PUBLIC VERSION MEMORANDUM OPINION

PARSONS, Vice Chancellor.

Plaintiffs, Charles Underbrink and James Harrison, were directors of Warrior Energy Services Corp. ("Warrior") until April 19, 2006, when they stepped down in connection with a secondary public offering by Warrior (the "SPO"). Shortly before the SPO, on April 13, 2006, Warrior adopted amended and restated bylaws (the "2006 Bylaws"). Seven months after the SPO, Underbrink and Harrison, together with Warrior's other two pre-SPO directors, were sued in their capacity as directors of Warrior in a lawsuit that was already pending in Texas (the "Texas Proceeding").

The Texas Proceeding was initially filed in March 2005 by certain limited partners of two investments partnerships (the "St. James Partnerships") affiliated with Underbrink and Harrison. The St. James Partnerships' largest positions were in Warrior. After Harrison and Underbrink were sued in the Texas Proceeding in their capacity as Warrior directors, they sought advancement of their legal fees and expenses. Warrior, which had since been acquired by Superior Energy Services, Inc. ("Superior"), refused Underbrink's and Harrison's requests. Underbrink and Harrison then filed this action seeking an advancement of litigation expenses from Warrior pursuant to Section 145 of the Delaware General Corporation Law ("DGCL") and the 2006 Bylaws.

Warrior challenges the validity of the 2006 Bylaws in general, and in particular the provisions granting Underbrink and Harrison mandatory retroactive advancement rights, arguing they were improperly adopted by Warrior's Board of Directors (the "Warrior Board" or the "Board") through unanimous written consent and without adequate consideration, and are void because those provisions were the product of self-dealing and are not entirely fair to Warrior. For the reasons stated in this opinion, I find Underbrink and Harrison are entitled to advancement for the Warrior-related litigation expenses associated with the Texas Proceeding.

I. FACTUAL BACKGROUND

These are the facts as I find them after trial.

A. The Parties

Plaintiff Underbrink was elected as a director of Warrior on April 1, 1998. By letter dated April 18, 2006, he formally resigned as a director at 12:01 a.m. on April 19, 2006. Underbrink practiced business law and finance at Faegre Benson in Minneapolis, Minnesota for approximately five years, and then became involved in various business ventures. In the 1994-95 timeframe, he associated with a number of individuals to form the first of the St. James Partnerships.

Plaintiff Harrison became a director of Warrior on February 25, 2003. By letter dated April 18, 2006, he formally resigned as a director at 12:01 a.m. on April 19, 2006. Before joining the St. James General Partners in 1998, Harrison was a manager at Ernst Young LLP, where he had been employed as a CPA for eight years. Harrison served as the chief financial officer of the St. James General Partners during the events in question, and continues to work in that capacity.

Warrior, previously known as Black Warrior Wireline Corp., is a Delaware corporation with is principal place of business in Columbus, Mississippi. It is a natural gas and oil well services company that provides cased-hole wireline and well intervention services to gas and petroleum exploration and production companies. Before the SPO, Warrior had two other directors, William Jenkins and Robert McNally. During the relevant time period, Jenkins served as chief executive officer of Warrior and chairman of the Board. In January 2006, McNally joined Warrior as executive vice president of finance and operations, and also became a director. On September 22, 2006, Superior agreed to acquire Warrior; the merger was effected in December 2006. McNally and Jenkins ceased to be directors after the merger.

From June 1997 to February 1999, Warrior entered into a series of transactions where it sold convertible promissory notes and common stock purchase warrants to the St. James Partnerships. In December 1999 and February 2000, Warrior sold additional convertible promissory notes and common stock purchase warrants to one of the St. James Partnerships, among others. As of December 31, 2005, the St. James Partnerships, Underbrink, and certain of Underbrink's family trusts and investment vehicles owned 86.3% of the outstanding shares of Warrior's common stock on a fully-diluted basis.

B. The Texas Proceeding

In 2002, certain limited partners brought a lawsuit in the Circuit Court of Cook County (Chicago), Illinois against the St. James Partnerships, the St. James General Partners, Underbrink, and another principal officer of the general partners. Many of those same limited partners later filed an action in Texas against KPMG, the auditor of the St. James Partnerships (the "Prior Texas Proceeding"). The St James Partnerships, the St. James General Partners, Underbrink, Harrison, McNally, Jenkins, and Warrior were not named as defendants in the Prior Texas Proceeding. KPMG, however, named Underbrink and the St. James General Partners as responsible third parties in the Prior Texas Proceeding.

In December 2004, St. James limited partners Eugene Crist and Marc Werner filed the original petition in the Texas Proceeding. Initially, KPMG was the only defendant in the Texas Proceeding, which sought to recover the limited partners' losses in their investments in the St. James Partnerships. Underbrink understood from the plaintiffs' counsel that they had no intention of suing any of the St. James related parties because they were barred by the applicable statute of limitations.

On March 7, 2005, however, the Texas Proceeding plaintiffs filed a First Amended Petition and Answer (the "First Amended Petition"), which added Underbrink. Capital Partners, and Merchant Bankers as defendants. The claims against Underbrink related to St. James Partnerships investments he allegedly made in violation of the partnership agreements and to benefits he received through the St James Partnerships' investments in Warrior. The Texas Proceeding plaintiffs did not name Warrior and its directors, as directors of Warrior, as defendants until November 2006. Nevertheless, the allegations in the First Amended Petition related sufficiently to Warrior for Underbrink to REDACTED REDACTED The ultimate disclosure in Warrior's 10-K, however. contained It stated in pertinent part:

The St. James Partnerships, their general partners and [Underbrink] . . . were added as defendants in an amended complaint filed in March 2005 in Texas by two of the limited partners of the St. James Partnerships. . . . No claim has been asserted against the Company and the Company is not a defendant in the action. However, the complaint and the amended complaint in the action contain allegations that the Company participated with [Underbrink] in actions the plaintiffs allege were fraudulent and constituted securities violations. The Company has not concluded that it is probable that a claim will be asserted against it and does not believe that if a claim is asserted that there is a reasonable possibility that the outcome would be unfavorable to the Company or that any resulting liability would be material. . . . In the view of the Company, the allegations in the complaint and amended complaint relating to it to the extent those allegations relate to the Company or its participation in the activities alleged against the defendants are baseless, without factual foundation and untrue.

