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☐ | | | Soliciting Material Pursuant to Section 240.14a−12Under §240.14a-12 |
Ocuphire Pharma, Inc.
Rexahn Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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REXAHN PHARMACEUTICALS, INC.
TABLE OF CONTENTS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 26, 2021
To be held April 11, 2017Dear Stockholder:
To our shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders (the “Annual Meeting”) of Rexahn Pharmaceuticals, Inc. (the “Company”) will be held on April 11, 2017, at 8:00 a.m. (local time), at the Radisson Hotel, 3 Research Court, Rockville, Maryland 20850. The Annual Meeting is called for the following purposes:
| 1. | to elect as directors the seven nominees named in the accompanying proxy statement to a term of one year each, or until their successors have been elected and qualified; |
| 2. | to ratify the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2017; |
| 3. | to approve, by non-binding vote, the Company’s executive compensation; |
| 4. | to recommend, by non-binding vote, the frequency of future non-binding votes on executive compensation; |
| 5. | to approve an amendment to the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated, to increase the number of shares of common stock reserved for issuance thereunder from 17,000,000 to 34,000,000;
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| 6. | to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation (in the event it is deemed by the Board of Directors to be advisable) to effect a reverse stock split of the Company’s common stock at a ratio within the range of 1:5 to 1:20, as determined by the Board of Directors, together with a corresponding proportional reduction in the number of authorized shares of the Company’s capital stock; |
| 7. | to approve the adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 6; and |
| 8. | to consider and take action upon such other matters as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
The Board of Directors has fixed February 21, 2017 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. Only shareholders of record at the close of business on that date will be entitled to receive notice of and to vote at the Annual Meeting or any adjournment or postponement thereof.
You are cordially invited to attend the 2021 Annual Meeting. Meeting of Stockholders (the “Annual Meeting”) of Ocuphire Pharma, Inc. to be held at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335, on June 7, 2021 at 4:00 p.m. local time. The enclosed Notice of 2021 Annual Meeting of Stockholders and the Proxy Statement contain details of the business to be conducted at the Annual Meeting and information you should consider when you vote your shares. At the Annual Meeting, the agenda includes: (1) to elect seven directors named in the Proxy Statement, each to serve a one-year term, (2) to ratify the appointment our independent registered public accounting firm for the fiscal year ending December 31, 2021 and (3) to approve our named executive officers’ compensation in an advisory vote. The Board of Directors unanimously recommends that you vote “FOR” the election of each of the director nominees, “FOR” the ratification of the appointment of our independent registered public accounting firm and “FOR” the approval of the advisory vote to approve our named executive officers’ compensation. Your vote is important. We currently intend to hold the Annual Meeting in person. However, in the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the Annual Meeting as promptly as practicable before the Annual Meeting, which may include holding the Annual Meeting solely by means of remote communication (i.e., a virtual-only Annual Meeting). Please monitor our website at www.ocuphire.com for updated information. Whether or not you expect to attend you are respectfully requested by the Board of DirectorsAnnual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to promptly either sign, datevote by submitting your proxy via the Internet at the address listed on the proxy card, by telephone at the number listed on the proxy card, or by signing, dating, and returnreturning the enclosed proxy card or vote via the Internet or by telephone by following the instructions provided on the proxy card. A return envelope, which requires no postage if mailed in the United States, is enclosed forenvelope. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your convenience.proxy. | | | Sincerely, | | | | | | | | | | | | | By Order of the Board of Directors, | |  | | Mina Sooch
President and Chief Executive Officer |
TABLE OF CONTENTS NOTICE OF 2021 ANNUAL
MEETING OF STOCKHOLDERS WHEN | | | June 7, 2021 at 4:00 p.m. local time | | Peter Brandt | | | | | | WHERE | Chairman of the Board of Directors | | 37000 Grand River Avenue, Suite 120, Farmington Hills, MI 48335* | February 24, 2017 | | | | | | |
PURPOSE OF MEETING AND AGENDA | | | Important Notice RegardingAt the Availability of Proxy Materials for the
2021 Annual Meeting, of Shareholders stockholders will vote: | | | | 1. | | | to be Held on April 11, 2017:
Copies of our Proxy Materials, consisting of the Notice of Annual Meeting,elect seven directors named in the Proxy Statement, andeach to serve for a one-year term;
| | | | 2. | | | to ratify the appointment of our 2016independent registered public accounting firm for 2021; and | | | | 3. | | | to approve our named executive officers’ compensation in an advisory vote. | | | | | | | | | | | Stockholders also will transact any other business that may properly come before the meeting or any adjournment or postponement thereof. | | | | | | | | WHO CAN VOTE | | | Stockholders of record at the close of business on April 15, 2021. | | | | | | | | VOTING | | | Your vote is very important. Please submit your proxy or voting instructions as soon as possible, whether or not you plan to attend the Annual ReportMeeting. | | | | | | | | ADMISSION TO THE ANNUAL MEETING | | | All of our stockholders are availableinvited to attend the Annual Meeting. If you attend, you will need to bring valid, government-issued photo identification. The doors to the meeting room will be closed promptly at http://www.viewproxy.com/rexahn/2017 the start of the meeting. |
*
| We currently intend to hold the Annual Meeting in person. However, in the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the Annual Meeting as promptly as practicable before the Annual Meeting. Please monitor our website at www.ocuphire.com for updated information. |
Sincerely, Mina Sooch
President and Chief Executive Officer Farmington Hills, Michigan
April 26, 2021 REXAHN PHARMACEUTICALS,TABLE OF CONTENTS OCUPHIRE PHARMA, INC.
15245 Shady Grove Road, Suite 455
Rockville, Maryland 20850
(240) 268-5300
PROXY STATEMENT
FOR 2021 ANNUAL MEETING OF SHAREHOLDERS STOCKHOLDERS
To be held April 11, 2017
TABLE OF CONTENTS This proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by the
TABLE OF CONTENTS OCUPHIRE PHARMA, INC. PROXY STATEMENT FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS GENERAL INFORMATION ABOUT THE MEETING Our Board of Directors of Rexahn Pharmaceuticals, Inc. (“we”, “us”, or(the “Board”) solicits your proxy on our behalf for the “Company”) for the2021 Annual Meeting of Shareholders to be heldStockholders (the “Annual Meeting”) and atthe Radisson Hotel, located at 3 Research Court, Rockville, Maryland 20850, on April 11, 2017, at 8:00 a.m. (local time) and for any postponement or adjournment thereof (the “Annual Meeting”),of the Annual Meeting for the purposes set forth in the accompanyingthis Proxy Statement. The Annual Meeting will be held at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335 on Monday, June 7, 2021 at 4:00 p.m. local time. On or about April 26, 2021, we intend to mail to our shareholders of record a Notice of Annual MeetingInternet Availability of Shareholders.
We are providing our Proxy Materials (the “Notice”). The Notice will contain instructions on how to record shareholders by sending a printed copy of the full set of our proxy materials (the “Proxy Materials”), consisting of the Notice of Annual Meeting,access this Proxy Statement and our 2020 annual report to stockholders, through the Internet and how to vote through the Internet. The Notice also will include instructions on how to receive such materials, at no charge, by paper delivery (along with a proxy card (the “Proxy Card”), and our 2016 Annual Reportcard) or by e-mail. Beneficial owners will receive a similar notice from their broker, bank, or other nominee. Please do not mail in the Notice, as it is not intended to Shareholders by mail. As permitted by Securities and Exchange Commission (“SEC”) rules, we are also providing accessserve as a voting instrument. Notwithstanding anything to the Proxy Materialscontrary, we may send certain stockholders of record a full set of proxy materials by paper delivery instead of the notice or in addition to sending the notice.
We currently intend to hold the Annual Meeting in person. However, in the event we determine it is not possible or advisable to hold the Annual Meeting in person, we will publicly announce alternative arrangements for the Annual Meeting as promptly as practicable before the Annual Meeting. Please monitor our website at www.ocuphire.com for updated information. Unless we state otherwise or the context otherwise requires, references in this proxy statement to “we,” “our,” “us”, or the “Company” are to Ocuphire Pharma, Inc., a Delaware corporation. Purpose of the Annual Meeting At the Annual Meeting, stockholders will act upon the proposals described in this proxy statement. 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 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. 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, 2021, the Internet.
record date, will be entitled to vote at the Annual Meeting. At the close of business on April 15, 2021, 11,749,172 shares of Common Stock were outstanding and entitled to vote.
The Proxy Statementholders 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 accompanying formconduct business. This presence is called a quorum. Your shares are counted as present at the meeting if you are present and vote in person at the meeting or if you have properly submitted a proxy. Voting Rights; Required Vote Each holder of proxyshares of Common Stock is entitled to one vote for each share of Common Stock held as of the close of business on April 15, 2021, the record date. You may vote all shares 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, bank, trustee or other nominee. Dissenters’ rights are firstnot applicable to any of the matters being mailed to stockholdersvoted on. Stockholder of Record: Shares Registered in Your Name. If on or about March 3, 2017. QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND ANNUAL MEETING
Q: | Why are these materials being made available to me? |
A: | The Proxy Materials are being provided to you in connection with the Annual Meeting and include this Proxy Statement and the related Proxy Card that are being used in connection with the Board of Directors’ solicitation of proxies for the Annual Meeting. The information included in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process and certain other required information. |
Q: | How do I access the Company’s Proxy Materials online? |
A: | The Proxy Card provides instructions for accessing the Proxy Materials over the Internet, and includes the Internet address where those materials are available. The Company’s Proxy Statement for the Annual Meeting and the Company’s 2016 Annual Report to Shareholders can also be viewed on the Company’s website at www.rexahn.com.
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Q: | What shares owned by me can be voted? |
A: | All shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”) owned by you as of the close of business on the Record Date may be voted by you. Each share of Common Stock is entitled to one vote. These shares include those (1) held directly in your name as the shareholder of record (“Shareholder of Record”), and (2) held for you as the beneficial owner through a broker, bank or other nominee.
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Q: | What is the Record Date? |
A:
| The Record Date is February 21, 2017. Only Shareholders of Record as of the close of business on this date will be entitled to vote at the Annual Meeting.
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Q: | How many shares are outstanding? |
A: | As of the Record Date, the Company had 237,443,785 shares of Common Stock outstanding. |
Q: | What is the difference between holding shares as a Shareholder of Record and as a beneficial owner? |
A: | As summarized below, there are some distinctions between shares held of record and those owned beneficially. |
Shareholder of Record
IfApril 15, 2021, your shares arewere registered directly in your name with the Company’sour transfer agent, American Stock Transfer & Trust Company, LLC, then you are considered the stockholder of record with respect to those shares,shares. As a stockholder of record, you may vote at the Shareholder of Record. As the Shareholder of Record, you have the right to grant your voting proxy directly to the Companymeeting, or to vote in person atadvance through the Annual Meeting.Internet, by telephone or by mail.
TABLE OF CONTENTS Beneficial Owner
Owner: Shares Registered in the Name of a Broker or Nominee. If on April 15, 2021, your shares arewere held in an account with a stock brokerage account or by afirm, bank or other nominee, then you are considered the beneficial owner of the shares held in “street name” and your broker, bank or other nominee is considered, with respect to those shares, the Shareholder of Record.street name. As thea beneficial owner, you have the right to direct your broker bank or nominee on how to vote and are also invited to attend the Annual Meeting. However, because you are not the Shareholder of Record, you may not vote these shares held in person at the Annual Meeting unless you receive a proxy fromyour account, and your broker bankhas enclosed or other nominee. Your broker, bank or other nominee has provided voting instructions for you to use. Ifuse 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 Adopt Proposals. Each director will be elected by a plurality of the votes of shares present in person or represented by proxy at the Annual Meeting and entitled to vote in person, please contact your broker, bank or other nominee soon the election of directors. This means that you can receive a legal proxythe individuals nominated for election to presentthe Board at the Annual Meeting.Meeting receiving the highest number of “FOR” votes will be elected. You may either vote “FOR” each nominee or “WITHHOLD” your vote with respect to each nominee. You may not cumulate votes in the election of directors. Approval of Proposals 2 and 3 will be obtained if the holders of the majority of voting power of the shares present in person, by remote communication, if applicable, or represented by proxy at the Annual Meeting and entitled to vote at the Annual Meeting vote “FOR” such proposal.
A: | You are being asked to vote on (1) the election as directors of the seven nominees named in this Proxy Statement to a term of one year each, or until their successors have been elected and qualified, (2) the ratification of the appointment of Baker Tilly Virchow Krause, LLP (“Baker Tilly”) as the independent registered public accounting firm of the Company for the year ending December 31, 2017, (3) the approval, by non-binding vote, of the Company’s executive compensation, (4) the recommendation, by non-binding vote, of the frequency of future non-binding votes on executive compensation, (5) the approval of an amendment to the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated (the “2013 Plan”) to increase the number of shares of Common Stock reserved for issuance thereunder from 17,000,000 to 34,000,000, (6) the approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation (in the event it is deemed by the Board of Directors to be advisable) to effect a reverse stock split of the Company’s Common Stock at a ratio within the range of 1:5 to 1:20, as determined by the Board of Directors, together with a corresponding proportional reduction in the number of authorized shares of the Company’s capital stock, and (7) the approval of the adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 6.
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A proxy submitted by a stockholder may indicate that the shares represented by the proxy are not being voted (stockholder withholding) with respect to a particular matter. In addition, a broker may not be permitted to vote on shares held in street name on a particular matter in the absence of instructions from the beneficial owner of the stock (broker non-vote). The shares subject to a proxy which are not being voted on a particular matter because of either stockholder withholding or broker non-votes will count for purposes of determining the presence of a quorum. Abstentions and broker non-votes will have no effect on Proposal 1. For Proposals 2 and 3, abstentions, if any, will not be treated as present and entitled to vote at the Annual Meeting and thus will have no effect on the outcome of this proposal unless you return your annual proxy or attend the Annual Meeting and select “ABSTAIN”. Broker non-votes, if any, will have no effect on any of the proposals.
The Company isBoard recommends a vote “FOR” each of the director nominees listed in this proxy statement, “FOR” the ratification of Ernst & Young, LLP’s appointment as our independent registered accounting firm and “FOR” the approval, on an advisory basis, of the compensation of our named executive officers. Voting Instructions; Voting of Proxies If you are a stockholder of record, you may: Vote in person — we will provide a ballot to stockholders who attend the Annual Meeting and wish to vote in person. Submitting a proxy will not currently aware of any mattersprevent a stockholder from attending the Annual Meeting, revoking their earlier-submitted proxy, and voting in person. Vote through the Internet — you may vote through the Internet. To vote by Internet, you will need to use a control number provided to you in the materials with this proxy statement and follow the additional steps when prompted. The steps have been designed to authenticate your identity, allow you to give voting instructions, and confirm that those instructions have been recorded properly. Vote by telephone — if you received your annual meeting materials by paper delivery, you may vote by telephone as indicated on your enclosed proxy card or voting instruction card. To vote by telephone, you will be broughtneed to use a control number provided to you in the materials with this proxy statement and follow the voting instructions. Vote by mail — complete, sign and date the accompanying proxy card and return it as soon as possible before the Annual Meeting (other than procedural matters) that are not referred to in the enclosed Proxy Card. If any other business should properly come beforeenvelope provided. Votes submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on June 6, 2021. 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 nominee to direct it on how to vote your shares. You may either vote “FOR” the nominee to the Board, or any postponementyou may withhold your vote from the nominee. For Proposals 2 and 3, you may vote “FOR” or adjournment thereof,“AGAINST” or “ABSTAIN” from voting. Your vote is important. Whether or not you plan to attend the persons namedAnnual Meeting, we urge you to vote by proxy to ensure that your vote is counted. TABLE OF CONTENTS All proxies will be voted in accordance with the instructions specified on the proxy card. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will vote on such matters according to their best judgment. Discretionary authority to vote on such matters is conferred by such proxies uponbe voted in accordance with the persons voting them.
A: | Shareholders of Record may vote by completing and signing the enclosed Proxy Card and returning it promptly in the enclosed postage prepaid, addressed envelope, or at the Annual Meeting in person. We will pass out written ballots to anyone who is eligible to vote at the Annual Meeting. We also will request persons, firms, and corporations holding shares of the Company’s Common Stock in their names or in the name of their nominees, which are beneficially owned by others, to send proxy material to and obtain proxies from the beneficial owners and will reimburse the holders for their reasonable expenses in so doing. Proxy Cards properly executed and delivered by shareholders (by mail or via the Internet) and timely received by the Company will be voted in accordance with the instructions contained therein. If you authorize a proxy to vote your shares over the Internet or by telephone, you should not return a Proxy Card by mail, unless you are revoking your proxy. If you hold your shares in “street name” through a broker, bank or other nominee, and are therefore not a Shareholder of Record, you must request a legal proxy from your broker, bank or other nominee in order to vote at the Annual Meeting. |
recommendations of our Board stated above. If you do not vote and you hold your shares in “street name”street name, and your broker does not have discretionary power to vote your shares, your shares may constitute “broker non-votes”. 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. 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, e-mail or otherwise. Following the original distribution and mailing of the solicitation materials, we will request brokers, custodians, nominees and other record holders to forward copies of those materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, we, upon the request of the record holders, will reimburse such holders for their reasonable expenses. 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: delivering to our Secretary (by any means, including facsimile) a written notice stating that the proxy is revoked; signing and delivering a proxy bearing a later date; voting again through the Internet or by telephone; or attending and voting at the Annual Meeting (although attendance at the meeting will not, by itself, revoke a broker,proxy). Please note, however, that if your shares are held of record by a brokerage firm, bank or other nominee and you may vote viawish to revoke a proxy, you must contact that firm to revoke or change any prior voting instructions. Voting Results Voting results will be tabulated and certified by the Internetinspector 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 going to www.proxyvote.com, while Shareholdersthe inspector of Record may go to www.aalvote.com/rnn to vote viaelections and filed with the Internet. All shareholders must have their control numberSecurities and Exchange Commission (the “SEC”) in order to vote viaa current report on Form 8-K within four business days of the Internet.Annual Meeting. TABLE OF CONTENTS ELECTION OF DIRECTORS Our Board currently consists of seven directors. Alan Meyer will not stand for re-election at the Annual Meeting. The Board has re-nominated the remaining six current directors and has also nominated Jay Pepose as a new nominee.
A:Mina Sooch | Forty percent | | 53 | | | Director and President and Chief Executive Officer | Cam Gallagher | | | 51 | | | Chairman of the Company’s issued and outstanding shares of Common Stock as of the Record Date must be present at the Annual Meeting, either in person or by proxy, in order to hold the Annual Meeting and conduct business. This is called a quorum.Board | Sean Ainsworth | | | 53 | | | Director | James Manuso | | | 72 | | | Director | Richard Rodgers | | | 54 | | | Director | Susan Benton | | | 56 | | | Director | Jay Pepose | | | 66 | | | Director Nominee |
Q: | How many votes must the director nominees have to be elected? |
A: | In order for a director to be elected, he must receive the affirmative vote of a plurality of the shares voted. There is no cumulative voting for our directors or otherwise. |
Q: | What are the voting requirements to approve the other proposals? |
A: | The affirmative vote of a majority of the shares cast in person or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to ratify the Company’s independent auditors, approve our executive compensation, to approve the amendment to the Company’s stock option plan and to approve an adjournment of the Annual Meeting The affirmative vote of a majority of the Company’s issued and outstanding shares is required to approve the reverse stock split and authorized share reduction. A plurality of the votes will be considered the shareholders’ preferred frequency for holding the non-binding vote on executive compensation. |
Q: | Who will count the votes? |
A: | Votes at the Annual Meeting will be counted by an inspector of election, who will be appointed by the Board of Directors or the chairman of the Annual Meeting. |
Q: | What is the effect of not voting? |
A: | If you are a beneficial owner of shares in street name and do not provide the broker, bank or other nominee that holds your shares with specific voting instructions then, under applicable rules, the broker, bank or other nominee that holds your shares can generally vote on “routine” matters, but cannot vote on “non‑routine” matters. In the case of a non-routine item, your shares will be considered “broker non-votes” on that proposal. |
Proposal 2 (ratificationWe believe each of the appointment of Baker Tilly Virchow Krause, LLP asBoard’s nominees meets the independent registered public accounting firm), Proposal 6 (approvalqualifications, skills and expertise established by the Board for continuing service on the Board, including regarding areas that are critical to the Company’s strategy and operations, and will continue to collectively serve in the best interests of the reverse stock splitstockholders and authorized share reduction)the Company.
All directors are elected annually and Proposal 7 (approvalwill serve one-year terms until the 2022 annual meeting of stockholders or until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. The Board has affirmatively determined that each of the adjournmentdirector nominees, except Ms. Sooch and Mr. Pepose, are independent under the applicable rules of the Nasdaq Capital Market (“Nasdaq”). Each nominee has consented to be listed in this proxy statement and agreed to serve as a director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of this proxy statement and the Annual Meeting, which we do not anticipate, the Board may designate a new nominee and the persons named as proxies in the attached proxy card will vote for that substitute nominee (unless the proxies were previously instructed to withhold votes for the nominee who has become unable or unwilling to serve). Alternatively, the Board may reduce the size of the Board. All directors will be elected by a plurality of the votes present in person or represented by proxy at the Annual Meeting and entitled to vote. This means that the individuals nominated for election to the Board at the Annual Meeting receiving the highest number of “FOR” votes will be elected. You may either vote “FOR” each nominee or “WITHHOLD” your vote with respect to each nominee. Shares represented by proxies will be voted “FOR” the election of each nominee, unless the proxy is marked to withhold authority to so vote. If any nominee is unable or unwilling to serve at the time of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 6) are matters we believe will be considered “routine.” Proposal 1 (election of directors), Proposal 3 (non-binding approval of the Company’s executive compensation), Proposal 4 (non-binding recommendation of the frequency of future non-binding votes on executive compensation) and Proposal 5 (amendment to the 2013 Plan) are matters we believe will be considered “non-routine.” If you are a Shareholder of Record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting. If you are a Shareholder of Record and you properly sign and return your Proxy Card, your shares will be voted as you direct. If no instructions are indicated on such Proxy Card and you are a Shareholder of Record, shares represented by the proxy will be voted in the manner recommended by the Board of Directors on all matters presented in this Proxy Statement, namely “FOR” all the director nominees, “FOR” the ratification of the appointment of Baker Tilly as the Company’s independent registered public accounting firm for the year ending December 31, 2017, “FOR” the non-binding vote on the Company’s executive compensation, “EVERY THREE YEARS” for the frequency of future non-binding votes on executive compensation, “FOR” the approval of the amendment to the 2013 Plan, “FOR” the approval of the reverse stock split and authorized share reduction, and “FOR” the adjournment of the Annual Meeting, if necessary.
Q: | How are broker non-votes and abstentions treated? |
A: | Broker non-votes and abstentions with respect to a proposal are counted as present or represented by proxy for purposes of establishing a quorum. If a quorum is present, broker-non votes and votes to withhold will have no effect on the outcome of the votes on Proposal 1 (election of directors), but abstentions will count as votes against Proposal 2 (ratification of the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm), Proposal 3 (non-binding approval of the Company’s executive compensation), Proposal 4 (non-binding recommendation of the frequency of future non-binding votes on executive compensation), Proposal 5 (amendment to the 2013 Plan) and Proposal 7 (approval of the adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 6), and broker non-votes and abstentions will have the same effect as votes against Proposal 6 (approval of the reverse stock split and authorized share reduction). |
Q: | Can I revoke my proxy or change my vote after I have voted? |
A: | You may revoke your proxy and change your vote by voting again via the Internet or telephone, by completing, signing, dating and returning a new Proxy Card or voting instruction form with a later date, or by attending the Annual Meeting and voting in person. Only your latest dated Proxy Card received at or prior to the Annual Meeting will be counted. Your attendance at the Annual Meeting will not have the effect of revoking your proxy unless you forward written notice to the Secretary of the Company at the above stated address or you vote by ballot at the Annual Meeting. |
Q: | What does it mean if I receive more than one Proxy Card? |
A: | It means that you have multiple accounts at the transfer agent and/or with brokers, banks or other nominees. To ensure that all of your shares in each account are voted, please sign and return all Proxy Cards, vote with respect to all accounts via the internet or by telephone, or, if you plan to vote at the Annual Meeting, contact each broker, bank or other nominee so that you can receive all necessary legal proxies to present at the Annual Meeting. |
Q: | What are the costs of soliciting these proxies and who will pay? |
A: | We will bear the costs of preparing, printing, assembling, and mailing the Proxy Materials and of soliciting proxies. In addition to solicitations by mail, the Company and its directors, officers and employees may solicit proxies by telephone and email. We will request brokers, custodians and fiduciaries to forward proxy soliciting material to the owners of shares of our Common Stock that they hold in their names. We will reimburse banks and brokers for their reasonable out-of-pocket expenses incurred in connection with the distribution of our proxy materials. |
Q: | Do I have appraisal or similar dissenter’s rights? |
A: | Appraisal rights and similar rights of dissenters are not available to shareholders in connection with proposals brought before the Annual Meeting. |
Q: | Where can I find the voting results of the Annual Meeting? |
A: | The Board of Directors will announce the voting results at the Annual Meeting. We will also publish the results in a Current Report on Form 8-K within four business days after the date of the Annual Meeting. We will file that report with the SEC, and you can get a copy: |
| · | by contacting the Company’s corporate offices via phone at (240) 268-5300 or by e-mail at ir@rexahn.com; or |
| · | through the SEC’s EDGAR system at www.sec.gov or by contacting the SEC’s public reference room at 1-800-SEC-0330.
|
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
The table below sets forth the beneficial ownership of our Common Stock as of February 21, 2017 by the following individuals or entities:
| · | each director and nominee; |
| · | each named executive officer identified in the Summary Compensation Table; and |
| · | all current directors and executive officers as a group. |
As of February 21, 2017, no person or group of affiliated persons is known to us to beneficially own 5% or more of our outstanding Common Stock.
