| Item 1.01. | Entry into a Material Definitive Agreement |
As previously disclosed, on July 26, 2021, Avenue Energy Opportunities Fund II AIV, L.P. (“AEOF”), a stockholder of Diamond Offshore Drilling, Inc. (the “Company”), and AEOF’s investment manager, Avenue Capital Management II, L.P. (collectively with AEOF, “Avenue Capital”), filed a complaint against the Company to compel an annual meeting of stockholders pursuant to 8 Del. C. Section 211(c) before the Court of Chancery of the State of Delaware (the “Court”, and such proceeding, the “Litigation”). As previously disclosed, on August 31, 2021, the Company and Avenue Capital agreed to settle the complaint. At the request of the parties, on September 1, 2021, the Court ordered the action dismissed with prejudice.
The Company scheduled its annual meeting of stockholders to be held on January 21, 2022 (the “Annual Meeting”). On November 18, 2021, Avenue Capital delivered to the Company a purported notice of nominations with respect to the election of Class I directors at the Annual Meeting (the “Nominations Notice”). The Company notified Avenue Capital that the Nominations Notice was invalid because neither the Nominations Notice nor Avenue complied with the requirements set forth in the Company’s Bylaws, and therefore the notice could not be accepted. On November 30, 2021, Avenue Capital filed a Motion to Enforce Settlement Agreement in the Litigation (including related motions, the “Motion to Enforce”), seeking an order compelling the Company to accept the Nominations Notice.
On December 29, 2021, the Company and Avenue Capital entered into an agreement providing for the settlement of any and all disputes among them relating to the Litigation, the Nominations Notice and the Motion to Enforce, without any admissions of guilt, liability, obligation or otherwise (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Nominations Notice and the related demand by Avenue Capital to review certain books and records of the Company under Section 220 of the Delaware General Corporation Law are deemed withdrawn, and the Motion to Enforce and all other pending motions in the Litigation will be withdrawn.
Under the terms of the Settlement Agreement, Avenue Capital is subject to customary standstill restrictions during the period from December 29, 2021 until the earlier of (x) the date that is 30 days prior to the deadline for the submission of stockholder nominations of director candidates for the Company’s 2023 annual meeting of stockholders and (y) any public announcement by the Company of an extraordinary transaction (the “Standstill Period”).
Under the Settlement Agreement, during the Standstill Period, Avenue Capital has agreed to cause its common stock in the Company to be present for quorum purposes at any meeting of the Company’s stockholders at which directors are elected and to vote in favor of the slate of directors nominated by the Board for election. In addition, the Company has agreed that in the event a vacancy on the Board arises as a result of certain events occurring prior to the one-year anniversary of the Settlement Agreement, the Company will appoint one director designated by Avenue Capital to fill such vacancy.
