01:18081076.1

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE VAALCO ENERGY, INC. CONSOLIDATED STOCKHOLDER LITIGATION

) ) ) ) )

C.A. No. 11775-VCL

DEFENDANTS’ ANSWERING BRIEF IN OPPOSITION TO PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT

AND IN FURTHER SUPPORT OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

OF COUNSEL: Michael C. Holmes Andrew E. Jackson Cortney C. Thomas VINSON & ELKINS LLP Trammel Crow Center 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201-2975 Dated: December 17, 2015

Rolin P. Bissell (No. 4478) Kathaleen St. J. McCormick (No. 4579) Elisabeth S. Bradley (No. 5459) Benjamin M. Potts (No. 6007) YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square 1000 North King Street Wilmington, Delaware 19801 (302) 571-6600 Counsel for Defendants Steven P. Guidry, Frederick W. Brazleton, O. Donaldson Chapoton, James B. Jennings, John J. Myers, Jr., Andrew L. Fawthrop, Steven J. Pully, and VAALCO Energy Inc.

EFiled: Dec 17 2015 11:51AM EST Transaction ID 58311739

Case No. 11775-VCL

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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ............................................................................... 1

I. The Charter and Bylaws Are Valid. ................................................................ 6

A. Plaintiffs bear the burden of demonstrating invalidity. ......................... 6

B. Plaintiffs have not demonstrated invalidity........................................... 7

1. The Charter and Bylaws do not transgress a mandatory rule of Delaware law. .................................................................. 7

a. Section 141(k) does not create a mandatory rule prohibiting for cause limitations on director removal. ............................................................................ 7

b. The exceptions in Section 141(k) do not render it a mandatory prohibition, and Plaintiffs’ reliance on Arnold is misplaced. ......................................................... 8

c. The other authorities on which Plaintiffs rely do not support their position. ...............................................11

2. The Charter and Bylaws do not transgress public policy. ........14

a. Plaintiffs’ public policy-based argument is circular and lacks substance, for good reason. ............................14

b. There is no policy reason to treat an unclassified board differently than a single-class classified board, which is expressly permitted under Section 141(d). .............................................................................17

c. Public policy supports reading Section 141(k) as a default provision consistent with Delaware law’s tendency in favor of private ordering and stockholder choice. .........................................................17

II. The Consent Revocations Should Not Be Invalidated. .................................19

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III. Plaintiffs’ Factual Arguments Are Irrelevant, and Are Unsupported in Any Event. .....................................................................................................22

A. The 2009 Amendment did not “neglect” to remove the prohibition against removal without cause. ........................................23

B. This case is driven by stockholder activism, not entrenchment. .........25

CONCLUSION ........................................................................................................29

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TABLE OF AUTHORITIES

Page(s)

CASES

Abrons v. Maree, 911 A.2d 805 (Del. Ch. 2006) ............................................................................ 21

Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del. 1994) ..........................................................................passim

Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003) ............................................................................................ 11

In re Checkfree Corp. S’holders Litig., 2007 WL 3262188 (Del. Ch. Nov. 1, 2007) ....................................................... 20

Concord Real Estate CDO 2006-1, Ltd. v. Bank of Am. N.A., 996 A.2d 324 (Del. Ch. 2010), aff’d, 15 A.3d 216 (Del. 2011) ......................... 10

In re Appraisal of Dell Inc., 2015 WL 4313206 (Del. Ch. July 30, 2015) ........................................................ 7

Fuhlendorf v. Isilon Sys., Inc., 2011 WL 3300338 (Del. Ch. July 22, 2011) ........................................................ 7

In re Genelux Corp., 2015 WL 6437193 (Del. Ch. Oct. 22, 2015) ...................................................... 28

Jones Apparel Grp., Inc. v. Maxwell Shoe Co., 883 A.2d 837 (Del. Ch. 2004) .....................................................................passim

Kallick v. Sandridge Energy, Inc., 68 A.3d 242 (Del. Ch. 2013) .......................................................................... 5, 22

La. Mun. Police Empls.’ Ret. Sys. v. Fertitta, 2009 WL 2263406 (Del. Ch. Jul. 28, 2009) ....................................................... 27

MM Cos., Inc. v. Liquid Audio, Inc., 813 A.2d 1118 (Del. 2003) ................................................................................. 15

In re The MONY Grp., Inc. S’holder Litig., 853 A.2d 661 (Del. Ch. 2004) .................................................................. 5, 21, 22

iv 01:18081076.1

Nycal Corp. v. Angelicchio, 1993 WL 401874 (Del. Ch. Aug. 31, 1993) ....................................... 3, 11, 12, 13

Robb v. Ramey Assocs., 14 A.2d 394 (Del. Super. Ct. 1940) .................................................................... 11

Rohe v. Reliance Training Network, Inc., 2000 WL 1038190 (Del. Ch. July 21, 2000) ...............................................passim

Roven v. Cotter, 547 A.2d 603 (Del. Ch. 1988) ........................................................................... 15

Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170 (Del. 2000) ................................................................................. 20

Stroud v. Grace, 1990 WL 176803 (Del. Ch. Nov. 1, 1990), aff’d in part, rev’d in part, 606 A.2d 75 (Del. 1992) ..................................................................................... 14

Third Point LLC v. Ruprecht, 2014 WL 1922029 (Del. Ch. May 2, 2014) ............................................ 10, 21, 26

Versata Enters., Inc. v. Selectica, Inc., 5 A.3d 586 (Del. 2010) ....................................................................................... 26

STATUTES

8 Del. C. § 102(b)(1) .................................................................................................. 1

8 Del. C. § 102(b)(7) .................................................................................................. 9

8 Del. C. § 141(d) ..................................................................................................... 17

8 Del. C. § 141(k) ..............................................................................................passim

D.C. Code Ann. § 29-306.08 ................................................................................... 18

Model Business Corp. Act § 8.08(a) (2013) ............................................................ 18

N.J. Stat. Ann. § 14A:6-6 ......................................................................................... 18

Va. Code Ann. § 13.1-680 ....................................................................................... 18

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OTHER AUTHORITIES

Jeffrey M. Gorris, Lawrence A. Hamermesh, & Leo E. Strine, Jr., The Model Business Corporation Act at Sixty: Delaware Corporate Law and the Model Business Corporation Act: A Study In Symbiosis, 74 Law & Contemp. Prob. 107 (2011)................................................................................. 18

