SEC Form DEFA14A filed by AIM ImmunoTech Inc.
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☒ | Definitive Additional Materials |
| ☐ | Soliciting Material under § 240.14a-12 |
AIM ImmunoTech Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| ☒ | No fee required |
| ☐ | Fee paid previously with preliminary materials |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
On November 4, 2024, AIM ImmunoTech Inc. (the “Company”) issued a press release, a copy of which is attached hereto as Exhibit 1, and launched a website, www.SafeguardAIM.com, to communicate with stockholders of the Company, screenshots and materials posted to the website are attached hereto as Exhibits 2 and 3, respectively. In addition, on November 4, 2024, the Company mailed a timeline of events detailing significant contacts between the Company and members of the dissident group to stockholders of the Company, a copy of which is attached hereto as Exhibit 4.
Important Additional Information
The Company, its directors and executive officers, Peter W. Rodino, III and Robert Dickey, IV, are deemed to be “participants” (as defined in Section 14(a) of the Securities Exchange Act of 1934, as amended) in the solicitation of proxies from the Company’s stockholders in connection with the Annual Meeting. The Company filed its definitive proxy statement (the “Definitive Proxy Statement”) and a WHITE universal proxy card with the SEC on November 4, 2024 in connection with such solicitation of proxies from the Company’s stockholders. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH DEFINITIVE PROXY STATEMENT, ACCOMPANYING WHITE UNIVERSAL PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING. The Definitive Proxy Statement contains information regarding the identity of the participants, and their direct and indirect interests, by security holdings or otherwise, in the Company’s securities and can be found in the section titled “Principal Stockholders” of the Definitive Proxy Statement and available here. Information regarding subsequent changes to their holdings of the Company’s securities can be found in the SEC filings on Forms 3, 4, and 5, which are available on the Company’s website available here or through the SEC’s website at www.sec.gov. Stockholders will be able to obtain the Definitive Proxy Statement, any amendments or supplements thereto and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the Company’s website at https://aimimmuno.com/sec-filings/.
Exhibit 1
AIM ImmunoTech Files Definitive Proxy Statement and Sends Letter to Shareholders
Warns Shareholders that Activist Group’s Self-Interested Agenda Could Disrupt AIM’s Momentum and Destroy Chances for Near-Term Value Creation
Expresses Excitement About Encouraging Progress of Clinical Trials for Ampligen in High-Value Indications Including Pancreatic Cancer
Urges Shareholders to Safeguard AIM by Voting “FOR” ALL Four of the Board’s Incumbent Candidates and Discarding Any Proxy Materials from the Activist Group
Visit www.SafeguardAIM.com for More Information
OCALA, Fla., November 4, 2024 — AIM ImmunoTech Inc. (NYSE American: AIM) (the “Company”) today announced that the Company has filed its definitive proxy statement with the U.S. Securities and Exchange Commission in connection with its upcoming 2024 Annual Meeting of Stockholders, scheduled for December 17, 2024. The Company also mailed a letter to shareholders.
The full text of the letter to shareholders follows:
November 4, 2024
Dear Fellow Shareholders:
Thank you for your investment in AIM ImmunoTech Inc. (“AIM” or the “Company”). Your vote at this year’s 2024 Annual Meeting of Stockholders (the “Annual Meeting”), scheduled for December 17, 2024, is critical. For the third year in a row, a group of activist investors (collectively, the “Activist Group”) has nominated a slate of nominees – which this time includes Robert L. Chioini, Todd Deutsch, Ted D. Kellner and Paul W. Sweeney – in an attempt to take control of the AIM Board of Directors (the “Board”). This year, the Activist Group – which includes individuals with checkered pasts who have close ties to securities law felons – is trying to replace your entire four-member Board.
We believe AIM has a bright future. We continue to execute on our strategy to create sustainable value for you and have significant momentum with our lead drug candidate, Ampligen, in areas with critical unmet needs – especially in the high-value pancreatic cancer space. Our active clinical trials are bringing us closer to helping patients and unlocking the Company’s intrinsic value for our shareholders.
However, our progress could be put in jeopardy if the Activist Group takes control of the Board. Electing the Activist Group’s nominees could severely disrupt our forward momentum, give them access to AIM’s capital and destroy the chances of near-term value creation for shareholders.
If the Activist Group actually wanted to create value for you, we believe it would have put forth a detailed operational plan and explain what it would do differently – which it has not done. We believe the Activist Group’s campaign shows a complete lack of seriousness and disregard for fellow shareholders.
What makes the Activist Group’s campaign even more worrying is that it is seemingly designed to get reimbursement from AIM – using shareholders’ money – for the millions of dollars its members have spent trying to take control of the Board. Don’t take our word for it – just read the Activist Group’s proxy statement, where it discloses its plan to recoup over $5 million spent in connection with certain of its members’ efforts relating to the Company’s 2023 Annual Meeting of Stockholders if it wins control of the Board, in addition to whatever expenses the Activist Group incurs in connection with this year’s Annual Meeting. The Activist Group has also indicated that it does not intend to submit this matter to a shareholder vote – forcing you, the shareholders, to foot its bill without any say.
In light of all this, your Board has determined that electing the Activist Group’s nominees to the Board would not be in the best interests of all shareholders. The Board is committed to protecting the significant momentum AIM has built over the last several years and is well-positioned to continue driving the clinical and operational execution of our pipeline.
We urge you to protect your investment by voting for the election of your Board’s incumbent candidates – Stewart L. Appelrouth, Nancy K. Bryan, Thomas K. Equels and Dr. William M. Mitchell – on the WHITE universal proxy card.
In contemplating your vote, we ask that you consider the following:
The Activist Group Includes Criminals and Individuals Who Have Attempted to Mislead AIM Shareholders for Years
Members of the Activist Group have repeatedly tried to take over your Board for years – all while attempting to hide key information from shareholders and mislead you about their true plans and the unsavory characters that are part of their efforts.
This year is no different. The Activist Group is attempting to replace your entire Board with four of its interconnected cronies – Messrs. Chioini, Deutsch, Kellner and Sweeney – nearly all of whom have been part of the multi-year effort to take control of AIM.
In each year that the Activist Group has sought control of the Board, we have unearthed new disturbing information about its members and past associates, as well as the nefarious tactics several of these individuals have employed, including initiating multiple lawsuits against AIM and their submission of nomination notices containing false statements and material omissions.
As the Delaware Court of Chancery (the “Court”) noted in 2022, in describing the Activist Group’s actions: “[t]he facts read like a game of telephone.”1 Consider the below details:
| ● | The Activist Group’s roots trace back to the efforts of Franz N. Tudor – a felon, who was convicted of insider trading – who began misrepresenting himself as associated with AIM to third parties – including an FDA lobbyist and principal investigators for Ampligen. Mr. Tudor’s behavior was so egregious that AIM successfully obtained an injunction against him in Marion County, Florida in August 2021.2 |
