Genesis CMG Holdings LLC v. Philip Yancey - Motion to Dismiss Contract Dispute

S ELENA E. M OLINA S ENIOR M AGISTRATE IN C HANCERY C OURT OF C HANCERY OF THE S TATE OF D ELAWARE L EONARD L. W ILLIAMS J USTICE C ENTER 500 N ORT H K ING S TREET, S UITE 11400 W I LMINGTON, DE 19801-3734 Febr uary 26, 2026 Sean J. Bellew, Esquire Bellew LLC 2961 C enter ville R oad, Su ite 302 Wilm ington, DE 19808 Arthu r G. Con nolly, III, Esquir e Conno lly G allagher, LLP 1201 M arke t Street, 20th F loor Wilm ington, D E 19801 Re: Genes is CMG Holdi ngs LLC, et al. v. Phil ip Yanc ey, et al., C.A. No. 2024 - 1317 - SEM Dear C ounse l: Pendi ng bef ore me is a motion to di smiss this c ontrac t dispute fo r fail ure to state a claim. The defe ndant s have be en sued for allege dly br eachi ng (or interf ering with) rest rictive coven ants a nd unit pur chase agree ments. The p robl em is most of the al lege dly brea ched re stric tions termi nated b y their own te rms by Octo ber 28, 2024. Because the gr avamen of the op erati ve com plaint is th at on and afte r October 31, 202 4, the ind ividua l defend ants breached the then - termi nated re stric tions (aide d by the newly for med entity def enda nt), the pla intiff s have faile d to st ate a via ble claim for rel ief u nder the ir pri mary t heory. And, as mor e full y expla ined her ein, t he remaini ng cl aims a re not well - pled, a nd t he com plaint shoul d be dism issed in full. This i s my fi nal rep ort.

C.A. No. 2024-1317-S EM February 26, 2026 Page 2 I. BACKG ROU ND Throug h thi s action, Genesi s CMG Holdi ngs, LLC (“ Gene sis”) and Conver ze Media Group, LLC (“Conv erze,” wi th Gen esis, the “P laint iffs”) seek t o enfor ce various rest ricti ve covena nts f ound wit hin re stricti ve cove nant a greem ent s (and incor pora ted into a re lated uni t purcha se agreem ent) again st its forme r exec utives, Phil lip Yance y and J ennife r Miller - Baten (the “Indiv idual D efen dants”), as we ll as Defe ndant Ya ncey’s ne w busine ss, Instin ctive Media Group, LL C (“Insti nctive, ” toge ther with the In dividual De fenda nts, the “Defenda nts”). 1 Here, a t the plea ding sta ge, I tak e the we ll - pled ave rments of fact in the Plain tiffs’ amended com plaint a s true. A. The Tr ansact ion Prior to Octob er 2023, the Defe ndant s were af filiate d with Converze, a direct respo nse me dia pur chasi ng agenc y, whi ch wor ks wit h busi ness es that s eek t o adver tise on te levisi on and rad io. 2 Through its work, Converz e assis ts its c lient s by devel opin g adver tisin g stra tegies a nd sec uring strate gic adv erti sing op portun ities. 3 Defe ndant Ya ncey wa s the f ounder, a former execu tive, an d 45% equ ity holde r of 1 Docket Item (“D.I.”) 18 (“Am. Compl.”). 2 Id. ¶ 9. 3 Id.

