IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

CERTISIGN HOLDING, INC.,

a Delaware corporation,

 Plaintiff,

 v.

SERGIO KULIKOVSKY,

 Defendant.

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SERGIO KULIKOVSKY and 

SK INERNATIONAL HOLDINGS, LLC,

 Counterclaim Plaintiffs,

 v.

CERTISIGN HOLDING, INC., 

a Delaware corporation,

 Counterclaim Defendant.

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C.A. No. 12055-VCS

MEMORANDUM OPINION

Date Submitted: March 12, 2018

Date Decided: June 7, 2018

Michael A. Pittenger, Esquire, Jaclyn C. Levy, Esquire, Jay G. Stirling, Esquire and 

Tyson J. Prisbrey, Esquire of Potter Anderson & Corroon LLP, Wilmington, 

Delaware, Attorneys for Plaintiff and Counterclaim Defendant CertiSign Holding, 

Inc.
David J. Margules, Esquire, Elizabeth A. Sloan, Esquire and Suzanne O. Lufadeju, 

Esquire of Ballard Spahr LLP, Wilmington, Delaware, and William B. Igoe, Esquire 

of Ballard Spahr LLP, Philadelphia, Pennsylvania, Attorneys for Defendant and 

Counterclaim Plaintiffs Sergio Kulikovsky and SK International Holdings, LLC.

SLIGHTS, Vice Chancellor 
1

John D. Rockefeller is quoted as saying, “a friendship founded on business is 

a good deal better than a business founded on friendship.”1 And so it was for three 

friends who formed a network of entities to do business in the internet protocol and 

security space. After a period of some success, the business began to falter and, 

ultimately, the business partners fell out. Verbal and physical skirmishes ensued. 

Whatever business sense the friends brought with them into the venture was replaced 

by shortsighted bitterness and vindictiveness. The partners behaved badly. 

Litigation inevitably followed. As it turns out, some of the bad behavior amounted 

to actionable wrongdoing. Because one of the entities at the center of the business 

relationship, CertiSign Holding, Inc. (“CertiSign” or the “Company”), is a Delaware 

corporation, the litigation landed in this Court. 

The parties are CertiSign as plaintiff and counterclaim defendant on one side, 

and a former director of CertiSign, Sergio Kulikovsky (“Kulikovsky”), and his 

wholly-owned entity, SK International Holdings, LLC (“SK Holdings”) as 

defendant (Kulikovsky) and counterclaim plaintiffs (Kulikovsky and SK Holdings)

on the other.

2

 The events leading to this litigation began in 2005, when CertiSign 

underwent a reorganization. In connection with the 2005 reorganization, CertiSign 

 

1

John D. Rockefeller, Random Reminiscences of Men and Events (Doubleday 1909) 

(actually attributing the quote to his business partner Henry Flagler).

2 Although SK Holdings is not a defendant, for simplicity’s sake, I refer to Kulikovsky and 

SK Holdings collectively as “Defendants.” 
2

issued a substantial amount of stock. Approximately three years later, in 2008, 

Kulikovsky, who had been serving as CEO of the operating company, resigned from 

that position after his business partners expressed a preference for a professional 

manager to serve as CEO. By then, the disintegration of the trio’s friendship and 

business relationship was brewing. Four years later, in 2012, as the parties began to 

explore a potential sale of CertiSign, it was discovered that the stock issued in 

connection with the 2005 reorganization had been issued before CertiSign’s 

amended and restated certificate of incorporation was filed with the appropriate 

authorities. Consequently, CertiSign’s outside legal advisors opined that because 

the vast majority of CertiSign’s outstanding stock (as issued in the reorganization) 

was defective, the subsequent vote to elect its board of directors had also been 

defective and all actions taken thereafter by the pseudo board were invalid. 

CertiSign sought to remedy these structural defects with certain self-help steps 

devised by its counsel. At the time the defects were discovered, Kulikovsky was 

one of two CertiSign directors in office who had been a director both before and 

after the reorganization. Accordingly, CertiSign needed Kulikovsky to sign certain 

consents to remedy the capital structure defects. But, by then, Kulikovsky’s 

relationship with his former friends and current business partners had soured. 

In response to the request for his assistance in restoring CertiSign’s capital structure, 

Kulikovsky declared that he would not sign the consents unless CertiSign and certain 
3

of its stockholders acceded to several demands. These demands included 

(1) dissolving CertiSign’s controlling stockholder, in which SK Holdings holds 

stock, so that Kulikovsky could vote the CertiSign shares he contributed to CKS 

directly, and (2) requiring another CertiSign director to repay Kulikovsky a personal 

loan owed to Kulikovsky. CertiSign did not give in to Kulikovsky’s demands and 

Kulikovsky never signed the consents. This, in turn, entirely shut down CertiSign’s 

self-help efforts. 

In a separate action, the Court granted relief to CertiSign under 8 Del. C. 

§ 205, over Kulikovsky’s opposition, by entering an order validating the stock issued 

in the reorganization.

3

 Having prevailed in the Section 205 action, CertiSign then 

initiated this action in which it alleges Kulikovsky breached his fiduciary duty of 

loyalty to CertiSign by refusing to sign the self-help documents unless CertiSign 

gave into his self-interested demands. CertiSign seeks damages, attorneys’ fees and 

expenses. In riposte, Kulikovsky and SK Holdings have pressed counterclaims 

against CertiSign in which Kulikovsky seeks to compel CertiSign to grant stock 

options to him that allegedly were promised but never delivered, and SK Holdings 

seeks to compel CertiSign to repay a loan that CertiSign allegedly assumed on behalf 

 

3

In re CertiSign Hldg., Inc., 2015 WL 5136226 (Del. Ch. Aug. 31, 2015); In re CertiSign 

Hldg., Inc., 2015 WL 5786138, at *1 (Del. Ch. Oct. 2, 2015) (ORDER).
4

of its indirectly-held, wholly-owned subsidiary (related to, but separate from, the 

personal loan owed to Kulikovsky). 

In this post-trial Memorandum Opinion, I conclude that (1) Kulikovsky 

breached his fiduciary duty of loyalty to CertiSign by refusing to cooperate with the 

self-help for solely personal reasons; (2) Defendants did not prove that CertiSign 

granted Kulikovsky options; and (3) Defendants did not prove that CertiSign 

assumed the debt owed to SK Holdings by CertiSign’s indirectly-held, whollyowned subsidiary. I also award CertiSign some attorneys’ fees and expenses as 

damages. My reasoning follows.

I. FACTUAL BACKGROUND

The facts are drawn from the parties’ pre-trial stipulation, evidence admitted 

at trial and those matters of which the Court may take judicial notice.4 The trial 

record consists of 431 joint trial exhibits, 990 pages of trial testimony and eight 

lodged depositions. The following facts were proven by a preponderance of the

competent evidence. 

 

4

I cite to the Joint Pre-Trial Stipulation and Order as “PTO ¶”; to the joint trial exhibits as 

“JX #”; to the trial transcript as “Tr. # (witness name)”; and to the transcript of the Oral 

Argument on Defendants’ and Counterclaim Plaintiffs’ Motion to Strike and Post-trial Oral 

Argument as “OA Tr. #.”
5

A. Parties and Relevant Non-Parties

Plaintiff/Counterclaim Defendant, CertiSign, is a Delaware corporation 

formed in December 2004 by non-party Certipar, S.A. (“Certipar”), a Brazilian 

corporation, to act as a holding company for Certipar. 5 CertiSign has four 

stockholders: (1) CKS Holding, Inc. (“CKS”); (2) Darby Technology Ventures

(“Darby”), a mutual fund; (3) Intel Capital Corporation (“Intel”); and (4) GeoTrust 

Inc.

6

Non-party, Certipar, functions solely as the parent of its indirect, whollyowned subsidiary, CertiSign Certificadora Digital S.A. (“CertiSign Brazil”).7

 Nonparty, CertiSign Brazil, is a Brazilian corporation based in São Paulo, Brazil.8

 It is 

an operating company that provides public key infrastructure-based solutions to 

financial institutions, governments and enterprises that utilize unsecured internet 

protocol networks to link business processes, exchange information and conduct 

banking and commerce transactions.9 CertiSign Brazil also provides a variety of 

 

5 PTO ¶ 4.

6

JX 500; PTO ¶ 9.

7 PTO ¶ 4. In December 2014, Fundo de Investimento em Participações Bordeaux (“FIP”), 

a Brazilian private equity fund, acquired 100% of the shares of CertiSign Brazil. Id. At the 

same time, Certipar acquired 100% of the shares of FIP. Id.

8 PTO ¶ 5.

9

Id.
6

security and consulting services ranging from digital certificates, authentication and 

managed digital identity.10

Defendant/Counterclaimant, Kulikovsky, served as a director and president of 

CertiSign from the Company’s inception until 2013.11 He also served as Chief 

Executive Officer (“CEO”) of CertiSign Brazil from 2002 until his forced 

resignation in 2008.12 He is an officer, director and the 100% owner of SK Holdings, 

a Delaware limited liability company.13 Kulikovsky is a resident of Brazil.14

Non-party, Nicola Cosentino (“Cosentino”), is the vice president, secretary 

and treasurer of CertiSign. 15 He, along with Kulikovsky and non-party,

Edgar Safdie, served as directors of CertiSign at the time of its formation. 16 

Cosentino is also a business development consultant at CertiSign Brazil, and his 

 

10 Id.

11 PTO ¶ 6.

12 Id.

13 PTO ¶¶ 6–7.

14 PTO ¶ 6.

15 Tr. 691–92 (Cosentino).

16 Tr. 697 (Cosentino). Kulikovsky, Cosentino and Edgar Safdie, each representing a 

family enterprise, began the CertiSign venture as friends. As discussed below, the 

friendship gave way under the weight of a struggling business and the self-interested 

decision-making that followed in the wake of those difficulties. 
7

brother, Julio Cosentino, helped found CertiSign.17 Non-party, Maybach Holdings

(“Maybach”), is Cosentino’s British Virgin Islands entity.18 

Non-party, CKS, is a British Virgin Islands corporation. 19 As owner of 

67.86% of CertiSign’s equity, CKS is CertiSign’s controlling stockholder.20 CKS, 

in turn, is owned equally by three entities: Maybach, Prime Ventures Limited

(“Prime Ventures”)21 and SK Holdings (collectively, the “CKS Partners”).

22

 CKS 

has three directors, one from each of its stockholder families.23 At the time of trial, 

those three directors were Cosentino, Kulikovsky and Isaac Khafif. 24 

 

17 Tr. 692 (Cosentino).

18 JX 500; Tr. 9 (Kulikovsky). 

19 PTO ¶ 8.

20 Id.

21 Prime Ventures is a holding company owned by the Safdie family, of which Edgar Safdie 

is a member. Id.

22 Id.; Tr. 389 (Khafif).

23 JX 226 at 1; Tr. 389 (Khafif).

24 Tr. 389 (Khafif). 
8

Non-party, Isaac Khafif, is an officer and director of CertiSign.25 He is also 

an officer of Certipar and CertiSign Brazil.26 Khafif ultimately replaced Edgar 

Safdie as the Safdie family’s appointee on the CKS board.27

Non-party, Paulo Kulikovsky, is Kulikovsky’s brother. 28 He worked at 

CertiSign Brazil from 2002 to 2013, and was also an officer of Certipar during that 

time.29 From 2005 to 2013, he was an officer of CertiSign.30

[Remainder of page intentionally left blank]

 

25 Tr. 388 (Khafif).

26 Id.

27 Tr. 113 (Kulikovsky).

28 Tr. 574 (P. Kulikovsky).

29 Id.

30 Id.
9

The following chart illustrates the current ownership structure of CertiSign 

and its various affiliates:

31

 

 

31 JX 500; PTO ¶ 9. GeoTrust was initially owned by VeriSign Capital Management 

(“VeriSign”) until Symantec Corporation purchased GeoTrust from VeriSign in August 

2010. JX 500; Tr. 9 (Kulikovsky).

GeoTrust Inc. 

(US)

Intel Capital Corp. 

(Cayman)

CKS (BVI)

CertiSign Holding 

(US)

Certipar (Brazil)

CertiSign Brazil 

(Brazil)

Maybach 

SK Holdings Holdings (BVI)

(US)

Darby Tech. Ventures 

Fund I (US)

FIP (Brazil)

33.3% 33.3% 33.3%

100%

100%

100%

8.78% 16.61% 67.86% 6.75%

Prime Ventures 

(BVI) 
10

B. SK Holdings Pays CertiSign Brazil’s Debt

In 2002 and 2003, CertiSign Brazil owed debts to VeriSign and Darby but 

was unable to pay those debts.

32 When VeriSign and Darby demanded payment, 

Kulikovsky caused SK Holdings to make payments on the debts directly to VeriSign 

and Darby on behalf of CertiSign Brazil. 33 SK Holdings ultimately paid 

$2,026,493.80 to VeriSign and $110,426.00 to Darby, totaling $2,136,919.80. 34 

In its financial statements, CertiSign Brazil recorded a debt to “the affiliate company 

SK International Holdings” which “originated via payment made [on] behalf of 

[CertiSign Brazil] to its suppliers” (the “Debt”).35

SK Holdings sent CertiSign Brazil seven letters reflecting the amounts paid 

to VeriSign and Darby on behalf of CertiSign Brazil.36 The letters do not specify 

 

32 PTO ¶ 10.

33 Id. The parties dispute whether, or in what amounts, the other CKS Partners either

advanced a portion of the funds to SK Holdings from which it made the payments on behalf 

of CertiSign Brazil or reimbursed SK Holdings after the payments were made. Id. n.1.

34 PTO ¶ 10.

35 Id. To be precise, the defined term “Debt” refers to the payment obligation owed by 

CertiSign Brazil to SK Holdings that arose in connection with SK Holdings’ satisfaction 

of CertiSign Brazil’s payment obligations to VeriSign and Darby, respectively. 

36 PTO ¶ 11; JX 2. I note that the PTO states SK Holdings sent CertiSign Brazil six, not 

seven, letters reflecting the payments to VeriSign and Darby. According to JX 2, however, 

seven letters were sent in total: six regarding payment to VeriSign and one regarding 

payment to Darby. 
11

the interest rate, maturity date or payment terms of the Debt.37 The payments by 

SK Holdings, a Delaware entity, on behalf of CertiSign Brazil, represented an inflow 

of foreign capital into Brazil.38 The Debt was not registered with the Brazilian 

Central Bank, which regulates foreign exchange and capital transactions.

39

The parties’ foreign law experts agreed that Brazilian law required that CertiSign 

Brazil register the Debt by June 3, 2007, at the latest.40

C. The 2005 Restructuring and Related Agreements

In March 2005, CertiSign entered into several agreements in an effort to 

reorganize (the “2005 Reorganization”).41 CertiSign’s board of directors at the time, 

comprised of Cosentino, Kulikovsky and Edgar Safdie, approved the 2005 

Reorganization by unanimous written consent dated March 16, 2015 (the 

“Unanimous Written Consent”).

42

 As part of the 2005 Reorganization, CertiSign 

 

37 JX 2.

38 Tr. 834 (Junqueira).

39 PTO ¶ 11. Foreign exchange and capital transactions are transactions between a 

Brazilian financial institution and a counterparty to purchase or sell Brazilian currency, 

Brazilian reais. Tr. 833 (Junqueira). 

