Alcon Research, LLC v. Aurion Biotech, Inc.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ALCON RESEARCH, LLC, )
)
Plaintiff, )
Counterclaim Defendant, )
)
v. ) C.A. No. 2024-1102-KSJM
)
AURION BIOTECH, INC., )
)
Defendant, )
Counterclaim Plaintiff. )

POST-TRIAL OPINION

Date Submitted: January 17, 2025
Date Decided: January 27, 2025

Jon E. Abramczyk, D. McKinley Measley, Elizabeth A. Mullin Stoffer, Jacob M.
Perrone, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware;
Monica K. Loseman, John D.W. Partridge, John Turquet Bravard, GIBSON, DUNN
& CRUTCHER LLP, Denver, Colorado; Mary Beth Maloney, Jonathan D. Fortney,
Mark H. Mixon, Jr., GIBSON, DUNN, CRUTCHER, New York, New York; Counsel
for Plaintiff and Counterclaim Defendant Alcon Research, LLC.

Richard R. Rollo, Travis S. Hunter, John M. O’Toole, Kevin M. Kidwell, Edmond S.
Kim, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Brad D.
Sorrels, Jessica A. Hartwell, Joshua A. Manning, WILSON SONSINI GOODRICH &
ROSATI P.C., Wilmington, Delaware; Counsel for Defendant and Counterclaim
Plaintiff, Aurion Biotech, Inc.

McCORMICK, C.
Defendant Aurion Biotech, Inc. and one of its Series C Preferred Stockholders,

Plaintiff Alcon Research, LLC, are battling over Aurion’s planned IPO. Aurion wants

to launch the IPO by mid-February 2025. Alcon seeks to block it. Their

disagreements boil down to three issues. The first dispute concerns whether Alcon’s

claims are barred by laches because Alcon waited too long to bring them. The next

dispute concerns whether Alcon’s Series C consent rights gave Alcon the right to block

Aurion’s reverse stock split, which Aurion undertook to free authorized shares to sell

in the IPO. The last dispute concerns whether Alcon successfully revoked its voting

proxy, in which case Alcon can vote its full 40% stake in Aurion. This post-trial

decision resolves the first issue and last issue in favor of Alcon and the other issue in

favor of Aurion. Alcon’s claims are not barred by laches. Aurion did not require

Alcon’s consent for the reverse stock split. And Alcon successfully revoked the voting

proxy.

I. FACTUAL BACKGROUND

Trial took place over two days. The record comprises 416 trial exhibits, live

testimony from six fact and two expert witnesses, video testimony from three fact

witnesses, deposition testimony from eleven fact and two expert witnesses, and

thirty-four stipulations of fact. These are the facts as the court finds them after trial.1

1 This decision cites to: C.A. No. 2024-1102-KSJM docket entries (by docket “Dkt.”

number); trial exhibits (by “JX” number); the trial transcript, Dkts. 189–90 (“Trial
Tr.”); and stipulated facts set forth in the Parties’ Stipulation and Pre-Trial Order,
Dkt. 141 (“PTO”). The witnesses were: Jeannette Bankes (Alcon Board designee), Dr.
Andrew ElBardissi (Deerfield Board designee), Thomas Hudnall (Alcon Board
designee), Gregory Daniel Kunst (Aurion CEO), Dr. William Link (Aurion investor
and former Aurion director) (by video deposition), Michiel C. McCarty (Alcon expert),
Steven J. Pully (Aurion expert), David Rostov (Aurion CFO) (by video deposition),
A. The Series C Fundraising Round

Aurion is an early-stage pharmaceutical company. It is pioneering a cell

therapy candidate to combat corneal endothelial disease, a prevalent cause of

blindness.2 The therapy has been approved in Japan but awaits FDA approval in the

United States.3 Aurion is set to begin Phase 3 trials later this year.4

To fund the development of its cell therapy, Aurion pursued a Series C

fundraising round in 2022.5 Deerfield Management, a venture capital investor

specializing in healthcare investments, led Aurion’s Series C round.6 Deerfield

negotiated the terms of the Series C financing, which would form the basis of Aurion’s

negotiations with other Series C investors.7 Deerfield partner Dr. Andrew ElBardissi

“quarterbacked” these negotiations and serves as Deerfield’s designee on the Aurion

Board of Directors (the “Board”).8 McDermott Will & Emory represented Deerfield in

the negotiations.9 Dr. Bill Link, an early Aurion investor who served on the Board,

David Scileppi (Alcon executive and in-house counsel), Jason Weems (Head of Alcon
Business Development & Licensing) (by video deposition), and Carlyn S. Williams
(Alcon outside counsel). The transcripts of the witnesses’ respective depositions are
cited using the witnesses’ last names and “Dep. Tr.”
2 PTO ¶ 17; Trial Tr. at 261:11–23 (Kunst).

3 PTO ¶¶ 17–18; Trial Tr. at 261:24–262:11 (Kunst).

4 Trial Tr. at 262:12–263:12 (Kunst).

5 Id. at 212:12–213:5 (Kunst).

6 PTO ¶ 20.

7 Trial Tr. at 176:7–17 (Williams); id. at 219:8–16 (Kunst).

8 Id. at 405:7–406:3 (ElBardissi).

9 Id. at 200:1–8 (Williams).

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was involved in negotiations for Aurion.10 Wilson Sonsini Goodrich & Rosati (“Wilson

Sonsini”) represented Aurion.11

Alcon is the largest eye-care company in the world, focusing on technical

advances in treating eye diseases and conditions.12 As Deerfield negotiated the

Series C financing terms, Alcon conducted its own diligence to assess whether it

would invest in the Series C round.13 Senior Legal Counsel for Business Development

& Licensing, David Scileppi, led the process for Alcon, with help from lead Business

Development & Licensing representative Jason Weems and Alcon’s outside counsel,

Arnold & Porter.14 Alcon relied on Deerfield to negotiate most of the terms for the

Series C investors.15

Deerfield and Aurion agreed to a term sheet in January 2022 (the “Term

Sheet”).16 Those terms were memorialized in a Preferred Stock Purchase Agreement

(the “Purchase Agreement”), which the parties signed on April 5, 2022.17 The

Purchase Agreement obligated Aurion to file an Amended and Restated Certificate of

10 Link Dep. Tr. at 17:3–19:10, 20:8–17, 27:23–28:9.

11 Trial Tr. at 275:23 (Kunst).

12 PTO ¶ 11.

13 Trial Tr. at 467:4–23 (Weems); JX-3 at 3–11; JX-261; JX-262.

14 Trial Tr. at 127:14–22, 129:13–130:8 (Scileppi).

15 Id. at 467:4–23 (Weems).

16 JX-10.

17 JX-168.

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Incorporation (the “Charter”).18 Wilson Sonsini drafted the Charter based on the

then-current National Venture Capital Association (“NVCA”) form.19

The Term Sheet gave investors holding more than one-third of the Series C

shares consent rights over certain corporate actions, including any Charter

amendment to alter the number of authorized shares, and any purchase, redemption,

or acquisition of shares.20 The Charter memorialized these rights in Section 3.4 (the

“Series C Consent Rights”).21

The Term Sheet provided that Series C Preferred Shares would be subject to

mandatory conversion upon the consummation of a “Qualified IPO,” defined as an

IPO that results in at least $90 million of gross proceeds and in which shares are sold

at a minimum price of $15.04 per share.22 The Charter memorialized that term in

Section 5.23

Although not reflected in the Term Sheet, Deerfield also negotiated the number

of authorized shares of Aurion Common Stock in connection with the Series C

financing to limit Aurion’s headroom for future capital transactions.24

18 Id. at 7.

19 See JX-301; Trial Tr. at 148:15–17 (Scileppi).

20 JX-10 at 9.

21 JX-170 § 3.4.

22 JX-10 at 8.

23 JX-170 § 5.1.

24 JX-11 at 7; JX-13 at 10, 24; JX-16 at 57; JX-248 at 2; Rostov Dep. Tr. at 40:6–41:7.

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The Series C financing was intended to secure $110 million for Aurion and

would be funded in three tranches.25 Deerfield agreed to invest $55 million in

exchange for 50% of the Series C shares.26 Alcon agreed to invest $40 million in

exchange for approximately 36% of the Series C shares.27 Several other investors

agreed to acquire the remaining Series C shares.28

After the initial closing on the first tranche of the Series C investment, the

Board comprised six members. Deerfield and Alcon each designated one director.29

Both Alcon and Deerfield purchased enough shares in the initial closing to entitle

them to exercise Series C Consent Rights.30 But Deerfield did not realize until mid-

