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THE COURT OF CHANCERY OF THE STATE OF DELAWARE
PETITION FOR RELIEF PURSUANT TO 8 DEL. C. 205
Blade Air Mobility, Inc. ("Blade" or the "Company"), by and through its undersigned counsel, brings this petition
pursuant to 8 Del. C. 205 (the "Petition"), seeking to have this Court validate potentially defective corporate
acts described below as follows:
Petition asks the Court to validate its Second Amended and Restated Certificate of Incorporation (Exhibit A, the "New Certificate
of Incorporation") adopted in connection with its business combination with BLADE Urban Air Mobility, Inc., which, among other
things, increased the aggregate number of authorized shares of Class A Common Stock of the Company (the "Class A Increase Amendment").
While the proposal to adopt the New Certificate of Incorporation received votes from a majority of the then-outstanding shares of Common
Stock, it did not receive votes from a majority of Class A Common Stock. This Court's decision in Garfield v. Boxed, Inc.,
2022 WL 17959766 (Del. Ch. Dec. 27, 2022) creates uncertainty as to the validity of the New Certificate of Incorporation, and
thus the Class A Increase Amendment, threatening the Company with irreparable harm as described more fully herein.
the number of authorized shares of a corporation requires an amendment to the certificate of incorporation under Section
242 of the Delaware General Corporation Law (the "DGCL"). Section 242(b)(2) provides that separate classes-but not
separate series-are entitled to vote separately as a class on certificate of incorporation amendments increasing the authorized
share count. Section 242(b)(2) provides in relevant part:
holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment, whether or not entitled
to vote thereon by the certificate of incorporation, if the amendment would increase or decrease the aggregate number of authorized shares
of such class . . . . The number of authorized shares of any such class or classes of stock may be increased or decreased . . . by the
affirmative vote of the holders of a majority of the stock of the corporation entitled to vote irrespective of this subsection, if so
provided in the . . . certificate of incorporation . . . .
242(b)(2) thus provides that an amendment to change the number of authorized shares of a class of stock requires a separate vote
of such class unless the certificate of incorporation contains a so-called "Section 242(b)(2) opt- out" provision specifically
denying the class that entitlement. Many special purpose acquisition companies' ("SPAC") certificates of incorporation,
including the Company's September 12, 2019 Amended and Restated Certificate of Incorporation (Exhibit B, the "Old Certificate
of Incorporation"), did not contain a Section 242(b)(2) opt-out provision. Despite not having a "Section 242(b)(2) opt-out"
provision, the Company has held the good-faith belief that the Class A Increase Amendment was legally and validly adopted under the terms
of the Old Certificate of Incorporation because under the language of the Old Certificate of Incorporation, the Class A Common Stock
was not a separate class of Common Stock, but instead, a series of the class of Common Stock.
However, this Court's decision in Boxed cast doubt on this good faith belief. There, in a decision on a mootness fee application
in the context of a SPAC that had amended its merger agreement and public disclosures to seek a separate vote of the Class A Common Stock
after receiving a demand letter, the Court indicated that it agreed with the plaintiff's interpretation that the Class A Common
Stock was a class rather than a series and was therefore entitled to a separate class vote under Section 242.
As a result of the Boxed decision, the capital structures of many SPACs, including the Company, which did not seek separate votes
of the Class A Common Stock in connection with their de-SPAC transactions have been thrown into doubt, inhibiting their ability to perform
basic, fundamental corporate functions, such as issuing stock or undertaking any of the numerous transactions customarily requiring the
Company to make representations regarding its capital structure. Moreover, the New Certificate of Incorporation itself is potentially
invalid on the basis of the improperly effected Class A Increase Amendment, jeopardizing other material amendments the Company made to
the Old Certificate of Incorporation.
Relief is needed to re-establish the validity of the New Certificate of Incorporation so that the Company may issue stock in reliance
on the Class A Increase Amendment and ensure stockholders receive securities under the terms set forth in the New Certificate of Incorporation.
As such, this Petition seeks entry of an order under 8 Del. C. 205 validating the New Certificate of Incorporation and
the Class A Increase Amendment.
The Company is a Delaware corporation originally incorporated on May 24, 2019, as a SPAC under the name Experience Investment Corp. ("EIC").
The Company consummated its IPO on September 17, 2019. In connection with its IPO, the Company amended and restated its certificate of
incorporation to read in its entirety as set forth in the Old Certificate of Incorporation. The Old Certificate of Incorporation set
forth the Company's capitalization structure as follows:
total number of shares of all classes of capital stock, each with a par value of $0.0001 per share, which the Corporation is authorized
to issue is 111,000,000 shares, consisting of (a) 110,000,000 shares of common stock (the "Common Stock"),
including (i) 100,000,000 shares of Class A Common Stock (the "Class A Common Stock"), and (ii) 10,000,000
shares of Class B Common Stock (the "Class B Common Stock"), and (b) 1,000,000 shares of preferred stock (the
B at Art. IV, 4.1 (emphasis in original).
