UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filed by a party other than the Registrant ¨
Check the appropriate box:
| x | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material under §240.14a-12 |
Bellerophon
Therapeutics, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
| ¨ | Fee paid previously with preliminary materials |
| ¨ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
c/o Verdolino & Lowey, P.C.
124 Washington Street, Suite 101
Foxborough, Massachusetts 02035
November , 2023
To Our Stockholders:
You are cordially invited to attend a Special
Meeting of Stockholders (the “Special Meeting”) of Bellerophon Therapeutics, Inc. (the “Company”) to be held at a.m.,
Eastern time, on , 2023 at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., 919 Third Avenue, New York, NY 10022.
The purpose of the Special Meeting is to approve
the liquidation and dissolution of the Company (the “Dissolution”) and the Plan of Liquidation and Dissolution (the “Plan
of Dissolution”), which if approved, will authorize the Company’s Board of Directors (the “Board”) to liquidate
and dissolve the Company in accordance with the Plan of Dissolution. The Notice of Meeting and Proxy Statement on the following pages
describe the matters to be presented at the meeting.
The Board carefully reviewed and considered the
Plan of Dissolution in light of the financial position of the Company, including its available cash, resources and operations following
and in light of the Company’s previously announced review and pursuit of strategic alternatives. The Board determined that the Dissolution
was advisable and in the best interests of the Company and our stockholders, approved the Dissolution and the Plan of Dissolution and
directed that the Plan of Dissolution and the Dissolution be submitted to the Company’s stockholders for approval. The Board
unanimously recommends that you vote “FOR” the Dissolution Proposal and “FOR” each of other proposals described
in the accompanying proxy statement.
More information about the Dissolution, the
Plan of Dissolution and the Special Meeting is contained in the accompanying proxy statement. In particular, you should carefully
read the section entitled “Risk Factors” beginning on page 7 of the proxy statement for a discussion of risks you should
consider in evaluating the Dissolution.
It is important that your shares be represented
at this meeting to assure the presence of a quorum. Whether or not you plan to attend the meeting, we hope that you will have your stock
represented by submitting a proxy to vote your shares over the Internet or by telephone as provided in the instructions set forth on the
enclosed proxy card, or by completing, signing, dating and returning your proxy in the enclosed envelope, as soon as possible.
Your stock will be voted in accordance with the instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
Peter Fernandes
Chief Executive Officer
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on
, 2023
To Our Stockholders:
NOTICE IS HEREBY GIVEN that a Special Meeting
of Stockholders (the “Special Meeting”) of Bellerophon Therapeutics, Inc. (the “Company”) will be held at a.m.,
Eastern time, on , 2023 at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., 919 Third Avenue, New York, NY 10022.
At the Special Meeting, stockholders will consider
and vote on the following matters:
1. the
approval of the liquidation and dissolution of the Company (the “Dissolution”) and the Plan of Liquidation and Dissolution
(the “Plan of Dissolution”), which, if approved, will authorize the Board to liquidate and dissolve the Company in accordance
with the Plan of Dissolution (the “Dissolution Proposal”); and
2. the
approval of an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the
time of the Special Meeting to approve the Dissolution Proposal (the “Adjournment Proposal”).
Stockholders of record at the close of business
on , 2023 (the “Record Date”), are entitled to notice
of, and to vote at, the Special Meeting or any postponement, continuation or adjournment thereof. Your vote is important regardless of
the number of shares you own.
We urge you to submit a proxy to vote your shares
over the Internet or by telephone as provided in the instructions set forth on the enclosed proxy card, or complete, date, sign and promptly
return the enclosed proxy card whether or not you expect to attend the Special Meeting. A postage-prepaid envelope, addressed to Broadridge
Financial Solutions, which is serving as proxy tabulator, has been enclosed for your convenience. If you attend the Special Meeting in
person you may vote your shares in person even if you have previously submitted a proxy.
By Order of the Board of Directors,
Naseem Amin
Chairman of the Board of Directors
November , 2023
Table of Contents
Page
PROXY STATEMENT
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
, 2023
This proxy statement and the enclosed proxy card
are being furnished in connection with the solicitation of proxies by the Board of Bellerophon Therapeutics, Inc., also referred to in
this proxy statement as the “Company,” “Bellerophon,” “we” or “us,” for use at the Special
Meeting of Stockholders to be held at a.m., Eastern time, on
, 2023 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 919 Third Avenue, New York, NY 10022, and
at any postponement, continuation or adjournment thereof.
This proxy statement and accompanying proxy materials
are being mailed to stockholders on or about , 2023.
Important Notice Regarding the Availability
of Proxy Materials for
the Special Meeting of Stockholders to be Held
on , 2023:
This proxy statement is available for viewing,
printing and downloading by following the instructions at
www.edocumentview.com/BLPH.
GENERAL INFORMATION
Who is soliciting my vote?
Our board of directors (the “Board”)
is soliciting your vote for the Special Meeting.
When is the record date for the Special Meeting?
The Record Date for determination of stockholders
entitled to vote at the Special Meeting or any postponement, continuation or adjournment thereof is the close of business on
, 2023.
How many votes can be cast by all stockholders?
There were
shares of our common stock, par value $0.01 per share, outstanding on the Record Date, all of which are entitled to vote
with respect to all matters to be acted upon at the Special Meeting. Each stockholder of record is entitled to one vote for each share
of our common stock held by such stockholder. Our common stock is our only class of voting stock.
How is a quorum reached?
Our Amended and Restated Bylaws provide that a
majority of the outstanding shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction
of business at the Special Meeting. Under the General Corporation Law of the State of Delaware (the “DGCL”), shares that are
voted “abstain” and broker “non-votes” (shares held by a broker or nominee that are represented at the meeting,
but with respect to which the broker or nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal)
are counted as present for purposes of determining whether a quorum is present at the Special Meeting. If a quorum is not present, the
meeting may be adjourned until a quorum is obtained.
How do I vote?
If you are the record holder of your shares, you
may vote in one of four ways. You may submit a proxy to vote over the Internet, by telephone, or by mail or you may vote in person at
the Special Meeting.
You may submit a proxy to vote over the Internet
or by telephone: Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote by
Internet or telephone.
You may submit a proxy to vote by mail: If
you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the
card.
You may vote in person: If you attend the
Special Meeting, you may vote by delivering your completed proxy card in person or you may vote by completing a ballot. Ballots will be
available at the meeting.
Telephone and Internet voting for stockholders
of record will be available until 11:59 p.m. Eastern Time on ,
2023 and mailed proxy cards must be received by , 2023 in order
to be counted at the Special Meeting. If the Special Meeting is adjourned or postponed, these deadlines may be extended.
The shares represented by all valid proxies will
be voted as specified in those proxies. If the shares you own are held in your name and you return a duly executed proxy without specifying
how your shares are to be voted, they will be voted as follows in accordance with the recommendations of our Board:
| · | FOR the Dissolution Proposal, which includes the approval of the liquidation and dissolution of the Company (the “Dissolution”)
and the Plan of Liquidation and Dissolution (the “Plan of Dissolution”), which, if approved, will authorize the Board to liquidate
and dissolve the Company in accordance with the Plan of Dissolution; and |
| · | FOR the Adjournment Proposal, which includes the approval of an adjournment of the Special Meeting, if necessary, to solicit additional
proxies if there are not sufficient votes at the time of the Special Meeting to approve the Dissolution Proposal. |
If you are a beneficial owner of shares held
in “street name” by your broker, bank or other nominee: If you are a beneficial owner of shares held in “street
name” by your broker, bank or other nominee, you should have received a voting instruction form with these proxy materials from
your broker, bank or other nominee rather than from us. The voting deadlines and availability to submit a proxy by telephone or the Internet
for beneficial owners of shares will depend on the voting processes of the broker, bank or other nominee that holds your shares. Therefore,
we urge you to carefully review and follow the voting instruction form and any other materials that you receive from that organization.
If you hold your shares in multiple accounts, you should submit a proxy to vote your shares as described in each set of proxy materials
you receive.
If the shares you own are held in street name,
the bank or brokerage firm, as the record holder of your shares, is required to vote your shares in accordance with your instructions.
You should direct your broker how to vote the shares held in your account. Under the rules that govern brokers who are voting with respect
to shares held by them as nominee, brokers have the discretion to vote such shares only on routine matters. The approval of the Dissolution
pursuant to the Plan of Dissolution is considered a non-routine matter. A broker “non-vote” occurs when a broker submits a
proxy form but declines to vote on a particular matter because the broker has not received voting instructions from the beneficial owner.
For non-routine matters, broker non-votes will have the effect of voting against that proposal. If you want to approve the Dissolution,
you must vote FOR the Dissolution Proposal. If you do not instruct your broker on how to vote your shares with respect to the Dissolution
Proposal, your broker will not be able to vote your shares with respect to the Dissolution Proposal, and it will have the effect of a
vote against that proposal.
The Adjournment Proposal is considered a routine
matter. If you do not instruct your broker on how to vote your shares, your broker will have the discretion to vote your shares with respect
to the Adjournment Proposal.
How do I revoke my proxy or change my vote?
If you are a stockholder of record on the Record
Date for the Special Meeting, you have the power to revoke your proxy at any time before your proxy is voted at the Special Meeting. You
can revoke your proxy in one of four ways:
| · | providing to our Secretary a signed notice of revocation; |
| · | granting a new, valid proxy bearing a later date; |
| · | submit a new proxy to vote by telephone or the Internet at a later time; or |
| · | attend the Special Meeting and vote in person. However, your attendance at the Special Meeting will not automatically revoke your
proxy unless you vote again at the Special Meeting. |
Any written notice of revocation or subsequent
proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Special Meeting. Such written notice of
revocation or subsequent proxy card should be delivered to Craig Jalbert at Verdolino & Lowey, P.C. (“V&L”), who will
be acting as our Corporate Secretary, or sent to V&L at 124 Washington St., Suite 101, Foxborough, Massachusetts 02035, Attention:
Bellerophon Therapeutics.
Your most current vote, whether by telephone,
Internet or proxy card is the one that will be counted. If a broker, bank or other nominee holds your shares, you must contact such broker,
bank or nominee in order to find out how to change your vote.
What vote is required to adopt each proposal?
The Dissolution Proposal requires the affirmative
vote of the holders of a majority of the outstanding shares of common stock of the Company entitled to vote at the Special Meeting. With
respect to the Dissolution Proposal, abstentions and failures to vote will have the same effect as votes against the proposal.
The Adjournment Proposal requires the approval
of a majority in voting power of the votes cast affirmatively or negatively by the holders entitled to vote on the proposal. With respect
to the Adjournment Proposal, abstentions will not affect the voting results.
The votes will be counted, tabulated and certified
by Computershare Trust Company, N.A. (“Computershare”), who shall serve as the inspector of elections for the Special Meeting.
Why is the Board recommending approval of the Plan of Dissolution?
The Board carefully reviewed and considered the
Plan of Dissolution in light of the financial position of the Company, including our available cash, resources and operations following
and in light of our previously announced review and pursuit of strategic alternatives. After due consideration of the options available
to the Company, our Board has determined that the Dissolution is advisable and in the best interests of the Company and our stockholders.
See “Proposal 1: Approval of the Dissolution Pursuant to the Plan of Dissolution — Reasons for the Proposed
Dissolution.”
What does the Plan of Dissolution entail?
The Plan of Dissolution provides an outline of
the steps for the Dissolution of the Company under Delaware law. The Plan of Dissolution provides that we will file the Certificate of
Dissolution following the required stockholder approval; however, the decision of whether or not to proceed with the Dissolution and when
to file the Certificate of Dissolution will be made by the Board in its sole discretion.
What will happen if the Dissolution is approved?
If the Dissolution is approved by our stockholders,
our Board will have sole discretion to determine if and when (at such time as they deem appropriate following stockholder approval of
the Dissolution) to proceed with the Dissolution. If the Board decides to proceed with the Dissolution, we will liquidate any remaining
assets, satisfy or make reasonable provisions for our remaining obligations, and make distributions to the stockholders of available proceeds,
if any. The Board intends to seek to distribute funds to our stockholders as quickly as possible, as permitted by the DGCL and the Plan
of Dissolution, and intends to take all reasonable actions to optimize the distributable value to our stockholders.
If our Board determines that the Dissolution is
not in our best interests or not in the best interests of our stockholders, our Board may direct that the Dissolution be abandoned, or
may amend or modify the Plan of Dissolution to the extent permitted by Delaware law without the necessity of further stockholder approval.
After the Certificate of Dissolution has been filed, revocation of the Dissolution would require stockholder approval under Delaware law.
Can the Company estimate the distributions that the stockholders
would receive in the Dissolution?
We cannot predict with certainty the amount of
distributions, if any, to our stockholders. However, based on the information currently available to us and if our stockholders approve
the Dissolution, we estimate that the aggregate amount of cash that will be available for distribution to our stockholders in the Dissolution
will be in the range between approximately $400,000 and $900,000 and the total amount distributed to stockholders will be in the range
between approximately $0.03 and $0.07 per share of common stock. These amounts may be paid in one or more distributions. You may receive
substantially less than the amount that we currently estimate that you may receive, or you may receive no distribution at all. Such distributions,
if any, will not occur until after the Certificate of Dissolution is filed, and we cannot predict the timing or amount of any such distributions,
as uncertainties as to the ultimate amount of our liabilities, the operating costs and amounts to be reserved for claims, obligations
and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible
to predict with certainty the actual net cash amount, if any, that will ultimately be available for distribution to stockholders or the
timing of any such distributions. Accordingly, you will not know the exact amount of any distribution you may receive as a result of the
Plan of Dissolution when you vote on the proposal to approve the Plan of Dissolution.
Although we cannot predict the timing or amount
of any such distributions, to the extent funds are available for distribution to stockholders, the Board intends to seek to distribute
such funds to our stockholders as quickly as possible, as permitted by the DGCL and the Plan of Dissolution, and will take all reasonable
actions to optimize the distributable value to our stockholders. See the section entitled “Proposal 1 — Approval
of the Dissolution Pursuant to the Plan of Dissolution — Estimated Distributions to Stockholders” beginning
on page 10 of this proxy statement for a description of the assumptions underlying and sensitivities of our estimate of the total cash
distributions to our stockholders in the Dissolution.