Leo E. Strine, Jr., Delaware’s Corporate Law System: Is Corporate America Buying an Exquisite Jewel or a Diamond in the Rough? A Response to Kahan & Kamar’s Price Discrimination in the Market for Corporate, 86 Cornell L. Rev. 1257 (2001) ............................................................................... 19

Michael P. Dooley & Michael D. Goldman, Some Comparisons Between the Model Business Corporation Act and the Delaware General Corporation Law, 56 Bus. Law. 737 (Feb. 2001) ................................................................... 18

2A Sutherland Statutory Construction § 47:11 (7th ed.) ......................................... 10

01:18081076.1

PRELIMINARY STATEMENT1

The question before this Court is whether Section 141(k) of the DGCL

affirmatively prohibits a Delaware corporation from maintaining a previously

adopted charter provision limiting director removal to removal for cause if that

corporation ceases to have a staggered, classified board. Delaware law presumes

that corporate instruments are valid. Plaintiffs bear the burden of rebutting this

presumption, and it is an onerous burden.2 To rebut this presumption, Plaintiffs

must demonstrate that the challenged provisions are “contrary to the laws of this

State,” meaning they transgress a mandatory statute or Delaware public policy. 8

Del. C. § 102(b)(1); see also Defs.’ OB at 15. In their Opening Brief, Plaintiffs do

not acknowledge this burden, much less demonstrate how they have met it.

Plaintiffs cannot demonstrate that the Charter and Bylaws transgress a

mandatory statute because Section 141(k) is not mandatory. Section 141(k)

1 Citations are to docketed pleadings and documents cited by docket (“Dkt.”) number, the Opening Brief in Opposition to Plaintiffs’ Motion for Summary Judgment and in Support of Defendants’ Motion for Summary Judgment (Dkt. 9) (“Defendants’ Opening Brief,” cited as “Defs.’ OB”), Exhibits 1–16 to the Transmittal Affidavit of Benjamin M. Potts filed with Defendants’ Opening Brief (Dkt. 9) (cited as “Ex.”), the Compendium of Corporate Instruments filed with Defendants’ Opening Brief (Dkt. 11–13), Plaintiffs’ Opening Brief in Support of Their Motion for Partial Summary Judgment (Dkt. 8) (“Plaintiffs’ Opening Brief,” cited as “Pls.’ OB”), and Exhibits to the Transmittal Affidavit of Christopher M. Foulds (Dkt. 8) (cited as “Pls.’ Aff. Ex.”). 2 All capitalized terms not defined herein have the meanings set forth in Defendants’ Opening Brief.

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establishes a default rule; it does not preclude a charter provision creating an

unclassified board that is removable only for cause. In arguing that Section 141(k)

creates a mandatory prohibition, Plaintiffs rely on an inapplicable theory of

statutory construction to which the Delaware Supreme Court refers in a footnote in

Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del. 1994). Pls.’ OB

at 13. Plaintiffs’ heavy reliance on Arnold is misplaced. In Arnold, the Delaware

Supreme Court did not abandon earlier Delaware precedent to adopt a strict

constructionist approach to the implication of exceptions. Arnold addresses the

extent to which a court should consider legislative history when the words of the

statute are clear. Further undermining Plaintiffs’ argument, the language on which

Plaintiffs rely in Arnold is not a holding of the Court, but rather, a partial quotation

from the treatise Sutherland Statutory Construction, which makes up the third and

last authority cited in a “see also” string cite in a footnote. A review of Sutherland,

including the language Plaintiffs omit from the quote on which they rely, shows

that the strict construction for which Plaintiffs advocate is disfavored. Contrary to

Plaintiffs’ argument, Delaware takes the more modern and liberal approach when

construing the DGCL as shown by Jones Apparel Group, Inc. v. Maxwell Shoe

Co., 883 A.2d 837, 845 (Del. Ch. 2004).

The other cases upon which Plaintiffs rely do not aid them either. Plaintiffs

cite to Rohe v. Reliance Training Network, Inc., 2000 WL 1038190 (Del. Ch. July

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21, 2000) and Nycal Corp. v. Angelicchio, 1993 WL 401874 (Del. Ch. Aug. 31,

1993) for the proposition that a charter provision may never limit director removal

to removal for cause. Pls.’ OB at 12–13. But neither case addresses the issue for

which it is cited. Rohe dealt with an attempt to abrogate director removal for

cause, and in Nycal, the question of director removal under Section 141(k) was not

disputed at all.

In sum, Plaintiffs cite no statutory language, no piece of legislative history,

and no case law compelling the conclusion that Section 141(k) is a mandatory rule

that affirmatively prohibits VAALCO from maintaining a charter provision

limiting director removal to for cause only.

Plaintiffs also cannot demonstrate that the Charter and Bylaws transgress

public policy. Plaintiffs argue that the public policy of Delaware is that

stockholders have a “fundamental right to remove directors,” and Plaintiffs point to

Section 141(k) as evidence for the claim. This reasoning is circular. No

fundamental right to remove directors without cause pre-dated the adoption of

Section 141(k). Rather, the only “fundamental rights” related to director removal

recognized at common law were (1) the right of stockholders to remove directors

for cause, and (2) the right of directors never to be removed without cause.

Section 141(k) eliminated the second of these common law rights while preserving

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the first; Section 141(k) did not codify any other common law removal right,

because none existed.

Plaintiffs’ “fundamental right” argument has no support in the DGCL. The

DGCL permits restrictions on director removal. Having an un-staggered board

elected annually and removable only for cause is less restrictive than having a

staggered board with directors removable only for cause. Further, Section 141(d)

and Section 141(k)(1) permit the functional equivalent of VAALCO’s board: a

single-class, classified board removable only for cause. No policy reason exists to

invalidate VAALCO’s “for cause only” charter provision simply because the board

is not called “classified.”

As for relief, in their Opening Brief, Plaintiffs present no argument for what

they implicitly seek—reformation of VAALCO’s Charter and Bylaws. Instead,

Plaintiffs request to invalidate VAALCO’s consent revocation cards. Because the

cards have not even been printed or mailed, they also have not yet been received.

Accordingly, there is nothing to invalidate, and Plaintiffs’ requested relief is

unnecessary.

