end of April 2021, SIFT Capital’s potential investment in the Company

had solidified.61 SIFT Capital would provide a $10 million interest-only loan with

a three-year maturity.62 SIFT Capital would also receive a warrant to purchase 2.5%

of the Company’s units at a nominal exercise price.63 These conditional terms were

subsequently memorialized.64

58
Id. at 27-28. Soura testified that he had video calls with SIFT Capital, using links sent
through WeChat and an iPad owned by his fiancée. Soura Dep. 67-70. But no WeChat
messages were produced, the iPad was apparently discarded, and the data room was
eventually closed. See Soura Dep. 70-71; JX 1910 at 2.
59
Soura Tr. 28-29; JX 639 (SIFT Capital due diligence request list); cf. JX 1685.
60
Soura Tr. 28-29. There is no documentary evidence of the data room or its contents. See
infra note 309 and accompanying text (declining to draw an adverse inference regarding
the data room). Still, it seems more likely than not that the data room existed and was used
by SIFT Capital to facilitate due diligence. The use of a data room to facilitate due
diligence is commonplace, and Soura’s testimony was consistent.
61
Soura Tr. 28; see JX 206.
62
Soura Tr. 31; see JX 206 at 2.
63
Soura Tr. 31, 34-35; see JX 206 at 3.
64
See JX 206; JXs 208-10.
13
F. The Commitment Letter

SIFT Capital sent Soura the first draft of a term sheet for its investment on

May 7, 2021.65 Soura sent SIFT Capital revisions to the term sheet the same day.66

Two days later, on May 9, SIFT Capital sent an updated term sheet incorporating

Soura’s revisions.67 An hour later, Soura sent further revisions addressing minor

65
Soura Tr. 35; see JX 206 at 2. SIFT Capital was represented by an attorney in Hong
Kong. Soura Tr. 27, 39; see JX 206; JX 208.
66
Soura Tr. 35-37; JX 206. Northern Gold objected to the authenticity of the Commitment
Letter, among other SIFT-related documents. See infra Section II.C.1 (resolving
authenticity objections). At post-trial argument, I asked whether there was any metadata
showing the creation date of the documents (JX 206; JXs 208-10; JXs 617-19). See Dkt.
196. REM OA subsequently provided me with a chart of metadata showing that the
documents were created on the dates reflected on their faces. Dkt. 190. For example, JX
206 purports to have been sent on May 7, 2021; the metadata for JX 206 confirms that this
document was created on May 7, 2021. See Dkt. 190; see also Dkt. 197. Northern Gold
raised concerns with the metadata and asked that I decline to consider it. Dkt. 195.
Absent the metadata, I find by a preponderance of the evidence—between the
documents themselves, the trial testimony, and other circumstantial evidence—that the
documents were created on the dates reflected on their faces. The weight of the evidence
does not indicate the documents were doctored or created after the fact. See infra Section
II.C.1. The metadata helpfully confirms this finding but is not required to make it.
Regardless, my review of the metadata is not prejudicial to Northern Gold. The metadata
was produced to Northern Gold during discovery. Dkt. 190. Northern Gold also cited to
metadata in its briefing, though that metadata was not introduced at trial. Def.’s Post-trial
Answering Br. (Dkt. 183) (“Def.’s Answering Br.”) 28, 35, 58; Def.’s Pre-trial Br. (Dkt.
157) 24, 34.
67
Soura Tr. 36-37; JX 208. The metadata for JX 208 confirms that the document was
created on May 9, 2021. Dkts. 190, 197; see supra note 66.
14
typographical issues.68 SIFT Capital then sent Soura a commitment letter attaching

a final term sheet (the “Commitment Letter”).69

The Commitment Letter is eight pages long. The first two pages consist of

SIFT Capital’s cover letter, signed by Zhang;70 the third page is a signature page for

the Company and several subsidiaries;71 and the last five pages are the term sheet

that Soura and SIFT Capital negotiated.72 The document provided that SIFT Capital

would purchase a promissory note with a warrant for a total of $10 million.73 The

note would have a three-year maturity, accrue interest at 7.5%, and be subordinate

to any senior bank debt.74 The warrant would allow SIFT Capital to purchase 2.5%

of the Company’s units at an exercise price of $0.01 per unit.75 The Commitment

Letter also contemplated definitive documentation to consummate the transaction:

Upon receipt by the undersigned [SIFT Capital] of an executed
counterpart of this commitment letter, our obligation to purchase from

68
Soura Tr. 37-39; JX 209. The metadata for JX 209 confirms that the document was
created on May 9, 2021. Dkts. 190, 197; see supra note 66.
69
Soura Tr. 39-40; JX 210. The metadata for JX 210 confirms that the document was
created on May 9, 2021. Dkts. 190, 197; see supra note 66.
70
JX 210 at 1-2 (“SIFT Capital agrees to purchase ten million US dollars ($10,000,000)
principal amount of Subordinated Notes (the ‘Notes’) with detachable Warrants to
purchase ownership/membership interests of the Company (the ‘Warrants’) with a nominal
exercise price to be issued by REM EQ.”).
71
Id. at 3.
72
Id. at 4-8.
73
Id.
74
Id.
75
Id.
15
the Company, and the Company’s obligation to issue, sell and deliver
to us the Notes and Warrants shall become a binding agreement
between us subject to the conditions set forth herein.76

Around this time, Soura told D’Arcy about the SIFT Capital investment.77

Soura relayed high-level details of the transaction to D’Arcy, leaving out the warrant

and the lender’s identity.78 D’Arcy expected that the deal would involve a warrant,

which he believed was commonplace in such transactions.79 Soura also told D’Arcy

that he planned to give Italia a copy of the Commitment Letter during an upcoming

meeting in Ilion, New York.80

76
Id. at 2.
77
Soura Tr. 32 (testifying that he told D’Arcy about the deal in the first week of May);
D’Arcy Tr. 576-77 (testifying the conversation occurred in May or June 2021); id. at 601
(testifying the conversation occurred in May 2021). To the extent that D’Arcy’s trial
testimony is inconsistent with his deposition testimony, I found D’Arcy’s trial testimony
that he later refreshed his recollection to be credible. See D’Arcy Dep. 167-69 (testifying
that he was unsure when the conversation occurred); D’Arcy Tr. 600-01 (testifying on
cross-examination that he refreshed his memory after his deposition); see also supra note 8.
78
Soura Tr. 145; D’Arcy Tr. 576, 602; see also D’Arcy Dep. 167-69. D’Arcy did not learn
the specific details of the deal until later, when the loan was being negotiated and finalized.
D’Arcy Tr. 576, 602; D’Arcy Dep. 171, 176. To the extent there is conflicting testimony
about whether D’Arcy ever saw the Commitment Letter, the weight of the evidence
suggests that he did later while definitive documentation was negotiated. Cf. D’Arcy Tr.
602-05; JX 1703 ¶ 14; D’Arcy Dep. 239.
79
D’Arcy Tr. 578-79; D’Arcy Dep. 167.
80
Soura Tr. 44-45; D’Arcy Tr. 576-77 (corroborating Soura’s account). Northern Gold
objected to the admissibility of D’Arcy’s testimony about what Soura told him. See
D’Arcy Tr. 577. D’Arcy’s testimony is admissible as a statement of Soura’s intent under
Delaware Rule of Evidence 803(3). See State v. MacDonald, 598 A.2d 1134, 1137-41
(Del. Super. 1991) (citing Mutual Life Ins. Co. v. Hillmon, 145 U.S. 285 (1892)). In
addition, I do not accept the testimony for the truth of the matter asserted—i.e., that Soura
gave a copy of the Commitment Letter to Italia during the Ilion meeting.
16
G. The Ilion Meeting

On May 10, 2021—the day after Soura received the Commitment Letter from

SIFT Capital—Soura and Italia met at the Company’s factory in Ilion, New York.81

By this point, Soura’s and Italia’s relationship had become strained.82 Italia was

frustrated because Soura had yet to transfer the Remington Outdoor assets from

Roundhill to the Company, though the bankruptcy sale had closed seven months

earlier.83

On the morning of May 10, Italia and a small entourage took a private flight

from Fort Lauderdale, Florida to Ilion,84 while Soura drove by himself from his home

in Newtown, Pennsylvania.85 Italia arrived at the factory first.86 He set up in a

conference room, met with several senior staff at the factory, and briefly walked

through the facility.87 When Soura arrived in the afternoon, Italia guided him to the

conference room for lunch.88

81
PTO ¶ 29.
82
Soura Tr. 149; Soura Dep. 18-19; Italia Tr. 338-40.
83
Italia Tr. 338-39.
84
Id. at 341-42. The members of Italia’s group included his son, several business
acquaintances, and friends. Id.
85
Soura Tr. 152; Soura Dep. 28.
86
Italia Tr. 343; Soura Tr. 151; Soura Dep. 28, 139.
87
Italia Tr. 343.
88
Soura Dep. 29; Soura Tr. 151; Soura Tr. 45.
17
At this point, Italia’s and Soura’s narratives diverge sharply.89

Soura testified that after lunch, he was shown the factory by an employee

before returning to the conference room with Italia and Italia’s group.90 He said that,

at some point after the tour, he and Italia “broke off” to a separate room where he

showed Italia a copy of the Commitment Letter that he had printed earlier in the

day.91 According to Soura, Italia reviewed the Commitment Letter and was “happy

with it” because it “was consistent with what [they] had spoke[n] about before.” 92

Afterward, Italia, his guests, several factory employees, and Soura went to dinner at

a local restaurant.93

By Italia’s account, his group, several factory employees, and Soura toured

the facility together after lunch.94 After the tour, he recalled that the group returned

to the conference room to discuss dinner plans and then went to a local restaurant.95

Italia testified that he and Soura were never alone on March 10, that they did not

89
See PTO ¶ 29.
90
Soura Dep. 143-44.
91
Id. at 146; see infra note 100 (discussing inconsistencies on when Soura printed the
letter).
92
Soura Tr. 48.
93
Soura Dep. 180-83.
94
Italia Tr. 345.
95
Id. at 346.
18
discuss financing, and that he was not shown the Commitment Letter.96 Rather,

Italia first recalled seeing a copy of the Commitment Letter on June 14, 2022 in

connection with a filing in this court.97

Soura and Italia adamantly stick to their stories, but one of them is lying.98

The May 10 meeting was not Schrödinger’s cat: either Soura gave Italia the

Commitment Letter in Ilion, or he did not. The timing generally supports Soura’s

account since the Ilion meeting came a few days after the Commitment Letter was

signed and before Italia was given documents to authorize the Commitment Letter.99

Yet Soura’s version of the day’s events is both illogical and inconsistent.100 Thus, I

96
Id. at 346-47.
97
PTO ¶ 29 (“Italia . . . states under oath that no copy of the Commitment Letter was ever
provided to him prior to an attachment to a pleading of the Company on June 14, 2022.”);
see JX 1643 (“Commitment Letter“); N. Gold Hldgs., LLC. v. REM EQ Hldgs., LLC, C.A.
No. 2022-0308-LWW (Dkt. 25) Ex. F (filing dated June 13, 2022).
98
A popular meme comes to mind. See The Spider-Man Pointing Meme, in SPIDER-MAN:
DOUBLE IDENTITY (1967), https://screenrant.com/spider-man-pointing-meme-cartoon-
origin/ (last accessed September 16, 2023).
99
See infra notes 114-16 and accompanying text. D’Arcy’s recollection that Soura said he
planned to share a copy of the Commitment Letter with Italia does not aid Soura. See supra
note 80. An intention does not guarantee corresponding action.
100
See Soura Tr. 44-46 (testifying that he printed the Commitment Letter at his home and
printed the Company’s organization chart in Ilion); id. at 156-60 (testifying that at his
deposition he could not recall where and when he printed the Commitment Letter, but he
since recalled at trial); Soura Dep. 37-45 (testifying—confusingly—about where and when
he printed the Commitment Letter). Why would Soura print a copy of the Commitment
Letter in Pennsylvania and drive it to Ilion when he could have emailed it to Italia?
Occam’s Razor suggests that he did not. Soura’s story of personally handing Italia a printed
copy of the Commitment Letter fortuitously explains away the lack of evidence
documenting the receipt or transmission of the Commitment Letter. Soura Tr. 164-65 (“Q.
And the reason you never sent Mr. Italia the commitment letter by email or WhatsApp, or
19
cannot find that Soura gave Italia a printed copy of the Commitment Letter during

the Ilion meeting. On balance, Italia’s account seems (slightly) more plausible,

consistent, and in line with the meeting’s overall purpose.101

Despite the intrigue surrounding the day in Ilion, it plays a minor role in the

overall story. That is because four days later, SIFT Capital’s commitment to invest

$10 million in the Company was explicitly disclosed to Italia.