C Warrior Conducts the SPO

The respective roles the Warrior directors played in the SPO are at issue in this action. Warrior admits, "the [SPO] was an immense undertaking for a company with no in house counsel, no CFO with capital finance experience[,] and only three directors. . . ." Underbrink and Harrison took active roles in the SPO, and I find they provided valuable assistance to Warrior. Beginning in August 2005, Harrison helped negotiate and draft the recapitalization agreements, was involved in preparing the materials for the tender offer, contacted each of the warrant holders to explain the terms of the tender offer, attended drafting sessions for the S-1, was involved in litigation and due diligence associated with the contemporaneous acquisition of Bobcat Pressure Control Inc., and worked with the company's accountants to prepare financial statements relating to Bobcat. Underbrink also participated in much of the same activity.

Commencing in October 2005, Warrior (1) exchanged a portion of its outstanding warrants for shares of its common stock through an SEC registered tender offer; (2) completed a one-for-ten reverse stock split of shares of its common stock; and (3) entered into an agreement whereby the St. James Partnerships and the Underbrink family entities agreed to convert their convertible subordinated notes and accrued interest into shares of Warrior common stock, and sell those shares, their remaining warrants, and any other shares they owned to Warrior at the close of the SPO. Concurrently, at the suggestion of McNally (who was then employed by Warrior's financial advisor), Warrior retained counsel, Baker Botts LLP, to advise Warrior, direct the recapitalization effort, and "lead" the SPO.

On April 13, 2006, the Warrior Board, consisting of Underbrink, Harrison, McNally, and Jenkins, acting through unanimous written consent, approved a series of resolutions, including those necessary to effectuate the SPO. The Board contemporaneously adopted other resolutions, including the acceptance of Underbrink's and Harrison's resignations and the appointment of new directors (Gerald M. Hage, Robert L. Hollier, and John McNabb), all of which were to become effective on the first business day following the SPO. Most importantly for purposes of this litigation, the Board also adopted the 2006 Bylaws.

Warrior commenced the SPO on April 18, 2006. The proceeds of the fully-subscribed offering were used to repay Warrior's outstanding indebtedness, including the equity and debt interests held by the St. James Partnerships, Underbrink, and the Underbrink family entities. Thereafter, Harrison and Underbrink resigned from the Board effective April 19, 2006.

Despite the passage of more than a year since the filing of the First Amended Petition, the Texas Proceeding plaintiffs had not named Warrior or its directors as defendants. With the successful consummation of the SPO, the approximately $22 million invested in Warrior by the St. James Partnerships returned approximately $140 million to their limited partners. Based on the success of the SPO, Underbrink and Harrison considered the possibility of Warrior and its directors being named as defendants in the Texas Proceeding increasingly unlikely. With the SPO pricing at the high end of the Warrior Board's expectations, Underbrink and Harrison also believed the returns to the St James Partnerships might resolve the Texas Proceeding because the plaintiffs' damages would have been substantially reduced.

D. The 2006 Bylaws

The second set of corporate governance improvements related to Warrior's bylaws. On November 3,2005, Geddes, noting REDACTED REDACTED Because the SPO prospectus referenced the to-be-adopted 2006 Bylaws, the Warrior Board and its counsel REDACTED On April 13, 2006, Warrior's counsel circulated board resolutions for the adoption of the 2006 Bylaws by written consent. All four directors, Underbrink, Harrison, McNally, and Jenkins, signed and delivered their consents that same day. Thus, the 2006 Bylaws became effective on April 13, 2006.

E. The Texas Proceeding plaintiffs add Warrior and its Directors as defendants

On December 12, 2006, the merger closed and Warrior became a wholly-owned subsidiary of Superior. After the Seventh Amended Petition was filed, but before the consummation of the merger, representatives of Warrior discussed with representatives of Superior the implications of the Seventh Amended Petition. Therefore, Superior had notice Warrior and its directors were defendants in the Texas Proceeding, and had full knowledge of Warrior's indemnification and advancement obligations under the 2006 Bylaws.

On January 3 and 5, 2007, Underbrink and Harrison, respectively, sent letters to Warrior's CFO and Secretary, Ron Whitter, requesting advancement of their expenses, including attorneys' fees, incurred in the Texas Proceeding. More than three months later, Warrior denied those requests.

On May 4, 2007, Underbrink provided Warrior a written undertaking to:

[R]eimburse [Warrior] for all Expenses (as defined in Section 16 of the Bylaws, including advances) paid by [Warrior] on my behalf if (a) it is determined pursuant to Article V or by final judgment that I am not entitled to be indemnified by [Warrior]; and (b) all appellate remedies related to that determination or final judgment have expired or been exhausted.

On May 16, 2007, Harrison submitted a similar written undertaking. On May 22, 2007, Warrior again denied Plaintiffs' requests for advancement. Two days later, Underbrink and Harrison filed their Verified Complaint ("Complaint") in this action. In contrast to its treatment of Underbrink and Harrison, Superior (through Warrior) began advancing the legal fees and expenses of Warrior directors Jenkins and McNally for the Texas Litigation by July 2007 at the latest.

