IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

L-5 HEALTHCARE PARTNERS, LLC,

Plaintiff, Counterclaim Defendant,

v.

ALPHATEC HOLDINGS, INC.,

Defendant, Counterclaim Plaintiff.

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C.A. No. 2019-0412-NAC

MEMORANDUM OPINION

Date Submitted: June 27, 2024

Date Decided: August 21, 2024

William M. Lafferty, D. McKinley Measley, Thomas P. Will, Alexandra M. Cumings, 

MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, Delaware; Antonio 

Yanez, Jr., Brady Sullivan, WILLKIE FARR & GALLAGHER LLP, New York, New 

York; Alexander L. Cheney, WILLKIE FARR & GALLAGHER LLP, San Francisco, 

California; Counsel for Plaintiff and Counterclaim Defendant L-5 Healthcare 

Partners, LLC.

Philip A. Rovner, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; 

Krista M. Enns, Edward C. Wipper, BENESCH FRIEDLANDER COPLAN & 

ARONOFF LLP, New York, New York; Counsel for Defendant and Counterclaim 

Plaintiff Alphatec Holdings, Inc.

COOK, V.C. 
1

This is a post-trial decision on the appropriate remedy to award for a breach of 

contract where the parties agreed, in the contract, to a specific performance remedy 

provision. The plaintiff invested $25 million in the defendant in 2017 in exchange for 

“certain warrants” and preemptive rights. The parties agree that, in entering a 

warrant-based lending agreement with a third-party lender, the defendant breached 

its obligations to the plaintiff under the preemptive rights provision. That provision 

required the defendant to “first offer” the plaintiff pro rata participation in the 

issuance of any such warrant “at the same price and on the same terms” as it offers 

to anyone else. Trial was held to determine whether specific performance is an

appropriate remedy and, if so, to determine what specific performance would require 

on the facts at issue here.

Consistent with the terms the parties bargained for and Delaware’s strong 

contractarian policies, specific performance is the appropriate remedy. And indeed, 

that is the equitable result here. To place the parties closest to where they would be 

had the defendant performed at the time performance was due, specific performance 

requires the defendant to offer to sell the plaintiff a pro rata warrant in exchange for 

the value the warrant had at the time of the breach.
2

I. FACTUAL BACKGROUND

This decision follows then-Vice Chancellor McCormick’s ruling on a motion for 

partial judgment on the pleadings (the “Ruling”).1 Defendant Alphatec Holdings, Inc. 

(“Alphatec”) entered a Securities Purchase Agreement (the “SPA”) with Plaintiff L-5 

Healthcare Partners, LLC (“L-5”) on March 8, 2018.2 Following the Ruling, the 

parties agree Alphatec breached the SPA by failing to perform its obligations under 

a preemptive rights provision contained therein (the “Preemptive Rights”). The 

record also supports that conclusion. The fact record set forth below is narrowed to 

those issues relevant to my determination of the appropriate remedy. 

A. The SPA

Under the SPA, in exchange for a $25 million investment, L-5 received “25,000 

shares of Alphatec preferred stock,” two board seats, “certain warrants[,]” and 

preemptive rights.

3 “In May of 2018, L-5’s preferred stock was converted to common 

stock and L-5 became Alphatec’s largest s[tock]holder.”4 

1 L-5 Healthcare P’rs, LLC v. Alphatec Hldgs., Inc., C.A. No. 2019-0412-NAC, Docket 

(“Dkt.”) 39, Mem. Op. (“Ruling”). 

2 See Dkt. 174, Pl. L-5’s Post-Trial Br. (“Pl.’s OB”) at 38; Dkt. 177, Def. Alphatec’s PostTrial Answering Br. (“Def.’s AB”) at 43.

3 Dkt. 158, Pre-Trial Stipulation and Order (“Stip.”) ¶ 30; see also id. ¶¶ 29, 39; J58 

(“SPA”). Notwithstanding the parties’ inconsistent use of “warrants” (plural) and warrant 

(singular), where practicable, I will use the singular reference when referring to an individual 

warrant to purchase shares of Alphatec common stock. Compare id. ¶ 30, and Pl.’s OB at 1 

n.1, with Def.’s AB at 1. 

4 Stip. ¶ 31.
3

Section 4.18(a) of the SPA sets out the Preemptive Rights. It requires that if 

Alphatec “authorizes the issuance and sale of” any “common stock equivalents” 

(which includes warrants),5 it must “first offer to sell” L-5 a pro rata portion of the 

securities at the “same price and on the same terms” as it sells to anyone else.6

Section 4.18(a) provides in full: 

Immediately following the Closing, and for so long as the LI Group 

beneficially owns such number of shares of Common Stock on a fully 

diluted basis (calculated in accordance with Section 4.ll(h)) equal to or 

greater than [12.5%], if [Alphatec] authorizes the issuance and sale of 

any Common Stock or Common Stock Equivalents (other than any 

Exempt Issuance), [Alphatec] will first offer to sell to [L-5], a pro rata 

portion of such securities equal to the percentage determined by dividing 

(i) the number of shares of Common Stock held by the LI Group 

(determined on a fully-diluted basis (calculated in accordance with 

Section 4.1l(h)), by (ii) the total number of shares of Common Stock then 

outstanding (determined on a fully-diluted basis (calculated in 

accordance with Section 4.11(h)). The members of the LI Group (as 

determined by [L-5]) will be entitled to purchase all or part of such stock 

or securities at the same price and on the same terms as such stock or 

securities are to be offered to any other Person.

7

5 Id. ¶ 33 (“Common Stock Equivalents ‘means any securities of the 

Company . . . which would entitle the holder thereof to acquire at any time Common Stock, 

including, without limitation, any . . . warrant or other instrument that is at any time 

convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to 

receive, Common Stock.’”).

6 SPA § 4.18(a).

7 Id. (emphases added). The parties agree that, at the time Alphatec breached the 

SPA, L-5 “held approximately 23.4% of Alphatec common stock on a fully diluted basis, 

calculated in accordance with Section 4.11(h)” and “[t]here is no Exempt Issuance at issue in 

this case.” Stip. ¶ 34; see also SPA § 11(a). As used in the SPA, “LI Group” means L-5 

“together with its Affiliates and its and its Affiliates’ respective members, stockholders, 

owners, equity holders and family members . . . .” SPA §§ 1.1, 4.11(a).
4

The Preemptive Rights were designed to serve two separate purposes. First, 

they “preserve[d L-5’s] ownership” by preventing dilution in the event Alphatec were 

to issue “equity-linked securities.”

8 Second, they allowed L-5 to ride the upside and 

“participate in the turnaround story that [it] had invested” in.

9

One additional provision in the SPA bears noting. Section 5.15 sets out a

specific performance remedy provision that entitles the parties to specific 

performance of the terms of the agreement in the event of breach. Section 5.15 

provides: 

“Remedies. In addition to being entitled to exercise all rights provided 

herein or granted by law, including recovery of damages . . . [L-5] and 

[Alphatec] will be entitled to specific performance under the Transaction 

Documents. The parties agree that monetary damages may not be 

adequate compensation for any loss incurred by reason of any breach of 

obligations contained in the Transaction Documents and hereby agree 

to waive and not to assert in any Action for specific performance of any 

such obligation the defense that a remedy at law would be adequate.10

The SPA’s terms are the product of significant, deliberate negotiations. 

8 Trial Tr. 9:7–15 (Segal).

9 Id.

10 SPA § 5.15. “Transaction Documents” includes the SPA. See SPA § 1.1. “Action” 

means “material action, suit, inquiry, notice of violation, proceeding or investigation pending 

or, to the knowledge of [Alphatec], threatened against or affecting [Alphatec], any Subsidiary 

or any of their respective properties before or by any court, arbitrator, governmental or 

administrative agency or regulatory authority (federal, state, county, local or foreign) . . . .” 