H. The May 14 Materials

On May 14, 2021, Soura sent Italia an email attaching 56 documents prepared

by Company counsel (collectively, the “May 14 Materials”), including:102

• draft agreements transferring or assigning the Remington Outdoor
assets from Roundhill to the Company and its subsidiaries;103

• a draft amended LLC Agreement dated May 14, 2021;104

• a draft written consent of the Company’s members (the “May 2021
Consent”);105

by any other means to communicate with him, is because you claim that you had already
given it to him . . . and he never asked for it again. . . . A. Yes.”); see id. at 140-41.
101
See Italia Tr. 339-48, 419.
102
PTO ¶ 30; JX 228. The Company’s outside counsel at Shulman Bastian Friedman &
Bui LLP prepared the May 14 Materials. Soura Tr. 51.
103
JXs 229-36.
104
JX 263.
105
JX 262. The May 2021 Consent was set up for execution by Soura on behalf of REM
OA and Italia on behalf of Northern Gold. Id.
20
• fourteen draft written consents for the Company’s subsidiaries (the
“Subsidiary Consents”);106 and

• additional copies of signature pages for the draft documents in the
package.107

The draft amended LLC Agreement attached a Schedule A reflecting that

REM OA and Northern Gold were both 50% members of the Company.108 It also

contemplated that the Company was managed “solely and exclusively” by its

members,109 that members could delegate authority to the Company’s officers,110

that the agreement could be amended by written consent,111 and that new members

would be automatically admitted upon the issuance of membership units.112

106
The Subsidiary Consents were for seven Company subsidiaries: GS Wood Products
LLC, REM FA Holdings LLC, REM MA Holdings LLC, REM MO Holdings LLC, REM
TML Holdings LLC, Remarms LLC, and Remops LLC. Seven of the Subsidiary Consents
were set up for execution by the governors (Soura and Italia), and seven were to be
executed by the Company’s members (Soura on behalf of REM OA and Italia on behalf of
Northern Gold). JX 259; JX 261; JXs 264-65; JXs 267-68; JX 270; JXs 272-73; JXs 275-
77; JXs 279-80.
107
JXs 283-84.
108
JX 263 at sched. A.
109
Id. § 4.1(A).
110
Id.
111
Id. § 11.4.
112
Id. at sched. 1.1 (“[A] Person will automatically be admitted as a Member when they
are issued Unit(s).”).
21
The May 2021 Consent provided for the authorization of various actions,

including the appointment of D’Arcy and Anderson as Company officers.113 It

explicitly addressed the Commitment Letter, explaining that the Company had

“received a commitment letter with term sheet from SIFT Capital Partners Limited

(the ‘Commitment Letter’) to provide financing to the Company in the approximate

amount of $10,000,000.00, subject to certain conditions and due diligence.”114 The

May 2021 Consent went on to confirm that:

the Members [REM OA and Northern Gold] have each reviewed the
. . . Commitment Letter, and have determined that it is in the best
interests of the Company and its stakeholders for the Company to enter
into the . . . Commitment Letter and to perform all its obligations
contemplated thereby.115

Accordingly, the May 2021 Consent authorized:

any Member or Officer acting alone . . . to execute and deliver . . . the
Commitment Letter and all documents relating thereto or contemplated
thereby, with such changes as the Member or Officer, as applicable,
deems in his sole discretion advantageous to the Company, all without
any further act, vote or approval of any Member, Officer or other person
or entity.116

113
JX 262; see Italia Tr. 350 (testifying that the purpose of the May 14 Materials “was the
creation of all the new companies, subsidiaries, and partnership agreement and the transfer
of all of the inventory to those subsidiaries”).
114
JX 262 (emphasis in original).
115
Id.
116
Id.
22
The May 2021 Consent referenced the Commitment Letter eight times across

each of its three pages. The term “Commitment Letter” is underlined, capitalized,

and set apart in parentheses.117 Six of the Subsidiary Consents similarly defined,

described, and provided for the authorization of the Commitment Letter.118 The May

14 Materials did not include a copy of the Commitment Letter.119

Italia testified that he noticed the references to the Commitment Letter in the

May 2021 Consent and understood them to mean that the Company had secured a

loan from SIFT Capital.120 Italia “didn’t pay much attention to it” because he “didn’t

know about [the Commitment Letter] . . . [and] didn’t know one existed.”121 Because

he neither received nor reviewed the Commitment Letter, he was unaware that the

SIFT transaction contemplated a warrant.122 He never asked.

117
Id.
118
JX 259; JX 264; JX 267; JX 273; JX 276; JX 279. Each of these Subsidiary Consents
states: “WHEREAS, the Company has received a commitment letter with term sheet from
SIFT Capital Partners Limited (the ‘Commitment Letter’) to provide financing to its
Member in the approximate amount of $10,000,000.00, subject to certain conditions and
due diligence.” E.g., JX 259 at 1 (emphasis in original).
119
PTO ¶ 31.
120
Italia Tr. 356-57, 388-90, 397. At his deposition, Italia said that he “knew of no
existence of any commitment letter.” Italia Dep. 337. He changed his story at trial and
admitted that he saw references to the Commitment Letter in the May 2021 Consent and
formed a mental impression of the Commitment Letter’s purpose. Italia Tr. 356-57. I
found his trial testimony believable.
121
Italia Tr. 399, 400 (“I saw a reference to it. I never gave it any attention because I never
received one, so I thought it was a moot point.”).
122
Id. at 358, 388-401.
23
I. Italia’s Review of the May 14 Materials

Shortly after receiving the May 14 Materials, Italia sent them to his accountant

and attorney for review.123 His accountant promptly provided comments on the

documents.124 But due to a potential conflict of interest, Italia’s attorney was unable

to assist him.125 On May 17, Italia turned Justin Vineberg of Davies Ward Phillips

& Vineberg LLP—Italia’s “oldest and trusted lawyer/friend”—for guidance.126

Over the next two weeks, Vineberg reviewed the May 14 Materials.127

Vineberg and Italia had multiple email and phone discussions about the documents

with Soura and Company counsel at Shulman Bastian Friedman & Bui LLP.128

Though tensions ran high at times, the parties and their counsel engaged in

productive discussions.129

123
JXs 286-88; JX 291; JX 293; Italia Tr. 338, 381; Italia Dep. 229-30.
124
JX 291.
125
Counsel had an “ongoing relationship with each of [Italia and Soura],” so he “c[ould
not] assist either of [them] individually in editing the[] agreements between [them].” JX
363. Instead, counsel worked “on behalf of Rem EQ Holdings and Remarms, to review
the draft documents to determine if they properly reflect [Italia and Soura’s] mutual
understanding that documents each grant [them] equal voting rights and all decision
making be by majority (which, in this case, means unanimous).” Id.; see also JXs 350-51;
JX 375; Soura Tr. 183; Italia Tr. 338, 422.
126
JX 351; see JX 293; Italia Tr. 383. Vineberg’s partner, Marc Berger, also assisted. See
Italia Tr. 351; see also JX 396; JX 401; JX 402.
127
See, e.g., JX 358; JX 370; JX 375; JX 390; JX 396; JXs 401-02; JX 460.
128
See, e.g., JX 358; JX 370; JX 375; JXs 389-90; JX 392; JX 394; JX 396; JXs 401-02.
129
Italia Tr. 433-34; Soura Tr. 291. Italia testified that Soura hung up on Vineberg and
refused to negotiate. Italia Tr. 385, 428. The testimony is contradicted by the documentary
24
One area of negotiation concerned a right of first refusal (ROFR) for the sale

of a member’s interests. Italia had considered selling his units or onboarding other

investors since the Company’s infancy.130 But the original LLC Agreement

prohibited all transfers of membership interests.131 Italia pushed for an amendment

to the LLC Agreement providing for a ROFR exception to the transfer prohibition.132

Soura agreed.133 Italia also made certain that the May 14 Materials effectuated the

transfer of the Remington Outdoor assets from Roundhill to the Company and its

subsidiaries.134

Additionally, Italia was also focused on ensuring that the May 14 Materials

maintained Northern Gold’s rights in and ownership of the Company relative to

REM OA.135 Soura and Italia asked counsel to confirm that the May 14 Materials

evidence showing that negotiations occurred. See infra notes 132-37 and accompanying
text; see also Italia Tr. 428-31.
130
Italia Tr. 324, 512; JX 14; JX 57; JX 65; JX 70; JX 73; JX 79; JX 90 at 3 (Italia texting
that he was “[g]oing to pursue selling [his] side of the asset”); JX 93; JX 100; JX 104; JXs
107-09.
131
JX 137 § 5.1; see JX 93; JXs 107-09; JX 197.
132
JX 358; JX 365; JX 368 §§ 5.1-5.2; JX 369 §§ 5.1-5.2; JX 385; Soura Tr. 54; Italia Tr.
423-24, 429-31, 443-44.
133
JX 368 §§ 5.1-5.2; JX 369 §§ 5.1-5.2; JX 385; Soura Tr. 54; Italia Tr. 423-24, 429-31,
443-44.
134
JX 358; JX 377; JX 401.
135
See JX 358; JX 385; JX 363; Soura Tr. 53; Italia Tr. 353-55.
25
gave them “equal voting rights.”136 In an email to an attorney at Shulman Bastian,

Soura reiterated that the May 14 Materials provided for a 50/50 ownership split

between Northern Gold and REM OA.137

Throughout the parties’ discussions and negotiations, neither Italia nor his

counsel inquired about the Commitment Letter, asked for a copy of the Commitment

Letter, or proposed any changes to the May 2021 Consent.138

J. Italia Executes the May 14 Materials.

On June 2, 2021, Italia executed the May 14 Materials.139 He did not sign

under duress.140 He sent his completed signature pages to Shulman Bastian.

The next day, Shulman Bastian circulated the fully executed May 14

Materials.141 The Remington Outdoor assets were transferred from Roundhill to

136
JX 363 (counsel memorializing a discussion with Soura and Italia); Soura Tr. 195-96
(testifying that he told Italia “REM OA didn’t have any special rights that Northern Gold
Holdings didn’t have”); Soura Dep. 421-22; see also Soura Tr. 189; Soura Dep. 410; supra
note 125 (describing counsel’s role).
137
JX 385; see also JX 365.
138
Soura Tr. 55; Italia Tr. 352; compare JX 262 (initial draft) with JX 582 (“May 2021
Consent”) (executed version). Italia and his counsel also did not propose changes to the
Subsidiary Consents. E.g., JX 583; JX 585; JXs 587-88; JXs 590-91; JXs 593-94; JXs
596-97; JXs 599-600; JXs 602-03; see supra note 106.
139
JX 461; see JX 399.
140
Italia Tr. 433 (“I was frustrated. So I don’t want to say duress. I was frustrated at that
point.”).
141
JX 581.
26
REM EQ and its subsidiaries,142 the amended LLC Agreement became effective,143

and D’Arcy and Anderson were appointed the Company’s CEO and CFO.144 By

operation of the May 2021 Consent, the Company was authorized to execute, and its

members and officers to close on, the transaction contemplated by the Commitment

Letter “without further act, vote or approval” of its members.145

On June 4, Soura executed the Commitment Letter on the Company’s

behalf.146 Soura testified that he returned the countersigned copy to SIFT Capital

through the data room.147

K. The Ault Letter of Intent

Shortly after executing the Commitment Letter, Soura learned that Italia was

negotiating a potential sale of Northern Gold’s interests in the Company to Ault

Global Holdings, Inc.148 Soura “slow-walk[ed]” negotiating the definitive

142
JXs 605-14.
143
The amended LLC Agreement referred to membership interests as “Units,” stated that
REM OA and Northern Gold each owned 50 units, and changed the Company’s
governance from manager-managed to member-managed. Compare JX 510 with JX 137.
It was later discovered that the wrong version of the amended LLC Agreement had been
circulated, as it did not contain the ROFR agreed on by Italia and Soura. JX 510; see
JX 372.
144
JX 581; May 2021 Consent at 2.
145
May 2021 Consent at 2.
146
Soura Tr. 59; JXs 617-19; see Commitment Letter. The metadata for JX 206 confirms
that this document was created on June 4, 2021. Dkts. 190-91; see supra note 66.
147
Soura Tr. 59.
148
Id. at 63; JXs 569-70. Italia had been considering selling his interests or onboarding
other investors since the Company’s formation. See Italia Tr. 324, 512; JX 14; JX 57; JX
27
documents with SIFT Capital while he waited to see if Italia’s sale to Ault would

materialize.149

On July 7, Italia and Ault executed a letter of intent for Ault to purchase an

option to acquire some of Northern Gold’s membership interests in the Company.150

The option would allow Ault to obtain a 44% equity interest and a 50% voting

interest, with Northern Gold retaining a 6% equity interest.151 On July 12, Italia

shared the letter of intent with Soura and sent Soura a ROFR notice.152 Soura and

Italia discussed the Ault offer.153 Soura did not mention the warrant contemplated

by the Commitment Letter to Italia.154

On July 9, SIFT Capital’s counsel Jade Kobeissi (a foreign attorney barred in

Beirut, Lebanon and Paris, France) contacted Soura for additional legal and financial

65; JX 70; JX 73; JX 79; JX 90 at 3 (Italia texting “[g]oing to pursue selling my side of the
asset”); JX 93; JX 100; JX 104; JXs 107-09.
149
Soura Tr. 62-64. Soura testified that he slowed down the process with SIFT Capital
because he hoped that partnering with Ault would enable the Company to negotiate more
favorable loan terms. Id. at 64, 211. It seems just as likely that Soura was waiting to see
whether Italia would remain a significant owner of the Company. Id. at 211-15; Soura
Dep. 240-244; JX 634 (D’Arcy texting Soura on July 4, 2021 that the Ault Global deal
“will get him [Italia] out sooner rather than later [which] will be beneficial”).
150
JX 655; Italia Tr. 359-60.
151
JX 655.
152
JX 654; Italia Tr. 360-61.
153
See Italia Tr. 361; Soura Dep. 246.
154
Soura Tr. 216-19; Soura Dep. 246-47; Italia Tr. 361.
28
due diligence.155 SIFT Capital was also represented in the transaction by Scott

Matthews, a Delaware attorney and partner at Tarabicos, Grosso & Hoffman,

LLP.156 Soura worked with Anderson to collect the diligence materials.157

Meanwhile, Italia’s talks with Ault stalled.158 By the fall of 2021, Soura—

believing that the Ault deal “was truly . . . dead”—renewed his engagement with

SIFT Capital.159

L. The Definitive Loan Materials

Around October 2021, Soura had several calls with SIFT Capital. Soura

testified that during one call, he was introduced to Zakaria Abou Issa, who later

played a role in finalizing the SIFT transaction.160 Negotiations intensified.161