C.A. No. 2024-1317-S EM February 26, 2026 Page 3 Converze. 4 Defenda nt Miller - Bat en wa s als o a former executive and 10% equi ty holde r of Conver ze. 5 That was un til Oct ober 27, 2 023, whe n the Defend ants executed a Unit P urcha se Agre ement (the “UPA”) to sell th eir inte rest s in Con verze to Gene sis. 6 Throug h t he UP A, t he D efendan ts (and a nonpa rty se ller) transferred all th ei r inte rest s in Converz e to Gene sis, under which Con verze wo uld conti nue to ope rate. In conn ection with t he UPA, Conver ze agr eed to m ake cert ain payme nts to the Defe ndant s (and the thir d, non - par ty equity ho lder), and Genes is ex e cut ed promi ssory n otes agr eeing, in per tinen t part, to pa y Defenda nt Ya ncey $4, 325,00 0 and Def endan t M iller - Baten $450,000 (the “ Sell er Note s”). 7 Those am ounts wer e reduc ed to $ 2,476, 221.23 an d $226,8 13.33, r espec tive ly, per an April 29, 2 024 sett lement a greem ent. 8 Converze also is sued a loan to Defe nda nt Yance y (and t he 4 Id. ¶ 10; D.I. 4 Ex. 1 ¶ 2. 5 Am. Compl. ¶ 10. 6 Id. Al though not attac hed to the a mended co mplaint, the U PA was filed in connection with earlier m otion pra ctice and is considered herein as incorporated by reference. See In re Morton’s Restau rant Grp., Inc. S’ho lders L itig., 74 A. 3d 656, 658 n.3 (Del. Ch. 2013) (“[T]he court may cons ider documents that are incorporate d by refere nce or integral to the complaint.”) (interna l quotations omitted). See D.I. 4 Ex. A. 7 Am. Compl. ¶ 11. 8 Id.

C.A. No. 2024-1317-S EM February 26, 2026 Page 4 non - party e quity h older) on the s ame day a s the U PA (the “Shareh older Loans”). 9 In con necti on with t he tran sactio n, the De fen dants al so exec uted Restrict ive Covena nt Ag reements (the “RCAs ”) wit h Genesi s, whic h were a conditi on to t he clos ing and c onsu mmati on of the tr ansa ction. 10 T he RCA s c ontain ed non - compe titio n, non - solicit ation, and c onfi dentia lity cl auses gover ning the Indi vidu al Defe ndant s’ conduc t p ost - trans action (after O ctob er 27, 2023). Tho se restr iction s, and w hether the Defe ndan ts viola ted th em, ar e at issu e in thi s acti on. B. The Restr ictio ns Under Sectio ns 1 – 4 of the RC A for Def endant Yanc ey, Defe ndant Ya nce y agree d to: (1) not co mpete f or fo ur year s anyw here w ithin the Un ited Sta tes, (2) no t solic it any Conve rze cus tomer s for two ye ars, (3) not solic it an y Conver ze emplo yees fo r four yea rs, an d (4) keep all Con verze’ s confi dentia l inform atio n confi dentia l and no t use or appr opria te it. 11 For Defe ndan t Miller - B aten, the restr ictiv e peri ods we re altere d suc h that the non - co mpet iti on was o nly for one year and th e non - solici tation pr ovisi ons were b oth for two yea rs. 12 9 Id. ¶ 13. Sec tion 8.1 0 of the UPA provides that the “sha reholder loans will not be payable and will be cancelled a t the time the se ller notes become due and pa yable (or such ot her time agreed to by [Genesis] . . . and [Yancey]. ” Id. ¶ 26. Miller - Baten was not part of the Shareholder Loans. D.I. 22 (“Defs.’ Opening Br. ”) at 14. 10 Am. Compl. ¶¶ 14, 39. 11 Am. Compl. Ex. A, §§ 1–4. 12 Am. Compl. Ex. B, §§ 1–4.

