pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
|
|
|
Filed by the Registrant
þ |
|
Filed by a Party other than the Registrant
o |
|
|
Check the appropriate box: |
|
|
|
þ Preliminary Proxy Statement |
|
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
|
o Definitive Proxy Statement |
|
o Definitive Additional Materials |
|
o
Soliciting Material Pursuant to §240.14a-12 |
IDERA PHARMACEUTICALS,
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 the appropriate box):
|
|
|
þ No fee required. |
|
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
|
|
|
1) Title of each class of securities to which transaction applies: |
|
|
|
2) Aggregate number of securities to which transaction applies: |
|
|
|
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
|
|
|
4) Proposed maximum aggregate value of transaction: |
|
|
|
o Fee paid previously with preliminary materials. |
|
|
|
o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
|
|
|
1) Amount Previously Paid: |
|
|
|
2) Form, Schedule or Registration Statement No.: |
IDERA
PHARMACEUTICALS, INC.
167 Sidney Street
Cambridge, Massachusetts 02139
NOTICE OF 2008 ANNUAL MEETING
OF STOCKHOLDERS
|
|
|
Date and Time: |
|
June 4, 2008 at 10:00 a.m., local time |
|
Place: |
|
Idera Pharmaceuticals
167 Sidney Street
Cambridge, Massachusetts 02139 |
|
Items of Business: |
|
At the meeting, we will ask our stockholders to: |
|
|
|
Elect three Class I Directors to our board of
directors for terms to expire at the 2011 annual meeting of
stockholders;
|
|
|
|
Approve an amendment to our Restated Certificate of
Incorporation increasing the number of authorized shares of
common stock from 40,000,000 to 70,000,000 shares;
|
|
|
|
Approve our 2008 Stock Incentive Plan;
|
|
|
|
Approve an amendment to our 1995 Employee Stock
Purchase Plan to increase the number of shares authorized for
issuance thereunder from 125,000 shares to
250,000 shares;
|
|
|
|
Ratify the selection by our audit committee of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2008; and
|
|
|
|
Transact any other business as may properly come
before the meeting or any postponement or adjournment of the
meeting.
|
|
|
|
The board of directors has no knowledge of any other business to
be transacted at the annual meeting. |
|
Record Date: |
|
You may vote at this annual meeting if you were a stockholder of
record at the close of business on April 7, 2008. |
|
Proxy Voting: |
|
It is important that your shares be represented and voted at the
meeting. Whether or not you plan to attend the meeting, please
mark, sign, date and promptly mail your proxy card in the
enclosed postage-paid envelope or follow the instructions on the
proxy card to vote by telephone or internet. You may revoke your
proxy at any time before its exercise at the meeting. |
By order of the board of directors,
Louis J. Arcudi, III
Secretary
Cambridge, Massachusetts
,
2008
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
6
|
|
|
|
|
7
|
|
|
|
|
7
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
9
|
|
|
|
|
9
|
|
|
|
|
9
|
|
|
|
|
9
|
|
|
|
|
10
|
|
|
|
|
11
|
|
|
|
|
13
|
|
|
|
|
14
|
|
|
|
|
20
|
|
|
|
|
22
|
|
|
|
|
23
|
|
|
|
|
25
|
|
|
|
|
25
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
33
|
|
|
|
|
36
|
|
|
|
|
38
|
|
|
|
|
40
|
|
|
|
|
40
|
|
|
|
|
43
|
|
|
|
|
44
|
|
|
|
|
44
|
|
|
|
|
44
|
|
|
|
|
45
|
|
|
|
|
45
|
|
|
|
|
47
|
|
i
IDERA
PHARMACEUTICALS, INC.
167 Sidney Street
Cambridge, Massachusetts 02139
PROXY STATEMENT
For our Annual Meeting of
Stockholders to be held on June 4, 2008
Idera Pharmaceuticals, Inc., a Delaware corporation, which is
referred to as we or us in this
document, is sending you this proxy statement and the enclosed
proxy card because our board of directors is soliciting your
proxy to vote at our 2008 annual meeting of stockholders. The
annual meeting will be held on Wednesday, June 4, 2008, at
10:00 a.m., local time, at our offices at 167 Sidney
Street, Cambridge, Massachusetts. If the annual meeting is
adjourned for any reason, then proxies submitted may be used at
any adjournments of the annual meeting.
This proxy statement summarizes information about the proposals
to be considered at the meeting and other information you may
find useful in determining how to vote. The proxy card is the
means by which you actually authorize another person to vote
your shares in accordance with your instructions.
We are mailing this proxy statement and the enclosed proxy card
to stockholders on or
about ,
2008.
In this mailing, we are also including copies of our annual
report to stockholders for the year ended December 31,
2007. Our annual report on
Form 10-K
for the year ended December 31, 2007, as filed with the
Securities and Exchange Commission, including our audited
financial statements, is included in our annual report to
stockholders and is also available free of charge on our
website, www.iderapharma.com, and can be accessed by
clicking Investors and then SEC Filings
or through the SECs electronic data system at
www.sec.gov. To request a printed copy of our
Form 10-K,
which we will provide to you free of charge, either write to
Investor Relations, Idera Pharmaceuticals, Inc., 167 Sidney
Street, Cambridge, Massachusetts, 02139, or email Investor
Relations at ir@iderapharma.com.
INFORMATION
ABOUT THE ANNUAL MEETING
Who may
vote?
Holders of record of our common stock at the close of business
on April 7, 2008, the record date for the meeting, are
entitled to one vote per share on each matter properly brought
before the meeting. As of the close of business on April 7,
2008, we had 22,270,797 shares of our common stock
outstanding.
A list of registered stockholders entitled to vote will be
available at the meeting. In addition, you may contact our
Secretary, Louis J. Arcudi, III, at our address set forth
above, to make arrangements to review a copy of the stockholder
list at our offices, for any purpose germane to the meeting,
between the hours of 8:30 A.M. and 5:00 P.M., local
time, on any business day from May 25, 2008 up to the time
of the meeting.
How may I
vote my shares if I am a stockholder of record?
If you are a stockholder of record (meaning that you hold shares
in your name in the records of our transfer agent, BNY Mellon
Shareowner Services, and that your shares are not held in
street name by a bank or brokerage firm), you may
vote your shares in any one of the following ways:
|
|
|
|
|
You may vote by mail. To vote by mail, you
need to complete, date and sign the proxy card that accompanies
this proxy statement and promptly mail it in the enclosed
postage-prepaid envelope. You do not need to put a stamp on the
enclosed envelope if you mail it in the United States.
|
|
|
|
You may vote by telephone. To vote by
telephone through services provided by BNY Mellon Shareowner
Services call 1-866-540-5760, and follow the instructions
provided on each proxy card. If you vote by telephone, you do
not need to complete and mail your proxy card.
|
|
|
|
You may vote by Internet. To vote over the
Internet through services provided by BNY Mellon Shareowner
Services, please go to the following website:
http://www.proxyvoting.com/idra
and follow the instructions at
|
1
|
|
|
|
|
that site for submitting your proxy card. If you vote on the
Internet, you do not need to complete and mail your proxy card.
|
|
|
|
|
|
You may vote in person. If you attend the
annual meeting, you may vote by delivering your completed proxy
card in person or you may vote by completing a ballot at the
meeting. Ballots will be available at the meeting.
|
Your proxy will only be valid if you complete and return the
proxy card, vote by telephone or vote by Internet on or before
the annual meeting. The persons named in the proxy card will
vote the shares you own in accordance with your instructions on
your proxy card, in your vote by telephone or in your vote by
Internet. If you return the proxy card, but do not give any
instructions on a particular matter described in this proxy
statement, the persons named in the proxy card will vote the
shares you own in accordance with the recommendations of our
board of directors.
The proxy card enclosed with this proxy statement states the
number of shares you are entitled to vote if you are a
stockholder of record.
How may I
vote my shares if I hold them in street
name?
If the shares you own are held in street name by a
bank or brokerage firm, your bank or brokerage firm, as the
record holder of your shares, is required to vote your shares
according to your instructions. In order to vote your shares,
you will need to follow the directions your bank or brokerage
firm provides you. Many banks and brokerage firms may solicit
voting instructions over the internet or by telephone.
If you do not give instructions to your bank or brokerage firm,
it will still be able to vote your shares with respect to
certain discretionary items, but will not be allowed
to vote your shares with respect to certain
non-discretionary items. The election of directors
(proposal one) and the ratification of Ernst & Young
LLP, our independent registered public accounting firm (proposal
five) are considered discretionary items. However, the approval
of the amendment to our Restated Certificate of Incorporation
(proposal two), the approval of our 2008 Stock Incentive Plan
(proposal three) and the amendment to our 1995 Employee Stock
Purchase Plan (proposal four) are non-discretionary items.
Accordingly, if you do not give instructions to your bank or
brokerage firm with respect to proposals two, three or four, or
if your bank or brokerage firm does not exercise its
discretionary authority with respect to proposal one or five,
your shares will be treated as broker non-votes on
that particular matter. Broker non-votes are shares
with respect to which a bank or brokerage firm does not receive
voting instructions from the beneficial holder or does not have
or exercise discretionary authority in voting on a proposal.
Regardless of whether your shares are held in street name, you
are welcome to attend the meeting. If your shares are held in
street name, you may not vote your shares in person at the
meeting unless you obtain a proxy, executed in your favor, from
the holder of record (i.e., your brokerage firm or bank). If you
hold your shares in street name and wish to vote in person,
please contact your brokerage firm or bank before the meeting to
obtain the necessary proxy from the holder of record.
How may I
change or revoke my vote?
If you are a stockholder of record, even if you complete and
return a proxy card, you may revoke it at any time before it is
exercised by taking one of the following actions:
|
|
|
|
|
send written notice to our Secretary, Louis J. Arcudi, III,
at our address above, stating that you wish to revoke your proxy;
|
|
|
|
send us another signed proxy card with a later date, vote by
telephone or vote by internet; or
|
|
|
|
attend the meeting, notify our Secretary that you are present,
and then vote by ballot.
|
If you own shares in street name, your bank or brokerage firm
should provide you with instructions for changing your vote.
2
What
constitutes a quorum?
In order for business to be conducted at the meeting, a quorum
must be present. A quorum consists of the holders of at least
11,135,399 shares, representing a majority of the shares of
common stock issued, outstanding and entitled to vote at the
meeting.
Shares of common stock present in person or represented by proxy
(including broker non-votes and shares that are abstained or
withheld, or with respect to which no voting instructions are
provided for one or more of the matters to be voted upon) will
be counted for the purpose of determining whether a quorum
exists.
If a quorum is not present, the meeting will be adjourned until
a quorum is obtained.
What vote
is required to approve each matter?
Proposal One Election of
Directors Directors will be elected by a
plurality of the votes cast by our stockholders entitled to vote
on the election. In other words, the three nominees for director
receiving the highest number of votes FOR election will be
elected as directors, regardless of whether any of those numbers
represents a majority of the votes cast.
You may vote FOR all of the nominees, WITHHOLD your vote from
all of the nominees or WITHHOLD your vote from any one or more
of the nominees.
Proposal Two Approve Increase to Authorized
Common Stock The affirmative vote of the holders
of a majority of the outstanding shares of common stock entitled
to vote at the meeting is needed to approve an amendment to our
Restated Certificate of Incorporation to increase the number of
shares of authorized common stock.
Proposal Three Approve our 2008 Stock
Incentive Plan The affirmative vote of the
holders of a majority of the shares of common stock present or
represented and voting on the matter is needed to approve our
2008 Stock Incentive Plan.
Proposal Four Approval of the Amendment to
our 1995 Employee Stock Purchase Plan The
affirmative vote of the holders of a majority of the shares of
common stock present or represented and voting on the matter is
needed to approve the amendment to our 1995 Employee Stock
Purchase Plan.
Proposal Five Ratification of the Selection
of Ernst & Young LLP The affirmative
vote of the holders of a majority of the shares of common stock
present or represented and voting on the matter is needed to
ratify the selection of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending December 31, 2008.
How will
votes be counted?
Each share of common stock will be counted as one vote. Shares
will not be voted in favor of a matter, and will not be counted
as voting on a matter if the holder of the shares either
withholds authority in the proxy to vote for a particular
director nominee or nominees, or abstains from voting on a
particular matter, or if the shares are broker non-votes. As a
result, withheld shares, abstentions and broker non-votes will
have no effect on the outcome of voting on the election of
directors, the approval of the 2008 Stock Incentive Plan, the
amendment to our 1995 Employee Stock Purchase Plan and the
ratification of the selection of Ernst & Young LLP but will
have the same effect as a vote against the proposed amendment to
our Restated Certificate of Incorporation to increase the
authorized number of shares of common stock.
How does
the board of directors recommend that I vote?
Our board of directors recommends that you vote to elect the
three nominees to the board of directors and FOR each of the
other proposals.
3
Will any
other business be conducted at the annual meeting?
Our board of directors does not know of any other business to be
conducted or matters to be voted upon at the meeting. Under our
bylaws, the deadline for stockholders to notify us of any
proposals or nominations for director to be presented for action
at the annual meeting has passed. If any other matter properly
comes before the meeting, the persons named in the proxy card
that accompanies this proxy statement will exercise their
judgment in deciding how to vote, or otherwise act, at the
meeting with respect to that matter.
Who pays
for the solicitation of proxies?
We will bear the costs of soliciting proxies. In addition to
solicitations by mail, our directors, officers and regular
employees, without additional remuneration, may solicit proxies
by telephone, facsimile, email, personal interviews and other
means. We have requested that brokerage houses, custodians,
nominees and fiduciaries forward copies of the proxy materials
to the persons for whom they hold shares and request
instructions for voting the proxies. We will reimburse the
brokerage houses and other persons for their reasonable
out-of-pocket expenses in connection with this distribution.
How and
when may I submit a proposal for the 2009 annual
meeting?
If you are interested in submitting a proposal for inclusion in
the proxy statement and the proxy card for our 2009 annual
meeting, you need to follow the procedures outlined in
Rule 14a-8
of the Securities Exchange Act of 1934. We must receive your
proposal intended for inclusion in the proxy statement at our
principal executive offices, 167 Sidney Street, Cambridge,
Massachusetts 02139, Attention: Secretary, no later than
December 31, 2008. SEC rules set standards for the types of
stockholder proposals and the information that must be provided
by the stockholder making the request.
If you wish to present a proposal at the 2009 annual meeting,
but do not wish to have the proposal considered for inclusion in
the proxy statement and proxy card or have not complied with the
requirements for inclusion of such proposal in our proxy
statement under SEC rules, you must also give written notice to
us at the address noted above. Our bylaws specify the
information that must be included in any such notice, including
a brief description of the business to be brought before the
annual meeting and the name of the stockholder proposing such
business. In accordance with our bylaws, we must receive this
notice at least 60 days, but not more than 90 days,
prior to the date of the 2009 annual meeting. Notwithstanding
the foregoing, if we provide less than 70 days notice or
prior public disclosure of the date of the meeting to the
stockholders, notice by the stockholders must be received by our
Secretary no later than the close of business on the tenth day
following the date on which the notice of the meeting was mailed
or such public disclosure was made, whichever occurs first. If a
stockholder who wished to present a proposal fails to notify us
by this date, the proxies that management solicits for that
meeting will have discretionary authority to vote on the
stockholders proposal if it is otherwise properly brought
before that meeting. If a stockholder makes timely notification,
the proxies may still exercise discretionary authority to vote
on stockholder proposals under circumstances consistent with the
SECs rules.
Are
annual meeting materials householded?
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that the brokers and
nominee record holders send only one copy of this proxy
statement and the accompanying annual report to multiple
stockholders in the same household. Upon request, we will
promptly deliver separate copies of this proxy statement and our
annual report. To make such a request, please call
(617) 679-5500
or write to Investor Relations, 167 Sidney Street, Cambridge,
Massachusetts 02139 or ir@iderapharma.com. To receive separate
copies of our annual report and proxy statement in the future,
or to receive only one copy for the household, please contact
your bank, broker, or other nominee record holder, or contact us
at the above address and phone number.
4
CORPORATE
GOVERNANCE INFORMATION
Board of
Directors
Our board of directors is responsible for establishing our broad
corporate policies and overseeing the management of our company.
Our chief executive officer and our other executive officers are
responsible for our day-to-day operations. Our board evaluates
our corporate performance and approves, among other things, our
corporate strategies and objectives, operating plans, major
commitments of corporate resources and significant policies. Our
board also evaluates and appoints our executive officers.
Our board of directors met nine times during 2007, including
regular, special and telephonic meetings. Each director who
served as a director during 2007 attended at least 75% of the
total number of board meetings held during the period of 2007
during which he or she was a director and the total number of
meetings held by all board committees on which he or she served
during the period of 2007 during which he or she was a member of
such committees.
Our board of directors has established three standing
committees audit, compensation, and nominating and
corporate governance each of which operates under a
charter that has been approved by our board of directors.
Current copies of the charters for the audit, compensation and
nominating and corporate governance committees are posted on our
website, www.iderapharma.com, and can be accessed by
clicking Investors and Corporate
Governance.
Our board of directors has determined that all of the members of
each of the audit, compensation and nominating and corporate
governance committees are independent as defined under
applicable NASDAQ rules including, in the case of all members of
the audit committee, the independence requirements contemplated
by
Rule 10A-3
under the Securities Exchange Act of 1934.
Our board of directors has adopted corporate governance
guidelines to assist our board in the exercise of its duties and
responsibilities, which we have posted on our website,
www.iderapharma.com, and can be accessed by clicking
Investors and Corporate Governance.
Audit
Committee
Our audit committees responsibilities include:
|
|
|
|
|
appointing, approving the compensation of, and assessing the
independence of our registered public accounting firm;
|
|
|
|
overseeing the work of our registered public accounting firm,
including through the receipt and consideration of certain
reports from such accounting firm;
|
|
|
|
reviewing and discussing with management and the registered
public accounting firm our annual and quarterly financial
statements and related disclosures;
|
|
|
|
monitoring our internal control over financial reporting,
disclosure controls and procedures and code of business conduct
and ethics;
|
|
|
|
discussing our risk management policies;
|
|
|
|
establishing procedures for the receipt and retention of
accounting related complaints and concerns;
|
|
|
|
reviewing and approving related party transactions, including
transactions with affiliates of directors;
|
|
|
|
meeting independently with our registered public accounting firm
and management; and
|
|
|
|
preparing the audit committee report required by SEC rules that
is included in the section of this proxy statement entitled
Report of the Audit Committee.
|
The current members of our audit committee are William S.
Reardon, C.P.A. (chairman), Hans Mueller, Ph.D. and Alison
Taunton-Rigby, Ph.D. Our board of directors has determined
that all three current members of the audit
5
committee are audit committee financial experts as
defined in Item 407(d)(5) of
Regulation S-K.
During 2007, our audit committee held seven meetings in person
or by teleconference.
Compensation
Committee
Our compensation committees responsibilities include:
|
|
|
|
|
annually reviewing and approving corporate goals and objectives
relevant to compensation for our chief executive officer;
|
|
|
|
determining our chief executive officers compensation;
|
|
|
|
reviewing and approving, or making recommendations to our board
of directors with respect to, the compensation of our senior
executives;
|
|
|
|
overseeing the evaluation of our other senior executives;
|
|
|
|
overseeing and administering our cash and equity incentive plans;
|
|
|
|
reviewing and making recommendations to the board of directors
with respect to director compensation;
|
|
|
|
reviewing and discussing annually with management our
Compensation Discussion and Analysis required by the
SECs rules and included in this proxy statement; and
|
|
|
|
preparing the compensation committee report required by
SECs rules, which is included in this proxy statement.
|
The current members of our compensation committee are James B.
Wyngaarden M.D. (chairman), C. Keith Hartley,
Dr. Mueller and Dr. Taunton-Rigby. During 2007, the
compensation committee held 14 meetings in person or by
teleconference.
The processes and procedures followed by our compensation
committee in considering and determining director and executive
compensation are described below under the headings
Proposal 1 Election of
Directors Director Compensation and
Executive Compensation.
Nominating
and Corporate Governance Committee
Our nominating and corporate governance committees
responsibilities include:
|
|
|
|
|
identifying individuals qualified to become members of our board
of directors;
|
|
|
|
recommending to our board of directors the persons to be
nominated for election as directors or to fill vacancies on our
board of directors, and to be appointed to each of the
committees of the board of directors;
|
|
|
|
reviewing and making recommendations to the board of directors
with respect to management succession planning;
|
|
|
|
developing and recommending to the board of directors corporate
governance principles; and
|
|
|
|
overseeing periodic evaluations of the board of directors.
|
The members of our nominating and corporate governance committee
are Mr. Hartley (chairman), Mr. Reardon and
Dr. Wyngaarden. During 2007, the nominating and corporate
governance committee held four meetings in person or by
teleconference.
The processes and procedures followed by our nominating and
corporate governance committee in identifying and evaluating
director candidates are described below under the heading
Director Nominating Process.
Director
Independence
Under applicable NASDAQ rules, a director will only qualify as
an independent director if, in the opinion of our
board of directors, that person does not have a relationship
which would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.
6
Our board of directors has determined that none of
Mr. Hartley, Dr. Mueller, Mr. Reardon,
Dr. Taunton-Rigby or Dr. Wyngaarden has a relationship
which would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director and that each
of these directors is an independent director as
defined under Rule 4200(a)(15) of the NASDAQ Stock Market,
Inc. Marketplace Rules.
Director
Nominating Process
The process followed by our nominating and corporate governance
committee to identify and evaluate director candidates includes
requests to members of our board of directors and others for
recommendations, meetings from time to time to evaluate
biographical information and background material relating to
potential candidates and interviews of selected candidates by
members of our nominating and corporate governance committee and
our board of directors. The nominating and corporate governance
committee also utilizes a third party recruiting firm to
identify and interview potential candidates.
In considering whether to recommend any particular candidate for
inclusion in the boards slate of recommended director
nominees, the nominating and corporate governance committee will
apply the criteria set forth in our corporate governance
guidelines. These criteria include the candidates:
|
|
|
|
|
business acumen,
|
|
|
|
knowledge of our business and industry,
|
|
|
|
age,
|
|
|
|
experience,
|
|
|
|
diligence,
|
|
|
|
conflicts of interest,
|
|
|
|
ability to act in the interests of all stockholders, and
|
|
|
|
in the case of the renomination of existing directors, the
performance of the director on our board of directors and on any
committee of which the director was a member.
|
Our nominating and corporate governance committee does not
assign specific weights to particular criteria and no particular
criterion is a prerequisite for any prospective nominee. We
believe that the backgrounds and qualifications of our
directors, considered as a group, should provide a composite mix
of experience, knowledge and abilities that will allow the board
of directors to fulfill its responsibilities.