What is the reporting and listing status of the Company?
On July 19, 2023, the Company was notified by
the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) that, in light of
the Company’s previously disclosed workforce reduction plan and focus on exploring strategic alternatives, based upon the Staff’s
belief that the Company is a “public shell” as that term is defined in Nasdaq Listing Rule 5101 and the Company’s non-compliance
with the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2), the Company would be delisted from The Nasdaq Capital
Market at the opening of business on July 28, 2023 unless the Company timely requests a hearing before a Nasdaq Hearings Panel (the “Panel”)
to address the deficiencies and present a plan to regain compliance. On July 26, 2023, the Company requested a hearing before the Panel,
which was held on September 21, 2023. On October 2, 2023, the Panel provided an extension for continued listing on the Nasdaq Capital
Market subject to certain conditions. On October 12, 2023, the Company notified the Panel that it will not be able to meet the conditions
of the Panel’s decision. Accordingly, on October 12, 2023, the Staff notified the Company that it determined to delist the Company’s
shares of common stock from the Nasdaq Capital Market and that trading in the Company’s shares will be suspended at the open of
trading on Monday October 16, 2023. Thereafter, Nasdaq will file a Form 25 with the SEC to formally delist the Company’s common
stock. Nasdaq has not specified the exact date on which the Form 25 will be filed. Following such delisting, our common stock may only
trade in the U.S. on the over-the-counter market, which is a less liquid market, if at all.
If the Dissolution is approved by our stockholders
and if the Board determines to proceed with the Dissolution, we will close our transfer books at the effective time of the Certificate
of Dissolution (the “Effective Time”). After such time, we will not record any further transfers of our common stock, except
pursuant to the provisions of a deceased stockholder’s will, intestate succession, or operation of law and we will not issue any
new stock certificates, other than replacement certificates. In addition, after the Effective Time, we will not issue any shares of our
common stock upon exercise of outstanding options, warrants, or restricted stock units. As a result of the closing of our transfer books,
it is anticipated that distributions, if any, made in connection with the Dissolution will likely be made pro rata to the same stockholders
of record as the stockholders of record as of the Effective Time, and it is anticipated that no further transfers of record ownership
of our common stock will occur after the Effective Time.
Additionally, whether or not the Dissolution is
approved, we will have an obligation to continue to comply with the applicable reporting requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) until we have exited such reporting requirements. The Company plans to initiate steps
to exit from certain reporting requirements under the Exchange Act.
However, such process may be protracted and we
may be required to continue to file Current Reports on Form 8-K to disclose material events, including those related to the Dissolution.
Accordingly, we will continue to incur expenses that will reduce the amount available for distribution, including expenses of complying
with public company reporting requirements and paying its service providers, among others.
Do I have appraisal rights in connection with the Dissolution?
None of Delaware law, our Restated Certificate
of Incorporation, as amended, or our Amended and Restated Bylaws provides for appraisal or other similar rights for dissenting stockholders
in connection with the Dissolution, and we do not intend to independently provide stockholders with any such right.
Are there any risks related to the Dissolution?
Yes. You should carefully review the section entitled
“Risk Factors” beginning on page 7 of this proxy statement for a description of risks related to the Dissolution.
Will I owe any U.S. federal income taxes as a result of the Dissolution?
If the Dissolution is approved and
implemented, a stockholder that is a U.S. person generally will recognize gain or loss on a share-by-share basis equal to the
difference between (1) the sum of the amount of cash and the fair market value of property, if any, distributed to the stockholder
with respect to each share, less any known liabilities assumed by the stockholder or to which the distributed property (if any) is
subject, and (2) the stockholder’s adjusted tax basis in each share of our common stock. You are urged to read the section
entitled “Proposal 1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Certain
Material U.S. Federal Income Tax Consequences of the Proposed Dissolution” beginning on page 19 of this proxy statement for a
summary of certain material U.S. federal income tax consequences of the Dissolution, including the ownership of an interest in a
liquidating trust, if any.
What will happen to our common stock if the Certificate of Dissolution
is filed with the Secretary of State of Delaware?
If the Certificate of Dissolution is filed with
the Secretary of State, our common stock (if not previously delisted and deregistered) will be delisted from the Nasdaq and deregistered
under the Exchange Act. From and after the Effective Time, and subject to applicable law, each holder of shares of our common stock shall
cease to have any rights in respect of that stock, except the right to receive distributions, if any, pursuant to and in accordance with
the Plan of Dissolution and the DGCL. After the Effective Time, our stock transfer records shall be closed, and we will not record or
recognize any transfer of our common stock occurring after the Effective Time, except, in our sole discretion, such transfers occurring
by will, intestate succession or operation of law as to which we have received adequate written notice. Under the DGCL, no stockholder
shall have any appraisal rights in connection with the Dissolution.
We expect to file the Certificate of Dissolution
and for the Dissolution to become effective as soon as reasonably practicable after the Dissolution is approved by our stockholders; however,
the decision of whether or not to proceed with the Dissolution will be made by the Board in its sole discretion. We intend to provide
advance notice to our stockholders prior to the closing of our stock transfer records.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information in this proxy statement includes
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend that such forward-looking
statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Exchange Act. These statements include statements regarding the intent, belief or current expectations of members
of our management team, as well as the assumptions on which such statements are based, and are generally identified by the use of words
such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,”
“expects,” “plans,” “predicts,” “intends,” “should,” “could,”
“continues,” or the negative version of these words or other comparable words. Forward-looking statements in this proxy statement
include, but are not limited to:
| · | plans and expectations for the Dissolution; |
| · | beliefs about the Company’s available options and financial condition; |
| · | all statements regarding the tax and accounting consequences of the transactions contemplated by the Dissolution; and |
| · | all statements regarding the amount and timing of distributions made to stockholders, if any, in connection with the Dissolution. |
You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date they are made. Such statements are subject to known
and unknown risks and uncertainties and other unpredictable factors, many of which are beyond our control. We make no representation
or warranty (express or implied) about the accuracy of any of the forward-looking statements. These statements are based on a number
of assumptions involving the judgment of management. Many relevant risks are described under the caption “Risk Factors”
on page 7 of this proxy statement, as well as throughout this proxy statement and the incorporated documents, and you should
consider these important cautionary factors as you read this document.
The forward-looking statements in this proxy statement
involve certain uncertainties and risks, including but not limited to:
| · | our ability to complete the Dissolution in a timely manner, or at all; |
| · | the timing and amount of cash and other assets available for distribution to our stockholders upon Dissolution; |
| · | the impact of business uncertainties in connection with the Dissolution; |
| · | the occurrence of any event, change or circumstance that could give rise to the termination of the Plan of Dissolution; |
| · | the risk that we may have liabilities or obligations about which we are not currently aware; |
| · | the risk that the cost of settling our liabilities and contingent obligations could be higher than anticipated; and |
| · | other risks and uncertainties described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year
ended December 31, 2022 filed with the SEC on March 31, 2023 and those risks and uncertainties described in our other reports filed with
the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. |
Any forward-looking statements are made as of
the date of this proxy statement only. In each case, actual results may differ materially from such forward-looking information. We can
give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse
change in one or more of the risk factors or risks and uncertainties referred to in this proxy statement or included in the documents
incorporated by reference herein or other periodic reports or other documents or filings filed with or furnished to the SEC from time
to time could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required
by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans,
assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this
proxy statement.
RISK FACTORS
The following risk factors, together with the
other information in this proxy statement and in the “Risk Factors” sections included in the documents incorporated by reference
into this proxy statement (see the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning
on page 26 of this proxy statement), should be carefully considered before deciding whether to vote to approve the Dissolution Proposal
as described in this proxy statement. In addition, stockholders should keep in mind that the risks described below are not the only risks
that are relevant to your voting decision. The risks described below are the risks that we currently believe are the material risks of
which our stockholders should be aware. Nonetheless, additional risks that are not presently known to us, or that we currently believe
are not material, may also prove to be important. Notably, the Company cautions that trading in the Company’s securities is highly
speculative and poses substantial risks.
Trading prices for the Company’s securities
may bear little or no relationship to the actual value realized, if any, by holders of the Company’s securities. Accordingly, the
Company urges extreme caution with respect to existing and future investments in its securities.
RISKS RELATED TO THE DISSOLUTION
We cannot predict the timing of the distributions to stockholders.
Our current intention is that, if approved by
our stockholders, the Certificate of Dissolution would be filed promptly after such approval; however, the decision of whether or not
to proceed with the Dissolution will be made by the Board in its sole discretion. No further stockholder approval would be required to
effect the Dissolution. However, if the Board determines that the Dissolution is not in our best interest or the best interest of our
stockholders, the Board may, in its sole discretion, abandon the Dissolution or may amend or modify the Plan of Dissolution to the extent
permitted by Delaware law without the necessity of further stockholder approval. After the Certificate of Dissolution has been filed,
revocation of the Dissolution would require stockholder approval under Delaware law.
Under Delaware law, before a dissolved corporation
may make any distribution to its stockholders, it must pay or make reasonable provision to pay all of its claims and obligations, including
all contingent, conditional or unmatured contractual claims known to the corporation. Furthermore, we may be subject to potential liabilities
relating to indemnification obligations, if any, to third parties or to our current and former officers and directors. It might take significant
time to resolve these matters, and as a result we are unable to predict the timing of distributions, if any are made, to our stockholders.
We cannot assure you as to the amount of distributions, if any,
to be made to our stockholders.
We cannot predict with certainty the amount of
distributions, if any, to our stockholders. However, based on the information currently available to us and if our stockholders approve
the Dissolution, we estimate that the aggregate amount of cash that will be available for distribution to our stockholders in the Dissolution
will be in the range between approximately $400,000 and $900,000 and the total amount distributed to stockholders will be in the range
between approximately $0.03 and $0.07 per share of common stock. These estimates do not include cash that may be available for distribution
from the proceeds from any sales or our remaining assets, including our intellectual property. Any such amounts may be paid in one or
more distributions. Such distributions will not occur until after the Certificate of Dissolution is filed, and we cannot predict the timing
or amount of any such distributions, as uncertainties as to the ultimate amount of our liabilities, the operating costs and amounts to
be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete
such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution
to stockholders or the timing of any such distributions. Examples of uncertainties that could reduce the value of distributions to our
stockholders include: unanticipated costs relating to the defense, satisfaction or settlement of lawsuits or other claims threatened against
us or our directors or officers; amounts necessary to resolve claims of any creditors or other third parties; and delays in the liquidation
and dissolution or other winding up process.
In addition, as we wind down, we will
continue to incur expenses from operations, including directors’ and officers’ insurance; payments to service providers
and any continuing employees or consultants; taxes; legal, accounting and consulting fees and expenses related to our filing
obligations with the SEC or in connection with our listing (including our scheduled hearing) on Nasdaq, which will reduce any
amounts available for distribution to our stockholders. As a result, we cannot assure you as to any amounts to be distributed to our
stockholders if the Board proceeds with the Dissolution. If our stockholders do not approve the Dissolution Proposal, we will not be
able to proceed with the Dissolution and no liquidating distributions will be made in connection therewith. See the section entitled
“Proposal 1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Estimated Distributions to
Stockholders” beginning on page 10 of this proxy statement for a description of the assumptions underlying and sensitivities
of our estimate of the total cash distributions to our stockholders in the Dissolution.
It is the current intent of the Board, assuming
approval of the Dissolution, that any cash will first be used to pay our outstanding current liabilities and then will be retained to
pay ongoing corporate and administrative costs and expenses associated with winding down the company, liabilities and potential liabilities
relating to or arising out of any litigation matters and potential liabilities relating to our indemnification obligations, if any, to
our service providers, or to our current and former officers and directors.
The Board will determine, in its sole discretion,
the timing of the distribution of the remaining amounts, if any, to our stockholders in the Dissolution. We can provide no assurance as
to if or when any such distribution will be made, and we cannot provide any assurance as to the amount to be paid to stockholders in any
such distribution, if one is made. Stockholders may receive substantially less than the amount that we currently estimate that they may
receive, or they may receive no distribution at all. To the extent funds are available for distribution to stockholders, the Board intends
to seek to distribute such funds to our stockholders as quickly as possible, as permitted by the DGCL, and intends to take all reasonable
actions to optimize the distributable value to our stockholders.
If our stockholders do not approve the Dissolution Proposal,
we would not be able to continue our business operations.
On June 5, 2023, we issued a press release announcing
top-line results from our pivotal Phase 3 REBUILD clinical trial evaluating the safety and efficacy of INOpulse® for the treatment
of fILD. The trial did not meet its primary endpoint and the secondary endpoints demonstrated minimal difference between the two groups
with none approaching statistical significance. Based on these findings, we decided to terminate the REBUILD Phase 3 clinical study and
withdraw patients from all of our ongoing INOpulse development programs and disclosed our intention to explore a range of strategic alternatives
to maximize stockholder value, including, but not limited to, a merger, a business combination, a sale of assets or other transaction
or a liquidation and dissolution, which we disclosed in a Form 8-K filed on June 29, 2023. In connection with our plan to explore strategic
alternatives, we also announced a reduction in force. After an extensive review of strategic alternatives, we have been unable to identify
and enter into a viable transaction with a merger partner or purchaser of our company or our assets. If our stockholders do not approve
the Dissolution Proposal, the Board will continue to explore what, if any, alternatives are available for the future of the Company in
light of its discontinued business activities; however, those alternatives are likely limited to seeking voluntary dissolution at a later
time with potentially diminished assets or seeking bankruptcy protection (should our net assets decline to levels that would require such
action). It is unlikely that these alternatives would result in greater stockholder value than the proposed Plan of Dissolution and the
Dissolution.
The Board may determine not to proceed with the Dissolution.
Even if the Dissolution Proposal is approved by
our stockholders, the Board may determine in its sole discretion not to proceed with the Dissolution. If our Board elects to pursue any
alternative to the Plan of Dissolution, our stockholders may not receive any of the funds that might otherwise be available for distribution
to our stockholders. After the Certificate of Dissolution has been filed, revocation of the Dissolution would require stockholder approval
under Delaware law.