2023 that Alcon could exercise those rights.31 In hindsight, Deerfield views Alcon’s

Series C Consent Rights as a “mistake” it made during the Series C negotiations.32

Alcon claims that ever since Deerfield realized that Alcon secured consent rights,

Deerfield has been attempting to eliminate them. Alcon views the IPO as another

ploy to do so.33

25 JX-2; JX-168 at 50.

26 PTO ¶ 20.

27 Id.; JX-168 at 50; Trial Tr. at 130:9–18 (Scileppi).

28 Trial Tr. at 245:11–12 (Kunst); id. at 406:4–11 (ElBardissi).

29 JX-19 at 1.

30 PTO ¶¶ 19–20; Trial Tr. at 70:1–14 (Hudnall).

31 Trial Tr. at 349:15–350:3 (ElBardissi).

32 Id. at 373:7–15 (ElBardissi).

33 Dkt. 167 (“Alcon Post-Trial Opening Br.”) at 16–18.

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B. The Voting Agreement

Just days before the initial closing, Alcon realized it might have a potential

accounting issue if it held stock equaling more than 20% of Aurion’s voting power.34

Alcon realized this after “[a]ll other investors had already signed” the Series C

financing documents, and Aurion “was chasing [Alcon] for [its] signature pages.”35

Weems spoke with Aurion’s CFO, David Rostov, on the Saturday night before the

Monday closing “to alert them to the issue.”36 Scileppi then began working with

Alcon’s attorneys “to try to come up with a solution.”37 Alcon conveyed to the parties

that it needed voting flexibility. For its part, Aurion needed to push forward with

Alcon’s financing because Aurion was “about a month away” from running out of

cash.38

Alcon would not cross the 20% threshold until the second or third tranche, so

Alcon proposed a temporary fix: a covenant in the Purchase Agreement through

which the parties agreed to “determine an approach to address” Alcon’s accounting

issue “after the initial closing so that the initial closing could go forward.”39 The

parties memorialized the temporary fix in Section 6.15 of the Purchase Agreement.

It states that “Alcon may elect to have any or all securities purchased by Alcon

34 Trial Tr. at 133:1–23 (Scileppi); id. at 219:21–220:14 (Kunst).

35 Id. at 133:4–12 (Scileppi); id. at 178:22–179:9 (Williams); id. at 222:7–24 (Kunst);

JX-15 at 1.
36 Trial Tr. at 134:21–24 (Scileppi).

37 Id.

38 Id. at 218:6–15 (Kunst).

39 Id. at 179:12–180:1 (Williams).

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hereunder to be in the form of non-voting securities or for such securities to have

limitations on voting rights[.]”40 Alcon’s counterparties agreed to take any actions

“reasonably necessary” to implement this provision.41 No one opposed this

language.42

At trial, ElBardissi testified that Section 6.15 “was critical for Deerfield and

the investor syndicate . . . to ensure that Alcon did not have a significant amount of

control.”43 But contemporaneous evidence does not support this testimony. Section

6.15 was added to the Purchase Agreement after Deerfield had already signed the

deal and agreed to Alcon’s $40 million investment. According to Link, no other party

to the Purchase Agreement demanded additional consideration in response to Alcon’s

request to add Section 6.15 to the Purchase Agreement.44

In May 2022, Alcon proposed to limit its voting rights by creating a new series

of non-voting preferred shares (“Series C-2 Preferred Stock”).45 As the only proposed

Series C-2 stockholder, Alcon (and only Alcon) could waive the Series C-2 rights or

40 JX-168 § 6.15.

41 Id.; see also Trial Tr. at 135:1–16 (Scileppi) (explaining that the provision reflects

Alcon’s counterparties’ agreement to “do what they could to accommodate Alcon’s
request at a later time”).
42 See Link Dep. Tr. at 34:17–35:15.

43 Trial Tr. at 118:4–16 (ElBardissi).

44 Link Dep. Tr. at 34:17–35:15.

45 JX-24; JX-29.

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elect to convert the non-voting shares back to voting shares.46 This guaranteed Alcon

“the optionality” to vote its full stake if Alcon decided to do so.47

Alcon first proposed the Series C-2 Preferred Stock transaction to Deerfield’s

counsel.48 Deerfield “signed off pretty quickly.”49

Alcon then reached out to Aurion’s counsel regarding the proposed Series C-2

Preferred Stock.50 Aurion believed the proposal was too complex and countered with

two different concepts: a pre-funded warrant, under which Alcon could elect to receive

pre-funded voting shares at some point, or a voting proxy.51

Alcon informed Aurion that the voting proxy approach was acceptable, and

outside counsel for the parties negotiated a Voting Agreement.52 Section 7.20 of the

Voting Agreement granted a “Voting Proxy” to Aurion’s CEO or CFO, permitting

either to vote any shares Alcon owned in excess of a “Voting Threshold” of 19% of all

outstanding shares on an as-converted basis.53 While in effect, the Voting Proxy

would not otherwise “impact any of the rights or votes that were put to Alcon as Series

C holders or preferred stockholders.”54 Section 7.20 also required that the shares in

46 JX-30 at 32–33, § 8.

47 Trial Tr. at 136:2–10 (Scileppi).

48 Id. at 179:22–180:13 (Williams).

49 Id. at 180:14–18 (Williams); id. at 136:13–17 (Scileppi).

50 Id. at 180:11–13 (Williams); see also, JX-30 at 1.

51 JX-254; Trial Tr. at 138:4–11 (Scileppi); id. at 180:19–181:8 (Williams).

52 JX-36 at 1–2.

53 JX-46 § 7.20.

54 Trial Tr. at 183:5–14 (Williams).

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excess of 19% owned by Alcon be voted in a “Neutral Manner,” meaning “in the same

proportion as the outstanding Series C Preferred Stock of [Aurion] [excluding Alcon’s

stock] is voted on the relevant matters.”55 Scileppi and Alcon’s outside counsel

understood when the parties were negotiating that the Voting Proxy was revocable

“because it didn’t say that it was irrevocable.”56

Section 7.8 of the Voting Agreement required the consent of Aurion, the

majority of common stockholders, and the Series C holders to amend the Voting

Agreement, subject to certain exceptions.57

C. Events Leading To This Litigation

Before the Board determined to pursue the challenged IPO, Alcon made

numerous offers to acquire Aurion or provide additional financing. In early March

2023, Aurion launched an auction to sell itself, which ultimately failed.58 During the

auction process, Alcon made a bid to buy Aurion, and the Board formed a Special

Committee in response.59 By June 8, Alcon ended its participation in the auction

process.60 Alcon also offered, in November 2023, to provide cash to Aurion to allow it

to reach regulatory milestones in exchange for the option to purchase Aurion later at

55 JX-46 § 7.20.

56 Trial Tr. at 184:3–5 (Williams); see also id. at 139:18–140:5 (Scileppi).

57 JX-46 § 7.8.

58 PTO ¶ 21.

59 Id. at ¶ 22; JX-65.

60 PTO ¶ 22.

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a predetermined price.61 Negotiations over the option deal continued through

October 2024. Meanwhile, in 2023, Alcon began exploring a possible IPO.62

1. The Board Votes To Pursue An IPO.

The Board first voted to pursue an IPO during its quarterly meeting in June

2024.63 Aurion CEO Greg Kunst summarized his conversations with investment

bankers.64 The investment bankers viewed Aurion as a good candidate for an IPO

and thought Aurion could achieve its medium and long-term financing goals through

an IPO.65 Rostov presented a high-level IPO timeline, and counsel from Wilson

Sonsini reviewed proposed Resolutions setting the IPO process in motion.66 All

directors except Alcon’s designee voted in favor of the Resolutions.67 The Resolutions