As of February 21, 2017, 237,443,785 shares of our Common Stock were issued and outstanding. Unless otherwise indicated, all persons named as beneficial owners of our Common Stockproxies may vote for a substitute nominee chosen by the present Board, or the Board will have sole voting power and sole investment power with respect toa vacancy, which it may fill at a later date or reduce the shares indicated as beneficially owned. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock that will be subject to options or other convertible securities held by that person that are exercisable as of February 21, 2017, or will become exercisable within 60 days thereafter, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. In addition, unless otherwise indicated, the address for each person named below is c/o Rexahn Pharmaceuticals, Inc., 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850.
| | | Shares of Rexahn Pharmaceuticals Common Stock Beneficially Owned | | | Name of Beneficial Owner | | Number of Shares | | | Percentage | | | Directors and Executive Officers: | | | | | | | | Chang H. Ahn | | | 7,745,294 | (1) | | | 3.3 | % | | Peter Suzdak | | | 3,109,189 | (2) | | | 1.3 | % | | Charles Beever | | | 340,000 | (3) | | | * | | | Kwang Soo Cheong | | | 333,000 | (4) | | | * | | | Peter Brandt | | | 420,000 | (5) | | | * | | | Mark Carthy | | | 170,000 | (6) | | | * | | | Richard J. Rodgers | | | 120,000 | (7) | | | * | | | Tae Heum Jeong | | | 1,393,435 | (8) | | | * | | | Ely Benaim | | | 904,984 | (9) | | | * | | | Lisa Nolan | | | - | | | | * | | | All current executive officers and directors as a group (10 persons) | | | 14,535,902 | (10) | | | 6.1 | % |
* | Represents less than 1% of the issued and outstanding shares of the Company’s Common Stock as of the February 21, 2017.
|
(1) | Includes Dr. Ahn’s options to purchase 1,235,294 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017 and 500,000 shares held by Dr. Ahn’s spouse.
|
(2) | Includes Dr. Suzdak’s options to purchase 3,049,189 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017. |
(3) | Includes Mr. Beever’s options to purchase 330,000 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(4) | Includes Dr. Cheong’s options to purchase 330,000 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(5) | Includes Mr. Brandt’s options to purchase 270,000 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(6) | Includes Mr. Carthy’s options to purchase 170,000 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(7) | Includes Mr. Rodgers’ options to purchase 120,000 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(8) | Includes Dr. Jeong’s options to purchase 888,435 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(9) | Includes Dr. Benaim’s options to purchase 904,984 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
(10) | Includes options to purchase 7,297,902 shares of Common Stock that are currently exercisable or exercisable within 60 days of February 21, 2017.
|
PROPOSAL 1: ELECTION OF DIRECTORS
Seven director nominees have been nominated for election at the Annual Meeting to serve a one-year term until the next Annual Meeting in 2018. Allsize of the nominees currently serve as directors of the Company. All nomineesBoard. We have consented to being named in this Proxy Statement and to serve if elected.
The Board of Directors recommends that the nominees listed below be elected as directors of the Company. The Company has no reason to believe that any of the nominees will not be a candidate ornominee will be unwilling or unable to serve. However, in the event that any of the nominees should become unable or unwilling to serve if elected as a director, the persons named in the proxy have advised that they will vote (unless authority has been withdrawn) for the election of such person or persons as shall be designated by management.
The following table sets forth the names, ages and positions of our nominees for directors. All ofdirector. Additional information regarding the director nominees are currently members of our Board of Directors.is set forth below.
Name
| Age
| Position
| Peter Brandt | 59 | Chairman of the Board of Directors | Chang H. Ahn | 65 | Chairman Emeritus, Director and Chief Scientist | Peter Suzdak | 58 | Chief Executive Officer and Director | Charles Beever | 64 | Director | Mark Carthy | 56 | Director | Kwang Soo Cheong | 55 | Director | Richard J. Rodgers | 50 | Director |
Mina Sooch
Peter Brandt. Mr. BrandtMina Sooch, MBA, has served as our Chairman since June 2015 and as director since September 2010. From February 2011 to early 2013, Mr. Brandt served on the Board of Directors and, in December 2012, became Chairman of the Board of Directors of ePocrates, Inc., which was acquired by athenahealth, Inc. Also, from November 2011 until March 2012, Mr. Brandt served as interimOcuphire’s Chief Executive Officer, and President, of ePocrates, Inc. Mr. Brandt served as President, Chief Executive Officer,Treasurer, and as a member of the Board since November 2020. Ms. Sooch currently serves as Vice Chair of Directorsthe Board. Prior to that, she served on the Board of Noven Pharmaceuticals,Private Ocuphire since she co-founded it in February 2018 until November 2020. Prior to Private Ocuphire, from November 2014 to May 2017, she served as president, chief executive officer and a member of the board of directors at Gemphire Therapeutics, Inc., a specialty pharmaceuticalprivate to Nasdaq biopharmaceutical company from early 2008 until Noven’s acquisition by Hisamitsu Pharmaceutical Co., Inc. in August 2009. Priorwhich she co-founded. From July 2012 to leading Noven, Mr. Brandt spent 28 years at Pfizer, the world’s largest pharmaceutical company. HeMay 2014, she served as Pfizer’s President – U.S. Pharmaceuticals Operations, where he helped deliver revenuethe president and earnings growth while engineering major change within Pfizer’s U.S. pharmaceuticals organization. Priorchief executive officer of ProNAi Therapeutics, Inc., a private to running U.S. operations, he led Pfizer’s Latin American pharmaceuticals operations,Nasdaq public oncology company, and as a member of the board of directors from its founding in 2004 through May 2014, as well as the following Pfizer Worldwide Pharmaceuticals functions: finance, information technology, planning anda business development. He also oversaw the operations of Pfizer’s care management subsidiary, Pfizer Healthcare Solutions. Mr. Brandt served as a director of Auxilium Pharmaceuticals, Inc. (“Auxilium”)development advisor from December 2010 to January 2015, at which time Auxilium was acquired by Endo International PLC. Mr. Brandt holds a B.A. from the University of Connecticut and an M.B.A. from the Columbia School of Business. Mr. Brandt contributes his broad operational management experience in the life sciences industry and experience serving on numerous boards of directors of life sciences companies to the Board of Directors.
Chang H. Ahn. Dr. AhnJune 2012. In addition, Ms. Sooch has served as Chairman Emeritusmanaging partner of the BoardApjohn Ventures Fund since its founding in 2003, and co-founded two additional life sciences startups, Afmedica, Inc. and Nephrion, Inc. (renamed CytoPherx, Inc.). She also serves as manager of Directors since June 2015, and as the Company’s Chief Scientist since February 2013. Dr. Ahn served as the Company’s Chairman and Chief Executive Officer from the Company’s incorporation as Rexahn, CorpTara Ventures I, LLC, an angel fund organized in May2002 for life sciences investments. From 2001 until the appointment of Dr. Suzdak as Chief Executive Officer in February 2013. From 1988 to 2001, Dr. Ahn2002, Ms. Sooch also served as an Expert Reviewer of anticancerentrepreneur in residence at North Coast Technology Investors LP. Ms. Sooch has served on multiple additional private and antiviral drug products at the U.S. Foodpublic boards including Biovie Inc. (OTC: BIOV), ZyStor Therapeutics, Inc. (sold to Biomarin Pharmaceutical Inc.), Asterand Inc. (ASTD: LSE), CytoPherx Inc. and Drug Administration (the “FDA”) Center for Drug Evaluation and Research. PriorSvelte Medical Systems, Inc. From 2006 to joining the FDA in 1988, Dr. Ahn carried out cancer research at the National Cancer Institute, as well as at Emory University School of Medicine. In 2003 and 2004, Dr. Ahn organized and chaired the U.S.-Korea Bio Business and Partnership Forum. He alsopresent, Ms. Sooch served as presidentadvisory board member at Wolverine Venture Fund, and from 2004 to 2012 as a board member of Michigan Venture Capital Association, and as chair from 2009 to 2010. From 1993 to
TABLE OF CONTENTS 2000, her senior roles included global account manager at Monitor Deloitte (formerly Monitor Company Group), a global strategy consulting firm based in Boston. Ms. Sooch has been the recipient of numerous awards, including being named one of the SocietyDeal Makers of Biomedical Researchthe Year in 2016 by Crain’s Detroit Business. Ms. Sooch received an MBA from 2000Harvard Business School in 1993 and a B.S. in Chemical Engineering, summa cum laude, from Wayne State University in 1989. Ocuphire believes that Ms. Sooch is qualified to 2003. Dr. Ahn holds a Ph.D. in pharmacology from Ohio State University. He also holds B.S. degrees in pharmacy from Creighton Universityserve on the Board due to her experience raising private and Seoul National University. Dr. Ahn’s expertisepublic capital, her experience on the boards of U.S. private and public biotech companies and her over 25 years in the pharmaceutical industry with a focus on business development, finance, strategy and evaluation of new drugs and applicable regulatory frameworks provides technical experiencemanagement in the bioscience industry topharmaceutical industry. Cam Gallagher Cam Gallagher, MBA, currently serves as Chair of the Board of Directors.
Peter Suzdak. Dr. Suzdak joined the Company as Chief Executive Officer in February 2013, and has served as a directormember of the Board since June 2013. Dr. Suzdak has over 25 years of diverse experience, including several management positions, in the pharmaceutical industry. Most recently, Dr. Suzdak was Chief Scientific Officer of Corridor Pharmaceuticals, a company developing small molecule compounds to treat pulmonary and vascular disorders, from 2010 to 2013.November 2020. Prior to Corridor Pharmaceuticals,that, he was co-Founder, Chief Executive Officer and Chief Scientific Officer of Cardioxyl Pharmaceuticals, a company focusedserved on therapies for the treatment of cardiovascular disease, from 2006 to 2009. Prior to Cardioxyl Pharmaceuticals, he was President and Chief Executive Officer of Artesian Therapeutics, a company engaged in the development of small molecule therapeutics for cardiovascular diseases, from 2002 to 2005. Dr. Suzdak’s experience also includes his position as Senior Vice President of Research and Development of Guilford Pharmaceuticals, a company that developed therapeutics and diagnostics for neurological diseases and cancer, from 1995 to 2002, and as Director of Neurobiology for Novo Nordisk from 1988 to 1995. Dr. Suzdak holds a Ph.D. in pharmacology and toxicology from the University of Connecticut. Dr. Suzdak contributes his extensive pharmacology, clinical development, business development, and pharmaceutical management experience, including his day-to-day leadership of the Company, to the Board of Directors.
Charles Beever. Mr. Beever has servedPrivate Ocuphire from January 2019 until November 2020. He serves as chair of Ocuphire’s audit committee and as a director since May 2006. From 1993 to June 2015, he wasmember of the Company’s nominating and corporate governance committee and compensation committee. He is a Vice President of PwC Strategy&, formerly Booz & Companyco-founder and Booz Allen Hamilton (“Booz Allen”), Prior to being elected Vice President of Booz Allen in 1993, he served as staff member and Engagement Manager at Booz Allen from January 1984 to October 1993. Prior to joining Booz Allen, Mr. Beever served in various management roles at McGraw-Edison Company. Mr. Beever holds a B.A. in Economics from Haverford College, where he was elected to Phi Beta Kappa, and an M.B.A. from the Harvard Graduate School of Business Administration. Mr. Beever contributes extensive managerial and business experience to the Board of Directors.
Mark Carthy. Mr. Carthy has served as a director since February 2014. Mr. Carthy is the Managing Partner of Orion Equity Partners, LLC, a healthcare venture capital management and advisory firm co-founded by Mr. Carthy in 2008. Prior to founding Orion, Mr. Carthy was a Venture Partner and General Partner at Oxford Bioscience Partners, an early stage venture capital firm that provides equity financing and management assistance to companies within the life sciences, technology, energy and healthcare sectors. From 1998 until 2000, Mr. Carthy served as the Biotechnology Portfolio Manager at Morningside Ventures, where he focused on early stage private equity investments. Previously, he was Chief Business Officer of Cubist Pharmaceuticals and Senior Director of Business Development at Vertex Pharmaceuticals. Mr. Carthy served as a member of the board of the New England Venture Capital Association from 2006 until 2013 and was listed on the Forbes Midas List in 2009 as onedirectors of the leading venture capitalists. He received a Bachelor of Chemical Engineering from the University College Dublin, Ireland, a Master of Science in Chemical Engineering from the University of Missouri and a Master of Business Administration from the Harvard Graduate School of Business Administration. Mr. Carthy contributes extensive business and industry expertise to the Board of Directors.
Kwang Soo Cheong. Dr. Cheong has served as a director since May 2006. He is a faculty member at the Department of Finance of the Johns Hopkins University Carey Business School, where he was an Assistant Professor from 2001 to 2005 and has been an Associate Professor from 2006 to date. Dr. Cheong was an Assistant Professor of Economics at the University of Hawaii from 1994 to 2001, and a lecturer at the Department of Economics of Stanford University from 1993 to 1994. During the summer of 1995, Dr. Cheong was a Visiting Fellow in the Taxation and Welfare Division at the Korea Development Institute in Korea. Dr. Cheong holds a B.A. in Economics and an M.A. in Economics from Seoul National University, and a Ph.D. in Economics from Stanford University. Dr. Cheong’s distinguished academic career focused on finance and economics contributes to the Board of Directors’ perspective.
Richard J. Rodgers. Mr. Rodgers has served as a directorZentalis Pharmaceuticals (Nasdaq: ZNTL) since December 2014. He has also served on the boards of VelosBio Inc., since October 2017, and SelectION, Inc., since June 2018. In addition to his board seatroles, Mr. Gallagher has served as chief business officer at Immusoft Corporation since March 2019 and at jCyte, Inc. since December 2019. From 2014 to 2016, he was a board member and the chief business officer at RetroSense Therapeutics, LLC, which was acquired by Allergan in 2016. In June 2007, Mr. Gallagher co-founded Nerveda, LLC, a life sciences seed fund, and served as managing director. Prior to these roles, from 1992 to 2007, he held management positions at Verus Pharma B.V., CV Therapeutics, Inc. and Dura Pharmaceuticals, Inc. Mr. Gallagher holds an MBA from the University of San Diego in 1997 and a B.S. in Business Administration from Ohio University in 1992. Ocuphire believes that Mr. Gallagher is qualified to serve on the Board as a result of his more than 28 years of experience in the life science and biotech industries with a focus on corporate development, finance, marketing business development and early-stage investing, as well as his experience on the boards of various U.S. private and public companies.
Sean Ainsworth Sean Ainsworth, MBA, currently serves as the Lead Independent Director of the Board, of which he has served as a member since November 2020. Prior to that, he served on the Board of Private Ocuphire from April 2018 until November 2020. He serves as chair of Ocuphire’s Compensation Committee and a member of Ocuphire’s Audit Committee. Since 2018, Mr. Ainsworth has been chief executive officer and chairman of the board at Immusoft Corporation, a cell therapy company. Previously, in 2009, he founded RetroSense Therapeutics LLC, an ocular gene therapeutic company, which was acquired by Allergan in 2016. From 2004 to 2012, Mr. Ainsworth served as chief executive officer of GeneVivo, LLC. In 2006, Mr. Ainsworth co-founded Compendia BioScience, Inc. From 2004 to 2012, Mr. Ainsworth served as an advisor to clients in the life sciences and entrepreneurial community on matters related to licensing, strategy and business planning. His other professional experience includes research at Medical Biology Institute, intellectual property roles at Koyama and Associates in Tokyo and international corporate development consulting at the Mattson Jack Group. Mr. Ainsworth holds a B.S. in Microbiology from University of California, San Diego, in 1996 and an MBA from Washington University in St. Louis in 2002. Ocuphire believes Mr. Ainsworth is qualified to serve on the Board due to his 25 years in life sciences industry, his experience investing in and managing companies in the industry, his financial and business expertise and his experience on boards of multiple biotech companies. James S. Manuso James S. Manuso, PhD, MBA has served as a member of the Board since November 2020, as chair of Ocuphire’s nominating and corporate governance committee and as a member of the audit committee. Prior to that, he served on the Board of Private Ocuphire from January 2019 until November 2020. From July 2011 until October 2013, Dr. Manuso served as chairman and chief executive officer of Astex Pharmaceuticals, Inc. (Nasdaq: ASTX) and led the sale of Astex Pharmaceuticals, Inc. to Otsuka Pharmaceuticals. In 2013, he was a senior mergers and acquisitions advisor to Otsuka Pharmaceuticals’ executive management. Since 2014, Dr. Manuso has served as chairman and chief executive officer of Talfinium Investments, Inc., an investment entity and financial consultancy. From 2015 until 2018, Dr. Manuso served as President, CEO and Vice Chairman of RespireRx Pharmaceuticals Inc. (OTC:QB:RSPI), a Phase 3-ready, clinical-stage respiratory and neurological pharmaceutical company. Since 2018, Dr. Manuso has served as managing member of Laurelside LLC, a family office, which he founded. Dr. Manuso has served as board TABLE OF CONTENTS chairman and chairman of the audit, governance and nominating, pricing and compensation committees of multiple companies’ boards, including Biotechnology Industry Organization, Novelos Therapeutics, Inc., Merrion Pharmaceuticals Ltd. (MERR:IEX; Dublin, Ireland), Inflazyme Pharmaceuticals, Inc. (IZP-TSE; Vancouver, Canada), Symbiontics, Inc., which he co-founded (sold to BioMarin Pharmaceutical Inc. as ZyStor, Inc.), Montigen Pharmaceuticals, Inc., Quark Pharmaceuticals, Inc., Galenica Pharmaceuticals, Inc., Supratek Pharma, Inc., EuroGen, Ltd. (London, UK), where he was chairman, and the Greater San Francisco Bay Area Leukemia & Lymphoma Society, where he also served as vice president. Dr. Manuso holds a B.A. with honors in Economics and Chemistry from New York University, a Ph.D. in Experimental Psychology and Genetics from the New School University, and an Executive MBA from Columbia Business School. Ocuphire believes that Dr. Manuso is qualified to serve on the board of directors of the Company due to his over 25 years of experience in the biopharmaceutical industry in finance, business development and management, and his experience as a member of the boards of directors of multiple pharmaceutical companies, both domestic and foreign. Richard Rodgers Richard Rodgers has served on our Board and as chair of the Audit Committee and member of the compensation committee since November 2020. Mr. Rodgers previously served as a member of the board of Rexahn from 2014 until November 2020. Mr. Rodgers currently serves on the Boardboard of Directorsdirectors of Ardelyx, Inc. (Nasdaq: ARDX), a publicly traded pharmaceutical company, and 3-Vthe board of directors of Sagimet Biosciences, Inc., a privately held clinical stage pharmaceutical company. Mr. Rodgers was previously Executive Vice President, Chief Financial Officer, Secretary and Treasurer of TESARO, Inc., an oncology-focused biopharmaceutical company that he co-founded, from March 2010 until August 2013. He served as the Chief Financial Officer from June 2009 to February 2010 of Abraxis BioScience, Inc. which was subsequently acquired by Celgene.Celgene Corporation. Prior to that, Mr. Rodgers served as Senior Vice President, Controller and Chief Accounting Officer of MGI PHARMA, INC., from 2004 until its acquisition by Eisai Co., Ltd. in January 2008. He has held finance and accounting positions at several private and public companies, including Arthur Anderson. Mr. Rodgers received a B.S. in Financial Accounting from St. Cloud State University and his MBA in Finance from the University of Minnesota, Carlson School of Business. Ocuphire believes that Mr. Rodgers’ contributesRodgers is qualified to serve on the Board because of his extensive financial andbackground, industry experience and service on other boards of directors of publicly traded companies. Susan K. Benton Susan K. Benton, MBA, has served on our Board since November 2020. Previously, Ms. Benton has served as the General Manager and Head of the U.S. for Thea Pharma, Inc., a wholly-owned subsidiary of Thea Laboratories, a leading independent ophthalmic pharmaceutical company, since August 2019. Ms. Benton also serves on the boards of two privately held ophthalmic companies, Tarsius Pharma Ltd, since March 2019, and Translatum Medicus, Inc., since July 2019. From April 2015 through July 2019, she served in a number of key leadership positions at Shire, Inc. (“Shire”) and played an instrumental role in the expansion of its ophthalmic pipeline. As the Head of New Products at Shire, she led the Ophthalmic Innovation Committee that shaped and executed the growth strategy for the franchise. Before joining Shire, Ms. Benton served in a leadership capacity in Global Business Development for Bausch + Lomb Pharmaceuticals (“B+L”) from September 2011 through September 2013, where she and the Corporate Development team transacted over ten deals in three years. She was a co-Founder and CCO for an ophthalmic start-up, Sirion Therapeutics, Inc., where she launched and oversaw the commercialization of Durezol® and Zirgan® before they were sold to Alcon and B+L, respectively. Ms. Benton began her ophthalmic career at B+L in March 1995, where she assumed leadership roles as the Head of Diversified Products and the VP of Professional Sales. During her tenure, she launched B+L’s first ever branded products, Lotemax® and Alrex®, in addition to Optivar® through a co-promote with Muro Pharmaceutical. She has also served as a strategic consultant for more than a dozen start-up ophthalmic companies. Her experience outside of ophthalmology includes roles as the VP of Consumer and Professional Sales for Johnson & Johnson’s diabetes franchise, LifeScan, and senior manager roles in Sanofi Pasteur’s vaccine business. Ms. Benton earned her MBA from the University of South Florida and a BS in Biology from Muhlenberg College. Ocuphire believes that Ms. Benton is qualified to serve on the Board given her 30 years’ experience in life sciences with over 20 years focused in ophthalmology. Jay Pepose Dr. Jay Pepose is a nominee to serve on our Board. Dr. Pepose is a board-certified ophthalmologist specializing in cataract, corneal, and refractive surgery and a recognized leader in ophthalmic pharmaceutical and device development. He is the founder and an attending surgeon of Pepose Vision Institute and Professor of Clinical TABLE OF CONTENTS Ophthalmology and Visual Sciences at Washington University School of Medicine, where he held the Bernard Becker Chair. In 1999, Dr. Pepose founded the Pepose Vision Institute, MidAmerica Surgery Center and Midwest Laser Center, now with multiple locations, 6 doctors and 54 staff. In October 2019, these entities were acquired by the Firmament PE group, along with a number of other regional and national ophthalmology practices. Since the acquisition, Dr. Pepose serves as a Board Member and President of Midwest Vision Partners, the midwest division of Vision Integrated Partners (VIP). VIP is Firmament’s management company, servicing a national consortium of practices and ambulatory surgery centers located in Missouri, Illinois, Ohio, Florida and California. Dr. Pepose is also President of Midwest Vision Research Foundation, a non-profit clinical research organization that conducts ophthalmic clinical trials. He also is a co-founder and board member of 911 Vision Foundation, a non-profit charity that provides free LASIK surgery for first responders in the greater St. Louis area. Ocuphire believes that Dr. Pepose is qualified to serve on the Board given his vast experience in life sciences and focus in ophthalmology. The Merger, Reverse Stock Split and Name Change On November 5, 2020, Ocuphire (formerly known as Rexahn Pharmaceuticals, Inc., and prior to the Boardmerger, referred to as “Rexahn”), completed its business combination with Ocuphire Pharma, Inc. (“Private Ocuphire”), in accordance with the terms of Directors.the Agreement and Plan of Merger, dated as of June 17, 2020, as amended, by and among Rexahn, Private Ocuphire, and Razor Merger Sub, Inc., a wholly-owned subsidiary of Rexahn (“Merger Sub”) (as amended, the “Merger Agreement”), pursuant to which Merger Sub merged with and into Private Ocuphire, with Private Ocuphire surviving as a wholly-owned subsidiary of Rexahn (the “Merger”).
In connection with, and immediately prior to the completion of, the Merger, Rexahn effected a reverse stock split of the common stock, at a ratio of 1-for-4 (the “Reverse Stock Split”). Under the terms of the Merger Agreement, after taking into account the Reverse Stock Split, Rexahn issued shares of its common stock to Private Ocuphire stockholders, based on a common stock exchange ratio of 1.0565 shares of common stock for each share of Private Ocuphire common stock. In connection with the Merger, Rexahn changed its name from “Rexahn Pharmaceuticals, Inc.” to “Ocuphire Pharma, Inc.,” and the business conducted by Rexahn became the business conducted by Private Ocuphire.
The BoardNon-Employee Director Compensation
Pre-Merger Compensation Prior to the Merger, directors of Directors recommends a vote FOR the election of eachCompany were compensated as follows: Director | | | $40,000 per annum, plus an additional $25,000
for the Chairman of the Board | Audit Committee (Chair) | | | $15,000 per annum | Audit Committee (Member) | | | $7,500 per annum | Compensation Committee (Chair) | | | $10,000 per annum | Compensation Committee (Member) | | | $5,000 per annum | Nominating and Corporate Governance Committee (Chair) | | | $7,500 per annum | Nominating and Corporate Governance Committee (Member) | | | $3,750 per annum | Business Development Committee (Chair) | | | $10,000 per annum | Business Development Committee (Member) | | | $5,000 per annum |
As part of the director nominees.compensation structure, each incumbent non-employee director received an annual equity grant equal to 0.088% of the outstanding shares of Rexahn at the time of grant. Rexahn also had an informal policy to grant each incoming director an equity award equal to twice the annual grant. Post-Merger Compensation In June 2020, our Board approved a non-employee director cash and equity compensation plan effective as of the closing of the Merger on November 5, 2020. Under this policy, the Company agreed to pay each of its non-employee Executive OfficersTABLE OF CONTENTS directors a cash stipend for service on its board of directors 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 chairperson of the compensation committee, nominating and corporate governance committee or audit committee or service as the non-executive chairperson. The stipends payable to each non-employee director for service on the Company’s Board are as follows: Board of directors | | | $40,000 | | | $35,000 | Audit committee | | | 7,500 | | | 15,000 | Compensation committee | | | 5,000 | | | 10,000 | Nominating and corporate governance committee | | | 4,000 | | | 8,000 | Lead Independent Director | | | 20,000 | | | — |
(1)
| Chairs of each committee do not receive a stipend for being a member of the applicable committee. |
Non-Employee Director Compensation in 2020
In addition to Peter Suzdak, whoseThe following table provides compensation information is included above, set forth below arefor the fiscal year ended December 31, 2020 for each non-employee member of the Board.
