Delaware Court rules in favor of AIM ImmunoTech against activist nominations

AIM ImmunoTech announced the Delaware Court of Chancery ruled that the nomination 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 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 said it 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. In reaching its decision, the Court noted the following: “… 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 Equels, executive vice chairman of the board, CEO and 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 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.