F. Current Claims of the Texas Proceeding

G. Procedural History of this Action

H. Parties' Contentions

Underbrink and Harrison contend Warrior has breached its obligation to provide them mandatory advancement under the 2006 Bylaws. In that respect, they seek to recover the expenses incurred by them to date in connection with the Texas Proceeding, including costs and attorneys' fees, as well as pre-judgment and post-judgment interest. Underbrink and Harrison further seek an order requiring Warrior to pay them the full amount of all expenses they reasonably incur in connection with the Texas Proceeding from the date of this Court's judgment until the entry of final and complete judgment in the Texas Proceeding. In addition, Plaintiffs also ask for an award of their expenses (including costs and attorneys' fees) in prosecuting this action.

Warrior denies Underbrink and Harrison are entitled to any relief, and contends the 2006 Bylaws are invalid. In the alternative, Warrior argues Underbrink and Harrison's requested recovery, including their attorneys' fees and expenses in prosecuting this action, "should be limited because many of the claims in the Texas Proceeding have nothing to do with Plaintiffs' status as former directors of Warrior. "

II. ANALYSIS A. Advancement

"A company's bylaws are contractual in nature." Thus, "indemnification is a right conferred by contract, under statutory auspice." Section 145 of the DGCL provides the statutory framework for when and how a corporation may provide advancement to an officer, director, employee, or agent of the corporation. "[T]he indemnification statute should be broadly interpreted to further the goals it was enacted to achieve," which are to "promote the desirable end that corporate officials will resist what they consider unjustified suits and claims, secure in the knowledge that their reasonable expenses will be borne by the corporation they have served if they are vindicated," and "encourage capable [persons] to serve as corporate directors, secure in the knowledge that expenses incurred by them in upholding their honesty and integrity as directors will be borne by the corporation they serve"

Courts use the tools of contract interpretation when construing bylaw provisions relating to indemnification and advancement. In that context, Delaware courts "simultaneously apply the patina of section 145's policy." As discussed in the next part, Warrior's bylaws state it shall advance expenses "to the fullest extent permitted by law." Therefore, to the extent the 2006 Bylaws are valid, the plain terms of those bylaws provide for mandatory advancement to the broadest extent possible under Delaware law.

B. Warrior's Advancement Provisions Provide for Mandatory Advancement

Because Warrior's mandatory advancement provision references proceedings where directors may seek indemnification, I begin with Warrior's indemnification provision. Under Article V, Section 1 of the 2006 Bylaws:

The Corporation shall, to the fullest extent permitted by applicable law in effect on the date of effectiveness of these Bylaws, and to such greater extent as applicable law may thereafter permit, indemnify and hold the Indemnitee harmless from and against any and all losses, liabilities, claims, damages and, subject to Article V, Section 2 (Expenses), Expenses . . . arising out of any event or occurrence related to the fact that the Indemnitee is or was a director or Officer of the Corporation . . . and such indemnification shall continue as to an Indemnitee who has ceased to be a director, Officer, employee or agent. . . .

The 2006 Bylaws define "Indemnitee" as including "any . . . director of the Corporation who is, or is threatened to be made, a witness in or a party to any Proceeding by reason of his Corporate Status whether the basis of such proceeding is alleged action in an official capacity as such [a] . . . director or in any other capacity while serving as such a . . . director."

Thus, a director is entitled to indemnification in any action or proceeding brought "by reason of his Corporate Status" "arising out of any event or occurrence related to the fact [he] is or was a director." That language is consistent with the statutory language contained in 8 Del. C. § 145(a), which authorizes indemnification when a person is made or threatened to be made a party to an action or proceeding "by reason of the fact" that the person is or was a director. The "by reason of the fact" standard, or the "official capacity" standard, is interpreted broadly and in favor of indemnification and advancement.

Within that context, Warrior's mandatory advancement provision states in its entirety:

In the event of any threatened or pending Proceeding in which the Indemnitee is a party or is involved and that may give rise to a right of indemnification under this Article V, following written request to the Corporation by the Indemnitee, the Corporation shall promptly pay to the Indemnitee amounts to cover Expenses reasonably incurred by Indemnitee in such Proceeding in advance of its final disposition upon the receipt by the Corporation of (i) a written undertaking executed by or on behalf of the Indemnitee providing that the Indemnitee will repay the advance if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as provided in these Bylaws and (ii) satisfactory evidence as to the amount of such Expenses.

Thus, the 2006 Bylaws mandate advancement of expenses incurred in any proceeding that may give rise to a right to indemnification.

C. Are the Advancement Bylaws Valid?

1. Were the 2006 Bylaws properly adopted by the Warrior Board through unanimous written consent?

Warrior contends the 2006 Bylaws were not properly adopted because the pre-merger Warrior Board enacted them by written consent, instead of at a meeting. Plaintiffs reply that Section 141(f) of the DGCL permitted the 2006 Board to amend the Bylaws by unanimous written consent.

Once a corporation has received payment for its stock, its bylaws may be amended only by stockholders unless the power to amend also is conferred upon the board through the corporation's certificate of incorporation. Warrior interprets Article IX of its 1992 Bylaws, which states that "The Board of Directors shall have the power to adopt, alter and repeal the By-Laws of the Corporation at any regular or special meeting of the Board . . ., " as precluding the Board from amending the bylaws by any means other than a meeting. For that assertion, Warrior cites Moon v. Moon Motor Car Co., which held bylaws adopted at a special meeting were invalid when directors had power only to make amendments at a regular meeting. Moon, however, was decided before the adoption of 8 Del. C. § 141(f) in 1967, which allows directors to take action through unanimous written consent. Thus, the decision in Moon does not preclude the Warrior Board from amending its bylaws by unanimous written consent, provided it may do so consistently with Section 141(f).

