In Re Aerojet Rocketdyne Holdings, Inc. ( 2022 )


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  •       IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
    )
    IN RE AEROJET ROCKETDYNE               )   C.A. No. 2022-0127-LWW
    HOLDINGS, INC.                         )
    )
    MEMORANDUM OPINION
    Date Submitted: June 6, 2022
    Date Decided: June 16, 2022
    A. Thompson Bayliss, Michael A. Barlow, Eliezer Y. Feinstein, & Samuel D.
    Cordle, ABRAMS & BAYLISS LLP, Wilmington, Delaware; R. Brian Timmons,
    QUINN EMANUEL URQUHART & SULLIVAN, LLP, Los Angeles, California;
    Ellison Ward Merkel & K. McKenzie Anderson, QUINN EMANUEL URQUHART
    & SULLIVAN, LLP, New York, New York; Counsel for Warren G. Lichtenstein
    Peter J. Walsh, Jr., Matthew F. Davis, Abraham C. Schneider, & Patrick A.
    Lockwood, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware;
    Counsel for James R. Henderson, Audrey A. McNiff, and Martin Turchin
    Raymond J. DiCamillo, Kevin M. Gallagher, Daniel E. Kaprow, & Caroline M.
    McDonough, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware;
    David J. Margules & Brittany M. Giusini, BALLARD SPAHR LLP, Wilmington,
    Delaware; Mark A. Kirsch & Adam H. Offenhartz, GIBSON, DUNN &
    CRUTCHER LLP, New York, New York; Colin B. Davis, GIBSON, DUNN &
    CRUTCHER LLP, Irvine, California; Terence M. Grugan, BALLARD SPAHR
    LLP, Philadelphia, Pennsylvania; Counsel for General Kevin P. Chilton, Thomas A.
    Corcoran, Eileen P. Drake, and General Lance W. Lord
    WILL, Vice Chancellor
    This case presents a cautionary tale about the perils that can befall a board
    with an even number of directors.
    In January 2022—with a director nomination deadline fast approaching and a
    pending acquisition of the company in limbo—the eight-member board of Aerojet
    Rocketdyne Holdings, Inc. deadlocked on a company slate of nominees.
    The deadlock spawned from a fractured relationship between the company’s
    Chief Executive Officer, Eileen Drake, and its Executive Chairman, Warren
    Lichtenstein. The relationship had begun to sour when the two disagreed on how to
    approach the then-potential acquisition. Drake eventually accused Lichtenstein of
    seeking to discredit her and take the company in a different direction if the deal fell
    through, which led to an internal investigation. Lichtenstein, for his part, claimed
    that Drake failed to undertake proper contingency planning. From that dispute grew
    different outlooks on the company’s strategic direction.
    Lichtenstein initially proposed that seven of the eight incumbents be named
    as the company’s nominees in the event the merger failed. The eighth incumbent
    had decided not to seek reelection. Drake objected to the proposal. The board
    decided to adjourn and meet again a few days later.
    Meanwhile, the Federal Trade Commission sued to block the acquisition of
    the company.     Lichtenstein proposed an agreement between Steel Partners (a
    longtime Aerojet stockholder controlled by Lichtenstein) and the company
    1
    confirming the slate of seven incumbents and forgoing Steel’s right to nominate
    director candidates. No agreement was reached.
    With the stockholder nomination deadline days away, Steel proceeded to
    nominate a slate of seven candidates that included Lichtenstein and three of the
    incumbents. Drake called upon the company’s executives and outside advisors to
    assist with a response to Steel’s nomination.
    One aspect of that response took the form of a press release that purported to
    express the company’s disappointment in Steel’s nomination, attributed ulterior
    motives to Lichtenstein, and disclosed the ongoing investigation. That press release
    was filed with the Securities and Exchange Commission and sent by Drake to the
    company’s largest stockholders. Another aspect involved the company’s longtime
    outside counsel threatening litigation against the incumbent directors nominated on
    Steel’s slate.
    This litigation followed.
    The plaintiffs—Lichtenstein and the three incumbent directors on the Steel
    slate—brought claims against Drake and the other three incumbents. The plaintiffs’
    claims concerned whether either half of the board was authorized to act for the
    company in connection with the election and whether the entity must stand neutral.
    The plaintiffs also sought a temporary restraining order preventing either faction
    from using the company’s name or resources to advantage itself in the election.
    2
    I granted a TRO with the intention of maintaining corporate neutrality given
    the board’s continued deadlock. After that ruling, Drake formally nominated her
    own stockholder slate of eight candidates, including the three incumbent directors
    who support her.
    Following a series of motions and an inability to compromise, the case
    culminated in a three-day trial.
    The plaintiffs maintain that the purpose of the trial was to level the playing
    field for the upcoming election. They ask the court to declare that certain of the
    defendants’ actions were unauthorized and contrary to a principle of corporate
    neutrality in a control dispute. They seek—in addition to final relief on their
    declaratory judgment claims—various forms of equitable relief and argue that the
    defendants should be held in contempt.
    The defendants contest the plaintiffs’ characterizations of their conduct. They
    assert that they acted with the good faith belief that their actions were authorized.
    They further contend that the corporation was not required to stand neutral because
    the Steel slate constituted a threat to the company. Finally, they argue that the
    plaintiffs’ unclean hands bar them from equitable relief.
    As discussed in this decision, the directors’ beliefs in the propriety of their
    actions did not alter the legal requirements for authorized board actions set by
    Delaware law and the company’s bylaws. Nor did they give one half of an
    3
    incumbent board the right to claim for itself the company’s support while painting
    the other half as hostile to the company’s interests. One faction’s ties to management
    do nothing to change that principle.
    Accordingly, I find that the plaintiffs are entitled to a declaration that certain
    of the defendants’ challenged acts were unauthorized and that, with the board
    deadlocked, the defendants could not deploy the company’s resources in support of
    their slate or to discredit the plaintiffs’ slate. I also grant a subset of the equitable
    relief sought by the plaintiffs. I decline, however, to find that any of the defendants
    are in contempt of court.
    A disclaimer is necessary: my findings in favor of the plaintiffs should in no
    way be taken as an endorsement of one faction’s electability over the other. In my
    view, both slates are comprised of highly qualified, impressive, and dedicated
    directors. I do not doubt that both the plaintiffs and the defendants believe that their
    slate can best serve the company and its stockholders.
    Rather, my decision is driven by core tenets of Delaware law. Stockholders—
    not this court or either subset of directors—must now decide which faction’s vision
    will become that of the company. To preserve the ultimate goal of a fair and
    balanced election, neither half of this divided board has a superior claim to the
    company’s resources in the interim.
    4
    I.        RELEVANT BACKGROUND
    The following facts were stipulated to by the parties or proven by a
    preponderance of the evidence at trial.1
    A.    The Company and its Board
    Nominal party Aerojet Rocketdyne Holdings, Inc. (“Aerojet” or the
    “Company”) is a manufacturer of propulsive systems for space, defense, civil, and
    commercial applications.2 It is a Delaware corporation with its principal place of
    business in California.3
    The Company has an eight-member board of directors (the “Board”).4 Its
    directors take center stage in this litigation.
    Plaintiff Warren G. Lichtenstein is the Board’s Executive Chairman. He has
    held that position since 2016 (having previously held the position of Chairman from
    2013) and has served as an Aerojet director since 2008.5 Lichtenstein is also the
    Executive Chairman of Steel Partners Holdings GP Inc., general partner of Steel
    1
    See Dkt. 247 (“PTO”). Where facts are drawn from exhibits jointly submitted by the
    parties at trial, they are referred to according to the numbers provided on the parties’ joint
    exhibit list and cited as “JX __” unless defined. Pincites refer to the page numbering
    overlaid on each joint exhibit. Trial testimony is cited as “[Name] Tr.” Deposition
    transcripts are cited as “[Name] Dep.”
    2
    PTO ¶ 23.
    3
    Id.
    4
    Id. ¶ 24.
    5
    Id. ¶ 5.
    5
    Partners Holdings L.P., a publicly listed diversified holding company (together with
    its affiliates, “Steel”).6 It has held a position in Aerojet since 2000 and currently
    holds an approximately 5% stake.7
    A 2008 shareholder agreement between the Company and Steel led to
    Lichtenstein’s initial appointment to the Board.8 Plaintiffs and Aerojet directors
    James R. Henderson and Martin Turchin joined the Board in 2008 through that same
    agreement.9 Defendant Thomas A. Corcoran has also served as an Aerojet director
    since 2008.
    Henderson has served as the CEO of seven companies and on the boards of
    ten public companies, with most of his experience in the defense industry.10 He was
    employed at Steel until 2011.11 He is currently a member of the Board’s Corporate
    Governance & Nominating Committee (the “Nominating Committee”).12
    6
    Id.
    7
    Id. More precisely, Steel invested in the Company’s predecessor, GenCorp Inc., in 2000.
    Id.
    8
    JX 1 at 4; Lichtenstein Tr. 929.
    9
    JX 1 at 4; PTO ¶¶ 7-8.
    10
    Henderson Tr. 6-7.
    11
    Id. at 8.
    12
    Id. at 9-10.
    6
    Turchin is a lawyer by training who has spent decades in the real estate
    industry and has served on the board of a publicly traded real estate investment
    trust.13 He is currently a member of the Nominating Committee.14
    Corcoran has held a variety of executive positions—including in the defense
    and aerospace industries—since the 1960s and has served on about 20 boards.15 He
    currently chairs the Board’s Nominating Committee.16
    Defendant Eileen P. Drake is the Company’s Chief Executive Officer and
    President.17 She has held those positions since June 2015.18 She joined Aerojet as
    its Chief Operating Officer in March 2015 after being recruited by Lichtenstein.19
    In her capacity as CEO, she reports to Lichtenstein.20 Drake has also been a member
    of the Board since 2015.21 Before joining Aerojet, she was a U.S. Army aviator and
    airfield commander and had held management positions at Ford Motor Company
    and United Technologies Corporation.22
    13
    Turchin Tr. 630-32.
    14
    Id.
    15
    Corcoran Tr. 204-07.
    16
    Id. 207-08.
    17
    PTO ¶ 11.
    18
    Id.
    19
    Id.
    20
    See JX 23 § 1(a); JX 591.
    21
    PTO ¶ 11.
    22
    Drake Tr. 427-28.
    7
    Defendants General Lance W. Lord and General Kevin P. Chilton joined the
    Board in 2015 and 2018, respectively.23
    Lord is a retired U.S. Air Force four-star general and previously served as the
    commanding officer of the United States Air Force Space Command.24
    Chilton is a retired U.S. Air Force General having served, among other roles,
    as an astronaut, program manager for the International Space Station, and
    Commander of the U.S. Strategic Command.25
    Plaintiff Audrey A. McNiff is the most recent addition to the Board, having
    joined in 2020.26 She previously worked in the financial services industry for three
    decades, most recently as a partner in Goldman Sachs’s securities division.27 She is
    a member of the Nominating Committee.28
    B.       The Merger Agreement
    In July 2020, Lockheed Martin Corp. submitted a non-binding indication of
    interest contemplating an all-cash acquisition of Aerojet for $47.50 per share.29
    From the outset, Drake and Lichtenstein disagreed about the Company’s approach
    23
    PTO ¶¶ 9, 12.
    24
    Lord Tr. 797-98.
    25
    Chilton Tr. 310-12.
    26
    PTO ¶ 6.
    27
    McNiff Tr. 120.
    28
    Id. at 121.
    29
    PTO ¶ 28.
    8
    to the transaction process.30 Their views continued to diverge as negotiations
    progressed.31
    Eventually, an agreement was reached whereby Lockheed would acquire the
    Company for $56 per share in an all-cash transaction.32 The Board unanimously
    approved an Agreement and Plan of Merger on December 19, 2020, which the
    Company executed the next day.33 Aerojet stockholders approved the merger
    agreement on March 9, 2021. Steel voted in favor of the merger.34
    The deal did not close after the stockholder vote because it remained subject
    to regulatory review by the Federal Trade Commission (“FTC”).35 The Company’s
    stock price traded considerably below the deal price during this time.36
    In August 2021, the head of the FTC expressed her view that antitrust
    enforcers should more frequently move to block mergers that could threaten
    competition.37 Lichtenstein became concerned that the FTC would prevent the
    transaction from being completed and wanted the Board to engage in contingency
    30
    Id. ¶ 29.