Our stockholders may be liable to third parties for part or all
of the amount received from us in our liquidating distributions if reserves are inadequate.
If the Dissolution becomes effective, we may
establish a contingency reserve designed to satisfy any additional claims and obligations that may arise. Any contingency reserve
may not be adequate to cover all of our claims and obligations. Under the DGCL, if we fail to create an adequate contingency reserve
for payment of our expenses, claims and obligations, each stockholder could be held liable for payment to our creditors for claims
brought prior to or after the expiration of the Survival Period (as defined below) after we file the Certificate of Dissolution with
the Secretary of State (or, if we choose the Safe Harbor Procedures (as defined under the section entitled “Proposal
1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Delaware Law
Applicable to Our Dissolution — Payments and Distributions to Claimants and
Stockholders — Safe Harbor Procedures under DGCL Sections 280 and 281(a)” beginning on page 13 of
this proxy statement), for claims brought prior to the expiration of the Survival Period), up to the lesser of (i) such
stockholder’s pro rata share of amounts owed to creditors in excess of the contingency reserve and (ii) the amounts previously
received by such stockholder in Dissolution from us and from any liquidating trust or trusts. Accordingly, in such event, a
stockholder could be required to return part or all of the distributions previously made to such stockholder, and a stockholder
could receive nothing from us under the Plan of Dissolution. Moreover, if a stockholder has paid taxes on amounts previously
received, a repayment of all or a portion of such amount could result in a situation in which a stockholder may incur a net tax cost
if the repayment of the amount previously distributed does not cause a commensurate reduction in taxes payable in an amount equal to
the amount of the taxes paid on amounts previously distributed.
Our stockholders of record will not be able to buy or sell shares
of our common stock after we close our stock transfer books on the Effective Time.
If the Board determines to proceed with the Dissolution,
we intend to close our stock transfer books and discontinue recording transfers of our common stock at the Effective Time. After we close
our stock transfer books, we will not record any further transfers of our common stock on our books except by will, intestate succession
or operation of law. Therefore, shares of our common stock will not be freely transferable after the Effective Time. As a result of the
closing of the stock transfer books, all liquidating distributions in the Dissolution will likely be made pro rata to the same stockholders
of record as the stockholders of record as of the Final Record Date.
We plan to initiate steps to exit from certain reporting requirements
under the Exchange Act, which may substantially reduce publicly available information about us. If the exit process is protracted, we
will continue to bear the expense of being a public reporting company despite having no source of revenue.
Our common stock is currently registered under
the Exchange Act, which requires that we, and our officers and directors with respect to Section 16 of the Exchange Act, comply with certain
public reporting and proxy statement requirements thereunder. Compliance with these requirements is costly and time-consuming. We plan
to initiate steps to exit from such reporting requirements in order to curtail expenses; however, such process may be protracted and we
may be required to continue to file Current Reports on Form 8-K or other reports to disclose material events, including those related
to the Dissolution. Accordingly, we will continue to incur expenses that will reduce the amount available for distribution, including
expenses of complying with public company reporting requirements and paying its service providers, among others. If our reporting obligations
cease, publicly available information about us will be substantially reduced.
Stockholders may not be able to recognize a loss for U.S. federal
income tax purposes until they receive a final distribution from us.
As a result of the Dissolution, for U.S.
federal income tax purposes, a stockholder that is a U.S. person generally will recognize gain or loss on a share-by- share basis
equal to the difference between (1) the sum of the amount of cash and the fair market value of property, if any, distributed to the
stockholder with respect to each share, less any known liabilities assumed by the stockholder or to which the distributed property
(if any) is subject, and (2) the stockholder’s adjusted tax basis in each share of our common stock. A liquidating
distribution pursuant to the Plan of Dissolution may occur at various times and in more than one tax year. Any loss generally will
be recognized by a stockholder only in the tax year in which the stockholder receives our final liquidating distribution, and then
only if the aggregate value of all liquidating distributions with respect to a share of our common stock is less than the
stockholder’s tax basis for that share. Stockholders are urged to consult with their own tax advisors as to the specific tax
consequences to them of the Dissolution pursuant to the Plan of Dissolution. See the section entitled “Proposal
1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Certain Material U.S.
Federal Income Tax Consequences of the Proposed Dissolution” beginning on page 19 of this proxy statement.
The tax treatment of any liquidating distribution may vary from
stockholder to stockholder, and the discussions in this proxy statement regarding tax consequences are general in nature.
We have not requested a ruling from the IRS with
respect to the anticipated tax consequences of the Dissolution, and we will not seek an opinion of counsel with respect to the anticipated
tax consequences of any liquidating distributions. If any of the anticipated tax consequences described in this proxy statement prove
to be incorrect, the result could be increased taxation at the corporate or stockholder level, thus reducing the benefit to our stockholders
and us from the Dissolution. Tax considerations applicable to particular stockholders may vary with and be contingent on the stockholder’s
individual circumstances. You should consult your own tax advisor for tax advice instead of relying on the discussions of tax consequences
in this proxy statement.
PROPOSAL 1 — APPROVAL
OF THE DISSOLUTION PURSUANT TO THE PLAN OF DISSOLUTION
We are asking you to authorize and approve
the Dissolution. Our Board has determined that the Dissolution is advisable and in the best interests of the Company and our
stockholders, has approved the Dissolution and has adopted the Plan of Dissolution. The reasons for the Dissolution are described
under “Proposal 1 — Approval of the Dissolution Pursuant to the Plan of
Dissolution — Background of the Proposed Dissolution” beginning on page 11 of this proxy statement. The
Dissolution requires approval by the holders of a majority of our outstanding common stock entitled to vote at the Special Meeting
that is the subject of this proxy statement. Our Board unanimously recommends that our stockholders authorize the Dissolution.
In general terms, when we dissolve, we will cease
conducting our business, wind up our affairs, dispose of our non-cash assets, pay or otherwise provide for our obligations, and distribute
our remaining assets, if any, during a post-dissolution period of at least three years, as required by the DGCL. With respect to the Dissolution,
we will follow the dissolution and winding-up procedures prescribed by the DGCL, as described in further detail under “Proposal
1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Delaware Law Applicable
to Our Dissolution” beginning on page 12 of this proxy statement. Our liquidation, winding up and distribution procedures will be
further guided by our Plan of Dissolution, as described in further detail under “Proposal 1 — Approval of the
Dissolution Pursuant to the Plan of Dissolution — Our Plan of Dissolution” beginning on page 15 of this proxy
statement. You should carefully consider the risk factors relating to our complete liquidation and dissolution and described under “Risk
Factors — Risks Related to The Dissolution” beginning on page 7 of this proxy statement.
Subject to the requirements of the DGCL and our
Plan of Dissolution, as further described below, we will use our existing cash to pay for our winding up procedures, including:
| · | the costs associated with our Dissolution and winding up over the Survival Period; these costs may include, among others, expenses
necessary to the implementation and administration of our Plan of Dissolution and fees and other amounts payable to professional advisors
(including legal counsel, financial advisors and others) and to consultants and others assisting us with our Dissolution; |
| · | any claims by others against us that we do not reject as part of the dissolution process; |
| · | any amounts owed by us under contracts with third parties; |
| · | the funding of any reserves or other security we are required to establish, or deem appropriate to establish, to pay for asserted
claims (including lawsuits) and possible future claims, as further described below; and |
| · | solely to the extent remaining after provision for the above-described payments, liquidating distributions to be made to our stockholders,
which distributions may be made from time to time as available and in accordance with the DGCL procedures described below. |
ESTIMATED DISTRIBUTIONS TO STOCKHOLDERS
Based on currently available information, we estimate
that we will have in the range between approximately $400,000 and $900,000 of cash that we will be able to distribute to stockholders
in connection with the Dissolution, which implies a per share distribution range of $0.03 to $0.07 per share of common stock. Calculating
such an estimate is inherently uncertain and requires that we make a number of assumptions regarding future events, many of which are
unlikely to ultimately be true. We used the following assumptions when calculating the estimated distributable cash value: (i) approximately
$700,000 payable for insurance, (ii) approximately $400,000 payable for wind-down administration services and retainage, (iii) approximately
$200,000 payable for legal fees, (iv) approximately $300,000 payable for severance, (v) approximately $400,000 payable for wages, board
fees and consultants, (vi) approximately $100,000 payable for accounting fees, (vii) approximately $100,000 payable for disposal of inventory,
property and equipment and (viii) approximately $200,000 payable for other general and administrative costs.
Distributions, if any, to our stockholders may
be paid in one or more distributions. Such distributions will not occur until after the Certificate of Dissolution is filed, and we cannot
predict the timing or amount of any such distributions, as uncertainties as to the ultimate amount of our liabilities, the operating costs
and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing
to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available
for distribution to stockholders or the timing of any such distributions. Examples of uncertainties that could reduce the value of distributions
to our stockholders include: unanticipated costs relating to the defense, satisfaction or settlement of existing or future lawsuits or
other claims threatened against us or our officers or directors; amounts necessary to resolve claims of our creditors; and delays in the
liquidation and dissolution or other winding up of our subsidiaries due to our inability to settle claims or otherwise.
Our estimate of the anticipated initial distribution
amounts is preliminary and many of the factors that are necessary to determine how much, if any, we will be able to distribute to our
stockholders in liquidation are subject to change and outside of our control. While we intend to pursue matters related to our liquidation
and winding up as quickly as possible if we obtain approval from our stockholders, the timing of many elements of this process after our
Dissolution will not be entirely within our control and, therefore, we are unable to estimate when we would be able to begin making any
post-Dissolution liquidating distributions to our stockholders. See the section entitled “Risk Factors — Risks
Related to The Dissolution” beginning on page 7 of this proxy statement.
The description of the Dissolution contained in
this introductory section is general in nature and is subject to various other factors and requirements, as described in greater detail
below.
BACKGROUND OF THE PROPOSED DISSOLUTION
In the ordinary course from time to time, our
Board and management team have evaluated and considered a variety of financial and strategic opportunities for the Company as part of
our long-term strategy to enhance value for our stockholders, including potential acquisitions, divestitures, business combinations and
other transactions.
Historically, we were a clinical-stage therapeutics
company focused on developing innovative products to address significant unmet medical needs in the treatment of cardiopulmonary diseases.
Our focus had primarily been the development of our nitric oxide therapy for patients with or at risk of pulmonary hypertension, or PH,
using our proprietary pulsatile nitric oxide delivery platform, INOpulse.
On June 5, 2023, we issued a press release announcing
top-line results from our pivotal Phase 3 REBUILD clinical trial evaluating the safety and efficacy of INOpulse. The trial did not meet
its primary endpoint and the secondary endpoints demonstrated minimal difference between the two groups with none approaching statistical
significance. Based on these findings, we decided to terminate the REBUILD Phase 3 clinical study and withdraw patients from all of our
ongoing INOpulse development programs and disclosed our intention to explore a range of strategic alternatives to maximize stockholder
value, including, but not limited to, a merger, a business combination, a sale of assets or other transaction or a liquidation and dissolution.
We also began implementation of a Board-approved plan to preserve capital, reduce operating costs, and maximize the value of our assets.
Consistent with our capital preservation efforts, we reduced our workforce except for certain executive officers and finance personnel
required to lead the strategic review process and manage remaining operations.
Our Board and management consulted with advisors
relating to the pursuit of a sale or merger of the Company, including a reverse merger. Despite broad canvassing and discussions with
multiple potential strategic parties, we were unsuccessful in identifying and entering into agreements for any viable transactions.
In light of the strategic alternatives review,
our Board determined that approving the Plan of Dissolution gives our Board the most flexibility in optimizing value for our stockholders
and as a result, on October 12, 2023, our Board adopted resolutions approving the Plan of Dissolution and the Dissolution and recommending
that our stockholders approve the Plan of Dissolution and the Dissolution.
REASONS FOR THE PROPOSED DISSOLUTION
The Board believes that the Dissolution is in
the Company’s best interests and the best interests of our stockholders. The Board considered and pursued at length potential strategic
alternatives available to the Company such as a merger, strategic partnership or other business combination transaction, and, following
the results of such review, now believe that pursuing a wind-up of the Company in accordance with the Plan of Dissolution gives our Board
the most flexibility in optimizing value for our stockholders.
In making its determination to approve the Dissolution,
the Board considered, in addition to other pertinent factors, the fact that the Company currently has no significant remaining business
operations or business prospects; the fact that the Company will continue to incur substantial accounting, legal and other expenses associated
with being a public company despite having no source of revenue or financing alternatives; and the fact that the Company has conducted
an evaluation to identify remaining strategic alternatives involving the Company, such as a merger, strategic partnership or other business
combination transaction, that would have a reasonable likelihood of providing value to our stockholders in excess of the amount the stockholders
would receive in a liquidation. As a result of its evaluation, the Board concluded that the Dissolution is the preferred strategy among
the alternatives now available to the Company and is in the best interests of the Company and its stockholders. Accordingly, the Board
approved the Dissolution of the Company pursuant to the Plan of Dissolution and recommends that our stockholders approve the Dissolution
Proposal.
DELAWARE LAW APPLICABLE TO OUR DISSOLUTION
We are a corporation organized under the laws
of the State of Delaware and the Dissolution will be governed by the DGCL. The following is a brief summary of some of the DGCL provisions
applicable to the Dissolution. The following summary is qualified in its entirely by Sections 275 through 283 of the DGCL, which are attached
to this proxy statement as Annex B.
Delaware Law Generally
Authorization of Board and Stockholders.
If a corporation’s board of directors deems it advisable that the corporation should dissolve, it may adopt a resolution to that
effect by a majority vote of the whole board and notify the corporation’s stockholders entitled to vote on the dissolution of the
adoption of the resolution and the calling of a meeting of stockholders to act on the resolution. Our Board has unanimously adopted a
resolution approving the Dissolution and the Plan of Dissolution and declaring them advisable and recommending them to our stockholders.
The Dissolution must be authorized and approved by the holders of a majority of our outstanding common stock on the Record Date entitled
to vote on the Dissolution Proposal.
Certificate of Dissolution. If a
corporation’s stockholders authorize its dissolution, to consummate the dissolution the corporation must file a certificate of dissolution
with the Secretary of State. If our stockholders authorize the Dissolution at the Special Meeting, we intend to file the Certificate of
Dissolution with the Secretary of State as soon as practicable after the receipt of such approval. However, the timing of such filing
is subject to the discretion of the Board.
