UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.   )

Ocuphire Pharma, Inc.

(Name of Registrant as Specified In Its Charter)

 

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

	​	​	Elect the seven director nominees named in the Proxy Statement;
	​	​	Ratify the appointment of Ernst & Young, LLP as the Company’s independent public accounting firm for the fiscal year ending December 31, 2024;
	​	​	Approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the accompanying Proxy Statement;
	​	​	Approve, pursuant to the Nasdaq Listing Rules, the potential issuance of shares of common stock to Lincoln Park Capital Fund, LLC in excess of 19.99% of our outstanding common stock;
	​	​	Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for the exculpation of officers; and
	​	​	Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 75 million shares to 125 million shares.

 

Notice of 2024 Annual Meeting of Stockholders

	​	​	Elect the seven director nominees named in the Proxy Statement;
	​	​	Ratify the appointment of Ernst & Young, LLP as the Company’s independent public accounting firm for the fiscal year ending December 31, 2024;
	​	​	Approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the accompanying Proxy Statement;
	​	​	Approve, pursuant to the Nasdaq Listing Rules, the potential issuance of shares of common stock to Lincoln Park Capital Fund, LLC in excess of 19.99% of our outstanding common stock;
	​	​	Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to provide for the exculpation of officers; and
	​	​	Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 75 million shares to 125 million shares.

 

 

	​	​	Page
General Information about the Meeting	​	​	1
Proposal No. 1 Election of Directors	​	​	6
Corporate Governance	​	​	15
Certain Relationships and Related-party Transactions	​	​	21
Non-Employee Director Compensation	​	​	22
Proposal No. 2 Ratification of Independent Registered Public Accounting Firm	​	​	25
Audit Committee Report	​	​	27
Executive Officers	​	​	28
Executive Compensation	​	​	30
Proposal No. 3 Advisory Vote to Approve the Compensation of Our Named Executive Officers	​	​	43
Proposal No. 4 Approval, Pursuant to The Nasdaq Listing Rules, The Potential Issuance of Share of Common Stock to Lincoln Park Capital Fund, LLC In Excess of 19.99% of our Outstanding Common Stock	​	​	45
Proposal No. 5 Approval of an Amendment to The Certificate of Incorporation for the Exculpation of Officers	​	​	49
Proposal No. 6 Approval of an Amendment to The Certificate of Incorporation to Increase the Number of Authorized Shares of Our Common Stock from 75 Million Shares to 125 Million Shares.	​	​	51
Security Ownership of Certain Beneficial Owners and Management	​	​	53
Additional Information	​	​	56
Other Matters	​	​	58

General Information About the Meeting

The Board of Directors (the “Board”) of Ocuphire Pharma, Inc. (the “Company”, “we”, “our” or “us”) solicits your proxy on our behalf for the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) and at any postponement or adjournment of the Annual Meeting for the purposes set forth in this Proxy Statement and the accompanying Notice of 2024 Annual Meeting of Stockholders (the “Notice”). The Annual Meeting will be held virtually via live audio webcast. You may attend the Annual Meeting via the internet, vote your shares and submit a question by first registering at https://viewproxy.com/ocuphire/2024/htype.asp using your Virtual Control Number that is on your proxy card. Your registration must be received by 11:59 p.m. Eastern Time on June 9, 2024. This Proxy Statement is first being sent to stockholders on or about April 29, 2024.

The Annual Meeting will be completely virtual and conducted via live audio webcast. You will be able to attend the Annual Meeting by first registering at https://viewproxy.com/ocuphire/2024/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote and submit questions during the virtual meeting.

We have created and implemented the virtual format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost (with the exception of any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies). A virtual Annual Meeting makes it possible for our stockholders (regardless of resources or physical location) to have direct access to information more quickly, while saving the company and our stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will enhance stockholder communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting, so as to more efficiently facilitate questions of the Board or management. During the live Q&A session of the Annual Meeting, we intend to answer appropriate questions as they are received and address those asked in advance, as time permits.

If you are a registered holder, your virtual control number will be on your proxy card.

If you hold your shares beneficially through a brokerage firm, bank or other nominee (a “broker”), you must provide a legal proxy from your broker during registration and you will be assigned a virtual control number in order to vote your shares during the Annual Meeting. You may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.com in advance of the meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the 2024 Annual Meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at https://viewproxy.com/ocuphire/2024/htype.asp.

Technical Difficulties

There will be technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting live audio webcast. Please be sure to check in by 3:45 p.m. Eastern Time on June 11, 2024, the day of the meeting, so that any technical difficulties may be addressed before the Annual Meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 866-612-8937.

Record Date; Quorum

Only holders of record of the Company’s common stock, par value of $0.0001 per share (the “Common Stock”), at the close of business on April 15, 2024, the record date, will be entitled to vote at the Annual Meeting. At the close of business on April 15, 2024, 25,608,506 shares of Common Stock were outstanding and entitled to vote.

The holders of a majority of the voting power of the outstanding shares of stock entitled to vote must be present in person or by proxy in order to hold the meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the meeting if you are virtually present and vote during the meeting or if you have properly submitted a proxy.

Purpose of the Annual Meeting

At the Annual Meeting, stockholders will act upon the proposals described in this Proxy Statement, set forth below:

In addition, we will consider any other matters that are properly presented for a vote at the meeting. We are not aware of any other matters to be submitted for consideration at the meeting. If any other matters are properly presented for a vote at the Annual Meeting, the persons named in the proxy, who are officers of the Company, have the authority in their discretion to vote the shares represented by the proxy.

Voting Rights

Stockholders are entitled to one vote for each share of Common Stock held by them as of the close of business on April 15, 2024, the record date. You may vote all shares of Common Stock owned by you at such date, including (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner in street name through a broker (provided that you follow the applicable procedures necessary to enable you to vote such shares).

Stockholder of Record: Shares Registered in Your Name. If, on April 15, 2024, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the meeting, or vote in advance through the Internet, by telephone or by mail.

Beneficial Owner: Shares Registered in the Name of a Broker. If, on April 15, 2024, your shares were held in an account with a broker, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the right to direct your broker on how to vote the shares held in your account, and your broker has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. Because the brokerage firm, bank or other nominee that holds your shares is the stockholder of record, if you wish to attend the meeting and vote your shares you must obtain a valid proxy from the firm that holds your shares giving you the right to vote the shares at the meeting.