    31
    Id. ¶¶ 29, 31.
    32
    Id. ¶¶ 30, 33.
    33
    Id. ¶¶ 33-34.
    34
    Id. ¶ 35.
    35
    Id. ¶ 36.
    36
    JX 590.
    37
    JX 51.
    9
    planning.38 Drake disagreed and expressed the view that such efforts could violate
    Aerojet’s merger agreement with Lockheed.39
    Ultimately, the FTC unanimously rejected the Aerojet-Lockheed transaction
    and sued to block it on January 25, 2022.40 Lockheed terminated the merger
    agreement on February 13, 2022.41
    C.     The Investigation
    While the deal was under FTC review, Drake and Lichtenstein’s relationship
    continued to deteriorate.      Drake began to raise a series of complaints about
    Lichtenstein with the Company’s then-General Counsel, Arjun Kampani.
    On May 10, 2021, Drake sent Kampani a “Memorandum for Record”
    describing an “erosion of trust” between her and Lichtenstein.42        Lichtenstein
    responded on May 25, 2021 to correct “certain inaccurate statements” for the
    record.43
    Drake sent a second memorandum to Kampani on September 2, 2021,
    reporting that she had learned Lichtenstein had spoken with certain individuals
    38
    PTO ¶ 37; JX 58.
    39
    JX 58.
    40
    PTO ¶ 53.
    41
    Id. ¶ 76.
    42
    JX 34.
    43
    JX 45.
    10
    outside of the Company regarding his views on the Company’s future if the
    Lockheed deal did not close.44 She expressed concern that he would remove her as
    CEO and the view that his demands for contingency planning and repeated
    information requests were both risky and distracting to management. At Drake’s
    request, Kampani shared the September 2 memo with Chilton, Lord, and Corcoran
    but excluded the other directors.45
    On September 10, 2021, a memorandum prepared by Kampani and described
    as being from the “Independent Members of the Board” (that is, the Board minus
    Drake and Lichtenstein) was sent to Lichtenstein (the “Guidance Memo”).46 The
    Guidance Memo noted that the Company “ha[d] received reports related to
    [Lichtenstein’s] conduct in communicating with third parties about the Lockheed
    Martin transaction as well as . . . with regard to the executive management of the
    Company” and “remind[ed]” Lichtenstein of his “fiduciary obligations and
    direct[ed] him to cease engaging in such conversations.”47 Four days after the
    Guidance memo was sent, McNiff, Henderson, and Turchin were provided with a
    copy of Drake’s September 2 memorandum.48
    44
    JX 70.
    45
    JX 77.
    46
    PTO ¶ 43.
    47
    JX 88.
    48
    PTO ¶ 46.
    11
    On October 6, 2021, Drake submitted a memorandum to the Board, reiterating
    her belief that Lichtenstein was searching for a CEO to replace her.49
    On October 13, 2021, the Board formed a committee consisting of the six non-
    management directors (the “Non-Management Committee”) to investigate Drake’s
    allegations (the “Investigation”).50       Corcoran was tasked with handling the
    procedural aspects of the Investigation, including retaining outside counsel and
    coordinating their process.51 The Committee hired Morris, Nichols, Arsht & Tunnell
    LLP and Weil, Gotshal & Manges LLP as its legal advisors. The members of the
    Non-Management Committee were advised that the Investigation was confidential.52
    On May 2, 2022—well into this litigation—the Non-Management Committee
    issued a memorandum directed to Drake and Lichtenstein summarizing the findings
    and results of its Investigation.53 The Committee reached two conclusions.
    The first conclusion concerned Drake’s allegations about Lichtenstein’s
    “[e]xtensive questioning and demands for information . . . in numerous
    communications in the months prior to and following the signing of the Lockheed
    Martin merger agreement . . . generally related to business and financial matters and
    49
    JX 107; Henderson Tr. 24-26; McNiff Tr. 133; Turchin Tr. 644-45.
    50
    PTO ¶ 48.
    51
    Turchin Tr. 646; Corcoran Tr. 214.
    52
    Henderson Tr. 32, 44; McNiff Tr. 137-38.
    53
    PTO ¶ 87; JX 578 at 1.
    12
    ‘contingency planning.’”54       The committee found that this “conduct did not
    constitute harassment or retaliation and was not improper under applicable Company
    policies or law.”55
    The second conclusion addressed Lichtenstein’s “communications with third
    parties outside the Company concerning the Lockheed merger and the Company’s
    CEO,” at least one of which occurred after Lichtenstein had received the Guidance
    Memo.56 The Non-Management Committee “formally reprimanded” Lichtenstein
    for “failing to follow the directives in the Guidance Memo” and “mandate[d]” that
    “he comply with the Company’s Code of Conduct and make no statements or
    communications to persons external to the Company concerning the Company’s
    CEO, any search for a new CEO, management tenure or succession generally, or the
    strategic direction of the Company” (unrelated to the current proxy fight) without
    Board approval.57
    54
    JX 578 at 3.
    55
    Id.
    56
    Id.
    57
    Id.
    13
    On May 3, 2022, Lichtenstein requested that the Board authorize the release
    of the Investigation report.58 Drake joined him in that request the next day.59 It was
    publicly released on May 16, 2022.60
    D.     The Attempts to Nominate a Company Slate
    In late January 2022, with uncertainties about the future of the Lockheed
    transaction growing and the Investigation ongoing, Lichtenstein’s contingency
    planning efforts turned to nominating a Company slate of directors. The Company’s
    bylaws required stockholders wishing to nominate a slate of directors to do so on or
    before February 5, 2022.61
    Lichtenstein began to ask the outside directors if they wished to stay on the
    Board if the merger failed.62 He suggested that Corcoran resign or otherwise not
    stand for reelection.63 In response, Corcoran stated his intention to see the Lockheed
    merger and the Investigation through to completion but determined that he would
    not seek reelection for personal reasons.64
    58
    PTO ¶ 88.
    59
    Id. ¶ 89.
    60
    JX 713.
    61
    Henderson Tr. 86; see JX 11 § 2.3.
    62
    Lichtenstein Tr. 967-68; see JX 122.
    63
    PTO ¶ 50; Lichtenstein Tr. 970-97.
    64
    PTO ¶ 51; JX 127; JX 136.
    14
    On January 21, 2022, Lichtenstein called a special meeting of the Board for
    January 24, 2022 to discuss nominating a Company slate of directors. 65 At that
    meeting, Lichtenstein proposed resolutions providing that, in the event the merger
    did not close, the Company’s slate of candidates for election at its 2022 annual
    meeting would consist of all sitting directors except Corcoran. The draft resolutions
    also stated that “the Board w[ould] use its reasonable best efforts to add two diverse
    director candidates to the Board.”66 Drake objected to the proposal on the grounds
    that it violated the Company’s Corporate Governance Guidelines by bypassing the
    Nominating Committee.67 The Board did not hold a vote but agreed to meet again
    later that week.68
    On January 26, 2022—the day after the FTC sued to block the Lockheed
    merger—Lichtenstein sent the Board materials for a January 27 meeting. 69 The
    materials consisted of a set of resolutions and a proposed letter agreement between
    Steel and Aerojet.70 The proposed letter agreement provided that Steel would agree
    to forgo its right to nominate its own slate of directors for election in 2022 in
    65
    PTO ¶ 51; JX 129; JX 131.
    66
    PTO ¶ 52; JX 134.
    67
    PTO ¶ 52; Drake Tr. 486.
    68
    PTO ¶ 52.
    69
    JX 155 at 1.
    70
    Id.
    15
    exchange for the contractual equivalents of the resolutions proposed at the January
    24 Board meeting.71 The resolutions differed from those presented on January 24
    only by an additional resolution approving the letter agreement.72
    The January 27 Board meeting never took place.73
    E.     The Steel Slate
    On January 28, 2022, Steel notified Aerojet of its intent to nominate
    Lichtenstein, Henderson, Turchin, McNiff and three additional candidates (the
    “Steel Slate”) for election to the Board at the Company’s 2022 annual meeting.74
    Steel representatives informed the Company that it remained willing to compromise
    to avoid a contested election and that—with the February 5 deadline for stockholder
    nominations looming—it felt the need to protect its rights.75 Steel also indicated that
    it would be willing to nominate an alternate candidate to the slate in Lichtenstein’s
    place in response to the Investigation’s conclusions.76
    The six outside directors met on January 30, 2022 to discuss the Steel Slate,
    with counsel for the Non-Management Committee in attendance. During that
    71
    Id. at 2.
    72
    Id. at 4; JX 134 at 3.
    73
    See JX 157; Lichtenstein Tr. 988.
    74
    PTO ¶ 56; JX 171.
    75
    PTO ¶ 56; JX 171.
    76
    JX 567 at 6; Lichtenstein Tr. 987-88.
    16
    meeting, those directors reached an agreement in principle to nominate the seven-
    member, all-incumbent slate that Lichtenstein originally proposed on January 26,
    subject to agreement among counsel on details and definitive documentation.77
    The next day, the Non-Management Committee’s counsel circulated draft
    resolutions. One proposed resolution provided that the Board “retained the authority
    to reconsider the inclusion of any person on the proposed slate in light of the results
    of the Company’s pending investigation or any other matter.”78 McNiff replied that
    she did not believe the resolutions reflected the consensus reached at the January 30
    meeting.79 The directors had agreed on entering into an agreement, not passing
    resolutions.
    Counsel for the Non-Management Committee was concurrently working with
    Company counsel on a strategy to respond to the “dissident” directors (i.e., those on
    the Steel Slate).80
    77
    PTO ¶¶ 58-59.
    78
    Id. ¶ 59; JX 219.
    79
    PTO ¶ 59; JX 221.
    80
    See JX 204; JX 206.
    17
    Later on January 31, 2022, Chilton, Lord, and Corcoran called a special Board
    meeting to discuss a response to Steel’s notice nominating the Steel Slate. 81 The
    plaintiffs declined to attend the meeting and it failed to secure a quorum.82
    On February 1, 2022, Steel filed an amendment to its Schedule 13D to
    publicly disclose the nomination of its slate.83
    F.    The February 1 Press Release
    Hours after Steel’s 13D amendment was filed, the Company issued a press
    release in response (the “February 1 Press Release”). The press release stated that
    the Company was “confirm[ing] an ongoing internal investigation involving Mr.
    Lichtenstein.”84 It also purported to provide the Company’s views on Steel’s
    nomination:
    The Company believes that Mr. Lichtenstein’s decision to
    cause [Steel] to launch a disruptive proxy contest at this
    time may ultimately be driven by his personal concerns
    and desire to secure his board position and gain leverage
    in the context of the Company’s internal investigation.
    The Company is disappointed that, at a critical time for the
    Company, Mr. Lichtenstein has decided to take these
    actions to launch a proxy fight.85
    81
    PTO ¶ 61.
    82
    Id.
    83
    Id. ¶ 63.
    84
    JX 241.
    85
    Id.
    18
    Drafts of the February 1 Press Release had been exchanged among multiple
    officers of the Company, the Company’s longtime outside counsel at Gibson Dunn
    & Crutcher LLP, and its M&A counsel at Jenner & Block LLP, among other
    advisors, as early as the morning of January 29, 2022.86 Correspondence circulated
    with those drafts reflected an intention to pressure Lichtenstein into withdrawing
    Steel’s nomination. The disclosure of the Investigation was viewed as a bargaining
    chip.87
    Outside counsel for the Non-Management Committee was also involved in
    the response and, on January 29, advised management that “[p]resumably we’ll need
    board or committee authorization for action in response to Steel’s slate.”88
    Before the issuance of the February 1 Press Release, Lichtenstein wrote
    Kampani, copying the Board, that “any press release or public disclosures by, for or
    in the name of the Company should be provided to all Board members so that they
    may review and provide comments . . . before such disclosures are issued or filed.”89
    Outside counsel for the Non-Management Committee sent a draft of the press release
    to Corcoran, Lord, and Chilton.90 Lichtenstein, Henderson, Turchin, and McNiff
    86
    JX 179; see JX 195, JX 200, JX 238.
    87
    JX 180; JX 186.
    88
    JX 180; see also JX 600; JX 601.
    89
    JX 802.