Warrior's next argument, seemingly in the alternative, focuses on the language in Section 141(f) limiting board action by unanimous written consent if the ability to take such action is "otherwise restricted by the certificate of incorporation or bylaws." Warrior contends Article IX's affirmative grant of power to the Board to amend the 1992 Bylaws in a regular or special meeting is also, implicitly, a restriction on its ability to effect such an amendment through written consent. Warrior cites no precedent for this assertion, and the Court is not aware of any. Warrior's interpretation effectively would require a bylaw that expressly authorizes amendment of the bylaws by written consent before the board could proceed in that manner.

Warrior's challenge to the validity of the Board's adoption of the 2006 Bylaws by written consent lacks merit because it does not comport with a fair reading of the Bylaws or with the policy underlying Section 141(f). Despite its incantation of several well-recognized principles of contract interpretation, Warrior's interpretation of the 1992 bylaws as restricting the ability of the Board to amend the 2006 Bylaws by unanimous written consent is flawed and unpersuasive. Among other things, Warrior relies on the principle that specific language in a contract should control over general language. The general language Warrior refers to appears in Section 141(f) of the DGCL and Article III, § 6 of Warrior's 1992 bylaws, both of which authorize the Board to act by unanimous written consent. The specific language appears in Article IX of the 1992 bylaws, which empowers the board to make amendments to the bylaws "at any regular or special meeting of the Board, subject to the power of the stockholders to alter or repeal any By-law adopted or altered by the Board of Directors."

The language from Article IX that Warrior relies on may be sufficient to require the Board to make any amendment to the bylaws at a meeting, but it does not restrict the Board's ability under Article III, § 6 and Section 141(f) to take such action by unanimous written consent Section 141(f) provides in pertinent part: "Unless otherwise restricted by the certificate of incorporation or bylaws, any action required or permitted to be taken at any meeting of the board of directors . . . may be taken without a meeting if all members of the board . . . consent thereto in writing . . . Viewing Articles III and IX of the 1992 Bylaws together in the context of Section 141(f), the Board would be precluded from amending the Bylaws by written consent only if such action was "otherwise restricted by the certificate of incorporation or the bylaws." No one argues the certificate imposes such a restriction. Thus, the issue is whether the Bylaws restrict the Board from effecting a bylaw amendment by unanimous written consent.

I find nothing in the Warrior Bylaws that reasonably could be read as "otherwise restricting" the power of the Board to amend the bylaws by unanimous written consent. Section 141(f) explicitly provides that, absent such a restriction, the mere fact that the bylaws might require a board to take an action at a meeting does not preclude the board from taking the same action by unanimous written consent. At most, Article IX imposes such a requirement. Further, Warrior's interpretation of Article IX of the 1992 Bylaws as precluding Warrior's directors from amending the Company's bylaws by unanimous written consent would undermine the policy behind Section 141(f). In enacting that statute, the Legislature recognized that "meetings should be required except where the decision is so clear that the vote is unanimous and in writing." Thus, I find the Warrior Board validly amended the 1992 and 1998 bylaws through unanimous written consent, and that the Board did not need to a hold a meeting to adopt the 2006 Bylaws.

Warrior has conceded that should this Court find the Board could act through unanimous written consent

then the only portion of the Bylaws which Warrior seeks to have declared invalid is any provision or reading of Article V which makes or purports to make the Bylaws retroactive and/or makes or purports to make advancement mandatory with respect to acts which occurred prior to the adoption of the Bylaws.

I next address these aspects of Warrior's challenge to the validity of the 2006 Bylaws.

2. Did Warrior receive consideration for the 2006 Bylaws?

Warrior contends "Plaintiffs cannot obtain advancement for their pre-April 13, 2006 conduct because Warrior did not receive any consideration in exchange for agreeing to provide retroactive mandatory advancement." Warrior failed to cite any precedent in which a court invalidated a board-approved bylaw providing for retroactive mandatory advancement, or any bylaw for that matter, for lack of consideration.

Warrior contends there was no consideration because Harrison and Underbrink approved no actions as directors at the time of or after passage of the 2006 Bylaws, which granted them mandatory retroactive advancement rights. Thus, according to Warrior, it "received no continued service from Plaintiffs following the adoption of the Bylaws." The Bylaws were amended on April 13, 2006; Underbrink and Harrison stepped down as directors on April 19, 2006. Thus, even assuming consideration was necessary for the passage of the mandatory advancement provision, Warrior received five additional days of service as consideration. The fact that Underbrink and Harrison only agreed to serve for a few additional days is irrelevant. "Absent fraud or unconscionability, the adequacy of consideration is not a proper subject for judicial scrutiny."

Furthermore, while the Warrior Board did not approve any transactions between the passage of the 2006 Bylaws and Plaintiffs' resignations, many of the necessary components for the SPO were approved simultaneously with the approval of the 2006 Bylaws on April 13, 2006. Moreover, after they approved the 2006 Bylaws, both Harrison and Underbrink signed Warrior's S-1 registration statement with the SEC on April 14, 2006.

Thus, even assuming arguendo that, in the circumstances of this case, consideration was required to support the Board's amendment of Warrior's bylaws to provide for mandatory retroactive advancement rights, I find Warrior failed to meet its burden to show the challenged amendment lacked sufficient consideration. I therefore reject this aspect of Warrior's argument.

3. Are Warrior's mandatory advancement provisions subject to entire fairness review?

As part of its counterclaim, Warrior contends the 2006 Bylaws are void ab initio because their adoption was a breach of Underbrink's and Harrison's fiduciary duties to Warrior and its shareholders. Warrior contends that Underbrink and Harrison were interested in the passage of the 2006 Bylaws because they benefited directly from the mandatory advancement provision, and that the Bylaws were not fair to Warrior.