Votes Required to Approve Proposals

Board Recommendations

The Board recommends a vote “FOR” the election each of the director nominees and “FOR” each of Proposals 2-6

Voting Instructions; Voting of Proxies

If you are a stockholder of record, you may:

Votes submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on June 10, 2024. Votes submitted through the mail must be received by the close of business on June 10, 2024 in order to be counted. Submitting your proxy, whether through the Internet, by telephone or by mail will not prevent a stockholder from attending the Annual Meeting, revoking their earlier-submitted proxy and voting in person. If you are not the stockholder of record, please refer to the voting instructions provided by your broker to direct it on how to vote your shares. You may either vote “FOR” each nominee to the Board, or you may withhold your vote from such nominee. For Proposals 2-6, you may vote “FOR” or “AGAINST” such proposal or “ABSTAIN” from voting on such proposal. Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote by proxy as soon as possible to ensure that your vote is counted.

All proxies will be voted in accordance with the instructions specified on the proxy card. A properly executed proxy returned without instructions as to how your shares on a particular proposal will be voted in accordance with the recommendations of our Board stated above.

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please complete, sign and return each proxy card to ensure that all of your shares are voted.

Broker Non-Votes

Brokers generally have authority to vote on “routine” proposals, such as the ratification of auditors, when they have not received instructions from beneficial owners. However, they are precluded from exercising their voting discretion with respect to the election of directors or other non-routine matters. At the Annual Meeting, we expect that brokers will have discretionary authority to vote shares on the ratification of the appointment of Ernst & Young, LLP as our independent public accounting firm for the fiscal year ending December 31, 2024 (Proposal 2) and on the amendment to our Charter to increase the number of authorized shares of the Company’s Common Stock (Proposal 6). We do not expect that brokers will have discretionary authority on the remainder of the proposals, and therefore broker non-votes may occur as to these other proposals if voting instructions are not provided by beneficial owners.

Expenses of Soliciting Proxies

We will pay the expenses associated with soliciting proxies. Following the original distribution and mailing of the solicitation materials, we or our agents may solicit proxies by mail, electronic mail, telephone, facsimile, by other similar means or in person. Our directors, officers and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone,

Revocability of Proxies

A stockholder of record who has given a proxy may revoke it at any time before the closing of the polls by the inspector of elections at the meeting by timely:

Please note, however, that if your shares are held of record by a broker and you wish to revoke a proxy, you must contact that firm to revoke or change any prior voting instructions. A revocation of a proxy submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on June 10, 2024. A revocation submitted through the mail must be received by the close of business on June 10, 2024 in order to be counted.

Voting Results

Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and filed with the Securities and Exchange Commission (the “SEC”) in a current report on Form 8-K within four business days of the Annual Meeting.

Proposal No. 1

Election of Directors

 

General

Skills Matrix

The following skills matrix illustrates the skills and experiences that the Board believes are important for the Company’s current and future business needs and how such skills are represented by each director nominee.

Director Nominees

Detailed information about the experience and qualifications of each of our directors can be found in the biographies spanning the following pages.

VOTE

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR’’ THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.

Corporate Governance

Board Leadership Structure

Mr. Gallagher serves as the independent Chair of the Board. The Board believes that separation of the positions of Chair and Chief Executive Officer reinforces the independence of the Board from management, creates an environment that encourages objective oversight of management’s performance, and enhances the effectiveness of the Board as a whole, and has concluded that our current board leadership structure is appropriate at this time. However, our Board has the flexibility to combine or separate the positions of Chair and Chief Executive Officer and to appoint a lead director in accordance with its determination that utilizing one or the other structure would be in the best interests of the Company. The Board will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.

Director Independence

The Board has determined that each director currently qualifies as an “independent director” as defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq, except Dr. Magrath, the Company’s Chief Executive Officer, and Dr. Pepose, a director on the Board and consultant of the Company. In making such independence determinations, the Board considers the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances that the Board deems relevant in determining each non-employee director’s independence, including the participation by the Company’s non-employee directors, or their affiliates, in certain financing transactions and the beneficial ownership of the Company’s Common Stock by each non-employee director.

Size of the Board

The Board currently consists of seven directors. If a vacancy on the Board occurs or the Board increases in size, the Board and its nominating and corporate governance committee will actively seek individuals that satisfy its criteria for membership on the Board, and may rely on multiple sources for identifying and evaluating potential nominees, including referrals from our current directors and management and independent search firms.

Board Diversity

The table below provides information regarding certain diversity attributes of our Board members and nominees as of April 29, 2024, with categories as set forth by Nasdaq Listing Rule 5605(f):

The nominating and corporate governance committee does not have a formal policy regarding gender and racial/ethnic diversity, although this diversity is taken into account when evaluating director candidates. The nominating and corporate governance committee intends to seek opportunities to increase the Board’s diversity in particular with any new appointments made in connection with regular director turnover.

Board Structure and Committees

The Board has established an audit committee, a compensation committee and a nominating and corporate governance committee. Each of these committees operates under a written charter approved by the Board that satisfies applicable SEC and Nasdaq standards. From time to time, the Board may establish other committees to facilitate the management of our business. Each committee’s charter is available under the “Investors — Corporate Governance” section of our website at www.ocuphire.com. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website.

The Board meets regularly throughout the year. During fiscal year 2023, the Board held ten meetings. Each director attended at least 75% of the aggregate number of meetings of the Board and the committees on which each served during the period of his or her service in 2023. The independent members of the Board also meet separately in executive sessions to discuss such matters as the independent directors consider appropriate. We encourage our directors to attend the Company’s annual meetings of stockholders.

The following table details certain basic information of our directors and the composition of our standing Board committees, including the number of meetings held by the full Board and each of its committees during the year ended December 31, 2023:

Directors and Board Committee Memberships

Audit Committee Matters

The audit committee reviews with management and the Company’s independent public accountants the Company’s financial statements, the accounting principles applied in their preparation, the scope of the audit, any comments made by the independent accountants upon the financial condition of the Company and its accounting controls and procedures and such other matters as the audit committee deems appropriate. More specifically, the responsibilities of the audit committee include the following:

The audit committee currently consists of three directors: Mr. Rodgers (as Chair), Mr. Ainsworth and Mr. Manuso. The Board has determined that each of Mr. Rodgers, Mr. Ainsworth and Mr. Manuso is “independent” under Nasdaq independence standards. Additionally, the Board has determined that each of Mr. Rodgers, Mr. Ainsworth and Mr. Manuso qualifies as an “audit committee financial expert” as that term is defined in rules promulgated by the SEC. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those generally imposed on each of them as a member of the audit committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the audit committee or the Board.