61 Trial Tr. at 140:11 (Scileppi).

62 Id. at 53:5–8 (Bankes); id. at 91:15–19 (Hudnall); id. at 266:14–18, 268:18–23
(Kunst). Also, Aurion issued a total of $33 million in convertible notes to Deerfield
and other investors in July and August 2024. Id. at 247:3–248:11 (Kunst). Alcon
describes the note offers as a “sweetheart deal” because, in the event of a Qualified
IPO, the noteholders’ outstanding balances will automatically convert into shares of
common stock at a 20% discount on the public price. Id. at 145:12–146:15 (Scileppi).
Alcon did not participate in the note financing and says that the deal was structured
to disincentivize Alcon from doing so. Id. at 144:9–145:11 (Scileppi). In response to
Aurion’s invitation to participate in the note financing, however, Alcon made multiple
alternative financing offers that it argues were on superior terms to the note offering,
and which Aurion rejected. JX-172 at 4, 10–13; JX-173; Trial Tr. at 251:6–253:3
(Kunst). The parties introduced these facts and the details concerning the auction
process and proposed option deal for context and color, which is the limited purpose
of this footnote.
63 JX-119.

64 Id.

65 Id.

66 Id.

67 Trial Tr. at 59:3–11 (Bankes).

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empowered the Special Committee to fully negotiate the terms of an IPO or any other

financing transaction on the table.68

Because the work toward an IPO was done by the Special Committee, Alcon

was in the dark on Aurion’s progress toward an IPO in the months that followed the

June meeting. In July 2024, Alcon’s lawyers asserted that Alcon would not consent

to any IPO.69 Alcon’s focus otherwise was on the possible option deal, which Alcon

had proposed before the June Board meeting. Because Aurion continued to negotiate

with Alcon over an option deal after the June Board meeting, Alcon viewed the IPO

as an option under consideration but far from inevitable.

2. Alcon Revokes The Voting Proxy.

Alcon acquired additional Aurion shares from Link’s entity in October 2024.70

This increased Alcon’s stake to approximately 40% of Aurion’s shares on an as-

converted basis.

On October 4, 2024, Alcon informed Aurion that, effective immediately, it was

revoking the Voting Proxy under Section 7.20 of the Voting Agreement so that Alcon

could exercise its full voting power.71 Aurion refused to recognize the revocation.72

68 JX-119 at 1.

69 JX-125.

70 Link Dep. Tr. at 100:1–8. Link’s testimony was generally favorable to Alcon and
highly credible. There is nothing to suggest that Link owed Alcon anything as a
consequence of this transaction.
71 JX-148 at 5–6.

72 Trial Tr. at 228:19–22 (Kunst).

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3. The Board Moves Forward With The IPO.

On October 14, 2024, Aurion noticed a Board meeting and distributed a draft

Registration Statement and proposed Board Resolutions.73 The Resolutions would

delegate authority to management to pursue an IPO and approve Aurion’s 2023

audited financial statements.74

The October Board meeting was the first meeting since the Board had

determined to pursue an IPO in June 2024.75 The October 14 meeting notice and

accompanying materials was the first that Alcon had learned about the IPO status

since the June meeting. After the June meeting, Alcon had swapped out one Board

designee and appointed another, each of whom were getting up to speed.76 And

although Alcon had asked to place a Board designee on the Special Committee, the

Board denied the request.77

The Board meeting occurred on October 17, 2024. During the meeting, the

Board approved the draft Registration Statement and Resolutions to advance the IPO

over the objections of Alcon’s Board designees.78 The draft Registration Statement

73 Id. at 78:24–80:19 (Hudnall); JX-151 at 4–6; JX-152.

74 JX-151.

75 Trial Tr. at 74:10–24 (Hudnall).

76 Id. at 66:21–67:1, 71:19–72:5 (Hudnall).

77 Id. at 75:1–22 (Hudnall).

78 Id. at 79:12–23 (Hudnall); id. at 256:3–7 (Kunst).

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shows that Aurion contemplated pursuing an IPO that would meet the requirement

of a “Qualified IPO” under the Charter.79

On October 18, 2024, Aurion submitted the Board-approved Registration

Statement to the U.S. Securities & Exchange Commission and sent Alcon’s directors

an internal IPO “project tracker” that revealed that Aurion was targeting a January

2025 launch.80

The tracker reveals that if Aurion does not complete an IPO by the middle of

February, it will have to complete and submit 2024 audited financial statements.81

The time needed to prepare the 2024 financials would delay the IPO beyond when

the Board projected Aurion would run out of cash.82

D. This Litigation

Recall that Section 5.1 of the Charter provided for mandatory conversion of

preferred stock upon the occurrence of a Qualified IPO. The effect of the conversion

is to exclude a Qualified IPO from the scope of Series C Consent Rights. So, Aurion

did not need Alcon’s consent to complete a Qualified IPO. But Aurion lacked

sufficient authorized shares to sell in an IPO. And the Charter requires Series C

Consent to increase the number of authorized shares.

Alcon filed this litigation on October 28, 2024, seeking a declaration that

Aurion would need Series C Consent to increase the number of authorized shares to

79 JX-150 at 119.

80 JX-153 at 1, 252–54.

81 Trial Tr. at 269:3–270:6 (Kunst).

82 Dkt. 9 (Counterclaims) ¶ 7.

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consummate a Qualified IPO. Alcon also sought a declaration that it successfully

revoked the Voting Proxy.83

Aurion filed its Answer and Counterclaims on November 4, 2024.84 Aurion

asserted laches as an affirmative defense, contending that Alcon was made aware of

a possible IPO at the June 2024 Board meeting and delayed in bringing this action

until after the IPO process was well underway.85

Through its Counterclaims, Aurion sought a declaration that it does not need

Series C consent to close a Qualified IPO. Aurion also sought a declaration that Alcon

did not validly revoke the Voting Proxy, the voting limitation found in Section 7.20

remains in effect, and any modification to Section 7.20 must be made in accordance

with Section 7.8 of the Voting Agreement.

The parties agreed that this action should proceed on an expedited schedule.86

E. The Reverse Stock Split

Tacitly conceding that it needed Series C Consent to amend the Charter to

increase the number of authorized shares, Aurion abandoned that plan during

litigation in favor of another means of securing more headroom in its capital

structure—the “Reverse Stock Split.”

The Board approved Resolutions authorizing the Reverse Stock Split on

December 16, 2024. The Resolutions stated that “every 1.395 shares of Common

83 Dkt. 1 ¶¶ 87, 94.

84 Dkt. 8; Dkt. 9.

85 Dkt. 88 at 43.

86 Dkt. 14; Dkt. 15.

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Stock” were to be “combined . . . into one share of Common Stock” which would be

“issued.”87 All stock certificates representing shares of Common Stock “prior to” the

Reverse Stock Split would have to be “promptly surrender[ed] to the Corporation” “in

exchange for a certificate” representing new “shares of common stock.”88 “No

fractional shares” would be issued as a result of the Reverse Stock Split.89 Instead,

“under Section 155 of the [DGCL], [Aurion] shall pay cash equal to the fair value of

such fractional interests.”90

Translated, the split combined all issued shares of Common Stock, which

includes both outstanding and treasury shares, into a lesser number of issued shares.