    90
    JX 208.
    19
    were not shown a draft of the press release or provided with prior notice before it
    was published.91
    On February 2, 2022, the Company filed a Form 8-K and a Schedule 14A with
    the Securities and Exchange Commission (together, the “February 2 Disclosures”),
    both enclosing the February 1 Press Release.92
    On February 7, 2022, Drake wrote to major Aerojet stockholders to highlight
    the February 1 Press Release.93
    G.      The Persisting Deadlock
    Chilton, Corcoran, and Lord called another special Board meeting on
    February 2, 2022 to discuss a response to Steel’s nomination.94         Lichtenstein
    informed them that he would be on a plane and unavailable. Notwithstanding
    Lichtenstein’s unavailability, the meeting went forward with the intention of passing
    resolutions prepared by the Non-Management Committee’s counsel that would have
    allowed a committee of Corcoran, Chilton, and Lord to exercise the Board’s
    91
    PTO ¶ 64; Lichtenstein Tr. 994-96; Henderson Tr. 39-41; Turchin Tr. 660-61; McNiff
    Tr. 147-49; see also JX 199; Corcoran Tr. 275-76; Chilton Tr. 383; Drake Tr. 534-35.
    92
    PTO ¶ 65; JX 276; JX 277.
    93
    See, e.g., JX 306; JX 308.
    94
    PTO ¶ 65.
    20
    authority in response to the Steel Slate.95 The Board could not reach a quorum
    because the plaintiffs did not attend the meeting.96
    On February 3, 2022, Gibson Dunn, “as litigation counsel for Aerojet,” wrote
    to the plaintiffs’ counsel, alleging that the plaintiffs had acted in breach of their
    fiduciary duties.97 It closed with: “Aerojet reserves all rights, including its right to
    enforce [the plaintiffs’] compliance with their fiduciary duties through litigation.”98
    The full Board convened on February 4, 2022.99 Corcoran, Chilton, and Lord
    proposed resolutions that would have created a committee consisting of those three
    directors.100 The resolutions would have delegated to the committee the power to
    speak on behalf of the Company in connection with the upcoming director election,
    exercise the Board’s authority in connection with the merger agreement with
    Lockheed, issue public filings on behalf of the Company, and take over the
    Investigation.101 A motion to adopt the resolutions failed to carry.102
    95
    JX 261.
    96
    PTO ¶ 66.
    97
    JX 287.
    98
    Id.
    99
    PTO ¶ 67.
    100
    Lord Tr. at 883-86; see JX 810 at 3-6.
    101
    PTO ¶ 68.
    102
    Id. ¶ 69.
    21
    Lichtenstein next proposed resolutions that he had circulated to the Board the
    day prior.103 Those resolutions would have memorialized the Board’s disagreement
    as to who should be nominated for election at the upcoming annual meeting if the
    Lockheed transaction did not close, specified that stockholders should resolve that
    dispute, confirmed that the Company would remain neutral in the dispute between
    the two factions, held that the Company’s voice and resources would not be used to
    support the election of either faction, and waived the Company’s advance notice
    bylaw to allow the defendants to run their own slate of directors. 104 A motion to
    adopt the resolutions failed to carry.105
    H.      The Litigation and TRO
    On February 7, 2022, the plaintiffs filed a Verified Complaint for Declaratory
    Judgment (the “Complaint”).106 Count I of the Complaint seeks a declaratory
    judgment that “no Defendant nor any Aerojet officer, director, employee or anyone
    else acting or purporting to act on the Company’s behalf may speak on behalf of the
    Company or take any action on behalf of the Company without proper authorization
    from the Board.”107        Count II seeks a declaratory judgment that “no officer,
    103
    JX 711.
    104
    PTO ¶ 70.
    105
    Id. ¶ 72.
    106
    Dkt. 1.
    107
    Id. ¶ 95.
    22
    employee, advisor or agent of the Company shall take action on behalf of the
    Company for the purpose of directly or indirectly supporting” a slate of directors in
    connection with the upcoming election.108 The Complaint was accompanied by a
    motion for a temporary restraining order and a motion to expedite.
    On February 10, 2022, Gibson Dunn sent a joint representation agreement
    related to this litigation to the Company and the defendants.109 The Company had
    paid the firm a $250,000 retainer related to the joint representation the previous
    day.110 On February 11, 2022, the defendants filed a separate lawsuit against the
    plaintiffs and a Steel entity both individually and (purportedly) on the Company’s
    behalf.       The defendants’ complaint alleged that the plaintiffs had breached their
    fiduciary duties and sought relief including the appointment of a custodian to break
    the Board deadlock, the removal of Lichtenstein as a director, and the
    disqualification of the Steel Slate.111
    The court held a hearing on the plaintiffs’ motions for a temporary restraining
    order and to expedite on February 15, 2022. Both motions were granted. The court’s
    February 15 oral ruling explained that the purpose of the temporary restraining order
    was to “retain the company’s neutrality regarding its upcoming director elections”
    108
    Id. ¶ 100.
    109
    See JX 324 at 18.
    110
    See JX 320; JX 324.
    111
    PTO ¶ 75.
    23
    given the Board deadlock.112 The parties were directed to submit an implementing
    order.113
    The parties disagreed on the form of that order. For example, the defendants’
    proposed order contemplated a Company-backed $20 million fund to be used to
    reimburse proxy costs.114 The plaintiffs’ proposed order did not. On February 23,
    2022, the court issued a letter decision adopting the plaintiffs’ proposed order, which
    was subsequently entered (the “Order” and, with the February 15 ruling, the
    “TRO”).115
    The Order entered on February 23 memorialized the parties’ agreement to
    extend the stockholder nomination deadline to February 28, 2022 and stated, among
    other things:
    No party to this Action, no officer, director, employee,
    advisor or agent of Aerojet Rocketdyne Holdings, Inc. (the
    “Company”), no person or entity purporting to have
    authority over the Company, and no person or entity acting
    in concert with any of the foregoing who has notice of this
    order, shall authorize, agree to, permit, or take any of the
    following actions without the prior written approval of the
    Company’s Board of Directors (the “Board”) . . . take
    action on behalf of or in the name of the Company or use
    or otherwise deploy Company funds or other Company
    112
    Dkt. 38.
    113
    Id.; PTO ¶ 77.
    114
    Dkt. 34.
    115
    Dkt. 40.
    24
    resources in support of the election efforts of any
    candidate for election at the Annual Meeting.116
    I.       The Drake Slate
    Following the TRO, the defendants continued to work with a variety of
    outside advisors who had previously advised the Company, including Gibson Dunn,
    Jenner, Evercore, and Citigroup.117 In addition, certain Aerojet executives continued
    to support the defendants’ efforts in the proxy contest.118 Aerojet employees also
    assisted Drake with transferring her shares into record name so that she could
    nominate a slate by February 28.119
    On February 28, 2022, Drake delivered her own notice of nomination to the
    Company.120 Drake’s slate of nominees consisted of herself, Corcoran, Lord,
    Chilton, and four others (the “Drake Slate”).121 Her efforts to assemble a slate to
    compete against the Steel Slate had begun as early as February 1.122
    116
    Dkt. 41.
    117
    See JX 357; JX 376; JX 412; JX 432; JX 519; JX 641; Drake Tr. 515, 545, 554.
    118
    See, e.g., JX 401; JX 430; JX 437; JX 471; JX 682; JX 686; JX 688; JX 875; JX 876.
    119
    See JX 437.
    120
    PTO ¶ 79; JX 469.
    121
    PTO ¶ 79.
    122
    JX 285.
    25
    J.      The Litigation Post-TRO
    Both parties took multiple actions in the litigation after the court’s ruling on
    the TRO, including a motion to enforce the TRO, a motion for a final judgment, and
    discovery motions. Some bear mentioning.
    On March 7, 2022, the defendants voluntarily dismissed their lawsuit against
    the plaintiffs.123
    On March 13, 2022, the plaintiffs filed a motion for leave to supplement their
    Complaint to include a count concerning the need for neutral counsel to advise the
    Board regarding the proxy contest.124 The court granted that motion on March 22,
    2022.125
    On March 22, 2022, the plaintiffs filed a Verified Supplement to their
    Complaint.126 The Supplement added a third declaratory judgment count asking the
    court to determine that no defendant “nor any Aerojet officer, director, employee nor
    anyone else acting on the Company’s behalf may direct any legal counsel to take
    action on behalf of the Company in connection with the Annual Meeting or proxy
    contest without proper authorization” and to order the Board to “appoint neutral
    123
    Dkt. 55.
    124
    Dkt. 75.
    125
    Dkt. 95.
    126
    Dkt. 97.
    26
    counsel in advise the Board in connection with all of the Company’s legal affairs
    and obligations related to the Annual Meeting and proxy contest.”127
    On April 21, 2022, the defendants answered the Complaint as supplemented,
    and asserted affirmative defenses (including unclean hands) and counterclaims.128
    The counterclaims mirror—in many respects—certain of the claims the defendants
    brought and voluntarily dismissed in March.
    A three-day trial was held beginning on May 23, 2022.129 Nine witnesses
    testified live at trial. The trial record includes 886 joint exhibits.
    II.      LEGAL ANALYSIS
    The plaintiffs bear the burden of proving their claims by a preponderance of
    the evidence.130 The defendants bear the same burden for their unclean hands
    affirmative defense.131 “Proof by a preponderance of the evidence means proof that
    something is more likely than not.”132
    127
    Verified Suppl. to Compl. ¶¶ 151-52 (Dkt. 97).
    128
    Dkt. 138.
    129
    Dkts. 258, 259, 260.
    130
    See Revolution Retail Sys., LLC v. Sentinel Techs., Inc., 
    2015 WL 6611601
    , at *9 (Del.
    Ch. Oct. 30, 2015); Osborn v. Kemp, 
    2009 WL 2586783
    , at *4 (Del. Ch. Aug. 20, 2009)
    (“Typically, in a post-trial opinion, the court evaluates the parties’ claims using a
    preponderance of the evidence standard.”), aff’d, 
    991 A.2d 1153
     (Del. 2010).
    131
    Stone & Paper Invs., LLC v. Blanch, 
    2021 WL 3240373
    , at *23 (Del. Ch. July 30, 2021)
    (noting that the party asserting the defense of unclean hands bears the “burden of
    persuasion to establish unclean hands by a preponderance of the evidence”).
    132
    Revolution Retail Sys., 
    2015 WL 6611601
    , at *9.
    27
    I begin by assessing the plaintiffs’ declaratory judgment claims and go on to
    consider whether the plaintiffs are entitled to any additional forms of relief. I next
    consider the defendants’ unclean hands affirmative defense. Finally, I address
    whether the defendants’ actions violated the TRO.
    A.     The Requested Declaratory Judgments
    The plaintiffs’ declaratory judgment claims concern whether certain of the
    defendants’ actions in connection with the contested election were authorized or
    permitted under the principle of corporate neutrality.                  Under the Delaware
    Declaratory Judgment Act, Delaware courts “have power to declare rights, status
    and other legal relations whether or not further relief is or could be claimed”133 so
    long as an “actual controversy” exists between the parties.134 The rights at issue
    concern those held by directors and management when a board is deadlocked in a
    control dispute. In such a scenario, who has the power to take action on behalf of
    the company and exploit its resources?
    133
    10 Del. C. § 6501.
    134
    Stroud v. Milliken Enters., 
    552 A.2d 476
    , 479-80 (Del. 1989) (explaining that an “actual
    controversy” exists if it “involve[s] the rights or other legal relations of the party seeking
    declaratory relief . . . [is] a controversy in which the claim of right or other legal interest is
    asserted against one who has an interest in contesting the claim . . . [is] between parties
    whose interests are real and adverse . . . [and] the issue involved in the controversy [is] ripe
    for judicial determination” (quoting Rollins Intern. v. Int’l Hydronics Corp., 
    303 A.2d 660
    ,
    662-63 (Del. 1973))).
    28
    “A corporation is an artificial being, invisible, intangible, and existing only in
    contemplation of law.”135 “Because it lacks a body and mind, a corporation only can
    act through human agents.”136 Under Delaware law, a company’s directors are the
    corporate agents charged with managing the business and affairs of the
    corporation.137     Only a “duly authorized board has the power to act for the
    corporation.”138
    The plaintiffs’ claims flow from these foundational concepts of our law. The
    first claim concerns whether certain acts taken by the defendants were invalid, given
    135
    Trs. of Dartmouth Coll. v. Woodward, 17 U.S. (4 Wheat.) 518, 636 (1819).