On November 2 and 3, Soura emailed SIFT Capital’s counsel (Kobeissi) legal

diligence materials, including “the consents of the entities consenting to all of the

terms of the SIFT commitment letter” (i.e., May 2021 Consent and Subsidiary

155
JXs 639-40.
156
Soura Tr. 69-70, 80; see JX 711.
157
JX 645. At this time, Anderson did not know the specific details of the SIFT transaction
and had not seen the Commitment Letter. Anderson Tr. 638-39. She did not learn that
SIFT Capital or SIFT Fixed were the counterparties until she executed loan agreements on
the Company’s behalf in late January 2022. Id. at 632; Anderson Dep. 120. Even then,
she knew “pretty much nothing” about the SIFT entities. Anderson Tr. 634.
158
On July 16, Italia canceled the Ault letter of intent. JXs 662-63.
159
Soura Tr. 65.
160
Id. at 65-66.
161
Id.
29
Consents).162 On November 5, Kobeissi sent Soura draft definitive loan materials

(the “Loan Materials”), including a “Warrant Agreement.”163

A few days later, Soura enlisted Joseph Kavan (the Company’s transactional

and compliance counsel and a partner at Kutak Rock LLP) to lead negotiations.164

On November 8, Soura shared Kavan’s contact information with Kobeissi.165 The

next day, SIFT Capital’s Delaware counsel (Matthews) sent Kavan the Loan

Materials.166

Negotiations continued over the next month, with Kavan and Matthews

exchanging various comments on and revisions to the Loan Materials.167 By early

December 2021, the Loan Materials reached near-final form.168 But the deal was

delayed while the parties secured an escrow agent and prepared perfection

certificates describing the collateral for the promissory note.169

162
JXs 688-99 (Subsidiary Consents for five subsidiaries); see also JX 674; Soura Tr. 65-
66.
163
JX 700; JX 703.
164
JX 709; Soura Tr. 67-68; Soura Dep. 194-95; Italia Tr. 579.
165
JX 709.
166
JXs 711-17.
167
See JXs 711-17; JX 720; JXs 726-28; JXs 739-40; JXs 751-52; JX 754.
168
JX 763.
169
JX 803; JX 1725; Soura Tr. 72-75; Anderson Tr. 616-17.
30
M. The Closing

On January 25, 2022, as authorized by the Commitment Letter, SIFT Capital

assigned its rights and obligations to SIFT Fixed US002, LLC.170 SIFT Fixed is a

Delaware limited liability company formed on January 21, 2022.171 SIFT Master

Limited, a Samoan company, is the sole member of and source of funding for SIFT

Fixed.172 SIFT Master has three stockholders, who were existing clients of SIFT

Capital and received the investment opportunity directly from SIFT Capital.173 Issa

served as SIFT Fixed’s manager until he resigned on November 1, 2022.174 Issa was

replaced by Joseph Sabeh Afaki, who owns a consulting firm specializing in

170
JX 1594. Northern Gold raised an authenticity objection to the assignment agreement
(JX 1594), among other documents, under Delaware Rule of Evidence 901. That objection
is resolved in Section II.C.1, infra.
171
JX 1595; JX 1704.
172
JX 1627; JX 1632; JX 1704. There is no evidence that Soura is affiliated with SIFT
Capital, SIFT Master, or SIFT Fixed. See Soura Tr. 83 (testifying that he has no affiliation
with any SIFT entities).
173
JX 1627; Afaki Tr. 556; Soura Tr. 221-24, 283. To the extent that Northern Gold has
raised an authenticity objection to this information, the sources cited in this footnote
corroborate that SIFT Master is funded by its shareholders—none of whom are Soura.
Northern Gold’s overarching authenticity objections are resolved later in this decision. See
Section II.C.1, infra.
174
JX 1627; JX 1609; JX 1611. Issa’s resignation occurred weeks after Northern Gold
noticed his deposition. Dkt. 53; JX 1627. Afterward, Northern Gold re-noticed a
deposition for Issa and filed a motion to compel it. Dkts. 89, 115. On December 14, 2022,
I denied the motion to compel. Dkts. 138, 136.
31
business development in the Middle East and Southeast Asia.175 SIFT Capital’s

Delaware counsel (Matthews) served as counsel for SIFT Fixed.176

On January 28, 2022, Matthews circulated Word and PDF versions of the

finalized Loan Materials. He asked Kavan that the Company “execute [two]

originals of each (except the promissory note - just one) and send them to [his]

attention, and send [him] PDFs of all executed documents.”177 Matthews also “asked

[his] client [SIFT Fixed] [to] provide [two] originals so that [he could] collate, date,

and distribute fully-executed and dated originals to both parties.”178 On January 31,

Anderson executed the Loan Materials on behalf of the Company.179 Issa did the

175
JX 1627; JX 1609; see Afaki Tr. 521-22 (testifying about his background). Afaki was
contacted about the role by a business acquaintance who asked Afaki if he could manage
an investment. Afaki Tr. 522-23. Afaki receives $1,500 in cash per month for his service
as the manager of SIFT Fixed. Id. at 527 (“[I]n the UAE, it’s customary to pay such [small]
amounts in cash.”). During Afaki’s deposition in Wilmington, Delaware, Northern Gold
questioned whether Afaki is an actor hired by SIFT Capital to play a role in this litigation.
Afaki Dep. 127-28 (Q: “Are you an entertainer?” A: “No, I’m not.” “Q: “Are you a
performer?” A: “Absolutely not.” Q: “Do you have any acting experience?” A: “None.”).
Afaki—both at his deposition and at trial—gave an unqualified rejection of Northern
Gold’s suggestion. See Afaki Tr. 536 (Q: “Are you a performer, Mr. Afaki?” A. “No, I’m
not.”); Afaki Dep Tr. 127-28. I do not doubt that Afaki is who he says he is and found his
trial testimony to be credible.
176
See JX 1150; JX 860.
177
JX 823.
178
Id.; see also JX 845.
179
JXs 873-79; Anderson Tr. 616-19; Soura Tr. 73-74. This was the first time that
Anderson learned about SIFT Capital or SIFT Fixed. Anderson Tr. 632; Anderson Dep.
120.
32
same for SIFT Fixed.180 The parties sent the executed documents to the escrow

agent, Pinnacle Bank.181

On February 22, 2022, Pinnacle informed SIFT Fixed and the Company by

email that it had received the loan proceeds and executed Loan Materials.182

Pinnacle attached signature pages to each of the Loan Materials signed by SIFT

Fixed and the Company.183 This included signature pages to a Loan Agreement in

which SIFT Fixed agreed to provide the Company and its related entities with a $10

million loan.184 It also included signature pages to the Warrant Agreement, which

granted SIFT Fixed a warrant to purchase 2.565 units (or 2.5% of the Company’s

outstanding units).185

180
JXs 1728-32. Northern Gold’s objection challenging the authenticity of the Warrant
Agreement (and Loan Materials) is addressed later in this decision. See Section II.C.1,
infra.
181
JXs 880-81. The Company sent the escrow agent its executed documents on February
14. JX 1107. SIFT Fixed sent its executed documents a few days later. See JX 1113; JX
1663.
182
JX 1727; JXs 1728-33.
183
JXs 1728-33.
184
JX 1329 (Loan Agreement).
185
JX 1337 (Warrant Agreement); see JX 1388 (Warrant Agreement with a different
signature page). The Loan Materials also included: a Promissory Note in which the
Company agreed to pay quarterly interest and to repay SIFT Fixed’s loan by February 22,
2025 (JX 1333); an Unconditional Guaranty for the loan between the Company’s wholly
owned subsidiaries and SIFT Fixed (JX 1335); and a Pledge and Security Agreement
granting SIFT Fixed a security interest in its loan (JX 1331).
33
In that same email, Pinnacle asked the parties to provide joint written notice

for “the amount to be distributed and the portion thereof to be deduced from the

escrow fund.”186 Later that day, SIFT Fixed and the Company gave Pinnacle written

authorization to break escrow.187 Pinnacle released the Loan Materials and

transferred the loan proceeds to the Company’s bank account.188

N. The February 2022 Consent

In late February 2022, Italia and Soura learned that they had “signed the wrong

version” of the amended LLC Agreement since it lacked a ROFR provision.189 Italia

asked that the parties execute another amendment to the LLC Agreement with a

ROFR. Soura agreed.190

On February 25, Soura sent Italia a draft revised LLC Agreement, along with

an “associated resolution.”191 Soura’s cover email confirmed that the only change

to the LLC Agreement related “to the transferability of units” and that “[a]ll prior

consents and resolutions remain[ed] effective.”192 The attached LLC Agreement

186
JX 1727.
187
JX 1150.
188
JX 1155.
189
JX 1058; Soura Tr. 83-84, 199; Italia Tr. 361, 442. They made this discovery after Italia
requested and received a copy of the May 14 Materials from Company counsel, which he
then sent to his own counsel to compare against his files. JX 1269; Italia Tr. 440-41.
190
Soura Tr. 84-85.
191
JX 1167; see JXs 1168-69.
192
JX 1167.
34
included a Schedule A reflecting that Northern Gold and REM OA were both 50%

members of the Company.193

The “resolution” was a draft written consent of the Company’s members dated

February 25, 2022 (the “February 2022 Consent”).194 The document referenced the

May 2021 Consent four times. It confirmed that “any written consent and/or written

resolution adopted by [Northern Gold and REM OA] (including, without limitation,

the written consent of the Members dated as of May 14, 2021) was validly entered

into.”195 It also “approved, confirmed and ratified . . . any and all actions taken by

[the Company] in connection with, related to, or in furtherance of any written

consent and/or written resolution,” including the May 2021 Consent and “executing

any agreements or otherwise entering into any transactions.”196

On February 28, Italia signed and returned the revised LLC Agreement

without changes.197 But he told Soura that he needed time to “review the written

consent” and would “get back to [Soura] with any proposed changes.”198 Italia asked

193
JX 1169 at sched. A.
194
JX 1168.
195
Id. at 2.
196
Id.
197
JX 1185; see JXs 1183-84. On March 2, Soura circulated a fully executed version of
the operative LLC Agreement. JX 1273 (“Operative LLC Agreement”).
198
JX 1185; see JX 1178; Italia Tr. 454, 461.
35
both Vineberg and a Delaware attorney to review the February 2022 Consent on his

behalf.199 Italia forwarded the May 14 Materials to his counsel.200

After review, Italia asked Soura whether the February 2022 Consent

exculpated or released claims against the Company’s officers.201 On March 2, Soura

sent Italia a revised document “with the added language [he and Italia] discussed”

and asked Italia to call him with any further concerns.202 Satisfied, Italia signed the

February 2022 Consent later that day and sent it to Soura.203 Soura then circulated

executed copies of the revised LLC Agreement and the February 2022 Consent.204

O. The LaGrange Meeting

While the SIFT transaction was being finalized, Italia was pressing Soura and

D’Arcy to facilitate a sale of Italia’s equity to the Mechanical and Chemical Industry

Corporation (“MKE”)—a defense contractor affiliated with the Turkish

199
JX 1191; JX 1196; JX 1229; JX 1264; JX 1269; Italia Tr. 460-62, 480-81.
200
JX 1229; JX 1269.
201
JXs 1222-23; Soura Tr. 90-91; Italia Tr. 454-55. Italia testified that he and his attorneys
did not review the “May 14, 2021[] consent” while reviewing the February 2022 Consent.
Italia Tr. 459. But Northern Gold’s privilege log reflects that on March 2, Italia and his
attorneys had a privileged discussion about the “May 14 Subsidiary Consents.” JX 1598,
Entry 103.
202
JXs 1222-23.
203
JX 1270 (“[H]ere u go[.]”); JX 1271.
204
JXs 1272-74.
36
government.205 The deal crystallized in late January 2022 when MKE submitted a

letter of intent to acquire 20% of the Company for $60 to $65 million.206

The offer raised red flags for D’Arcy.207 Just six months earlier, Ault had

valued the Company at roughly $38 million.208 By contrast, MKE’s bid valued the

Company at approximately $300 to $325 million. The Company’s officers and

counsel were also concerned by Italia’s diligence requests.209

On March 8, 2022, Soura, Italia, and MKE’s counsel met in LaGrange,

Georgia to discuss the MKE deal and visit the Company’s new manufacturing

facility.210 Soura recorded their conversation—unbeknownst to the other

participants.211 The recording includes suggestions that the deal was a “kickback”

205
Soura Tr. 100-01.
206
JXs 901-02.
207
D’Arcy Tr. 587-90 (expressing concern about sharing diligence information with a
foreign firearms manufacturer); see also Soura Tr. 101-03; Italia Tr. 498-500.
208
See JX 655.
209
D’Arcy Tr. 586-89; JX 1311; JX 1324; JX 1342; see also Soura Tr. 103-04.
210
Soura Tr. 104-06; Italia Tr. 371-72, 500-01.
211
Soura Tr. 104-05; Italia Tr. 501; JXs 1618-19; JX 1681. Northern Gold objected to the
introduction of a transcription of the recorded conversation based on the best evidence rule.
Italia Tr. 504-05; see D.R.E. 1002. Having reviewed the relevant portions of the
transcription and the recorded conversation, I find the transcription to be accurate. JX 1681
at 2-3; id. at 1-2; see Atkins v. State, 523 A.2d 539, 544-45 (Del. 1987) (“When original
tape recordings are properly introduced into evidence, transcriptions of those recordings
may also be received into evidence with the exercise of judicial discretion.”).
37
scheme based on a purposefully inflated valuation.212 At trial, Italia adamantly

denied making these statements.213

P. The Warrant Exercise
After the meeting in LaGrange, Soura relayed the discussion about the

potential MKE transaction to D’Arcy and SIFT Fixed’s representatives (Kobeissi

and Issa).214 Soura also reported that Italia had taken firearms, ammunition, and

other Company property worth millions of dollars.215 Issa told Soura that SIFT Fixed

intended to exercise its warrant.216

212
JX 1681 at 2; see also id. at 3, 5, 8, 97-98, 129, 162. I consider this discussion only
insofar as it provides context for SIFT Fixed’s subsequent exercise of its warrant and bears
on witness credibility. I make no assessment of the discussed matters beyond that and am
not finding that a kickback scheme was hatched.
213
Italia Tr. 502-04.
214
Soura Tr. 107-09; Afaki Tr. 549; D’Arcy Tr. 590. Northern Gold raised a standing
objection to hearsay insofar as Afaki testified about what Issa told him. See Afaki Tr. 543.
Afaki testified about Issa’s then-present intention to exercise the warrant. Id. at 549. This
testimony is admissible on that basis under Delaware Rule of Evidence 803(3). See supra
note 80.
215
JXs 97-98; JX 143; JX 156; JX 196; JXs 212-14; JX 121; JX 151; JX 393; JX 1452; JX
1457; JX 1911; D’Arcy Tr. 590-91 (discussing artwork, ammunition, machine guns, a
truck, and other firearms that “went missing”); Soura Tr. 98. I make no finding on whether
Italia did, in fact, engage in this conduct. See Italia Tr. 348-49 (describing taking 47 guns
for himself that were “all registered,” “documented,” and “lawfully transferred”). I
consider it only as relevant context for SIFT Fixed’s exercise its warrant and witness
credibility.
216
Soura Tr. 111-13. Northern Gold objected to Soura’s testimony about what Issa said
on hearsay grounds. Soura’s testimony is admissible as a statement of Issa’s then-present
intent under Delaware Rule of Evidence 803(3). See supra notes 80, 214.
38
On March 21, 2022, Issa executed a Notice of Exercise on behalf of SIFT

