Jason Terrell v. Kiromic Biopharma, Inc

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
MORGAN T. ZURN LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

January 31, 2024

Scott James Leonhardt, Esquire Laurence V. Cronin, Esquire
The Rosner Law Group LLC Smith, Katzenstein & Jenkins LLP
824 North Market Street, Suite 810 1000 West Street, Suite 1501
Wilmington, DE 19801 Wilmington, DE 19899

RE: Jason Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ

Dear Counsel:

This letter decision addresses whether language sounding in waiver extends

to unexercised stock options. Plaintiff, Dr. Jason Terrell, argues he holds rights to

unexercised stock options under certain agreements; defendant Kiromic

Biopharma, Inc. (the “Company”) argues Terrell waived those rights in a

subsequent stock option grant notice. This letter assumes familiarity with the

underlying dispute and previously defined terms; concludes the Company’s

committee lacked authority to interpret the grant notice; concludes Terrell waived

rights to any unexercised options under that grant notice; and grants the

Company’s motion to dismiss.
Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ
January 31, 2024
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I. BACKGROUND1

Terrell seeks a declaration that Agreements 1 and 2 remain valid and

enforceable contracts2 and seeks specific performance of those Agreements,

including as to unexercised options.3 There is no dispute that Agreements 1 and 2

are valid and enforceable insofar as they granted Terrell options he then exercised

on or before Agreement 3’s execution date.4 The dispute concerns whether

1
For the purposes of the pending motion, I draw the following facts from the plaintiff’s
Verified Complaint, as well as the documents attached and integral to it. See, e.g., N.
River Ins. v. Mine Safety Appliances, 2013 WL 6713229, at *7 (Del. Ch. Dec. 20, 2013);
H-M Wexford v. Encorp, 832 A.2d 129, 139 (Del. Ch. May 27, 2003). Unless otherwise
indicated, this opinion adopts the defined terms used in Terrell v. Kiromic Biopharma,
Inc. (Terrell I), 2022 WL 175858 (Del. Ch. Jan. 20, 2022). Citations in the form
“Compl.” refer to plaintiff’s Verified Complaint, available at docket item (“D.I.”) 1.
Citations in the form “DOB” refer to Defendant’s Opening Brief in Support of its Motion
to Dismiss, available at D.I. 12. Citations in the form “PAB” refer to Plaintiff’s
Answering Brief in Opposition to Defendant’s Motion to Dismiss, available at D.I. 16.
Citations in the form “DRB” refer to Defendant’s Reply Brief in Further Support of its
Motion to Dismiss, available at D.I. 18.
2
Compl. ¶¶ 42–43, 52–53.
3
Id. ¶¶ 43, 45, 47, 55, 57, 59.
4
See DOB 16 (“If he exercised his options and received stock certificates, then the
merger clause has no effect on those . . . .”); see also D.I. 28 at 8 (noting Terrell is still
entitled to shares he received after exercising options granted by Agreements 1 and 2).
Readers will recall the Grant Notice, the Incentive Plan, the Stock Option Agreement,
and the Exercise Agreement “constitute the entire agreement” referred to as Agreement 3.
D.I. 1, Ex. D at 2017 Stock Option Agreement [hereinafter “SOA”] § 15.2; Terrell v.
Kiromic Biopharma, Inc. (Terrell III), 297 A.3d 610, 614 (Del. 2023).
Terrell v. Kiromic Biopharma, Inc.,
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language in Agreement 3’s Grant Notice waived Terrell’s rights to unexercised

options granted by Agreements 1 and 2.

The relevant Grant Notice provision (the “Waiver”) reads:

By signing this Grant Notice, you acknowledge and agree that other
than the Shares, you have no other rights to any other options, equity
awards or other securities of the Company (except securities of the
Company, if any, issued to you on or prior to the date hereof, if any),
notwithstanding any commitment or communication regarding
options, equity awards or other securities of the Company made prior
to the date hereof, whether written or oral, including any reference to
the contrary that may be set forth in your offer letter, consultant
agreement or other documentation with the Company or any of its
predecessors.5