C.A. No. 2024-1317-S EM February 26, 2026 Page 5 T he RC As spec ifie d that the writt en agree ment “co nstit utes the entire Agree ment a mong the par ties” and t hat an y amen dmen ts, modi fica tions, or wa ivers in con nection therew ith coul d only be ma de “by a writ ten agree ment si gned by” th e Defe ndant party to the agree ment a nd Gen esis. 13 T he RCA s also have an “ou t ” th rough which restrictions (1) – (3) abo ve would autom atica lly ter minate. Secti on 22 of the RCA s provi des: Adjus tmen t to Re strict ed Per iod. Notwith stan ding anyt hing to the contra ry here in, if, f ollow ing the f irst ann iver sary of the Effec tive Date, any of the Sel ler No tes (a s define d in the Purcha se Agre eme nt) or the Earno ut Payme nt (as def ined i n the Pur chase A greeme nt) rem ain unpa id for a ny reas on, and re gard less of w hether the paym ent i s delaye d or rest ricte d by the Subor dina tion Agr eeme nt (as defi ned in the Purc hase Agr eemen t) or the Se nior Cred it Agree ment (a s define d in the Purc hase Agr eement) or as a result of an y Default or Event of Def ault there under, then S ecti ons 1, 2, and 3 of thi s Agreem ent s hall ter minat e and be of no f urther f orce or e ffect. ” 14 With the “Effec tive Da te” of Octo ber 27, 2 023, this pr ovisi on provide d that t he non - compe titio n and non - solicit ation re strict ions wo uld term inate b y October 28, 202 4 if, by t hat date, the Sell er Note s (as define d in th e UPA) we re un paid. Article IX o f the UP A defi nes Sel ler Note s as: “t hose cer tain subor dinate d prom issory notes i n the aggre gate pr incipa l amount of $8,500, 000 to be iss ued by [Gene sis] to t he 13 Am. Compl. Ex. A, §§ 11, 13, 18; Ex. B, §§ 11, 13, 18. 14 Am. Compl. Ex. A at 8; Ex. B at 8.

C.A. No. 2024-1317-S EM February 26, 2026 Page 6 Members [,] ” a defin ed term which i nclude s the In divid ual Def endan ts. 15 This tracks in all mat erial res pect s how I have define d Seller No tes herei n. Under this def initi on, b y Oc tober 28, 20 24, the Sel ler Note s rema ined unpa id. The Pla intiff s plea d only tha t Defenda nt Mil ler - Bate n’s no te wa s paid a nd con cede that Def enda nt Yanc ey’s was not. 16 Th e Plai ntiffs ave r, ho wev er, that t he par ties “ agreed ” to offse t the S eller Not es whic h remaine d unpa id aga inst the S h are hol der L oans, which w ere greater than t he rema inin g amou nt owe d on the Selle r Note s. 17 Abse nt from the ope rative ple adi ng, how ever, are any detail s as to that pur ported agree ment (e. g., t he date a nd term s of any offer, acceptance, or counteroffer). 18 C. The Alleged B reaches Relyi ng upo n the the ory tha t the re strict ions di d not term inate under Se ctio n 22 and point ing to th e non - termina ting c onfide ntia lity res trict ions, the Plainti ffs allege tha t the Defe ndant s bre ach ed their ob ligat ions und er the RC As “[s] ince at least Oc tober ” of 2024 in conne ction wi th their wo rk wi th Inst inctiv e. 19 Defe ndant Ya ncey formed In stinc tive on Oc tober 3 1, 2024. 20 He and 15 D.I. 4 Ex. A, art. IX. 16 See Am. Compl. ¶ 28. 17 Id. ¶ 25. 18 Id. 19 Id. ¶ 19. 20 Id. ¶ 5.

C.A. No. 2024-1317-S EM February 26, 2026 Page 7 Defe ndant Mi ller - Ba ten ar e alle ged to have c reated Insti nctive “to dir ectly comp ete with” Conver ze an d have s olicit ed seve ral of Conver ze’s e mploy ees an d clien ts. 21 The P laintif fs fur the r alle ge that these compet itive acti vities have i nvolve d the misu se of Co nverze’ s conf identi al infor matio n and re sulte d in fina ncia l harm t o Conve rze’ s ongoin g busi ness p ost - transac tion, thr ough t he loss of cli ents an d employ ees. 22 D. Procedur al Posture The Pla intif fs file d the ir ini tial com plain t on Decembe r 19, 2024, along wit h a moti on to exp edite and mot ion for a temp orary re strai ning or der. 23 Vice C hance llor Fiora vanti den ied t hose m otions o n Dece mber 31, 2024. 24 The Plai ntiffs th en f iled their a mende d com plain t on Februa ry 18, 202 5 (the “Am ended C ompla int”). 25 In the Amen ded Comp laint, which is the o perati ve plead ing, the Plaint iffs p led thr ee coun ts: Cou nt I for breach of contr act, C ount II for br each of the imp lied c ovena nt of go od faith a nd fai r deali ng, an d Count II I for tor tious interf erenc e with contrac t. On Mar ch 21, 202 5, the Def endan ts move d to dism iss the A mended 21 Id. ¶ 19. 22 Id. ¶¶ 19, 30–33. 23 D.I. 1. 24 D.I. 12–14. 25 D.I. 18.