On December 14, 2020, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
BLADE Urban Air Mobility Inc. would become a wholly owned subsidiary of the Company (the "Merger"). Following the Merger,
the Company, now named Blade Air Mobility Inc., is in the business of providing urban air mobility as a cost-effective and time-efficient
alternative to ground transportation for passengers and last-mile critical cargo.
On April 6, 2021, the Company filed a proxy statement (Exhibit C, the "2021 Proxy"), identifying seven proposals to be voted
on at a special meeting of stockholders scheduled for May 5, 2021 (the "Special Meeting"). Among them was a proposal to amend
and restate the Old Certificate of Incorporation to read in its entirety as set forth in the New Certificate of Incorporation (the "Certificate
of Incorporation Proposal"). The New Certificate of Incorporation would affect several changes to the Old Certificate of Incorporation,
including, among others:
Company set forth in detail the rationale for each proposed amendment. The purpose of the increase in the number of authorized
for the issuance of 48,125,000 shares of EIC Class A common stock necessary to consummate the [Merger and related agreements] including,
without limitation, the PIPE Investment, and also provide[] shares of EIC Class A common stock to reserve for issuance upon exercise
of the EIC Options and necessary to allow future equity awards to be made under the Incentive Plan after the closing of the [Merger and
related agreements], as well as flexibility for future issuances of common stock determined by the Board to be in the best interests
of EIC without incurring the risk, delay and potential expense incident to obtaining stockholder approval for a particular issuance.
at 132. The rationale behind providing that certain transactions are not "corporate opportunities" was "because
each Identified Person should not be restricted from investing in or operating similar businesses and such parties would be unwilling
or unable to enter into the [Merger and related agreements] without such assurances due to their activities as investors in a wide range
of companies." Id. at 132-33. Finally, the amended Article X, opting out of Section 203, would "help to prevent a
third party from acquiring creeping control' of EIC without paying a fair premium to all stockholders" and thus serve
"the best interests of EIC and its stockholders."
The 2021 Proxy stated that the Certificate of Incorporation Proposal would "require the affirmative vote of the holders of a majority
of the outstanding shares of EIC common stock." Ex. C at 133.
of the record date of the Special Meeting, there were 34,375,000 shares of the Company's common stock outstanding and entitled
to vote consisting of 27,500,000 shares of Class A Common Stock and 6,875,000 shares of Class B Common Stock. As disclosed in the Company's
May 6, 2021 Form 8-K (Exhibit D, the "Voting Results Form 8-K"), the Certificate of Incorporation Proposal received the affirmative
vote of 19,418,816 shares, a majority of the 34,375,000 shares outstanding and entitled to vote. As such, the Company believed the Certificate
of Incorporation Proposal had received the requisite stockholder vote and disclosed in the Voting Results Form 8-K that the Certificate
of Incorporation Proposal had been approved.
Certificate of Incorporation Proposal was not approved by a majority of the outstanding shares of Class A Common Stock. Of the 27,500,000
shares of Class A Common Stock then outstanding and entitled to vote, only 12,543,816 voted in favor.
As disclosed in the Company's May 13, 2021 Form 8-K (Exhibit E, the "Merger Closing Form 8-K"), the Company proceeded
to file the New Certificate of Incorporation with the Delaware Secretary of State and to consummate its acquisition of Blade on May 7,
2021. At the effective time of the acquisition, each of the then issued and outstanding Class A Common Stock and Class B Common Stock
of EIC automatically converted on a one-for-one basis into a share of Class A Common Stock of the combined company - i.e.,
Blade. As a result, immediately following the Merger, the Company's outstanding capital stock consisted of 78,903,021 shares of
outstanding Class A Common Stock and warrants to purchase approximately 14,166,667 shares of Common Stock. As of February 7, 2023, 71,975,045
shares of Common Stock were issued and outstanding and 21,606,594 shares of Common Stock were reserved for issuance upon exercise of
warrants, options and other securities. The number of shares of Class A Common Stock issued and outstanding or reserved for issuance
immediately following the Merger was and at all times through the date hereof has remained less than the 100,000,000 authorized shares
of Class A Common Stock originally provided for under the Old Certificate of Incorporation. The Class A Common Stock now trades
on the Nasdaq Stock Market under the symbol "BLDE."
The Boxed decision calls into question the validity of the New Certificate
of Incorporation and the Class A Increase Amendment. The defendant corporation in Boxed had sought stockholder approval to amend
its certificate of incorporation to increase the number of authorized shares of Class A common stock in connection with a de-SPAC transaction.
2022 WL 17959766, at *1. Before the stockholder vote, the plaintiff wrote a letter to the company's board asserting that the voting
standard provided for that amendment violated the Class A common stockholders' voting rights under Section 242(b). Id. The
company amended its merger agreement and supplemented its proxy statement to require the separate vote of the holders of its Class A