The court noted that Section 145(e) of the DGCL permits, but does not require, companies to advance expenses incurred by their officers and directors in defending against any proceeding brought against them for actions or omissions in their capacity as such. Massey's COI required the company to advance expenses to its directors and officers to the fullest extent permitted by law.

In particular, Massey's COI stated that an officer or director's right to indemnification was a "contract right." The COI granted current and former Massey officers and directors the right to advancement of their expenses incurred in defending any proceeding in advance of its final disposition, on condition that the individual deliver an undertaking to repay all amounts advanced if it is ultimately determined that the individual was not entitled to indemnification. In contrast with typical advancement disputes, Massey and Alpha acknowledged that Blankenship would be entitled to advancement under the terms of the COI. Their argument revolved solely around the terms of the 2011 undertaking and Massey's determination that Blankenship had breached the representation regarding reasonable cause.

The key question before the court was whether a breach of Blankenship's representation regarding reasonable cause in the undertaking permitted Massey to terminate his right to advancement. To answer this question, the court evaluated the meaning of the "contingency" in the undertaking.

Massey argued that the 2011 undertaking allowed it to terminate Blankenship's right to advancement if he breached either of the representations regarding good faith or reasonable cause at any point. Blankenship argued that the representations were simply assurances to Massey to begin advancing funds.

The court noted that Massey's COI specifically provided that advancement was a contract right and that the dispute was a matter of contractual interpretation. In reviewing the definition of "contingent" terms of the 2011 undertaking as a whole, the court found that Blankenship had the only reasonable interpretation of the undertaking. The court held that the representations regarding good faith and reasonable cause were only assurances, but were not triggers for termination that could allow Massey to stop advancing funds before ultimate disposition of the underlying proceeding, even if Massey later decided the statements were not true.

The court highlighted that the inclusion of separate contractual grounds for Massey to stop advancement (a guilty plea or finding, or a separate legal determination), without adding that a breach by Blankenship of his representations would also be grounds to stop advancement, made it clear that breach of a representation was not grounds to stop advancement. The court also noted that Delaware public policy supports resolution of ambiguous terms in favor of indemnification and advancement.

On these bases, the court concluded that Massey was obligated to advance expenses to Blankenship, and was not permitted to determine that he was no longer entitled to advancement based on an alleged breach of representation.

The court also reviewed the indemnification provisions of the merger agreement and concluded that, under separate sections of the agreement, Blankenship was entitled to advancement and potential indemnification from each of Massey and Alpha to the extent permitted under Delaware law.

The court noted that Alpha's obligations extended to proceedings that were brought against an indemnified party after the completion of the merger but which arose from his or her conduct as a Massey director or officer before the merger.

The court found that Blankenship was entitled to advancement from Alpha under this provision of the merger agreement because he was indicted after completion of the merger.

In addition to its ruling in Blankenship's favor regarding the 2011 undertaking, the court also upheld Blankenship's 2015 undertaking to Alpha as valid. The court found that, based on the language of the merger agreement and the Massey COI, Alpha did not have the right to impose any terms or conditions on Blankenship's advancement other than an undertaking to repay.

The court noted that the merger agreement conditioned Alphas obligation to provide advancement on receipt of an undertaking in favor of Alpha as contemplated by Massey's COI. As described above, the Massey COI only conditioned advancement on delivery of an undertaking to repay any advanced expenses if it is later determined that the director or officer was not entitled to indemnification.

Consequently, the Massey COI did not require, or reserve any right for Massey to impose, any additional terms or conditions in the undertaking. Similarly, the merger agreement did not specifically permit Alpha to impose any additional terms or conditions on advancement. As a result, the court concluded that Alpha could not request anything further from Blankenship other than an undertaking to repay advances. Because Blankenship had provided this undertaking to Alpha, Alpha was obligated to provide advancement.

The court also ruled that Blankenship was entitled to reimbursement by Massey and Alpha of his reasonable expenses incurred in litigating these claims for advancement. In support of this determination, the court cited the Delaware Supreme Court's decision in Stifel Financial Corp. v. Cochran (809 A.2d 555 (Del. 2002)), which held that a person who successfully prosecutes a claim under Section 145 of the DGCL is typically entitled to recover his or her reasonable expenses, unless the company has precluded this recovery up front in its COI or other agreement providing indemnification. Because neither the Massey COI nor the merger agreement contained this restriction, the court granted Blankenship the additional fees.