Level 4 Yoga, LLC v. CorePower Yoga, LLC and CorePower Yoga Franchising, LLC ( 2022 )


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  •    IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
    LEVEL 4 YOGA, LLC,               )
    )
    Plaintiff,       )
    )
    v.                      )                   C.A. No. 2020-0249-JRS
    )
    COREPOWER YOGA, LLC,             )
    COREPOWER YOGA FRANCHISING, LLC, )
    )
    Defendants.      )
    MEMORANDUM OPINION
    Date Submitted: December 23, 2021
    Date Decided: March 1, 2022
    Lisa A. Schmidt, Esquire and Matthew D. Perri, Esquire of Richards, Layton &
    Finger, P.A., Wilmington, Delaware; Michael Dockterman, Esquire, John J. Byron,
    Esquire, Cara Lawson, Esquire and Betsy Zyrkowski, Esquire of Steptoe &
    Johnson LLP, Chicago, Illinois; and Lia Metreveli, Esquire of Steptoe & Johnson
    LLP, Washington, DC, Attorneys for Plaintiff Level 4 Yoga, LLC.
    Daniel B. Rath, Esquire, Rebecca L. Butcher, Esquire and Jennifer L. Cree, Esquire
    of Landis Rath & Cobb LLP, Wilmington, Delaware and Howard Graff, Esquire,
    Michael Cryan, Esquire, Bernice K. Leber, Esquire, Eric A. Biderman, Esquire and
    Jacob M. Gilbert, Esquire of Arent Fox LLP, New York, New York, Attorneys for
    Defendants CorePower Yoga, LLC and CorePower Yoga Franchising LLC.
    SLIGHTS, Vice Chancellor
    According to the Centers for Disease Control and Prevention, the first case of
    the COVID-19 virus in the United States was “laboratory confirmed” on January 20,
    2020.1 Eight months before, in May 2019, Defendants, CorePower Yoga, LLC and
    CorePower Yoga Franchising, LLC (together, “CorePower”), exercised a pre-
    existing contractual “call option” to require one of its franchisees, Plaintiff, Level 4
    Yoga, LLC (“Level 4”), to sell CorePower all of Level 4’s assets, comprised mainly
    of yoga studios located in several states and the business components required to
    operate those studios under the CorePower Yoga brand (the “Transaction”).
    The parties’ acquisition agreement was memorialized in an Asset Purchase
    Agreement (“APA”), dated as of November 27, 2019. According to the APA, the
    acquisition of Level 4’s yoga studios was to occur in three tranches, with the first
    tranche to close on April 1, 2020. But as April 1 approached, and as businesses
    throughout the country began to “shut down” to manage exposure to COVID-19,
    either voluntarily or in response to government mandates, CorePower decided it
    wanted to delay or terminate the Transaction. Level 4 refused to delay and insisted
    that it stood ready and willing to honor its commitments under the APA.
    1
    See CDC Museum COVID-19 Timeline, Centers for Disease Control and Prevention,
    https://www.cdc.gov/museum/timeline/covid19.html#:~:text=January%2020%2C%2020
    20%20CDC,18%20in%20Washington%20state (last visited February 18, 2022).
    1
    Frustrated that Level 4 would not agree to delay closing, CorePower turned to
    the APA looking for ammunition to support its “delay or terminate” position. By
    then, CorePower had directed its franchisees, including Level 4, to shut down their
    yoga studios, just as CorePower had shut down the studios it owned and operated
    directly. With Level 4’s studios now temporarily closed, on March 26, 2020, after
    invoking the APA’s Material Adverse Effect (“MAE”) clause and the APA’s
    requirement that Level 4 continue to operate its yoga studios in the Ordinary Course
    of Business (as defined), CorePower declared that the APA was no longer valid
    because Level 4 had “repudiated” the contract such that CorePower was no longer
    obligated to perform.
    In response, Level 4 invoked the operative franchise agreements and argued
    that it was bound by contract to follow the direction of CorePower, as franchisor,
    even if Level 4 did not agree with that direction. Operating its studios in compliance
    with the franchise agreements, as it had always done, was “ordinary course,” said
    Level 4, and therefore, temporarily closing its studios at CorePower’s direction was
    also “ordinary course.” Moreover, according to Level 4, CorePower was ignoring
    that Level 4 was contractually obligated to sell to CorePower and that, in recognition
    of this unusual dynamic, the parties intentionally structured the APA as a “one-way
    gate” without any conditions to closing and without any right to terminate. Level 4
    2
    insisted on this structure to account for the fact that it was not a voluntary seller once
    CorePower exercised its right to force the sale of Level 4’s highly profitable studios.
    Following several rounds of back-and-forth saber-rattling, Level 4 demanded
    that CorePower close on time. CorePower refused. Unable to see the way to
    compromise, these purveyors of mindfulness launched what would become a nearly
    two-year, hard-fought litigation campaign against each other, culminating in a week-
    long trial during the summer of last year. “Everything zen? Everything zen? I don’t
    think so. . . .”2
    After carefully considering the evidence presented at trial, I am satisfied that
    the APA is structured, as Level 4 describes it, to effectuate a “one-way gate” through
    which the parties would pass on their way to inevitable closings. By agreeing not to
    include conditions to closing or express rights to terminate in their contract, the
    parties evidenced their intent to close the Transaction even if either party was in
    breach of the APA prior to the contractually-designated staggered closings.
    Moreover, there are no common law bases to allow CorePower to back out of
    the one-way gate and refuse to close. Level 4 has not repudiated or materially
    breached the APA in any respect, and the purpose of the APA has not been frustrated.
    By following the directions of its franchisor, as it always has done, Level 4 operated
    2
    Gavin Rossdale, Everything Zen (Interscope, ©BMG 1994).
    3
    its yoga studios in the Ordinary Course of Business when it closed them as directed
    by CorePower and as mandated by state and local governments. The preponderance
    of the evidence also reveals that the temporary closure of Level 4’s studios did not
    meet the definition of Material Adverse Effect as stated in the APA and as applied
    under Delaware law.
    Upon satisfying its contractual obligations, Level 4 was entitled to expect that
    CorePower would do the same. It did not. Instead, upon concluding that the
    Transaction was no longer in its best interests, and frustrated that Level 4 would not
    agree to delay closing, CorePower abruptly announced that its obligations under the
    APA had been “discharged.” That was a material breach of the APA. Having so
    proven, Level 4 is now entitled to the benefits of its bargain.
    I. BACKGROUND
    The following facts were either stipulated to by the parties before trial or
    proven by a preponderance of the evidence during trial.3 I address which party bears
    the burden of proof in my analysis of the claims and defenses presented.
    3
    I cite to the joint trial exhibits as “JX__”; the docket items as “D.I. __”; the trial transcript
    as “Tr. __ (witness name)”; the Joint Pre-Trial Stipulation and Order (D.I. 152) as
    “PTO [paragraph number]”; and depositions lodged as evidence as “(Name) Dep. __.”
    4
    A. Parties and Relevant Non-Parties
    Defendants, CorePower Yoga, LLC and CorePower Yoga Franchising, LLC
    (together “CorePower”), are Colorado limited liability companies that in
    combination operate as the largest chain of yoga studios in the United States.4
    CorePower’s network of yoga studios consists of both corporate-owned and
    franchisee-owned studios.5 Non-Party, TSG Consumer Partners LLC (“TSG”),
    is the majority owner of CorePower.6
    Plaintiff, Level 4 Yoga, LLC, a Colorado limited liability company, became
    a franchisee of CorePower in 2007, and has since grown into the largest franchisee
    of CorePower-branded yoga studios.7 It operates its studios across six states under
    separate franchise agreements with CorePower.8
    Several non-party fact witnesses offered relevant testimony at trial:
    (1) Christopher Kenny, co-founder and principal of Level 4, who served as Level 4’s
    principal negotiator in connection with the Transaction,9 (2) Edward Wong,
    4
    PTO ¶¶ 29–30, 32.
    5
    PTO ¶ 32.
    6
    PTO ¶ 31.
    7
    PTO ¶¶ 28, 33. The APA provides that Delaware law governs the agreement and the
    parties consented to venue and jurisdiction in this Court. PTO ¶ 27.
    8
    PTO ¶ 34.
    9
    PTO ¶ 80(a).
    5
    Managing Director of TSG and member of CorePower’s board, who served as a
    principal negotiator for CorePower in connection with the Transaction,10 (3) Sara
    Otepka, co-founder and CEO of Level 4,11 (4) Karina Brett Jaros, director of
    financial planning and analysis at Level 4,12 (5) Niki Leondakis, CorePower’s
    CEO,13 (6) Rebecca Pessin, CorePower’s former CFO,14 and (7) Michael Layman,
    managing director of TSG, member of CorePower’s board and also a negotiator in
    connection with the Transaction.15
    Level 4 called Jeffrey Mordaunt to testify as an expert witness regarding the
    transactional structure and allocation of risk agreed to by the parties, the operational
    representations and warranties in the APA, whether Level 4 experienced an MAE,
    the “financial and operational aspects of the material breach test set forth in the
    Restatement (Second) of Contracts,” and damages.16 Level 4 also presented the
    expert reports and deposition of Sheri Colosimo regarding “whether the actions that
    10
    PTO ¶ 81(g).
    11
    PTO ¶ 80(b).
    12
    PTO ¶ 80(c).
    13
    PTO ¶ 81(b).
    14
    PTO ¶ 81(d).
    15
    PTO ¶ 81(h).
    16
    JX 644 at 2.
    6
    Level 4 took in the wake of the COVID-19 pandemic, including in the pre-Closing
    period, were consistent with past customs and practices.”17
    CorePower presented expert testimony from Jay C. DeCoons regarding
    standard operating procedures for yoga studios, an overview of CorePower’s and
    Level 4’s business operations before and after the COVID-19 pandemic, and the
    effects of the pandemic on the fitness industry generally and Level 4 specifically.18
    Robert F. Reilly testified as an expert witness on behalf of CorePower regarding
    whether Level 4 experienced a post-signing MAE and damages.19
    B. The Franchise Agreement
    As noted, prior to the APA, the relationship between CorePower and Level 4
    was governed primarily by a series of “nearly identical” franchise agreements
    (collectively, the “Franchise Agreement”).20 CorePower requires its franchisees to
    enter into its form franchise agreement before they can operate CorePower-branded
    yoga studios, and Level 4 was no exception.21
    17
    JX 645 at 1; see also JX 670 (rebuttal report); JX 2017 (expert deposition).
    18
    JX 661 at 3.
    19
    JX 660 at 7.
    20
    See JX 34 (“Franchise Agreement”); PTO ¶¶ 34–35; Tr. 11:7–12:1, 19:4–21 (Kenny).
    21
    Tr. 998:2–16 (Wong).
    7
    In order to maintain consistency across its network of yoga studios,
    CorePower requires in the Franchise Agreement that franchisees, like Level 4,
    follow certain operational standards, referred to in the agreements as “System
    Standards.”22 The System Standards are the “standards, specifications, operating
    procedures, and rules that [CorePower] periodically prescribe[s] for operating a
    Studio,”23 as set forth in the Franchise Agreement and CorePower’s “Operations
    Manual.”24 Level 4’s obligation to operate and maintain its studios in accordance
    with the System Standards is not discretionary, and it must adhere to the standards
    even when it “believe[s] that a System Standard is not in the Franchise System’s or
    [its own] best interests.”25
    Certain provisions of the Franchise Agreement are particularly relevant here:
    • CorePower May Regulate Level 4’s Days of Operation: CorePower
    may regulate the days and hours of operation for Level 4’s studios.26
    22
    See Franchise Agreement §§ 4.4.1, 8.1.3; JX 52 at 8; Tr. 19:4–22:20 (Kenny); Tr. 298:9–
    299:3 (Otepka).
    23
    Franchise Agreement § 4.3.
    24
    JX 52 at 8. The Operations Manual includes “one or more separate manuals, as well as
    audiotapes, videotapes, compact discs, computer software, information available on an
    Internet site, other electronic media, bulletins and/or other written materials.”
    Franchise Agreement § 4.3.
    25
    Franchise Agreement § 8.1.1.
    26
    Franchise Agreement § 8.1.2.7.
    8
    • CorePower May Dictate Membership Terms: CorePower may
    regulate Level 4’s membership terms, including payment terms.27
    CorePower may also contact Level 4’s members directly to inform
    them of studio closures and changes to payment terms.28
    • Compliance with Law: Under the Franchise Agreement, Level 4 is
    required to operate its yoga studios “in full compliance with all
    applicable laws, ordinances and regulations.”29 Section 1.1 of the
    Franchise Operations Manual further reinforces this obligation.30
    • Adherence to Good Business Practice: The Franchise Agreement
    requires Level 4 to adopt good business practices and to “refrain
    from any business . . . which may injure [CorePower’s] business and
    the goodwill associated with the [CorePower brand] and other
    [CorePower studios].”31
    The Franchise Agreement also imposes on Level 4 and its owners a two-year non-
    compete, non-solicitation and non-interference covenant that begins to run after the
    franchise relationship terminates.32
    C. The Call Option and the Call Option Agreement
    In addition to setting operational standards, the Franchise Agreement gave
    CorePower the right, at its election, to purchase the yoga studios governed by the
    27
    Franchise Agreement §§ 8.1.2.3, 8.4.
    28
    Franchise Agreement § 8.4.4.
    29
    Franchise Agreement § 8.7.1.
    30
    JX 10 (“Franchise Operations Manual”) § 1.1 (noting that “one [] brand standard is the
    requirement that owners adhere to all laws related to the operation of the Studio”).
    31
    Franchise Agreement § 8.7.2.
    32
    Franchise Agreement §§ 15.6, 15.7.
    9
    Franchise Agreement upon the occurrence of certain events (the “Call Option”).33
    Concerned that CorePower might exercise this Call Option with respect to some but
    not all of Level 4’s studios, and thereby leave Level 4 without the scale it had worked
    hard to achieve, Level 4 bargained for and obtained a commitment from CorePower
    that any exercise of the Call Option would cover all of Level 4’s studios.34
    To memorialize this commitment, on April 27, 2017, CorePower and Level 4
    entered into a “Call Option Agreement” in which CorePower agreed that it would
    acquire all of Level 4’s CorePower-branded yoga studios in the event it exercised
    its Call Option.35 Under the Call Option Agreement, CorePower had thirty days
    from the triggering event to exercise its Call Option.36 The purchase price associated
    with the option would then be determined under a formula set forth in Section 5 of
    33
    See Franchise Agreement § 15.5. Relevant here, CorePower’s “right to purchase
    [Level 4’s] studio[s]” was triggered by a “Control Event,” defined to include “a merger”
    or a “sale of all or substantially all” of CorePower’s assets. See Franchise
    Agreement § 15.5.6. As discussed below, the parties stipulate that “TSG’s purchase of
    CorePower was a Control Event. . . .” PTO ¶ 38.
    34
    Tr. 34:10–20 (Kenny).
    35
    See JX 18 (“Call Option Agreement”).
    36
    Call Option Agreement § 3.
    10
    the Call Option Agreement.37 Once calculated, CorePower was required to close on
    the Transaction and pay the prescribed purchase price within sixty days.38
    D. The Franchise Expansion Plan Agreement
    On April 30, 2018, well before either party contemplated that CorePower
    would exercise its Call Option, CorePower and Level 4 entered into a Franchise
    Expansion Plan Agreement.39 This agreement gave Level 4 the right to develop at
    least eleven additional studios in Arizona, North Carolina, South Carolina and other
    markets (the “Development Studios”).40 The Franchise Expansion Plan Agreement
    evidenced Level 4’s long-term devotion to the CorePower brand and its intent to
    grow its already substantial network of CorePower yoga studios.
    E. CorePower Exercises Its Call Option
    On April 2, 2019, TSG, a San Francisco-based private equity firm, purchased
    CorePower.41 This acquisition was a “Control Event” that triggered CorePower’s
    Call Option and activated the Call Option Agreement,42 giving CorePower’s new
    37
    Call Option Agreement § 5.
    38
    Call Option Agreement § 3.
    39
    JX 47 (“Franchise Expansion Plan Agreement”).
    40
    Franchise Expansion Plan § 3.
    41
    PTO ¶ 37.
    42
    PTO ¶ 38.
    11
    owner, TSG, the right to acquire all of Level 4’s CorePower-branded studios.43
    TSG quickly determined that it wanted to exercise the Call Option with respect to
    Level 4 but it was not pleased with the Call Option Agreement’s requirement that it
    take all of Level 4’s studios at once.44 The intake of more than 30 studios would
    pose serious integration challenges.45 To minimize these challenges, CorePower
    asked for accommodations: staggered closings, the removal of certain Level 4
    Development Studios not yet built from the acquisition, Level 4’s commitment to
    “build out” certain other Development Studios before transferring them to
    CorePower, and Level 4’s commitment to enter into a definitive acquisition
    agreement even though the Call Option Agreement did not require one.46
    Level 4 was reluctant to agree to amend the Call Option Agreement it had
    bargained hard to secure.47 CorePower’s proposed changes meant delay and risk.48
    43
    See Call Option Agreement § 2.
    44
    Tr. 967:3–8 (Wong).
    45
    Id.
    46
    Tr. 902:11–903:4, 970:17–971:2 (Wong); Tr. 42:10–48:13 (Kenny).
    47
    Tr. 42:10–43:12 (Kenny); Tr. 967:9–20 (Wong).
    48
    Tr. 42:22–43:4 (Kenny) (discussing Level 4’s belief that the Call Option Agreement had
    memorialized the parties’ intent that once CorePower exercised the call option, all Level 4
    studios would be transferred in a structure he characterized as a “one-way gate”);
    Tr. 47:24–48:21 (Kenny) (discussing Level 4’s concerns with CorePower’s proposed
    changes to the Call Option Agreement).
    12
    CorePower appreciated Level 4’s concerns and was willing to make concessions to
    address them.49 In May 2019, the parties entered into the Call Option Exercise
    Agreement, a modification of the Call Option Agreement, that incorporated the
    following elements: the “definitive agreement in respect of the acquisition” would
    not contain closing conditions or express rights to terminate, but would contain a
    post-closing indemnification regime; the Franchise Expansion Plan Agreement
    would be cancelled; CorePower would make certain payments in consideration for
    not acquiring certain Development Studios; and the parties would agree to revised
    valuations for other Development Studios to incentivize Level 4 to develop
    them well.50
    After several months of negotiations, CorePower and Level 4 entered into the
    APA to memorialize the terms by which CorePower would acquire all of Level 4’s