"The power to make and amend the bylaws of a corporation has long been recognized as an inherent feature of the corporate structure." "[B]ylaw amendments are presumed to be valid unless they are unreasonable. " As with any other action taken by a board of directors, the Warrior Board had to exercise its fiduciary duties of care and loyalty when it approved the mandatory retroactive advancement provision as part of the 2006 Bylaws.

a. The Business Judgment Rule

The burden is on the party challenging the decision to establish facts rebutting the presumption. Generally, that party must allege sufficient facts from which the court could reasonably infer (1) a majority of the individual directors were interested or beholden or (2) the challenged transaction was not otherwise the product of a valid exercise of business judgment. If a plaintiff fails to rebut the business judgment rule, "a court will not substitute its judgment for that of the board if the latter's decision can be `attributed to any rational business purpose.'"

b. Should the Board's passage of the 2006 Bylaws be subject to entire fairness review?

In Orloff v. Shulman, the plaintiffs alleged "the defendants approved [a mandatory advancement bylaw and a § 102(b)(7) charter provision] under the threat of imminent litigation, and breached their fiduciary duties by self-interestedly protecting themselves against litigation that they knew would soon name them as defendants." With respect to the mandatory advancement bylaw, the court held the plaintiffs pled "no facts which suggest that the bylaw amendment at issue is unreasonable in this case. Therefore, it is not subject to further scrutiny by this court." Citing Havens v. Attar, the court limited its holding, however, to situations in which "plaintiffs challenge the adoption of a bylaw that requires the corporation to advance litigation costs sometime in the future rather than challenging the directors' decision to advance particular litigation expenses."

In Havens, the plaintiffs argued the defendant directors breached their duties of care and loyalty in advancing litigation expenses in the absence of a mandatory advancement provision. The court first noted "a board's decision to accept an undertaking and to advance expenses is left to the business judgment of the board in the absence of a by-law specifically providing for mandatory advancement." In the context of advancing particular litigation expenses, and on a preliminary injunction record, the court found plaintiffs likely would succeed in rebutting the presumption of the business judgment rule because the defendant directors "fail[ed] to consider the potential magnitude of expenses or damages or the ability of the defendant directors to repay any funds ultimately advanced." In fact, the defendant directors failed to present evidence "rebutting plaintiffs' claim that the defendant directors failed to obtain or consider any information pertaining to [that] decision. . . ."

The issue presented in this case is whether Orloff or Havens is more apposite in determining the appropriate standard of review to apply to the Board's adoption of the mandatory retroactive advancement provision. In Orloff, the court held the adoption of such a provision even in the face of an imminent threat of litigation is subject to deferential business judgment review. The court in Havens subjected a decision to provide advancement in the absence of a mandatory advancement bylaw to entire fairness review based upon the plaintiff's showing that the decision was not the product of a valid exercise of business judgment. The facts of this case more closely resemble the situation in Orloff; I therefore hold that Orloff provides the applicable standard.

Warrior points to no less than fifteen different factual findings that, it contends, indicate Underbrink and Harrison "knew that they were being targeted as directors of Warrior." None of those proposed factual findings, however, show Underbrink and Harrison faced something more than an "imminent threat of litigation" for actions taken by them as Warrior directors ( e.g., they were not named defendants in the Texas Proceeding) such that the Board, when it enacted the 2006 Bylaws, was in fact advancing litigation expenses for a particular proceeding.

Rather than review all of the factual findings Warrior would rely on, I briefly discuss Warrior's strongest contentions. Citing the original petition in the Texas Proceeding, Warrior contends "every petition filed in the [Texas Proceeding] before the [2006] Bylaws were adopted identified Warrior directors by name and alleged that they breached their fiduciary duties as directors of Warrior." While true, those allegations do not create more than an imminent threat of litigation. Warrior also cites REDACTED Underbrink's statement does not imply Warrior, or Underbrink for that matter, was then the target of a particular litigation, but instead suggests, at most, he was subject to an imminent threat of litigation.

Unrelated to the Texas Proceeding, Warrior contends a stockholder demand by the Bendover Corporation also rendered the Directors interested. Beginning on November 17, 2005, Bendover submitted a series, ultimately totaling eighteen, of document requests, some of which related to the SPO, Plaintiffs, and Warrior's relationship with the St. James Partnerships. Thereafter, on March 14, 2006, Bendover made a demand upon the Warrior Board that it take a number of corrective actions (the "Bendover Demand") and threatened to bring a shareholder's derivative suit if corrective action was not taken. The Bendover Demand alleged, among other things, that Underbrink. Jenkins, and Harrison breached their fiduciary duties to Warrior. I find, however, the Bendover Demand was nothing more than an imminent threat of litigation. Warrior has only demonstrated that "Bendover was threatening to suc."

Thus, as in Orloff, I find Warrior is "challeng[ing] the adoption of a bylaw that requires the corporation to advance litigation costs sometime in the future rather than challenging the directors' decision to advance particular litigation expenses." Under Orloff, Warrior's mandatory advancement provision would be valid unless it was "unreasonable." Warrior has not shown any basis for me to conclude the passage of the 2006 Bylaws, relating to mandatory retroactive advancement, would not be fair to the corporation in the circumstances of this case. The mandatory advancement provision was passed as part of updating Warrior's bylaws in preparation for the SPO; REDACTED and there is no suggestion the provision is otherwise unreasonable.