Cam Gallagher(2) | | | 13,011 | | | 13,508 | | | 26,519 | Sean Ainsworth(2) | | | 12,004 | | | 13,508 | | | 25,512 | James Manuso(2) | | | 8,596 | | | 13,508 | | | 22,104 | Richard Rodgers | | | 60,163 | | | 141,695 | | | 201,858 | Susan Benton(2) | | | 6,815 | | | 141,695 | | | 148,510 | Alan Meyer(2) | | | 6,196 | | | 20,263 | | | 26.459 | Charles Beever(3) | | | 48,750 | | | — | | | 48,750 | Kwang Soo Cheong(3) | | | 43,451 | | | — | | | 43,451 | Ben Gil Price(3) | | | 42,391 | | | — | | | 42,391 | Lara Sullivan(3) | | | 45,571 | | | — | | | 45,571 | Peter Brandt(3) | | | 69,946 | | | — | | | 69,946 |
(1)
| The amounts reported reflect the aggregate grant date fair value of each equity award granted to the Company’s non-employee directors during the fiscal year ended December 30, 2020, as computed in accordance with ASC 718. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
(2)
| Appointed as a director on November 5, 2020 following the effective time of the Merger. |
(3)
| Mr. Beever, Mr. Cheong, Mr. Price, Ms. Sullivan and Ms. Brandt resigned from the Board on November 5, 2020, pursuant to the Merger Agreement. |
As named executive officers of the Company:
Tae Heum Jeong. Dr. Jeong, 46, has served asCompany, compensation paid to Ms. Sooch and Mr. Swirsky, our former Chief FinancialExecutive Officer and Secretary since May 2005 and was a director from June 2005 to June 2012. Dr. Jeong served as Chief Financial Officer of Rexahn, Corp from December 2002 to May 2005. From 1997 to(who resigned on November 2002, Dr. Jeong served as a senior investment manager at Hyundai Venture Investment Corporation, a venture capital firm where he managed the biotech investment team. He was also a committee member of the Industrial Development Fund of Korea’s Ministry of Commerce, Industry and Energy from 2000 to 2002. Dr. Jeong holds a Doctor of Management from the University of Maryland, an M.S. in Finance from Johns Hopkins University, and a B.S. and an M.S., in Chemistry, from POSTECH.
Ely Benaim. Dr. Benaim, 56, has served as Chief Medical Officer since February 2015. Prior to joining Rexahn, Dr. Benaim was Senior Vice President of Regulatory Affairs & Chief Medical Officer of Berg Pharma from June 2013 to January 2015. Prior to joining Berg Pharma, from March 2011 to June 2013, Dr. Benaim was Global Clinical Development Leader at Millennium Pharmaceuticals Inc., where he oversaw global clinical development of the Aurora A kinase inhibitor program. Prior to joining Millennium, Dr. Benaim served as Vice President of Clinical Affairs for Sangamo BioSciences, where he lead the development of zinc-fingers transcription factors cellular therapies in the areas of Cancer, Diabetes, Neurology, Cardiovascular and HIV. Before Sangamo, Dr. Benaim served at Amgen as Global Clinical Lead for clinical development across several drug development programs. Prior to Amgen he was a Senior Director, Oncology Clinical Development at Salmedix, Inc., where he led the development of TREANDA® to a Phase 3 pivotal trial for lymphoma. Dr. Benaim received his M.D. from the Universidad Central de Venezuela, Caracas and completed his pediatric residency training at the University of South Florida. He completed fellowships in pediatric oncology and bone marrow transplantation at St. Jude's Children's Research Hospital, in Memphis, Tennessee. From 1997 to 2004, he was Assistant Professor in the Department of Pediatrics at the University of Tennessee and an Assistant Member5, 2020, pursuant to the Department of Hematology/Oncology.Merger Agreement) for fiscal 2020 is fully reflected under “Summary Compensation Table for Fiscal Year 2020.”
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE Lisa Nolan.“FOR” Dr. Nolan, 54, has served as Chief Business Officer since June 2016. Prior to this, she served as Chief Business Officer of Relmada Therapeutics, Inc. from April 2015 to June 2016. From March 2010 through June 2016. Dr. Nolan served as Managing Director of Nolex Advisors, LLC, where she led successful competitive processes for out-licensing of early and late-stage pharmaceutical products. Over the course of her career, Dr. Nolan has held various leadership roles at biopharmaceutical companies including Chief Business Officer at Topigen Pharmaceuticals, where she led the acquisition of Topigen by Pharmaxis. Additionally, she served as Vice President, Global Business Development and Strategic Marketing for SkyePharma Inc., where she completed over a dozen out-licensing deals in the U.S. and Europe with deal values ranging in excess of $500 million. Dr. Nolan holds a Ph.D. in clinical pharmacology and a M.Sc., and B.Sc., in pharmacy from Trinity College in Dublin, Ireland.THE ELECTION OF EACH OF THE NOMINATED DIRECTORS. Director IndependenceTABLE OF CONTENTS BOARD AND COMMITTEE INFORMATION
Our Common Stock is listed onWe are committed to good corporate governance practices. These practices provide an important framework within which our Board and management pursue our strategic objectives for the NYSE MKT. We use the NYSE MKT definition of “Independent Director” in determining whether a director is independent in his capacity as a director and in his capacity as a member of a board committee. For the Audit Committee, we additionally use Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Each director serving on our Audit Committee must also comply with the following additional NYSE MKT requirements:
(a) the director must not have participated in the preparationbenefit of our financial statements or any current subsidiary at any time during the past three years; and
(b) the director must be able to read and understand fundamental financial statements, including our balance sheet, income statement, and cash flow statement.
We currently have a total of seven directors, five of whom are Independent Directors. Our Independent Directors are Messrs. Brandt, Beever, Carthy and Rodgers and Dr. Cheong.
stockholders.
Board Leadership Structure
Our Board is currently chaired by Cam Gallagher, who has authority, among other things, to call and preside over meetings of our Board, to set meeting agendas and to determine materials to be distributed to the Board and, accordingly, has substantial ability to shape the work of the Board. The positions of our chairman of the Board and Chief Executive Officer are presently separated. Separating these positions allows our Chief Executive Officer, Ms. Sooch, to focus on our day-to-day business, while allowing Mr. Gallagher to lead the Board.
Role of the Board in Risk Oversight Our Board of Directors does not have a policy on whetherstanding risk management committee, but rather administers this oversight function directly through their Board as a whole. The Board’s risk oversight is administered primarily through the rolefollowing: review and approval of Chairmanan annual business plan; review of a summary of risks and opportunities at meetings of the Board; review of business developments, business plan implementation and financial results; oversight of internal controls over financial reporting; and review of employee compensation and its relationship to our business plans. Director Independence Nasdaq listing standards require that the Company’s board of directors consist of a majority of independent directors, as determined under the applicable rules and regulations of Nasdaq. Based upon information requested from and provided by each proposed director concerning his or her background, employment and affiliations, including family relationships, the Company believes that each current member of the Board 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 Ms. Sooch, the Company’s President and Chief Executive Officer, should be separate or combined. However, atand Mr. Meyer, a director on the present time, these roles are separate. Our Board and former consultant of Directors believesthe Company. In making such independence determinations, the Board considers the current and prior relationships that utilizing separate individuals as Chairman and Chief Executive Officer will provide for additional leadership and management perspective aseach non-employee director has with the Company progressesand all other facts and circumstances that the Board deems relevant in determining each non-employee director’s independence, including the development of its drug candidates. Five of our seven director nominees are independentparticipation by the Company’s non-employee directors, or their affiliates, in certain financing transactions and each of our standing committees (Audit, Nominating and Corporate Governance, and Compensation) is comprised solely of independent directors. We believe this structure provides adequate oversight of Company operations by our independent directors in conjunction with our Chairman and Chief Executive Officer.
Our Audit Committee has primary responsibility for oversight of risk management on behalfthe beneficial ownership of the BoardCompany’s common stock by each non-employee director.
Structure and Operation of Directors. Management reportsthe Board Because our Common Stock listed on Nasdaq, the Company is subject to the Audit Committee on matters relating to risk management andNasdaq listing requirements regarding committee matters. The Company currently has the Audit Committee and management communicate directly with the full Board of Directors on these matters.
Board of Directors and Board of Directors Meetings
The Board of Directors of the Company held seven meetings during the year ended December 31, 2016. Each current director attended 75% or more of the meetings of the Board of Directors and committees of which they were members during the period in which he or she served as a director during the year ended December 31, 2016.
Any shareholder who wishes to send any communications to the Board of Directors or to individual directors should deliver such communications to the Company’s executive offices, 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850, Attention: Corporate Secretary (secretary@rexahn.com). Any such communication should indicate whether the communication is intended to be directed to the entire Board of Directors or to a particular director(s), and must indicate the number of shares of Common Stock beneficially owned by the shareholder. The Secretary will forward appropriate communications to the Board of Directors and/or the appropriate director(s), but will not forward inappropriate communications. Inappropriate communications include correspondence that does not relate to the business or affairs of the Company or the functioning of the Board of Directors or its committees, advertisements or other commercial solicitations or communications, and communications that are frivolous, threatening, illegal or otherwise not appropriate for delivery to directors.
Members of our Board of Directors are encouraged to attend the Annual Meeting if they are available. All members of our Board of Directors in office at the time, except Mr. Carthy, attended the Annual Meeting held in 2016.
Board of Directors Committees
The Board of Directors has three standing committees, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which is composed of three members. Each of these committees has a charter that is available on our website at www.rexahn.com.
Audit Committee
The Audit Committee Charter provides that such committee, among other things:
| · | appoints or replaces and oversees our independent auditors and approves all audit engagement fees and terms; |
| · | preapproves all audit (including audit-related) services, internal control-related services and permitted non-audit services (including fees and terms thereof) to be performed for us by our independent auditors; |
| · | reviews and discusses with our management and independent auditors significant issues regarding accounting and auditing principles and practices and financial statement presentations; |
| · | reviews and approves our procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding accounting or auditing matters; and |
| · | reviews and oversees our compliance with legal and regulatory requirements. |
Mr. Rodgers, Dr. Cheong, and Mr. Beever serve as members of our Audit Committee. Mr. Rodgers serves as Chair of the Audit Committee. The Board of Directors has determined that the Company has twofollowing committees: an audit committee, financial experts serving on the Audit Committee. Both Mr. Rodgersa compensation committee and Dr. Cheong are qualified audit committee financial experts within the meaning of applicable SEC regulations. Each of the current members meets the criteria for independence required by the NYSE MKTa nominating and Rule 10A-3 under the Exchange Act. During the year ended December 31, 2016, the Audit Committee met five times.corporate governance committee.
Nominating and Corporate Governance Committee
The Nominatingnominating and Corporate Governance Committee Charter provides that suchcorporate governance committee among other things:
| · | reviews, evaluates and seeks out candidates qualified to become Board of Directors members; |
| · | reviews committee structure and recommends directors for appointment to committees; |
| · | develops, reevaluates (not less frequently than every three years) and recommends the selection criteria for Board of Directors and committee membership; |
| · | establishes procedures to oversee evaluation of our Board of Directors, its committees, individual directors and management; and |
| · | develops and recommends guidelines on corporate governance. |
Mr. Brandt, Mr. Carthy, and Dr. Cheong currently serve as members of our Nominating and Corporate Governance Committee. Mr. Brandt serves as Chair of the Nominating and Corporate Governance Committee. Each of the Nominating and Corporate Governance Committee’s members meets the criteria for independence required by NYSE MKT.
The Nominating and Corporate Governance Committee reviews, evaluates and seeks out candidates qualified to become Board of Directors members. OurThe Board of Directors currently includes individuals with a diversity of experience, including scientific, business, financial and academic backgrounds. However, while diversity relating to background, skill, experience and perspective is one factor considered in the nomination process, the Company does not have a formal policy relating to diversity. Nominations may be submitted by directors, officers, employees, shareholdersstockholders and others for recommendation to the Board of Directors.Board. In fulfilling this responsibility, the NominatingCompany’s nominating and Corporate Governance Committeecorporate governance committee also consults with the Board of Directors and the Chief Executive Officer concerning director candidates. While weThe nominating and corporate governance committee’s charter is available on our website, www.ocuphire.com, under Investors — Corporate Governance.
The responsibilities of the Company’s nominating and corporate governance committee include the following: reviewing, evaluating and seeking out candidates qualified to become members of the Board; reviewing committee structure and recommending directors for appointment to committees; TABLE OF CONTENTS developing, reevaluating (not less frequently than every three years) and recommending the selection criteria for board and committee membership; establishing procedures to oversee evaluation of the board, its committees, individual directors and management; and developing and recommending guidelines on corporate governance. The current members of our nominating and corporate governance committee are Mr. Gallagher, Ms. Benton, and Mr. Manuso, each of whom has been determined by the Board to be independent under the rules and regulations of the Nasdaq Stock Market LLC. Mr. Manuso is the chair of the nominating and corporate governance committee. Compensation Committee The compensation committee’s charter is available on our website, www.ocuphire.com, under Investors — Corporate Governance. The responsibilities of the compensation committee include the following: fixing salaries of executive officers and reviewing salary plans for other executives in senior management positions; reviewing and making recommendations with respect to the compensation and benefits for the Company’s non-employee directors, including through equity-based plans; evaluating the performance of the Company’s chief executive officer and other senior executives and assisting the Board in developing and evaluating potential candidates for executive positions; and administering the incentive compensation, deferred compensation and equity-based plans pursuant to the terms of the respective plans. The current members of the compensation committee are Mr. Ainsworth, Mr. Gallagher, and Mr. Rodgers. Mr. Ainsworth is the chair of the compensation committee. The compensation committee may form and delegate authorities to subcommittees as appropriate, including, but not limited to, a subcommittee composed of one or more members of the Board or officers of the Company to grant stock awards under the Company’s equity incentive plans. 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, and that the Board consider whether a director is affiliated with the Company and, if so, whether such affiliation would impair the director’s judgment as a member of the Company’s compensation committee. The Board has concluded that the composition of the compensation committee meets the requirements for independence under the rules and regulations of the Nasdaq Stock Market LLC and the SEC. 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. The audit committee’s charter is available on our website, www.ocuphire.com, under Investors — Corporate Governance. 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. The responsibilities of the audit committee include the following: appointing or replacing and overseeing the Company’s independent auditors and approving all audit engagement fees and terms; TABLE OF CONTENTS preapproving all audit (including audit-related) services, internal control-related services and permitted non-audit services (including fees and terms thereof) to be performed for the Company by its independent auditors; reviewing and discussing with management and independent auditors’ significant issues regarding accounting and auditing principles and practices and financial statement presentations; reviewing and approving procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Ocuphire employees of concerns regarding accounting or auditing matters; and reviewing and overseeing compliance with legal and regulatory requirements. 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. Board Meetings and Attendance Board Meetings in 2020 The Board meets regularly throughout the year and holds special meetings and acts by written consent from time to time. During fiscal year 2020, the Board held eleven meetings. During fiscal year 2020, none of the directors attended fewer than 75% of the aggregate of the total number of meetings held by the Board during his or her tenure. The independent members of the Board also meet separately to discuss such matters as the independent directors consider appropriate. We do not have a policy regarding attendance by directors at the Company’s annual meetings of stockholders. Audit Committee Meetings in place formal procedures2020 During fiscal year 2020, the audit committee held five meetings, and none of the audit committee members attended fewer than 75% of the aggregate of the total number of audit committee meetings held during his or her tenure. Compensation Committee Meetings in 2020 During fiscal year 2020, the compensation committee held two meetings, and none of the compensation committee members attended fewer than 75% of the aggregate of the total number of audit committee meetings held during his or her tenure. 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 Chairman) may do so by which shareholders may recommend director candidatesletters addressed to the Nominatingattention 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 Corporate Governance Committee, shareholders may communicate withprovided to the members of the Board of Directors, including the Nominatingunless such communications are unsolicited items, sales materials and Corporate Governance Committee, by writingother routine items and items unrelated to the Secretaryduties and responsibilities of the Board. Considerations in Evaluating Director Nominees If a vacancy on the Board occurs or the Board increases in size, the Board 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. TABLE OF CONTENTS 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 Exchange Act or the Securities Act unless and only to the extent that we specifically incorporate it by reference. The audit committee has reviewed and discussed with our management and Ernst & Young, LLP (“EY”) our audited consolidated financial statements as of Directors at our headquarters address. In addition, our Amended and Restated Bylaws establish a procedure with regard to shareholder proposals for the Annual Meeting of Shareholders, including nominations of persons for election to the Board of Directors. Because shareholders have an adequate opportunity to recommend nominees for directors, we believe that formal procedures are not necessary. During thefiscal year ended December 31, 2016,2020. The audit committee has discussed with the Nominatingindependent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and Corporate Governance Committee met once. Compensation Committee
the SEC.
The Compensation Committee Charter provides that suchaudit committee among other things: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.
| · | fixes salaries of executive officers and reviews salary plans for other executives in senior management positions; |
| · | reviews and makes recommendations with respect to the compensation and benefits for non-employee directors, including through equity-based plans; |
| · | evaluates the performance of our Chief Executive Officer and other senior executives and assists the Board of Directors in developing and evaluating potential candidates for executive positions; and |
| · | administers our incentive compensation, deferred compensation and equity-based plans pursuant to the terms of the respective plans. |
The Compensation Committee may delegate this authorityBased on the review and discussions referred to subcommittees consisting of one or more of its members.
Our Chief Executive Officer makes recommendationsabove, the audit committee recommended to the Compensation Committee regardingBoard that the Company’s business goals andaudited financial statements be included in our company’s Annual Report on Form 10-K for the performance of executives in achieving those goals, and recommends other executives’ compensation levels to the Compensation Committee based on such performance. The Compensation Committee considers these recommendations and then makes an independent decision regarding officer compensation levels and awards.
As part of determining compensation for our executive officers, the Compensation Committee has engaged Radford, an AON Hewitt Consulting company, as its independent compensation consultant. Radford provides analysis and recommendations to the Compensation Committee regarding:
| · | trends and emerging topics with respect to executive compensation; |
| · | peer group selection for executive compensation benchmarking; |
| · | compensation practices for our peer group; |
| · | compensation programs for executives; and |
| · | stock utilization and related metrics. |
When requested, Radford consultants attend meetings of the Compensation Committee. Radford reports to the Compensation Committee and not to management, although Radford confers with management for purposes of gathering information for its analyses and recommendations. In determining to engage Radford, the Compensation Committee considered the independence of Radford, and determined that Radford and the individual compensation advisors employed by Radford are independent.
Mr. Beever, Mr. Rodgers and Mr. Carthy currently serve as members of our Compensation Committee. Mr. Beever serves as Chairman of the Compensation Committee. Each of the members meets the criteria for independence required by NYSE MKT. During thefiscal year ended December 31, 2016,2020 for filing with the Compensation Committee met six times.SEC.
Audit Committee: Richard Rodgers
James S. Manuso
Sean Ainsworth Compensation Discussion & Analysis
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
This Compensation Discussion & Analysis addressesThe Audit Committee has appointed EY as the principles underlying our policies and decisions with respectindependent registered public accounting firm to audit the compensation of our executive officers who are named in the “Summary Compensation Table” below, or our “named executive officers,” and material factors relevant to these policies and decisions. It should be read together with the related tables and disclosures that follow. Our named executive officersCompany's consolidated financial statements for the year ending December 31, 2021. Effective November 5, 2020 in connection with the Merger, the Audit Committee approved the dismissal of Baker Tilly US, LLP as the Company's independent registered public accounting firm.
As a result of the Merger, Private Ocuphire became a wholly-owned subsidiary of the Company. For accounting purposes, the Merger is treated as a reverse acquisition and, as such, the historical financial statements of the accounting acquirer, Private Ocuphire, became the historical financial statements of the Company. The financial statements of the Company as of and for the years ended December 31, 2016 were:2020 and 2019 were audited by EY. In a reverse acquisition, a change of accountants is presumed to have occurred unless the same accountant audited the pre-merger financial statements of both the legal acquirer and the accounting acquirer, and such change is generally presumed to occur on the date the reverse acquisition is completed. We expect that representatives of EY will be present at the Annual Meeting, will be able to make a statement if they so desire and will be available to respond to appropriate questions. At the Annual Meeting, the stockholders are being asked to ratify the appointment of EY as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Our Board is submitting the selection of EY to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. If this proposal does not receive the affirmative approval of a majority of the votes present in person or by proxy and entitled to vote on the proposal, the Board would reconsider the appointment. Even if our stockholders ratify the selection, our Board, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the Board believes that such a change would be in our best interests and the interests of our stockholders. 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, 2020 and 2019, which were approved by the Audit Committee in accordance with its established policies and procedures. Audit fees(1) | | | $674,300 | | | $312,800 | Audit-related fees(2) | | | $— | | | — | Tax fees(3) | | | $— | | | — | All other fees | | | $— | | | — | Total fees | | | $674,300 | | | $312,800 |
(1)
| · | Peter Suzdak,Audit fees include fees for professional services provided by EY in connection with the annual audit of our Chief Executive Officerconsolidated financial statements, review of our quarterly consolidated financial statements, and related services that are typically provided in connection with registration statements and other SEC filings. Fees for fiscal year 2019 related to Private Ocuphire. |
(2)
| · | Tae Heum Jeong,Audit-related fees include fees billed for assurance and related services reasonably related to the performance of the audit or reviews of our Chief Financial Officerconsolidated financial statements that are not included as audit fees. There were no such fees incurred during the years ended December 31, 2020 or 2019. |
(3)
| · | Ely Benaim, our Chief Medical OfficerTax fees include fees for tax compliance, advice and planning. There were no such fees incurred during the years ended December 31, 2020 or 2019. |
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. | · | Lisa Nolan, our Chief Business Officer |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 2.TABLE OF CONTENTS Dr. Nolan joined the Company in July 2016. The information with respect to Dr. Nolan discussed below and in the tables that follow reflects the compensation she received from the Company for the portion of 2016 that she was employed by the Company. During 2016, the above individuals were the only individuals who served as executive officers.
Compensation Philosophy and Objectives
ADVISORY VOTE TO APPROVE OUR NAMED EXECUTIVE OFFICERS’ COMPENSATION
Our primary objectives with respect toBoard proposes that stockholders provide advisory (non-binding) approval of the compensation of our named executive officers, are to attract top executive talent, and to retain and motivateas disclosed in this proxy statement in accordance with the SEC’s rules (commonly known as a “say-on-pay” proposal). We recognize the interest our existing executives because we believe theystockholders have experience and competencies that are critical to achievementin the compensation of our business goals. We seek to achieve these objectives by:executives and we are providing this advisory proposal in recognition of that interest and as required by Section 14A of the Exchange Act.
In a non-binding advisory vote on the frequency of the say-on-pay proposal held at Rexahn’s 2017 annual meeting of shareholders, a majority of shareholders voted in favor of holding say-on-pay votes annually. In light of this result and other factors considered by the Board, the Board determined that the Company would hold advisory say-on-pay votes on an annual basis until the next required advisory vote on such frequency, which must be held no later than 2023.
| · | Establishing the components of our compensation packages at competitive levels. This means using comparative market data to target overall compensation levels, with a focus on cash conservation that results in cash compensation at or below the 50th percentile.
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| · | Using an annual variable incentive compensation that is tied to specific corporate goals. Our annual incentive program is focused on motivating our executives to achieve Company-wide goals that are tied to our strategic plan.
|
| · | Using equity awards that vest over time and deliver greater value as our stock price increases. We use equity awards in order to align our named executive officers’ interests with the interest of our shareholders in increasing long-term shareholder value.
|
Strong Compensation Practices
OurPlease read “Executive Compensation” for additional details about our named executive officer compensation program, features a number of practices designed to align furtherincluding information about the intereststarget and earned compensation of our named executive officers with those ofin 2020.
We are asking our shareholders. Practices we employ:
| · | We pay for performance. Compensation tied to Company performance comprises a significant part of an executive’s total compensation. Performance is used for determining the size of both short-term and long-term awards.
|
| · | We target pay competitively. We seek to target pay to verifiable market data in order to ensure that we are both paying fairly and not overpaying our executives.
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| · | We use an independent compensation consultant. The Compensation Committee uses Radford to help verify market and best practices.
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| · | We have meaningful vesting periods. Beginning with awards made in 2015, equity awards used for our long-term incentive program typically vest over four years.
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Practices we do not employ:
| · | We do not provide for excessive perquisites. We do not provide any perquisites to our named executive officers, except for de minimis amounts of additional life insurance for Dr. Jeong and Dr. Nolan.
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| · | We do not offer guaranteed bonuses. We do not pay annual bonuses without achievement of performance goals, regardless of the reason for the failure to achieve performance goals, and we retain the flexibility to take into account overall Company performance in determining whether to pay bonuses.
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| · | We do not permit hedging. We prohibit profiting from short-term speculative swings in the value of the Company’s stock through “short sales”, “put” and “call” options, and hedging transactions.