C.A. No. 2024-1317-S EM February 26, 2026 Page 8 Compl aint (the “Motio n”). 26 Vice C hance llor F iorava nti a pprov ed the parti es’ brief ing sche dule, which con templ ated the pa rties c omplet ing bri efing o n the Mo tion in July 202 5. 27 Ther eafter, on O ctober 6, 2025, the Ch ancell or rea ssigne d this action to me. 28 I he ard argu ment o n Decem ber 9, 202 5, and t ook the Mo tion u nde r advis ement. 29 II. ANAL YSIS Thro ugh the Mot ion, the De fenda nts see k dismi ssal for fa ilure to sta te a cla im under C ourt of C han cery Rule 12(b)(6). 30 The Defen dants make sev eral ar gument s incl uding tha t: (1) the cla ims in the Amende d Compla int m irror th ose al read y deemed n ot colo rable by the Vice Ch ancell or; (2) t he non - comp et ition and non - solic itation res trictions termina ted by t heir own ter ms pri or to the allege d breach es; (3) the Plai ntiff s fail ed to pl e a d fact ual av erment s sup porti ng the a llege d confi dentia lity br eac hes; (4) the Pla intiff s faile d to ple ad a ga p suppor ting a n implie d coven ant cl aim; (5) absent a ctio nable br eache s, there is no ac tiona ble tort ious interf ere nce clai m; and (6) the r estric tions are over broad a nd unenfor ceable. 26 D.I. 22. 27 D.I. 26. 28 D.I. 35. 29 D.I. 37. 30 D.I. 22 at 1; Defs.’ Op ening Br. at 10.

C.A. No. 2024-1317-S EM February 26, 2026 Page 9 As m ore fu lly ex plain ed belo w, I a gree w ith the Defe ndants as to (2), (3), (4) and (5). Wit h those holding s, I nee d not rea ch (6). I also disa gree with the prop osition in (1), tha t the Vic e Cha ncellor ’s col orab ility a nalys is is bi ndin g on my pleadin g - stage r eview. Well - reaso ned as i t was, it ha s little, if a ny, wei ght at t his stag e and the Vice Chancel lor forecas ted as much. 31 N everth eless, I conc lude that the Ame nde d Compl aint sho uld be dism isse d for failure to state a claim. The s tandar d for di smissa l under Rule 1 2(b)(6) is se ttled: (i) all wel l - pleade d fact ual alle gatio ns are a ccepte d as true; (ii) e ven vague a lleg ation s are we ll - pleade d if the y give the opp osing party notic e of the c laim; (iii) the C ourt m ust dra w all reas onable infer ences in favor of the non - mo ving par ty; and [i v] dismi ssal is ina ppropria te unle ss the pla intiff would n ot be en titled t o recove r under any reas onabl y concei vable set of c ircum stance s susce ptible of pro of. 32 Altho ugh thi s is a plaint iff - frie ndly sta nda rd, the Cour t does not “simply acce pt concl usory a lleg ation s unsupp orte d by spe cific fa cts, n or do we draw u nreas onabl e infer ence s” in favo r of the plea der. 33 31 D.I. 17 at 51: 9 – 19 (“ And I note for the sak e of clarity that my rul ing today does not constitute a final resolution of the plai ntiffs’ claims. Before m e today are a motion to expedite, which is a scheduling m otion, and a motion for a tempor ary restraining order, which is a discrete request for extrao rdinary injunctive rel ief. It is on these moti ons that I rule today. And my ru ling today provid es only that thi s case shall proceed on a nor mal schedule and that the p laintiffs are not entitl ed to extraord inary relie f on this prelim inar y record.”). 32 Savor, Inc. v. F MR Corp., 81 2 A.2d 89 4, 896 – 97 (Del. 2002) (qu otation marks and citations omitted). 33 Clinton v. Enter. Rent- A-Car Co., 977 A.2d 892, 895 (D el. 2009).

