Supreme Court of Delaware
804 A.2d 256 (2002)
Alteon, Inc. (defendant) was a pharmaceutical company that specialized in cardiovascular drugs. Charles Grimes (plaintiff), a lawyer and investor, purchased large blocks of stock in small technology companies. Grimes and his wife held approximately 9.9 percent of Alteon’s stock. The President and Chief Executive Officer of Alteon, Kenneth Moch, told Grimes that Alteon was considering a private stock offering to raise funds. Grimes offered to buy 10 percent of any private offering, and Moch verbally agreed to let Grimes buy 10 percent of any private offering. However, Alteon’s board of directors never approved this promise, and the promise was not reduced to writing. Alteon later publicly announced a private offering, but it did not allow Grimes to participate. After the announcement, Alteon’s stock increased. Grimes sued Alteon for damages and specific performance of the alleged oral agreement between Grimes and Moch. Alteon moved to dismiss the case. Alteon contended that any agreement between Grimes and Moch was a right to purchase stock that, under Delaware law, must be approved by the board of directors in writing. Therefore, because this was an oral agreement that had never been approved by the board of directors, Alteon argued the agreement was invalid. The trial court agreed, and dismissed the case. Grimes appealed.
Rule of Law
Holding and Reasoning (Lansing, J.)
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