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Compensation Setting Process
Determination of Compensation. The Compensation Committee of our Board of Directors makes compensation decisions regarding our named executive officers. Our compensation program and the compensation arrangements and packages we havestockholders to indicate their support for our named executive officers have been influenced overofficer compensation as described in this proxy statement. Accordingly, we will ask our stockholders to vote “FOR” the last several years by our change from a company led by our founder to a company led by a new chief executive officer and other new executive officers. As those changes occurred, our Compensation Committee determined that it would be appropriate to have a more structured and competitive compensation program. As a result of that decision, in mid-2014 the Compensation Committee engaged Radford, an AON Hewitt Consulting company, as an independent compensation consultant to provide advice on the overall compensation program, as well as information regarding market and best practices. The Company used the information provided by Radford for setting 2015 compensation and continued to use that information for setting 2016 compensation. The Committee determined that it was a more prudent use of resourcesfollowing resolution at the time to continue to rely on the 2015 report, rather than paying to obtain a newer report. In advance of setting 2017 compensation, at the end of 2016 the Committee received a new report from Radford. The new report validated the decisions made by the Committee for 2016, particularly with respect to the percentages used for short-term and long-term incentives.Annual Meeting:
When making decisions about compensation for the named executive officers other than Dr. Suzdak, the Compensation Committee considers the recommendations of Dr. Suzdak regarding their performance and the Committee’s compensation consultant, as well as its industry experience and business judgment. Dr. Suzdak does not make recommendations with respect to his own compensation.
The Compensation Committee also intends to consider the outcome of say on pay votes when making executive compensation decisions in the future. See “Proposal 3” below for this year’s “say on pay” proposal. In the last shareholder vote, approximately 94% of the votes cast on this proposal were voted in favor of the proposal. The Compensation Committee believes that this overwhelming majority of votes cast affirms shareholders’ support for the judgment of the Compensation Committee in setting executive compensation and, as a result, did not set or change 2016 executive compensation as a direct result of the prior shareholder vote.
Independent Compensation Consultant. Radford, as the Compensation Committee’s independent compensation consultant, provides analysis and recommendations to the Compensation Committee regarding:
| · | trends and emerging topics with respect to executive compensation; |
| · | peer group selection for executive compensation benchmarking; |
| · | compensation practices for our peer group; |
| · | compensation programs for executives; and |
| · | stock utilization and related metrics. |
When requested, Radford consultants attend meetings of the Compensation Committee. Radford reports to the Compensation Committee and not to management, although Radford confers with management for purposes of gathering information for its analyses and recommendations.
Comparative Framework. As discussed above, as part of its consideration of executive officer compensation for 2016, the Compensation Committee used a comparative framework developed with the assistance of Radford in mid-2014. This framework blends equally information from the proxy statements of a peer group of companies and from survey data assembled by Radford in order to come up with a competitive market composite against which compensation can be measured. The survey data used for the competitive market composite was based on public biopharmaceutical companies having fewer than 100 employees and a market capitalization of between $100 million and $600 million and was taken from the Radford 2014 Global Life Sciences Survey.
To develop the peer group of companies, the Compensation Committee, with assistance from Radford, considered the stage of product development, market capitalization and other key business metrics of biotechnology and biopharmaceutical companies. The selected peer group consisted of the following companies:
Achillion Pharmaceuticals, Inc. | Fate Therapeutics, Inc. | Ocera Therapeutics, Inc. | Akebia Therapeutics | Flexion Therapeutics, Inc. | Targacept, Inc. | Ambit Biosciences Corporation | Galectin Therapeutics, Inc. | TetraLogic Pharmaceuticals Corporation | Arrowhead Research Corp. | GlycoMimetics, Inc. | TG Therapeutics, Inc. | BIND Therapeutics, Inc. | Idera Pharmaceuticals, Inc. | Trevena, Inc. | Cytokinetics, Incorporated | MEI Pharma, Inc. | ZIOPHARM Oncology, Inc | Esperion Therapeutics, Inc. | Neuralstem, Inc. | |
In 2014, when this peer group was confirmed by the Compensation Committee for use in setting 2015 compensation, none of these companies had active product candidates more advanced than Phase 2 and our market capitalization was at approximately the 44th percentile of the group.
Components of our Compensation Program
The compensation program for our named executive officers consists of base salary, annual variable incentives under our short-term incentive (“STI”) program and long-term incentives, for which we currently use stock option awards. Our named executive officers are also entitled to certain compensation upon termination of their employment. We believe these different forms of compensation provide appropriate incentives to achieve our business goals within the context of our overall philosophy for compensation.
It is the objective of the Compensation Committee to generally establish compensation for our named executive officers so that base salary and short-term incentive target opportunities are at or below the 50th percentile of the competitive market composite, with long-term incentive opportunities between the 50th and the 75h percentile of the competitive market composite, subject to downward adjustment to reflect prior performance. The Compensation Committee believes these targets are consistent with our philosophy discussed above of establishing compensation at competitive levels in order to attract and retain high performing executives, while focusing on opportunities to align our named executive officers’ interests with the interest of our shareholders in increasing long-term shareholder value.
Base Salary. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, roles and responsibilities.
For 2016, there were no changes to the base salaries for Dr. Suzdak, Dr. Jeong or Dr. Benaim. Dr. Suzdak and Dr. Jeong’s salaries had been increased in mid-2014 as a result of the overall review done by the Compensation Committee of our executive compensation program. At that time, the base salary for both of these executive officers was set at the 25th percentile of the competitive market composite. When Dr. Benaim was hired by the Company in 2015, his base salary was initially set at $375,000, which resulted from the negotiation necessary to attract him to the Company and reflected approximately the 50th percentile of the competitive market composite data. When Dr. Nolan was hired by the Company in 2016, her base salary was initially set at $320,000, which resulted from the negotiation necessary to attract her to the Company and reflected approximately the 50th percentile of the competitive market composite data that had been obtained in 2014.
Short-term Incentive Program.
General. Our STI program is intended to provide a cash incentive to our named executive officers for achieving Company-wide goals approved at the beginning of each year by our Compensation Committee. We believe that having an annual STI program provides an important and customary retention tool and motivates our executives to achieve the specific goals that are a part of the program. The Compensation Committee establishes a set bonus target expressed as a percentage of salary for each named executive officer and established goals for the STI program. After the conclusion of the year, the Compensation Committee determines at what level the goals were achieved.
Target Payout. The STI program is structured so that achievement of the Company-wide goals at a level of 100% would result in the named executive officer receiving an STI target payment in an amount equal to a specified percentage of his or her base salary. The target percentages were equal to 50%, 35%, 40% and 35% for Dr. Suzdak, Dr. Jeong, Dr. Benaim and Dr. Nolan, respectively. These percentages were consistent with the 50th percentile of the competitive market composite provided by Radford. Accordingly, because these percentages are expressed as a percentage of base salaries, the STI payment opportunities for Dr. Suzdak and Dr. Jeong are lower than the 50th percentile of the competitive market composite.
Company-wide Goals. For 2016, the Compensation Committee established three categories of Company-wide goals. This approach of using Company-wide goals reflects our belief that if the primary focus of our named executive officers is the achievement of Company-wide goals that are shared across the organization, then we will increase the likelihood of achieving our strategic plan. However, in order to take into account individual performance, the Compensation Committee established different weighting for each named executive officer based on their areas of responsibility. For 2016, the Compensation Committee selected the following goals:
| 1. | Clinical and Scientific Goals, the purpose of which was to advance the clinical status of compounds in the portfolio (Weighted 40% for Dr. Suzdak, 50% for Dr. Benaim, 30% for Dr. Jeong and 40% for Dr. Nolan): |
| · | Complete the first part of RX-3117 and Supinoxin Phase Ib/IIa clinical proof-of-concept trials and select the drug dosage and indication for further study |
| · | Complete stage 2 enrollment of Archexin Phase IIa |
| · | Identify at least one novel/patentable scaffold from the 3D Gold/TIMES platforms |
| 2. | Financial and Strategic Goals, the purpose of which was to end the year with a longer cash ‘runway’ than at the beginning of the year (Weighted 40% for Dr. Suzdak, 30% for Dr. Benaim 50% for Dr. Jeong, and 40% for Dr. Nolan):
|
| · | Complete a corporate partnership for specified product candidates |
| · | Complete additional financings |
| · | Target greater than 12 months of cash on hand at year end |
| 3. | Operational goals, the purpose of which was to have effective operations (Weighted 20% for each named executive officer): |
| · | Meet or exceed expense and cash management targets based on 2016 budget, including introducing practices to improve overall productivity |
| · | Build a stronger organization |
Company-wide Goals and Payout in Stock Options. In early 2017, our Compensation Committee assessed our progress on the Company-wide goals and determined the amounts earned under the STI program. The Committee determined that progress had been made on the clinical goals, but stage 2 enrollment in Archexin’s Phase IIa clinical trial had not been completed by the end of the year. The Committee determined that while the Company had completed two financings in 2016 and met targets for cash on hand, a corporate partnership had not been completed. The Committee determined“RESOLVED, that the operational goals were fully met basedCompany’s stockholders approve, on continued strong improvements toan advisory basis, the organization, including the hiring of Dr. Nolan, and the Company’s achievement of its budget expectations. The Committee’s assessment of the goal completion, as well as its overall assessment of the performancecompensation of the named executive officers, resultedas disclosed in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Summary Compensation Table, and the other related tables and disclosure.”
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’ concerns and the Board will evaluate whether any actions are necessary to address those concerns. OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 3. TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of our Common Stock as of April 15, 2021 for: each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our Common Stock; each of our named executive officers; each of our directors; and all of our current executive officers and directors as a group. The table lists applicable percentage ownership based on 11,749,172 shares of Common Stock outstanding as of April 15, 2021. 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, 2021. 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 STI payoutescrow account for Dr. Suzdakthe benefit of 70%such holder to the extent the receipt of his target (or 35%such shares would cause such holder, together with its affiliates, to beneficially own a number of his base salary)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. Except as otherwise noted below, the address for persons listed in the table is c/o Ocuphire Pharma, Inc., 60% for Dr. Jeong (or 21% of his base salary), 80% for Dr. Benaim (or 32% of his base salary), and 70% for Dr. Nolan (or 24.5% of her pro-rated base salary).c/o Mina Sooch, 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335. Greater than 5% Stockholders:
| | | | | | | Altium Growth Fund, LP(2) | | | 5,562,590 | | | 9.99% | Empery Entities(3) | | | 5,529,902 | | | 9.99% | Apexian Pharmaceuticals, Inc.(4) | | | 779,993 | | | 6.6% | Directors and Named Executive Officers:
| | | | | | | Mina Sooch(5) | | | 1,134,486 | | | 9.4% | Cam Gallagher(6) | | | 102,622 | | | * | Sean Ainsworth(7) | | | 125,941 | | | 1.1% | Alan R. Meyer(8) | | | 553,620 | | | 4.7% | James S. Manuso(9) | | | 86,354 | | | * | Richard Rodgers(10) | | | 56,158 | | | * | Susan K. Benton | | | 1,893 | | | * | Jay Pepose(11) | | | 21,279 | | | * | Bernhard Hoffmann(12) | | | 171,359 | | | 1.4% | Amy Rabourn(13) | | | 24,668 | | | * | Douglas Swirsky | | | 1,041 | | | * | All Current Directors and Officers as a Group (9 persons)(14) | | | | | | 18.0% |
The table below shows each executive officer’s target STI award and the amount earned under the STI plan. The STI awards were paid in cash.
| Name | | Target STI Payout | | | Earned STI Award Percentage | | | Earned STI Award Value | | | Peter Suzdak | | $ | 215,000 | | | | 70 | % | | $ | 150,500 | | | Tae Heum Jeong | | $ | 103,250 | | | | 60 | % | | $ | 61,950 | | | Ely Benaim | | $ | 150,000 | | | | 80 | % | | $ | 120,000 | | | Lisa Nolan | | $ | 54,600 | (1) | | | 70 | % | | $ | 38,220 | |
*
| (1) | Dr. Nolan’s 2016 target STI payout is calculated by based on her pro-rated base salary.Less than 1% |
Long-term Incentive Program. Our use of equity awards is intended to align
TABLE OF CONTENTS (1)
| Based on 11,749,172 shares of Common Stock outstanding as of April 15, 2021. |
(2)
| Based on a Schedule 13G/A filed on February 16, 2021, and the Company’s records regarding the issuance of warrants. The number of shares consists of (i) 895,481 shares of Common Stock held directly and 1,173,409 shares held in escrow for the benefit of the holder, and (ii) 3,493,700 shares of Common Stock issuable upon exercise of the warrants, without giving effect to the blocker provision described above. Altium Capital Management, LP, the investment manager of Altium Growth Fund, LP, has voting and investment power over these securities. Jacob Gottlieb is the managing member of Altium Capital Growth GP, LLC, which is the general partner of Altium Growth Fund, LP. Each of Altium Growth Fund, LP and Jacob Gottlieb disclaims beneficial ownership over these shares. |
(3)
| Based on a Schedule 13G/A filed on February 2, 2021, and the Company’s records regarding the issuance of warrants. Includes (i) 511,153 shares of Common Stock held directly and 1,525,049 shares held in escrow for the benefit of the holder, and (ii) 3,493,700 shares of Common Stock issuable upon exercise of the warrants, without giving effect to the blocker provision described above. The securities are held by Empery Asset Master Ltd (“EAM”), Empery Tax Efficient, LP (“ETE”), and Empery Debt Opportunity Fund, LP (“EDOF”, and together with EAM and ETE, the “Empery Entities” and each, an “Empery Entity”). Empery Asset Management LP, the authorized agent of each Empery Entity, has discretionary authority to vote and dispose of the shares held by each Empery Entity and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by the Empery Entities. The Empery Entities, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares. The address of Empery Asset Management, LP is 1 Rockefeller Plaza, Suite 1205, New York, NY 10020. The address for Empery Asset Management is c/o Empery Asset Management, 1 Rockefeller Plaza, Suite 1205, New York, NY 10020. |
(4)
| The address for Apexian is 20 North Meridian Street, Suite 801, Indianapolis, IN 46204. With regard to the shares held by Apexian, the members of the board of directors of Apexian (who are: John H. Barnard, David A. Broecker, Homer L. Pearce, Mark R. Kelley, and Martin Haslanger) share voting and investment discretion with respect to these shares. |
(5)
| Includes (i) options to purchase 314,983 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 19,459 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(6)
| Includes (i) options to purchase 64,300 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 14,968 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(7)
| Includes (i) options to purchase 66,308 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 14,968 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(8)
| Includes (i) options to purchase 63,597 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 2,994 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(9)
| Includes (i) options to purchase 64,300 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 7,484 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(10)
| Includes warrants to purchase 29,937 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(11)
| Includes options to purchase 19,166 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(12)
| Includes options to purchase 71,239 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(13)
| Includes options to purchase 24,668 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
(14)
| Includes (i) options to purchase 669,395 shares of Common Stock that are exercisable within 60 days of April 15, 2021 and (ii) warrants to purchase 89,810 shares of Common Stock that are exercisable within 60 days of April 15, 2021. |
TABLE OF CONTENTS The following table provides information regarding our named executive officers’ interests with the interest of our shareholders by providing an incentive to our named executive officers as of April 15, 2021: Mina Sooch | | | 53 | | | Chief Executive Officer, President and Director | Bernhard Hoffmann | | | 65 | | | Vice President of Corporate Development and Operations | Amy Rabourn | | | 41 | | | Vice President of Finance |
See “Proposal No. 1 — Election of Directors” for biographical and other information regarding Ms. Sooch. Bernhard Hoffmann Mr. Hoffmann has served as Vice President of Corporate Development and Operations of the Company since November 2020, and prior to increase long-term shareholder value. Furthermore, we believe that as Vice President of Corporate Development and Finance of Private Ocuphire since its founding in February 2018. Previously, he served as an advisor to the founders of Ocularis from 2008 to February 2018 related to raising capital and evaluating possible strategic transactions for the company. Since 2004, Mr. Hoffmann has served as a financial and strategic advisor to emerging pharmaceutical development companies, including SynDevRx, Inc., a pioneer in the biopharmaceutical industry, equity awards arefield of metabo-oncology. Prior to that, he served as a primary motivatordirector at Prudential Vector Healthcare Group from 1996 to retain executives. For 2016, we use stock options for equity awards, including because2001 and as chief financial officer and Managing Director, Investment Banking, of EHS Securities, LLC from 2001 to 2003. In both roles, Mr. Hoffmann managed numerous private placements, initial public offerings and follow-on offerings, as well as strategic and license transactions. Previously, Mr. Hoffmann gained extensive experience in corporate finance and merger and acquisition transactions and managed capital markets relationships at Goldman Sachs and Credit Suisse First Boston. Mr. Hoffmann earned his undergraduate degree in English from Dartmouth College and his MBA from the beginningTuck School of Business. Amy Rabourn Ms. Rabourn has served as Vice President of Finance of the yearCompany since November 2020. Ms. Rabourn has over eighteen years of finance and accounting experience, including public company experience, with a focus on life sciences. In her most recent role, she was Director of Finance at Gemphire Therapeutics, Inc. from December 2014 through December 2019, which merged with NeuroBo Pharmaceuticals, Inc. in December of 2019. She joined the company in December 2014 as its first finance employee. Ms. Rabourn implemented processes and procedures that wassupported Gemphire through private fund raising and its initial public offering in August of 2016. She oversaw daily financial transactions, performed budgeting and forecasting, and managed the only form of equity compensation that we were authorized to use under the plan approved by our shareholders. We determine the sizefinancial reviews and frequencyaudit, SEC filings and tax preparation. Upon departure of the stock awards based on numerous factors,CFO in September of 2018, she assumed additional responsibilities including management of insurance and HR activities and reporting to the executive’s skills and experience,Audit Committee. After the executive’s responsibilities, performancemerger, she continued as a consultant to NeuroBo in the priorsame role as they transitioned to public company status. Prior to Gemphire, she held a position as Controller of a software start-up, performed financial consulting in the life sciences space and worked in Finance at Pfizer. She is a licensed CPA with public accounting experience from PricewaterhouseCoopers, LLP where she worked in the audit practice. Ms. Rabourn is a graduate of the University of Michigan where she earned a MAcc (Master of Accounting) and BBA with a Finance and Accounting concentration. TABLE OF CONTENTS Summary Compensation Table for Fiscal Year 2020 The following table shows the compensation earned or received during the fiscal year ended December 31, 2020 and the approach to setting compensation described under “—Determination of Compensation” above. In January 2016, the Compensation Committee granted stock options to Dr. Suzdak, Dr. Jeong and Dr. Benaim. In determining the size of the awards, the Committee considered market composite data and generally adjusted awards downward to reflect each executive’s 2015 performance with respect to the goals under the 2015 short-term incentive plan, balancedfiscal year ended December 31, 2019 by a view of the executive’s future potential. In July 2016, Dr. Nolan received an option grant upon joining the Company. The amount of Dr. Nolan’s option grant resulted from negotiation necessary to attract her to the Company and was larger than a regular annual grant would have been to reflect that she was newly joining the Company.
All of the stock options issued to the named executive officers vest over a four year-period, with the first installment vesting on the first anniversary of the award.
Dr. Benaim’s Discretionary Bonus. In August 2016, we entered into a letter agreement with Dr. Benaim, pursuant to which we agreed to pay him a discretionary bonus of $100,000 in a single payment. Dr. Benaim will be required to repay (a) the Net Amount if he resigns for other than Good Reason or is terminated for Cause (each as defined under the terms of Dr. Benaim’s existing employment agreement) on or prior to August 2, 2017, and (b) half the Net Amount if he resigns for other than Good Reason or is terminated for Cause after August 2, 2017 but on or prior to August 2, 2018.
Employment Agreements
At the time of each of our named executive officers joining our Company, we entered into employment agreements with them. Dr. Jeong’s agreement was subsequently amended(as determined pursuant to the SEC’s disclosure requirements for executive compensation in 2010Item 402 of Regulation S-K).
Mina Sooch(4)
Chief Executive Officer and President
| | | 2020 | | | — | | | 81,667 | | | 31,127 | | | 370,279 | | | — | | | 483,073 | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | Bernhard Hoffmann(5)
Vice President of Corporate Development and Operations
| | | 2020 | | | — | | | 36,361 | | | 8,649 | | | 56,966 | | | — | | | 101,976 | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | Amy Rabourn(6)
Vice President of Finance
| | | 2020 | | | 10,000 | | | 33,333 | | | 9,700 | | | 213,623 | | | — | | | 266,656 | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | Douglas J. Swirsky,
Former President and Chief Executive Officer
| | | 2020 | | | — | | | 343,542 | | | — | | | — | | | 1,228,986 | | | 1,572,528 | | | 2019 | | | — | | | 425,000 | | | 212,500 | | | — | | | 13,177 | | | 650,677 |
(1)
| For 2020, the amounts presented in this column represent the pro-rated portion of the total non-equity incentive plan compensation earned by Ms. Sooch, Mr. Hoffmann and Ms. Rabourn beginning on November 6, 2020, as described below under the heading “Bonus”. |
(2)
| The amounts reported reflect the aggregate grant date fair value of the stock options granted to Ocuphire’s named executive officers during 2020 and 2019. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
(3)
| Amounts reflect (1) severance payments in connection with the merger in 2020 which were $1,168,750, (2) $11,648 in COBRA insurance coverage through December 31, 2020, (3) Company 401(k) matching contributions, which were $11,400 in 2020, (4) $37,188 in vacation pay-outs, and (5) the dollar value of group life insurance premiums paid during 2019. |
(4)
| Ms. Sooch was appointed as our President and Chief Executive Officer effective November 6, 2020, and received no compensation from the Company during the fiscal year ended December 31, 2019. |
(5)
| Mr. Hoffmann was appointed as our Vice President of Corporate Development and Operations effective November 6, 2020, and received no compensation from the Company during the fiscal year ended December 31, 2019. |
(6)
| Ms. Rabourn was appointed as our Vice President of Finance effective November 11, 2020, and received no compensation from the Company during the fiscal year ended December 31, 2019. |
Narrative to reflect developments in our business. These agreements were designed to be a part of a competitiveSummary Compensation Table The compensation packageprogram for a publicly-traded company and to keep ourOcuphire’s named executive officers focused on our business goalshave three components: base salary, annual cash bonus and objectives. Thestock option grants, as further described below. Base Salary Pursuant to Ms. Sooch’s and Mr. Hoffmann’s employment agreements, are described in detail“–Employment Agreements” below, Ms. Sooch and Mr. Hoffmann are entitled to annual base salary amounts of $525,000 and $233,750 per year, respectively. Pursuant to Ms. Rabourn’s employment agreement, described in the narrative disclosure following the Summary Compensation Table below.“–Employment Agreements” below, Ms. Rabourn is entitled to an annual base salary amount of $240,000 per year.
Payments on Termination
Bonus
Pursuant to their employment agreements, each of ourMs. Sooch, Mr. Hoffmann and Ms. Rabourn are entitled to certain bonuses as set forth in their employment agreements. In 2020, target bonuses for Ms. Sooch, Mr. Hoffmann and Ms. Rabourn were 50%, 35% and 30% of base salary. In 2020, the board of directors of Private Ocuphire approved performance targets for fiscal 2020 that it would consider in approving bonus payments for 2020. These targets included various corporate objectives related to company financing goals, regulatory submissions, and other corporate goals. TABLE OF CONTENTS In February 2021, the Compensation Committee determined that each of Ms. Sooch, Mr. Hoffmann and Ms. Rabourn had achieved 97% of their target bonuses, resulting in bonus payments of $203,434, $56,525 and $9,700 to Ms. Sooch, Mr. Hoffmann, and Ms. Rabourn, respectively, of which approximately $31,127, $8,649 and $9,700 was earned following the consummation of the Merger. Equity Grants In connection with the closing of the Merger, in November 2020 the Board awarded Ms. Sooch, and Mr. Hoffmann options to purchase 130,000 shares and 20,000 shares of Common Stock, respectively, exercisable at $4.05 per share which vest at month-end from November 2020 through October 2024. In connection with her employment, in November 2020 the Board awarded Ms. Rabourn options to purchase 75,000 shares of Common Stock, exercisable at $4.05 per share, which vest at month-end from November 2020 through October 2024. Employment Agreements Ocuphire has entered into written employment agreements with each of its currently named executive officers, is entitled to specified benefits in the eventas described below. For a discussion of the severance pay and other benefits to be provided in connection with a termination of their employment under specified circumstances, including termination followingand/or a change ofin control ofunder the Company. The terms of these arrangements are more fully described below under “Employment Agreements” and “Potential Payments Upon a Termination or Change in Control.” We believe these protections are appropriate for the senior executives of a biopharmaceutical company such as the Company, including because of the level of acquisition activity in this industry. We believe that providing benefits in the event of a change of control of the Company allows our named executive officers to focus their attention on building our business rather than on the personal implications of a transaction.
Federal Tax Considerations under Section 162(m)
Section 162(m) of the Internal Revenue Code (the “Code”) disallows a federal income tax deduction to any publicly traded corporation for any remuneration in excess of $1.0 million of compensation paid to specified executive officers in a calendar year. Compensation in excess of $1.0 million may be deducted if, among other things, it qualifies as performance-based compensation within the meaning of Section 162(m). We expect that our Compensation Committee will periodically consider the potential consequences of Section 162(m) on the various elements of our executive compensation program. In its judgment, where the Compensation Committee determines it is reasonably practicable and consistent with our overall compensation program objectives, it will seek to structure the equity incentives component of our executive compensation program to comply with the exemptions in Section 162(m). However, we do not consider Section 162(m) to be a priority for the Company given the levels of compensation we pay to our executives.
REPORT OF THE COMPENSATION COMMITTEE
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY US UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE THIS REPORT.