C.A. No. 2024-1317-S EM February 26, 2026 Page 10 The pri mary c laim in th e Amen ded Com plaint i s for bre ach of contrac t in Count I. I hold tha t the Pla intiff s faile d to stat e a claim f or bre ach of con tract i n Count I, vit iating Count III for torti ous inte rfer ence, and tha t the P laintiff s faile d to iden tify the gap ne cessary for the imp lied cov enan t claim in Cou nt II to sur vive. A. The P laintif fs hav e not ad equate ly pled that th e Defe ndants breached the RCAs. The Pla intif fs aver t hat the De fenda nts br eache d the re stricti ve co venants in the R C As by competing, solicit ing, an d using confiden tial in formati on. The non - compe titio n and non - solicit ation restric tions, however, t erminate d b y th eir own term s prior to the alleged br eache s. And the alle ged m isuse of c onfide ntia l inform atio n is not suppor ted by any we ll - ple d fact s. The Pla intiff s, thu s, faile d to state a claim in Co unt I. Gener ally, “ [i] n orde r to survi ve a mot ion to di smiss for fail ure to s tate a breac h of con tract c laim, t he plai ntiff m ust dem onstr ate: f irst, the exis tence of the contra ct . . . second, the b reach o f an ob ligati on imp osed by that con tract; and th ird, the re sultan t damage to the pla intiff. ” 34 In inte rpreti ng the obl igati ons impo sed by a contra ct, “De laware law ad heres t o an ob ject ive the ory of c ontr acts, u nder wh ich a court w ill not c onsid er extri nsic evi dence to ‘ inter pret the i ntent of t he part ies, to 34 VLIW Tech., L LC v. Hewlett - Packard Co., 8 40 A.2d 606, 61 2 (Del.200 3) (citing Winston v. Mandor, 710 A.2d 8 35, 840 (Del. Ch. 1997)).

C.A. No. 2024-1317-S EM February 26, 2026 Page 11 vary th e term s of the co ntract o r to cre ate an amb iguit y ’ when the rel evant contr act term s are u nambig uous.” 35 Rath er I look to t he four corne rs of the RCA s a nd inter pret t he plai n meani ng of their provi sions. 36 Here, t here i s no dis pute th at the pa rties execut ed the RCAs, which impose d restr ictio ns upon th e Defenda nts. T hose res tricti ons, i n Sec tions 1 – 4, are unamb iguo us. But, als o unambi guous, are the inte gratio n, modi fication, and autom atic termin ation prov ision s. That is t he firs t proble m with t he Plai ntiffs’ breach of con tract c laim, specif icall y for the alleg ed breac hes of S ectio n s 1–3. T he RCAs have non - com pet ition and non - solicit ation re stri ctions i n S ections 1– 3. But Sect ion 22 of the RC As pro vides t hat th ose res tricti ons “ shall term inate and be of no further f orce or effect [,] ” if the Sel ler Note s rema in unpaid on t he firs t anni versar y of the agr eeme nt’s effec tive da te. “Seller Not es” is defin ed in the RCAs to mea n all the S eller Notes, as a co llect ive un it, rather than s olely th e note for the indiv idual s ignin g each of the RCA s. Th us, the P laint iffs’ p leadin g conce ssion that Defe ndant Ya ncey’s no te r emains un paid i m pa cts both of the RCAs. 35 Revolution Retail Sys., LLC v. Sentinel Tec hs., Inc., 2015 WL 66116 01, at *9 (Del. Ch. Oct. 30, 2015), judgme nt entered, (Del. Ch. 2015), and or der clarified, (Del. Ch. 2015). 36 See T hompson St. Cap. P’rs IV, L. P. v. Sonova U.S. Hearing Instrume nts, LLC, 34 0 A.3d 1151, 1166 (Del. 2025).