    assets.51       Specifically, CorePower agreed to purchase thirty-four CorePower-
    branded yoga studios from Level 4.52 Consistent with the Call Option Exercise
    Agreement, the Level 4 studios were to be delivered in tranches at staggered
    49
    Pessin Dep. at 114:22–116:4; Tr. 914:16–915:9 (Wong).
    50
    JX 131 (the “Call Option Exercise Agreement”); Tr. 43:5–12, 48:7–17, 49:14–50:23,
    50:22–23, 52:10–19, 57:20–58:13, 66:19–67:7 (Kenny); Tr. 967:17–20, 971:3–16,
    979:15–23, 983:4–19 (Wong).
    51
    JX 149 (“APA”).
    52
    PTO ¶ 2.
    13
    closings, there were no closing conditions or express rights to terminate, certain
    Development Studios would not be part of the Transaction, and the valuation
    methodologies for certain studios, including other Development Studios, were
    modified from the valuation methodologies set forth in the Call Option Agreement.53
    The APA designates the tranches of studios as follows:54
    Tranche/Studio            Region              Number of            Transfer Date
    Type                                       Studios
    Tranche 1               Colorado                  8                 April 1, 2020
    Tranche 2           Arizona & North               6                 July 1, 2020
    Carolina
    Development55      South Carolina,                 5                July 1, 2020
    Arizona & North
    Carolina
    Tranche 1               Illinois                  15              October 1, 2020
    F. The APA
    As noted, the parties executed the APA “as of November 27, 2019.”56 Several
    provisions are relevant here and summarized below.
    53
    PTO ¶¶ 44–46; APA §§ 2.2.1, 2.2.4.; Tr. 903:20–904:3 (Wong).
    54
    PTO ¶ 43. The chart in the APA, as replicated in the Pretrial Order, is confusing in that
    it describes the Colorado and Illinois studios as Tranche 1, even though the
    “Transfer Dates” for the studios are different. I have found no explanation for this apparent
    discrepancy in the trial record or in the parties’ briefs.
    55
    As for the Development Studios CorePower agreed to acquire, CorePower agreed to pay
    Level 4 a total of $3,212,623 for those studios upon the execution of the APA. PTO ¶ 46.
    CorePower made that payment on November 27, 2019. Id.
    56
    APA at 1.
    14
    1. Level 4’s Representations and Warranties
    As is customary, Level 4 made certain representations and warranties in the
    APA concerning its yoga studios.57 Three are particularly relevant here.
    a. The Absence of Certain Developments
    In Section 3.6, Level 4 represented that, “[s]ince January 1, 2019,
    the Business58 has been conducted in the Ordinary Course of Business 59 (including
    promotional and marketing practices consistent with past practice) and [as relevant
    here], except for the matters disclosed on Schedule 3.6:”
    • “There has been no material loss, destruction, damage or eminent
    domain taking (in each case, whether or not insured) affecting
    the Business or any Acquired Asset with a value in excess of
    $50,000;”60
    • “[Level 4] has not . . . terminated any agreement or contract
    providing for the employment or engagement of any Person . . .
    or otherwise . . . terminated the employment or engagement of
    any foregoing persons, in each case other than in the Ordinary
    Course of Business . . . ;”61
    57
    APA §§ 3–5.
    58
    The APA defines “Business” to mean “the CorePower Yoga business conducted by the
    Seller.” APA Ex. A at 53.
    59
    The APA defines “Ordinary Course of Business” to mean “action taken by any Person
    in the ordinary course of such Person’s business which is consistent with the past customs
    and practices of such Person (including past practice with respect to quantity, amount,
    magnitude and frequency and standard employment policies and past practices with respect
    to management of cash and working capital).” APA Ex. A at 59.
    60
    APA § 3.6(a).
    61
    APA § 3.6(c).
    15
    • “[Level 4] has not terminated or closed any facility, business or
    operation;”62
    • “[Level 4] has not entered into, amended or terminated any lease
    or sublease of real property or any renewals thereof;”63
    • “[Level 4] has not accelerated any accounts receivable or delayed
    any accounts payable, except in the Ordinary Course of
    Business;”64 and
    • “No event or circumstance has occurred which constitutes a
    Material Adverse Effect.”65
    b. Compliance with Laws
    In Section 3.11 of the APA, Level 4 represented and warranted that its
    business had been operated in compliance with the various legal requirements set
    forth in Sections 3.11.1 through 3.11.4.66 Significantly, at Section 3.11.1, Level 4
    represented that it was not in “violation . . . in any material respect [of] any Legal
    Requirement,” defined to include “any United States federal, state or local . . . law,
    62
    APA § 3.6(e).
    63
    APA § 3.6(i).
    64
    APA § 3.6(j).
    65
    APA § 3.6(l).
    66
    APA § 3.11.
    16
    statute, standard, . . . ordinance, code, rule, regulation, . . . or any Government
    Order . . .”67
    c. Compliance with the Franchise Agreement
    In Section 3.15.3, Level 4 represented and warranted that, as of each closing,
    it would not be “in breach of or violation of . . . any . . . Franchise Agreement.” 68
    And “Franchise Agreement” was defined to include all of the franchise agreements
    related to each yoga studio to be sold under the APA.69
    Covenants
    At Section 5 of the APA, Level 4 gave several covenants with respect to its
    operation of the Business until closing.        One, in particular, is relevant here.
    In Section 5.1.1, Level 4 agreed that, “[f]rom the date of this Agreement until the
    final Closing,” it would “conduct the Business only in the Ordinary Course of
    Business” (as previously defined) (the “Ordinary Course Covenant”).70
    67
    APA § 3.11.1; APA Ex. A at 58.
    68
    APA § 3.15.3.
    69
    APA Ex. A at 56.
    70
    APA § 5.1.1.
    17
    No Closing Conditions or Express Right to Terminate
    As noted, both parties acknowledge that the APA does not contain any express
    conditions to either party’s obligation to close.71 Nor does it contain any provision
    expressly allowing for termination of the agreement, a force majeure clause, or any
    provision expressly allowing either party unilaterally to postpone any of the
    staggered closings.72
    The Specific Performance Provision
    Section 8.11 of the APA, entitled “Specific Performance,” provides that both
    parties agree a breach of the APA will result in irreparable harm and, therefore, the
    parties may seek “to enforce specifically this Agreement.” The provision goes on to
    state that, in addition to specific performance, the parties may pursue “any other
    remedy to which [they] may be entitled, at law or in equity.”73
    71
    Wong Dep. at 115:22–24; see generally APA.
    72
    Id.
    73
    APA § 8.11. CorePower maintains that the language to the effect that the parties may
    seek specific performance “in addition to any other remedy to which [they] may be entitled,
    at law or in equity” is tantamount to a termination clause in that either party would possess
    a common law right to terminate if the counter-party materially breached the contract.
    I address that argument below.
    18
    *****
    Upon executing the APA, the parties turned their focus to the first of the
    staggered closings to be held on April 1, 2020. As discussed below, that closing
    never occurred.
    G. CorePower Requires the Temporary Closure of Level 4 Yoga Studios to
    Manage COVID-19 Risks
    In January 2020, the COVID-19 virus began to spread rapidly across the
    United States.74 By January 31, 2020, the Department of Health and Human
    Services had declared a public health emergency for the entire country.75 Nearly six
    weeks later, on March 11, 2020, the World Health Organization declared COVID-
    19 a pandemic.76 And two days after that, on March 13, 2020, former President
    Donald Trump declared the COVID-19 pandemic a national emergency.77
    On March 15, 2020, to manage the risk of COVID-19 exposure, CorePower
    announced that all CorePower-branded yoga studios, including those operated by
    Level 4, would close for two weeks beginning on March 16, 2020.78 CorePower did
    74
    PTO ¶ 52.
    75
    Id.
    76
    Id.
    77
    Id.
    78
    PTO ¶¶ 53, 55. CorePower notified Level 4’s CorePower members of the temporary
    closures directly. PTO ¶ 53.
    19
    not seek Level 4’s consent to the closures because, under the Franchise Agreement,
    it was not required to do so.79 Following CorePower’s March 15 announcement,
    Level 4 closed its thirty-four yoga studios as directed.80 Through MindBodyOnline
    (CorePower’s online scheduling tool), CorePower erased the class schedules for all
    of Level 4’s studios and caused the Level 4 website to display the message:
    “Temporarily Closed.”81
    CorePower’s management understood that these closures could create internal
    liquidity issues and, to protect itself from a liquidity crisis,82 CorePower drew down
    $36.5 million on its delayed-draw term loan facility.83 As a condition to obtaining
    the loan, CorePower certified to its lenders that, as of March 19, 2020, its business
    79
    See Franchise Agreement § 8.1 (“Therefore, you agree at all times to operate and
    maintain your Studio according to all of our System Standards, as we periodically modify
    and supplement them, even if you believe that a System Standard is not in the Franchise
    System’s or your best interests.”); Tr. 342:4-343:8 (Otepka) (commenting that after the
    CEO of CorePower announced that CorePower yoga studios were closed, Level 4 had to
    close its CorePower-branded studios because “you can’t tell your customer one thing and
    then do something else. So, in this case, you know, the CEO of CorePower said, we’re
    closing all our studios. It was not a decision for me to be made to say, Nope. I’m Sara.
    I’m doing something different.”).
    80
    PTO ¶ 56.
    81
    Tr. 119:9–125:6 (Kenny).
    82
    Tr. 1282:17–24 (Leondakis).
    83
    JX 224; PTO ¶ 58.
    20
    had not experienced and was not reasonably expected to experience a Material
    Adverse Effect, as defined in the credit agreement.84
    CorePower’s board of directors held a meeting on the morning of March 20,
    2020, during which management forecasted that CorePower’s COVID-19 related
    studio closures would now last six weeks instead of the two weeks originally
    anticipated.85 That forecast proved prescient as state and local governments began
    to issue proclamations in various forms, typically at the executive level, mandating
    that certain businesses, including commercial fitness centers, close to the public.86
    At the conclusion of its March 20 meeting, the CorePower board decided to
    delay the Level 4 acquisition.87 A few hours after the meeting, on the evening of
    March 20, 2020, Wong sent an email to Kenny stating that CorePower and TSG
    believed Level 4 was not operating in the Ordinary Course of Business, as required
    by the APA, because Level 4 had temporarily closed its yoga studios in response to
    84
    See JX 224; JX 120; Pessin Dep. at 165:5–166:11; Tr. 1093:17–1094:2 (Wong);
    Tr. 1303:21–1306:16 (Leondakis).
    85
    JX 257 at 3.
    86
    See JX 246; JX 247; JX 253; JX 263; JX 266; JX 301; Tr. 343:9–12 (Otepka).
    87
    Tr. 1292:14–1293:21 (Leondakis).
    21
    COVID-19.88           Wong ended his email by proposing that the parties consider
    adjourning the closing dates under the APA.89
    Two days later, on March 22, 2020, Kenny responded to Wong’s email,
    expressing his disagreement with Wong’s assertion that Level 4 was operating
    outside the Ordinary Course of Business.90 Kenny also assured Wong that Level 4
    was ready to transfer its assets on the schedule agreed to in the APA and expected
    CorePower to consummate the Transaction.91 On March 26, 2020, four days after
    Kenny’s response to Wong, Michael Layman, a CorePower board member and
    managing director at TSG, emailed Kenny to advise Level 4 that CorePower and
    TSG believed Level 4 had “disavow[ed]” the following Representations and
    Warranties and Covenants in the APA:
    • “There ha[d] been no material loss, destruction, damage or eminent
    domain taking . . . affecting the Business or any Acquired Asset with
    a value in excess of $50,000” (Section 3.6(a) of the APA);
    • Level 4 had not “terminated or closed any facility, business or
    operation” (Section 3.6(d) of the APA);
    • “No event or circumstances ha[d] occurred which constitutes a
    Material Adverse Effect” (Section 3.6(1) of the APA); and
    88
    JX 273 at 2.
    89
    Id.
    90
    JX 273 at 1–2.
    91
    JX 273 at 2.
    22
    • Level 4 would conduct its business in the Ordinary Course of
    Business (defined as “consistent with past customs and practices”)
    (Section 5.1.1 of the APA).92
    The email also advised Level 4 that, “[i]t is now [CorePower and TSG’s] view that
    [CorePower and TSG’s] contractual performance has been discharged” due to
    Level 4’s “repudiation” of its obligations under the APA.93
    During a brief conference call held shortly after Layman’s email was received,
    TSG and CorePower reiterated their position to Level 4 and declared that CorePower
    would not close the Transaction.94          Four days later, on March 30, 2020,
    Nikki Leondakis, CorePower’s CEO, sent yet another email to Kenny, again
    reiterating CorePower and TSG’s position: “Level 4 Yoga, LLC has repudiated
    multiple material obligations embodied in the Asset Purchase Agreement
    thereby . . . discharging our obligations thereunder.”95 When the time came to close
    on the first tranche of yoga studios on April 1, 2020, only Level 4 showed up to the
    virtual closing table.96
    92
    JX 288 at 1.
    93
    Id.; Layman Dep. at 226:2–25.
    94
    Tr. 1084:15–1085:6 (Wong).
    95
    JX 303; PTO ¶ 65.
    96
    PTO ¶ 66; Leondakis Dep. at 280:23–281:5.
    23
    H. Level 4’s Post-April 1 Operations
    After the failed closing on April 1, 2020, Level 4 began to take a number of
    cost-saving measures to preserve what it now believed to be CorePower’s assets
    “as steward” of those assets and to mitigate damages.97 These included temporary
    studio closures,98 laying off or furloughing a majority of its workforce,99 and
    restructuring its leases.100 Level 4 also continued to satisfy its obligation under
    Section 2.5.1 of the APA to provide CorePower with estimated balance sheets for
    each of the subsequent scheduled closings.101 CorePower never responded to
    Level 4’s emails transmitting the estimated balance sheets, nor did it attend any of
    the subsequent staggered closings.102
    I. Procedural History
    Level 4 filed this lawsuit on April 2, 2020, the day after the first closing was
    scheduled to occur, claiming that CorePower breached the APA in March 2020 by
    refusing to close on the Transaction, failing to deliver certain required payments
    97
    Tr. 111:8–9 (Kenny).
    98
    E.g., Tr. 191:14–18, 207:11–208:1 (Kenny).
    99
    E.g., Tr. 403:3–405:1 (Otepka); JX 316; JX 342.
    100
    E.g., JX 292; JX 293.
    101
    See APA § 2.5.1; Tr. 492:17–493:9 (Jaros); JX 291; JX 417; JX 467.
    102
    Tr. 113:4–114:7 (Kenny).
    24
    under the APA, and ultimately failing to take possession of Level 4’s yoga studios.103
    Level 4 requested declaratory relief, specific performance and damages, including
    damages incurred by having to maintain the yoga studios while CorePower refused
    to perform under the APA.104
    CorePower brought a motion to dismiss the initial complaint,105 which the
    Court denied.106 Level 4 subsequently filed a Verified First Amended Complaint on
    August 28, 2020,107 and a Verified Second Amended Complaint (the operative
    Complaint) on November 5, 2020.108 CorePower filed its Answer, Affirmative
    Defenses, and Amended Verified Counterclaims on December 14, 2020.109 Level 4
    moved to dismiss CorePower’s counterclaims, which motion the Court granted in
    part and denied in part.110
    103
    D.I. 1; PTO ¶ 6.
    104
    PTO ¶ 6.
    105
    D.I. 4.
    106
    D.I. 29.
    107
    D.I. 31.
    108
    D.I. 46. (Verified Second Am. Compl.) (“Complaint”).
    109
    D.I. 50 (Answer, Aff. Defs. and Verified Countercls. of Defs. CorePower Yoga, LLC
    and CorePower Yoga Franchising, LLC) (“CorePower Counterclaim”); PTO ¶ 19.
    110
    PTO ¶ 20.
    25
    The Court convened a five-day trial from August 9 through August 13.111 The
    parties presented their closing arguments on December 9, 2021, and, after
    supplemental briefing, the matter was deemed submitted for decision on
    December 23, 2021.112
    II. ANALYSIS
    The parties seek competing declaratory judgments––Level 4 seeks a
    declaration that the APA is valid and enforceable and that CorePower is in breach
    of the agreement; CorePower seeks a declaration that Level 4 repudiated or
    materially breached the APA pre-closing such that CorePower was excused from
    performing. If the Court determines that CorePower breached the APA, Level 4
    seeks a decree of specific performance that would compel CorePower to close on all
    of the Level 4 yoga studios per the APA and an award of damages caused by the
    breach.113 For its part, in addition to seeking declaratory relief, CorePower asserts a
    claim for breach of contract or, alternatively, sounding in “quasi-contract” to recover
    payments made by CorePower to Level 4 related to the Development Studios after
    the APA was signed.114
    111
    D.I. 170–74.
    112
    D.I. 198 (“Post-Trial Oral Arg.”); D.I. 199–200.
    113
    Complaint at 25.
    114
    CorePower Counterclaim at 68.
    26
    While the parties’ relationship was forged long before CorePower exercised
    its Call Option and initiated the Transaction, the claims and counterclaims arise from
    the APA. It is, therefore, appropriate to focus the analysis there. With that said,
    when undertaking to construe a contract, our Supreme Court has instructed that the
    trial court must consider “[t]he basic business relationship between [the] parties” so
    that it can “give sensible life” to the agreement.115 Accordingly, I begin my
    deliberations by reviewing the parties’ pre-APA relationship and the context in
    which they negotiated the APA before turning to the contractual language.
    “With the [APA’s] commercial context in hand, and mindful that my
    understanding of the parties’ contractual relationship cannot overwrite an
    unambiguous contract,”116 I turn to whether the APA, as written, represents a “one-
    way gate” to closing, as Level 4 construes it, or whether the parties included off-
    ramp provisions in the APA, as Core Power believes, that would allow a party to
    elect not to consummate the Transaction in certain circumstances. As explained
    below, the APA unambiguously contains no conditions to closing and no express
    115
    Chi. Bridge & Iron Co. v. Westinghouse Elec. Co. LLC, 
    166 A.3d 912
    , 926–27
    (Del. 2017).
    116
    Pearl City Elevator, Inc. v. Gieseke, 
    2021 WL 1099230
    , at *9 (Del. Ch. Mar. 23, 2021),
    aff’d, 
    265 A.3d 995
     (Del. 2021) (citing Town of Cheswold v. Cent. Del. Bus. Park,
    