Compensation Committee

The compensation committee oversees policies relating to compensation and benefits of our officers and employees. More specifically, the responsibilities of the compensation committee include the following:

The compensation committee currently consists of four directors: Mr. Gallagher (as Chair), Mr. Ainsworth, Ms. Benton and Mr. Rodgers. To qualify as independent to serve on the Company’s compensation committee, the listing standards of Nasdaq require a director not to accept any consulting, advisory, or other compensatory fee from the Company, other than for service on the Board,

Nominating and Corporate Governance Committee

The nominating and corporate governance committee reviews, evaluates and seeks out candidates qualified to become Board members. More specifically, the responsibilities of the nominating and corporate governance committee include the following:

When evaluating potential nominees to serve on the Board, the nominating and corporate governance committee seeks individuals with a diversity of experience, including scientific, business, financial and academic backgrounds, and examines a candidate’s skills, expertise, diversity attributes, age, personal and professional integrity, character, business judgment, time availability, dedication, independence, potential conflicts of interest and such other relevant factors that the committee considers appropriate in the context of the needs of the Board. Director candidates may be submitted by directors, officers, employees, stockholders and others for recommendation to the Board. In fulfilling this responsibility, the Company’s nominating and corporate governance committee also consults with the Board and the Chief Executive Officer concerning director candidates. Candidates recommended by stockholders will be considered using the same criteria as it does in evaluating candidates submitted by other sources. Any such suggestions should be submitted to the Secretary, 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335. If the Company receives such a suggestion, the Company may request additional information from the candidate to assist in its evaluation.

The nominating and corporate governance committee currently consists of three directors: Mr. Manuso (as Chair), Ms. Benton and Mr. Gallagher, each of whom qualifies as “independent” under applicable rules and regulations of Nasdaq and the SEC.

Role of the Board in Risk Oversight

The Board administers its role in the oversight of risk directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas. Risk assessment and oversight are an integral part of our governance and management processes. Throughout the year, senior management reviews significant risks with the Board at regular board meetings as part of management presentations and presents the steps taken by management to mitigate or eliminate such risks.

As part of the Board’s risk oversight function, the Board:

The audit committee oversees our major financial risk exposures and the steps our management team has taken to monitor and control these exposures. Our audit committee also monitors compliance with legal and regulatory requirements, oversees risk management associated with the Company’s information technology and data security and considers and approves or disapproves any related person transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance practices and of the Board. Our compensation committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk-taking.

For more information on our management of cybersecurity risks, please refer to Item 1C, “Cybersecurity,” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Code of Business Conduct and Ethics

Our Board has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer and other executive officers. The code of business conduct and ethics is available on our website, www.ocuphire.com, under “Investors - Corporate Governance.” We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of these provisions in public filings.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines to assist the Board in carrying out its oversight responsibilities and to serve the best interests of the Company and our stockholders. Our Corporate Governance Guidelines are intended to serve as a flexible framework for the conduct of the Board’s operations and are available on our website, www.ocuphire.com, under “Investors - Corporate Governance.”

Prohibition of Hedging

The Company’s Insider Trading and Compliance Policy prohibits all directors, officers, employees, and certain contractors from engaging in hedging transactions including short sales; transactions in put or call options, hedging or monetization transactions; or other inherently speculative transactions with respect to the securities of the Company at any time.

Communications with Directors

Stockholders and interested parties who wish to communicate with our Board, non-management members of our Board as a group, or a specific member of our Board (including our Chair) may do so by letter addressed to the attention of our Secretary, Ocuphire Pharma, Inc., 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335.

All communications by letter addressed to the attention of our Secretary will be reviewed by the Secretary and provided to the members of the Board unless such communications are unsolicited items, sales materials and other routine items and items unrelated to the duties and responsibilities of the Board or are otherwise determined to be frivolous, irrelevant, threatening, illegal or similarly unsuitable.

Certain Relationships and

Related-Party Transactions

There have been no transactions since January 1, 2022 to which the Company has been a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or holders of more than five percent of our capital stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described elsewhere in this proxy statement.

Policies and Procedures for Transactions with Related Parties

To assist the Company in complying with its disclosure obligations and to enhance the Company’s disclosure controls, the Board has a formal written policy regarding related person transactions. A “related person” is a director, officer, nominee for director or a more than 5% stockholder (of any class of the Company’s voting stock) since the beginning of the Company’s last completed fiscal year, and their immediate family members. A related person transaction is any transaction or any series of transactions in which the Company was or is to be a participant, the amount involved exceeds the lesser of $120,000 or 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. The audit committee or the independent directors of the Board review such proposed business transactions to ensure that the Company’s involvement in such transactions is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and is in the best interests of the Company and its stockholders.

Non-Employee Director Compensation

Our Board has adopted a non-employee director cash and equity compensation plan. Under the policy for 2023, the Company pays each of its non-employee directors a cash stipend for service on the Board and, if applicable, on the audit committee, compensation committee and nominating and corporate governance committee.

Each of the Company’s non-employee directors receives an additional stipend for service as the chair of the audit committee, compensation committee or nominating and corporate governance committee or service as the non-executive chair. Directors may elect to receive stock in lieu of their cash fees. In 2023, the Company amended and restated its director compensation program to (i) increase the annual stipends for service as a member of the Board, as a member or chair of a Board committee, or as the non-executive chair, and (ii) provide for the initial and annual equity awards to be granted 40% in the form of stock options and 60% in the form of restricted stock units, and for the size of such grants to be expressed in dollar amounts rather than shares. The stipends payable to each non-employee director for service in 2023 on the Company’s Board are as follows:

Additionally, in October 2023, the Board approved the creation of a transition committee consisting of Richard Rodgers and Dr. Jay Pepose. Each member received a grant of 35,000 restricted stock units, which vest on the first anniversary of the grant date, and a monthly cash retainer of $25,000.

Upon the election or appointment of any new non-employee director, such new director will be entitled to receive equity awards with a grant date fair value of $180,000 on the date of his or her initial election or appointment, and each non-employee director is automatically granted equity awards with target value of $90,000 at the close of business on the date of each annual meeting, with the number of shares subject to such awards determined based on the average stock price over the 30 days preceding the grant date. Such equity awards will consist of 40% stock options, and 60% restricted stock units. In addition, pursuant to a consulting arrangement with the Company, Dr. Pepose serves as the Company’s Chief Medical Advisor and was paid a monthly consulting fee of $25,000 for his services in such role. Dr. Pepose was also granted stock options with respect to 33,291 shares in January 2023, which vested with respect to 8,322 shares on January 10, 2024 and is scheduled to vest in twelve equal quarterly installments thereafter with respect to the remaining shares subject to the award.