1 Jorgl v. AIM ImmunoTech Inc. et al., 2022 WL 16543834, at *1 (Del. Ch. Oct. 28, 2022). (emphasis added).
2 See Jorgl, 2022 WL 16543834, at *3.
| ● | Mr. Tudor then solicited Mr. Chioini to join members of the Activist Group. The two knew each other well, having worked together for nearly a decade at Rockwell Medical Technologies, Inc. (“Rockwell Medical”). But the Company later learned that Mr. Chioini had been fired as Rockwell Medical’s CEO because, according to Rockwell Medical, he “lacked key attributes necessary to oversee the growth and long-term success of the [c]ompany.”3 Rockwell Medical ultimately sued Mr. Chioini, stating that he “refuse[d] to accept the decision” and, following his termination, took “action purportedly on the [c]ompany’s behalf without authorization.”4 |
| ● | Mr. Chioini then solicited the aid of yet another felon, Michael Xirinachs, who pled guilty to wire fraud involving fraudulent securities trading and misuse of funds.5 Mr. Xirinachs agreed to fund members of the Activist Group’s activities6 – we believe likely in exchange for a promise that he could be reimbursed with generous interest from the Company’s coffers. But the Activist Group failed to disclose Mr. Xirinachs’ involvement in the scheme until it was revealed in litigation discovery,7 instead attempting to run the funds through a separate entity to conceal Mr. Xirinachs’ involvement.8 |
| ● | Email communications show that Mr. Xirinachs began discussing AIM with members of the Activist Group around the time of his legal troubles.9 This felon, who, like Mr. Chioini, is not a shareholder, agreed to pay for the legal fees in connection with their nomination efforts at the Company.10 |
| ● | Messrs. Xirinachs and Chioini worked with Mr. Tudor to plan the 2022 campaign before Jonathan Jorgl – the “face” of the 2022 campaign – was even asked to purchase shares.11 Further, Mr. Jorgl was used to hide the involvement of Mr. Xirinachs and others – which involvement the Activist Group only admitted to after Mr. Xirinachs’ involvement was disclosed in discovery.12 |
| ● | Leading up to the 2022 campaign, it was disclosed that Mr. Chioini texted a business associate of his that he was “burning a Cuban [cigar] . . . on my dock . . . [t]he same thing we’re going to do when we celebrate . . . taking control of the [C]ompany.”13 |
3 See Kellner v. AIM ImmunoTech Inc., 307 A.3d 998, at 1008.
4 See Press Release issued by Rockwell Medical on May 24, 2018, available at: https://www.prnewswire.com/news-releases/rockwell-medical-issues-statement-300654699.html.
5 See Kellner v. AIM ImmunoTech Inc., 307 A.3d 998, at 1010.
6 See Jorgl, 2022 WL 16543834, at *7–8.
7 See Press Release issued by Mr. Jorgl on July 21, 2022, available at: https://www.nasdaq.com/press-release/update-aim-stockholder-full-value-committee-announces-director-nominations-for-aim (identifying River Rock Advisors LLC as a participant); Preliminary Proxy Statement filed by Mr. Jorgl et al. with the U.S. Securities and Exchange Commission (the “SEC”) on September 15, 2022 (belatedly acknowledging Mr. Xirinachs’ involvement); Jorgl, 2022 WL 16543834, at *8.
8 See Jorgl, 2022 WL 16543834, at *8 & n.92.
9 See id. at *4.
10 See id. at *1.
11 See id. at *14.
12 See id. at *34.
13 See Press Release issued by the Company on October 26, 2022, available at: https://aimimmuno.com/aim-immunotech-board-issues-letter-to-shareholders/.
| ● | Mr. Tudor has known Mr. Deutsch for over 15 years, having worked together at the Galleon Group,14 a hedge fund that closed in 2009 after an insider trading scandal led to over 50 convictions or guilty pleas.15 |
| ● | Current nominees Messrs. Deutsch and Kellner have known each other for over two decades and invested in more than 20 companies together.16 |
| ● | Current nominees Messrs. Chioini and Deutsch have business ties to the orchestrator of the original campaign, convicted criminal, Mr. Tudor.17 |
| ● | Individuals formerly associated with the Activist Group have, in years past, spread disparaging misinformation about the Company, its directors and its progress, including through numerous misleading internet posts by Mr. Tudor under the pseudonym “beaufordb” (which Mr. Tudor was later forced to concede during a deposition belongs to him). |
| ● | Following litigation brought by a member of the Activist Group, the Court agreed with the Board’s determination and found that the Activist Group’s 2022 nomination notice “was – at best – misleading.”18 |
| ● | The Court agreed with the Board and found that the Activist Group flouted AIM’s Bylaws and determined that the Activist Group was “engaging in manipulative conduct.”19 |
| ● | In its 2023 nomination notice, the Activist Group finally exposed its motives for seeking control of the Board – namely its plan to force AIM shareholders to foot the bill for the millions of dollars of expenses it incurred in connection with its failed 2022 campaign.20 |
| ● | At no point has the Activist Group presented any business plan or CEO candidate for AIM. Why? Because it has no plan – beyond, we believe, draining AIM’s resources to pay its members and their associates millions of dollars related to their years-long efforts to seize control of the Board. |
The Court described the Activist Group as a “web of individuals” working together to nominate a slate of nominees to take control of the Board in 2022.21 Two years later, the interconnections remain striking. (See Figure 1)
14 See Jorgl, 2022 WL 16543834, at *3.
15 See Press Release issued by the SEC on October 16, 2009, available at: https://www.sec.gov/news/press/2009/2009-221.htm.
16 See Kellner v. AIM ImmunoTech Inc., 307 A.3d 998, 1009 (Del. Ch. Dec. 28, 2023).
17 See id. at 1009; see Kellner v. AIM ImmunoTech Inc., 320 A.3d 239, 247 (Del. 2024).
18 Jorgl, 2022 WL 16543834, at *1. (emphasis added).
19 See id. at *17. (emphasis added).
20 See Schedule 13D/A filed by Mr. Kellner with the SEC on September 3, 2024.
21 Jorgl, 2022 WL 16543834, at *1.
Our Board and Management Team are Driving Significant Momentum
The Board and management team have established a robust pipeline developing our lead product candidate Ampligen across a number of disease areas – with a true focus on oncology indications – and a cash position expected to fund operations through multiple key milestones.
Ampligen has shown broad-spectrum activity in human clinical studies with significant positive data published in numerous well-respected journals and forums. We have multiple active and ongoing clinical trials for Ampligen across areas of unmet medical need and high-value indications. Advancing these human clinical studies is our primary focus and we have established a growing body of consistent safety and efficacy data with Ampligen that continues to encourage us and our program collaborators.
In particular, we are developing Ampligen as part of a combination therapy with our lead program in pancreatic cancer. We’ve seen exciting data in two ongoing Phase 2 studies of Ampligen and AstraZeneca’s Durvalumab for pancreatic cancer and Merck’s Keytruda.
Other key accomplishments and milestones in 2024 include:
| ○ | Metastatic Pancreatic Ductal Adenocarcinoma |
| ○ | Commenced enrollment and dosing in DURIPANC Phase 1b/2 study combining Ampligen® with AstraZeneca’s anti-PD-L1 immune checkpoint inhibitor Imfinzi® (durvalumab) for the treatment of late-stage pancreatic cancer; |
| ○ | Announced that the first dose level is generally well-tolerated in the DURIPANC Phase 1b/2 study of Ampligen and Imfinzi as a combination therapy for late-stage pancreatic cancer; and |
| ○ | Reported positive preliminary data from Phase 1b/2 Study of Ampligen and Imfinzi as a combination therapy for late-stage pancreatic cancer demonstrating a preliminary finding of stable disease in two out of three patients at six months in the first subject cohort. |
| ○ | Locally Advanced Pancreatic Adenocarcinoma |
| ○ | Received authorization from the Erasmus Medical Center Ethics Committee to open a European site for the ongoing Phase 2 study (“AMP-270”) of Ampligen as a therapy for locally advanced pancreatic cancer; and |
| ○ | Announced the publication of new data analysis from a long-term Early Access Program studying Ampligen for the treatment of advanced pancreatic ductal adenocarcinoma. |
| ○ | Recurrent Ovarian Cancer |
| ○ | Reported positive top-line, protocol-planned interim report data from the study of Ampligen combined with pembrolizumab for the treatment of recurrent ovarian cancer. |
| ○ | Post-COVID Conditions |
| ○ | Reported positive topline results from the Company’s Phase 2 study evaluating the efficacy and safety of Ampligen as a potential therapeutic for people with the post-COVID condition of fatigue (“AMP-518”); and |
| ○ | Reported an analysis of the AMP-518 clinical trial which supported the Company’s belief in Ampligen as a potential therapeutic for people with the moderate-to-severe post-COVID condition of fatigue, and that this would be the likely subject population for AIM’s planned follow-up clinical trial. |
| ○ | Additional Key Accomplishments |
| ○ | Successfully completed cGMP manufacturing of 9,042 clinical vials of Ampligen; |
| ○ | Announced the publication of new pre-clinical data of Ampligen as part of a combinational therapy in the treatment of melanoma; and |
| ○ | Granted a patent for Ampligen for the treatment of endometriosis. |
Furthermore, we are executing our clinical strategy to prepare a compelling data package for discussions on big pharma development and commercialization.