SPA §§ 1.1, 3.1(j). 
5

B. The 2018 Agreement

Soon after entering the SPA, Alphatec again found itself seeking further 

financing. This time, it needed funds to repay a debt it owed to a competitor.

11 In 

September 2018, non-party Squadron Medical Finance Solutions LLC (“Squadron”) 

offered Alphatec financing to pay off the debt.12 Negotiations ensued. And on

November 6, 2018, Alphatec entered a five-year secured term loan with Squadron for 

$35 million (the “2018 Agreement”).13 Alphatec secured the loan with a first lien on 

“substantially all of [its] assets except for its accounts receivable.”

14 Under the 2018 

Agreement, Alphatec agreed to issue Squadron a warrant to purchase 845,000 shares 

of Alphatec common stock at a $3.15 per share strike price, which it subsequently 

issued (the “2018 Warrant”).

15 

Alphatec did not offer L-5 pro rata participation in the 2018 Warrant that it 

issued to Squadron, and L-5 did not seek to enforce its Preemptive Rights as to the

2018 Warrant.

16

11 Stip. ¶¶ 40–43.

12 Id. ¶ 44.

13 Id. ¶ 45; J104 (“2018 Agreement”). The parties explain the 2018 Agreement as 

comprised of two parts. The first part is the secured term loan described above. “The secured 

term loan that was part of the 2018 Agreement had a five-year maturity and bore interest at 

LIBOR + 8% with a floor of 10% and a ceiling of 13%.” Stip. ¶ 46. The second part is “an 

inventory financing agreement for $3 million.” Id. ¶ 45. 

14 Stip. ¶ 46; 2018 Agreement. 

15 Stip. ¶¶ 46–47.

16 Id. ¶ 48. 
6

C. The 2019 Agreement

Notwithstanding the SPA and the 2018 Agreement, Alphatec, for a third time,

found itself in need of funding. This time, it needed to secure an additional $20 

million in funding availability by the time it filed its 10-K on March 31, 2019.17 

Otherwise, it would face an unfavorable qualified going concern audit opinion.18

So, beginning in February 2019, Alphatec pursued a second lending 

arrangement with Squadron. 

After catching wind of this second agreement, L-5 first sought to provide the 

required financing itself and ultimately made an offer on March 4, 2019. But the 

Special Financing Committee—a subcommittee of Alphatec’s board of directors (the 

“Board”)—rejected L-5’s offer the next day.

19 Jeff Black (Alphatec’s CFO) called Paul 

Segal (L-5’s President and Manager) to relay the news and inform Segal that 

Alphatec was moving forward with a Squadron deal.

20 During that call, Segal 

promptly asserted L-5’s Preemptive Rights.

21 And indeed, Tyson Marshall—

Alphatec’s then-Associate General Counsel—had previously flagged Section 4.18 as 

17 J133 at 15; Trial Tr. 11, 51–52 (Segal). 

18 J133 at 15; Trial Tr. 11, 51–52 (Segal). 

19 See, e.g., J159 (February 8, 2019, email from Segal to Patrick Miles (Alphatec’s CEO) 

explaining that L-5 had “begun internal discussions on potential structures to provide capital 

to [Alphatec] to fund its business plan over the next 12 months.”); Trial Tr. 101–102 (Segal) 

(describing the March 4, 2019 offer); J223 (Special Financing Committee’s March 5, 2019 

Meeting Minutes); Stip. ¶ 57.

20 See Stip. ¶ 58; J225; J226; J227.

21 See J441 (Black Dep.) at 132–33; J242; J251.
7

being among the “most problematic” provisions in the SPA for structuring a Squadron 

deal that required certain warrant issuances.22

Alphatec was aware of L-5’s rights and its obligations under the SPA.

23 Yet, 

on March 7, 2019, after an affirmative vote by the Board, Alphatec signed a term 

sheet with Squadron (the “Term Sheet”).

24 This sparked a wave of communications 

between Alphatec and L-5. L-5 repeatedly asserted the Preemptive Rights under the 

SPA.

25 Alphatec, on the other hand, took the position in its communications with L5 that it was “premature” for L-5 to raise the Preemptive Rights and that it would 

address the Preemptive Rights at a later time.

26 

This notwithstanding, Alphatec tried to get L-5 to sign an acknowledgment 

and reservation of rights, providing that “[L-5] hereby agrees and acknowledges that”

the terms in the Term Sheet and the financing agreement it contemplates do not give 

rise to a “Preemptive Right event under Section 4.18 of the [SPA].”

27 L-5 refused. In 

22 See J168.

23 See, e.g., J242.

24 J420 at 35, 59–60. 

25 See, e.g., Stip. ¶ 60; J258 (“Can you please let us know how [Alphatec] intends to 

implement the preemptive rights?”); J277 (“Following up to see if you’ve made any progress 

on the Squadron loan and how to address L-5’s preemptive rights under Section 4.18 of the 

2018 SPA. We’re prepared to engage promptly . . . .”). 

26 See, e.g., J277 (“[I]t is premature to address L-5’s participation rights under Section 

4.18 of the 2018 SPA . . . .”); see also J420 at 37 (“premature at that time”).

27 J295. Alphatec believed that if L-5 signed the acknowledgment and reservation of 

rights, L-5 would have waived the claims it now brings in this action. See Trial Tr. 546 

(Marshall) (Q. “So meaning if L-5 had signed this version two, they would have waived the 
8

the meantime, while telling L-5 it was “premature” to assert its rights, Alphatec’s

communications with Squadron reflect its belief that either L-5 did not have 

Preemptive Rights to assert or its Preemptive Rights did not apply.

28 And Alphatec’s 

internal communications reflect the same—albeit in more colorful language.29 

Alphatec’s General Counsel explained succinctly that Alphatec “[was]n’t going to 

engage with L5 (at all) prior to getting the deal done. We’ll see when/whether/how 

we engage down the road, but however it goes down, I predict pain.”30 

claim that they are asserting today?” A. “That’s correct.”). As the predicate for seeking such 

waiver, the acknowledgment and reservation of rights explained that the Term Sheet and 

financing agreement contemplated therein did “not obligate [Alphatec] to authorize the 

issuance and sale of any Common Stock or Common Stock Equivalents . . . and, as such, d[id] 

not constitute a Preemptive Right event” under the SPA. J295. This Court would later reject 

this idea in the Ruling, as it relates to the eventual, second transaction Alphatec entered 

with Squadron. See Ruling at 15 (“Alphatec’s interpretation does not work.”).

28 J276 (Email from Black to David Pelizzon (Squadron’s President) stating: There is 

“[n]o real update from counsel on the L[-]5 pre-emptive rights discussion, other than that we 

continue to take the position that it does not apply . . . .”); J286 (Email from Black to Pelizzon: 

L-5 “is interested in preserving any participation rights [it has] (we think they have 

none) . . . .”); J288 (“if these rights even exist at all, which we do not agree they do”).

29 See, e.g., J309 (Email from Miles to Black: “Agreed with all said...d’bags....we owe 

them no explanation.” (ellipses in original)); id. (“bastards”); id. (“They’re being jackasses. 

We’ll continue to ignore them.”); id. (“In other words, #FUL5.”); J305.

30 J305.
9

While these communications were ongoing, Alphatec sought to avoid triggering 

the Preemptive Rights.

31 To do so, it styled the new agreement as an amendment to 

the 2018 Agreement.32

On March 27, 2019, Alphatec and Squadron “signed the First Amendment to 

Credit, Security and Guaranty Agreement” (the “2019 Agreement”).

