COURT OF CHANCERY OF THE STATE OF DELAWARE L ORI W. W ILL V ICE C HANCELLOR L EONARD L. W ILLIAMS J USTICE C ENTER 500 N. K ING S TREET , S UITE 11400 W ILMINGTON , D ELAWARE 19801

- 3734 Date Submitted: February 27, 2024 Date Decided: March 2 7 , 2024
Kevin M. Gallagher , Esquire Andrew L. Milam , Esquire Richards, Layton & Finger, P.A. 920 North King Street Wilmington, Delaware 19801 Lisa M. Zwally , Esquire Greenberg Traurig, LLP 222 Delaware Avenue Suite 1600 Wilmington, Delaware 19801

RE: Wright et al. v. Silver C reek Pharmaceuticals, Inc.
, C.A. No. 20 23

- 1044

- LWW

Dear Counsel:
This action is brought by stockholders of Silver Creek Pharmaceuticals, Inc.
, who seek to compel an annua l meeting under 8 Del. C. § 211 . Silver Creek insists

that I should reject the plaintiffs’ request because it acted by written consent in lieu
of a meeting . For the reasons discussed in this letter opinion, the written consent is

insufficient

. The matter is resolved in favor of the plaintiff s insofar as Silver Cr eek
must promptly hold an annual meeting

.
I. BACKGROUND

The following background is drawn from the undisputed facts in the
pleadings and evidence presented by the parties

.
Defe ndant Silver Creek Pharmaceuticals, Inc. (the “ Company ” ) is a
Delaware corporation with its principal place of business in San Francisco,C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 2 of 9

California. 1 Plaintiff

s Suzanne Wright and The Wesley Hefni 2011 Irrevocable

Trust are Silver Creek stockholders

. 2
According to Article II
, Section 2.2 of Silver Creek’s bylaws : Annual meetings of stockholders, commencing within the year 2010, shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Director s, and transact such other business as may properly be brought before the meeting. 3

Section 2.3 of A rticle III requires that “written notice of any stockholder
meeting

. . . be given to each stockholder entitled to vote at such meeting not fewer

than ten (10) nor more than sixty (60) days before the date of the meeting.” 4

Silver Creek has n ot held an annual meeting “ in the last 13 months , if not
significantly longer

. ” 5 On O ctober 17, 2023, the plaintiffs filed a complaint asking

the court to direct Silve r Creek to hold an annual meeting for the election of its

1 Verified Compl. Pursuant to 8 Del. C. § 211 (Dkt. 1) (“Compl.”) ¶ 4; Answer to Verified Am. Comp. (D kt. 10) (“Answer”) ¶ 4.

2 Compl. ¶

¶ 2 , 3 ; Answer ¶

¶ 2 , 3

. 3 Compl. ¶ 6; Answer ¶ 6.

4 Compl. ¶ 6; Answer ¶ 6.

5 Compl. ¶ 7; Answer ¶ 7.C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 3 of 9
directors and any other b oard vacancies pursuant to 8 Del. C. § 211(c). 6 On
November 6, Silver Creek answered the complaint. 7
On December 8, the plaintiffs filed a motion for judgment on the plea dings. 8
Silver Creek filed a response contending that this action was mooted by a
purported stockholder written consent. 9 According to Silver Creek, it obta ined

consents from over 70% of its stockholders to elect directors in lieu of hold ing an
annual meeting. 10 In their reply , the plaintiffs argued that the purported written

consent did not moot their motion. 11
As I explained at oral argument on January 3, 2024, the parties’ submissions
caused a procedural quandary. 12 Silver Creek ’s opposition to the plaintiffs’ motion
relied on an unsigned version of a stockholder written consent that was outside the
pleadings. Yet i f Silver Creek had

— as it insisted

— properly acted by written

consent pursuant to Section 211(b), it would be needles s to order it to hold an
annual meeting. I therefore asked that Silver Creek produce materials supporting

6 See Compl. ¶ 13.

7 Dkt. 10.

8 Pls.’ Mot. for J. on the Pleadings (Dkt. 12)

. 9 Def.’s Response to Pls.’ Mot. for J. o n the Pleadings (Dkt. 16) (“Def.’s Response”).