    188 A.3d 810
    , 820 (Del. 2018)); see also Ascension Ins. Hldgs., LLC v. Underwood,
    
    2015 WL 356002
    , at *4 (Del. Ch. Jan. 28, 2015) (“[O]ur courts will enforce the contractual
    scheme that the parties have arrived at through their own self-ordering.”).
    27
    right for either party to terminate the contract pre-closing. Nor are there provisions
    in the APA that somehow imply a pre-closing right to terminate.
    Having concluded that the APA is indeed a one-way gate, I next address
    CorePower’s assertion that, even though the APA provides no express right to avoid
    closing, its performance was excused under the common law because Level 4
    repudiated or materially breached the APA and because the purpose of the APA was
    frustrated. Rejecting these contentions as factually unsupported, I conclude that
    CorePower was, both as a matter of contract and as a matter of common law, obliged
    to close and that its refusal to do so was a breach of the APA.
    Finally, I discuss the remedies to which Level 4 is entitled. As explained
    below, the Court’s verdict and final judgment will include a decree of specific
    performance and an award of damages with pre-judgment and post-judgment
    interest.
    A. The Parties’ Pre-Signing Business Relationship
    More so than usual, the pre-signing relationship between this buyer and this
    seller directly informs my analysis of the parties’ competing claims of breach of
    contract. In fact, as discussed below, the parties’ significant pre-signing relationship
    directly influenced the timing and structure of the APA and the conduct of Level 4,
    as seller, after signing.
    28
    The franchisor/franchisee relationship is animated by the franchisor’s need
    “to drive consistency across its stores.”117 To accomplish the goal of consistency,
    the franchisor requires the franchisee to adhere to certain standards, referred to
    within the CorePower network as “System Standards,” that, in essence, “instruct
    [the] franchisees [how] to behave.”118           Given that Level 4 cannot operate
    CorePower-branded studios without a franchise agreement, it must comply with the
    System Standards or lose the requisite authorization to run its business.119
    Significantly, this obligation to comply with the Franchise Agreement and its System
    Standards continued during the post-signing/pre-closing period, and CorePower
    sought and obtained from Level 4 a representation in the APA that Level 4 had
    117
    Tr. 19:15–16, 21:3 (Kenny).
    118
    Tr. 12:13–12:15 (Kenny). Cf. Billops v. Magness Const. Co., 
    391 A.2d 196
    , 197
    (Del. 1978) (noting that “franchise agreements, in general, attest to the skill of corporate
    counsel in reserving as many rights in the franchisor as is possible to maintain control and
    to protect the product and service covered by the trademark or tradename,” and holding
    that, in some instances, the degree of control exercised over the daily operations of the
    franchisee can create “an agency relationship” between franchisor and franchisee).
    119
    Tr. 998:2–16 (Wong) (“Q. Well, how do you – I mean, legally, how do you establish a
    relationship with a franchisee, Mr. Wong? A. We have a franchise agreement with them.
    Q. And in the absence of a franchise agreement, can the franchisee operate as a CorePower
    Yoga studio? A. No, they can’t brand it a CorePower Yoga studio.”); Tr. 298:9–12
    (Otepka) (“[Being a] franchisee of the franchisor gives us the right to own and operate
    under their trademark and gives us a playbook which we follow to operate.”).
    29
    remained in compliance with the Franchise Agreement pre-closing.120 In other
    words, unlike the typical “busted deal” case, CorePower, as buyer, had the
    contractual right to direct, in large measure, how Level 4, as seller, operated its
    business post-signing and pre-closing.
    The franchisor/franchisee relationship between CorePower and Level 4 is
    marked by another feature relevant here––the Call Option, the Call Option
    Agreement and the Call Option Exercise Agreement. Again, this is not the typical
    “busted deal” case where the story begins with a willing buyer and willing seller.
    Indeed, Level 4 was not looking to sell.121 Its studios were highly profitable and it
    had entered into the Franchise Expansion Plan Agreement that paved the way for it
    to grow its already extended family of CorePower-branded yoga studios even
    further.122 Nevertheless, as a condition to becoming a CorePower franchisee,
    Level 4 had agreed to provide CorePower a Call Option that, when exercised, would
    120
    APA § 3.15.3; see, e.g., PTO ¶ 34; Tr. 302:6–18 (Otepka); Tr. 1306:23–1307:16
    (Leondakis) (“Q. Is it fair to say that as the franchisor, CorePower expects Level 4 to
    operate its yoga studios in accordance with the franchise agreements? A. Yes.”).
    121
    Tr. 41:12–43:12 (Kenny) (recalling when he was notified that CorePower was going to
    exercise its call option and describing the CorePower-branded studios as the Level 4
    owners’ “core asset”).
    122
    Tr. 9:5–21 (Kenny) (describing the purpose of the Franchise Expansion Plan
    Agreement); Tr. 32:9–35:2 (describing how the Franchise Expansion Plan Agreement was
    mutually beneficial to CorePower’s original owner and Level 4); Tr. 142:15–143:9
    (Kenny) (confirming Level 4’s revenue pre-COVID-19); see also JX 146.
    30
    require Level 4 to sell its yoga studios back to CorePower.123 That obligation was
    refined in the Call Option Agreement, where CorePower agreed that if it exercised
    its Call Option, it would do so as to all of Level 4’s yoga studios.124
    When TSG acquired CorePower, it inherited the Call Option right but also the
    obligation that it acquire all Level 4 studios, not just a few.125 That posed a challenge
    for TSG. Level 4 was CorePower’s largest franchisee. When TSG exercised the
    Call Option, it was just “24 days into [its] ownership period, and [it] needed time to
    figure out how to digest the fact that Level 4 was 20 percent of the stores in the
    system and put together a plan to take those [studios] into the system.”126 As Kenny
    credibly testified, Layman approached Kenny to deal with the integration challenges
    and told him, “[w]e want some things, and we’re willing to give some things.”127
    What CorePower wanted, and received, was an agreement to acquire the
    Level 4 studios in tranches, with Level 4 agreeing to manage the studios
    123
    See Franchise Agreement § 15.5.
    Tr. 901:1–902:17 (Wong) (recognizing that after the occurrence of a “Control Event”
    124
    CorePower had the “ability to effectively call and acquire Level 4”).
    125
    Tr. 902:11–24 (Wong) (acknowledging that under the Call Option Agreement
    CorePower was obligated to acquire all of Level 4’s studios at the same time).
    126
    Tr. 42:14–18 (Kenny).
    127
    Tr. 42:11–12 (Kenny).
    31
    (for payment) until the studios were transferred.128 In exchange, Level 4 asked for,
    and CorePower agreed to give, an acquisition agreement with “no closing
    conditions” and “no force majeure”; “[the] transaction ha[d] to close.”129 As Kenny
    credibly described it, the deal structure Level 4 bargained for, as previewed in the
    Call Option Exercise Agreement, was one where the APA would be the visage of a
    “one-way gate.”130 This structure was “consistent with the call option all the way
    through.”131
    B. The One-Way Gate
    “While [our courts] have recognized that contracts should be read in full and
    situated in the commercial context between the parties, [as noted], the background
    facts cannot be used to alter the language chosen by the parties within the four
    corners of their agreement.”132 Accordingly, “[a]s is the Delaware way, I turn to the
    128
    Tr. 42:6–43:20, 169:1–8 (Kenny); Tr. 902:17–903:19 (Wong).
    129
    Tr. 43:5–7 (Kenny). See also Tr. 914:13–916:2 (Wong) (acknowledging that the APA
    was structured to omit express closing conditions or express rights to terminate).
    130
    Tr. 43:1, 43:12, 52:18 (Kenny). The Call Option Exercise Agreement set forth terms to
    be incorporated within a “definitive agreement in respect of the acquisition.” JX 131 § 3.6.
    Those terms did not include conditions to closing or express termination provisions.
    Id. at Ex. B.
    131
    Tr. 52:18–19 (Kenny).
    132
    Town of Cheswold, 188 A.3d at 820.
    32
    words the parties agreed to in their contract [for] the best evidence of their intent.”133
    As explained below, those words and the words intentionally omitted, speak
    volumes about who is in breach and who is not.
    No Closing Conditions or Express Right to Terminate
    Not surprisingly, CorePower maintains that it never would have agreed to sign
    the APA if the contract required it to close no matter what.134 But that position is
    hard to reconcile with CorePower’s failure to secure any of the typical provisions
    that would allow a party to refuse to close under contractually identified
    circumstances.135 Not a single one––there are no conditions to closing, no express
    termination provisions, and no termination or reverse termination fees; there is not
    even a force majeure clause.136 Indeed, with respect to the staggered closings, while
    133
    Pearl City, 
    2021 WL 1099230
    , at *12.
    134
    Tr. 915:16–916:2 (Wong); Defs. and Countercl. Pls. CorePower Yoga, LLC
    and CorePower Yoga Franchising LLC’s Post-Trial Opening Br. (“CPY OB”) (D.I. 184)
    at 27–29.
    135
    Tr. 43:5–12, 66:19–67:2 (Kenny); Tr. 967:17–20 (Wong); see generally the Call Option
    Exercise Agreement; the APA; cf. Lou R. Kling & Eileen T. Nugent, Negotiated
    Acquisitions of Companies, Subsidiaries and Divisions § 13.01 (2013) (“Kling & Nugent”)
    (observing that “the representations, the covenants and the closing conditions in the
    acquisition agreement should be carefully woven together”); id. at § 14.01 (stating that
    “[o]nce the agreement has been signed, a party is obligated to consummate the transaction
    unless one or more of the conditions to its obligation to close are not satisfied at the time
    set for closing,” and noting that acquisition agreements that “have the fewest and the most
    limited [closing] conditions are known as ‘hell or high water’ agreements”).
    136
    Tr. 66:24–67:7 (Kenny) (explaining that “there are no exits to [the APA]. There’s no
    closing conditions. There’s no force majeure.”); Tr. 914:15–915:9 (Wong)
    (acknowledging that because of Level 4’s focus on the certainty that the Transaction close,
    33
    there is no right to avoid them, the APA does allow CorePower to accelerate them
    at its election.137 The absence of any contractual condition to closing or express
    CorePower “agreed to drop the closing conditions. But [CorePower] would not agree to
    drop the reps and warranties, which [it] thought was a baseline of what [it] would at least
    expect to receive.”). In this regard, CorePower argues that the representations and
    warranties in the APA “embody a ‘bring down’ provision” that, in essence, assured
    CorePower that the “business of the target will be substantially the same at the date of
    closing as it was on the date the purchase agreement was signed” and served to induce it to
    enter the APA. See CPY OB at 27 (citing AB Stable VIII LLC v. Maps Hotels & Resorts
    One LLC, 
    2020 WL 7024929
    , at *74 (Del. Ch. Nov. 30, 2020), judgment entered,
    (Del. Ch. 2021), and aff’d, 
    2021 WL 5832875
     (Del. Dec. 8, 2021)); APA § 3 (stating that
    “in order to induce the Buyer to enter into and perform this Agreement and to consummate
    the Contemplated Transactions, the Seller hereby represents and warrants to Buyer, as of
    the date hereof and as of the applicable Closing Date, as follows:”). The argument is not
    persuasive. I note that the only evidence of actual inducement was offered by Wong in
    response to highly leading questions. See, e.g., Tr. 917:9–9:18:6; 1115:13–1121:8 (Wong).
    More importantly, the inducement language in the preface to Section 3 is a far cry from the
    typical condition to closing language that this APA conspicuously lacks. Cf. AB Stable
    VIII LLC, 
    2020 WL 7024929
    , at *1, 29, 33, 52 (discussing at length conditions to closing
    and distinguishing them from the operative agreement’s “bring-down condition”); Akorn,
    Inc. v. Fresenius Kabi AG, 
    2018 WL 4719347
    , at *2–3, 18, 45 (Del. Ch. Oct. 1, 2018)
    (discussing contractual conditions to closing), aff’d, 
    198 A.3d 724
     (Del. 2018);
    Bardy Diagnostics, Inc. v. Hill-Rom, Inc., 
    2021 WL 2886188
    , at *14 (Del. Ch. July 9,
    2021) (same); Snow Phipps Gp., LLC v. KCAKE Acq., Inc., 
    2021 WL 1714202
    , at *23–24
    (Del. Ch. Apr. 30, 2021) (same). A closing condition expressly makes the truth of the
    representation(s) a condition to closing. See GRT, Inc. v. Marathon GTF Tech., Ltd., 
    2011 WL 2682898
    , at *12–13 (Del. Ch. July 11, 2011). No such provision appears in the APA.
    137
    Section 2.3 of the APA provides that each closing: “will take place on the dates set forth
    on Exhibit D hereto (each, a “Closing Date”). Notwithstanding the foregoing, the Buyer
    may elect to consummate any Closing for the Tranche 1 Studios, Tranche 2 Studios or
    Development Studios at any time prior to the applicable date set forth on Exhibit D by
    providing the Seller with written notice of such new Closing Date at least 75 days prior
    thereto.”
    34
    termination right is potent evidence of the parties’ intent here and supportive of
    Kenny’s “one-way gate” descriptor.138
    This is not to say that the APA left CorePower without recourse should
    Level 4 breach its representations and warranties pre-closing. On the contrary, the
    APA contains a purchase price adjustment clause,139 and a hearty post-closing
    indemnification regime.140 Additionally, because the APA does not contain an anti-
    138
    See Kling & Nugent §14.01 n.3 (citing to Restatement (Second) of Contracts §§ 237,
    239 (1981); Farnsworth, Contracts § 8.15 (1990)) (“There is clear authority to the effect
    that a party is not obligated to perform its obligations under an agreement if the other party
    is in material breach of its obligations. However, the issue is essentially one of contractual
    intent. Consequently, if the parties did not include any conditions to their obligations to
    close, the issue would be one of whether the omission evidenced an intent to require closing
    notwithstanding the breach.”) (internal citations omitted); Julian v. E. States Const.
    Serv., Inc., 
    2008 WL 2673300
    , at *15 (Del. Ch. July 8, 2008) (noting that the absence of
    contractual language in the operative contract used in similar agreements that were
    proffered as evidence of the parties’ intent was “striking”); Casey Empl. Servs., Inc. v. Dali,
    