33 “[T]he terms 

of the 2019 Agreement tracked the terms of the term sheet” under which “Squadron 

agreed to make available to Alphatec an additional $30 million term loan[,]” secured 

by “the same security interest as granted to Squadron” under the “2018 Agreement.”34

But “if and when Alphatec drew on that additional credit facility, Alphatec would 

then issue to Squadron warrants to purchase 4,838,710 shares of Alphatec common 

stock at $2.17 per share (with a seven-year term).”35 “Unlike the 2018 Agreement, 

31 See, e.g., J241 (requesting the inclusion of specific language to avoid triggering 

Preemptive Rights); J238 (Marshall telling Squadron’s outside counsel he “want[ed] to make 

sure the terms” of the proposed Squadron agreement were “all harmonious with [Alphatec’s] 

existing obligations[,]” which Marshall followed immediately by asking whether Squadron 

envisions the deal as “a separate (new) term loan in addition to the credit facility currently 

in place” or as “an amendment to the current credit facility.”); J247 (suggesting it was 

Alphatec’s “preference as well” to structure the deal as an amendment to the 2018 

Agreement); J323.

32 Recall that, as discussed above, L-5 did not assert its Preemptive Rights over the 

2018 Agreement, and Alphatec failed to “first offer” L-5 pro rata participation therein. But 

see SPA § 5.5 (“No waiver of any default with respect to any provision, condition or 

requirement of this Agreement shall be deemed to be a continuing waiver in the future or a 

waiver of any subsequent default or a waiver of any other provision, condition or requirement 

hereof, nor shall any delay or omission of any party to exercise any right hereunder in any 

manner impair the exercise of any such right.”).

33 Stip. ¶ 64; J304 (“2019 Agreement”).

34 Stip. ¶¶ 65, 68. 

35 Id.
10

Alphatec was not obligated to draw on the loan, although a failure to draw on the 

loan by June 30, 2019 would trigger a requirement that Alphatec pay $300,000 to 

Squadron.”36 For “tax purposes,” the 2019 Agreement provides that the warrant 

“issue price” is “equal to $1.98.”

37 

On June 13, 2019, Alphatec “made its first draw pursuant to the 2019 

Agreement” and “issued 4.8 million warrants to Squadron” (the “2019 Warrant”).38 

This was followed by a second, final draw “in the amount of $20 million” on April 2, 

2020.39

D. The Proposal

On April 29, 2019, Craig Hunsaker (Alphatec’s General Counsel) wrote to L-5 

“to formally respond to L[-]5’s claim to Section 4.18 preemptive rights.”40 Therein, 

Hunsaker explained that Alphatec “do[es] not believe Section 4.18 applies, nor was it 

intended to apply, to an amendment to an existing credit facility.”41 Thus, Hunsaker 

wrote, “[Alphatec’s] position is that Section 4.18 does not—and cannot—apply to the 

March 2019 amendment.”42 On May 14, 2019, after again asserting Alphatec’s belief 

36 Id. ¶ 66.

37 2019 Agreement § 3(D)(e)(ii).

38 Stip. ¶ 70.

39 Id. ¶ 71.

40 J323. 

41 Id.

42 Id.
11

that the Preemptive Rights did not apply, Hunsaker further tried to explain that even 

if the Preemptive Rights did apply, it would “not permit L-5 to meddle” with or 

“retroactively insert itself into” Alphatec’s “existing contractual obligations . . . with 

Squadron.”43 Put another way, after having asserted it was “premature” for L-5 to 

raise its Preemptive Rights before Alphatec entered the 2019 Agreement, Alphatec

changed its tune to argue that it was seemingly too late to cut L-5 in (assuming the

Preemptive Rights even applied). 

Nonetheless, on May 17, 2019, Alphatec proposed a blended terms transaction 

to address L-5’s Preemptive Rights (the “Proposal”).

44 The Proposal was contingent 

on approval by both Squadron and the Board45 and sought to blend the terms of the 

2018 Agreement and the 2019 Agreement to force L-5 to participate in both.

46

43 J372. 

44 J344; J375.

45 See J344; J375.

46 See Ruling at 7–8 (“The Proposal sought to replicate the price and terms of the 2018 

Agreement and the 2019 Agreement together. To that end, it required that L-5 initially make 

a first term loan of $11,550,137 in exchange for warrants to purchase 256,839 Alphatec 

common shares at $3.15 per share—the exercise price set forth in the 2018 Agreement. It 

then required that L-5 commit to make a second term loan of $9,118,529. Upon Alphatec’s 

draw on the second term loan, L-5 would receive warrants to purchase 1,470,731 shares of 

Alphatec common stock at $2.17 per share—the exercise price set forth in the 2019 

Agreement.” (footnotes omitted)).
12

E. Litigation And Post-Litigation Developments

“On June 4, 2019, L-5 filed a Verified Complaint against Alphatec” (the 

“Complaint”).47 Therein, L-5 asserts three claims. In Count I, L-5 seeks a declaration 

that Alphatec must offer it the opportunity to participate in the 2019 Agreement at 

the same price and on the same terms it provided to Squadron. In Count II, L-5 

asserts a breach of contract claim based on Alphatec’s failure to offer it the 

opportunity to participate in the 2019 Agreement. In Count III, L-5 seeks a 

declaration that Alphatec must indemnify it for damages, losses, and expenses 

incurred as a result of Alphatec’s breach and must reimburse L-5 for reasonable 

attorneys’ fees and other costs and expenses.

On July 30, 2019, Alphatec filed its answer and affirmative defenses “and 

asserted two counterclaims seeking declarations that mirror the relief sought in 

Counts I and II of the Complaint.”48 L-5 answered the counterclaims on September 

18, 2019.49

On October 12, 2020, the Court issued the Ruling—granting in part and 

denying in part L-5’s motion for partial judgment on the pleadings.

50 This Court 

concluded that “L-5 is entitled to a declaration that the 2019 Agreement and 2019 

47 Stip. ¶ 69. 

48 Ruling at 11; see also Dkt. 11.

49 Dkt. 14. 

50 Stip. ¶ 72. 
13

[Warrant i]ssuance triggered L-5’s [Preemptive Rights] and that the Proposal did not 

constitute an ‘offer’ compliant with Section 4.18(a) of the [SPA].”

51 It explained that 

the Proposal was not an “offer,” as required by Section 4.18(a) since it remained 

subject to approval by Squadron and the Board and thus did not create the right of 

acceptance in L-5.52 But the Ruling did “not resolve Alphatec’s affirmative defenses, 

what terms and conditions would be required to match Alphatec’s 2019 Agreement 

with Squadron, or whether L-5 is entitled to reasonable attorneys’ fees and other 

costs.”53

After the Ruling, the parties agree Alphatec breached Section 4.18(a) of the 

SPA.54 The parties also agree the attorneys’ fees issue is suitable for resolution after 

trial.55 This case was reassigned to me on August 9, 2022.56 Trial was held from 

January 29 to 31, 2024, and I heard post-trial oral argument on June 27, 2024.