40 Tr. 872–73 (Junqueira); 934–35 (Fernandes).

41 JX 15; PTO ¶ 12.

42 JX 15 at 6.
12

acquired the stock of Certipar and became the indirect parent of CertiSign Brazil.43

Through a Stock Contribution Agreement (the “2005 Stock Contribution 

Agreement”), Certipar’s stockholders contributed all of their issued and outstanding 

shares of Certipar stock to CertiSign in exchange for shares of CertiSign stock.44 

At the time of the 2005 Reorganization, Certipar’s stockholders were CKS, a Darbyaffiliated investment fund and a VeriSign-affiliated investment fund.45

 The 2005 

Stock Contribution Agreement also granted CKS a warrant to purchase additional 

shares of CertiSign capital stock.46

In addition to the 2005 Stock Contribution Agreement, CertiSign executed a 

Debt Contribution Agreement whereby CKS contributed approximately $3,800,000 

of Certipar’s indebtedness in exchange for 3,900,000 shares of CertiSign’s Series A 

preferred stock.47 The parties also amended and restated CertiSign’s certificate of 

 

43 PTO ¶ 12.

44 PTO ¶ 13.

45 Id. CKS became a Certipar stockholder shortly before the 2005 Reorganization by 

acquiring Certipar shares that had been held by Shemtov S.A. Id. Prior to forming CKS, 

Kulikovsky and SK Holdings together held approximately 45% of Shemtov, Prime 

Ventures and a Safdie family member held approximately 33%, and Maybach held

approximately 21%. Id. In connection with the 2005 Reorganization, Kulikovsky, 

Cosentino and the Safdie family elected to hold their shares of CertiSign stock through an 

entity of which each would own a third and created CKS for that purpose. Id.

46 Id.

47 JX 15 at 3; PTO ¶ 13.
13

incorporation (the “A&R COI”). 48 The A&R COI created an expanded board 

comprising six directors, and pursuant to a voting agreement, CKS had a say in the 

selection of three of the six directors.

49

 Specifically, the voting agreement provided 

that CertiSign’s Class A and Class B common stockholders and Series A preferred

stockholders, voting together as a single class, shall be entitled to elect three 

members of the board.

50

 It also provided that the Class A and Class B common 

stockholders and Series A preferred stockholders would vote all their shares in favor 

of the three directors nominated by majority vote of these stockholders.51 As owner 

of 67.86% of CertiSign’s equity, CKS effectively controlled these three board 

seats.

52 Darby and Intel controlled two seats.53 The final director would be selected 

by a nominating committee comprised of the other directors (excluding Intel’s 

appointee), and this director could not be affiliated with CertiSign or any of 

CertiSign’s stockholders, unless the nominating committee unanimously waived this 

 

48 JX 15 at 4.

49 JX 22 at 16; JX 18 at 1–2, 13–15. 

50 JX 18 at 1–2. Class A and Class B common stockholders are CKS, Darby and VeriSign. 

Id. at 13. The voting agreement contemplates that CKS would be the sole Series A 

preferred stockholder. Id. at 14.

51 Id. at 1–2.

52 PTO ¶ 8.

53 JX 18 at 2–3.
14

requirement.54 The voting agreement designated Kulikovsky, Cosentino and Edgar 

Safdie as three of the six CertiSign directors.55

Also as part of the 2005 Reorganization, CertiSign entered into an agreement 

concerning the Debt. In or about December 2004, in anticipation of the 2005 

Reorganization, $70,000 of the Debt was excused, reducing the principal amount to 

$2,066,919.80.56 Then, in connection with the 2005 Reorganization, the Debt was 

to be divided into two parts.

57

 CertiSign Brazil, CertiSign and CKS contemplated 

that one portion—$1,115,782.02 in principal amount—would be capitalized in a 

transaction involving the issuance of shares of CertiSign Series A preferred stock to 

CKS (the “Debt Capitalization Transaction”).

58 It was intended that this portion of 

 

54 JX 18 at 1–3.

55 Id. at 2. As noted, Edgar Safdie left CertiSign’s board in 2006. Tr. 112–13 (Kulikovsky).

56 PTO ¶ 11.

57 PTO ¶ 15.

58 The Unanimous Written Consent executed in connection with the 2005 Reorganization 

states: “WHEREAS, in connection with the Stock Contribution Agreement and the Debt 

Contribution Agreement, the Board believes it is in the best interest of the Company to 

enter into a Series A Stock Purchase Agreement . . . with CKS whereby the Company 

would issue to CKS 1,100,000 shares of its Series A Preferred Stock in exchange for 

$1,115,782.08.” JX 15 at 3. I note that there is inconsistency regarding whether the 

principal amount is $1,115,782.02 or $1,115,782.08. The PTO, a draft Consent of 

Directors of CertiSign Holdings, Inc. and a draft stock purchase agreement all refer to the 

former amount, while the Unanimous Written Consent refers to the latter. Compare PTO 

¶ 15; JX 196 at 16; JX 196 at 34, with JX 15 at 3.
15

the Debt would no longer accrue interest.59 To implement the Debt Capitalization 

Transaction, the Company and CKS executed a Stock Purchase Agreement (the 

“2005 SPA”) on March 29, 2005.

60

 The recitals in the 2005 SPA state that CertiSign 

desired to raise capital to repay a “certain debt” and that CKS desired to purchase 

shares of CertiSign Series A preferred stock. 61 Although the 2005 SPA was 

executed, shares of CertiSign Series A preferred stock were never issued to CKS.

62

 

The second portion of the Debt—the remaining principal balance of 

$951,137.78—remained due in cash, and that portion would continue to accrue 

interest (the “Interest Bearing Debt Portion”).

63

 CertiSign Brazil never made any 

payment of principal or interest on account of the Debt.64

D. The Three Alleged Options Issuances

Following these transactions in March 2005, whereby CertiSign purportedly 

became the parent company of Certipar and indirect parent company of CertiSign 

Brazil, members of CertiSign’s board of directors periodically discussed issuing 

 

59 PTO ¶ 15.

60 Id.

61 Id.

62 Id.

63 PTO ¶ 16.

64 Id.
16

stock options to employees and management, including during an April 2, 2008 

board meeting. 65 Kulikovsky’s Amended Verified Counterclaims (the 

“Counterclaims”) identify three alleged options issuances totaling 1,150,000 

options: (1) an April 2, 2008 issuance of 100,000 options to Kulikovsky at a $1.00 

per share exercise price (the “First Alleged Issuance”); (2) an issuance between April 

200866 and September 2010 of 100,000 options to Kulikovsky at a $1.00 per share 

exercise price (the “Second Alleged Issuance”); and (3) an issuance in or around 

September 2010 of options in the following amounts (all at an exercise price of $0.50

per share): (a) 475,000 to Cosentino; (b) 275,000 to Kulikovsky; (c) 100,000 to Julio 

Cosentino; and (d) 100,000 to Paulo Kulikovsky, for a total of 950,000 options (the 

“Third Alleged Issuance”).

67

 

Kulikovsky relies on the minutes of the April 2, 2008 CertiSign board meeting 

as evidence of the First Alleged Issuance. Those minutes, in relevant part, state:

Sergio will be elected Chairman of the Board of Directors in order to 

lead the process of selling the company. Sergio will receive 100,000 

 

65 PTO ¶ 20.

66 Defendants’ interrogatory responses state the Second Alleged Issuance occurred “[a]t 

various times between August 2007 and September 2010.” JX 256 at 9.

67 JX 258 ¶¶ 12–14. In the PTO, the parties stipulated that in 2010, the Board discussed 

issuing options (to Kulikovsky, Cosentino, Julio Cosentino and Paulo Kulikovsky) in 

connection with a potential sale of CertiSign. PTO ¶ 21. 
17

stock options at the strike price of $1.00, according to the company 

stock options plan.68

Kulikovsky testified that he was never elected Chairman of the board and that no 

stock option instruments were ever issued for the 100,000 options.

69

 As for the 

Second Alleged Issuance, Kulikovsky testified that it occurred “during the year 2008 

somewhere,” and the exercise price was “probably $1 per share.”70

The details surrounding the Third Alleged Issuance are hazier still. 

Defendants’ interrogatory responses aver that the Third Alleged Issuance granted 

Kulikovsky 475,000 options, not 275,000 as identified in his Counterclaims, which 

brings the total options allegedly granted from 1,150,000 up to 1,350,000.

71

 At trial, 

Kulikovsky testified that the Third Alleged Issuance granted him 275,000 options.72 

Moreover, Defendants’ interrogatory responses and Counterclaims state the Third 

Alleged Issuance occurred “in or around September 2010,” but at trial Kulikovsky 

testified it occurred “[i]n the beginning of January 2011.”73 Kulikovsky further 

 

68 JX 49 at 2 (emphasis added).

69 Tr. 228–29 (Kulikovsky).

70 Tr. 206 (Kulikovsky) (emphasis added).

71 JX 256 at 10. Notably, Kulikovsky testified that CertiSign’s board is authorized to issue 

one million options, at most. Tr. 204–05 (Kulikovsky). 

72 Tr. 136 (Kulikovsky).

73 JX 256 at 10; JX 258 ¶¶ 14–15; Tr. 136 (Kulikovsky).
18

elaborated that the options “were granted by the board, but we still had to approve 

them by all the board—by the whole board, because we needed to approve the 

expansion of the option pool. And it took until January of 2011 to get the full 

approval of everyone.”

74

 

The total number of options granted between the three alleged issuances is a 

mystery. An exhibit to the Counterclaims, which Kulikovsky represented is a 

capitalization table that was distributed to stockholders in connection with the 

potential acquisition of the Company in 2010, assumed management had granted 

1,000,000 options. 75 This figure is lower than both the grant of 1,150,000 options 

described in the Counterclaims and the grant of 1,350,000 options described in

Defendants’ interrogatory responses. When asked about this discrepancy at trial, 

Kulikovsky dismissed the exhibit to the Counterclaims as having been mistakenly

attached to the pleading.

76

The exercise price of the options is also impossible to pin down in the 

evidence. Defendants’ interrogatory responses and Counterclaims state the exercise 

 

74 Tr. 223–24 (Kulikovsky); see also Tr. 224 (Kulikovsky) (“Q: But you’re absolutely 

certain that by no later than January 2011, that option—that it had been decided—that 

options had already been issued to those four individuals in the amounts you contend they 

were issued; correct? That’s your testimony? A: That’s my testimony.”).

75 JX 258, Ex. C.

76 Tr. 220–23 (Kulikovsky). Kulikovsky testified that the correct exhibit should have 

shown 1,150,000 options. Id.
19

price was set at $0.50 per share. 77 In the PTO, however, Kulikovsky seeks a 

declaration from this Court that he “holds 475,000 options to purchase shares of 

Class A common stock of the Company at an exercise price of $0.10 (US) per 

share.” 78 At trial, Kulikovsky maintained that the strike price for the 275,000 

options granted in the Third Alleged Issuance was $0.10.79 And, as noted, he also 

testified at trial that the strike price for the options granted in the Second Alleged 

Issuance was “probably $1 per share.”80 

Contemporaneous documents reveal that the options were neither granted nor 

approved by CertiSign’s board and that critical terms of the alleged option grants 

remained in flux as late as February 2011, despite Kulikovsky having testified the 

Third (and final) Alleged Issuance occurred no later than January 2011. Specifically, 

in a January 24, 2011 email to Company counsel regarding “document[ing] the 

option grants” “for an eventual sale of CertiSign,” Kulikovsky wrote:

There is still an issue as to the dates and quantities, but we’ll probably 

issue around 1,200,000 options, which is above the current option pool 

of 1,000,000 options. I’ll get the ok from all parties, so will probably 

need some kind of board/shareholder resolution authorizing the 

issuance of the additional 200,000 options. Also advise if we need the 

 

77 JX 256 at 10; JX 258 at ¶¶14–15.

78 PTO ¶ 111 (emphasis added).

79 Tr. 143 (Kulikovsky).

80 Tr. 206 (Kulikovsky).
20

board to approve the grants individually. Options will fully vest upon 

sale of the company . . .81

At trial, Kulikovsky testified that the statements in his January 24, 2011 email were 

accurate, that necessary parties had not yet authorized the issuance of the options 

when he wrote the email and that the parties ultimately did not authorize the issuance 

of the options.82 

In email correspondence on January 31, 2011, Kulikovsky and Khafif 

discussed the size of the option grants, again indicating that the size of the option 

grants had not yet been fixed, much less approved.83 Then, on February 11, 2011, 

Kulikovsky again wrote to Company counsel, stating:

We want to: 

1. Increase option pool from 1,000,000 to 1,250,000 options of 

Common A . . . 

2. Confirm the option grant (board) as follows: . . . 

b. CKS: 1,150,000 @ $0.01 per share (we will think during this 

weekend whether it would be better to give to CKS or to the actual 

individuals), grant on 29/3/05

3. Draft option grant agreements for the above quantities and price. 

Options subject to 4 yr vesting, 1 yr cliff, quarterly therefore [sic].

84

 

81 JX 95 at 2; JX 98 at 3; Tr. 240–41 (Kulikovsky).

82 Tr. 240–41 (Kulikovsky).

83 JX 92 at 5; Tr. 237–40 (Kulikovsky).

84 JX 98 at 1.
21

On May 8, 2011, Kulikovsky advised CertiSign’s financial consultant that “there are 

options still to be issued (all in accordance [with] the previously delivered data).”85 

Kulikovsky testified at trial that in October 2012, after CertiSign’s counsel advised 

him that the document trail for the options issuances was fragmented at best, he 

created a capitalization table which contemplated several scenarios including 

“a scenario in which we do not issue the options.”

86

The record is replete with other documents discussing various options 

proposals with differing terms indicating that option grants had been discussed, but 

not actually granted.

87

 I decline to rehash each document and instead have only 

focused on the facts relevant to my analysis. 

E. Debt Assumption

In 2010, the parties returned their focus to the Debt and how to repay it.

88

 

“There were many discussions from 2005 [] about how to pay. There was regulatory 

concern about how to pay and also there was a tax issue because taxes in Brazil 

 

85 JX 114 at 1; Tr. 144, 252–53 (Kulikovsky).

86 JX 420 at 2, 4; Tr. 271–75 (Kulikovsky).

87 See, e.g., JX 96; JX 97; JX 104 at 35; JX 143 at 3. 

88 Recall that the original debt totaled $2,136,919.80. As part of the 2005 Reorganization, 

$70,000 of the Debt was forgiven, leaving a balance of $2,066,919.80. Of this balance, 

$1,115,782.02 was to be capitalized in the Debt Capitalization Transaction as contemplated 

in the 2005 SPA pursuant to which CertiSign would issue Series A preferred stock to CKS, 

leaving $951,137.78 of the Debt to be repaid. As stated, CertiSign did not issue Series A 

preferred stock to CKS nor did CertiSign Brazil make payment on the $951,137.78 balance. 
22

should have been paid in relation to [the Debt]. And taxes were not paid.” 89 

The parties also were concerned that the Debt was not registered with the Brazilian 

Central Bank.90 Thus, Khafif testified at trial that “[i]n princip[le], everybody agreed 

that the debt should be paid; it was just a question of how to pay it.”91 

These concerns led to suggestions in 2010 that CertiSign assume the Debt 

from CertiSign Brazil. There are no documents in this time frame that evidence or 

even suggest that CertiSign, CertiSign Brazil or SK Holdings reached any 

agreements in this regard.92 But there are several contemporaneous documents that 

reflect the parties were taking steps to facilitate CertiSign’s assumption of the Debt 

from CertiSign Brazil. 

First, from December 6 through December 8, 2010, Kulikovsky, Cosentino, 

Khafif and others were engaged in discussions regarding calculating the exact 

amount of the Debt still owed to SK Holdings and the applicable interest.93 To that 

end, they circulated among themselves three spreadsheet calculations representing 

three different interest scenarios: (1) basic interest; (2) “[c]ompound [i]nterest since 

 

89 Tr. 142 (Kulikovsky).

90 Tr. 397 (Khafif).

91 Tr. 398 (Khafif). 

92 PTO ¶ 19. 

93 JX 83 at 5–7. 
23

the entry [sic] of Darby and Intel”; and (3) “[c]ompound [i]nterest since the start of 

the loan operations,” which would result in Debt sizes of $2,950,608.40, 

$3,098,043.82, and $3,425,489.73, respectively.