Fixed.217 Soura testified that he received the Notice of Exercise through the SIFT

Capital data room.218 On March 22, Soura updated Schedule A of the operative LLC

Agreement to reflect the issuance of units to SIFT Fixed, listing SIFT Fixed as a

2.5% member of the Company.219 Soura did not send the updated Schedule A to

anyone at that time.220

Q. The Dallas Meeting

On March 31, 2022, Italia, Soura, and D’Arcy met at the Dallas airport to

discuss the potential MKE transaction and corporate governance issues.221 By this

point, Italia and Soura’s relationship had soured and D’Arcy acted as an

intermediary.222 The meeting began with Soura telling Italia that he would not

217
JX 1648; Soura Tr. 114-15; JX 1400. According to Northern Gold, JX 1400 “has a
document metadata date of April 20, 2022.” Def’s Answering Br. 28.
218
Soura Tr. 114-15. To the extent that there is contradictory evidence about how Soura
received the Notice of Exercise, Soura’s testimony that he received the document through
the data room was more credible when placed in context of the overall record. Cf. Soura
Dep. 250, 467-70, 493-94; Soura Tr. 255, 267-69; JX 1685; JX 1476.
219
JX 1455 at sched. A; JX 1424 at sched. A. According to Northern Gold, the document
metadata date for JX 1424 is March 22, 2022. Def’s Answering Br. 35.
220
Cf. infra note 233 and accompanying text.
221
D’Arcy Tr. 593-94; Italia Tr. 364-65; Soura Tr. 116-17.
222
D’Arcy Tr. 593.
39
support the MKE deal.223 Soura also raised the SIFT transaction and explained that

SIFT Fixed had exercised its warrant.224

After the Dallas meeting, on April 4, Italia emailed D’Arcy to express his

“surprise” that the Company had “taken a loan from an offshore entity in Hong

Kong.”225 Italia requested documentation on the SIFT transaction and asked D’Arcy

to forward him the “loan documents.”226 That afternoon, D’Arcy sent Italia the Loan

Materials, including the Warrant Agreement.227 D’Arcy did not include the

Commitment Letter.228

R. The Books and Records Action

The next day, Northern Gold filed a books and records action in this court,

seeking documents pertaining to the Commitment Letter, the May 2021 Consent,

223
Id. at 593-94.
224
Id. (testifying that Soura brought the “loan agreement” to the meeting and “Italia said
he had never seen these, never agreed with them”); Soura Tr. 118-19. Italia testified that
he learned about the $10 million loan from SIFT at the meeting. Italia Tr. 365-66. But he
denied that Soura told him about the warrant. Italia Tr. 368, 513-16. His denial is,
however, contradicted by Northern Gold’s own filings in this court stating that Italia
learned about the warrant during the March 31 meeting. JX 1552 ¶ 50; JX 1723 at 21; see
Italia Tr. 516-20. Italia testified that Northern Gold’s submissions were inaccurate and that
he had not reviewed them before filing, despite having testified otherwise during his
deposition. Italia Tr. 516-20; Italia Dep. 46. Given these inconsistencies and the other
evidence, it seems more likely than not that Italia learned about the warrant during the
Dallas meeting.
225
JX 1382.
226
Id.
227
JXs 1389-94.
228
JXs 1389-94.
40
SIFT Capital, and SIFT Fixed.229 On April 21, Soura emailed Company counsel at

Richards, Layton & Finger, P.A. (“RLF”) a “complete set” of “the corporate

documents and loan documents for REM EQ and [its] subsidiaries.”230 The

documents included the Commitment Letter, the Warrant Agreement, and the Notice

of Exercise.231

On May 9, RLF informed Northern Gold that SIFT Fixed had executed its

warrant, was a member of the Company, and was a party to the LLC Agreement.232

RLF also attached a copy of the revised Schedule A to the LLC Agreement reflecting

SIFT Fixed’s membership in the Company.233

S. This Litigation

This action was commenced by plaintiffs REM OA and SIFT Fixed on

June 30, 2022.234 The plaintiffs seek a declaration under 6 Del. C. § 18-110 that (at

229
N. Gold Hldgs., LLC v. Rem EQ Hldgs., LLC, 2022 WL 17338787, ¶¶ 1.j-l (Del. Ch.
Nov. 23, 2022). A paper trial was held in the books and records action on September 20,
2022, and I issued a bench ruling on October 10. See infra note 390. A final order and
judgment was entered on November 23, 2022. C.A. No. 2022-0308-LWW (Del. Ch. Nov.
23, 2022) (ORDER).
230
JX 1401.
231
JX 1446; JX 1451; JX 1419. Northern Gold raised an authenticity objection to various
versions of the Commitment Letter (e.g., JX 1446), among other documents, under
Delaware Rule of Evidence 901. That objection is resolved in Section II.C.1, infra.
232
JX 1907. There is no evidence that SIFT Fixed executed a joinder to the LLC
Agreement.
233
JX 1909.
234
Dkt. 1.
41
the time the action was filed) SIFT Fixed was a 2.5% member of the Company, and

Northern Gold and REM OA were 48.75% members.235 The plaintiffs also seek an

award of fees and costs.236

On August 1, Northern Gold filed a counterclaim seeking declarations that the

warrant and units issued to SIFT Fixed were unauthorized and invalid, that SIFT

Fixed is not a member of the Company, and that Northern Gold owns 50% of the

Company’s units.237

On August 5, I entered an order to maintain the status quo during the pendency

of the litigation.238 On November 3, Northern Gold moved to enforce the status quo

order to prevent the Company’s proposed $5 million capital raise through a pro rata

equity issuance (the “Capital Raise”).239 The Company asserted that additional

capital was urgently needed to fund the Company’s relocation to Georgia.240 Given

the Company’s professed financial straits, I declined to bar it from proceeding with

the Capital Raise. I did so provided that while the status quo order remained in

235
Compl. ¶¶ 61-64.
236
Id. ¶¶ 69-72.
237
Answer and Countercl. ¶¶ 111-20.
238
Dkt. 29.
239
Dkt. 59. The Company proposed issuing 20.51 membership units pro rata to SIFT
Fixed, REM OA, and Northern Gold. If a member chose not to participate, a participating
member could buy the unpurchased units. Dkt. 59 Ex. B.
240
Dkts. 72, 75. The plaintiffs supported the Company’s position.
42
place, no redemption of units would occur and no single member of the Company

would be deemed to control more than 50% of the Company’s units.241 Northern

Gold was free to take part in the Capital Raise.

Subsequently, REM OA and SIFT Fixed subscribed to the Capital Raise.242

After Northern Gold declined to participate, REM OA purchased the units Northern

Gold passed on.243 On December 6, Anderson circulated an updated capitalization

table for the Company with the following ownership breakdown: REM OA,

56.8737%; Northern Gold, 40.6256%; and SIFT Fixed, 2.5007%.244

A two-day trial was held on January 24 and 25, 2023.245 Post-trial briefing

followed, and a post-trial argument was held on May 10, 2023.246 After additional

241
Dkts. 106-07.
242
JXs 1616-17; JXs 1620-22. Northern Gold raised a relevance objection to these exhibits
(as well as JXs 1623-24 and JX 1626) under Delaware Rule of Evidence 401. The
documents are relevant to my description of the procedural history of this matter.
243
JXs 1623-24; see supra note 242 (discussing relevance).
244
JX 1626; see supra note 242 (discussing relevance). As I explained during the January
17, 2023 pre-trial conference, the merits of this equity issuance were not a topic for trial.
Dkt. 172 at 27. I have made no findings of fact about the propriety or effectiveness of the
Capital Raise. I am describing the Capital Raise as part of the procedural background
leading up to trial and to provide context for the declaratory relief entered after trial.
245
Dkts. 171, 174-75. On the eve of trial, the plaintiffs filed a motion in limine to allow
Jade Kobeissi to testify remotely despite his repeated refusals to sit for a deposition. Dkt.
154. I denied the plaintiffs’ motion as prejudicial to Northern Gold. Dkt. 172, 171, 162.
246
Dkts. 189, 196. After trial, the Company submitted a letter outlining its position that it
complied with certain federal regulations. Dkt. 178. I have not considered the Company’s
assertions when determining whether the plaintiffs met their burden at trial.
43
submissions regarding metadata, the matter was taken under advisement on June 20,

2023.247

II. LEGAL ANALYSIS

Under 6 Del. C. § 18-110, this court is authorized “to determine the

membership interest in a limited liability company.248 “The parties have the burden

of proving their respective claims by a preponderance of the evidence.”249 The

plaintiffs have done so. Northern Gold has not.

Northern Gold authorized the Commitment Letter and SIFT transaction when

it signed the May 2021 Consent after weeks of review and advice from counsel. It

provided further authorization through the February 2022 Consent. Although

Northern Gold lacked actual knowledge of the transaction’s terms, it could have

learned them through basic diligence. None of Northern Gold’s challenges

invalidate its consent, the SIFT transaction, or the admittance of SIFT Fixed as a

member of the Company.

247
Dkt. 197. The parties also submitted letters on metadata associated with certain exhibits.
Dkts. 190-95; see supra note 66.
248
6 Del. C. § 18-110.
249
Lynch v. Gonzalez, 2020 WL 4381604, at *30 (Del. Ch. July 31, 2020), aff’d, 253 A.3d
556 (Del. 2021); see also In re IAC/InterActiv Corp., 948 A.2d 471, 493 (Del. Ch. 2008)
(“[T]he plaintiff in the [18-110] Action[ ] bears the burden of proving by a preponderance
of the evidence that it is entitled to relief.”).
44
A. Whether Northern Gold Authorized the SIFT Transaction

The LLC Agreement requires that the Company’s “Members” authorize the

issuance of units and warrants.250 The “Members” are those “holding, in the

aggregate, a majority of more of the total issued and outstanding Units.”251 Because

neither Northern Gold nor REM OA held more than 50% of the units, they were both

required to consent to the Company’s execution of the Commitment Letter and the

issuance of the warrant to SIFT Fixed.

The LLC Agreement permits the members to act by written consent.252 The

May 2021 Consent was signed by REM OA and Northern Gold.253 They expressly

250
LLC Agreement § 3.1(A) (stating that the “Members” “shall have the authority in their
sole and absolute discretion . . . to issue Units . . . and to cause the Company to issue
warrants, options or other instruments relating to Units”); Operative LLC Agreement §
3.1(D); Operative LLC Agreement § 3.2(A); see also Operative LLC Agreement § 4.1(A);
infra notes 365-68, 383-84 and accompanying text.
251
Operative LLC Agreement at sched. 1.1; see id. (“Unit: shall mean the ownership
interest of a Member in the Company at any particular time, including the Member’s share
of the profits and losses of the Company, the right to receive distributions from the
Company and the right to any and all other benefits to which such Member may be entitled
as provided in this Agreement and in the LLC Act, together with the obligations of such
Member to comply with all the terms and provisions of this Agreement and of the LLC
Act. The Units owned by a Member shall represent such Member’s entire interest in the
Company, and a Member will automatically cease to be a member of the Company when
they no longer own any Units (whether by sale, assignment, redemption or otherwise).”).
I note that the LLC Agreement as revised on March 22, 2022 is identical to the version
revised in February 2021, except for Soura’s updates to Schedule A. See JX 1455. Other
than the changes to Schedule A, the relevant material provisions of the LLC Agreement
are not in dispute. See Defs.’ Answering Br. 35-36.
252
Operative LLC Agreement § 4.1(A); see infra note 382 and accompanying text.
253
Italia’s knowledge and actions are imputed to Northern Gold, just as Soura’s are
imputed to REM OA. See In re Am. Int’l Grp., Inc., 965 A.2d 763, 806 (Del. Ch. 2009)
45
granted “any Member or Officer, acting alone” the authority to execute the

Commitment Letter “without any further act, vote or approval.”254 Thus, Soura’s

execution of the Commitment Letter was authorized by the Company’s members.

