Exhibit 99.1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
In re QUANTUMSCAPE CORP. )
) C.A. No. 2023- -
VERIFIED PETITION FOR RELIEF PURSUANT TO 8 DEL. C. § 205
Petitioner QuantumScape Corporation (the “Company”), by and through its undersigned counsel, petitions the Court pursuant to 8 Del. C. § 205 as follows:
NATURE OF THE ACTION
thereon at the Special Meeting, voting as a single class (the “Voting Standard”). The Company’s stockholders also voted to approve the Transaction.
stock in connection with a de-SPAC transaction, and sought approval of its common stockholders voting as a single class, similar to the Voting Standard. The Boxed plaintiff made a demand on Boxed, contending that under Section 242(b) of the DGCL, Boxed’s Class A and Class B common stockholders were required to approve the proposed amendment voting as separate classes. Boxed acceded to the demand and altered the approval standard for the proposed amendment. The plaintiff then moved for an award of a mootness fee. The parties joined issue on whether the plaintiff’s demand had been meritorious—that is, whether a separate class vote was required—or whether the Class A Common Stock and Class B Common Stock were instead series within a single class of stock. The Court held for the plaintiff, concluding that a separate class vote was required because (i) Boxed’s charter used the word “class,” rather than “series,” to describe the Class A shares; (ii) Boxed’s charter authorized three classes of stock (Class A, Class B, and Preferred), fixing the number of shares and par value of each, as permitted by Section 102(a)(4) of the DGCL; and (iii) the charter allowed the board to provide for series of preferred stock by resolution but did not include any board authority to similarly fix series of common stock.
Stock and Class B Common Stock were separate classes of stock and that the Charter Amendments were unauthorized because they did not receive the approval of a majority of the outstanding shares of Class A Common Stock voting as a separate class. The Demand Letter demanded that the Company, among other things, seek ratification or validation of the Share Increase Amendment pursuant to Section 204 or Section 205 of the DGCL and seek stockholder approval of the Opt-Out Amendment or file a certificate of correction voiding the Opt-Out Amendment.
$0.0001 per share, that the Corporation is authorized to issue is 111,000,000 shares, consisting of (a) 110,000,000 shares of common stock, including (i) 100,000,000 shares of Class A Common Stock, and (ii) 10,000,000 shares of Class B Common Stock, and (b) 1,000,000 shares of preferred stock.” Ex. B Art. IV § 4.1 (internal definitions omitted). The use of the word “including,” as well as the structure breaking out the Class A and B as subparts within “common stock,” led the Company
to reasonably believe that Class A and Class B Common Stock are series within the broader class of common stock, but Boxed has called that interpretation into question.
ability to obtain funding and operate in the ordinary course. Validation under the circumstances would be equitable; this is precisely the scenario for which Section 205 was designed.
FACTUAL ALLEGATIONS
Proposal No. 2 – a proposed amendment to (a) increase the number of authorized shares of Class A Common Stock from 100,000,000 to 1,000,000,000, (b) increase the number of authorized shares of Class B Common Stock
from 10,000,000 to 250,000,000, and (c) increase the number of authorized shares of Preferred Stock from 1,000,000 to 100,000,000.
Ex. C at 131.
Proposal No. 5 – a set of proposed amendments to, among other things, “make such other changes that the Kensington Board deems appropriate for a public operating company.” This proposal included the Opt-Out Amendment, which amended the Old Charter to allow future changes to the number of authorized shares of Common Stock or any class or series thereof (except Class B shares) to be approved by the holders of a majority of the voting power of the Class A and Class B Common Stock, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
Id. at 135-36.
Exhibit D). The Company therefore believed the Share Increase Amendment had received the requisite stockholder vote and had been approved.
1 The Share Issuances included 5,750,000 shares of Class A Common Stock issued upon conversion of existing shares of Class B Common Stock and 50 million shares of Class A Common Stock issued as part of a PIPE financing transaction.
last three months the Company’s average daily trading volume was approximately
7.5 million shares.
ALL SECTION 205 FACTORS POINT IN FAVOR OF VALIDATION
the corporation and the board of directors treated the defective corporate act as a valid act and whether any person acted in reliance on the public record that the defective corporate act was valid; (3) whether anyone was or will be harmed by the validation of the defective corporate act, excluding any harm that would have resulted if the defective act had been valid when approved or effectuated; (4) whether anyone will be harmed by the failure to validate the defective corporate act; and (5) other factors or considerations the Court deems just and equitable. 8 Del. C.
§ 205(d).
stock authorized pursuant to the Share Increase Amendment, creating uncertainty as to past and future voting results.
talent. The Company has an upcoming annual meeting where it will need to know how many shares it has outstanding and which shares are entitled to vote on matters at the annual meeting.
204 of the DGCL because any such ratification would require a vote of the holders of the Company’s valid stock under Section 204(c) and (d), and it is unclear which stockholders would be able to vote on such a ratification. It has been over two years since the vote on the Charter Amendments, and the Company’s Class A Common Stock has been actively traded on the NYSE since that date. Thus, the Company has no way to effectively trace the shares that were issued prior to the Charter Amendments. And since the Company went from 23,000,000 to over 189,469,223 outstanding shares of Class A Common Stock upon the closing of the Transaction on November 25, 2020, even the 100,000,000 shares of Class A Common Stock authorized under the Original Charter cannot be identified because a large portion of such shares were issued simultaneously with the shares in question under the Share Increase Amendment. As a result, even if the original 23,000,000 outstanding Class A Common shares could conceivably be traced, that would leave approximately 94% of the Company’s purported Class A shares outstanding unable to vote on the ratification or at the upcoming annual meeting.2
2 Based on 356,503,201 shares of Class A Common Stock outstanding as of October 21, 2022. QuantumScape Inc., Form 10-Q, Oct. 28, 2022.
position they have believed themselves to be in since the Charter Amendments were approved, meanwhile harming no one.
CAUSE OF ACTION
Validation of Corporate Acts Under 8 Del. C. § 205
§ 205(a).
PRAYER FOR RELIEF
WHEREFORE, the Company respectfully requests that this Court enter judgment as follows:
ASHBY & GEDDES, P.A.
/s/ F. Troupe Mickler IV
F. Troupe Mickler IV (#5361) Marie M. Degnan (#5602)
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Wilmington, Delaware 19801
(302) 654-1888
Counsel for Petitioner QuantumScape Corporation
Dated: February 9, 2023