    136
    Prairie Cap. III, L.P. v. Double E Hldg. Corp., 
    132 A.3d 35
    , 60 (Del. Ch. 2015); see
    also Mallinckrodt Chem. Works v. Missouri, 
    238 U.S. 41
    , 56 (1915) (“Corporations, unlike
    individuals, derive their very right to exist from the laws of the state; they have perpetual
    succession; and they act only by agents.”); N. Assur. Co. v. Rachlin Clothes Shop, 
    125 A. 184
    , 188 (Del. 1924) (“[B]eing a purely metaphysical creature, having no mind with which
    to think, no will with which to determine and no voice with which to speak, [a corporation]
    must depend upon the faculties of natural persons to determine for it its policies and direct
    the agencies through which they are to be effectuated.”).
    137
    8 Del. C. § 141(a); see Quickturn Design Sys., Inc. v. Shapiro, 
    721 A.2d 1281
    , 1291
    (Del. 1998) (“One of the most basic tenets of Delaware corporate law is that the board of
    directors has the ultimate responsibility for managing the business and affairs of a
    corporation.”); McMullin v. Beran, 
    765 A.2d 910
    , 916 (Del. 2000) (“One of the
    fundamental principles of the Delaware General Corporation Law statute is that the
    business affairs of a corporation are managed by or under the direction of its board of
    directors.”).
    138
    Grayson v. Imagination Station, Inc., 
    2010 WL 3221951
    , at *5 (Del. Ch. Aug. 16, 2010);
    see 1 Robert S. Saunders et al., Folk on the Delaware General Corporation Law
    § 141.01[A] at 4-24 (7th ed. 2021) (“Section 141(a) expresses the general statutory
    requirement that corporate affairs be managed by an elected board of directors. The
    Delaware Supreme Court has emphasized that a board’s managerial authority under section
    141(a) is ‘a cardinal precept of the DGCL.’ However, only a duly authorized board has
    the power to act for the corporation.” (quoting 8 Del. C. 141(a))).
    29
    the lack of Board or committee approval. The plaintiffs ask that the court declare
    that those actions were unauthorized. The defendants argue, in response, that they
    had a good faith basis to believe otherwise.
    The second claim concerns whether the corporation was required to remain
    neutral in the ongoing control dispute. The plaintiffs seek a declaration that the
    principle of corporate neutrality applies and was violated by the defendants’
    usurpation of the Company’s name and resources. The defendants argue that the
    principle has no application to the present dispute.
    I address each of these actual controversies in turn.139
    1.     Whether Certain Actions Were Authorized
    The default standard under Delaware law is that a board cannot take action
    without the approval of “the majority of the directors present at a meeting at which
    a quorum is present.”140 “Each member of a corporate body has the right to
    consultation with the others and has the right to be heard upon all questions
    considered.”141 The Company’s bylaws confirm that the Board cannot take action
    139
    The plaintiffs raised a third count in their Supplement, focused on the retention of
    neutral legal counsel. Because that claim and any associated relief were not discussed in
    the parties’ submissions at trial, it is not discussed here. In addition, it is moot (in part) as
    neutral counsel—as required by the TRO—has been retained by the Company in
    connection with this litigation.
    140
    8 Del. C. § 141(b); see also id. § 141(a).
    141
    Lippman v. Kehoe Stenograph Co., 
    95 A. 895
    , 902 (Del. Ch. 1915); see also
    OptimisCorp v. Waite, 
    137 A.3d 970
    , at *3 n.8 (Del. 2016) (TABLE) (“Given that the
    DGCL allocates fundamental decision-making power to the board as a whole, and not to
    30
    without the approval of a majority of the directors present at a meeting or by
    unanimous written consent.142 For the current eight-member Board, five directors
    were needed for a quorum. The defendants are only four. When a subset of the
    board without authority to act disregards this rule, the court has found its actions to
    be invalid.143
    Absent that authorization, the defendants were not permitted to act on the
    Company’s behalf in an election contest involving competing halves of the Board.
    In In re TransPerfect Global, Inc., the court held that press releases by one member
    of a deadlocked board that were couched as company statements were improper
    because they were “unauthorized act[s] of the company.”144 And in In re Howard
    Midstream Energy Partners, LLC, the court determined that a CEO’s notice to
    unitholders portraying his own opinion related to a corporate control dispute as the
    company’s was unapproved by the board and unauthorized.145 So too here.
    any individual director qua director, all directors must have the opportunity to participate
    meaningfully in any matter brought before the board and to discharge their oversight
    responsibilities.” (quoting J. Travis Laster & John Mark Zeberkiewicz, The Rights and
    Duties of Blockholder Directors, 70 Bus. Law. 33, 35, 41 (2015))).
    142
    JX 11 §§ 3.6-3.8.
    143
    See Applied Energetics, 239 A.3d at 426, 428 (invalidating action taken by board
    minority based on the “default rule” in 8 Del. C. § 141(b)).
    144
    C.A. No. 9700-CB, at 35-36 (Del. Ch. Sept. 18, 2014) (TRANSCRIPT) (stating that it
    was “plainly false to characterize [a press release] as an act of the company when it was
    issued unilaterally by [one member of a two-person board]”).
    145
    C.A. No. 2021-0487-LWW, at 64-66 (Del. Ch. July 22, 2021) (TRANSCRIPT).
    31
    The plaintiffs contend that the defendants unilaterally acted on Aerojet’s
    behalf. They maintain that the retention of Gibson Dunn on behalf of the Company
    to threaten litigation against the plaintiffs, the payment of an evergreen retainer by
    the Company in furtherance of that engagement, and the February 11, 2022 lawsuit
    purportedly filed by the Company against the plaintiffs were not authorized by the
    Board or a committee.146 They make similar arguments regarding the February 1
    Press Release and February 2 Disclosures.
    The defendants understood that the approval of the Board or a duly authorized
    committee was required to respond to Steel’s nomination of the Steel Slate.147 They
    had proposed resolutions to create a committee comprised of Lord, Chilton, and
    Corcoran for that very reason.148 The resolutions were not approved.149 Yet the
    challenged actions were undertaken anyway.150
    The defendants do not refute that the challenged actions were taken without
    Board approval. They argue, instead, that they believed in good faith that their
    actions were properly authorized.              They cite to the Company’s Corporate
    146
    Pls.’ Post-Trial Br. 45-50 (Dkt. 263).
    147
    JX 180; JX 600; see JX 204; JX 601; JX 802; Lichtenstein Tr. 994-95.
    148
    JX 711.
    149
    PTO ¶¶ 68-69; see Lord Tr. 885.
    150
    Corcoran Tr. 277-80; Chilton Tr. 382-83; Drake Tr. 534-35; see also JX 199; JX 232;
    JX 287; JX 364.
    32
    Governance Guidelines, delegation matrices, and ordinary course practices for
    support.151 Although I do not doubt the defendants’ good faith beliefs in the
    propriety of their actions, those views did not provide them with the legal
    authorization to act.
    The Company’s Corporate Governance Guidelines state that “[i]t is the
    Company’s policy that the CEO [and the] Executive Chairman . . . speak for the
    Company.”152 Nothing in the Company policies or guidelines, however, provides
    management with the right to act and speak on the Company’s behalf—over the
    objection of half of the Board—in a proxy contest. And the delegation matrices state
    not only that a press release requires the CEO’s approval,153 but also that they
    represent the “minimum level of review required.”154 The matrices also require
    Board approval if (as here) a press release triggers an “SEC Filing.”155 Furthermore,
    151
    The defendants also assert that they acted in good faith reliance on the advice of counsel
    pursuant to Section 141(e). See Defs.’ Post-Trial Br. 38 (Dkt. 261); but see supra note 93;
    Lord Tr. 885; JX 711. That may be relevant to the exercise of their fiduciary duties but not
    to the question of whether they were legally authorized to act under Section 141(b) and
    Aerojet’s bylaws.
    152
    JX 18 ¶ 25.
    153
    JX 66 at 7.
    154
    Id. at 2, 9.
    155
    Id. at 7. In any event, the evidence suggests that the defendants did not rely on these
    policies at the time that the February 1 Press Release and February 2 Disclosures were
    issued. See JX 336; JX 337; JX 879.
    33
    Aerojet’s bylaws provide that an officer’s delegated authority “as generally pertains
    to their respective offices” is “subject to the control of the Board.”156
    Moreover, although the CEO had the authority to run the Company’s day-to-
    day business, the challenged actions were not “ordinary course.”157 The February 1
    Press Release questioned the motives of the Company’s Executive Chairman and
    disclosed the ongoing Investigation of which he was the subject. And counsel was
    retained on Aerojet’s behalf to bring litigation against half of the Board, using
    corporate funds in support.
    The defendants also claim that they were legally required to disclose the
    Investigation to “put the Steel Slate into context” because Steel’s Schedule 13D
    156
    JX 11 § 4.1. Section 142(a) of the DGCL provides that corporations shall have “officers
    with such titles and duties as shall be stated in the bylaws or in a resolution of the board of
    directors which is not inconsistent with the bylaws.” 8 Del. C. § 142(a). Aerojet’s bylaws
    generally provide that officers shall have such powers “as may be assigned by the Board”
    and that “officers shall have such powers and shall perform such duties, executive or
    otherwise, as from time to time may be assigned to them by the Board and, to the extent
    not so assigned, as generally pertain to their respective offices, subject to the control of the
    Board.” JX 11 §§ 4.1, 4.2.
    157
    See Defs.’ Post-Trial Br. 43-44. The defendants cite to this court’s decision in In re
    Walt Disney Co. Derivative Litigation, which provides that a CEO generally has “no
    obligation to continuously inform the board of [her] actions as CEO, or to receive prior
    authorization for those actions.” 
    907 A.2d 693
    , 761 (Del. Ch. 2005), aff’d, 
    906 A.2d 27
    (Del. 2006); see also 2A William Meade Fletcher et al., Fletcher Cyclopedia of the Law of
    Corporations § 559 (2021) (“The general rule is that a president of a corporation is
    empowered to transact, without special authorization from the board of directors, all acts
    of an ordinary nature that are incident to the office by usage or necessity and to thus bind
    the corporation.”). That may be true in the normal course. In fact, the discussion in Disney
    emphasized that “everyday governance should be ‘under the direction’ of the board of
    directors rather than ‘by the board.’” 
    907 A.2d at
    761 n.490 (emphasis added). But the
    circumstances presented in this case are far from everyday governance matters.
    34
    omitted “material information” such as the Investigation.158 But it is not clear why
    the defendants would be obligated to clarify Steel’s disclosures of why Stee’s 13D
    amendment was required (or even permitted) to disclose an internal and confidential
    Aerojet investigation. Regardless, the February 1 Press Release was drafted on
    January 28—days before Steel’s Schedule 13D was amended.159 Moreover, the
    weight of the evidence indicates that it was a negotiating lever to pressure
    Lichtenstein to withdraw his slate.160
    Accordingly, the plaintiffs are entitled to a declaration that the following
    actions taken by the defendants lacked authorization from the Board or a duly
    authorized committee of the Board:
    • the approval of the February 1 Press Release and February 2
    Disclosures;
    • the retention of Gibson Dunn to represent the Company in threatening
    and pursuing litigation against the plaintiffs; and
    • the payment of the $250,000 retainer to Gibson Dunn from Company
    funds to represent the Company and defendants.
    158
    Defs.’ Post-Trial Br. 40.
    159
    JX 179; JX 245.
    160
    JX 161; JX 179; JX 186; JX 209; JX 856; but see JX 207. Even if management believed
    that the law required disclosure of the investigation, the press release went well beyond
    disclosing the fact of the investigation. See Martin Marietta Mat’ls, Inc. v. Vulcan Mat’ls
    Co., 
    56 A.3d 1072
    , 1139-41 (Del. Ch. 2012) (explaining that a disclosure requirement does
    not give a party free reign to file a “propaganda piece” casting its counterparty in a negative
    light through “debatable and selective” disclosures), aff’d, 
    68 A.3d 1208
     (Del. 2012), as
    corrected (July 12, 2012).