The members also authorized the Company’s entry into the Loan Materials

(including the Warrant Agreement). The May 2021 Consent provided that “any

Member or Officer” was “fully authorized to execute and deliver” and to cause the

Company “to perform its obligations under . . . all documents relating [to] or

contemplated [by]” the Commitment Letter.255 The final Loan Materials relate to

and are contemplated by the Commitment Letter. They conformed to the

Commitment Letter’s key business terms, including that SIFT Capital or its designee

would receive a warrant for 2.5% of the Company’s outstanding equity.256

(“[T]he knowledge of an agent is normally imputed to the agent’s principal.”), aff’d sub
nom. Teachers’ Ret. Sys. of Louisiana v. PricewaterhouseCoopers LLP, 11 A.3d 228 (Del.
2011); Cuppels v. Mountaire Corp., 2020 WL 3414848, at *6 (Del. Super. June 18, 2020)
(“[U]nder standard principles of agency law, [the agent’s] actions may be imputed to [the
principal].”).
254
May 2021 Consent at 2; see also JX 526; JX 583; JX 587; JX 590; JX 596; Italia Tr.
399, 401-02; Operative LLC Agreement at sched. 1.1 (“Member: means REM OA
HOLDINGS, LLC and NORTHERN GOLD HOLDINGS, LLC, as the initial members of
the Company, and includes any Person admitted as an additional member of the Company
or a substitute member of the Company pursuant to the provisions of this Agreement . . .
or other agreement authorized by the Members . . . .”).
255
May 2021 Consent at 2.
256
Compare JX 210 with JX 1391 at 2 and JX 1394 at 1; see also infra notes 346-53; infra
Section II.C.1 (resolving Northern Gold’s authenticity challenges, including to JX 1391).
Moreover, the “Member or Officer” was permitted to finalize the documents “with such
changes . . . deem[ed] in his [or her] sole discretion advantageous to the Company, all
46
Northern Gold and REM OA further authorized the Commitment Letter and

Loan Materials when they executed the February 2022 Consent. They affirmed that

the May 2021 Consent “was validly entered into” and a “binding agreement

enforceable against” each member, ratified actions previously taken pursuant to the

May 2021 Consent, and authorized “any Member, Officer or other agent of the

Company . . . to continue to take any and all actions . . . in furtherance of” the May

2021 Consent.257

Delaware is a “contractarian” state.258 Our law recognizes that “parties have

a right to enter into good and bad contracts” and “enforces both.”259 “As a matter of

ordinary course, parties who sign contracts and other binding documents, or

authorize someone else to execute those documents on their behalf, are bound by the

obligations that those documents contain.”260 “The presumption that the parties are

bound by the language of the agreement” they signed “applies with even greater

force when the parties are sophisticated” and “engaged in arms-length

without any further act, vote or approval of any Member, Officer or other person or entity.”
May 2021 Consent at 2.
257
JX 1274 at 2.
258
GRT, Inc. v. Marathon GTF Tech., Ltd., 2011 WL 2682898, at *12 (Del. Ch. July 11,
2011) (explaining that Delaware “is more contractarian than . . . many other states”).
259
Nemec v. Shrader, 991 A.2d 1120, 1126 (Del. 2010).
260
Off. Comm. of Unsecured Creds. of Motors Liquid. Co. v. JPMorgan Chase Bank, N.A.,
103 A.3d 1010, 1015 (Del. 2014).
47
negotiations.”261 This presumption is particularly strong when sophisticated parties

are represented by counsel.262

Italia is a sophisticated businessperson. He founded, ran, and sold two

businesses for substantial profits.263 He was advised by counsel in negotiating and

executing the May 2021 Consent—the same counsel who has represented him in

“dozens” of corporate transactions.264 He was represented by counsel again in

connection with the February 2022 Consent, even negotiating for the inclusion of a

provision.265 He is presumptively held to his agreements.

B. Whether Northern Gold’s Authorization Is Valid

Northern Gold avers that it should not be bound by the May 2021 Consent

(and the agreements it authorized) for numerous reasons. These include that:

(1) Northern Gold was not given a copy of the Commitment Letter to approve;

(2) Northern Gold was mistaken or misled about the terms of the SIFT transaction;

and (3) information about the dilutive terms of the SIFT transaction was withheld

261
W. Willow-Bay Ct., LLC v. Robino–Bay Ct. Plaza, LLC, 2007 WL 3317551, at *9 (Del.
Ch. Nov. 2, 2007), aff’d, 985 A.2d 391 (Del. 2009).
262
See Comrie v. Enterasys Networks, Inc., 2004 WL 936505, at *4 (Del. Ch. Apr. 27,
2004), aff’d, 864 A.2d 929 (Del. 2004); Great Lakes Chem. Corp. v. Pharmacia Corp., 788
A.2d 544, 555 (Del. Ch. 2001).
263
E.g., Italia Tr. 463.
264
Id. at 383.
265
JX 1274.
48
from Northern Gold by REM OA. None of these arguments invalidate Northern

Gold’s authorization.

1. Ignorance of the Commitment Letter’s Terms

The plaintiffs did not prove that Northern Gold was shown the Commitment

Letter before Italia signed the May 2021 Consent.266 But Italia was admittedly aware

that he was signing a document authorizing a Commitment Letter for SIFT Fixed to

provide a $10 million loan to the Company.267 Even if he were not, a review of the

May 2021 Consent would have made it obvious. The May 2021 Consent

emphasized and repeatedly mentioned the Commitment Letter.268

A contracting party must “stand by the words of his contract.”269 Avoidance

is not justified by “a party’s failure to read a contract” or insistence that she “had not

been informed of [its] stated terms.”270 This is especially so where the contracting

266
See supra note 101 and accompanying text (finding that Italia was not given a copy of
the Commitment Letter during the Ilion meeting). They also did not prove that Italia
received a copy before he signed the February 2022 Consent.
267
Italia Tr. 356-57, 388; see supra notes 120-21 and accompanying text (finding that Italia
saw references to and formed an impression of the Commitment Letter when he reviewed
the May 2021 Consent); May 2021 Consent at 1-2.
268
See supra note 117 and accompanying text (discussing the repeated mentions and
emphases of the Commitment Letter in the May 2021 Consent).
269
Pellaton v. Bank of N.Y., 592 A.2d 473, 477 (Del. 1991).
270
Id.; see also Graham v. State Farm Mut. Auto. Ins. Co., 565 A.2d 908, 913 (Del. 1989)
(“[A] party’s failure to read a contract [cannot] justify its avoidance.”); Moore v.
O’Connor, 2006 WL 2442027, at *4 (Del. Super. Aug. 23, 2006) (“One of the basic tenets
of contract law is that a party is responsible for the terms of a contract they sign, even if
unaware of the terms.”); Harrington Raceway, Inc. v. Vautrin, 2001 WL 1456873, at *3
49
party is a sophisticated businessperson represented by counsel.271 Italia and his

lawyers—who spent weeks reviewing the May 14 Materials—had ample

opportunity to ask about the Commitment Letter. Their failure to do so cannot vitiate

Northern Gold’s written assent.272

The fact that the warrant was unmentioned in the May 2021 Consent does not

require a different outcome.273 The May 2021 Consent referenced the Commitment

Letter that, in turn, addressed the warrant. “The obligation of a contracting party to

read any contract it signs extends to documents incorporated by reference, which

become part of the terms of the parties’ agreement at the time of execution.”274

(Del. Super. Aug. 31, 2001) (“[T]he Court cannot protect business people who decide to
sign contracts . . . without reading them.”).
271
Braga Inv. & Advisory, LLC v. Yenni, 2023 WL 3736879, at *14 (Del. Ch. May 31,
2023) (explaining that “a sophisticated investor, cannot rely on its own failure to request
and read [an agreement] as grounds to rescind . . . or to invalidate” the agreement).
272
See McAnulla Elect. Const., Inc. v. Radius Techs., LLC, 2010 WL 3792129, at *1 (Del.
Super. Sept. 24, 2010).
273
See Def.’s Answering Br. 39-40.
274
McAnulla, 2010 WL 3792129, at *4 (rejecting the plaintiff’s argument that it was not
bound by a contract incorporated by reference into its agreement with the defendant
because the plaintiff was never given the referenced contract); see also Rose Heart, Inc. v.
Ramesh C. Batta Assocs., P.A., 1994 WL 164581 (Del. Super. Apr. 12, 1994). Northern
Gold tries to distinguish McAnulla because the agreement at issue there was a single page
in length. Def.’s Answering Br. 46. This argument is unavailing. None of the written
consents referencing the Commitment Letter exceeded two and a half pages. See May
2021 Consent; JX 526; JX 583; JX 587; JX 590; JX 596; JX 599; see also RHA Constr.,
Inc. v. Scott Eng’g, Inc., 2013 WL 3884937, at *7 (Del. Super. July 24, 2013) (holding that
a separate document not provided at the time of execution was incorporated into an
enforceable contract where the contract was ten pages long and the separate document was
referenced on the ninth page).
50
Northern Gold “bore responsibility for making further inquiries before it agreed to

assume obligations defined in a separate document.”275 It chose not to inquire.

2. Mistake or Fraud

Northern Gold suggests that its authorization of the Commitment Letter was

ineffective because Soura and Company counsel led it to believe that the May 2021

Consent preserved Northern Gold’s 50% membership interest.276 Insofar as this

argument invokes the doctrines of mistake or fraudulent inducement, neither

applies.277

275
McAnulla, 2010 WL 3792129, at *4.
276
Def.’s Answering Br. 40-42. Northern Gold also suggests that its authorization of the
Commitment Letter in the May 2021 Consent is ineffective because there is “no evidence
of a meeting of the minds for Northern Gold to give away its valuable 50% interest in the
Company for no consideration and for Soura to acquire a controlling interest in the
Company (with SIFT [Fixed]) for no consideration.” Id. at 42. Setting aside that Soura
did not obtain a controlling interest, Northern Gold’s argument falls apart in view of Italia’s
decision to execute the May 14 Materials. By signing the materials, his “mutual assent to
the exchange and consideration” was manifested. United Health All, LLC v. United Med.,
LLC, 2013 WL 6383026, at *6 (Del. Ch. Nov. 27, 2013). Further, the $10 million loan
provided consideration to the Company, whose benefit was indirectly shared with Northern
Gold. See Agostino v. Hicks, 845 A.2d 1110, 1124 (Del. Ch. 2004) (observing that
“warrants were issued as partial consideration for providing [a loan] to [the company] (the
benefits of which were indirectly shared by plaintiff)”).
277
Northern Gold does not expressly invoke either of these doctrines. Instead, it cites to
various cases involving unrelated legal principles. Def.’s Answering Br. 41. The plaintiffs
(fairly) interpreted Northern Gold’s disjointed arguments as raising theories of fraudulent
inducement or mistake. See Pls.’ Post-trial Reply Br. (Dkt. 186) 6-8. I have therefore
considered the doctrines and whether they bear on my conclusion that Northern Gold
authorized the Commitment Letter and SIFT transaction by signing the May 2021 Consent.
Insofar as Northern Gold is invoking the doctrines, both unilateral mistake and fraudulent
inducement must be proven by the party seeking to void the contract. See FdG Logistics
51
Under Delaware law, recission of a contract due to unilateral mistake is only

available when a party can demonstrate that “the mistake occurred regardless of the

exercise of ordinary care.”278 As discussed, Northern Gold could have discovered

the warrant by exercising ordinary care: requesting and reviewing the Commitment

Letter referenced in the May 2021 Consent.279 A party is not excused from its

obligations because it “was mistaken as to the legal effect of his contract.”280

Fraudulent inducement is likewise “not available as a defense when one had

the opportunity to read the contract and by doing so could have discovered the

misrepresentation.”281 Italia had known since January 2021 that Soura was looking

LLC v. A&R Logistics Hldgs., Inc., 131 A.3d 842, 861 (Del. Ch. Feb. 23, 2016), aff’d, 148
A.3d 1171 (Del. 2016); Braga Inv., 2023 WL 3736879, at *10.
278
FdG Logistics, 131 A.3d at 861 (citation omitted).
279
W. Willow-Bay, 2009 WL 3247992, at *4 n.19 (Del. Ch. Oct. 6, 2009) (“‘[F]ailure to
read a contract provides no defense against enforcement of its provisions where the mistake
sought to be avoided is unilateral and could have been deterred by the simple, prudent act
of reading the contract.’” (quoting 27 Williston on Contracts § 70.113 (4th ed. 2009))),
aff’d, 985 A.2d 391 (Del. 2009) (TABLE); Burge v. Fidelity Bond & Mortg. Co., 648 A.2d
414, 420 (Del. 1994) (explaining that a unilateral mistake must have “occurred regardless
of the exercise of ordinary care”).
280
Shah v. Shah, 1988 WL 67403, at *4 (Del. Ch. June 28, 1988).
281
Carrow v. Arnold, 2006 WL 3289582, at *11 (Del. Ch. Oct. 31, 2006) (citing 17A Am.
Jur. 2d Contracts § 214 (2006)), aff’d, 933 A.2d 1249 (Del. 2007); see also Snyder v.
Jehovah’s Witnesses, Inc., 2005 WL 2840285, at *3 (Del. Super. Oct. 28, 2005) (holding
that reliance was not justifiable where the party “had both the awareness and the
opportunity to discover the accurate information . . . but chose not to”); Hollinger Int’l v.
Black, 844 A.2d 1022, 1065-66 n.95 (Del. Ch. 2004) (“Succinctly put, a party will not be
heard to complain that he has been defrauded when it is his own evident lack of due care
which is responsible for his predicament.”).
52
to raise funds by offering a “a non-controlling stake.”282 When Italia saw the

references to the Commitment Letter in the May 2021 Consent, he knew they

concerned a loan from SIFT Capital.283 He opted not to investigate.284 Instead,

Northern Gold executed multiple written consents authorizing the Commitment

Letter.285

3. Breach of Fiduciary Duty

Northern Gold also contends that its consent is negated by “REM OA’s

violation of its fiduciary duty of disclosure” regarding the Commitment Letter.286

REM OA did not, however, owe fiduciary duties to Northern Gold.

