Kellner Seeking Expedited Appeal of Delaware Court Finding that Nomination Notice was Properly Denied

Rhea-AI Summary

Court Found that Several AIM Advance Notice Bylaws Are Invalid. The Delaware Court of Chancery ruled in favor of the Kellner Group, finding four separate advance notice bylaw provisions adopted by AIM Immunotech Inc. to be invalid. However, the Court also found that Mr. Kellner's notice of nominations did not comply with certain remaining advance notice provisions. AIM announced that it will disregard the Kellner Group's nominations, and any proxies voted in favor of the Kellner Group nominees will not be recognized or tabulated at the Annual Meeting.

Legal Expert

The Delaware Court of Chancery's ruling on the invalidity of several advance notice bylaw provisions of AIM Immunotech Inc. presents a significant legal precedent in corporate governance and shareholder rights. By striking down bylaws that were deemed as entrenching the incumbent board and obstructing contested elections, the Court reaffirms the principle that corporate bylaws should not be used as a defensive mechanism against shareholder activism. This decision could influence future corporate governance disputes, encouraging companies to adopt more shareholder-friendly practices and potentially impacting the balance of power between boards and shareholders.

The ruling may also serve as a cautionary tale for corporations that might consider similar bylaw provisions in the future. For AIM Immunotech Inc., this legal development could lead to increased scrutiny by shareholders and potential investors regarding the company's governance practices, which may affect the company's reputation and investor confidence. The decision underscores the importance of transparency and fairness in the nomination process for directors, which is vital for healthy corporate democracy and accountability.

Financial Analyst

The court's decision to invalidate key provisions of AIM Immunotech Inc.'s advance notice bylaws and the subsequent appeal by the Kellner Group could have material financial implications for the company. The uncertainty surrounding the outcome of this legal battle may introduce volatility in AIM's stock price as investors react to potential changes in the company's board composition and strategic direction. A shift in board members, particularly one driven by activist shareholders, often signals a push for operational or strategic changes that could affect the company's performance and, consequently, its market valuation.

Moreover, the cost associated with legal proceedings and the potential for a proxy contest can be substantial, potentially diverting resources from other business opportunities or investments. Shareholders may need to consider the implications of these costs on the company's financial health and future earnings potential. The ongoing dispute also raises questions about the effectiveness of the current board's decision-making and risk management, which are critical factors for investors when assessing a company's governance quality.

Corporate Governance Analyst

The conflict between the Kellner Group and AIM Immunotech Inc.'s board represents a notable case study in the realm of corporate governance. The court's ruling against certain bylaw provisions suggests a pushback against tactics that may be perceived as anti-shareholder, reinforcing the necessity for boards to align their governance structures with shareholder interests. This event could prompt other companies to re-examine their own bylaws and governance policies to avoid similar challenges and to ensure they are constructed in a way that fosters shareholder engagement rather than dissuasion.

For stakeholders, the outcome of this dispute could signify a shift in the company's governance dynamics, possibly leading to changes in corporate strategy and oversight. The ability of shareholders to influence board composition is a critical component of governance that can drive company performance and strategic initiatives. The case also highlights the importance of proxy advisory firms and their role in shaping the voting outcomes of such corporate battles, which can have a significant impact on the future direction of a company.

Court Found that Several AIM Advance Notice Bylaws Are Invalid

NEW YORK, Jan. 3, 2024 /PRNewswire/ -- Ted D. Kellner, Todd Deutsch and Robert L. Chioini (collectively, the "Kellner Group") today  issue the following statement in connection with their efforts to bring accountability to the entrenched, incumbent Board of Directors (the "Board") of AIM Immunotech Inc. (NYSE American: AIM) and create value for stockholders.

On December 28, 2023, the Delaware Court of Chancery ruled in Mr. Kellner's favor that four separate advance notice bylaw provisions adopted by the AIM Board in March 2023 are invalid.  The invalidated provisions relate to the substantive topics of arrangements and understandings, prior relationships among the nominating stockholder or associated persons and nominees, ownership and other economic interests and known support. According to the Court, "these provisions seem designed to thwart an approaching proxy contest, entrench the incumbents, and remove any possibility of a contested election." (emphasis added)  The Court only addressed six directly challenged provisions and found four of those to be invalid, but noted that certain offending language appeared in numerous other provisions throughout the advance notice bylaws. 