Our Well-Qualified Board Has the Right Experience to Drive AIM Forward
We believe our Board has the right mix of experience and skillsets to oversee the Company’s strategy for value creation. Your current Board members – and candidates for election this year – include:
| ○ | Stewart L. Appelrouth – Mr. Appelrouth has valuable financial and regulatory expertise as a certified public accountant with over 40 years of accounting and audit experience. His extensive experience as an accountant and provider of business and tax consulting services equips him to serve as Chairman of the Board’s Audit Committee. |
| ○ | Nancy K. Bryan – Ms. Bryan possesses deep commercial, marketing, business development and corporate finance expertise from her service at major pharmaceutical companies including Merck, GlaxoSmithKline and Bayer Pharmaceuticals as well as startup biotech companies including Indevus Pharmaceuticals and NPS Pharmaceuticals. She was named a director in March 2023 as part of AIM’s effort to bring additional diverse perspectives and biotechnology commercialization experience into the boardroom. |
| ○ | Thomas K. Equels, M.S., J.D. – Mr. Equels is Executive Vice Chairman, Chief Executive Officer and President of the Company and has over 25 years of experience as a practicing attorney specializing in complex business litigation. He also has extensive experience in clinical trial design and development, creating intellectual property concepts and in financing drug development. |
| ○ | Dr. William M. Mitchell – Dr. Mitchell serves as Chairman of the Board and has extensive medical industry experience, including as a Professor of Pathology at Vanderbilt University School of Medicine, a board-certified physician and a former member of the board of directors of Chronix Biomedical, a company involved in next-generation DNA sequencing for medical diagnostics. |
Together, the Board has taken the necessary steps to defend the best interests of shareholders while maintaining the significant momentum of our development pipeline. We are confident they have the right experience and backgrounds to continue advancing AIM toward sustainable value creation.
We are committed to protecting the best interests of shareholders and appreciate your support and investment in the Company.
Please ignore any proxy materials you receive from the Activist Group and vote on the Company’s WHITE universal proxy card for your current highly qualified directors to protect your investment.
If you have any questions or need further assistance, please contact our proxy solicitor, Sodali & Co. at [email protected] or (800) 662-5200.
To learn more, shareholders are encouraged to visit: www.SafeguardAIM.com.
Sincerely,
AIM ImmunoTech Inc. Board of Directors
WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED WHITE UNIVERSAL PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED, OR VOTE BY INTERNET AS INSTRUCTED ON THE WHITE UNIVERSAL PROXY CARD, WHETHER OR NOT YOU PLAN TO VIRTUALLY ATTEND THE ANNUAL MEETING.
THE BOARD RECOMMENDS A VOTE “FOR” ALL OF OUR BOARD’S CANDIDATES (STEWART L. APPELROUTH, NANCY K. BRYAN, THOMAS K. EQUELS AND DR. WILLIAM M. MITCHELL) ON PROPOSAL 1 USING THE ENCLOSED WHITE UNIVERSAL PROXY CARD.
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 X, 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. Data, pre-clinical success and clinical success seen to date does not guarantee that Ampligen will be approved as a treatment or therapy for any diseases or conditions. The Company urges investors to consider specifically the various risk factors identified in its most recent Annual Report on Form 10-K, and any risk factors or cautionary statements included in any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, filed with 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 the 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.
Important Additional Information
The Company, its directors and executive officers, Peter W. Rodino, III and Robert Dickey, IV, are deemed to be “participants” (as defined in Section 14(a) of the Securities Exchange Act of 1934, as amended) in the solicitation of proxies from the Company’s stockholders in connection with the Annual Meeting. The Company filed its definitive proxy statement (the “Definitive Proxy Statement”) and a WHITE universal proxy card with the SEC on November 4, 2024 in connection with such solicitation of proxies from the Company’s stockholders. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH DEFINITIVE PROXY STATEMENT, ACCOMPANYING WHITE UNIVERSAL PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS THEY CONTAIN IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING. The Definitive Proxy Statement contains information regarding the identity of the participants, and their direct and indirect interests, by security holdings or otherwise, in the Company’s securities and can be found in the section titled “Principal Stockholders” of the Definitive Proxy Statement and available here. Information regarding subsequent changes to their holdings of the Company’s securities can be found in the SEC filings on Forms 3, 4, and 5, which are available on the Company’s website available here or through the SEC’s website at www.sec.gov. Stockholders will be able to obtain the Definitive Proxy Statement, any amendments or supplements thereto and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the Company’s website at https://aimimmuno.com/sec-filings/.
Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
Media Contact:
Longacre Square Partners
Joe Germani / Miller Winston
Exhibit 2
Exhibit 3
Exhibit 4
Timeline OF Events
The summary below details the significant contacts between AIM ImmunoTech Inc. (the “Company” or “AIM”) and members of the dissident group beginning in 2022 through the date hereof. This summary does not purport to catalogue every conversation of or among members of the Company’s board of directors (the “Board”), the Company’s management, the Company’s advisors and representatives of the dissident group and their advisors relating to the dissident group’s solicitation.
In connection with the Company’s 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) and 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”), a group of individuals, including at least two convicted felons, attempted to replace a majority of the Board. These efforts were unsuccessful. In each instance, the dissidents’ purported attempts to make nominations were found by the Company to have failed to adhere to the Company’s bylaws and presented misleading and incomplete information about the group and its members in order to conceal the group’s true intentions with respect to the Company. As a result, the Company rejected the dissidents’ purported nominations. Although the dissidents challenged these rejections in court, neither the Delaware Court of Chancery nor the Delaware Supreme Court disturbed the Company’s rejection of the purported attempts to make nominations.
Now, in connection with the Company’s 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”), members of the same dissident group are once again seeking to replace the entire Board. Ted D. Kellner, the latest public face of the dissident group, has submitted a notice of intent to nominate himself, Todd Deutsch, Robert Chioini and Paul W. Sweeney for election to the Board.
The Board strongly urges you to vote on the Company’s WHITE universal proxy card “FOR ALL” of the Board’s four proposed nominees, Nancy K. Bryan, Thomas K. Equels, William M. Mitchell, and Stewart L. Appelrouth, to safeguard the Company and its promising clinical trials from disruption by the group currently being led by Messrs. Kellner, Deutsch, Chioini and Sweeney. As the timeline of events discussed below demonstrates, the current dissident group is the outgrowth of efforts of individuals with a history of criminal conduct and corporate misbehavior that, in the Board’s view, should disqualify anyone associated with this group from seizing control of the Board. Voting for the Board’s nominees will help prevent the dissident group from capturing Board control and ensure that the current Board will be able to both continue to act in the best interests of all AIM stockholders and be positioned to capitalize on important upcoming clinical milestones. Ultimately, we believe that supporting the Board’s nominees is the best way to protect your investment.
The Initial Formation of the Dissident Group
The dissident group’s efforts ultimately trace back to July 2020, when an AIM stockholder named Franz Tudor requested a call with AIM’s Chief Executive Officer, Thomas K. Equels, and pressed to obtain a position as an international business development consultant for AIM. Mr. Equels then researched Mr. Tudor and learned that Mr. Tudor had a criminal background, having been convicted of securities fraud in 2009. Upon learning of Mr. Tudor’s history of criminal securities fraud, AIM declined Mr. Tudor’s overtures.
Mr. Tudor then began what the Company views as a campaign of disruption and harassment. For example, he interfered with AIM’s business by falsely suggesting to third parties—including an FDA lobbyist and principal investigators in clinical trials for AIM’s lead product—that he was associated with AIM. In addition, he tried to obtain confidential research information about AIM by falsely claiming that he was an associate of AIM. Mr. Tudor’s conduct became so disruptive that AIM sought and obtained injunctive relief against him in Marion County, Florida (the “Florida Injunction”), which indefinitely enjoined Mr. Tudor from contacting AIM’s business relations.