94

 As between these three 

approaches, the Interest Bearing Debt Portion had values of (1) $1,834,826.38; 

(2) $1,982,261.80; and (3) $2,309,707.71, respectively.

95

 

Khafif favored the third approach—the computation that applied “compound 

interest since the start of the loan operations,” resulting in $3,425,489.73 in Debt, 

with the Interest Bearing Debt Portion comprising $2,309,707.71 (the “Third Interest 

Calculation Approach”).

96

 Cosentino did not object to the idea of remitting 

approved sums to CertiSign, and in fact, he furthered the plan by suggesting the 

remitted sums should not include attorneys’ fees associated with drawing up 

contracts necessary for the assumption of the Debt at the CertiSign level.97

 

94 JX 83 at 6–7. These debt size projections include both the sum that was intended for the 

Debt Capitalization Transaction per the 2005 SPA and the Debt balance that continued to 

accrue interest. 

95 Id.

96 Id. at 5. Interestingly, although Khafif recommended the Third Interest Calculation 

Approach, in the same email thread, he wrote that the “CertiSign debt to SK Holdings in 

accordance with our suggestion should total USD 2,309,707.” This calculation reflects

only the Interest Bearing Debt Portion, not the $3,425,489.73 total debt value of the Third 

Interest Calculation Approach. Id.

97 Id. at 6.
24

Second, certain financial documents recorded transactions related to the Debt. 

In December 2010, entries regarding the Debt were made in the CertiSign and 

CertiSign Brazil general ledgers.98 On December 29, 2010, CertiSign recorded two 

debits totaling $3,434,602.00 described as “debt to be capitalized” and “investment 

in Certipar S.A.”99 That same day, CertiSign also recorded a $1,115,782.00 credit 

characterized as “debt to be capitalized”100 and a $2,318,820.00 credit characterized 

as “debt with related entities – SK.”101 Also on December 29, 2010, CertiSign Brazil 

upstreamed a $2,350,000.00 distribution to Certipar, which then upstreamed the

$2,350,000.00 distribution to CertiSign for the purpose of paying part of the Interest 

 

98 PTO ¶ 17.

99 Id.

100 As noted above, the Debt Capitalization Transaction contemplated in the 2005 SPA 

involved $1,115,782.02 of the Debt.

101 PTO ¶ 17. The sum of these two credits, $2,318,820.00 and $1,115,782.00, equals 

CertiSign’s debit that same day in the amount of $3,434,602.00. I note that the credit of 

$2,318,820.00 is close in value to the size of the Interest Bearing Debt Portion when interest 

is “compounded [] since the start of the loan operations,” $2,309,707.71, as contemplated 

in the Third Interest Calculation Approach. 
25

Bearing Debt Portion.

102

 On December 31, 2010, CertiSign Brazil recorded a 

R$4,922,556.04 credit described as “forgiveness of SK Holding debt.”103 

CertiSign and CertiSign Brazil’s financial statements tracked transactions

related to the Debt. The upstreaming was reflected in the notes to CertiSign’s 

consolidated financial statements for December 31, 2009, 2010 and 2011, which 

stated:

The accounts payable for related company [sic] refers to the debt with 

SK International Holding, stemming from payments made in the name 

of the affiliate, CertiSign Certificadora Digital S.A., to its suppliers in 

previous years, with an undetermined period agreed interest rate of 9% 

per year, on a given amount. 

On December 30, 2010, the affiliate in question wrote off the debt in 

question to the result [sic] as a debt forgiveness operation, resulting in 

non-operating revenue of approximately US$ 3,035[,000]. That same 

fiscal year, the Company recognized this in its financial statements as 

an operating expense, of the amount payable stemming from the 

transaction in question, of US$ 3,434[,000]. On December 31, 2011, 

the sum outstanding relative to this operation had reached 

US$ 3,652[,000].104

 

102 PTO ¶ 18. The money that CertiSign Brazil upstreamed to CertiSign has not been used 

to repay any portion of the Debt. Id. I note that the upstreamed $2,350,000.00 is close in 

value to CertiSign’s recorded credit of $2,318,820.00 and the $2,309,707.71 of the Interest 

Bearing Debt Portion in the Third Interest Calculation Approach.

103 PTO ¶ 17; See Pl.’s Opening Post-Trial Br. (“Pl.’s Opening Br.”) 60 (citing JX 88 at 1).

104 JX 417 at 46. I note the discrepancy regarding the upstreamed amount: the consolidated 

financial statements state $3,035,000.00 was upstreamed while the PTO states 

$2,350,000.00 was upstreamed. Compare JX 417 at 46, with PTO ¶ 18. 
26

CertiSign’s balance sheet ending December 31, 2010 reflected “total debt with 

SK Holding” in the amount of $2,318,820.105 Moreover, CertiSign’s United States 

tax returns for 2010 and 2012 record a debt in the amount of $2,318,820 “due to SK 

Holdings” as one of CertiSign’s “Current Liabilities.”106 CertiSign Brazil’s financial 

statements ending December 31, 2010 and 2011 note operating revenue that 

CertiSign Brazil deemed “misc. revenue – debt forgiveness,” and the footnote 

accompanying that entry states: 

The Company opted to account for the sum of BRL 5,057[,000] on 

December 30, 2010, as other operating revenue – debt forgiveness 

referring to the existing debt up to the referred date at the affiliate 

company SK International Holding, originated via payment made in 

[sic] behalf of the Company to its suppliers.107

 

105 JX 105 at 4.

106 JX 132 at 41; JX 231 at 44.

107 JX 167 at 48. The footnote further qualified that, as a result of this accounting treatment, 

“net equity on December 31, 2011 and 2010, and the income statement for the fiscal year 

ending on December 31, 2010, [were] overvalued by the referred amount.” Id. at 30. 

Similarly, CertiSign Brazil’s audited financial statements for fiscal year ending 

December 31, 2012, stated: 

At the closing of the financial statements on December 31, 2010, the 

Company opted to recognize, by means of forgiveness of debt, the amount 

owed to the company linked to SK International Holding, of approximately 

BRL 3.3 million, net of taxes, without the required supporting 

documentation. There is no evidence that the company is relieved of this 

obligation, consequently, the current liabilities and the net equity may be 

undervalued and overvalued in the referred to sum. 

JX 237 at 59. 
27

Khafif’s trial testimony further confirms that CertiSign and CertiSign Brazil

recorded a transaction related to the Debt. He explained:

Then [in] 2010, the company registered in its books a forgiveness of the 

debt and there was income generated in the company. The company 

paid Brazilian taxes for this forgiveness of the loan and the debt 

appeared in the books of CertiSign []. But that was a problem, too, 

because there was no proper explanation of what has been done in 

December 2010, what was the transaction that was done. So the 

auditors in Brazil, they did not approve the statements of the company 

and they put a qualified note in the statements stating that the debt has 

not been forgiven. They did not have records of the forgiveness of the 

debt.108

Khafif testified that he signed CertiSign’s 2012 tax returns, with the Debt reflected, 

and that he did so to “the best of [his] knowledge at the time.”109 

Finally, there are emails and draft transactional documents in the record from 

2011 and 2012 wherein Kulikovsky and Paulo Kulikovsky discussed various Debt 

restructuring proposals with Company counsel.

110

 None of these proposals were 

implemented.111 

 

108 Tr. 399 (Khafif).

109 Tr. 483–84 (Khafif). CertiSign points out that, notwithstanding Kulikovsky’s

contention that CertiSign assumed the Debt in December 2010 and corresponding financial 

statement entries to that effect, the record contains several proposals for Debt restructuring 

subsequent to December 2010. See Pl.’s Opening Br. 26–30 (citing JX 86 at 6–7, JX 89, 

JX 94, JX 109, JX 124 and JX 421). 

110 See, e.g., JX 94; JX 109; JX 124; JX 421.

111 See Tr. 587, 656, 664–67 (P. Kulikovsky).
28

Both parties’ experts on Brazilian law agreed that if the Debt had been 

registered with the Brazilian Central Bank, the assumption of the Debt would also 

need to be registered.112 Neither the Debt nor an assumption has been registered 

with the Brazilian Central Bank.113

F. CertiSign Discovers the 2005 Reorganization-Related Defects and 

Commences Self-Help

In 2012, CertiSign was exploring a sale of the Company or its Brazilian 

subsidiaries to a third-party investor.114 During the course of due diligence, the 

Company was advised of a technical flaw in the issuance of most (or possibly all) of 

its capital stock which, in turn, raised the possibility that some of the Company’s 

then-current directors had not been validly elected or appointed to the board.115 

Specifically, CertiSign discovered that the outstanding stock issued in connection 

 

112 Tr. 874 (Junqueira), 935 (Fernandes). Defendants’ expert, Lavinia Junqueira, 

maintained that even if a debt is not registered, an assumption of the debt could be 

undertaken. Tr. 874 (Junqueira). In her opinion, the Brazilian debtor would be subject to 

a fine, but failure to register does not invalidate an agreement because “the Brazilian 

Central Bank registration requirements do not govern the existence or not of the debt 

assumption.” Tr. 874, 882 (Junqueira). Plaintiff’s expert, Edison Fernandes, disagrees. 

He opined that the consequences for failure to register a debt include both a fine and a 

prohibition on the “transfer of money or, in other words, to make [] payment.” Tr. 936 

(Fernandes); see also Tr. 947 (Fernandes) (“Q: It is your opinion that CertiSign Brazil 

could not or cannot legally repay this debt unless it was registered with the Brazilian 

Central Bank; is that correct? A: Yes, it’s my opinion.”).

113 Tr. 874 (Junqueira).

114 PTO ¶ 22.

115 Id.
29

with the 2005 Reorganization had been issued several days before the A&R COI 

authorizing those shares was filed.116 CertiSign, its stockholders, and its board of 

directors, including Kulikovsky, concurred that the technical flaw was the result of 

a ministerial error and that it was appropriate to cure this defect.117 In November 

2012, the Company’s counsel, Chadbourne & Parke LLP (“Chadbourne”), proposed 

a series of steps to remedy the Company’s capitalization defect without judicial 

intervention (the “Self-Help”).118

The Self-Help contemplated that the Company’s directors and stockholders 

would take actions to correct the potential defect with respect to the outstanding 

shares of stock by, among other things, implementing an exchange agreement 

whereby stockholders would exchange all of their defective shares for valid 

shares.119 The Self-Help also included documentation to authorize an Amended and 

Restated Stock Purchase Agreement between the Company and CKS, which amends 

and restates the 2005 SPA (the “A&R SPA”).

120

 Whereas CertiSign and CKS were 

 

116 In re CertiSign Hldg., Inc., 2015 WL 5136226, at *2. 

117 PTO ¶ 22; JX 252 ¶ 1.

118 PTO ¶ 23; JX 196.

119 PTO ¶ 23; JX 196 at 5–6, 10–15. 

120 PTO ¶ 23; JX 196 at 5–6, 16–17, 34–46.
30

the only signatories to the 2005 SPA, these two entities, as well as SK Holdings, 

were to be parties to the A&R SPA.121 The recitals of the A&R SPA state:

WHEREAS, [CertiSign] desires to satisfy the principal outstanding of 

certain debt (the “Debt”) in the aggregate amount of US$1,115,782.02 

that was originally owed by [CertiSign Brazil], to [SK Holdings], which 

is a shareholder of CKS, but which Debt has been assumed by 

[CertiSign]; . . .

WHEREAS, CKS still desires to obtain from [CertiSign], and 

[CertiSign] still desires to issue to CKS, 1,115,782 of the shares . . . of 

Series A Preferred Stock of [CertiSign] in consideration for CKS 

causing the Debt to be discharged; . . .122

The Self-Help steps also included resolutions of the CertiSign board of 

directors regarding the issuance of options to Kulikovsky, Paulo Kulikovsky, 

Cosentino and Julio Cosentino “to compensate [them] for their services to the 

Company’s subsidiaries” and the “[r]atification of [p]rior [a]ctions [r]elating to 

Debt.”123 The resolutions stated that Cosentino and Kulikovsky would each receive 

475,000 options at an exercise price of $0.10 per share, while Julio Cosentino and 

Paulo Kulikovsky would each receive 100,000 options at the same exercise price.

124

 

 

121 PTO ¶ 15; JX 196 at 6. 

122 JX 196 at 34.

123 Id. at 47–48.

124 Id. The execution version of the Self-Help resolutions respecting option grants does not 

acknowledge any previous grant(s) of options; rather, it states that “the Company hereby 

grants options” to the Kulikovsky and Cosentino brothers in the specified 

amounts. Id. at 47 (emphasis added).
31

As to the Debt, the resolutions contemplated “Ratification of Prior Actions Relating 

to Debt,” and addressed the Interest Bearing Debt Portion, $1,191,402.07, which had 

not been wrapped up in the 2005 SPA.

125

 The option grants and Debt assumption, 

however, were not initially included in the Self-Help documents. 

As best as I can discern, on August 9, 2012, Company counsel circulated draft 

Self-Help documents that did not include the option grants or Debt assumption.126 

Counsel noted that the grant of options and “conversion of the debt”127 could be 

“worked” into the draft documents or, alternatively, the parties could “get everything 

corrected and then deal with the debt and options separately.”

128

 Moreover, when 

asked about “the other note” (apparently referring to the Interest Bearing Debt 

Portion), Paulo Kulikovsky responded that “[t]he other note is to be paid back in 

 

125 PTO ¶ 23; JX 196 at 5–6, 47–57. Here, I pause to note a discrepancy as to the Interest 

Bearing Debt Portion. The Debt totaled $2,136,919.80. PTO ¶ 10. In connection with the 

2005 Reorganization, $70,000 was forgiven, leaving a balance of $2,066,919.80. Id. at 

¶ 11. Also in connection with the 2005 Reorganization, $1,115,782.02 was capitalized in 

the 2005 SPA and became non-interest bearing. PTO ¶ 15; JX 15 at 3; JX 196 at 34. The 

remaining balance of the Debt on which interest accrues, therefore, would be $951,137.78, 

not the $1,191,402.07 identified in the Self-Help documents. JX 196 at 48. Without more 

details as to whether the $1,191,402.07 figure accounts for interest accrued on the principal 

amount of $951,137.78, I cannot make sense of this discrepancy. 

126 JX 176 at 5.

127 “Conversion of the debt” appears to concern converting the $1,115,782.08 portion of 

the Debt to CertiSign Class A preferred shares. Id. at 2. Thus, at this stage, the relevant 

actors did not even contemplate including assumption of the Debt in the existing drafts of 

the Self-Help documents.

128 Id. at 5.
32

cash (it should remain outstanding until there is enough cash at the holding [sic] to 

pay it back).”129 On August 16, 2012, Company counsel again circulated drafts of 

the Self-Help documents and, again, the documents did not cover option grants or 

assumption of the Debt.130 Then, on August 30, 2012, Paulo Kulikovsky wrote to 

Company counsel and others, that:

I took a look at the documentation, and I missed two issues that still 

have to be handled: 

- The transfer of the debt (that, for now, is to remain outstanding); and

- Distribution of options (including an increase in the pre-approved 

option pool)

I thought these issues would be included in this set of documents. 