Stockholder
Nominees
Stockholders may recommend individuals to the nominating and
corporate governance committee for consideration as potential
director candidates by submitting the individuals names,
together with appropriate biographical information and
background materials and a statement as to whether the
stockholder or group of stockholders making the recommendation
has beneficially owned more than 5% of our common stock for at
least one year as of the date such recommendation is made, to
Nominating and Corporate Governance Committee,
c/o Secretary,
Idera Pharmaceuticals, Inc., 167 Sidney Street, Cambridge,
Massachusetts 02139. Assuming that appropriate biographical and
background material has been provided on a timely basis, the
nominating and corporate governance committee will evaluate
stockholder-recommended candidates by following substantially
the same process, and applying substantially the same criteria,
as it follows for candidates submitted by others. If the board
of directors determines to nominate a stockholder-recommended
candidate and recommends his or her election, then his or her
name will be included in our proxy card for the next annual
meeting.
Stockholders also have the right under our bylaws to nominate
director candidates directly, without any action or
recommendation on the part of the nominating and corporate
governance committee or the board of directors, by following the
procedures set forth under Information about the annual
meeting How and when may I submit a proposal for the
2009 annual meeting? above. Candidates nominated by
stockholders in accordance with the procedures set forth in our
bylaws will not be included in our proxy card for the next
annual meeting.
7
Communicating
with our Board of Directors
Our board of directors will give appropriate attention to
written communications that are submitted by stockholders and
will respond if and as appropriate. The chairman of the board of
directors is primarily responsible for monitoring communications
from stockholders and for providing copies or summaries to the
other directors, as he or she considers appropriate.
Communications are forwarded to all directors if they relate to
important substantive matters and include suggestions or
comments that the chairman of the board of directors considers
to be important for the directors to know. In general,
communications relating to corporate governance and long-term
corporate strategy are more likely to be forwarded than
communications relating to ordinary business affairs, personal
grievances and matters as to which we tend to receive repetitive
or duplicative communications.
Stockholders who wish to send communications on any topic to the
board of directors should address such communications to Board
of Directors,
c/o Secretary,
Idera Pharmaceuticals, Inc., 167 Sidney Street, Cambridge,
Massachusetts 02139.
Each communication from a stockholder should include the
following information in order to permit stockholder status to
be confirmed and to provide an address to forward a response if
deemed appropriate:
|
|
|
|
|
the name, mailing address and telephone number of the
stockholder sending the communication;
|
|
|
|
the number of shares held by the stockholder; and
|
|
|
|
if the stockholder is not a record owner of our securities, the
name of the record owner of our securities beneficially owned by
the stockholder.
|
Director
Attendance at Annual Meeting of Stockholders
Directors are expected to attend the annual meeting of
stockholders. All directors attended the 2007 annual meeting of
stockholders.
Compensation
Committee Interlocks and Insider Participation
Our compensation committee currently consists of
Dr. Wyngaarden, Mr. Hartley, Dr. Mueller and
Dr. Taunton-Rigby. Mr. Reardon was a member of the
compensation committee from January 2007 to December 2007. No
member of our compensation committee was at any time during
2007, or was formerly, an officer or employee of ours. No member
of our compensation committee engaged in any related person
transaction involving our company. None of our executive
officers has served as a director or member of the compensation
committee (or other committee serving the same function as the
compensation committee) of any other entity, while an executive
officer of that other entity served as a member of our
compensation committee.
8
PROPOSAL 1
ELECTION OF DIRECTORS
General
Information
Our board of directors is divided into three classes and
currently consists of three Class I directors, C. Keith
Hartley, Hans Mueller, Ph.D. and William S. Reardon,
C.P.A., two Class II directors, Robert W. Karr, M.D.
and James B. Wyngaarden, M.D., and three Class III
directors, Sudhir Agrawal, D. Phil., Youssef El Zein and Alison
Taunton-Rigby, Ph.D. The terms of the three classes are
staggered so that one class is elected each year. Members of
each class are elected for three-year terms. The Class I,
Class II and Class III directors were elected to serve
until the annual meeting of stockholders to be held in 2008,
2009 and 2010, respectively, and until their respective
successors are elected and qualified.
Our board of directors, on the recommendation of our nominating
and corporate governance committee, has nominated
Messrs. Hartley and Reardon and Dr. Mueller for
election as Class I directors. The persons named in the
enclosed proxy card will vote to elect Messrs. Hartley and
Reardon and Dr. Mueller as Class I directors unless
you withhold authority to vote for the election of any or all
nominees by marking the proxy to that effect. The proxy card may
not be voted for more than three directors. Each Class I
director will be elected to hold office until the 2011 annual
meeting of stockholders and until his successor is elected and
qualified. Each of the nominees is presently a director, and
each has indicated a willingness to serve as a director, if
elected. If a nominee becomes unable or unwilling to serve,
however, the persons acting under the proxy may vote for
substitute nominees selected by the board of directors.
Information
about our Directors
Set forth below are the names of each of the nominees for
election as Class I directors, each Class II director
and each Class III director, the year in which each first
became a director, their ages as of March 31, 2008, their
positions and offices with our company, their principal
occupations and business experience during at least the past
five years and the names of other public companies for which
they serve as a director.
Our board of directors recommends that you vote FOR the
election of C. Keith Hartley, Hans Mueller and William S.
Reardon as Class I directors.
Nominees
for Class I Directors Terms to Expire in
2011
|
|
C. Keith
Hartley |
Director
since 2000 |
Mr. Hartley, age 65, has been President of Hartley
Capital Advisors, a financial consulting firm, since June 2000.
Mr. Hartley was Managing Partner of Forum Capital Markets
LLC, an investment banking firm, from August 1995 to May 2000.
Mr. Hartley also serves as a director of Universal Display
Corporation, a developer of flat panel displays.
|
|
Hans
Mueller, Ph.D. |
Director since 2007 |
Dr. Mueller, age 67, most recently served as Senior
Vice President of Global Business Development at Wyeth
Pharmaceuticals, a pharmaceutical company, from 1993 to 2004.
Upon his retirement in 2004, Dr. Mueller began consulting
for a number of private life science companies. From 1985 to
1993, Dr. Mueller served as Executive Vice President,
President and Chief Executive Officer of Nova Pharmaceutical
Corporation (now part of Scios, Inc.), a drug research and
development company. Previously, he held roles with increasing
levels of responsibility at Sandoz, now part of Novartis AG, a
pharmaceutical company, in the areas of research, regulatory
affairs, manufacturing, systems development, new product
planning, licensing and business development.
|
|
William
S. Reardon, C.P.A. |
Director
since 2002 |
Mr. Reardon, age 61, was an audit partner at
PricewaterhouseCoopers LLP, where he led the Life Science
Industry Practice for New England and the Eastern United States
from 1986 until his retirement from the firm in July 2002.
Mr. Reardon served on the Board of the Emerging Companies
Section of the Biotechnology Industry Organization from June
1998 to June 2000 and the board of directors of the
Massachusetts Biotechnology Council
9
from April 2000 to April 2002. He also serves as a director of
Oscient Pharmaceuticals Corporation (formerly Genome
Therapeutics Corp.), a pharmaceutical company, and Synta
Pharmaceuticals, Inc., a biopharmaceutical company.
Continuing
Members of the Board of Directors
Class II
Directors Terms to Expire in 2009
|
|
Robert W.
Karr, M.D. |
Director
since 2005 |
Dr. Karr, age 59, is an independent consultant to
biotechnology companies. Dr. Karr served as our President
from December 2005 until December 2007. Prior to joining us,
Dr. Karr was an independent consultant and, from June 2000
through December 2004, Dr. Karr was a senior executive for
Global Research & Development for Pfizer, Inc., a
pharmaceutical company, where he served as Senior Vice
President, Strategic Management from 2003 to 2004 and Vice
President of Strategic Management from 2000 to 2003. Prior to
its merger with Pfizer, Dr. Karr served as Vice President,
Research & Development Strategy for Warner-Lambert
Company, a pharmaceutical company. He also serves on the board
of directors of GTx, Inc., a biotechnology company.
|
|
James B.
Wyngaarden, M.D. |
Director
since 1990 |
Dr. Wyngaarden, age 83, has been Chairman of our board
of directors since February 2000 and was Vice Chairman from
February 1997 to February 2000. Dr. Wyngaarden co-founded
the Washington Advisory Group LLC, a consulting firm, in 1996
and remained a principal until January 2002. He was Senior
Associate Dean, International Affairs at the University of
Pennsylvania Medical School from 1995 to 1997.
Dr. Wyngaarden was Foreign Secretary of the National
Academy of Sciences and the Institute of Medicine from 1990 to
1994. He was Director of the Human Genome Organization from 1990
to 1991 and a council member from 1990 to 1993.
Dr. Wyngaarden was Director of the National Institutes of
Health from 1982 to 1989, and Associate Director for Life
Sciences, Office of Science and Technology Policy in the
Executive Office of the President, the White House, from 1989 to
1990. He is also a member of the board of directors of Genaera
Corporation, a biopharmaceutical company.
Class III
Directors Terms to Expire in 2010
|
|
Sudhir
Agrawal, D. Phil. |
Director
since 1990 |
Dr. Agrawal, age 54, is our Chief Executive Officer
and Chief Scientific Officer. He joined us in 1990 and has
served as our Chief Scientific Officer since January 1993, our
Senior Vice President of Discovery since March 1994, our
President from February 2000 to October 2005, a director since
March 1993 and our Chief Executive Officer since August 2004.
Prior to his appointment as Chief Scientific Officer, he served
as our Principal Research Scientist from February 1990 to
January 1993 and as our Vice President of Discovery from
December 1991 to January 1993. He served as Acting Chief
Executive Officer from February 2000 until September 2001. Prior
to joining us, Dr. Agrawal served as a Foundation Scholar
at the Worcester Foundation for Experimental Biology from 1987
through 1991 and at the Medical Research Councils
Laboratory of Molecular Biology in Cambridge, England from 1985
to 1986.
|
|
Youssef
El Zein |
Director
since 1992 |
Mr. El Zein, age 59, has been Vice Chairman of our
board of directors since February 1997. Mr. El Zein has
been managing partner of Pillar Investment Limited, a private
investment firm, since 1991. Mr. El Zein is also Director
of Optima Life Sciences Limited, an investment company that owns
shares in Idera. Mr. El Zein is also a managing partner of
Search Dynamics Corporation and Optima Strategic Corporation,
two special purpose vehicles founded by Pillar that invest in
early stage technology-based companies.
|
|
Alison
Taunton-Rigby, Ph.D. |
Director
since 2004 |
Dr. Taunton-Rigby, age 63, has been Chief Executive
Officer and Director of RiboNovix, Inc., a privately held
development stage biotechnology company she co-founded, since
February 2003. Prior to founding RiboNovix,
Dr. Taunton-Rigby was Chief Executive Officer of CMT, Inc.,
a healthcare technology company, from 2001 to 2003. Previously,
Dr. Taunton-Rigby was President and Chief Executive Officer
of Aquila Biopharmaceuticals,
10
Inc., a life sciences company, President and Chief Executive
Officer of Cambridge Biotech Corporation, a life sciences
company, and President and Chief Executive Officer of Mitotix,
Inc., a biopharmaceutical company, Senior Vice President,
Biotherapeutics at Genzyme Corporation, and held senior
management positions at Biogen, Inc. (now Biogen Idec), Vivotech
Inc., Collaborative Research, Inc. and Arthur D. Little.
Dr. Taunton-Rigby is also a director of Healthways, Inc.,
Abt Associates, and Riversource Funds.
Director
Compensation
We use a combination of cash and equity-based compensation to
attract and retain candidates to serve on our board of
directors. We do not compensate directors who are also our
employees for their service on our board of directors. As a
result, Dr. Agrawal, our chief executive officer and chief
scientific officer does not receive any compensation for his
service on our board of directors. Additionally, Dr. Karr,
our president until December 2007, did not receive any
compensation for his service on our board of directors in 2007.
We periodically review our cash and equity-based compensation
for non-employee directors.
As part of that process, in 2007, the compensation committee
engaged Radford Surveys + Consulting, a compensation consultant,
to assist in a review of the compensation program for
non-employee directors. Radford Surveys + Consulting reviewed
trends in director compensation with respect to both cash fees
and equity and compared our program to the compensation programs
of comparable life sciences companies. As a result of its review
of the compensation program, in December 2007, the compensation
committee recommended, and our board of directors approved,
changes to the director compensation program, effective as of
January 2008.
2007 Director
Compensation
Cash
Fees
We pay our non-employee directors annual retainers in cash. For
2007, the chairman of our board received an annual retainer of
$60,000, which was paid in monthly installments, and the
chairman of our audit committee received an annual retainer of
$15,000, which was paid in quarterly installments. All other
non-employee directors received an annual retainer of $10,000,
which was paid in quarterly installments.
During 2007, we also paid members of the board of directors who
were not employees $1,250 for personal attendance and $500 for
telephonic attendance at board of directors and committee
meetings. No additional compensation was paid for committee
meetings held in conjunction with board meetings.
Directors were also reimbursed for their expenses incurred in
connection with their attendance at board of directors and
committee meetings.
We had a policy under which non-employee directors were entitled
to elect to receive meeting fees in the form of common stock in
lieu of cash. During 2007, the number of shares of common stock
issued to directors electing to receive common stock under this
program was determined on a quarterly basis by dividing the fees
for meetings attended in the quarter to be issued in common
stock by 85% of the closing price of our common stock on the
first business day of the quarter following the quarter in which
the fees were earned. In connection with this policy, directors
elected to receive common stock in lieu of cash for board of
director and committee meeting fees earned during 2007 as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
Cash Fees
|
|
Value of Stock
|
Director
|
|
Common Stock
|
|
Foregone
|
|
Received(1)
|
|
William S. Reardon
|
|
|
1,291
|
|
|
$
|
9,500
|
|
|
$
|
11,182
|
|
James B. Wyngaarden, M.D.
|
|
|
1,456
|
|
|
$
|
11,250
|
|
|
$
|
13,233
|
|
|
|
|
(1) |
|
Equals the number of shares of common stock issued to the
director times the closing price of our common stock on the date
the shares were issued. |
Equity
Compensation
During 2007, we granted each non-employee director options to
purchase 3,125 shares of our common stock upon his or her
initial election to the board of directors and options to
purchase 1,250 shares of common stock on the
11
first day of each calendar quarter. We granted initial options
and options to purchase 469 shares of the quarterly awards
under the 1995 Director Stock Option Plan. We made the
remainder of the quarterly awards under our 1997 Stock Incentive
Plan or our 2005 Stock Incentive Plan. All of these options were
granted with exercise prices equal to the fair value of our
common stock, which is the closing price of our common stock, on
the date of grant and vest in full on the first anniversary of
the date of grant, provided that the option holder continues to
serve as a director on such date. These options will become
immediately exercisable in full if there is a change in control
of our company.
The following table sets forth a summary of the compensation we
paid to our non-employee directors for service on our board in
2007.
DIRECTOR
COMPENSATION TABLE FOR 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or Paid
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Youssef El Zein
|
|
$
|
17,500
|
|
|
$
|
18,502
|
|
|
|
|
|
|
$
|
36,002
|
|
James B. Wyngaarden, M.D.
|
|
$
|
73,750
|
(3)
|
|
$
|
18,502
|
|
|
$
|
1,983
|
|
|
$
|
94,235
|
|
C. Keith Hartley
|
|
$
|
24,250
|
|
|
$
|
18,502
|
|
|
|
|
|
|
$
|
42,752
|
|
Hans Mueller, Ph.D.(4)
|
|
$
|
7,250
|
|
|
$
|
5,890
|
|
|
|
|
|
|
$
|
13,140
|
|
William S. Reardon
|
|
$
|
31,500
|
(3)
|
|
$
|
18,502
|
|
|
$
|
1,682
|
|
|
$
|
51,684
|
|
Alison Taunton-Rigby, Ph.D.
|
|
$
|
26,000
|
|
|
$
|
18,502
|
|
|
|
|
|
|
$
|
44,502
|
|
|
|
|
(1) |
|
The amount shown represents the amount of compensation cost that
we recognized for financial statement reporting purposes for
fiscal 2007 for all options held by each of the non-employee
directors as computed in accordance with SFAS No. 123R
utilizing the modified prospective transition method. In
accordance with SFAS No. 123R, the fair value of each
stock option is determined on the date of grant using the
Black-Scholes option pricing model. This value is then amortized
ratably over the vesting period. See Note 2(k) of the
financial statements in our annual report on
Form 10-K
for the year ended December 31, 2007 regarding assumptions
we made in determining the SFAS No. 123R value of
equity awards. The grant date fair value, computed in accordance
with SFAS No. 123R, of stock options granted to each of our
non-employee directors in 2007 was $22,876 except that in the
case of Dr. Mueller it was $22,643. As of December 31,
2007, our non-employee directors held options to purchase shares
of our common stock as follows: Mr. Hartley: 21,877;
Dr. Mueller: 4,375; Mr. Reardon: 20,627;
Dr. Taunton-Rigby: 17,813; Dr. Wyngaarden: 82,877;
Mr. El Zein: 20,502. |
|
(2) |
|
Represents the difference between the value of our common stock
received by the director pursuant to his election to forgo cash
meeting fees and the amount of the cash meeting fees foregone
with respect to such common stock. See Director
Compensation 2007 Director
Compensation Cash Fees above for further
information about the cash fees foregone. |
|
(3) |
|
Includes cash meeting fees foregone at the election of the
director of $11,250 in the case of Dr. Wyngaarden and
$9,500 in the case of Mr. Reardon. In lieu of such fees,
the director elected to receive shares of our common stock. |
|
(4) |
|
Dr. Mueller joined our board of directors in September 2007. |
2008 Director
Compensation
Under our new director compensation program, effective as of
January 1, 2008, cash fees for our non-employee directors
are as follows:
|
|
|
|
|
|
|
|
|
|
|
Member
|
|
|
Chairman
|
|
|
|
Annual Fee
|
|
|
Annual Fee
|
|
|
Board of Directors
|
|
$
|
35,000
|
|
|
$
|
60,000
|
|
Audit Committee
|
|
$
|
7,000
|
|
|
$
|
15,000
|
|
Compensation Committee
|
|
$
|
5,000
|
|
|
$
|
10,000
|
|
Nomination and Corporate Governance Committee
|
|
$
|
3,500
|
|
|
$
|
7,500
|
|
12
These fees are payable quarterly in arrears. As part of the
changes to our director compensation program, our board of
directors eliminated meeting fees. Additionally, in conjunction
with our new director compensation program, our board adopted a
new stock-for-fees policy. Under this policy, directors have the
right to elect to receive common stock in lieu of cash fees. The
number of shares to be issued to participating directors is
determined on a quarterly basis by dividing the cash fees to be
issued in common stock by the fair market value of our common
stock, which is the closing price of our common stock, on the
first business day of the quarter following the quarter in which
the fees were earned.
Under our new director compensation program, upon their initial
election to the board of directors, new non-employee directors
will receive an option grant for 16,000 shares and all
non-employee directors receive an annual option grant for
10,000 shares. The annual grants are made on the date of
the annual meeting of stockholders. These options will vest
quarterly over three years from the date of grant, subject to
continued service as a director and will be granted under our
2005 Stock Incentive Plan or, if it is approved by our
stockholders as described below under proposal three, our 2008
Stock Incentive Plan. These options will be granted with
exercise prices equal to the fair market value of our common
stock, which is the closing price of our common stock, on the
date of grant and become immediately exercisable in full if
there is a change in control of our company.
Effective January 2, 2008, our board of directors also
granted all currently serving non-employee directors an option
to purchase 16,000 shares of our common stock at an
exercise price equal to the closing price of our common stock on
January 2, 2008, which was $13.28. These options vest
quarterly over three years from the date of grant, subject to
continued service as a director and become immediately
exercisable in full if there is a change in control of our
company.
PROPOSAL 2
INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
In March 2008, our board of directors voted to recommend to the
stockholders that they approve an amendment to our Restated
Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 40,000,000 shares to
70,000,000 shares. A copy of the Certificate of Amendment
to the Restated Certificate of Incorporation is attached to this
proxy statement as Exhibit A. As of March 31,
2008, we had authorized, outstanding or reserved for issuance
the following shares of Common Stock:
|
|
|
|
|
22,270,797 shares of Common Stock outstanding;
|
|
|
|
1,926 shares Common Stock reserved for issuance upon
conversion of our Series A Convertible Preferred Stock;
|
|
|
|
855,901 shares of Common Stock reserved for issuance upon
exercise of outstanding warrants;
|
|
|
|
3,212,239 shares of Common Stock reserved for issuance upon
exercise of outstanding stock options; and
|
|
|
|
884,303 shares of Common Stock reserved for future issuance
under our 2005 Stock Incentive Plan, our 1995 Directors
Option Plan and our 1995 Employee Stock Purchase Plan.
|
Our board of directors believes that the authorization of the
additional shares of Common Stock is necessary to provide us
with the flexibility to issue shares of Common Stock in
connection with possible future financings, joint ventures,
acquisitions, stock incentive plans and other general corporate
purposes. For instance, in this proxy statement, we are seeking
stockholder approval for our 2008 Stock Incentive Plan and an
increase to the number of shares of Common Stock authorized for
issuance under our 1995 Employee Stock Purchase Plan.
We do not currently have any plans, understandings,
arrangements, commitments or agreements, written or oral, for
the issuance of the additional shares of Common Stock that would
be authorized if this proposal is approved. If this proposal to
amend our Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock is adopted by the
stockholders, our board of directors will have authority to
issue these additional shares of Common Stock without the
necessity of further stockholder action. Holders of the Common
Stock have no preemptive rights with respect to any shares that
may be issued in the future.
13
If this proposal is approved, we intend to file an amendment to
the Restated Certificate of Incorporation promptly following the
annual meeting reflecting the approved increase in the number of
authorized shares of Common Stock.
Under Delaware law, stockholders are not entitled to
dissenters rights with respect to the proposed amendment
to our Restated Certificate of Incorporation.
Our board of directors believes that approval of the
amendment to the Restated Certificate of Incorporation is in the
best interests of our company and our stockholders and therefore
recommends that stockholders vote FOR the approval of the
amendment.
PROPOSAL 3
APPROVAL OF 2008 STOCK INCENTIVE PLAN
On March 18, 2008, our board of directors adopted, subject
to stockholder approval, the 2008 Stock Incentive Plan, or the
2008 Plan. Up to 3,700,000 shares of Common Stock (subject
to adjustment in the event of stock splits and other similar
events) may be issued pursuant to awards granted under the 2008
Plan.
The 2008 Plan is intended to replace our 2005 Stock Incentive
Plan (the 2005 Plan). As of March 31, 2008,
options to purchase 1,683,240 shares of Common Stock were
outstanding under the 2005 Plan and an additional
804,407 shares were reserved for future stock awards. If
the 2008 Plan is approved, all then outstanding options under
the 2005 Plan will remain in effect, but no additional option
grants may be made under the 2005 Plan. As a result, if our
stockholders approve the 2008 Stock Incentive Plan, we will have
a total of 3,700,000 shares of Common Stock available for
future issuance under equity compensation awards.