    634 A.2d 938
    , at *3 (Del. 1993) (TABLE) (discussing the extent to which the absence of
    contractual language, in certain circumstances, can be evidence of the parties’ intent);
    Gluckman v. Holzman, 
    51 A.2d 487
    , 491 (Del. Ch. 1947) (Seitz, Vice Chancellor)
    (observing that the lack of contractual provision with respect to “time of performance” was
    presumptive evidence that the parties intended performance to be made “within a
    reasonable time”). But see Levy Fam. Inv., LLC v. Oars + Alps LLC, 
    2022 WL 245543
    ,
    at *10 (Del. Ch. Jan. 27, 2022) (observing in the context of a form promissory note that,
    given the likely lack of negotiation surrounding the agreement, the lack of a “superseding
    clause” did not necessarily reflect an intent that the promissory did not “supersede” prior
    note agreements).
    139
    APA § 2.5.5.
    140
    APA § 6.1.1. Indeed, as contemplated in the Call Option Exercise Agreement (JX 131,
    Ex. B), the APA acknowledges that CorePower had coverage under a Representations and
    Warranty Insurance Policy. APA §§ 5.2, 5.15, 6.1.1. And CorePower bargained expressly
    for the right to pursue indemnification from Level 4 for any claim “excluded from coverage
    under the R&W Insurance Policy.” APA § 6.1.1(d); Tr. 1137:11–1138:3 (Wong).
    Relatedly, Level 4 points out that, under Section 6.8, CorePower’s only remedy post-
    35
    sandbagging provision,141 nothing expressly prevented CorePower from closing on
    a tranche of studios and then seeking indemnification for a known breach.142 While
    the indemnification provisions are not conclusive evidence that the parties intended
    to close come-what-may, they do fit well within Level 4’s view that CorePower had
    agreed to close on the Level IV studios upon exercise of its Call Option, and support
    Kenny’s credible description of the APA’s “one-way gate.”
    closing is indemnification. CorePower responds that Level 4’s reliance on Section 6.8 is
    misplaced because Section 6.8 applies only after a Closing has occurred; it does not affect
    the buyer’s pre-closing rights. D.I. 150 at 28; CPY OB at 82. Section 6.8 is titled
    “Exclusive Remedy” and provides that “[t]he Seller and the Buyer each acknowledge and
    agree that from and after the applicable Closing, excluding any claim for injunctive or other
    equitable relief, the indemnification provisions of this ARTICLE VI are intended to be the
    sole and exclusive remedy with respect to any and all claims relating to the subject matter
    of this Agreement and the Contemplated Transactions.” APA § 6.8. Ultimately, I need
    not address the relevance of Section 6.8 as my construction of the contract does not rely on
    that provision.
    141
    Tr. 1137:11–1138:3 (Wong).
    142
    See NASDI Hldgs. v. N. Am. Leasing, No. 10540-VCL, at 57 (Del. Ch. Oct. 23, 2015)
    (TRANSCRIPT) (observing that “Delaware is what is affectionately known as a
    ‘sandbagging’ state”); Cobalt Operating, LLC v. James Crystal Enter., LLC, 
    2007 WL 2142926
    , at *28 (Del. Ch. July 20, 2007) (“[A] breach of contract claim is not
    dependent on a showing of justifiable reliance. . . . Having contractually promised [the
    buyer] that it could rely on certain representations, [the seller] is in no position to contend
    that [the buyer] was unreasonable in relying on [the seller’s] own binding words.”),
    judgment entered, (Del. Ch. 2007), and aff’d, 
    945 A.2d 594
     (Del. 2008). But see Eagle
    Force Hldgs., LLC v. Campbell, 
    187 A.3d 1209
     n.185 (Del. 2018) (acknowledging that the
    issue of sandbagging is not resolved in Delaware).
    36
    Allowing Termination of the APA Pre-Closing Produces Absurd
    Results
    Level 4’s one-way gate construct is also entirely consistent with the untenable
    consequences of a failure to close. As Level 4 correctly points out, under the APA,
    the Franchise Agreement terminated on “the applicable Closing Date,” not upon the
    applicable “Closing.”143 In other words, if CorePower did not close on the first
    closing date (April 1), then, as of April 2, Level 4 would still be the owner of the
    studios that should have been acquired by CorePower, but the Franchise Agreement
    associated with those studios would be terminated. Of course, Level 4 cannot
    operate a CorePower-branded yoga studio unless it does so under a valid franchise
    agreement with respect to that particular studio.144 To require that Level 4 hold
    CorePower-branded studios without being able to operate them, or that it turn
    elsewhere for a banner under which its studios could operate, are absurd results that,
    according to the evidence, neither party intended.145 This is further evidence that the
    parties entered into the APA intending to close on the Transaction without limitation.
    143
    APA § 2.1.6 (emphasis added); see also Tr. 1000:18–1001:18 (Wong) (recognizing that
    the defined term “Closing Date” refers to an agreed-upon calendar date).
    144
    Franchise Agreement §§ 14.2, 15.2.
    145
    See Osborn ex rel. Osborn v. Kemp, 
    991 A.2d 1153
    , 1160 (Del. 2010)
    (“An unreasonable interpretation produces an absurd result or one that no reasonable
    person would have accepted when entering the contract.”). The parties appeared to
    appreciate that Level 4 could not and would not continue to own and operate CorePower-
    branded yoga studios after the Closing Date. See, e.g., Tr. 1329:24–1395:20 (Kenny)
    (discussing absurd results if APA did not close); Tr. 1019:14–19 (Wong) (stating that at
    37
    C. No Basis in the Contract to Terminate
    CorePower counters Level 4’s one-way gate theory by attempting to
    transfigure the APA’s boilerplate “Specific Performance” provision into an express
    contractual tunnel out of the bargain it struck,146 and by arguing that the so-called
    “materiality scrape” that modifies the APA’s indemnification provisions somehow
    reflects the parties’ intent to allow a party to terminate pre-closing.147 For the
    reasons explained below, I reject both arguments.148
    1. Section 8.11
    It is difficult to accept that CorePower would bury its supposedly bargained-
    for express right to terminate the APA within a boilerplate provision entitled
    “Specific Performance” that appears within other “MISCELLANEOUS” provisions
    of the contract.149 In fact, neither the word “terminate” nor any synonym of that
    the time the APA was drafted he viewed the prospect of a breach as “highly unlikely”);
    Tr. 1001:13–18 (Wong) (“Q: And if you didn’t think for sure the closings were going to
    occur on those dates, the franchisor, you, never would have allowed your franchisee to
    terminate the franchise agreement on those dates, would you? A: That is correct.”).
    146
    APA § 8.11.
    147
    CPY OB at 29.
    148
    As noted above, I was not persuaded by CorePower’s argument that Level 4’s
    representations constitute a “bring down” provision. This argument was another post-hoc
    attempt by CorePower to find a nonexistent contractual exit off the one-way street to
    closing.
    149
    APA §§ 8, 8.11.
    38
    word appear in Section 8.11 or, with respect to a right to terminate the APA at least,
    anywhere else in the APA. But, even if I were to accept that the parties intended
    Section 8.11 to do the work CorePower would have it do here, as explained below,
    Level 4 did not materially breach the APA and, consequently, CorePower enjoys no
    “other remedy . . . at law or in equity” that would justify its refusal to close.150
    2. The Materiality Scrape
    Likewise, CorePower’s argument regarding the so-called “materiality scrape”
    is unpersuasive.        Specifically, CorePower contends that because the APA’s
    indemnification provision removes any materiality qualifiers from the APA’s
    representations and warranties,151 this somehow evidences the parties’ intent to
    allow a party to terminate the agreement before closing.152 In CorePower’s view, if
    this interpretation is rejected, then the “warranties given by [Level 4] that were
    qualified as to materiality” and the No-MAE Representation would be rendered
    meaningless because those words are specifically deleted in the post-closing
    indemnification context; thus, “the only application under the APA of those
    150
    APA § 8.11. At best for CorePower, Section 8.11 might be read to incorporate default
    common law rules into the parties’ contractual relationship. That, of course, was
    unnecessary; as explained below, contracting parties always bargain in the shadow of the
    common law, unless they choose expressly to disclaim it.
    151
    APA § 6.1.1(a).
    152
    CPY OB at 29.
    39
    warranties (including the MAE warranty) is before closing.”153 In other words,
    because materiality is not a condition to a post-closing indemnification claim, the
    parties must have included “materiality” within the representations and warranties
    for some other purpose—namely, to reflect those representations that, if breached,
    would justify pre-closing termination of the agreement. I disagree.
    If the representations and warranties were included only to define the
    indemnification claims CorePower could bring against Level 4, then CorePower’s
    interpretation might have more persuasive force.               But the representations and
    warranties made by Level 4 serve more than one purpose. In addition to defining
    the scope and nature of post-closing indemnification claims available to CorePower,
    among other functions, the materiality qualifiers within the representations and
    warranties define the scope of what must be disclosed on the disclosure schedules to
    the APA and the circumstances in which a party can seek specific performance or
    injunctive relief to prevent a breach of the APA.154
    In support of its materiality scrape argument, CorePower cites our Supreme
    Court’s decision in AB Stable and argues that “the representations and warranties in
    153
    CPY OB at 28–29 (emphasis in original).
    154
    See APA § 2.4.2(g) (requiring that at each closing, Level 4 must deliver to CorePower
    the consents and approvals set forth on Schedule 3.4); § 3.4 (containing multiple materiality
    qualifiers); § 8.11 (stating that the parties have the right to an injunction to prevent breaches
    or violations of the provisions of the APA).
    40
    the APA must be considered to ‘act independently’ from the post-closing remedy
    provision embodied in Article VI” because the two provisions contain different
    materiality standards.155       CorePower’s reliance on AB Stable, however, is
    misplaced. In AB Stable, as part of its analysis of an ordinary course covenant and
    a no-MAE representation, the Supreme Court remarked that “[t]he parties also chose
    different materiality standards for the two provisions, which shows that the parties
    intended the provisions to act independently.”156 Here, as explained above, the
    representations and warranties in the APA act independently from the
    indemnification provision. At bottom, CorePower’s materiality scrape argument
    appears to be yet another post hoc attempt to generate an excuse not to close.157
    *****
    For the reasons just explained, I am satisfied the parties intended that the
    Transaction would close without conditions. Kenny’s explanation of the one-way
    155
    D.I. 200 (“CPY Supplemental Submission”).
    156
    AB Stable, 
    2021 WL 5832875
    , at *13.
    157
    Level 4 correctly points out that CorePower first asserted its materiality scrape argument
    in its opening post-trial brief. Level 4 AB at 33. Because this argument was not asserted
    by CorePower “in any submissions prior to trial, but rather was made for the first time in
    its post-trial brief,” the argument was waived. ThoughtWorks, Inc. v. SV Inv. P’rs, LLC,
    
    902 A.2d 745
    , 754 (Del. Ch. 2006); see also Zaman v. Amedeo Hldgs, Inc., 
    2008 WL 2168397
    , at *16 (Del. Ch. May 23, 2008) (“Raising this argument in the post-trial
    briefs is unfair, too late, and does not preserve this argument. It is waived.”). I have
    considered the argument on the merits for the sake of completeness.
    41
    gate embedded within the APA was credible and corroborated by other evidence,
    especially the APA itself. To the extent Level 4 breached the APA before closing,
    CorePower’s remedies included purchase price adjustments and indemnification.
    They did not include termination.
    CorePower maintains that even if the APA, on its face, did not contemplate
    that the parties could “hit reverse” and back out of the one-way gate, CorePower’s
    election not to close reflects its proper exercise of common law rights. To be sure,
    the parties did not disclaim common law rights in the APA and Level 4 has offered
    no principled basis in law or fact to support the notion that either of these contracting
    parties intended to waive their common law rights with respect to the APA or
    otherwise. Accordingly, having concluded that the APA requires CorePower to
    close on the Transaction, I turn next to the extra-contractual, common law
    justifications proffered by CorePower that might justify its refusal to perform.
    D. No Common Law Bases to Avoid Performance
    CorePower contends that it was entitled to walk away from the Transaction
    because Level 4 repudiated the contract,158 the purpose of the APA was frustrated,
    and Level 4 materially breached the contract.159 I address each of these proffered
    158
    CPY OB at 101.
    159
    CPY OB at 104–05.
    42
    excuses below, but first address a threshold question––at what point should
    Level 4’s conduct and compliance with the APA be measured when determining
    whether CorePower had an extra-contractual basis to refuse to close?
    Level 4 posits that the answer to the timing question is simple––the Court
    should focus on the state of performance as of the time CorePower declared that it
    would not close. According to Level 4, in advancing its common law excuses for
    refusing to perform, CorePower conveniently ignores that it declared it would not
    close on the Transaction as of March 26, yet it prates on about Level 4’s purported
    breaches of the APA by pointing to events that transpired well after the first closing
    date came and went without an actual closing.160
    By CorePower’s lights, Level 4 was required to remain in compliance with the
    APA’s representations and warranties throughout the entire Transaction period—
    meaning through the final closing October 1, 2020—even after CorePower refused
    to attend the first closing and declared that its “obligations [under the APA were]
    discharged.161 In this regard, CorePower points to Section 5 of the APA, which
    160
    Level 4 AB at 65; Tr. 620:1–7 (DeCoons) (acknowledging that the furloughs at Level 4
    took place on April 3, 2020); Tr. 764:6–14 (DeCoons) (acknowledging that the drop in rent
    expenses occurred after April 1, 2020); Tr. 769:3–9 (DeCoons) (acknowledging that no
    leases were amended prior to April 1, 2020); Leondakis Dep. at 224:6–10 (acknowledging
    that as of April 1, 2020, Level 4 maintained the business’s capital expenditure and
    promotional and marketing expenditure practices consistent with past practices).
    161
    JX 288 at 1; see Defs. and Countercl. Pls. CorePower Yoga, LLC and CorePower Yoga
    Franchising, LLC’s Post-Trial Answering Br. (“CPY AB”) (D.I. 191) at 69–78.
    43
    states that the Ordinary Course Covenant applies “[f]rom the date of [the APA] until
    the final Closing.”162 But this provision expressly contemplates that the parties will
    have reached the final closing in the succession of closings contemplated in
    the APA. They did not. In fact, CorePower saw to it that the parties did not even
    reach the first closing. If CorePower had not materially breached the APA by
    refusing to close on Tranche 1, then Level 4 would have been required to remain in
    compliance with the Seller’s representations and warranties until the final Closing.
    But when CorePower communicated to Level 4 that it would not perform under the
    APA as of March 26,163 the bargained-for structure of the APA was lost, and when
    that was lost, so too was CorePower’s justification for non-performance based on
    subsequent actions or omissions by Level 4.164 When CorePower failed to perform
    162
    APA § 5.
    163
    E.g., Level 4 Yoga, LLC’s Post-Trial Opening Br. (“Level 4 OB”) (D.I. 183) at 69;
    Level 4 AB at 42 (“CorePower’s litany of rationalizations share only one thing in common:
    they all post-date CorePower’s decision to walk away from the acquisition.”).
    164
    See Bardy Diagnostics, 
    2021 WL 2886188
    , at *26 (explaining that party seeking to
    justify its non-performance must demonstrate that the justification existed “at the time” the
    party elects not to perform); Preferred Inv. Servs., Inc. v. T&H Bail Bonds, Inc.,
    
    2013 WL 3934992
    , at *11 (Del. Ch. July 24, 2013) (“The party first guilty of a material
    breach of contract cannot complain if the other party subsequently [does not] perform”);
    14 Richard A. Lord & Samuel Williston, Williston on Contracts, § 43:5 (Nov. 2021
    Update) [hereinafter Williston on Contracts] (observing that “the party first in default under
    a bilateral contract cannot recover for the subsequent failure of the other party to perform”).
    The Williston treatise goes on to explain that this rule is especially apt when the first breach
    is “total,” such as an outright refusal to perform, as opposed to “partial.” Id. See also
    Commonwealth Const. Co. v. Cornerstone Fellowship Baptist Church, Inc.,
    
    2006 WL 2567916
    , at *19 (Del. Super. Ct. Aug. 31, 2006) (holding that “a party in material
    44
    on April 1, Level 4 correctly perceived that, from that point forward, it was merely
    a steward of CorePower’s assets.165
    Having determined that I must focus on Level 4’s compliance with the APA
    as of the time CorePower declared it would not close when considering the
    bona fides of CorePower’s proffered common law justifications for refusing to
    perform, I address each justification in turn. As discussed below, none excuse
    CorePower’s non-performance.166
    Repudiation
    “A repudiation of a contract is an outright refusal by a party to perform a
    contract or its conditions.”167      “A party may repudiate an obligation through
    statements when its language, reasonably interpreted, indicates that it will not or
    cannot perform; alternatively, a party may repudiate through a voluntary and
    breach”––here CorePower by refusing to close without justification––“. . . cannot then
    complain if the other party fails to perform”). This perspective makes perfect sense in this
    case. It is impossible to know how Level 4 might have performed under the APA going
    forward had CorePower honored its obligation to close on April 1 and completed the
    acquisition of Tranche 1, and Level 4 was not obliged to engage in that conjectural exercise
    to prove that it is entitled to specific performance.
    165
    Level 4 AB at 65. Cf. McKinley v. Casson, 
    80 A.3d 618
    , 627 (Del. 2013) (“The duty to
    mitigate damages generally arises after a defendant has breached its duty to a plaintiff.”).
    166
    I begin the analysis with repudiation since that was the only excuse CorePower
    communicated to Level 4 in real-time when it decided not to close. JX 288 at 1; Tr. 352:21–
    355:16 (Otepka).
    167
    PAMI–LEMB I Inc. v. EMB–NHC, L.L.C., 
    857 A.2d 998
    , 1014 (Del. Ch. 2004).
    45
    affirmative act rendering performance apparently or actually impossible. In any
    event, repudiation must be ‘positive and unconditional.’”168 CorePower argues
    Level 4 repudiated the APA in both word and in deed.169 In fact, Level 4’s supposed
    repudiation was the rationale proffered by CorePower when it walked away from the
    deal.170    The evidence adduced at trial, however, reveals that the proffered
    “repudiation” was nothing more than CorePower’s knee-jerk contrivance to justify
    its preordained decision to back out of the deal after Level 4 refused to delay the
    closings.171
    168
    W. Willow-Bay Court, LLC v. Robino-Bay Court Plaza, LLC, 
    2009 WL 458779
    , at *5
    (Del. Ch. Feb. 23, 2009) (quoting Carteret Bancorp, Inc. v. Home Gp., Inc.,
    