If not, what is the strategy to be followed for this?131

Thereafter, at Paulo Kulikovsky’s urging, language respecting the option grants and 

Debt assumption found its way into the Self-Help documents.132 

When the Debt assumption was incorporated in the Self-Help efforts, the 

initial understanding was that the Debt would be assumed, not that it had been 

 

129 Id. at 2.

130 JX 177 at 3.

131 Id. at 1.

132 JX 178; JX 196 at 5–6, 47–48.
33

assumed.133 For reasons unspecified in the record, on September 18, 2012, in email 

correspondence discussing the Self-Help documents, Company counsel represented 

to Paulo Kulikovsky and others that they would begin to “prepare the resolutions to 

reflect the assumption of the debt by Certisign Delaware.”134 On September 19, 

2012, Company counsel circulated draft resolutions, and Paulo Kulikovsky 

responded that same day, stating: 

My comment here is that I would like to add, on the resolution of the 

debt assumption, the amount of debt (in US$) that was assumed by the 

Holding company in 2010 []more precisely, the assumption was dated 

December 15, 2010 and the amount outstanding at that time 

(principal +[] interest) [was] US$2,309,707.71. 135 Additionally, the 

debt was incurred on or prior to December 31, 2002 ([there] were a 

series of payments in the second half of 2002), the reason that I think it 

would be helpful to put such amount as of 12/15/2010.136

Company counsel incorporated Paulo Kulikovsky’s revisions.

137

 Therefore, per 

Paulo Kulikovsky’s request that the Self-Help documents state that the Debt had 

been assumed, the execution version of the Self-Help documents characterized the 

 

133 JX 178 at 1 (“With respect [t]o other remaining debt, this will [b]e simpler as it is not 

being converted to equity at this point but rather will be assumed by CertiSign Holding 

Inc.”). 

134 JX 179 at 1.

135 Note that $2,309,707.71 is the Interest Bearing Debt Portion of the Third Interest 

Calculation Approach discussed in December 2010. JX 83 at 6–7.

136 JX 180 at 1.

137 Id.; JX 187 at 3; JX 196.
34

Debt assumption as a “Ratification of Prior Actions Relating to Debt.”

138

 

Specifically, the execution version of the Self-Help resolution concerning the Debt

stated,

WHEREAS, that [sic] the Company’s subsidiary, CertiSign

Certificadora Digital S.A. (“CertiSign Brazil”), incurred debt on or 

prior to December 31, 2002 in the aggregate principal amount of 

$1,191,402.07, which bears interest at 9% (the “Debt”);

WHEREAS, the Debt is now held by SK International Holdings, LLC; 

and . . .

RESOLVED, that the previous assumption of the Debt by the Company 

from CertiSign Brazil be, and it is hereby approved, ratified and 

confirmed in all respects.139

Thus, the execution version of the Self-Help documents provided for the grant of 

475,000 options to Kulikovsky and designated for ratification that CertiSign had 

assumed the Interest Bearing Debt Portion.

140

 

138 PTO ¶ 23; JX 196 at 5–6, 47–57. 

139 JX 196 at 48.

140 JX 187; JX 196 at 47–48. While the execution version of the Self-Help documents 

refers to “ratification” of CertiSign’s “previous assumption of the Debt” from CertiSign 

Brazil, as stated, when Company counsel circulated draft Self-Help documents in 

September 2012, Paulo Kulikovsky urged counsel to add the purported Debt assumption. 

See JX 180 at 1. As discussed below, the record does not establish that any of the affected 

parties in fact reached an agreement in December 2010 (or otherwise) under which 

CertiSign would assume the Debt. 
35

Counsel advised the parties that they needed to execute the Self-Help 

documents in a specific order to ensure their validity.141 As contemplated, the first 

step would be the execution of a written consent of the CertiSign board to confirm 

the proper election of the board members.142 This consent was to be signed by two 

of the initial three directors of the Company, Kulikovsky and Cosentino. 143 

As discussed below, Kulikovsky refused to sign this first written consent (or any 

other consents), thus bringing the entire Self-Help process to a screeching halt before 

it even left the gate.

144

 Kulikovsky stood alone in his recalcitrance; all of the other 

directors and stockholders who were to participate in the Self-Help had executed 

their respective consents and delivered them to CertiSign, or had placed executed 

consents in escrow pending Kulikovsky’s execution of the Self-Help documents.

145

 

141 JX 196 at 3 (“For example, the document will be electing a new board of directors and 

that Board will be approving certain documents to be signed by the Company, thus it is 

necessary that the new Board be elected before the other documents are signed.”).

142 PTO ¶ 24; JX 196 at 5, 7–8.

143 PTO ¶ 24; JX 196 at 5. Edgar Safdie, the third initial CertiSign director, had previously 

resigned. PTO ¶ 24 n.2.

144 PTO ¶ 25.

145 Id.
36

G. Kulikovsky Imposes Conditions on His Participation in the Self-Help

On December 12, 2012, Khafif circulated the Self-Help documents for 

signatures.146 By January 9, 2013, only Kulikovsky and Darby had not executed the 

step-one and step-two documents which would duly elect the board and officers and 

then authorize a certificate of correction for CertiSign’s certificate of incorporation, 

the exchange agreement to correct defective stock and the new warrant and stock 

purchase agreement.147 Darby executed the necessary documents on February 6, 

2013.

148

 On February 27, 2013, Khafif emailed Kulikovsky to “insist[] [that he] sign 

the documents,” and to “invit[e] him to come to [Khafif’s] office to sign them on the 

same copy that [Cosentino and Khafif] signed.”149 Kulikovsky did not respond.

150

 

Undeterred, on March 5, 2013, Khafif emailed Kulikovsky again to reiterate that 

Kulikovsky needed to sign the documents, to remind him “that [] only his signature 

[is] missing” and to “invite him to come again . . . to [Khafif’s] office to sign.”

151

 

 

146 JX 203 at 1–2. 

147 Id. at 1. 

148 Id.

149 JX 206 at 1; Tr. 417–18 (Khafif).

150 Tr. 417–18 (Khafif).

151 JX 206 at 1; Tr. 418–19 (Khafif).
37

Kulikovsky did not respond to this email either.152 By March 13, 2013, Kulikovsky 

still had not signed the documents and would “not confirm if he [was] willing to sign 

them or not.”153

On March 18, 2013, during a CertiSign stockholders meeting, Kulikovsky was 

asked again (this time in person) to sign the Self-Help documents. Kulikovsky

testified that he responded to these requests by advising his fellow stockholders: 

“We need to fix CKS,” because my issue was—2010-2011, we almost 

sold CertiSign. 2012, we almost sold CertiSign. 2013, we had no 

perspective [sic] of selling the company. So I was, like, “Okay, now 

I’m locked here in this company for another few years,” as I am now. 

So I told them, “We need to address CKS. We need to fix CKS. 

We need to address [Cosentino’s] debt to me. I’m very uncomfortable 

being the guy that’s financing the person that’s personally attacking me. 

I’m very uncomfortable being the minority shareholder for a group that 

all they think about is how to gain power in CertiSign, the group that 

thinks that I’m always to be mistrusted, that is really making a mess in 

the company.”154

With these concerns in mind, Kulikovsky conditioned his cooperation with respect 

to the Self-Help on CKS liquidating or otherwise distributing its stock holdings in 

CertiSign to the three stockholders of CKS directly, so that Kulikovsky could 

 

152 Tr. 419 (Khafif).

153 JX 207 at 1; Tr. 417–21 (Khafif).

154 Tr. 164–65 (Kulikovsky). The debt to which Kulikovsky referred was not the Debt, but 

rather was a debt owed by Cosentino to Kulikovsky directly dating back to when 

Kulikovsky loaned money to Cosentino in connection with restructuring Shemtov into 

CKS. Tr. 45, 49–51 (Kulikovsky).
38

directly own and vote his CertiSign shares.155 At trial, Kulikovsky admitted that by 

refusing to sign the Self-Help documents, he sought to advance his bid to guarantee 

a CertiSign board seat by obtaining direct ownership of his portion of CKS’

CertiSign stock holdings.

156

CKS convened a stockholders meeting on May 21, 2013, to follow up on the 

previous CertiSign stockholders meeting where Kulikovsky refused to sign the SelfHelp documents. 157 Kulikovsky arrived at the meeting with Edgar Safdie and 

requested a private audience with Cosentino. 158 According to Cosentino, 

Kulikovsky and Edgar Safdie tried to convince him to dissolve CKS following a 

buy-out (the proposal would allow any CKS stockholder to buy out the others).159 

Cosentino rejected the proposal. 160 In the midst of this exchange, a physical 

 

155 Tr. 322 (Kulikovsky).

156 Tr. 376 (Kulikovsky) (“what I really wanted was to make sure that my seat on the board 

was my seat and not the seat of CKS”).

157 JX 226. 

158 Id. at 2–3. 

159 Tr. 719–20 (Cosentino).

160 Id.
39

confrontation erupted between Edgar Safdie, Khafif and Cosentino.161 When the 

dust settled, Kulikovsky again refused to sign the Self-Help documents.162

H. CKS Removes Kulikovsky as a CertiSign Director and Officer

Two weeks later, on June 3, 2013, Cosentino and Khafif, acting on behalf of 

CKS as CertiSign’s majority stockholder, executed a written consent removing 

Kulikovsky as a director of CertiSign.163 On June 4, 2013, the reconstituted board 

of directors of CertiSign resolved to remove Kulikovsky from any officer position 

he might have held at the Company (including president).164

I. Kulikovsky’s June 2014 Surrender

In June 2014, before commencing litigation, CertiSign asked Kulikovsky to 

sign an acknowledgment that he did not object to judicial validation of CertiSign’s 

defective stock.165 By letter dated June 6, 2014, Kulikovsky communicated his 

willingness to consent to the entry of a court order validating CertiSign’s issuance 

of Series A and Series B common stock and Series A and B preferred stock, provided 

 

161 JX 266 at 2 (referring to “the aggression during the board meeting of CKS” and 

describing “punches” and “blows”); Tr. 432–34 (Khafif).

162 Tr. 718 (Cosentino).

163 PTO ¶ 26; JX 228.

164 PTO ¶ 26; JX 229.

165 See JX 233.
40

the court order resolved all issues relating to CertiSign’s capital structure. 166 

Specifically, Kulikovsky requested that the court order resolve “the issues relating 

to all Common and Preferred Stock, all options and warrants and all significant 

debt.” 167 Of course, the Self-Help documents that Kulikovsky had previously 

refused to sign already addressed all of these issues.168 Thus, in his June 6, 2014 

letter, Kulikovsky finally agreed to the Self-Help without the self-interested 

conditions he had previously imposed.

169 CertiSign, however, did not accept 

Kulikovsky’s surrender. Instead, CertiSign chose to litigate the Self-Help issues in 

this Court. 

J. Procedural Posture

In August 2014, CertiSign and Cosentino (the “Petitioners”) filed an action 

under 8 Del. C. § 205, seeking the Court’s validation of CertiSign’s capital structure

(the “Section 205 Action”).

170

 Kulikovsky intervened and filed a counter-petition 

seeking validation of (i) CertiSign’s issuance of options to purchase 1,150,000 

 

166 JX 233. 

167 Id.

168 See JX 196 at 5–6, 16–17, 47–49.

169 By this time, however, CKS, acting as majority stockholder of CertiSign, had already 

removed Kulikovsky as a CertiSign director. Therefore, Kulikovsky’s belated agreement 

to the Self-Help was too little too late as he was no longer in a position to execute the SelfHelp documents. 

170 PTO ¶ 27.
41

shares of CertiSign Class A common stock and (ii) CertiSign’s assumption of a debt 

comprising $4,337,693.58 in principal and interest (as of August 1, 2014) owed to 

SK Holdings (i.e., the Debt).171 Petitioners filed a motion for partial judgment on 

the pleadings with respect to validating CertiSign’s capital structure.172 Kulikovsky 

responded to that motion on April 3, 2015.173 In his response, Kulikovsky did not 

object to validating CertiSign’s defective capital stock, but asked that the remedy be 

delayed until the Court could act on all of the issues relating to CertiSign’s capital 

structure.174 The Court granted Petitioners’ motion for partial judgment on the 

pleadings and thereafter entered an order validating the Company’s outstanding 

stock and approving a proffered stock ledger.175

In February 2016, CertiSign initiated this action in which it alleges that 

Kulikovsky breached his fiduciary duty of loyalty to the Company by refusing to 

sign the Self-Help documents.

176

 CertiSign seeks an award of damages against 

Kulikovsky as the remedy for the breach. 

 

171 PTO ¶ 27; JX 240 at 40.

172 PTO ¶ 27.

173 Id.; Section 205 Action, Dkt. 22.

174 PTO ¶ 27.

175 In re CertiSign Hldg., Inc., 2015 WL 5136226, at *7; In re CertiSign Hldg., Inc., 

2015 WL 5786138, at *1; JX 248.

176 PTO ¶ 28.
42

The parties agreed and stipulated that the same counterclaims Kulikovsky 

filed in the Section 205 Action could be asserted and adjudicated in this action, and 

that the Section 205 Action would remain pending (but would be stayed) to permit 

timely appeals after the conclusion of this action.

177

 Kulikovsky’s two 

counterclaims are: Count I, asserting breach of contract related to the Debt; and 

Count II, seeking judicial validation that CertiSign granted certain board members 

and managers 1,150,000 options to purchase shares of Class A common stock of the 

Company and that CertiSign assumed the Debt.178 

The parties tried the following issues: (1) whether Kulikovsky breached his 

fiduciary duty of loyalty as a CertiSign director by refusing to sign the Self-Help 

documents179; (2) whether CertiSign granted 1,150,000 options to purchase shares 

of Class A common stock of the Company at an exercise price of $0.10 per share 

and whether Kulikovsky holds 475,000 such options 180 ; (3) whether CertiSign 

assumed the Debt in the principal amount of $2,066,919.80, plus nine percent

interest compounded monthly since the time SK Holdings made payment to 

VeriSign and Darby on behalf of CertiSign Brazil, which payment is due 

 

177 Id.; JX 258. 

178 JX 258 at ¶¶ 41–56.

179 PTO ¶ 31.

180 PTO ¶¶ 110–11.
43

immediately 181 ; and (4) whether CertiSign should be awarded damages for 

Kulikovsky’s breach of the fiduciary duty of loyalty.

182

A four-day trial was held in October 2017. The parties presented post-trial 

oral argument on March 12, 2018. To follow is my post-trial decision. 

II. ANALYSIS

I take up the issues in the following order: (1) did Kulikovsky breach the 

fiduciary duty of loyalty; (2) did CertiSign grant options; (3) did CertiSign assume 

the Debt; and (4) is CertiSign entitled to damages?

A. Kulikovsky Breached His Fiduciary Duty of Loyalty

“A public policy, existing through the years . . . demands of a corporate officer 

or director, peremptorily and inexorably, the most scrupulous observance of his duty, 

not only affirmatively to protect the interests of the corporation committed to his 

charge, but also to refrain from doing anything that would work injury to the 

corporation.”183 Kulikovsky breached his duty of loyalty to CertiSign by refusing to 

 

181 PTO ¶¶ 112–14.

182 PTO ¶¶ 107, 116. 

183 Guth v. Loft, Inc., 5 A.2d 503, 510 (Del. 1939). See also id. (“Corporate officers and 

directors are not permitted to use their position of trust and confidence to further their 

private interests.”); In re Walt Disney Co., 2004 WL 2050138, at *5 n.49 (Del. Ch. Sept. 10, 

2004) (“[T]he duty of loyalty . . . imposes an affirmative obligation to protect and advance 

the interests of the corporation and mandates that [a director] absolutely refrain from any 

conduct that would harm the corporation. This duty has been consistently defined as broad 

and encompassing, demanding of a director the most scrupulous observance. To that end, 
44

sign the director consents unless and until CKS agreed to give him (through 

dissolution or otherwise) SK Holdings’ one-third share of CKS’ CertiSign share

holdings and Cosentino agreed to repay to Kulikovsky a personal debt.184

The Court need not draw a circumstantial line between Kulikovsky’s refusal 

to repair CertiSign’s defective capital structure and a purely self-interested motive. 