The board of directors believes that our future success depends,
in large part, upon our ability to maintain a competitive
position in attracting, retaining and motivating key personnel.
Accordingly, the board of directors believes adoption of the
2008 Plan is in the best interests of our company and our
stockholders and recommends that stockholders vote FOR the
approval of the 2008 Plan.
Description
of the 2008 Plan
The following is a brief summary of the 2008 Plan, a copy of
which is attached as Exhibit B to this Proxy
Statement.
Types of
Awards
The 2008 Plan provides for the grant of incentive stock options
intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the Code),
non-statutory stock options, stock appreciation rights,
restricted stock, restricted stock units and other stock-based
awards as described below, which are collectively referred to as
awards.
Incentive Stock Options and Non-statutory Stock
Options. Optionees receive the right to purchase
a specified number of shares of Common Stock at a specified
option price and subject to such other terms and conditions as
are specified in connection with the option grant. Options may
be granted at an exercise price equal to or greater than the
fair market value of the Common Stock on the date of grant.
Under present law, however, incentive stock options and options
intended to qualify as performance-based compensation under
Section 162(m) of the Code may not be granted at an
exercise price less than 100% of the fair market value of the
Common Stock on the date of grant (or less than 110% of the fair
market value in the case of incentive stock options granted to
optionees holding more than 10% of the voting power of our
company). Options may not be granted for a term in excess of ten
years. The 2008 Plan permits the following forms of payment of
the exercise price of options:
|
|
|
|
|
payment by cash, check, wire transfer or in connection with a
cashless exercise through a broker,
|
|
|
|
subject to certain conditions, surrender to us of shares of
Common Stock,
|
|
|
|
subject to certain conditions, delivery to us of a promissory
note,
|
|
|
|
any other lawful means, or
|
14
|
|
|
|
|
any combination of these forms of payment.
|
Stock Appreciation Rights. A Stock
Appreciation Right, or SAR, is an award entitling the holder,
upon exercise, to receive an amount in Common Stock or cash or a
combination thereof determined by reference to appreciation,
from and after the date of grant, in the fair market value of a
share of Common Stock. SARs may be granted independently or in
tandem with an option.
Restricted Stock Awards. Restricted Stock
awards entitle recipients to acquire shares of Common Stock,
subject to our right to repurchase all or part of such shares
from the recipient in the event that the conditions specified in
the applicable award are not satisfied prior to the end of the
applicable restriction period established for such award.
Restricted Stock Unit Awards. Restricted Stock
Unit awards entitle the recipient to receive shares of Common
Stock to be delivered at the time such shares vest pursuant to
the terms and conditions established by the board of directors.
Other Stock-Based Awards. Under the 2008 Plan,
the board of directors has the right to grant other awards based
upon the Common Stock having such terms and conditions as the
board of directors may determine, including the grant of shares
based upon certain conditions, the grant of awards that are
valued in whole or in part by reference to, or otherwise based
on, shares of Common Stock, and the grant of awards entitling
recipients to receive shares of Common Stock to be delivered in
the future.
Performance Conditions. The compensation
committee may determine, at the time of grant, that a Restricted
Stock award, Restricted Stock Unit award or Other Stock-Based
award granted to an officer will vest solely upon the
achievement of specified performance criteria designed to
qualify for deduction under Section 162(m) of the Code. The
performance criteria for each such award will be based on one or
more of the following measures: (a) earnings per share,
(b) return on average equity or average assets with respect
to a pre-determined peer group, (c) earnings,
(d) earnings growth, (e) revenues, (f) expenses,
(g) stock price, (h) market share, (i) return on
sales, assets, equity or investment, (j) regulatory
compliance, (k) achievement of balance sheet or income
statement objectives, (l) total shareholder return,
(m) net operating profit after tax, (n) pre-tax or
after-tax income, (o) cash flow, (p) achievement of
research, development, clinical or regulatory milestones,
(q) product sales and (r) business development
activities, and may be absolute in their terms or measured
against or in relationship to other companies comparably,
similarly or otherwise situated. These performance measures may
be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or
otherwise situated. Such performance goals may be adjusted to
exclude any one or more of (i) extraordinary items,
(ii) gains or losses on the dispositions of discontinued
operations, (iii) the cumulative effects of changes in
accounting principles, (iv) the write-down of any asset,
and (v) charges for restructuring and rationalization
programs. Such performance goals: (i) may vary by
Participant and may be different for different awards;
(ii) may be particular to a Participant or the department,
branch, line of business, subsidiary or other unit in which the
Participant works and may cover such period as may be specified
by the compensation committee; and (iii) will be set by the
compensation committee within the time period prescribed by, and
will otherwise comply with the requirements of,
Section 162(m).
We believe that disclosure of any further details concerning the
performance measures for any particular year may be confidential
commercial or business information, the disclosure of which
would adversely affect our company.
Transferability
of Awards
Except as the board of directors may otherwise determine or
provide in an award, awards may not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to
whom they are granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution or,
other than in the case of an incentive stock option, pursuant to
a qualified domestic relations order. During the life of the
Participant, awards are exercisable only by the Participant.
15
Eligibility
to Receive Awards
Employees, officers, directors, consultants and advisors of our
company and its subsidiaries are eligible to be granted awards
under the 2008 Plan. Under present law, however, incentive stock
options may only be granted to our employees and employees of
our subsidiaries.
The maximum number of shares with respect to which awards may be
granted to any participant under the 2008 Plan may not exceed
500,000 shares per calendar year. For purposes of this
limit, the combination of an option in tandem with SAR is
treated as a single award.
Share
Counting
An aggregate of 3,700,000 shares are reserved for issuance
under the 2008 Plan (subject to adjustments for stock splits and
the like). Any award that is not a full-value award
is counted against the aggregate share limit as one share for
each share of Common Stock subject to such award and any award
that is a full-value award is be counted against the
aggregate share limit as 1.57 shares for each one share of
Common Stock subject to such full-value award. Full-value
award means any restricted stock award or other
stock-based award with a per share price or per unit purchase
price lower than 100% of fair market value on the date of grant.
For purposes of counting the number of shares available for the
grant of awards under the 2008 Plan:
|
|
|
|
|
all shares of Common Stock covered by independent SARs will be
counted against the number of shares available for the grant of
awards, except with respect to independent SARs that may be
settled in cash only;
|
|
|
|
if any award (i) expires or is terminated, surrendered or
canceled without having been fully exercised or is forfeited in
whole or in part (including as the result of shares of Common
Stock subject to the award being repurchased by us at the
original issuance price pursuant to a contractual repurchase
right) or (ii) results in any shares of Common Stock not
being issued (including as a result of an independent SAR that
was settleable either in cash or in stock actually being settled
in cash), the unused shares of Common Stock covered by the award
will again be available for the future grant of awards, except
that share counting with respect to incentive stock options will
be subject to any limitations under the Code and with respect to
independent SARs the full number of shares subject to any
stock-settled SAR will be counted against the shares available
under the 2008 Plan regardless of the number of shares actually
used to settle the SAR upon exercise;
|
|
|
|
shares of Common Stock tendered to us by a participant in the
2008 Plan to purchase shares of Common Stock upon the exercise
of an award or to satisfy tax withholding obligations, including
shares retained from the award creating the tax obligation, will
not be added back to the number of shares available for the
future grant of awards;
|
|
|
|
to the extent a share that was subject to an award that counted
as one share is returned each applicable share reserve will be
credited with one share and to the extent that a share that was
subject to an award that counts as 1.57 shares is returned
to the 2008 Plan, each applicable share reserve will be credited
with 1.57 shares; and
|
|
|
|
shares of Common Stock repurchased by us on the open market
using the proceeds from the exercise of an award will not
increase the number of shares available for future award grants.
|
Plan
Benefits
As of March 31, 2008, approximately 45 persons were
eligible to receive awards under the 2008 Plan, including our
four executive officers and seven non-employee directors. The
granting of awards under the 2008 Plan is discretionary, and we
cannot now determine the number or type of awards to be granted
in the future to any particular person or group.
On March 31, 2008, the last reported sale price of our
Common Stock on the NASDAQ Global Market was $10.01.
16
Administration
The 2008 Plan is administered by the board of directors. The
board of directors has the authority to adopt, amend and repeal
the administrative rules, guidelines and practices relating to
the 2008 Plan and to interpret the provisions of the 2008 Plan.
Pursuant to the terms of the 2008 Plan, the board of directors
may delegate authority under the 2008 Plan to one or more
committees or subcommittees of the board of directors. The board
of directors has authorized the compensation committee to
administer certain aspects of the 2008 Plan, including the
granting of options to executive officers.
Subject to any applicable limitations contained in the 2008
Plan, the board of directors, the compensation committee, or any
other committee to whom the board of directors delegates
authority, as the case may be, selects the recipients of awards
and determines
|
|
|
|
|
the number of shares of Common Stock covered by options and the
dates upon which such options become exercisable,
|
|
|
|
the exercise price of options,
|
|
|
|
the duration of options (which may not exceed
10 years), and
|
|
|
|
the number of shares of Common Stock subject to any SAR,
restricted stock award, restricted stock unit award or other
stock-based awards and the terms and conditions of such awards,
including conditions for repurchase, issue price and repurchase
price.
|
The board of directors is required to make appropriate
adjustments in connection with the 2008 Plan and any outstanding
awards to reflect stock splits, stock dividends,
recapitalizations, spin-offs and other similar changes in
capitalization. The 2008 Plan also contains provisions
addressing the consequences of any reorganization event, which
is defined as:
|
|
|
|
|
any merger or consolidation of our company with or into another
entity as a result of which all of our Common Stock is converted
into or exchanged for the right to receive cash, securities or
other property, or is cancelled; or
|
|
|
|
any exchange of all of our Common Stock for cash, securities or
other property pursuant to a share exchange transaction; or
|
|
|
|
any liquidation or dissolution of our company.
|
In connection with a reorganization event, the board of
directors or the compensation committee will take any one or
more of the following actions as to all or any outstanding
awards on such terms as the board or the committee determines:
|
|
|
|
|
provide that awards will be assumed, or substantially equivalent
awards will be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof);
|
|
|
|
upon written notice, provide that all unexercised options or
other unexercised awards will terminate immediately prior to the
consummation of such reorganization event unless exercised
within a specified period following the date of such notice;
|
|
|
|
provide that outstanding awards will become exercisable,
realizable or deliverable, or restrictions applicable to an
award will lapse, in whole or in part prior to or upon such
reorganization event;
|
|
|
|
in the event of a reorganization event under the terms of which
holders of Common Stock will receive upon consummation thereof a
cash payment for each share surrendered in the reorganization
event (the acquisition price), make or provide for a
cash payment to an award holder equal to (A) the
acquisition price times the number of shares of Common Stock
subject to the holders awards (to the extent the exercise
price does not exceed the acquisition price) minus (B) the
aggregate exercise price of all the holders outstanding
awards, in exchange for the termination of such awards;
|
|
|
|
provide that, in connection with a liquidation or dissolution of
our company, awards will convert into the right to receive
liquidation proceeds (if applicable, net of the exercise price
thereof); and
|
17
|
|
|
|
|
any combination of the foregoing.
|
The board of directors or the compensation committee may at any
time provide that any award will become immediately exercisable
in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the
case may be.
If any award expires or is terminated, surrendered, canceled or
forfeited, the unused shares of Common Stock covered by such
award will again be available for grant under the 2008 Plan,
subject, however, in the case of incentive stock options, to any
limitations under the Code.
Substitute
Options
In connection with a merger or consolidation of an entity with
our Company or the acquisition by us of property or stock of an
entity, the board of directors may grant options in substitution
for any options or other stock or stock-based awards granted by
such entity or an affiliate thereof. Substitute options may be
granted on such terms as the board of directors deems
appropriate in the circumstances, notwithstanding any
limitations on options contained in the 2008 Plan. Substitute
options will not count against the 2008 Plans overall
share limit, except as may be required by the Code.
No
Repricings without Stockholder Approval
Other than in connection with a stock split or similar change in
the number of outstanding shares, the 2008 Plan prohibits the
repricing of stock options and stock appreciation rights without
the approval of stockholders.
Amendment
or Termination
No award may be made under the 2008 Plan after March 17,
2018 but awards previously granted may extend beyond that date.
The board of directors may at any time amend, suspend or
terminate the 2008 Plan; provided that, to the extent determined
by the Board, no amendment requiring stockholder approval under
any applicable legal, regulatory or listing requirement will
become effective until such stockholder approval is obtained. No
award will be made that is conditioned upon stockholder approval
of any amendment to the Plan.
If Stockholders do not approve the adoption of the 2008 Plan,
the 2008 Plan will not go into effect, and we will not grant any
awards under the 2008 Plan. In such event, the board of
directors will consider whether to adopt alternative
arrangements based on its assessment of our needs.
Federal
Income Tax Consequences
The following is a general summary of the United States federal
income tax consequences that generally will arise with respect
to awards granted under the 2008 Plan. This summary is based on
the federal tax laws in effect as of the date of this proxy
statement. In addition, this summary assumes that all awards are
exempt from, or comply with, the rules under Section 409A
of the Code regarding nonqualified deferred compensation. The
plan provides that no award will provide for deferral of
compensation that does not comply with Section 409A of the
Code, unless the board of directors, at the time of grant,
specifically provides that the award is not intended to comply
with Section 409A. Changes to these laws could alter the
tax consequences described below.
Incentive
Stock Options
A participant will not have income upon the grant of an
incentive stock option. Also, except as described below, a
participant will not have income upon exercise of an incentive
stock option if the participant has been employed by us or our
corporate parent or 50% or more-owned corporate subsidiary at
all times beginning with the option grant date and ending three
months before the date the participant exercises the option. If
the participant has not been so employed during that time, then
the participant will be taxed as described below under
Non-statutory Stock Options. The exercise of an
incentive stock option may subject the participant to the
alternative minimum tax.
A participant will have income upon the sale of the stock
acquired under an incentive stock option at a profit (if sales
proceeds exceed the exercise price). The type of income will
depend on when the participant sells the stock. If a participant
sells the stock more than two years after the option was granted
and more than one year after the option was exercised, then all
of the profit will be long-term capital gain. If a participant
sells the stock prior to satisfying these waiting periods, then
the participant will have engaged in a disqualifying disposition
and a portion of the profit
18
will be ordinary income and a portion may be capital gain. This
capital gain will be long-term if the participant has held the
stock for more than one year and otherwise will be short-term.
If a participant sells the stock at a loss (sales proceeds are
less than the exercise price), then the loss will be a capital
loss. This capital loss will be long-term if the participant
held the stock for more than one year and otherwise will be
short-term.
Non-statutory
Stock Options
A participant will not have income upon the grant of a
non-statutory stock option. A participant will have compensation
income upon the exercise of a non-statutory stock option equal
to the value of the stock on the day the participant exercised
the option less the exercise price. Upon sale of the stock, the
participant will have capital gain or loss equal to the
difference between the sales proceeds and the value of the stock
on the day the option was exercised. This capital gain or loss
will be long-term if the participant has held the stock for more
than one year and otherwise will be short-term.
Stock
Appreciation Rights
A participant will not have income upon the grant of a stock
appreciation right. A participant generally will recognize
compensation income upon the exercise of an SAR equal to the
amount of the cash and the fair market value of any stock
received. Upon the sale of the stock, the participant will have
capital gain or loss equal to the difference between the sales
proceeds and the value of the stock on the day the SAR was
exercised. This capital gain or loss will be long-term if the
participant held the stock for more than one year and otherwise
will be short-term.
Restricted
Stock Awards
A participant will not have income upon the grant of restricted
stock unless an election under Section 83(b) of the Code is
made within 30 days of the date of grant. If a timely 83(b)
election is made, then a participant will have compensation
income equal to the value of the stock less the purchase price.
When the stock is sold, the participant will have capital gain
or loss equal to the difference between the sales proceeds and
the value of the stock on the date of grant. If the participant
does not make an 83(b) election, then when the stock vests the
participant will have compensation income equal to the value of
the stock on the vesting date less the purchase price. When the
stock is sold, the participant will have capital gain or loss
equal to the sales proceeds less the value of the stock on the
vesting date. Any capital gain or loss will be long-term if the
participant held the stock for more than one year and otherwise
will be short-term.
Restricted
Stock Units
A participant will not have income upon the grant of a
restricted stock unit. A participant is not permitted to make a
Section 83(b) election with respect to a restricted stock
unit award. When the restricted stock unit vests, the
participant will have income on the vesting date in an amount
equal to the fair market value of the stock on the vesting date
less the purchase price, if any. When the stock is sold, the
participant will have capital gain or loss equal to the sales
proceeds less the value of the stock on the vesting date. Any
capital gain or loss will be long-term if the participant held
the stock for more than one year and otherwise will be
short-term.
Other
Stock-Based Awards
The tax consequences associated with any other stock-based award
granted under the 2008 Plan will vary depending on the specific
terms of such award. Among the relevant factors are whether or
not the award has a readily ascertainable fair market value,
whether or not the award is subject to forfeiture provisions or
restrictions on transfer, the nature of the property to be
received by the participant under the award and the
participants holding period and tax basis for the award or
underlying Common Stock.
Tax
Consequences to Us
There will be no tax consequences to our company except that we
will be entitled to a deduction when a participant has
compensation income. Any such deduction will be subject to the
limitations of Section 162(m) of the Code.
19
PROPOSAL 4
INCREASE IN THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE UNDER
THE 1995 EMPLOYEE STOCK PURCHASE PLAN
On March 18, 2008, our board of directors voted to amend
the 1995 Employee Stock Purchase Plan, which we refer to as the
ESPP, to increase the number of shares of Common Stock available
for issuance from 125,000 shares to 250,000 shares,
subject to stockholder approval. The ESPP allows our employees
to purchase shares of our Common Stock at a discount from market
price through payroll deductions. Currently, we make four
consecutive offerings each year.
The ESPP provides an important employee benefit which helps us
attract and retain employees and encourage their participation
in and commitment to our business and financial success. As of
March 31, 2008, only 53,735 shares of the
125,000 shares previously authorized by stockholders for
issuance under the ESPP remained available for issuance.
Approval of this increase in shares authorized for issuance
under the plan is needed to allow us to continue to offer to our
employees the opportunity to purchase shares of our Common Stock
under the ESPP. Based on our current stock price and the number
of current participants in the ESPP, we anticipate that this
increase will provide sufficient shares for us to offer
purchases under the ESPP for the foreseeable future.
The ESPP is intended to qualify as an employee stock purchase
plan under Section 423 of the Internal Revenue Code of
1986. If the plan is qualified under Section 423, the
employees who participate in the plan may enjoy certain tax
advantages, as described below. Stockholder approval is required
for the plan to be qualified under Section 423.
The board of directors believes that our future success depends,
in large part, upon our ability to maintain a competitive
position in attracting, retaining and motivating key personnel.
Accordingly, our board of directors believes that increasing
the number of shares available for issuance pursuant to the ESPP
is in the best interests of us and our stockholders and
recommends a vote FOR the increase in the number of shares
available for issuance pursuant to the ESPP.
Description
of the ESPP
The following is a brief summary of the ESPP.
Administration
Our board of directors or a committee appointed by our board of
directors administers the ESPP and is authorized to make rules
for the administration and interpretation of the plan.
Eligibility
All of our employees and employees of any subsidiary designated
by the board of directors or the committee are eligible to
participate in the ESPP if they are regularly employed by us or
the designated subsidiary for more than twenty hours a week and
for more than five months in a calendar year, they have been
employed by us or a designated subsidiary for a least three
months prior to enrolling in the plan and they are employees of
us or a designated subsidiary on the first day of the applicable
plan offering period. Any employee who, immediately after the
grant of an option under the plan, would own 5% or more of the
total combined voting power or value of our or any
subsidiarys stock, is not eligible to participate. As of
March 31, 2008, approximately 38 employees were
eligible to participate in the ESPP.
Offerings
We may make one or more offerings to employees to purchase our
Common Stock under the ESPP, as determined by the board of
directors. The Committee chosen by the board of directors has
determined that offerings will begin on the first trading day on
or after September 1, December 1, March 1 and
June 1, of each year, and that each such offering period
will end on the last trading day of November, February, May and
August. Our board of directors or the committee appointed by the
board of directors may, at its discretion, change the duration
of offering periods and the commencement date of offering
periods.
20
Purchase
Limitations
An employee may elect to have any multiple of 1% of the
employees base salary up to a maximum of 10% deducted for
the purpose of purchasing stock under the ESPP. An employee may
not be granted an option which permits his or her rights to
purchase our Common Stock under this plan and any other Idera
stock purchase plan to accrue at a rate which exceeds $25,000 of
the fair market value of the stock (determined at the time the
option is granted) for each calendar year in which the option is
outstanding at any time.
Purchase
Price
A participating employee may purchase the stock at 85% of the
last reported sale price of our Common Stock on either the day
the offering begins or ends, whichever is lower.
Amendment
and Termination
Our board of directors may at any time amend the plan in any
respect, except that (a) if the approval of our
stockholders is required under Section 423 of the Internal
Revenue Code or any other applicable law, regulation or stock
exchange rule, the amendment will not be effected without their
approval, and (b) in no event may any amendment be made
which would cause the ESPP to fail to comply with
Section 423 of the Internal Revenue Code.
Merger or
Consolidation
In the event that Idera merges or consolidates with another
company and our capital stockholders immediately prior to such
merger or consolidation continue to hold at least 80% of the
voting power of the capital stock of the surviving corporation,
at the end of the then current plan period each option holder
under the ESPP will be entitled to receive securities or
property of the surviving entity as if they were a Common
Stockholder at the time of such transaction. In the event that
such a merger or consolidation occurs and the holders of our
capital stock hold less than 80% of the surviving corporation,
the board of directors may elect to cancel all outstanding
options under the ESPP and either: a) refund all
contributed payments made by the holders or b) provide the
holders with the right to exercise such option as of a date no
less than ten days prior to such event. If the board of
directors does not chose to cancel the options, after the
effective date of such transaction each option holder shall be
entitled to receive securities of the surviving entity as if
they were a holder of Common Stock at the time of the
transaction.
Plan
Benefits
Directors who are not employees are not eligible to participate
in the ESPP. The table below shows the number of shares of
Common Stock purchased under the ESPP since its inception in
1995 by our Chief Executive Officer, each of our other named
executive officers listed in the Summary Compensation Table
under Executive Compensation below, all current
executive officers as a group and all employees as a group other
than current executive officers.