This letter is the most recent stop on a multijurisdictional tour. A dispute

resolution provision in Agreement 3’s Stock Option Agreement (the “SOA”)

required the parties to submit any dispute regarding “the interpretation of this

Agreement” to a Company committee (the “Committee”).6 I concluded the

Committee had to decide, in the first instance, (i) whether the dispute over the

Grant Notice, a separate instrument from the SOA that was also part of Agreement

5
D.I. 1, Ex. D at Notice of Stock Option Grant [hereinafter “Grant Notice”] at 2.
6
Terrell III, 297 A.3d at 617, 619; SOA § 15.1.
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3, fell within that provision, and (ii) if so, Terrell’s dispute itself.7 The Committee

determined:

i. the Committee has the exclusive authority, pursuant to Section 15.1
of Dr. Jason Terrell’s Stock Option Agreement with Kiromic
BioPharma, Inc., to interpret Dr. Terrell’s November 2017 “Notice of
Stock Option Grant”; and

ii. the merger clause in Dr. Terrell’s grant notice supersedes and
nullifies any option rights Dr. Terrell may have had under Dr.
Terrell’s prior agreements with Kiromic.8

I then dismissed the action for lack of subject matter jurisdiction.9

Terrell appealed, contending this Court “fail[ed] to review the Committee’s

determination before dismissing his action for lack of subject matter jurisdiction,”

as this Court was “still required to subject the Committee’s determination to some

form of judicial review.”10 The Supreme Court of Delaware agreed, concluding

this Court was “not precluded by the terms of the parties’ agreement from

reviewing the Committee’s resolution of” (i) the scope of the Committee’s

7
Terrell I, 2022 WL 175858, at *7.
8
D.I. 29 at Ltr.
9
Terrell v. Kiromic Biopharma, Inc., (Terrell II), 2022 WL 3083229 (Del. Ch. Aug. 2,
2022).
10
Terrell III, 297 A.3d at 616.
Terrell v. Kiromic Biopharma, Inc.,
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authority, and (ii) its decision that language in the Grant Notice extinguished

unexercised options granted by Agreement 3.11

The high court then considered the “standard by which the Court of

Chancery should review the Committee’s legal determinations.”12 Analogizing the

Committee as an expert to an appraiser, Terrell III relied on Adkins Limited

Partnership v. O Street Management, LLC.13 Adkins explains that when an

appraiser must interpret the meaning of a legal document before performing an

appraisal, that interpretation is subject to judicial review in which the appraiser’s

interpretation, while “clothed with no presumption of correctness,” warrants

deference “as long as it is reasonable and does not exceed the appraiser’s

authority.”14 Adkins also explains that when the question of contract interpretation

goes to the scope of the appraiser’s authority, that question resembles the question

11
Id. at 622–23.
12
Id. at 621. The Supreme Court also held Agreement 3 “as interpreted by the Court of
Chancery” was not unconscionable. Id. at 623–24.
13
Id. at 622–23 (citing Adkins Ltd. P’ship v. O St. Mgmt., LLC, 56 A.3d 1159 (D.C.
2012)).
14
Adkins, 56 A.3d at 1167 (first quoting Marceron v. Chevy Chase Servs., Inc., 258 F.2d
155, 158 (D.C. Cir. 1958); then quoting Doggett v. McLachlen Bancshares Corp., 663
A.2d 511, 516 (D.C. 1995)). Terrell III also analogized contractually created expert
committees charged with legal questions to statutorily created quasi-judicial
administrative courts, the decisions of which federal courts review de novo. Terrell III,
297 A.3d at 623 n.49.
Terrell v. Kiromic Biopharma, Inc.,
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of substantive arbitrability, and the trial court will review that determination de

novo.15 Terrell III also discussed AIU Insurance Company v. Lexes, which

similarly explains that the scope of an appraiser’s authority is a legal question for

the courts.16 Terrell III concluded “the Committee’s contractual interpretation was

subject, under the [Adkins] court’s reasoning, to de novo review,” and this Court