The Compensation Committee of the Board of Directors of the Company has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the board that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K (including through incorporation by reference to this Proxy Statement).
| By the Compensation Committee: | | | | Charles Beever (Chairman) | | Richard J. Rodgers | | Mark Carthy |
Summary Compensation Table
The following table sets forth the annual and long-term compensation, from all sources, for the Company’s named executive officers for services rendered in all capacities to Rexahn for the years ended December 31, 2016, 2015 and 2014, except as noted below. The Company’s named executive officers include the Company’s principal executive officer, its principal financial officer and the two other executive officers that served as executive officers during 2016. The compensation described in this table does not include medical or other benefits which are available generally to all of our salaried employees.
| Name and Principal Position(s) | | Year | | | | | | | | | | | Non- Equity Incentive Plan ($)(2) | | | | | | | | | Peter D. Suzdak | | 2016 | | | 430,000 | | | | -- | | | | 229,581 | | | | 150,500 | | | | 14,010 | | | | 824,091 | | | Chief Executive Officer | | 2015 | | | 430,000 | | | | -- | | | | 629,484 | | | | - | | | | 12,947 | | | | 1,072,431 | | | | | 2014 | | | 368,462 | | | | 150,500 | | | | 881,566 | | | | - | | | | 12,747 | | | | 1,413,275 | | | Tae Heum Jeong | | 2016 | | | 295,000 | | | | - | | | | 22,958 | | | | 61,950 | | | | 13,736 | | | | 393,644 | | | Chief Financial Officer | | 2015 | | | 295,000 | | | | - | | | | 185,342 | | | | - | | | | 12,947 | | | | 493,289 | | | | | 2014 | | | 267,308 | | | | 70,800 | | | | 141,866 | | | | - | | | | 12,747 | | | | 492,721 | | Ely Benaim (3) | | 2016 | | | 375,000 | | | | 100,000 | | | | 114,791 | | | | 120,000 | | | | 13,983 | | | | 723,774 | | | Chief Medical Officer | | 2015 | | | 343,750 | | | | 50,000 | | | | 606,590 | | | | 61,875 | | | | 96,586 | | | | 1,158,801 | | Lisa Nolan (4) | | 2016 | | | 156,513 | | | | - | | | | 192,870 | | | | 38,220 | | | | 12,024 | | | | 399,627 | | | Chief Business Officer | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Reflects grant date fair value computed in accordance with FASB ASC Topic 718. The actual value realized by each officer with respect to option awards will depend on the difference between the market value of our Common Stock on the date the option is exercised and the exercise price. For 2015, option awards reflect options awarded as an equity grant as a long-term incentive (“LTI Options”) in addition to amounts paid in respect of the portion of 2015 short-term incentive awards that was delivered in equity (“STI Options”). |
(2) | For 2015, non-equity incentive awards for Dr. Suzdak and Dr. Jeong, and a portion of the award for Dr. Benaim, were paid by delivery of additional stock options. See the discussion in footnote 1 above. |
(3) | Dr. Benaim joined the Company in February 2015. His 2015 salary represents salary for the portion of 2015 during which he was an employee of the Company. |
(4) | Dr. Nolan joined the Company in July 2016. Her 2016 salary represents salary for the portion of 2016 during which she was an employee of the Company. |
Grants of Plan-Based Awards Table
This table provides information regarding grants of plan-based awards to each of our named executive officers during 2016:
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | | | | | | | | | | Name | | Grant Date | | Target ($) | | | All Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) (1) | | | Grant Date Fair Value of Option Awards ($) (2) | | | Peter Suzdak | | 1/28/2016 | | $ | 215,000 | | | | 1,000,000 | | | | 0.35 | | | $ | 229,581 | | | Tae Heum Jeong | | 1/28/2016 | | $ | 103,250 | | | | 100,000 | | | | 0.35 | | | $ | 22,958 | | | Ely Benaim | | 1/28/2016 | | $ | 150,000 | | | | 500,000 | | | | 0.35 | | | $ | 114,791 | | | Lisa Nolan | | 7/6/2016 | | $ | 54,600 | | | | 1,200,000 | | | | 0.26 | | | $ | 192,870 | |
(1) | Amounts represent the closing price of our Common Stock as reported on the NYSE MKT on the grant date. |
(2) | Reflects the grant date fair value of each award computed in accordance with ASC 718. These amounts do not correspond to the actual value that will be recognized by the named executive officers. |
Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table
For an explanation of the amount of salary, bonus, stock and option awards and other compensation paid to ourcurrent named executive officers, please see “–Compensation Discussion & Analysis–Components“— Potential Payments Upon Termination or Change in Control” below. Each of Our Compensation Program” aboveour current named executive officers has also executed Ocuphire’s standard form of confidential information and “–Employment Agreements” below, as well as the footnotes to the Summary Compensation Tableinvention assignment agreement and Grantshas executed its standard form of Plan-Based Awards Table.confidential information and invention assignment agreement.
Employment Agreements
The Company has employment agreements with each of our named executive officers.
Effective as of February 4, 2013, the Company entered into an employment agreement with Dr. Suzdak to serve as the Company’s Chief Executive Officer for a term of two years with the option to renew the employment agreement for additional one-year periods thereafter until terminated. Pursuant to the employment agreement the Company agreed to pay Dr. Suzdak an annual base salary of $330,000, with the option of a discretionary annual cash bonus of up to 40% of his base salary, as determined by performance against objectives and milestones set by the Board of Directors. Agreement. On August 4, 2014, the Compensation Committee increased Dr. Suzdak’s salary to $430,000. The employment agreement also provides for a grant of 1,200,000 options to purchase shares of the Company’s Common Stock, which grant was made on February 4, 2013, and that the Board of Directors may award him additional options each year. In the event Dr. Suzdak’s employment is terminated by reason of disability or for “cause,” as defined in the employment agreement, the Company will pay Dr. Suzdak his base salary owed up to the termination date, including payment for any unused vacation days. If the Company terminates Dr. Suzdak’s employment without cause or Dr. Suzdak terminates his employment with “Good Reason,” as defined below, then Dr. Suzdak’s stock options will be subject to accelerated vesting to the extent to which they would have vested within the 12 months following termination and the Company shall pay Dr. Suzdak a lump sum equal to his then-current annual base salary, an amount equal to the pro-rata portion of the bonus that he otherwise would have been entitled to, and COBRA premiums for 12 months, if he makes a timely election and is eligible for coverage. In the event the Company terminates Dr. Suzdak’s employment without cause or Dr. Suzdak terminates his employment with Good Reason within the one-year period following a “Change of Control,” as defined in the 2013 Plan, the Company shall pay Dr. Suzdak a lump sum equal to 200% of his current annual base salary, a cash payment to offset any incremental additional state or federal income tax payable as a result of this salary increase, the pro rata portion of his bonus and COBRA premiums for 18 months if he makes a timely election. Dr. Suzdak’s equity awards would also vest and become exercisable in connection with the Change of Control. A resignation by Dr. Suzdak is deemed a resignation for “Good Reason” if he provides written notice to the Company of the specific circumstances alleged to constitute Good Reason within 90 days after any one or more of the following events and such Good Reason is not cured within 30 days of the Company’s receipt of such notice:
| · | a material diminution in his duties or authority inconsistent with his position; |
| · | a change in his reporting from solely and directly to the Company’s Board of Directors; |
| · | a material reduction of his salary or bonus eligibility; |
| · | requiring him to be based at any office that is more than 40 miles from the Company’s office at the time of the signing of the agreement; or |
| · | any material breach by the Company of the terms and provisions of the agreement. |
The employment agreement also contains a provision prohibiting Dr. Suzdak from soliciting the Company’s executives, employees, customers or clients for a period of 12 months following his termination.
On September 9, 2010, the CompanyNovember 5, 2020, Ocuphire entered into an amended and restated employment agreement with Dr. Jeong, its Senior Vice President, Chief Financial Officer and Secretary. Dr. Jeong’sMs. Sooch. Her employment agreement provided for an annual base salary of $200,000. The agreement provided forhas an initial term of three years withbeginning on November 5, 2020 and automatically renews for an automatic one year renewal uponadditional 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. Sooch at least 90 days prior to the expiration of the initial term and everyor any renewal term of its intention not to renew.
Ms. Sooch’s employment agreement entitles her to, among other benefits, the following compensation: (i) an annual base salary of at least $525,000, reviewed at least annually commencing with the review of compensation for the year thereafter unless the officer’s employment is terminated earlier by the Company or the officer. The agreement provides that Dr. Jeong may receiveended December 31, 2020; (ii) an annual cash bonus and an annual option grant in such amounts, if any, as determined by the Compensation Committee. Any such cash bonus shall be paid to Dr. Jeong within 60 days after the date the Compensation Committee determines to award such bonus. In order to receive any such cash bonus, Dr. Jeong must be actively employed by the Company on the date on which such bonus is scheduled to be paid. The agreement also provides that upon the occurrence of any of the following events, the Compensation Committee will meet and determine in its discretion whether Dr. Jeong should be entitled to receive an additional bonus in consideration of his role in bringing about such events: | · | the completion by the Company of a successful end-of-Phase 2 meeting with the Food and Drug Administration for any drug candidate; |
| · | the completion by the Company of pivotal trials of any drug candidate; |
| · | the filing by the Company of a New Drug Application with the Food and Drug Administration with respect to any drug candidate; |
| · | the approval by the Food and Drug Administration of a New Drug Application filed therewith by the Company with respect to any drug candidate; |
| · | the receipt by the Company of additional equity or debt financing; or |
| · | the execution by the Company of an agreement that may lead to the payment to the Company of up-front or milestone payments. |
The agreement entitles Dr. Jeong to receive customary benefits applicable to Rexahn’s other executive level employees, and in addition to receive term life insurance coverage in an amount equalof up to four timesfifty percent (50%) of her annual base salary, for which Dr. Jeong may designate the beneficiary.
Upon a terminationsalary; (iii) participation in equity-based long-term incentive compensation plans generally available to senior executive officers of his employment, Dr. Jeong will be entitled to receive the certain compensation from the Company. If Dr. Jeong’s employment is terminated as a result of his death, disability, for cause by the Company or(beginning in 2020); and (iv) participation in welfare benefit plans, practices, policies and programs (including, without “Good Reason” by Dr. Jeong, as defined below, then he will be entitledlimitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to receive the base salary to which he is otherwise entitled for the period ending on the termination date and for any accrued but unused vacation days asother senior executive officers of the termination date. If Dr. Jeong’sCompany.
Bernhard Hoffmann Employment Agreement. On November 5, 2020, Ocuphire entered into an employment is terminatedagreement with Mr. Hoffmann. His employment agreement has an initial term of three years beginning on November 5, 2020 and automatically renews for any other reason byan additional one-year period at the Company or with Good Reason by Dr. Jeong, but not following a change of control, then he will be entitled to receive the base salary to which he is otherwise entitled for the period ending on the termination date and for any accrued but unused vacation days asend of the termination dateinitial term and an amount equal to his then-current base salary foreach anniversary thereafter, provided that the period beginning on the termination date ending upon the last day of the employment term.
A resignation by Dr. Jeong is deemed a resignation for “Good Reason” if he providesBoard does not provide written notice to Mr. Hoffmann at least 90 days prior to the Companyexpiration of the specific circumstances allegedinitial term or any renewal term of its intention not to constitute Good Reason within 90 days after any one or more ofrenew.
Mr. Hoffmann’s employment agreement entitles him to, among other benefits, the following events and such Good Reason is not cured within 30 days of the Company’s receipt of such notice:
| · | a material diminution in his duties, responsibilities or authority inconsistent with his position, authority, duties or responsibilities; |
| · | a change in his reporting from solely and directly to the Company’s Chief Executive Officer; |
| · | a material reduction of his salary; |
| · | requiring him to be based at any office that is more than 40 miles from the Company’s office at the time of the signing of the agreement; or |
| · | any material breach by the Company of the terms and provisions of the agreement. |
If Dr. Jeong’s employment is terminated by the Company without cause (and not as a result of death or a disability) and such termination date falls within the one-year period immediately following a “Change of Control,” as defined in the Company’s 2013 Stock Option Plan, as amended and restated (the “2013 Plan”), then he will be entitled to receive the following amounts:compensation: (i) thean annual base salary to which he is otherwise entitledof at least $233,750, reviewed at least annually commencing with the review of compensation for the period ending on the termination date and for any accrued but unused vacation days as of the termination date;year ended December 31, 2020; (ii) an amount equal to the greater of (x) twice his then-current base salary and (y) his then-current base salary for the period beginning on the termination date and ending upon the last day of the employment term; (iii) an amount equal to a pro-rata portion of theannual cash bonus to which he otherwise might have been entitled, assuming for such purposes that the executive would have received a bonus for that year equal to half of his then-current base salary; (iv) a one-time cash payment, subject to applicable withholding requirements under applicable state and federal law, in an amount equalof up to thirty-five percent (35%) of his increased income tax costs as a result of payments madeannual base salary; (iii) participation in equity-based long-term incentive compensation plans generally available to him by the Company under this change of control provision of the amended and restated employment agreement; and (v) COBRA premiums for 18 months, if he makes a timely election and is eligible for coverage. Following a change in control termination, Dr. Jeong must in good faith seek other employment in a position comparable to his former position with the Company. The payment obligationssenior executive officers of the Company will be reduced on a dollar-for-dollar basis by the amount of any payments(beginning in 2020); and the value of any benefits received by Dr. Jeong for services rendered(iv) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to any other party during the one-year period following the datesenior executive officers of the change in control. Immediately prior to a change in control, all options, restricted stock and other equity-based awards granted to Dr. Jeong by the Company shall become immediately and fully vested and, in the case of stock options, shall remain exercisable for their respective original terms.Company.
Effective as of February 2, 2015,
TABLE OF CONTENTS Amy Rabourn Employment Agreement. On November 11, 2020, the Company entered into an employment agreement with Dr. Benaim to serve asMs. 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 Company’s Chief Medical Officer. PursuantBoard 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. Ms. Rabourn’s employment agreement entitles her to, among other benefits, the Company agreed to pay Dr. Benaimfollowing compensation: (i) an annual base salary of $375,000,at least $240,000, reviewed at least annually commencing with the review of compensation for the year ended December 31, 2020; (ii) a signing bonus of $50,000, and a discretionary$10,000; (iii) an annual cash bonus in an amount of up to 40%thirty percent (30%) of hisher annual base salary, based on a programsalary; (iv) participation in equity-based long-term incentive compensation plans generally available to senior executive officers of the Company (beginning in 2020); and criteria established by(v) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other senior executive officers of the Compensation Committee. TheCompany. Additionally, pursuant to her employment agreement, also provides for a grant of 1,200,000Ms. Rabourn was granted certain options to purchase shares of the Company’s Common Stock,common stock. Potential Payments Upon Termination or Change in Control Mina Sooch Employment Agreement. Ms. Sooch’s amended and restated employment agreement provides that either party may terminate the agreement at-will, and regardless of the manner in which grant was made on February 2, 2015.Ms. Sooch’s service terminates, she is entitled to receive amounts earned during her term of service, including salary and other benefits. In addition, the agreement provides that in the event Dr. Benaim’s employment is terminated by reason of disability orMs. Sooch’s termination for “cause,” as defined in the employment agreement, the Company will pay Dr. Benaim his base salary owed up to the termination date, including payment for any unused vacation days. If the Company terminates Dr. Benaim’s employment without cause or Dr. Benaim terminates his employment with good reason then Dr. Benaim’s stock optionsor if Ocuphire exercises its right to terminate Ms. Sooch, Ms. Sooch will be subjecteligible to accelerated vesting toreceive the extent to which they would have vested within the 12 months following termination and the Company shall pay Dr. Benaim a lump sum equal to his then-current annual base salary,severance benefits: (i) an amount equal to the pro-rata portionsum of the bonus that he otherwise might have been entitled to, and COBRA premiums for 12 months, if he makes a timely election. A resignation by Dr. Benaim is deemed a resignation for “Good Reason” if he provides written notice to the Company of the specific circumstances alleged to constitute Good Reason within 90 days after any one or more of the following events and such Good Reason is not cured within 30 days of the Company’s receipt of such notice:
| · | a material diminution in his duties, responsibilities or authority inconsistent with his position, authority, duties or responsibilities; |
| · | a material reduction in his annual base salary or target bonus percentage; or |
| · | any material breach by the Company of the terms and provisions of the agreement. |
In the event the Company terminates Dr. Benaim’s employment without cause or Dr. Benaim terminates his employment with Good Reason within the one-year period following a “Change of Control,” as defined in the 2013 Plan, the Company shall pay Dr. Benaim a lump sum equal to his then-current(x) her annual base salary the pro rataand (y) an amount equal to a prorated portion of hisher cash bonus and COBRA premiums for 18 months if he makes a timely election. Dr. Benaim’sthe year in which the termination occurs; (ii) the immediate vesting of Ms. Sooch’s stock options or other equity awards then outstanding and subject to time-based vesting that would also vesthad vested had Ms. Sooch remained employed through the period ending on the 12-month anniversary of the date of termination; and become exercisable in connection with the Change(iii) 12 months of Control. The employment agreement also contains a provision prohibiting Dr. Benaim from soliciting the Company’s executives, employees, customerscontinued health coverage. However, if such termination or clients for a period ofresignation occurs within three months prior to or 12 months following his termination.
Effective as of July 6, 2016, the Company entered into an employment agreement with Dr. Nolan to serve as the Company’s Chief Business Officer. Pursuant to the employment agreement the Company agreed to pay Dr. Nolan an annual base salary of $320,000 and a discretionary annual cash bonus of up to 35% of her base salary, based on a program and criteria established by the Compensation Committee. The employment agreement also provides for a grant of 1,200,000 options to purchase shares of the Company’s Common Stock, which grant was made on July 6, 2016. In the event Dr. Nolan’s employment is terminated by reason of disability or for “cause,” as definedchange in the employment agreement, the Company will pay Dr. Nolan her base salary owed up to the termination date, including payment for any unused vacation days. If the Company terminates Dr. Nolan’s employment without cause or Dr. Nolan terminates her employment with good reason, then Dr. Nolan’s stock optionscontrol, Ms. Sooch will be subjecteligible to accelerated vesting toreceive the extent to which they would have vested within the 9 months following termination and the Company shall pay Dr. Nolan a lump sum equal to her then-current annual base salary,severance benefits: (i) an amount equal to the pro-rata portionproduct of 1.5 times the sum of her annual base salary and the full amount of her target bonus that she otherwise mightfor the then-current fiscal year; (ii) the vesting in full of all of her stock options or other equity awards then outstanding and subject to time-based vesting; and (iii) 12 months of continued health coverage.
The following definitions have been entitledadopted in Ms. Sooch’s employment agreement: “termination for cause” means a termination of Ms. Sooch’s employment by Ocuphire due to (i) acts of dishonesty undertaken by Ms. Sooch and COBRA premiumsintended to result in personal enrichment to her at the expense of Ocuphire; (ii) gross misconduct on the part of Ms. Sooch that is injurious to Ocuphire; (iii) Ms. Sooch’s commission of, or entry into a no contest plea to, any felony; (iv) breach by Ms. Sooch of her fiduciary obligations as an officer or director of Ocuphire; (v) a persistent and deliberate failure by Ms. Sooch to perform the duties and responsibilities of her employment which remains uncured for 9 months, if she makes a timely election. A resignation by Dr. Nolan is deemed a resignation for “Good Reason” if she30 days after Ocuphire provides Ms. Sooch with written notice to the Company of the specific circumstances alleged to constitute Good Reason within 90her intentional action or conduct; or (vi) material breach of any terms and conditions of her employment agreement which remains uncured for 10 days after any one or moreOcuphire provides Ms. Sooch with written notice. “termination for good reason” means a termination of the following events and such Good Reason is not curedMs. Sooch’s employment by Ms. Sooch within 30 days of Ocuphire’s failure to cure any of the following: (i) a material reduction in her base salary (unless such reduction is pursuant to a salary reduction program applicable generally to Ocuphire’s similarly situated executives); (ii) removal of Ms. Sooch by Ocuphire from the position of President and Chief Executive Officer; (iii) a material reduction in Ms. Sooch’s authority, duties or responsibilities; (iv) a material change in Ms. Sooch’s reporting relationships; (v) the material relocation of Ms. Sooch’s principal place of employment; and (vi) a material breach by Ocuphire of any material provision of Ms. Sooch’s employment agreement. All severance benefits payable to Ms. Sooch under her amended and restated employment agreement are subject to her signing, not revoking and complying with a release of claims in favor of Ocuphire. TABLE OF CONTENTS Bernhard Hoffmann and Amy Rabourn Employment Agreements. Each of Mr. Hoffmann’s and Ms. Rabourn’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, the executive will be eligible to receive the following severance benefits: (i) an amount equal to 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; (ii) 6 months of continued health coverage. Although, if such termination or resignation occurs within three months prior to or 12 months following a change in control, the applicable executive will be eligible to receive the following severance benefits: (i) an amount equal to the product of 1 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) 6 months of continued health coverage. The following definitions have been adopted in each of Mr. Hoffmann’s and Ms. Rabourn’s employment agreement: “termination for cause” means a termination of the executive’s employment by Ocuphire due to (i) acts of dishonesty undertaken by the executive and intended to result in personal enrichment to him or her at the expense of Ocuphire; (ii) gross misconduct on the part of the executive that is injurious to Ocuphire; (iii) the executive’s commission of, or entry into a no contest plea to, any felony; (iv) breach by the executive of his or her fiduciary obligations as an officer or director of Ocuphire; (v) a persistent and deliberate failure by executive to perform the duties and responsibilities of his or her employment which remains uncured for 30 days after Ocuphire provides executive with written notice of his or her intentional action or conduct; or (vi) material breach of any terms and conditions of his or her employment agreement which remains uncured for 10 days after Ocuphire provides the executive with written notice. “termination for good reason” means a termination of the executive’s employment by the executive within 30 days of Ocuphire’s failure to cure any of the following: (i) a material reduction in executive’s base salary (unless such reduction is pursuant to a salary reduction program applicable generally to similarly situated executives); (ii) removal of executive by Ocuphire from the position of Vice President; (iii) a material reduction in the executive’s authority, duties or responsibilities; (iv) a material change in the executive’s reporting relationships; or (v) a material breach by Ocuphire of any material provision of the executive’s employment agreement. All severance benefits payable to either executive under his or her employment agreement are subject to the executive signing, not revoking and complying with a release of claims in favor of Ocuphire. 2020 Equity Incentive Plan The Ocuphire 2020 Equity Incentive Plan (the “2020 Plan”) is designed to secure and retain the services of the Company’s receiptemployees, directors and consultants, provide incentives for such employees, directors and consultants to exert maximum efforts for the success of such notice:
| · | a material diminution in her duties, responsibilities or authority inconsistent with his position, authority, duties or responsibilities; |
| · | a material reduction in her annual base salary or target bonus percentage; or |
| · | any material breach by the Company of the terms and provisions of the agreement. |
In the event the Company terminates Dr. Nolan’s employment without causeand its affiliates, and provide a means by which the Company’s employees, directors and consultants may be given an opportunity to benefit from increases in the value of its common stock. Awards granted under the 2020 Plan may be subject to acceleration of vesting and exercisability upon or Dr. Nolan terminates her employment with Good Reason within the one-year period followingafter a “Change of Control,” aschange in control (as defined in the 2013 Plan,2020 Plan) as may be provided in the applicable stock award agreement or in any other written agreement between the Company shall pay Dr. Nolanor any affiliate and the participant, but in the absence of such provision, no such acceleration will automatically occur.
2018 Equity Incentive Plan The Ocuphire 2018 Equity Incentive Plan (the “2018 Plan”) provides that a lump sum equalstock award may be subject to her then-current annual base salary,additional acceleration of vesting and exercisability upon or after a change in control transaction as may be provided in the pro rata portionstock award agreement or as may be provided in any other written agreement between Ocuphire or any affiliate and the holder of her bonus, and COBRA premiumssuch stock award, or as may be otherwise determined in the discretion of the board of directors. Under the 2018 Plan, a change of control is generally (i) the acquisition by a person or entity of more than 50% of Ocuphire’s combined voting power other than by merger, consolidation or similar transaction; (ii) a consummated merger, consolidation or similar transaction involving Ocuphire immediately after which Ocuphire’s stockholders do not own more than 50% of the combined voting power of the surviving entity or of its parent entity; or (iii) a TABLE OF CONTENTS consummated sale, lease or exclusive license or other disposition of all or substantially of Ocuphire’s consolidated assets. The merger will not constitute a change in control for 18 months if she makespurposes of the 2018 Plan, but the change in control provisions could be triggered by a timely election. Dr. Nolan’s equity awards would also vest and become exercisable in connection with the Change of Control. The employment agreement also contains a provision prohibiting Dr. Nolan from soliciting the Company’s executives, employees, customers or clients for a period of 12 months following his termination. 30
subsequent transaction.Outstanding Equity Awards at Fiscal Year-End 2020
ThisThe following table shows the unexercised options to purchase Common Stock that have been previously awarded to each of thesets forth information regarding outstanding equity awards held by our named executive officers and which remained outstanding as of December 31, 2016.2020:
| | | Option Awards | | Name | | Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | | Option Expiration Date | | | Exercisable | | | Unexercisable | | | Peter Suzdak | | | 1,200,000 | | | | - | | | | 0.37 | | 2/4/2023 | | | | | 210,000 | | | | 140,000 | (1) | | | 1.14 | | 1/12/2024 | | | | | 500,000 | | | | 500,000 | (2) | | | 0.83 | | 9/4/2024 | | | | | 275,000 | | | | 825,000 | (3) | | | 0.71 | | 1/23/2025 | | | | | - | | | | 411,689 | (5) | | | 0.35 | | 1/28/2026 | | | | | - | | | | 1,000,000 | (6) | | | 0.35 | | 1/28/2026 | | Tae Heum Jeong | | | 250,000 | | | | - | | | | 0.78 | | 12/11/2018 | | | | | 250,000 | | | | - | | | | 0.31 | | 3/1/2023 | | | | | 105,000 | | | | 70,000 | (1) | | | 1.14 | | 1/12/2024 | | | | | 83,333 | | | | 249,999 | (3) | | | 0.71 | | 1/23/2025 | | | | | - | | | | 98,853 | (5) | | | 0.35 | | 1/28/2026 | | | | | - | | | | 100,000 | (6) | | | 0.35 | | 1/28/2026 | | Ely Benaim | | | 550,000 | | | | 650,000 | (4) | | | 0.71 | | 2/2/2025 | | | | | - | | | | 98,734 | (5) | | | 0.35 | | 1/28/2026 | | | | | - | | | | 500,000 | (6) | | | 0.35 | | 1/28/2026 | | Lisa Nolan | | | - | | | | 1,200,000 | (7) | | | 0.26 | | 7/6/2026 |
Mina Sooch | | | October 1, 2018 | | | 178,284 | | | — | | | $0.90 | | | October 1, 2028 | | | December 27, 2019 | | | 88,746 | | | 69,729 | | | $1.21 | | | December 27, 2029 | | | November 11, 2020 | | | 5,400 | | | 124,600 | | | $4.05 | | | November 11, 2030 | Bernhard Hoffmann | | | October 1, 2018 | | | 42,867 | | | — | | | $0.90 | | | October 1, 2028 | | | December 27, 2019 | | | 16,798 | | | 13,312 | | | $1.21 | | | December 27, 2029 | | | June 3, 2020 | | | 2,324 | | | 1,902 | | | $1.65 | | | June 3, 2030 | | | November 11, 2020 | | | 832 | | | 19,168 | | | $4.05 | | | November 11, 2030 | Amy Rabourn | | | June 3, 2020 | | | 8,452 | | | 12,678 | | | $1.65 | | | June 3, 2030 | | | November 11, 2020 | | | 3,124 | | | 71,876 | | | $4.05 | | | November 11, 2030 | Douglas Swirsky | | | — | | | — | | | — | | | — | | | — |
Chief Executive Officer Pay Ratio(1) | Represents option awards granted under the 2013 Plan on January 12, 2014, which vested 30% on January 12, 2015 and 2016 and vested 40% on January 12, 2017. |
As a “smaller reporting company”, we are not required to provide information relating to the ratio of total compensation of our Chief Executive Officer to the median of the annual total compensation of all of our employees, as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.(2) | Represents option awards granted under the 2013 Plan on September 4, 2014, which vested 25% on September 4, 2015 and 2016, and will vest 25% on September 4, 2017 and 2018. |
(3) | Represents option awards granted under the 2013 Plan on January 23, 2015, which vested 25% on January 23 2016 and 2017, and will vest 25% on January 23, 2018 and 2019 |
(4) | Represents option awards granted under the 2013 Plan on February 2, 2015, which vested 25% on February 2, 2016, and one forty-eighth of which will vest on the first business day of each month beginning March 2016 and ending February 2019. |
(5) | Represents option awards granted under the 2013 Plan on January 28, 2016, which vested on January 28, 2017. |
(6) | Represents option awards granted under the 2013 Plan on January 28, 2016, which vested 25% on January 28, 2017, and one forty-eighth of which will vest on the first business day of each month beginning February 2017 and ending January 2020. |
(7) | Represents option awards granted under the 2013 Plan on July 6, 2016, which will vest 25% on July 6, 2017, and one forty-eighth of which will vest on the first business day of each month beginning August 2017 and ending July 2020. |
TABLE OF CONTENTS Potential Payments Upon a Termination or Change in ControlCERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
As discussed under the caption “Employment Agreements” above,There have been no transactions since January 1, 2019 to which the Company has agreements withbeen 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 nameddirectors, 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 under “Executive Compensation” and as described below.