Possible Permitted Abandonment of Dissolution.
The resolution authorizing a dissolution adopted by a corporation’s board of directors may provide that, notwithstanding authorization
of the dissolution by the corporation’s stockholders, the board of directors may abandon the dissolution without further action
by the stockholders. While we do not currently foresee any reason that our Board would abandon our proposed Dissolution once it is authorized
by our stockholders, to provide our Board with the maximum flexibility to act in the best interests of our stockholders, the resolutions
adopted by our Board included language providing the board with the flexibility to abandon the Dissolution without further action of our
stockholders at any time prior to the filing of the Certificate of Dissolution.
Time of Dissolution. When a corporation’s
certificate of dissolution is filed with the Secretary of State and has become effective, along with the corporation’s tender of
all taxes (including Delaware franchise taxes) and fees authorized to be collected by the Secretary of State, the corporation will be
dissolved. We refer to the effective time of the Certificate of Dissolution herein as the “Effective Time.”
Continuation of Corporation After Dissolution
A dissolved corporation continues its existence
for three years after dissolution, or such longer period as the Delaware Court of Chancery may direct, for the purpose of prosecuting
and defending suits and enabling the corporation to settle and close its business, to dispose of and convey its property, to discharge
its liabilities and to distribute to its stockholders any remaining assets. A dissolved corporation may not, however, continue the business
for which it was organized. Any action, suit or proceeding begun by or against the corporation before or during this survival period does
not abate by reason of the dissolution, and for the purpose of any such action, suit or proceeding, the corporation will continue beyond
the Survival Period until any related judgments, orders or decrees are fully executed, without the necessity for any special direction
by the Delaware Court of Chancery. Our Plan of Dissolution will govern our winding up process after Dissolution. See the section entitled
“Proposal 1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Our Plan
of Dissolution” beginning on page 15 of this proxy statement.
Payment and Distribution to Claimants and Stockholders
A dissolved corporation must make provision for
the payment (or reservation of funds as security for payment) of claims against the corporation in accordance with the applicable provisions
of the DGCL and the distribution of remaining assets to the corporation’s stockholders. The dissolved corporation may do this by
following one of two procedures, as described below.
Safe Harbor Procedures under DGCL Sections 280 and 281(a) (the
“Safe Harbor Procedures”)
A dissolved corporation may elect to give notice
of its dissolution to persons having a claim against the corporation (other than claims against the corporation in any pending actions,
suits or proceedings to which the corporation is a party) (“Current Claimants”) and to persons with contractual claims contingent
on the occurrence or nonoccurrence of future events or otherwise conditional or unmatured (“Contingent Contractual Claimants”),
and after giving these notices, following the procedures set forth in the DGCL, as described below.
The Plan of Dissolution provides the Board with
the discretion to elect to follow the Safe Harbor Procedures rather than the Alternative Procedures.
Current Claimants
Notices and Publication. The notice
to Current Claimants must state (1) that all such claims must be presented to the corporation in writing and must contain sufficient information
reasonably to inform the corporation of the identity of the claimant and the substance of the claim; (2) the mailing address to which
the claim must be sent; (3) the date (the “Claim Date”) by which the claim must be received by the corporation, which must
be no earlier than 60 days from the date of the corporation’s notice; (4) that the claim will be barred if not received by the Claim
Date; (5) that the corporation may make distributions to other claimants and the corporation’s stockholders without further notice
to the Current Claimant; and (6) the aggregate annual amount of all distributions made by the corporation to its stockholders for each
of the three years before the date of dissolution. The notice must be published at least once a week for two consecutive weeks in a newspaper
of general circulation in the county in which the corporation’s registered agent in Delaware is located and in the corporation’s
principal place of business and, in the case of a corporation having $10.0 million or more in total assets at the time of dissolution,
at least once in all editions of a daily newspaper with a national circulation. On or before the date of the first publication of the
notice, the corporation must also mail a copy of the notice by certified or registered mail, return receipt requested, to each known claimant
of the corporation, including persons with claims asserted against the corporation in a pending action, suit or proceeding to which the
corporation is a party.
Effect of Non-Responses to Notices.
If the dissolved corporation does not receive a response to the corporation’s notice by the Claim Date from a Current Claimant who
was given actual notice according to the foregoing paragraph, then the claimant’s claim will be barred.
Treatment of Responses to Notices.
If the dissolved corporation receives a response to the corporation’s notice by the Claim Date, the dissolved corporation may accept
or reject, in whole or in part, the claim. If the dissolved corporation rejects a claim, it must mail a notice of the rejection to the
Current Claimant by certified or registered mail, return receipt requested, within 90 days after receipt of the claim (or, if earlier,
at least 150 days before the expiration of the Survival Period). The notice must state that any claim so rejected will be barred if the
Current Claimant does not commence an action, suit or proceeding with respect to the claim within 120 days of the date of the rejection.
Effect of Non-Responses to Rejections of
Claims. If the dissolved corporation rejects a claim and the Current Claimant does not commence an action suit or proceeding with
respect to the claim within the 120-day post- rejection period, then the Current Claimant’s claim will be barred.
Contingent Contractual Claims
Notices. The notice to Contingent
Contractual Claimants (persons with contractual claims contingent on the occurrence or nonoccurrence of future events or otherwise conditional
or unmatured) must be in substantially the same form and sent and published in the same manner, as notices to Current Claimants and shall
request that Contingent Contractual Claimants present their claims in accordance with the terms of such notice.
Responses to Contractual Claimants.
If the dissolved corporation receives a response by the date specified in the notice by which the claims from Contingent Contractual Claimants
must be received by the corporation, which must be no earlier than 60 days from the date of the corporation’s notice to Contingent
Contractual Claimants, the dissolved corporation must offer to the Contingent Contractual Claimant such security as the dissolved corporation
determines is sufficient to provide compensation to the claimant if the claim matures. This offer must be mailed to the Contingent Contractual
Claimant by certified or registered mail, return receipt requested, within 90 days of the dissolved corporation’s receipt of the
claim (or, if earlier, at least 150 days before the expiration of the post- dissolution survival period). If the Contingent Contractual
Claimant does not deliver to the dissolved corporation a written notice rejecting the offer within 120 days after receipt of the offer
for security, the claimant is deemed to have accepted the security as the sole source from which to satisfy the claim against the dissolved
corporation.
Determinations by Delaware Court of Chancery
A dissolved corporation that has complied with
the Safe Harbor Procedures must petition the Delaware Court of Chancery to determine the amount and form of security that will be (1)
reasonably likely to be sufficient to provide compensation for any claim against the dissolved corporation that is the subject of a pending
action, suit or proceeding to which the dissolved corporation is a party, other than a claim barred pursuant to the Safe Harbor Procedures,
(2) sufficient to provide compensation to any Contingent Contractual Claimant who has rejected the dissolved corporation’s offer
for security for such person’s claims made pursuant to the Safe Harbor Procedures, and (3) reasonably likely to be sufficient to
provide compensation for claims that have not been made known to the dissolved corporation or that have not arisen but that, based on
facts known to the dissolved corporation, are likely to arise or to become known to the dissolved corporation within five years after
the date of dissolution or such longer period of time as the Delaware Court of Chancery may determine, not to exceed ten years after the
date of dissolution.
Payments and Distributions
If a dissolved corporation has followed the Safe
Harbor Procedures, then it will (1) pay the current claims made but not rejected, (2) post the security offered and not rejected for contractual
claims that are contingent, conditional or unmatured, (3) post any security ordered by the Delaware Court of Chancery in response to the
dissolved corporation’s petition to the court described above, and (4) pay or make provision for all other claims that are mature,
known and uncontested or that have been finally determined to be owing by the dissolved corporation. If there are insufficient assets
to make these payments and provisions, then they will be satisfied ratably in accordance with legal priorities, to the extent that assets
are available.
All remaining assets will be distributed to the
dissolved corporation’s stockholders, but not earlier than 150 days after the date of the last notice of rejection given by the
dissolved corporation to a Current Claimant pursuant to the Safe Harbor Procedures.
Alternative Procedures under DGCL Section 281(b) (the “Alternative
Procedures”)
If a dissolved corporation does not elect to follow
the Safe Harbor Procedures, it must adopt a plan of distribution pursuant to which it will (1) pay or make reasonable provision to pay
all claims and obligations, including all contingent, conditional or unmatured contractual claims known to the corporation, (2) make such
provision as will be reasonably likely to be sufficient to provide compensation for any claim against the dissolved corporation that is
the subject of a pending action, suit or proceeding to which the dissolved corporation is a party and (3) make such provision as will
be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the dissolved corporation or
that have not arisen but that, based on facts known to the dissolved corporation, are likely to arise or to become known to the dissolved
corporation within ten years after the date of dissolution. If there are insufficient assets to make these payments and provisions, then
they will be satisfied ratably in accordance with legal priorities, to the extent assets are available. All remaining assets will be distributed
to the dissolved corporation’s stockholders.
The Plan of Dissolution adopted by the Board and
proposed to the stockholders for approval constitutes the plan of distribution for purposes of the Alternative Procedures.
Liabilities of Stockholders and Directors
If a dissolved corporation follows either the
Safe Harbor Procedures or the Alternative Procedures, then (1) a stockholder of the dissolved corporation’s will not be liable for
any claim against the dissolved corporation in an amount in excess of the lesser of (a) the stockholder’s pro rata share of the
claim and (b) the amount distributed to the stockholder. If a dissolved corporation follows the Safe Harbor Procedures, then a stockholder
of the dissolved corporation will not be liable for any claim against the dissolved corporation on which an action, suit or proceeding
is not begun before the expiration of the Survival Period. In no event will the aggregate liability of a stockholder of a dissolved corporation
for claims against the dissolved corporation exceed the amount distributed to the stockholder in dissolution. If a dissolved corporation
fully complies with either the Safe Harbor Procedures or the Alternative Procedures, then the dissolved corporation’s directors
will not be personally liable to the dissolved corporation’s claimants.
Application of These Procedures to Us
We currently plan to elect to follow the
Alternative Procedures. However, our Plan of Dissolution specifically permits our Board the discretion to decide to abandon any
plans to follow the Alternative Procedures and to follow the Safe Harbor Procedures permitted by Delaware law. If we follow the Safe
Harbor Procedures, then the required published notices would be published in a newspaper of general circulation in New Castle
County, Delaware (the location of our registered agent), and Foxborough, Massachusetts (the location of our principal place of
business). For more information about our liquidation, winding up and distribution procedures, see the section entitled
“Proposal 1 — Approval of the Dissolution Pursuant to the Plan of Dissolution — Our
Plan of Dissolution” beginning on page 15 of this proxy statement.
OUR PLAN OF DISSOLUTION
The Dissolution will be conducted in accordance
with the Plan of Dissolution, which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement.
The following is a summary of our Plan of Dissolution and does not purport to be complete or contain all of the information that is important
to you. To understand our Plan of Dissolution more fully, you are urged to read this proxy statement as well as the Plan of Dissolution.
Our Plan of Dissolution may be modified, clarified or amended by action by our Board at any time and from time to time, as further described
below.
Authorization and Effectiveness
Our Plan of Dissolution will be deemed approved
if the holders of a majority of the outstanding stock entitled to vote on the Dissolution Proposal have authorized the Plan of Dissolution
and the Dissolution and will constitute our authorized plan and will evidence our authority to take all actions described in the Plan
of Dissolution. Following the authorization of the Dissolution by our stockholders, at such time as our Board determines to be appropriate,
we will file the Certificate of Dissolution with the Secretary of State and ensure that all relevant taxes (including Delaware franchise
taxes) and fees are paid. The Effective Time of our Dissolution will be when the Certificate of Dissolution is filed with the office of
the Secretary of State or such later date and time that is stated in the Certificate of Dissolution.
Survival Period
For three years after the Effective Time (or such
longer period as the Delaware Court of Chancery may direct) (the “Survival Period”), we will continue as a body corporate
for the purpose of prosecuting and defending lawsuits (civil, criminal or administrative) by or against us; settling and closing our business;
disposing of and conveying our property; discharging our liabilities in accordance with the DGCL; and distributing our remaining assets
to our stockholders. We will no longer engage in the development of treatments for cardiopulmonary diseases. We anticipate that distributions,
if any, to our stockholders will be made in cash, and may be made at any time, from time to time, in accordance with the DGCL.
General Liquidation, Winding Up and Distribution Process
We intend to elect to follow the Alternative
Procedures described under the section entitled “Proposal 1 — Approval of the Dissolution Pursuant to the
Plan of Dissolution — Delaware Law Applicable to Our Dissolution — Alternative Procedures
under DGCL Section 281(b)” beginning on page 14 of this proxy statement but our Board retains the discretion to opt to
dissolve the Company in accordance with the Safe Harbor Procedures.
The Board intends to seek to distribute funds,
if any, to our stockholders as quickly as possible, as permitted by the DGCL and the Plan of Dissolution, and intends to take all reasonable
actions to optimize the distributable value to our stockholders.
Continuing Employees and Consultants
During the Survival Period, we may retain, hire,
employ or contract with employees, consultants, agents, trustees, independent professional advisors (including legal counsel, accountants
and financial advisors) and others, as the Board may determine, from time to time, to be necessary or advisable to effect the Dissolution
as described in our Plan of Dissolution. The Board expects that during the Dissolution, the Company will continue to retain Verdolino
& Lowey, P.C. to help with the winding-up activities and administering the Dissolution. The Board also expects that outside legal
and financial advisors will continue to advise on and assist with the Dissolution.
After filing the Certificate of Dissolution, the
Board expects it will reduce the size of the Board at three or fewer Board seats to save costs.
We may, in the absolute discretion of the Board,
pay the Company’s directors, any employees it may hire, consultants, agents and other representatives, compensation or additional
compensation above their regular compensation, including pursuant to severance and retention agreements, in money or other property, in
recognition of the extraordinary efforts they will be required to undertake in connection with the implementation of the Plan of Dissolution;
however, given the Company’s already streamlined operations, the Board does not expect to need to hire any employees or otherwise
expand the team of advisors and consultants currently in place.