The adoption of the 2006 Bylaws regarding mandatory advancement is therefore subject to deferential business judgment review. On that basis, I find the 2006 Bylaws to have been properly adopted and the retroactive mandatory advancement provisions at issue to be valid.

D. The Sufficiency of Underbrink's and Harrison's Undertakings

Where a bylaw clearly creates a right to mandatory advancement, the right is enforceable upon satisfaction of the prerequisites, including the appropriate form of undertaking as specified in the bylaws. Under the 2006 Bylaws. Underbrink and Harrison must provide "a written undertaking executed by or on behalf of the Indemnitee providing that the Indemnitee will repay the advance if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as provided in these Bylaws." In addition, Article V, Section 4 of the 2006 Bylaws provides:

Repayment of Advances or Other Expenses. The Indemnitee agrees that the Indemnitee shall reimburse the Corporation for all Expenses paid by the Corporation in defending any Proceeding against the Indemnitee in the event and only to the extent that it shall be determined pursuant to the provisions of this Article V or by final judgment or other final adjudication under the provisions of any applicable law that the Indemnitee is not entitled to be indemnified by the Corporation for such Expenses

Warrior contends Underbrink's and Harrison's undertakings failed to comply with the 2006 Bylaws because they include the limitation that Plaintiffs will not repay amounts advanced until "all appellate remedies related to [a determination that he is not entitled to indemnification] have expired or been exhausted." Warrior argues the 2006 Bylaws "do not give Plaintiffs the right to exhaust all appellate remedies before they have to repay amounts improperly advanced nor do they allow Plaintiffs to modify, limit or restrict the circumstances under which Plaintiffs will repay improper advances." Underbrink and Harrison disagree, contending the 2006 Bylaws authorize advancement until a "final disposition" of the proceeding.

Warrior's mandatory advancement provision states Warrior " shall promptly pay to the Indemnitee amounts to cover Expenses reasonably incurred by Indemnitee in such Proceeding in advance of its final disposition upon the receipt" of an undertaking and proof of expense. Thus, Warrior's mandatory advancement provision requires advancement of eligible expenses up until the time of "final disposition." The parties dispute the meaning of "final disposition." The phrase is found both in Section 145 and in the relevant provisions of the 2006 Bylaws, but is otherwise undefined. Warrior contends "final disposition" should be read as meaning "final judgment" in the sense of a trial court's issuance of an order clearly defining the parties' rights and leaving nothing for future determination. Warrior, however, cites no precedent or evidence for reading "final disposition" to mean "final judgment."

Although Section 3 of Article V of the 2006 Bylaws refers to "final disposition" as the point up to which Underbrink and Harrison could receive advancement, Section 4 refers to a "final judgment or other final adjudication that the Indemnitee is not entitled to be indemnified as an event which would trigger an obligation of the Indemnitee." The differences between this language and the reference to an "ultimate determin[ation]" in the portion of Article V, Section 3 relating to the undertaking raise potentially interesting issues regarding when exactly an Indemnitee's obligation to repay an advance under Warrior's bylaws arises. For purposes of this opinion, however, I need not resolve all of those issues. The question before me is much narrower — i.e., whether the form of the undertakings Underbrink and Harrison submitted to Warrior in May 2007, and to which Warrior did not object in any meaningful way until August 2007, are deficient and provide a basis for denial of their requests for advancement. I hold they are not and that Warrior's defense based on the form of the undertaking lacks merit

I find the construction of Sections 3 and 4 of Article V of the 2006 Bylaws implicit in Plaintiffs' undertaking to be that the ultimate determination of whether they are entitled to be indemnified by Warrior does not occur until "all appellate remedies related to [that determination if it goes against them] have expired or been exhausted." I further find that construction to be at least colorable and that Plaintiffs' undertaking reflects an intent on their part to defer their obligation to repay any amounts advanced to them to the latest time permitted under Article V. In the words of Section 4, that would be until such time as it would "be determined pursuant to the provision of Article V or by final judgment or other final adjudication under the provisions of any applicable law that [they are] not entitled to be indemnified by the Corporation for such Expenses."

Further, because Warrior did not object to the form of Underbrink's and Harrison's undertakings contemporaneously with its initial denial of their request for advancement and did not specify, even generally, the basis for their later objection until August 2007, shortly before trial, I reject Warrior's argument that Plaintiffs should be denied advancement for lack of a proper undertaking. Instead, I hold that Plaintiffs' undertaking is sufficient, but that it merely preserves their right to defer any required repayment to the full extent authorized by Article V of the 2006 Bylaws. At this point, I need not decide the precise extent of those rights in terms of the impact on the timing of their repayment obligation of any appeal from a determination that Plaintiffs are not entitled to indemnification. If a concrete dispute on that issue arises at some future time and the Bylaws properly are held to require repayment before the exhaustion of all appeals, Plaintiffs will be obligated by the Bylaws and their undertaking, as I have construed it, to abide by that ruling.

E. For Which Claims in the Texas Proceeding May Underbrink and Harrison Receive Advancement?

Underbrink and Harrison's right to receive the costs of their defense in advance does not depend upon the merits of the claims asserted against them. Instead, the terms of Article V of the 2006 Bylaws control. Section 1 of Warrior's indemnification article explicitly states Warrior "shall . . . indemnify . . . the Indemnitee . . . from and against any . . . claims . . . arising out of any event or occurrence related to the fact that the Indemnitee is or was a director of . . . [Warrior]. . . ." Section 3 goes on to mandate advancement for all reasonable expenses incurred in any such proceeding in advance of its final disposition.

1. Are some of Underbrink's and Harrison's claims for advancement moot now that those claims have been dismissed in the Texas Proceeding?