    1988 WL 3010
    , at *6 (Del. Ch. Jan. 13, 1988)).
    169
    CPY OB at 101.
    170
    E.g., JX 288 at 1 (stating on March 26 in an email that CorePower viewed Level 4’s
    “denials and posturing” as “a repudiation of multiple obligations embodied in the Purchase
    Agreement”); JX 303 (reiterating CorePower’s view that Level 4 had “repudiated multiple
    material obligations embodied in the Asset Purchase Agreement” and thereby
    “discharge[ed] [CorePower’s] obligations thereunder”).
    171
    I note that CorePower has not invoked “anticipatory repudiation” or “anticipatory
    breach” as a basis to avoid performance. Its position in March 2020 (and since) was
    (and has been) that Level 4, then and there, had repudiated the APA. JX 288 at 1. In any
    event, “to constitute an anticipatory repudiation,” the acts or statements of the alleged
    repudiator must “amount[] to an unequivocal statement . . . that the breaching party would
    not perform its promise.” AMG Vanadium LLC v. Glob. Advance Metals U.S.A., Inc.,
    
    2020 WL 1233752
    , at *7 (Del. Super. Ct. 2020) (cleaned up). “An expression of doubt
    alone as to one’s ability to tender performance on time is not enough to amount to
    repudiation.” Elliott Assoc., L.P. v. Bio-Response, Inc., 
    1989 WL 55070
    , at *3 (Del. Ch.
    May 23, 1989) (citing 4 Corbin on Contracts § 974 (1951)). As discussed below, Level 4
    made no such unequivocal statement, by word or deed, prior to the time CorePower
    announced it would not close.
    46
    a. No Repudiation by Word
    CorePower appears to rely on a single email exchange between Kenny and
    Wong as evidence that Level 4 expressed its intent to repudiate by word.172
    On March 19, 2020, Kenny wrote that current COVID-19 dynamics “have
    [Level 4’s] operating mode no longer in the ordinary course of business.”173
    According to CorePower, this email evidences Level 4’s unconditional intent to
    repudiate the APA since it confirms at the highest level that Level 4 was unable to
    honor its express commitment to operate in the ordinary course before closing. The
    persuasive trial evidence, however, revealed CorePower’s characterization of
    Kenny’s email to be litigation-driven hyperbole.174
    Repudiation requires “an outright refusal by a party to perform a contract or
    its conditions.”175 Aside from the language plucked out by CorePower, Kenny’s
    March 19 email, as a whole, illustrates a commitment from Level 4 to close on the
    172
    PTO ¶ 59.
    173
    JX 265 at 3.
    174
    Kenny credibly explained that his email was responding to a previous telephone
    conversation with Wong during which Wong generally observed that COVID-19 had
    caused operations at CorePower yoga studios to deviate from the ordinary course.
    Tr. 72:5–74:14 (Kenny). During that discussion, the parties were speaking in general terms
    and not specifically referring to the APA’s Ordinary Course Covenant or representations
    that included an ordinary course qualifier. Id.
    175
    Veloric v. J.G. Wentworth, Inc., 
    2014 WL 4639217
    , at *15 (Del. Ch. Sept. 18, 2014).
    47
    Transaction.176 Moreover, three days later, Kenny’s next email affirmed that Level 4
    believed the deal was on: “We expect the Buyer to close on the timeline described
    in the amended Exhibit D to the APA . . . .”177 To remove any doubt as to Level 4’s
    intentions and expectations, in his March 22 email, Kenny expressly states,
    “[w]e want to be clear on our expectations and the terms of the APA. We have and
    will continue to operate the Business in the ordinary course pursuant to
    the APA . . . . More specifically, we have, and we will, preserve the assets associated
    with the Business.”178 These are not the statements of a repudiating party. Wong
    himself agreed.179
    b. No Repudiation by Deed
    Nor did Level 4 repudiate the APA by deed. In its March 26 email to Level 4,
    CorePower asserts that its “contractual performance has been discharged” because
    Level 4’s “disavowal of [certain] obligations constitutes a repudiation of the
    176
    E.g., JX 265 at 3 (“Our team would commit the resources pre- and post-closing to ensure
    success with the transitioning team.”).
    177
    JX 265 at 1. At best for CorePower, even if Level 4 repudiated the APA by email on
    March 19, Kenny’s later email expressly revoked that repudiation. See Willow-Bay Court,
    
    2009 WL 458779
    , at *5 (“Unless the non-repudiating party relies upon the repudiation or
    notifies the promisor that it considers the repudiation final, the promisor may retract his
    repudiation, thereby returning the parties to the status quo ante.”).
    178
    JX 265 at 1 (emphasis added).
    179
    Tr. 1079:24–1080:14 (Wong) (“Q. Did this email, in your view, constitute a repudiation
    of the asset purchase agreement? A. This email itself? Q. Yes. A. No.”).
    48
    [APA].”180        Specifically, CorePower identified the following as evidence of
    Level 4’s supposed repudiation by deed:
    The applicable contractual provisions [Level 4 had allegedly
    disavowed] include, among others:
    • Section 3.6(a), which calls on you to conduct the Business in
    the Ordinary Course of Business so that the Business does not
    experience a material loss;
    • Section 3.6(e), requiring that the “Seller has not terminated or
    closed any facility, business or operation”
    • Section 3.6(1), requiring that Seller conduct the Business in
    the Ordinary Course of Business so that the Business does not
    experience a Material Adverse Effect; and
    • Section 5.1, requiring that the Seller conduct the Business
    “only in the Ordinary Course of Business” detailing multiple
    components of the business that must be so conducted
    “consistent with past practice.”181
    CorePower’s March 26 email states the basis for its refusal to close. It is appropriate,
    therefore, to focus on the proffered acts of repudiation outlined in that email when
    assessing whether Level 4, in fact, had repudiated the APA when CorePower
    declared it would no longer perform under the APA.182
    180
    JX 288 at 1.
    181
    
    Id.
    182
    CorePower generated new excuses for refusing to close as this litigation wore on,
    culminating in its post-trial argument that, by March 26, Level 4 had demonstrated a
    general “unwillingness to deliver . . . [a] business with particular attributes operating at an
    established standard” and “[t]he goodwill and intangible assets” of the studios. CPY OB
    at 102. Of course, CorePower’s argument that Level 4 was obliged to deliver assets with
    49
    Contrary to its repudiation pretext, CorePower’s proffered evidence reveals
    who actually played the repudiation card first and, in so doing, exposes the flaw in
    its argument. Indeed, all of the actions (or events) CorePower points to in support
    of its repudiation argument were taken (or occurred) after CorePower had
    definitively declared it would not close on the Transaction.183 Whether one looks to
    March 20, when the CorePower board proposed that the parties consider adjourning
    the closing dates under the APA, or March 26, when CorePower asserted that
    Level 4 had repudiated, none of the actions CorePower relies on to argue repudiation
    by deed had occurred by the relevant date (April 1, 2020, the first closing date)––as
    a particular level of “goodwill” value finds no support in the APA. Instead, the APA simply
    required Level 4 to deliver the goodwill associated with the Acquired Assets and not to
    “engage in any activity that might injure the goodwill of the Business.” See APA Ex. A,
    § 5.6.2(c). Similarly, CorePower’s refrain that Level 4 promised to deliver “well-run” and
    “well-operated” studios is nowhere supported by the language of the APA or any other
    credible evidence. See, e.g., Tr. 214:22–215:18 (Kenny) (“Q. Well, look at what your
    obligations are. Wasn’t the deal you were talking about from where – it’s fair to say that
    the transaction you were talking about was the transfer of well-run studios? A. I don’t
    believe that’s what the APA says. Q. I’m asking you about – the basic purpose of your
    transaction was to have you transfer well-operated studios to the buyer? A. I don’t agree
    that that’s what the APA says. Q. Let me try again. Isn’t it fair to say that the essence of
    the transaction, because you talked all about lots of different pieces of paper – the essence
    of this transaction was for you to transfer well-operated studios to CorePower? A. I don’t
    know of a defined term in the APA or the call option agreement defining “well-operated
    studios.” So I don’t know how to live up to that statement.”). In fact, the APA makes clear
    that Level 4 was to deliver its yoga studios “as is” and “where is.” APA § 3.21.
    183
    Level 4’s Answering Post-Trial Br. (“Level 4 AB”) (D.I. 192) at 8. While the studios
    were closed prior to April 1, CorePower points to the “prolonged shutdown of all Studios”
    as evidence of repudiation. CPY OB at 98. The studios were not shut down for a prolonged
    period of time prior to April 1; in fact, at that time, as noted, the closures were expected to
    be very temporary.
    50
    discussed below, Level 4 had not restructured any leases, laid-off employees or cut
    its marketing expenditures.184
    i. Material Loss—Section 3.6(a)
    CorePower’s March 26 email maintained that Level 4 repudiated the APA
    because Level 4’s business as a whole had experienced financial losses greater than
    $50,000.185 Level 4’s expert, Jeffrey J. Mordaunt, disagreed with this interpretation,
    stating in his report that “[CorePower’s] interpretation of this provision is
    inconsistent with my experience involving similar provisions in acquisition
    agreements.”186 Specifically, Mordaunt explained that, based on his experience,
    representations like those in Section 3.6(a) are “made to ensure that there is no
    physical damage to or dispossession of the assets of the business. The purpose of
    184
    JX 1020 (lease amendment summary); Tr. 768:19-769:9 (DeCoons) (recognizing that
    there were no lease amendments dated prior to April 1, 2020); Tr. 1313:10–15 (Leondakis)
    (acknowledging that Level 4 conducted its layoffs on April 3, 2020, which was after
    CorePower had conducted its layoffs); Leondakis Dep. at 224:6–10 (“Q. Did Level 4
    maintain the business’s capital expenditure and promotional and marketing expenditure
    practices consistent with best practice as of the date of closing? A. I believe so.”).
    185
    JX 288 at 1; CPY OB at 65 n.39 (stating that Section 3.6(a) barred Level 4 from
    suffering a material loss in excess of $50,000); CPY AB at 18–20; APA § 3.6(a) (Level 4
    representing that “[t]here has been no material loss . . . affecting the Business or any
    Acquired Asset with a value in excess of $50,000”).
    186
    JX 644 (“Mordaunt’s Report”) ¶ 107.
    51
    these types of representations is for the seller to provide assets in a similar condition
    compared to when the agreement was entered.”187
    In my view, neither party has proffered a reasonable construction of the
    contractual provision at issue. Section 3.6(a) represents that no “material loss”
    (undefined) had “affect[ed]” the Business or an “Acquired Asset with a value in
    excess of $50,000.”188 As the language makes clear, $50,000 describes the value of
    the Acquired Assets subject to the representation, not that the value of the loss to
    such Acquired Assets. And CorePower presented no evidence of a “material loss”
    as of March 26. That being said, even under CorePower’s proffered interpretation,
    the evidence supports a finding that Level 4 “had not experienced a financial loss
    over $50,000 by the time TSG and the Defendants [walked away from] the
    Transaction on March 20, 2020.”189 As Mordaunt credibly testified, as of the date
    CorePower terminated the Transaction, “Level 4’s EBITDA was $(28,669), which
    does not meet the threshold of a $50,000 loss.”190
    187
    Mordaunt’s Report ¶ 108.
    188
    APA § 3.6(a).
    189
    Mordaunt’s Report ¶ 112.
    190
    Mordaunt’s Report ¶ 112(a).
    52
    ii. Studio Closures—Section 3.6(e)
    CorePower also asserted that Level 4 had repudiated the APA by breaching
    Section 3.6(e).191 There, Level 4 represented that it had “not terminated or closed
    any facility, business or operation.”192 On March 15, 2020, CorePower announced
    on its website that all CorePower studios, including Level 4’s, would be closed in
    response to COVID-19.193 As a result, Level 4 was required to close its studios and
    did so the following day.194 Not long after, when government-mandated closures
    went into effect, like all other CorePower yoga studios, Level 4 was obligated under
    the Franchise Agreement to close its studios to comply with those mandates.195
    At the time CorePower walked away from the Transaction, the parties operated
    under the assumption that these closures would be temporary.196
    191
    JX 288 at 1.
    192
    APA § 3.6(e).
    193
    PTO § III(D)(55).
    194
    PTO § III(D)(56).
    195
    Pessin Dep. at 42:9–24 (acknowledging that the franchise agreements required
    CorePower franchisees to operate their studios in full compliance with all applicable laws,
    ordinances and regulations, and if a government order required a CorePower franchisee,
    like Level 4, temporarily to close a CorePower-branded yoga studio, then CorePower
    would expect the franchisee to do so).
    196
    Tr. 587:10–588:6 (Mordaunt) (commenting that “as of March 16th of 2020, the CDC
    and the White House had only suggested temporary closures for two weeks. And then
    states that issued closure orders within the second half of March, all of them expected the
    closures to last through the end of March or, worst case, mid-April of 2020, that on April 1,
    2020”); Pessin Dep. at 141:11–19 (“Q. Is it fair to say that on March 2020 – March 20,
    53
    When determining whether these temporary closures evidenced Level 4’s
    “outright refusal . . . to perform the [APA],”197 I must focus on whether Level 4
    signaled “that it [would] not or [could not] perform” the APA when it complied with
    CorePower’s direction that it temporarily shutter its CorePower-branded yoga
    studios.198       No such signal was delivered.          First, repudiation requires a
    “voluntary act.”199 Level 4 did not voluntarily close its yoga studios; it was required
    to close them, first at the direction of its franchisor and then by government
    mandates.200 Moreover, at most, CorePower expected the closures to last for six
    2020, that CorePower management’s best estimate about the anticipated duration of the
    Coronavirus closures was six weeks? A. Yeah, I guess. I guess. There’s probably a deck
    that shows two, and there’s probably one that shows eight. So yes, I guess. At that moment
    in time, maybe it was six weeks we were looking at.”).
    197
    PAMI–LEMB I Inc., 
    857 A.2d at 1014
    .
    198
    W. Willow-Bay Court, LLC, 
    2009 WL 458779
    , at *5.
    199
    