Sale of Our Remaining Assets
We have a portfolio of patents, know how,
trade secrets, and other intellectual property that covers our platform technologies as well as our product discoveries. The Plan of
Dissolution contemplates the sale of all of our remaining non-cash assets, including our intellectual property, if and at such time
as the Board may approve, without further stockholder approval. The Plan of Dissolution does not specify the manner in which we may
sell our assets. Such sales could take the form of sales of individual assets, sales of groups of assets organized by type of asset
or otherwise, a single sale of all or substantially all of our assets, or some other form of sale. The assets may be sold to one or
more purchasers in one or more transactions over a period of time. It is not anticipated that any further stockholder votes will be
solicited with respect to the approval of the specific terms of any particular sales of assets approved by the Board. There can be
no assurance that we will be able to sell our intellectual property assets on attractive terms, or at all. We do not anticipate
amending or supplementing this proxy statement to reflect any such agreement or sale, unless required by applicable law, or selling
any additional assets in the future. See the section entitled “Risk Factors — Risks Related to the
Dissolution” beginning on page 7 of this proxy statement.
Costs and Expenses
We will pay all costs and expenses that the Board
may determine from time to time to be necessary or advisable to effect the Dissolution in accordance with the Plan of Dissolution and
as may be necessary or advisable to continue our existence and operations. These costs and expenses may include, without limitation, brokerage,
agency, professional, consulting and other fees and expenses of persons rendering services to the Company in connection with the matters
described in the Plan of Dissolution and costs incurred to comply with contracts to which the Company is a party.
Indemnification
We will continue to indemnify our officers, directors,
employees and agents in accordance with, and to the extent required or permitted by, the DGCL, our Restated Certificate of Incorporation,
as amended, our Amended and Restated Bylaws and any contractual arrangements, whether these arrangements existed before the Dissolution
or were entered into after the Dissolution. During the Survival Period, acts and omissions of any indemnified or insured person in connection
with the implementation of the Plan of Dissolution will be covered to the same extent that they were covered before the effective time
of the Dissolution. The Board is authorized to obtain and maintain insurance as may be necessary to cover the Company’s indemnification
obligations, including seeking an extension in time and coverage of our insurance policies currently in effect.
Stockholder Consent
Authorization of the Dissolution by the holders
of a majority of the outstanding stock of the Company entitled to vote thereon shall, to the fullest extent permitted by law, constitute
approval of all matters described in this proxy statement relating to the Dissolution, including our Plan of Dissolution.
Authorization of the Dissolution by the holders
of a majority of the outstanding stock of the Company shall constitute the authorization of the sale, exchange or other disposition in
liquidation of all of the remaining property and assets of the Company after the effective time of the Dissolution, whether the sale,
exchange or other disposition occurs in one transaction or a series of transactions, and shall constitute ratification of any and all
contracts for sale, exchange or other disposition that are conditioned on stockholder approval.
Subsidiaries
As part of the Dissolution, we may take actions
with respect to our subsidiaries, based on the advice and counsel of our legal and other advisors and in accordance with the requirements
of the laws and charter documents governing such subsidiary, to liquidate, dissolve or otherwise wind up such subsidiaries.
Legal Claims
We will defend any claims against us, our officers
or directors or our subsidiaries, whether a claim exists before the Effective Time or is brought during the Survival Period, based on
advice and counsel of our legal and other advisors and in such manner, at such time and with such costs and expenses as our Board may
approve from time to time. During the Survival Period, we may continue to prosecute any claims that we had against others before the Effective
Time and may institute any new claims against any person as the Board may determine necessary or advisable to protect the Company and
its assets and rights or to implement the Plan of Dissolution. At the Board’s discretion, we may defend, prosecute or settle any
lawsuits, as applicable.
Effective Time; Stock of the Company
The Effective Time will be the effective time
of the Certificate of Dissolution as filed with the Secretary of State of Delaware.
From and after the Effective Time, and subject
to applicable law, each holder of shares of our common stock shall cease to have any rights in respect of that stock, except the right
to receive distributions, if any, pursuant to and in accordance with the Plan of Dissolution and the DGCL. After the Effective Time, our
stock transfer records shall be closed, and we will not record or recognize any transfer of our common stock occurring after the Effective
Time, except, in our sole discretion, such transfers occurring by will, intestate succession or operation of law as to which we have received
adequate written notice. We expect the Effective Time to be as soon as reasonably practicable after the Dissolution is approved by our
stockholders, and we intend to provide advance notice to our stockholders prior to closing our stock transfer records. No stockholder
shall have any appraisal rights in connection with our Dissolution and winding-up. It is anticipated that no further trading of our shares
will occur after the Effective Time.
Unclaimed Distributions
If any distribution to a stockholder cannot be
made, whether because the stockholder cannot be located, has not surrendered a certificate evidencing ownership of the Company’s
common stock or provided other evidence of ownership as required in the Plan of Dissolution or by the Board or for any other reason, the
distribution to which the stockholder is otherwise entitled will be transferred, at such time as the final liquidating distribution is
made by us, or as soon as practicable after that distribution, to the official of such state or other jurisdiction authorized by applicable
law to receive the proceeds of the distribution. The proceeds of such distribution will thereafter be held solely for the benefit of and
for ultimate distribution to the stockholder as the sole equitable owner of the distribution and will be treated as abandoned property
and escheat to the applicable state or other jurisdiction in accordance with applicable law. The proceeds of any such distribution will
not revert to or become the property of us or any other stockholder.
Liquidating Trust
While we do not currently propose transferring
our assets to a liquidating trust, we may do so if deemed appropriate by our Board, based on advice of our legal, tax and accounting advisors.
We may, for example, transfer assets to a liquidating trust if we are unable to complete the Dissolution within the initial three-years
of the Survival Period.
Abandonment, Exceptions, Modifications, Clarifications and Amendments
Notwithstanding the authorization of the Dissolution
by our stockholders as described in this proxy statement, our Board will have the right, as permitted by the DGCL, to abandon the Dissolution
at any time before the Effective Time and terminate our Plan of Dissolution, without any action by our stockholders, if our Board determines
that to do so is in the best interest of us and our stockholders. Without further action by our stockholders, our Board may, to the extent
permitted by Delaware law, waive, modify or amend any part of our Plan of Dissolution, and may provide for exceptions to or clarifications
of the terms of our Plan of Dissolution. After the Effective Time, revocation of the Dissolution would require stockholder approval under
Delaware law.
Contingent Liabilities; Reserves
Under Delaware law, we are required, in connection
with the Dissolution, to pay or make reasonable provision for payment of our liabilities and obligations. We will pay all of our expenses
(including operating and wind-up expenses to be incurred throughout the Dissolution and wind-up process) and other known, non-contingent
liabilities. We have used and anticipate continuing to use cash until the end of the Survival Period for a number of items, including,
but not limited to, the following:
| · | ongoing operating, reporting and listing expenses; |
| · | expenses, including retention amounts, incurred in connection with extending our directors’ and officers’ insurance coverage; |
| · | expenses incurred in connection with the Dissolution; |
| · | taxes imposed upon us and any of our assets; and |
| · | professional, legal, consulting and accounting fees. |
We will maintain a reserve, consisting of cash
or other assets that we believe will be adequate for the satisfaction of all of our current unknown, contingent and/or conditional claims
and liabilities. We may also take other steps to provide for the satisfaction of the reasonably estimated amount of such claims and liabilities,
including acquiring insurance coverage with respect to certain claims and liabilities. We currently estimate that we will maintain a cash
reserve in the range between approximately $250,000 and $700,000 of cash for expenses as well as unknown, contingent and/or conditional
liabilities during the Survival Period.
The estimated amount of the reserve is based upon
certain estimates and assumptions and a review of our estimated operating expenses and future estimated liabilities, including, without
limitation, estimated operating costs, directors’ and officers’ insurance, legal, accounting and consulting fees and miscellaneous
expenses, and accrued expenses reflected in our financial statements. There can be no assurance that the reserve will be sufficient. If
any of our estimates regarding the expenses to be incurred in the liquidation process, including expenses of personnel required and other
operating expenses (including legal, accounting and consulting fees) necessary to dissolve and liquidate the Company and the expenses
to satisfy outstanding obligations, liabilities and claims during the liquidation process, are inaccurate, we may be required to increase
the amount of the reserve. After the liabilities, expenses and obligations for which the reserve is established have been satisfied in
full (or determined not to be owed), we will distribute to our stockholders any remaining portion of the reserve.
In the event we fail to create an adequate reserve
for the payment of our expenses and liabilities and amounts have been distributed to the stockholders under the Plan of Dissolution, our
creditors may be able to pursue claims against our stockholders directly to the extent that they have claims co-extensive with such stockholders’
receipt of liquidating distributions. See the section entitled “Risk Factors — Risk Factors Related to the Dissolution — Our
stockholders may be liable to third parties for part or all of the amount received from us in our liquidating distributions if reserves
are inadequate” beginning on page 8 of this proxy statement.
If we were held by a court to have failed to make
adequate provision for our expenses and liabilities or if the amount required to be paid in respect of such liabilities exceeded the amount
available from the reserve and any assets of the liquidating trust or trusts, a creditor of ours could seek an injunction against the
making of liquidating distributions under the Plan of Dissolution on the grounds that the amounts to be distributed were needed to provide
for the payment of our expenses and liabilities. Any such action could delay or substantially diminish the cash distributions to be made
to stockholders under the Plan of Dissolution.
Reporting Requirements
Whether or not the Dissolution is approved, we
will have an obligation to continue to comply with the applicable reporting requirements of the Exchange Act until we have exited from
such reporting requirements. We plan to initiate steps to exit from certain reporting requirements under the Exchange Act. However, such
process may be protracted and we may be required to continue to file Current Reports on Form 8-K to disclose material events, including
those related to the Dissolution. Accordingly, we will continue to incur expenses that will reduce the amount available for distribution,
including expenses of complying with public company reporting requirements and paying its service providers, among others.
Interests of Certain Persons in the Dissolution
After the Effective Time, we expect that our Board
(or some subset thereof) and some of our officers will continue in their positions for the purpose of winding up our business and affairs.
We expect to compensate these individuals at a level consistent with their compensation level prior to Effective Time.
See “Security Ownership of Certain Beneficial
Owners and Management” for information regarding the number of shares of common stock owned by our directors and executive officers.
Our Restated Certificate of Incorporation, as Amended, Amended and
Restated Bylaws and the DGCL
During the Survival Period, we will continue to
be governed by our Restated Certificate of Incorporation, as amended, and Amended and Restated Bylaws, insofar as their terms apply and
insofar as necessary or appropriate to implement our Plan of Dissolution. Our Board will continue to have the authority to amend our Amended
and Restated Bylaws as it may deem necessary or advisable. To any extent that the provisions of our Plan of Dissolution conflict with
any provision of the DGCL, the provisions of the DGCL shall prevail.
Authority of the Board
Our Board, without further action by our stockholders,
is authorized to take all actions as they deem necessary or advisable to implement our Plan of Dissolution. All determinations and decisions
to be made by our Board will be at the absolute and sole discretion of our Board.
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PROPOSED
DISSOLUTION
Certain U.S. Federal Income Tax Consequences
The following discussion is a general summary
of certain material U.S. federal income tax consequences of the proposed Dissolution to our common stockholders that are U.S. holders
(defined below). The following discussion is based on the Code, its legislative history, the Treasury Regulations and published rulings
and decisions, all as currently in effect as of the date of this proxy statement, and all of which are subject to change, possibly with
retroactive effect. Tax considerations under state and local laws, federal laws other than those pertaining to income tax, or non-U.S.
tax laws are not addressed in this proxy statement. The following discussion has no binding effect on the IRS or the courts. This discussion
does not address all of the U.S. federal income tax consequences that may be relevant to our stockholders in light of their individual
circumstances. The discussion below does not address any U.S. federal income tax consequences to our stockholders who, for U.S. federal
tax purposes, are subject to special rules, such as:
| · | banks, financial institutions or insurance companies; |
| · | persons who hold shares as part of a straddle, hedge, integrated transaction or conversion transaction; |
| · | persons who have been, but are no longer, citizens or residents of the United States; |
| |
· |
persons holding shares through an S corporation, partnership or other fiscally transparent entity; |
| · | dealers or traders in securities, commodities or currencies, or other persons who have elected mark-to- market accounting; |
| · | U.S. persons whose “functional currency” is not the U.S. dollar; |
| · | regulated investment companies or real estate investment trusts; |
| |
· |
persons who hold shares as “qualified small business stock” under Section 1202 of the Code or “section 1244 stock” under Section 1244 of the Code, |
| · | persons who are not U.S. holders; |
| · | persons who received the shares of our common stock through the exercise of incentive stock options or through the issuance of restricted
stock under an equity incentive plan or through a tax qualified retirement plan; or |
| · | persons who own (directly or through attribution) five percent or more (by voting power or value) of our common stock. |
Furthermore, this discussion does not apply to
holders of options or warrants or stockholders who acquired their shares by exercising options or warrants, nor does it apply to stockholders
who received their shares in connection with the performance of services. This discussion assumes that stockholders hold their shares
of our common stock as capital assets within the meaning of Section 1221 of the Code.
For purposes of this discussion, a “U.S.
holder” is a beneficial owner of shares of common stock of the Company that for U.S. federal income tax purposes is:
| · | an individual citizen or resident of the United States; |
| · | a corporation (or other entity treated as a corporation for U.S. federal tax purposes) created or organized in or under the laws of
the United States or any state thereof or the District of Columbia; |
| · | an estate the income of which is subject to U.S. federal income tax regardless of its source; or |
| · | a trust, if the trust has validly elected to be treated as a U.S. person for U.S. federal tax purposes or if (1) a U.S. court can
exercise primary supervision over its administration and (2) one or more U.S. persons have authority to control all of the substantial
decisions of the trust. |
If a partnership (or other entity or arrangement
treated as a partnership for U.S. federal tax purposes) is a beneficial owner of shares of our common stock, the tax treatment of a partner
in that partnership will generally depend on the status of the partner and the activities of the partnership. HOLDERS OF OUR COMMON STOCK
THAT ARE NOT U.S. HOLDERS, INCLUDING PARTNERSHIPS AND PARTNERS IN THOSE PARTNERSHIPS, SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE
U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF THE PROPOSED LIQUIDATION AND DISSOLUTION.