Plaintiffs’ request to invalidate VAALCO’s consent revocation cards is

improper in any event. Plaintiffs argue that invalidation is required due to the

Board’s allegedly false statements. Plaintiffs do not identify any false or

misleading statements, however, and the actual language of the preliminary proxy

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reveals that there are none. Even if the disclosures were found to be inaccurate,

sterilization of consent revocations is unnecessary. The Court views supplemental

disclosures as a sufficient remedy, as reflected in In re The MONY Group, Inc.

Shareholder Litigation, 853 A.2d 661 (Del. Ch. 2004), to which Plaintiffs cite.

The other case on which Plaintiffs rely, Kallick v. Sandridge Energy, Inc., 68 A.3d

242 (Del. Ch. 2013), stands in helpful contrast to the case at hand. There, the

Court held on a preliminary injunction record that the defendants’ fiduciary

misconduct warranted the relief sought. Plaintiffs do not press—or even allege—

comparable allegations to those at issue in Kallick.

Additionally, although Plaintiffs portray this dispute as a narrow “legal

determination” resolvable on the undisputed record—namely, the Charter, the

Bylaws, and the DGCL (Pls.’ OB at 10)—Plaintiffs’ Opening Brief is larded with

erroneous factual assertions. While these factual assertions are unsupported and

irrelevant to the narrow legal issues of facial validity, Defendants herein rebut two:

Plaintiffs’ allegations regarding the intent underlying the 2009 Amendment and the

Board’s purported entrenchment.

Effectively, Plaintiffs beseech the VAALCO Board to proactively repudiate,

without a stockholder vote, the plain language of the Company’s governing

instruments, based solely on a legal issue that no Delaware court has previously

resolved. If directors of Delaware corporations were to heed this counsel, there is

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no doubt that stockholder plaintiffs would inundate this Court with claims that the

stockholder right to vote on the contents of a charter was being trampled.

For all of these reasons, and as described more fully below, Plaintiffs’

motion should be denied.

ARGUMENT

I. The Charter and Bylaws Are Valid.

A. Plaintiffs bear the burden of demonstrating invalidity.

Plaintiffs’ Opening Brief ignores that they bear the burden of proving

invalidity. This is an onerous burden, as discussed in Defendants’ Opening Brief.

Defs.’ OB 14–18. To succeed, Plaintiffs must demonstrate that the challenged

provisions are “contrary to the laws of this State,” in that they “contravene . . . a

mandatory rule of our corporate code or common law.” Jones Apparel, 883 A.2d

at 846. To be “contrary to the laws of this State,” a provision must be “contrary to

this State’s public policy, in the sense that it clashes with fundamental policy

priorities that clearly emerge from the DGCL or our common law of corporations.”

Id. at 843; see also Defs.’ OB at 15–16 (citing Jones Apparel and other cases).

Delaware courts interpret this language narrowly, and their approach in finding

provisions to be invalid is a “cautious one.” Defs.’ OB at 16.

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B. Plaintiffs have not demonstrated invalidity.

1. The Charter and Bylaws do not transgress a mandatory rule of Delaware law.

As discussed in Defendants’ Opening Brief, Delaware corporation law

adheres to the policy of encouraging and optimizing private ordering.3 The DGCL

does not function as “a comprehensive code, but rather as a broadly enabling

statute that leaves ample room for private ordering and interpretation.” In re

Appraisal of Dell Inc., 2015 WL 4313206, at *13 (Del. Ch. July 30, 2015).

“Delaware’s corporate statute is widely regarded as the most flexible in the nation

because it leaves the parties to the corporate contract (managers and stockholders)

with great leeway to structure their relations . . . .” Jones Apparel, 883 A.2d at

845.

a. Section 141(k) does not create a mandatory rule prohibiting for cause limitations on director removal.

Plaintiffs argue that, unlike numerous other sections of the DGCL, Section

141(k) is mandatory rather than permissive. Plaintiffs are wrong. As set forth in

Defendants’ Opening Brief, nothing on the face of Section 141(k) indicates that it

3 See, e.g., Jones Apparel, 883 A.2d at 838 (discussing “the wide room for private ordering authorized by the DGCL, when such private ordering is reflected in the corporate charter”); Fuhlendorf v. Isilon Sys., Inc., 2011 WL 3300338, at *2 (Del. Ch. July 22, 2011) (“[T]he Delaware General Corporation Law is intentionally designed to provide directors and stockholders with flexible authority, permitting great discretion for private ordering and adaptation.”) (quotations and citation omitted).

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is a mandatory prohibition on charter provisions making an unclassified board

removable only for cause. Defs.’ OB at 18–20.

Properly construed, Section 141(k) provides a series of default rules that

apply to different contexts. The first sentence of Section 141(k) creates a general

default rule that directors of a Delaware corporation “may be removed with or

without cause.” 8 Del. C. § 141(k). If the legislature had intended a mandatory

prohibition on any charter limitation on director removal, it would have been

simple enough to say: “The holders of a majority of the shares then entitled to vote

at an election of directors shall have the right to remove any director or the entire

board of directors with or without cause . . . .” By employing “may” rather than

“shall,” and by specifying that there may be different treatment of “with” cause

and “without cause,” Section 141(k) reflects that a blanket prohibition was not

intended.

b. The exceptions in Section 141(k) do not render it a mandatory prohibition, and Plaintiffs’ reliance on Arnold is misplaced.

Plaintiffs contend that the exceptions to Section 141(k) transform its first

sentence from a default rule to a mandatory prohibition. The exceptions, however,

set different default rules for companies that have adopted a classified board or

cumulative voting. For example, the first exception, Section 141(k)(1), reverses

the default rule with respect to classified boards. It provides that for a classified

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board, stockholders may effect removal only for cause, unless the charter says

otherwise. In essence, Plaintiffs argue that because Section 141(k)(1) provides that

a charter of a corporation with a classified board must specify if directors are going

to be removable without cause, then charters of all corporations without classified

boards may not have a limitation requiring removal to be for cause. This is

fallacious logic, and Section 141(k)(1)’s treatment of classified boards does not

change the meaning of the first sentence of Section 141(k).

In arguing that the presence of exceptions to Section 141(k) renders it

mandatory, Plaintiffs do not discuss the plain language of the rule. Rather,

Plaintiffs base their argument on an excerpt from footnote 31 in Arnold v. Society

for Savings Bancorp, Inc., 650 A.2d 1270 (Del. 1994), which states: “where the

statute expressly enumerates specific exceptions, courts should not imply or create

new exceptions from otherwise generally applicable language.” Pls.’ OB at 13.