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
Purchased under
|
|
|
|
the ESPP
|
|
|
Sudhir Agrawal, D. Phil.
|
|
|
|
|
Louis L. Arcudi, III
|
|
|
|
|
Alice S. Bexon, MBChB
|
|
|
|
|
Timothy M. Sullivan Ph.D.
|
|
|
23,166
|
|
Robert W. Karr, M.D.(1)
|
|
|
|
|
Robert G. Andersen(2)
|
|
|
9,574
|
|
Donna A. Lopolito(3)
|
|
|
|
|
All current executive officers as a group (4 persons)
|
|
|
23,166
|
|
All employees as a group other than the current executive
officers as a group
|
|
|
48,099
|
|
|
|
|
(1) |
|
Dr. Karr served as our President until December 31,
2007. |
|
(2) |
|
Mr. Andersen served as our Chief Financial Officer until
July 31, 2007. |
|
(3) |
|
Ms. Lopolito served as our interim chief financial officer
on an interim, part-time basis from August 1, 2007 until
December 3, 2007. |
21
The benefits and amounts that may be received in the future by
persons eligible to participate in the ESPP are not currently
determinable.
Federal
Income Tax Consequences
The following generally summarizes the United States federal
income tax consequences that will arise with respect to
participation in the ESPP and with respect to the sale of Common
Stock acquired under the ESPP. This summary is based on the tax
laws in effect as of the date of this proxy statement. Changes
to these laws could alter the tax consequences described below.
Tax
Consequences to Participants
A participant will not have income upon enrolling in the ESPP or
upon purchasing Common Stock at the end of an offering.
A participant may have both compensation income and a capital
gain or loss upon the sale of Common Stock that was acquired
under the ESPP. The amount of each type of income and loss will
depend on when the participant sells the Common Stock.
If the participant sells the Common Stock more than two years
after the commencement of the offering during which the Common
Stock was purchased and more than one year after the date that
the participant purchased the Common Stock and if such sale is
made at a profit (the sales proceeds exceed the purchase price),
then the participant will have compensation income equal to the
lesser of:
|
|
|
|
|
15% of the value of the Common Stock on the day the offering
commenced; and
|
|
|
|
the participants profit.
|
Any profit in excess of the profit computed above and recognized
as compensation income will be long-term capital gain. If the
participant sells the Common Stock at a loss (if sales proceeds
are less than the purchase price) after satisfying these waiting
periods, then the loss will be a long-term capital loss.
If the participant sells the Common Stock prior to satisfying
these waiting periods, then he or she will have engaged in a
disqualifying disposition. Upon a disqualifying disposition, the
participant will have compensation income equal to the value of
the Common Stock on the day he or she purchased the Common Stock
less the purchase price. The participant also will have a
capital gain or loss equal to the difference between the sales
proceeds and the value of the Common Stock on the day he or she
purchased the Common Stock. This capital gain or loss will be
long-term if the participant has held the Common Stock for more
than one year and otherwise will be short-term.
Tax
Consequences to Us
There will be no tax consequences to us except that we will be
entitled to a deduction when a participant has compensation
income upon a disqualifying disposition. Any such deduction will
be subject to the limitations of Section 162(m) of the Code.
PROPOSAL 5
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of our board of directors has selected the
firm of Ernst & Young LLP as our independent
registered public accounting firm for the current fiscal year.
Ernst & Young LLP has served as our independent
auditors since 2002. Although stockholder approval of the audit
committees selection of Ernst & Young LLP is not
required by law, our board of directors believes that it is
advisable to give stockholders an opportunity to ratify this
selection. If this proposal is not approved at the annual
meeting, the audit committee of our Board of Directors may
reconsider its selection.
Representatives of Ernst & Young LLP are expected to
be present at the annual meeting. They will have the opportunity
to make a statement if they desire to do so and will also be
available to respond to appropriate questions from stockholders.
Our board of directors recommends that you vote FOR the
ratification of Ernst & Young LLP as our independent
registered public accounting firm for the current fiscal
year.
22
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
On February 29, 2008, we had 21,991,133 shares of
Common Stock issued and outstanding. The following table sets
forth information we know about the beneficial ownership of our
Common Stock, as of February 29, 2008, by:
|
|
|
|
|
each person known by us to own beneficially more than 5% of the
outstanding shares of our Common Stock,
|
|
|
|
each of our directors,
|
|
|
|
each of our named executive officers, and
|
|
|
|
all directors and executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
Number of Shares
|
|
Common Stock
|
Name of Beneficial Owner(2)
|
|
Beneficially Owned(1)
|
|
Outstanding
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Felix J. Baker and Julian C. Baker(3)
|
|
|
3,222,599
|
|
|
|
13.6
|
%
|
667 Madison Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10021
|
|
|
|
|
|
|
|
|
Merck & Co, Inc.
|
|
|
1,818,182
|
|
|
|
8.3
|
%
|
One Merck Drive
|
|
|
|
|
|
|
|
|
Whitehouse Station, NJ 08889
|
|
|
|
|
|
|
|
|
Youssef El Zein(4)
|
|
|
1,659,204
|
|
|
|
7.4
|
%
|
c/o Optima
Life Sciences Limited
|
|
|
|
|
|
|
|
|
Stanley House
|
|
|
|
|
|
|
|
|
Lord Street
|
|
|
|
|
|
|
|
|
Douglas
|
|
|
|
|
|
|
|
|
Ile of Man, IM1 2BF
British Isles
|
|
|
|
|
|
|
|
|
Optima Life Sciences Limited(5)
|
|
|
1,194,976
|
|
|
|
5.4
|
%
|
Stanley House
|
|
|
|
|
|
|
|
|
Lord Street
Douglas
|
|
|
|
|
|
|
|
|
Ile of Man, IM1 2BF
|
|
|
|
|
|
|
|
|
British Isles
|
|
|
|
|
|
|
|
|
Sudhir Agrawal, D. Phil.(6)
|
|
|
1,178,011
|
|
|
|
5.1
|
%
|
Other Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
Robert G. Andersen(7)
|
|
|
149,330
|
|
|
|
*
|
|
Louis J. Arcudi, III
|
|
|
|
|
|
|
|
|
Alice S. Bexon, MBChB(8)
|
|
|
35,624
|
|
|
|
*
|
|
C. Keith Hartley(9)
|
|
|
64,894
|
|
|
|
*
|
|
Robert W. Karr, M.D.(10)
|
|
|
118,360
|
|
|
|
*
|
|
Donna A. Lopolito
|
|
|
|
|
|
|
|
|
Hans Mueller, Ph.D.(11)
|
|
|
1,333
|
|
|
|
*
|
|
William S. Reardon(12)
|
|
|
23,623
|
|
|
|
*
|
|
Timothy M. Sullivan, Ph.D.(13)
|
|
|
102,616
|
|
|
|
*
|
|
Alison Taunton-Rigby, Ph.D.(14)
|
|
|
16,646
|
|
|
|
*
|
|
James B. Wyngaarden, M.D.(15)
|
|
|
119,679
|
|
|
|
*
|
|
All current directors and executive
|
|
|
3,319,990
|
|
|
|
13.9
|
%
|
officers as a group (11 persons)(16)
|
|
|
|
|
|
|
|
|
23
|
|
|
(1) |
|
The number of shares beneficially owned by each person is
determined under rules of the SEC, and the information is not
necessarily indicative of beneficial ownership for any other
purpose. Under such rules, beneficial ownership includes any
shares as to which the stockholder has the sole or shared voting
power or investment power and any shares that the stockholder
has the right to acquire within 60 days after
February 29, 2008 through the conversion of any convertible
security or the exercise of any stock option, warrant or other
right. Unless otherwise indicated, each stockholder has sole
investment and voting power (or shares such power with his or
her spouse) with respect to the shares set forth in the table.
The inclusion of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of such shares. |
|
(2) |
|
Except as otherwise noted, the address for each person listed
above is
c/o Idera
Pharmaceuticals, Inc. 167 Sidney Street, Cambridge,
Massachusetts 02139. |
|
(3) |
|
As reported on a Schedule 13G/A filed with the SEC on
February 14, 2008 and Forms 4 filed on January 9,
2008 and January 14, 2008. Consists of shares of common
stock held by the following entities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Shares of
|
|
|
Issuable Upon
|
|
|
|
Common
|
|
|
Exercise of
|
|
Registered Holder
|
|
Stock
|
|
|
Warrants
|
|
|
Baker Brothers Life Sciences, L.P.
|
|
|
933,109
|
|
|
|
1,047,740
|
|
Baker Brothers Investments, L.P.
|
|
|
46,990
|
|
|
|
52,763
|
|
Baker Brothers Investments II, L.P.
|
|
|
42,468
|
|
|
|
47,682
|
|
Baker Biotech Fund I, L.P.
|
|
|
466,766
|
|
|
|
524,108
|
|
14159, L.P.
|
|
|
28,721
|
|
|
|
32,252
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,518,054
|
|
|
|
1,704,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By virtue of their ownership of entities that have the power to
control the investment decisions of the limited partnerships
listed in the table above, Felix J. Baker and Julian C. Baker
may each be deemed to be beneficial owners of shares owned by
such entities and may be deemed to have shared power to vote or
direct the vote of and shared power to dispose or direct the
disposition of such securities. |
|
(4) |
|
Includes 19,335 shares of common stock subject to
outstanding stock options, which are exercisable within the
60 day period following February 29, 2008. Also
includes (a) 275,466 shares of common stock issuable
upon the exercise of warrants held by Optima Life Sciences Ltd.,
or Optima, (b) 919,510 shares of common stock held by
Optima and (c) 198,212 shares of common stock issuable
upon the exercise of warrants held by Pillar Investment Ltd., or
Pillar. Mr. El Zein is a director of Pillar and a director
of Optima. Pillar is the manager and investment advisor of
Optima and holds all of the voting shares of Optima. Because of
his relationship with Pillar and Optima, Mr. El Zein may be
deemed to beneficially own all of the shares of common stock
that Pillar and Optima beneficially own. Mr. El Zein is one
of our directors. |
|
(5) |
|
Includes 275,466 shares of common stock issuable upon the
exercise of warrants held by Optima. |
|
(6) |
|
Includes 1,089,333 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
|
(7) |
|
Includes 119,615 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
|
(8) |
|
Consists of shares of common stock subject to outstanding stock
options that are exercisable within 60 days after
February 29, 2008. |
|
(9) |
|
Includes 20,710 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
|
(10) |
|
Includes 117,811 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
|
(11) |
|
Consists of shares of common stock subject to outstanding stock
options that are exercisable within 60 days after
February 29, 2008. |
|
(12) |
|
Includes 19,460 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
24
|
|
|
(13) |
|
Includes 79,450 shares of common stock subject to
outstanding stock options that are exercisable within
60 days after February 29, 2008. |
|
(14) |
|
Consists of shares of common stock subject to outstanding stock
options that are exercisable within 60 days after
February 29, 2008. |
|
(15) |
|
Includes 81,710 shares of common stock subject to
outstanding stock options that are exercisable within
60 days following February 29, 2008 and
1,284 shares of common stock issuable upon exercise of
warrants. |
|
(16) |
|
Includes 1,481,412 shares of common stock subject to
outstanding stock options held by the directors and executive
officers as a group that are exercisable within 60 days
after February 29, 2008, and, as described in notes (3),
(4) and (15) above, 474,962 shares of common
stock issuable upon the exercise of warrants. |
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The compensation committee of our board of directors is
responsible for establishing compensation policies with respect
to our executive officers, including our chief executive officer
and our other executive officers who are listed in the Summary
Compensation table below. We refer to these officers as
named executive officers. Our compensation committee
makes compensation decisions relating to our executive officers
after consultation with our board of directors.
During 2007, we experienced several changes to our management
team. On December 3, 2007, Louis J. Arcudi, III,
joined us as Chief Financial Officer and Treasurer of our
company. Also, Alice S. Bexon, our Vice President of Clinical
Development, joined us on January 16, 2007. Robert G.
Andersen, our former Chief Financial Officer and Vice President
of Operations, ended his employment with us effective
July 31, 2007. In connection with Mr. Andersens
departure, we engaged AccountAbility Outsourcing, Inc., an
accounting outsourcing firm, for the services of Donna A.
Lopolito commencing August 1, 2007 and ending
December 3, 2007. During our engagement of Accountability
Outsourcing, Ms. Lopolito performed the functions of the
chief financial officer on an interim, part-time basis. Under a
letter agreement dated July 19, 2007 between us and
AccountAbility Outsourcing, we paid AccountAbility Outsourcing
an aggregate of $82,460 for the services provided by
Ms. Lopolito, but did not compensate Ms. Lopolito
directly for her services. Dr. Robert W. Karr, our
President since December 2005, resigned effective
December 31, 2007.
Overview
of Compensation Program and Philosophy
The compensation committee seeks to achieve the following broad
goals in connection with our executive compensation programs and
decisions regarding individual compensation:
|
|
|
|
|
attract, retain and motivate the best possible executive talent;
|
|
|
|
ensure executive compensation is aligned with our corporate
strategies and business objectives, including our short-term
operating goals and longer-term strategic objectives;
|
|
|
|
promote the achievement of key strategic and financial
performance measures by linking short- and long-term cash and
equity incentives to the achievement of measurable corporate and
individual performance goals; and
|
|
|
|
align executives incentives with the creation of
stockholder value.
|
To achieve these objectives, the compensation committee
evaluates our executive compensation program with the goal of
setting compensation at levels the committee believes are
competitive with those of other companies in our industry and
our region that compete with us for executive talent. In
addition, our executive compensation program ties a substantial
portion of each executives overall compensation to key
strategic, financial and operational goals such as clinical
trial and regulatory progress, intellectual property portfolio
development, establishment and maintenance of key strategic
relationships and exploration of business development
25
opportunities, as well as our financial and operational
performance. We also provide a portion of our executive
compensation in the form of stock options or other stock awards
that vest over time, which we believe helps to retain our
executives and align their interests with those of our
stockholders by allowing them to participate in the longer term
success of our company as reflected in stock price appreciation.
In making compensation decisions, our compensation committee
reviews compensation survey data, such as the Radford Global
Life Science Survey, a survey of U.S. biotech companies
generally and the Radford Survey of U.S. biotech companies
with fewer than 50 employees, as well as publicly available
data about our competitors. During 2007, our compensation
committee engaged Radford Surveys + Consulting, a compensation
consultant, to advise on our director compensation program,
which is discussed above under Director
Compensation, on equity ownership levels and equity
incentive programs for our Chief Executive Officer and
President, and on our compensation generally. In making
compensation decisions with respect equity ownership levels and
equity incentive programs for our Chief Executive Officer and
President, the compensation committee reviewed data on equity
compensation of a peer group of publicly traded companies which
the committee believes have business life cycles, growth
profiles, market capitalizations, products, research and
development investment levels and number/capabilities of
employees that are roughly comparable to ours and against which
the committee believes we compete for executive talent. The
companies included in our peer group in connection with the
review of equity ownership levels of our Chief Executive Officer
and President were Allos Therapeutics, Inc., Anadys
Pharmaceuticals, Inc., ARIAD Pharmaceuticals, Inc., ArQule,
Inc., AVI BioPharma, Inc., BioCryst Pharmaceuticals, Inc., Coley
Pharmaceutical Group, CytRx Corp., Dynavax Technologies Corp,
Entremed, Inc., ImmunoGen, Inc., Kosan Biosciences, Inc.,
Micromet, Inc., Palatin Technologies, Inc., Peregrine
Pharmaceuticals, Inc., Poniard Pharmaceuticals, Inc., Sangamo
BioSciences, Inc., Sunesis Pharmaceuticals, Inc. and Synta
Pharmaceuticals Corp. During 2007, the compensation committee
used the Radford Global Life Science Survey data in connection
with determinations regarding base salary, bonuses and annual
equity awards.
Our compensation committee intends that if an executive achieves
the individual and company performance goals determined by the
compensation committee, then the executive should have the
opportunity to receive compensation that is competitive with our
peer group and industry norms. Therefore, the compensation
committee considers the compensation levels of our executive
officers in comparison to the percentiles from survey data for
similarly situated executives. Our compensation committee uses
specific target percentiles from survey data as one factor along
with the experience, performance levels, potential performance
levels of the executive and changes in duties and
responsibilities to set compensation.
In order to accomplish its objectives consistent with its
philosophy for executive compensation, our compensation
committee takes the following actions annually:
|
|
|
|
|
reviews executive officer performance in order to determine if
individual goals are met at the end of the year;
|
|
|
|
reviews all components of executive officer compensation,
including base salary, cash bonuses, equity compensation, the
dollar value to the executive and cost to us of all health and
life insurance and other employee benefits and the estimated
payout obligations under severance and change in control
scenarios;
|
|
|
|
seeks input from our chief executive officer
and/or the
president on the performance of all other executive officers;
|
|
|
|
holds executive sessions (without our management present);
|
|
|
|
reviews information regarding the performance and executive
compensation of other companies and members of comparative peer
group; and
|
|
|
|
reviews all of the foregoing with the board of directors.
|
The compensation committee has implemented an annual performance
review program for our executives, under which annual
performance goals are determined at the beginning of each
calendar year for our company as a whole, each corporate
department and each executive. Annual corporate goals are
proposed by management and approved by the compensation
committee. These corporate goals target the achievement of
specific research, clinical and operational milestones. Annual
department and individual goals focus on contributions that
facilitate the achievement of the corporate goals and are
generally set during the first quarter of each calendar year.
26
Department goals are proposed by each department head and
approved by the chief executive officer. Individual goals are
proposed by each executive and approved by the chief executive
officer. Individual goals are closely aligned with corporate
goals. Typically, the compensation committee sets the chief
executive officers goals and reviews and discusses with
the chief executive officer the goals for all other executive
officers. The compensation committee considers the achievement
of these corporate, department and individual performance goals
as one of the factors in determining annual salary increases,
annual bonuses, and annual stock option awards granted to our
executives.
Typically, at the end of each year, the compensation committee
evaluates individual, department and corporate performance
against the goals for the recently completed year. The chief
executive officer prepares evaluations of the other executives
and recommends annual executive salary increases, annual stock
option awards and bonuses, if any, which are then reviewed and
approved by the compensation committee. The compensation
committee consults with the Board of Directors prior to
approving compensation for executive officers. In the case of
the chief executive officer, the compensation committee conducts
his individual performance evaluation and determines his
compensation changes and awards. For all executives, annual base
salary increases are implemented during the first calendar
quarter of the year. Any annual stock option awards and bonuses
are granted or paid as determined by the compensation committee,
typically in late December or early January of the next year.
The compensation committee does not plan to approve annual
equity grants to all employees, including named executive
officers, at a time when our company is in possession of
material non-public information. We do not award stock options
to named executive officers concurrently with the release of
material non-public information.
Elements
of Compensation
The compensation program for our executives generally consists
of five elements based upon the foregoing objectives:
|
|
|
|
|
base salary,
|
|
|
|
annual cash bonuses,
|
|
|
|
stock option awards,
|
|
|
|
health care and life insurance and other employee
benefits, and
|
|
|
|
severance and change in control benefits.
|
The value of our variable, performance-based compensation is
split between short-term compensation in the form of a cash
bonus and long-term compensation in the form of stock option
awards that vest over time. The annual cash bonus is intended to
provide an incentive to our executives to achieve near-term
operational objectives. The stock option awards provide an
incentive for our executives to achieve longer-term strategic
business goals, which should lead to higher stock prices and
increased stockholder value. We have not had any formal or
informal policy or target for allocating compensation between
long-term and short-term compensation, between cash and non-cash
compensation or among the different forms of non-cash
compensation. Instead, the compensation committee, after
reviewing industry information, determines subjectively what it
believes to be the appropriate level and mix of the various
compensation components.
We do not have any non-equity incentive plans, defined benefit
pension plans or non-qualified deferred compensation plans.
We entered into a multi-year employment agreement with our chief
executive officer, Dr. Agrawal, in October 2005, and
employment offer letters with each of Louis J. Arcudi, III,
our Chief Financial Officer, and Alice S. Bexon, our Vice
President of Clinical Development, when they joined us in 2007.
We were party to an employment agreement with Robert W. Karr,
our former president who resigned as of December 31, 2007.
Subsequently, we entered into a one-year consulting agreement
with Dr. Karr.
27
We were also a party to an employment agreement with Robert G.
Andersen, our former chief financial officer and vice president
of operations. In May 2007, we entered into a transition letter
agreement with Mr. Andersen, which provided that he would
remain with us until July 31, 2007.
All of these agreements are described below under the caption
Agreements with our Named Executive Officers.
Base
Salary
In establishing base salaries for our executive officers, our
compensation committee reviews survey data provided by our
compensation consultant, considers historic salary levels of the
executive and the nature of the individuals
responsibilities and compares the executives base salary
with those of our other executives. The compensation committee
also considers the challenges involved in hiring and retaining
managerial personnel and scientific personnel with extensive
experience in the chemistry of DNA and RNA and its application
to toll-like receptors because of the new nature of this
technology, general economic conditions, our financial
performance and the individuals performance.
In setting base salaries for 2007, which the compensation
committee did in December 2006, the compensation committee
reviewed industry survey materials prepared by Millbrook
Partners, an executive compensation consulting firm that was
engaged by management. After reviewing such data and taking into
consideration the other items described in the preceding
paragraph, the compensation committee determined to increase
each executives 2007 base salary compared to 2006 base
salary by approximately 4%, which reflected increases in the
consumer price index for the New England area. Dr. Sullivan
also received an additional increase of 4% to reflect his
expanded responsibilities.
The base salaries we agreed to pay Mr. Arcudi, who joined
us in December 2007, and Dr. Bexon, who joined us in
January 2007, resulted from the compensation committees
review of survey data for comparable positions, a review of
their experience and prior compensation levels and our
companys needs with respect to the position being filled,
and negotiations between us and Mr. Arcudi and
Dr. Bexon in connection with their hiring.
At the end of 2007, the compensation committee set salaries for
2008, which reflected increases in the range of 4-5% for our
named executive officers consistent with increases in the
consumer price index for the New England area and some minor
adjustments to reflect performance and changes in
responsibility. In setting base salaries for 2008, the
compensation committee reviewed the survey data presented by
Radford Surveys + Consulting from the Radford Global Life
Sciences Survey.
Cash
Bonuses
The compensation committee generally structures cash bonuses by
linking them to the achievement of specified company and
individual performance objectives. The amount of the bonus paid,
if any, varies among the executive officers depending on their
success in achieving individual performance goals and their
contribution to the achievement of corporate performance goals.
The compensation committee reviews and assesses corporate goals
and individual performance by executive officers and considers
the reasons why specific goals has not been achieved. Corporate
performance criteria that are considered by the compensation
committee include performance with respect to development
milestones, business development objectives, commercialization
goals, financial goals and other measures of corporate
performance. Our executive officers generally do not have bonus
targets.
In determining the cash bonuses to be paid to each of the
executive officers for services rendered in 2007, the
compensation committee reviewed data from the Radford Global
Life Sciences Survey. Corporate goals for 2007 were established
in six categories: Clinical/Regulatory, Business Development,
Finance/SEC Compliance/Facility, Investor Relations/Public
Relations, Science/Intellectual Property and
Financial/Corporate. The committee worked with our chief
executive officer to determine these goals, which were designed
to be challenging goals that the committee believed could be
reasonably achieved in 2007.