51 Ruling at 22. 

52 See id. at 15–19.

53 Id. at 22. 

54 Pl.’s OB at 38; Def.’s AB at 43–44. 

55 See Stip. ¶ 114.

56 Dkt. 54. 
14

II. LEGAL ANALYSIS

Two issues are before me: (1) whether L-5 is entitled to specific performance 

and (2) if so, what does specific performance require.57

A. L-5 Is Entitled To Specific Performance 

To say that Delaware prides itself on the contractarian nature of its law 

risks understatement: [“]This jurisdiction respects the right of parties to 

freely contract and to be able to rely on the enforceability of their 

agreements; where Delaware’s law applies, with very limited 

exceptions, our courts will enforce the contractual scheme that the 

parties have arrived at through their own self-ordering, both in 

recognition of a right to self-order and to promote certainty of obligations 

and benefits.[”]

58

“Delaware courts are ‘especially chary about relieving sophisticated business 

entities of the burden of freely negotiated contracts.’”59 

Within this framework, public policy plays a limited role. “When parties 

have ordered their affairs voluntarily through a binding contract, 

Delaware law is strongly inclined to respect their agreement, and will 

only interfere upon a strong showing that dishonoring the contract is 

required to vindicate a public policy interest even stronger than freedom 

of contract.” More significant interests “are not to be lightly found, as 

the wealth-creating and peace-inducing effects of civil contracts are 

57 Alphatec does not meaningfully raise its affirmative defenses in its post-trial 

briefing. It does so only to assert a mitigation theory, which I address below. By failing to 

raise its other affirmative defenses in its post-trial briefing, Alphatec waived them. Oxbow 

Carbon & Mins. Hldgs., Inc. v. Crestview-Oxbow Acq., LLC, 202 A.3d 482, 502 n.77 (Del. 

2019) (“The practice in the Court of Chancery is to find that an issue not raised in post-trial 

briefing has been waived, even if it was properly raised pre-trial.”).

58 New Enter. Assocs. 14, L.P. v. Rich, 295 A.3d 520, 565–66 (Del. Ch. 2023) (quoting 

Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *4 (Del. Ch. Jan. 28, 2015)).

59 Id. 
15

undercut if citizens cannot rely on the law to enforce their voluntarily

undertaken mutual obligations.60

Delaware courts extend these contractarian policies to their treatment of 

remedy provisions. Our courts have explained that “[w]here parties have expressed 

their expectations through a specific contractual remedy, Delaware law favors 

enforcing that remedy. Requiring parties to live with ‘the language of the contracts 

they negotiate holds even greater force when, as here, the parties are sophisticated 

entities that bargained at arm’s length.’”61 

So it should come as no surprise that, where feasible, our courts favor 

enforcement of remedy provisions calling for specific performance. Indeed, as this 

Court explained, “Delaware is strongly contractarian, and the presence of a provision 

in favor of specific performance in case of breach . . . must be respected.”62 Thus, 

“[t]he existence of these provisions is sufficient to support a decree of specific 

performance, although a court can decline to issue one if there are supervening 

equities or other considerations.”63 

60 Id. (footnote omitted).

61 In re Cellular Tel. P’ship Litig., 2021 WL 4438046, at *72 (Del. Ch. Sept. 28, 2021)

(quoting Progressive Int’l Corp. v. E.I. Du Pont de Nemours & Co., 2002 WL 1558382, at *7 

(Del. Ch. July 9, 2002)); see also CURO Intermediate Hldgs. Corp. v. Sparrow Purchaser, 

LLC, 2024 WL 2847264, at *6 n.52 (Del. Ch. June 5, 2024) (raising foregoing principles in 

relation to specific performance remedy provision).

62 Am. Healthcare Admin. Servs., Inc. v. Aizen, 285 A.3d 461, 495 (Del. Ch. 2022)

(quoting Williams Cos., Inc. v. Energy Transfer Equity, L.P., 2016 WL 3576682, at *2 (Del. 

Ch. June 24, 2016), aff’d, 159 A.3d 264 (Del. 2017)).

63 Id.; see, e.g., Gildor v. Optical Sols., Inc., 2006 WL 4782348, at *11 (Del. Ch. June 5, 

2006).
16

Section 5.15 of the SPA is similar to specific performance provisions this Court 

has enforced in other decisions.

64 Consistent with the contractarian nature of 

Delaware law, I see no reason to depart meaningfully from those decisions. 

Defendant argues specific performance remains a matter of judicial 

discretion.65 That is correct.66 “But when a party has agreed to” a “provision like the 

[s]pecific [p]erformance [c]lause, the party must establish a persuasive” and “casespecific” reason “why the clause should not be respected.”67 Here, Defendant fails to 

64 Compare Gildor, 2006 WL 4782348, at *11 (“The Company and Stockholders shall 

be entitled to enforce their rights under this Agreement specifically, to recover damages by 

reason of any breach of any provision of this Agreement and to exercise all other rights 

existing in their favor. The parties hereto agree and acknowledge that money damages would 

not be an adequate remedy for any breach of the provisions of this Agreement and that the 

Company and any Stockholder may in its sole discretion apply to any court of law or equity 

of competent jurisdiction for specific performance . . . in order to enforce or prevent any 

violation of the provisions of this Agreement.”), and Aizen, 285 A.3d at 495 (“Section 10.8 of 

the Purchase Agreement provides that ‘if any party violates or refuses to perform any 

covenant or agreement made by it herein, the non-breaching party shall be entitled, in 

addition to any other remedies or relief permitted herein, to specific performance of such 

covenant or agreement,’ and ‘each party hereby agrees not to raise any objections to the 

availability of specific performance ... to specifically enforce the terms and provisions of this 

Agreement, and to enforce compliance with the covenants and obligations in this 

Agreement.’”), with SPA § 5.15 (“In addition to being entitled to exercise all rights provided 

herein or granted by law, including recovery of damages, each of the Purchasers and the 

Company will be entitled to specific performance under the Transaction Documents. The 

parties agree that monetary damages may not be adequate compensation for any loss 

incurred by reason of any breach of obligations contained in the Transaction Documents and 

hereby agree to waive and not to assert in any Action for specific performance of any such 

obligation the defense that a remedy at law would be adequate.”).

65 Def.’s AB at 24. 

66 See Gildor, 2006 WL 4782348, at *11 (“Specific performance, of course, is a form of 

relief available at the discretion of this court.”); Restatement (Second) of Contracts § 357 cmt. 

c (Am. L. Inst. 1981) (“The granting of equitable relief has traditionally been regarded as 

within judicial discretion.”).

67 Aizen, 285 A.3d at 496.
17

provide any such persuasive basis. Instead, asks me to exercise my discretion against 

the great weight of our contractarian law to override the parties’ clear, contractually 

stipulated intent and expectations as set forth in the SPA’s terms.68 That I will not 

do.

Alphatec knew of its obligation to “first offer” L-5 pro rata participation in 

“any” securities issuance well before it began discussions with Squadron over the 

2019 Agreement. Indeed, one of Alphatec’s own in-house attorneys flagged Section

4.18 of the SPA as one of the “most problematic” in structuring the 2019 Agreement 

with Squadron.69 That is, in part, why Alphatec tried to structure the 2019 

Agreement as an “amendment” to the 2018 Agreement—to escape its specific 

contractual obligation to L-5 under the SPA. But such “maneuvers to escape its 

contractual obligations offend basic notions of equity.”70 Moreover, notwithstanding 

L-5’s significant protest, Alphatec went ahead with the 2019 Agreement—all the 

while telling L-5 it would address the Preemptive Rights later. But, as trial showed, 

68 See Sassano v. CIBC World Mkts. Corp., 948 A.2d 453, 462 (Del. Ch. 2008) 

(“[C]ourt[s] look[] to the most objective indicia of . . . intent: the words found in the written 

instrument.”).