Plaintiffs’ reliance on footnote 31 is misplaced.

First, Arnold did not involve the question of how to construe exceptions to a

statute. It involved a different question of statutory interpretation—to what extent

a court should consider legislative history when the words of the statute are clear.

650 A.2d at 1287. The Delaware Supreme Court found that Section 102(b)(7) was

unambiguous and there was no need to resort to legislative history to interpret it.

Id.

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Second, the language that Plaintiffs quote is not a holding by the Delaware

Supreme Court, but rather a partial quotation from the treatise Sutherland Statutory

Construction, which makes up the third and last authority cited in a “see also”

string cite. Moreover, Plaintiffs omit language from the quote that undermines

their position. The full quotation reads:

Further, where the statute expressly enumerates specific exceptions, courts should not imply or create new exceptions from otherwise generally-applicable language, id. § 47.11, at 165, unless failure to do so would lead to a “manifest contradiction of the apparent purpose of [the] statute,” id. at 50 (Supp. 1994).

650 A.2d at 1287 n.31 (emphasis added). The rule of strict construction that

Plaintiffs’ urge here has no support in Arnold.

Third, a review of Sutherland shows that Plaintiffs’ strict construction

argument is disfavored. It states:

Generally, though, modern courts are more likely to interpret both exceptions and provisos in terms of legislative intent or statutory meaning, and not presume that qualifying language should be strictly construed. Whether a court inclines toward a strict or intent- or meaning-based interpretation, an exception usually limits only the matter which directly precedes it unless a clear, contrary intent or meaning indicates a general limitation on all of an act’s provisions.

2A Sutherland Statutory Construction § 47:11 (7th ed.) (footnotes omitted). That

Delaware takes the more modern and liberal approach when construing the DGCL

is shown by the Jones Apparel decision. 883 A.2d at 845. Cf. Concord Real

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Estate CDO 2006-1, Ltd. v. Bank of Am. N.A., 996 A.2d 324, 334 (Del. Ch. 2010),

aff’d, 15 A.3d 216 (Del. 2011) (observing that the restrictive inclusio unius est

exclusio alterius canon need not be “mechanically applied”).4

In short, through their misuse of Arnold, Plaintiffs urge this Court to

abandon its policy of flexible interpretation of the DGCL, and to adopt in the place

of such policies a mechanical and unbending rule of statutory construction. Arnold

does not require this approach, Sutherland does not suggest this approach, and

Delaware law rejects this approach. The Court should reject this approach and

construe Section 141(k) as Delaware courts have construed the other provisions of

the DGCL, i.e., as a default rule that can be altered by charter.

c. The other authorities on which Plaintiffs rely do not support their position.

Plaintiffs also cite Rohe and Nycal to contend that Section 141(k) is a

mandatory right to remove directors without cause. See Pls.’ OB at 12–13 (citing

Rohe v. Reliance Training Network, Inc., 2000 WL 1038190 (Del. Ch. July 21,

2000) and Nycal Corp. v. Angelicchio, 1993 WL 401874 (Del. Ch. Aug. 31, 4 See also Robb v. Ramey Assocs., 14 A.2d 394, 396 (Del. Super. Ct. 1940) (“The mention of one thing is not to be held exclusive when the context shows a different intention; and the maxim does not apply to a statute the language of which may fairly comprehend many different cases, in which some only are mentioned expressly by way of example, and not as excluding others of a similar nature.”); Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003) (“We do not read the enumeration of one case to exclude another unless it is fair to suppose that Congress considered the unnamed possibility and meant to say no to it.”).

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1993)). However, neither Rohe nor Nycal holds that Section 141(k) establishes

such a mandatory right. See Defs.’ OB at 23 n.12 (discussing Rohe and Nycal).

In Rohe, the plaintiff directors challenged their removal for cause from the

board of Reliance Training Network, Inc. (“RTN”). 2000 WL 1038190, at *12.

The Court rejected the plaintiffs’ interpretation of a series of interrelated corporate

and stockholder instruments, concluding that the RTN charter could not divest the

RTN stockholders of the right to remove directors for cause. Id. at *11–12. In

dicta, the Court described the right to remove directors as “a fundamental element

of stockholder authority.” See Pls.’ OB at 12 (citing Rohe at *11). However, the

right at issue in Rohe was the right to remove directors for cause. See Defs.’ OB at

23. Removal for cause is a fundamental stockholder right (see infra Section

I.2(a)), but that right is not at issue here.5 Thus, Rohe is inapposite.

In Nycal, the plaintiff directors did not challenge their removal under

Section 141(k) at all, but rather, whether a governance agreement gave them the

right to name their replacements before being removed. 1993 WL 401874, at *3.

The Court’s language generally describing Section 141(k) as a “guarantee” was

5 As an independent basis for rejecting the plaintiffs’ proposal, the Court also held that the relevant instruments did not express an intent to supplant the statutory rule. Id. at *12. The clear language concerning director removal in the VAALCO Charter and Bylaws stands in helpful contrast to the language at issue in Rohe, which did not reflect a clear intent concerning director removal.

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made in dictum, resolved no dispute before it, and did not address whether a

charter or bylaw provision could provide for removal only for cause. Id.

Thus, neither of these cases addresses the issue before this Court: whether

Section 141(k) affirmatively prohibits a Delaware corporation with an unclassified

board from eliminating the ability to remove directors without cause.

Plaintiffs overstate the significance of Delaware commentators’ discussions

of Section 141(k), which also do not address the question at issue in this litigation.