In establishing bonuses for 2006, the compensation committee
recognized that in prior years the committee had limited the
amount of cash bonuses due to our cash position. Accordingly, in
light of our more favorable cash position at the end of 2006,
the compensation committee determined to modify its customary
allocation of incentive performance payments between cash and
equity and increase the weight of the cash portion of such
payments. In
28
determining 2007 bonus amounts, the committee believed that
bonuses for 2006 should not be regarded as precedent for 2007 or
future years.
In reviewing Dr. Agrawals performance, the
compensation committee also considered that we had agreed in
Dr. Agrawals employment agreement to pay him a bonus
of between 20% and 70% of his base salary for 2007. In
recognition of the extraordinary performance of Dr. Agrawal
in 2007, the compensation committee elected to give a one-time
bonus in excess of the high end of the bonus range provided for
in his employment agreement. The compensation committee granted
a bonus of 108% of Dr. Agrawals base salary.
In determining Dr. Bexons annual performance bonus,
in addition to her 2007 performance and the foregoing factors,
the committee considered her employment offer letter agreed that
she would be eligible for an annual bonus of up to 25% of her
annual base salary. Under the terms of the offer letter, we also
paid Dr. Bexon a $60,000 signing bonus, a $60,000 bonus on
her six-month anniversary of employment and agreed to pay her a
$40,000 bonus on her first year anniversary. These bonus
arrangements for Dr. Bexon resulted from negotiations
between us and Dr. Bexon in connection with her hiring, and
reflect the committees consideration of relevant survey
data and compensation foregone by Dr. Bexon from her prior
employer.
Under the transition letter agreement we entered into with
Mr. Andersen, we agreed to pay Mr. Andersen a bonus
equal to between 20% and 50% of his annual base salary, as
determined by the board of directors (or a committee thereof) in
its sole discretion, if Mr. Andersen satisfactorily
achieved specified objectives during the transition period.
These goals related to specific operational needs of our company
in the areas of finance, operations, and information technology
including relocation of our headquarters to our new building in
Cambridge, Massachusetts, and the exit from our prior building,
preparing our 2007 - 2008 budget, engaging a consulting
firm to assist with SOX 404 compliance and developing
information technology system upgrades. The compensation
committee believed these goals were important ongoing projects
or key operational needs that required senior management
commitment and supervision and that the bonus would help ensure
a smooth transition for our company. After completion of
Mr. Andersens employment with us, the compensation
committee agreed to pay the transition bonus at the 50% level,
equal to $163,000, in recognition of Mr. Andersens
achievement of these goals.
Equity
Compensation
Our equity award program is the primary vehicle for offering
long-term incentives to our executive officers, including our
named executive officers. We believe that equity awards provide
our executives with a strong link to our long-term performance,
create an ownership culture and help to align the interest of
our named executive officers and our stockholders. Equity grants
are intended as both a reward for contributing to the long-term
success of our company and an incentive for future performance.
The vesting feature of our equity awards is intended to further
our goal of executive retention by providing an incentive to our
named executive officers to remain in our employ during the
vesting period, which is typically quarterly over four years. In
determining the size of equity awards to our executives, our
compensation committee considers comparable equity awards of
executives in our compensation peer group, our company-level
performance, the applicable executives previous awards,
the recommendations of management and the information received
from the compensation consultant.
Our equity awards have typically taken the form of stock
options. However, under the terms of our stock incentive plans,
we may grant equity awards other than stock options, such as
restricted stock awards, stock appreciation rights and
restricted stock units. In 2007, we made one restricted stock
grant, as described below.
The compensation committee approves all equity awards of options
to our executives. The compensation committee reviews all
components of the executives compensation when determining
annual equity awards to ensure that an executives total
compensation conforms to our overall philosophy and objectives.
The compensation committee typically makes initial stock option
awards to new executives and annual stock option awards as part
of our overall compensation program. In general, our option
awards vest over four years in 16 equal quarterly installments.
However, any of our executives unvested stock options will
vest and become immediately exercisable in full upon a change in
control of our company. We generally set the exercise price of
stock options to equal the closing price of our common stock on
NASDAQ on the date of grant.
29
Equity awards to our named executive officers are typically
granted annually in conjunction with the review of their
individual performance. This review typically occurs at the
regularly scheduled meeting of the compensation committee held
in the fourth quarter of each year. In December 2006, the
compensation committee made annual awards in connection with the
performance reviews for 2006. However, the annual awards for
2007 were made in December 2007, with an effective date of
January 2, 2008. As a result, the only equity awards to
named executive officers made in 2007 were the grants to
Dr. Agrawal in June 2007 and the grants to Mr. Arcudi
and Dr. Bexon in connection with their joining us in 2007,
as discussed below.
Following the stock option awards made to Drs. Agrawal and Karr
in December 2006, the compensation committee agreed with
Drs. Agrawal and Karr to consider what stock option levels
are most appropriate for a long-time executive of a company who
is promoted to chief executive officer, such as
Dr. Agrawal, and an executive of a company that serves as
president, such as Dr. Karr, and in that context to
specifically review the stock option awards that had been made
to Drs. Agrawal and Karr since they had signed their
employee agreements with us. The committee engaged Radford
Surveys + Consulting to assist with this review. As a result of
this review, in June 2007, the committee determined that the
level of stock options granted to Dr. Karr had been
appropriate but that the level of stock options granted to
Dr. Agrawal was low. Therefore, after taking into account
the per-participant limitations on stock awards and stock option
awards in any calendar year under our 2005 Stock Incentive Plan,
the committee granted Dr. Agrawal 62,500 shares of
restricted stock, vesting annually over three years in three
equal installments, and an option to purchase 62,500 shares
of common stock, vesting over four years with 25% of the shares
subject to the option vesting on the first anniversary of the
date of grant and the remaining 75% vesting in 12 quarterly
installments over the following three years.
In connection with our hiring of Mr. Arcudi and
Dr. Bexon we granted each of them options to purchase
shares of our common stock. Mr. Arcudis option to
purchase 80,000 shares of common stock vests over three
years, with one-third of the shares subject to the option
vesting on the first anniversary of the date of grant and the
remaining two-thirds of the shares vesting quarterly over the
following two years. In the event of a change of control of our
company occurring during the first year of
Mr. Arcudis employment, the vesting as to the first
installment will be accelerated. Dr. Bexon was granted two
options, one for 70,000 shares that vests in sixteen equal
quarterly installments until fully vested on the fourth
anniversary of the date of grant, and one for 20,000 shares
which vests in eight equal quarterly installments until fully
vested on the second anniversary of the date of grant. The terms
of these options were negotiated with Mr. Arcudi and
Ms. Bexon at the time of their hire and were based on the
overall level of compensation that the committee determined was
appropriate in light of survey data, the officers
experience, the job description and negotiations necessary to
ensure that he or she accepted our offer of employment. In the
case of Dr. Bexon, the option awards also reflected, in
part, the value of compensation in her former employer that
Dr. Bexon would forego as a result of joining our company.
In December 2007, the compensation committee made annual awards,
effective as of January 2, 2008, to each of our executive
officers, other than Mr. Arcudi who joined us in December
2007. We granted Dr. Agrawal an option to purchase
125,000 shares, Dr. Karr an option to purchase
45,000 shares, Dr. Bexon an option to purchase
20,000 shares and Dr. Sullivan an option to purchase
25,000 shares. In determining these option awards, the
compensation committee considered the performance of each
executive officer during 2007 and data from the Radford Global
Life Science Survey.
Benefits
and Other Compensation
We maintain broad-based benefits that are provided to all
employees, including health and dental insurance, life and
disability insurance and a 401(k) plan. During 2007, consistent
with our prior practice, we matched 50% of the employee
contributions to our 401(k) plan up to a maximum of 6% of the
participating employees annual salary, resulting in a
maximum company match of 3% of the participating employees
annual salary, and subject to certain additional statutory
aged-based dollar limitations. Named executive officers are
eligible to participate in all of our employee benefit plans, in
each case on the same basis as other employees. Except for
Mr. Arcudi who joined us in December 2007, each of our
named executive officers contributed to our 401(k) plan and
their contributions were matched by us.
We occasionally pay relocation expenses for newly hired
executive officers whom we require to relocate as a condition to
their employment by us. We believe that this is a typical
benefit offered by comparable companies to
30
executives who are asked to relocate and that we would be at a
competitive disadvantage in trying to attract executives who
would need to relocate in order to work for us if we did not
offer relocation assistance.
In 2007, Drs. Bexon, and Sullivan received reimbursement for
local housing expenses and associated travel costs. Each of
Drs. Bexon and Sullivan maintained a primary residence
outside of a reasonable daily commuting range to our
headquarters. Under our employment agreement with Dr. Karr,
we reimbursed him up to $2,500 per month for reasonable housing
expenses during the two-year term of his employment with us.
Our named executive officers also may participate in our
employee stock purchase program, which is generally available to
all employees who work over 20 hours per week, including
our executive officers so long as they own less than 5% of our
common stock. Two of our named executive officers,
Dr. Sullivan and Mr. Andersen, participated in the
employee stock purchase program during 2007.
Severance
We currently have an employment agreement with Dr. Agrawal
and an employment offer letter with Mr. Arcudi under which
we agreed to provide benefits in the event of the termination of
their employment under specified circumstances. We have provided
more detailed information about these benefits, along with
estimates of their value under various circumstances, under the
captions Agreements with our Named Executive
Officers and Potential Payments Upon Termination or
Change in Control below.
We believe providing these benefits helps us compete for
executive talent. We believe providing severance and
change-in-control
benefits are a component that can help us attract and retain
highly talented executive officers whose contributions are
critical to our long-term success. After reviewing the practices
of companies in general industry surveys provided by our
independent compensation consultant, we believe that our
severance and
change-in-control
benefits are appropriate.
Compliance
with Internal Revenue Code Section 162(m).
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public companies for certain
compensation in excess of $1 million paid to our chief
executive officer and the other officers whose compensation is
required to be disclosed under the Exchange Act by reason of
being among Ideras four most highly compensated officers.
Certain compensation, including qualified performance-based
compensation, will not be subject to the deduction limit if
specified requirements are met. In general, we structure and
administer our stock option plans in a manner intended to comply
with the performance-based exception to Section 162(m).
Nevertheless, there can be no assurance that compensation
attributable to future awards granted under its plans will be
treated as qualified performance-based compensation under
Section 162(m). In addition, the compensation committee
reserves the right to use its judgment to authorize compensation
payments that may be subject to the limit when the compensation
committee believes such payments are appropriate and in the best
interests of our company and our stockholders.
Compensation
Committee Report
The compensation committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with Ideras management. Based on this review and
discussion, the compensation committee recommended to our board
of directors that the Compensation Discussion and Analysis be
included in this proxy statement.
By the compensation committee of the board of directors
James B. Wyngaarden, Chairman
C. Keith Hartley
Hans Mueller
Alison Taunton-Rigby
31
Summary
Compensation Table
The table below summarizes compensation paid to or earned by our
chief executive officer, our chief financial officers, our
interim chief financial officer and our other executive
officers, who we refer to collectively as our named
executive officers. Our named executive officers have no
non-equity plan compensation, defined benefit pension or
non-qualified compensation to report for 2007 or 2006.
Summary
Compensation Table For Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Name and
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Compensation
|
|
|
Total
|
|
Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
(1)($)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
Sudhir Agrawal, D. Phil.
|
|
|
2007
|
|
|
$
|
463,000
|
|
|
$
|
500,000
|
(4)
|
|
$
|
73,500
|
|
|
$
|
408,822
|
|
|
$
|
25,727
|
|
|
$
|
1,471,049
|
|
Chief Executive Officer
|
|
|
2006
|
|
|
$
|
445,000
|
|
|
$
|
450,000
|
(4)
|
|
|
|
|
|
$
|
284,788
|
|
|
$
|
33,617
|
|
|
$
|
1,213,405
|
|
and Chief Scientific Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Louis J. Arcudi, III
|
|
|
2007
|
|
|
$
|
19,167
|
|
|
|
|
|
|
|
|
|
|
$
|
16,326
|
|
|
$
|
1,243
|
|
|
$
|
36,736
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Treasurer(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alice S. Bexon, MBChB
|
|
|
2007
|
|
|
$
|
273,125
|
|
|
$
|
190,000
|
(6)
|
|
|
|
|
|
$
|
132,616
|
|
|
$
|
21,087
|
|
|
$
|
628,703
|
|
Vice President of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
2007
|
|
|
$
|
253,800
|
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
82,986
|
|
|
$
|
35,771
|
|
|
$
|
422,557
|
|
Vice President,
|
|
|
2006
|
|
|
$
|
235,000
|
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
72,213
|
|
|
$
|
32,691
|
|
|
$
|
389,904
|
|
Development Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D.
|
|
|
2007
|
|
|
$
|
390,000
|
|
|
$
|
200,000
|
|
|
|
|
|
|
$
|
228,545
|
|
|
$
|
54,907
|
|
|
$
|
873,452
|
|
Former President(7)
|
|
|
2006
|
|
|
$
|
375,000
|
|
|
$
|
250,000
|
|
|
|
|
|
|
$
|
119,051
|
|
|
$
|
63,009
|
|
|
$
|
807,060
|
|
Robert G. Andersen
|
|
|
2007
|
|
|
$
|
190,167
|
|
|
$
|
163,000
|
|
|
|
|
|
|
$
|
110,178
|
|
|
$
|
423,114
|
|
|
$
|
886,459
|
(9)
|
Former Chief Financial Officer and
|
|
|
2006
|
|
|
$
|
313,500
|
|
|
$
|
70,000
|
|
|
|
|
|
|
$
|
47,983
|
|
|
$
|
26,883
|
|
|
$
|
458,366
|
|
Vice President, Operations(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donna A. Lopolito
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Interim Chief Financial Officer(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the amount of compensation cost that we recognized
for financial statement reporting purposes for fiscal year 2007
with respect to restricted stock awarded in fiscal year 2007. In
accordance with SFAS No. 123(R), the grant date fair
value, which is determined by multiplying the total number of
shares of restricted stock by the closing price of our
companys common stock on the grant date, is amortized
ratably over the vesting period. |
|
(2) |
|
Represents the amount of compensation cost that we recognized
for financial statement reporting purposes for fiscal year 2007
with respect to stock options granted in fiscal year 2007 and
previous fiscal years, as computed in accordance with
SFAS No. 123R. In accordance with
SFAS No. 123R, the fair value of each stock option is
determined on the date of grant using the Black-Scholes option
pricing model. This value is then amortized ratably over the
vesting period. The amounts disregard the estimate of
forfeitures related to service-based vesting conditions. When
Mr. Andersens employment ended on July 31, 2007,
he forfeited options to purchase 33,813 shares of common
stock. See Note 2(k) of the financial statements in our
annual report on
Form 10-K
for the year ended December 31, 2007 regarding assumptions
we made in determining the SFAS 123R value of equity awards. |
32
|
|
|
(3) |
|
All Other Compensation for each of the named
executive officers includes the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Agrawal
|
|
Mr. Arcudi
|
|
Dr. Sullivan
|
|
Dr. Bexon
|
|
Dr. Karr
|
|
Mr. Andersen
|
|
Unused Vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,435
|
|
Reimbursement for housing and temporary associated travel
expenses
|
|
|
|
|
|
|
|
|
|
$
|
13,583
|
|
|
$
|
12,290
|
|
|
$
|
27,500
|
|
|
|
|
|
Company match on 401(k)
|
|
$
|
10,250
|
|
|
|
|
|
|
$
|
7,614
|
|
|
$
|
6,413
|
|
|
$
|
10,250
|
|
|
$
|
5,705
|
|
Premiums paid by us for all insurance plans
|
|
$
|
15,477
|
|
|
$
|
1,243
|
|
|
$
|
14,574
|
|
|
$
|
2,384
|
|
|
$
|
17,157
|
|
|
$
|
8,095
|
|
Termination benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
389,879
|
|
|
|
|
|
|
See footnotes 8 and 9 below for further information on the
termination benefits paid to Mr. Andersen.
|
|
(4) |
|
In the case of Dr. Agrawal, the bonus exceeded the high end
of the bonus provided for in his employment agreement with us,
which was $324,100 in 2007 and $311,500 in 2006. For further
discussion of Dr. Agrawals bonus, please see
Compensation Discussion and Analysis-Cash Bonuses
above. |
|
(5) |
|
Mr. Arcudis employment with us commenced on
December 3, 2007. |
|
(6) |
|
Dr. Bexons bonus includes a $60,000 signing bonus, which
was paid in January 2007 when Dr. Bexons
employment commenced, and a $60,000 signing bonus, which was
paid in July 2007 on her six-month anniversary of
employment. |
|
(7) |
|
Dr. Karrs employment with us ended on
December 31, 2007. |
|
(8) |
|
Mr. Andersens employment with us ended on
July 31, 2007. Pursuant to the transition letter agreement
we entered into with Mr. Andersen, we agreed that
Mr. Andersen would receive: (i) one year of salary,
equal to $326,000, one-half of which was payable on
February 1, 2008 and the remainder payable over the next
six months; (ii) acceleration of 12 months of vesting
on all stock options held by Mr. Andersen having an
intrinsic value of $55,815 based upon the difference between the
closing price of our common stock on July 31, 2007 and the
exercise price of such accelerated shares of the options,
(iii) a bonus equal to between 20% to 50% of
Mr. Andersens base salary in effect as of the date
his employment ended, which was paid out at the maximum of 50%
and totaled $163,000 and (iv) continuation of medical,
dental and insurance benefits for 12 months after
termination but only to the extent Mr. Andersen did not
receive comparable benefits from a new employer, the cost of
which totaled $8,064. |
|
(9) |
|
Includes amount of compensation cost that we recognized for
financial statement reporting with respect to stock options held
by Mr. Andersen as well as the intrinsic value of shares
for which we accelerated vesting as described in footnote 8
above. |
|
(10) |
|
Ms. Lopolito served as our interim chief financial officer
on an interim, part-time basis from August 1, 2007 until
December 3, 2007, pursuant to a letter agreement between us
and Accountability Outsourcing, Inc., an accounting outsourcing
firm. We paid AccountAbility Outsourcing an aggregate of $82,460
for the services provided by Ms. Lopolito in 2007. We did
not compensate Ms. Lopolito directly for her services. |
See Compensation Discussion and Analysis above for a
discussion of annual cash bonuses and the amount of salary and
bonus in proportion to total compensation.
Agreements
with our Named Executive Officers
We have entered into agreements with certain of our named
executive officers, as discussed below, that provide benefits to
the executives upon their termination of employment in certain
circumstances or under which we have agreed to specific
compensation elements. Other than as discussed below, our named
executive officers do not have employment agreements with us,
other than standard employee confidentiality agreements, and are
at-will employees.
Sudhir Agrawal, D. Phil. We are a party to an
employment agreement with Dr. Sudhir Agrawal, our chief
executive officer and chief scientific officer. Under the
agreement, we agreed to continue to employ Dr. Agrawal for
a term originally ending on October 19, 2008. The
employment term is automatically extended for an additional
33
year on October 19th of each year during the term of
the agreement unless either party provides prior written notice
to the other that the term of the agreement is not to be
extended. As a result, on October 19, 2007, the term was
extended to October 19, 2010.
Under the agreement, Dr. Agrawal is currently entitled to
receive an annual base salary of $485,000 or such higher amount
as our compensation committee or our board of directors may
determine, and an annual bonus in an amount equal to between 20%
and 70% of his base salary, as determined by the compensation
committee or our board of directors. Under the agreement, in
2006 we granted Dr. Agrawal an option to purchase
50,000 shares based on the achievement or near-achievement
of the milestones in Dr. Agrawals employment
agreement, which options vest quarterly over a three-year
period, commencing on the date the option is granted.
If we terminate Dr. Agrawals employment without cause
or if he terminates his employment for good reason, as such
terms are defined in the agreement, we have agreed to:
|
|
|
|
|
continue to pay Dr. Agrawal his base salary as severance
for a period ending on the earlier of the final day of the term
of the agreement in effect immediately prior to such termination
and the second anniversary of his termination date, provided
that payment of Dr. Agrawals severance for the first
six months following termination will be made in a lump sum on
the date that is six months and one day following termination;
|
|
|
|
pay Dr. Agrawal a lump sum cash payment equal to the pro
rata portion of the annual bonus that he earned in the year
preceding the year in which his termination occurs;
|
|
|
|
continue to provide Dr. Agrawal with healthcare, disability
and life insurance benefits for a period ending on the earlier
of the final day of the term of the agreement in effect
immediately prior to the termination date and the second
anniversary of the termination date, except to the extent
another employer provides Dr. Agrawal with comparable
benefits;
|
|
|
|
accelerate the vesting of any stock options or other equity
incentive awards previously granted to Dr. Agrawal as of
the termination date to the extent such options or equity
incentive awards would have vested had he continued to be an
employee until the final day of the term of the agreement in
effect immediately prior to such termination; and
|
|
|
|
permit Dr. Agrawal to exercise any vested stock options
until the second anniversary of the termination date.
|
If Dr. Agrawals employment is terminated by him for
good reason or by us without cause in connection with, or within
one year after, a change in control, we have agreed to provide
Dr. Agrawal with all of the items listed above, except that
in lieu of the severance amount described above, we will pay
Dr. Agrawal a lump sum cash payment equal to his base
salary multiplied by the lesser of the aggregate number of years
or portion thereof remaining in his employment term and two
years. We have also agreed that if we execute an agreement that
provides for our company to be acquired or liquidated, or
otherwise upon a change in control, we will vest all unvested
stock options held by Dr. Agrawal in full.
Our employment agreement with Dr. Agrawal provides that if
all or a portion of the payments made under the agreement are
subject to the excise tax imposed by Section 4999 of the
Code, or a similar state tax or assessment, we will pay him an
amount necessary to place him in the same after-tax position as
he would have been had no excise tax or assessment been imposed.
Any amounts paid pursuant to the preceding sentence will also be
increased to the extent necessary to pay income and excise tax
on those additional amounts.
In the event of Dr. Agrawals death or the termination
of his employment due to disability, we have agreed to pay
Dr. Agrawal or his beneficiary a lump sum cash payment
equal to the pro rata portion of the annual bonus that he earned
in the year preceding his death or termination due to
disability. Additionally, any stock options or other equity
incentive awards previously granted to Dr. Agrawal and held
by him on the date of his death or termination due to disability
will vest as of such date to the extent such options or equity
incentive awards would have vested had he continued to be an
employee until the final day of the term of the employment
agreement in effect immediately prior to his death or
termination due to disability. Dr. Agrawal or his
beneficiary will be permitted to exercise such stock options
until the second anniversary of his death or termination of
employment due to disability.
34
Dr. Agrawal has agreed that during his employment with us
and for a one-year period thereafter, he will not hire or
attempt to hire any of our employees or compete with us.
