Grimes v. Alteon Inc.
Supreme Court of Delaware
804 A.2d 256 (2002)
Alteon's (defendant) CEO Kenneth Moch verbally agreed to let shareholder Charles Grimes (plaintiff), who held about 9.9 percent of Alteon's stock, purchase 10 percent of any future private stock offering, but this promise was never approved by Alteon's board of directors nor reduced to writing; when Alteon later publicly announced a private offering without including Grimes, and its stock price rose, Grimes sued for damages and specific performance of the oral agreement, and the trial court dismissed his claim, finding the agreement unenforceable under Delaware corporate law's requirements for stock-issuance commitments.
Whether an oral agreement by a corporation's CEO, promising a shareholder the right to purchase a specific percentage of a future stock offering, is enforceable absent board approval and a written instrument.