69 J168.

70 Sarissa Cap. Domestic Fund LP v. Innoviva, Inc., 2017 WL 6209597, at *27 (Del. 

Ch. Dec. 8, 2017) (addressing balancing of equities in action for specific performance of 

settlement agreement); see also Bruckel v. TAUC Hldgs., LLC, 2023 WL 4583575, at *15

n.166 (Del. Ch. July 17, 2023) (explaining that “a party ‘cannot avoid its contractual 

obligations by creating, in bad faith, an outcome that technically satisfies the express terms 

of the [contract], but deprives plaintiffs of their legitimate expectations’” (alteration in 

original) (quoting Winshall v. Viacom Int’l, Inc., 55 A.3d 629, 639 (Del. Ch. 2011), aff’d, 76 

A.3d 808 (Del. 2013))).
18

Alphatec had been talking out of both sides of its mouth. Despite telling L-5 it was 

“premature” to assert the Preemptive Rights, Alphatec was simultaneously 

representing to Squadron that it did not believe the Preemptive Rights applied. Sure 

enough, only after entering the 2019 Agreement did Alphatec change tack in its 

communications with L-5. This time, it took the position that either L-5’s Preemptive 

Rights did not apply, or it was too late to raise them. As Plaintiff argues, this may

come close to crossing into bad faith territory. 

Preemptive rights and specific performance provisions mean something. When

parties bargain for provisions like those here, they must expect to be held to those 

terms. In some instances, parties may persuade a court not to exercise its discretion 

in favor of enforcing a specific performance provision. Not so here. Defendant’s 

dismal showing does not, to my mind, provide a compelling reason to deviate from the 

terms these sophisticated parties negotiated at arm’s length.71

71 Defendant’s primary contentions on the balancing of equities—one of the factors 

considered when determining whether a specific performance decree is appropriate—are the 

following: (1) Section 4.18’s purpose can no longer be given effect since it was only included 

to enable L-5 to avoid dilution, (2) L-5 explained to Alphatec how it could avoid triggering an 

anti-ratchet provision in the SPA (Section 4.19), (3) L-5 raised its Preemptive Rights shortly 

before Alphatec’s planned earnings call, and (4) L-5 refused to negotiate with Alphatec after 

it entered the 2019 Agreement and/or tell Alphatec what terms it believed would satisfy 

Section 4.18. Def.’s AB at 37–40. The first argument fails because Section 4.18 was also 

designed to allow L-5 to participate in the upside of Alphatec’s turnaround story. See Trial 

Tr. 9:7–15 (Segal); see also Gildor, 2006 WL 4782348, at *11 n.33. It further fails because 

the absence of the complete realization of a provision’s purpose does not, per se, render 

performance pursuant to the provision meaningless or of no value. To the contrary, had 

Alphatec performed, the resulting performance would have been of significant value to L-5—

even if it did not bring the complete realization of the non-dilutive purpose of Section 4.18 

into full view. The second argument is not particularly clear. My best read of Defendant’s 

argument is that by suggesting a method for Alphatec to navigate around the anti-ratchet 

provision, L-5 somehow tricked Defendant into believing it did not plan to enforce its 
19

As the foregoing makes plain, I find no reason for my discretion to swing in 

Alphatec’s favor. Instead, equity and our contractarian policies strongly support 

enforcing the specific performance provision. Alphatec breached the SPA in a manner 

demonstrating its clear, deliberate intention to deprive L-5 of its contract rights. L5 upheld its end of the bargain—investing $25 million pursuant to the terms of the 

SPA in what, at the time, seemed like a failing Alphatec. In exchange, it bargained 

for Preemptive Rights. It is entitled to specific performance of those rights.72

Preemptive Rights or waived its rights under Section 4.18—notwithstanding L-5’s numerous 

assertions of the Preemptive Rights and refusal to sign the acknowledgment and reservation 

of rights effectively releasing claims under Section 4.18 arising from the 2019 Agreement. 

And Alphatec’s own internal communications show that even it did not view such interactions 

with L-5 to absolve it of its obligations under Section 4.18. See, e.g., J242 (“L[-]5 will get on 

board with this not being a dilutive issuance (Section 4.19), assuming the equity grant is 

truly conditional (which it will be). However, L[-]5 is now raising the Preemptive Rights 

provision . . . .”). Even at best, this argument is unpersuasive. And any persuasive import 

this argument might have is lost in light of Section 5.5 of the SPA, which includes a nocontinuing waiver clause. See SPA § 5.5. Defendant’s third argument is similarly infirm. 

The notion that L-5 raised its Preemptive Rights too late ignores the fact that under Section 

4.18(a), the burden is on Alphatec to “first offer” pro rata participation to L-5. Moreover, 

Defendant’s argument is that L-5 waited opportunistically to assert the Preemptive Rights 

at a time that was inconvenient for Alphatec. But L-5 asserted its rights during the very 

same phone call in which it first learned Alphatec would not move forward with its financing 

proposal. In other words, it asserted the Preemptive Rights immediately upon learning

Alphatec likely would be entering a transaction with Squadron to which the Preemptive 

Rights would apply. As to Defendant’s fourth argument, the failure to tell Alphatec what 

terms it would accept or to otherwise negotiate other terms does not, under the facts here, 

suggest L-5 acted inequitably. This is especially true, as here, where L-5 acted well within 

its express contractual rights in doing so. I return to the text of Section 4.18(a), which plainly 

places the burden on Alphatec to provide L-5 with a compliant offer. It does not place the 

burden on L-5 to explain the deal and what proposal would satisfy Alphatec’s burden. 

Accordingly, I find none of Defendant’s arguments compelling when considering the equities 

at play in this matter.

72 Ordinarily, for a court to order specific performance, “a party must ‘prove by clear 

and convincing evidence’ that a legal remedy would be inadequate and that ‘(1) a valid 

contract exists, (2) he is ready, willing, and able to perform, and (3) that the balance of 

equities tips in favor of the party seeking performance.’” Aizen, 285 A.3d at 495 (quoting 
20

Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010)). Even under these 

requirements, I would remain inclined to find that specific performance is appropriate. First,

there is no dispute that the SPA is a valid contract under Delaware law. Second, although 

Defendant challenges the extent to which L-5 was “ready, willing, and able” to perform at the 

time of the breach—seemingly due to non-committal language L-5 used in responding to the 

Proposal and in other negotiations—that does not show it was not ready willing and able to 

perform had Alphatec made a valid, compliant offer. See also J277 (“Following up to see if 

you’ve made any progress on the Squadron loan and how to address L-5’s preemptive rights

under Section 4.18 of the 2018 SPA. We’re prepared to engage promptly . . . .” (emphasis 

added)). Third, as the foregoing shows, the equities clearly support enforcing the parties’ 

bargained-for terms. And the presence of a specific performance provision, showing the 

parties’ clear intentions, pushes the equities heavily toward enforcing the parties’ intentions 

and expectations as set forth in the SPA. See 26 Cap. Acq. Corp. v. Tiger Resort Asia Ltd., 

309 A.3d 434, 473 (Del. Ch. 2023) (addressing specific performance provision as a significant 

factor when assessing balancing of equities). As to the adequacy of a legal remedy—the 

specific performance remedy provision expressly bars Defendant from asserting the adequacy 

of a legal remedy. See SPA § 5.15. Given this contractual bar, Defendant does “not argu[e] 

that specific performance is inappropriate solely because there is an adequate remedy at 

law.” Def.’s AB at 24 n.83 (citing SPA § 5.15). But, even if Defendant had contested this 

requirement, “[c]ontracts providing preemptive rights to purchase non-listed securities have 

given rise to specific performance orders . . . .” Gildor, 2006 WL 4782348, at *11 & n.33 

(explaining further “[t]his court has recognized that specific performance of a stock purchase 

is appropriate in situations where the stock is not available in the market, is unique, or has 

unique value to the purchaser.” (citing Amaysing Tech. Corp. v. Cyberair Commc’ns, Inc.,

