Delaware Court Rules in Favor of AIM ImmunoTech and Upholds Board’s Determination that Activist Group’s Nominations Are Invalid
AIM ImmunoTech Inc. (NYSE American: AIM) announced the Delaware Court of Chancery ruled against the Activist Group's nomination notice, finding it invalid under the Company's Bylaws. The Court upheld the Board's decision to reject the notice due to omissions and misleading information. AIM will reconvene its 2023 Annual Meeting and adjourn until January 5th, disregarding any proxies submitted by the Activist Group. The Board urges shareholders to vote for all four Company Directors on the WHITE Proxy Card.
The recent decision by the Delaware Court of Chancery underscores the critical importance of adherence to corporate bylaws, particularly in the context of board nominations and shareholder rights. The Court's ruling in favor of AIM ImmunoTech Inc. reflects the judiciary's role in enforcing corporate governance standards and the potential implications for shareholder activism.
By rejecting the nomination notice for failing to provide required information, the Court has affirmed the enforceability of advance notice bylaws. These bylaws are designed to ensure that shareholders and directors have adequate information to make informed decisions regarding board elections, which is a cornerstone of effective corporate governance.
From a legal perspective, the ruling may deter future attempts to circumvent corporate bylaws and could reinforce the need for transparency and full disclosure in board nomination processes. This decision could also influence how other companies draft and enforce their own bylaws, potentially leading to stricter advance notice requirements and more rigorous vetting of board nominees.
The Court's enforcement of AIM's advance notice bylaws holds significant implications for corporate governance practices. It emphasizes the importance of transparency and full disclosure in the nomination of board candidates, which is essential for maintaining trust among shareholders and ensuring the integrity of board elections.
The rejection of the activist group's nominations due to nondisclosure suggests that AIM's current leadership has a strong grasp on the company's governance framework. This adherence to governance norms is often seen as a positive indicator by investors who value stability and ethical management practices. It could also serve as a benchmark for other firms, reinforcing the trend towards more stringent governance standards in the industry.
This situation highlights the delicate balance between shareholder rights to nominate directors and the company's right to enforce its bylaws. The outcome of this legal dispute may encourage shareholders and activist groups to be more diligent in their efforts to comply with bylaws, potentially leading to more constructive engagement between shareholders and company management.
The market's reaction to the Court's ruling will likely depend on the perceived impact of the decision on AIM's future performance and governance stability. If investors interpret the Court's decision as a victory for AIM's current management and a sign of strong corporate governance, it could positively influence investor confidence and, consequently, AIM's stock price.
However, the ruling also indicates that AIM's management will face less immediate pressure from activist shareholders, which could have varying effects on the stock market. On one hand, it may reassure investors that the current strategic direction will continue without disruption. On the other hand, some investors might have been looking forward to the changes proposed by the activist group, potentially leading to disappointment and negative market sentiment.
In the long term, the ruling may contribute to a more stable governance environment for AIM, which can be beneficial for consistent corporate strategy execution. However, it is also important to monitor how the activist group and other shareholders respond, as continued contention could lead to market volatility for AIM's shares.
12/29/2023 - 08:00 AM
Court Finds Activist Group “Flouted” AIM’s Bylaws by Failing to Provide Required Information
AIM Will Reconvene Annual Meeting Today and then Adjourn Until January 5th
Any Proxies Submitted by Activist Group Will Be Disregarded
AIM Urges Shareholders to Vote on the WHITE Proxy Card “For All” Four Company Directors to Support Company’s Positive Momentum and Protect Their Investment
OCALA, Fla. --(BUSINESS WIRE)--
AIM ImmunoTech Inc. (NYSE American: AIM) (“AIM” or the “Company”) today announced the Delaware Court of Chancery (the “Court”) ruled that the nomination notice (the “Notice”) submitted by a member of a group of individuals who are seeking to nominate three candidates for election to AIM’s four-person Board of Directors (the “Board”) (collectively, the “Activist Group”) was properly rejected for being invalid under the Company’s Bylaws. This ruling follows a trial held at the end of October in connection with the Activist Group’s lawsuit against the Company.
As a reminder, the AIM Board had unanimously determined that the Activist Group’s nomination notice was invalid because it omitted key information and included misleading information, ignoring what the Company’s Bylaws require to be disclosed. In light of the Court’s ruling, the Company will disregard the Activist Group’s director nominations, and no proxies or votes in favor of their three nominees will be recognized or tabulated at the 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”).
In reaching its decision, the Court noted the following:1
“… the Board acted reasonably and equitably in rejecting the [nomination notice submitted by Ted D. Kellner] . It did not breach its fiduciary duties in enforcing valid advance notice bylaws. The plaintiff’s group—not the Board—are ‘the ones engaging in manipulative conduct.’”