Section 4.1(A) of the LLC Agreement provides that the Company’s

management rests with the “Members” (i.e., a majority of the members).287 Section

4.4(B) states that “[e]xcept as otherwise provided herein . . . each Member shall have

282
See supra note 36 and accompanying text.
283
See Italia Tr. 356-57; supra notes 120-21 and accompanying text.
284
See Carrow, 2006 WL 3289582, at *1 (concluding that a party had not proven fraudulent
inducement where the party reviewed the contract, saw the allegedly fraudulent terms, and
failed to investigate); Arwood v. AW Site Services, LLC, 2022 WL 705841, at *25 (Del.
Ch. Mar. 9, 2022) (rejecting a fraud claim where the plaintiffs saw evidence of the fraud
and were recklessly indifferent to the truth).
285
As such, Northern Gold’s authorization was neither “silent” nor given by
“acquiesce[nce].” Def.’s Answering Br. 42.
286
Id.
287
Operative LLC Agreement § 4.1(A).
53
the default fiduciary duties provided by applicable law.”288 But “only managing

members or controllers owe fiduciary duties by default in LLCs.”289 REM OA was

neither.290 The LLC Agreement does not impose any additional, non-default

fiduciary duties on REM OA.291

C. Whether the Relevant Agreements Are Valid

Next, Northern Gold asserts that the agreements effectuating the SIFT

transaction are invalid.292 It makes two main arguments. First, that the Commitment

Letter, Loan Materials, and Notice of Exercise are inauthentic or forged. And

288
Id. § 4.4(B). Section 4.4(B) waives the fiduciary duties of majority Members: “To the
fullest extent permitted by law, the Members, when acting pursuant to the authority given
to them in this Agreement, shall not have any fiduciary duties to any other Member or any
other Person bound by this Agreement.” Id.
289
Beach to Bay Real Est. Ctr. LLC v. Beach to Bay Realtors Inc., 2017 WL 2928033, at
*5 (Del. Ch. July 10, 2017, revised July 11, 2017) (holding that minority members of
Delaware LLCs do not owe default fiduciary duties). The only case Northern Gold cites
to argue otherwise addresses the availability of Corwin ratification. See Def.’s Answering
Br. 42.
REM OA owned 50% of the Company. The Company was managed by the “Members,”
290

meaning a majority. JX 1424 at sched. 1.1.
291
Even if REM OA owed a fiduciary duty to Northern Gold, Northern Gold had the means
to evaluate the decision presented to it. See Dohmen v. Goodman, 234 A.3d 1161, 1171
(Del. 2020) (stating that where the company asks a stockholder to enter into an individual
transaction, the stockholder “may refuse to do so until he is satisfied the [company] has
given him sufficient information to evaluate the decision presented to him”) (citing
Latesco, L.P. v. Wayport, Inc., 2009 WL 2246793, at *6 (Del. Ch. July 24, 2009)).
292
These arguments are made in a section of Northern Gold’s post-trial brief called “The
Plaintiffs Have Not Met Their Burden to Prove the Validity of the ‘Warrant’ or that a Valid
Contract Exists Between the Company and SIFT002 Making SIFT002 a Tie-Breaking
Member in the Company.” Def.’s Answering Br. 55. Sub-arguments made in this section
overlap with others I have addressed elsewhere. I have endeavored to avoid duplication
where possible.
54
second, that the plaintiffs did not prove that the Warrant Agreement is an enforceable

contract. The Warrant Agreement and related documents are authentic and credible

evidence. The Warrant Agreement is also enforceable.

1. Authenticity

Northern Gold contends that the plaintiffs failed to prove the authenticity of

the Commitment Letter, Warrant Agreement, and Notice of Exercise.293 It asserts

that the signatories for SIFT Capital and SIFT Fixed—Zhang and Issa—are

imaginary and that their signatures are “forger[ies].”294 These arguments are without

factual or legal support.

Under Rule 901 of the Delaware Rules of Evidence, authentication requires

“evidence sufficient to support a finding that the item is what the proponent claims

it is.”295 This “lenient burden” is “easily met.”296 “The proponent need not

conclusively prove the evidence’s authenticity, but merely provide a ‘rational basis’

293
Def.’s Answering Br. 56-65.
294
Id. at 61, 63, 76. Northern Gold bears the burden of proving that the documents are
forgeries. See Clymer v. DeGirolano, 2021 WL 2181377, at *4 (Del. Ch. May 27, 2021)
(“The weight of authority in Delaware indicates that the [party seeking to invalidate the
contract] bear the burden of proving that [the] signature was forged.”); see also Matter of
Doris J. Foster Inter Vivos Declaration of Tr., 2022 WL 17091972, at *3 n.35 (Del. Ch.
Nov. 21, 2022) (“To the extent that [the party] contends that the signature was forged, [that
party] bears the burden of proof.”).
295
D.R.E. 901(a).
296
Schaffer v. State, 2018 WL 1747793, at *5 (Del. 2018).
55
from which a reasonable finder of fact could draw that conclusion.”297 Means to

authenticate are flexible and include “witness testimony, corroborative

circumstances, distinctive characteristics, or other evidence probative of

authenticity.”298

The authenticity inquiry under Rule 901 is distinct from the question of

whether a document is a forgery. Authenticity is the threshold matter.299 Once the

court is satisfied that the requirements of Rule 901 are met, the factfinder must

determine whether the admitted evidence is credible.300 The record provides a

sufficient evidentiary basis to authenticate the various agreements with SIFT

entities. I reject Northern Gold’s contentions that the documents are fake or forged.

297
Id.; see United States v. Turner, 718 F.3d 226, 232 (3d Cir. 2013) (explaining that the
federal counterpart of D.R.E. 901 requires “a prima facie showing of some competent
evidence to support authentication”). Delaware Rule of Evidence 901 tracks Federal Rule
of Evidence 901, and federal decisions are highly persuasive authority on the former. See
Dawson v. Pittco Cap. P’rs, L.P., 2010 WL 692385, at *1 n.3 (Del. Ch. Feb. 15, 2010).
298
Schaffer, 2018 WL 1747793, at *5 (citation omitted).
299
Parker v. State, 85 A.3d 682, 687-88 (Del. 2014) (“Where a proponent seeks to
introduce [] evidence, he or she may use any form of verification available under Rule 901
. . . . [T]he trial judge as the gatekeeper of evidence may admit the [evidence] when there
is evidence ‘sufficient to support a finding’ by a reasonable juror that the proffered
evidence is what its proponent claims it to be. . . . If the Judge answers that question in the
affirmative, the jury will then decide whether to accept or reject the evidence.”); see United
States v. Black, 767 F.2d 1334, 1342 (9th Cir. 1985) (“The question of authenticity is left
to the discretion of the trial judge [under F.R.E. 901].”).
300
See United States v. Aldaco-Lopez, 956 F.2d 1168, 1168 (9th Cir. 1992) (“Once the
[proponent] meets this burden [under F.R.E. 901], the probative force of the evidence is an
issue for the jury.”); United States v. Turner, 718 F.3d 226, 232 (3d Cir. 2013) (same).
56
a. Zhang and Issa

Northern Gold’s attacks on the documents’ authenticity stem from its

insistence that Zhang and Issa do not “even exist.”301 Although neither Zhang nor

Issa testified in this action, there is ample evidence confirming their existences and

roles at SIFT Capital and SIFT Fixed, respectively.302 Soura, D’Arcy, and Anderson

each had multiple conversations with Issa;303 Afaki met him in person.304 There is

documentary evidence that SIFT Fixed’s Delaware counsel (Matthews) worked with

Issa to obtain his signature for the loan documents.305 Regarding Zhang, Soura

testified to numerous conversations with him.306 Self-authenticating filings with the

Securities and Exchange Commission further confirm Zhang’s background and role

at SIFT Capital.307

301
Def’s Answering Br. 61-67.
302
See Castro v. State, 266 A.3d 201, 206 n.14 (Del. 2021) (“The law makes no distinction
between direct and circumstantial evidence.”). Northern Gold sought to compel the
depositions of Zhang and Issa. Dkt. 115. I denied this motion because both were foreign
citizens and neither was then a director, officer, managing agent, or employee of SIFT
Fixed. See Dkt. 145.
303
Soura Tr. 65-66, 77-78, 110-11; D’Arcy Tr. 581; Anderson Tr. 621-22 (describing a
Teams meeting with Issa); JX 1587; JX 1477 (meeting invite with Anderson, Soura,
D’Arcy, and Issa); JX 1479; JX 1485; JX 1487.
304
Afaki Tr. 537.
305
JXs 711-17; JXs 719-20; JX 727; JXs 739-40; JXs 751-52; JX 754; JXs 873-79;
Anderson Tr. 616, 618-19; Soura Tr. 69-70, 73-74, 76-77, 80; JXs 880-81; JX 1133; JXs
1150-53.
306
Soura Tr. 23-24, 27, 66.
307
E.g., JX 1679 at 8.
57
b. The Commitment Letter

Circumstantial evidence provides adequate grounds to authenticate the

Commitment Letter and reject the argument that it was forged. At trial, Soura

testified to conversations with Zhang about terms of the SIFT transaction that were

later documented in the Commitment Letter.308 He explained that drafts of the term

sheet portion of the Commitment Letter were exchanged through the data room.309

Soura credibly testified that the data room was controlled by SIFT Capital on its

eponymous website and bore SIFT Capital’s unique logo.310 The Commitment

308
Soura Tr. 23-24, 27, 66.
309
Id. at 255-56; Soura Dep. 492-93. Because few documents from the data room were
produced in this litigation, Northern Gold also seeks an adverse inference against the
plaintiffs “that the documents that were purged from the data room would have
demonstrated that [SIFT Fixed] is not a valid member of the Company.” Def.’s Answering
Br. 103. I decline to grant this adverse inference given the lack of evidence that the
plaintiffs “intentionally or recklessly destroy[ed] evidence.” Sears, Roebuck & Co. v.
Midcap, 893 A.2d 542, 552 (Del. 2006); cf. Braga Inv., 2023 WL 3736879, at *7 (noting
that “[t]he only documentary evidence of the contents of the data room is a screenshot of
an automated email sent from the data room service provider to [the defendant]”). An
adverse inference is also inappropriate because any evidence from the data room would
presumably aid the plaintiffs’ case. See Stern v. Shammas, 2015 WL 4530473, at *14
(E.D.N.Y. July 27, 2015) (explaining that an adverse inference was uncalled for where both
parties were equally prejudiced by loss of evidence) (citation omitted). Furthermore,
Northern Gold also lost data. Northern Gold imaged Italia’s phone on September 20,
2022—months after litigation commenced. But Italia apparently dropped his phone from
a helicopter in April 2022, and pre-April 2022 data was irretrievably lost. Dkt. 145 at 80.
It is more likely than not that Soura obtained the Commitment Letter and Notice of Exercise
from the data room. An adverse inference suggesting otherwise would be illogical as it
would require the existence of a grand conspiracy to hoodwink Italia (and the court). There
is no proof of any such scheme.
310
Soura Tr. 41, 28-29, 40; see JX 1685 (explaining that the data room was closed by SIFT
Capital on or around March 27, 2022).
58
Letter was also printed on SIFT Capital letterhead and signed by Zhang, SIFT

Capital’s CEO.311

The metadata produced to Northern Gold with draft and final versions of the

Commitment Letter confirms the authenticity of the documents. The first draft of

the Commitment Letter was created on May 7, 2021, and subsequent drafts were

created over the next few days.312 The final Commitment Letter bearing Zhang’s

signature was created on May 9—the day before the Ilion meeting.313 Soura

countersigned the Commitment Letter on June 4, after Northern Gold and REM OA

executed the May 2021 Consent.314

c. The Warrant Agreement

The record also supports the Warrant Agreement’s authenticity. The Warrant

Agreement was part of the Loan Materials, which were negotiated between the

Company’s and SIFT Fixed’s counsel.315 There is evidence that drafts of the

Warrant Agreement and signature pages to the contract were transmitted by email.

311
JX 210; see Soura Tr. 40.
312
See supra note 66. I would conclude that the documents are both authentic and credible
regardless of the metadata, based upon the circumstantial evidence discussed above.
313
Id.
314
Id. Northern Gold objects to the admissibility of the drafts. The drafts satisfy Rule 901
for the same reasons as the final Commitment Letter.
315
JXs 711-20; JXs 726-28; JXs 739-40; JXs 751-52; JX 754; JXs 763-64; JX 803; JXs
836-37; JX 823; JX 1116; Soura Tr. 69-70, 73-74, 76-77, 80; JXs 873-79; Anderson Tr.
616, 618-19; JX 880-81; JX 1133; JXs 1150-53.
59
For example, counsel sent their clients’ signature pages to Pinnacle.316 Pinnacle

released the funds after receiving written authorization from both parties.317

Northern Gold raises concerns about the credibility of the Warrant

Agreement because there are two different versions of the fully executed document,

each with a slightly different signature by Issa.318 One version is redlined,319 and the

other is clean.320 Based on the record, it is more likely that the two versions exist

because SIFT Fixed’s counsel was acting expeditiously, rather than due to nefarious

316
JX 1133; JX 1113; JX 900; JX 860; JX 1107; JX 845; JX 1110; JX 893; JX 867; JX
1109; JX 858.
317
Soura Tr. 76-77; JX 1150; JX 1663; JX 1727; JX 1107; JX 1147; JX 1140. To the
extent that Northern Gold is challenging the authenticity of the Loan Materials more
broadly, the analysis and outcome are the same.
318
Compare JX 1337 with JX 1380. Northern Gold also argues that the Warrant Agreement
is fake because the address listed for SIFT Fixed in the Warrant Agreement is to a “strip
mall with no offices” related to SIFT Fixed. See Def.’s Answering Br. 58; Soura Tr. 238-
39. There is no documentary evidence to support this contention.
319
JX 1337; see also JX 1336; JXs 1372-73.
320
JX 1380; JX 1383; JXs 1388-89; JXs 1394-96; JX 1401; JX 1451; JX 1530; JX 1537;
JX 1647. This version was circulated several times as a fully compiled and executed
version.
60
reasons.321 Issa’s signatures on the two versions are not so different to my eye that

one or both must be forged.322

d. The Notice of Exercise
Lastly, the Notice of Exercise is admissible under Rule 901. The Notice of

Exercise was part of the Loan Materials as Appendix 1 to the Warrant Agreement.