The cited discussions do not, as Plaintiffs suggest, reflect an understanding that

stockholders have an “absolute right to remove directors without cause.” Pls.’ OB

at 14. Instead, the commentators that Plaintiffs cite describe and quote the same

sources discussed in Defendants’ Opening Brief—common law and legislative

history leading to the enactment of Section 141(k), the language of Section 141(k)

itself, and case law discussing Section 141(k) (e.g., Rohe). Thus, the secondary

authority to which Plaintiffs cite does not supplant the language of Section 141(k)

or add to the analysis of that language.6

6 Plaintiffs cite to a 1989 article that lists Section 141(k) in a footnote identifying “a partial list of mandatory provisions in the Delaware Code.” See Pls.’ OB at 13 (citing Jeffrey N. Gordon, Contractual Freedom in Corporate Law, The Mandatory Structure of Corporate Law, 89 Colum. L. Rev. 1549, 1553 n.16 (1989)). The list appears to be based on the outdated assumption that the lack of express “unless otherwise provided” language requires a conclusion that a DGCL provision is mandatory. This argument has since been rejected by this Court. See Defs.’ OB at 18–20; Jones Apparel, 883 A.2d 837, 847–48 (Del. Ch. 2004); Stroud

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2. The Charter and Bylaws do not transgress public policy.

a. Plaintiffs’ public policy-based argument is circular and lacks substance, for good reason.

Because the Charter and Bylaws do not transgress a mandatory rule of

Delaware law, Plaintiffs must show that the provisions violate public policy. To

do so, Plaintiffs contend that the public policy of Delaware is that stockholders

have a “fundamental right to remove directors,” Pls.’ OB at 15, and such public

policy is evidenced by Section 141(k). Thus, Plaintiffs argue that their

interpretation of 141(k) is supported by public policy. This reasoning is circular.

It begs the question: from what common law or public policy can a “fundamental

right to remove directors” without cause7 be derived to support reading Section

141(k) as a mandatory provision? There is none.

v. Grace, 1990 WL 176803, at *12 (Del. Ch. Nov. 1, 1990), aff’d in part, rev’d in part, 606 A.2d 75 (Del. 1992). 7 Plaintiffs’ broad statement that Delaware law recognizes a “fundamental right to remove directors” is uncontroversial and irrelevant to the extent that it merely stands for the proposition that the stockholders’ ability to remove directors for cause can never be eliminated. Defendants do not argue, and never have argued, that Section 141(k) or any other source of Delaware law permits one to eliminate the stockholders’ ability to remove directors for cause. See, e.g., Defs.’ OB at 3 (“Delaware common law and the DGCL have always recognized an unfettered right of stockholders to remove directors for cause . . . .”). Thus, by referencing the stockholders’ “fundamental right to remove directors,” Plaintiffs must implicitly be attempting to invoke some basic right of stockholders to remove directors without cause; otherwise, Plaintiffs’ conclusion that 141(k) is mandatory is a blatant non sequitur. As explained further below, no such right exists.

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The only “fundamental rights” related to director removal recognized at

common law were (1) the right of stockholders to remove directors for cause,8 and

(2) the right of directors never to be removed without cause.9 To be sure, Section

141(k) eliminated the second of these common law rights (while preserving the

first). But to say that a fundamental right of removal without cause pre-dated

Section 141(k), and thus requires or supports reading it as a mandatory provision,

is simply wrong. Indeed, a policy-based “fundamental right” to remove directors

without cause would contradict Section 141(k)(1)’s creation of a default rule under

which directors of a staggered board can be removed only for cause.10

8 Roven v. Cotter, 547 A.2d 603, 605 (Del. Ch. 1988) (“Delaware courts have always recognized the inherent power of stockholders to remove a director for cause) (citing Campbell v. Loew’s, Inc., 134 A.2d 852, 858 (Del. Ch. 1957)); see also Rohe, 2000 WL 1038190, at *1. 9 See, e.g., Roven, 547 A.2d at 608 (“At common law a director had a vested right in his position arising from his duties and responsibilities to the corporation.”). 10 Plaintiffs cite to Rohe and MM Companies as supportive of their public policy-based argument. Rohe is unhelpful to Plaintiffs for the reasons given supra at 12–13. MM Companies is equally unhelpful because it is not even about director removal outside the context of annual elections. MM Companies, Inc. v. Liquid Audio, Inc., 813 A.2d 1118, at 1127 (Del. 2003) (“Maintaining a proper balance in the allocation of power between the stockholders’ right to elect directors and the board of directors’ right to manage the corporation is dependent upon the stockholders’ unimpeded right to vote effectively in an election of directors.”) (emphasis added). Again, Defendants take no issue with stockholders’ power and right to vote in director elections. Plaintiffs’ citation to MM Companies illustrates their confusion about the difference between the stockholder franchise generally and stockholders’ default authority to remove directors without cause.

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A review of several permissible board structures and corresponding removal

rules also reveals why Plaintiffs are unable to articulate a coherent policy basis for

reading Section 141(k) as a mandatory prohibition. First, it is permissible under

Section 141(k) to have an unclassified board with directors removable with or

without cause. Second, it is permissible under Section 141(k)(1) to have a

staggered board with directors removable with or without cause (as long as such

without-cause removal is provided for in the certificate of incorporation). Third, it

is permissible under Section 141(k)(1) to have a staggered board with directors

removable only for cause.

As one moves from the first to the third of these permissible arrangements,

the board structures and removal rules become more and more restrictive of

stockholders’ abilities to “refresh the board using tools of corporate democracy.”

Pls.’ OB at 15. A fourth arrangement, namely a de-staggered board with directors

removable only for cause, is what is at issue here. This fourth arrangement fits

comfortably in the middle of the spectrum of stockholder franchise-restrictiveness.

It is more restrictive than having a de-staggered board with directors removable

with or without cause, and it is less restrictive than having a staggered board with

directors removable only for cause. Since both ends of the spectrum are

permissible under Delaware law, there cannot be a policy reason why an

arrangement falling on the middle of the spectrum is impermissible. Thus,

17 01:18081076.1

Plaintiffs can provide no policy-based rationale for preventing a de-staggered

board from having directors removable only for cause.

b. There is no policy reason to treat an unclassified board differently than a single-class classified board, which is expressly permitted under Section 141(d).

By their express terms, Sections 141(d) and 141(k) permit the creation of a

single-class classified board whereby the directors are elected annually and are

removable only for cause.11 Section 141(d) permits the directors of a corporation

to be divided into one class, 8 Del. C. § 141(d), and Section 141(k)(1) states that

when a board is classified “as provided in [Section 141(d)], stockholders may

effect . . . removal [of directors] only for cause . . . .” Id. § 141(k)(1). The Board,

while technically not classified, is functionally equivalent to the single-class board

with directors removable for cause. No policy reason exists to invalidate

VAALCO’s “for cause only” charter provision just because the board is not

formally called “classified.”

c. Public policy supports reading Section 141(k) as a default provision consistent with Delaware law’s tendency in favor of private ordering and stockholder choice.