Every 1.395 pre-split shares were reclassified into 1 post-split share.91 Each post-

split share represents a larger percentage ownership of Aurion, resulting in a higher

per-share value. The increased per-share value of the Common Stock resulted in an

increase in the conversion price of the Preferred Stock, meaning that each share of

Preferred Stock became convertible into fewer shares of Common Stock, but these

shares were more valuable, on a per-share basis. On a post-split basis, therefore,

Aurion needed to reserve fewer shares of Common Stock to accomplish full conversion

of the Preferred Stock.92

87 JX-236 at 1.

88 Id.

89 Id.

90 Id. at 2.

91 Id. at 1.

92 JX-161 at 9.

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Stock splits are often accompanied by a corresponding increase or decrease in

the number of authorized shares.93 The Board, however, did not authorize a

proportionate reduction in the total number of authorized shares. That was by

design.94 By reducing the number of issued and reserved shares but maintaining the

number of authorized shares, the split had the effect of making available millions of

shares of authorized and issuable Common Stock for sale in a Qualified IPO.95

On December 11, Alcon amended its Complaint seeking a declaration that the

Reverse Stock Split violated numerous Series C Consent Rights.96

The parties tried their claims on an expedited basis on January 1 and January

14, 2025.97 The court held closing arguments immediately after the close of evidence

on January 14, 2025.98

II. LEGAL ANALYSIS

The parties raise three issues. First, are Alcon’s claims barred by laches?

Second, does the Reverse Stock Split or a Qualified IPO implicate Alcon’s Series C

Consent Rights? Third, does Alcon have the right to vote all of its shares?

93 See Trial Tr. at 296:17–21 (McCarty).

94 Id. at 295:8–12 (McCarty).

95 Id.; JX-236.

96 Dkt. 84. On December 16, Alcon filed a motion for a status quo order to prevent
Aurion from consummating the Reverse Stock Split during this litigation (the “Status
Quo Motion”). The court rejected the Status Quo Motion in part because Aurion
represented that nothing would prevent the court from invalidating the Reverse
Stock Split if, after trial, the court found the transaction violated the Series C Consent
Rights. See Dkt. 89; Dkt. 174 (Oral Arg. Tr.) at 35:8–17.
97 Dkt. 152; Dkt. 182.

98 Dkt. 182.

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A. Laches

Aurion asserts an affirmative defense of laches, arguing that Alcon

impermissibly delayed in filing this lawsuit. To prevail on laches, a defendant must

show two elements: “(i) unreasonable delay in bringing a claim by a plaintiff with

knowledge” of an infringement of his or her rights, and (ii) “resulting prejudice to the

defendant.”99 When the defendant makes the requisite showing, the plaintiff “will be

prevented from enforcing a claim in equity.”100

Aurion contends that Alcon was made aware of a possible IPO at the June 2024

Board meeting. In that meeting, all the Board members besides Alcon’s designee

voted to approve Resolutions concerning the IPO.101 Aurion argues Alcon’s delay was

due in part to its change of Board members. Aurion further argues that by waiting

until the IPO process was well underway to bring this action—after Aurion had

already spent millions of dollars on the bankers, financial advisors, and lawyers

required to proceed with a Qualified IPO—Alcon prejudiced Aurion.102

Aurion overstates the facts. After Aurion first actively began pursuing an IPO

in June, Alcon sought information and raised its consent rights in July.103 Alcon was

excluded from the Special Committee process concerning the IPO. And Alcon had no

99 Levey v. Brownstone Asset Mgmt., LP, 76 A.3d 764, 769 (Del. 2013).

100 Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 974 (Del. Ch. 2016).

101 See JX-119; Trial Tr. at 63:22–64:7 (Bankes); id. at 91:15–19 (Hudnall).

102 Dkt. 166 (“Aurion Post-Trial Opening Br.”) at 47.

103 See, e.g., JX-223 at 1 (email between Alcon’s counsel and the Special Committee

members); JX-172 at 2–5 (letters between Alcon’s and Aurion’s counsel).

17
reason to believe that the IPO was inevitable, given that Aurion continued to

negotiate the option deal with Alcon. Upon first learning “Aurion was actually

moving forward with an IPO” in late September or early October 2024,104 Alcon

attempted to resolve the disagreement out of court.105 Alcon filed suit only after those

efforts failed, within weeks of the Board’s approval of the draft Registration

Statement. That is not the stuff of laches.

B. The Series C Consent Rights

Alcon claims that the Reverse Stock Split required its consent under Sections

3.4.2 and 3.4.5 of the Charter. Section 3.4.2 requires Series C Consent to “indirectly”

increase the number of authorized shares. Section 3.4.5 requires Series C Consent to

“acquire,” “purchase,” or “redeem” shares. Alcon further argues that Aurion requires

its consent under Section 3.4.1 of the Charter amendment because the transaction

required amending the Charter. Each of Alcon’s arguments fails.

Delaware law applies contract law by analogy when enforcing corporate

charters,106 and principles of contract interpretation therefore govern the court’s

analysis. Delaware courts follow the objective theory of contracts, giving words “their

plain meaning unless it appears that the parties intended a special meaning.”107 In

104 Trial Tr. at 77:11–18 (Hudnall).

105 See JX-178; JX-179; JX-219.

106 Airgas, Inc. v. Air Prods. & Chems., Inc., 8 A.3d 1182, 1188 (Del. 2010).

107 Allen v. Encore Energy P’rs, L.P., 72 A.3d 93, 104 (Del. 2013) (citing AT & T Corp.

v. Lillis, 953 A.2d 241, 252 (Del. 2008)); see also Salamone v. Gorman, 106 A.3d 354,
367–68 (Del. 2014) (“A contract’s construction should be that which would be

18
practice, the objective theory of contracts requires that a court “give priority to the

parties’ intentions as reflected in the four corners of the agreement, construing the

agreement as a whole and giving effect to all its provisions.”108

Interpreting the agreement under Delaware law requires the court to enforce

the contract’s plain language unless the contract is ambiguous.109 The court must not

read ambiguity into a contract where none exists.110 “[A] contract is only ambiguous

when the provisions in controversy are reasonably or fairly susceptible to different

interpretations or may have two or more different meanings.”111

“Since stock preferences are in derogation of the common law, they must be

strictly construed.”112 As the Delaware Supreme Court has held:

understood by an objective, reasonable third party.” (quoting Osborn ex rel. Osborn v.
Kemp, 991 A.2d 1153, 1159 (Del. 2010))).
108 In re Viking Pump, Inc., 148 A.3d 633, 648 (Del. 2016) (citing Salamone, 106 A.3d

at 368).
109 Riverside Fund V, L.P. v. Shyamsundar, 2015 WL 5004906, at *3 (Del. Super.

Aug. 17, 2015) (“Absent any ambiguity, the Court should interpret a contract in
accordance with the plain meaning of language in the document.” (citing Eagle
Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997)); NAMA
Hldgs., LLC v. World Mkt. Ctr. Venture, LLC, 948 A.2d 411, 418 (Del. Ch. 2007)
(“[T]he clear, literal meaning of the terms in a legally binding agreement should be
given effect when those terms ‘establish the parties’ common meaning so that a
reasonable person in the position of either party would have no expectations
inconsistent with the contract language.’” (quoting Multi–Fineline Electronix, Inc. v.
WBL Corp., 2007 WL 431050, at *6 (Del. Ch. Feb. 2, 2007) (citing Eagle Indus., 702
A.2d at 1232), aff’d, 945 A.2d 594 (Del. 2008)).
110 O’Brien v. Progressive N. Ins. Co., 785 A.2d 281, 288 (Del. 2001) (“[C]reating an

ambiguity where none exists could, in effect, create a new contract with rights,
liabilities and duties to which the parties had not assented.”).
111 Id.