Robert W. Karr, M.D. We were a party to
an employment agreement with Dr. Robert W. Karr, our
President, which expired on December 5, 2007. Under the
agreement, Dr. Karr was entitled to receive:
|
|
|
|
|
an annual base salary that was $390,000 or such higher amount as
our compensation committee or our board of directors may
determine;
|
|
|
|
an annual bonus as determined by our compensation committee or
our board of directors; and
|
|
|
|
reimbursement for housing of up to $2,500 per month.
|
In connection with the execution of the agreement, we granted
Dr. Karr options, under our 2005 Stock Incentive Plan, to
purchase 125,000 shares of Common Stock at an exercise
price of $4.80 per share. These options vest quarterly over a
four-year period so long as Dr. Karr remains an employee or
officer of, or consultant or advisor to, our company.
Under the employment agreement, we agreed to pay Dr. Karr
severance, accelerate the vesting of his stock options and
continue certain medical and insurance benefits if we terminated
Dr. Karrs employment without cause or if he
terminated his employment for good reason. If the termination
occurred in connection with, or within one-year after, a change
of control, we also agreed to reimburse Dr. Karr for excise
tax imposed by Section 4999 to the same extent as described
above for Dr. Agrawal. In the event of Dr. Karrs
death or the termination of his employment due to disability, we
agreed to accelerate in part the vesting of any stock options or
other equity incentive awards previously granted to
Dr. Karr.
Dr. Karr agreed that during his employment with us and for
a one-year period thereafter, he will not hire or attempt to
hire any of our employees or compete with us.
Dr. Karr resigned as President effective December 31,
2007. Dr Karr remains a director of our company. In
addition, Dr. Karr serves as a consultant to us, receiving
a consulting fee of $375 per hour up to a maximum of $3,000 per
day, under a consulting agreement dated January 2, 2008.
Louis J. Arcudi, III. In connection with
our hiring of Mr. Arcudi, we agreed in his offer letter:
|
|
|
|
|
that he would be eligible for a bonus equal to between 20% and
30% of his base salary for 2008;
|
|
|
|
to pay Mr. Arcudi a signing bonus of $50,000 payable in two
equal installments on January 31, 2008 and May 30,
2008, and
|
|
|
|
in the event that a change of control occurs during the first
year of Mr. Arcudis employment with us, to accelerate
the vesting as to one-third of the shares subject to the option
granted to Mr. Arcudi at the time of his hire.
|
If we terminate Mr. Arcudis employment without cause,
we agreed to pay Mr. Arcudi three months severance and
continue his medical and dental insurance and to pay him his
signing bonus on the agreed upon dates. Our obligation to make
such payments and provide such benefits is contingent upon
Mr. Arcudis execution of a release in a form
reasonably acceptable to us.
Alice S. Bexon, MBChB. In connection with our
hiring of Dr. Bexon, we agreed in her offer letter that she
would be eligible for a bonus of up to 25% of her base salary.
We also agreed to pay her a $60,000 signing bonus on the
commencement of her employment, a $60,000 signing bonus on her
six-month anniversary of employment and a $40,000 bonus on her
first anniversary of employment.
Robert G. Andersen. We were a party to an
employment agreement with Robert G. Andersen, our Chief
Financial Officer and Vice President of Operations until
July 31, 2007, which agreement provided for base salary, a
bonus as determined by our compensation committee or our board
of directors and severance benefits if his employment was
terminated by us without cause or due to disability, by him for
good reason, or following a change of control. In May 2007, we
entered into a transition letter agreement with
Mr. Andersen, which provided that he
35
would remain with us until July 31, 2007. Under the
agreement, if Mr. Andersen satisfactorily performed his
employment duties with us through July 31, 2007, we agreed
that following July 31, 2007, we would:
Robert G. Andersen. We were a party to an
employment agreement with Robert G. Andersen, our Chief
Financial Officer and Vice President of Operations until
July 31, 2007, which agreement provided for base salary, a
bonus as determined by our compensation committee or our board
of directors and severance benefits if his employment was
terminated by us without cause or due to disability, by him for
good reason, or following a change of control. In May 2007, we
entered into a transition letter agreement with
Mr. Andersen, which provided that he would remain with us
until July 31, 2007. Under the agreement, if
Mr. Andersen satisfactorily performed his employment duties
with us through July 31, 2007, we agreed that following
July 31, 2007, we would:
|
|
|
|
|
pay Mr. Andersen an amount equal to 12 months of his
annual base salary in effect as of his termination date, one
half of which would be payable on February 1, 2008 and the
remainder of which would be payable in accordance with our
payroll practices commencing on February 1, 2008 and ending
July 31, 2008;
|
|
|
|
accelerate the vesting of any stock options or other equity
incentive awards held by Mr. Andersen such that such
options or equity incentive awards would be vested as if he had
continued to be an employee until July 31, 2008;
|
|
|
|
permit Mr. Andersen to exercise his stock options until
July 31, 2008, except for options that by their terms
permit for a longer exercise period;
|
|
|
|
continue to provide Mr. Andersen and his eligible
dependents with healthcare, disability and life insurance
benefits until July 31, 2008, except to the extent another
employer provides Mr. Andersen with comparable
benefits; and
|
|
|
|
pay Mr. Andersen a transition bonus equal to between 20%
and 50% of his annual base salary, as determined by the board of
directors (or a committee thereof) in its sole discretion, if
Mr. Andersen satisfactorily achieved specified performance
objectives during the transition period.
|
Grants of
Plan-Based Awards
The following table sets forth information regarding stock
options and restricted stock awards granted to each named
executive officer during 2007.
Grants of
Plan-Based Awards for Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other Option
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Awards: Number of
|
|
|
|
|
|
Fair Value of
|
|
|
|
|
|
|
Number of
|
|
|
Securities
|
|
|
Exercise or Base
|
|
|
Stock and
|
|
|
|
Grant
|
|
|
Shares of Stock
|
|
|
Underlying Options
|
|
|
Price of Option
|
|
|
Option
|
|
Name
|
|
Date
|
|
|
or Units (#)(1)
|
|
|
(#)(2)
|
|
|
Awards ($/Sh)
|
|
|
Awards($)(3)
|
|
|
Sudhir Agrawal, D. Phil.
|
|
|
6/25/07
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
$
|
440,625
|
|
|
|
|
6/25/07
|
|
|
|
|
|
|
|
62,500
|
|
|
$
|
7.05
|
|
|
$
|
295,250
|
|
Louis J. Arcudi, III
|
|
|
12/3/07
|
|
|
|
|
|
|
|
80,000
|
|
|
$
|
12.25
|
|
|
$
|
640,208
|
|
Alice S. Bexon, MBChB
|
|
|
1/16/07
|
|
|
|
|
|
|
|
90,000
|
|
|
$
|
7.55
|
|
|
$
|
453,213
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D.(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Andersen(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donna A. Lopolito(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of a restricted stock award to Dr. Agrawal under
our 2005 Stock Incentive Plan, which award vests over three
years from the date of grant in three equal installments. See
Agreements with our Named Executive Officers for
further information regarding Dr. Agrawals employment
agreement which provides for acceleration of vesting in
connection with the termination of Dr. Agrawals
employment in specified circumstances. |
|
(2) |
|
The stock options granted to each of the named executive
officers listed above were granted pursuant to our 2005 Stock
Incentive Plan. The term of these options is ten years. The
stock option granted to Dr. Agrawal vests |
36
|
|
|
|
|
over four years from the date of grant, with 25% of the shares
subject to the option vesting on the first anniversary of the
date of grant and the remaining 75% vesting in twelve equal
installments over the following three years. The stock option
granted to Mr. Arcudi vests over three years from the date
of grant with the first installment vesting on the first
anniversary of the date of grant and the balance of the shares
vesting quarterly over the remaining two years. See
Agreements with our Named Executive Officers for
further information about acceleration of vesting of
Dr. Agrawals options in connection with the
termination of his employment and in the event of a change of
control and of Mr. Arcudis options in the event of a
change of control. The option granted to Dr. Bexon to
purchase 70,000 shares vests in sixteen equal quarterly
installments until fully vested on the fourth anniversary of the
date of grant. The option granted to Dr. Bexon to purchase
20,000 shares vests in eight equal quarterly installments
until fully vested on the second anniversary of grant. |
|
|
|
(3) |
|
The option-related amounts represent the grant date fair value,
computed in accordance with SFAS No. 123R of stock
options granted to the named executive officers in 2007. In
accordance with SFAS No. 123R, the grant date fair
value of the stock options is determined on the date of grant
using Black-Scholes option pricing model and the grant date fair
value of the restricted stock award is equal to the number of
shares multiplied by the closing price of our common stock on
the date of grant. See Note 2(k) of the consolidated
financial statements in our annual report on
Form 10-K
for the year ended December 31, 2007 regarding assumptions
we made in determining the SFAS 123R value of equity awards. |
|
(4) |
|
Dr. Karr served as our President until December 31, 2007. |
|
(5) |
|
Mr. Andersen served as our Chief Financial Officer until
July 31, 2007. |
|
(6) |
|
Ms. Lopolito served as our interim chief financial officer on a
part-time basis from August 1, 2007 to December 31,
2007. |
37
Outstanding
Equity Awards At Fiscal Year-End
The following table sets forth information regarding the
outstanding stock options and restricted stock awards held by
our named executive officers as of December 31, 2007.
Outstanding
Equity Awards At Fiscal Year-End for 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
Units of Stock
|
|
|
Units of Stock
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercise
|
|
|
Expiration
|
|
|
That Have
|
|
|
That Have
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
Price($)
|
|
|
Date
|
|
|
Not Vested (#)
|
|
|
Not Vested ($)
|
|
|
Sudhir Agrawal, D. Phil.(1)
|
|
|
62,500
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
7/21/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
62,499
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
1/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
1/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
243,751
|
|
|
|
|
|
|
$
|
4.50
|
|
|
|
3/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
47,718
|
|
|
|
|
|
|
$
|
8.50
|
|
|
|
4/2/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
288,750
|
|
|
|
|
|
|
$
|
6.60
|
|
|
|
7/25/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
23,437
|
(2)
|
|
|
7,813
|
(2)
|
|
$
|
4.16
|
|
|
|
11/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
104,167
|
(3)
|
|
|
20,833
|
(3)
|
|
$
|
4.48
|
|
|
|
5/12/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
41,667
|
(4)
|
|
|
8,333
|
(4)
|
|
$
|
5.76
|
|
|
|
6/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(5)
|
|
|
18,750
|
(5)
|
|
$
|
4.24
|
|
|
|
12/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
35,418
|
(6)
|
|
|
89,582
|
(6)
|
|
$
|
5.10
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
(7)
|
|
$
|
7.05
|
|
|
|
6/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
(16)
|
|
$
|
818,750
|
(17)
|
Louis J. Arcudi, III
|
|
|
|
|
|
|
80,000
|
(8)
|
|
$
|
12.25
|
|
|
|
12/3/2017
|
|
|
|
|
|
|
|
|
|
Alice S. Bexon, MBChB
|
|
|
7,500
|
(9)
|
|
|
12,500
|
(9)
|
|
$
|
7.55
|
|
|
|
1/16/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
13,125
|
(10)
|
|
|
56,875
|
(10)
|
|
$
|
7.55
|
|
|
|
1/16/2017
|
|
|
|
|
|
|
|
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
7,500
|
|
|
|
|
|
|
$
|
11.28
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
|
|
|
$
|
6.24
|
|
|
|
12/12/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
|
|
|
|
|
|
$
|
8.96
|
|
|
|
12/16/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
44,062
|
(2)
|
|
|
14,688
|
(2)
|
|
$
|
4.16
|
|
|
|
11/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
(5)
|
|
|
6,250
|
(5)
|
|
$
|
4.24
|
|
|
|
12/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(11)
|
|
|
15,000
|
(11)
|
|
$
|
5.10
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D. (13)
|
|
|
3,125
|
|
|
|
|
|
|
$
|
4.88
|
|
|
|
6/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
$
|
4.48
|
|
|
|
7/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
|
|
|
$
|
5.36
|
|
|
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
(12)
|
|
|
62,500
|
(12)
|
|
$
|
4.80
|
|
|
|
12/5/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
31,250
|
(11)
|
|
|
93,750
|
(11)
|
|
$
|
5.10
|
|
|
|
12/14/2016
|
|
|
|
|
|
|
|
|
|
Robert G. Andersen(14)
|
|
|
4,737
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
3/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
56,250
|
|
|
|
|
|
|
$
|
10.00
|
|
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
27,441
|
|
|
|
|
|
|
$
|
4.50
|
|
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
32,812
|
|
|
|
|
|
|
$
|
4.16
|
|
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
15,525
|
|
|
|
|
|
|
$
|
4.24
|
|
|
|
7/31/2008
|
|
|
|
|
|
|
|
|
|
Donna A. Lopolito(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In accordance with the terms of our employment agreement with
Dr. Agrawal unvested stock options vest in full upon a
change in control of our company. See Agreements with our
Named Executive Officers for more information. |
38
|
|
|
(2) |
|
6.25% of the shares subject to this option vest quarterly from
the date of grant until November 30, 2008 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(3) |
|
8.33% of the shares subject to this option vest quarterly from
the date of grant until May 12, 2008 when all shares will
be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(4) |
|
8.33% of the shares subject to this option vest quarterly from
the date of grant until June 1, 2008 when all shares will
be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(5) |
|
6.25% of the shares subject to this option vest quarterly from
the date of grant until December 15, 2009 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(6) |
|
50,000 of the shares subject to this option vest quarterly from
the date of grant until December 14, 2009 and 75,000 of the
shares subject to this option vest quarterly from the date of
grant until December 14, 2010, when all shares will be
vested. |
|
(7) |
|
25% of the shares subject to this option vest on June 25,
2009, the first anniversary of the date of grant, and the
remaining 75% vest in 12 equal quarterly installments commencing
on September 25, 2009 until June 25, 2012. The total
number of shares subject to the option equals the sum of the
figures in the exercisable and unexercisable columns. |
|
(8) |
|
One-third of the shares subject to this option vest on
December 3, 2008 and the remainder will vest in equal
quarterly installments beginning on March 3, 2009 until
December 3, 2010 when all shares will be vested. The total
number of shares subject to the option equals the sum of the
figures in the exercisable and unexercisable columns. In
accordance with the terms of our employment offer letter with
Mr. Arcudi, the vesting with respect to one-third of the
option held by him will accelerate in full upon a change of
control that occurs during the first year of his employment. See
Agreements with our Named Executive Officers for
more information. |
|
(9) |
|
12.5% of the shares subject to this option vest quarterly from
the date of grant until January 16, 2009 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(10) |
|
8.33% of the shares subject to this option vest quarterly from
the date of grant until January 16, 2011 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(11) |
|
6.25% of the shares subject to this option vest quarterly from
the date of grant until December 14, 2010 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(12) |
|
6.25% of the shares subject to this option vest quarterly from
the date of grant until December 5, 2009 when all shares
will be vested. The total number of shares subject to the option
equals the sum of the figures in the exercisable and
unexercisable columns. |
|
(13) |
|
Dr. Karr served as our President until December 31,
2007. |
|
(14) |
|
Pursuant to a transition letter agreement between us and
Mr. Andersen, as of July 31, 2007 the vesting of any
stock options or other equity incentive awards held by
Mr. Andersen was accelerated to the extent such options or
equity incentive awards would have vested had he continued to be
an employee until July 31, 2008. Additionally,
Mr. Andersen is entitled to exercise his vested stock
options until July 31, 2008, except for options that by
their terms permit for a longer exercise period.
Mr. Andersen served as our Chief Financial Officer until
July 31, 2007. |
|
(15) |
|
Ms. Lopolito served as our interim chief financial officer
on a part-time basis from August 1, 2007 to
December 3, 2007. |
|
(16) |
|
These restricted shares vest in three equal annual installments
from the date of grant until June 25, 2010 when all shares
will be vested. |
39
|
|
|
(17) |
|
This amount was determined by multiplying the total number of
shares of our common stock underlying the restricted stock by
$13.10, the closing price of our common stock on
December 31, 2007. |
Option
Exercises
The following table sets forth information regarding the
exercise of options by our named executive officers during 2007.
None of our named executive officers had stock awards that
vested in 2007.
Option
Exercises and Stock Vested For Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
|
Acquired on Exercise
|
|
|
Exercise
|
|
Name
|
|
(#)
|
|
|
($)(1)
|
|
|
Sudhir Agrawal, D. Phil.
|
|
|
4,033
|
|
|
$
|
20,283
|
|
Louis J. Arcudi, III
|
|
|
|
|
|
|
|
|
Alice S. Bexon, MBChB
|
|
|
|
|
|
|
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D.(2)
|
|
|
|
|
|
|
|
|
Robert G. Andersen(3)
|
|
|
59,480
|
|
|
$
|
391,744
|
|
Donna A. Lopolito(4)
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized on exercise was calculated by multiplying the
number of shares acquired on exercise by the difference between
the market price of the underlying securities at exercise and
the exercise price of the options. The market price at exercise
represents the closing market price of our common stock on the
date of exercise or the sales price if the options were
exercised and sold. |
|
(2) |
|
Dr. Karr served as our President until December 31,
2007. |
|
(3) |
|
Mr. Andersen served as our Chief Financial Officer until
July 31, 2007. |
|
(4) |
|
Ms. Lopolito served as our interim chief financial officer
on an interim part-time basis from August 1, 2007 to
December 3, 2007. |
Potential
Payments Under Termination or Change in Control
We have an employment agreement with Dr. Agrawal that
provides for severance benefits following a termination of his
employment with our company. We also had an employment agreement
with Dr. Karr, our President, which expired on
December 5, 2007. Dr. Karr resigned effective
December 31, 2007. Additionally, Mr. Arcudis
employment offer letter provides for severance benefits in
certain circumstances. We entered into a transition letter
agreement with Mr. Andersen that provided for benefits upon
his departure. These agreements are described above under the
caption Agreements with our Named Executive
Officers. We have not entered into employment agreements
with Dr. Sullivan or Dr. Bexon and neither of them is
entitled to any severance benefits following a termination of
his or her employment with our company.
40
The following table sets forth the estimated potential benefits
that our named executive officers would be entitled to receive
upon their termination of employment with our company (other
than a termination in connection with or following a change in
control of the company). Except for Mr. Andersen, these
disclosed amounts assume that the named executive officers
employment terminated on December 31, 2007, are estimates
only and do not necessarily reflect the actual amounts that
would be paid to our named executive officers, which would only
be known at the time that they become eligible for payment
following their termination. Mr. Andersens employment
with us terminated on July 31, 2007 and the information in
the table reflects actual amounts paid or payable to
Mr. Andersen upon his departure.
Termination
of Employment Not In Connection With or Following
Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Value of
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
Accelerated Vesting
|
|
|
Continuation of
|
|
|
|
|
|
|
Payments
|
|
|
Bonus Amount
|
|
|
of Stock Options(1)
|
|
|
Benefits
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Sudhir Agrawal, D. Phil.(2)
|
|
$
|
926,000
|
|
|
$
|
450,000
|
|
|
$
|
1,282,373
|
|
|
$
|
40,571
|
(3)
|
|
$
|
2,698,944
|
|
Louis J. Arcudi, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alice S. Bexon, MBChB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D.(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert G. Andersen(5)
|
|
$
|
326,000
|
|
|
$
|
163,000
|
|
|
$
|
55,815
|
|
|
$
|
8,064
|
|
|
$
|
552,879
|
|
Donna A. Lopolito(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the case of Dr. Agrawal, this amount equals the
difference between the exercise price of each in the
money option and $13.10, the closing price of our common
stock on December 31, 2007 multiplied by the number of
options that would vest as a result of the accelerated vesting
provided for under the employment agreements in the case of
termination without cause by us or termination by
Dr. Agrawal for good reason. In the case of
Mr. Andersen, this amount equals the difference between the
exercise price of each in the money option and
$6.90, the closing price of our common stock on July 31,
2007, the date Mr. Andersens employment with us
terminated, multiplied by the number of options that vested as a
result of the accelerated vesting provided for under the
transition letter agreement entered into between
Mr. Andersen and us in connection with the termination of
his employment. |
|
(2) |
|
The severance payments to Dr. Agrawal will be paid out in
accordance with our payroll practices over the term of the
severance period. However, the severance payments for the
six-month period following termination will be paid in a lump
sum on the date six months and one day following the date of
termination. Severance payments will only be paid to
Dr. Agrawal following termination by him for good reason or
following termination by us other than for death, disability or
cause. Dr. Agrawal would be entitled to the pro rata
portion of the bonus earned for the prior fiscal
year in this case, 2006. This amount does not
include any bonus that would otherwise be paid for 2007. We will
pay the bonus following termination upon Dr. Agrawals
death or disability, termination by us without cause or
termination by Dr. Agrawal for good reason. If
Dr. Agrawals employment were terminated upon his
death or disability the value of his accelerated stock options
would be $1,463,754. Upon termination of Dr. Agrawals
employment for death or disability the vesting of options
through the remainder of the employment term would be
accelerated. |
|
(3) |
|
This amount represents the estimated cost to us of continuing
Dr. Agrawals healthcare, disability, life and dental
insurance benefits for the full severance period based on our
costs for such benefits at December 31, 2007. Under our
employment agreement with Dr. Agrawal, we will pay benefits
continuation following a termination by us other than for death,
disability or cause or termination by the named executive
officer for good reason. |
|
(4) |
|
Although we were a party to an employment agreement with
Dr. Karr that provided for severance upon the termination
of his employment, the agreement expired on December 5,
2007. Dr. Karr served as our President until
December 31, 2007. |
41
|
|
|
(5) |
|
The amounts shown for Mr. Andersen represent actual amounts
paid or payable to Mr. Andersen in connection with his
departure on July 31, 2007. See Agreements with our
Named Executive Officers for a description of the
transition letter agreement we entered into with
Mr. Andersen regarding severance and other benefits upon
the termination of his employment. See also footnote 8 to the
Summary Compensation Table above for further information on the
amounts set forth above. |
|
(6) |
|
Ms. Lopolito served as our interim chief financial officer on a
part-time basis from August 1, 2007 to December 3,
2007. |
Under Dr. Agrawals employment agreement, he would be
entitled to receive the estimated benefits shown in the table
below if his employment were terminated in connection with or
within one year after a change in control. Additionally,
Mr. Arcudis employment offer letter provides that if
a change of control occurs within the first year of his
employment, the vesting as to one-third of the stock option
granted to him in connection with his hire would accelerate.
These disclosed amounts are estimates only and do not
necessarily reflect the actual amounts that would be paid to our
named executive officers, which would only be known at the time
that they become eligible for payment and would only be payable
if a change in control were to occur. The table below reflects
the amount that could be payable under the various arrangements
assuming that the change in control occurred on
December 31, 2007 and the named executive officers
employment was immediately terminated, and an estimate regarding
any gross-up
payment for certain taxes in the event that any payments made in
connection with a
change-in-control
of our company would be subject to the excise tax imposed by
Section 4999 of the Code. Mr. Andersen and
Ms. Lopolito were not employed with us on December 31,
2007 and are not listed in the table below.