This was not Mr. Tudor’s first injunction. On August 2, 2011, the Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York, entered a final judgment against Mr. Tudor (the “SEC Injunction”) in an insider trading case that the Securities and Exchange Commission (“SEC”) brought against him. The SEC Injunction permanently enjoined Mr. Tudor from violations of Section 10(b) of the Securities and Exchange Act of 1934 (the “Exchange Act”), and ordered him to pay over $70,000 in disgorgement penalties. The SEC Injunction further barred Mr. Tudor from association with any investment advisor, broker, dealer, municipal securities dealer or transfer agent. Mr. Tudor also pleaded guilty to charges of securities fraud and conspiracy to commit securities fraud in a related criminal case.
We believe Mr. Tudor’s later conduct demonstrated that he largely flouted the Florida Injunction. He contacted AIM’s investment bank and continued to contact its investor relations firm in what, in the Company’s view, amounted to an ongoing effort to disrupt AIM. The Company believes that the injunction, along with Mr. Tudor’s prior criminal conviction, may explain why Mr. Tudor preferred to work behind the scenes with other individuals with respect to his various later efforts to gain a majority of the seats on the Board.
In those subsequent efforts to take control of the Board, two of the individuals Mr. Tudor worked with were Mr. Kellner and Mr. Deutsch. Mr. Tudor had worked with Mr. Deutsch at the Galleon Group (“Galleon”), a hedge fund that closed in 2009 after an insider trading scandal led to over 50 convictions or guilty pleas. Mr. Deutsch and Mr. Kellner have invested in more than 20 companies together, and Mr. Deutsch introduced Mr. Kellner to Mr. Tudor. By late 2021, Mr. Tudor also recruited Walter Lautz, another AIM stockholder, to join his campaign.
After assembling this group in late 2021, Mr. Tudor and Mr. Deutsch began sending AIM and its investor relations firm increasingly aggressive communications. At one point, Mr. Deutsch attempted to have Mr. Tudor secretly attend a call between himself, Mr. Kellner and AIM’s investor relations firm.
By April 2022, Mr. Tudor was identifying potential Board nominees. The first was Mr. Tudor’s longtime business acquaintance, Robert Chioini. Mr. Tudor had known Mr. Chioini for nearly a decade, having worked together at Rockwell Medical Technologies, Inc. (“Rockwell Medical”), a business co-founded by Mr. Chioini. Mr. Chioini was fired as Rockwell Medical’s CEO because, according to Rockwell Medical, he “lacked key attributes necessary to oversee the growth and long-term success of the [c]ompany.” Rockwell Medical ultimately sued Mr. Chioini, stating that he “refuse[d] to accept the decision” and, following his termination, took “action purportedly on the [c]ompany’s behalf without authorization.”
April 2022 Nomination Efforts
On April 18, 2022, Mr. Lautz submitted a Rule 14a-8 stockholder proposal (the “Lautz Proposal”) to the Company purporting to nominate Mr. Chioini and Daniel Ring for election to the Board.
The Company rejected the Lautz Proposal because Rule 14a-8 of the Exchange Act explicitly states that a basis for excluding a stockholder proposal is if the proposal “[s]eeks to include a specific individual in the company’s proxy materials for election to the board of directors.” The Company later sought and obtained a no-action letter from the SEC affirming that the Board had a lawful basis for excluding the Lautz Proposal.
The Company subsequently learned that Mr. Tudor and Mr. Deutsch were behind the Lautz Proposal and had initiated the April 2022 nomination efforts. Mr. Tudor informed Mr. Deutsch in April 2022 that Mr. Ring was willing to be nominated but that they would need a stockholder to make the nomination. Mr. Tudor was the one who suggested to Mr. Lautz that Messrs. Chioini and Ring would be interested in being nominated for election to the Board at the 2022 Annual Meeting. In fact, the defective Rule 14a-8 proposal that Mr. Lautz sent purporting to nominate Messrs. Chioini and Ring was drafted by Mr. Tudor, and Mr. Lautz did not make any revisions before delivering it to the Company. Mr. Lautz’s nomination proposal did not mention Mr. Tudor or his involvement in orchestrating the attempted nominations.
By late April 2022,1 Mr. Chioini had contacted his Rockwell Medical co-founder, Michael Xirinachs, regarding the nomination efforts. The inclusion of Mr. Xirinachs added yet another felon to the group, as he pleaded guilty in 2022 to criminal charges involving fraudulent securities trading and promotion, material misrepresentations to investors, and misuse of funds, and, previously, had been found to have committed wire fraud, with the SEC obtaining a judgment against him and his company, Emerald Asset Advisors, LLC.
July 2022 Nomination Efforts
In mid-June 2022, Mr. Lautz declined Mr. Tudor’s offer to participate in a second attempt at nominating director candidates, telling Mr. Tudor that he “can’t be the face of this partaking.” Messrs. Tudor and Chioini thus needed to find a new “face,” and, the Company believes, was motivated to conceal the involvement of (i) Mr. Tudor, who was subject to the Florida Injunction and SEC Injunction; and (ii) Mr. Xirinachs, who did not own AIM stock and was a convicted felon.
Soon thereafter, Messrs. Tudor and Chioini identified Jonathan Jorgl to serve as the new “face” of the nomination efforts. The Company believes that Mr. Jorgl was recommended by Michael Rice, an individual the Delaware Court of Chancery later described as Mr. Jorgl’s “surfing buddy.” Mr. Rice had served as an advisor to Rockwell Medical during Mr. Chioini’s tenure there as CEO and replaced Mr. Ring on the group’s nominee slate.
On June 27, 2022, the same day that the SEC confirmed AIM had a basis for excluding the Lautz Proposal, Jonathan Jorgl acquired 1,000 shares of AIM common stock. He had not previously owned any AIM stock. Messrs. Chioini, Rice and Xirinachs advised Mr. Jorgl regarding the purchase of his shares and transferring them into record ownership.
On July 7, 2022, after Mr. Jorgl expressed concern about the costs associated with the nominations and proxy contest, Mr. Chioini sent a text to Mr. Jorgl to reassure him that he “would not be on the hook” for any costs and that “[w]e are paying [the] fees.” AIM believes the “we” referred to Messrs. Chioini and Xirinachs.
On July 8, 2022, Mr. Jorgl, who held 1,000 shares, delivered to the Company a notice (the “Jorgl Notice”) of his intention to nominate his director candidates, Messrs. Chioini and Rice, to replace a majority of the Board at the 2022 Annual Meeting. The Jorgl Notice made no reference to the involvement of Messrs. Tudor or Xirinachs and, among other false statements, indicated that Mr. Jorgl would be sharing in the expenses of the nominations and proxy contest with Messrs. Chioini and Rice, even though just the day before, Mr. Jorgl had received confirmation from Mr. Chioini that Mr. Jorgl would not be responsible for any of the costs. Mr. Rice also denied he had ever agreed to pay any of the expenses.
On July 11, 2022, Mr. Xirinachs emailed Mr. Chioini to discuss his intentions regarding his 2022 nomination efforts, noting “[t]he way I hope this all plays out is we get control of AIM … [In the meantime,] we continue to look for opportunities to either acquire, (to spin off at a later time), license technology, or possibly merge with.”
1 On April 25, 2022, Mr. Chioini sent AIM’s proxy statement relating to the Company’s 2021 Annual Meeting of Stockholders to Mr. Xirinachs.
The Board rejected the Jorgl Notice for failing to comply with AIM’s bylaws, and Mr. Jorgl sued the Company in the Delaware Court of Chancery, seeking a preliminary injunction and a finding that the Jorgl Notice and Mr. Jorgl’s purported nominations were valid. In the case Jonathan Thomas Jorgl v. AIM ImmunoTech Inc., 2022 WL 16543834 (Del. Ch. Oct. 28, 2022) (the “2022 Delaware Litigation”), the Court denied Mr. Jorgl’s motion for a preliminary injunction, ending the July 2022 nomination efforts. In the Court’s memorandum opinion, the Court stated that the Jorgl Notice “was—at best—misleading” and that the associated discovery process (the ““2022 Discovery Process”) “indicated that a web of individuals had worked together to bring Jorgl’s nomination forward.”