2004 WL 1192602, at *3 (Del. Ch. May 28, 2004) and Hazen v. Miller, 1991 WL 244240, at 

*5–6 (Del. Ch. Nov.18, 1991))); see also Restatement (Second) of Contracts ch. 16, topic 3,

intro. note (“Courts have been increasingly willing to order [specific] performance in a wide 

variety of cases in[clud]ing . . . contracts for the sale of a business or of an interest in a 

business represented by shares of stock . . . .”); 18A Am. Jur. 2d Corporations § 443 (May 

2024 Update) (“Where a shareholder’s preemptive rights have been violated by the issuance 

of new stock, the shareholder may choose one of a variety of remedies. One such remedy 

would be to purchase the shares at the same price paid by the new purchaser[.]” (footnote 

omitted)). In Gildor, then-Vice Chancellor Strine explained that, under the facts at issue 

there, “the stock was not available in the market, as [the defendant] was a small private 

company, and the preemptive rights gave [the plaintiff] the right to maintain his proportional 

share of the upside of a start-up firm.” Gildor, 2006 WL 4782348, at *11 n.33. This suggests 

there would not be an adequate remedy at law. See Hazen, 1991 WL 244240, at *5–6 (“The 

remedy at law is inadequate if the stock is not generally available in the market place or is 

unique[.]”); 18A Am. Jur. 2d Corporations § 445 (May 2024 Update) (“The remedy of specific 

performance has been available to enforce a stockholder’s preemptive right to stock where 

the stock cannot be purchased in the open market or has no market value.”). But, in Gildor, 

the Court concluded that “[d]ue to the remedy provision of the Stockholder 

Agreement . . . [the Court] need not determine whether the specific nature of [the 

defendant’s] stock would warrant specific performance in the absence of that provision.” 2006 

WL 4782348, at *11 n.33. The warrants at issue here are not, themselves, publicly available 
21

B. What Specific Performance Requires

“An order of specific performance is intended to produce as nearly as is 

practicable the same effect that the performance due under a contract would have 

produced. It usually, therefore, orders a party to render the performance that he 

promised.”73 “An order of specific performance . . . will be so drawn as best to 

effectuate the purposes for which the contract was made and on such terms as justice 

requires.”

74 Thus, “[i]t need not be absolute in form and the performance that it 

requires need not be identical with that due under the contract.”75 

The Restatement (Second) of Contracts explains that: 

The objective of the court in granting equitable relief is to do complete 

justice to the extent that this is feasible. Under the rule . . . the court 

has the power to mold its order to this end. The form and terms of the 

order are to a considerable extent within the discretion of the court. Its 

order may be directed at the injured party as well as at the party in 

and at least arguably seem to be unique, valuable assets for which a legal remedy would be 

inadequate. But, as the Court did in Gildor when addressing the breach of a party’s 

preemptive rights under an agreement requiring specific performance and barring a defense 

of the availability of a legal remedy, I too see no need to characterize the exact nature of the 

warrant at issue here.

73 Restatement (Second) of Contracts § 357 cmt. a; see also Moore Bus. Forms, Inc. v. 

Cordant Hldgs. Corp., 1998 WL 71836, at *9 (Del. Ch. Feb. 4, 1998) (“The purpose of the 

specific performance remedy is to place the aggrieved party in the position that it would have 

been in but for the breach.”); Certainteed Corp. v. Celotex Corp., 2005 WL 217032, at *6 (Del. 

Ch. Jan. 24, 2005) (“[S]pecific performance is a specialized request for a mandatory 

injunction, requiring a party to perform its contractual duties.”); Dkt. 183, Post-Trial Oral 

Arg. Tr. (“OA Tr.”) at 66 (“I mean, the goal is to fashion a remedy to accomplish the purpose

of the contract, right.”).

74 Restatement (Second) of Contracts § 358(1); see also Snow Phipps Grp., LLC v. 

Kcake Acq., Inc., 2021 WL 1714202, at *55 (Del. Ch. Apr. 30, 2021) (quoting Restatement 

(Second) of Contracts § 358(1)).

75 Restatement (Second) of Contracts § 358(1); see also Snow Phipps, 2021 WL 

1714202, at *55.
22

breach. It may be conditional on some performance to be rendered by 

the injured party or a third person, such as the payment of money to 

compensate for defects or the giving of security. It may even be 

conditional on the injured party’s assent to the modification of the 

contract that he seeks to enforce.76

The issue thus turns to a determination of what pro rata participation at the 

same price and on the same terms of the 2019 Agreement looks like and what specific 

performance it requires.

L-5 asks for an order requiring Alphatec to issue it a pro rata portion of the 

2019 Warrant—i.e., a warrant to purchase 1,133,160 shares of Alphatec common 

stock at a strike price of $2.17 per share and an expiration of June 21, 2026 (the 

“Warrant”)—in exchange for no consideration (“Modified Scenario A”). 

Initially, in what it referred to as “Scenario A,” L-5 requested a specific 

performance order that required Alphatec to issue the Warrant to it in addition to a 

payment of $73,267 in money damages.77 L-5 calculated the money damages as 

follows: $814,662 in foregone interest on the $7,020,000 loan principle it would have 

lent to Alphatec if permitted pro rata participation in the 2019 Agreement, plus 

$1,997,173 in prejudgment interest on the principal and interest payments, less 

76 Restatement (Second) of Contracts § 358 cmt. a; see also Vaughan v. Creekside 

Homes, Inc., 1994 WL 586833, at *1 (Del. Ch. Oct. 7, 1994) (“[I]n decreeing specific 

performance [this Court] will adjust the equities of the parties in such a manner as to put 

them as nearly as possible in the same position as if the contract had been performed 

according to its terms.” (emphasis and alterations in original) (quoting Tri State Mall Assocs. 

v. A. A. R. Realty Corp., 298 A.2d 368, 371–72 (Del. Ch. 1972))); Aizen, 285 A.3d at 498 (“A 

court may place conditions on a decree of specific performance.” (citing Mumford v. Long, 

1986 WL 2249, at *4 (Del. Ch. Feb. 21, 1986) and Valley Builders, Inc. v. Stein, 193 A.2d 793, 

799 (Del. Ch. 1963))).

77 Pl.’s OB at 45–49.
23

$2,738,568 to account for its alternative rate of return.78 But L-5 “withdr[ew] its 

request for the prejudgment interest on the principal payments” at post-trial oral 

argument.79 Accounting for this adjustment, L-5’s alternative rate of return would 

have yielded a return exceeding the remaining money damages sought.80 So, as of 

post-trial oral argument, L-5 abandoned its request for money damages on the loan 

and only seeks an order requiring Alphatec to issue the Warrant to it for no 

consideration (i.e., Modified Scenario A).81 

In the alternative to Modified Scenario A, L-5 seeks an order permitting L-5 to 

purchase the Warrant for $2.2 million—which, the parties agree, represents the value 

of the Warrant at the time Alphatec entered the 2019 Agreement (“Scenario B”).

82

Alphatec argues Modified Scenario A would create a windfall—giving L-5 the 

valuable Warrant for nothing. If Alphatec performed and L-5 accepted a pro rata 

participation offer, L-5 would have taken on certain funding obligations to Alphatec. 

So to give L-5 the Warrant seemingly for free would put L-5 in a manifestly better 

position than it would have been in if Alphatec performed. And it would do so while 

78 Id. 

79 OA Tr. at 14. 

80 Id. at 14–15. 

81 See id.

82 See Pl.’s OB at 46; J451 at 14, 19; Def.’s AB at 60. The $2.2 million valuation is 

based on the issue price set out in the 2019 Agreement ($1.98) multiplied by the number of 

Alphatec shares of common stock issuable upon exercise of the warrant. See J451 (Brown’s 

Expert Report) at 14, 19; 2019 Agreement § 3(D)(e)(ii).
24

depriving Alphatec of the benefit of L-5 making funds available in exchange for the 

Warrant—irrespective of whether, as a practical matter, Alphatec was able to draw 

on those funds at the time as a result of terms set out in subsequent agreements.