    Id.
    200
    See JX 230; JX 261; Tr. 336:8–23, 343:9–12 (Otepka); Tr. 120:24–122:11 (Kenny);
    JX 302; JX 306–07; JX 320; JX 340; JX 343;JX 345–46; JX 349; JX 363; JX 367; JX 375;
    JX 391; JX 393; JX 396; JX 412–13; JX 432; JX 618. To be sure, CorePower notified
    Level 4’s members of the closures directly and then shut-down Level 4’s yoga class
    reservation system. See Tr. 342:18–343:12 (Otepka). Once the government stepped in,
    the APA and the Franchise Agreement both required Level 4 to comply with the mandated
    closures lest it breach its contractual obligations. See APA § 3.11.1; Franchise Agreement
    § 8.7; Tr. 1069:23–1070:4 (Wong).
    54
    weeks.201 Such temporary closures hardly evidence outright refusal and inability to
    perform.202
    iii. Material Adverse Effect—Section 3.6(l)
    CorePower next asserted that a repudiation had occurred because the effects
    of the COVID-19 pandemic caused Level 4 to breach its representation that no MAE
    had occurred (the “No-MAE Representation”).203 To determine whether an MAE
    occurred, I start with the APA’s definition of the term and then consider “whether
    there has been an adverse change in the target’s business that is consequential to the
    company’s long-term earnings power over a commercially reasonable period, which
    one would expect to be measured in years rather than months.”204 With that said,
    I am mindful that “[t]here is no ‘bright-line test’ for evaluating whether an event has
    caused a material adverse effect.”
    Under the APA, MAE is defined as “a material and adverse effect on the
    business, assets, liabilities, financial condition, property or results of operations of
    201
    JX 257 at 3 (showing that as of March 20, 2020, CorePower thought the studios would
    be closed for no longer than six weeks).
    202
    PAMI–LEMB I Inc., 
    857 A.2d at 1014
    .
    203
    JX 288 at 1; CPY AB at 75. See APA §3.6(l) (representing that “[n]o event or
    circumstance has occurred which constitutes a Material Adverse Effect”).
    204
    Hexion Specialty Chems., Inc. v. Huntsman Corp., 
    965 A.2d 715
    , 738 (Del. Ch. 2008).
    55
    the Seller, taken as a whole.”205 This definition, unlike other MAE definitions,
    contains no exceptions.206 This would signal that the seller is assuming most of the
    risk of an MAE.207
    On the other hand, certain aspects of the APA’s MAE definition favor the
    seller.     Specifically, the definition does not contemplate that the parties will
    undertake a forward-looking analysis when assessing if an MAE has occurred.208
    This court has observed that, “[t]he forward-looking nature of the [MAE] also flows
    from the language of a standard MAE provision, which asks whether an effect
    ‘has had or is reasonably expected to have’ a material adverse effect.”209 The phrase
    205
    APA Ex. A at 58.
    206
    AB Stable, 
    2020 WL 7024929
    , at *48 (commenting that the contractual definition of
    material adverse effect at issue in that case “follows standard form, consisting of an initial
    definition followed by a series of exceptions”); see also Matthew Jennejohn et al., COVID-
    19 as a Force Majeure in Corporate Transactions (Columbia L. and Econ. Working Paper
    No. 625, BYU L. Research Paper No. 21-10, 2020) (available at
    https://ssrn.com/abstract=3577701) (finding that, as of March 26, 2020, nearly 24% of
    pending deals explicitly carve out pandemic-like contingencies and 42% implicitly carve
    out such events through general force-majeure provisions).
    207
    Unlike the “overwhelming majority of contemporary deals,” the MAE definition in the
    APA “does not contain an exclusion for events that have a disproportionate effect on
    [Level 4 or its business]. A disproportionate-effect exclusion favors the seller by shifting
    risk back to the buyer.” AB Stable, 
    2020 WL 7024929
    , at *61. Thus, “the omission of a
    disproportionality exclusion signals a seller-friendly MAE clause.” 
    Id.
    APA § 3.6(l) (“No event or circumstance has occurred which constitutes a Material
    208
    Adverse Effect.”) (emphasis supplied).
    209
    AB Stable, 
    2020 WL 7024929
     at *61 (emphasis supplied) (citing Frontier Oil Corp. v.
    Holly Corp., 
    2005 WL 1039027
    , at *34 (Del. Ch. Apr. 29, 2005)).
    56
    “expected to have” would allow a buyer to declare an MAE based on reasonably
    anticipated events, even if those events had not yet occurred. As noted, this forward-
    looking language is absent from the MAE definition at issue here.210
    When determining whether an MAE has occurred, the court must find that
    “the magnitude of the downward deviation in the affected company’s performance
    [was] material,”211 and that the effect will “substantially threaten the overall earnings
    potential of the target in a durationally-significant manner.”212 The durational
    significance is particularly important here because CorePower was seeking to
    acquire Level 4 as part of a long-term strategy.213 “To such an acquiror, the
    important thing is whether the company has suffered a Material Adverse Effect in
    its business or results of operations that is consequential to the company’s earnings
    210
    With this said, even in the absence of forward-looking language in the definition,
    “[t]he concept of a material adverse effect is inherently forward looking, and necessarily
    so because of the ‘basic proposition of corporate finance that the value of a company is
    determined by the present value of its future cash flows.” AB Stable, 
    2020 WL 7024929
    ,
    at *61 (citing Hexion, 
    965 A.2d at
    743 n.75).
    211
    Akorn, 
    2018 WL 4719347
    , at *52.
    212
    In re IBP, Inc. S’holders Litig., 
    789 A.2d 14
    , 68 (Del. Ch. 2001), as corrected (Del. Ch.
    June 18, 2001).
    213
    Tr. 961:6–12 (Wong) (When asked what TSG’s investment horizon was for CorePower
    Yoga, Wong remarked that TSG “underwrite[s] to a five-year investment horizon.”);
    Tr. 1034: 6–13 (Wong) (“Q. And you were the long-term owner; right? A. Potentially,
    yes, we were scheduled to be the long-term owner, yes. Q. Well, you had signed a contract
    that made you the long-term owner, hadn’t you? A. Yes, but hadn’t closed yet, so we
    weren’t long-term owner yet.”).
    57
    power over a commercially reasonable period, which one would think would be
    measured in years rather than months.”214
    CorePower, Level 4 and their respective experts offered dueling perspectives
    regarding whether the COVID-19 pandemic significantly impacted the value of
    Level 4’s business.215 I need not decide who has the better of the evidence on this
    issue, however, because even if the effect ultimately was significant, at the time
    CorePower purported to invoke the No-MAE Representation, there was absolutely
    no basis for CorePower to conclude that the business effects of COVID-19 were
    then, or later would be, significant.216
    An MAE’s durational significance must be measured from the perspective of
    a “reasonable acquiror.”217 “[O]ur courts have stopped short of prescribing specific
    time periods when assessing ‘durational significance,’ and for good reason. . . .
    214
    In re IBP, 
    789 A.2d at 67
    .
    215
    See generally Mordaunt’s Report; JX 673.
    216
    See Bardy Diagnostics, 
    2021 WL 2886188
    , at *26 (analyzing whether the effect on
    plaintiff’s earning potential, “at the time [the defendant] invoked the MAE clause, would
    reasonably be expected to constitute an MAE”) (emphasis added) (internal quotation marks
    omitted); Channel Medsystems, Inc. v. Boston Sci. Corp., 
    2019 WL 6896462
    , at *28
    (Del. Ch. Dec. 18, 2019) (holding that the party asserting the occurrence of a material
    adverse effect “has the burden to prove that, as of the termination date, the inaccurate
    representations in the [a]greement would reasonably be expected to have a Material
    Adverse Effect on [the allegedly breaching party] around the time the parties[ ] expected
    the merger to close.”) (emphasis added).
    217
    In re IBP, 
    789 A.2d at 68
     (emphasis added).
    58
    [T]he determination of what is a ‘commercially reasonable period’ is contextual and
    necessarily fact intensive”; it will “turn on the target company’s unique
    characteristics and the broader business dynamics in which the target operates.”218
    As in Snow Phipps, where Chancellor McCormick observed that
    “[t]his court’s decisions in IBP and Akorn provide helpful benchmarks confirming
    that it was not reasonable to expect that [COVID-19’s effects on the target] would
    mature into a material adverse effect,” I am satisfied those benchmarks lead to the
    same conclusion here.219 Chancellor McCormick aptly summarized those cases as
    follows:
    In IBP, the seller experienced a 64% decrease in year-over-year first
    quarter earnings due to severe winter weather that adversely affected
    livestock supplies. By the termination date, however, the seller had two
    weeks of strong earnings that signaled a strong quarter ahead. Further,
    the analyst community was predicting that IBP would return to
    historically healthy earnings the following year. The court concluded
    that the business appears to be in sound enough shape to deliver results
    of operations in line with the company’s recent historical performance.
    The court thus held that a material adverse effect was not reasonably
    expected.
    In Akorn . . . , the seller’s EBITDA had grown each year from 2012
    through 2016, but it fell by 55% after the merger agreement was signed
    in 2017. The buyer sent the seller a notice of termination in early 2018.
    According to the seller’s management, the downturn had already
    persisted for a year and showed no sign of abating. Analyst estimates
    218
    Bardy Diagnostics, 
    2021 WL 2886188
    , at *27.
    219
    Snow Phipps, 
    2021 WL 1714202
    , at *33 (finding that no material adverse effect had
    occurred).
    59
    for the seller’s 2018, 2019, and 2020 EBITDA were lower than those
    at the time of signing by 62.6%, 63.9%, and 66.9%, respectively. The
    court found that the company’s poor performance was the result of
    unexpected new market entrants, which lead to price erosion. The court
    held that this sudden and sustained drop in Akorn’s business
    performance was reasonably expected to constitute a material adverse
    effect.
    The Akorn court also addressed whether the seller’s regulatory issues,
    which were not disclosed to the buyer when the merger agreement was
    signed, constituted a material adverse effect. After weighing the
    credibility of the experts and conducting its own cross-check, the court
    concluded that the regulatory issues represented a 21% decrease in the
    equity value of the seller. The court held that this decrease was
    reasonably expected to constitute a material adverse effect.220
    With this backdrop in mind, it is rather easy to conclude that the evidence of
    COVID-19’s effects on Level 4’s business as of the time CorePower declared the
    occurrence of an MAE falls well short of reaching the MAE mark. It is not
    surprising, then, that CorePower’s expert witness, Robert Reilly, testified that he had
    no opinion on whether Level 4 had experienced an MAE prior to April 1, 2020. 221
    And CorePower’s other witnesses admitted they performed no analysis of whether
    Level 4 experienced an MAE in March 2020 when CorePower decided not to
    close.222
    220
    Snow Phipps, 
    2021 WL 1714202
    , at *33–34 (emphasis in original) (internal quotation
    marks, footnotes and alterations omitted).
    221
    Tr. 1213:23–1214:1 (Reilly).
    222
    Tr. 1297:24–1298:5, 1301:12–1302:15 (Leondakis); Trial Tr. 1064:7–17 (Wong).
    60
    CorePower’s own actions and statements indicate that, as of the date of the
    first closing, it did not believe the COVID-19 pandemic would persist for any
    durationally significant period. As a condition to drawing on its delayed-draw term
    loan, CorePower certified to its lenders that, as of the proposed borrowing date
    (March 19, 2020), “there ha[d] been no event or circumstance, either individually or
    in the aggregate, that has had or would reasonably be expected to have a Material
    Adverse Effect.”223 Not surprisingly, CorePower presented no credible evidence to
    explain how the COVID-19 pandemic purportedly disrupted Level 4’s business to a
    degree that would qualify as an MAE while CorePower’s business was able to rise
    above the MAE mark. To the contrary, I am satisfied that when CorePower certified
    to its lender that it had not suffered an MAE as of March 19, 2020, it had no reason
    to believe then, or a week later, that Level 4 was situated any differently.224
    On March 20, 2021, during a presentation to its board, CorePower’s
    management team forecasted that CorePower’s COVID-related studio closures
    223
    See JX 120 § 5.04(c); JX 224; Pessin Dep. at 165:5–166:11; Tr. 1093:17–1094:2
    (Wong); Tr. 1303:21–1306:16 (Leondakis).
    224
    This evidence is especially convincing given that the MAE representation made by
    CorePower under its credit agreement contained the forward-looking phrase––“has had or
    would be reasonably be expected to have”––that the parties chose to omit from the APA’s
    MAE definition. See JX 120 § 4.01(i).
    61
    would last six weeks.225 This is hardly durationally significant under any measure.226
    And yet, at this same March 20 board meeting, CorePower decided it would not
    close on the Transaction.227 I need not decide whether CorePower’s decision was
    motivated by a perceived need to preserve its liquidity, as argued by Level 4,228 or by
    a preference to focus more acutely on the evolving COVID-19 situation without
    distraction. In either scenario, it appears that CorePower anticipated only “[a] short-
    term hiccup in earnings,” which our court has determined “should not suffice” for
    an MAE.229
    iv. Ordinary Course of Business—Section 5.1
    CorePower’s final proffered basis to rationalize its repudiation claim was that
    Level 4 had breached the Ordinary Course Covenant and the representations that
    225
    JX 257 at 3.
    226
    Akorn, 
    2018 WL 4719347
    , at *53 (citing to Raskin v. Birmingham Steel Corp.,
    
    1990 WL 193326
    , at *5 (Del. Ch. Dec. 4, 1990) and Allegheny Energy v. DQE, Inc.,
    
    74 F. Supp. 2d 482
    , 518 (W.D. Pa. 1999)) (“Chancellor Allen posited that a decline in
    earnings of 50% over two consecutive quarters would likely be an MAE. Courts in other
    jurisdictions have reached similar conclusions.”).
    227
    Tr. 1293:13–1294:21 (Leondakis).
    228
    See, e.g., Level 4 AB at 4–5 (“The repudiation argument was merely the first of a long
    series of CorePower’s excuses for its financial decision at its March 20, 2020 board
    meeting to preserve cash during the pandemic regardless of its contractual obligations to
    Level 4 and heedless of the cost to Level 4.”).
    229
    Akorn, 
    2018 WL 4719347
    , at *53 (quoting In re IBP, 
    789 A.2d at 68
    ).
    62
    were subject to an ordinary course condition.230 CorePower continued to press that
    claim at trial and it bore the burden to prove it.231 Here again, its trial proofs fell
    short.232
    This court has interpreted “the contractual term ordinary course to mean the
    normal and ordinary routine of conducting business.”233 As explained in AB Stable:
    Generally speaking, there are two principal sources of evidence that the
    court can examine to establish what constitutes the ordinary course of
    business. First, the court can look to how the company has operated in
    the past, both generally and under similar circumstances. Second, the
    court can look to how comparable companies are operating or have
    operated, both generally and under similar circumstances.234
    As is the case here, however, when “an ordinary course provision includes the phrase
    ‘consistent with past practice’ or a similar phrase, the court evaluates the second
    230
    JX 288 at 1.
    231
    See AB Stable, 
    2020 WL 7024929
    , at *51 (“Buyer contends that Seller failed to fulfill
    the Ordinary Course Covenant. Consistent with prior precedent, Buyer bore the burden of
    proving that Seller breached this covenant and caused the Covenant Compliance Condition
    to fail.”).
    232
    I confess that CorePower’s position that it should be excused from performing the APA,
    in part, because Level 4 followed CorePower’s instruction temporarily to close its
    studios—an instruction CorePower itself executed when it directly contacted Level 4
    members to advise them that Level 4’s studios were closed and then manually cancelled
    all Level 4 yoga classes––was received by the Court with the sour taste of hypocrisy.
    233
    See AB Stable, 
    2020 WL 7024929
    , at *68 (cleaned up); Cooper Tire & Rubber Co. v.
    Apollo (Mauritius) Hldgs. Pvt. Ltd., 
    2014 WL 5654305
    , at *17 (Del. Ch. Oct. 31, 2014)
    (quoting Ivize of Milwaukee, LLC v. Complex Litig. Supp., LLC, 
    2009 WL 1111179
    , at *9
    (Del. Ch. Apr. 27, 2009)).
    234
    AB Stable, 
    2020 WL 7024929
    , at *70.
    63
    category only.”235 Thus, when determining whether Level 4 failed to operate in the
    Ordinary Course of Business, I train my sight on how Level 4 itself historically has
    operated, both generally and under similar circumstances.236
    As explained above, Level 4’s operation of its CorePower-branded studios
    was almost entirely dictated by CorePower’s System Standards. And all relevant
    evidence presented at trial revealed that Level 4 historically and faithfully adhered
    to those standards.237 If CorePower took an action with respect to its corporate-
    235
    Snow Phipps, 
    2021 WL 1714202
    , at *38 (citing AB Stable, 
    2020 WL 7024929
    , at *71).
    To reiterate, the APA defines “Ordinary Course of Business” as “an action taken by any
    Person in the ordinary course of such Person’s business which is consistent with the past
    customs and practices of such Person (including past practice with respect to quantity,
    amount, magnitude and frequency and standard employment policies and past practices
    with respect to management of cash and working capital) which is taken in the ordinary
    course of the normal day-to-day operations of such Person.” APA Ex. A at 59 (emphasis
    supplied).
    236
    I acknowledge CorePower’s argument that Level 4 is asking “the Court [to] rewrite the
    absolute and unqualified language of the provision—adding a scienter requirement or
    efforts qualifier that would limit the application of that provision to Plaintiff’s volitional
    conduct.” CPY Supplemental Submission at 3. I disagree. Level 4 did not argue, and the
    evidence did not prove, that Level 4 did its best to operate in the ordinary course but fell
    short. Rather, Level 4 has maintained all along, and the preponderance of the evidence
    proves, that Level 4 was successful in its efforts to operate its yoga studios in the ordinary
    course during the post-signing/pre-closing period.
    237
    Tr. 23:15–25:14 (Kenny) (summarizing instances when Level 4 complied with the
    System Standards despite disagreeing with the direction); Tr. 300:11–17 (Otepka) (“Q. Did
    Level 4 have a practice of complying with its franchise agreements? A. Yes, we did.
    Q. Can you recall a time that Level 4 ever received a notice that it was not in compliance
    with its franchise agreement? A. No, we never received that notice.”). I acknowledge that
    the evidence reveals that Level 4 occasionally deviated from System Standards.
    Tr. 1272:13–1273:20 (Leondakis) (discussing how, unlike CorePower, Level 4 did not
    mandate the wearing of masks); Tr. 1270:5–1272:8; 1333:23–1335:13 (Leondakis)
    (describing how, in November 2020, CorePower’s Chicago studios remained closed due to
    64
    operated studios that affected its mode of operation, Level 4 was required under the
    Franchise Agreement to follow suit.238            If CorePower gave a direction to its
    franchisees, such as to close yoga studios temporarily, Level 4 was obligated to
    health regulations, but because Level 4 interpreted the same regulation differently,
    it elected to open its Chicago studios). These deviations were almost always cured and
    they were uncommon. Tr. 1333:13–22 (Leondakis) (“But you’ve never gone to Level 4
    after you became aware of it and said, you’re doing something inconsistent with your
    franchise obligations, have you? A. No. Q. And you acknowledged at your deposition that
    if CorePower believed that Level 4 was in violation of its franchise agreements, CorePower
    would have given notice to Level 4. Right? A. Yes.”) Tr. 1335:4–21 (Leondakis)
    (discussing when Level 4 failed to follow system standards regarding studio closures and
    masking protocols and CorePower’s response). More to the point, the occasional
    deviations do not alter my factual finding that Level 4’s custom and practice was to comply
    with System Standards and other directions it received from CorePower as franchisor.
    238
    Tr. 301:23-302:18 (Otepka) (Section 8.1 of the Franchise Agreement states,
    “You acknowledge and agree that operating and maintaining your Studio according to
    System Standards is essential to preserve the goodwill of the Marks and all Studios.” When
    asked how Level 4 followed this guidance in the ordinary course of its business, Otepka
    credibly testified: “So as CEO, it’s my responsibility for running the studios according to
    CorePower Yoga’s standards. And as it says here, these – following their standards,
    following their guidance, following their lead to follow these standards, it is important for
    maintaining brand consistency. And it’s ‘essential to preserve the goodwill of the Marks’
    means, you know, it’s critical that we maintain brand consistency by operating under these
    standards.”) (emphasis supplied). At trial, Wong testified that, in some respects,
    CorePower deviated from its own historic practices and never advised Level 4 that it was
    required to “follow these new standards.” Tr. 1054:5–1055:5 (Wong). I found the
    testimony confusing and ultimately unpersuasive. No evidence was presented that would
    indicate Level 4 was not required under the Franchise Agreement to operate in accordance
    with the System Standards. And the System Standards include any direction provided by
    CorePower to Level 4 via written or oral communications. Franchise Agreement § 4.3;
    see also Tr. 1050:9–1051:23 (Wong).
    65
    comply.239 This is precisely why Level 4 took the actions that CorePower now
    asserts violated the Ordinary Course Covenant.
    As noted, CorePower directed that its franchisees close their studios, and
    Level 4, consistent with past practice, obliged. CorePower started implementing
    employee layoffs soon after, on March 30, 2020.240 Ultimately, CorePower laid off
    roughly 98% of its employees and made its franchisees, like Level 4, aware of those
    layoffs as they happened.241 CorePower also provided its franchisees with a script
    the franchisee could use when conducting its own layoffs.242 A few days later, on
    April 3, 2020, Level 4 followed CorePower’s lead and furloughed the majority of its
    staff.243 Again, while the layoffs may have been extraordinary, the practice of
    239
    Tr. 366:14–367:3 (Otepka) (“Q. Were Level 4’s temporary closures consistent with its
    past custom and practice? A. Absolutely. Q. And why? A. Well, as I’ve been mentioning,
    we’ve had a longstanding history of following the franchise agreement. That’s our Bible.
    And in that, we followed, you know, the health and safety, as I described. We also had a
    history of following what CorePower was doing. And, again, CorePower was – their studio
    closed ours, and we were closing according to what they were doing, as we always would
    have.”) Tr. 1037:13–22; 1056:2–1057:13 (Wong) (confirming that CorePower notified its
    members that all CorePower studios would be closed).
    240
    JX 1010; Tr. 1311:4–7 (Leondakis). Of course, by March 30, CorePower had already
    advised Level 4 that CorePower would not perform under the APA. See JX 288 at 1.
    241
    Tr. 1312:1–24 (Leondakis).
    242
    Tr. 1313:1–5 (Leondakis).
    243
    Tr. 1313:10–15 (Leondakis).
    66
    following the direction of the franchisor was entirely ordinary and consistent with
    past practice.244
    In its post-trial brief, CorePower argued there were differences between
    Level 4’s operations pre- and post-pandemic in other respects (even after studios
    reopened), including “revenue, staffing, class size, lockers, hands-on training,
    teacher training, bring your own stuff, safety protocols[,] etc.” 245 CorePower, once
    again, fails to recognize that these actions were consistent with Level 4’s ordinary
    course because, in each respect, Level 4 followed the example set by its franchisor.246
    With respect to changes in revenue, the APA contains no seller’s representation that
    revenue was not affected pre-closing, and CorePower has offered no other basis to
    lash a vague assertion that revenue was “affected” to the APA’s Ordinary Course
    Covenant.247
    244
    The lease amendments and PPP loans followed and, again, were necessary responses to
    Level 4’s compliance with direction from the mothership.
    245
    CPY OB at 56.
    246
    Tr. 1329:15–1331:4 (Leondakis) (acknowledging that when CorePower reopened its
    studios it implemented a series of COVID-19 protocols, including reduced studio
    capacities, social distancing, increased cleaning protocols, masking, suspending towel and
    mat rentals, prohibiting hands-on teacher assists, and reducing staff). Tr. 1329:3–5
    (Leondakis) (acknowledging that CorePower closed off access to all of the locker rooms
    and showers).
    247
    In Hexion, this court rejected Hexion’s interpretation of an MAE provision because
    “[t]o allow the MAE analysis to hinge on Huntsman’s failure to hit its forecast targets
    during the period leading up to closing would eviscerate, if not render altogether void, the
    meaning of section 5.11(b).” Hexion Specialty Chems., Inc., 
    965 A.2d at 741
    . Specifically,
    Section 5.11(b) “explicitly disclaim[ed] any representation or warranty by Huntsman with
    67
    At the time CorePower claimed Level 4 had repudiated the APA by failing to
    operate in the ordinary course, the only steps Level 4 had implemented in response
    to COVID-19 were to close its yoga studios at CorePower’s direction and to cancel
    yoga classes, again at CorePower’s direction. These steps reflected Level 4’s
    compliance with its obligations as franchisee, not deviations from past practice.
    There was no repudiation of the APA by virtue of a breach of the Ordinary Course
    Covenant.
    Frustration of Purpose
    While not proffered as a basis to excuse non-performance when CorePower
    declared it would not close the Transaction, CorePower now argues that its
    performance under the APA was excused because the purpose of the APA was
    frustrated by Level 4’s post-signing conduct.248 The frustration of purpose doctrine
    applies when: “(1) there is substantial frustration of the principal purpose of the
    contract; (2) the parties assumed that the frustrating event would not occur; and
    respect to ‘any projections, forecasts or other estimates, plans or budgets of future
    revenues, expenses or expenditures, future results of operations, future cash flows or future
    financial condition of [Huntsman] or any of its Subsidiaries heretofore or hereafter
    delivered to or made available to [Hexion or its affiliates].’” 
    Id.
     at 740–41 (cleaned up).
    The APA contains a similar provision at Section 3.21, which explicitly disclaims any
    representations and warranties “regarding the probable success or future profitability of the
    Business.” APA § 3.21.
    248
    CPY OB at 102.
    68
    (3) the [d]efendant is not at fault.”249 While frustration of purpose can excuse a
    party’s performance under a contract, it “is very difficult to invoke,” and for good
    reason.250 Delaware courts understandably are “extremely reluctant to allow parties
    to disavow obligations that they have agreed to.”251
    According to CorePower, the “fundamental purpose of the APA was to
    facilitate Defendants’ purchase of an entire business consisting of well-operating
    Yoga Studios.”252 The argument that Level 4 “substantially frustrated” this purpose
    presupposes that Level 4 either repudiated or materially breached the APA.253
    As discussed above and below, Level 4 did not repudiate or materially breach the
    APA and, therefore, there was no frustration of purpose. Moreover, to reiterate, the
    yoga studio closures, which are at the heart of CorePower’s frustration of purpose
    argument, occurred in direct response to CorePower’s own direction. That is not a
    249
    CRS Proppants LLC v. Preferred Resin Hldg. Co., LLC, 
    2016 WL 6094167
    , at *7
    (Del. Super. Sept. 27, 2016) (finding that defendant’s performance was not excused by a
    frustration-of-purpose defense).
    250
    Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 
    2005 WL 5757653
    , at *6 (Del. Ch. July 27,
    2005).
    251
    