Kulikovsky admitted that his obstruction was motivated by a desire to secure for 

himself a permanent CertiSign board seat. It is indisputable that Kulikovsky was the 

sole impediment to CertiSign’s efforts to correct the potentially devastating effects 

of its invalid issuance of millions of shares of stock for which CertiSign’s 

stockholders paid valuable consideration. Moreover, Kulikovsky was well aware 

that his refusal to sign the Self-Help documents perpetuated the defective 

constitution of the CertiSign board which, in turn, rendered every single board act 

over a period of several years invalid. By his defiance, Kulikovsky single-handedly 

and knowingly jeopardized CertiSign’s existence and operations in order to obtain

 

a director may not allow his self-interest to jeopardize his unyielding obligations to the 

corporation and its shareholders.”) (emphasis in original).

184 See eBay Domestic Hldgs., Inc. v. Newmark, 16 A.3d 1, 46 (Del. Ch. 2010) (finding 

directors “breached their fiduciary duty of loyalty by using their power as directors and 

controlling stockholders to implement an interested transaction” that did not “bear[] some 

reasonably necessary relation to the corporation’s best interest” but rather was undertaken 

“to protect [the directors’] personal, sentimental interests . . . .”).
45

leverage to advance his personal interests. This is the quintessential breach of the 

duty of loyalty. Kulikovsky’s arguments to the contrary are meritless. 

First, Kulikovsky argues that he resisted signing the Self-Help documents 

because “Delaware directors have an affirmative duty to oppose threats to the 

corporation and its [stockholders] from perceived harm whether a threat originates 

from third parties or other shareholders.”

185 In the case of CertiSign, Defendants 

argue the threat was the “exploitation of CKS by Cosentino and Khafif to deprive 

the majority shareholders of the meaningful exercise of the corporate franchise.”186 

Their logic courses through a tree of sagging branches: (1) CKS controls CertiSign; 

(2) while Cosentino and Khafif control only two-thirds of CKS, they used this 

control of CertiSign’s majority stockholder to “drag along” the other CertiSign 

stockholders187; (3) this dynamic was contrary to the intent of CKS’ founders; and 

yet (4) “Cosentino and Khafif refused to address their control of CertiSign on the 

many occasions Kulikovsky sought to discuss it”188; and so (5) Kulikovsky had no 

 

185 Opening Post-Trial Br. of Def./Counterclaim Pls. Sergio Kulikovsky & SK Int’l Hldgs., 

LLC (“Defs.’ Opening Br.”) 49 (citing Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 

946, 952 (Del. 1985)) (internal quotations omitted). 

186 Id. at 51.

187 Id. at 51–52. As stated, CKS has three board members, each representing one of the 

three families that own a one-third interest in CKS. 

188 Id. at 52.
46

choice but to force Cosentino and Khafif’s hand regarding CKS’ control of CertiSign 

by refusing to sign the Self-Help documents.189 

Defendants’ logic tree withers under even casual scrutiny. Even following 

Defendants’ own logic, Kulikovsky exploited his CertiSign directorship to further 

his personal interests respecting CKS. A control dispute among CKS’ owners, 

however, cannot justify Kulikovsky’s decision, as a CertiSign fiduciary, to hold 

hostage the entire capital and board structure of CertiSign at the expense of that 

company’s stockholders.190 Because Defendants’ position on this point utterly fails 

on the facts, I need not, and decline to, undertake a full-blown Unocal analysis as 

Defendants would have me do.191 

Second, in a superficial variation of his first argument, Kulikovsky contends

that he did not breach his fiduciary duty of loyalty because to have breached his duty, 

his actions must have been for his own benefit “at the expense of stockholders 

 

189 Id. (“Having been effectively disenfranchised by Khafif and Cosentino, Kulikovsky 

used the only measure of leverage available to him—his signature on documents needed to 

fix the capitalization defect—to attempt to foster a discussion with Khafif and 

Cosentino.”).

190 It is worth noting that Kulikovsky was quite content with CKS’ capital structure, which 

he helped to design, when his interests aligned with Cosentino and Khafif’s predecessor on 

CKS’ board of directors, Edgar Safdie. JX 10 at 4–5, 9; JX 226 at 2; Tr. 110–14, 188–190

(Kulikovsky). That these friends fell out and took sides does not justify Kulikovsky’s 

turning CertiSign upside down until he got his way. 

191 Unocal, 493 A.2d 946.
47

generally.”192 Kulikovsky reasons that if he had received his share of CertiSign 

stock from CKS, and had thereby regained the power to vote his shares, then other 

stockholders would have been released from the shackles that prevented their 

meaningful exercise of the corporate franchise because the reign of Cosentino and 

Khafif’s control over CertiSign through CKS would have ended.

193 Moreover, 

according to Kulikovsky, “any personal benefit to Kulikovsky from a restoration of 

corporate democracy would be de minimis” because, with CKS dismantled, he 

would only own 23% of CertiSign and thus would not have control of CertiSign.194

Here again, Kulikovsky’s professed altruism is not credible. As stated, 

Kulikovsky’s conditions for executing the Self-Help documents furthered his 

personal interest (obtaining CertiSign stock directly, receiving repayment of a 

personal loan and securing for himself a CertiSign board seat) at the expense of 

fixing CertiSign’s illegitimate board and defective capital structure. Every 

stockholder holding defective stock had an interest in remedying the situation 

immediately. Kulikovsky single-handedly derailed the Self-Help in pursuit of his 

personal interests. No amount of spin control can alter that reality. 

 

192 Defs.’ Opening Br. at 53 (citing OptimisCorp v. Waite, 2015 WL 5147038, at *59 

(Del. Ch. Aug. 26, 2015)).

193 Id. at 54.

194 Id.
48

Third, Defendants argue that in June 2014, Kulikovsky consented to the SelfHelp documents that he had previously refused to sign, thus curing any supposed 

breach of his duty of loyalty.195 Setting aside that his past breaches of fiduciary duty 

were not excused when Kulikovsky finally decided to come to his fiduciary senses, 

Kulikovsky’s pre-litigation change of heart was too little too late because, by then,

he had already been removed from the CertiSign board and was, therefore, no longer 

authorized to execute the Self-Help documents. 

Fourth, Kulikovsky argues that he “did not refuse to sign the Self-Help

documents, [but rather] only declin[ed] to do so at that moment” in order “merely to 

prompt a discussion about CKS, which Khafif and Cosentino were unwilling to 

abide.”196 Perhaps a “momentary” refusal to act might be excusable. Perhaps. But 

Kulikovsky was first asked to sign the Self-Help documents in December 2012.197 

He refused and maintained that position until June 2014, when he finally made the 

futile offer to consent to the Self-Help. By then, CertiSign was poised to seek relief 

from the Court under Section 205. 

 

195 Post-trial Answering Br. of Def./Counterclaim Pls. Sergio Kulikovsky & SK Int’l 

Hldgs., LLC (“Defs.’ Answering Br.”) 18.

196 Id. at 17.

197 JX 203 at 1–2.
49

The evidence reveals that Kulikovsky was displeased that his former friends 

had joined forces against him. He was displeased that they were critical of his 

leadership of CertiSign. And he was displeased that they had, effectively, removed 

him from that position and then boxed him into his minority position. His frustration 

and anger is a product of basic human nature. It is not, however, a justification for 

petty tactics that jeopardized the well-being of CertiSign and its stockholders for the 

sake of personal advantage and satisfaction. That conduct was a breach of the duty 

of loyalty. 

B. The Option Grants

Defendants seek a declaration that Kulikovsky currently holds 475,000 

options to purchase shares of Class A common stock of CertiSign at an exercise price 

of $0.10 per share.198 According to Defendants, CertiSign clearly intended to grant 

these options.

199

 Thus, Defendants argue, if the grants were for some reason

defective, then this Court should validate the grants under Section 205.

200

CertiSign acknowledges its principals frequently discussed the grant of stock 

options and may have even agreed in broad terms that granting stock options was a 

good idea. But CertiSign is adamant that the parties never reached agreement on the 

 

198 PTO ¶ 111; Defs.’ Opening Br. 17, 44.

199 Defs.’ Opening Br. 46–47.

200 Id. at 47–48.
50

essential terms of a stock option plan. There is, therefore, no corporate act for the 

Court to validate under Section 205. Here again, the preponderance of the evidence 

supports CertiSign’s position. 

Under 8 Del C. § 157(a), “[s]ubject to any provisions in the certificate of 

incorporation, every corporation may create and issue . . . rights or options entitling 

the holders thereof to acquire from the corporation any shares of its capital stock of 

any class or classes, such rights or options to be evidenced by or in such instrument 

or instruments as shall be approved by the board of directors.” While this statutory 

grant of authority to create an option plan is quite broad, as reflected in the enabling 

provisions of Section 157(a), the plan must be formally adopted by the corporation 

and its terms must be set forth specifically in an “instrument,” as required by 8 Del. 

C. § 157(b):

The terms upon which, including the time or times which may be 

limited or unlimited in duration, at or within which, and the 

consideration (including a formula by which such consideration may be 

determined) for which any such shares may be acquired from the 

corporation upon the exercise of any such right or option, shall be such 

as shall be stated in the certificate of incorporation, or in a resolution 

adopted by the board of directors providing for the creation and issue 

of such rights or options, and, in every case, shall be set forth or 

incorporated by reference in the instrument or instruments evidencing 

such rights or options. A formula by which such consideration may be 

determined may include or be made dependent upon facts ascertainable 

outside the formula, provided the manner in which such facts shall 

operate upon the formula is clearly and expressly set forth in the 

formula or in the resolution approving the formula. . . .
51

The basic requirements prescribed by Sections 157(a) and (b) are not onerous. 

To evidence an intent to create and issue stock options, the corporation must 

manifest that intent with requisite specificity either in its “certificate of 

incorporation, or in a resolution adopted by the board of directors.”201 Defendants 

have proffered neither in the trial record. For this reason alone, Kulikovsky’s claim 

that he holds CertiSign stock options must be rejected. 

Even if the Court were to look past the absence of any formal recognition of 

the stock options, the evidence still falls short of revealing that the CertiSign board 

reached a meeting of the minds on key terms of any option grants such that a 

Section 205 validation could even be attempted. To be sure, the necessary parties 

discussed stock options frequently, and all involved in those discussions appeared to 

agree that option grants were appropriate. But the discussions were fluid and even 

Kulikovsky remained unclear as to key aspects of the option grants both before and 

after this litigation was initiated. Simply stated, the evidence falls short of the mark 

required to justify specific performance or validation of an intended, but defective, 

corporate act. 

 

201 8 Del. C. § 157(b). 
52

1. The Alleged Option Grants Were Not Approved in the Certificate of 

Incorporation or by Board Resolution

According to Defendants, CertiSign’s intent to execute the First Alleged 

Issuance is evidenced not in the CertiSign certificate of incorporation or in any 

formal board resolution (as required by Section 157(b)), but rather in the minutes of 

the CertiSign board’s April 2, 2018 meeting.

202

 As for the Second Alleged Issuance 

and the Third Alleged Issuance, Defendants rely on emails and correspondence as 

evidence of the board’s intent to create and issue the options.

203

 And, as for the 

actual execution of the stock option grants, Defendants acknowledge that there is no 

“instrument” that reflects the specific “rights” attached to the grants or the “formula” 

by which the specific grants were “determined.”204 The total failure to comply with 

 

202 Tr. 134, 211–212 (Kulikovsky); Defs.’ Opening Br. 17 (“CertiSign’s April 2, 2008 

minutes confirm the Board awarded Kulikovsky ‘100,000 stock options at the strike price 

of $1.00, according to the company stock options plan.’”) (quoting JX 49 (minutes of 

April 2, 2008 CertiSign board meeting)).

203 Defs.’ Opening Br. 18, 46 (citing JX 81, JX 92, JX 96, JX 115, JX 135, JX 143, JX 414).

204 Tr. 212:19–23 (Kulikovsky) (“Q: CertiSign Holding never issued any option certificates 

or option instruments representing the options that you claim along the lines of a stock 

certificate, did they? A: That’s correct.”). See also Niehenke v. Right O Way Transp., Inc., 

1995 WL 767348, at *3 (Del. Ch. Dec. 28, 1995) (“In purporting to issue an option to his 

wife, Hayes failed to adhere to provisions in section 157 which require that the terms of 

the options be separately stated in either the certificate of incorporation or in a resolution 

adopted by the board of directors. There is no persuasive evidence of such board 

resolution. Consistent with the interest in protecting against fraudulent, secretive or 

otherwise improper issuance of stock option rights and with other evidence questioning the 

timing and valid issuance of the Hayes Option, the failure here to adhere to statutory 

formality renders the Hayes Option void and unenforceable.”) (internal citations omitted). 
53

any aspect of Sections 157(a) and (b) is alone a basis to reject Defendants’ claim for 

stock options and is, at the least, powerful evidence that the CertiSign board did not 

intend to authorize the options. 

Defendants urge the Court to proceed beyond the CertiSign board’s failure to 

meet the statutory requisites of Section 157 and to employ Section 205 as a means 

to remedy that failure. According to Defendants, the evidence reveals that the 

CertiSign board did everything but comply with Section 157(b) with respect to the 

grant of stock options. Thus, all that is left to do is bless the option grants by court 

order as if the board had properly completed the process. I disagree. 

2. The Alleged Option Grants Lacked Specificity as to Material Terms

Section 157(b) requires option grants to be specific as to material terms of the 

grant, including maturity, exercise price and vesting.205 In Grimes v. Alteon, our 

Supreme Court reiterated prior rulings in which the court emphasized that 

Section 157 reflects a statutory mandate for “strict adherence to [] formality in 

matters relating to the issuance of capital stock.” 206 Grimes emphasized, “the 

issuance of corporate stock is an act of fundamental legal significance having a direct 

 

205 8 Del. C. § 157(b) (“The terms upon which, including the time or times which may be 

limited or unlimited in duration, at or within which, and the consideration (including a 

formula by which such consideration may be determined) for which any such shares may 

be acquired from the corporation upon the exercise of any such right or option, shall be 

such as shall be stated . . .”).

206 804 A.2d 256, 260 (Del. 2002).
54

bearing upon questions of corporate governance, control and the capital structure of 

the enterprise. The law properly requires certainty in such matters.”207 

The evidence presented by Defendants in support of their options 

counterclaim was striking in its lack of certainty with respect to material terms of 

the purported option grants, and fell well short of demonstrating that the CertiSign 

board had authorized a grant to Kulikovsky of 475,000 options at an exercise price 

of $0.10.208 Indeed, Defendants have struggled to maintain any consistent narrative

with respect to even the most basic elements of the option grants, including the 

quantity of options that were issued, the exercise price, when the options were issued 

and even the recipients of the options. These basic elements must be fixed before 

any valid claim to the options may be pressed so that “everyone know[s] what [the] 

claims on the capital will be, who has rights to invest capital, and what rights the 

corporation has with respect to actual or potential investors.”

209

 

207 Id.

208 PTO ¶ 111.

209 Grimes, 804 A.2d at 259. Other material terms include duration and vesting. 8 Del. C. 

§ 157(b). See also Sai Man Jai, Ltd. v. Personal Computer Card Corp., 1991 WL 110458, 

at *2 (Del. Ch. June 18, 1991) (finding “whether the option was exercisable only upon 

payment of cash, or whether the option could be exercised in exchange for a promissory 

note,” to be a material term).
55

(a) Uncertainty as to Exercise Price and Quantity Issued

As stated, Defendants claim CertiSign issued 475,000 options to Kulikovsky 

via three alleged options issuances: the First Alleged Issuance of 100,000 options 

as authorized during an April 2, 2008 CertiSign board meeting, the Second Alleged 

Issuance of 100,000 options as authorized at some point between April 2008 and 

September 2010 and the Third Alleged Issuance of 275,000 options as authorized in 

or around September 2010. While the evidence relating to each of the option grants 

is as clear as dishwater, the evidence surrounding the Third Alleged Issuance is the 

most puzzling and best illustrates the fallacy of Defendants’ claim. According to the 

verified Counterclaims, the Third Alleged Issuance granted Kulikovsky 275,000 

options out of a total 950,000 options granted.