83

Moreover, it bears noting that in one of L-5’s lead cases, the Court declined one 

form of the plaintiff’s requested relief for the very reason that it would have created 

a “windfall” for the plaintiff.84 At least from my view, Alphatec’s criticism—that 

Modified Scenario A would create a windfall—seems like a valid concern. 

But notwithstanding its criticism of Scenario A, Alphatec seems surprisingly 

on board with Scenario B. For its part, L-5 does not provide a meaningful basis to 

prefer Modified Scenario A over Scenario B. It asserts only that Scenario B would be 

an incomplete remedy because Scenario B would “depriv[e] it of the foregone value of 

the loan . . . .”85 But, as of post-trial oral argument, L-5 has abandoned its request 

for any such money damages in conjunction with the loan that it previously requested 

as part of Scenario A. Now, it only seeks the Warrant in exchange for no 

consideration—Modified Scenario A. This leaves me with no unique reason to prefer 

Modified Scenario A over Scenario B. Since Modified Scenario A seems to provide L5 better terms than the ones it bargained for, and L-5 provides no other reasons to 

83 See OA Tr. at 86–88.

84 Gildor, 2006 WL 4782348, at *10.

85 Pl.’s OB at 48. 
25

prefer Modified Scenario A over Scenario B, the latter seems to place the parties 

closer to where they would have been had Alphatec performed in 2019. 

As noted, Alphatec seems generally amenable to the use of Scenario B—albeit 

with an unprecedented twist. Alphatec’s argument starts out well enough. In the 

beginning, it tracks the methodology of L-5’s Scenario B. In that regard, the parties 

seem to agree that such a specific performance remedy—cash for the Warrant—is an 

appropriate way to resolve this matter. Indeed, as Alphatec explained at oral 

argument, “[i]f the Court is inclined to enter judgment awarding specific performance 

as a remedy, the only fair and equitable framework for a specific performance award 

is a cash payment in return for a warrant for the 1.1 million shares of Alphatec 

common stock at a strike price of $2.17.”86 Alphatec even agrees that, at the time it 

entered the 2019 Agreement, the Warrant would have been worth $2.2 million.87 This 

all seems to make sense and, again, tracks L-5’s Scenario B. 

86 OA Tr. at 21. Alphatec contends similarly in its briefing. It explains that of the 

alternative scenarios L-5’s expert walked through, the ones that “arguably approximate what 

happened in 2019 are those under which L-5 ‘buys’ the warrant from Alphatec for cash” since 

“requiring L-5 to buy the warrant confers some benefit on Alphatec.” Def.’s AB at 51. Indeed, 

notwithstanding Alphatec’s extensive briefing on the potential applicability of its blended 

terms Proposal, it raises the Proposal only in an attempt to show L-5 was not “ready, willing, 

and able” to perform at the time Alphatec’s performance was due. Alphatec does not, 

however, suggest that, if I award specific performance, the decree should be one that tracks 

the terms in the Proposal or otherwise requires some blend of the terms in the 2018 

Agreement and 2019 Agreement. Instead, its position is that a specific performance decree 

should only be a cash-for-Warrant exchange. Id.

87 See Def.’s AB at 60; OA Tr. at 21 (discussing “the value of the [W]arrant” at the time 

of breach, “which was approximately $2.2 million”).
26

But then Alphatec asserts that, by using an alternative rate of return to reduce 

the money damages that L-5 was seeking in addition to its request for specific 

performance under Scenario A, L-5 functionally concedes that it was required to 

“mitigate” Alphatec’s breach.88 So, Alphatec argues, L-5 should have purchased $2.2 

million of Alphatec common stock to “mitigate” Alphatec’s refusal to fulfill its 

Preemptive Rights obligation to L-5.

89 

Per Alphatec, since the value of its stock has increased considerably since 2019, 

if L-5 had invested in Alphatec stock at the time Alphatec breached the SPA, such a 

$2.2 million investment in Alphatec common stock would have increased by 

approximately $8.5 million.

90 Thus, the argument goes, L-5 should be required to pay 

Alphatec $10.7 million in exchange for the Warrant.

91

Alphatec, however, can point to no case suggesting that a party has a duty to 

mitigate in the specific performance context.92 Alphatec also points to no cases 

88 Def.’s AB at 57–61. 

89 Id.

90 Id.

91 See id. 

92 See id.; OA Tr. at 65–66. That said, the determination of whether to award specific 

performance remains a matter of judicial discretion, and, in fashioning a specific performance 

decree, courts remain free to “adjust the equities” as justice requires. See Vaughan, 1994 WL 

586833, at *1; Snow Phipps, 2021 WL 1714202, at *55; Restatement (Second) of Contracts § 

358(1). The other part of Alphatec’s “windfall” argument follows from its assessment of risk 

asymmetry. In addition to the foregoing, Alphatec contends that ordering Alphatec to issue 

L-5 the Warrant in exchange for no consideration would produce a windfall because (a) L-5 

did not take on any of the risk like Squadron did, thus “[w]ithout duplicating that risk, 

requiring Alphatec to issue warrants to L-5 as if L-5 loaned $7 million to Alphatec in 2019 is 
27

suggesting that any such duty might require a plaintiff to mitigate a breach involving 

the issuance of a warrant by purchasing common stock—a different security with a 

different value proposition and a different risk profile.

93

not at the same price and same terms as Squadron[,]” (Def.’s AB at 48) and (b) “Alphatec 

issued a warrant to Squadron in part to compensate Squadron for (1) taking the risk of losing 

all or part of its investment, and (2) holding a warrant for” what were by that point 

“underwater shares” (Id. at 49) that it received under the 2018 Agreement. L-5 counters that 

any failure to take on the risk Squadron donned was not of its own doing. So any blame for 

the Warrant being issued to L-5 risk-free would fall at Alphatec’s feet since it was only 

because Alphatec breached the SPA that L-5 was wrongfully prevented from participating in 

the 2019 Agreement and taking on whatever risk may have accompanied such an investment. 

I find Plaintiff’s position persuasive here. Whatever risk asymmetry Alphatec now complains 

of is a product of its own making and should not be construed to L-5’s disadvantage. 

“[S]pecific performance will not usually be denied where the hardship is due to defendants’ 

own acts or . . . was clearly foreseeable.” Tassette, Inc. v. M. A. Gerett, Inc., & Holmes E. 

Penn, 1971 WL 1714, at *3 (Del. Ch. Feb. 5, 1971). Moreover, Alphatec provides no reason to 

believe that one lender taking on more risk than another should preclude enforcement of a 

“same price and on the same terms” provision conferring preemptive rights. And, to the 

extent one wishes to consider the relevant risk profiles at issue here, it bears noting that L5 took on considerable risk in 2018 when it entered the SPA and invested $25 million in a 

then-floundering Alphatec. See TT590–91 (Brown); Restatement (Second) of Contracts § 364 

cmt. b (“In determining the fairness of an exchange [to evaluate the appropriateness of a 

specific performance decree], account will be taken of the risks taken by both parties at the 

time the agreement was made.”). As I noted at oral argument, Defendant’s reading would 

have the Court believe specific performance of a “same price and on the same terms” provision 

may differ depending on who a third-party lender is. OA Tr. at 30–33. But such a reading 

of Section 4.18 is nowhere to be found. The risk Squadron bore “might explain why the terms 

[of the 2019 Agreement] exist, but it wouldn’t have changed the terms” Alphatec was required 

to provide L-5 to comply with its obligation under the Preemptive Rights provision in the 

SPA. TT588 (Brown).