Ocuphire Convertible Notes Between May 25, 2018 and March 10, 2020, Ocuphire directors, executive officers and related parties purchased Ocuphire convertible notes in four different closings. The following table summarizes the principal amount of Ocuphire convertible notes that were purchased or acquired through conversion of Ocuphire promissory notes by Ocuphire’s directors, executive officers and related parties. Mina Sooch | | | 200,540 | Bernhard Hoffmann | | | 22,500 | Sean Ainsworth | | | 100,000 | Cam Gallaher | | | 100,000 | James S. Manuso | | | 75,000 | Alan R. Meyer | | | 243,982 |
All convertible notes were converted immediately prior to the Merger, pursuant to which they will receive severance payments upon certain termination events. The information below describes and quantifies certain compensation that would have been available under our existing plans and arrangements if (i) the named executive officer were terminated as of December 31, 2016 or (ii) if a “Change of Control,” as defined herein, had occurred on December 31, 2016Debt Conversion Agreement entered into between Private Ocuphire and the named executive officer had been subsequently terminated on that date. noteholders in June 2020.Consulting Arrangements Termination by Death, Disability or for Cause; Resignation Without Good Reason
In the event that a named executive officer’s employment was terminated by the Company for any reason other than for cause, death, or disability as of December 31, 2016, or if the named executive officer resigned for Good Reason as of December 31, 2016, such officer would have been entitled to his accrued base salary to which he is otherwise entitled for the period ending on the termination date and his base salary for any accrued but unused vacation days asOcuphire incurred consulting expenses from one member of the termination date
Termination Other than for Cause, Death or Disability; Resignation With Good Reason
Assuming a December 31, 2016 termination event, the aggregate value of the payment and benefits to which each named executive officer would have been entitledBoard, Alan R. Meyer, in the event that the named executive officer’s employment was terminated by the Company for any reason other than for cause, death, or disability, or if the named executive officer had resigned for Good Reason, would have been as follows:
| Name | | Cash Severance ($) (1) | | | Bonus ($) (2) | | | Benefits and Health Programs ($) (3) | | | Total ($) | | | | | | | | | | | | | | | | | Peter Suzdak | | | 430,000 | | | | 172,000 | | | | 23,199 | | | | 625,199 | | | | | | | | | | | | | | | | | | | | | Tae Heum Jeong | | | 203,372 | | | | - | | | | 11,346 | | | | 214,718 | | | | | | | | | | | | | | | | | | | | | Ely Benaim | | | 375,000 | | | | 150,000 | | | | 24,439 | | | | 549,439 | | | | | | | | | | | | | | | | | | | | | Lisa Nolan | | | 320,000 | | | | 112,000 | | | | 108 | | | | 432,108 | |
(1) | For Drs. Suzdak, Benaim and Nolan, this amount represents 100% of the executive’s then-current annual base salary. For Dr. Jeong, this amount represents the amount of his then-current base salary for the period beginning on the termination date and ending on September 9, 2017, the last day of his then-current term. |
(2) | This amount represents the target bonus of Drs. Suzdak and Benaim of 40% of then-current annual base salary and the target bonus of 35% for Dr. Nolan. |
(3) | This amount represents COBRA premiums for 12 months after the termination date for Drs. Suzdak and Benaim, and 9 months of COBRA premiums for Dr. Nolan, assuming timely COBRA elections are made by the executive. For Dr. Jeong, the amount represents the salary which he was entitled to for any accrued but unused vacation days. |
Termination Following a “Change of Control”
Assuming a December 31, 2016 Change of Control and termination event on that date for any reason other than cause, death or disability, or if the named executive officer resigned for Good Reason as of that date, the aggregate value of the payment and benefits to which each named executive officer would have been entitled would have been as follows:
| Name | | Cash Severance ($) (1) | | | Bonus ($) (2) | | | Benefits and Health Programs ($) (3) | | | Tax Gross-Up ($) (4) | | | Total ($) | | | | | | | | | | | | | | | | | | | | Peter Suzdak | | | 860,000 | | | | 172,000 | | | | 34,799 | | | | 76,000 | | | | 1,142,799 | | | | | | | | | | | | | | | | | | | | | | | | | Tae Heum Jeong | | | 590,000 | | | | 147,500 | | | | 31,491 | | | | 64,000 | | | | 832,991 | | | | | | | | | | | | | | | | | | | | | | | | | Ely Benaim | | | 375,000 | | | | 150,000 | | | | 36,659 | | | | - | | | | 561,659 | | | | | | | | | | | | | | | | | | | | | | | | | Lisa Nolan | | | 480,000 | | | | 112,000 | | | | 216 | | | | - | | | | 592,216 | |
(1) | This amount represents 200% of the then-current annual base salary for Drs. Suzdak and Jeong, 100% of the then-current annual base salary for Dr. Benaim, and 150% of the then current base salary for Dr. Nolan. |
(2) | This amount represents the target bonus for Drs. Benaim and Dr. Suzdak of 40% of then-current annual base salary, and an assumed bonus for Dr. Jeong equal to 50% of his then-current annual base salary, and the target bonus of 35% for Dr. Nolan of then-current annual base salary. |
(3) | This amount represents COBRA premiums for 18 months after the termination date, assuming timely elections are made. For Dr. Jeong, this amount also includes an amount equal to the salary to which he was entitled for any accrued but unused vacation days. |
(4) | For Drs. Suzdak and Jeong, this amount represents an amount equal to increased income tax as a result of other payments made to each by the Company in connection with the termination under his employment agreement. |
Director Compensation
The table below sets forth information concerning the compensation of the directors of the Company for$34,138 during the year ended December 31, 2016, except2019. No consulting services were provided by the Board member during the year ended December 31, 2020.
Apexian Sublicense Agreement On January 21, 2020, Ocuphire entered into the Apexian Sublicense Agreement by which it obtained certain patent and other intellectual property rights. Pursuant to the Apexian Sublicense Agreement, Ocuphire issued 738,281 shares of its Private Ocuphire common stock to Apexian, 42,188 Private Ocuphire shares each to Mark R. Kelley and Richard Messmann, and 21,094 Private Ocuphire shares to BT Capital Management. Messrs. Kelley and Messmann are consultants to Ocuphire. John H. Barnard and Timothy J. Tichenor, principals of BT Capital Management, are a director and an officer, respectively, of Apexian. Pre-Merger Financing On June 17, 2020, Ocuphire, Rexahn and certain investors entered into a securities purchase agreement, which was amended and restated in its entirety on June 29, 2020 (as amended and restated, the “Securities Purchase Agreement”). Pursuant to the Securities Purchase Agreement, the investors invested a total of $21.15 million in cash, including $300,000 invested by five directors of Private Ocuphire, including Ms. Sooch and Messrs. Meyer, Manuso, Ainsworth, and Gallagher, and one director of Rexahn, Mr. Rodgers, upon closing of the Merger (the “Pre-Merger Financing”). Pursuant to the Pre-Merger Financing, (i) Ocuphire issued and sold to the investors shares of Private Ocuphire common stock (the “Initial Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 1,249,996 shares (the “Converted Initial Shares”) of common stock, (ii) Ocuphire deposited into escrow, for Dr. Suzdak, whose compensation is disclosed above.the benefit of the Investors, additional shares of Private Ocuphire common stock (the “Additional Shares”) which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 3,749,992 shares of common stock (the “Converted Additional Shares”), which Converted Additional Shares were delivered (or became deliverable) to the investors on November 19, 2020, and (iii) the Company agreed
| Name | | Fees Earned Or Paid In Cash ($) | | | Option Awards ($) (1) | | | All Other Compensation ($) | | | Total ($) | | Chang H. Ahn (2) | | | - | | | | 45,916 | | | | 412,364 | | | | 458,280 | | | Peter Brandt | | | 67,500 | | | | 38,281 | | | | - | | | | 105,781 | | | Charles Beever | | | 52,500 | | | | 38,281 | | | | - | | | | 90,781 | | | Mark Carthy | | | 43,750 | | | | 38,281 | | | | - | | | | 82,031 | | | Kwang Soo Cheong | | | 46,250 | | | | 38,281 | | | | - | | | | 84,531 | | | Richard J. Rodgers | | | 55,000 | | | | 38,281 | | | | - | | | | 93,281 | |
(1) | Grant date fair value computed in accordance with FASB ASC Topic 718. The actual value realized with respect to option awards will depend on the difference between the market value of our Common Stock on the date the option is exercised and the exercise price. As of December 31, 2016, Dr. Ahn had 1,622,793 option awards outstanding; Mr. Beever and Dr. Cheong each had 555,000 option awards outstanding; Mr. Brandt had 495,000 option awards outstanding; Mr. Carthy had 395,000 option awards outstanding; and Mr. Rodgers had 345,000 option awards outstanding. |
(2) | As an employee of the Company, Dr. Ahn earns no compensation for his work on the Board of Directors. The amounts specified under the “All Other Compensation” column for Dr. Ahn reflect a salary of $320,000, a $78,400 bonus, $10,600 in retirement plan contributions and other compensation totaling $3,364 as a Company employee. |
ElementsTABLE OF CONTENTS to issue to each investor on the tenth trading day following the consummation of Non-Employee Director Compensation
the Merger (x) Series A Warrants representing the right to acquire shares of common stock equal to the sum of (A) the Converted Initial Shares purchased by the investor, (B) the Converted Additional Shares delivered or deliverable to the investor, without giving effect to any limitation on delivery contained in the Securities Purchase Agreement and (C) the initial number of shares of common stock, if any, underlying the Series B Warrants issued to the Investor and (y) additional warrants to purchase shares of common stock.
The Company’sfive directors of Private Ocuphire and director compensation program is designedof Rexahn participated in the Pre-Merger Financing, investing an aggregate of $300,000. Following the closing of the Merger, these directors received 17,729 Converted Initial Shares, 53,189 Converted Additional Shares, 80,366 Series A Warrants and 9,444 Series B Warrants. Waiver Agreements Effective February 3, 2021, each investor (including the following six current directors of the Company, Ms. Sooch and Messrs. Meyer, Manuso, Ainsworth, Rodgers and Gallagher) who invested in the Pre-Merger Financing (each, a “Holder”) entered into a Waiver Agreement with the Company (collectively, the “Waiver Agreements”). Pursuant to the Waiver Agreements, the Holders and the Company agreed to waive certain rights, finalize the exercise price and number of Series A Warrants and Series B Warrants, eliminate certain financing restrictions, extend the term of certain leak-out agreements, and, in the case of certain Holders, grant certain registration rights for the shares underlying the warrants. The Waiver Agreements provide for the permanent waiver of the full ratchet anti-dilution provisions, contained in the Series A Warrants (as certain of the anti-dilution provisions had previously caused liability accounting treatment for the Series A Warrants).Each of the directors waived his or her right to the final reset of the Series B Warrants such that the number of Series B Warrants for such director was fixed at the initial number of Series B Warrants issued on November 19, 2020. Indemnification Agreements Ocuphire has entered into individual indemnification agreements with its directors and executive officers. Ocuphire believes that these provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. The Ocuphire Bylaws require Ocuphire to indemnify its directors and officers to the fullest extent permitted under Delaware law. 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 approved a formal policy in January 2021 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 $120,000, and in which any related person had or will have a direct or indirect material interest. Specifically, the policy establishes a process for identifying related persons and procedures for reviewing and approving such related person transactions. In addition, directors and executive officers are required to complete an annual questionnaire in connection with the Company’s proxy statement for its annual meeting of stockholders, which includes questions regarding related person transactions, and such persons also are required to provide written notice to the Company or outside legal counsel of any updates to such information prior to the annual meeting. The Audit Committee and/or the independent directors to represent shareholders onof 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 actis in theirthe best interest. The Compensation Committee, which consists solelyinterests of independent directors, has primary responsibilitythe Company and its stockholders. TABLE OF CONTENTS Stockholder Proposals to be Presented at Next Annual Meeting Requirements for settingStockholder Proposals to be Brought Before an Annual Meeting. Our Second Amended and Restated Bylaws provide that for stockholder nominations to our director compensation program. Radford assistsBoard or other proposals to be considered at an annual meeting, the Compensation Committeestockholder must give timely notice thereof in evaluating our director compensation program.
In July 2015, the Compensation Committee reviewed an assessment by Radford regarding director compensation. Based on its review of Radford’s assessment, the Compensation Committee recommendedwriting to the Secretary at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335.
To be timely for the Company’s Board2022 annual meeting of Directors that certain increasesstockholders, a stockholder’s notice must be madedelivered to or mailed and received by our Secretary at our principal executive offices not earlier than the close of business on February 7, 2022 and not later than the close of business on March 9, 2022. 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 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. 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 2022 annual meeting of stockholders must be received by us not later than December 27, 2021 in order to position the applicable elements of compensation closerbe considered for inclusion in our proxy materials for that meeting. A stockholder’s notice to the competitive median ofSecretary must set forth as to each matter the peer group used forstockholder proposes to bring before the purposes of director compensation. In addition, certain compensation practices, including payment of additional compensation toannual meeting the Chairman of the Board, additional equity grants for new directors,information required by applicable law and payment in retainer fees rather than meeting-based fees were instituted to align better with prevailing market practices. On September 16, 2015, the Board of Directors approved the following non-employee director compensation structure, effective as of July 1, 2015:
Position | Compensation*
| Director | $35,000 per annum, plus an additional $25,000 for the Chairman of the Board | Audit Committee (Chairman) | $15,000 per annum | Audit Committee (Member) | $7,500 per annum | Compensation Committee (Chairman) | $10,000 per annum | Compensation Committee (Member) | $5,000 per annum | Nominating and Corporate Governance Committee (Chairman) | $7,500 per annum | Nominating and Corporate Governance Committee (Member) | $3,750 per annum |
As part of this compensation structure, the Board also approved an equity compensation structure whereby each incumbent non-employee director would receive options to purchase 90,000 shares of the Company’s Common Stock (increased from 60,000). New directors, who were previously compensated with the same equity compensation as incumbent directors, would receive 180,000 options.
In June 2016, the Board approved additional changes to equity compensation and added an aggregate annual compensation cap for non-employee directors, effective as of June 9, 2016. The Board approved a target value of the equity component of incumbent non-employee director compensation of $42,000, based on the Black-Scholes valuation of the Company’s Common Stock, as previously recommended by Radford in connection with its 2015 assessment.
34our bylaws.
Delinquent Section 16(a) ReportsSection 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)16 of the Exchange Act requires the Company’sour directors, executive officers directors and any persons who beneficially own more than 10% of a registered class of the Company’s equity securitiesour Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securitieswith the SEC. Based solely on our review of the Company. Suchcopies of such forms filed with the SEC and written representations from our directors and executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports filed by such reporting persons.
Wewe believe that during 2016,fiscal 2020 each of our directors and executive officers and directors and more than 10% beneficial owners timely filed all forms required to be filed under Section 16(a) of the Exchange Act.
Code of Ethics
We have adopted a code of conduct and ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, in accordancecomplied with applicable federalreporting requirements for transactions in our equity securities lawsother than the following late filings: one late Form 3 filing for Amy Rabourn, and as required by NYSE MKT. The Codeone late Form 4 filing for each of Ethics is available on our corporate website at www.rexahn.com.Amy Rabourn, Mina Sooch, Sean Ainsworth, Alan Meyer, Cam Gallagher, Richard Rodgers, and James Manuso.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Audit Committee charter requires that our Audit Committee review and approve all proposed transactions between“Householding” — Stockholders Sharing the Company and any director, officer or other employee of the Company, and any holder of five percent or more of the Company’s voting capital stock, in order to ensure that any such transaction is on an arm’s length basis and in accordance with all applicable laws and regulations and the requirements of any exchange on which the Company’s securities may be listed from time to time. Based on the Company’s review of its transactions, there have been no transactions or proposed transactions considered to be related person transactions since January 1, 2016.
REPORT OF THE AUDIT COMMITTEE
Same Address
The Board of Directors of the Company has appointed an Audit Committee composed of three directors, each of whom meets the independence, qualification and experience requirements under the listing standards of NYSE MKT, Section 10A(m)(3) of the Exchange Act and applicable rules of the SEC. The Board of DirectorsSEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a written charter fordelivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the Audit Committee. Asame address may receive a single copy of the Charter is available on the Company’s website at www.rexahn.com.
The Audit Committee’s responsibility is to provide assistance and guidance to the Board of Directors in fulfilling its oversight responsibilities to the Company’s shareholders with respect to (1) the Company’s corporate accounting and reporting practices, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditors’ qualifications and independence (4) the quality and integrity of the Company’s financial statements and reports, (5) reviewing and approving all audit engagement fees and terms, as well as all non-audit engagements with the independent auditors, and (6) producing this report. The Audit Committee members are not professional accountants or auditors and these functions are not intended to replace or duplicate the activities of management or the independent auditors. Management has primary responsibility for preparing the financial statements and designing and assessing the effectiveness of internal control over financial reporting. Management is responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. Baker Tilly Virchow Krause, LLP (“Baker Tilly”), the Company’s independent auditing firm, is responsible for planning and carrying out an audit of the Company’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles, reviewing the Company’s quarterly financial statements prior to the filing of each quarterlyour annual report on Form 10-Q,10-K and proxy materials unless the affected stockholder has provided other procedures.instructions. This procedure reduces printing costs and postage fees, and helps protect the environment as well.
The Audit Committee reviewed and discussed the Company’s audited financial statementsWe expect that a number of brokers with both management and with the Company’s independent registered auditors for 2016.
The Audit Committee has discussed with Baker Tilly the matters required under Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301, Communications with Audit Committees. In addition, the Audit Committee has received and reviewed the written disclosures and letter from Baker Tilly required by applicable requirements of the PCAOB regarding Baker Tilly’s communications with the Audit Committee concerning independence, and has discussed with Baker Tilly its independence.
Both the Company’s management and auditors responded appropriately to issues raised by the Audit Committee. Based on the review and discussions referred to above, the Audit Committee determined that the audited financial statementsaccount holders who are our stockholders will be included in the Company’s Annual Report“householding” our annual report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.
| By the Audit Committee: | | | | Richard J. Rodgers (Chairman) | | Charles Beever | | Kwang Soo Cheong |
PROPOSAL 2: RATIFICATIONOF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors recommends a vote for the ratification of the appointment of Baker Tilly Virchow Krause, LLP (“Baker Tilly”) as the Company’s independent registered public accounting firm for the year ending December 31, 2017. Baker Tilly has no direct or indirect financial interest in the Company.and proxy materials. A representative of Baker Tilly is expected to be present at the Annual Meeting with the opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions.
If the shareholders do not ratify this appointment, the Audit Committee may consider other independent public accountants or continue the appointment of Baker Tilly.
Fees
The following table presents fees for professional audit services rendered by our independent registered public accounting firm for the audits of the Company’s annual financial statements for the years ended December 31, 2016 and 2015, respectively.
| | | 2016 | | | 2015 | | Audit Fees1 | | $ | 189,735 | | | $ | 205,312 | | | Audit-Related Fees | | | - | | | | - | | | Tax Fees | | | - | | | | - | | | All Other Fees | | | - | | | | - | |
(1) Audit Fees relate to the audit of the Company’s financial statements, reviews of financial statements included in the Company’s quarterly reports on Form 10-Q, comfort letters requested for the Company’s financing, and the auditor consents to registration statements.
All audit and non-audit services to be performed by the Company’s independent accountant must be approved in advance by the Audit Committee. The Audit Committee may delegate to one of its members or a subcommittee of the Audit Committee the authority to grant pre-approvals with respect to non-audit services. For audit services, each year the independent accountant provides the Audit Committee with an engagement letter outlining the scope of proposed audit services to be performed during the year. This letter must be formally accepted by the Audit Committee before the audit commences. The independent accountant also submits an audit services fee proposal, which also must be approved by the Audit Committee before the audit commences.
The Board of Directors recommends a vote FOR the ratification of the appointment of Baker Tilly Virchow Krause, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017.
PROPOSAL 3: NON-BINDING VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, we are asking shareholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the summary compensation tables and narrative discussion, is hereby APPROVED.
We urge shareholders to read “Compensation of Executive Officers” beginning on page 17 of this Proxy Statement, including the “Compensation Discussion & Analysis,” which provides detailed information on the Company’s compensation policies and practices and the compensation of our named executive officers. As described in “Compensation Discussion & Analysis,” our primary objectives with respect to the compensation of our named executive officers are to attract top executive talent, and to retain and motivate our existing executives because we believe they have experience and competencies that are critical to achievement of our business goals. We seek to achieve these objectives by:
| · | Establishing the components of our compensation packages at competitive levels. This means using comparative market data to target overall compensation levels, with a focus on cash conservation that results in cash compensation at or below the 50th percentile.
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| · | Using an annual variable incentive compensation that is tied to specific corporate goals. Our annual incentive program is focused on motivating our executives to achieve Company-wide goals that are tied to our strategic plan.
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| · | Using equity awards that vest over time and deliver greater value as our stock price increases. We use equity awards in order to align our named executive officers’ interests with the interest of our shareholders in increasing long-term shareholder value.
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In addition, our compensation program features a number of practices designed to align further the interests of our named executive officers with those of our shareholders.
Practices we employ:
| · | We pay for performance. Compensation tied to Company performance comprises a significant part of an executive’s total compensation. Performance is used for determining the size of both short-term and long-term awards.
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| · | We target pay competitively. We seek to target pay to verifiable market data in order to ensure that we are both paying fairly and not overpaying our executives.
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| · | We use an independent compensation consultant. The Compensation Committee uses Radford to help verify market and best practices.
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| · | We have meaningful vesting periods. Beginning with awards made in 2015, equity awards used for our long-term incentive program typically vest over four years.
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Practices we do not employ:
| · | We do not provide for excessive perquisites. We do not provide any perquisites to our named executive officers, except for de minimis amounts of additional life insurance for Dr. Jeong and Dr. Nolan.
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| · | We do not offer guaranteed bonuses. We do not pay annual bonuses without achievement of performance goals, regardless of the reason for the failure to achieve performance goals, and we retain the flexibility to take into account overall Company performance in determining whether to pay bonuses.
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| · | We do not permit hedging. We prohibit profiting from short-term speculative swings in the value of the Company’s stock through “short sales”, “put” and “call” options, and hedging transactions.
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The Board of Directors recommends a vote FOR this resolution because it believes that the compensation paid and compensation policies described in “Compensation of Executive Officers” are effective in rewarding the Company’s named executive officers for excellence in leadership and achievement of the Company’s business goals, and in encouraging the Company’s named executive officers to remain with the Company to advance long-term goals. Named executive officer compensation over the past three years reflects cash and option awards.
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when evaluating our executive compensation program.
The Board of Directors recommends a vote FOR the approval
of the Company’s executive compensation.
PROPOSAL 4: NON-BINDING VOTE ON THE FREQUENCY OF FUTURE NON-BINDING VOTES ON EXECUTIVE COMPENSATION
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are seeking shareholder input on how often it will seek non-binding votes on the compensation of named executive officers as disclosed in future proxy statements, similar to Proposal 3 in this Proxy Statement. We are required to hold such votes at least once every three years. Accordingly, shareholders may indicate their preference to hold future non-binding votes on executive compensation:
You may also abstain from voting.