210

 Defendants provided a different 

number in their sworn interrogatory responses where they stated that Kulikovsky

had been granted 475,000 options.211 The fact that Defendants’ sworn statements of 

fact differ so substantially on a point where “certainty” is required is bad enough. 

That the revised version of history fails as a matter of mathematics makes the claim 

even less credible. Defendants’ claim for options in the Third Alleged Issuance, 

whether based on 275,000 or 475,000 options, assumes that CertiSign granted either 

1,150,000 or 1,350,000 total options. The math does not work given that, under 

 

210 JX 258 ¶ 14.

211 JX 256 at 10.
56

either scenario, Kulikovsky would have CertiSign granting either 150,000 or 

350,000 options in excess of the 1,000,000 options pool “limit” as reflected in the 

A&R COI.

212

As for the exercise price, Kulikovsky testified he was uncertain about the 

exercise price of the Second Alleged Issuance, stating it was “probably $1 per 

share.”213 Kulikovsky’s testimony that the exercise price was “probably $1” is, on 

its face, lacking in requisite “certainty.”

214

 Moreover, it bears no resemblance to the 

$0.10 per share exercise price that Defendants advanced at trial. 215 Given 

Kulikovsky’s own lack of clarity or consistency regarding the exercise price, it is 

 

212 JX 22, art. IV § B(4)(d)(ii)(C); JX 256 at 10. The total number of options authorized in 

the pool was itself a moving target in the evidence. The verified Counterclaims put the 

total number at 1,150,000; Defendants’ interrogatory responses put the number at 

1,350,000; a capitalization table distributed to stockholders in connection with a possible 

sale of the Company (attached as Exhibit A to the Counterclaims), in my view the most 

credible evidence, put the number at 1,000,000; an email that Kulikovsky wrote in January 

2011 put the number at 1,200,000; and an email that Kulikovsky wrote in February 2011 

put the number at 1,250,000. JX 258 ¶ 14; JX 256 at 10; JX 258, Ex. C; JX 95 at 2; JX 98 

at 1.

213 Tr. 206 (Kulikovsky).

214 Grimes, 804 A.2d at 260.

215 Tr. 206 (Kulikovsky). Here again, Defendants’ position on exercise price is remarkable 

in its utter lack of consistency. The Counterclaims said $1.00 for the First and Second

Alleged Issuance and $0.50 for the Third Alleged Issuance; emails from Kulikovsky 

suggested an exercise price of $0.01 per share; and then Kulikovsky testified at trial that 

the exercise price for the Third Alleged Issuance was $0.10 per share. Tr. 143

(Kulikovsky). Kulikovsky’s change in tune going into trial came as a surprise to CertiSign 

as well. See Pl.’s Opening Br. 13–14 (“For the first time, in the pre-trial order, Kulikovsky 

contends CertiSign issued all the alleged options at an exercise price of $0.10 per share.”).
57

not surprising that Defendants do not even mention, much less highlight, any 

evidence that the CertiSign board ever set a $0.10 per share exercise price.216 

(b) Uncertainty as to Timing and Recipients

The timing of the option grants is also murky. Though the Third (and final)

Alleged Issuance supposedly occurred in or around September 2010, on January 24, 

2011, Kulikovsky wrote, “[t]here is still an issue as to the dates and quantities, but 

we’ll probably issue around 1,200,000 options, which is above the current option 

pool of 1,000,000 options.”

217

 Moreover, Kulikovsky’s February 11, 2011 email to 

Company counsel indicated that the identit(ies) of the option grantee(s) remained to 

be determined.218 

Kulikovsky’s emails to Company counsel in January and February 2011 

perhaps best illustrate the uncertainty regarding the alleged option issuances. Those 

emails, together with related documents and trial testimony, make clear that the 

following questions remained undecided: (1) whether 1,000,000 options, 1,150,000 

 

216 Defendants’ Opening Brief mentions $0.10 exactly once, in connection with discussing 

a May 11, 2012 email where Cosentino suggested telling Chadbourne the exercise price of 

options is $0.10. Defs.’ Opening Br. 20 (citing JX 142) (“Let’s send to [Chadbourne] the 

quantity of arranged options. I suggest putting US$ 0.10 as the cost.”). Cosentino’s 

suggestion is not the equivalent of a board decision setting the exercise price at $0.10. See 

Grimes, 804 A.2d at 266 (holding that “to the extent such transactions obligate the board 

concerning stock issuance, the board must approve them in writing”) (emphasis added). 

217 JX 95 at 2 (emphasis added).

218 JX 92 at 5.
58

options, 1,200,000 options, 1,250,000 options or 1,350,000 options had been issued; 

(2) whether the exercise price was $1.00, $0.50, $0.10 or $0.01 per share; 

(3) whether CKS or unidentified individuals received the option grants; and (4) as 

of when the options were granted.

219 On a claim where evidentiary precision is 

necessary, Defendants’ evidence is a study in obscurity. 

3. Validation under Section 205 is Not Available

“The Court cannot determine the validity of a defective corporate act without 

an underlying corporate act to analyze.”220 As this Court has explained: 

There must be a difference between corporate acts and informal 

intentions or discussions. Our law would fall into disarray if it 

recognized, for example, every conversational agreement of two of 

three directors as a corporate act. Corporate acts are driven by board 

meetings, at which directors make formal decisions. The Court looks 

to organizational documents, official minutes, duly adopted resolutions, 

and a stock ledger, for example, for evidence of corporate acts.221

Here, although there were extensive board discussions in principle agreeing to issue

options, no options were actually issued as evidenced by the lack of board documents 

or instruments authorizing or granting such options. Even if there existed board 

 

219 JX 49; JX 95 at 2; JX 98 at 1–2; JX 142; JX 256 at 10; JX 258 ¶¶ 12–14; JX 258, Ex. C; 

Tr. 143, 206 (Kulikovsky).

220 In re Numoda Corp. S’holders Litig., 2015 WL 402265, at *9, 11 (Del. Ch. Jan. 30, 

2015) (finding no corporate act to validate where the party seeking validation had “not 

been able to establish when any board approved an issuance of 400,000 shares to her”),

aff’d sub nom. In re Numoda Corp., 128 A.3d 991 (Del. 2015). 

221 Numoda, 2015 WL 402265, at *9 (internal citation omitted).
59

documents purporting to grant options (including defective documents), the alleged 

option grants lack definite, material terms such as the quantity, exercise price, timing 

of grants and recipients. Consequently, they are not legally cognizable. A defective 

corporate act is a prerequisite to validation of the defective act. On this record, 

Defendants have not proven there was a defective corporate act (and not merely 

discussions among board members) for this Court to validate. For that reason, 

Section 205 does not work here.222 

C. The Debt

Defendants seek a declaration that, in or before December 2010, CertiSign 

assumed the Debt in the principal amount of $2,066,919.80, plus nine percent 

interest compounded monthly since the time that SK Holdings made payments to 

VeriSign and Darby on behalf of CertiSign Brazil. They also seek a declaration that 

the Debt is due and payable immediately to SK Holdings.223 At a basic level, the 

 

222 Even if Defendants were to argue (which they do not) that the inclusion of the option 

grants (or the assumption of the Debt) in the Self-Help documents evidences a prior 

agreement to grant the options (or assume the Debt), Section 205 still would not work. The 

credible evidence reveals that the options and Debt were included in the Self-Help 

documents not because the CertiSign board had reached an agreement to grant options or 

assume Debt, but rather because Kulikovsky and his brother pushed to resolve the lingering 

questions regarding the options and the Debt at the same time the Board sought to ratify 

the 2005 stock issuances. See JX 176–180. That counsel acquiesced and included the 

extraneous matters in the Self-Help documents does not mean there was a deliberate 

corporate act that can now be validated.

223 PTO ¶¶ 112–14.
60

parties agree a debt is owed to SK Holdings and must be repaid. 224 They disagree, 

however, as to who owes the Debt. CertiSign maintains the Debt is owed by 

CertiSign Brazil. Defendants, on the other hand, contend that CertiSign has assumed 

the Debt from CertiSign Brazil and should be ordered to pay it immediately. 

During trial, Kulikovsky agreed on behalf of SK Holdings to accept 

repayment from either CertiSign or CertiSign Brazil. And both parties’ Brazilian 

law experts agreed that there are straightforward, lawful methods by which the Debt

can be repaid. Nevertheless, consistent with their demonstrated pattern of leaving 

all business sense at the courtroom door, the parties have declined to reach a business 

solution to this problem in favor of litigation. 

Because the parties do not dispute that the Debt exists and should be repaid, 

I accept that reality as a matter of fact and turn to the questions of who owes the

Debt, has it been assumed and can it be repaid in compliance with Brazilian law even 

though it was never registered with the Brazilian Central Bank.

225

 I address each 

question in turn below.226 

 

224 Tr. 398 (Khafif) (“In princip[le], everybody agreed that the debt should be paid; it was 

just a question of how to pay it”); Pl.’s Opening Br. 62 (“All parties agree the Debt should 

be repaid.”). 

225 Tr. 398 (Khafif); Pl.’s Opening Br. 62.

226 During post-trial oral argument, I reserved decision on Defendants’ motion to strike 

CertiSign’s statute of limitations argument, raised by CertiSign for the first time in posttrial briefing in response to an incredibly confusing characterization of the Debt assumption 

claim advanced by Defendants during and after trial. OA Tr. 11, 15. Given my findings 
61

1. Choice of Law 

Before addressing the questions relating to debt assumption, I must first 

answer the threshold question of whether Brazilian or Delaware law governs this 

issue. Not surprisingly, the parties’ Brazilian law experts disagreed on choice of 

law. 227 On behalf of Defendants, Junqueira opined that Delaware law governed the 

debt assumption issues under Brazilian choice of law doctrine.228 She testified that 

Brazilian law dictates that a transaction, such as a debt obligation, “is governed by 

the law of the country where it [was] created. So it doesn’t matter where the 

debtor is. It matters where the obligation has been created.”

229

 In the case of a debt 

obligation, Brazilian law deems “the place where the creditor is and where the 

creditor is disbursing the funds” as the place where debt obligation was created for 

 

here, I decline to reach the statute of limitations issue and, therefore, deny the motion to 

strike as moot. CertiSign’s request for fees in connection with Defendants’ motion to strike 

is denied. Fee-shifting under the “bad faith” exception to the American Rule is warranted 

only where the party seeking fee-shifting has shown by clear evidence that “the party 

against whom the fee award is sought . . . acted in subjective bad faith.” Arbitrium (Cayman 

Islands) Handels AG v. Johnston, 705 A.2d 225, 232 (Del. Ch. 1997) (emphasis in 

original), aff’d, 720 A.2d 542 (Del. 1998). Here, CertiSign has not adduced “clear 

evidence” that Defendants’ motion to strike is (or was) the product of Defendants’ 

“subjective bad faith.” 

227 Ct. Ch. R. 44.1 (“The Court, in determining foreign law, may consider any relevant 

material or source, including testimony, whether or not submitted by a party or admissible 

under Rule 43. The Court’s determination shall be treated as a ruling on a question of 

law.”).

228 Tr. 851–57 (Junqueira).

229 Tr. 853 (Junqueira).
62

purposes of choice of law.230 According to Junqueira, in this case, “the creditor 

disbursing the fund[s was] SK Holdings, a Delaware entity, and the funds [were] 

disbursed in the U.S.”

231

 Thus, Brazilian law must give way to Delaware law with 

respect to issues relating to the Debt obligation.

232

 

 

230 Tr. 854 (Junqueira).

231 Id.

232 CertiSign brought a motion in limine to exclude Junqueira’s rebuttal report and 

testimony to the extent it opined that Delaware law applies to the Debt and the subsequent 

assumption of the Debt by CertiSign. According to CertiSign, Junqueira was attempting 

not only to supplant the Court’s adjudicative role, she also sought to opine on Delaware 

law, a subject about which she is unqualified to testify. Junqueira clarified at trial that her 

opinion was based solely on Brazilian law:

[T]he Brazilian Civil Code does not apply to determine whether CertiSign 

Holding made the sufficient expression of will and to the formalities for the 

obligation because the law of the place where the obligation is created 

appl[ies]. . . . [T]he Brazilian Civil Code rules do not apply initially to [the 

Debt] obligation because it was not created in Brazil. And then since this 

discussion is handled in the Delaware court, it is up to the Delaware court, 

then, to decide which law should apply to the obligation. But my intention 

was to say that – to rebut [] what Mr. Edison Fernandes was stating in his 

report, that the Brazilian Civil Code would apply, because my understanding 

was that it was not applicable. So when I say Delaware law [applies], my 

intention was actually to say Delaware jurisdiction. So this Court should 

decide which law applies.

Tr. 884–85 (Junqueira). Indeed, Junqueira’s rebuttal report clarified that her opinion was 

simply that “[t]he formalities established in the Brazilian Civil Code regarding debt 

assumption are not applicable in this case.” JX 170 at 3. Based on Junqueira’s 

clarifications regarding the scope of her opinion in her rebuttal report and at trial, I am 

satisfied she was not purporting to address Delaware choice of law principles or to tell this 

Court how to apply them. I view her opinions as addressing Brazilian law only and have 

considered them solely in that context. I note that CertiSign’s counsel also appeared to 

accept Junqueira’s clarification following her trial testimony. See Tr. 886 (Junqueira)

(CertiSign’s counsel: “Your Honor, I guess with that, I’m wondering if I need to ask further 

questions on this topic because we had understood . . . that her report was saying that 
63

On behalf of CertiSign, Fernandes did not opine explicitly on choice of law. 

Rather, his opinions assumed that Brazilian law applies.233 Because Fernandes did 

not address Brazilian choice of law doctrine, I accept Junqueira’s unrebutted opinion 

that, at least under Brazilian choice of law doctrine, Brazilian law does not govern 

the Debt obligation or the purported assumption of the Debt by CertiSign. 

Even if the Court were to engage more thoroughly on the choice of law

question, the result would not change for the simple reason that there is no conflict 

between Brazilian and Delaware law with respect to the relevant Debt related 

issues.234 While the pathways may vary some, the application of either Brazilian or 

Delaware law leads to the same final destination. 

 

Delaware law applies and now I understand her to be agreeing with us that you decide the 

choice of law under Delaware choice-of-law principles.”).

233 Tr. 938 (Fernandes) (“Q: . . . Based on your analysis, what is your opinion of whether 

CertiSign Holding assumed the debt from CertiSign Brazil? A: Okay. First of all, I -- I[’d] 

like to be clear that I assumed that I have [] analyzed this situation under Brazilian law. 

I’m not saying that Brazilian law [] appl[ies] or not, but I am assuming this situation under 

[] Brazilian law.”); Tr. 959 (Fernandes) (“Q: And it is your opinion . . . that Brazilian law 

applies to the question of whether CertiSign Holding made a sufficient expression of will 

to assume the debt. A: I don’t have an opinion about Delaware law or Delaware court[s]. 

What [I can say] is under [] Brazilian law, we have [a] debtor that is [a] Brazilian company. 

So we have some connection with [] Brazilian law. Q: And so it’s your opinion that 

Brazilian law applies to this question; correct? A: No. My assumption is that Brazilian 

law appl[ies].”).