Warrior overstates the ruling in Haseotes. The plaintiff in that case sought advancement for two claims and indemnification for another. In determining the plaintiff was not entitled to advancement of a tax claim, the Court considered the equities of allowing advancement when the plaintiff waited eight months before demanding advancement, the claim had been adjudicated, and the claim ultimately may not have been indemnifiable. In the same ruling, however, then Vice Chancellor, now Justice Jacobs also awarded advancement on a different claim that already had proceeded to judgment, and for which there was no equitable or other basis to decline advancement.

In contrast to the tax claim in Haseotes, Warrior points to nothing in the record here indicating that either Harrison or Underbrink proceeded with their advancement claim in a dilatory or otherwise inequitable fashion. Rather, shortly after being named as defendants in their capacity as Warrior directors in the Seventh Amended Petition in the Texas Proceeding, Plaintiffs formally requested advancement of their litigation expenses. Furthermore, Harrison and Underbrink have been successful at least in part in the underlying litigation; this is not a situation where a director is seeking advancement of expenses for litigation which he has lost.

Advancement actions are meant to be summary proceedings. Although Warrior's defenses and counterclaim are colorable, were I now to deny Harrison and Underbrink's advancement request because of their success in the underlying litigation, I effectively would reward Warrior for pressing its counterclaim and other defenses, which have drawn out this advancement action. It would be inequitable to deny advancement to Harrison and Underbrink because they ultimately succeeded in portions of the Texas Proceeding shortly before the conclusion of this advancement action. This is especially true when the prolonged nature of this action is due, in part, to Warrior's, and not Plaintiffs', litigation strategy.

2. Are Underbrink and Harrison entitled to advancement for all of their expenses incurred in the Texas Proceeding after the Seventh Amended Petition?

Underbrink and Harrison request "their fees and expenses incurred after the Seventh Amended Petition was filed." Their request encompasses not only defending those claims and allegations against them by reason of their corporate status as directors of Warrior, but also those claims related solely to their positions within the St. James Partnerships.

As discussed earlier, under the 2006 Bylaws, a director is entitled to indemnification in any action or proceeding brought "by reason of his Corporate Status" "arising out of any event or occurrence related to the fact [he] is or was a director." The 2006 Bylaws mandate advancement of expenses incurred in any proceeding that may give rise to a right to indemnification. Underbrink and Harrison contend they ought to be advanced all of their expenses in defending themselves in the Texas Proceeding, even those incurred by them in defending claims which are not made by reason of their status as Warrior directors. Warrior replies that the advancement of expenses for defending claims unrelated to Plaintiffs' status as directors would be unreasonable. I agree.

Under both 8 Del. C. § 145 and the 2006 Bylaws Article V, §§ 2-3 Warrior's obligation to advance expenses is subject to a reasonableness requirement. A claim not "arising out of any event or occurrence related to the fact [the claimant] is or was a director" would not qualify for indemnification under Article V, § 1. In seeking advancement for expenses related to the defense of claims not brought by reason of the fact they were directors of Warrior, Plaintiffs are asking for advancement of expenses for which indemnification is not possible. I find such a request unreasonable under the terms of the 2006 Bylaws. Underbrink and Harrison are only entitled to advancement of expenses incurred in defending against claims brought "by reason of [their] Corporate Status" with Warrior and "arising out of any event or occurrence related to the fact [each of them] is or was a director."

3. For which expenses are Underbrink and Harrison entitled to receive advancement ?

The parties dispute which claims are subject to advancement For purposes of implementing the ruling in the previous Part a guiding principle is that "if there is a nexus or causal connection between any of the underlying proceedings . . . and one's official corporate capacity, those proceedings are `by reason of the fact' that one was a corporate officer, without regard to one's motivation for engaging in that conduct." "This connection is established if the corporate powers were used or necessary for the commission of the alleged misconduct." "Further, the requisite nexus can be established even if the cause of action does not specify a claim of breach of fiduciary duty owed to the corporation."

At this point, however, the record is not sufficiently developed to enable the Court to examine the individual claims as they have evolved since the Seventh Amended Petition to determine which claims and expenses, at which time, relate to Underbrink's and Harrison's status as directors of Warrior. Moreover, "the function of a § 145(k) advancement case is not to inject this court as a monthly monitor of the precision and integrity of advancement requests." Delaware courts "will not perform the task of playground monitor, refereeing needless and inefficient skirmishes in the sandbox." "[A] balance of fairness and efficiency concerns would seem to counsel deferring fights about details until a final indemnification proceeding."

In addition to disputing which claims are subject to advancement, the parties also dispute which expenses are subject to advancement. As I understand them, Underbrink and Harrison contend all expenses incurred in defending against Warrior-related claims are subject to advancement, while Warrior contends only Warrior-related issues are subject to advancement. Under the 2006 Bylaws, expenses not "arising out of any event or occurrence related to the fact the claimant is or was a director" are not subject to advancement. Conversely, if some, but not all, of the conduct underlying a claim relates to the fact Underbrink or Harrison was a director of Warrior, advancement for expenses associated with defending that aspect of the claim would be appropriate.

With that guidance in mind, Underbrink and Harrison "shall submit a good faith estimate of expenses incurred to date to address the precise allegations that trigger [their] advancement right." Some level of imprecision is inherent in the retrospective application of this task. In "order to ensure the integrity of this process, [Plaintiffs'] attorneys shall provide a sworn affidavit certifying their good faith, informed belief that the identified litigation expenses relate solely to defense activity to address those allegations for which [Plaintiffs are] owed advancement." Plaintiffs shall follow the same procedures for any future expenses for which they seek advancement.

F. Underbrink and Harrison are Entitled to Their Reasonable Attorneys' Fees

Underbrink and Harrison seek their attorneys' fees for prosecuting this advancement action. They cite well-settled Delaware precedent supporting the award of such fees, as well as the 2006 Bylaws which mandate an award of fees in the event of successful litigation in pursuit of advancement rights."