    35
    2.     Whether the Neutrality Principle Was Violated
    This court has observed that a Delaware corporation must remain neutral
    when a there is a legitimate question as to who is entitled to speak or act on its behalf.
    Where a board cannot validly exercise its ultimate decision-making power, neither
    faction has a greater claim to the company’s name or resources.161                   The
    corporation—“the neutral res”—cannot take sides while the control dispute is
    unresolved.162 The entity’s sole interest is that it be “managed by those who are
    authorized to serve in that role.”163 It does not fall to management to step into the
    power vacuum in the interim.164
    This idea is not new. In Campbell v. Loew’s Incorporated, Chancellor Seitz
    was faced with a situation where two factions of directors—one headed by the
    161
    See In re TransPerfect, C.A. No. 9700-CB, at 35 (explaining that Delaware law
    prohibits a director from “acting unilaterally on behalf of the company for . . . personal
    advantage in [an] ongoing [control] disputes”).
    162
    Pearl City Elevator, Inc. v. Gieseke, C.A. No. 2020-0419-JRS, at 88 (Del. Ch. Sept. 11,
    2020) (TRANSCRIPT) (“A deadlocked LLC cannot validly retain counsel and file an
    answer.” (quoting Maitland v. Int’l Registries, LLC, 
    2008 WL 2440521
    , at *2 (Del. Ch.
    June 6, 2008))).
    163
    
    Id.
     Unlike Pearl City, the present matter is not a Section 18-110 (or Section 225)
    proceeding. But the animating principles are the same. Where a control dispute prevents
    the board—charged with the duty to oversee the entity—from validly acting, the
    corporation cannot take sides. The question of who may act for the entity must first be
    resolved—there, by the court, and here, by the stockholders.
    164
    See In re Carlisle Etcetera LLC, 
    114 A.3d 592
    , 607 (Del. Ch. Apr. 30, 2015)
    (explaining, in the LLC context, that the entity’s manager “managing the Company because
    of a power vacuum created by [a] deadlock” among the members lacked authority because
    he was “not the board”).
    36
    company’s president and the other by a director—were engaged in a proxy fight for
    control of Loew’s.165 The Loew’s board was unable to act on the proxy solicitation
    because it could not muster a meeting quorum. The plaintiff sought to enjoin the
    president from “using his corporate authority and the corporate resources to deny the
    will of the board of directors and to maintain himself in office.”166 The court found
    that the president’s actions were improper:
    The fact that [the president] had the power to call a
    stockholders’ meeting to elect directors, and is, so to
    speak, in physical control of the corporation cannot
    obscure the fact that the possible proxy fight is between
    two sets of directors. [The] president ha[d] no legal
    standing to make “his” faction the exclusive voice of
    Loew’s in the forthcoming election.167
    165
    
    134 A.2d 852
    , 862 (Del. Ch. 1957).
    166
    
    Id.
    167
    
    Id. at 863
    . The defendants cite to a holding in Campbell that the president’s faction was
    permitted to “expend reasonable sums of corporate funds in the solicitation of proxies.”
    
    Id. at 864
    . Based on that text, they assert that, in this case, the defendants’ faction was
    entitled to tap corporate resources because they “represent[] those who have been and are
    now responsible for corporate policy and administration.” Defs.’ Post-Trial Br. 38 (quoting
    Campbell, 
    134 A.2d at 864
    ). The facts presented in Campbell, however, are quite different.
    In Campbell, Loew’s management (headed by the president, Vogel) agreed with a director
    (Tomlinson)—who headed the competing faction—to appoint 13 directors, with six
    nominated by Vogel, six nominated by Tomlinson, and one neutral director. Campbell,
    
    134 A.2d at 855
    . Between the time of that agreement and the litigation, four directors
    resigned, giving Tomlinson a 5-4 majority. Those resignations caused an “unusual”
    situation that made it misleading for Tomlinson’s slate to represent that it had been
    responsible for corporate policy in the preceding year. 
    Id. at 862
    . In the present dispute,
    by contrast, each faction has an equal claim to having been charged with the Company’s
    corporate policy. One faction is led by the Company’s Executive Chairman, and the other
    by its CEO. Both factions include long-tenured directors.
    37
    This neutrality principle applies to the present dispute. Because the Board has
    deadlocked in a contested election, Aerojet is (and must remain) neutral as to the
    election’s outcome.
    The plaintiffs maintain that the defendants violated the neutrality principle—
    both before and after the TRO was entered. The bulk of their allegations focus on
    Drake, who had access to the Company’s employees and advisors in her role as CEO.
    The plaintiffs point out that the defendants relied upon Aerojet’s employees and
    outside advisors to help craft the defendants’ response to Steel’s nomination. The
    plaintiffs further assert that the defendants invoked the Company’s attorney-client
    privilege to withhold materials from them, despite the plaintiffs’ broad information
    rights as directors.168 And they say that Drake used her office as CEO to contact
    major Aerojet stockholders to feature the February 1 Press Release. To the extent
    that these actions required the deployment of corporate resources to advantage the
    defendants or disable the plaintiffs, they were inconsistent with corporate neutrality.
    The defendants acknowledge that this principle applies in a “typical board
    deadlock situation.”169 But they assert that, here, it “gives way to a duty to defend
    where an activist paralyzes the [B]oard to prevent it from responding to his
    168
    See generally In re Aerojet Rocketdyne Hldgs., Inc., 
    2022 WL 1446782
     (Del. Ch. May
    5, 2022).
    169
    Defs.’ Post-Trial Br. 36-37.
    38
    challenge.”170 They also contend that Lichtenstein was motivated by a desire to
    entrench himself irrespective of the outcome of the Investigation, rendering the
    neutrality principle inapplicable. Neither of these arguments carry the day.
    Setting aside the matter of who would be authorized to respond to a “threat,”
    it is not apparent why Steel’s decision to run a slate should be viewed as such.
    Corporate democracy is not an attack.171 Even if launching a proxy contest could be
    viewed as a hostile act in some scenarios,172 the nomination of the Steel Slate was
    not.
    The unique facts presented in this case render classic notions of activism inapt.
    An activist investor is one that seeks to cause management and the board of directors
    170
    Id. at 37.
    171
    Prominent commentators have described the importance of a fair election process, free
    from “disproportionate influence,” that leaves decisions to the “neutrals.” See M. Kahan
    & E. Rock, Anti-Activists Poison Pills, 
    99 B.U. L. Rev. 915
    , 994-95 (2019) (explaining
    that a fair election “need not be tied to any substantive assessment of the merits in a
    particular contest—whether, in absolute terms, the proposal of the activist is good or, in
    relative terms, the activist is better or worse than the incumbents. The substance of the
    proposal will be part of the arguments made to the neutral deciders who, in this context,
    make the ultimate determination.” (quoting Third Point LLC v. Ruprecht, 
    2014 WL 1922029
    , at *21 (Del. Ch. May 2, 2014))); see also Yucaipa Am. All. Fund II, L.P. v. Riggio,
    
    1 A.3d 310
    , 360 (Del. Ch. 2010) (“Yucaipa is left the chance to gain influence by electing
    three directors at the next meeting, and three more at the following meeting. It just must do
    so by convincing other stockholders on the merits to vote for its slate, and without entering
    into mutual agreements about joint governance that raise the spectre of a de facto control
    bloc.”).
    172
    See generally Strategic Inv. Opportunities LLC v. Lee Enters, Inc., 
    2022 WL 453607
    (Del. Ch. Feb. 14, 2022) (addressing a proxy fight launched by a hedge fund against a
    company in which had recently acquired a large stake and had no representatives on the
    incumbent board).
    39
    to “change or influence a corporation’s direction.”173 The board is alone responsible
    for determining that direction given its “duty to establish or approve the long-term
    strategic, financial and organizational goals of the corporation [and] to approve
    formal or informal plans for the achievement of these goals.”174 A control contest
    brought by a “dissident” is—by definition—one that seeks to “wrest governing
    power from the corporation’s incumbent board of directors.”175 Here, the Steel Slate
    includes half of the incumbents. In addition, Steel, which has held a position in
    Aerojet (or its predecessor) since 2000, cannot be described as an archetypal
    “activist.”176
    Because the Board deadlocked on the nomination of a slate, the defendants
    cannot use the Company’s resources to react to the Steel Slate as hostile to Aerojet’s
    interests. The two groups maybe be adverse to one another given their competing
    desires to be elected—a conflict affecting all members of the Board alike.177 But
    173
    Williams Cos. S’holder Litig., 
    2021 WL 754593
    , at *29 (Del. Ch. Feb. 26, 2021).
    174
    Grimes v. Donald, 
    1995 WL 54441
    , at *1 (Del. Ch. Jan. 11, 1995).
    175
    Randall S. Thomas and Catherine T. Dixon, Aranow & Einhorn on Proxy Contests for
    Corporate Control § 2.01 (3d ed. 2001).
    176
    Steel, which first invested in the Company in 2000, is far from the “archetypal short-
    term investor” seeking near-term value with little regard for long-term corporate strategies.
    Goldstein v. Dinner, 
    2022 WL 1671006
    , at *32 (Del. Ch. May 26, 2022) (citation omitted).
    177
    Aprahamian v. HBO & Co., 
    531 A.2d 1204
    , 1206 (Del. Ch. 1987) (“A candidate for
    office, whether as an elected official or as a director of a corporation, is likely to prefer to
    be elected rather than defeated. [The candidate] therefore has a personal interest in the
    outcome of the election even if the interest is not financial and [the candidate] seeks to
    serve from the best of motives.”); see also Strategic Inv. Opportunities, 
    2022 WL 453607
    ,
    40
    they are not adverse to the Company.178 That the Drake Slate includes the CEO is
    irrelevant.
    Finally, the defendants’ argument that the Company was not required to
    remain neutral because Lichtenstein was motivated by a unique conflict of
    “freezing” the Investigation is unsuccessful.            In terms of the Investigation,
    Lichtenstein was cooperative. There is no evidence that he attempted to interfere
    with it reaching its conclusion.179 Lichtenstein also proposed that his spot on the
    Board could be taken by another Steel representative if the Non-Management
    Committee’s recommendations called for him to step down.180 Perhaps more
    importantly, there is no contemporaneous evidence demonstrating that the
    at *15; MM Cos. v. Liquid Audio, Inc., 
    813 A.2d 1118
    , 1129 (Del. 2003) (noting “the
    inherent conflicts of interest that arise when a board of directors acts to prevent
    shareholders from effectively exercising their right to vote either contrary to the will of the
    incumbent board members generally or to replace the incumbent board members in a
    contested election”).
    178
    In re Aerojet Rocketdyne Hldgs., Inc., 
    2022 WL 552653
    , at *3 (Del. Ch. Feb. 23, 2022)
    (“There is not a single slate of incumbent directors seeking reelection over insurgent
    candidates. Half of the Board supports one slate and half supports another (yet to be
    nominated) slate. What the defendants describe as the ‘insurgent’ slate includes four
    incumbent directors. The defendant’s slate would not automatically become the
    ‘Company’s’ simply because the CEO is in that group.”); see also Howard Midstream
    Energy, C.A. No. 2021-0487-LWW, at 62-67 (rejecting an argument that the parties’
    disagreement over who controlled the board caused one faction to become adverse to the
    company itself).
    179
    JX 111; JX 534 at 2; Lichtenstein Tr. 972; Chilton Tr. 407; Turchin Tr. 653.
    180
    See JX 567 at 6.
    41
    defendants acted because of a belief that Lichtenstein ran a slate because he was
    concerned about the Investigation.181
    Ultimately, the defendants—irrespective of their beliefs that they acted in
    Aerojet’s best interest—had no more right to draw upon corporate resources to
    advance their cause than the plaintiffs. The defendants’ good faith intentions are
    “irrelevant” when “the question is who should comprise the board.”182 “The notion
    that directors know better than the stockholders about who should be on the board is
    no justification at all.”183
    The two halves of the Board have separate—but equally valid—pitches to
    make to stockholders. The Company, which is necessarily guided by the Board,
    could not (and cannot) take sides pending the outcome of the election. To hold that
    one stockholder-nominated slate comprising half of the incumbent directors can
    181
    It seems more likely that the defendants developed that view later. See Drake Tr. at
    487-89 (testifying that the agreement would have “hardwired” Lichtenstein to the board);
    Lord Tr. at 853-54 (testifying that the company did not want to “hardwire anybody in” to
    a board seat); compare JX 881 (outside counsel discussing “‘hard-wir[ing]’ the
    composition of [the] board”).