C.A. No. 2024-1317-S EM February 26, 2026 Page 12 To avo id as much, th e Plain tiffs ple d that the par ties “agr eed” t o offse t the Selle r Notes a gainst t he Shareh older L oans. But that purpor ted agreem ent is o utside the fou r corne rs of th e RCAs, which are unambi guou s and cont ain clea r inte gratio n clause s pro viding t hat the RCAs con tain th e entire a greem ent. T he RCAs al so have clear modif icati on cla uses pr ovidi ng tha t any cha nges ther eto nee ded to be i n writin g signe d by both parti es. Given the Plain tiffs ’ admis sion tha t the Se ller No tes rema ine d unpa id by Octo ber 2 7, 20 24 and absent any averments that the al leged agre ement t o offse t the S hareho lder L oans wa s mem orial ized in s igned wr iting, th e only reas onable interpr etati on of t he RCA s is tha t the n on - compet ition and non - solic itation restr icti ons termi nate d by Octo ber 28, 2024. 37 37 In briefing, the Plaintiffs emphas ized that com munications abou t the Shareholder Loans offset were in written e mail communicatio ns. See, e.g., D.I. 23 (“Pls. ’ Answering Br.”) at 13. But it is no t reason able to interpret th e modification c lauses, whi ch require “a writte n agreement signed by” the parties, to permit modificatio n by email communica tions. See Am. Compl. Ex. A, §§ 11, 13; Ex. B, §§ 11, 13. Cf. Kokorich v. M omentus Inc., 2023 WL 3454190, at *9 – 10 (Del. Ch. May 15, 2023), aff’d, 308 A.3d 1192 (Del. 2023), and aff’d, 308 A.3d 1192 (Del. 2023) (rejecting a theory that an e mail reflecting the party “will agree” to a modification was an effective modifica tion of an agreement that required modifi cations in writing and si gned b y both partie s); Zutrau v. Jansi ng, 2014 WL 7 013578, at * 1 – 2 (Del. Ch. Dec. 8, 2014), aff’ d, 123 A.3d 938 (Del. 2015) (hold ing that em ail communications did not effectively mod ify an agreement tha t required mod ifications to be in “a subsequent writing executed by the parties”). Because the email co mmunications could n ot effectively modify the RCAs, the parties’ seeming disp ute about what t hey reflect is irrelevan t; the Plaintiffs’ claims fail. S ee Pls.’ Answering Br. at 14. The Plaintiffs also argued that Section 2 2 is, at most, a conditio n prec edent and that further analysis is need ed to determine m ateriality. For this argument, the Plainti ffs rely on the Delaware Supreme Court’s decision i n Thompson S treet. 340 A. 3d 1156. Therein, the Delaware Supreme C ourt emp hasized that “Delaware is a contra ctarian sta te, but ou r common law abhors a forfeiture.” Id. at 1156. It explained, “[c ]onditions precedent th at