112 Waggoner v. Laster, 581 A.2d 1127, 1134 (Del. 1990).

19
Any rights, preferences and limitations of preferred stock
that distinguish that stock from common stock must be
expressly and clearly stated, as provided by statute.
Therefore, these rights, preferences and limitations will
not be presumed or implied.113

Further, these rules apply without regard to preferred stockholders’ appeals to

equitable principles. “Equity respects the freedom to contract[.]”114 “It is not the

court’s role to rewrite [a] contract between sophisticated market participants . . . to

suit the court’s sense of equity or fairness. Nor is it the job of a court to relieve

sophisticated parties of the burdens of contracts they wish they had drafted

differently but in fact did not.”115

1. Section 3.4.2

Alcon argues that the Reverse Stock Split violated Section 3.4.2 of the Charter

because it “indirectly” increased the number of authorized shares. Section 3.4.2

states that Aurion

shall not, either directly or indirectly by amendment,
merger, consolidation or otherwise, . . . increase or decrease
the number of authorized shares of Common Stock . . . .116

113 Elliott Associates, L.P. v. Avatex Corp., 715 A.2d 843, 852–3 (Del. 1998).

114 Asten, Inc. v. Wangner Sys. Corp., 1999 WL 803965, at *6 (Del. Ch. Sept. 23, 1999).

115 Exit Strategy, LLC v. Festival Retain Fund BH, L.P., 2023 WL 4571932, at *7 (Del.

Ch. July 17, 2023), aff’d, 326 A.3d 356 (Del. 2024) (internal quotation marks and
footnote omitted).
116 JX-170 § 3.4.2. The NVCA Form has a similar limitation, which requires consent

to: “increase the authorized number of shares of Preferred Stock or any additional
class or series of capital stock of the Corporation unless the same ranks junior to the
Preferred Stock with respect to its rights, preferences and privileges.” JX-301 § 3.3.3.

20
The major problem with Alcon’s argument is that the Reverse Stock Split did

not increase or decrease the number of authorized shares of Common Stock—either

directly or indirectly. Rather, it divided the issued shares by a specific number.117

Before the Reverse Stock Split, there were 33,185,455 shares of Common Stock

authorized under the Charter. After the Reverse Stock Split, there were the exact

same number—33,185,455 shares of Common Stock—authorized under the Charter.

Alcon concedes this fact.118

Alcon argues, nevertheless, that the term “indirectly” is intended to prevent

Aurion from undertaking “the functional equivalent” of actions covered by Section

3.4.2.119 To Alcon, the function of Section 3.4.2 was to fix Aurion’s capital structure

and prevent all forms of dilution. By increasing the number of available shares, the

Reverse Stock Split allows Aurion to dilute Alcon’s interests. Alcon thus reasons

Aurion required its consent to consummate the split.

Alcon’s functional-equivalent argument runs headlong into the doctrine of

independent legal significance120 and principles of contract interpretation governing

117 1 R. Franklin Balotti & Jesse A. Finkelstein, Balotti and Finkelstein’s Delaware

Law of Corporations and Business Organizations § 8.5 (4th ed. Supp. 2024-2).
118 See Alcon Post-Trial Opening Br. at 37; Trial Tr. at 93:17–21 (Hudnall); id. at

157:13–17 (Scileppi); id. at 296:13–16 (McCarty).
119 Alcon Post-Trial Opening Br. at 33–34.

120 SIPCA Hldgs. S.A. v. Optical Coating Lab’y, Inc., 1997 WL 10263, at *5 (Del. Ch.

Jan. 6, 1997) (“[T]he doctrine of independent legal significance holds that legal action
authorized under one section of the corporation law is not invalid because it causes a
result that would not be achievable if pursued through other action under other
provisions of the statute.”); see also Gunderson v. Trade Desk, Inc., 326 A.3d 1264,

21
stock preferences.121 These two principles combine to force the court to treat different

forms of corporate action authorized by the DGCL as independently permissible,

regardless of any similarities in their substantive outcomes. As Vice Chancellor

Fioravanti recently explained when applying these doctrines in Trade Desk, “[a]n

open-ended inquiry into substantively equivalent outcomes, devoid of attention to the

formal means by which they are reached, is inconsistent with the manner in which

Delaware law approaches issues of transactional validity and compliance with the

applicable business entity statute and operative entity documents.”122

The DGCL distinguishes between an amendment that changes the number of

authorized shares and an amendment that divides issued stock into “lesser numbers,”

which is exactly what a reverse stock split does.123 Therefore, a change in authorized

1275–79 (Del. Ch. Nov. 8, 2024) (including a scholarly discussion of the doctrine of
independent legal significance).
121 See, e.g., Waggoner, 581 A.2d at 1134 (Del. 1990) (“Since stock preferences are in

derogation of the common law, they must be strictly construed.”).
122 Trade Desk, 326 A.3d at 1285.

123 Blades v. Wisehart, 2010 WL 4638603, at *10 (Del. Ch. Nov. 17, 2010) (“[I]t is

crucial to distinguish an amendment to the certificate of incorporation that merely
increases a corporation’s authorized but unissued capital stock, as expressly
authorized under the first clause of § 242(a)(3), from an amendment that changes the
number of outstanding shares, as expressly authorized by the amended language in
the last clause of § 242(a)(3) that contemplates a distinct charter amendment that
would have the effect of ‘subdividing or combining the outstanding shares of any class
or series of a class of shares into a greater or lesser number of outstanding shares.’”),
superseded on other grounds by statute 8 Del. C. § 204; see also 8 Del. C. § 242(d)(2)
(differentiating between “[a]n amendment to increase or decrease the authorized
number of shares of a class of capital stock” and “an amendment to reclassify by
combining the issued shares of a class of capital stock into a lesser number of issued
shares of the same class of stock”).

22
shares has independent legal significance from a reverse stock split. Strictly

construing Section 3.4.2, as the court must, the provision governs only amendments

to authorized stock.

The Reverse Stock Split did not require the Series C Consent under Section

3.4.2.

2. Section 3.4.5

Alcon newly argues that the Reverse Stock Split implicated the Series C

Consent Rights in Section 3.4.5, which states that Aurion:

shall not, either directly or indirectly by amendment,
merger, consolidation or otherwise, do any of the following
without . . . the written consent or affirmative vote of the
Requisite Series C Holders . . . purchase or redeem . . . or
acquire any shares of share capital of this Corporation,
other than [exceptions omitted].124

Alcon argues that the Reverse Stock Split implicates Section 3.4.5 in two ways:

because Aurion both “acquired” shares of Common Stock and “purchased” or

“redeemed” fractional shares.125 Neither argument works.

124 JX-170 § 3.4.5.The NVCA Form uses similar language, prohibiting the company
from “purchas[ing] or redeem[ing] . . . any shares of capital stock of the Corporation
other than [exceptions omitted].” JX-301 § 3.3.5.
125 Unlike other places in the Charter, Section 3.4.5 does not refer to stock splits, stock

combinations, stock cancellations, stock conversions, or fractional shares. But see,
e.g., JX-170 §§ 1.1–5.3. This express mention of relevant transactions in the Charter,
and the absence of that language in Section 3.4.5, is likely enough to defeat Alcon’s
argument. To imply those limitations in Section 3.4.5 would violate the strict rules
of construction for preferred stock protective provisions.

23
a. No Acquisition

The Charter does not define “acquire.” Alcon adopts the following definitions:

“[t]o gain possession or control of; to get or obtain by any means,”126 or “to come into

possession or ownership of.”127 Alcon argues that Aurion improperly “acquired”

shares through the Reverse Stock Split because Aurion gained possession or control

of additional shares of Common Stock through the transaction.128 To Alcon, the logic

is simple: before the Reverse Stock Split, “Aurion did not have enough shares to close

a Qualified IPO”; after, it did.129 Thus, Alcon argues, Aurion must have “acquired

approximately seven million shares of Common Stock available for sale at the IPO

that it previously did not possess.”130

Alcon admits that the Reverse Stock Split did not involve a corporate

expenditure. Relying on the language of Section 160(a) of the DGCL, however, Alcon

argues that this does not matter. Section 160(a) authorizes a corporation to “purchase

redeem, receive, take or otherwise acquire . . . its own shares[.]”131 From this, Alcon

concludes that a corporation may “otherwise acquire” assets without purchasing

126 Alcon Post-Trial Opening Br. at 29 (citing Black’s Law Dictionary (12th ed. 2024)).

127 Id. (citing Acquire Definition and Meaning, Dictionary.com,
https://www.dictionary.com/browse/acquire (last visited Jan. 7, 2025)).
128 Alcon Post-Trial Opening Br. at 29.