    Id.
    252
    CPY OB at 5.
    253
    CRS Proppants LLC, 
    2016 WL 6094167
    , at *7.
    69
    circumstance where the frustration of purpose doctrine will excuse non-
    performance.254
    Material Breach
    As with frustration of purpose, CorePower’s material breach arguments
    emerged in the midst of litigation.255 Not surprisingly, the scope of the alleged
    material breaches has expanded rather substantially from the bases CorePower
    proffered to support its sweeping declaration in real-time that Level 4 had repudiated
    the APA in March 2020. Indeed, it very much appears to this factfinder that
    CorePower simply went down the list of the seller’s Section 3.6 representations and
    checked any that might arguably be implicated by events that transpired after it
    declared it would not perform. As discussed below, CorePower has a substantial
    hurdle to clear here—the APA does not allow it to walk from closing based on a
    simple breach of contract. To justify its non-performance, CorePower was obliged
    254
    See Id.; Martin v. Star Publ’g Co., 
    126 A.2d 238
    , 242–43 (Del. 1956) (“In all the cases
    holding that the promisor was discharged from duty by impossibility of performance or
    frustration of purpose, it has been assumed that the promisor was not himself the
    responsible cause of the impossibility or frustration.”) (quoting 6 Corbin on Contracts
    § 1329).
    255
    In fact, Level 4 correctly points out that CorePower’s assertions that Level 4 breached
    Section 3.6(i) of the APA by amending its leases and Section 3.7 of the APA by accepting
    a Paycheck Protection Program (“PPP”) loan did not appear in CorePower’s operative
    counterclaim and, instead, first made an appearance in pre-trial briefing. Here again, this
    late appearance is tantamount to waiver. See Snow Phipps, 
    2021 WL 1714202
    , at *44
    (rejecting an argument raised for the first time in pre-trial briefing). Once again, however,
    for the sake of completeness, I address the claims below.
    70
    to demonstrate a material breach of the APA. It did not come close to clearing that
    imposing bullfinch.
    “Delaware law firmly supports the principle that a party to a contract is excused
    from performance if the other party is in material breach of his contractual
    obligations.”256 “The converse of this principle is that a slight breach by one party,
    while giving rise to an action for damages, will not necessarily terminate the
    obligations of the injured party to perform under the contract.” 257 As a matter of
    common law, “[a] breach is material if it goes to the root or essence of the agreement
    between the parties, or touches the fundamental purpose of the contract and defeats
    the object of the parties in entering into the contract.”258 “Under this doctrine,
    whether a breach is material ‘is determined by weighing the consequences in the
    256
    Brasby v. Morris, 
    2007 WL 949485
    , at *4 (Del. Super. Ct. March 29, 2007)
    (cleaned up). See also Segovia v. Equities First Hldgs., LLC, 
    2008 WL 2251218
    , at *23
    (Del. Super. Ct. May 30, 2008) (“The concept of cancelling contracts upon a material
    breach is well-settled in Delaware law: [‘][A] party may terminate or rescind a contract
    because of substantial nonperformance or breach by the other party.”) (citations omitted).
    257
    Brasby, 
    2007 WL 949485
    , at *4 (citation omitted); see also Segovia, LLC, 
    2008 WL 2251218
    , at *23 (“Not all breaches will authorize the other party to abandon or refuse
    further performance. To justify termination it is necessary that the failure of performance
    on the part of the other go to the substance of the contract.[’]”).
    258
    Mrs. Fields Brand, Inc. v. Interbake Foods, LLC, 
    2017 WL 2729860
    , at *28 (Del. Ch.
    June 26, 2017).
    71
    light of the actual custom of men in the performance of contracts similar to the one
    that is involved in the specific case.’”259
    Section 241 of the Restatement (Second) of Contracts provides five factors that
    are useful when determining whether a breach is material. They are:
    (i) the extent to which the injured party will be deprived of the benefit
    which he reasonably expected, (ii) the extent to which the injured party
    can be adequately compensated for the part of that benefit of which he
    will be deprived, (iii) the extent to which the party failing to perform or
    to offer to perform will suffer forfeiture, (iv) the likelihood that the
    party failing to perform or to offer to perform will cure his failure,
    taking account of all the circumstances including any reasonable
    assurances, and (v) the extent to which the behavior of the party failing
    to perform or to offer to perform comports with standards of good faith
    and fair dealing.260
    Unfortunately, CorePower did not focus on these or any other factors to support its
    argument that Level 4’s material breach justified its own non-performance. The
    failure to do so is not surprising given that the evidence of material breach is sorely
    lacking here.261 As discussed below, none of the alleged breaches of the APA were
    consequential enough to excuse CorePower’s performance.
    259
    AB Stable VIII LLC, 
    2020 WL 7024929
    , at *98.
    260
    