10 Id. ¶ 12.

11 Pls.’ Reply in Further Supp. of their Mot. for J. on the Pleadings (Dkt. 20) (“Pls.’ Reply”) ¶ 9

. 12 See Trans. of Jan. 3
, 2 024 Oral Arg . on Pls.’ Mot. for J. on the Pleadings (Dkt. 34).C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 4 of 9

its assertion that the action taken by written consent in lieu of an annual meeting

satisfied the statute.
On January 10, Silver Creek’s counsel prov ided the court with copies of

executed consents and a chart listing the stockholders who had signed them. 13
After the plaintiffs’ counsel argued that they were also entitle d to review the
materials, 14 I ordered Silver Creek to file copies of the consents on the docket. 15
The documents were filed on January 30. 16
On February 6, the plaintiffs filed a letter arguing that the information
provided by Silver Creek was insufficient to moot this action. 17 They raised a
series of perceived deficiencies, including t hat the consent was non

- compliant with
Section 211(b). On February 27, Silver Creek filed a letter s t a t i n g that it believes
the court is in receipt of all requested papers r egarding the C ompany’s action by

written consent. 18 I deemed the matter under advi sement at that time.

13 Dkt. 28; see also Dkt. 27.

14 See Dkts. 29, 30.

15 Dkt. 32. I permitted Silver Creek to redact certain identifying information. Id.

16 Dkt. 33.

17 Dkt. 35.

18 Dkt. 36.C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 5 of 9

II. ANALYSIS “This court will grant a motion for judgment on the pleadings pursuant to
Court of Chancery Rule 12(c) when there are no material issues of fact and the
movant is entitled to judgment as a matter of law. ” 19 Because both parti es have

relied on evidence outside the pleadings and had ample opportunity to present
pertinent material
, the plaintiffs’ motion will be treated as one for summary
judgment u nder Rule 56

. 20 The standard guiding my analysis is the same. 21
Section 211(c) of t he Delaware General Corporation Law provides that this
court may summarily order a company to hold an annual meeting if it has failed to
timely “hold the annual meeting or take action by written consent to elect directors
in lieu of an annual meeting

. ” 22 “ [A] prima facie case is made out pursuant to 8

Del. C. § 211 when (1) the petitioner is a stockholder, and (2) no meeting has been

held for over thirteen months.” 23 There is no dispute that the plaintiffs are

stockholders and that Silver Creek has not held an annual meeting for at least that

19 McMillan v. Intercargo Corp. , 768 A.2d 492, 499 (Del. Ch. 200 0 ).

20 Ct. Ch. R. 12(c) (“ If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 [.]”).

21 See Ct. Ch. R. 56(c).

22 8 Del. C. § 211(c).

23 Opportunity P’rs, L.P. v. Transtech Serv. P’rs Inc. , 2009 WL 997334, at *3 (Del. Ch. Apr. 14, 2009).C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 6 of 9
time period . Instead, Silver Creek asserts that this action is moot because directors
were elected by written consent in lieu of a meeting pursuant to Section 211(b). 24
Section 211(b) requires that “ all of the directorships to which directors could
be elected at an annual meeting held at the effective tim e of such action are vacant
and are filled by such ” non

- unanimous written consent. 25 “To operate in lieu of an
annual meeting, a non

- unanimous written consent

. . . must first remove all sitting
directors and then fill the resulting vacancies. Stockholders cannot use a non

unanimous written consent to remove lawfully serving incumbent directors, and
then elect successor directors, between annual meetings

. ” 26

Silver Creek’s purported written consent co ntravenes these requirements

. The Company “ obtained conse nts from over 70% of its shareholders, but less than
unanimous consent” such that “the prior Board was vacated and all directorships
were filled by written consent.” 27 The unsigned version of the stockholder consent
filed with Silver Creek’s response to the motion states that “ all directors of the

24 Def.’s Response ¶

¶ 1, 11.

25 8 Del. C. § 211(b) ; see also Lewis S. Black, Es q. and Frederick H. Alexander, Esq., A NALYSIS OF THE 1997 A MENDMENTS TO THE D ELAWARE G ENERAL C ORPORATION L AW , 313

- 314 (1997) (“[A]s amended, the statute provides that less

- than

- unanimous written consent electing directors in lieu of an annual meeting is pe rmissible, but only if all the directorships to which directors could be elected at an annual meeting held at the effective time of the written consent are vacant and are filled by such action

. ”).