93 See TT793 (Zurek) (“Q. Well, in other words, the warrant has option value that a 

share of stock does not. Is that fair? A. That’s right. And you would only exercise it . . . early 

if you expected some events to diminish the value of the underlying shares, and then you may 

want to exercise it early or sell it in the market.”); see also TT590–91 (Brown) (explaining 

how requiring L-5 to purchase Alphatec common stock would have imposed substantially 

more risk on L-5 than the SPA’s bargained-for terms contemplated: “Q. But [Alphatec’s 

expert] says that L-5 could have mitigated its losses by buying stock. You’re aware of that; 

right? A. I am. It’s just a different risk profile. I mean, this transaction contemplates a first 

lien loan to, you know, a company with a sub [$]60 [to] $70 million market cap that was faced 

with a going concern warrant. It’s a very different risk profile to buy the stock versus to get 

first lien loan. Q. And what are some of those differences? A. Well, if you’ve got a first lien 
28

Instead, Alphatec points only to L-5’s use of an alternative rate of return to 

reduce the money damages L-5 sought.94 Alphatec fails to prove its starting point—

that L-5 concedes the applicability of mitigation principles to specific performance to 

exclude an alternative rate of return—since L-5’s only purported use of such 

principles is limited to apply exclusively to the money damages part of the relief it

sought. 

But perhaps even more compelling is simply pausing to consider whether such 

“mitigation” would come remotely close to placing the parties in the positions they 

would have been in had Alphatec performed. Here, Alphatec argues that instead of 

lending it $7.02 million—which Alphatec would likely have repaid in full with 

loan and it goes bankrupt, then you’re sitting on the collateral package. You’re at the top of 

the capital structure as opposed to at the bottom of the capital structure.”).

94 See OA Tr. at 64–67. Here, Alphatec’s failure to provide any supporting authority 

for its position as to mitigation in this context “constitutes waiver of the issue.” Macrophage 

Therapeutics, Inc. v. Goldberg, 2021 WL 2585429, at *4 (Del. Ch. June 23, 2021) (“‘[C]ounsel 

is required to develop a reasoned argument supported by pertinent authorities.’ ‘[F]ailure to 

cite any authority in support’ of [a] legal argument . . . ‘constitutes a waiver of the issue.’”). 

Alphatec tries to argue that a duty to mitigate should apply to limit the extent of a specific 

performance decree. It provides no support for that proposition and, indeed, some legal 

scholars suggest a duty to mitigate does not (or cannot) apply to an action for specific 

performance arising from breach of contract. See, e.g., Thomas S. Ulen, The Efficiency of 

Specific Performance: Toward A Unified Theory of Contract Remedies, 83 Mich. L. Rev. 341, 

390 (1984) (“With money damages there is an obligation on the breachee to mitigate his 

losses, and it is generally conceded that this is an efficient obligation. With specific 

performance there is no such obligation to mitigate, nor is it easy to see how such an 

obligation could be imposed under that contract remedy.” (footnotes omitted)); see also Ash 

Park, LLC v. Alexander & Bishop, Ltd., 783 N.W.2d 294, 310–12 (Wis. 2010). Here, the 

warrant is different from common stock. It is not a widget. And Alphatec agreed in the SPA 

not to argue remedies at law would be adequate. SPA § 5.15. If anything, Alphatec’s 

mitigation argument comes across as an attempt to shoehorn legal remedy arguments into 

this action for specific performance, in seemingly yet another breach by Alphatec of its 

express contractual obligations. 
29

interest and the Warrant to boot—L-5 should be required to now give Alphatec over 

$10.7 million (i.e., more than the combined value of the principal and interest on a 

pro rata loan), which it will not repay and on which interest will not accrue, in 

exchange for the same Warrant Alphatec concedes was worth $2.2 million at the time 

it breached the SPA.95 This comes nowhere near what the parties bargained for and 

seeks to shift L-5’s contractual entitlement to benefit from the appreciation in 

Alphatec’s stock price since 2019 away from L-5 and toward the breaching party, i.e.,

Alphatec.

Alphatec asserted at oral argument that equity requires the Court to consider 

the change in the value of the Warrant between 2019 and the present and to fashion 

an order that takes into account the change in the value of Alphatec stock.96 But this 

Court previously has declined to adjust the equities to account for an increase in value 

of an asset that appreciated during a delay caused by a wrongful breach of contract 

by a defendant’s predecessor. The Court explained that “had the contract been 

performed” at the time performance was due, “the plaintiffs would have enjoyed all 

of the appreciation in the value of the property, and any income derivable therefrom” 

and adjusting the equities “would enable [the defendant] to profit by its predecessor’s 

95 See OA Tr. at 95–96.

96 Id. at 21 (“In fashioning that [specific performance] award we also respectfully 

submit that the Court must price the purchase of that warrant not only at the value of the 

warrant at the time of the alleged breach, which was approximately $2.2 million, but adding 

to the purchase price the amount L-5 would have realized if in March of 2019 it had made an 

alternative investment in Alphatec stock.”).
30

wrongful breach and retention of the property.”97 This seems to apply in equal force 

to the analogous facts and issues here. Accordingly, I reject Defendant’s argument 

that specific performance requires L-5 to purchase the Warrant for $10.7 million. 

Nonetheless, the parties both seem generally amenable to an award consistent 

with L-5’s Scenario B—Defendant only goes one step further to apply an 

unprecedented mitigation theory to the specific performance remedy. And since L-5 

provides no meaningful reason to prefer Modified Scenario A over Scenario B, I see 

no need to belabor this. Accordingly, I will order that, consistent with Scenario B,

Alphatec is to make available to L-5 a warrant to purchase 1,133,160 shares of 

Alphatec common stock at a $2.17 strike price and a June 21, 2026, expiration date. 

And, in exchange, L-5 will have the choice of whether to purchase the warrant from 

Alphatec for $2.2 million or any portion thereof98 (based on a $1.98 per share 

valuation) or to decline to do so. 

97 Vaughan, 1994 WL 586833, at *3 n.2; see also Osborn, 991 A.2d at 1162 (“[M]ere 

increase in land values, unaccompanied by other circumstances showing inequity, is not such 

hardship as justifies a court of equity in denying specific performance.” (quoting Cunningham 

v. Esso Standard Oil Co., 118 A.2d 611, 614 (Del. 1955))); Esso Standard Oil Co. v. 

Cunningham, 114 A.2d 380, 382–83 (Del. Ch.) (enforcing specific performance of an option 

for the sale of land that had increased substantially in value during the term of the option

and stating that “[w]hile defendants have proved hardship in the sense that they would 

realize substantially more in a sale of their property at its present market value rather than 

at the option price, a modern court of equity cannot force a party to renegotiate a contract for 

the sale of land solely in the light of changes in land values occurring after the date of the 

contract[.]”)), aff’d, 118 A.2d 611 (Del. 1955). 

98 See SPA § 4.18(a) (“The members of the LI Group (as determined by [L-5]) will be 

entitled to purchase all or part of such stock or securities at the same price and on the same 

terms as such stock or securities are to be offered to any other Person.” (emphasis added)).
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III. CONCLUSION

For the foregoing reasons, L-5 prevails in this action seeking enforcement of 

the terms and provisions of the SPA. It is entitled to specific performance in the 

manner described above. The parties are to confer on a form of order implementing 

this decision and to submit a joint letter advising the Court of any issues that may 

remain to be addressed.