“Ultimately, the nondisclosure of certain [arrangements, agreements or understandings] is fatal to Kellner’s nomination effort . After the [Jonathan] Jorgl litigation, Kellner, [Robert] Chioini, [Todd] Deutsch and their counsel should have been closely attuned to the importance of completely disclosing all relevant arrangements and understandings. Still, they flouted the Company’s advance notice requirements . Because of the timing of Kellner’s submission—the night before the submission deadline—there was no possibility of correcting any deficiencies.”
“The concealment of arrangements and understandings that go to the heart of a nomination effort risks undermining the essential disclosure function of advance notice bylaws. Directors and stockholders would justifiably want to know whether a nomination is part of a broader scheme. Such information was withheld from or obfuscated in the Kellner Notice .”
Thomas K. Equels, M.S., J.D., Executive Vice Chairman of the Board, CEO & President, stated:
“For the second year in a row, a group of interconnected individuals with seemingly nefarious intentions has tried to take over the AIM Board without paying other shareholders an appropriate premium for that control. We are pleased that the Court has validated the Board’s determination that the Activist Group omitted and misrepresented critical information related to its members’ backgrounds and intentions for AIM. We believe this will protect the best interests of shareholders as we position the Company to capitalize on important upcoming clinical milestones. We look forward to continuing to build on our significant momentum in delivering life-saving treatments for unmet patient needs as well as creating shareholder value.”
The Company will reconvene its 2023 Annual Meeting as planned today at 11:00 a.m. Eastern Time, and will then adjourn proceedings, without conducting any other business, until Friday, January 5, 2024 at 11:00 a.m. Eastern Time to allow all parties time to process the Court’s ruling before the business to come before the 2023 Annual Meeting is conducted.
A copy of the Court’s ruling is available online at the following address: https://courts.delaware.gov/Opinions/Download.aspx?id=357400 .
To learn more, visit: www.SafeguardAIM.com .
***
THE BOARD RECOMMENDS A VOTE “FOR ALL ” OF OUR BOARD’S NOMINEES (STEWART L. APPELROUTH, NANCY K. BRYAN, THOMAS K. EQUELS AND DR. WILLIAM M. MITCHELL) ON PROPOSAL 1 USING THE WHITE PROXY CARD.
If you have any questions or require any assistance in voting your shares, please contact our proxy solicitor:
Morrow Sodali LLC
430 Park Avenue, 14th Floor
New York, NY 10022
AIM@investor.MorrowSodali.com
About AIM ImmunoTech Inc.
AIM ImmunoTech Inc. is an immuno-pharma company focused on the research and development of therapeutics to treat multiple types of cancers, immune disorders and viral diseases, including COVID-19. The Company’s lead product is a first-in-class investigational drug called Ampligen® (rintatolimod), a dsRNA and highly selective TLR3 agonist immuno-modulator with broad spectrum activity in clinical trials for globally important cancers, viral diseases and disorders of the immune system.
For more information, please visit aimimmuno.com and connect with the Company on Twitter, LinkedIn, and Facebook.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Words such as “may,” “will,” “expect,” “plan,” “anticipate,” “continue,” “believe,” “potential,” “upcoming” and other variations thereon and similar expressions (as well as other words or expressions referencing future events or circumstances) are intended to identify forward-looking statements. Many of these forward-looking statements involve a number of risks and uncertainties. The Company urges investors to consider specifically the various risk factors identified in its most recent Form 10-K, and any risk factors or cautionary statements included in any subsequent Form 10-Q or Form 8-K, filed with the U.S. Securities and Exchange Commission (the “SEC”). You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Among other things, for those statements, the Company claims the protection of safe harbor for forward-looking statements contained in the PSLRA. The Company does not undertake to update any of these forward-looking statements to reflect events or circumstances that occur after the date hereof.
1 Emphasis added.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231229723423/en/
Investors:
JTC Team, LLC
AIM@jtcir.com
Media:
Longacre Square Partners
AIM@longacresquare.com
Source: AIM ImmunoTech Inc.
What did the Delaware Court of Chancery rule regarding the Activist Group's nomination notice?
The Delaware Court of Chancery ruled the nomination notice invalid under AIM's Bylaws, upholding the Board's decision to reject it.
When will AIM's 2023 Annual Meeting be reconvened and adjourned?
The 2023 Annual Meeting will be reconvened today and adjourned until January 5th, 2024.
What action will AIM take regarding proxies submitted by the Activist Group?
AIM will disregard any proxies submitted by the Activist Group and urges shareholders to vote for all four Company Directors on the WHITE Proxy Card.
Where can the copy of the Court's ruling be accessed?
The copy of the Court's ruling is available online at the following address: https://courts.delaware.gov/Opinions/Download.aspx?id=357400.
Who is the Executive Vice Chairman of the Board, CEO & President of AIM?
Thomas K. Equels, M.S., J.D. is the Executive Vice Chairman of the Board, CEO & President of AIM.