should have decided the Company’s motion to dismiss “in light of its de novo

interpretation of the relevant agreements.”17

The Supreme Court remanded the matter for this Court to interpret the

relevant agreements “consistent with [its] opinion.”18 The parties submitted

post-remand letters on August 8 and August 18, which I took under advisement on

September 4.19

15
Adkins, 56 A.3d at 1167.
16
Terrell III, 297 A.3d at 622 (citing AIU Ins. Co. v. Lexes, 815 A.2d 312, 314
(Del. 2003)); AIU Ins. Co., 815 A.2d at 314 (noting “[t]he issue is whether the appraisers
have the authority to include in their valuation items that are expressly excluded from
coverage or items that exceed the coverage limits,” and concluding that the trial court had
jurisdiction to issue a “declaration of the scope of the appraisal process”).
17
Terrell III, 297 A.3d at 623.
18
Id.
19
D.I. 37 [hereinafter “Def. Letter”]; D.I. 38 [hereinafter “Pl. Letter”]; D.I. 39.
Terrell v. Kiromic Biopharma, Inc.,
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II. ANALYSIS

On the Company’s Rule 12(b)(6) motion to dismiss, I must consider the

facts as stated in the complaint and draw all reasonable inferences from those facts

in favor of the plaintiff. “[T]he Court can resolve contract interpretation on a

motion to dismiss.”20 In doing so, “I give priority to the intention of the parties,”

and I “start by looking to the four corners of the contract to conclude whether the

intent of the parties can be determined from its express language.”21 “When the

contract is clear and unambiguous, [I] will give effect to the plain-meaning of the

contract’s terms and provisions”22 with the aid of interpretive canons.23 I must

“lean in favor of a construction which will render every word operative, rather than

one which may make some idle and nugatory.”24

20
Light Years Ahead v. Valve Acq., 2021 WL 6068215, at *5 (Del. Super. Dec. 22, 2021).
21
Paul v. Deloitte & Touche, LLP, 974 A.2d 140, 145 (Del. 2009).
22
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010).
23
Bouchard v. Braidy Indus., 2020 WL 2036601, at *9 (Del. Ch. Apr. 28, 2020) (“[T]he
court evaluates the relevant provision’s semantics, syntax, and context, aided by
interpretive canons.”).
24
Osborn, 991 A.2d at 1159 (“We will read a contract as a whole, and we will give each
provision and term effect, so as not to render any part of the contract mere surplusage.
We will not read a contract to render a provision or term ‘meaningless or illusory.’”); see
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts
[hereinafter “Reading Law”] 174 (2012) (quoting Thomas M. Cooley, A Treatise on the
Constitutional Limitations Which Rest upon the Legislative Power of the States of the
American Union 58 (1868)).
Terrell v. Kiromic Biopharma, Inc.,
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A. The Parties Did Not Send Disputes Regarding The Grant
Notice To The Committee.

My mandate on remand is de novo review “under the [Adkins] court’s

reasoning.”25 Under Adkins, review of the Committee’s scope of authority is de

novo.26 A de novo review of the Committee’s scope of authority leads to the

conclusion that the Committee did not have authority to resolve a dispute regarding

the interpretation of the Grant Notice.

Section 15.1 of the SOA reads: “Interpretation. Any dispute regarding the

interpretation of this Agreement shall be submitted by Optionee or the Company to

the Committee for review. The resolution of such a dispute by the Committee shall

be final and binding on the Company and Optionee.”27 The SOA defines

“Agreement” to mean the SOA itself:

This Stock Option Agreement (this ‘Agreement’) is made and entered
into as of the date of grant (the ‘Date of Grant’) set forth on the Notice
of Stock Option Grant attached as the facing page to this Agreement
(the ‘Grant Notice’) by and between Kiromic, Inc., a Delaware
corporation (the ‘Company’), and the optionee named on the Grant
Notice (‘Optionee’).28

25
Terrell III, 297 A.3d at 623.
26
Adkins, 56 A.3d at 1167.
27
SOA § 15.1.
28
Id. at 1.
Terrell v. Kiromic Biopharma, Inc.,
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This language plainly creates a distinction between the Grant Notice on the one

hand and the SOA on the other, and limits Section 15.1 to the SOA.