C.A. No. 2024-1317-S EM February 26, 2026 Page 13 To sta te a via ble b reach of contr act c laim, t he Plai ntiffs, thus, neede d to ple ad fact ual pred icate sup portin g a reaso nably conceiv able theor y that the Defen dants compe ted and solicit ed prior to October 28, 202 4. They faile d to do so. In the Amen ded Com plaint, the Plai ntiffs p led tha t the Individu al Defenda nts ’ co nduct wa s “[s] in ce at lea st Octo ber ” of 2024. 38 But all the c halle nged co nduct wa s direc tly i n conne ction with In stinct ive, w hich wa s not for med u ntil October 31, 2024. In the Plain tiffs’ own the ory of the ca se, the Individ ual Def endants violate d thei r restr ictive covena nts by: “ es tablis hing a com peti ng enti ty, viola ting a n oncom petiti on clau se, a non - solici tatio n of custom ers cla use, a no n - solic itati on of emp loyee s claus e, and a trigger forfeitures create a tensio n in contr act law. On the on e hand, Dela ware is a contractarian state that holds parties’ freedo m of contract in high rega rd. On the other hand, our common law gene rally disfavors for feitures.” Id. at 1168. Thus, when reviewing a contract claim, particul arly at the pleadi ng stage, trial c ourts were caution ed “to look to whether the langua ge clearly provides fo r a forfeiture. If the langu age does not clearl y provide for a forfeiture, then a court will construe the agreement to avoid cau sing one. If the language clearly provides for a fo rfeiture, the n a court may consi der whether compliance with the co ndition may be excused in accor dance with th e criteria discusse d” later in the decision. Id. For such criteria, the court looked to the Res tatement (Second) o f Contracts, adopting its language that: “the Court may excuse the nonoccurrence of a condition that would cause a disproport ionate forfeiture unless i ts occurrence was a material part of the agr eed Exchange.” Id. at 1169 (citatio n omitted). I have carefully considered t he Supreme Court’s thoughtful exploration of conditions precedent in Thompson Street. It further supports my holding herein. Section 22 is an express cond ition preceden t, and a material part of the pa rties’ agreements reflected in the RCAs. The language agreed to by the parties clearly provide s for a forfeiture and eschews any future excusal in clear and unam biguous terms. T here is no need nor basis for further factual develop ment. 38 Am. Compl. ¶ 19.

C.A. No. 2024-1317-S EM February 26, 2026 Page 14 confi dentia lity c lause. ” 39 There are no well - pled fac ts in the Am ended C ompla in t from which I can infer pre - term inat ion con duct suff icie nt for the Plaint iffs t o state a viable breac h of contract c laim. That leave s Secti on 4, t he conf ident ialit y restr ictio ns in the RCAs. These restr ictio ns did not aut omat ically termi nate a nd co ntinue to bin d the Indivi dual Defe ndant s. But the Plaint iffs ha ve fail ed to sta te a cogn izabl e claim t hat the Indiv idual Defe ndant s misu sed or appro pria ted Converz e’s confi dential inform atio n. The o nly aver ment r egardin g conf ident ialit y provi des that t he Individual Defe ndant s’ “unlaw ful solic itat ions al so invol ved the use of Conf ident ial Information[.]” 40 The Plain tiffs see k an infere nce that, because c ertai n ide ntifie d clien ts of C onver ze s igned with I nstinc tive, t he In dividua l Def endant s mus t have used Co nverz e’s con fidenti al inf ormati on. 41 They argue “[i]n orde r to appr oac h these C onver ze clie nts,” t he Indi vidua l Defen dants ne cessa rily relied u pon Con verze confi dentia l informat ion inc ludin g custom er lis ts, clie nt requir eme nts, and te rms of contra cts w ith cli ents an d custom ers. 42 39 D.I. 23, p. 12. 40 Am. Compl. ¶ 19. 41 Pls.’ Answering Br. at 27. 42 Id.

C.A. No. 2024-1317-S EM February 26, 2026 Page 15 This is no t, ho wever, a r eason able in ference from the pleadi ngs. T o dra w thi s infer ence wo uld conf late the di stinc t obli gatio ns in Secti on 1 – 3 an d Secti on 4. And i t wou ld bles s concl usory a llega tions, which fa il to pr ovide notic e of how the Indi vidual Defen dants al legedl y breac hed the conf identia lity c lause s. F or exam ple, t he Pl aintiff s fai led to ident ify the spec ific infor matio n that r emained in the Indi vidual Def enda nts ’ posse ssion a nd the attr ibute s of tha t inform atio n whic h would s upport a reasona bly conce ivab le claim tha t it is withi n the defin ition o f “Conf iden tial Inf orma tion” in the RC As. A bsent t hat fac tual pre dica te, the P lain tiffs’ averm ents f ail to sta te a rea sonabl y conce ivable c la im that the Indi vidual s had, an d misu sed, “C onfide ntia l Inf ormatio n” in violat ion of Sec tion 4 of the RCA s. 43 All told the Plain tiffs ha ve failed to p lead tha t the Defe ndants b reache d any bindin g rest ricti ve cov enants in the RCAs. Cou nt I shou ld be dis missed on tha t basis. With th is holding, I need not rea ch the Defen dants’ a lter native argume nts f or dism issal of the co ntrac t claim, a nd I can easily dispos e of the tortio us inte rferenc e claim in Coun t III. In Count III, the Pla intiff s allege Ins tincti ve knew of the RC As and UP A and a cted a s the cor pora te vehic le thr ough which the Indivi dual D efen dants breac hed the ir con tractu al oblig ations. Wi th no v iab le bre ach of co ntract, Coun t III, too, f ails. 43 See Kalkomey Enters., LLC v. Strobl, 2 026 WL 129295, at *4 (Del. Ch. Jan. 16, 2026).