2023 Director Compensation

Consulting Agreement with Dr. Jay Pepose

On April 8, 2022, the Company entered into a consulting agreement with Dr. Jay Pepose, a director of the Company, which was subsequently amended on September 19, 2022, December 1, 2022, and January 1, 2024 (as amended, the “Original Consulting Arrangement”). The Original Consulting Arrangement provided for a monthly retainer of $25,000 paid in cash by the Company to Dr. Pepose, with the exception of the final month of its term, for which Dr. Pepose received a retainer of $49,000. Additionally, on April 8, 2022, in connection with the Original Consulting Arrangement, Dr. Pepose received a stock option grant for 50,000 options, 25% of which vested on March 31, 2023 and the remainder vesting in equal monthly installments over 36 months, with acceleration of such options upon certain termination events three months prior or 12 months following a change in control. The Original Consulting Arrangement expired on March 31, 2024.

Proposal No. 2

Ratification of Independent

Registered Public

Accounting Firm

 

Service Fees Paid to the Independent Registered Public Accounting Firm

The following table shows the fees for professional services rendered to us by EY for services in respect of the fiscal years ended December 31, 2023 and 2022, which were approved by the audit committee in accordance with its established policies and procedures.

Our audit committee is responsible for pre-approving all audit and permitted non-audit and tax services provided by the independent registered public accounting firm.

Audit Committee Report

The information contained in the following report is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by us under the Securities Exchange Act of 1934 or the Securities Act of 1933 unless and only to the extent that we specifically incorporate it by reference.

The audit committee has reviewed and discussed with our management and EY our audited consolidated financial statements as of and for the fiscal year ended December 31, 2023. The audit committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.

The audit committee has received and reviewed the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with EY its independence.

Based on the review and discussions referred to above, the audit committee recommended to the Board that the audited financial statements be included in our company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for filing with the SEC.

Audit Committee:

Richard Rodgers

James S. Manuso

Sean Ainsworth

Executive Officers

The following table provides the name, age and position(s) of each of our executive officers:

Dr. George Magrath

For Dr. Magrath’s biographical information, see “Proposal No. 1 - Election of Directors.”

Joseph Schachle

Mr. Schachle was appointed to Chief Operating Officer in November 2023. Prior to joining the Company, Mr. Schachle was Chief Operating Officer of Opus Genetics, Inc., a position he served in from October 2021 through March 2023 (where, following his service as Chief Operating Officer, he served as a consultant to Opus Genetics, Inc. from April 2023 through December 2023). Prior to serving in these roles, he served with Grifols, S.A., a global healthcare company and leading manufacturer of plasma-derived medicines, as its Vice President of Global Commercial Services & Controlling from August 2017 to February 2020 and its Vice President of Customer Experience Enablement from March 2020 to September 2021. Mr. Schachle earned his Master of Business Administration from Old Dominion University and his Bachelor of Business Administration in Marketing from James Madison University.

Nirav Jhaveri

Mr. Jhaveri was appointed to Chief Financial Officer in February 2024. Prior to joining the Company, Mr. Jhaveri served as the Chief Financial Officer of Insilico Medicine, a position he held from September 2021 through February 2024. Prior to that, Mr. Jhaveri had served in various financial management positions in the life sciences industry, and held roles in equity research at Citigroup and investment banking at Bank of America. He earned his B.A. in Chemistry and Economics and the University of Pennsylvania and his M.B.A from New York University’s Stern School of Business. Mr. Jhaveri is a CFA charterholder.

Ash Jayagopal

Dr. Jayagopal has served as Chief Scientific and Development Officer since his appointment on February 14, 2024. Prior to joining the Company, he served as the Chief Scientific Officer of Opus Genetics, Inc. (Opus) beginning in 2021. In this role he had scientific and clinical leadership responsibility for Opus’ retinal gene therapy portfolio, including management of discovery, manufacturing, nonclinical development, and clinical development functions. Prior to Opus, he was Executive Director of Discovery Medicine at

Executive Compensation

Overview

The following is a discussion and analysis of compensation arrangements of our named executive officers. Because we qualify as a “smaller reporting company” under the SEC rules, we have elected to prepare this Proxy Statement and other annual and periodic reports as a “smaller reporting company” consistent with rules of the SEC. Under the scaled disclosure obligations applicable to smaller reporting companies, we are not required to provide, among other things, a Compensation Discussion and Analysis and certain other tabular and narrative disclosures relating to executive compensation.

The following individuals were our named executive officers for 2023:

2023 Summary Compensation Table

The following table shows the compensation earned or received during the fiscal year ended December 31, 2023 and, to the extent required by SEC disclosure rules, the fiscal year ended December 31, 2022, by each of our named executive officers.

Narrative to Summary Compensation Table

The compensation program for Ocuphire’s named executive officers have three components: base salary, annual cash bonus and stock option grants, as further described below.

Base Salary

We entered into employment agreements or offer letters with each of our named executive officers (other than Mr. Rodgers) that establish annual base salaries, which are reviewed periodically by our compensation committee in order to compensate our named executive officers for the satisfactory performance of duties to the Company. Annual base salaries are intended to provide a fixed component of compensation to our named executive officers, reflecting their skill sets, experience, roles and responsibilities. Base salaries for our named executive officers have generally been set at levels deemed necessary to attract and retain individuals with superior talent.

Ms. Sooch’s, Ms. Rabourn’s, Mr. Hoffmann’s and Mr. Patel’s base salaries were adjusted to $583,000, $305,000, $305,000 and $265,200, respectively, effective January 1, 2023. Ms. Sooch’s employment was terminated on April 19, 2023, as discussed below under “—Sooch Separation Agreement”. Mr. Patel’s base salary was increased to $300,000 effective April 24, 2024 in connection with his promotion to Senior Vice President, Operations and Chief Business Development Officer and was further increased to $350,000 effective as of December 1, 2023 in connection with his promotion to Chief Business Officer. Pursuant to his amended and restated employment agreement, Mr. Patel’s base salary will be increased to $400,000 upon the earlier of (i) the achievement of certain operational goals and (ii) the achievement of a financial goal. Dr. Magrath’s base salary was established at $575,000 at the time he joined the Company in November 2023.

We entered into a letter agreement with Mr. Rodgers which provided that he would receive a $40,000 monthly salary during the term of his employment as Interim Chief Executive Officer.

Non-Equity Incentive Plan

Pursuant to their employment agreements, each of our executive officers are entitled to certain bonuses as set forth in their employment agreements. In 2023, target bonuses for Mr. Hoffmann and Ms. Rabourn were each 40% of their base salary, and the target bonus for Ms. Sooch was 55% of her base salary. Mr. Patel’s target bonus for 2023 was equal to 40% of base salary for the portion of the year prior to his promotion to Chief Business Officer and 45% of base salary for the portion of the year following such promotion. Dr. Magrath’s target bonus was established at the time he joined the Company at 55% of his base salary, prorated for 2023 based on his start date.

In January 2023, the Board approved performance targets for fiscal 2023 that it would consider in approving bonus payments for 2023. These targets included various corporate objectives related to company financing goals, regulatory submissions, clinical, manufacturing and other corporate goals.