It is true that the Grant Notice incorporates the SOA by reference, and the

SOA incorporates the Grant Notice.29 “[A] contract may incorporate by reference

provisions contained in some other instrument.”30 “When an executed contract

refers to another instrument and makes the conditions of the other instrument a part

of it, the two will be interpreted together as the agreement of the parties.”31 But

interpreting agreements together is a different matter than setting aside the plain

definition provided in one of those agreements. Indeed, a holistic review of the

instruments in Agreement 3 indicates they explicitly rely on each other for content

29
Id. § 15.2 (“Entire Agreement. The [Incentive] Plan, the Grant Notice and the Exercise
Agreement are each incorporated herein by reference. This Agreement, the Grant Notice,
the [Incentive] Plan and the Exercise Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all prior undertakings and
agreements with respect to such subject matter.”); Grant Notice at 1 (“By their signatures
below, [Terrell] and the Company agree that this Option is granted under and governed
by this [Grant Notice] and by the provisions of the [Incentive] Plan and the Stock Option
Agreement. The [Incentive] Plan and the Stock Option Agreement are incorporated
herein by reference.”).
30
Duff v. Innovative Discovery LLC, 2012 WL 6096586, at *12 n.72 (Del. Ch.
Dec. 7, 2012) (quoting State ex rel. Hirst v. Black, 83 A.2d 678, 681 (Del. Super.
1951)).
31
Pauley Petroleum, Inc. v. Cont’l Oil Co., 231 A.2d 450, 456 (Del. Ch. 1967), aff’d,
239 A.2d 629 (Del. 1968).
Terrell v. Kiromic Biopharma, Inc.,
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when that is what the drafters intended.32 The SOA’s drafters plainly limited

Section 15.1 to the SOA itself. That section did not send Grant Notice

interpretation disputes to the Committee.

That leaves the dispute over the Grant Notice for this Court.

B. The Grant Notice Contains An Express Waiver.

The parties agree that the disputed Grant Notice interpretation is “a simple

question of contract interpretation”: whether Agreement 3’s Grant Notice

preserved Terrell’s unexercised options granted by Agreements 1 and 2.33 I begin

by observing that the Waiver is, in fact, a waiver. This Court has long found clear

and unequivocal waivers to be binding on the waiving party.34 “A waiver is ‘the

32
E.g., SOA § 15.1 (referring to the “Committee,” which is only defined in the Incentive
Plan at Section 14); Grant Notice at 1 (stating that the Grant Notice is “subject to the
conditions, described below and in the Stock Option Agreement attached hereto as
Exhibit A, including its annexes”).
33
Pl. Letter at 1; see Def. Letter at 2.
34
Realty Growth Inv. v. Council of Unit Owners, 453 A.2d 450, 456 (Del. 1982)
(discussing the requirements and effect of a waiver but finding no basis for attributing
waiver beyond the construction of the fourth building that occurred); see 13 Richard A.
Lord, Williston on Contracts [hereinafter “Williston on Contracts”] § 39:15 (4th ed.
2023) (“A party who has intentionally relinquished the right to performance by the other
party may not thereafter seek judicial enforcement of the contract with regard to the
waived performance and loses any right to damages for the failure to perform. In short,
once it has been established that a right has been waived, the party possessing the right
prior to the waiver is generally precluded from asserting it in a court of law . . . .”).
Terrell v. Kiromic Biopharma, Inc.,
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voluntary and intentional relinquishment of a known right.’”35 “Three elements

must be satisfied before a conclusion of waiver may be reached: (i) there is a

requirement or condition to be waived, (ii) the waiving party must know of the

requirement or condition, and (iii) the waiving party must intend to waive that

requirement or condition.”36 A waiver “of a contract provision may be made by a

party’s express declaration, or it may be implied by representations that fall short

of an express declaration of waiver.”37 An express waiver occurs when a party

makes an unequivocal representation in words to disclaim certain rights.38

Delaware courts use contract principles of interpretation to determine whether a

written representation is “unequivocal and clear.”39

35
Realty Growth Inv., 453 A.2d at 456.
36
Specialty Dx Hldgs. v. Lab’y Corp. of Am. Hldgs., 2021 WL 6327369, at *9 (Del. Ch.
Dec. 16, 2021).
37
13 Williston on Contracts § 39:27; see Specialty Dx Hldgs., 2021 WL 6327369, at *9
(“A waiver may [be] express or implied, but either way, it must be unequivocal.”).
38
Vila v. BVWebTies LLC, 2010 WL 3866098, at *10 n.72 (Del. Ch. Oct. 1, 2010) (“[A]
party may waive—by words or conduct—any contractual right or obligation”)
(summarizing 13 Williston on Contracts § 39:14); see 13 Williston on Contracts § 39:14
(“[A] finding of waiver must be based on an intention expressed in explicit language to
forego a right or on conduct under the circumstances justifying an inference of a
relinquishment of it.”).
39
Bouchard, 2020 WL 2036601, at *9, 10 (invoking Delaware’s objective theory of
contracts, and looking to semantics, syntax and context, aided by interpretive canons,
including the whole-text canon, to determine whether a contractual provision amounted
to a jurisdictional waiver and holding that on its face, the language fell “short of
Terrell v. Kiromic Biopharma, Inc.,
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On its face, the Waiver unequivocally relinquishes Terrell’s “rights to any