U.S. Federal Income Tax Consequences to the Company
Until all of our remaining assets have been distributed
to our stockholders or a liquidating trust and the liquidation is complete, we will continue to be subject to U.S. federal income tax
on our income, if any, such as interest income. We will recognize gain or loss, if any, upon the sale of any assets held directly by us
in connection with our Dissolution in an amount equal to the difference between (1) the fair market value of the consideration received
for each asset sold and (2) our adjusted tax basis in the asset sold. We may also recognize income from the liquidation and dissolution
of our subsidiaries that will occur as part of the proposed Dissolution. We should not recognize any gain or loss upon the distribution
of cash to our stockholders as part of the proposed Dissolution. We currently do not anticipate making distributions of property other
than cash to stockholders as part of the proposed Dissolution. If we do make a liquidating distribution to our stockholders of property
other than cash, we generally will recognize gain or loss upon the distribution of the property as if the property were sold to our stockholders
for its fair market value on the date of the distribution. Any tax liability resulting from the proposed Dissolution will reduce the cash
available for distribution to our stockholders.
U.S. Federal Income Tax Consequences to U.S. Holders
U.S. holders that receive any distributions made
by us pursuant to the Plan of Dissolution will be treated as receiving those amounts as full payment in exchange for their shares of common
stock in the Company. A U.S. holder generally will recognize gain or loss on a share-by-share basis equal to the difference between (1)
the sum of the amount of cash and the fair market value of property, if any, distributed to the U.S. holder with respect to each share
(including distributions to any liquidating trust, as discussed below), less any known liabilities assumed by the U.S. holder or to which
the distributed property (if any) is subject, and (2) the U.S. holder’s adjusted tax basis in each share of our common stock. A
U.S. holder may determine gain or loss on a block-by-block basis if the U.S. holder holds blocks of our common stock (generally as a result
of acquiring a block of common stock at the same time and at the same price). Each U.S. holder must allocate liquidating distributions
proportionately to each share of common stock, or, if applicable, each block of common stock, held by the U.S. holder. Liquidating distributions
are first applied against, and reduce, the U.S. holder’s adjusted tax basis with respect to a share or a block before recognizing
any gain or loss. A U.S. holder will recognize gain to the extent the aggregate distributions allocated to the share of common stock or,
if applicable, block of common stock exceeds the U.S. holder’s adjusted tax basis with respect to such share or such block. A U.S.
holder will recognize loss only to the extent the U.S. holder has an adjusted tax basis with respect to a share or a block after taking
into account all liquidating distributions allocated to the share or the block. Any loss can only be recognized in the tax year that a
U.S. holder receives our final liquidating distribution.
Generally, gain or loss recognized by a U.S. holder
in connection with the proposed Dissolution will be capital gain or loss, and will be long- term capital gain or loss if the U.S. holder
has held a share or block for more than one year or short-term capital gain or loss if the U.S. holder has held the share or block for
one year or less. Certain U.S. holders, including individuals, may qualify for preferential tax rates on long-term capital gains. The
deductibility of capital losses is subject to certain limitations. While we do not anticipate distributing any contingent claims to our
U.S. holders or a liquidating trust as part of the proposed Dissolution, amounts, if any, received by a U.S. holder upon the resolution
of a contingent claim that has been distributed could be considered ordinary income rather than capital gain. U.S. holders should consult
their own tax advisors with respect to the tax consequences of receiving a contingent claim as part of the proposed Dissolution.
If we effect the proposed Dissolution, we intend
to provide U.S. holders and the IRS with statements indicating the amount of cash, and, as applicable, our best estimates of the fair
market value of any other property, distributed to our U.S. holders (or transferred to the liquidating trust, as discussed below) at such
time and in such manner as required by applicable Treasury Regulations.
Backup Withholding
Distributions to any U.S. holder that fails to
provide the appropriate certification in accordance with applicable Treasury Regulations generally will be reduced by backup withholding
at the rate applicable at the time of the distributions. Backup withholding generally will not apply to payments made to certain exempt
recipients, such as corporations. Backup withholding is not an additional tax. Amounts that are withheld under backup withholding rules
may be refunded or credited against the U.S. holder’s U.S. federal income tax liability, if any, provided that certain required
information is furnished to the IRS in a timely manner. U.S. holders should consult their own tax advisors regarding the application of
backup withholding in their particular circumstances.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED
ABOVE ARE FOR GENERAL INFORMATION ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR CONSEQUENCES THAT MAY
APPLY TO THEM.
Votes Required
The affirmative vote of a majority of the shares
of our common stock outstanding on the Record Date and entitled to vote on the Dissolution Proposal is required to approve the Dissolution
Proposal. Abstentions, broker non-votes, and failures to vote will have the same effect as a vote “AGAINST” the Dissolution
Proposal.
Board Recommendation
The Board recommends that the stockholders vote
“FOR” the Dissolution Proposal to approve the Dissolution in accordance with the terms and conditions of the Plan of Dissolution.
PROPOSAL 2 — APPROVAL
OF AN ADJOURNMENT OF THE SPECIAL MEETING
Our stockholders are being asked to consider and
vote upon an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the
time of the Special Meeting to approve the Dissolution Proposal.
In the Adjournment Proposal, we are asking you
to authorize the holder of any proxy solicited by the Board to vote in favor of granting discretionary authority to the proxy holders,
and each of them individually, to adjourn the Special Meeting, from time to time, to a later date or dates, for the purpose of soliciting
additional proxies. If the stockholders approve the Adjournment Proposal, we could adjourn the Special Meeting and use the additional
time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously voted.
Votes Required
The Adjournment Proposal requires the approval
of a majority in voting power of the votes cast affirmatively or negatively by the holders entitled to vote on the proposal. With respect
to the Adjournment Proposal, abstentions and broker non-votes will not affect the voting results.
Board Recommendation
The Board recommends that the stockholders
vote “FOR” the adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient
votes at the time of the Special Meeting to approve the Dissolution Proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information,
to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our common stock as of
October 31, 2023 by:
| · | all of our directors and executive officers as a group; and |
| · | each person, or group of affiliated persons, who is known by us to be the beneficial owners of greater than 5.0% of our common stock. |
The column entitled “Shares Beneficially
Owned” is based on a total of 12,232,648 shares of our common stock outstanding as of October 31, 2023.
Beneficial ownership is determined in accordance
with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Shares of our common
stock subject to options, warrants and restricted stock units that are currently exercisable or exercisable within 60 days of October
31, 2023 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage
ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted,
the persons and entities in this table have sole voting and investing power with respect to all of the shares of our common stock beneficially
owned by them, subject to community property laws, where applicable. Except as otherwise set forth below, the address of each beneficial
owner is Bellerophon Therapeutics, Inc., c/o Verdolino & Lowey, P.C., 124 Washington Street, Suite 10, Foxborough, Massachusetts 02035.
| |
|
|
Shares |
|
of Shares |
|
| |
|
|
Beneficially |
|
Beneficially |
|
| Name of Beneficial Owner |
|
|
Owned |
|
Owned |
|
| 5% Stockholders |
|
|
|
|
|
|
|
| None. |
|
|
|
|
|
|
|
| Executive Officers and Directors |
|
|
|
|
|
|
|
| Peter Fernandes (1) |
|
|
110,677 |
|
|
* |
|
| Parag Shah (2) |
|
|
86,175 |
|
|
* |
|
| Martin Dekker |
|
|
25,973 |
|
|
* |
|
| Naseem Amin (3) |
|
|
315,676 |
|
|
2.6 |
% |
| Scott Bruder (4) |
|
|
38,212 |
|
|
* |
|
| Mary Ann Cloyd (5) |
|
|
37,757 |
|
|
* |
|
| All executive officers and directors as a group (6 persons) |
|
|
655,727 |
|
|
5.2 |
% |
| * | Less than 1% of the outstanding shares of our common stock. |
| (1) |
Includes 43,528 shares of common stock issuable upon the exercise of options exercisable within 60 days after October 31, 2023 and 32,500 shares of common stock issuable upon the vesting of restricted stock units during the 60 days after October 31, 2023. |
| (2) |
Includes 35,970 shares of common stock issuable upon the exercise of options exercisable within 60 days after October 31, 2023 and 25,500 shares of common stock issuable upon the vesting of restricted stock units during the 60 days after October 31, 2023. |
| (3) |
Includes 47,619 shares of common stock issuable upon the exercise of warrants, 23,809 shares of common stock issuable upon the exercise of options exercisable within 60 days after October 31, 2023, and 47,578 shares of common stock issuable upon the vesting of restricted stock units during the 60 days after October 31, 2023. |
| (4) |
Includes 36,966 shares of common stock issuable upon the exercise of options exercisable within 60 days after October 31, 2023. |
| (5) |
Includes 36,300 shares of common stock issuable upon the exercise of options exercisable within 60 days after October 31, 2023. |
HOUSEHOLDING OF PROXY MATERIALS
Some banks, brokers and other nominee record holders
may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy
of our documents, including this proxy statement, may have been sent to multiple stockholders in your household. We will promptly deliver
a separate copy of either document to you upon written or oral request to Bellerophon Therapeutics, Inc., c/o 124 Washington Street, Suite
101, Foxborough, Massachusetts 02035. If you want to receive separate copies of the proxy statement or annual report to stockholders in
the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank,
broker or other nominee record holder, or you may contact us at the above address and phone number.
STOCKHOLDER PROPOSALS
We do not intend to hold future annual meetings
of stockholders, including the 2024 annual meeting, if the Plan of Dissolution is approved with the Secretary of State of Delaware.
OTHER MATTERS
Our Board does not know of any other matters to
be brought before the Special Meeting. If any other matters not mentioned in this proxy statement are properly brought before the meeting,
the individuals named in the enclosed proxy intend to use their discretionary voting authority under the proxy to vote the proxy in accordance
with their best judgment on those matters.
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION
BY REFERENCE
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. These documents may be accessed through the SEC’s electronic data gathering,
analysis and retrieval system, or EDGAR, via electronic means, including the SEC’s home page on the Internet (www.sec.gov).
The SEC allows us to incorporate by reference
the information and reports we file with it, which means that we can disclose important information to you by referring you to these documents.
The information incorporated by reference is an important part of this proxy statement, and information that we file later with the SEC
will automatically update and supersede the information already incorporated by reference. Such documents are considered to be a part
of this proxy statement, effective as of the date such documents are filed. In the event of conflicting information in these documents,
the information in the latest filed document should be considered correct. We are incorporating by reference the documents listed below,
which we have already filed with the SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, including all filings made after the date of the filing of this proxy statement, except as to any portion of any future
report or document that is not deemed filed under such provisions:
| · | our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 31, 2023; |
| · | our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023 and June 30, 2023, as filed with the SEC on May
15, 2023 and August 14, 2023, respectively; |
| · | our Current Reports on Form 8-K (other than the portions thereof that are furnished and not filed) as filed with the SEC on January
5, 2023, January 18, 2023, February 9, 2023, March 3, 2023, March 6, 2023, April 25, 2023, May 5, 2023, May 11, 2023, May 11, 2023, June
5, 2023, June 9, 2023, June 29, 2023, July 14, 2023, July 20, 2023, July 24, 2023, August 7, 2023, October 13, 2023, and October 13, 2023. |
Upon request, either orally or in writing, we
will provide, without charge, to each person, including any beneficial owner, to whom a copy of this proxy statement is delivered, a copy
of the documents incorporated by reference into this proxy statement but not delivered with the proxy statement. You may request a copy
of these filings, and any exhibits we have specifically incorporated by reference as an exhibit in this proxy statement, at no cost by
writing us at the following address: Bellerophon Therapeutics, Inc., c/o 124 Washington Street, Suite 101, Foxborough, Massachusetts 02035,
(508) 543-1720.
ANNEX A
PLAN OF LIQUIDATION AND
DISSOLUTION
OF
BELLEROPHON THERAPEUTICS, INC.
This Plan of Liquidation
and Dissolution (the “Plan”) is intended to accomplish the complete liquidation and dissolution of BELLEROPHON THERAPEUTICS,
INC., a Delaware corporation (such corporation or a successor entity, the “Company”), in accordance with Section 281(b) of
the General Corporation Law of the State of Delaware (the “DGCL”).
1. Approval
of Plan. The Board of Directors of the Company (the “Board”) has adopted this Plan and presented the Plan to the Company’s
stockholders to take action on the Plan. If the Plan is adopted by the requisite vote of the Company’s stockholders, the Plan shall
constitute the adopted Plan of the Company.
2. Certificate
of Dissolution. Subject to Section 14 hereof, after the stockholders of the Company approve the dissolution of the Company,
the Company shall file with the Secretary of State of the State of Delaware a certificate of dissolution (the “Certificate of Dissolution”)
in accordance with the DGCL at such time as determined by the Board in its sole discretion (the time of such filing, or such later time
as stated therein, the “Effective Time”).
3. Cessation
of Business Activities. After the Effective Time, the Company shall not engage in any business activities except to the extent necessary
to preserve the value of its assets, wind up its business affairs and distribute its assets in accordance with this Plan.
4. Continuing
Employees and Consultants. For the purpose of effecting the dissolution of the Company, the Company may hire or retain such employees,
consultants and advisors as the Company deems necessary or desirable to supervise or facilitate the dissolution and winding up of the
Company.
5. Dissolution
Process.
From and after the Effective Time, the Company (or any successor
entity of the Company) shall complete the following corporate actions:
(i) The
Company (a) shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured
contractual claims known to the Company, (b) shall make such provision as will be reasonably likely to be sufficient to provide
compensation for any claim against the Company which is the subject of a pending action, suit or proceeding to which the Company is a
party, and (c) shall make such provision as will be reasonably likely to be sufficient to provide compensation for claims that have
not been made known to the Company or that have not arisen but that, based on facts known to the Company, are likely to arise or to become
known to the Company within 10 years after the date of dissolution. All such claims shall be paid in full and any such provision for payment
made shall be made in full if there are sufficient assets. If there are insufficient assets, such claims and obligations shall be paid
or provided for according to their priority and, among claims of equal priority, ratably to the extent of assets legally available therefor.