In January 2024, the compensation committee determined that each of Dr. Magrath, Ms. Rabourn, Mr. Hoffmann and Mr. Patel had achieved 95% of their target bonuses, respectively, resulting in bonus payments of $50,073, $115,900, $115,900 and $108,864 to Dr. Magrath, Ms. Rabourn, Mr. Hoffmann and Mr. Patel, respectively. As described below, in connection with her separation, Ms. Sooch received a pro-rated target bonus for the year.

Pursuant to the terms of his letter agreement, Mr. Rodgers was eligible for a prorated bonus at the discretion of the Board following the end of his service as Interim Chief Executive Officer. In March 2024, Mr. Rodgers was paid a bonus of $100,000 in recognition of his performance as Interim Chief Executive Officer in 2023.

Equity Grants

Our equity-based incentive awards, which are mainly comprised of stock options and restricted stock units, are designed to align our interests with those of our employees and consultants, including our named executive officers. Our compensation committee has responsibility for granting equity-based incentive awards to our named executive officers. Vesting of equity awards is generally tied to continuous service with us and serves as an additional retention measure.

In January 2023, the Board granted Ms. Sooch, Ms. Rabourn, Mr. Hoffmann, and Mr. Patel stock options to purchase 201,683, 69,912, 69,912 and 25,956 shares, respectively, and restricted stock units with respect to 134,456, 46,608, 46,608 and 17,304 shares, respectively. For the stock options, twenty-five percent of the shares vest on the first anniversary of the grant date, with the remaining shares vesting quarterly in 12 equal installments thereafter. For the restricted stock units, twenty-five percent of the shares vest on each of the first, second, third and fourth anniversaries of the grant date.

In April 2023, in connection with his appointment as Interim Chief Executive Officer, Mr. Rodgers received restricted stock units with respect to 50,000 shares, which vest 12 months following the grant date. In connection with his promotion to Senior Vice President, Operations and Chief Business Development Officer, on April 24, 2023, the Company granted to Mr. Patel stock options to purchase 30,000 shares and restricted stock units with respect to 20,000 shares. The stock options vest twenty-five percent on the first anniversary of the grant date, with the remaining shares vesting quarterly in 12 equal installments thereafter. The restricted stock units vest twenty-five percent on each of the first, second, third and fourth anniversaries of the grant date.

In November 2023, in connection with his appointment as Chief Executive Officer, Dr. Magrath received inducement equity awards in the form of stock options to purchase 600,000 shares and restricted stock units with respect to 400,000 shares. For the stock options, twenty-five percent of the shares vest on the first anniversary of the grant date, with the remaining shares vesting monthly in 36 equal installments thereafter. For the restricted stock units, twenty-five percent of the shares vest on each of the first, second, third and fourth anniversaries of the grant date.

In December 2023, in connection with his promotion to Chief Business Officer and pursuant to the terms of his amended and restated employment agreement, Mr. Patel was granted stock options to purchase 74,538 shares and restricted stock units with respect to 49,692 shares. Each award vests twenty-five percent on the six-month anniversary of the effective date of his promotion and the remainder of the shares vest in equal installments every six months thereafter over the two years following the promotion date, subject to Mr. Patel’s continuous service with the Company or an affiliate through such vesting dates.

401(k) Plan

We maintain a tax-qualified 401(k) retirement plan, pursuant to which employees may elect to defer up to 90% of their eligible compensation, subject to applicable annual Internal Revenue Code limits. We match 100% of participant contributions up to 3% of eligible compensation and 50% on the next 2% of eligible compensation. Participants are immediately 100% vested in such matching contributions. We may also make discretionary nonelective contributions on behalf of participants in our 401(k) retirement plan, which vest 25% per year over four years. We did not make any such nonelective contributions in 2023.

Employment Agreements

Ocuphire has entered into written agreements with each of its named executive officers other than Mr. Rodgers, as described below. For a discussion of the severance pay and other benefits to be provided in connection with a termination of employment and/or a change in control under the arrangements with our named executive officers, please see “- Potential Payments Upon Termination or Change in Control” below. Each of our named executive officers other than Mr. Rodgers has also executed Ocuphire’s standard form of confidential information and invention assignment agreement.

Dr. George Magrath

On October 31, 2023, the Company entered into an employment agreement with Dr. Magrath. His employment agreement has an initial term of two years beginning on November 1, 2023 and automatically renews for an additional one-year period at the end of the initial term and each anniversary thereafter, provided that the Board does not provide written notice to Dr. Magrath at least 60 days prior to the expiration of the initial term or any renewal term of its intention not to renew. Dr. Magrath’s employment agreement entitles him to, among other benefits, the following compensation: (i) an annual base salary of $575,000, reviewed annually; (ii) an annual cash bonus in an amount of up to fifty-five percent (55%) of his annual base salary, prorated with respect to 2023; (iii) participation in equity-based long-term incentive compensation plans generally available to senior executive officers of the Company; and (iv) participation in welfare benefit plans, practices, policies and programs made available to other senior executive officers of the Company. Additionally, pursuant to his employment agreement, Dr. Magrath was granted certain stock option and restricted stock unit awards in November 2023 as an inducement to join the Company, as described above.

Bernhard Hoffmann

On November 5, 2020, Ocuphire entered into an employment agreement with Mr. Hoffmann. His employment agreement has an initial term of three years beginning on November 5, 2020 and automatically renews for an additional one-year period at the end of the initial term and each anniversary thereafter, provided that the Board does not provide written notice to Mr. Hoffmann at least 90 days prior to the expiration of the initial term or any renewal term of its intention not to renew.

Amy Rabourn

On November 11, 2020, the Company entered into an employment agreement with Ms. Rabourn. Her employment agreement has an initial term of three years beginning on November 11, 2020 and automatically renews for an additional one-year period at the end of the initial term and each anniversary thereafter, provided that the Board does not provide written notice to Ms. Rabourn at least 90 days prior to the expiration of the initial term or any renewal term of its intention not to renew.

Ronil Patel

On April 24, 2023, the Company entered into an amended and restated employment agreement with Mr. Patel in connection with his promotion to Senior Vice President, Operations and Chief Business Development Officer. The amended and restated agreement has an initial term of three years beginning on April 24, 2023 and automatically renews for an additional one-year period at the end of the initial term and each anniversary thereafter, provided that the Board does not provide written notice to Mr. Patel at least 90 days prior to the expiration of the initial term or any renewal term of its intention not to renew. Mr. Patel’s amended and restated employment agreement was further amended on December 1, 2023 in connection with his promotion to Chief Business Officer, as described further below.