other options, equity awards or other securities of the Company.”40 The Waiver

begins: “By signing this Grant Notice, you acknowledge and agree that other than

the Shares, you have no other rights to any other options, equity awards or other

unequivocally relinquishing the right to contest a Delaware court’s personal
jurisdiction”).
40
Grant Notice at 2. Terrell argues that the Grant Notice could not operate as a waiver of
his unexercised options because “Agreement 3 . . . confer[red] no new consideration to
Dr. Terrell, and, thus, would not constitute a binding contract in the first place.” PAB
10. A waiver is a “voluntary . . . relinquishment of a known right.” Realty Growth Inv.,
453 A.2d at 456. It does not require support by consideration. 13 Williston on Contracts
§ 39:14; see, e.g., In re Coinmint, LLC, 261 A.3d 867, 893 (Del. Ch. Apr. 15, 2021)
(reciting the standard for showing waiver, with consideration notably absent).
Terrell also argues that he could not have agreed to a relinquishment of his rights
because such a waiver is unreasonable insofar as “no reasonable person would have
accepted” it and it “is commercially unreasonable.” PAB 8. This argument is an
unconscionability argument. See Ketler v. PFPA, LLC, 132 A.3d 746, 748
(Del. 2016) (“[A]n unconscionable contract is one which no man in his senses and not
under delusion would make on the one hand, and as no honest or fair man would accept,
on the other.” (internal quotation marks omitted)); Rummel Klepper & Kahl v. Del. River
& Bay Auth., 2022 WL 29831, at *14 (Del. Ch. Jan. 3, 2022)
(“The ‘business-practices-of-the-community’ test is a means of evaluating
substantive unconscionability.” (citing Tulowitzki v. Atl. Richfield Co., 396
A.2d 956, 960 (Del. 1978) (explaining unconscionability can be shown by the
“business-practices-of-the-community test [that] asks whether the terms are so extreme as
to appear unconscionable according to the mores and business practices of the time and
place”))). The Supreme Court of Delaware rejected Terrell’s argument that Argument 3
was unconscionable. Terrell III, 297 A.3d at 624. I will not belabor the matter. Neither
Terrell’s consideration nor unreasonableness argument disrupts the efficacy of the
Waiver.
Terrell v. Kiromic Biopharma, Inc.,
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securities of the Company . . . .”41 The waived rights are expressly and

expansively identified as “options,” with reiterative phrases making clear that

Terrell has “no other rights” or “any other options.”

And the Waiver goes further, expressly emphasizing Terrell’s renunciation

of his reliance on prior Company commitments. He relinquished his

rights to any other options . . . notwithstanding any commitment or
communication regarding options, equity awards or other securities of
the Company made prior to the date hereof, whether written or oral,
including any reference to the contrary that may be set forth in [his]
offer letter, consultant agreement or other documentation with the
Company or any of its predecessors.42

The term “notwithstanding” indicates the parties’ intention “to supersede all other

[agreements].”43

The Grant Notice contains an express waiver. “A clearer statement is

difficult to imagine.”44

41
Grant Notice at 2.
42
Id. (emphasis added).
43
Cisneros v. Alpine Ridge Grp., 508 U.S. 10, 18 (1993); see Reading Law 126–27 (“A
dependent phrase that begins with notwithstanding indicates that the main clause that it
introduces or follows derogates from the provision to which it refers.”).
44
Cisneros, 508 U.S. at 18 (internal quotation marks omitted).
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C. The Waiver Carveout Does Not Preserve Unexercised
Options.