The Board believes that a say-on-pay vote every three years is most appropriate for the Company. This approach will provide an effective way for the Company to regularly obtain shareholders’ opinions regarding executive compensation and allow adequate time for the Company to respond to shareholder feedback. We believe a three-year cycle provides shareholders the time to evaluate the effects of our executive compensation strategies and their impact on our performance, financial, and business goals. By contrast, a more frequent vote might lead to a short-term perspective on executive compensation that is inconsistent with the longer-term approach taken by our Compensation Committee and with which we currently view our business.
The Board does not view the say-on-pay vote as the sole means by which shareholders may share their views about executive compensation. At any time, shareholders can communicate directly with the entire Board or individual Board members as indicated in the “Board of Directors and Board of Directors Meetings” section of this Proxy Statement. Accordingly, a say-on-pay vote once every three years will not foreclose shareholders’ opportunity to engage our Board on executive compensation issues during the interim period between votes.
Before making its recommendation, the Board considered the arguments in favor of more frequent votes, including increased opportunities for shareholder input and the belief that annual votes might promote greater accountability on executive compensation. Weighing the alternatives, the Board believes that, on balance, a three-year cycle is most appropriate for the Company.
The Board of Directors recommends a vote in favor of holding future non-binding votes on executive compensation “EVERY THREE YEARS.”
PROPOSAL 5: APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 STOCK OPTION PLAN, AS AMENDED AND RESTATED
The Board of Directors recommends a vote for approvalsingle set of an amendment to the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated (the “2013 Plan”), to increase the maximum aggregate number of shares authorized for issuance under the plan from 17,000,000 shares to 34,000,000 (the “Amendment”).
2013 Plan Amendment
On December 8, 2016, upon recommendation of the Compensation Committee, the Board of Directors approved an amendment to the 2013 Plan to increase the maximum aggregate number of shares authorized for issuance under the 2013 Plan from 17,000,000 shares to 34,000,000 shares. The Board of Director’s approval of the Amendment was made subject to shareholder approval at the Annual Meeting. If approved by our shareholders at the Annual Meeting, the Amendment will become effective at the time of shareholder approval. A copy of the Amendment is attached hereto as Annex A.
The 2013 Plan is our only equity incentive compensation plan under which we grant equity incentive awards to directors, officers, employees and consultants. The 2013 Plan is designed to promote the long-term growth of the Company by (i) providing key people with incentives to improve shareholder value and to contribute to the growth and financial success of the Company, and (ii) enabling the Company to attract, retain and reward the best available persons for positions of substantial responsibility. To accomplish such purpose, the 2013 Plan currently permits the granting of stock options (including nonqualified stock options and incentive stock options qualifying under Section 422 of the Code), restricted stock, and restricted stock units (collectively “Awards”).
The Board of Directors believes that the 2013 Plan is important to our continued growth and success and that additional shares are required to be able to continue to make equity awards under the 2013 Plan in a size that the Board of Directors believes is necessary to accomplish the goals of the 2013 Plan. Even if the Amendment is not approved by shareholders, the 2013 Plan will continue in effect, and the Company may continue to grant Awards under the 2013 Plan to the extent of the shares of common stock remaining available for issuance. The Board of Directors believes that, if the Amendment is not approved, our ability to align the interests of key people with shareholders through equity-based compensation would be compromised, disrupting our compensation program and impairing our ability to attract, retain and reward key people, or requiring us to shift our compensation plan to include more cash compensation.
Description of the 2013 Plan
The following description of the 2013 Plan is a summary of its terms and is qualified in its entirety by reference to the 2013 Plan itself, a copy of which is incorporated by reference as an exhibit to the Company’s Annual Reportannual report on Form 10-K for the year ended December 31, 2016, and to the Amendment, a copy of which is attached hereto as Annex A.
Effective Date. The 2013 Plan originally became effective on March 7, 2013 and was later amended and restated, effective as of June 9, 2016.
Administration. The 2013 Plan is administered and interpreted by the Compensation Committee of the Board of Directors. The members of the Compensation Committee are both “Non-Employee Directors” within the meaning of SEC Rule 16b-3 and “outside directors” within the meaning of Section 162(m) of the Code.
Eligible Participants. Awards may be granted to our officers, employees, consultants and directors, except that consultants and non-employee directors will not be eligible to receive Awards of incentive stock options. As of February 21, 2017, there are approximately 20 officers and employees and approximately 5 non-employee directors eligible to participate in the 2013 Plan.
Number of Shares Covered by the 2013Plan. The maximum number of shares of common stock initially reserved for issuance under the 2013 Plan was 17,000,000 shares. If the Amendment is approved by the shareholders, the maximum number of shares of common stock reserved for issuance under the 2013 Planother proxy materials will be 34,000,000 shares.
As of February 21, 2017, 662,485 shares of common stock remain available for issuance under the 2013 Plan. In the event of a reclassification, recapitalization, stock split, stock dividend, combination of shares, or other similar event, the number of shares of common stock under the 2013 Plan, the number of sharesdelivered to which any Award relates and the exercise price per share of any Award shall be adjusted to reflect such increase or decrease in the total number of shares of common stock outstanding. On February 21, 2017, the closing price of a share of common stock as reported on the NYSE MKT was $0.22 per share.
Awards. Under the 2013 Plan, the Compensation Committee determines which employees, including officers, non-employee directors and consultants will be granted Awards, what types of Awards will be granted, the number of shares subject to each Award, the exercise price or purchase price of each Award, and the vesting period of each Award.
Terms and Conditions of Options. The Compensation Committee may grant incentive stock options and nonqualified stock options under the 2013 Plan. Under the 2013 Plan, the per share exercise price of each option must be no less than the fair market value of a share of common stock on the date the option is granted (110% of fair market value in the case of incentive stock options granted to employees who beneficially own 10% or more of the total combined voting power of all classes of shares of the Company).
Options will generally become vested and exercisable as provided by the Compensation Committee and as set forth in a written grant agreement. The right to exercise vested options is cumulative. However, no vesting generally may occur on or aftermultiple stockholders sharing an option holder’s employment or service with the Company is terminated, except as may be specified by the Compensation Committee in a written grant agreement at the time an option is granted.
Except as otherwise provided by the Compensation Committee in a written grant agreement, each option or portion thereof will be exercisable at any time on or after it vests and is exercisable until the earlier of either: (i) ten years after its date of grant or (ii) the date on which an option holder's employment or service terminates.
Options generally may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of except by will or the laws of descent and distribution, and during a participant’s lifetime, may be exercisable only by the participant or his guardian or legal representative. In addition, a participant who holds a nonqualified stock option may transfer such option to certain family members, to certain family trusts and or pursuant to a qualified domestic relations order, as described in the 2013 Plan. Awards transferred in accordance with the 2013 Plan will be exercisable by the transferee according to the same terms and conditions as applied to the participant.
Terms and Conditions of Restricted Stock and Restricted Stock Units. Subject to the provisions of the 2013 Plan, the Compensation Committee will determine the terms and conditions of each Award of restricted stock or restricted stock units, including the restricted period for all or a portion of the Award, the restrictions applicable to the Award in addition to or other than the expiration of the restricted period, including the achievement of corporate or individual performance goals, and the purchase price, if any, for the common stock subject to the Award.
A participant who receives a grant of restricted stock willaddress unless contrary instructions have the right to vote the shares of restricted stock and receive dividend payments or distributions, except to the extent limited by the Compensation Committee or the 2013 Plan. The Compensation Committee may provide in a grant agreement for restricted stock that (a) any cash dividend payments or distributions paid on restricted stock will be reinvested in shares of common stock, which may be subject to the same vesting conditions and restrictions as applicable to such underlying shares of restricted stock, or (b) any dividend payments or distributions on shares of restricted stock shall only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of restricted stock. A participant who receives a grant of restricted stock units will have no voting or dividend rights or other rights of a shareholder.
Awards of restricted stock and restricted stock units may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of except by will or the laws of descent and distribution.
Terms and Conditions of Dividend Equivalent Rights. The Compensation Committee may grant dividend equivalent rights to a participant in connection with an Award under the 2013 Plan, or without regard to any other Award, except that no dividend equivalent right may be granted in connection with, or related to an option. Dividend equivalent rights will entitle participants to receive cash, Common Stock, other Awards or other property equal in value to dividends or other period payments paid or made with respect to a specified number of Common Stock. The terms and conditions of Awards of dividend equivalent rights will be specified in the applicable grant agreement.
Dividend equivalents credited to the holder thereof may be paid currently (with or without being subject to forfeiture or a repayment obligation) or may be deemed to be reinvested in additional Common Stock, which may thereafter accrue additional dividend equivalent rights (with or without being subject to forfeiture or a repayment obligation). Any such reinvestment will be at the fair market value of the Common Stock on the reinvestment date. Dividend equivalent rights may be settled in cash or Common Stock or a combination thereof, in a single installment or in multiple installments, as determined by the Compensation Committee.
A dividend equivalent right granted as a component of another Award may provide that the dividend equivalent right will be settled upon exercise, settlement, or payment of, or lapse of restrictions on, the other Award, and that the dividend equivalent right will expire or be forfeited or annulled under the same conditions as the other Award. A dividend equivalent right granted as a component of another Award also may contain terms and conditions that are differentbeen received from the terms and conditions of the other Award. Dividend equivalent rights may not be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of except by will or the laws of descent and distribution.
No Repricing without Shareholder Approval. Except in connection with certain transactions involving the Company (including, without limitation, any stock dividend, distribution (whether in the form of cash, shares of common stock, other securities or other property), stock split, extraordinary dividend, recapitalization, Change in Control (as defined below), reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of common stock or other securities or similar transaction), and notwithstanding any provision to the contrary in the 2013 Plan, the Company may not, without obtaining shareholder approval: (i) amend the terms of outstanding options to reduce the exercise price of such outstanding options; (ii) cancel outstanding options in exchange for or substitution of options with an exercise price that is less than the exercise price of the original options; or (iii) cancel outstanding options with an exercise price above the current fair market value in exchange for cash or other securities, unless such action would not be deemed to be a repricing under the rules of any securities exchange market on which the common stock is listed or traded.
Payment. Options may be exercised by payment of the exercise price of the shares to be acquired in accordance with the provisions of the written grant agreement evidencing such option, and/or such rules and regulations as the Compensation Committee may have prescribed, and/or such determinations, orders, or decisions as the Compensation Committee may have made. Payment of the exercise price for any shares of common stock of an option, or the purchase price, if any, for restricted stock or restricted stock units may be made in cash (or cash equivalents acceptable to the Compensation Committee) or, unless otherwise determined by the Compensation Committee, in shares of common stock or a combination of cash and shares of common stock, or by such other means as the Compensation Committee may prescribe. Shares of common stock delivered in payment of the exercise price may be previously owned shares or, if approved by the Compensation Committee, shares acquired upon exercise of the option. The Compensation Committee may authorize the payment of the exercise price for options or purchase price, if any, for restricted stock or restricted stock units by broker-assisted cashless exercise.
Adjustments. The Compensation Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the Company or any subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Compensation Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2013 Plan.
Effect of a Change in Control. Upon a Change in Control (as defined below), the Compensation Committee will take action as it deems appropriate and equitable to effectuate the purposes of the 2013 Plan and to protect the participants, including, without limitation, any one or more of the following: (i) acceleration of vesting of any restricted stock, restricted stock units, or dividend equivalent rights, (ii) acceleration or change of the exercise dates of any option, (iii) arrangements with participants for the payment of appropriate consideration for the cancellation and surrender of any Award, or (iv) in any case where equity securities other than common stock of the Company are to be delivered in exchange for or with respect to common stock of the Company, arrangements providing that any Award shall become one or more award with respect to such other equity securities.
Definition of a Change in Control. A Change in Control means (i) any sale, exchange or other disposition of all or substantially all of the Company’s assets to an unrelated person or entity, or (ii) any merger, share exchange, consolidation or other reorganization or business combination in which the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the surviving or resulting entity immediately upon completion of such transaction.
Liquidation or Dissolution. If the Company dissolves and liquidates (other than pursuant to a plan of merger or reorganization, and except as provided in any grant agreement), then notwithstanding any restrictions on exercise set forth in the 2013 Plan: (i) the Awards of restricted stock and restricted stock units shall fully vest, (ii) each participant shallaffected stockholders. Once you have the right to exercise his or her option, to the extent vested and exercisable, at any time up to ten (10) days prior to the effective date of such liquidation and dissolution; and (iii) the Compensation Committee may make arrangements for the payment of appropriate consideration to them for the cancellation and surrender of any Award that is so canceled or surrendered at any time up to ten (10) days prior to the effective date of such liquidation and dissolution.
Amendment and Termination. The 2013 Plan may be amended or terminated by our Board of Directors at any time and, subject to limitations under the 2013 Plan, the Awards granted under the 2013 Plan may be amended by the Compensation Committee at any time, provided that no such action to the 2013 Plan or an Award may, without a participant’s written consent, adversely affect in any material way any previously granted Award. No amendment that would (i) amend the no repricing provisions of the 2013 Plan, or (ii) require shareholder approval under any securities exchange or over-the-counter market upon which the Company’s stock trade may become effective without shareholder approval.
Shareholder Approval. If the Amendment is not approved by shareholders, the 2013 Plan will continue in effect, and the Company may continue to grant Awards under the 2013 Plan to the extent of the shares of common stock remaining available for issuance.
Certain U.S. Federal Income Tax Consequences
Set forth below is a discussion of certain United States federal income tax consequences with respect to Awards that may be granted pursuant to the 2013 Plan. The following discussion is a brief summary only, and reference is made to the Code and the regulations and interpretations issued thereunder. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences of participation in the 2013 Plan.
(i) | Incentive Stock Options. The grant of an incentive stock option will not result in any immediate tax consequences to us or to the participant. A participant will not recognize taxable income, and we will not be entitled to any deduction, upon the timely exercise of an incentive stock option, but the excess of the fair market value of the shares of our Common Stock acquired over the option exercise price will be includable in the optionee’s “alternative minimum taxable income” for purposes of the alternative minimum tax. If the participant does not dispose of the shares of our Common Stock acquired within one year after their receipt, and within two years after the option was granted, gain or loss recognized on the subsequent disposition of the shares of our Common Stock will be treated as long-term capital gain or loss. Capital losses of individuals are deductible only against capital gains and a limited amount of ordinary income. In the event of an earlier disposition, the participant will recognize ordinary income in an amount equal to the lesser of (i) the excess of the fair market value of the shares of our Common Stock on the date of exercise over the option exercise price or (ii) if the disposition is a taxable sale or exchange, the amount of any gain recognized. Upon such a disqualifying disposition, we will be entitled to a deduction in the same amount as the participant recognizes such ordinary income.
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(ii) | Nonqualified Stock Options. In general, the grant of a nonqualified stock option will not result in any immediate tax consequences to us or the participant. Upon the exercise of a nonqualified stock option, generally the participant will recognize ordinary income and we will be entitled to a deduction, in each case, in an amount equal to the excess of the fair market value of the shares of our Common Stock acquired at the time of exercise over the option exercise price. In the event of a subsequent sale of shares received upon the exercise of a nonqualified stock option, any appreciation after the date on which taxable income is realized by the participant in respect of the option exercise should be taxed as capital gain in an amount equal to the excess of the sales proceeds for the shares over the participant’s basis in such shares. The participant’s basis in the shares will generally equal the amount paid for the shares plus the amount included in ordinary income by the participant upon exercise of the nonqualified stock option.
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(iii) | Restricted Stock. A participant who receives a grant of restricted stock will not recognize any taxable income in the year of the Award if the Common Stock is subject to restrictions (that is, the restricted stock is nontransferable and subject to a substantial risk of forfeiture). A participant, however, may elect under Section 83(b) of the Code to recognize compensation income in the year of the Award in an amount equal to the fair market value of the Common Stock on the date of the Award, determined without regard to the restrictions. If the participant does not make a Section 83(b) election, the fair market value of the Common Stock on the date on which the restrictions lapse will be treated as compensation income to the participant and will be taxable in the year in which the restrictions lapse. The Company generally will be entitled to a deduction for compensation paid equal to the amount treated as compensation income to the participant in the year in which the participant is taxed on the income, if the Company complies with applicable reporting requirements and with the restrictions of Section162(m) of the Code.
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(iv) | Restricted Stock Units. A distribution of Common Stock or a payment of cash in satisfaction of restricted stock units will be taxable as ordinary income when the distribution or payment is actually or constructively received by the participant. The amount taxable as ordinary income is the aggregate fair market value of the Common Stock determined as of the date it is received or, in the case of a cash award, the amount of the cash payment. The Company will be entitled to deduct the amount of such payments when such payments are taxable as compensation to the participant if the Company complies with applicable reporting requirements and with the restrictions of Section 162(m) of the Code.
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(v) | Dividend Equivalent Rights. Participants under the 2013 Plan who receive awards of dividend equivalent rights will be required to recognize ordinary income in the amount distributed to the participant pursuant to the Award. If the Company complies with applicable reporting requirements and with the restrictions of Section 162(m) of the Code, it will be entitled to a business expense deduction in the same amount and generally at the same time as the participant recognizes ordinary income.
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Equity Compensation Plan Information
The following table provides information, as of December 31, 2016, about shares of our Common Stock that may be issued upon the exercise of options, warrants and rights granted to employees, consultants or directors under all of our existing equity compensation plans:
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants Rights | | Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a)) | | | | (a) | | (b) | | (c) | | | Equity compensation plans approved by security holders* | | | 16,780,415 | | | $ | 0.62 | | | | 4,530,585 | | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | | Total | | | 16,780,415 | | | $ | 0.62 | | | | 4,530,585 | |
| | * As of December 31, 2016, there were 12,461,915 outstanding options under the 2013 Plan, which originally became effective in June 2013. With the adoption of the 2013 Plan, no new stock options may be issued under the Rexahn Pharmaceuticals, Inc. Stock Option Plan (the “2003 Plan”), which initially became effective in August 2003 as the Rexahn Corporation Stock Option Plan, but previously issued options under the 2003 Plan remain outstanding until their expiration. As of December 31, 2016, there were 4,318,500 outstanding options under the 2003 Plan. |
Awards granted under the 2013 Plan to our executive officers, directors and other employees are discretionary and are not subject to set amounts, and we have not approved any Awards that are conditioned on shareholder approval of this Proposal 5. Accordingly, we cannot determine the benefits or number of shares that may be granted in the future under the 2013 Plan, nor can we determine the amounts that would have been granted for the last completed year if the Amendment would have been in effect.
The Board of Directors recommends a vote FOR approval of the Amendment to the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated.
PROPOSAL 6: APPROVAL OF AN AMENDMENT TO THE COMPANY’S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT AND AUTHORIZED SHARE REDUCTION
General
The Board of Directors has unanimously approved, and recommended that our shareholders approve, an amendment to the Company’s Amended and Restated Certificate of Incorporation, in substantially the form attached hereto as Annex B (the “Certificate of Amendment”) (in the event it is deemed by the Board to be advisable), to effect a reverse stock split at a ratio within a range from 1-for-5 to 1-for-20, with the final ratio to be determined by the Board, in its sole discretion, following shareholder approval, together with a corresponding proportional reduction in the number of authorized shares of the Company’s capital stock. If the shareholders approve the reverse stock split and authorized share reduction, and the Board decides to implement them, the reverse stock split and authorized share reduction will become effective upon the filing of the Certificate of Amendment with the Secretary of State of the State of Delaware.
The reverse stock split will be realized simultaneously for all outstanding Common Stock and the ratio determined by the Board will be the same for all outstanding Common Stock. The reverse stock split will affect all holders of Common Stock uniformly and each shareholder will hold the same percentage of Common Stock outstanding immediately following the reverse stock split as that shareholder held immediately prior to the reverse stock split, except for adjustments that may result from the treatment of fractional shares as described below. The Certificate of Amendment will not change the par value of the Common Stock (which will remain at $0.0001 per share).
Purposes of the Proposed Reverse Stock Split
Maintaining our Listing on the NYSE MKT.
Our Common Stock is listed on the NYSE MKT. Section 1003(f)(v) of the NYSE Company Guide provides that a company’s common stock may be delisted from the NYSE MKT if it is selling for a substantial period of time at a low price per share and the Company fails to effect a reverse stock split within a reasonable time after being notified that the NYSE MKT deems such action to be appropriate under all the circumstances. While we have not yet received a notice from the NYSE MKT providing notice that the NYSE MKT deems it appropriate for the Company to effect a reverse stock split, given the Company’s recent trading prices, we expect that the NYSE MKT will deliver such a letter if the price of the Common Stock does not increase.
Delisting from the NYSE MKT may adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of the Common Stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities. Moreover, the Company committed in connection with the sale of securities, to use commercially reasonably efforts to maintain the listing of the Common Stock during such time that certain warrants are outstanding.
If the Common Stock were to be delisted from the NYSE MKT and we are not able to list the Common Stock on another exchange, the Common Stock could be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, we could face significant adverse consequences including, among others:
| · | a limited availability of market quotations for our securities; |
| · | a determination that the Common Stock is a “penny stock,” which will require brokers trading in the Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| · | a limited amount of news and little or no analyst coverage for the Company; |
| · | the Company would no longer qualify for exemptions from state securities registration requirements, which may require us to comply with applicable state securities laws; and |
| · | a decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3) or obtain additional financing in the future. |
The Board of Directors believes that if the current stock price does not increase and the NYSE MKT delivers a notice to us that it deems a reverse stock split to be required for continued listing of the Common Stock, than having the ability to implement a reverse stock split will give us a potentially effective means to maintain compliance with the listing rules of the NYSE MKT.
Listing on Another National Securities Exchange.
In the future, we may consider seeking a listing of our Common Stock on another national securities exchange. Eligibility for listing on a national securities exchange is subject to a number of criteria, such as public float, minimum share price, number of shareholders, market capitalization, net income and other factors. For example, one of the listing requirements that we do not currently meet is a minimum per share price of $4.00. We believe that the reverse split will increase our ability to meet the minimum share price requirement at such time, if ever, that we meet the other listing criteria.
Increase Our Common Stock Price to a Level More Appealing for Investors.
We believe that the reverse stock split could enhance the appeal of our Common Stock to the financial community, including institutional investors, and the general investing public. We believe that a number of institutional investors and investment funds are reluctant to invest in lower-priced securities and that brokerage firms may be reluctant to recommend lower-priced securities to their clients, which may be due in part to a perception that lower-priced securities are less promising as investments, are less liquid in the event that an investor wishes to sell its shares, or are less likely to be followed by institutional securities research firms and therefore more likely to have less third-party analysis of the company available to investors. We believe that the reduction in the number of issued and outstanding shares of the Common Stock caused by the reverse stock split, together with the anticipated increased stock price immediately following and resulting from the reverse stock split, may encourage interest and trading in our Common Stock and thus possibly promote greater liquidity for our shareholders, thereby resulting in a broader market for the Common Stock than that which currently exists.
We cannot assure you that all or any of the anticipated beneficial effects on the trading market for our Common Stock will occur. Our Board of Directors cannot predict with certainty what effect the reverse stock split will have on the market price of the Common Stock, particularly over the longer term. Some investors may view a reverse stock split negatively, which could result in a decrease in our market capitalization. Additionally, any improvement in liquidity due to increased institutional or brokerage interest or lower trading commissions may be offset by the lower number of outstanding shares. We cannot provide you with any assurance that our shares will qualify for, or be accepted for, listing on a national securities exchange.
Reasons for the Authorized Share Reduction
The Company currently has 500,000,000 authorized shares of Common Stock and 100,000,000 authorized shares of preferred stock, par value $0.0001 per share. Given that there will be proportionate reduction in the number of outstanding shares of the Common Stock through implementation of the reverse stock split, the Company believes that it will continue to have sufficient excess authorized shares of capital stock to meet business needs as they arise, to take advantage of favorable opportunities and to respond to a changing corporate environment.
Determination of Ratio
The ratio of the reverse stock split, if approved and implemented, will be a ratio of not less than 1-for-5 and not more than 1-for-20, as determined by the Board in its sole discretion. In determining the reverse stock split ratio, the Board will consider numerous factors, including:
| · | the historical and projected performance of the Common Stock; |
| · | prevailing market conditions; |
| · | general economic and other related conditions prevailing in our industry and in the marketplace; |
| · | the projected impact of the selected reverse stock split ratio on trading liquidity in the Common Stock and our ability to qualify the Common Stock for listing on another national securities exchange; |
| · | our capitalization (including the number of shares of Common Stock issued and outstanding); |
| · | the prevailing trading price for Common Stock and the volume level thereof; and |
| · | potential devaluation of our market capitalization as a result of a reverse stock split. |
The purpose of asking for authorization to implement the reverse stock split at a ratio to be determined by the Board, as opposed to a ratio fixed in advance, is to give the Board the flexibility to take into account then-current market conditions and changes in price of Common Stock and to respond to other developments that may be deemed relevant when considering the appropriate ratio.
Principal Effects of the Reverse Stock Split
A reverse stock split refers to a reduction in the number of outstanding shares of a class of a corporation’s capital stock, which may be accomplished, as in this case, by reclassifying and combining all of our outstanding shares of Common Stock into a proportionately smaller number of shares. For example, if the Board decides to implement a 1-for-5 reverse stock split of Common Stock, then a shareholder holding 10,000 shares of Common Stock before the reverse stock split would instead hold 2,000 shares of Common Stock immediately after the reverse stock split. Each shareholder’s proportionate ownership of outstanding shares of Common Stock would remain the same, except that shareholders that would otherwise receive fractional shares as a result of the reverse stock split will receive cash payments in lieu of fractional shares.