Termination
of Employment In Connection With or Following
Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
Accelerated Vesting
|
|
|
Continuation of
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
Bonus Amount
|
|
|
of Stock Options(2)
|
|
|
Benefits(3)
|
|
|
Tax Gross-
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Up Payments
|
|
|
($)
|
|
|
Sudhir Agrawal, D. Phil.
|
|
$
|
926,000
|
|
|
$
|
450,000
|
|
|
$
|
1,571,499
|
|
|
$
|
40,571
|
|
|
$
|
416,187
|
|
|
$
|
3,404,257
|
|
Louis J. Arcudi, III
|
|
|
|
|
|
|
|
|
|
$
|
22,670
|
|
|
|
|
|
|
|
|
|
|
$
|
22,670
|
|
Alice S. Bexon, MBChB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy M. Sullivan, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Karr, M.D.(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The severance and bonus payments will be paid out in a lump sum
within 30 days of the date of termination. Severance
payments will only be paid following termination by the named
executive officer for good reason or termination by us other
than for death, disability or cause. |
|
(2) |
|
This amount equals the difference between the exercise price of
each in the money option and $13.10, the closing
price of our common stock on December 31, 2007, multiplied
by the number of options that would vest as a result of the
accelerated vesting provided for under the employment
agreements. Upon a change of control, the vesting of all
Dr. Agrawals unvested options will accelerate. Upon a
change of control occurring in the first year of
Mr. Arcudis employment with us, the vesting as to
one-third of the shares of common stock subject to the option to
purchase 80,000 shares granted to him in connection with
his hire will accelerate. |
|
(3) |
|
Represents the estimated cost to us of continuing the
healthcare, disability, life and dental insurance benefits of
the named executive officers for the applicable severance period
based on our costs for such benefits at December 31, 2007. |
|
(4) |
|
Dr. Karr served as our President until December 31, 2007. |
42
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER OUR
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our common stock
that may be issued upon exercise of options, warrants and rights
under all of our equity compensation plans as of
December 31, 2007.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Equity Compensation
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Plans (Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Securities Reflected in
|
|
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by stockholders(1)
|
|
|
2,428,292
|
|
|
$
|
5.63
|
|
|
|
1,489,741
|
|
Equity compensation plans not approved by stockholders(2)
|
|
|
324,662
|
|
|
$
|
6.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,752,954
|
|
|
$
|
5.77
|
|
|
|
1,489,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1995 Stock Option Plan
|
|
|
|
1995 Employee Stock Purchase Plan
|
|
|
|
1995 Director Stock Option Plan
|
|
|
|
1997 Stock Incentive Plan
|
|
|
|
2005 Stock Incentive Plan
|
|
|
|
|
|
If our stockholders approve our 2008 Stock Incentive plan as
outlined in proposal 3, following the annual meeting,
shares will be available for future issuance only under our 1995
Employee Stock Purchase Plan and our 2008 Stock Incentive Plan.
|
|
|
|
(2) |
|
Consists of non-statutory stock option agreements issued to
Dr. Sudhir Agrawal, effective as of April 2, 2001 and
July 25, 2001. |
Non-Statutory
Stock Option Agreements with Dr. Agrawal
In 2001, we granted Dr. Agrawal four non-statutory stock
options outside of any equity compensation plan approved by our
stockholders, as follows:
|
|
|
|
|
A non-statutory stock option agreement providing for the
purchase of 157,500 shares of common stock at an exercise
price of $6.60 per share;
|
|
|
|
A non-statutory stock option agreement providing for the
purchase of 68,750 shares of common stock at an exercise
price of $6.60 per share;
|
|
|
|
A non-statutory stock option agreement providing for the
purchase of 62,500 shares of common stock at an exercise
price of $6.60 per share; and
|
|
|
|
A non-statutory stock option agreement providing for the
purchase of 35,912 shares of common stock at an exercise
price of $8.504 per share.
|
These options have a term of ten years and are now fully vested.
Subject to the terms of Dr. Agrawals employment
agreement with us, unless we terminate his employment for cause
or he voluntarily resigns, these options are exercisable at any
time prior to the earlier of the date that is 24 months
after the termination of Dr. Agrawals relationship
with us and the option expiration date. If we terminate
Dr. Agrawals employment for cause or he voluntarily
resigns, then the options will be exercisable at any time prior
to the earlier of the date that is 12 months after the
termination of Dr. Agrawals relationship with us and
the option expiration date.
43
ACCOUNTING
MATTERS
Report of
the Audit Committee
The audit committee has reviewed our audited financial
statements for the fiscal year ended December 31, 2007 and
discussed them with our management and our registered public
accounting firm.
The audit committee has also received from, and discussed with,
our registered public accounting firm various communications
that our registered public accounting firm is required to
provide to the audit committee, including the matters required
to be discussed by the Statement on Auditing Standards
No. 61, as amended (AICPA, Professional Standards,
Vol. 1, AU section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
The audit committee has received the written disclosures and the
letter from our companys registered public accounting firm
required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1,
Independence Discussions with audit committees), as
adopted by the Public Company Accounting Oversight Board in
Rule 3600T, and has discussed with our registered public
accounting firm their independence.
Based on the review and discussions referred to above, the audit
committee recommended to our board of directors that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2007.
By the audit committee of the board of directors,
AUDIT COMMITTEE
William S. Reardon, Chairman
Hans Mueller
Alison Taunton-Rigby
Registered
Public Accounting Firm Fees
We paid Ernst & Young LLP a total of $383,960 for
professional services rendered for the year ended
December 31, 2007 and $286,468 for professional services
rendered for the year ended December 31, 2006. The
following table provides information about these fees.
|
|
|
|
|
|
|
|
|
Fee Category
|
|
2006
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
247,743
|
|
|
$
|
302,075
|
|
Audit-Related Fees
|
|
|
20,725
|
|
|
|
17,625
|
|
Tax Fees
|
|
|
16,500
|
|
|
|
41,760
|
|
All Other Fees
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
286,468
|
|
|
$
|
383,960
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
Audit fees consist of fees for the audit of our financial
statements, the audit of our internal control over financial
reporting, the review of the interim financial statements
included in our quarterly reports on
Form 10-Q,
and other professional services provided in connection with
statutory and regulatory filings or engagements.
Audit-Related
Fees
Audit-related fees consisted of fees for assurance and related
services that are reasonably related to the performance of
audits and reviews of our financial statements that are not
reported under Audit Fees. These services include
audits of our employee benefit plans and consultations regarding
internal controls, financial accounting and reporting standards.
44
Tax
Fees
Tax fees consisted of fees for tax compliance, tax advice and
tax planning services. Tax compliance services, which relate to
preparation of tax returns, accounted for $18,500 of the total
tax fees billed in 2007 and all of the total tax fees billed in
2006. Tax advice and tax planning services relate to tax advice
related to our net operating losses.
All Other
Fees
During fiscal 2007, all other fees related to our subscription
to Ernst & Youngs online accounting and auditing
research tool. Ernst & Young LLP did not collect fees
for any other services for 2006 or 2007.
Our audit committee believes that the non-audit services
described above did not compromise Ernst & Young
LLPs independence. Our audit committee charter, which you
can find by clicking Investors and Corporate
Governance on our website, www.iderapharma.com,
requires that all proposals to engage Ernst & Young
LLP for services, and all proposed fees for these services, be
submitted to the audit committee for approval before
Ernst & Young LLP may provide the services.
Pre-Approval
Policies and Procedures
Our audit committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our registered public accounting firm. This
policy generally provides that we will not engage our registered
public accounting firm to render audit or non-audit services
unless the service is specifically approved in advance by the
audit committee or the engagement is entered into pursuant to
the pre-approval procedures described below.
From time to time, the audit committee may pre-approve specified
types of services that are expected to be provided to us by our
registered public accounting firm during the next
12 months. Any such pre-approval is detailed as to the
particular service or type of services to be provided and is
also generally subject to a maximum dollar amount.
RELATED
PARTY TRANSACTIONS
Our board of directors is committed to upholding the highest
legal and ethical conduct in fulfilling its responsibilities and
recognizes that related party transactions can present a
heightened risk of potential or actual conflicts of interest.
Accordingly, as a general matter, it is our preference to avoid
related party transactions.
In accordance with our audit committee charter, members of the
audit committee, all of whom are independent directors, review
and approve all related party transactions for which approval is
required under applicable laws or regulations, including SEC and
the NASDAQ Stock Market rules. Current SEC rules define a
related party transaction to include any transaction,
arrangement or relationship in which we are a participant and
the amount involved exceeds $120,000, and in which any of the
following persons has or will have a direct or indirect interest:
|
|
|
|
|
our executive officers, directors or director nominees;
|
|
|
|
any person who is known to be the beneficial owner of more than
5% of our common stock;
|
|
|
|
any person who is an immediate family member, as defined under
Item 404 of
Regulation S-K,
of any of our executive officers, directors or director nominees
or beneficial owner of more than 5% of our common stock; or
|
|
|
|
any firm, corporation or other entity in which any of the
foregoing persons is employed or is a partner or principal or in
a similar position or in which such person, together with any
other of the foregoing persons, has a 5% or greater beneficial
ownership interest.
|
In addition, the audit committee reviews and investigates any
matters pertaining to the integrity of management, including
conflicts of interest and adherence to our Code of Business
Conduct and Ethics. Under our Code of Business Conduct and
Ethics, our directors, officers and employees are expected to
avoid any relationship,
45
influence or activity that would cause or even appear to cause a
conflict of interest. Under our Code of Business Conduct and
Ethics, a director is required to promptly disclose to our board
of directors any potential or actual conflict of interest
involving him or her. In accordance with our Code of Business
Conduct and Ethics, the board of directors will determine an
appropriate resolution on a
case-by-case
basis. All directors must recuse themselves from any discussion
or decision affecting their personal, business or professional
interests.
Since January 1, 2007, we have entered into or engaged in
the following transactions with the following directors,
officers and stockholders who beneficially owned more than 5% of
our outstanding common stock at the time of these transactions,
as well as affiliates or immediate family members of those
directors, officers stockholders. We believe that the terms of
the transactions described below were no less favorable than
those that we could have obtained from unaffiliated third
parties.
Youssef
El Zein and Affiliates.
Mr. El Zein is a director of Pillar Investment Ltd. and a
director of Optima Life Sciences Limited. Pillar is the manager
and investment advisor of Optima and holds all of the voting
shares of Optima. In 2005, Optima purchased $3,102,750 aggregate
principal amount of our 4% convertible subordinated notes due
April 30, 2008. In February 2007, in connection with our
election to automatically convert such 4% notes into shares
of our common stock, we issued to Optima 435,779 shares of
our common stock and paid accrued interest of $37,578 in cash.
Merck &
Co., Inc.
In December 2006, we entered into an exclusive license and
research collaboration agreement with Merck & Co.,
Inc. to research, develop and commercialize vaccine products
containing our agonist compounds targeting toll-like receptors,
or TLR, 7, 8 and 9 in the licensed fields of oncology,
infectious diseases and Alzheimers disease. In 2007,
Merck & Co. sponsored approximately $1.1 million
of our research and development activities.
Under the terms of the agreement, we granted Merck worldwide
exclusive rights to a number of our agonist compounds targeting
TLR 7, 8 and 9 for use in combination with Mercks
therapeutic and prophylactic vaccines under development in the
licensed fields. There is no limit to the number of vaccines to
which Merck can apply our agonists within the licensed fields.
In addition, we agreed that we would not develop or
commercialize, either directly or through a third party, any
agonist targeting TLR 7, 8 or 9 for use in connection with
vaccine products in the licensed fields. We also agreed with
Merck to engage in a two-year research and development
collaboration to generate novel agonists targeting TLR 7 and TLR
8 and incorporating both Merck and Idera chemistry for use in
the licensed fields. Merck may extend the collaboration for two
additional one-year periods.
Under the terms of the agreement,
|
|
|
|
|
Merck paid us a $20 million upfront license fee;
|
|
|
|
Merck purchased 1,818,182 shares of our common stock for a
price of $5.50 per share resulting in an aggregate purchase
price of $10 million;
|
|
|
|
Merck agreed to fund the research and development collaboration;
|
|
|
|
Merck agreed to pay us milestone payments as follows:
|
|
|
|
|
|
up to $165 million if vaccines containing our TLR9 agonist
compounds are successfully developed and marketed in each of the
oncology, infectious disease and Alzheimers disease fields;
|
|
|
|
up to $260 million if vaccines containing our TLR9 agonist
compounds are successfully developed and marketed for follow-on
indications in the oncology field and if vaccines containing our
TLR 7 and 8 agonists are successfully developed and marketed in
each of the oncology, infectious disease and Alzheimers
disease fields; and
|
|
|
|
if Merck develops and commercializes additional vaccines using
our agonists, we would be entitled to receive additional
milestone payments.
|
46
|
|
|
|
|
Merck agreed to pay us royalties on net product sales of
vaccines using our TLR agonist technology that are developed and
marketed.
|
Under the research and collaboration agreement, Merck is
obligated to pay us royalties, on a
product-by-product
and
country-by-country
basis, until the later of the expiration of the patent rights
licensed to Merck and the expiration of regulatory-based
exclusivity for the vaccine product. If the patent rights and
regulatory-based exclusivity expire in a particular country
before the 10th anniversary of the products first
commercial sale in such country, Merck will continue to pay us
royalties at a reduced royalty rate until such anniversary,
except that Mercks royalty obligation will terminate upon
the achievement of a specified market share in such country by a
competing vaccine containing an agonist targeting the same
toll-like receptor as that targeted by the agonist in the Merck
vaccine. In addition, the applicable royalties may be reduced if
Merck is required to pay royalties to third parties for licenses
to intellectual property rights, which royalties exceed a
specified threshold. Mercks royalty and milestone
obligations may also be reduced if Merck terminates the
agreement based on specified uncured material breaches by us.
The agreement may be terminated by either party based upon
specified uncured breaches by the other party or by Merck at any
time after providing us with advance notice of termination.
Merck has agreed that, during the balance of the research and
collaboration term, its ability to sell the shares we issued to
it will be subject to specified volume limitations. We also
entered into a registration rights agreement with Merck and
filed a registration statement with the SEC registering the
resale of the shares of common stock issued and sold to Merck.
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on our review of copies of reports filed by
individuals and entities required to make filings pursuant to
Section 16(a) of the Exchange Act or written
representations from such individuals or entities, we believe
that during 2007 all filings required to be made by such
individuals or entities were timely made in accordance with the
Exchange Act, except that Youssef El Zein failed to timely file
Form 4 in connection with transactions effected on
April 27, 2007 and October 1, 2007.
By order of the board of directors,
Louis J. Arcudi, III, Secretary
,
2008
47
EXHIBIT
A
CERTIFICATE
OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
IDERA PHARMACEUTICALS, INC.
Idera Pharmaceuticals, Inc. (hereinafter called the
Corporation), organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
does hereby certify as follows:
By action of the Board of Directors of the Corporation at a
meeting held on March 18, 2008, the Board of Directors of
the Corporation duly adopted a resolution, pursuant to
Section 242 of the General Corporation Law of the State of
Delaware, setting forth an amendment to the Restated Certificate
of Incorporation of the Corporation, as amended to date (the
Certificate of Incorporation), and declaring said
amendment to be advisable. The stockholders of the Corporation
duly approved said proposed amendment in accordance with
Section 242 of the General Corporation Law of the State of
Delaware at a meeting of stockholders held
on , 2008. The resolution
setting forth the amendment is as follows:
RESOLVED: That the first paragraph of
Article FOURTH of the Certificate of Incorporation be and
hereby is amended and restated in its entirety so that the same
shall read as follows:
FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
(i) Seventy Million (70,000,000) shares of Common Stock,
$.001 par value per share (Common Stock), and
(ii) Five Million (5,000,000) shares of Preferred Stock,
$.01 par value per share (Preferred Stock),
which may be issued from time to time in one or more series as
set forth in Part B of this Article FOURTH.
IN WITNESS WHEREOF, the Corporation has caused this Certificate
of Amendment to be signed by its duly authorized officer
this
day
of
2008.
IDERA PHARMACEUTICALS, INC.
Name:
A-1
EXHIBIT
B
IDERA
PHARMACEUTICALS, INC.
2008
STOCK INCENTIVE PLAN
1. Purpose
The purpose of this 2008 Stock Incentive Plan (the
Plan) of Idera Pharmaceuticals, Inc., a Delaware
corporation (the Company), is to advance the
interests of the Companys stockholders by enhancing the
Companys ability to attract, retain and motivate persons
who are expected to make important contributions to the Company
and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended
to better align the interests of such persons with those of the
Companys stockholders. Except where the context otherwise
requires, the term Company shall include any of the
Companys present or future parent or subsidiary
corporations as defined in Sections 424(e) or (f) of
the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the Code) and
any other business venture (including, without limitation, joint
venture or limited liability company) in which the Company has a
controlling interest, as determined by the Board of Directors of
the Company (the Board).
2. Eligibility
All of the Companys employees, officers, directors,
consultants and advisors are eligible to be granted options,
stock appreciation rights (SARs), restricted stock,
restricted stock units (RSUs) and other stock-based
awards (each, an Award) under the Plan. Each person
who receives an Award under the Plan is deemed a
Participant.
3. Administration
and Delegation
(a) Administration by Board of
Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines
and practices relating to the Plan as it shall deem advisable.
The Board may construe and interpret the terms of the Plan and
any Award agreements entered into under the Plan. The Board may
correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and
it shall be the sole and final judge of such expediency. All
decisions by the Board shall be made in the Boards sole
discretion and shall be final and binding on all persons having
or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by
the Board shall be liable for any action or determination
relating to or under the Plan made in good faith.
(b) Appointment of Committees. To
the extent permitted by applicable law, the Board may delegate
any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a
Committee). All references in the Plan to the
Board shall mean the Board or a Committee of the
Board or the officers referred to in Section 3(c) to the
extent that the Boards powers or authority under the Plan
have been delegated to such Committee or officers.
(c) Delegation to Officers. To the
extent permitted by applicable law, the Board may delegate to
one or more officers of the Company the power to grant Awards
(subject to any limitations under the Plan) to employees or
officers of the Company or any of its present or future
subsidiary corporations and to exercise such other powers under
the Plan as the Board may determine, provided that the Board
shall fix the terms of the Awards to be granted by such officers
(including the exercise price of such Awards, which may include
a formula by which the exercise price will be determined) and
the maximum number of shares subject to Awards that the officers
may grant; provided further, however, that no officer shall be
authorized to grant Awards to any executive officer
of the Company (as defined by
Rule 3b-7
under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) or to any officer of the
Company (as defined by
Rule 16a-1
under the Exchange Act).
B-1
(d) Awards to Non-Employee
Directors. Discretionary Awards to
non-employee directors will only be granted and administered by
a Committee, all of the members of which are independent as
defined by Section 4200(a)(15) of the Nasdaq Marketplace
Rules.
4. Stock
Available for Awards
(a) Number of Shares; Share Counting.
(1) Authorized Number of
Shares. Subject to adjustment under
Section 9, Awards may be made under the Plan for up to
3,700,000 shares of common stock, $0.001 par value per
share, of the Company (the Common Stock). Shares
issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(2) Fungible Share Pool. Subject
to adjustment under Section 10, any Award that is not a
Full-Value Award shall be counted against the share limits
specified in Sections 4(a)(1) as one share for each share
of Common Stock subject to such Award and any Award that is a
Full-Value Award shall be counted against the share limits
specified in Sections 4(a)(1) as 1.57 shares for each
one share of Common Stock subject to such Full-Value Award.
Full-Value Award means any Restricted Stock Award or
other Stock-Based Award with a per share price or per unit
purchase price lower than 100% of Fair Market Value (as defined
below) on the date of grant. To the extent a share that was
subject to an Award that counted as one share is returned to the
Plan pursuant to Section 4(a)(3), each applicable share
reserve will be credited with one share. To the extent that a
share that was subject to an Award that counts as
1.57 shares is returned to the Plan pursuant to
Section 4(a)(3), each applicable share reserve will be
credited with 1.57 shares.
(3) Share Counting. For purposes
of counting the number of shares available for the grant of
Awards under the Plan and under the
sub-limit
contained in Sections 4(b), (i) all shares of Common
Stock covered by independent SARs shall be counted against the
number of shares available for the grant of Awards; provided,
however, that independent SARs that may be settled in cash only
shall not be so counted; (ii) if any Award (A) expires
or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including
as the result of shares of Common Stock subject to such Award
being repurchased by the Company at the original issuance price
pursuant to a contractual repurchase right) or (B) results
in any Common Stock not being issued (including as a result of
an independent SAR that was settleable either in cash or in
stock actually being settled in cash), the unused Common Stock
covered by such Award shall again be available for the grant of
Awards; provided, however, in the case of Incentive Stock
Options (as hereinafter defined), the foregoing shall be subject
to any limitations under the Code; and provided further, in the
case of independent SARs, that the full number of shares subject
to any stock-settled SAR shall be counted against the shares
available under the Plan and against the
sub-limit
listed in the first clause of this Section regardless of the
number of shares actually used to settle such SAR upon exercise;
(iii) shares of Common Stock delivered (either by actual
delivery or attestation) to the Company by a Participant to
(A) purchase shares of Common Stock upon the exercise of an
Award or (B) satisfy tax withholding obligations (including
shares retained from the Award creating the tax obligation)
shall not be added back to the number of shares available for
the future grant of Awards; and (iv) shares of Common Stock
repurchased by the Company on the open market using the proceeds
from the exercise of an Award shall not increase the number of
shares available for future grant of Awards.
(b) Section 162(m) Per-Participant
Limit. Subject to adjustment under
Section 9, the maximum number of shares of Common Stock
with respect to which Awards may be granted to any Participant
under the Plan shall be 500,000 per calendar year. For purposes
of the foregoing limit, the combination of an Option (as
hereafter defined) in tandem with a SAR shall be treated as a
single Award. The per Participant limit described in this
Section 4(b) shall be construed and applied consistently
with Section 162(m) of the Code or any successor provision
thereto, and the regulations thereunder
(Section 162(m)).
(c) Substitute Awards. In
connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Awards in substitution for any
options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted
on such terms as the Board deems appropriate in the
circumstances, notwithstanding any limitations on
B-2
Awards contained in the Plan. Substitute Awards shall not count
against the overall share limit set forth in
Section 4(a)(1) or any
sub-limits
contained in the Plan, except as may be required by reason of
Section 422 and related provisions of the Code.
5. Stock
Options
(a) General. The Board may grant
options to purchase Common Stock (each, an Option)
and determine the number of shares of Common Stock to be covered
by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each
Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
An Option that is not intended to be an Incentive Stock Option
(as hereinafter defined) shall be designated a
Nonstatutory Stock Option.