The parties’ dispute centers on the meaning of that waiver and the carveout

within it. Terrell agreed he has “no other rights to any other options, equity awards

or other securities of the Company (except securities of the Company, if any, issued

to [him] on or prior to the date hereof, if any)” (the “Carveout”).45 Terrell claims

the Carveout expressly preserves “[options] of the Company . . . issued to [him]”

because an option is a security.46 The Company contends an unexercised option is

not an “issued security.”47 I conclude, under Agreement 3’s language, that while

an option is a security, it is not an issued security.

An “option” is a type of “security” under the Grant Notice and the rest of

Agreement 3. The Waiver’s text makes this plain. Its phrase “no other rights to

any other options, equity awards or other securities of the Company” categorizes

options and equity awards as subsets of securities.48 Generally, the conjunction

45
Grant Notice at 2 (emphasis added).
46
PAB 7.
47
See DOB 11.
48
Grant Notice at 2.
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“or” “is . . . used to indicate an alternative.”49 And the use of the word “other”

before a catchall phrase warrants application of the “reverse ejusdem generis”

principle, under which the catchall helps define the specific examples.50 Under

that principle, the “grammatical context”51 and syntax of the phrase “A, B, or other

C” supports the conclusion “that A must fall within the class C.”52 In the Grant

Notice, the general phrase “or other securities” defines the class of the preceding

listed items. It follows that while a “security” is not necessarily an “option,” an

“option” must be a type of security.

49
13 Williston on Contracts § 30:12.
50
See Lantheus Med. Imaging, Inc. v. Zurich Am. Ins. Co., 255 F.Supp.3d 443, 460 (S.D.
N.Y. Apr. 28, 2015) (explaining the proper use of reverse ejusdem generis and holding it
did not apply because the list did not conclude with a “catch-all” phrase and some of the
specific terms preceding the general one did not have a common attribute from which a
kind or class could be identified); Safe Food & Fertilizer v. E.P.A., 350 F.3d. 1263, 1269
(D.C. Cir. 2003) (applying reverse ejusdem generis to understand the operation of the
phrase “or other discarded materials” and holding that the “listed materials are ‘solid
waste’ only if they are also ‘discarded,’” because “the phrase ‘A, B, or any other C’
indicates that A is a subset of C”).
51
Bristol-Myers Squibb Co. v. U.S., 2000 WL 1860718, at *358 (Fed. Cl. Dec. 18, 2000)
(“[The] [p]laintiff argues that the three conditions are in a categorical series linked by the
word ‘otherwise,’ and that the reverse of the interpretive maxim ejusdem generis supports
this interpretation . . . . The court concludes that plaintiff’s interpretation of the proviso is
consonant with its plain meaning. The meaning of these three phrases in the proviso
derives from grammatical context.”).
52
U.S. v. Delgado, 4 F.3d 780, 786 (9th Cir. 1993).
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Concluding that an option is a type of security does not settle the Carveout’s

meaning.53 The Carveout applies only to securities “issued to [Terrell] on or prior

to the date hereof, if any.”54 The parties dispute whether unexercised options were

“issued” before that date, or if the Carveout is limited to “issued” shares. The

Waiver would be meaningless if the Carveout’s “issued” securities included all of

Terrell’s options: Terrell’s statement that he has “no other rights to any other

options” would be swallowed by the Carveout.55 If “by any reasonable

construction, the two can be made to stand together,” I must pursue that

construction.56

And so, because identical words used in different parts of the same

agreement are presumed to “bear the same meaning throughout,” I look to other

53
DRB 2 (“Terrell maintains that “options” must be treated as ‘securities’ . . . . This
misses the mark: the question is not what the single word ‘security’ means . . . but rather
what the complete phrase ‘securities of the Company, if any, issued to you’ means in
Agreement 3 . . . .”).
54
Grant Notice at 2.
55
Id.
56
Reading Law 174 (quoting Thomas M. Cooley, A Treatise on the Constitutional
Limitations Which Rest upon the Legislative Power of the States of the American Union
58 (1868)).
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uses of the verb “to issue” and its related nouns in Agreement 3.57 Agreement 3