Finally, as discussed above, Delaware corporation law adheres to the policy

of encouraging private ordering. Consistent with that policy is a rule permitting

stockholders to have the power to determine in the governing documents whether

11 See Defs.’ OB at 24–25.

18 01:18081076.1

their unclassified board should be removable without cause or only for cause.

Indeed, the Model Business Corporation Act (the “MBCA”) and several

jurisdictions whose corporation laws are based on the MBCA expressly provide

this power to stockholders.12 In general, the DGCL tends (and aims) to be more

flexible and less restrictive than the MBCA.13 If this Court adopts Plaintiffs’

argument, however, Delaware law will be more restrictive of stockholder choice

and private ordering than the MBCA and other jurisdictions. Instead, this Court

should interpret Section 141(k) as a default rule consistent with the well-

established purpose of the DGCL to provide maximal flexibility and optionality for

12 Model Business Corp. Act § 8.08(a) (2013); see also, e.g., N.J. Stat. Ann. § 14A:6-6; Va. Code Ann. § 13.1-680; D.C. Code Ann. § 29-306.08. 13 See, e.g., Jeffrey M. Gorris, Lawrence A. Hamermesh, & Leo E. Strine, Jr., The Model Business Corporation Act at Sixty: Delaware Corporate Law and the Model Business Corporation Act: A Study In Symbiosis, 74 Law & Contemp. Prob. 107, 116 (2011) (engaging in comparative analysis of the DGCL and the MBCA, and explaining that “Delaware has been the more prolific source of innovation in statutory corporate law,” in contrast to the “MBCA’s propensity to build bright-line rules into the statute in an attempt to create greater certainty”); see also Michael P. Dooley & Michael D. Goldman, Some Comparisons Between the Model Business Corporation Act and the Delaware General Corporation Law, 56 Bus. Law. 737, 766 (Feb. 2001) (“The most significant difference that emerges from the preceding discussion is the more directive, ‘bright line’ approach the Model Act adopts in some instances. Delaware, on the other hand, has preferred to state its statutory standards in more general terms, leaving counsel and courts to fill in the interstices.”).

19 01:18081076.1

stockholders and thus encourage innovation and economically beneficial

outcomes.14

II. The Consent Revocations Should Not Be Invalidated.

Plaintiffs argue that the Court should invalidate the consent revocations

received by VAALCO due to allegedly false statements made by the Board

concerning the Charter and Bylaws. Pls.’ OB at 17–18. This argument is

superfluous, as the Company has not sent or received any consent revocations that

could be invalidated. Plaintiffs, who purportedly are stockholders, should know

that the stockholders have not yet received consent revocation cards—VAALCO

has not even printed them yet.

Plaintiffs’ argument also fails because none of the statements that Plaintiffs

identify as misleading are false or misleading on their face or in the total mix of

information available to the stockholders, and none would be made false by a

finding that the Charter and Bylaws are invalid. See Compl. ¶¶ 30-31; Pls.’ OB at

14 See, e.g., Leo E. Strine, Jr., Delaware’s Corporate Law System: Is Corporate America Buying an Exquisite Jewel or a Diamond in the Rough? A Response to Kahan & Kamar’s Price Discrimination in the Market for Corporate, 86 Cornell L. Rev. 1257, 1259 (2001) (“[M]uch of Delaware corporate law’s indeterminacy and litigation intensiveness is an unavoidable consequence of the flexibility of the Delaware Model, which leaves room for economically useful innovation and creativity. That is, reducing the indeterminacy of Delaware corporate law by moving closer to the Mandatory Statutory Model might also impair its central emphasis on corporate empowerment and private ordering, to the detriment of social welfare.”).

20 01:18081076.1

7–9.15 For example, Plaintiffs selectively, and misleadingly, quote language from

the November 16, 2015 press release. Pls.’ OB at 7 (citing Pls.’ Aff. Ex. 9 at

exhibit 99.1). The statements reflect an accurate description of language in the

Charter and of the Board’s beliefs concerning the effect of the Charter provision:

The Company noted that under its certificate of incorporation filed in accordance with the General Corporation Law of the State of Delaware (the ‘Charter’), duly elected members of VAALCO’s Board can only be removed from office for cause. As fiduciaries of the Company, the Board cannot ignore, waive or amend the clear language in its current Charter without stockholder approval. Accordingly, the Board believes that the Group 42-BLR Group proposal to remove four VAALCO Board members without cause is not an action that can properly be taken under the Company’s Charter, and therefore, any purported action by written consent to remove a director without reference to the cause requirement would be null and void.

Pls.’ Aff. Ex. 9 at exhibit 99.1. Plaintiffs additionally complain that “the press

release did not mention Section 141(k) or so much as suggest that the validity of

the Charter and Bylaw Provisions may be in question.” Pls.’ OB at 7. The press

release, however, responded to Group 42’s prior statement that Plaintiffs admit

15 “[D]irectors need only disclose information that is material, and information is material only ‘if there is a substantial likelihood that a reasonable stockholder would consider it important in deciding how to vote.’” In re Checkfree Corp. S’holders Litig., 2007 WL 3262188, at *2 (Del. Ch. Nov. 1, 2007) (quoting Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 143 (Del. 1997)). To be material, an omitted fact must “‘significantly alter[] the ‘total mix’ of information made available.’” Skeen v. Jo-Ann Stores, Inc., 750 A.2d 1170, 1172 (Del. 2000).

21 01:18081076.1

discussed the language of Section 141(k). Compl. ¶ 24; see also Abrons v. Maree,

911 A.2d 805, 813 (Del. Ch. 2006) (disclosure of “[c]onsistent and redundant

facts” is unnecessary).16

Invalidation of any consent revocation cards would be unwarranted even if

the challenged disclosures were false and misleading. “[T]he effect of reversing

any exercise of ‘the will of the stockholder’, even for their own benefit, is to create

an insurmountable obstacle of confusion and antipathy.” Third Point LLC v.

Ruprecht, 2014 WL 1922029, at *24 (Del. Ch. May 2, 2014) (citations omitted).

In In re The MONY Group, Inc. Shareholder Litigation, 853 A.2d 661 (Del. Ch.