Soura testified that in March 2022, Issa said that “he intended to exercise [the

warrant] and would be sending [the executed Notice of Exercise] shortly.”323 Soura

said that he then retrieved the signed document from the SIFT Capital data room.324

Issa’s signature on the Notice of Exercise appears similar to his signature on other

321
During closing of the SIFT transaction, SIFT Fixed’s Delaware counsel directed Issa
and the Company to execute the Warrant Agreement twice. JX 823; see JX 845. He
complied and sent signature pages to the escrow agent. JXs 1727-33. After closing, Soura
sought to locate a complete version of the Warrant Agreement with signature pages and
realized that the document had redlining. JX 1336; JX 1337. Kavan explained that
Matthews had sent the Company a redlined version “in the interest of time” since he had
not “heard back” from his client on the clean version. JX 1344. Matthews had directed
the Company “to call [the redlined version] the final version.” JX 1344. Kavan later found
the clean version and sent it to D’Arcy, Soura, and RLF before a final version was
compiled. JX 1389; JXs 1394-96; JX 1401; JX 1451; JX 1530; JX 1537. The clean final
version was the one filed as an attachment to the Complaint. JX 1647.
322
JX 1915 (citing JX 1336; JXs 1647-48; JX 1468; JX 1722; JX 1539; JX 1673); see
D.R.E. 901(b)(3).
323
Soura Tr. 115. Northern Gold objected to this testimony on hearsay grounds. As with
similar, previously addressed hearsay objections, this testimony is admissible to show
Issa’s then-present intent to sign and send the documents. See supra notes 80, 214, 216;
see also D.R.E. 803(3). I do not consider the testimony proof that Issa signed the
documents at that time.
324
Soura Tr. 114-15.
61
documents.325 This evidence suggests that the Notice of Exercise as signed by Issa

is authentic and not a forgery.326

2. Enforceability
Northern Gold also argues that the plaintiffs failed to show that the Warrant

Agreement is a valid and enforceable contract.327 A party seeking to enforce a

contract “bears the burden of proving the existence of a contract by a preponderance

of the evidence.”328 “The elements necessary to prove the existence of an

enforceable contract are: (1) the intent of the parties to be bound; (2) sufficiently

definite terms; and (3) consideration.”329 The plaintiffs have proven these elements.

First, the Warrant Agreement reflects the Company’s and SIFT Fixed’s intent

to be bound.330 “Whether a party manifested an intent to be bound is a question of

325
JX 1915.
326
Northern Gold avers that the metadata for the Notice of Exercise shows that it was
created on April 20, 2022. Def.’s Answering Br. 28. This is incongruous with the date on
the face of the document. JX 1400; see also Soura Tr. 94 (testifying that the Notice of
Exercise was executed on March 21, 2022); JX 1454. But given the timing, it is possible
that the document as produced was “created” on a file system. See Altman v. New Rochelle
Pub. Sch. Dist., 2017 WL 66326, at *13 (S.D.N.Y. Jan. 6, 2017) (“[T]he ‘Created’ date
found in the metadata ‘does not necessarily reflect the authoring date of a document, but .
. . more accurately reflects the date the file was ‘created’ within the file system of a
particular device.’”).
327
Def.’s Answering Br. 56-60.
328
Harrison v. Dixon, 2013 WL 4759681, at *2 (Del. Ch. Sept. 5, 2013).
329
Pulieri v. Boardwalk Props., LLC, 2015 WL 691449, at *6 (Del. Ch. Feb. 18, 2015)
(citation omitted).
330
JX 210.
62
fact.”331 Delaware courts look to “overt manifestation of assent—not subjective

intent” when assessing whether a contract was formed.332

Anderson overtly manifested the Company’s intent when she signed the

Warrant Agreement on its behalf.333 “That act alone is the strongest evidence of an

intent to be bound.”334 To be sure, “a wet ink, signed version of a contract . . . is not

evidence so powerful that it negates all other evidence to the contrary.”335 The

weight of the evidence, however, lends further support to the Warrant Agreement’s

enforceability.

The Warrant Agreement was negotiated by Soura as authorized by the May

2021 Consent signed by the Company’s members.336 He engaged in arm’s-length

negotiations over several months.337 Company counsel advised on those

331
Eagle Force Hldgs., LLC v. Campbell, 235 A.3d 727, 735 (Del. 2020).
332
Black Horse Cap., LP v. Xstelos Hldgs., Inc., 2014 WL 5025926, at *12 (Del. Ch. Sept.
30, 2014) (quoting Indus. Am., Inc. v. Fulton Indus., Inc., 285 A.2d 412, 415 (Del. 1971));
see also UBEO Hldgs., LLC v. Drakulic, 2021 WL 1716966, at *9 (Del. Ch. Apr. 30, 2021).
333
JX 1337.
334
Restanca, LLC v. House of Lithium, Ltd., 2023 WL 4306074, at *18 (Del. Ch. June 30,
2023); see also Eagle Force, 235 A.3d at 736 (“[T]he act of placing signatures on the
signature lines at the end of a contract is so universally recognized as the means of
accepting and binding one’s self to the contract” that in all but the most unusual case “no
other act or statement is ordinarily required.”) (citation omitted).
335
Kotler v. Shipman Assoc., LLC, 2019 WL 4025634, at *17 (Del. Ch. Aug. 21, 2019).
336
May 2021 Consent at 2-4.
337
See supra notes 162-68 and accompanying text. The limited involvement of D’Arcy or
Anderson in negotiating the SIFT transaction is not improper since the May 2021 Consent
gave Soura equal authority to act. May 2021 Consent at 2; see also D’Arcy Dep. 325;
Anderson Dep. 145; Anderson Tr. 632. It was also consistent with Soura’s general role in
63
negotiations.338 Anderson’s execution of the Warrant Agreement was also

authorized by the Company’s members pursuant to the May 2021 Consent.339

SIFT Fixed manifested its intent to be bound when Issa signed the Warrant

Agreement. Northern Gold argues otherwise because there are two different

executed versions of the Warrant Agreement.340 That is because SIFT’s Delaware

counsel “never heard back from SIFT concerning the clean version” of the Warrant

Agreement and “in the interest of time” sent the Company a signed redlined version

of the document that he deemed “the final version.”341

Second, the Warrant Agreement contains sufficiently definite terms.342 It

details the number of shares to be issued, the issuance price, and the manner of

securing financing. For example, he had similarly led efforts to secure the PPP loan early
in the Company’s existence. See supra notes 20, 38-39.
338
See, e.g., JX 818; see also supra note 167.
339
May 2021 Consent at 2.
340
Def.’s Answering Br. 58. Northern Gold argues that the plaintiffs did not prove that
SIFT Fixed signed the Warrant Agreement because (1) the address listed for SIFT Fixed
on the signature line is to a strip mall in New Jersey, and (2) Issa’s signatures on the two
versions of the Warrant Agreement do not match. Id. I am aware of no authority invaliding
a contract based on a mailing address. As to Issa’s signature, I have rejected the argument
that it is a forgery. See supra Section II.C.1.
341
JX 1344; see supra note 318.
342
See Sarissa Cap. Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *21 (Del.
Ch. Dec. 8, 2017) (explaining that the “relevant inquiry” is whether a “reasonable
negotiator” would conclude that “the agreement reached constituted agreement on all of
the terms that the parties themselves regarded as essential” (quoting Leeds v. First Allied
Conn. Corp., 521 A.2d 1095, 1097 (Del. Ch. 1986))).
64
exercise.343 It lacks specific dates, listing “February ___, 2022” as the “Issue Date”

and “February ___, 2027” as the “Expiration Date.”344 But these omissions are not

fatal. “[T]ime, unlike price and quantity, is not invariably a material element of a

contract.”345

Northern Gold contends that the Warrant Agreement is unenforceable because

its terms differ from the Commitment Letter.346 The Commitment Letter provides

for the application of Hong Kong law.347 The Warrant Agreement includes a

Delaware choice of law provision.348 But the Commitment Letter says nothing about

which law governs future Loan Materials. Its choice of law provision is limited to

“this Commitment Letter.”349

343
JX 1394.
344
Id.
345
Hazen v. Miller, 1991 WL 244240, at *2 (Del. Ch. Nov. 18, 1991) (“In a proper case
the Court may infer a reasonable time for performance.”).
346
See Defs.’ Answering Br. 60; Commitment Letter at 1 (requiring that definitive
documentation be in the same “form and substance” as outlined in the Commitment Letter);
see Def.’s Answering Br. 60.
347
Commitment Letter at 4. Northern Gold also argues that the Commitment Letter’s
dispute resolution provision is inconsistent with the LLC Agreement and the Warrant
Agreement, which have Delaware forum provisions. Def.’s Answering Br. 60. The
Warrant Agreement is, however, a superseding contract. See supra notes 350-53 and
accompanying text. And the Commitment Letter’s dispute resolution provision does not
purport to bind members with respect to disputes under the LLC Agreement. See infra
note 349 (citing Commitment Letter at 4).
348
JX 1394 § 4.8.
349
Commitment Letter at 4 (“This commitment letter shall be governed by Hong Kong law,
without regard to Hong Kong choice of law principles. Any dispute, controversy,
difference or claim arising out of or relating to this commitment letter . . . shall be referred
65
In any event, “where a new, later contract between the parties covers the same

subject matter as an earlier contract, the new contract supersedes and controls that

issue, if the two agreements conflict.”350 The parties’ intent that a later contract

supersede an earlier one may be evidenced by language to that effect, such as an

integration clause in the later contract.351 The Commitment Letter was expressly

subject to future “[d]efinitive documentation” and “ancillary documents . . . to be

executed prior to disbursement of proceeds.”352 The parties entered into the

superseding Warrant Agreement, which contains an integration clause.353

to and finally resolved by arbitration administered by the Hong Kong International
Arbitration Centre . . . .”) (emphasis added).
350
Cabela’s LLC v. Wellman, 2018 WL 5309954, at *4 (Del. Ch. Oct. 26, 2018).
351
See Bioveris Corp. v. Meso Scale Diagnostics, LLC, 2017 WL 5035530, at *7 (Del. Ch.
Nov. 2, 2017); see also Country Life Homes, Inc. v. Shaffer, 2007 WL 333075, at *5 (Del.
Ch. Jan. 31, 2007) (“The new contract, as a general matter, will control over the old contract
with respect to the same subject matter to the extent that the new contract is inconsistent
with the old contract or if the parties expressly agreed that the new contract would
supersede the old one.”) (citation omitted).
352
Commitment Letter at 8. In addition, the May 2021 Consent authorized the Company’s
entry into agreements contemplated by the Commitment Letter “with such changes as the
Member or Officer, as applicable, deem[ed] in his sole discretion advantageous to the
Company.” May 2021 Consent at 2.
353
JX 1394 § 4.9. Northern Gold argues that other terms of the Commitment Letter were
unmet: that there was no “recapitalization of the Company” and that the “Company, the
Warrant holders and other members of the Company” did not “enter into an agreement
containing Co-Sale, Drag-along and Pre-emptive rights customary and consistent with
transactions of this type.” Def.’s Answering Br. 60. But the parties entered into the
superseding Warrant Agreement.
66
Third, there is no dispute that the Warrant Agreement provides for

consideration. The Company was given a $10 million loan. In exchange, SIFT

Fixed received interest and a warrant.

D. Whether the Issuance of Units to SIFT Fixed is Enforceable
Northern Gold also contends that the SIFT transaction is invalid, void, or

otherwise unenforceable because: (1) the primary purpose of the transaction was to

dilute Northern Gold; (2) the plaintiffs did not prove the transaction’s compliance

with the federal law as required by the LLC Agreement; and (3) the transaction

violates public policy. To the extent that I have jurisdiction to decide them, none of

these arguments invalidate the Warrant Agreement or SIFT Fixed’s acquisition of

units.

1. Primary Purpose

Northern Gold contends that the SIFT transaction is invalid because its

“primary purpose” was to dilute Northern Gold rather than to provide financing.354

Northern Gold cites no legal basis for applying a “primary purpose” test to invalidate

a contract, much less a contract approved by the challenging party. Instead, it relies

on precedent in the inapposite contexts of director entrenchment and stockholder

disenfranchisement.355

354
Def.’s Answering Br. 53-54.
355
Id. (citing cases).
67
Even if such a test applied (it does not), the record demonstrates that the

Company’s primary purpose was to secure funding.356 Italia, D’Arcy, and Soura

expected from the outset that the Company would need substantial capital beyond

the purchase price.357 When Soura initiated discussions with SIFT Capital, the $10

million PPP loan was dwindling, traditional loans were unavailable, and the

Company was rapidly burning cash.358 The SIFT transaction provided funds needed

to restore the Company’s operations—not to mention build the new manufacturing

facility in Georgia.

2. Compliance with Section 5.3 of the LLC Agreement

Northern Gold also avers that the plaintiffs failed to prove that the issuance of

units to SIFT Fixed complies with Section 5.3 of the LLC Agreement.359 Section

5.3 provides that “no Units shall be Transferred unless such Transfer is in

compliance with all foreign, federal and state laws.”360 Northern Gold questions

whether the transaction violated federal regulations. The SIFT transaction did not,

356
I do not doubt that Soura viewed the dilution of Northern Gold as an added benefit,
given his failing relationship with Italia. The primary purpose of the transaction, though,
was to raise capital for the Company.
357
See supra notes 34-35 and accompanying text.
See supra notes 40-44 and accompanying text; D’Arcy Tr. 570 (testifying that the
358

Company remains “financially strapped”).
359
See Operative LLC Agreement § 5.3; Def.’s Answering Br. 72-84.
360
Operative LLC Agreement § 5.3 (“Any attempted Transfer of Units not in accordance
with the terms and conditions of this Section 5.3, shall be void ab initio and shall not bind
or be recognized by the Company.”).
68
however, involve a “Transfer” of existing “Units” as described in Section 5.3.