129 Id. at 27.

130 Id. at 34.

131 8 Del. C. § 160(a) (emphasis added).

24
them. Alcon argues that Section 3.4.5 tracks the language of Section 160(a), and thus

similarly covers purchases, redemptions and “other acquisitions” of Aurion stock.132

That is a decent argument, but it fails in the end. The lack of a corporate

expenditure is not the issue—there are likely ways to acquire assets without making

a corporate expenditure, but the Reverse Stock Split did not have that consequence.

The bottom line is that, through the transactional magic of a reverse stock split,

Aurion did not acquire any issued shares by operation of the Reverse Stock Split.

From a technical perspective, the Reverse Stock Split was a reclassification of

existing shares governed by Section 242 of the DGCL, not an acquisition or

repurchase under Section 160 of the DGCL, as Alcon argues.133 Again, the number

of authorized Common Stock shares remained constant throughout the process. The

increased head room in Aurion’s Common Stock resulted from a reduced number of

issued shares relative to the unchanged number of authorized shares and fewer

132 Alcon Post-Trial Opening Br. at 32–33.

133 It is worth noting that if Section 160 governed reverse stock splits, then reverse

stock splits could not be undertaken by corporations that are insolvent or lack
surplus. This would be problematic because reverse stock splits are frequently
employed by public companies on the verge of insolvency seeking to maintain their
stock exchange listing status. See, e.g., SEC Release No. 30-101306 (Oct. 10, 2024),
available at https://www.sec.gov/files/rules/sro/nyse/2024/34-101306.pdf (noting that
the NYSE “has observed that some companies, typically those in financial distress or
experiencing a prolonged operational downturn, engage in a pattern of repeated
reverse stock splits” and “believes that such behavior is often indicative of deep
financial or operational distress within such companies”); 1 David A. Drexler et al.,
Delaware Corporation Law & Practice § 20.04 (2024) (explaining that “Section 173
distinguishes between stock dividends and stock splits, providing that no such
transfer from surplus to capital is necessary in the latter case[,]” such that the
creditor protections applicable to a stock dividend are not applicable to stock splits
effected by charter amendment).

25
shares being contractually required to be reserved for issuance upon conversion of

the Preferred Stock. The reverse split was not an acquisition as understood under

the DGCL, against which this court interprets stock preferences.

The split was also not an acquisition from an accounting perspective. Aurion

cites to authority for the proposition that “[n]either unissued shares, treasury shares,

nor outstanding rights or options are shown as assets on the books of the

corporation.”134 Alcon did not rebut this assertion.

For these reasons, it seems a stretch to construe the Reverse Stock Split as an

acquisition. Alcon did not meet its burden of persuasion on this point. Aurion did

not “acquire” shares in violation of Section 3.4.5.

b. No Purchase Or Redemption

Alcon contends that Aurion “purchase[d] or redeem[ed]” shares through the

Reverse Stock Split based on the treatment of fractional shares in the transaction.135

Where a corporation does not issue fractional shares after a reverse split,

Section 155 allows it to “pay in cash the fair value of fractions of a share.”136

134 Balotti, supra note 117, § 5.17, at 5-56, n.312 (4th ed. 2025); see also Wood v.

Coastal States Gas Corp., 401 A.2d 932, 941 (Del. 1979) (explaining that a stock split
effects “changes in the number of outstanding shares which are unaccompanied by
other balance sheet changes: thus a stock split, reverse split or stock dividend
changes only the number of shares outstanding without any change in corporate
assets”); cf. 8 Del. C. § 153 (recognizing the difference between an issuance of shares
out of authorized but unissued shares and a “disposition” of treasury shares (which,
for par value shares, may be issued without the need to receive consideration at least
equal to the par value)).
135 Alcon Post-Trial Opening Br. at 35–36.

136 8 Del. C. § 155(2).

26
Corporations that opt to do so must “pay ‘fair value’ to stockholders who are cashed

out for their fractional interest.”137 The Resolution approving the Reverse Stock Split

states that “no fractional shares of Common Stock shall be issued in connection with

the Reverse Stock Split and instead, pursuant to Section 155 of the [DGCL], [Aurion]

shall pay cash equal to the fair value of such fractional interests[.]”138

Based on the requirement of Section 155 and the language of the Board

resolution, Alcon argues that “any fractional shares of Common Stock existing after

the split were returned to Aurion—presumably to be combined into full treasury

shares—in exchange for a cash payment from Aurion. Aurion has thus purchased

Common Stock shares in exchange for cash payments without Series C Consent.”139

Alcon’s conclusion does not flow from its premise. Aurion did not purchase or

redeem fractional shares through the split because Aurion did not issue fractional

shares.140 Rather, where the number of Common Stock shares owned by a holder

was not perfectly divisible by 1.395, the fractional overage was canceled and

converted into the right to receive equivalent value in cash. Canceling is not

137 Samuels v. CCUR Hldgs., Inc., 2022 WL 1744438, at *4 (Del. Ch. May 31, 2022)

(quoting 8 Del. C. § 155); see also Zutrau v. Jansing, 2014 WL 3772859, at *32 (Del.
Ch. July 31, 2014) (noting this type of stock split is one that “compensate[s]
stockholders in lieu of issuing fractional shares”).
138 JX-236 at 2.

139 Alcon Post-Trial Opening Br. at 35.

140 JX-185 at 3 (“[N]o fractional shares of Common Stock shall be issued in connection

with the Reverse Stock Split and instead, pursuant to Section 155 of the Delaware
General Corporation Law, the Company shall pay cash equal to the fair value of such
fractional interests[.]”); JX-186 at 2 (“No fractional shares of Common Stock shall be
issued as a result of the Reverse Stock Split.”).

27
purchasing. The distinction is subtle, but dispositive: Aurion did not purchase or

redeem anything.

3. Section 3.4.1

Alcon also argues that Aurion needs its consent to consummate a Qualified

IPO in all scenarios, regardless of the application of the Series C Consent Rights to

the Reverse Stock Split.141 This is so because, at closing of the planned Qualified IPO,

Aurion intends to amend the Charter to include provisions that customarily appear

in public company charters, such as a restriction on the stockholders’ power to act by

written consent.142 Because Section 3.4.1 of the Charter requires Series C Consent

for amendments generally,143 Alcon argues that its consent is required for a Qualified

IPO.

Alcon does not advance this argument whole-heartedly, and for good reason.

The argument is illogical in light of the parties’ contractual scheme. Section 5 of the

Charter governs “Mandatory Conversion.” If Aurion required Series C Consent to

carry out a Qualified IPO under Section 5.1(a), then the conversion would not be

“mandatory.”144

141 Alcon Post-Trial Opening Br. at 25–26, 29–34.

142 JX-152 at 77.

143 JX-170 § 3.4.1.

144 See Sunline Com. Carriers, Inc. v. CITGO Petroleum Corp., 206 A.3d 836, 839 (Del.

2019) (“As we have previously recognized, we must ‘give each provision and term
effect, so as not to render any part of the contract mere surplusage.’”) (quoting Kuhn
Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396–97 (Del. 2010)).

28
Moreover, the closing of the Qualified IPO follows a process. First comes the

mandatory conversion of the issued Preferred Stock. Second comes the filing of the

amended and restated IPO charter. Because all shares of Series C Preferred Stock

will have been automatically converted upon the Qualified IPO, no shares will remain

outstanding upon the filing and effectiveness of the “IPO charter.” Without any

Series C Shares outstanding, there is no blocking right to exercise. Thus, the Series

C Consent Rights will not apply to a Qualified IPO.145

C. Revocation Of The Voting Proxy

The parties request competing declarations concerning Alcon’s ability to vote

its full block of shares.146 Alcon maintains that it revoked the Voting Proxy and can

now vote all its shares. Aurion takes the opposite position, arguing the purported

revocation is invalid and unenforceable.