Mina Sooch

Ms. Sooch served as our Chief Executive Officer until April 19, 2023. She previously served under the terms of an amended and restated employment agreement dated November 5, 2020, which set forth the initial terms of her employment. Ms. Sooch was terminated from the Company without cause, effective April 19, 2023 and, on June 8, 2023, she entered into a separation and release agreement, pursuant to which the Company agreed: (i) to pay Ms. Sooch an initial lump sum equal to $678,756, which includes Ms. Sooch’s $583,000 annual base salary plus a $95,756 pro rata bonus for 2023, (ii) to pay Ms. Sooch a second lump sum of $500,000 six months after the release becomes effective and irrevocable, (iii) that Ms. Sooch’s outstanding stock options will (a) vest as if Ms. Sooch was employed by the Company through April 19, 2024 and (b) remain exercisable until the expiration date of such stock options as set forth in the applicable award agreements or through April 19, 2026, whichever is later, (iv) that Ms. Sooch’s restricted stock units will vest as if Ms. Sooch was employed by the Company

Potential Payments Upon Termination or Change in Control

Dr. George Magrath

Employment Agreement. Dr. Magrath’s employment agreement, dated November 1, 2023, provides that either party may terminate the agreement at-will, and regardless of the manner in which Dr. Magrath’s service terminates, he is entitled to receive amounts earned during his term of service, including salary and other benefits. In addition, the agreement provides that in the event of Dr. Magrath’s termination for good reason or if Ocuphire exercises its right to terminate Dr. Magrath other than for cause or to not renew the term of the employment agreement, Dr. Magrath will be eligible to receive the following severance benefits: (i) an amount equal to his annual base salary, to be paid in six equal monthly installments; and (ii) up to 12 months of continued health coverage. However, if such termination or resignation occurs within three months prior to or 12 months following a change in control (the “Change in Control Period”), Dr. Magrath will be eligible to receive the following severance benefits: (i) an amount equal to the product of 1.0 times the sum of his annual base salary and the full amount of his target bonus for the then-current fiscal year, reduced by any amounts paid to Dr. Magrath by the Company in exchange for his covenant not to compete against the Company, directly or indirectly, for a one-year period following termination; (ii) the vesting in full of all of his stock options or other equity awards then outstanding and subject to time-based vesting; and (iii) up to 12 months of continued health coverage. Dr. Magrath’s employment agreement also provides that, in the event of a change in control in which his inducement equity awards are not assumed or substituted by the surviving or acquiring corporation, such awards will fully vest and become exercisable immediately prior to such change in control, subject to Dr. Magrath’s continued employment through such date.

All severance benefits payable to Dr. Magrath under his employment agreement are subject to him signing, not revoking and complying with a release of claims in favor of Ocuphire.

Bernhard Hoffmann, Amy Rabourn and Ronil Patel

Employment Agreements. Each of Mr. Hoffmann’s, Ms. Rabourn’s and Mr. Patel’s employment agreement provides that either party may terminate the agreement at-will, and regardless of the manner in which such executive’s service terminates, he or she is entitled to receive amounts earned during his or her term of service, including salary and other benefits. In addition, each agreement provides that in the event of the executive’s termination for good reason or if Ocuphire exercises its right to terminate the executive other than for cause or to not renew the term of the employment agreement, the executive will be eligible to receive the following severance benefits: (i) an amount equal to 0.5 (increased to 0.75 with respect to Mr. Patel in connection with his promotion to Chief Business Officer) multiplied by the sum of (x) his or her annual base salary and (y) an amount equal to a prorated portion of his or her cash bonus for the year in which the termination occurs (or, if greater, his or her average annual bonus for the prior two years); (ii) six months of continued health coverage. Although, if such termination or resignation occurs within the Change in Control Period, the applicable executive will be eligible to receive the following severance benefits: (i) an amount equal to the product of 1.0 times the sum of his or her annual base salary and the full amount of his or her target bonus for the then-current fiscal year; (ii) the vesting in full of all of his or her stock options or other equity awards then outstanding and subject to time-based vesting; and (iii) nine months of continued health coverage (increased in 2023 from six month of continued coverage).

Change in Control Policy

The Board has adopted a policy that provides if within 12 months following or three months prior to the effective date of a change in control (as defined in the Ocuphire Pharma, Inc. 2020 Equity Incentive Plan (the “2020 Plan”)), a vice president or executive officer effects a termination for good reason, or is terminated other than due to death, disability, for cause, all outstanding options and restricted stock units granted to such vice president or executive officer will become fully vested and exercisable on the date of termination.

Outstanding Equity Awards at Fiscal Year-End 2023

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023:

Pay Versus Performance

We are providing the following information about the relationship between executive compensation actually paid (“CAP") and certain financial performance of the Company as required by SEC rules.

Pay Versus Performance Table

The amounts deducted or added in calculating the equity award adjustments for Mr. Rodgers are as follows:

The amounts deducted or added in calculating the equity award adjustments for Dr. Magrath are as follows:

Analysis of Information Presented in the Pay Versus Performance Table

The Company is providing the following descriptions of the relationships between information presented in the Pay Versus Performance table, including CAP, as required by Item 402(v) of Regulation S-K. The compensation committee does not use CAP, as computed in accordance with Item 402(v) of Regulation S-K, to set target compensation amounts or align our named executive officers compensation to Company performance.

 

 

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information as of December 31, 2023 concerning our equity compensation plans:

Proposal No. 3

Advisory Vote to Approve the

Compensation of

Our Named Executive Officers

 

The say-on-pay vote is advisory, and therefore not binding on the Company or our Board. We value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ feedback and the Board will evaluate whether any actions are necessary to address that feedback.

Proposal No. 4

Approval, Pursuant to the Nasdaq Listing Rules, the Potential Issuance of Shares of Common Stock to Lincoln Park Capital Fund, LLC in Excess of 19.99% of Our Outstanding Common Stock

 

Background and Overview

Equity Line of Credit Common Stock Purchase Agreement

Pursuant to the Purchase Agreement, we have the right, but not the obligation, to sell to Lincoln Park up to $50.0 million worth of our Common Stock (the “Purchase Shares”) from time to time over the 30-month term of the Purchase Agreement (the “Committed Equity Facility”), beginning only after certain conditions set forth in the Purchase Agreement have been satisfied, which we refer to as the “Commencement Date.” After the Commencement Date, on any business day selected by the Company, the Company may direct Lincoln Park to purchase up to 50,000 shares of its Common Stock on such business day (a “Regular Purchase”), provided that the closing sale price of the Company’s Common Stock on Nasdaq on the applicable purchase date is not below $0.25 and subject to other adjustments. A Regular Purchase may be increased to up to (i) 60,000 shares if the closing sale price of the Company’s Common Stock on Nasdaq is not below $5.00 on the applicable purchase date and (ii) 70,000 shares if the closing sale price of the Company’s Common Stock on Nasdaq is not below $7.50 on the applicable purchase date. The Company may direct Lincoln Park to purchase shares in Regular Purchases as often as every business day.