The following table illustrates the effects of the reverse stock split and authorized share reduction at certain exchange ratios within the 1-for-5 to 1-for-20 range, without giving effect to any adjustments for fractional shares of Common Stock or any approval of an increase in the number of shares of Common Stock authorized for issuance under the 2013 Plan pursuant to Proposal 4, on our outstanding shares of Common Stock and authorized shares of capital stock as of February 21, 2017:
| | | Before | | | After Reverse Stock Split | | | | | Reverse Stock Split | | | 1-for-5 | | | 1-for-10 | | | 1-for-20 | | | Common Stock Authorized | | | 500,000,000 | | | | 100,000,000 | | | | 50,000,000 | | | | 25,000,000 | | | Preferred Stock Authorized | | | 100,000,000 | | | | 20,000,000 | | | | 10,000,000 | | | | 5,000,000 | | | Common Stock Outstanding | | | 237,443,785 | | | | 47,488,757 | | | | 23,744,378 | | | | 11,872,189 | | | Common Stock Underlying Options and Warrants | | | 75,265,362 | | | | 15,053,072 | | | | 7,526,536 | | | | 3,763,268 | | | Common Stock Available for Grant under Company Stock Plans | | | 662,485 | | | | 132,497 | | | | 66,248 | | | | 33,124 | | | Total Common Stock Authorized but Unreserved | | | 186,628,368 | | | | 37,325,674 | | | | 18,662,838 | | | | 9,331,419 | |
Because no fractional shares will be issued, holders of Common Stock could be eliminated in the event that the proposed reverse stock split is implemented. However, the Board does not intend to use the reverse stock split as a part of or a first step in a “going private” transaction within the meaning of Rule 13e-3 of the Exchange Act. There is no plan or contemplated plan by the Company to take itself private at the date of this Proxy Statement. As of February 21, 2017, we had approximately 18 record holders who held fewer than 20 shares of Common Stock, out of a total of approximately 65 record holders. We believe that a reverse stock split, even if approved and implemented at a ratio of 1-for-20, would have no meaningful effect on the number of record holders of Common Stock.
Principal Effects of the Authorized Share Reduction
The decrease in the number of authorized shares of capital stock would result in fewer shares of authorized but unissued shares of capital stock being available for future issuance. This would decrease the number of shares of Common Stock available for issuance for various purposes such as to raise capital or to make acquisitions. The Company believes, however, that after the proposed decrease, the number of authorized but unissued shares of Common Stock remaining will be sufficient for such purposes, given that there will be proportionate reduction in the number of outstanding shares of Common Stock through implementation of the reverse stock split.
Certain Risks Associated with the Reverse Stock Split
Before voting on this Proposal 6, you should consider the following risks associated with the implementation of the reverse stock split:
| · | Although we expect that the reverse stock split will result in an increase in the market price of the Common Stock, we cannot assure you that the reverse stock split, if implemented, will increase the market price of the Common Stock in proportion to the reduction in the number of shares of the Common Stock outstanding or result in a permanent increase in the market price, nor can we assure you that over the long term the Company will be able to maintain its listing on the NYSE MKT. The effect the reverse stock split may have upon the market price of the Common Stock cannot be predicted with any certainty, and the history of similar reverse stock splits for companies in similar circumstances to ours is varied. The market price of the Common Stock is dependent on many factors, including our business and financial performance, general market conditions, prospects for future success and other factors detailed from time to time in the reports we file with the SEC. Accordingly, the total market capitalization of the Common Stock after the proposed reverse stock split may be lower than the total market capitalization before the proposed reverse stock split and, in the future, the market price of the Common Stock following the reverse stock split may not exceed or remain higher than the market price prior to the proposed reverse stock split. |
| · | The reverse stock split may result in some shareholders owning “odd lots” of less than 100 shares of Common Stock on a post-split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares. |
| · | While the Board believes that a higher stock price may help generate investor interest, there can be no assurance that the reverse stock split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of the Common Stock may not necessarily improve. |
| · | Although the Board believes that the decrease in the number of shares of Common Stock outstanding as a consequence of the reverse stock split and the anticipated increase in the market price of Common Stock could encourage interest in the Common Stock and possibly promote greater liquidity for our shareholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. |
Effect on Fractional Shareholders
No fractional shares of Common Stock will be issued in connection with the reverse stock split. If as a result of the reverse stock split, a shareholder of record would otherwise hold a fractional share, the shareholder will receive a cash payment in lieu of the issuance of any such fractional share in an amount per share equal to the closing price per share on the NYSE MKT on the trading day immediately preceding the effective time of the reverse stock split (as adjusted to give effect to the reverse stock split), without interest. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other right except to receive the cash payment therefor.
If a shareholder is entitled to a cash payment in lieu of any fractional share interest, a check will be mailed to the shareholder’s registered address as soon as practicable after the reverse stock split. By signing and cashing the check, shareholders will warrant that they owned the shares of Common Stock for which they received a cash payment.
Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests that are not timely claimed after the Effective Time (as defined below) may be required to be paid to the designated agent for each such jurisdiction. Thereafter, shareholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which they were paid.
Effect on Beneficial Shareholders
If you hold shares of Common Stock in street name through a broker, bank or other nominee, we will treat your Common Stock in the same manner as Common Stock held by Shareholders of Record. Brokers and other nominees will be instructed to effect the reverse stock split for their customers holding Common Stock in street name. However, these brokers, banks and other nominees may have different procedures for processing a reverse stock split. If you hold shares of Common Stock in street name, we encourage you to contact your broker bank or other nominee.
Registered “Book-Entry” Holders of Common Stock
If you hold shares of Common Stock electronically in book-entry form with our transfer agent, you do not currently have and will not be issued stock certificates evidencing your ownership after the reverse stock split, and you do not need to take action to receive post-reverse stock split shares. If you are entitled to post-reverse stock split shares, a transaction statement will automatically be sent to you indicating the number of shares of Common Stock held following the reverse stock split.
If you are entitled to a payment in lieu of any fractional share interest, payment will be made as described above under “Effect on Fractional Shareholders.”
Effect on Registered Shareholders Holding Certificates
As soon as practicable after the reverse stock split, our transfer agent will mail transmittal letters to each shareholder holding shares of Common Stock in certificated form. The letter of transmittal will contain instructions on how a shareholder should surrender his or her certificate(s) representing shares of Common Stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-reverse stock split Common Stock (the “New Certificates”). No New Certificates will be issued to a shareholder until such shareholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No shareholder will be required to pay a transfer or other fee to exchange his or her Old Certificates. Shareholders will then receive a New Certificate(s) representing the number of whole shares of Common Stock that they are entitled as a result of the reverse stock split. Until surrendered, we will deem outstanding Old Certificates held by shareholders to be cancelled and only to represent the number of whole shares of post-reverse stock split Common Stock to which these shareholders are entitled. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates.
If you are entitled to a payment in lieu of any fractional share interest, payment will be made as described above under “Effect on Fractional Shareholders.”
Effect on Outstanding Options, Warrants and Restricted Stock Units
Upon a reverse stock split, all outstanding options, warrants, restricted stock units and future or contingent rights to acquire Common Stock will be adjusted to reflect the reverse stock split. With respect to all outstanding options and warrants to purchase Common Stock, the number of shares of Common Stock that such holders may purchase upon exercise of such options or warrants will decrease, and the exercise prices of such options or warrants will increase, in proportion to the fraction by which the number of shares of Common Stock underlying such options and warrants are reduced as a result of the reverse stock split. Also, the number of shares reserved for issuance under our existing stock option and equity incentive plans would be reduced proportionally based on the ratio of the reverse stock split.
Procedure for Effecting the Reverse Stock Split and Authorized Share Reduction
If our shareholders approve this proposal, and the Board elects to effect the reverse stock split and authorized share reduction, we will effect the reverse stock split and authorized share reduction by filing the Certificate of Amendment (as completed to reflect the reverse stock split ratio as determined by the Board, in its discretion, within the range of not less than 1-for-5 and not more than 1-for-20, together with a corresponding proportional reduction in the number of authorized shares of the Company’s capital stock) with the Secretary of State of the State of Delaware. The reverse stock split and authorized share reduction will become effective, and the combination of, and reduction in, the number of our outstanding shares as a result of the reverse stock split will occur automatically, at the time of the filing of the Certificate of Amendment (referred to as the “effective time”), without any action on the part of our shareholders and without regard to the date that stock certificates representing any certificated shares prior to the reverse stock split are physically surrendered for new stock certificates. Beginning at the effective time, each certificate representing pre-reverse stock split shares will be deemed for all corporate purposes to evidence ownership of post-reverse stock split shares. The text of the Certificate of Amendment is subject to modification to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as the Board deems necessary and advisable to effect the reverse stock split and authorized share reduction.
The Board reserves the right, notwithstanding shareholder approval and without further action by the shareholders, to elect not to proceed with the reverse stock split and authorized share reduction if, at any time prior to filing the Certificate of Amendment, the Board, in its sole discretion, determines that it is no longer in the best interests of the Company and its shareholders to proceed with the reverse stock split and authorized share reduction. By voting in favor of the reverse stock split and authorized share reduction, you are expressly also authorizing the Board to delay (until April 11, 2018) or abandon the reverse stock split and authorized share reduction. If the Certificate of Amendment has not been filed with the Secretary of State of the State of Delaware by the close of business on April 11, 2018, the Board will abandon the reverse stock split and authorized share reduction.
Shareholders should not destroy any stock certificate(s) and should not submit any certificate(s) until they receive a letter of transmittal from our transfer agent.
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of important tax considerations of the reverse stock split. It addresses only shareholders who hold Common Stock as capital assets. It does not purport to be complete and does not address shareholders subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign shareholders, shareholders who hold their pre-reverse stock split shares as part of a straddle, hedge or conversion transaction, and shareholders who acquired their pre-reverse stock split shares pursuant to the exercise of employee stock options or otherwise as compensation. This summary is based upon current law, which may change, possibly even retroactively. It does not address tax considerations under state, local, foreign and other laws. The tax treatment of a shareholder may vary depending upon the particular facts and circumstances of such shareholder. Each shareholder is urged to consult with such shareholder’s own tax advisor with respect to the tax consequences of the reverse stock split.
A shareholder generally will not recognize gain or loss on the reverse stock split, except to the extent of cash, if any, received in lieu of a fractional share interest. The aggregate tax basis of the post-reverse stock split shares received will be equal to the aggregate tax basis of the pre-reverse stock split shares exchanged therefor (excluding any portion of the holder’s basis allocated to fractional shares), and the holding period of the post-reverse stock split shares received will include the holding period of the pre-reverse stock split shares exchanged.
A holder of the pre-reverse stock split shares who receives cash will generally be treated as having exchanged a fractional share interest for cash in a redemption by us. The amount of any gain or loss will be equal to the difference between the portion of the tax basis of the pre-reverse stock split shares allocated to the fractional share interest and the cash received.
The foregoing views are not binding on the Internal Revenue Service or the courts. Accordingly, each shareholder should consult with his or her own tax advisor with respect to all of the potential tax consequences to him or her of the reverse stock split.
Accounting Matters
The par value of the Common Stock will remain unchanged at $0.0001 per share after the reverse stock split and authorized share reduction. As a result, our stated capital, which consists of the par value per share of the Common Stock multiplied by the aggregate number of shares of the Common Stock issued and outstanding, will be reduced proportionately at the effective time of the reverse stock split. Correspondingly, our additional paid-in capital, which consists of the difference between our stated capital and the aggregate amount paid to us upon the issuance of all currently outstanding shares of Common Stock, will be increased by a number equal to the decrease in stated capital. Further, net loss per share, book value per share and other per share amounts will be increased as a result of the reverse stock split because there will be fewer shares of Common Stock outstanding.
Required Vote
The affirmative vote of the holders of a majority of the shares of the Common Stock outstanding on the Record Date will be required to approve the reverse stock split and authorized share reduction. Accordingly, abstentions and broker non-votes (to the extent a broker does not exercise its authority to vote) will have the same effect as a vote against the proposal. Shares represented by valid proxies and not revoked will be voted at the Annual Meeting in accordance with the instructions given. If no voting instructions are given, such shares will be voted “FOR” this proposal.
The Board of Directors recommends that you vote FOR the approval
of the reverse stock split and authorized share reduction.
PROPOSAL 7: THE ADJOURNMENT OF THE ANNUAL MEETING
Our shareholders are being asked to consider and vote upon an adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are insufficient votes in favor of approval of a proposed amendment to our restated certificate of incorporation to effectuate a reverse stock split and authorized share reduction as described in Proposal 6.
Approval of the adjournment of the Annual Meeting requires an affirmative vote of a majority in interest of the shareholders present in person or by proxy and entitled to vote at the Annual Meeting. Abstentions will count against the proposal.
The Board of Directors Recommends that you vote FOR the adjournment of the Annual Meeting, if a quorum is present, to solicit additional proxies if there are insufficient votes to approve Proposal6.
SHAREHOLDER PROPOSALS
Shareholder Proposals Pursuant to Rule 14a-8
Shareholders interested in submitting a proposal for inclusion in the proxy statement for the 2018 Annual Meeting may do so by submitting the proposal in writing to the Company’s executive offices, 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850, Attention: Corporate Secretary. Pursuant to Rule 14a-8 under the Exchange Act, to be eligible for inclusion in our proxy statement, shareholder proposals must be received no later than October 27, 2017, which is 120 days prior to the anniversary date of this Proxy Statement. The submission of a shareholder proposal does not guarantee that it will be included in the proxy statement.“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.
Nominations and Shareholder Proposals Under our Bylaws
The Company’s Amended and Restated Bylaws also establish an advance notice procedure with regardUpon written or oral request, we will undertake to nominations of persons for election to the Board of Directors and shareholder proposals to be brought before an annual meeting. Shareholder proposals and nominations may not be brought before the Annual Meeting unless, among other things, the shareholder’s submission contained certain information concerning the proposal or the nominee, as the case may be, and other information specified in the Company’s Amended and Restated Bylaws, and the shareholder’s submission was received by us no earlier than the close of business on December 12, 2016, and no later than January 11, 2017. No notice thatpromptly deliver a shareholder intends to present a proposal or nomination for the Annual Meeting was received. Proposals or nominations not meeting these requirements will not be entertained at the Annual Meeting.
Shareholder proposals and nominations may not be brought before the 2018 Annual Meeting unless, among other things, the shareholder’s submission contains certain information concerning the proposal or the nominee, as the case may be, and other information specified in the Company’s Amended and Restated Bylaws, and the shareholder’s submission is received by us no earlier than the close of business on December 12, 2017, and no later than January 11, 2018. Proposals or nominations not meeting these requirements will not be entertained at the 2018 Annual Meeting.
Shareholders recommending candidates for consideration by the Nominating and Corporate Governance Committee must provide the candidate’s name, biographical data and qualifications. Any such recommendation should be accompanied by a written statement from the individual of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director. These requirements are separate from, and in addition to, the SEC’s requirements that a shareholder must meet in order to have a shareholder proposal included in the proxy statement. A copy of the full text of these bylaw provisions may be obtained from our website at www.rexahn.com.
WHERE YOU CAN FIND MORE INFORMATION
We file annual and quarterly reports, proxy statements and other information with the SEC. Shareholders may read and copy any reports, statements or other information that we file at the SEC’s public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. Our public filings are also available from commercial document retrieval services and at the Internet website maintained by the SEC at www.sec.gov. The Company’s Annual Report on Form 10-K, for the year ended December 31, 2016 was mailed along with this Proxy Statement.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT. WE TAKE NO RESPONSIBILITY FOR, AND CAN PROVIDE NO ASSURANCE AS TO THE RELIABILITY OF, ANY OTHER INFORMATION THAT OTHERS MAY GIVE YOU. THIS PROXY STATEMENT IS DATED FEBRUARY 24, 2017. SHAREHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.
AVAILABILITY OF FORM 10-K
We are providing to each shareholder as of the Record Date a copy of our Annual Report on Form 10-K for the year ended December 31, 2016 concurrently with this Proxy Statement, except the exhibits to the Form 10-K. We will provide copies of these exhibits upon request by eligible shareholders, and we may impose a reasonable fee for providing such exhibits. Requests for copies of such exhibits or the amount of the fee payable should be requested from our Secretary, Tae Heum Jeong at 240-268-5300, by mail at 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850 or by email at ir@rexahn.com. Our Annual Reportreport on Form 10-K and our other filings with the SEC, including the exhibits, are also available for free on the SEC’s website at www.sec.gov.
HOUSEHOLDING
If you are a beneficial owner, but not the record holder, of shares of the Company’s Common Stock, your broker, bank or other nominee may only deliver one (1) copy of this Proxy Statement and our 2016 Annual Reportproxy materials to multiple shareholders at the same address, unless that nominee has received contrary instructions from one (1) or more of the shareholders. The Company will deliver, upon request, a separate copy of this Proxy Statement to a shareholderany stockholder at a shared address to which a single copy of theany of those documents was delivered. A shareholder desiring toTo receive a separate copy of the Proxy Statementannual report on Form 10-K and 2016 Annual Report, nowother proxy materials, you may write our Chief Executive Officer at 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335, or incall 248-681-9815.
Any stockholders who share the future, should call our Secretary, Tae Heum Jeong, at 240-268-5300, or submit a request by writing to 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850 or by emailing us at ir@rexahn.com. Also, beneficial owners sharing ansame address who are receivingand currently receive multiple copies of our annual report on Form 10-K and other proxy materials and annual reports and who wish to receive a singleonly one copy of such materials in the future will need tocan contact their bank, broker bank or other nomineeholder of record to request that only a single copy of each document be mailed to all shareholdersinformation about “householding” or our Chief Executive Officer at the same address in the future.or telephone number listed above.
February 24, 2017
Annex A
FIRST AMENDMENT
TO THE
REXAHN PHARMACEUTICALS, INC.
2013 STOCK OPTION PLAN,
AS AMENDED AND RESTATED AS OF JUNE 9, 2016
25
The Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated as of June 9, 2016 (the “Plan”), is hereby amended, effective as of April 11, 2017, as follows:
1. | Section 4 of the Plan is hereby deleted and replaced in its entirety with the following: |
| 4. | Maximum Shares Available for the Plan |
Subject to adjustments as provided in Section 13 of the Plan, the shares of Stock that may be delivered or purchased with respect to Awards granted under the Plan, including with respect to incentive stock options intended to qualify under Section 422 of the Code, shall not exceed an aggregate of thirty-four million (34,000,000) shares of Stock of the Corporation. The Corporation shall reserve said number of shares for Awards under the Plan, subject to adjustments as provided in Section 13 of the Plan. If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled without the delivery of shares of Stock or other consideration, the shares of Stock subject to such Award shall thereafter be available for future Awards under the Plan.
2. | Except as amended above, the Plan shall remain in full force and effect. |
IN WITNESS WHEREOF, Rexahn Pharmaceuticals, Inc. has caused this First Amendment to the Plan to be executed this ____ day of ___________, 2017.
| REXAHN PHARMACEUTICALS, INC. | | | | | By: | | | Name: | | | Title: | |
Annex B
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
REXAHN PHARMACEUTICALS, INC.
Rexahn Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
1. The name of the Corporation is Rexahn Pharmaceuticals, Inc.
2. Article 4 of the Amended and Restated Certificate of Incorporation of the Corporation, as amended to date, is hereby amended by replacing the first paragraph thereof with the following:
The total number of shares of all classes of stock which the Corporation shall have the authority to issue is ______________1 shares of the par value of $.0001 each, of which ______________2 are to be of a class designated Preferred Stock (the “Preferred Stock”) and ______________3 shares of the par value of $.0001 each are to be of a class designated Common Stock (the “Common Stock”).
Upon the filing and effectiveness (the “Effective Time”) of this amendment to the Corporation’s Amended and Restated Certificate of Incorporation pursuant to the Delaware General Corporation Law, each ______________4 shares of the Common Stock (the “Old Common Stock”) issued immediately prior to the Effective Time shall be reclassified and combined into one validly issued, fully paid and non-assessable share of the Corporation’s common stock, $.0001 par value per share (the “New Common Stock”), without any action by the holder thereof (the “Reverse Stock Split”). The Corporation shall not issue fractions of shares of New Common Stock in connection with such reclassification and combination. Stockholders who, immediately prior to the Effective Time, own a number of shares of Old Common Stock which is not evenly divisible by ______________5 shall, with respect to such fractional interest, be entitled to receive cash from the Corporation in lieu of fractions of shares of New Common Stock from the disposition of such fractional interest as provided below. The Corporation shall arrange for the disposition of fractional interests by those otherwise entitled thereto, by the mechanism of having (x) the transfer agent of the Corporation aggregate such fractional interests, (y) the shares resulting from the aggregation sold and (z) the net proceeds received from the sale allocated and distributed among the holders of the fractional interests as their respective interests appear. Each certificate that theretofore represented shares of Old Common Stock shall thereafter represent that number of shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified and combined; provided, that each person holding of record a stock certificate or certificates that represented shares of Old Common Stock shall receive, upon surrender of such certificate or certificates, a new certificate or certificates evidencing and representing the number of shares of New Common Stock to which such person is entitled under the foregoing reclassification and combination.”
1 | To be a number between 30 million and 120 million, determined by dividing 600 million by the number determined by the Board of Directors of the Corporation (the “Board”) for the purposes of footnote 4 below. |
2 | To be a number between 5 million and 20 million, determined by dividing 100 million by the number determined by the Board for the purposes of footnote 4 below. |
3 | To be a number between 25 million and 100 million, determined by dividing 500 million by the number determined by the Board for the purposes of footnote 4 below |
4 | To be five, six, seven, eight, nine, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, or 20, as determined by the Board of Directors of the Corporation. |
5 | To be the number determined by the Board for the purposes of footnote 5 above. |
3. This CertificateTABLE OF CONTENTS Available Information We will mail without charge, upon written request, a copy of Amendment has been duly adopted byour annual report on Form 10-K for the fiscal year ended December 31, 2020, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to Amy Rabourn, our Vice President of Finance, 37000 Grand River Avenue, Suite 120, Farmington Hills, Michigan 48335. Our Board does not presently intend to bring any other business before the meeting and, so far as is known to the Board, of Directors and stockholdersno matters are to be brought before the meeting except as specified in the Notice of the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware.
4. This Certificate of Amendment shall become effective at ____________ ___.m. Eastern _____________Time on ___________, 2017.
IN WITNESS WHEREOF, the Corporation has caused its duly authorized officermeeting. As to execute this Certificate of Amendment on this __________ day of _________, _________.
| REXAHN PHARMACEUTICALS, INC. | | | | | By: | | | Name: | | | Title: | |
REXAHN PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 11, 2017
The undersigned hereby appoints Peter Suzdakany business that may arise and Tae Heum Jeong, and each of them, with power to act without the other and with full power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided below, all the shares of Rexahn Pharmaceuticals, Inc. common stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Rexahn Pharmaceuticals, Inc. to be held on April 11, 2017, at 8:00 a.m. (local time), atmeeting, however, it is intended that proxies, in the Radisson Hotel, 3 Research Court, Rockville, Maryland 20850, or any adjournment thereof, with all powers which the undersigned would possess if present at the meeting.
This proxy is revocable andform enclosed, will be voted as directed, but if no instructions are specified, this proxy will be voted “FOR”in respect thereof in accordance with the election of eachjudgment of the nominees for director named in Proposal 1 and “FOR” Proposals 2, 3, 5, 6, 7 and “EVERY THREE YEARS” frequency in Proposal 4. If any other business is presented at the Annual Meeting of Shareholders, this proxy will be voted by those named in this proxy in their best judgment. At the present time, the Board of Directors knows of no other business to be presented at the Annual Meeting of Shareholders.persons voting such proxies.
Please mark, date, sign, and mail your proxy promptly in the envelope provided
IMPORTANT: SIGNATURE REQUIRED ON THE OTHER SIDE
pPLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.p
KEEP THIS PORTION FOR YOUR RECORDS.26
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be held April 11, 2017.
The Proxy Statement and 2016 Annual Report to Shareholders are available at: http://www.viewproxy.com/rexahn/2017
TABLE OF CONTENTS THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES IDENTIFIED IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3, 5, 6, 7 AND “EVERY THREE YEARS” FREQUENCY IN PROPOSAL 4. Please mark your votes like this Proposal 1. Election of Directors FOR WITHHOLD Proposal 2. Ratification of the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm of Rexahn Pharmaceuticals, Inc. for the fiscal year ending December 31, 2017. FOR AGAINST ABSTAIN DO NOT PRINT IN THIS AREA (Shareholder Name & Address Data) CONTROL NUMBER Proposal 3. Approval, by non-binding vote, of Rexahn Pharmaceuticals, Inc.’s executive compensation. FORAGAINSTABSTAIN Proposal 4. Recommendation, by non-binding vote, of the frequency of future non-binding votes on executive compensation.3 YEARS 2 YEARS 1 YEAR ABSTAIN Proposal 5. Approval of an amendment to the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan, as amended and restated, to increase the number of shares of common stock reserved for issuance thereunder from 17,000,000 to 34,000,000. FOR AGAINST ABSTAIN Proposal 6. Approval of an amendment to the Amended and Restated Certificate of Incorporation of Rexahn Pharmaceuticals, Inc. (in the event it is deemed by the Board of Directors to be advisable) to effect a reverse stock split of the common stock of Rexahn Pharmaceuticals, Inc. at a ratio within the range of 1:5 to 1:20, as determined by the Board of Directors, together with a corresponding proportional reduction in the number of authorized shares of capital stock. FORAGAINST ABSTAIN Proposal 7. Approval of the adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 6. FOR AGAINST ABSTAIN YES NO /We plan to attend the meeting: NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee or guardian, please give full title as such. Signature Signature (if held jointly) Date: , 2017 PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11 digit control number ready when voting by Internet or Telephone INTERNET Vote Your Proxy on the Internet: Go to www.AALvote.com/RNN Have your proxy card available when you access the above website. Follow the prompts to vote your shares. TELEPHONE Vote Your Proxy by Phone: Call 1 (866) 804-9616 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. MAIL Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.
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