(ii) After
the payments are made pursuant to clause (i) above, if there are any assets remaining, the Company shall distribute to its stockholders,
in accordance with the Company’s certificate of incorporation, as amended and/or restated through the Effective Time, all remaining
assets, including all available cash, including the cash proceeds of any sale, exchange or disposition, except such cash, property or
assets as are required for paying or making reasonable provision for the claims and obligations of the Company. Such distribution may
occur all at once or in a series of distributions and shall be in cash or assets, in such amounts, and at such time or times, as the Board
in its absolute discretion, may determine. If and to the extent deemed necessary, appropriate or desirable by the Board, in its absolute
discretion, the Company may establish and set aside a reasonable amount of cash and/or property to satisfy claims against the Company,
including, without limitation, tax obligations, all expenses related to the sale of the Company’s property and assets, all expenses
related to the collection and defense of the Company’s property and assets, and the liquidation and dissolution provided for in
this Plan.
Notwithstanding anything
contained herein to the contrary, the Company, at the discretion of the Board, may opt to dissolve and wind-up the Company in accordance
with the procedures set forth in Sections 280 and 281(a) of the DGCL.
6. Cancellation
of Stock. The distributions to the Company’s stockholders pursuant to Section 5 hereof shall be deemed to be in complete
cancellation of all of the outstanding shares of capital stock of the Company as of the date that the continuation of the Company’s
legal existence terminates in accordance with Section 278 of the DGCL. From and after the Effective Time, and subject to applicable
law, the holder of all outstanding shares of capital stock of the Company shall cease to have any rights in respect thereof, except the
right to receive distributions, if any, pursuant to and in accordance with Section 5 hereof. As a condition to receipt of any distribution
to the Company’s stockholders, the Company may require the Company’s stockholders to (i) surrender their certificates
evidencing its shares of capital stock to the Company, or (ii) furnish the Company with evidence satisfactory to the Company of
the loss, theft or destruction of such certificates, together with such surety bond or other security or indemnity as may be required
by and satisfactory to the Company. The Company will close its stock transfer books and discontinue recording transfers of shares of capital
stock of the Company at the Effective Time, and thereafter any certificate representing shares of capital stock of the Company will not
be assignable or transferable on the books of the Company except by will, intestate succession, operation of law or upon the dissolution
of the stockholders or their successors.
7. Conduct
of the Company Following Approval of the Plan. Under Delaware law, dissolution is effective upon the filing of a certificate of dissolution
with the Secretary of State of the State of Delaware or upon such future effective date as may be set forth in the certificate of dissolution.
Section 278 of the DGCL provides that a dissolved corporation shall be continued for the term of 3 years from such dissolution or
for such longer period as the Court of Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and defending
suits, whether civil, criminal or administrative, by or against it, and of enabling it gradually to settle and close its business, to
dispose of and convey its property, to discharge its liabilities and to distribute to its stockholders any remaining assets, but not for
the purpose of continuing the business for which the corporation was organized. With respect to any action, suit or proceeding begun by
or against the corporation either prior to or within 3 years after the date of its dissolution, the action shall not abate by reason of
the dissolution of the corporation; the corporation shall, solely for the purpose of such action, suit or proceeding, be continued as
a body corporate beyond the 3-year period and until any judgments, orders or decrees therein shall be fully executed, without the necessity
for any special direction to that effect by the Court of Chancery. The powers of the officers and directors of the corporation shall continue
during this time period in order to allow them to take the necessary steps to wind up the affairs of the corporation.
8. Absence
of Appraisal Rights. Under Delaware law, the Company’s stockholders are not entitled to appraisal rights for shares of capital
stock of the Company in connection with the transactions contemplated by the Plan.
9. Abandoned
Property. If any distribution to the stockholders of the Company cannot be made, whether because such stockholder cannot be located,
has not surrendered its certificate evidencing the capital stock as required hereunder or for any other reason, the distribution to which
such stockholder is entitled shall be transferred, at such time as the final liquidating distribution is made by the Company, to the official
of such state or other jurisdiction authorized by applicable law to receive the proceeds of such distribution. The proceeds of such distribution
shall thereafter be held solely for the benefit of and for ultimate distribution to such stockholders as the sole equitable owner thereof
and shall be treated as abandoned property and escheat to the applicable state or other jurisdiction in accordance with applicable law.
In no event shall the proceeds of any such distribution revert to or become the property of the Company.
10. Stockholder
Consent to Sale of Assets. Adoption of this Plan by the stockholders of the Company shall constitute the approval of such stockholders
of the sale, exchange or other disposition in liquidation of all of the property and assets of the Company, whether such sale, exchange
or other disposition occurs in one transaction or a series of transactions, and shall constitute ratification of all contracts for sale,
exchange or other disposition that are conditioned on adoption of this Plan.
11. Expenses
of Dissolution. In connection with and for the purposes of implementing and assuring completion of this Plan, the Company may pay
any brokerage, agency, professional and other fees and expenses of persons rendering services to the Company in connection with the collection,
sale, exchange or other disposition of the Company’s property and assets and the implementation of this Plan.
12. Compensation.
In connection with and for the purpose of implementing and assuring the completion of this Plan, the Company may pay the Company’s
officers, directors, employees, agents and representatives, or any of them, compensation or additional compensation above their regular
compensation, including pursuant to severance and retention agreements, in money or other property, in recognition of the extraordinary
efforts they, or any of them, will be required to undertake, or actually undertake, in connection with the implementation of this Plan.
Adoption of this Plan by the requisite vote of the outstanding capital stock of the Company shall constitute the approval of the Company’s
stockholders of the payment of any such compensation.
13. Indemnification.
The Company shall continue to indemnify its officers, directors, employees, agents and trustee in accordance with its Certificate of Incorporation,
Bylaws, and contractual arrangements as therein or elsewhere provided, the Company’s existing directors’ and officers’
liability insurance policy and applicable law, and such indemnification shall apply to acts or omissions of such persons in connection
with the implementation of this Plan and the winding up of the affairs of the Company. The Company is authorized to obtain and maintain
insurance as may be necessary to cover the Company’s indemnification obligations.
14. Modification
or Abandonment of the Plan. Notwithstanding adoption of this Plan by the stockholders of the Company, the Board may modify, amend
or abandon this Plan and the transactions contemplated hereby without further action by such stockholders to the extent permitted by the
DGCL.
15. Authorization.
The Board is hereby authorized, without further action by the stockholders of the Company, to do and perform or cause the officers of
the Company to do and perform, any and all acts, and to make, execute, deliver or adopt any and all agreements, resolutions, conveyances,
certificates and other documents of every kind that are deemed necessary, appropriate or desirable, to implement this Plan and the transactions
contemplated hereby, including, without limiting the foregoing, all filings or acts required by any state or federal law or regulation
to wind up the affairs of the Company.
ANNEX B
Sections 275 through 283 of the DGCL
§ 275. Dissolution generally; procedure.
| (a) | If it should be deemed advisable in the judgment of the board of directors of any corporation that it should be dissolved, the board,
after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause
notice of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution to be given to each stockholder
entitled to vote thereon as of the record date for determining the stockholders entitled to notice of the meeting. |
| (b) | At the meeting a vote shall be taken upon the proposed dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon shall vote for the proposed dissolution, a certification of dissolution shall be filed with the Secretary of State pursuant
to subsection (d) of this section. |
| (c) | Dissolution of a corporation may also be authorized without action of the directors if all the stockholders entitled to vote thereon
shall consent in writing and a certificate of dissolution shall be filed with the Secretary of State pursuant to subsection (d) of this
section. |
| (d) | If dissolution is authorized in accordance with this section, a certificate of dissolution shall be executed, acknowledged and filed,
and shall become effective, in accordance with § 103 of this title. Such certificate of dissolution shall set forth: |
| (1) | The name of the corporation; |
| (2) | The date dissolution was authorized; |
| (3) | That the dissolution has been authorized by the board of directors and stockholders of the corporation, in accordance with subsections
(a) and (b) of this section, or that the dissolution has been authorized by all of the stockholders of the corporation entitled to vote
on a dissolution, in accordance with subsection (c) of this section; |
| (4) | The names and addresses of the directors and officers of the corporation; and |
| (5) | The date of filing of the corporation’s original certificate of incorporation with the Secretary of State. |
| (e) | The resolution authorizing a proposed dissolution may provide that notwithstanding authorization or consent to the proposed dissolution
by the stockholders, or the members of a nonstock corporation pursuant to § 276 of this title, the board of directors or governing
body may abandon such proposed dissolution without further action by the stockholders or members. |
| (f) | If a corporation has included in its certificate of incorporation a provision limiting the duration of its existence to a specified
date in accordance with § 102(b)(5) of this title, a certificate of dissolution shall be executed, acknowledged and filed in
accordance with § 103 of this title within 90 days before such specified date and shall become effective on such specified
date. Such certificate of dissolution shall set forth: |
| (1) | The name of the corporation; |
| (2) | The date specified in the corporation’s certificate of incorporation limiting the duration of its existence; |
| (3) | The names and addresses of the directors and officers of the corporation; and |
| (4) | The date of filing of the corporation’s original certificate of incorporation with the Secretary of State. |
The failure to timely file a certificate of dissolution
pursuant to this subsection with respect to any corporation shall not affect the expiration of such corporation’s existence on the
date specified in its certificate of incorporation pursuant to § 102(b)(5) of this title and shall not eliminate the requirement
to file a certificate of dissolution as contemplated by this subsection. If a certificate of good standing is issued by the Secretary
of State after the date specified in a corporation’s certificate of incorporation pursuant to § 102(b)(5) of this title, such
certificate of good standing shall be of no force or effect.
| (g) | A corporation shall be dissolved upon the earlier of: |
| (1) | The date specified in such corporation’s certificate of incorporation pursuant to § 102(b)(5) of this title; or |
| (2) | The effectiveness in accordance with § 103 of this title of a certificate of dissolution filed in accordance with this section. |
§ 276. Dissolution of nonstock corporation; procedure.
| (a) | Whenever it shall be desired to dissolve any nonstock corporation, the governing body shall perform all the acts necessary for dissolution
which are required by § 275 of this title to be performed by the board of directors of a corporation having capital stock. If any
members of a nonstock corporation are entitled to vote for the election of members of its governing body or are entitled to vote for dissolution
under the certificate of incorporation or the bylaws of such corporation, such members shall perform all the acts necessary for dissolution
which are contemplated by § 275 of this title to be performed by the stockholders of a corporation having capital stock, including
dissolution without action of the members of the governing body if all the members of the corporation entitled to vote thereon shall consent
in writing and a certificate of dissolution shall be filed with the Secretary of State pursuant to § 275(d) of this title. If there
is no member entitled to vote thereon, the dissolution of the corporation shall be authorized at a meeting of the governing body, upon
the adoption of a resolution to dissolve by the vote of a majority of members of its governing body then in office. In all other respects,
the method and proceedings for the dissolution of a nonstock corporation shall conform as nearly as may be to the proceedings prescribed
by § 275 of this title for the dissolution of corporations having capital stock. |
| (b) | If a nonstock corporation has not commenced the business for which the corporation was organized, a majority of the governing body
or, if none, a majority of the incorporators may surrender all of the corporation rights and franchises by filing in the office of the
Secretary of State a certificate, executed and acknowledged by a majority of the incorporators or governing body, conforming as nearly
as may be to the certificate prescribed by § 274 of this title. |
| (c) | If a nonstock corporation has included in its certificate of incorporation a provision limiting the duration of its existence to a
specified date in accordance with § 102(b)(5) of this title, a certificate of dissolution shall be executed, acknowledged and filed
in accordance with § 103 of this title within 90 days before such specified date and shall become effective on such specified date.
Such certificate of dissolution shall include the information required by § 275(f) of this title. The failure to timely file a certificate
of dissolution pursuant to this subsection with respect to any nonstock corporation shall not affect the expiration of such corporation’s
existence on the date specified in its certificate of incorporation pursuant to § 102(b)(5) of this title and shall not eliminate
the requirement to file a certificate of dissolution as contemplated by this subsection. If a certificate of good standing is issued by
the Secretary of State after the date specified in a nonstock corporation’s certificate of incorporation pursuant to § 102(b)(5)
of this title, such certificate of good standing shall be of no force or effect. |
§ 277. Payment of franchise taxes before dissolution, merger,
transfer or conversion.
No corporation shall be dissolved, merged, transferred (without
continuing its existence as a corporation of this State) or converted under this chapter until:
| (1) | All franchise taxes due to or assessable by the State including all franchise taxes due or which would be due or assessable for the
entire calendar month during which such dissolution, merger, transfer or conversion becomes effective have been paid by the corporation;
and |
| (2) | All annual franchise tax reports including a final annual franchise tax report for the year in which such dissolution, merger, transfer
or conversion becomes effective have been filed by the corporation; notwithstanding the foregoing, if the Secretary of State certifies
that an instrument to effect a dissolution, merger, transfer or conversion has been filed in the Secretary of State’s office, such
corporation shall be dissolved, merged, transferred or converted at the effective time of such instrument. |
§ 278. Continuation of corporation after dissolution for
purposes of suit and winding up affairs.
All corporations, whether they expire by their own limitation
or are otherwise dissolved, shall nevertheless be continued, for the term of 3 years from such expiration or dissolution or for such longer
period as the Court of Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and defending suits, whether
civil, criminal or administrative, by or against them, and of enabling them gradually to settle and close their business, to dispose of
and convey their property, to discharge their liabilities and to distribute to their stockholders any remaining assets, but not for the
purpose of continuing the business for which the corporation was organized. With respect to any action, suit or proceeding begun by or
against the corporation either prior to or within 3 years after the date of its expiration or dissolution, the action shall not abate
by reason of the dissolution of the corporation; the corporation shall, solely for the purpose of such action, suit or proceeding, be
continued as a body corporate beyond the 3-year period and until any judgments, orders or decrees therein shall be fully executed, without
the necessity for any special direction to that effect by the Court of Chancery.
Sections 279 through 282 of this title shall apply to any
corporation that has expired by its own limitation, and when so applied, all references in those sections to a dissolved corporation or
dissolution shall include a corporation that has expired by its own limitation and to such expiration, respectively.