In accordance with the Purchase Agreement, we issued 246,792 shares of our Common Stock (the “Commitment Shares”) to Lincoln Park as consideration for its commitment to purchase the Purchase Shares under the Purchase Agreement.

Under the Committed Equity Facility, the purchase price per share for each such Regular Purchase will be equal to the lesser of:

In addition, the Company may also direct Lincoln Park, on any business day on which the Company has submitted a Regular Purchase notice for the maximum amount allowed for such Regular Purchase, to purchase an additional amount of the Company’s Common Stock (an “Accelerated Purchase”) of up to the lesser of:

The purchase price per share for each such Accelerated Purchase will be equal to 96.5% of the lower of:

The Purchase Agreement also prohibits us from directing Lincoln Park to purchase any shares of our Common Stock if those shares, when aggregated with all other shares of our Common Stock then beneficially owned by Lincoln Park (as calculated pursuant to Section 13(d) of the Exchange Act, and Rule 13d-3 thereunder), would result in Lincoln Park and its affiliates beneficially owning more than 4.99% of the then total outstanding shares of Common Stock.

Why We are Seeking Stockholder Approval of the Full Issuance of Shares under the Purchase Agreement

Pursuant to Nasdaq Rule 5635(d), stockholder approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of our Common Stock (or securities convertible into or exercisable for our Common Stock), which equals 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i) the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of our Common Stock for the five trading days immediately preceding the signing of the binding agreement for the transaction (the “Nasdaq 20% Rule”).

Under the Nasdaq 20% Rule, in no event may we issue or sell to Lincoln Park under the Purchase Agreement shares of our Common Stock, including the Commitment Shares, in excess of 4,195,058 shares, which is equal to 19.99% of the shares of our Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”) unless (i) we obtain stockholder approval to issue shares of our Common Stock in excess of the Exchange Cap or (ii) the average price of all shares of Common Stock issued to Lincoln Park under the Purchase Agreement equals or exceeds $4.399 per share (which represents the lower of (A) the official closing price of the Company’s Common Stock on Nasdaq on the date of the Purchase Agreement and (B) the average official closing price of the Company’s Common Stock on Nasdaq for the five consecutive trading days ending on the date of the Purchase Agreement, as adjusted to take into account the issuance of the Commitment Shares to Lincoln Park for non-cash consideration), such that the transactions contemplated by the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules, including the Nasdaq 20% Rule. In any event, the Purchase Agreement specifically provides that we may not issue or sell any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicable rules or regulations of the Nasdaq.

As of April 15, 2024, we had issued 1,600,000 shares of our common stock to Lincoln Park under the Purchase Agreement, leaving 2,348,266 shares of our common stock available for issuance without seeking stockholder approval. However, as of April 15, 2024, an aggregate value of approximately $44,936,195 million remained available for sale under the Committed Equity Facility. Based on the closing sale price of our common stock as reported on Nasdaq on such date, to fully utilize the remaining amount available to us, we would need to issue 25,531,929 shares of common stock to Lincoln Park, which would be significantly in excess of the Exchange Cap. Accordingly, in order to be able to sell to Lincoln Park the full amount of Purchase Shares remaining under the Purchase Agreement, while complying with the Nasdaq 20% rule, we are seeking stockholder approval to issue greater than the Exchange Cap.

Additional Information

This summary is intended to provide you with basic information concerning the Purchase Agreement. The full text of the Purchase Agreement a copy of which is available as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on August 11, 2023.

Effect on Current Stockholder if the Proposal is Approved

Upon obtaining the stockholder approval requested in this Proposal No. 4, we would no longer be bound by the Nasdaq 20% Rule restriction on issuances of common stock to Lincoln Park. If this Proposal No. 4 is approved by our stockholders, we would be able to issue more than the Exchange Cap (or 4,195,058 shares) to Lincoln Park under the Purchase Agreement at an average sale price of all shares below $4.399 per share.

Each additional share of Common Stock that would be issuable to Lincoln Park would have the same rights and privileges as each share of our currently outstanding Common Stock. The issuance of shares of Common Stock to Lincoln Park pursuant to the terms of the Purchase Agreement will not affect the rights of the holders of our outstanding Common Stock, but such issuances will have a

Effect on Current Stockholders if the Proposal is Not Approved

If our stockholders do not approve this Proposal No. 4, the Company will be unable to issue any Purchase Shares in excess of the Exchange Cap, unless the average sale price of all shares sold pursuant to the Committed Equity Facility is equal to or exceeds $4.399 per share. Accordingly, the Company may not fully utilize the remaining amount available to us of $44,939,195 pursuant to the Purchase Agreement as of April 15, 2024 and may need to seek alternative sources of financing, which financing may not be available on advantageous terms, or at all, and which may result in the incurrence of additional transaction expenses. The Company expects to receive gross proceeds of $50.0 million upon issuance of all of the Purchase Shares.

The Company’s ability to successfully implement its business plans and ultimately generate value for its stockholders is dependent upon its ability to raise capital and satisfy its ongoing business needs. If the Company is unable to issue Purchase Shares pursuant to the Committed Equity Facility, it may be unable to fully satisfy its ongoing business needs on the terms or timeline it anticipates, if at all, the effect of which could materially and adversely impact future operating results, and result in a delay in or modification or abandonment of our business plans.

Proposal No. 5

Approval of an Amendment to the Certificate of Incorporation for the Exculpation of Officers

 

Conditions and Limitations to Exculpation under DGCL Section 102(b)(7)

As adopted, amended Section 102(b)(7) of the DGCL protects officers from personal monetary liability for breaches of the fiduciary duty of care.

Exculpation for officers is not available for:

In addition, the protections of Section 102(b)(7) of the DGCL are limited to monetary damages only. Accordingly, claims against officers for equitable relief are still available.

For purposes of the Exculpation Amendment, “officer” has the meaning provided in Section 102(b)(7) of the DGCL.

Reasons for the Exculpation Amendment

The Board believes that eliminating personal monetary liability for officers under the circumstances permitted by the DGCL is reasonable and appropriate. Claims against directors and officers for breaches of fiduciary duties are expected to continue. Delaware corporations that fail to adopt officer exculpation provisions may experience a disproportionate amount of nuisance litigation against officers and disproportionately increased costs in the form of increased director and officer liability insurance premiums, as well as diversion of management attention from the business of the corporation while such claims are ongoing.

Further, we anticipate that officer exculpation provisions will become more common over time. As a result, officer exculpation provisions may become necessary for Delaware corporations to attract and retain experienced and qualified corporate officers.