The Company held the 2022 Annual Meeting as scheduled on November 3, 2023, where all members of the Board were re-elected.
Through the 2022 Delaware Litigation and the 2022 Discovery Process, the Company learned about a number of significant arrangements and understandings among many individuals, including members of the dissident group, to, among other things, conceal the identity and role of certain individuals who were heavily involved in orchestrating or supporting the July 2022 nomination efforts.
For example, the Jorgl Notice failed to disclose the involvement of Mr. Chioini’s long-time business associate, Mr. Xirinachs, or that Mr. Xirinachs had been sentenced to three years of probation and ordered to pay $353,000 in restitution after he pleaded guilty in June 2022 to wire fraud charges involving fraudulent securities trading and promotion, material misrepresentations to investors and the misuse of funds.
In addition, on July 11, 2022, Mr. Xirinachs contacted an acquaintance, Paul Tusa, seeking to use his entity, River Rock Advisors (“River Rock”), as a front that would appear to fund Mr. Jorgl’s nomination attempt. Mr. Xirinachs gave Mr. Tusa $5,000 to keep River Rock’s bank account open. On July 21, 2022, the group2 put out a press release belatedly identifying River Rock as a “participant[ ] in the proxy solicitation.” But the Company’s understanding is that neither Mr. Tusa nor River Rock contributed any funds to the nomination efforts, rendering the press release misleading.
The Company believes that the failure of Messrs. Jorgl, Chioini and Rice to candidly disclose these facts was motivated by a desire to hide that Mr. Xirinachs—a convicted felon—and Mr. Chioini—an individual who had been fired by a company he co-founded for alleged misconduct— were the financial forces behind the July 2022 nomination efforts and related litigation, even though neither of them owned any shares of AIM stock. In fact, Messrs. Chioini and Xirinachs ultimately became responsible for $2 million in expenses related to the 2022 nomination efforts and related litigation. For example, according to Mr. Kellner’s notice of intent to nominate himself and Messrs. Deutsch and Chioini (the “2023 Purported Nomination Notice”), as of August 2023, Messrs. Chioini and Xirinachs owed approximately $1.3 million to legal counsel Baker & Hostetler LLP (“BakerHostetler”) and other advisors. The 2023 Purported Nomination Notice also stated that Messrs. Chioini and Xirinachs were on a payment plan with BakerHostetler for the outstanding expenses from the July 2022 nomination efforts and related litigation and that Mr. Chioini had attempted to persuade Mr. Xirinachs to pay his share of the expenses.
2 This group of individuals included Mr. Jorgl, together with his nominees, Messrs. Chioini and Rice. These individuals collectively referred to themselves as the “AIM Stockholder Full Value Committee” or the “ASFV Committee.”
Efforts of Ted Kellner and Todd Deutsch at AIM
The Company also learned from the 2022 Discovery Process that, since at least October 2021, Messrs. Deutsch and Kellner had communicated among themselves and with Mr. Tudor regarding plans and proposals to, among other things, materially change the Company’s business and corporate structure and to change the Board and management team. For example, Mr. Kellner emailed Mr. Deutsch on November 4, 2021, to ask, “Have you and Franz [Tudor] drafted the letter we were intending to send to the AIM management team?” Messrs. Deutsch and Kellner have long-standing ties to each other. According to the 2023 Purported Nomination Notice, the two have had a “strong business and personal relationship for the past 25-plus years” and have invested in the same companies on numerous occasions.
The Company estimates that by mid-December 2021, Messrs. Deutsch and Kellner had acquired aggregate beneficial ownership of more than 5% of the AIM common stock. However, they did not file a Schedule 13D reporting greater than 5% ownership, as required by law and the regulations of the SEC, until Summer 2023, approximately 600 days after the Company estimates Messrs. Deutsch and Kellner were legally required to make the filing.
By Spring 2022, Mr. Deutsch was frequently forwarding e-mails regarding AIM to and from each of Messrs. Kellner and Tudor within minutes of receipt.
Messrs. Deutsch and Tudor have known each other for over 15 years, having worked together at Galleon. Mr. Deutsch—the head trader at the Galleon Captain’s Fund—left Galleon around June 2008. While Mr. Tudor departed Galleon before Mr. Deutsch’s departure, Mr. Tudor became ensnared in the Galleon insider trading probe. Subsequently, Mr. Tudor pleaded guilty to conspiracy to commit securities fraud and cooperated with investigators, including by wearing a recording device to tape conversations with his alleged insider trading co-conspirators. The SEC issued an injunction against Mr. Tudor that permanently enjoined him from, among other things, engaging in certain activities related to “penny stocks.” Like a number of other SEC injunctions issued at the time, the SEC injunction against Mr. Tudor was later partially vacated on July 5, 2019, to remove the bar on association with any investment advisor, municipal securities dealer or transfer agent. The rest of the SEC injunction against Mr. Tudor remains in force.
On April 19, 2022, the day after Mr. Lautz submitted the Lautz Proposal, Mr. Deutsch emailed Mr. Kellner a profile on the Company’s business, prospects and clinical studies to be used for pitching investors to invest in AIM. Through the 2022 Discovery Process, the Company received a copy of Mr. Kellner’s notes on that email that included a handwritten note saying “what do we own? 15 – 18%?” in apparent reference to the group’s aggregate beneficial ownership of shares of AIM common stock at the time. Nonetheless, the group did not file a Schedule 13D reporting greater than 5% ownership, as required by law and the regulations of the SEC, for more than a year after this email was sent. Mr. Kellner also wrote notes suggesting that he believed Mr. Tudor had written the contents of Mr. Deutsch’s April 19, 2022 email.
After the first person Mr. Tudor chose to be the “face” of his takeover effort, Mr. Lautz, failed in his attempt to nominate Messrs. Chioini and Ring in April 2022, Mr. Tudor updated Mr. Deutsch on the renewed efforts and arrangements being made for a proxy fight at the 2022 Annual Meeting and the need for funding assistance. As Mr. Tudor scrambled to line up a second nomination attempt, he wrote a June 2, 2022 email to Mr. Deutsch, saying “If you would like to send to Ted [Kellner]. . . . I have 2 strong candidates to run and get control of the [Board]. . . . I have a shareholder who is will[ing] to have their name as the lead but so far have not been able to find anyone to front the $150K.” Mr. Deutsch promptly forwarded the email to Mr. Kellner.
On June 16, 2022, an outside counsel of the Company sent a letter to Messrs. Deutsch and Kellner, notifying them of the Company’s serious concerns that they were violating federal securities laws, including Section 13(d) of the Exchange Act, and seeking proof of their ownership and the ownership of any other members of their 13D group. The Company received a copy of Mr. Kellner’s handwritten notes on a copy of that letter through the 2022 Discovery Process. The notes included a list of Mr. Kellner’s written-down questions, including “Proceed w/ vote new board?” and “[I] thought collectively we had 20%?”
By the time that Mr. Jorgl submitted the Jorgl Notice on July 8, 2022, Messrs. Kellner and Tudor were in direct communication with each other about the nomination efforts in connection with the 2022 Annual Meeting.
On July 9, 2022—before Mr. Jorgl’s purported nominations under the Jorgl Notice were made public—Messrs. Kellner and Tudor had a call during which Mr. Tudor updated Mr. Kellner on the effort to nominate two director candidates to gain a majority of the Board seats. Mr. Kellner took notes on the call, writing “Franz [Tudor] submitted 2 new directors on Friday July 8th: 1. Mike Rice 2. Rob Chioini”.