As the Supreme Court noted in Stifel Financial Corp. v. Cochran, "indemnification for expenses incurred in successfully prosecuting an indemnification suit is permissible under § 145(a), and therefore `authorized by law.'" The Court held that when a corporation's bylaws provide for indemnification "to the fullest extent permitted by law" that corporation must indemnify a director for his "fees on fees" in pursuing an action to vindicate his indemnification rights.

Allowing indemnification for the expenses incurred by a director in pursuing his indemnification rights gives recognition to the reality that the corporation itself is responsible for putting the director through the process of litigation. Further, giving full effect to § 145 prevents a corporation from using its "deep pockets" to wear down a former director, with a valid claim to indemnification, through expensive litigation. Finally, corporations will not be unduly punished by this result. They remain free to tailor their indemnification bylaws to exclude "fees on fees," if that is a desirable goal.

The same policy considerations justifying allowance of fees on fees for indemnification equally support an award of fees for the successful prosecution of advancement claims as well.

Moreover, Article V, Section 10 of the 2006 Bylaws provides Underbrink and Harrison with a contractual right to their attorneys' fees. Section 10 provides that directors can recover all of their reasonable attorneys' fees if they are at least partially successful in prosecuting an action for advancement, as Plaintiffs here have been. The parties disagree, however, as to whether Underbrink and Harrison may recover all of their fees in litigating this action, or only a proportional amount based on the degree to which they have succeeded.

"Both [DGCL] § 145 and bylaw provisions like that adopted by [Warrior] are subject to an implied reasonableness requirement." Indeed, Section 10's mandate of an award of Underbrink and Harrison's attorneys' fees is explicitly limited to those "reasonably incurred by [them] in such judicial adjudication." Consistent with the holding in Fasciana II, I conclude based on the reasonableness requirement in Section 10, as well as Cochran's admonition that awards of fees on fees are conditioned on the successful prosecution of an underlying § 145 action, that Underbrink and Harrison should only be entitled to advancement of those expenses reasonably proportionate to the level of success they achieved in this action.

This advancement action has focused on Warrior's defenses and counterclaim, and for the most part has not involved a substantive dispute as to which claims or expenses are properly subject to advancement. The vast majority of the litigation involved Warrior's effort to avoid payment of its advancement obligation altogether. In that regard, Plaintiffs have been overwhelmingly successful. The only material point on which Warrior prevailed was that Plaintiffs are not entitled, in the abstract, to advancement on all expenses they have incurred in the Texas Proceeding since the filing of the Seventh Amended Petition. On the limited record before me, I cannot say to what extent Plaintiffs will be entitled to advancement as to expenses they have incurred or will incur in the Texas Proceeding. The range of possible outcomes is broad, and will have to await Plaintiffs' submissions of their requests for advancement of specific expenses. The reasonableness of the positions the parties take as to those requests may well affect their future ability to obtain fees on fees, if the requests engender further litigation. With respect to the adjudication of this action to date, however, I hold Plaintiffs are entitled to recover all of the attorneys' fees and expenses they actually and reasonably incurred in this "judicial adjudication."

G. Pre-judgment and Post-judgment Interest

"In Delaware, prejudgment interest is awarded as a matter of right. Such interest is to be computed from the date payment is due." "The purpose of prejudgment interest is to compensate plaintiffs for losses suffered from the inability to use the money awarded during the time it was not available."` A party seeking advancement is entitled to interest from the date on which the party "specified the amount of reimbursement demanded and produced his written promise to pay."

In Citrin v. International Airport Centers LLC, the court distinguished between expenses incurred before the plaintiff's first demand, and those incurred after the demand. The court granted pre-judgment interest on those expenses incurred before demand as of the date of demand because the sums became final on that date, and granted interest on those expenses incurred later from the date they were paid. Using the same rationale, I grant Underbrink and Harrison's request for pre-judgment interest on those expenses properly subject to advancement, compounded quarterly¹⁷³ at the legal rate under 6 Del. C. § 2301(a).¹⁷⁴ For those expenses subject to advancement, but incurred before the date of Plaintiffs' undertakings, pre-judgment interest shall run from the date of their respective undertakings;¹⁷⁵ those expenses subject to advancement incurred after the undertakings will accrue pre-judgment interest from the date they were paid.

Delaware courts routinely grant post-judgment interest in advancement cases.¹⁷⁶ Because Warrior has made no persuasive showing otherwise, I grant post-judgment interest on the full amount of the judgment, including that part comprised of pre-judgment interest,¹⁷⁷ compounded quarterly at the legal rate under 6 Del. C. § 2301(a).

III. CONCLUSION

For the reasons set forth in this opinion, Underbrink's and Harrison's requests for advancement of their reasonable litigation expenses in connection with the Texas Proceeding is granted. Warrior's counterclaim for breach of fiduciary duty is dismissed with prejudice. Underbrink and Harrison's request for their attorneys' fees and expenses in the prosecution of this action also is granted, as is their request for pre-and post-judgment interest.

Plaintiffs shall submit a detailed request for attorneys' fees and expenses, together with any supporting materials, within ten (10) days from the date of this opinion. Warrior shall file any opposition to that request within ten (10) days after receipt of it. Plaintiffs shall circulate a proposed form of order and final judgment to opposing counsel for review, and the parties shall file a joint or, if necessary, separate proposed forms of order and final judgment within twenty (20) days of the date of this opinion.

JX 10 (Email from Geddes to Underbrink and Harrison, Nov. 3, 2005).

See Geddes Dep. at 26-27, 29-30.

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