C.A. No. 2024-1317-S EM February 26, 2026 Page 16 B. The P laintif f s ha ve not pled a cogniz able imp lied co venant claim. The fi nal cla im that r emain s in the Am ended C ompla int is Co unt II, throu gh whic h the Plai ntiffs allege tha t Defen dant M iller - Ba ten bre ached the implie d coven ant of good fai th and fa ir dea ling im plicit in the RC A s, UPA, a nd Gene sis’ LLC op erating agreeme nt. “ To suf ficie ntly p lead br each o f the im plie d coven ant of good f aith an d fair deali ng, a com plai nt ‘ must a llege a specif ic imp lied co ntract ual obl igati on, a brea ch of tha t obli gatio n by the defen dant, a nd resu ltin g damag e to the p laint iff. ’” 44 As expla ined rec ently by Vice Cha ncellor Cook, “ our case law sugge sts th ere are two strai ns of the imp lied cov enant: (1) gap - fil ling an d (2) p rotec ting aga inst ar bitra ry and bad f aith exe rcis e of discre tion.” 45 Here, wi th no dis cretiona ry ob ligatio ns at issue, I pres ume we a re in ga p - fil ling te rritory. Ther eunder, “the implied c ove nant is impl icate d when an a greem ent is tr uly sile nt on a te rm and re quire s a party to iden tify a gap i n the c ontrac t to sta te a cla im.” 46 It “ e xists to f ill c ontract ual ga ps tha t neith er 44 Sheehan v. AssuredPa rtners, Inc., 2020 WL 2838575, at *11 (Del. Ch. May 29, 2020) (internal quotations om itted). 45 Osios LLC v. Tiptree, Inc., 20 24 WL 2947854, at *5 (Del. Ch. June 12, 2024) (c itations omitted). 46 Id. (citations omitted).

C.A. No. 2024-1317-S EM February 26, 2026 Page 17 party antic ipate d [,]” and “ pro te cts an ag re eme nt ’ s sp irit aga inst underha nded tactic s that den y a party the frui ts of its barg ain. ” 47 The Pla intif fs have failed t o ide ntify a ny contr actua l gap suf ficie nt to pl ead a n impl ied cove nant cla im. C ount II, on i ts face, is defic ient. It pr ovide s, in conc lusor y fashi on, th at the imp lied c ovenan t i s inhere nt in al l contrac ts, De fenda nt Mil ler - Bate n was a part y to sever al contr acts, and that h er chall enge d conduct (the alle ged compe titio n, sol icitati on, an d use of c onfide ntial i nforma tion) br each ed tha t coven ant. Co unt II fa ils to sta te a cogniz able im plie d covena nt clai m and sho uld be dism issed. III. CO NCLUS ION For the above r easo ns, the M otion is grant ed, a nd this a ction sho uld be dism issed w ith pre judice. This i s a fina l repor t under C ourt of Cha ncery Ru le 144. Respe ctful ly submit ted, /s/ Se lena E. Molin a Senior Magi strate in Chance ry 47 Sheehan, 2020 WL 28 38575, at *11.