On July 15, 2022, the Company filed a lawsuit against Messrs. Chioini, Deutsch, Jorgl, Kellner, Lautz, Rice and Tudor in the Federal District Court for the Middle District of Florida, seeking (1) a declaration that these defendants violated Section 13(d) of the Exchange Act; and (2) an injunction forcing the defendants to remedy their ongoing violations of federal securities law (the “Federal Securities Action”).
As noted above, on July 29, 2022, Mr. Jorgl brought suit (the 2022 Delaware Litigation) against the Company and its directors in the Delaware Court of Chancery after the Board rejected Mr. Jorgl’s nomination notice due to its failure to comply with the Company’s bylaws.
The Company later learned during discovery in Mr. Kellner’s 2023 litigation (discussed below) that Mr. Kellner had withheld material information when he responded to a subpoena in the 2022 Delaware Litigation and that he had acknowledged in writing in August 2022 that he, Mr. Deutsch and Mr. Tudor were heavily involved in the 2022 efforts to take control of the Board. Specifically, in August 2022, Mr. Kellner drafted an update email to some of his former fraternity brothers who had invested in the “Beta Fund” that Mr. Kellner managed. The fund owned AIM stock. In his draft email, Mr. Kellner acknowledged: “A couple of weeks ago, Todd Deutsch, who is known to several of you, and a gentlemen named Franz Tudor, commenced a proxy to replace all of the directors [of AIM] and ultimately management. I am now a party to that proxy fight, which will hopefully commence with the replacement of the management team in the next twelve months. More on that as time progresses.”
According to the 2023 Purported Nomination Notice, around October 2022, Mr. Deutsch hired Mr. Tudor to provide “part-time back-office support services” to Mr. Deutsch because “he needed a job and has limited resources”.
After the Delaware Court of Chancery denied Mr. Jorgl’s motion for preliminary injunction in the 2022 Delaware Litigation, Mr. Kellner attended the 2022 Annual Meeting in person and briefly spoke with representatives of the Company, including Mr. Equels and AIM’s Chief Operating Officer and General Counsel Peter W. Rodino III.
On November 3, 2022, Mr. Kellner texted Messrs. Tudor and Deutsch seeking to set up a call with the “Jorgl team” to discuss “next steps” toward a 2023 proxy contest, expressing his hope that the Jorgl team would be “fully committed” to another proxy contest in 2023.
On November 9, 2022, AIM filed an amended complaint in the Federal Securities Action, providing additional information about the defendants’ failures to comply with federal securities law. On the same day, AIM also issued a press release announcing the initiation of a process to identify two additional directors with a focus on diverse candidates possessing biotechnology commercialization experience and a plan to engage a nationally recognized independent compensation consultant to evaluate the Company’s current executive compensation plans. The Compensation Committee did not ultimately engage a second compensation consultant but instead requested that its previously engaged, nationally recognized compensation consultant conduct a new assessment of the Company’s executive compensation.
On November 13, 2022, representatives of BakerHostetler delivered a letter on behalf of Messrs. Chioini and Rice (neither of whom owned any AIM stock), recommending that the Board “appoint Mr. Chioini and Mr. Rice to the Board and appropriate committees promptly.”
On November 23, 2022, Mr. Lautz filed a motion to dismiss AIM’s amended complaint in the Federal Securities Action. Messrs. Deutsch and Kellner, along with the former’s family office, filed their own motion to dismiss on November 23, 2022.
On a December 5, 2022 call between a representative of BakerHostetler and a representative of the Company’s outside counsel, Potter Anderson & Corroon LLP (“Potter Anderson”), the representative of BakerHostetler communicated the view of Messrs. Chioini and Rice that if an agreement on mutually agreeable director candidates to join the Board could not be reached between the Company and Messrs. Chioini and Rice before the December 2022 holidays, Messrs. Chioini and Rice planned to conduct a proxy contest in 2023 and would be “better organized next year” and were “ready to come out guns blazing.”
On December 12, 2022, Mr. Kellner spoke to Mr. Chioini about a 2023 proxy contest. In correspondence to his counsel two days later, Mr. Chioini stated that Mr. Kellner was “very interested in working with” Messrs. Chioini and Rice to remove AIM’s Board and that Mr. Kellner “want[ed] to keep in touch.”
On December 14, 2022, AIM responded to Mr. Lautz’s and Messrs. Deutsch and Kellner’s motions to dismiss in the Federal Securities Action.
On January 20, 2023, Mr. Jorgl filed a motion to dismiss AIM’s amended complaint in the Federal Securities Action. In relevant part, Mr. Jorgl attested that, the day before filing his motion, he transferred his 1,000 shares in AIM to an undisclosed third party (whose name he redacted in court filings), which he contended mooted AIM’s claims against him. AIM responded to Mr. Jorgl’s motion on February 10, 2023. The Company later learned that the undisclosed third party to whom Mr. Jorgl had transferred his 1,000 shares in AIM was a business associate of Mr. Jorgl.
On March 28, 2023, the Board adopted Restated and Amended Bylaws (the “2023 Bylaws”) and appointed Nancy K. Bryan to the Board as an independent director. The Board determined that updating AIM’s bylaws was advisable following the July 2022 nomination efforts of Mr. Jorgl and the other members of the group of individuals publicly fronted by him to attempt to evade and circumvent the requirements of AIM’s advance notice bylaws, including that group’s efforts to actively conceal the significant role and involvement of two felons in the scheme. The bylaw amendments included, among other things, updates to the advance notice provision to ensure the provision would be less susceptible to attempts to circumvent the bylaws and conceal material information from the Board and the Company’s stockholders. The amendments set forth in the 2023 Bylaws were summarized in and attached to the Company’s Annual Report for the fiscal year ended December 31, 2022 on Form 10-K filed with the SEC on March 31, 2023.
Also on March 31, 2023, the magistrate judge in the Federal Securities Action recommended denying Mr. Lautz’s and Messrs. Deutsch and Kellner’s motions to dismiss on all grounds. The magistrate judge also recommended dismissing the Company’s claims against Mr. Jorgl based on his transfer of shares to an unidentified third party.
Later, in April or May 2023, Messrs. Kellner and Tudor had breakfast together in Florida.
The 2023 Nomination Efforts
On July 24, 2023, representatives of BakerHostetler, who were representing Mr. Kellner (among others) and had previously represented Messrs. Jorgl, Chioini, Rice and Xirinachs (among others) in the July 2022 nomination efforts, requested copies of the Company’s director and officer questionnaire (the “D&O Questionnaire”) and written representation and agreement, each as required by the 2023 Bylaws to be submitted in connection with a stockholder’s nomination of director candidates to the Board.
On July 27, 2023, Messrs. Deutsch and Kellner filed a Schedule 13D (the “Initial 13D”) with the SEC, disclosing beneficial ownership in the aggregate of approximately 6.5% of the outstanding Common Stock. In the Initial 13D, they disclosed, among other things, their group’s intention to nominate individuals for election to the Board at the 2023 Annual Meeting.
On July 31, 2023, the Company furnished copies of the D&O Questionnaire and the written representation and agreement to the dissident group’s counsel at BakerHostetler.
On August 3, 2023, the day before the deadline to submit stockholder nominations under the 2023 Bylaws in connection with the 2023 Annual Meeting, representatives of BakerHostetler delivered the 2023 Purported Nomination Notice to the Company on behalf of Mr. Kellner, dated as of August 4, 2023, purporting to provide notice of Mr. Kellner’s intent to nominate himself and Messrs. Chioini and Deutsch for election to the Board at the 2023 Annual Meeting. This represented the third attempt to nominate Mr. Chioini for election to the Board in under 16 months. In addition, the 2023 Purported Nomination Notice, among other things, stated that Messrs. Deutsch and Kellner’s group intended to seek reimbursement from the Company of the costs incurred in connection with the 2023 nomination efforts as well as the costs incurred by Messrs. Chioini and Xirinachs in connection with the 2022 Annual Meeting. The Company believes the 2023 nomination efforts were partially motivated by a desire to recoup the significant expenses incurred by Messrs. Chioini and Xirinachs in connection with the unsuccessful 2022 nomination efforts and related litigation—to the detriment and expense of other stockholders.