    182
    Liquid Audio, 
    813 A.2d at 1129
     (explaining that “good faith beliefs were not a proper
    basis for interfering with the stockholder franchise in a contested election for successor
    directors”).
    183
    Mercier v. Inter-Tel (Del.), Inc., 
    929 A.2d 786
    , 807-10 (Del. Ch. 2007).
    42
    advantage itself with access to the company’s name, funds, and employees because
    it includes management would unfairly tip the scales in that slate’s favor.184
    Accordingly, the plaintiffs are entitled to a declaration that the principle of
    corporate neutrality applies in connection with the contested election and that it was
    violated.
    B.     Whether Equitable Relief Should Issue
    The court has “broad latitude to exercise its equitable powers to craft a
    remedy.”185 The plaintiffs call on the court to fashion a variety of relief beyond
    declaratory judgments. They seek—with varying degrees of specificity—permanent
    injunctive relief, corrective disclosures, the invalidation of certain proxies, and the
    voiding of the defendants’ unauthorized acts.
    1.     Permanent Injunctive Relief
    The plaintiffs request a permanent injunction to “enforce the neutrality
    principle.”186 That relief would act as a corollary of the declaratory judgment on that
    184
    See Liquid Audio, 
    813 A.2d at 1127
     (“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.”).
    185
    Hogg v. Walker, 
    622 A.2d 648
    , 654 (Del.1993); see also Rsrvs. Dev. LLC v. Severn Sav.
    Bank, FSB, 
    961 A.2d 521
    , 525 (Del. 2008) (“The Court of Chancery has broad discretion
    to fashion equitable relief.”).
    186
    Pls.’ Post-Trial Br. 62; Pls.’ Pre-Trial Br. 65 (Dkt. 236).
    43
    principle and essentially extends the restrictions in the TRO through the conclusion
    of the election.
    “To merit a permanent injunction, a plaintiff must show: (1) actual success on
    the merits; (2) irreparable harm, and (3) the harm resulting from a failure to issue an
    injunction outweighs the harm to the opposing party if the court issues the
    injunction.”187 Each element is met.
    As described above, the plaintiffs succeeded on the merits of their claims.188
    The interim relief established by the TRO will no longer be in place now that
    the court has issued a final decision on the merits. If the parties act in a way that
    contravenes the principles articulated in the court’s declaratory judgment, the
    ultimate goal of a fair election could be imperiled. Granting injunctive relief will
    provide protection against future harm and make any necessary enforcement more
    readily available.189
    187
    Agilent Techs., Inc. v. Kirkland, 
    2010 WL 610725
    , at *31 (Del. Ch. Feb. 18, 2010)
    (quoting COPI of Del., Inc. v. Kelly, 
    1996 WL 633302
    , at *4 (Del. Ch. Oct. 25, 1996)); see
    Pitts v. City of Wilm., 
    2009 WL 1204492
    , at *3 (Del. Ch. Apr. 27, 2009) (describing the
    requirement of success on the merits—rather than reasonable likelihood of success—as the
    difference between the preliminary and permanent injunction standards).
    188
    See generally supra Section II.A.
    189
    See Steffel v. Thompson, 
    415 U.S. 452
    , 482 (1974) (“A declaratory judgment is simply
    a statement of rights, not a binding order supplemented by continuing sanctions.”); see
    Samuel L. Bray, The Myth of the Mild Declaratory Judgment, 
    63 Duke L.J. 1091
    , 1109-10
    (2014) (describing the “sanction rationale” explanation—the fact that declaratory relief
    does not threaten a sanction for disobedience—for why some consider declaratory
    judgments to be milder remedies than injunctive relief); Owen M. Fiss, The Civil Rights
    Injunction, 
    86 Yale L.J. 1103
    , 1122 (1977) (noting that an injunction “gives the defendant
    44
    The balance of equities also favors granting an injunction. The parties should
    conduct themselves in accordance with the declaratory judgment. An injunction
    requiring as such will not cause harm.
    Accordingly, I exercise my discretion to impose an injunction to remain in
    place until Aerojet stockholders elect a new board of directors.190 The injunction
    will effectively mirror the TRO Order, except for provisions that are no longer
    relevant.191
    2.    Corrective Disclosures
    The plaintiffs also seek an order mandating the issuance of corrective
    disclosures. The plaintiffs’ post-trial brief states that this relief is needed to address
    “a litany of disclosure violations,” including the February 1 Press Release, the
    corresponding February 2 Disclosures, unspecified “stockholder communications in
    the Company’s name,” and “selective” disclosures about the investigation in the
    one more chance” and a declaratory judgment “gives the defendant two more chances”).
    There is naturally no “preliminary declarations” and preliminary relief had to take the form
    of some type of interim injunctive relief. See Doran v. Salem Inn, Inc., 
    422 U.S. 922
    , 931
    (1975); see also Clark v. State Farm Mut. Auto. Ins. Co., 
    131 A.3d 806
    , 815 (Del. 2016)
    (noting that a declaratory judgment “is not a tool fitting” the “ambitious purpose” of
    detailing a remedy so as to “give life to [it]”).
    190
    Agilent, 
    2010 WL 610725
    , at *31; 11A Charles Alen Wright & Arthur R. Miller,
    Federal Practice and Procedure, § 2942 (3d ed. 2022) (“Perhaps the most significant
    component in the judicial decision whether to . . . grant permanent injunctive relief is the
    court’s discretion.”).
    191
    For example, the injunction need not address the extension of the advance notice bylaw
    deadline. See Dkt. 41 ¶ 3.
    45
    defendants’ proxy materials.192 That is, only the February 1 Press Release and
    February 2 Disclosures are specifically identified.193 I therefore limit my analysis to
    those disclosures. It does not fall upon the court to comb the universe of the
    defendants’ public statements to identify potential disclosure violations.
    Although corrective disclosures are often paired with breach of fiduciary duty
    claims (which are not advanced in the pleadings),194 the court can “fashion any form
    of equitable and monetary relief as may be appropriate” and “grant such other relief
    as the facts of a particular case may dictate.”195 In In re Howard Midstream, for
    example, the court ordered a company to issue a curative disclosure to remedy the
    violation of a status quo order after its CEO sent a notice to unitholders
    characterizing his personal views on litigation about the proper composition of the
    board as the company’s views.196 The ordered disclosure was designed to inform
    192
    See, e.g., Pls.’ Post-Trial Br. 61-62.
    193
    At post-trial argument, the plaintiffs’ counsel confirmed that the February 1 press
    release and related Form 8-K are the focus of this request for relief. See Post-trial Hr’g Tr.
    June 6, 2022, at 58-59 (Dkt. 271).
    194
    E.g., In re MONY Grp. Inc. S’holder Litig., 
    852 A.2d 9
    , 15 (Del. Ch. 2004) (requiring
    supplemental disclosures to inform stockholders of material information in a breach of
    fiduciary duty case).
    195
    Weinberger v. UOP, Inc., 
    457 A.2d 701
    , 714 (Del. 1983).
    196
    C.A. No. 2021-0487-LWW, at 63-64, 69.
    46
    unitholders that the notice was not approved by the board and that the company
    would remain neutral on the outcome of the pending lawsuit.197
    A similar disclosure is appropriate here. As described above, the February 1
    Press Release and February 2 Disclosures made unauthorized use of the Company’s
    name to favor one faction of the Board.198 The evidence suggests that these
    disclosures created a public perception that the Company was adverse to the Steel
    Slate.199 They also disclosed the pending Investigation without the approval of the
    Non-Management Committee overseeing it.200
    The market undoubtedly has a wealth of information about this dispute
    between the parties’ respective proxy filings and this litigation. Lest there be any
    doubt about the propriety of the February 1 Press Release and February 2
    Disclosures, however, corrective disclosures must issue in the form of a press release
    and a corresponding Form 8-K.201 The parties shall meet and confer on the contents
    of the disclosure, which must then be provided to the Company’s neutral counsel for
    197
    Id. at 70.
    198
    See supra Section II.A.
    199
    See JX 707 (ISS Report); JX 708 (Glass Lewis Report).
    200
    See, e.g., JX 280; JX 306; JX 307; JX 308; JX 309; JX 310; JX 312; JX 313.
    201
    The defendants argue that the Drake Slate’s June 3, 2022 Schedule 14A, which notes
    that “[t]he February 1, 2022 press release . . . was issued without the authorization of a
    majority of the [Board],” obviates the need for a corrective disclosure. Aerojet Rocketdyne
    Hldgs., Inc., Definitive Additional Materials (Schedule 14A) (June 3, 2022). In my view,
    a Company press release and Company filing have a different meaning and effect than a
    filing issued by the Drake Slate.
    47
    its comment and approval. The disclosure should retract the statements in the
    February 1 Press Release, state that neither the February 1 Press Release nor
    February 2 Disclosures were authorized by the Board, and explain that the Company
    takes no position on the outcome of the pending director election.
    3.     Invalidation of Submitted Proxies
    The plaintiffs next request that the court “[s]terilize stockholder consents and
    proxy votes” obtained before the issuance of the corrective disclosures.202 That relief
    is denied.
    The two slates’ proxy materials have documented and commented on this
    litigation for months.203 Stockholders who have chosen to submit proxies did so
    knowing that this court’s decision was forthcoming. Stockholders also retain the
    ability to revoke previously submitted proxies as they see fit by submitting new
    proxies.204 I see no equitable basis to make that decision for stockholders by broadly
    mandating that their proxies be invalidated.
    202
    Pls.’ Post-Trial Br. 63.
    203
    See In re Seminole Oil & Gas Corp., 
    150 A.2d 20
    , 23-24 (Del. Ch. 1959) (“Where, as
    here, the conflicting claims and answers were presented to the stockholders at length, I
    think that is a factor which militates against the ordering of complete resolicitation. This
    is particularly true since the alleged misrepresentations were pointed out to the solicited
    stockholders.”). While In re Seminole Oil & Gas dealt with the possibility of ordering a
    new election after the fact, the opinion highlights the court’s “discretion in determining the
    form of relief” and the type of considerations that may lead it to its conclusions. 
    Id. at 25
    .
    204
    This right has been made clear to stockholders. See, e.g., Aerojet Rocketdyne Hldgs.,
    Inc., Definitive Additional Materials (Schedule 14A), at 13 (May 5, 2022) (“An executed
    proxy card may be revoked at any time before it is voted at the special meeting.”); Aerojet
    48
    4.    Voiding Unauthorized Acts
    Finally, the plaintiffs indicate that the court should void the unauthorized
    actions taken by the defendants on behalf of the Company. Those actions are
    described in Section II.A.1, above.
    With regard to the February 1 Press Release and February 2 Disclosures, I see
    no practical reason to “void” those disclosures in light of the fact that corrective
    disclosures will issue and provide an adequate remedy.205
    As described below, the unauthorized retention of Gibson Dunn to jointly
    represent the Company and the defendants in litigation against the plaintiffs was
    cured when a new engagement agreement limited to the representation of the
    defendants—with no requirement that Company funds be used—was executed on
    February 28, 2022.206
    The $250,000 evergreen retainer, paid by the Company to Gibson Dunn in
    connection with its representation of the Company and defendants in this litigation
    Rocketdyne Hldgs., Inc., Definitive Proxy Statement (Schedule 14A), at 3 (June 3, 2022)
    (“If you have already voted on the white proxy card furnished by the Drake committee,
    you have every right to revoke that proxy and change your vote by signing, dating and
    returning a later dated green proxy card.”).
    205
    The plaintiffs themselves noted at the post-trial hearing that there may not be a “practical
    difference” between corrective disclosures and voiding certain acts. Post-trial Hr’g Tr.
    June 6, 2022, at 28.
    206
    See JX 647; JX 324.
    49
    and the proxy contest, remains in the possession of the firm.207 That payment was
    unauthorized and is void.