We believe this ruling is consistent with our view that the clear purpose of AIM's advance notice bylaw amendments was to provide pretext to deny any nomination, no matter the disclosure provided, and it was inevitable that any nomination attempt would be denied.

However, despite this ruling, the Court went on to find that Mr. Kellner's notice of nominations did not comply with certain remaining advance notice provisions that were not invalidated (or, in one case, a predecessor provision that the Court revived).  The Kellner Group disagrees with the Court's opinion on this finding as to numerous matters of fact and law and Mr. Kellner is seeking an expedited appeal and to enjoin the Annual Meeting pending such appeal.  

As one of AIM's largest stockholders, Mr. Kellner is pursuing this appeal to bring accountability to a Board that is committed to entrenching itself at all costs. We continue to believe that for AIM to have any chance of success, significant change in the Board is urgently needed.  It is clear to us that stockholders have no faith in the incumbent Board's abilities or motivations.  It is also very clear to us that if the Board allowed a meaningful director election, stockholders would overwhelmingly vote for change.

Following the Delaware Court's decision, AIM announced that it will disregard the Kellner Group's nominations and that any proxies voted in favor of the Kellner Group nominees will not be recognized or tabulated at the Annual Meeting.  If the Annual Meeting is not enjoined and goes forward as currently scheduled before the appeal is resolved, any stockholder that previously delivered a gold proxy card to the Kellner Group, and wishes to be represented at the Annual Meeting, should consult AIM's proxy materials for information. Although stockholders would not be able to vote for the Kellner Group nominees at the Annual Meeting, stockholders would retain the ability to "withhold" their votes for the incumbent directors.  Even if the Annual Meeting is not enjoined and goes forward as currently scheduled, Mr. Kellner intends to pursue his appeal and seek relief to allow for a stockholder vote on the Kellner Group nominees.

Contact:

Okapi Partners LLC
1212 Avenue of the Americas, 17th Floor,
New York, New York 10036
Stockholders may call toll-free: (844) 343-2623
Banks and brokers call: (212) 297-0720
Email: info@okapipartners.com

Important Information and Participants in the Solicitation

The Kellner Group has filed a definitive proxy statement and associated GOLD proxy card with the Securities and Exchange Commission ("SEC") to be used to solicit votes for the election of its slate of highly-qualified director nominees at the upcoming annual meeting of stockholders of AIM. Details regarding the Kellner Group nominees are included in its proxy statement.

THE KELLNER GROUP STRONGLY ADVISES ALL STOCKHOLDERS OF AIM TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Information regarding the identity of participants in the Kellner Group's solicitation, and their direct or indirect interests, by security holdings or otherwise, is set forth in the Kellner Group's proxy statement. Stockholders can obtain a copy of the proxy statement, and any amendments or supplements thereto and other documents filed by the Kellner Group with the SEC for no charge at the SEC's website at www.sec.gov. Copies will also be available at no charge at the following website: https://www.okapivote.com/AIM. Investors can also contact Okapi Partners LLC at the telephone number or email address set for the above.

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SOURCE Kellner Group

What advance notice bylaw provisions were found to be invalid by the Delaware Court of Chancery?

The Court ruled that four separate advance notice bylaw provisions adopted by AIM Immunotech Inc. in March 2023 are invalid.

What did the Court find regarding Mr. Kellner's notice of nominations?

The Court found that Mr. Kellner's notice of nominations did not comply with certain remaining advance notice provisions.

What is the response of AIM to the Kellner Group's nominations?

AIM announced that it will disregard the Kellner Group's nominations and that any proxies voted in favor of the Kellner Group nominees will not be recognized or tabulated at the Annual Meeting.

What action is Mr. Kellner taking following the Court's decision?

Mr. Kellner is seeking an expedited appeal and to enjoin the Annual Meeting pending such appeal.

Where can stockholders obtain important information about the solicitation by the Kellner Group?

Stockholders can obtain important information from the Kellner Group's definitive proxy statement and associated GOLD proxy card filed with the Securities and Exchange Commission.