Section 7.20 contains the Voting Proxy. It provides:

Voting Rights. Alcon shall not be permitted to exercise
voting rights with respect to any shares of capital stock
beneficially owned by Alcon that, in the aggregate,

145 See generally TCG Secs., Inc. v. Southern Union Co., 1990 WL 7525, at *10 (Del.

Ch. Jan. 31, 1990) (finding on a motion for a preliminary injunction that protective
provisions ceased to apply to a merger when the shares, by redemption, ceased to be
outstanding before the effectiveness of the merger, even though the shares were
outstanding on the record date); Greenmont Cap. P’rs I, LP v. Mary’s Gone Crackers,
Inc., 2012 WL 4479999 (Del. Ch. Sept. 28, 2012) (holding that the protective
provisions given to the holders of Series B preferred stock (acting as a separate series)
did not apply to a charter amendment effected after the mandatory conversion of all
outstanding preferred stock because the conversion extinguished the shares of Series
B preferred stock, thus eliminating the separate series protective provisions that
would have otherwise enabled them to block the later charter amendment).
146 Aurion Post-Trial Opening Br. at 38–39; Alcon Post-Trial Opening Br. at 25; PTO

¶¶ 58(a), 59(a).

29
represent voting rights in excess of 19% of the Company’s
outstanding Common Stock on an as-converted basis (the
“Voting Threshold”) on any matter submitted to vote of
all holders of capital stock of the Company. Instead, the
Chief Financial Officer or the Chief Executive Officer of the
Company then in office, each of them individually, with full
power of substitution and resubstitution, shall exercise the
voting rights with respect to such shares of capital stock in
excess of the Voting Threshold in a Neutral Manner (the
“Voting Proxy”). “Neutral Manner” means in the same
proportion as the outstanding Series C Preferred Stock of
the Company (excluding any and all capital stock of the
Company owned, directly or indirectly, by Alcon) is voted
on the relevant matters. For the avoidance of doubt,
nothing contained herein shall limit Alcon’s ability to vote
all shares of capital stock beneficially owned by it on any
matter submitted to the holders of Preferred Stock as a
class, or any matter submitted to the holders of one or more
series of Preferred Stock, voting together as a single class,
whether or not such vote is calculated on an as-converted
to Common Stock basis, including, without limitation, a
vote of the Requisite Series C Holders (as such term may
be amended after the date hereof). Alcon and each Investor
hereby agree that the implementation of the Voting Proxy
hereby satisfies any and all obligations of the Company and
the Company’s stockholders due under Section 6.15
“Accounting Treatment” of the Purchase Agreement, and
that the Company and the Company’s stockholders
therefore have no remaining obligations to Alcon under
such Section of the Purchase Agreement.147

Alcon’s primary argument under Section 7.20 is straightforward. Delaware

courts apply a “presumption against disenfranchisement” requiring “clear and

convincing evidence that the contract was intended to restrict” voting.148 Consistent

with this presumption, Delaware law treats a proxy as revocable unless it is expressly

147 JX-46 § 7.20.

148 Salamone v. Gorman, 106 A.3d 354, 371 (Del. 2014).

30
made irrevocable by the principal.149 Section 7.20 of the Voting Agreement

establishes a voting proxy arrangement by its plain terms. Section 7.20 is not

expressly irrevocable.150 Accordingly, Section 7.20 is revocable at Alcon’s will.

Aurion responds in three ways. Aurion first argues that Section 7.20 is not, in

fact, a proxy. It next argues that Section 7.20 is a term of the Voting Agreement and

can only be modified in accordance with Section 7.8 of the Voting Agreement, which

generally requires the other parties’ consent to amend, modify, or terminate its

provisions. It last argues that even if Alcon were able to revoke the Voting Proxy

portion of Section 7.20, it would be prohibited, under the remaining portions of

Section 7.20, to vote more than 19% of Aurion’s fully diluted stock, and further, that

Alcon’s shares in excess of the 19% threshold must be voted in a “Neutral Manner.”151

Each of these arguments fails.

Aurion’s first argument is its weakest. Aurion argues that Section 7.20 is not

a proxy even though the parties called it a Voting Proxy.152 As a leading treatise on

Delaware law describes, “[t]he proxy relationship is a ‘particular sort of agency’ in

which the stockholder is the principal and the proxy holder is the agent to vote on the

shares.”153 This is what the Voting Proxy does. Alcon, the principal, grants the agent,

149 See 8 Del. C. § 212(e); Eliason v. Englehart, 733 A.2d 944, 947 (Del. 1999).

150 JX-46 § 7.20.

151 Dkt. 135 (Aurion Pre-Trial Br.) at 45.

152 See, e.g., JX-36 at 1; JX-204 at 2; JX-249 at 2; JX-250 at 4; JX-254; JX-256 at 1.

153Edward P. Welch et al., Folk on the Delaware General Corporation Law,
Fundamentals § 212.03[A], at GCL-688–89 (2020 ed.) (citing Duffy v. Loft, Inc., 151

31
the CFO or the CEO, the right to vote its shares. Aurion de-emphasizes these facts,

arguing that the “identity of the person who implements Alcon’s obligation is

immaterial” under the Voting Proxy.154 To Aurion, the only relevant part of the

Voting Proxy is Alcon’s agreement to have its “excess shares” voted in a Neutral

Manner. But this argument ignores many words in Section 7.20, including “Voting

Proxy.”

Tellingly, Aurion gives its first argument very little attention, citing no

authority to support it. It thus seems fair to give the argument equally terse

treatment: It flunks. The Voting Proxy is a proxy.

Aurion’s second argument rests on Section 7.8 of the Voting Agreement and is

stronger, but it falters under the presumption against disenfranchisement. Section

7.8 is titled “Consent Required to Amend, Terminate or Waive.” The first sentence of

Section 7.8 requires consent from multiple parties (including Aurion) for any

amendment, modification, termination or waiver:

This Agreement may be amended, modified or terminated
. . . and the observance of any term hereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument
executed by (i) [Aurion]; (ii) the holders of a majority of the
shares of Common Stock issued or issuable upon
conversion of the shares of Preferred Stock beneficially
owned by the Investors (voting together as a single class

A. 223, 227 (Del. Ch. 1930), aff’d, 152 A. 849 (Del. 1930); Rice & Hutchins, Inc. v.
Triplex Shoe Co., 147 A. 317, 322 (Del. Ch. 1929), aff’d, 152 A. 342 (Del. 1930)).
154 Aurion Post-Trial Opening Br. at 43–44.

32
and on an as-converted basis); . . . and (iii) the Requisite
Series C Holders.155

The second sentence of Section 7.8 begins with “Notwithstanding the

foregoing” and is followed by a list of eight subparts providing for additional required

consents or exceptions to the first sentence of Voting Agreement Section 7.8. Five of

those subparts—(a) and (e) through (h)—identify additional required consents. Three

additional subparts—(b), (c), and (d)—identify exceptions to the consents required by

the first sentence. To Aurion, the Voting Proxy is a “term” of the agreement and thus

subject to Section 7.8. The structure of Section 7.8 suggests that the parties

considered each provision of the Voting Agreement carefully to determine when a

contractual party could alter obligations under it. Because none of the exceptions

cover the Voting Proxy, Alcon required Aurion’s consent to revoke it.

In response, Alcon disputes whether the exceptions of Section 7.8 apply, but

concludes in the end that it does not matter. To Alcon, Section 7.8 does not govern

Section 7.20 because it does not govern “revocation.” It could have. The parties knew

how to structure an irrevocable proxy. They did so in Section 4.2 of the Voting

Agreement, titled “Irrevocable Proxy and Power of Attorney.” They did not do so in

Section 7.20. And they did not address revocation in Section 7.8.

155 JX-46 § 7.8. “Requisite Series C Holders” is defined as “the holders of at least
66.7% of the shares of Common Stock then issued or issuable upon conversion of the
shares of then outstanding shares of Series C Preferred Stock (for the avoidance of
doubt, without giving effect to limitations associated with the Voting Threshold).” Id.
§ 3.2.