never uses the word “issued” in relation to options. Instead, every use of

“issued,”58 “issuance,”59 and “issuable”60—all thirty-five of them—relates to

57
Id. at 170–73; see JJS, Ltd. v. Steelpoint CP Hldgs., 2019 WL 5092896, at *1 (Del. Ch.
Oct. 11, 2019) (“[A]bsent anything indicating a contrary intent, the same phrase should
be given the same meaning when it is used in different places in the same contract.”).
58
See, e.g., Grant Notice at 2 (preserving “securities of the Company . . . issued to you”);
SOA § 10 (discussing conferral of stockholder rights “from and after the date that Shares
are issued to Optionee”); Incentive Plan § 2.1 (discussing a forfeiture where “Shares
previously issued under the [Incentive] Plan are reacquired by the Company”); id.
(discussing the Company’s reacquisition of “Shares previously issued”).
59
See, e.g., SOA § 4.3(e) (requiring payment approved by the Committee that
“constitutes legal consideration for the issuance of Shares”); id. § 4.4 (“Prior to the
issuance of the Shares upon exercise of the Option, Optionee must pay . . . .”); id. § 4.5
(heading titled “Issuance of Shares”); id. § 5 (“The exercise of this Option and the
issuance and transfer of Shares shall be subject to compliance by the Company and
Optionee . . . .”); id. § 7.1(d) (“Optionee shall have provided the Company with written
assurances . . . for the grant of the Option, the issuance of Shares thereunder . . . .”); id.
§ 9.7 (discussing termination of right of first refusal “other than a registration statement
relating solely to the issuance of Common Stock pursuant to a business combination or an
employee incentive or benefit plan”); D.I. 1, Ex. D [hereinafter “Exercise Agreement”]
§ 4 (indicating optionee’s acceptance of the “terms and conditions of the issuance of the
Purchased Shares”); Incentive Plan § 2.1 (discussing forfeiture or repurchase whereby
“such shares shall be added to the number of shares then available for issuance under the
Plan”); id. (discussing the event where the “number of Shares reserved and available for
grant and issuance under the [Incentive] Plan is increased”).
60
See, e.g., SOA § 4.4 (discussing “Shares issuable upon exercise”); id. § 4.5 (indicating
the Company “shall issue the Shares issuable upon a valid exercise of this Option”);
Incentive Plan § 11(b) (“[T]he exercise price and the number and nature of shares
issuable upon exercise of any such option . . . will be adjusted appropriately.”).
Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ
January 31, 2024
Page 18 of 21

Shares, not options.61 The definitions of “Shares” and “Exercise Price” both

include the word “issuable;”62 the definition of “Option” does not.63 To describe

the Company’s delivery of an option to purchase shares, Agreement 3 only uses

the word “grant.”64 The Grant Notice itself uses that word.65 And Agreement 3

61
DRB 6 (“[T]he term ‘issued’ is never used in Agreement 3 with respect to options, but
only with respect to actual shares of stock.”).
62
See, e.g., Incentive Plan § 14 (“Shares’ means shares of the Company’s Common
Stock . . . reserved for issuance under this Plan.”); id. (“Exercise Price’ means the price
per Share at which a holder of an Option may purchase Shares issuable upon exercise of
the Option.”).
63
Id. (“Option’ means an award of an option to purchase Shares pursuant to Section 4 of
the [Incentive] Plan.”).
64
See Grant Notice at 1 (“The Optionee . . . has been granted an option . . . . Optionee
and the Company agree that this Option is granted under and governed by this Notice of
Stock Option Grant . . . . Optionee accepts the electronic delivery of any documents that
the Company . . . may deliver in connection with this grant.”); SOA at 1 (“This Stock
Option Agreement . . . is made and entered into as of the date of grant . . . .”); id. § 1
(“The Company hereby grants to Optionee an option . . . to purchase up to the total
number of shares . . . .”); id. § 7.1(d) (referencing “the grant of the Option, [and] the
issuance of Shares”); Exercise Agreement § 8 (discussing the exercise price per share “at
the time the option was granted by the Board”); Incentive Plan § 4 (“The Committee may
grant Options”); id. § 4.1 (discussing “[e]ach option granted under this Plan”); id.
§ 4.2 (“The date of grant of an Option will be the date on which the Committee makes the
determination to grant such Option . . . .”); id. § 4.4. (“The Exercise Price of an Option
will be determined by the Committee when the Option is granted and shall not be less
than the Fair Market Value . . . unless expressly determined in writing by the Committee
on the Option’s date of grant.”); id. § 4.8 (“[T]he Exercise Price may not be reduced
below the minimum . . . that would be permitted . . . for Options granted . . . .”); id. § 11.2
(“In the event the Company elects to grant a new Option . . . such a new Option . . . may
be granted . . . .”); id. § 12.3 (discussing the board delegation’s to a Committee for “the
granting of stock options and other equity awards”); id. 13.1(b) (“[N]o Option . . . granted
. . . shall be exercised prior to the time . . . .”).
Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ
January 31, 2024
Page 19 of 21