On August 7, 2023, Messrs. Deutsch and Kellner filed Amendment No. 1 to the Initial 13D, which disclosed the submission of the 2023 Purported Nomination Notice.
On August 8, 2023, the Company filed a motion to reconsider the Federal Securities Action. The court had dismissed the Federal Securities Law Action on July 10, 2023, on mootness grounds because the 2022 Annual Meeting, including the election of directors, had already occurred. The Company filed its motion for the court to reconsider the dismissal of the Federal Securities Action because (1) the Initial 13D disclosing Messrs. Deutsch and Kellner’s intention to nominate director candidates for election at the 2023 Annual Meeting failed to correct the material deficiencies prompting AIM’s amended complaint, (2) Mr. Kellner had since submitted the 2023 Purported Nomination Notice, and (3) a number of related activities surrounding the 2023 Annual Meeting occurred in the interim, including the threat to run a “better organized” proxy contest in 2023 issued by a representative of BakerHostetler on behalf of its clients Messrs. Chioini and Rice in December 2022. The court denied the Company’s motion to reconsider on September 27, 2023. Separately, Mr. Lautz moved for reconsideration of the court’s order pursuant to the Private Securities Litigation Reform Act of 1995 on August 7, 2023, and Mr. Jorgl moved for attorneys’ fees under Rule 11 on September 12, 2023. On October 10, 2023, the court granted in part Mr. Lautz’s motion, postponed ruling on Mr. Jorgl’s motion and scheduled a hearing on November 2, 2023. However, after AIM filed a notice of appeal on October 27, 2023, the court canceled the November 2, 2023 hearing and ordered the parties to meet and confer on preparing a joint statement addressing whether (1) the district court retained subject-matter jurisdiction over Messrs. Lautz’s and Jorgl’s motions and (2) judicial economy counsels in favor of postponing a ruling on Messrs. Lautz’s and Jorgl’s motions pending AIM’s appeal.
The Board held Board meetings on August 8, 2023 and August 21, 2023, with representatives of outside counsel Potter Anderson and the Company’s then-additional outside counsel, Kirkland & Ellis LLP (“K&E”), present to discuss the 2023 Purported Nomination Notice, including its compliance (or lack thereof) with the requirements of the 2023 Bylaws.
On August 14, 2023, representatives of Abrams and Bayliss LLP (“Abrams”), Delaware counsel to Messrs. Deutsch and Kellner, delivered their clients’ demand for books and records (the “2023 220 Demand”) pursuant to Section 220 of the General Corporation Law of the State of Delaware.
On August 21, 2023, representatives of Potter Anderson delivered a letter to representatives of Abrams rejecting many of the requests in the 2023 220 Demand for failing to state a proper purpose and because of the impermissibly broad nature of certain requests. In the letter, the representatives of Potter Anderson noted that the Company would be amenable to providing the requested stocklist materials, subject to the associated payment and entry into a customary confidentiality agreement. Between August 30 and September 14, 2023, representatives of Abrams and Potter Anderson negotiated the confidentiality agreement, which the Company executed on September 14, 2023 and Messrs. Kellner and Deutsch executed on or about September 21, 2023.
At a reconvened Board meeting on August 22, 2023, after careful consideration and Board discussion, the Board unanimously resolved to reject the 2023 Purported Nomination Notice on the grounds that it did not comply with the 2023 Bylaws and directed representatives of Potter Anderson and K&E to communicate the rejection to Mr. Kellner and his representatives.
On August 23, 2023, representatives of Potter Anderson delivered a letter (the “Rejection Letter”) on behalf of the Board and Company to representatives of BakerHostetler rejecting the 2023 Purported Nomination Notice. The Company also issued a press release announcing the rejection of the 2023 Purported Nomination Notice and filed a Form 8-K with the SEC, attaching both the press release and the Rejection Letter, as exhibits thereto. The Rejection Letter noted numerous deficiencies and failures to comply with clear 2023 Bylaw requirements in the 2023 Purported Nomination Notice, including, among other things, (1) failures by Mr. Kellner to adequately and accurately describe certain agreements, arrangements and understandings between members of his activist group and certain third parties with respect to the nominations and any nominations made during the past 24 months; (2) failures to comply with numerous requirements of applicable law; and (3) false responses by the purported nominees in their respective D&O Questionnaires, including the failure to disclose adverse recommendations by proxy advisory firms ISS and Glass Lewis with respect to the purported nominees on at least nine separate occasions.
On August 25, 2023, Mr. Kellner filed suit against the Company and the members of the Board in the Delaware Court of Chancery (the “2023 Delaware Litigation”) seeking a declaratory judgment that, among other things, the 2023 Purported Nomination Notice is valid under the 2023 Bylaws and the 2023 Bylaws were improperly adopted. The Company opposed the allegations in Mr. Kellner’s complaint and filed the Company’s answer and counterclaims on September 11, 2023.
On August 28, 2023, Messrs. Deutsch and Kellner filed Amendment No. 2 to the Initial 13D and issued a press release disclosing the 2023 Delaware Litigation and announcing their intent to proceed with Mr. Kellner’s purported nominations, notwithstanding the Board’s rejection of the 2023 Purported Nomination Notice.
On August 31, 2023, representatives of BakerHostetler delivered a letter to the Company, stating the 2023 Purported Nomination Notice constituted the notice required from Mr. Kellner by the SEC’s universal proxy rules. That same day, representatives of K&E delivered a letter to representatives of BakerHostetler putting the firm on notice of potential claims (the “Claims Notice”) that the Company was exploring bringing against believed clients of BakerHostetler for their concerted efforts against the Company. Representatives of BakerHostetler responded to the Claims Notice on September 5, 2023.
On September 14, 2023, representatives of Potter Anderson delivered a letter (the “September 14th 2023 Letter”), on behalf of the Company to representatives of BakerHostetler announcing the Company’s intent to solicit proxies in favor of the election of the following director nominees of the Board at the 2023 Annual Meeting: Stewart L. Appelrouth, Nancy K. Bryan, Thomas K. Equels and William M. Mitchell. The September 14th 2023 Letter indicated that because the 2023 Purported Nomination Notice did not constitute valid notice of nominations pursuant to the 2023 Bylaws, as indicated in the Rejection Letter, Mr. Kellner’s nominations would be disregarded at the 2023 Annual Meeting, and the Company was therefore not required to comply with the universal proxy rules. The September 14th 2023 Letter expressly disclaimed the applicability of certain notice requirements under the SEC’s universal proxy rules with respect to Mr. Kellner’s purported nominees but indicated that it was being sent solely to reserve the Company’s right to comply with the universal proxy rules if the Company was required to comply by applicable law, including through the decision of a Delaware court.
On October 10, 2023, the Company filed its preliminary proxy statement with the SEC in connection with the 2023 Annual Meeting.
On October 13, 2023, Messrs. Kellner, Deutsch and Chioini filed their preliminary proxy statement with the SEC in connection with the 2023 Annual Meeting.
On October 24, 2023, the Company filed its revised preliminary proxy statement with the SEC in connection with the 2023 Annual Meeting.
From October 30 to November 1, 2023, the Delaware Court of Chancery conducted a trial in connection with the 2023 Delaware Litigation.
On November 1, 2023, Messrs. Kellner, Deutsch and Chioini filed their definitive proxy statement with the SEC in connection with the 2023 Annual Meeting.
On November 6, 2023, the Company filed its definitive proxy statement with the SEC in connection with the 2023 Annual Meeting.
On November 21, 2023, post-trial argument was held in connection with the 2023 Delaware Litigation.
On December 28, 2023, the Delaware Court of Chancery ruled on the 2023 Delaware Litigation that the 2023 Purported Nomination Notice was properly rejected. The Court also held that certain provisions in the 2023 Bylaws were invalid, but the Board’s decision to amend the bylaws was based on a reasonable assessment of the “manipulative, misleading, and improper conduct” of the dissidents, both in connection with the 2023 Purported Nomination Notice and their efforts concerning the 2022 Annual Meeting.
