338 A.3d 1272
Del.2025Background
- Jason Terrell, M.D., provided consulting services and served on the board of Kiromic Biopharma, Inc. between 2014 and 2021.
- Terrell received three stock option awards under separate agreements: one for consulting (Agreement 1, 2014) and two for board service (Agreement 2, 2017; Agreement 3, 2017).
- After resigning from the board in 2019, Terrell attempted to exercise options under Agreements 1 and 2, but Kiromic refused, relying on a waiver clause in Agreement 3.
- Terrell sued for specific performance, claiming rights to the earlier options; the Court of Chancery dismissed his claim, finding a clear waiver in Agreement 3.
- On appeal, the Delaware Supreme Court reviewed whether the contractual waiver language was ambiguous regarding the survival of earlier options.
- The Court ultimately found ambiguity in the waiver language, reversed the dismissal, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the waiver in Agreement 3 unambiguously extinguished rights to options in Agreements 1 and 2 | Terrell: Waiver is ambiguous; "securities…issued" includes prior granted options; language is susceptible to multiple meanings | Kiromic: Waiver clearly covers all prior options; "issued" refers only to shares, not options | Waiver language is ambiguous; both interpretations are reasonable; dismissal improper |
Key Cases Cited
- Salamone v. Gorman, 106 A.3d 354 (Del. 2014) (addresses the objective theory of contract interpretation and review of contract ambiguity)
- Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153 (Del. 2010) (discusses the objective theory of contracts in Delaware)
- Manti Holdings, LLC v. Authentix Acquisition Co., Inc., 261 A.3d 1199 (Del. 2021) (clarifies when contract language is considered ambiguous)
- Kuhn Const. Inc. v. Diamond State Port Corp., 990 A.2d 393 (Del. 2010) (sets out de novo standard of review for contract interpretation)