Rather, it involved the issuance of a warrant, which was later exercised.

Article V of the LLC Agreement governs the “Transferability of Units.”361

Section 5.1(A) provides that “no Member has the right or power to [ ] endorse, sell,

give, pledge, encumber, assign, or transfer (a ‘Transfer’) all or part of his or her

Units.”362 Section 5.1(C) allows a member to unilaterally transfer her units subject

to a right of first refusal process.363 The plain terms of these provisions concern the

transfer of a member’s existing units.364

Article III, by contrast, addresses the Company’s issuance of new membership

interests.365 Section 3.1(A) authorizes members, “in their sole and absolute

discretion . . . to issue Units” and “to cause the Company to issue warrants.”366

361
Operative LLC Agreement Art. V.
362
Id. § 5.1(A). A “Transferee” is defined as “any individual or entity to whom all or any
part of an [sic] Unit is Transferred for any reason or by any means.” Id. at sched. 1.1; see
also id. (defining “Member” and “Unit”).
363
Id. § 5.1(C).
364
“Delaware law adheres to the objective theory of contracts,” meaning that “a contract’s
construction should be that which would be understood by an objective, reasonable third
party.” Salamone v. Gorman, 106 A.3d 354, 367-68 (Del. 2014) (quoting Osborn ex rel.
Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010)); see LLC Agreement § 11.5(A)
(providing that Delaware law governs). “When interpreting a contract, [the] Court ‘will
give priority to the parties’ intentions as reflected in the four corners of the agreement.’”
Id. at 368 (quoting GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d
776, 779 (Del. 2012)).
365
Operative LLC Agreement Art. III (“Members; Capital Contribution; and Units”).
366
Id. § 3.1(A).
69
Section 3.1(D) authorizes “the Company to issue to any Person the number and class

of Units (and any related warrants, options, or other instruments relating to Units) as

may be determined by the Members . . . .”367 Section 3.2(A) outlines the mechanism

for admitting “an additional Member” that receives units from the Company through

a warrant.368

Article III and Article V address separate matters. To apply Article V to the

issuance of new membership interests would render the relevant provisions of

Article III surplusage.369 Because SIFT Fixed’s receipt of the warrant falls under

Article III, the requirements of Section 5.3 do not apply.

Northern Gold similarly argues that Section 5.3 governs SIFT Capital’s

transfer of membership interests to SIFT Fixed through the Assignment

Agreement.370 But at the time of the Assignment Agreement, SIFT Capital was not

367
Id. § 3.1(D).
368
Id. § 3.2(A) (“The Members may cause the Company to admit an additional Member .
. . as, and upon such terms and conditions as, the Members deem advisable (including,
without limitation, pursuant to the provisions of any . . . financing arrangement or other
agreement authorized by the Members whether by the issue of Units, options or warrants
or similar instruments.”).
369
See Osborn, 991 A.2d at 1159 (stating that the court must construe the contract “as a
whole and . . . will give each provision and term effect, so as not to render any part of the
contract mere surplusage” (quoting Kuhn Constr., Inc. v. Diamond State Port Corp., 990
A.2d 393, 396-97 (Del. Mar. 8, 2010))); see also In re Kinder Morgan, Inc. Corp. Reorg.
Litig., 2014 WL 5667344, at *3 (Del. Ch. Nov. 5, 2014).
370
Def.’s Answering Br. 70-71. This argument concerns an aspect of the SIFT transaction
that is distinct from the issuance of the warrant (or subsequent receipt of units after
70
a “Member”371 and the warrant was not “Units.”372 The Commitment Letter was an

agreement to purchase a warrant conditioned on final documentation and the

provision of a $10 million loan.373 At most, SIFT Capital assigned to SIFT Fixed a

conditional right to purchase a warrant; it did not assign an actual warrant or units.374

3. Public Policy

Relatedly, Northern Gold argues that the SIFT transaction is void as a matter

of public policy because it violated regulations imposed by the International Traffic

in Arms Regulations (ITAR) and the Committee on Foreign Investment in the United

exercising the warrant). I have addressed it here given the overlap with Northern Gold’s
other argument about Section 5.3.
371
Operative LLC Agreement at sched. 1.1; see supra note 254 (defining “Member”).
372
Operative LLC Agreement at sched. 1.1; see supra note 251 (defining “Unit”).
373
Commitment Letter at 3-4.
374
JX 1594 § 2.1. Northern Gold argues that Section 5.3 applies because the Commitment
Letter gave SIFT Capital “equitable or beneficial equity ownership based on contractual
rights to shares.” Def.’s Answering Br. 71-72. The case law relied on by Northern Gold
does not support this position. Each of the cited cases considered equitable or beneficial
ownership in the stockholder standing context. See In re New Valley Corp. Deriv. Litig.,
2004 WL 1700530, at *6 (Del. Ch. June 28, 2004) (observing that a warrant confers
beneficial ownership of the underlying stock only where the plaintiff already paid for the
stock, no intermediate step to execute the warrant is necessary, and there is no
convertibility feature to the warrant); Pennington v. Neukomm, 1973 WL 463, at *3 (Del.
Ch. Oct. 3, 1973) (addressing the plaintiff’s standing to press derivative litigation where
he had entered into a separation agreement requiring the defendant to transfer stock to the
plaintiff), aff’d, 344 A.2d 386 (Del. 1975); Jones v. Taylor, 348 A.2d 188, 192 (Del. Ch.
1975) (holding that the plaintiff had standing to bring a derivative suit where she entered
into a contract in which her mother transferred a possessory interest in stock in exchange
for a promise to execute a will bequeathing the plaintiff one-half of the stock upon the
mother’s death). Here, I am resolving a matter of contract interpretation, not standing.
71
States (CFIUS).375 The Company insists that the transaction complied with both sets

of regulations.376

Bargains are “unenforceable on grounds of public policy if legislation

provides that [they are] unenforceable.”377 Yet, I do not know—and cannot

determine—whether federal law was violated. There is no indication in the record

that the relevant federal authorities have flagged the SIFT transaction, pursued an

investigation, or begun enforcement proceedings. I lack the subject matter

jurisdiction to resolve a challenge to the transaction’s compliance with ITAR or

CFIUS.378 Both ITAR and CFIUS contemplate a comprehensive review process and

provide for administrative remedies.379 The agencies tasked with administering

these regulatory regimes are best suited to address potential violations.

375
Def.’s Answering Br. 73-85. The statutory authority for ITAR is 25 U.S.C. § 2751 et
seq., and the statutory authority for CFIUS is 50 U.S.C. § 4565.
376
See supra note 246.
377
Restatement (Second) of Contracts § 178 (1981); see PHL Variable Ins. Co. v. Price
Dawe 2006 Ins. Trust, 28 A.3d 1059, 1067 (Del. 2011) (“Under Delaware common law,
contracts that offend public policy or harm the public are deemed void as opposed to
voidable.”) (emphasis in original).
378
See Walker v. City of Wilmington, 2014 WL 4407977, at *7-9 (Del. Ch. Sept. 5, 2014)
(dismissing equitable claim for lack of subject matter jurisdiction where plaintiff failed to
first exhaust adequate remedy at law through the designated administrative body).
379
22 C.F.R. §§ 127-28 (ITAR); 31 C.F.R. § 800 (CFIUS); 50 U.S.C. § 4565(e)(2)
(providing that “[a] civil action challenging an action or finding [by the administrative
agency administering CFIUS] may be brought only in the United States Court of Appeals
for the District of Columbia Circuit”); see also Aizupitis v. Atkins, 2009 WL 3589530, at
*6 (Del. Ch. Oct. 28, 2009); 10 Del. C. § 342.
72
E. Whether SIFT’s Admittance as a Member Complied with the LLC
Agreement
Finally, Northern Gold argues that SIFT Fixed’s membership is “null” and

“void” under the LLC Agreement.380 Specifically, it asserts that it did not authorize

the Company to give SIFT Fixed a membership interest, as the LLC Agreement

requires.381

Section 4.1(A) of the LLC Agreement permits the Company’s members to act

“without a meeting,” “vote to authorize any action in writing,” and to “by the[ir]

written consent” give “a single Member, acting alone” the power “to act on behalf

of or to bind the Company.”382 Sections 3.1 and 3.2 permit the members to issue

“Units [] and any related warrants” and “cause the Company to admit an additional

Member.”383 Consistent with these provisions, the May 2021 Consent authorized

“any Member or Officer, acting alone” to execute “the Commitment Letter and all

documents relating thereto or contemplated thereby . . . without any further act, vote

380
Def.’s Answering Br. 39 (“[P]ursuant to the Operative LLC Agreement or the
‘Amended LLC Agreement,’ the transaction by which SIFT002 claims to own Units and
membership in the Company is unauthorized, null, void or voidable, and of no further force
and effect.”).
381
Id. at 38-39 (citing Sections 3.1(A), 3.1(D), 3.2, and 4.1(A) of LLC Agreement dated
May 14, 2021).
382
Operative LLC Agreement § 4.1(A); but see Def.’s Answering Br. 39 (suggesting that
the transaction is void because no meeting to admit SIFT Fixed took place and citing Box
v. Box, 1996 WL 73575, at *14 (Del. Ch. Feb. 15, 1996)).
Operative LLC Agreement §§ 3.1-3.2. Section 4.2(ix) further permits the Company’s
383

members to take “all actions deemed necessary” to secure financing. Id. § 4.2(ix).
73
or approval of any Member.”384 By authorizing the Commitment Letter, Italia

authorized the Loan Materials—including a warrant—and the admission of SIFT

Fixed as a member upon the exercise of its warrant.

The LLC Agreement’s definition of “Member” contemplates that “a Person

will automatically be admitted as a Member when they are issued Unit(s).”385

Section 3.2(A) provides that, once the members have “cause[d] the Company to

admit an additional Member,” “[n]o such admission . . . shall require the consent or

approval of any Member.”386 SIFT Fixed was therefore a member as soon as it was

issued units irrespective of when and whether Soura updated Schedule A to the LLC

Agreement.

F. Whether the Plaintiffs Are Entitled to a Remedy

The plaintiffs have proven their claim under Section 18-110 by a

preponderance of the evidence. They have shown that the SIFT transaction was

authorized by the May 2021 Consent (and February 2022 Consent) and that SIFT

384
May 2021 Consent at 2; see also JX 324; JX 264; JX 267; JX 273; JX 276; JX 279
(permitting “any Governor and Officer” to do the same).
385
Operative LLC Agreement at sched. 1.1.
386
Operative LLC Agreement § 3.2(A). To the extent there is any deviation between the
LLC Agreement and the terms of the SIFT transaction, the February 2022 Consent affirmed
that the May 2021 Consent was “validly entered into and to the extent necessary constitutes
an amendment to the LLC Agreement.” JX 1274. The LLC Agreement similarly provides
that “any written consent executed by the Members will be deemed an amendment to this
Agreement to the extent necessary to effectuate the subject matter of such written consent.”
Operative LLC Agreement § 11.4.
74
Fixed was validly admitted as a member of the Company in accordance with the

LLC Agreement. None of Northern Gold’s arguments to the contrary require a

different conclusion. Nor has Northern Gold proven its counterclaim.

Accordingly, the plaintiffs are entitled to a declaration that before the Capital

Raise, SIFT Fixed was a 2.5% member of the Company, REM OA was a 48.75%

member, and Northern Gold was a 48.75% member.387

The plaintiffs also seek an award of their fees and costs under Section 11.7 of

the LLC Agreement, which provides:

In any proceeding by which a Member or the Company either seeks to
enforce its rights under this Agreement (whether in contract, tort, or
otherwise) or seeks a declaration of any rights or obligations under this
Agreement, if the Company and/or the Members are the prevailing
party, to the fullest extent permitted by law, they shall be awarded
reasonable costs and expenses (which shall be payable by the
non-prevailing party), including reasonable outside attorneys’ fees and
expert witness fees incurred to resolve the dispute and enforce the final
judgment.388
The plaintiffs each brought this suit as a “Member,”389 seeking a declaration under

the LLC Agreement about the membership of the Company. Because SIFT Fixed

was a 2.5% member of the Company and REM OA was a 48.75% member

387
Further proceedings would be necessary to make that assessment, to the extent that the
parties are inclined to pursue claims concerning the Capital Raise. See supra note 244
(explaining that the Capital Raise was not the subject of trial).
388
Operative LLC Agreement § 11.7.
389
Although the plaintiffs brought this action together as “Members,” each plaintiff also
brought this suit as a “Member.”
75
immediately before the Capital Raise, the plaintiffs were and continue to be

“Members.”390 The plaintiffs have prevailed in this action. Nonetheless, further

proceedings are necessary to resolve the plaintiffs’ entitlement to costs and

expenses.391

III. CONCLUSION

Judgment is entered for the plaintiffs under 6 Del. C. § 18-110. The plaintiffs

are entitled to a declaration that immediately before the Capital Raise, SIFT Fixed

was a 2.5% member of the Company, REM OA was a 48.75% member of the

Company, and Northern Gold was a 48.75% member of the Company. The parties

shall confer on a proposed order to implement this decision and file it within 14 days.

390
See N. Gold, C.A. No. 2022-0308-LWW, at 26-31 (Del. Ch. Oct. 10, 2022)
(TRANSCRIPT) (interpreting Section 11.7 of the LLC Agreement).
391
A letter requesting supplemental submissions on this issue will follow.
76