234 Deuley v. DynCorp Int’l, Inc., 8 A.3d 1156, 1161 (Del. 2010) (explaining that, in the 

case of a “false conflict, [] the court should avoid the choice-of-law analysis altogether”).
64

2. No Assumption under Brazilian Law

If Brazilian law applies, Fernandes opined that the consent of the party 

assuming the debt and the creditor is required in order for an assumption of debt to 

take place.235 According to Fernandes, the so-called “expression of will doctrine”

governs that consent under Brazilian law.236 Under this doctrine, an expression of 

will occurs “when the part[ies] show the intention or said intention” or “when the 

part[ies] confirm this expression of will [] in a contract or with any document or with 

some behavior that confirm[s] the expression of will.”237 Applying the doctrine, 

Fernandes concluded that CertiSign did not assume the Debt because an expression 

of will to assume a debt must be achieved through a resolution of a board of directors. 

Recognition of the Debt in CertiSign’s audited financial statements, even though 

approved by CertiSign’s board or officers, is not a sufficient expression of will 

because the board did not expressly resolve to assume the Debt. Moreover, because 

 

235 Tr. 958 (Fernandes). 

236 Id. Because she concluded that Delaware law applied, Junqueira did not opine on 

whether the Debt was assumed under Brazilian law. Tr. 860 (Junqueira) (The Court: “As 

regards to debt assumption, my understanding is under Brazilian law, she has offered no 

opinion beyond saying she agrees with Mr. Fernandes.”). 

237 Tr. 938–39 (Fernandes). At his deposition, Fernandes testified that under Brazilian law, 

“[t]here is not any specific form required [for an expression of will], but there needs to be 

a decision of the people in charge.” See also Tr. 861 (Junqueira).
65

the audited financials are subject to qualifiers from the auditors, they also cannot 

evidence the Board’s unfiltered expression of will.

238

Fernandes’ testimony was credible. While there certainly is some 

circumstantial evidence in the trial record that might suggest CertiSign had 

“expressed its will” to assume the Debt, the absence of any board resolution, contract 

or even unequivocal correspondence to that effect, in my view, is telling. In the 

absence of such evidence, I do not find an adequate “expression of will” by the 

parties to consummate an assumption by CertiSign of CertiSign Brazil’s debt to SK 

Holdings under Brazilian law. 

3. No Assumption under Delaware Law 

Under Delaware law, “[a] contract for the assumption of the liabilities of 

another is a third party beneficiary contract in which the debtor is the promisee, the 

assuming party the promisor, and the original creditor the beneficiary.”

239

 A “valid 

contract exists when (1) the parties intended that the contract would bind them, 

(2) the terms of the contract are sufficiently definite, and (3) the parties exchange 

legal consideration.”240 “Whether both of the parties manifested an intent to be 

 

238 Tr. 964–972 (Fernandes).

239 John Julian Const. Co. v. Monarch Builders, Inc., 306 A.2d 29, 33 (Del. Super. Ct. 

1973), aff’d, 324 A.2d 208 (Del. 1974).

240 Black Horse Capital, LP v. Xstelos Hldgs., Inc., 2014 WL 5025926, at *12 (Del. Ch. 

Sept. 30, 2014) (citing Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010)). 
66

bound is to be determined objectively based upon their expressed words and deeds 

as manifested at the time rather than by their after-the-fact professed subjective 

intent.”241 “To determine whether a binding contract exists, therefore, courts in 

Delaware look for objective, contemporaneous evidence indicat[ing] that the parties 

have reached an agreement, whether that be in the parties’ spoken words or 

writings.”

242

 Based on the record, I find that, although CertiSign and CertiSign 

Brazil contemplated that CertiSign would assume the Debt in December 2010, they 

stopped short of entering into an enforceable contract.

(a) Circumstantial Expressions of Intent to Assume the Debt

 

There is no dispute that SK Holdings clearly intended that CertiSign would 

assume the Debt. The dispute is whether CertiSign and CertiSign Brazil ever 

reached that same state of clarity. In my view, they did not. 

To be sure, there is evidence indicating that a debt assumption was 

contemplated. For instance, CertiSign Brazil approved upstreaming $2,350,000 to 

CertiSign to repay a portion of the Debt and both CertiSign and CertiSign Brazil 

evidenced the assumption in their financial statements and general ledgers.243 The 

amount of the upstreamed funds, $2,350,000, approximates the Interest Bearing 

 

241 Id.

242 Id.

243 PTO ¶ 18; JX 417 at 46.
67

Debt Portion of the Third Interest Calculation Approach ($2,309,707.71) which 

Kulikovsky, Cosentino, Khafif and others discussed in December 2010 as part of an 

effort to calculate the amount of the Debt owed to SK Holdings and the applicable 

interest.

244

 Moreover, CertiSign Brazil’s general ledgers contained entries 

indicating “forgiveness of SK Holding debt”245 and it paid Brazilian taxes for the 

loan forgiveness. 246 Indeed, CertiSign Brazil’s financial statements ending 

December 31, 2010 and 2011 note operating revenue that was deemed “misc.

revenue – debt forgiveness.”

247

 

For its part, CertiSign’s balance sheet ending December 31, 2010, shows an 

entry “total debt with SK Holding” in the amount of $2,318,820,

248 and its United 

States tax returns for 2010 and 2012 list debt due to SK Holdings as a current 

liability, also in the amount of $2,318,820.249 In December 2010, CertiSign recorded 

 

244 JX 83 at 5–7.

245 Pl.’s Opening Br. 60 (citing JX 88 at 1).

246 Tr. 399 (Khafif).

247 JX 167 at 48.

248 JX 105 at 4.

249 JX 132 at 41; JX 231 at 44. Khafif signed CertiSign’s 2012 tax returns, which reflected 

the Debt, and he testified that the document reflected “the best of [his] knowledge at the 

time.” Tr. 483–84 (Khafif). Entries on filed tax documents can be deemed admissions of 

contested facts. See Numoda, 2015 WL 402265, at *11 (“Given the lack of formality, the 

evidence that these contested acts occurred largely exists in the form of testimony, 
68

two debits, totaling $3,434,602, that it described as “debt to be capitalized” and 

“investment in Certipar S.A.,” as well as two credits, also totaling $3,434,602

(a $1,115,782 credit and a $2,318,820 credit), characterized as “debt to be 

capitalized” and “debt with related entities – SK.”250 The $1,115,782 credit matches 

the $1,115,782.02 non-interest bearing portion of the Debt that was to be capitalized 

pursuant to the 2005 SPA,

251 while the $2,318,820 credit is close to the amount 

upstreamed and the Interest Bearing Debt Portion. 

(b) Specificity of the Terms of the Assumption 

Despite the evidence of an intent to assume the Debt in CertiSign and 

CertiSign Brazil’s general ledgers, financial statements and tax returns, the terms of 

the assumption as reflected in those documents lack the specificity required to 

evidence a binding agreement that can be specifically enforced by the Court or 

validated under Section 205.

252

 The numbers appearing on the various financial 

documents discussed above are close in value to the Debt, but they do not replicate 

 

documents prepared by independent contractor John Dill (‘Dill’), and representations by 

agents of the corporations (such as tax filings) not formally adopted by the board.”).

250 PTO ¶ 17.

251 JX 196 at 48.

252 See Szambelak v. Tsipouras, 2007 WL 4179315, at *4 (Del. Ch. Nov. 19, 2007) 

(to obtain specific performance the plaintiff must demonstrate, by clear and convincing 

evidence, the terms of “a valid and specifically enforceable contract”). 
69

the Debt in a manner that would support a finding that the terms of the Debt 

assumption are stated there. In particular, the amount upstreamed, the Interest 

Bearing Debt Portion and the amount CertiSign credited differ by as much as 

$40,292.29. Furthermore, it is unclear whether the plan was for CertiSign to assume 

the entire Debt or just the Interest Bearing Debt Portion. CertiSign’s financial 

statements show credits and debits that appear to account for the non-interest bearing 

portion of the Debt, but CertiSign Brazil appears to have only upstreamed enough to 

cover the Interest Bearing Debt Portion. Therefore, the circumstantial evidence 

within the financial statements raises unanswered questions that preclude a finding

that the parties entered into a “specifically enforceable contract.”253

(c) Legal Consideration 

 

Even assuming I could find that the terms of the assumption were sufficiently 

definite to allow for specific enforcement, it is difficult to discern how the parties 

exchanged legal consideration. “It is well settled that consideration for a contract 

can consist of either a benefit to the promisor or a detriment to the promisee.”254 

 

253 Id. 

254 First Mortg. Co. of Pa. v. Fed. Leasing Corp., 456 A.2d 794, 795–96 (Del. 1982). 

See also 3 Williston on Contracts § 7:19 (4th ed.) (“so long as the promisee incurs a 

bargained-for detriment, in exchange for the promisor’s undertaking, the promisor’s 

promise is supported by consideration and may be enforced”). I note that, in this case, the 

lack of specificity with regard to the terms of the purported Debt assumption makes 

designating who is “promisor” and who is “promisee” for purposes of determining the 
70

Viewing this transaction most favorably to Defendants, CertiSign Brazil upstreamed 

cash to CertiSign so that CertiSign could pay CertiSign Brazil’s debt. With that 

transactional structure in mind, it is difficult to see any benefit or detriment to either 

party. CertiSign Brazil was to pay off a debt that it already owed, albeit through 

CertiSign as middleman; for its part, CertiSign was to receive money from CertiSign 

Brazil so that it could pay off CertiSign Brazil’s debt. Without a formal debt 

assumption in hand that might provide some nuanced twist to the consideration 

analysis, I cannot detect any cognizable benefit or detriment as between the parties 

to the purported agreement that could support a finding of legal consideration. 

(d) Statute of Frauds 

Even if Defendants could clear the legal consideration hurdle, they still run 

smack into the impassable wall that is the statute of frauds. Under 6 Del. C. 

§ 2714(a), Delaware’s statute of frauds, agreements to answer for the debt of 

another—assumption of debt—must be reduced to a writing.255 “The contract to 

 

adequacy of legal consideration more complicated than usual. That fact, alone, suggests 

that consideration is lacking here.

255 6 Del. C. § 2714(a) (“No action shall be brought to charge any person upon any 

agreement made upon consideration of marriage, or upon any contract or sale of lands, 

tenements, or hereditaments, or any interest in or concerning them, or upon any agreement 

that is not to be performed within the space of 1 year from the making thereof, or to charge 

any person to answer for the debt, default, or miscarriage, of another, in any sum of the 

value of $25 and upwards, unless the contract is reduced to writing, or some memorandum, 

or notes thereof, are signed by the party to be charged therewith, or some other person 

thereunto by the party lawfully authorized in writing . . .”) (emphasis added); Borish v. 

Graham, 655 A.2d 831, 834 (Del. Super. Ct. 1994) (“Section 2714(a) of Title 6 of the 
71

assume the debt of another must not only be in writing but the writing must contain 

on its face enough to show that the person signing it was assuming liability.”256 And 

the fact the Debt could have been repaid within one year does not remove the 

purported assumption agreement from the strictures of the statute of frauds.257 

Defendants argue that the existence of multiple writings evidencing the Debt 

assumption satisfies the statute of frauds.

258

 Indeed, our law recognizes that 

“[m]ultiple writings will satisfy the statute of frauds if they (a) reasonably identify 

the subject matter of the contract, (b) indicate that a contract has been made between 

the parties or an offer extended by the signing party and (c) state with reasonable 

certainty the essential terms of the unperformed promises in the contract.”259 While 

Defendants do not specify the multiple writings they would have the Court rely upon 

 

Delaware Code, provides essentially four situations in which an agreement must be in 

writing and signed by the party to be charged in order to be enforceable: agreements for 

marriage; agreements that cannot be performed within one year; agreements for the sale of 

land; and agreements to answer for the debt of another.”) (emphasis in original).

256 Trader v. Wilson, 2002 WL 499888, at *5 (Del. Super. Ct. Feb. 1, 2002), aff’d, 804 A.2d 

1067 (Del. 2002) (internal quotations omitted).

257 Borish, 655 A.2d at 834 (“All four types of agreements specified in [S]ection 2714(a) 

must therefore be in writing and signed by the party to be charged to be enforceable, 

regardless of whether they can be performed within one year. The legislature specified 

that each of these agreements must meet certain requirements to be enforceable. To hold 

otherwise would be contrary to the expressed legislative intent.”).

258 Defs.’ Answering Br. 7 (citing Olson v. Halvorsen, 982 A.2d 286, 293 (Del. Ch. 2008), 

aff’d, 986 A.2d 1150 (Del. 2009)). 

259 Olson, 982 A.2d at 293.
72

to invoke this exception, I presume they rest their argument, again, on the CertiSign 

and CertiSign Brazil financial statements and general ledgers and CertiSign’s tax 

returns.

260

 These writings, if one can characterize them as such, are not what our 

law requires to satisfy the statute of frauds by presenting “multiple writings.” 

In Olson v. Halvorsen, the case upon which Defendants principally rely to 

defeat CertiSign’s statute of frauds defense, the “writings” at issue were a signed 

and an unsigned agreement. 261 There, the Court’s multiple writings analysis 

centered on whether the signed agreement sufficiently referenced the unsigned 

agreement such that the unsigned agreement could be excepted from the statute of 

frauds.262 Here, however, there are no agreements—no signed agreement, no draft 

agreement, no unsigned agreement. That is precisely the problem.263 

 

260 See Defs.’ Opening Br. 33 (“the assumption was evidenced by both companies’ 

financial statements and general ledgers . . . CertiSign also certified in its U.S. tax returns 

that the assumption occurred”).

261 Olson, 982 A.2d at 289.

262 Id. at 293.

263 Id. at 294 (declining to find that an unsigned operating agreement met the multiple 

writings exception because there was no “clear and specific reference in a signed writing 

to the unsigned [] operating agreement,” and further declining to find that tax returns and 

annual statements were sufficiently clear reflections of an agreement to constitute a 

“writing” as contemplated by the statute of frauds). 
73

Before leaving the statute of frauds, I pause to consider whether any other 

exception might apply here. In my view, the only potentially applicable exception 

is detrimental reliance.264 As explained in Professor Williston’s treatise:

When the plaintiff has acted to its detriment solely in reliance on an oral 

agreement, the defendant may be estopped to assert the defense of the 

Statute of Frauds. This is based on the principle established in equity, 

and applying to every transaction in which the Statute is invoked, that 

the Statute of Frauds, having been enacted for the purpose of preventing 

fraud, may not be made an instrument for shielding, protecting, or 

aiding the party who relies on it in the perpetration of a fraud or in the 

consummation of a fraudulent scheme. It is called into operation to 

defeat what would be an unconscionable use of the Statute and guards 

against the utilization of the Statute as a means for defrauding innocent 

persons who have been induced or permitted to change their position in 

reliance on oral agreements within its operation.265

 

264 Defendants erroneously proffer part performance and performance within a year as 

applicable exceptions to the statute of frauds. Defs.’ Answering Br. 8–9. As to the part 

performance doctrine, “[i]t has generally been said that the Doctrine of Part Performance 

is not applicable to provisions of the Statute other than the one relating to real estate.” 

10 Williston on Contracts § 28:8 (4th ed.). See also CSH Theatres, LLC v. Nederlander of 

San Francisco Assocs., 2015 WL 1839684, at *17 (Del. Ch. Apr. 21, 2015) 

(“Part performance is a well-recognized exception to the Statute of Frauds for contracts 

involving interests in land.”); CSH Theatres, 2015 WL 1839684, at *17 n.84 (“Indeed, the 

part performance exception applies only to oral contracts involving interests in land.”); 

Hionis v. Shipp, 2005 WL 1490455, at *5 (Del. Ch. June 16, 2005) (same), aff’d, 903 A.2d 

323 (Del. 2006). The “performance within a year” doctrine fails per 6 Del. C. § 2714(a). 

Borish, 655 A.2d at 834 (“All four types of agreements specified in section 2714(a) must 

therefore be in writing and signed by the party to be charged to be enforceable, regardless 

of whether they can be performed within one year.”). 