    C.     Whether Unclean Hands Bars Equitable Relief
    The defendants raise the affirmative defense of unclean hands as foreclosing
    the plaintiffs from obtaining relief. The doctrine of unclean hands is grounded in
    public policy and exists “to protect the public and the court against misuse” by
    litigants whose actions offend fundamental equitable principles.208 Irrespective of
    the merits of an action, a court of equity applying the doctrine may decline to grant
    equitable relief to a party who has “violated conscience or good faith or other
    equitable principles in his conduct.”209 These actions must bear “immediate and
    necessary relation to the claims under which relief is sought” for the unclean hands
    207
    As discussed below in Section II.D, the payment has not been drawn down since the
    TRO was entered. See JX 320; JX 324; Drake Tr. 562; Chilton Tr. 413; Corcoran Tr. 307;
    Moloney Dep. 137-38, 148.
    208
    Skoglund v. Ormand Indus., Inc., 
    372 A.2d 204
    , 213 (Del. Ch. 1976) (holding that to
    invoke the unclean hands doctrine, a plaintiff’s conduct must be “shocking to the integrity
    of the Court”); see Nakahara v. NS 1991 Am. Tr., 
    718 A.2d 518
    , 522 (Del. Ch. 1998) (“The
    unclean hands doctrine is aimed at providing courts of equity with a shield from the
    potentially entangling misdeeds of the litigants in any given case . . . [T]he Court refuses
    to consider requests for equitable relief in circumstances where the litigant’s own acts
    offend the very sense of equity to which he appeals.”).
    209
    Bodley v. Jones, 
    59 A.2d 463
    , 469 (Del. 1947); see Gallagher v. Holcomb & Salter,
    
    1991 WL 158969
    , at *4 (Del. Ch. Aug. 16, 1991) (“The question raised by a plea of unclean
    hands is whether the plaintiff’s conduct is so offensive to the integrity of the court that his
    claims should be denied, regardless of their merit.”).
    50
    doctrine to apply.210      The court has “extraordinarily broad discretion” when
    considering this defense.211
    “Cases turning on matters related to unclean hands are infrequent as a matter
    of course.”212 This case is no exception. Although the plaintiffs ignored the
    defendants’ unclean hands defense in their briefing, the defendants have failed to
    meet their burden.
    As an initial matter, the doctrine of unclean hands does not apply to the
    plaintiffs’ legal claims seeking declaratory judgments. “[A] party may not assert an
    equitable defense against a purely legal claim, even when the legal claim is pending
    in a court of equity.”213 The doctrine could apply only to the plaintiffs’ request for
    equitable remedies.214
    210
    Nakahara, 
    718 A.2d at 523
    .
    211
    
    Id. at 522
    ; see Keystone Driller Co. v. Gen. Excavator Co., 
    290 U.S. 240
    , 245-46 (1933)
    (“[The Court applying unclean hands is] not bound by formula or restrained by any
    limitation that tends to trammel the free and just exercise of discretion.”).
    212
    Nakahara, 
    718 A.2d at 522
    .
    213
    NASDI Hldgs., LLC v. N. Am. Leasing, Inc., 
    2019 WL 1515153
    , at *6 (Del. Ch. Apr. 8,
    2019).
    214
    See Lehman Bros. Hldgs. Inc. v. Spanish Broad. Sys., Inc., 
    2014 WL 718430
    , at *7 n.47
    (Del. Ch. Feb. 25, 2014) (explaining that the “‘unclean hands’ doctrine bars equitable, but
    not legal, relief”), aff’d, 
    105 A.3d 989
     (Del. 2014) (TABLE); Dan B. Dobbs, Law of
    Remedies § 2.4(2) (2d ed. 1993) (“If the defense is really an appeal to equitable discretion,
    then it should apply only to bar equitable remedies.”).
    51
    Furthermore, a stronger “countervailing public policy” precludes the
    application of unclean hands.215 The equitable relief requested by the plaintiffs seeks
    to ensure corporate neutrality in the face of Board deadlock, with the ultimate goal
    of a fair election. The underlying public policy at play is undoubtedly strong.
    That is not to say that the plaintiffs’ actions were unimpeachable. As the
    defendants point out, best practices would have included that Lichtenstein follow the
    Board’s nomination procedures in nominating a Company slate and disclose to the
    Board his intention to launch a proxy contest before Steel issued its notice. But I
    fail to see how this conduct has an “immediate and necessary relation” to that giving
    rise to the equitable relief granted: specifically, the issuance of the February 1 Press
    Release and February 2 Disclosures and the co-opting of corporate resources by one
    half of a deadlocked board.216
    The only conduct complained of that could potentially present the requisite
    direct relation is either contrary to my findings of fact after trial or was not before
    215
    Nakahara, 
    718 A.2d at 523
     (describing the application of a “countervailing public
    policy” as the “greatest limitation” on the doctrine of unclean hands); Belle Isle Corp., v.
    Corcoran, 
    49 A.2d 1
    , 4 (Del. 1946) (explaining that the “public policy of [the] State . . .
    will not be disturbed by the application of [the unclean hands] doctrine”).
    216
    Keystone Driller, 
    290 U.S. at 245
     (requiring that the plaintiff’s conduct have an
    “immediate and necessary relation to the equity [the plaintiff] seeks in respect of the matter
    in litigation” for the unclean hands defense to apply). For example, here the defendants
    claim that the February 1 Press Release was issued in response to Steel’s 13D. Defs.’ Pre-
    Trial Br. 41 (Dkt. 235). While they may have believed the 13D was misleading because it
    did not disclose the Investigation (which at the time was still confidential), this subjective
    belief bears no relation to the plaintiffs’ claims regarding authority and corporate neutrality.
    52
    me. For instance, I have not found that the plaintiffs endeavored to force the Board
    to guarantee Lichtenstein’s seat on the board regardless of the outcome of the
    Investigation. Nor have I found that Lichtenstein was motivated by a singular goal
    of ousting senior management. I have not—at present—been asked to determine
    whether Lichtenstein breached his fiduciary duties or engaged in self-dealing.217
    In short, while both factions of directors undoubtedly share the blame for the
    circumstances that led the Board to deadlock, the plaintiffs do not “come[] to this
    court with hands dirty enough to deny [them] any relief”—particularly when the
    ultimate beneficiary of that relief is the Aerojet electorate.218
    D.      Whether the Challenged Conduct Violated the TRO
    The plaintiffs also contend that the defendants’ use of corporate resources
    continued after February 15, 2022, in violation of the TRO. They ask that the court
    hold the defendants in contempt.219 Court of Chancery Rule 70(b) authorizes the
    court to find a party in contempt for the failure “to obey or to perform any order.”220
    217
    These allegations are raised in the defendants’ counterclaims, which remain pending
    and were not tried with the plaintiffs’ claims.
    218
    Portnoy v. Cryo-Cell Int’l, Inc., 
    940 A.2d 43
    , 81 (Del. Ch. 2008); see Gallagher, 
    1991 WL 158969
    , at *4 (holding that conduct must be “so offensive to the integrity of the court
    that [the plaintiff’s] claims should be denied, regardless of their merit”).
    219
    Pls.’ Post-Trial Br. 45-59.
    220
    Ct. Ch. R. 70(b).
    53
    “To establish civil contempt, [the petitioning party] must demonstrate that the
    [alleged contemnors] violated an order of this Court of which they had notice and
    by which they were bound.”221 “A cardinal requirement for any adjudication of
    contempt is that the order allegedly violated give clear notice of the conduct being
    proscribed.”222 The alleged violation must also be “meaningful” and not merely
    “technical.”223
    A party petitioning for a finding of contempt “must ‘establish the
    contemptuous conduct by a preponderance of the evidence.”224 If that burden is
    221
    TR Invs., LLC v. Genger, 
    2009 WL 4696062
    , at *15 (Del. Ch. Dec. 9, 2009) (quoting
    Arbitrium v. Johnston, 
    1997 WL 589030
    , at *3 (Del. Ch. Sept. 17, 2009), aff’d, 
    26 A.3d 180
     (Del. 2011) (alterations in original) (citation omitted)).
    222
    Mother Afr. Union First Colored Methodist Protestant Church v. Conf. of Afr. Union
    First Colored Methodist Protestant Church, 
    1992 WL 83518
    , at *9 (Del. Ch. Apr. 22,
    1992) (declining to finding contempt where order “proscribed certain conduct,” but
    challenged action “was not included”), aff’d, 
    633 A.2d 369
     (Del. 1993) (TABLE); see also
    inTEAM Assoc., 
    2021 WL 5028364
    , at *11 (same); Schwartz v. Cognizant Tech. Sols.
    Corp., 
    2022 WL 880249
    , at *5 (Del. Ch. Mar. 25, 2022) (finding the court had no basis to
    hold a party in civil contempt where the order at issue did not specifically proscribe the
    conduct complained of).
    223
    Dickerson v. Castle, 
    1991 WL 208467
    , at *3 (Del. Ch. Oct. 15, 1991); see also
    TransPerfect Glob., Inc. v. Pincus, 
    2022 WL 1763204
    , at *8 (Del. June 1, 2022) (“When
    an asserted violation of a court order is the basis for contempt, the party to be sanctioned
    must be bound by the order, have clear notice of it, and nevertheless violate it in a
    meaningful way.”).
    224
    TransPerfect, 
    2022 WL 1763204
    , at *8 (quoting Wilm. Fed’n of Tchrs. v. Howell, 
    374 A.2d 832
    , 838 (Del. 1977)).
    54
    carried, “the burden then shifts to the [purported] contemnors to show why they were
    unable to comply with the order.”225
    The decision to hold a party in contempt is a discretionary matter for the
    court.226 Here, the exercise of my discretion is guided by an assessment of whether
    the defendants meaningfully violated the TRO and whether a finding of contempt
    would serve a remedial purpose.
    1.     Alleged Violations of the TRO
    They plaintiffs argue that the defendants failed to comply with a provision of
    the TRO mandating that neutral counsel for the Company be retained.227 They also
    argue that the defendants violated the TRO by using the Company’s outside
    advisors, funds, and employees to advantage the Drake Slate.228 The defendants
    assert that the plaintiffs have not proven that any of these alleged acts constitute
    meaningful violations of the TRO.
    a.     Retention of Neutral Counsel
    The plaintiffs assert that the defendants violated a provision of the Order
    requiring the Company to “retain independent counsel agreed upon and authorized
    225
    TransPerfect, 
    2022 WL 1763204
    , at *8 (quoting TR Invs., 
    2009 WL 4696062
    , at *15).
    226
    See Dickerson, 
    1991 WL 208467
    , at 3.
    227
    Id. at 45-59.
    228
    See Pls.’ Post-Trial Br. 48-59.
    55
    by at least 5 members of the Board in connection with the [pending litigation].”229
    The defendants’ alleged conduct did not violate the Order.
    On February 17, 2022, the six outside directors reached some consensus on
    the retention of outside counsel to “work with Aerojet’s existing general counsel to
    assist him with any actions that require company input,” including “[a]ssisting with
    public filings” and providing counsel “to the Board and the Company as to how to
    proceed with acquisition overtures from interested third parties.”230 After Drake
    objected to the proposal as different than the neutral counsel “outlined in [the]
    TRO,”231 the defendants declined to move forward.232
    The engagement considered by the directors on February 17 well exceeded
    the bounds of the TRO, which only mandated neutral counsel to represent the
    Company in this litigation.233 The court repeatedly emphasized that the TRO was
    intended to be narrowly focused on efforts “in support of the election efforts of any
    candidate for election at the Annual Meeting.”234 In any event, an agreement was
    229
    Dkt. 41.
    230
    JX 402.
    231
    JX 647.
    232
    See JX 402.
    233
    See id.; Dkt. 41.
    234
    Dkt. 38 at 82.
    56
    eventually reached for the Company to retain Morris James LLP and Debevoise &
    Plimpton LLP to represent it in this proceeding.235
    b.     Use or Deployment of Company Funds or Other
    Resources
    The plaintiffs’ contempt allegations primarily concern the defendants’ alleged
    use of Company funds and resources to impair the Lichtenstein Slate or advantage
    the Drake Slate. The TRO prohibited certain conduct to prevent unauthorized
    actions that could unfairly benefit one faction in the proxy contest. The Order set
    forth the precise parameters of the TRO, including that “[n]o party to this Action, no
    officer, director, employee, advisor or agent of [the Company] . . . shall . . . without
    the prior written approval of the Company’s Board of Directors . . . use or otherwise
    deploy Company funds or other Company resources in support of the election efforts
    of any candidate for election at the Annual Meeting.”236
    i.      Third party advisors
    The plaintiffs contend that the phrase “other company resources” should be
    read to include the defendants’ post-February 15 use of third-party advisors who
    work with the Company—including Gibson Dunn, Jenner, Evercore, and
    Citibank.237 They point out that the defendants’ proposed order to implement the
    235
    PTO ¶¶ 21-22.