On January 3, 2024, Mr. Kellner filed for an expedited appeal of the 2023 Delaware Litigation.
Also on January 3, 2024, Messrs. Deutsch and Kellner filed Amendment No. 3 to the Initial 13D and issued a press release announcing their intent to appeal the results of the 2023 Delaware Litigation and encouraging stockholders of the Company to withhold their votes on the Board’s candidates.
On January 5, 2024, the 2023 Annual Meeting3 was held and each of the Company’s director candidates were each elected to the Board.
On January 19, 2024, the Company filed for a cross-appeal of the 2023 Delaware Litigation with respect to the invalidation of four of the amended 2023 Bylaw provisions.
3 The 2023 Annual Meeting was initially convened on December 1, 2023 and was adjourned to December 29, 2023 before being adjourned again and finally held on January 5, 2024.
On July 11, 2024, the Delaware Supreme Court upheld the Delaware Court of Chancery’s ruling that the 2023 Purported Nomination Notice was properly rejected. Though the Court held that the amended bylaws were invalid, it noted that no further action was needed given “Kellner’s and his nominees’ deceptive conduct.”
On July 26, 2024, Mr. Kellner moved for reconsideration of the Delaware Supreme Court’s decision to, among other things, affirm the rejection of the 2023 Purported Nomination Notice.
On July 29, 2024, the Supreme Court of Delaware denied Mr. Kellner’s motion for re-argument en Banc, stating that “it appears that the motion is without merit.” The case was not remanded for an award of attorneys’ fees and costs, as Mr. Kellner had requested.
The 2024 Nomination Efforts
On July 15, 2024, Messrs. Deutsch and Kellner filed Amendment No. 4 to the Initial 13D, announcing their intent to continue pursuing “significant change in the board” and that they continued to consider nominating directors for election to the Board at the 2024 Annual Meeting.
On July 30, 2024, Messrs. Deutsch and Kellner filed Amendment No. 5 to the Initial 13D, disclosing Mr. Kellner’s July 26, 2024 motion for reargument in connection with the 2023 Delaware Litigation.
On July 31, 2024, the Company adopted Restated and Amended Bylaws (the “2024 Bylaws”) to, among other things, remove or revise provisions deemed unenforceable or invalid by the Delaware Supreme Court.
On August 14, 2024, Messrs. Deutsch and Kellner filed Amendment No. 6 to the Initial 13D, announcing that Mr. Kellner intended to submit a notice of his intent to nominate himself and Messrs. Deutsch and Chioini to the Board.
On August 21, 2024, representatives of BakerHostetler delivered a letter (the “August 21st 2024 Letter”) to the Company stating that Mr. Kellner planned to submit a notice of intent to nominate directors for election to the Board at the 2024 Annual Meeting and requesting clarification with respect to certain provisions of the 2024 Bylaws.
On August 26, 2024, a representative of the Company’s outside counsel, Silverman Shin & Schneider PLLC (“Silverman”), delivered a letter to a representative of BakerHostetler, providing clarification on the 2024 Bylaws as requested in the August 21st 2024 Letter.
On August 27, 2024, a representative of Abrams delivered a letter to a representative of Potter Anderson demanding reimbursement of nearly $5 million in legal fees incurred by Mr. Kellner in connection with the 2023 Delaware Litigation.
Also on August 27, 2024, representatives of Abrams delivered their client’s demand for books and records (the “2024 220 Demand”) pursuant to Section 220 of the General Corporation Law of the State of Delaware.
On September 3, 2024, Mr. Kellner delivered a letter (the “2024 Nomination Notice”) notifying the Company of his intent to nominate himself and Messrs. Deutsch and Chioini for election to the Board at the 2024 Annual Meeting. The 2024 Nomination Notice also stated that Mr. Kellner intended to seek reimbursement from the Company of the costs incurred in connection with the 2024 nomination efforts and that Messrs. Kellner, Deutsch and Chioini intended to seek reimbursement from the Company of the $5.3 million in costs incurred in connection with the 2023 Annual Meeting. The Company believes that these 2024 nomination efforts are partially motivated by a desire to recoup the many millions in expenses incurred by the dissidents, to the detriment and expense of other stockholders.
Also on September 3, 2024, Messrs. Deutsch and Kellner filed Amendment No. 7 to the Initial 13D, disclosing the 2024 Nomination Notice and the 2024 220 Demand.
On September 4, 2024, representatives of Potter Anderson delivered a response to the 2024 220 Demand, stating, among other things, that the Company would be amenable to providing the requested stocklist materials, subject to associated payment and entry into a customary confidentiality agreement, and that while Mr. Kellner was not entitled to books and records beyond the stocklist materials, the Company would consider voluntarily producing the other books and records requested. Between September 13 and October 18, 2024 representatives of Abrams and Potter Anderson negotiated the confidentiality agreement, which was executed on October 18, 2024.
On September 11, 2024, Mr. Kellner delivered a letter to the Company (the “Supplement”), purporting to supplement the 2024 Nomination Notice. The Supplement notified the Company of Mr. Kellner’s intent to nominate Paul W. Sweeney for election to the Board at the 2024 Annual Meeting.
Also on September 11, 2024, Messrs. Deutsch, Kellner and Sweeney filed Amendment No. 8 to the Initial 13D, disclosing the Supplement.
Additionally on September 11, 2024, representatives of the Company’s outside counsel, Vinson & Elkins LLP (“V&E”), delivered a letter (the “Nomination Response Letter”) on behalf of the Board and Company to representatives of Abrams stating that the 2024 Nomination Notice was incomplete and that Mr. Kellner could cure the deficiencies in the 2024 Nomination Notice prior to the close of business on September 16, 2024.
On September 16, 2024, Mr. Kellner delivered a letter (the “First Kellner Response”) on behalf of Mr. Kellner to representatives of V&E in response to the Nomination Response Letter, providing responses to the deficiencies identified in the Nomination Response Letter.
Also on September 16, 2024, representatives of V&E delivered a letter (the “Company Supplemental Response”) to representatives of BakerHostetler and Abrams, requesting additional information by September 23, 2024 and stating that the Supplement was incomplete and that Mr. Kellner could cure the deficiencies in the Supplement by September 23, 2024.
On September 20, 2024, representatives of BakerHostetler delivered a letter (the “Second Kellner Response”) on behalf of Mr. Kellner to representatives of V&E in response to the Company Supplemental Response, providing responses to the deficiencies and request for additional information identified in the Company Supplemental Response.
On September 30, 2024, representatives of Abrams, BakerHostetler and V&E held a telephonic meeting during which representatives of V&E expressed that the Company was open to reaching a settlement framework, including by nominating a director of Mr. Kellner’s choice (the “September 30 Offer”).
On October 8, 2024, representatives of Abrams, BakerHostetler and V&E held a telephonic meeting during which representatives of Abrams and BakerHostetler rejected the September 30 Offer and presented a counter-proposal seeking to provide control of the Board to the dissident group, pursuant to which (i) the Board would consist of Messrs. Kellner, Deutsch, Chioini and Sweeney along with one incumbent director and (ii) the Company would make a payment, which totaled to several million dollars, to make all litigants whole in connection with certain litigation. Between October 8 and the date hereof, representatives of Abrams, BakerHostetler and V&E continued to engage in discussions regarding a potential settlement framework.
On October 15, 2024, the Company filed its preliminary proxy statement with the SEC in connection with the 2024 Annual Meeting.
On October 18, 2024, the dissident group filed their preliminary proxy statement with the SEC in connection with the 2024 Annual Meeting.
On October 30, 2024, the dissident group filed Amendment No. 1 to its preliminary proxy statement with the SEC in connection with the 2024 Annual Meeting
Also on October 30, 2024, the Company filed Amendment No. 1 to its preliminary proxy statement with the SEC in connection with the 2024 Annual Meeting.
On November 4, 2024, the Company filed its definitive proxy statement with the SEC in connection with the 2024 Annual Meeting.