2004), the plaintiff sought to invalidate proxies that were received prior to the

court’s earlier decision preliminarily enjoining a stockholder vote until

supplemental disclosures could be made. Id. at 666. Rather than invalidate the

proxies, the Court directed that “those who submitted proxies be made aware of the

additional disclosures,” requiring that the “revised proxy materials should include a

16 The other statements that Plaintiffs identify likewise are not false or misleading. It is accurate that “[t]he Company’s charter permits stockholders to remove directors only for ‘cause’ and there is no case law that has held that a ‘cause’ restriction for director removal in a charter would be unenforceable under Delaware law.” See Pls.’ Aff. Ex. 10 (VAALCO’s Nov. 23, 2014 Preliminary Proxy Statement). It is also accurate that the “Board believes that the Group 42-BLR Group’s effort to remove four directors, which constitutes a majority of the Board, ‘without cause’ is an action that cannot properly be taken under the Company’s organizational documents.” See Pls.’ Aff. Ex. 12 (VAALCO’s Dec. 4, 2015 Definitive Proxy Statement).

22 01:18081076.1

statement clearly visible to stockholders directing their attention to the

supplemental disclosures made in response to the Opinion.” Id. at 681. In

reaching this conclusion, the Court noted the unusual nature of such a remedy,

commenting that it was “unaware of any precedent that would support the

plaintiffs’ suggestion that this court should consider sterilizing the voting power of

shares in situations of this kind.” Id. at 666 n.1. Accordingly, if the Court were to

find that supplemental disclosures are required here, such disclosures would not

require invalidation of the consent revocations.

Plaintiffs cite only one case in which the Court invalidated consent

revocations, and in circumstances vastly different from the facts at issue here. In

Kallick, after considering a full record on a preliminary injunction motion, the

Court found it likely that an incumbent board had violated its fiduciary duties by

withholding approval of a stockholder’s competing slate, for the purpose of the

“proxy put” change-of-control clauses in a company’s indentures, with no

“rational, good faith justification.” Kallick, 68 A.3d at 264. No comparable facts

have been alleged, much less proven, here.

III. Plaintiffs’ Factual Arguments Are Irrelevant, and Are Unsupported in Any Event.

Plaintiffs contend that the issue before the Court is a purely “legal

determination.” Pls.’ OB at 10 (citing Arnold). Yet, Plaintiffs’ Opening Brief is

larded with factual assertions that are irrelevant to the narrow legal issue in this

23 01:18081076.1

case. They are also unsupported and erroneous. To the extent they are relevant,

these factual assertions are disputed and, thus, should not be ruled upon by this

Court on the pleadings. Rather than respond to each of these conclusory

allegations, Defendants instead focus on the two mischaracterizations that receive

the most attention in Plaintiffs’ Opening Brief: (1) the intent underlying the 2009

Amendment and (2) the Board’s purported acts of “entrenchment.”

A. The 2009 Amendment did not “neglect” to remove the prohibition

against removal without cause.

As set out in Defendants’ Opening Brief, the 2009 Amendment declassified

VAALCO’s Board while retaining the provision that directors could only be

removed for cause. Defs.’ OB at 6–9. Plaintiffs imply that this framework was

inadvertent or neglectful. See Pls.’ OB at 4 (“[T]he Company neglected to also

include for elimination the [for-cause removal provisions].”); see also Compl. ¶ 2

(attributing the purported omission to an “oversight by counsel”). However,

Plaintiffs cannot support the proposition that retention of Article V, Section 3 of

the Charter and Article III, Section 2 of the Bylaws was not the intent of the

stockholders and the Board. Indeed, the only evidence before the Court is contrary

to Plaintiffs’ position.

First, the plain language of the Charter and Bylaws is clear: beginning with

the 2010 annual meeting, VAALCO was to have a declassified Board comprised of

members who would be elected annually and could only be removed for cause.

24 01:18081076.1

Ex. 1, Charter, Art. III, §§ 2, 3; Ex. 2, Bylaws, Art. III, § 2. It is undisputed that

the Charter and Bylaws have never been amended to modify the for-cause

provision. In fact, VAALCO’s Charter has provided that “any director may be

removed from office only for cause” since at least September 1997, and the 2009

Amendment makes clear that only Article V, Section 2 will be amended. Ex. 1,

Charter, Art. V, § 3.

Second, the 2009 Amendment providing for a declassified board with

directors removable only for cause was the product of an earlier activist

intervention and a resulting settlement. Both sides were represented by counsel.

The activist stockholder who required a stockholder vote on the 2009 Amendment

as part of the proxy contest settlement, Nanes Balkany Partners, used the same law

firm and even the same attorney as Group 42, Inc. and Bradley L. Radoff, the

Activist Stockholders who assert that the 2009 Amendment was flawed.17 No

stockholders, including Nanes Balkany Partners, objected to this amended

structure. In fact, the stockholders overwhelmingly voted in favor of it. Defs.’ OB

17 Nanes Balkany Partners was represented by Olshan Frome Wolosky LLP. See Ex. 3, Nanes Delorme Partners I LP, General Statement of Acquisition of Beneficial Ownership (Schedule 13D) at 1. The Activist Stockholders referenced in the Opening Brief are also represented by the same Olshan attorney. See Pls.’ Aff. Ex. 5, Group 42, Inc., General Statement of Acquisition of Beneficial Ownership (Schedule 13D) at 1.

25 01:18081076.1

at 8; Pls.’ OB at 4. In the six years following the 2009 Amendment, no other

stockholder objected or complained.

Third, the fact that at least 175 Delaware corporations have elected to

employ a similar framework is circumstantial evidence that the continued

prohibition against removal without cause was not accidental or inadvertent. See

Compendium of Corporate Instruments.

Thus, the stockholders intended to set forth the structure provided in the

2009 Amendment, and Plaintiffs have failed to meet their burden of demonstrating

otherwise.

B. This case is driven by stockholder activism, not entrenchment.

Ignoring that stockholders will have the opportunity to replace the entire

board at the next annual meeting regardless of the outcome of this proceeding or

the January 5, 2016 special meeting, Plaintiffs argue that the Board is motivated by

entrenchment. They say: “The members of the Board chose . . . to clothe

themselves in a robe of facially invalid provisions.” Pls.’ OB at 8. But Plaintiffs’

flourish does not change what happened. Contrary to Plaintiffs’ allegations, the

Board has acted at all times in accordance with its fiduciary duties to VAALCO’s

stockholders and Delaware Law.