33
Alcon has the better side of this argument. The parties did not deem Section

7.20 irrevocable. That seems intentional, given their treatment of Section 7.8.

Bolstered by the presumption against disenfranchisement, Alcon’s interpretations

succeed. Alcon has the authority to revoke the Voting Proxy even if it has not met

the requirements of Section 7.8.

The court need not revert to extrinsic evidence to make this determination

given the presumption favoring Alcon’s interpretation. But the extrinsic evidence

supports Alcon’s view.

 It was Alcon who requested a solution to the accounting issue days
before the initial closing, after the other Series C investors had already
signed off on the Purchase Agreement.156 Alcon’s counsel proposed the
covenant that became Section 6.15. It states that “Alcon may elect to
have any or all securities purchased by Alcon hereunder to be in the
form of non-voting securities or for such securities to have limitations
on voting rights.”157

 Aurion argues repeatedly that the other Series C investors demanded
the Voting Agreement “to ensure that Alcon did not have a significant
amount of control.”158 But Aurion relies exclusively on the testimony of
ElBardissi, which is not consistent with the contemporaneous evidence.
Section 6.15 was added after Deerfield had already signed the deal and
agreed to Alcon’s $40 million investment.159

 When Alcon elected to pursue its rights under Section 6.15, it proposed
to Deerfield’s counsel a new series of preferred non-voting shares.160

156 Trial Tr. at 133:10–24 (Scileppi); id. at 222:7–24 (Kunst) (“Alcon raised the issue.”);

id. at 178:24–179:9 (Williams); JX-15 at 1.
157 JX-168 at 39 (emphasis added).

158 Trial Tr. at 118:4–16 (ElBardissi); see also Aurion Post-Trial Opening Br. at 44.

159 Trial Tr. at 179:19–180:1 (Williams); id. at 135:13–16 (Scileppi); id. at 70:15–71:4

(Hudnall).
160 JX-28; JX-29.

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Alcon (and only Alcon) could waive the provision.161 And any non-voting
shares could likewise convert back into voting shares at Alcon’s
option.162 This guaranteed Alcon “the optionality” to vote its full stake
if Alcon decided to do so.163 Deerfield “signed off pretty quickly.”164

 Aurion then responded with two alternative ways to achieve the desired
outcome, proposing a pre-funded warrant, under which Alcon could elect
to receive pre-funded voting shares at some point, or a voting proxy.165
Alcon elected the voting proxy approach.166 No one at Aurion proposed
that it be irrevocable. And Section 7.20 does not speak to that issue. As
a consequence, Scileppi and Alcon’s counsel understood that it was
revocable.167

This all suggests that it was the parties’ intent to allow Alcon to revoke the

Voting Proxy. Aurion’s second argument thus also falls short.

Aurion’s last argument seeks to retain the Neutral-Manner instruction and the

Voting Threshold even if the Voting Proxy is revoked. Aurion’s argument as to the

Neutral-Manner instruction is easily dismissed. The Neutral Manner language gives

instructions to Alcon’s proxy on how to vote its shares. As a voting instruction to the

proxy, it no longer had relevance once the proxy was revoked.168

161 JX-30 at 32–33, § 8.

162 Id. at 17–18, § 4.1; Trial Tr. at 136:6–12 (Scileppi); id. at 180:2–13 (Williams).

163 Trial Tr. at 136:6–10 (Scileppi).

164 Id. at 180:14–18 (Williams); id. at 136:13–17 (Scileppi).

165 JX-254; Trial Tr. at 138:4–11 (Scileppi); id. at 180:21–181:8 (Williams).

166 JX-36 at 1–2.

167 Trial Tr. at 139:18–140:5 (Scileppi); id. at 184:3–5 (Williams).

168 See In re Appraisal of Dell Inc., 143 A.3d 20, 57–58 (Del. Ch. 2016) (finding that

the revocation of a voting proxy included the revocation of voting instructions
associated with that proxy); Parshalle v. Roy, 567 A.2d 19, 28 n.9 (Del. Ch. 1989)
(explaining that where a later issued proxy revoked an earlier issued proxy, the
voting instructions on the later issued proxy would be operative).

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Aurion’s argument as to the Voting Threshold is a bit trickier. Aurion argues

that the first sentence of Section 7.20 containing the definition of Voting Threshold

affirmatively obligates Alcon to refrain from voting shares above the Voting

Threshold. It provides: “Alcon shall not be permitted to exercise voting rights with

respect to any shares of capital stock . . . in excess of” the Voting Threshold. Section

7.20 establishes the Voting Proxy and the Neutral-Manner instructions in the second

sentence. The two sentences serve different purposes, according to Aurion, and

should be independently interpreted and enforced.

In seeking to excise the first sentence of Section 7.20 from the remainder of

that provision, Aurion ignores the first word in the second sentence: “[i]nstead.” That

word signals that the two sentences are intended to operate together. That is, the

Voting Proxy described in the second sentence of Section 7.20 exists “instead” of or as

an alternative to a circumstance where Alcon votes its excess shares. This suggests

that if the Voting Proxy is revoked, so too is the Voting Threshold.

Aurion’s interpretation also ignores the last sentence of Section 7.20, which

states that the provision is intended to satisfy Aurion’s obligations under Section 6.15

of the Purchase Agreement.169 And Section 6.15 itself states that the parties “intend

for Alcon to invest in [Aurion] on a basis . . . that does not convey control of [Aurion]

169 JX-46 § 7.20 (“Alcon and each Investor hereby agree that the implementation of

the Voting Proxy hereby satisfies any and all obligations of the Company and the
Company’s stockholders due under Section 6.15 ‘Accounting Treatment’ of the
Purchase Agreement, and that the Company and the Company’s stockholders
therefore have no remaining obligations to Alcon under such Section of the Purchase
Agreement.”).

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to Alcon in a manner that would result in Alcon consolidating the financial results of

[Aurion] with those of Alcon[.]”170 Thus, Section 7.20, in its entirety, exists to address

Alcon’s accounting concerns.

For these reasons, Aurion’s proposed interpretation is untenable. The Voting

Threshold was eliminated with the revocation of the Voting Proxy.

Alcon and Aurion agree that under Section 7.16, the party whose

interpretation of the Voting Agreement prevails is entitled to attorneys’ fees.171

Although Delaware courts generally apply the American Rule that “each party is

obligated to pay its own attorneys’ fees regardless of the outcome,”172 “where the

parties have determined the allocation of fees by private ordering,” “departure from

this general rule and deference to their agreement are warranted.”173 Because Alcon

has prevailed on the Voting Agreement claim, it is entitled to reasonable attorneys’

fees.

III. CONCLUSION

Judgment will be entered in Aurion’s favor with respect to the Reverse Stock

Split. Alcon’s claims are not barred by laches. Aurion’s Charter does not require the

170 JX-168 § 6.15.

171 Aurion Post-Trial Opening Br. at 45; Alcon Post-Trial Opening Br. at 51 n.14; see

also JX-46 § 7.16 (“The prevailing party shall be entitled to reasonable attorney’s fees,
costs, and necessary disbursements in addition to any other relief to which such party
may be entitled.”).
172 Thornton v. Lamborn, 2024 WL 3757903, at *1 (Del. Ch. Aug. 12, 2024) (citing

Chrysler Corp. v. Dann, 223 A.2d 384, 386 (Del. 1966)).
173 Aloha Power Co., LLC v. Regenesis Power, LLC, 2017 WL 6550429, at *5 (Del. Ch.

Dec. 22, 2017); see also LPPAS Representative, LLC v. ATH Hldg. Co., LLC, 2022 WL
94610, at *7 (Del. Ch. Jan. 10, 2022).

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consent of the holders of 66.7% of the outstanding shares of Series C Preferred Stock

to complete a Qualified IPO. Judgment is entered in Alcon’s favor with respect to the

Voting Proxy. Alcon has the right to vote its full block of stock, and Alcon is entitled

to its attorneys’ fees under the Voting Agreement. To facilitate a prompt appeal, the

parties shall submit a form of order implementing this decision within one day.

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