    Id.
     (quoting Restatement (Second) of Contracts § 241 (1981) (internal quotations
    omitted)).
    261
    See 14 Williston on Contracts, § 43:6 (noting that “whether a nonperformance is
    sufficiently material is ordinarily an issue of fact,” and that “[i]t is ultimately a question of
    degree, which, it has been said, should be decided based on the inherent justice of the
    matter”); Commonwealth Const. Co., 
    2006 WL 2567916
    , at *19 (“Whether a breach is
    material is a fact-sensitive analysis.”); 17A Am. Jur. 2d Contracts § 670 (Feb. 2022
    72
    a. Material Loss—Section 3.6(a)
    For the same reasons Level 4 did not repudiate the APA by breaching
    Section 3.6(a), it did not materially breach that section either. CorePower presented
    no credible evidence that Level 4 had sustained a “material loss . . . affecting the
    Business or any Acquired Asset with a value in excess of $50,000” at the time
    CorePower declared it would not close the Transaction.262 And, to the extent
    CorePower is correct that $50,000 sets the mark for “material loss,” the evidence
    reveals that Level 4 did not reach that mark as of March 26, 2020.263 There was no
    material breach of Section 3.6(a) as of the date CorePower announced it would not
    close.
    b. Staff Layoffs—Section 3.6(c)
    At Section 3.6(c), Level 4 represented that it had not “amended or terminated
    any agreement or contract providing for the employment or engagement of any
    Update) (“Where a breach causes no damages or prejudice to the other party, it may be
    deemed not to be material.”).
    262
    APA § 3.6(a).
    263
    Given the anticipated short-term consequences of COVID-19 at the time CorePower
    purportedly was assessing Level 4’s compliance with Section 3.6, I cannot conclude that
    CorePower would have been “deprived” of the benefit of the bargain it reasonably expected
    even if Level 4’s losses had exceeded the $50,000 threshold, or that CorePower could not
    have been “adequately compensated” for such losses post-closing under the APA’s price
    adjustment or indemnification regimes. See Restatement (Second) of Contracts § 241
    (1981).
    73
    Person on a full time or time . . . basis . . . other than in the Ordinary Course of
    Business.”264 Even assuming Level 4 had initiated staff layoffs prior to CorePower’s
    declaration that it would not close, an assumption not supported by the evidence,
    CorePower did not prove that the temporary staff layoffs, made in response to
    CorePower’s direction that Level 4 close its studios, “touche[d] the fundamental
    purpose of the contract and defeat[ed] the object of the parties in entering into the
    contract,”265 or that they departed from Level 4’s ordinary past practice of following
    its franchisor’s directions.      To the contrary, the layoffs were quintessentially
    temporary, as CorePower itself recognized.266 That Level 4 followed CorePower’s
    lead by laying off employees for the short duration the closures were expected to last
    did not provide a basis for CorePower to refuse to close.
    c. Studio Closures—Section 3.6(e)
    The same is true with respect to studio closures. Level 4 temporarily closed
    its yoga studios when CorePower announced to Level 4’s members that the studios
    would close and the yoga classes would be cancelled. CorePower internally decided
    that it did not wish to proceed with the Transaction in the midst of these temporary
    264
    APA § 3.6(c).
    265
    Mrs. Fields Brand, Inc. v. Interbake Foods, LLC, 
    2017 WL 2729860
    , at *28 (Del. Ch.
    June 26, 2017).
    266
    Tr. 1313:1–5 (Leondakis).
    74
    closures and asked Level 4 if it would agree to adjourn the April 1 closing. When
    Level 4 refused, and reminded CorePower that there was no contractual exit off the
    road to closing, CorePower had a choice. It could have proceeded to close on April 1
    as it was contractually obliged to do and then invoke its post-closing remedies, or it
    could go “all in” by refusing to close (or otherwise honor the APA) purportedly as a
    matter of common law right. Apparently frustrated that Level 4 would not agree to
    delay, it abruptly chose the latter course and, by so doing, committed itself to
    demonstrating that the temporary closures of Level 4’s studios, prompted by
    CorePower’s own direction, “defeat[ed] the object of the parties in entering into the
    contract.”267 The preponderance of the evidence said otherwise.
    d. Lease Amendments—Section 3.6(i)
    In Section 3.6(i), Level 4 represented that it had not “amended or terminated
    any lease or sublease of real property of the renewals thereof.”268 CorePower started
    267
    Mrs. Fields Brand, Inc., 
    2017 WL 2729860
    , at *28. See also Restatement (Second) of
    Contracts § 241 (1981) (noting that it is appropriate to consider whether the non-breaching
    party can be “adequately compensated” for the breach without refusing to perform when
    determining whether a material breach has occurred). CorePower certainly could have
    been compensated for any harm caused by the temporary closures post-closing through an
    indemnification claim or price adjustment. CorePower also argues that Level 4 breached
    Section 3.6(e) when it permanently closed four of its yoga studios. CPY AB at 71.
    As CorePower acknowledged in its briefing, however, these permanent closures occurred
    in October 2020, well after it declared that it would not honor the APA. Id.; JX 556 at 13–
    15.
    268
    APA § 3.6(i).
    75
    sending letters to its landlord requesting rent abatements on or around March 23,
    2020.269 Level 4 began sending out similar letters prior to the first scheduled closing
    date, but no lease amendments were effective until April 1, 2020 or later.270 Despite
    CorePower’s contention to the contrary, seeking lease amendments without
    CorePower’s approval or knowledge was not prohibited by the APA. More to the
    point, even if seeking rent abatements and favorable rent adjustments to account for
    the temporary closure of studios breached the APA, the credible evidence does not
    support a finding that these measures, taken to preserve assets, constituted a material
    breach of the APA that would justify CorePower walking away from the deal.271
    Here again, the measures were temporary and consistent with CorePower’s own
    mitigation efforts. And any harm flowing from the lease amendments readily and
    adequately could have been addressed by post-closing remedies.272
    e. Material Adverse Effect—Section 3.6(l)
    CorePower’s invocation of the MAE clause in its material breach case raises
    the interesting question of whether, having failed to bargain for a provision that
    269
    Tr. 1316:11–1317:7 (Leondakis); JX 374 at 15.
    270
    JX 1020; Tr. 768:19-769:9 (DeCoons).
    271
    Tr. 1314:6–20 (Leondakis). Of course, as stated, from Level 4’s perspective, it was
    actually preserving CorePower’s assets once the first closing date passed.
    272
    See Restatement (Second) of Contracts § 241 (1981).
    76
    would make the non-occurrence of an MAE a condition to closing, CorePower must
    now demonstrate that Level 4 suffered a “material Material Adverse Effect”
    to justify its refusal to close. Or does any Material Adverse Effect necessarily meet
    the material breach threshold?
    If it were the case that the occurrence of any MAE would justify a refusal to
    close, buy-side transactional planners might well wonder why they have bargained
    so hard to include express language in their acquisition agreements that makes clear
    the non-occurrence of an MAE is a condition to closing. In my view, they need not
    wonder or question whether they’ve been wasting their time. To justify a refusal to
    close based on a purported breach of an MAE representation (or covenant) in the
    absence of an express corresponding condition to close, the buyer must demonstrate
    that the breach of that representation (or covenant) was material.
    This is not redundant. Parties may define an MAE to mean whatever they
    want it to mean. And one can certainly envision an MAE definition that is triggered
    in circumstances that do not “go[] to the root or essence of the agreement between
    the parties, or touch[] the fundamental purpose of the contract and defeat[] the object
    of the parties in entering into the contract.”273 In such instances, while there might
    273
    Mrs. Fields Brand, Inc., 
    2017 WL 2729860
    , at *28.
    77
    be an MAE, there would not be a material breach of the MAE representation or
    covenant.
    Here, for the reasons explained above, there was no MAE and, therefore, there
    was no material breach of the MAE representation at Section 3.6(l). To the extent
    CorePower seeks to excuse its refusal to close on a material breach of this provision,
    the excuse fails.
    f. Debt—Section 3.7
    CorePower also points to Level 4’s application for a PPP loan as evidence that
    Level 4 was not operating in the ordinary course of business as required by the
    Ordinary Course Covenant and as evidence that Level 4 was in breach of
    Section 3.7.274 Level 4 did not apply for a PPP loan until April 9, 2020. 275 Thus,
    Level 4’s application for a PPP loan does not support CorePower’s assertion that
    274
    CPY OB at 49. In Section 3.7 of the APA, Level 4 represents that it “has no Liabilities
    in respect of Debt that is secured by any Encumbrance on any Acquired Asset or that
    otherwise could reasonably be expected to become a Liability of the Business except as set
    forth on Schedule 3.7. For each item of Debt, Schedule 3.7 correctly sets forth the debtor,
    the principal amount of the Debt as the date of this Agreement, the creditor and the
    collateral, if any, securing the Debt. The Seller has no Liability in respect of a Guarantee
    of any Liability of any other Person relating to the Business.” APA § 3.7.
    275
    JX 326.
    78
    Level 4 was not operating in the ordinary course at the time CorePower walked away
    from the Transaction.276
    In CorePower’s Pre-Trial Brief, it argues that Level 4 breached Section 3.7 of
    the APA when it accepted a PPP loan.277 Again, this alleged breach would have
    occurred after CorePower walked away from the Transaction and cannot be
    proffered as evidence to excuse CorePower’s failure to close on the First Tranche.
    g. Ordinary Course of Business—Section 5.1
    At the risk of intolerable redundancy, Level 4 did not materially breach its
    Ordinary Course Covenant in a manner that would excuse CorePower’s non-
    performance because, as of April 1, Level 4 was operating in the ordinary course.
    CorePower’s arguments to the contrary are rejected for the same reasons they were
    rejected when proffered in support of its repudiation excuse.
    E. Level 4 is Entitled to Specific Performance, Damages and Interest
    CorePower breached the APA when it refused to close on April 1, 2020, and
    then fully abandoned the Transaction it had agreed to consummate. Level 4 claims
    276
    In seeking the PPP loan, Level 4, once again, was following CorePower’s lead.
    Tr. 1324:8–20 (Leondakis) (confirming that CorePower applied for a PPP loan in
    March 2020).
    277
    D.I. 150 at 17.
    79
    it is entitled to specific performance and compensatory damages, in addition to pre-
    judgment interest on the deal price.278 I agree.
    Under Delaware law, a party seeking specific performance must establish that
    “(1) a valid, enforceable[] agreement exists between the parties; (2) the party seeking
    specific performance was ready, willing, and able to perform under the terms of the
    agreement; and (3) a balancing of the equities favors an order of specific
    performance.”279 The APA expressly provides that specific performance is an
    appropriate remedy “in the event any of the provisions of this [APA] are not
    performed in accordance with their specific terms or otherwise are breached or
    violated.”280 Our Chancellor recently observed that, “[t]his court has not hesitated
    to order specific performance in cases of this nature, particularly where sophisticated
    parties represented by sophisticated counsel stipulate that specific performance
    would be an appropriate remedy in the event of breach.”281 I see no basis to
    hesitate here.
    278
    Level 4 OB at 99.
    279
    Simon-Mills II, LLC v. Kan Am USA XVI Ltd. P’ship, 
    2017 WL 1191061
    , at *32
    (Del. Ch. Mar. 30, 2017) (quoting BAE Sys. Info. & Elec. Sys. Integration, Inc. v. Lockheed
    Martin Corp., 
    2009 WL 264088
    , at *7 (Del. Ch. Feb. 3, 2009)).
    280
    APA § 8.11.
    281
    Snow Phipps, 
    2021 WL 1714202
    , at *51.
    80
    The APA was and continues to be a valid contract, and Level 4 is entitled to
    the declaration it seeks to that effect. Level 4 continues to “stand ready to deliver to
    CorePower the studio assets it contracted to deliver in the APA.”282 And, as
    CorePower breached the APA notwithstanding its exercise of the Call Option and
    its commitment to honor the Call Option Agreement and Call Option Exercise
    Agreement, the balance of equities decidedly favors Level 4.283
    According to CorePower, specific performance is impractical in this case
    because the Transaction was a “significant undertaking” and “never a simple
    transaction.”284 But, as noted, “[t]his court has not hesitated to order specific
    282
    Level 4 OB at 95; see Tr. 262:15–17, 1396:11–1398:15 (Kenny); Tr. 498:22–499:9,
    515:12–518:24 (Jaros); JX 762; JX 763; JX 1019; JX 1020; see also Osborn, 
    991 A.2d at 1161
     (argument that a party was not able to perform at some historical point in time did
    not preclude order of specific performance when party stood ready and willing to perform
    at the time of judgment).
    283
    At trial, Kenny described how the APA contained a noncompete provision that was an
    “enhanced” version of the noncompete provision in the Franchise Agreement.
    Tr. 1377:15–13 (Kenny); Franchise Agreement § 15.6; APA § 5.6. According to Kenny,
    the term of the noncompete was to run from the date of the first closing, and he suggested
    the Court’s specific performance order should account for this by finding that the
    noncompete term has now expired. Tr. 1381:18–24 (Kenny). There is support for Kenny’s
    position in our law. See Physiotherapy Corp. v. Moncure, 
    2018 WL 1256492
    , at *5
    (Del. Ch. Mar. 12, 2018) (holding that party’s breach of contract excused counter-party’s
    performance of non-compete restrictive covenant). But Level 4’s prayers for relief in the
    Complaint and in the Pretrial Order did not seek an adjustment of the APA’s non-compete
    provision, and so I have no basis to provide that relief here. See generally, Complaint
    Prayers for Relief (no prayer for reformation of or excusal from noncompete); PTO Sec. V
    (same).
    284
    CPY OB at 97.
    81
    performance” of transaction agreements like the APA, even when doing so might
    involve a “significant undertaking.”285 Again, I see no reason to hesitate here.286
    Level 4 will deliver all assets it agreed in the APA to deliver and CorePower will
    pay what it agreed in the APA to pay for those assets.
    Section 2.2 of the APA sets forth the methodology for determining the
    purchase price associated with each of the staggered closings.287 Mordaunt followed
    this methodology and determined that CorePower was to pay Level 4 $6,254,452 as
    of the closing for Tranche 1, $6,260,934 as of the closing for Tranche 2, and
    $13,850,773 as of the final closing for Tranche 1 (collectively, the “APA
    Consideration”).288     Mordaunt’s opinion in this regard was credible and not
    285
    Snow Phipps, 
    2021 WL 1714202
    , at *51; 
    id.
     at *51 n.565 (collecting cases). See also
    Channel Medsystems, Inc. v. Boston Sci. Corp., 
    2019 WL 7293896
    , at ¶ 4 (Del Ch. Dec. 26,
    2019) (ordering specific performance of merger agreement); Hexion, 
    965 A.2d at 763
    (same); In re IBP, 
    789 A.2d at 84
     (same).
    286
    I note that this case does not involve personal services, construction or the like—cases
    in which this court has been hesitant to supervise a specific performance award. See, e.g.,
    Ryan v. Ocean Twelve, Inc., 
    316 A.2d 573
    , 575 (Del. Ch. 1973) (“As a general rule, a court
    of equity will not order specific performance of a building contract in a situation in which
    it would be impractical to carry out such an order unless there are special circumstances or
    the public interest is directly involved.”); Bali v. Christiana Care Health Servs., Inc.,
    
    1999 WL 413303
    , at *2–3 (Del. Ch. June 16, 1999) (observing that many courts and the
    Restatement hold that a contract for personal services typically will not be specifically
    enforced).
    287
    APA § 2.2.
    288
    Mordaunt’s Report ¶ 150; at p. 116. See also Tr. 590:13–592:9 (Mordaunt) (credibly
    testifying regarding his process for determining the unpaid portion of the purchase price).
    82
    meaningfully challenged by CorePower. Thus, CorePower must pay Level 4 the
    APA Consideration, which, as adjusted, totals $26,366,159.
    As “an order of specific performance seldom results in performance within
    the time the contract requires,” “damages for the delay will usually be
    appropriate.”289 So too here. When CorePower walked-away from the Transaction,
    Level 4 became a steward of the studio assets.290 As a steward, Level 4 began taking
    cost-saving measures to preserve the assets and mitigate damages.291 From April 1,
    2020 through May 31, 2021, Level 4 sustained $3,523,516 in operating losses
    protecting CorePower’s assets.292 Under the terms of the APA, Level 4 would have
    captured and incurred any profits or losses up until each closing date for the
    289
    Snow Phipps, 
    2021 WL 1714202
    , at *55 (quoting Restatement (Second) of Contracts
    § 358 cmt. c) (internal quotation marks omitted).
    290
    Tr. 493:13–24 (Jaros) (“Q: So let’s talk about what happened after April 1, 2020. After
    CorePower terminated the acquisition, what did Level 4 do with respect to the yoga
    studios? A. At that point, we became a steward of the asset for CorePower.”).
    291
    See Am. Gen. Corp. v. Cont’l Airlines Corp., 
    622 A.2d 1
    , 11 (Del. Ch.1992) (“While
    there is a general duty to mitigate damages if it is feasible to do so, a plaintiff need not take
    unreasonably speculative steps to meet that duty.”), aff’d, 
    620 A.2d 856
     (Del. 1992). I note
    that CorePower contends Level 4 could have sought CorePower’s consent before taking its
    “good steward” actions. CPY Supplemental Submission at 8. For this proposition,
    CorePower cites our Supreme Court’s decision in AB Stable. Here, unlike in AB Stable
    and as described above, there and no provisions in the APA requiring consent and, in any
    event, the actions taken by Level 4 as the steward of the assets were consistent with
    Level 4’s (and CorePower’s) ordinary course of business. Thus, Level 4 did not need to
    seek permission from CorePower prior to taking actions to mitigate damages.
    292
    Tr. at 592:10–593:11 (Mordaunt); Tr. at 508:22–509:22 (Jaros); JX 532; JX 630;
    JX 680; JX 681.
    83
    respective studios to be delivered in each tranche, and CorePower would have
    captured and incurred the profits and losses from that date forward.293 Thus, any
    losses Level 4 incurred as a result of operating the studios after each “Closing Date”
    passed without a closing (the “Operating Losses”) would have been incurred post-
    closing by CorePower had it adhered to the terms of the APA, and CorePower must
    bear those losses.
    Level 4 will also be awarded pre-judgment interest on the APA Consideration
    and the Operating Losses at the statutory rate accruing from the date that each
    payment was due and payable under the APA (or in the case of the Operating Losses,
    the date the Operating Losses were incurred) until the date of this Memorandum
    Opinion.294 At trial and in his report, Mordaunt credibly opined that Level 4 suffered
    damages by not receiving the purchase price agreed to by the parties at the agreed
    upon times.295       As Mordaunt explained, given the staggered closings, it was
    293
    Mordaunt’s Report ¶ 151(b).
    294
    See 6 Del. C. § 2301; see also Brandywine Smyrna, Inc. v. Millennium Builders, LLC,
    
    34 A.3d 482
    , 486 (Del. 2011) (holding that pre-judgment interest “in Delaware cases is
    awarded as a matter of right”); 2 Donald J. Wolfe & Michael A. Pittenger, Corporate and
    Commercial Practice in the Delaware Court of Chancery, § 16.09[f][1], at 16-136 (2d ed.
    2020) (“[T]he Court of Chancery has the authority to grant pre- and post-judgment interest,
    and to determine the form of that interest. The practice of awarding pre-judgment interest
    is well accepted in Delaware.”) (footnote omitted).
    Mordaunt’s Report ¶ 150; 594:3–595:18 (Mordaunt) (credibly testifying regarding the
    295
    methodology and results of his damages calculations).
    84
    appropriate to calculate this aspect of the damages either by looking to the statutory
    pre-judgment interest or by determining what the expected return on the APA
    Consideration would have been had Level 4 invested the APA Consideration.296
    In its opening post-trial brief, Level 4 requested “that the Court order
    CorePower to pay pre-judgment interest on the purchase price and stewardship
    losses at the statutory rate through the date of payment.”297 Because Level 4
    requested that I use pre-judgment interest as a basis to calculate the full extent of its
    losses both with respect to the APA Consideration and the Operating Losses
    (resulting in a lower return than the alternative), and because I have found
    Mordaunt’s opinion in this regard to be credible, I am satisfied that an award of pre-
    judgment interest on the APA Consideration, as of the contractually determined
    closing dates, adequately compensates Level 4 for the harm caused by CorePower’s
    breach of the APA.298 Level 4 is also entitled to receive pre-judgment statutory
    interest on the Operating Losses, which shall be calculated in accordance with
    Exhibit K-2 to Mordaunt’s expert report.299 Within ten (10) days from the date of
    296
    Id.
    297
    CPY OB at 100.
    298
    Mordaunt’s Report ¶ 150; Tr. 595:5–9 (Mordaunt) (stating that the amount Level 4 lost
    out on in expected interest or returns through the date of the trial was $1,550,344 and
    $3,294,106, respectively).
    299
    Mordaunt’s Report at p. 120.
    85
    this Memorandum Opinion, the parties shall submit a calculation of the statutory
    pre-judgment interest on the APA Consideration and the Operating Losses, which
    should make current the calculation submitted by Level 4 as of the start of trial using
    the same methodology.300
    Level 4 is also entitled to post-judgment interest, again at the statutory rate,
    as well as recoverable costs.301 Level 4 has failed, however, to support its request
    for attorney’s fees by failing to articulate a basis for the Court to bypass the
    American Rule.
    As a final point, CorePower paid Level 4 several pre-closing payments,
    including:
    • $494,039 to cancel the buildout of the Cancelled Studios, terminate
    the concomitant Franchise Agreement, and reimburse Level 4;302
    • $3,212,623 for the acquisition of the Development Studios on
    November 27, 2019;303 and
    300
    See Mordaunt’s Report ¶¶ 150(b)(ii); 151(c)(ii). The parties should confer on this
    calculation in an effort to agree on the number. This is a mathematical exercise only, and
    CorePower waives no rights by agreeing to the math. If the parties cannot agree, then they
    shall submit competing, simultaneous calculations.
    301
    See Wilmington Country Club v. Cowee, 
    747 A.2d 1087
    , 1097 (Del. 2000) (observing
    that post-trial interest “is a right belonging to the prevailing plaintiff and is not dependent
    upon the trial court’s discretion”); Ct. Ch. R. 54(d) (providing for prevailing party costs).
    302
    PTO ¶ 47.
    303
    PTO ¶ 46; see also APA § 2.2.4; Tr. 1016:15–20 (Wong).
    86
    • An unidentified amount to reimburse Level 4 for the cost of building
    out the Development Studios for the negative cash flow from
    November 2019 to June 2020 agreed to in APA § 2.2.4.304
    To clarify, CorePower has paid these amounts and received everything it has
    bargained for in exchange for these payments. There is no basis to order Level 4 to
    return them.305
    III. CONCLUSION
    For the foregoing reasons, my verdict is for Level 4 on its claim for specific
    performance of the Agreement, damages, pre-judgment and post-judgment interest
    at the statutory rate and prevailing party costs. CorePower’s counterclaims fail.
    Level 4’s counsel shall file, on notice to opposing counsel, a proposed form of final
    judgment within ten (10) days of the date of this opinion that incorporates the Court’s
    verdict and includes its revised interest calculations.
    304
    See APA § 2.2.4.
    305
    I note there is no provision in the APA for reimbursement of pre-closing payments,
    further highlighting the “one-way” nature of this Transaction. See APA; Tr. 983:4–19
    (Wong).
    87