makes clear that options and shares are different: “[an] [o]ptionee shall not have

any of the rights of a stockholder with respect to any Shares unless and until such

Shares are issued to [the] [o]ptionee.”66 Based on Agreement 3’s language

describing the delivery of options as compared to shares, I conclude that shares are

“issued” while options are “granted.”

The Carveout preserves only securities that have been issued, not securities

that have been granted. This was presumably intentional.67 If the parties intended

for the Carveout to include grants and not just issuances, they would have included

the word “grant[ed],” as they did other times where “grant and issuance” were to

be construed together.68

65
Grant Notice at 1 (“The Optionee . . . has been granted an option (this ‘Option’) to
purchase shares of Common Stock . . . .”); id. (“Optionee and the Company agree that
this Option is granted under and governed by this Notice of Stock Option Grant . . . .”).
66
SOA § 10.
67
MALT Fam. Tr. v. 777 P’rs, 2023 WL 7476966, at *7 (Del. Ch. 2023) (interpreting a
contractual provision that only identified the plaintiff and concluding that the inclusion of
the plaintiff indicated the intentional exclusion of the defendant under the interpretative
maxim expressio unius est exclusio alterius).
68
Incentive Plan § 2.1 (“Subject to Sections 2.2 and 11 hereof, the total number of Shares
reserved and available for grant and issuance pursuant to this Plan will be Twenty Million
(20,000,000) Shares.”); id. (“Shares subject to Awards that are . . . used to pay . . . the
exercise price of an Option or that expire by their terms at any time will again be
available for grant and issuance in connection with other Awards.”).
Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ
January 31, 2024
Page 20 of 21

Because the Carveout addresses only issued securities, and because options

are granted and not issued, the Carveout excludes from the Waiver only shares, and

not unexercised options. This interpretation preserves the Waiver’s significance

and the use of the terms “issue” and “grant” throughout Agreement 3.

Terrell points me to the world outside Agreement 3, specifically the

Securities Act of 1933 and common law, for inspiration to conclude that issued

securities include options.69 He also implicitly suggests that the Carveout is

ambiguous, arguing I should apply the contra proferentem canon.70 For its part,

the Company points me to several cases providing that options are not “issued”

shares.71 But Agreement 3 is unambiguous and provides an ample roadmap to a

reasonable construction. It would be improper to stray from those directions.

In sum, I read the Waiver to be an express waiver, by which Terrell waived

all rights to unexercised options granted to him in any agreement other than

Agreement 3.

69
Pl. Letter at 2 (first quoting 15 U.S.C. §77(b)(3); and then quoting and Davidow v. Lrn.
Corp., 2020 WL 898097, at *2, 4, 10 (Del. Ch. Feb. 25, 2020)).
70
See PAB 6; see also Pl. Letter at 3–5.
71
DOB 15–17 (first citing Reis v. Hazelett Strip-Casting Corp., 28 A.3d 442, 478 (Del.
Ch. Jan. 21, 2011); then citing Corp. Prop. Assocs. 14 v. CHR Hldg. Corp., 2008 WL
963048, at *4 (Del. Ch. Apr. 10, 2008); and Feldman v. Cutaia, 2006 WL 920420, at *6
n.37 (Del. Ch. Apr. 5, 2006)).
Terrell v. Kiromic Biopharma, Inc.,
Civil Action No. 2021-0248-MTZ
January 31, 2024
Page 21 of 21

III. CONCLUSION

Terrell’s claims for a declaration that the unexercised options granted by

Agreements 1 and 2 were not waived by the Grant Notice are DISMISSED. The

parties shall submit a stipulated proposed final order.

Sincerely,

/s/ Morgan T. Zurn

Vice Chancellor

MTZ/ms

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