As one example, Plaintiffs argue that the Board is entrenched because it

instituted a 10% shareholder rights plan after becoming aware of the rapid

26 01:18081076.1

accumulation of stock by the Activist Stockholders. However, this Court has

created a high bar for plaintiffs who would argue that a board’s decision to adopt a

shareholder rights plan, in the context of a stockholder activist campaign and the

related prospect of creeping control or negative control, is not a reasonable

response in relation to the threat posed to the company. Third Point, 2014 WL

1922029, at *16–17, 20 (finding that stock accumulation by an activist hedge fund

was a cognizable threat under Delaware law). Given that the VAALCO Board was

aware of the accumulation by the Activist Stockholders, and given that the

adoption of a shareholder rights plan in response to an attempt to gain effective

control without paying a control premium is widely deemed under Delaware law to

be a proportionate response, VAALCO’s Board acted appropriately and with

reasonable business judgment. See id. at *20. And, a 10% ownership trigger, as

here, is not out of the ordinary or substantial evidence of an entrenchment motive.

Cf. Versata Enters., Inc. v. Selectica, Inc., 5 A.3d 586, 602 (Del. 2010) (finding

that a shareholder rights plan that contained a 5% trigger should not be

differentiated from other similar rights plans previously upheld by Delaware

courts).

If the Board were to sit idly by, as Plaintiffs appear to suggest, and simply

allow a Group 42-led slate of director candidates take control of the Company

without regard for protecting the interests of all stockholders, then it could be

27 01:18081076.1

subjected to the same criticisms the board of Landry’s Restaurants, Inc. faced in

Louisiana Municipal Police Employees’ Retirement System v. Fertitta, 2009 WL

2263406, at *8, n.34 (Del. Ch. Jul. 28, 2009). In Fertitta, the Court found it

reasonable to infer fiduciary misconduct in “the board’s failure to employ a poison

pill to prevent a significant stockholder (also a director and officer) from obtaining

control without paying a control premium” in the context of a motion to dismiss.

Id.18 Put simply, the Board has a duty to its stockholders to prevent the Activist

Stockholders from obtaining control without paying a control premium. Thus, the

Board’s use of a poison pill is in accordance with its obligations under Delaware

law, not an attempt to “entrench” itself, as Plaintiffs suggest.

As another example, Plaintiffs denounce, without any support, the January

2016 special meeting as “a cynical attempt to appear magnanimous,” complaining

that the stockholders should not be required to first vote by supermajority (66.67%)

to amend the Charter and Bylaws to additionally provide for removal without

cause. See Pls.’ OB at 7–8. However, the VAALCO Board’s decision to put the

18 Plaintiffs make no attempt to distance themselves from the Activist Stockholders. In fact, they actively embrace their efforts. See generally Pls.’ OB at 5–6. The Activist Stockholders have similarly embraced Plaintiffs’ positions in this case. See Letter from Gregory Varallo to the Hon. J. Travis Laster (Dec. 15, 2015). The Activist Stockholders also have recently championed a plan for VAALCO to repurchase stock using the corporation’s precious cash, a move calculated to benefit the Activist Stockholders without regard to the best interests of the corporation itself. Ex. 14, Group 42 Proxy at 4.

28 01:18081076.1

issue of its removal up to a stockholder vote in early January 2016, standing alone,

indicates that it is not seeking to entrench itself.19

Moreover, the Board’s resolution to leave this decision to the stockholders is

entirely appropriate. Plaintiffs argue, effectively, that the Board should have

unilaterally determined that the Charter and Bylaw removal provisions were

invalid, and then reformed or ignored them.20 As discussed above and in

Defendants’ Opening Brief, the language of the Charter and Bylaws

unambiguously prohibits removal without cause. While Plaintiffs contend that

these provisions conflict with Delaware law, they are unable to point to a single

case where a Delaware court invalidated a similar provision. Instead, this is a case

of first impression. In the absence of contrary case law, the Board did not have the

ability to unilaterally amend its Charter without stockholder approval, nor could it

simply choose to ignore the Charter’s clear language. 19 It should also be noted that the VAALCO Board has engaged the Activist Stockholders in settlement discussions for the purpose of resolving this dispute. 20 Alternatively, Plaintiffs contend that VAALCO should have filed a Section 205 action to obtain a declaration that the Charter and Bylaw provisions are null and void rather than holding a stockholder vote. Pls.’ OB at 8. Plaintiffs’ reliance on Section 205 is misplaced. Section 205 allows for a company that has taken an act it believes to be valid to petition the Court to correct a technical defect. In re Genelux Corp., 2015 WL 6437193, at *18 (Del. Ch. Oct. 22, 2015). Section 205 is not to be used to enable “a company to invalidate a prior act.” Id. (finding such an interpretation of Section 205 enabling invalidation to be “unreasonable and inconsistent with the statute’s inherent presumption that the company intended to act and believed it to be valid at the time it was taken”).

29 01:18081076.1

By urging VAALCO’s directors to ignore the plain language of the Charter

and Bylaws based on an unsupported interpretation of Delaware law, Plaintiffs

invite havoc and promote bad policy.

CONCLUSION

For all the foregoing reasons, and those set forth in Defendants’ Opening

Brief, Defendants respectfully request that the Court grant their Motion for

Summary Judgment, deny Plaintiffs’ Motion for Partial Summary Judgment, and

enter a declaratory judgment in favor of Defendants that VAALCO Energy Inc.’s

Charter and Bylaws are valid and enforceable.

OF COUNSEL: Michael C. Holmes Andrew E. Jackson Cortney C. Thomas VINSON & ELKINS LLP Trammel Crow Center 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201-2975 Dated: December 17, 2015

YOUNG CONAWAY STARGATT & TAYLOR, LLP /s/ Rolin P. Bissell Rolin P. Bissell (No. 4478) Kathaleen St. J. McCormick (No. 4579) Elisabeth S. Bradley (No. 5459) Benjamin M. Potts (No. 6007) Rodney Square 1000 North King Street Wilmington, Delaware 19801 (302) 571-6600 Counsel for Defendants Steven P. Guidry, Frederick W. Brazleton, O. Donaldson Chapoton, James B. Jennings, John J. Myers, Jr., Andrew L. Fawthrop, Steven J. Pully, and VAALCO Energy, Inc.