26 Crown EMAK Partners, LLC v. Kurz , 992 A.2d 377, 401 (Del. 2010)

. 27 Id. ¶ 12.C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 7 of 9
[ C ompany] have executed conditional resignations as directors effective
immediately prior to the effective time of this action by consent.” 28 The d ir ector
resignations , in turn, were “contingent upon the effectivenes s” of the stockholder

written consent. 29

Thus , the effectiveness of the consent and resignations i s circular. T h e directorships that the consent sought to fill were not vacant when (and if) the

consent bec ame effective because the resignations were contingent on the
effectiveness of the action by written consent

. I nstead of removing all sitting
directors and then filling resulting vacancies, the consent would become effective
after “the execution and delivery of conditional resignations of each of the

directors of the [ C ompany] .” 30 T he resignations wo uld only ever be effective if the
directors were immediately re

- elected to their positions

— making the resignations

functiona lly meaningless. 31

28 Def.’s Response Ex. A (emphasis added)

. 29 Pls.’ Reply Ex. 4 at 7.

30 Def.’s Response Ex. A at 5 (sig nature page).

31 Cf. Fair Value Inv s. , Inc. v. Roach , C.A. No. 2020

- 0847

- JTL, at 58

- 59 (Del. Ch. Jan. 21, 2022) (TRANSCRIPT) (finding that Section 211(b) was satisfied where a 92% stockholder acted by written conse nt to remove all incumbent directors and then to elect new directors).C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 8 of 9

T he excepti on to holding an annual meeting in Section 211(b) is therefore

unmet. 32 Silver Creek is non

- compliant with its obligati ons under Section 211.

Silver Creek must promptly hold an annual meeting of stockholders in accordance

with the statute and its bylaws

. The plaintiffs further request that I order Silver Creek to issue notice of the
meeting “ with disclosures concerning the current s tatus of the Company and its
operations

. ” 33 They als o ask me to mandate that the meeting agenda include “a
discussion at the annual meeting regarding the current business and operations of
the Company and a question and answer session during which stockholders of the
Company shall be permitted to ask questions of the Company’s board of directors
and management team.” 34 This relief is denied.

Section 211(c) permits this court to “ issue such orders as may be
appropriate, including, without limitation, orders desig nating the time and place of
such meeting, the record date or dates for determination of stockholders entitled to
notice of the meeting and to vote thereat, and the form of notice of such

32 The plaintiffs also argue that the information provided by Silver Creek presents discrepancies between the list of stockholders who executed the consents and the C ompany’s stock list. See Dkt. 35. Given the technical i ssue with the consent outlined above, I need not reach these issues.

33 Dkt. 13.

34 Id.C.A. No. 2023

- 1044

- LWW

March 27, 2024 Page 9 of 9
meeting .” 35 The court can “ specify the details and logistics, i ncluding the date,
time and location of the election, the record date for the meeting and who may

vote .” 36 But the statute makes no reference to the court detail ing the form of

disclosure s accompanying a notice or the discussion format for a n annual meeting.

To the extent that I have discretion to do so, I decline to exercise it.

III. CONCLUSION The plaintiffs’ motion is granted in part

. Th ere is no issue of material fact
that Silver Creek has failed to timely hold an annual meeting. The evidenc e proffered by the Com pany to suggest that it validly acted by written consent in lieu
of a meeting is inconsistent with the requirements of Section 211(b) as a matter of

law. Silver Creek must therefore issue notice and hold an annual meeting of

stockho lders pursuant to Section 211 . The remaining relief sought in the motion is

denied. IT IS SO ORDERED.
Sincerely yours,

/s/ Lori W. Will

Lori W. Will Vice Chancell or

35 8 Del. C. § 211(c).

36 In re Hawk Sys., Inc. , 2019 WL 4187452, at *9 (Del. Ch. Sept. 4, 2019)
, aff ’ d sub nom. Spanakos v. Pate , 237 A.3d 809 (Del. 2020)

.