265 10 Williston on Contracts § 27:16 (4th ed.). See also Walton v. Beale, 2006 

WL 4763946, at *4 (Del. Ch. Jan. 30, 2006) (finding detrimental reliance on an oral 

contract to buy land where plaintiff “paid $20,000 in earnest money . . . and has paid what 

he believes were property taxes on [the] lots” for several years).
74

Here, Defendants do not attempt to explain how SK Holdings was “induced . . . to 

change [its] position in reliance on [the] oral agreement [for CertiSign to assume the 

Debt].”

266

 Rather, Defendants’ argument with regard to detrimental reliance 

comprises exactly one sentence and lacks any reference to facts in the record.267 This 

is not surprising, however, given that the record reveals that SK Holdings was 

content to refrain from seeking repayment of the Debt starting from when the loan 

was made in 2002 up until 2012.268 By then, Kulikovsky’s relationship with his 

CKS partners had soured and he raised repayment of the Debt as a condition to 

offering his cooperation to effect the Self-Help.

269

 There was no detrimental reliance 

here.

Nor does the record support the conclusion that SK Holdings’ forbearance 

was fraudulently induced. Rather, the evidence reveals that the parties considered 

and then pursued an effort to have CertiSign assume CertiSign Brazil’s debt. That 

effort, by all accounts, was well intentioned. It simply fell short of producing an

 

266 10 Williston on Contracts § 27:16 (4th ed.).

267 Defs.’ Answering Br. 8 (“SK Holdings detrimentally relied on the assumption by 

foregoing collection of the Debt from CertiSign Brazil, a forbearance reflected on 

CertiSign Brazil’s financial statements.”).

268 See Tr. 69–70, 84–86, 98, 152–53 (Kulikovsky).

269 Tr. 69–70; JX 252 at 21 (“[Kulikovsky] admits that he was unwilling to support the 

‘self-help’ process unless the Board ratified . . . the warrant issued to CKS, options issued

to certain senior executives and [the] [D]ebt owed to SK Holdings.”).
75

enforceable agreement. Accordingly, I am satisfied that the detrimental reliance 

exception to the statute of frauds does not apply because the record is devoid of any 

suggestion that SK Holdings relied on an oral agreement that CertiSign would 

assume the Debt or that CertiSign or CertiSign Brazil engaged in any sort of 

fraudulent inducement.

Having found that Defendants have failed to prove that an enforceable 

contract exists pursuant to which CertiSign assumed the Debt, I reject the request 

for specific performance or damages on the Debt.

270

 Nor will the Court employ 

 

270 JX 258 ¶ 51; PTO ¶¶ 70, 113–14; Pretrial Br. of Def./Counterclaim Pls. Sergio 

Kulikovsky & SK Int’l Hldgs, LLC 3. Although not ultimately relevant to my decision, 

I cannot help but observe that CertiSign’s protestation that it cannot, as a matter of 

Brazilian law, assume and repay the Debt is not convincing. As I understand the Brazilian 

law experts’ testimony at trial, both ultimately acknowledged that the failure to register the 

Debt with the Brazilian Central Bank does not prevent repayment. Tr. 838 (Junqueira), 

943–44 (Fernandes). According to Junqueira, the assumption of a Brazilian company’s 

debt by a foreign company is not a foreign exchange contract governed by the Brazilian

Central Bank that would require registration with that bank. Tr. 833 (Junqueira). While 

Fernandes disagreed, he conceded that the failure to register the Debt does not prevent the 

debt from being repaid if the proper regulatory procedures are followed. Tr. 944

(Fernandes). Specifically, both experts agreed that the party responsible for registering the 

Debt, CertiSign Brazil, could pay a fine, which would then allow CertiSign to assume and 

repay the Debt. Tr. 847, 911, 916–17 (Junqueira); 976–77 (Fernandes). According to 

Junqueira, CertiSign Brazil’s fine burden if it registered the Debt at the time of trial would 

have been approximately R$125,000, or $40,000 USD. Tr. 848–49 (Junqueira). Moreover, 

the Brazilian Central Bank has five years to charge a fine, so it may well be that the statute 

of limitations on any fine has already expired. Tr. 844 (Junqueira), 937 (Fernandes). Under 

these circumstances, it is clear to me that CertiSign Brazil and CertiSign could figure out 

a way to get the Debt repaid if they were inclined to do so. That they are not is, no doubt, 

frustrating to Kulikovsky and highly disappointing to the Court. Unfortunately, for the 

reasons stated, I cannot find that a valid debt assumption occurred here and I have no 

jurisdiction over CertiSign Brazil to compel it to pay what it owes to SK Holdings.
76

Section 205 to force a debt assumption upon CertiSign to which the necessary parties

never agreed. This is not a case for validation, again, because there was no defective 

corporate act to validate.271

D. Damages and Interest

As a remedy for Kulikovsky’s breach of fiduciary duty, CertiSign seeks to 

recover the legal fees and expenses it incurred while attempting to implement the 

Self-Help, while prosecuting the Section 205 Action and while defending the 

Counterclaims in the present action. 272 It also seeks “pre-judgment and postjudgment interest on a compounded basis.”273

“[T]he scope of recovery for a breach of the duty of loyalty is not to be 

determined narrowly.”274 “The strict imposition of penalties under Delaware law 

are designed to discourage disloyalty.”

275

 In general, “damages must be logically 

and reasonably related to the harm or injury for which compensation is being 

 

271 Numoda, 2015 WL 402265, at *7 (citing 8 Del. C. § 205(b)(8), (b)(10)).

272 Pl.’s Pre-Trial Br. 16; Pl.’s Opening Br. 39–40; Pl.’s Answering Br. 18.

273 PTO ¶ 108.

274 Thorpe v. CERBCO, Inc., 676 A.2d 436, 445 (Del. 1996). See also id. at 444 (finding 

breach of “fiduciary duties and that damages flowing from that breach are to be liberally 

calculated”).

275 Thorpe, 676 A.2d at 445. 
77

awarded.” 276 With that said, “[c]oncerns of equity and deterrence justify 

‘loosen[ing] normally stringent requirements of causation and damages’ when a 

breach of the duty of loyalty is shown.”

277

CertiSign asserts that if Kulikovsky had simply signed the director consents, 

then litigation would have been avoided because the Self-Help would have corrected 

the Company’s defective capitalization and board issues, CertiSign ultimately would 

have agreed to issue to Kulikovsky the options he seeks and CertiSign also would 

have agreed to assume the Debt.278 According to CertiSign, Kulikovsky should not 

receive any credit for his June 2014 “surrender,” given that CertiSign’s only viable 

remedial option at that point was to file and prosecute the Section 205 Action.279 

Thus, CertiSign seeks all fees and expenses it incurred related to the Self-Help and 

related litigation, as well as “two-thirds of the total fees and expenses [it incurred in 

this action], which represents the fees and expenses incurred” in defense of the 

Counterclaims.280 

 

276 In re J.P. Morgan Chase & Co. S’holder Litig., 906 A.2d 766, 773 (Del. 2006).

277 In re Primedia Inc. Deriv. Litig., 910 A.2d 248, 262 (Del. Ch. 2006) (citing Thorpe, 

676 A.2d at 445).

278 Pl.’s Opening Br. 39–40.

279 Pl.’s Answering Br. 15–16.

280 Pl.’s Opening Br. 40–41 n.25; Pl.’s Answering Br. 19–20.
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Defendants, by contrast, argue that CertiSign may “recover only a fraction” 

of the fees and expenses it incurred related to the Section 205 Action, and may not 

recover any fees and expenses incurred in the present action.281 In this regard, 

Defendants contend that (1) Kulikovsky should receive some credit for his June 2014 

surrender, whereby he expressed his willingness to consent to CertiSign’s proposed 

Self-Help measures without the conditions he had previously imposed; (2) since 

CertiSign rejected Kulikovsky’s surrender, it should “recover nothing more than the 

cost of preparing and filing the [Section] 205 Petition”; and (3) there is no basis on 

which CertiSign may recover any fees or expenses it incurred in defending the 

Counterclaims in this action.282

Between March 2013 and December 2015, CertiSign incurred $390,455.20 in 

legal fees and expenses in connection with remedying its defective capitalization and 

board issues—including its prosecution of the Section 205 Action.283 Thereafter, 

CertiSign incurred $1,249,223.81 in fees and expenses between November 2015 and 

September 2017 in connection with the prosecution of its breach of fiduciary duty 

claim and its defense of the Counterclaims in this action.284

 

281 Defs.’ Opening Br. 55.

282 Id. at 55, 59.

283 JX 429.

284 Id. at 2–3.
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After carefully reviewing the evidence, I award CertiSign damages in the 

amount of $390,455.20, reflecting all legal fees and expenses incurred by CertiSign 

in connection with its efforts to remedy its defective capitalization and board issues 

after March 18, 2013, the date on which Kulikovsky first imposed self-interested 

conditions on his cooperation in effecting the Self-Help.285 Such fees and expenses 

are “logically and reasonably related to the harm or injury” for which CertiSign seeks 

compensation; namely, Kulikovsky’s self-interested sabotage of CertiSign’s SelfHelp process to remedy its capitalization defect and board issues.

286

 

Kulikovsky’s refusal to sign the Self-Help documents made it impossible for 

CertiSign to remedy its defective capitalization and board issues without judicial 

intervention. By the time of his “surrender” in June 2014, Kulikovsky was no longer 

on the CertiSign board and, therefore, no longer in a position to facilitate CertiSign’s 

Self-Help process. At that point, with the need for judicial intervention obvious to 

all, Kulikovsky could have chosen to consent to the relief sought in the Section 205 

Action, as requested by CertiSign prior to initiating the action, or he could choose to 

fight. Consistent with his pattern of self-interested recalcitrance, he chose to fight. 

In doing so, he passed on the opportunity to contain the Section 205 litigation 

expenses caused by his breach. CertiSign was required to respond to Kulikovsky’s 

 

285 Id. at 1.

286 J.P. Morgan Chase & Co. S’holder Litig., 906 A.2d at 773.
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counterclaims—which dragged the distinct issues of option grants and Debt 

assumption into the Section 205 Action—and then to litigate a contested motion for 

judgment on the pleadings. Not surprisingly, Vice Chancellor Noble granted 

CertiSign’s motion, validated the capital structure and directed that the 

Counterclaims should be litigated separately. This was an entirely predictable result 

given the urgency of the issues presented in CertiSign’s petition and the peripheral 

nature of the issues relating to the option grants and Debt assumption. Under these 

circumstances, it is entirely reasonable, indeed necessary, to compensate CertiSign 

for all fees incurred leading up to and in connection with the Section 205 Action.287 

Compensation to CertiSign for its need to defend claims that Kulikovsky 

would have brought in any event, however, is not warranted. Those fees and 

expenses are not “logically and reasonably related to the harm or injury” that 

CertiSign suffered as a result of Kulikovsky’s breach of fiduciary duty.288 Indeed, 

Defendants have presented legitimate disputes relating to the alleged option grants 

and the Debt assumption. That Defendants ultimately did not prevail is no basis to 

award attorneys’ fees incurred by CertiSign in defense of those claims. There is no 

 

287 I am satisfied that the amount of the fees incurred by CertiSign leading up to and during 

the Section 205 Action is reasonable. In this regard, I note that Defendants have raised no 

meaningful challenge to the amount of the fees billed by any of CertiSign’s legal counsel. 

Thus, as stated, CertiSign is awarded $390,455.20 in damages from Kulikovsky on account 

of his breach of fiduciary duty.

288 J.P. Morgan Chase & Co. S’holder Litig., 906 A.2d at 773.
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contractual or statutory basis for fee-shifting.

289 Nor have Defendants engaged in

bad faith by presenting a legitimate dispute for adjudication.

290

 Thus, CertiSign’s 

request for fees with respect to its defense of the Counterclaims must be denied.

As for the interest calculation, “prejudgment interest in Delaware cases is 

awarded as a matter of right, [and] the general rule is that interest accumulates from 

the date payment was due the plaintiff.”

291

 The “legal rate of interest has historically 

been the benchmark for pre-judgment interest.”292 “Subject to the court’s discretion, 

a party is also entitled to post-judgment interest until the date of payment on an 

amount that includes both the amount of the judgment and the amount of 

prejudgment interest.”

293

 “Unless the parties have specified another rate by contract 

or the court determines that a different rate is warranted by the equities, the statutory 

 

289 Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 

A.3d 665, 686 (Del. 2013) (“It is beyond dispute that litigants in Delaware are generally 

responsible for paying their own counsel fees, absent special circumstances or a contractual 

or statutory right to receive fees.”) (internal quotations omitted).

290 Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017) (“Although there is no single definition 

of bad faith conduct, courts have found bad faith where parties have unnecessarily 

prolonged or delayed litigation, falsified records[,] or knowingly asserted frivolous 

claims.”) (internal quotations omitted) (alternation in original). 

291 Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del. 2011)

(internal quotations omitted).

292 Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 409 (Del. 1988). 

293 BTG Int’l, Inc. v. Wellstat Therapeutics Corp., 2017 WL 4151172, at *21 (Del. Ch. 

Sept. 19, 2017). See also Summa, 540 A.2d at 409 (stating the Court “has broad discretion, 

subject to principles of fairness, in fixing the [interest] rate to be applied.”).
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rate of interest governs.”

294

 The Court’s broad discretion in fixing the interest rate 

includes the authority to award compound interest,295 and “compound interest is a 

more accurate means of measuring the time value of money.”296 

Given the nature of Kulikovsky’s fiduciary breach, I award CertiSign prejudgment and post-judgment interest at the statutory rate, compounded quarterly.297

 

Pre-judgment interest shall accrue beginning March 18, 2013, the date of the 

CertiSign stockholder meeting where Kulikovsky first declined to cooperate with 

regard to the Self-Help unless his fellow CKS stockholders acceded to his selfinterested demands.298

 Post-judgment interest shall be calculated “on an amount that 

includes both the amount of the judgment and the amount of prejudgment 

interest.”

299

 

294 BTG Int’l, 2017 WL 4151172, at *21.

295 Gotham P’rs, L.P. v. Hallwood Realty P’rs, L.P., 817 A.2d 160, 173 (Del. 2002) (“[W]e 

agree with the Court of Chancery that its uncontested ‘discretion to select a rate of interest 

higher than the statutory rate . . . include[es] the lesser authority to award compounding.’”).

296 ReCor Med., Inc. v. Warnking, 2015 WL 535626, at *1 (Del. Ch. Jan. 30, 2015) 

(awarding “interest on the fee and expense award[,] compounded quarterly”).

297 See id.

298 Tr. 322 (Kulikovsky); see Brandywine Smyrna, 34 A.3d at 486 (“Prejudgment interest 

in Delaware cases is awarded as a matter of right, [and] the general rule is that interest 

accumulates from the date payment was due the plaintiff” or the date of the harm).

299 BTG Int’l, 2017 WL 4151172, at *21.
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III. CONCLUSION

For the foregoing reasons, judgment is entered in favor of CertiSign on its

breach of fiduciary duty claim and on the two Counterclaims. CertiSign is awarded 

damages in the amount of $390,455.20, with pre-judgment and post-judgment 

interest at the statutory rate, compounded quarterly. Given that Kulikovsky 

presented a serious dispute, particularly with respect to the Debt, I am satisfied, in 

this instance, that both parties should bear their own costs notwithstanding Court of 

Chancery Rule 54(d).300 

IT IS SO ORDERED.

 

300 Cf. Consol. Fisheries Co. v. Consol. Solubles Co., 112 A.2d 30, 40 (Del. 1955)

(confirming that taxation of prevailing party costs under statute analogous to Chancery 

Rule 54(d) is left to the sound discretion of the trial judge), modified on other grounds, 113 

A.2d 576 (Del. 1955).