Contract analysis

From: "Audrey Zhou" To: "Brendan Walsh" Date: Thu, 25 Apr 2024 03:17:00 -0000 Subject: Research Assignment — Blasius Enhanced Scrutiny in Contested Election Context [AGMG — Matter No. 1017-00002]

Need your help on a research project for the Aurelius matter. Nathaniel is working on a comprehensive proxy contest defense memorandum for the AGMG Board (to be finalized by Monday the 28th), and one area we need to flesh out is the application of the *Blasius* standard — i.e., enhanced judicial scrutiny of board actions taken with the primary purpose of impeding or interfering with the shareholder franchise.

This is directly relevant because the Board is weighing several defensive responses to Corvus Peak Capital Partners' proxy contest for the June 7, 2024 Annual General Meeting, and we need to make sure none of those measures cross the *Blasius* line.

- Corvus Peak (8.7% holder, approximately 35,896,200 shares out of 412,600,000 outstanding) has nominated three director candidates — Malcolm Trask, Vanessa Loring, and Dr. Raymond Chu — for the 2024 AGM. - Corvus Peak filed its preliminary proxy on April 1; AGMG filed its preliminary proxy on April 5. - The Board has already decided against adopting a shareholder rights plan (poison pill) — that was addressed in Nat

I need you to research and prepare a memorandum addressing the following:

**(a) *Blasius* Framework — Core Standard**

Restate the foundational *Blasius* standard: when a board action is taken for the primary purpose of impeding the exercise of stockholder voting power, the board bears the burden of demonstrating a "compelling justification" for that action — a standard that is, as you know, extremely difficult to satisfy. Trace the doctrinal evolution from *Blasius Industries, Inc. v. Atlas Corp.* through subsequent Chancery Court d

**(b) Relationship Between *Blasius* and *Unocal***

Analyze how Delaware courts have addressed the interplay between *Blasius* enhanced scrutiny and the *Unocal*/*Unitrin* proportionality framework. In some cases the Chancery Court has folded *Blasius* concerns into the *Unocal* analysis rather than applying *Blasius* as a standalone test — please identify the leading decisions on this point and explain how the frameworks interact.

**(c) Application to Specific Defensive Measures in Contested Elections**

This is the heart of what we need. Focus on recent Delaware Chancery Court decisions (last 10 years preferred, but include seminal older cases) that have applied *Blasius* or *Blasius*-like scrutiny in the following contexts:

1. **Bylaw amendments** adopted by the board after a proxy contest is initiated — particularly amendments to advance notice provisions or director qualification requirements. 2. **Expansion of board size / appointment of additional directors** during or immediately before a contested election. 3. **Acceleration of strategic processes** (e.g., announcing a strategic review or commencing a sale process) that could dilu

One note specific to AGMG: the advance notice window has already closed (it ran February 10 – March 11, 2024, based on the June 9, 2023 prior year AGM), and Corvus Peak's March 1 nominations were timely. So the question is not about the existing advance notice bylaw but about any *prospective* amendments or other board actions that could be challenged.

**(d) Burden of Proof and Evidentiary Standards**

What evidence do courts look at to determine whether the "primary purpose" of a board action was to interfere with shareholder franchise? How do courts distinguish between actions with mixed motives (legitimate business purpose plus franchise-impeding effect)?

**(e) Practical Safe Harbors / Best Practices**

Identify any practical guidance from the case law about what kinds of contemporaneous documentation, board process, or independent committee involvement help insulate board actions from *Blasius* challenges. This is particularly relevant because the Special Committee (Tobias Kessler as Chair, Lucinda Farrow-Grant, and Dr. Anwen Llewellyn) is overseeing both the CEO succession process and the activist response — we wa

- Research memorandum, approximately 8–12 pages. - **I need a working draft by end of day Saturday, April 27**, so I can review and integrate into the broader proxy contest defense memo before Nathaniel reviews on Sunday. Final version due end of day Monday, April 28. - Structure suggestion: organize by defensive-measure type (bylaw amendments, board expansion, timing changes, strategic process acceleration), with a

Let me know if you have questions or need me to pull any of the AGMG corporate governance documents — I have the annotated bylaws summary (dated March 14, 2024), the Certificate of Incorporation, the Special Committee Charter (executed March 18, 2024), and all the other committee charters on file.

Also — please flag if you come across anything in the case law about *Blasius* in the specific context of a CEO succession process running concurrently with a proxy contest. That intersection is unusual, and Nathaniel will want to know if there's any authority on point.

Thanks, Brendan. Appreciate you turning this around quickly.

Audrey Zhou | Senior Associate Sterling, Cromwell & Bower LLP One Liberty Plaza, 41st Floor | New York, NY 10006 T: (212) 555-0147 | azhou@calderwoodharkness.com

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