§ 279. Trustees or receivers for dissolved corporations; appointment;
powers; duties.
When any corporation organized under this chapter shall
be dissolved in any manner whatever, the Court of Chancery, on application of any creditor, stockholder or director of the corporation,
or any other person who shows good cause therefor, at any time, may either appoint 1 or more of the directors of the corporation to be
trustees, or appoint 1 or more persons to be receivers, of and for the corporation, to take charge of the corporation’s property,
and to collect the debts and property due and belonging to the corporation, with power to prosecute and defend, in the name of the corporation,
or otherwise, all such suits as may be necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and
to do all other acts which might be done by the corporation, if in being, that may be necessary for the final settlement of the unfinished
business of the corporation. The powers of the trustees or receivers may be continued as long as the Court of Chancery shall think necessary
for the purposes aforesaid.
§ 280. Notice to claimants; filing of claims.
| (a) | (1) After a corporation has been dissolved in accordance with the procedures set forth in this chapter, the corporation or any successor
entity may give notice of the dissolution, requiring all persons having a claim against the corporation other than a claim against the
corporation in a pending action, suit or proceeding to which the corporation is a party to present their claims against the corporation
in accordance with such notice. Such notice shall state: |
| a. | That all such claims must be presented in writing and must contain sufficient information reasonably to inform the corporation or
successor entity of the identity of the claimant and the substance of the claim; |
| b. | The mailing address to which such a claim must be sent; |
| c. | The date by which such a claim must be received by the corporation or successor entity, which date shall be no earlier than 60 days
from the date thereof; and |
| d. | That such claim will be barred if not received by the date referred to in paragraph (a)(1)c. of this section; and |
| e. | That the corporation or a successor entity may make distributions to other claimants and the corporation’s stockholders or persons
interested as having been such without further notice to the claimant; and |
| f. | The aggregate amount, on an annual basis, of all distributions made by the corporation to its stockholders for each of the 3 years
prior to the date the corporation dissolved. |
Such notice shall also be published at least once a week
for 2 consecutive weeks in a newspaper of general circulation in the county in which the office of the corporation’s last registered
agent in this State is located and in the corporation’s principal place of business and, in the case of a corporation having $10,000,000
or more in total assets at the time of its dissolution, at least once in all editions of a daily newspaper with a national circulation.
On or before the date of the first publication of such notice, the corporation or successor entity shall mail a copy of such notice by
certified or registered mail, return receipt requested, to each known claimant of the corporation including persons with claims asserted
against the corporation in a pending action, suit or proceeding to which the corporation is a party.
| (2) | Any claim against the corporation required to be presented pursuant to this subsection is barred if a claimant who was given actual
notice under this subsection does not present the claim to the dissolved corporation or successor entity by the date referred to in paragraph
(a) (1)c. of this section. |
| (3) | A corporation or successor entity may reject, in whole or in part, any claim made by a claimant pursuant to this subsection by mailing
notice of such rejection by certified or registered mail, return receipt requested, to the claimant within 90 days after receipt of such
claim and, in all events, at least 150 days before the expiration of the period described in § 278 of this title; provided however,
that in the case of a claim filed pursuant to § 295 of this title against a corporation or successor entity for which a receiver
or trustee has been appointed by the Court of Chancery the time period shall be as provided in § 296 of this title, and the 30-day
appeal period provided for in § 296 of this title shall be applicable. A notice sent by a corporation or successor entity pursuant
to this subsection shall state that any claim rejected therein will be barred if an action, suit or proceeding with respect to the claim
is not commenced within 120 days of the date thereof, and shall be accompanied by a copy of §§ 278-283 of this title and, in
the case of a notice sent by a court- appointed receiver or trustee and as to which a claim has been filed pursuant to § 295 of this
title, copies of §§ 295 and 296 of this title. |
| (4) | A claim against a corporation is barred if a claimant whose claim is rejected pursuant to paragraph (a)(3) of this section does not
commence an action, suit or proceeding with respect to the claim no later than 120 days after the mailing of the rejection notice. |
| (b) | (1) A corporation or successor entity electing to follow the procedures described in subsection (a) of this section shall also give
notice of the dissolution of the corporation to persons with contractual claims contingent upon the occurrence or nonoccurrence of future
events or otherwise conditional or unmatured, and request that such persons present such claims in accordance with the terms of such notice.
Provided however, that as used in this section and in § 281 of this title, the term “contractual claims” shall not include
any implied warranty as to any product manufactured, sold, distributed or handled by the dissolved corporation. Such notice shall be in
substantially the form, and sent and published in the same manner, as described in paragraph (a)(1) of this section. |
| (2) | The corporation or successor entity shall offer any claimant on a contract whose claim is contingent, conditional or unmatured such
security as the corporation or successor entity determines is sufficient to provide compensation to the claimant if the claim matures.
The corporation or successor entity shall mail such offer to the claimant by certified or registered mail, return receipt requested, within
90 days of receipt of such claim and, in all events, at least 150 days before the expiration of the period described in § 278 of
this title. If the claimant offered such security does not deliver in writing to the corporation or successor entity a notice rejecting
the offer within 120 days after receipt of such offer for security, the claimant shall be deemed to have accepted such security as the
sole source from which to satisfy the claim against the corporation. |
| (c) | (1) A corporation or successor entity which has given notice in accordance with subsection (a) of this section shall petition the
Court of Chancery to determine the amount and form of security that will be reasonably likely to be sufficient to provide compensation
for any claim against the corporation which is the subject of a pending action, suit or proceeding to which the corporation is a party
other than a claim barred pursuant to subsection (a) of this section. |
| (2) | A corporation or successor entity which has given notice in accordance with subsections (a) and (b) of this section shall petition
the Court of Chancery to determine the amount and form of security that will be sufficient to provide compensation to any claimant who
has rejected the offer for security made pursuant to paragraph (b)(2) of this section. |
| (3) | A corporation or successor entity which has given notice in accordance with subsection (a) of this section shall petition the Court
of Chancery to determine the amount and form of security which will be reasonably likely to be sufficient to provide compensation for
claims that have not been made known to the corporation or that have not arisen but that, based on facts known to the corporation or successor
entity, are likely to arise or to become known to the corporation or successor entity within 5 years after the date of dissolution or
such longer period of time as the Court of Chancery may determine not to exceed 10 years after the date of dissolution. The Court of Chancery
may appoint a guardian ad litem in respect of any such proceeding brought under this subsection. The reasonable fees and expenses of such
guardian, including all reasonable expert witness fees, shall be paid by the petitioner in such proceeding. |
| (d) | The giving of any notice or making of any offer pursuant to this section shall not revive any claim then barred or constitute acknowledgment
by the corporation or successor entity that any person to whom such notice is sent is a proper claimant and shall not operate as a waiver
of any defense or counterclaim in respect of any claim asserted by any person to whom such notice is sent. |
| (e) | As used in this section, the term “successor entity” shall include any trust, receivership or other legal entity governed
by the laws of this State to which the remaining assets and liabilities of a dissolved corporation are transferred and which exists solely
for the purposes of prosecuting and defending suits, by or against the dissolved corporation, enabling the dissolved corporation to settle
and close the business of the dissolved corporation, to dispose of and convey the property of the dissolved corporation, to discharge
the liabilities of the dissolved corporation and to distribute to the dissolved corporation’s stockholders any remaining assets,
but not for the purpose of continuing the business for which the dissolved corporation was organized. |
| (f) | The time periods and notice requirements of this section shall, in the case of a corporation or successor entity for which a receiver
or trustee has been appointed by the Court of Chancery, be subject to variation by, or in the manner provided in, the Rules of the Court
of Chancery. |
| (g) | In the case of a nonstock corporation, any notice referred to in the last sentence of paragraph (a)(3) of this section shall include
a copy of § 114 of this title. In the case of a nonprofit nonstock corporation, provisions of this section regarding distributions
to members shall not apply to the extent that those provisions conflict with any other applicable law or with that corporation’s
certificate of incorporation or bylaws. |
§ 281. Payment and distribution to claimants and stockholders.
| (a) | A dissolved corporation or successor entity which has followed the procedures described in § 280 of this title: |
| (1) | Shall pay the claims made and not rejected in accordance with § 280(a) of this title, |
| (2) | Shall post the security offered and not rejected pursuant to § 280(b)(2) of this title, |
| (3) | Shall post any security ordered by the Court of Chancery in any proceeding under § 280(c) of this title, and |
| (4) | Shall pay or make provision for all other claims that are mature, known and uncontested or that have been finally determined to be
owing by the corporation or such successor entity. |
Such claims or obligations shall be paid in full and any
such provision for payment shall be made in full if there are sufficient assets. If there are insufficient assets, such claims and obligations
shall be paid or provided for according to their priority, and, among claims of equal priority, ratably to the extent of assets legally
available therefor. Any remaining assets shall be distributed to the stockholders of the dissolved corporation; provided, however, that
such distribution shall not be made before the expiration of 150 days from the date of the last notice of rejections given pursuant to
§ 280(a)(3) of this title. In the absence of actual fraud, the judgment of the directors of the dissolved corporation or the governing
persons of such successor entity as to the provision made for the payment of all obligations under paragraph (a)(4) of this section shall
be conclusive.
| (b) | A dissolved corporation or successor entity which has not followed the procedures described in § 280 of this title shall, prior
to the expiration of the period described in § 278 of this title, adopt a plan of distribution pursuant to which the dissolved corporation
or successor entity (i) shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional
or unmatured contractual claims known to the corporation or such successor entity, (ii) shall make such provision as will be reasonably
likely to be sufficient to provide compensation for any claim against the corporation which is the subject of a pending action, suit or
proceeding to which the corporation is a party and (iii) shall make such provision as will be reasonably likely to be sufficient to provide
compensation for claims that have not been made known to the corporation or that have not arisen but that, based on facts known to the
corporation or successor entity, are likely to arise or to become known to the corporation or successor entity within 10 years after the
date of dissolution. The plan of distribution shall provide that such claims shall be paid in full and any such provision for payment
made shall be made in full if there are sufficient assets. If there are insufficient assets, such plan shall provide that such claims
and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of
assets legally available therefor. Any remaining assets shall be distributed to the stockholders of the dissolved corporation. |
| (c) | Directors of a dissolved corporation or governing persons of a successor entity which has complied with subsection (a) or (b) of this
section shall not be personally liable to the claimants of the dissolved corporation. |
| (d) | As used in this section, the term “successor entity” has the meaning set forth in § 280(e) of this title. |
| (e) | The term “priority,” as used in this section, does not refer either to the order of payments set forth in paragraph (a)(1)-(4)
of this section or to the relative times at which any claims mature or are reduced to judgment. |
| (f) | In the case of a nonprofit nonstock corporation, provisions of this section regarding distributions to members shall not apply to
the extent that those provisions conflict with any other applicable law or with that corporation’s certificate of incorporation
or bylaws. |
§ 282. Liability of stockholders of dissolved corporations.
| (a) | A stockholder of a dissolved corporation the assets of which were distributed pursuant to § 281(a) or (b) of this title shall
not be liable for any claim against the corporation in an amount in excess of such stockholder’s pro rata share of the claim or
the amount so distributed to such stockholder, whichever is less. |
| (b) | A stockholder of a dissolved corporation the assets of which were distributed pursuant to § 281(a) of this title shall not be
liable for any claim against the corporation on which an action, suit or proceeding is not begun prior to the expiration of the period
described in § 278 of this title. |
| (c) | The aggregate liability of any stockholder of a dissolved corporation for claims against the dissolved corporation shall not exceed
the amount distributed to such stockholder in dissolution. |
§ 283. Jurisdiction.
The Court of Chancery shall have jurisdiction
of any application prescribed in this subchapter and of all questions arising in the proceedings thereon, and may make such orders and
decrees and issue injunctions therein as justice and equity shall require.
1 U P X Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 0 3 W C D A + + Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. B q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q 2023 Special Meeting Proxy Card 1234 5678 9012 345 Proposals — The Board of Directors recommends a vote FOR Proposals 1 and 2. A 1. The approval of the liquidation and dissolution of Bellerophon Therapeutics, Inc. (the “Company”) and the Plan of Liquidation and Dissolution (the “Plan of Dissolution”), which, if approved, will authorize the Company’s Board of Directors to liquidate and dissolve the Company in accordance with the Plan of Dissolution (the “Dissolution Proposal”); and 2. The approval of an adjournment of the Special Meeting, if necessary, to solicit additional proxies if there are not sufficient votes at the time of the Special Meeting to approve the Dissolution Proposal (the “Adjournment Proposal”). For Against Abstain For Against Abstain MMMMMMMM M 5 9 2 1 6 4 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T MMMMMMMMMMMM MMMMMMMMMMMMMM MMMMMM If no electronic voting, delete QR code and control # Δ ≈ 000001 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Online Go to www.envisionreports.com/BLPH or scan the QR code — login details are located in the shaded bar below. Phone Call toll free 1 - 800 - 652 - VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/BLPH Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 1:00am, Eastern Time, on December 11 , 2023.
Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/BLPH Notice of 2023 Special Meeting of Shareholders Proxy Solicited by Board of Directors for Special Meeting — December 11, 2023 Peter Fernandes and Fred Hanuschek, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Special Meeting of Shareholders of Bellerophon Therapeutics, Inc . to be held on December 11 , 2023 or at any postponement or adjournment thereof . Shares represented by this proxy will be voted by the shareholder . If no such directions are indicated, the Proxies will have authority to vote FOR items 1 and 2 . In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting . (Items to be voted appear on reverse side) Bellerophon Therapeutics, Inc. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Change of Address — Please print your new address below. Comments — Please print your comments below. Non - Voting Items C + + Important notice regarding the Internet availability of proxy materials for the Special Meeting of Shareholders. The material is available at: www.envisionreports.com/BLPH 2023 Special Meeting Admission Ticket 2023 Special Meeting of Bellerophon Therapeutics, Inc. Shareholders Monday, December 11, 2023 11:00 A.M. Eastern Time Offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 919 Third Avenue, New York, NY 10022 Upon arrival, please present this admission ticket and photo identification at the registration desk.
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