Accordingly, the Board has determined it is advisable and in the best interests of the Company and its stockholders to seek stockholder approval for the Exculpation Amendment.

Effectiveness of the Exculpation Amendment if Approved

If the Exculpation Amendment is approved, it will become effective upon the filing of the amendment with the Secretary of State of the State of Delaware, which is expected to occur shortly following the 2024 Annual Meeting of Stockholders. The proposed amendment to our Charter would become effective immediately upon the filing of the Certificate of Amendment to our Charter with the Secretary of State of the State of Delaware, attached to this Proxy Statement as (the “Certificate of Amendment”). We expect to file the Certificate of Amendment with the Secretary of State of the State of Delaware promptly upon approval by our stockholders. Approval of this Proposal 5 is not contingent upon the approval of Proposal 6. If Proposal 5 is approved by our stockholders and Proposal 6 is not approved, the Certificate of Amendment will be modified to include only the amendments to our Charter described in this Proposal 5.

Proposal No. 6

Approval of an Amendment to the Certificate of Incorporation to Increase the Number of Authorized Shares of Our Common Stock from

75 Million Shares to 125 Million Shares

 

Our Board believes that it is important to have available a sufficient number of authorized shares of our Common Stock to provide us with flexibility to support corporate purposes as needs arise. For example, as we evaluate the future financing needs of our business, we may use a portion of the additional authorized shares to raise capital by issuing shares of our Common Stock, issuing shares of our preferred stock that are convertible into shares of our Common Stock and/or issuing warrants that are exercisable for shares of our Common Stock. Additional authorized shares may, from time to time, be used for the issuances of shares under the Company’s equity incentive plans, settling outstanding obligations or acquiring companies or assets.

Our Board will determine whether, when and on what terms the issuance of shares of our Common Stock may be warranted in connection with any future actions. No further action or authorization by our stockholders will be necessary before issuance of additional shares of Common Stock authorized under our Charter, as further amended by the Increase in Authorized Shares Amendment, except as may be required for a particular transaction by applicable law or regulatory agencies or by the Nasdaq Rules or the rules of any other stock market or exchange on which our Common Stock may then be listed.

The additional shares of our Common Stock, if issued, would have the same rights and privileges as the existing shares of our Common Stock. Any issuance of additional shares of our Common Stock would increase the number of outstanding shares of our Common Stock, and (unless such issuance was pro rata among existing stockholders) our existing stockholders’ percentage ownership of our Common Stock would be diluted accordingly.

Although an increase in the number of authorized shares of our Common Stock could, under certain circumstances, also be construed as having an anti-takeover effect (for example, by permitting easier dilution of the stock ownership of a person seeking to effect a change in the composition of our Board or contemplating a tender offer or other transaction resulting in our acquisition by another company), the proposed increase in shares authorized is not in response to any effort by any person or group to obtain control of us by any means. In addition, the proposal is not part of any plan by our Board to recommend or implement a series of anti-takeover measures.

Effectiveness of the Increase in Authorized Shares Amendment if Approved

The proposed increase in the number of authorized shares of our Common Stock would become effective immediately upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware, attached to this Proxy Statement as . We expect to file the Certificate of Amendment with the Secretary of State of the State of Delaware promptly upon approval by our stockholders. Approval of this Proposal 6 is not contingent upon the approval of Proposal 5. If Proposal 6 is approved by our stockholders and Proposal 5 is not approved, the Certificate of Amendment will be modified to include only the amendments to our Charter described in this Proposal 6.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the beneficial ownership of our Common Stock as of April 15, 2024 for:

The table lists applicable percentage ownership based on 25,608,506 shares of Common Stock outstanding as of April 15, 2024.

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws. In addition, the rules include shares of our Common Stock issuable pursuant to the exercise of stock options and warrants that are either immediately exercisable or exercisable within 60 days of April 15, 2024. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Under the terms of certain of our outstanding warrants, holders may not exercise the warrants to the extent such exercise would cause such holder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% or 9.99%, as applicable, of our then outstanding Common Stock following such exercise, excluding for purposes of such determination Common Stock issuable upon exercise of the warrants which have not been exercised. In addition, pursuant to an agreement with the Company, certain holders of our Common Stock cannot receive shares of Common Stock held in an escrow account for the benefit of such holder to the extent the receipt of such shares would cause such holder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 9.99% of the outstanding shares of our then outstanding Common Stock following such exercise. The number of shares beneficially owned do not reflect these limitations.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10 percent of a registered class of our equity securities (“Reporting Persons”), to file with the SEC reports of ownership and reports of changes in ownership of our Common Stock and our other equity securities. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such reports received or written representations from certain Reporting Persons, the Company believes that during the fiscal year ended December 31, 2023, all Reporting Persons complied with all applicable requirements, except that Dr. Jay Pepose and Richard Rodgers each submitted a late Form 4 filing on November 13, 2023.

Additional Information

Stockholder Proposals to be Presented at the Next Annual Meeting of Stockholders

Requirements for Stockholder Proposals to be Considered for Inclusion in our Proxy Materials. Stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at our 2025 annual meeting of stockholders must be received by us not later than December 30, 2024 in order to be considered for inclusion in our proxy materials for that meeting. A stockholder’s notice to the Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by applicable law and our Bylaws.

Requirements for Other Stockholder Proposals and Director Nominations to be Brought Before an Annual Meeting. Our Bylaws provide that for stockholder nominations to our Board or other proposals to be considered at an annual meeting, the stockholder must give timely notice thereof in writing to the Secretary at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335.

To be timely for the Company’s 2025 annual meeting of stockholders, a stockholder’s notice must be delivered to or mailed and received by our Secretary at our principal executive offices not earlier than the close of business on February 11, 2025 and not later than the close of business on March 13, 2025. A stockholder’s notice to the Secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting the information required by applicable law and our Bylaws. In addition, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with the additional requirements of Rule 14a-19(b) of the Exchange Act and deliver the applicable notice by April 14, 2025. In no event will the public announcement of an adjournment or a postponement of our annual meeting commence a new time period for the giving of a stockholder’s notice as provided above.

“Householding” - Stockholders Sharing the Same Address

The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report on Form 10-K and proxy materials unless the affected stockholder has provided other instructions. This procedure reduces printing costs and postage fees and helps protect the environment as well.

We expect that a number of brokers with account holders who are our stockholders will be “householding” our annual report on Form 10-K and proxy materials. A single set of an annual report on Form 10-K and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting your broker.

Upon written or oral request, we will undertake to promptly deliver a separate copy of the annual report on Form 10-K and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the annual report on Form 10-K and other proxy materials, you may write our Senior Vice President of Finance at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335, or call 248-957-9024.