    236
    Dkt. 41.
    237
    See JX 357; JX 376; JX 412; JX 432; JX 519; JX 641; Drake Tr. 515, 545, 554.
    57
    TRO—which the court rejected—included language that would have permitted the
    parties “to work with any advisors (including counsel, financial advisors and public
    relations firm) that may have represented the Company prior to the date hereof.”238
    But the Order proposed by the plaintiffs and entered by the court lacked any
    language preventing such engagements. The Order cannot objectively be read to
    have done so by implication. In fact, it expressly contemplated that Gibson Dunn
    would withdraw its appearance on behalf of the Company and continue to represent
    the defendants.239
    ii.     Company funds
    The plaintiffs next highlight a Joint Representation Agreement entered into
    among Gibson Dunn, Aerojet, and the defendants as evidencing the post-TRO use
    of Company funds. That agreement was sent to the defendants on February 10,
    2022—5 days before the TRO was granted.240 It provided that Aerojet would cover
    all of the defendants’ legal fees and pay a $250,000 retainer to Gibson Dunn.241
    Corcoran, Drake, and Kampani (on behalf of Aerojet) signed the agreement on
    February 15, 16, and 17—all after the court’s oral ruling granting the TRO.242
    238
    Compare Dkt. 41 with Dkt. 35, Ex. A ¶ 9.
    239
    Dkt. 41 ¶ 8.
    240
    JX 324.
    241
    Id.
    242
    JX 366; JX 627; JX 628.
    58
    Though I do not condone the post-TRO execution of an agreement pertaining
    to the use of Company funds to represent the defendants in this litigation, I cannot
    conclude that doing so constituted contempt of the TRO. The payment of the retainer
    occurred before the TRO was granted. The Company’s funds have not yet been used
    to pay Gibson Dunn as it has not drawn down on the $250,000 retainer.243 Gibson
    Dunn is—at present—acting “pro bono.” As this court previously explained in
    granting the Order, “[t]he board that stockholders elect” can decide whether
    expenses either faction incurred in connection with the proxy contest should be
    reimbursed.244 Furthermore, Gibson Dunn and the defendants entered into a new
    engagement agreement related to their representation in this action, which lacked
    any commitment by Aerojet to pay the defendants’ legal expenses.245
    iii.     Company employees
    When it comes to reliance on Company employees for assistance in the proxy
    contest, the plaintiffs focus on various actions taken by Drake and by other Company
    employees after February 15. The actions take two forms: the promotion of the
    243
    Corcoran Tr. 307; Drake Tr. 562; Moloney Dep. 148.
    244
    In re Aerojet, 
    2022 WL 552653
    , at *3; see also 
    id.
     *2 n.16 (“[A] board could . . . choose
    to reimburse the expense of an insurgent slate. And Section 113 of the [DGCL] expressly
    permits Delaware corporations to adopt proxy expense reimbursement bylaws.”); Jana
    Master Fund, Ltd. v. CNET Networks, Inc., 
    954 A.3d 335
    , 341 (Del. Ch. 2008) (noting that
    “insurgent” stockholders will “finance their own bid [for election] and can hope for
    reimbursement only if that bid is successful”). This is equally true for Evercore’s
    arrangement with Drake. JX 458.
    245
    JX 641; Drake Tr. 626; Moloney Dep. 153-55.
    59
    Drake Slate; and relying on Company assistance to transfer her shares into record
    name.
    On the first subject, various company officers are alleged to have assisted
    Drake in running the proxy contest. For example, certain high-level employees
    participated alongside Drake in election-related strategy sessions and joined her for
    calls with Company investors intended to solicit support for the Drake Slate.246
    Those employees are a “Company resource.”
    But Paragraph 5 of the Order states that “[n]othing in this order shall affect
    the right of any person to act in his or her individual capacity to support the election
    of any candidate for election.”247 That is, the employees were not barred from
    voluntarily assisting in their personal, individual capacities—rather than as
    representatives of the Company. The Company’s CFO, for instance, maintains that
    he was volunteering his non-working time to assist Drake.248 Although the evidence
    cuts both ways, the carveout in Paragraph 5 of the Order weighs against a finding
    that this assistance was violated by the TRO.249
    246
    See JX 401; JX 430; JX 471; JX 682; JX 686; JX 688; JX 875; JX 876; Drake
    Tr. 593-94; Boehle Tr. 784-86, 913-14.
    247
    Dkt. 41 ¶ 5.
    248
    See Boehle Tr. 761-62; see also Drake Tr. 505-08.
    249
    See, e.g., JX 426; JX 477; JX 479; Boehle Tr. 790-91.
    60
    Drake’s authorization of Company employees to transfer shares of her Aerojet
    stock into record name is a different matter. Drake authorized this conduct in her
    capacity as CEO, rather than as a stockholder. And she relied on Aerojet employees
    acting in their official roles for assistance.
    At trial, Drake testified that Aerojet did not meaningfully facilitate the transfer
    of Aerojet shares into her personal Computershare account.250 She claims that she
    did nothing more than ask for Aerojet employees to provide ministerial assistance in
    unlocking her Computershare password.251 The evidence indicates greater support
    was provided by the Company.
    Drake commenced the process of transferring shares into record name on
    February 25—three days before the February 28 nomination deadline.252 Record
    ownership was a necessary condition for her to nominate a slate pursuant to Aerojet’s
    advance notice bylaw.253
    Drake and her financial advisor initially attempted to transfer her shares into
    her name at Computershare using a DRS process that did not require company
    250
    Drake Tr. 579-89.
    251
    Id. at 514-15.
    252
    Id. at 513.
    253
    JX 11. The deadline for submitting stockholder nominations in connection with the
    Company’s 2022 annual meeting of stockholders was originally February 5, 2022. JX 163.
    The plaintiffs agreed to extend that deadline until February 28, 2022 to allow the
    defendants additional time to run a slate. Dkt. 34.
    61
    approval.254 Because Drake did not know her Computershare account information,
    her broker could not initiate the transfer until Computershare received a letter
    requesting the information by mail for review.255
    Drake turned to an Aerojet executive for help in obtaining the account
    information and multiple Aerojet employees proceeded to “urgent[ly]” reach out to
    Computershare to “help [their] CEO” obtain her account information.256 After
    obtaining the account information, Aerojet’s associate general counsel, Drake’s
    personal broker, and Gibson Dunn learned that the DRS process would not be
    completed by the nomination deadline.257 They pursued a different process (called
    DWAC) that required a letter of authorization from Aerojet but would transfer shares
    immediately.258 A letter was sent on behalf of Aerojet instructing Computershare to
    accept a DWAC transfer of Drake’s shares.259
    The defendants minimize these actions as “a mere technical lapse.”260 But
    without this assistance by Aerojet, Drake would not have become a record holder
    254
    Drake Tr. 513.
    255
    JX 437 at 5; Drake Tr. 514.
    256
    JX 589; JX 437 at 6; see also JX 437 at 1-2, 7-8, 10-12; Drake Tr. 515.
    257
    See JX 437 at 8.
    258
    See id. at 17.
    259
    Id. at 27, 61.
    260
    Defs.’ Post-Trial Br. 55.
    62
    before the nomination deadline (as extended) expired.261 The actions were also not
    neutral. Steel Partners had requested that Aerojet send a similar letter instructing
    Computershare to accept a DWAC transfer of its shares in late January 2022 but was
    rebuffed.262
    2.     Whether a Civil Contempt Remedy Would Be Appropriate
    Irrespective of whether these actions technically violated the TRO, I decline
    to hold any of the defendants in civil contempt. “The remedy of civil contempt
    serves two purposes: to coerce compliance with the order being violated, and to
    remedy injury suffered by other parties as a result of the contumacious behavior.”263
    An aggrieved party must therefore show that relief would be coercive or remedial
    rather than punitive.264 This court has broad discretion to remedy violations of its
    order so long as doing so is “just and reasonable.”265
    It is difficult to see what coercive purpose could be served by granting the
    relief sought by the plaintiffs. In the context of similar orders, this court has
    explained that “[t]he only purpose for finding the defendants in contempt and
    Drake’s broker separately pursued the DRS method but it did not process until after the
    261
    nomination deadline had passed. JX 437 at 40-59.
    262
    JX 446 at 1, 5.
    263
    Aveta Inc. v. Bengoa, 
    986 A.2d 1166
    , 1181 (Del. Ch. 2009).
    See TR Invs., 
    2009 WL 4696062
    , at *15; Mitchell Lane Publ’rs, Inc. v. Rasemas, 2014
    
    264 WL 4804792
    , at *2 (Del. Ch. Sept. 26, 2014).
    265
    Gallagher v. Long, 
    940 A.2d 945
    , 
    2007 WL 3262150
    , at *2 (Del. 2007) (TABLE).
    63
    assessing a penalty [ ] would be to coerce them to obey the Order.”266 The remedies
    granted in this decision (including injunctive relief) provide appropriate protection
    against the risk of any future misuse of corporate resources pending the outcome of
    the election.267
    To hold the defendants in civil contempt would also not serve any remedial
    purpose. The only conduct that could support a finding that the TRO was violated
    concerns the Company’s assistance in the transferring Drake’s shares into record
    name.268 The sole cognizable harm to the plaintiffs is that Drake’s timely transfer
    of shares into record name gave her the ability to nominate a slate before the
    nomination deadline contained in the Order had expired. The TRO was never
    intended to act as a bar preventing the defendants from running a slate in the proxy
    contest. Had the defendants requested that the court grant a further extension of the
    deadline to do so as set forth in the Order, the court would have willingly
    entertained it.
    266
    Macrophage Therapeutics, Inc. v. Goldberg, 
    2021 WL 2585429
    , at *3 (Del. Ch. June
    23, 2021) (quoting Dickerson, 
    1991 WL 208467
    , at *4).
    267
    See, e.g., EDIX Media Gp. v. Mahani, 
    2006 WL 3742595
    , at *14 (Del. Ch. Dec. 12,
    2006) (explaining that damages awarded were “adequate recompense” for any harm
    suffered by the plaintiff and that additional penalties for alleged violation of a stipulated
    restraining order would be “inappropriate”).
    268
    See Mitchell Lane, 
    2014 WL 4804792
    , at *2 (considering whether an alleged violation
    of the court’s order was “part of a pattern of noncompliance that should be addressed by
    the Court”).
    64
    Finally, fee shifting would not be appropriate. The plaintiffs ask that the court
    award them all of the fees and expenses they incurred since the TRO was granted on
    February 15. Where an award of fees is sought as a sanction, this court “has broad
    discretion in determining the amount of fees to be awarded.”269 The conduct the
    plaintiffs say was contemptuous is hardly the cause of the post-TRO expenses the
    plaintiffs incurred—such as extensive discovery and a three-day trial. Awarding the
    plaintiffs their fees for the limited portions of their briefing and trial presentations
    focused on contempt would be an imprecise and unsuitable remedy.
    III.    CONCLUSION
    Judgment is for the plaintiffs on their claims for declaratory judgment. The
    plaintiffs are also entitled to certain additional equitable relief as described herein.
    The defendants’ affirmative defense is unsuccessful. Finally, I decline to make a
    finding of contempt.
    Corrective disclosures shall issue as described above by June 20, 2022. The
    parties shall also confer on and submit a proposed implementing order by June 20,
    2022.
    269
    Shawe v. Elting, 
    157 A.3d 142
    , 152 (Del. 2017); see Long, 
    2007 WL 3262150
    , at *2
    (“A trial judge has broad discretion on impose sanctions for failure to abide by its orders.”);
    In re TransPerfect Glob., Inc., 
    2019 WL 5260362
    , at *15 (Del. Ch. Oct. 17, 2019) (granting
    a sanction that included all legal fees “in connection with the prosecution of the contempt
    motion.”), aff’d in part, rev’d in part sub nom. TransPerfect, 
    2022 WL 1763204
     (Del.
    June 1, 2022).
    65