(b) Incentive Stock Options. An
Option that the Board intends to be an incentive stock
option as defined in Section 422 of the Code (an
Incentive Stock Option) shall only be granted to
employees of Idera Pharmaceuticals, Inc., any of Idera
Pharmaceuticals, Inc.s present or future parent or
subsidiary corporations as defined in Sections 424(e) or
(f) of the Code, and any other entities the employees of
which are eligible to receive Incentive Stock Options under the
Code, and shall be subject to and shall be construed
consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or
any other party, if an Option (or any part thereof) that is
intended to be an Incentive Stock Option is not an Incentive
Stock Option or for any action taken by the Board, including
without limitation the conversion of an Incentive Stock Option
to a Nonstatutory Stock Option.
(c) Exercise Price. The Board
shall establish the exercise price of each Option and specify
the exercise price in the applicable option agreement. The
exercise price shall be not less than 100% of the Fair Market
Value (as defined below) on the date the Option is granted;
provided that if the Board approves the grant of an Option with
an exercise price to be determined on a future date, the
exercise price shall be not less than 100% of the Fair Market
Value on such future date.
(d) Duration of Options. Each
Option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable
option agreement; provided, however, that no Option will be
granted with a term in excess of 10 years.
(e) No Reload Options. No Option
granted under the Plan shall contain any provision entitling the
Participant to the automatic grant of additional Options in
connection with any exercise of the original Option.
(f) Exercise of Option. Options
may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board,
together with payment in full as specified in Section 5(g)
for the number of shares for which the Option is exercised.
Shares of Common Stock subject to the Option will be delivered
by the Company as soon as practicable following exercise.
(g) Payment Upon Exercise. Common
Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:
(1) in cash, by check or by wire transfer, payable to the
order of the Company;
(2) except as the Board may otherwise provide in the
applicable option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy
broker to deliver promptly to the Company sufficient funds to
pay the exercise price and any required tax withholding or
(ii) delivery by the Participant to the Company of a copy
of irrevocable and unconditional instructions to a creditworthy
broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price and any required tax
withholding;
(3) for so long as the Common Stock is registered under the
Exchange Act, by delivery (either by actual delivery or
attestation) of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a
manner approved by) the Board (Fair Market Value),
provided (i) such method of payment is then permitted under
applicable law, (ii) such Common Stock, if acquired
directly from the Company, was owned by the Participant for such
minimum period of time, if any, as may be established by the
Board in its discretion and (iii) such Common Stock is not
subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements;
B-3
(4) to the extent permitted by applicable law and provided
for in the applicable option agreement or approved by the Board,
in its sole discretion, by (i) delivery of a promissory
note of the Participant to the Company on terms determined by
the Board, or (ii) payment of such other lawful
consideration as the Board may determine; or
(5) by any combination of the above permitted forms of
payment.
(h) Limitation on
Repricing. Unless such action is approved by
the Companys stockholders: (1) no outstanding Option
granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise
price per share of such outstanding Option (other than
adjustments pursuant to Section 9) and (2) the
Board may not cancel any outstanding option (whether or not
granted under the Plan) and grant in substitution therefor new
Awards under the Plan covering the same or a different number of
shares of Common Stock and having an exercise price per share
lower than the then-current exercise price per share of the
cancelled option.
6. Stock
Appreciation Rights
(a) General. The Board may grant
Awards consisting of SARs, which entitle the holder, upon
exercise, to receive an amount of Common Stock or cash or a
combination thereof (such form to be determined by the Board)
determined in whole or in part by reference to appreciation,
from and after the date of grant, in the fair market value of a
share of Common Stock over the exercise price established
pursuant to Section 6(c). The date as of which such
appreciation is determined shall be the exercise date.
(b) Grants. SARs may be granted in
tandem with, or independently of, Options granted under the Plan.
(1) Tandem Awards. When SARs are
expressly granted in tandem with Options, (i) the SAR will
be exercisable only at such time or times, and to the extent,
that the related Option is exercisable (except to the extent
designated by the Board in connection with a Reorganization
Event) and will be exercisable in accordance with the procedure
required for exercise of the related Option; (ii) the SAR
will terminate and no longer be exercisable upon the termination
or exercise of the related Option, except to the extent
designated by the Board in connection with a Reorganization
Event and except that a SAR granted with respect to less than
the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related
Option has been exercised or has terminated exceeds the number
of shares not covered by the SAR; (iii) the Option will
terminate and no longer be exercisable upon the exercise of the
related SAR; and (iv) the SAR will be transferable only
with the related Option.
(2) Independent SARs. A SAR not
expressly granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as
the Board may specify in the SAR Award.
(c) Exercise Price. The Board
shall establish the exercise price of each SAR and specify it in
the applicable SAR agreement. The exercise price shall not be
less than 100% of the Fair Market Value on the date the SAR is
granted; provided that if the Board approves the grant of a SAR
with an exercise price to be determined on a future date, the
exercise price shall be not less than 100% of the Fair Market
Value on such future date.
(d) Duration of SARs. Each SAR
shall be exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable SAR
agreement; provided, however, that no SAR will be granted with a
term in excess of 10 years.
(e) Exercise of SARs. SARs may be
exercised by delivery to the Company of a written notice of
exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board,
together with any other documents required by the Board.
(f) Limitation on
Repricing. Unless such action is approved by
the Companys stockholders: (1) no outstanding SAR
granted under the Plan may be amended to provide an exercise
price per share that is lower than the then-current exercise
price per share of such outstanding SAR (other than adjustments
pursuant to Section 9) and (2) the Board may not
cancel any outstanding SAR (whether or not granted under the
Plan) and grant in substitution therefor new Awards under the
Plan covering the same or a different number of shares of Common
Stock and having an exercise price per share lower than the
then-current exercise price per share of the cancelled SAR.
B-4
7. Restricted
Stock; Restricted Stock Units
(a) General. The Board may grant
Awards entitling recipients to acquire shares of Common Stock
(Restricted Stock), subject to the right of the
Company to repurchase all or part of such shares at their issue
price or other stated or formula price (or to require forfeiture
of such shares if issued at no cost) from the recipient in the
event that conditions specified by the Board in the applicable
Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such
Award. Instead of granting Awards for Restricted Stock, the
Board may grant Awards entitling the recipient to receive shares
of Common Stock or cash to be delivered at the time such Award
vests (Restricted Stock Units) (Restricted Stock and
Restricted Stock Units are each referred to herein as a
Restricted Stock Award).
(b) Terms and Conditions for All Restricted Stock
Awards. The Board shall determine the terms
and conditions of a Restricted Stock Award, including the
conditions for vesting and repurchase (or forfeiture) and the
issue price, if any.
(c) Additional Provisions Relating to Restricted
Stock.
(1) Dividends. Participants
holding shares of Restricted Stock will be entitled to all
ordinary cash dividends paid with respect to such shares, unless
otherwise provided by the Board. Unless otherwise provided by
the Board, if any dividends or distributions are paid in shares,
or consist of a dividend or distribution to holders of Common
Stock other than an ordinary cash dividend, the shares, cash or
other property will be subject to the same restrictions on
transferability and forfeitability as the shares of Restricted
Stock with respect to which they were paid. Each dividend
payment will be made no later than the end of the calendar year
in which the dividends are paid to shareholders of that class of
stock or, if later, the 15th day of the third month
following the date the dividends are paid to shareholders of
that class of stock.
(2) Stock Certificates. The
Company may require that any stock certificates issued in
respect of shares of Restricted Stock shall be deposited in
escrow by the Participant, together with a stock power endorsed
in blank, with the Company (or its designee). At the expiration
of the applicable restriction periods, the Company (or such
designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has
died, to the beneficiary designated, in a manner determined by
the Board, by a Participant to receive amounts due or exercise
rights of the Participant in the event of the Participants
death (the Designated Beneficiary). In the absence
of an effective designation by a Participant, Designated
Beneficiary shall mean the Participants estate.
(d) Additional Provisions Relating to Restricted
Stock Units.
(1) Settlement. Upon the vesting
of and/or
lapsing of any other restrictions (i.e., settlement) with
respect to each Restricted Stock Unit, the Participant shall be
entitled to receive from the Company one share of Common Stock
or an amount of cash equal to the Fair Market Value of one share
of Common Stock, as provided in the applicable Award agreement.
The Board may, in its discretion, provide that settlement of
Restricted Stock Units shall be deferred, on a mandatory basis
or at the election of the Participant, in a manner compliant
with Section 409A of the Code.
(2) Voting Rights. A Participant
shall have no voting rights with respect to any Restricted Stock
Units.
(3) Dividend Equivalents. To the
extent provided by the Board, in its sole discretion, a grant of
Restricted Stock Units may provide Participants with the right
to receive an amount equal to any dividends or other
distributions declared and paid on an equal number of
outstanding shares of Common Stock (Dividend
Equivalents). Dividend Equivalents may be paid currently
or credited to an account for the Participants, may be settled
in cash
and/or
shares of Common Stock and may be subject to the same
restrictions on transfer and forfeitability as the Restricted
Stock Units with respect to which paid, as determined by the
Board in its sole discretion, subject in each case to such terms
and conditions as the Board shall establish, in each case to be
set forth in the applicable Award agreement.
8. Other
Stock-Based Awards
(a) General. Other Awards of
shares of Common Stock, and other Awards that are valued in
whole or in part by reference to, or are otherwise based on,
shares of Common Stock or other property, may be granted
hereunder to Participants (Other
Stock-Based-Awards), including without limitation Awards
entitling recipients to receive
B-5
shares of Common Stock to be delivered in the future. Such Other
Stock-Based Awards shall also be available as a form of payment
in the settlement of other Awards granted under the Plan or as
payment in lieu of compensation to which a Participant is
otherwise entitled. Other Stock-Based Awards may be paid in
shares of Common Stock or cash, as the Board shall determine.
(b) Terms and Conditions. Subject
to the provisions of the Plan, the Board shall determine the
terms and conditions of each Other Stock-Based Award, including
any purchase price applicable thereto.
9. Adjustments
for Changes in Common Stock and Certain Other
Events
(a) Changes in Capitalization. In
the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in
capitalization or event, or any dividend or distribution to
holders of Common Stock other than an ordinary cash dividend,
(i) the number and class of securities available under this
Plan, (ii) the share counting rules and
sub-limits
set forth in Sections 4(a) and 4(b), (iii) the number
and class of securities and exercise price per share of each
outstanding Option, (iv) the share- and per-share
provisions and the exercise price of each SAR, (v) the
number of shares subject to and the repurchase price per share
subject to each outstanding Restricted Stock Award and
(vi) the share- and per-share-related provisions and the
purchase price, if any, of each outstanding Other Stock-Based
Award, shall be equitably adjusted by the Company (or
substituted Awards may be made, if applicable) in the manner
determined by the Board. Without limiting the generality of the
foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price
of and the number of shares subject to an outstanding Option are
adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then an
optionee who exercises an Option between the record date and the
distribution date for such stock dividend shall be entitled to
receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option
exercise, notwithstanding the fact that such shares were not
outstanding as of the close of business on the record date for
such stock dividend.
(b) Reorganization Events.
(1) Definition. A
Reorganization Event shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange
transaction or (c) any liquidation or dissolution of the
Company.
(2) Consequences of a Reorganization Event on Awards
Other than Awards of Restricted Stock. In
connection with a Reorganization Event, the Board may take any
one or more of the following actions as to all or any (or any
portion of) outstanding Awards other than Awards of Restricted
Stock on such terms as the Board determines: (i) provide
that Awards shall be assumed, or substantially equivalent Awards
shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to a
Participant, provide that the Participants unexercised
Awards will terminate immediately prior to the consummation of
such Reorganization Event unless exercised by the Participant
within a specified period following the date of such notice,
(iii) provide that outstanding Awards shall become
exercisable, realizable, or deliverable, or restrictions
applicable to an Award shall lapse, in whole or in part prior to
or upon such Reorganization Event, (iv) in the event of a
Reorganization Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for
each share surrendered in the Reorganization Event (the
Acquisition Price), make or provide for a cash
payment to a Participant equal to the excess, if any, of
(A) the Acquisition Price times the number of shares of
Common Stock subject to the Participants Awards (to the
extent the exercise price does not exceed the Acquisition Price)
over (B) the aggregate exercise price of all such
outstanding Awards and any applicable tax withholdings, in
exchange for the termination of such Awards, (v) provide
that, in connection with a liquidation or dissolution of the
Company, Awards shall convert into the right to receive
liquidation proceeds (if applicable, net of the exercise price
thereof and any applicable tax withholdings) and (vi) any
combination of the foregoing. In taking any of the actions
permitted under this Section 9(b), the Board shall not be
obligated by the Plan to treat all Awards, all Awards held by a
Participant, or all Awards of the same type, identically.
B-6
For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in value (as
determined by the Board) to the per share consideration received
by holders of outstanding shares of Common Stock as a result of
the Reorganization Event.
(3) Consequences of a Reorganization Event on Awards
of Restricted Stock. Upon the occurrence of a
Reorganization Event other than a liquidation or dissolution of
the Company, the repurchase and other rights of the Company
under each outstanding Award of Restricted Stock shall inure to
the benefit of the Companys successor and shall, unless
the Board determines otherwise, apply to the cash, securities or
other property which the Common Stock was converted into or
exchanged for pursuant to such Reorganization Event in the same
manner and to the same extent as they applied to the Common
Stock subject to such Award of Restricted Stock. Upon the
occurrence of a Reorganization Event involving the liquidation
or dissolution of the Company, except to the extent specifically
provided to the contrary in the instrument evidencing any Award
of Restricted Stock or any other agreement between a Participant
and the Company, all restrictions and conditions on all Awards
of Restricted Stock then outstanding shall automatically be
deemed terminated or satisfied.
10. General
Provisions Applicable to Awards
(a) Transferability of
Awards. Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to
whom they are granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution or,
other than in the case of an Incentive Stock Option, pursuant to
a qualified domestic relations order, and, during the life of
the Participant, shall be exercisable only by the Participant;
provided, however, that the Board may permit or provide in an
Award for the gratuitous transfer of the Award by the
Participant to or for the benefit of any immediate family
member, family trust or other entity established for the benefit
of the Participant
and/or an
immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a
Form S-8
for the registration of the sale of the Common Stock subject to
such Award under the Securities Act of 1933, as amended;
provided, further, that the Company shall not be required to
recognize any such transfer until such time as the Participant
and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument in form
and substance satisfactory to the Company confirming that such
transferee shall be bound by all of the terms and conditions of
the Award. References to a Participant, to the extent relevant
in the context, shall include references to authorized
transferees.
(b) Documentation. Each Award
shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as
otherwise provided by the Plan, each Award may be made alone or
in addition or in relation to any other Award. The terms of each
Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The
Board shall determine the effect on an Award of the disability,
death, retirement, termination or other cessation of employment,
authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participants
legal representative, conservator, guardian or Designated
Beneficiary, may exercise rights under the Award.
(e) Withholding. The Participant
must satisfy all applicable federal, state, and local or other
income and employment tax withholding obligations before the
Company will deliver stock certificates or otherwise recognize
ownership of Common Stock under an Award. The Company may decide
to satisfy the withholding obligations through additional
withholding on salary or wages. If the Company elects not to or
cannot withhold from other
B-7
compensation, the Participant must pay the Company the full
amount, if any, required for withholding or have a broker tender
to the Company cash equal to the withholding obligations.
Payment of withholding obligations is due before the Company
will issue any shares on exercise or release from forfeiture of
an Award or, if the Company so requires, at the same time as is
payment of the exercise price unless the Company determines
otherwise. Except as the Board may otherwise provide in an
Award, a Participant may satisfy such tax obligations in whole
or in part by delivery (either by actual delivery or
attestation) of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at
their Fair Market Value; provided, however, except as otherwise
provided by the Board, that the total tax withholding where
stock is being used to satisfy such tax obligations cannot
exceed the Companys minimum statutory withholding
obligations (based on minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that
are applicable to such supplemental taxable income). Shares used
to satisfy tax withholding requirements cannot be subject to any
repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(f) Amendment of Award. Except as
otherwise provided in Section 5(h) and 6(f) with respect to
repricings, Section 10(i) with respect to Performance
Awards or Section 11(d) with respect to actions requiring
shareholder approval, the Board may amend, modify or terminate
any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different
type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock
Option. The Participants consent to such action shall be
required unless (i) the Board determines that the action,
taking into account any related action, would not materially and
adversely affect the Participants rights under the Plan or
(ii) the change is permitted under Section 9 hereof.
(g) Conditions on Delivery of
Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the
Plan until (i) all conditions of the Award have been met or
removed to the satisfaction of the Company, (ii) in the
opinion of the Companys counsel, all other legal matters
in connection with the issuance and delivery of such shares have
been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
(h) Acceleration. The Board may at
any time provide that any Award shall become immediately
exercisable in full or in part, free of some or all restrictions
or conditions, or otherwise realizable in full or in part, as
the case may be.
(i) Performance Awards.
(1) Grants. Restricted Stock
Awards and Other Stock-Based Awards under the Plan may be made
subject to the achievement of performance goals pursuant to this
Section 10(i) (Performance Awards), subject to
the limit in Section 4(b) on shares covered by such grants.
(2) Committee. Grants of
Performance Awards to any Covered Employee intended to qualify
as performance-based compensation under
Section 162(m) (Performance-Based Compensation)
shall be made only by a Committee (or subcommittee of a
Committee) comprised solely of two or more directors eligible to
serve on a committee making Awards qualifying as
performance-based compensation under
Section 162(m). In the case of such Awards granted to
Covered Employees, references to the Board or to a Committee
shall be deemed to be references to such Committee or
subcommittee. Covered Employee shall mean any person
who is, or whom the Committee, in its discretion, determines may
be, a covered employee under Section 162(m)(3)
of the Code.
(3) Performance Measures. For any
Award that is intended to qualify as Performance-Based
Compensation, the Committee shall specify that the degree of
granting, vesting
and/or
payout shall be subject to the achievement of one or more
objective performance measures established by the Committee,
which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following:
(a) earnings per share, (b) return on average equity
or average assets with respect to a pre-determined peer group,
(c) earnings, (d) earnings growth, (e) revenues,
(f) expenses, (g) stock price, (h) market share,
(i) return on sales, assets, equity or investment,
(j) regulatory compliance, (k) achievement of balance
sheet or income statement objectives, (l) total shareholder
return (m) net operating profit after tax, (n) pre-tax
or after-tax
B-8
income, (o) cash flow, (p) achievement of research,
development, clinical or regulatory milestones, (q) product
sales and (r) business development activities, and may be
absolute in their terms or measured against or in relationship
to other companies comparably, similarly or otherwise situated.
The Committee may specify that such performance measures shall
be adjusted to exclude any one or more of (i) extraordinary
items, (ii) gains or losses on the dispositions of
discontinued operations, (iii) the cumulative effects of
changes in accounting principles, (iv) the writedown of any
asset, and (v) charges for restructuring and
rationalization programs. Such performance measures:
(i) may vary by Participant and may be different for
different Awards; (ii) may be particular to a Participant
or the department, branch, line of business, subsidiary or other
unit in which the Participant works and may cover such period as
may be specified by the Committee; and (iii) shall be set
by the Committee within the time period prescribed by, and shall
otherwise comply with the requirements of, Section 162(m).
Awards that are not intended to qualify as Performance-Based
Compensation may be based on these or such other performance
measures as the Board may determine.
(4) Adjustments. Notwithstanding
any provision of the Plan, with respect to any Performance Award
that is intended to qualify as Performance-Based Compensation,
the Committee may adjust downwards, but not upwards, the cash or
number of Shares payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable
performance measures except in the case of the death or
disability of the Participant or a change in control of the
Company.
(5) Other. The Committee shall
have the power to impose such other restrictions on Performance
Awards as it may deem necessary or appropriate to ensure that
such Awards satisfy all requirements for Performance-Based
Compensation.
11. Miscellaneous
(a) No Right To Employment or Other
Status. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall
not be construed as giving a Participant the right to continued
employment or any other relationship with the Company. The
Company expressly reserves the right at any time to dismiss or
otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights As
Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall
have any rights as a stockholder with respect to any shares of
Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares.
(c) Effective Date and Term of
Plan. The Plan shall become effective on the
date the Plan is approved by the Companys stockholders
(the Effective Date). No Awards shall be granted
under the Plan after the expiration of 10 years from the
Effective Date, but Awards previously granted may extend beyond
that date.
(d) Amendment of Plan. The Board
may amend, suspend or terminate the Plan or any portion thereof
at any time provided that (i) to the extent required by
Section 162(m), no Award granted to a Participant that is
intended to comply with Section 162(m) after the date of
such amendment shall become exercisable, realizable or vested,
as applicable to such Award, unless and until such amendment
shall have been approved by the Companys stockholders if
required by Section 162(m) (including the vote required
under Section 162(m)); (ii) no amendment that would
require stockholder approval under the rules of the NASDAQ Stock
Market (NASDAQ) may be made effective unless and
until such amendment shall have been approved by the
Companys stockholders; and (iii) if the NASDAQ amends
its corporate governance rules so that such rules no longer
require stockholder approval of material amendments to equity
compensation plans, then, from and after the effective date of
such amendment to the NASDAQ rules, no amendment to the Plan
(A) materially increasing the number of shares authorized
under the Plan (other than pursuant to Section 4(c) or 9),
(B) expanding the types of Awards that may be granted under
the Plan, or (C) materially expanding the class of
participants eligible to participate in the Plan shall be
effective unless stockholder approval is obtained. In addition,
if at any time the approval of the Companys stockholders
is required as to any other modification or amendment under
Section 422 of the Code or any successor provision with
respect to Incentive Stock Options, the Board may not effect
such modification or amendment without such approval. Unless
otherwise specified in the amendment, any amendment to the Plan
adopted in accordance with this Section 11(d) shall apply
to, and be binding on the holders of, all Awards outstanding
under the Plan at the time the amendment is
B-9
adopted, provided the Board determines that such amendment does
not materially and adversely affect the rights of Participants
under the Plan. No Award shall be made that is conditioned upon
stockholder approval of any amendment to the Plan.
(e) Provisions for Foreign
Participants. The Board may modify Awards
granted to Participants who are foreign nationals or employed
outside the United States or establish subplans or procedures
under the Plan to recognize differences in laws, rules,
regulations or customs of such foreign jurisdictions with
respect to tax, securities, currency, employee benefit or other
matters.
(f) Compliance with Code
Section 409A. No Award shall provide for
deferral of compensation that does not comply with
Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to
comply with Section 409A of the Code. The Company shall
have no liability to a Participant, or any other party, if an
Award that is intended to be exempt from, or compliant with,
Section 409A is not so exempt or compliant or for any
action taken by the Board.
(g) Governing Law. The provisions
of the Plan and all Awards made hereunder shall be governed by
and interpreted in accordance with the laws of the State of
Delaware, excluding
choice-of-law
principles of the law of such state that would require the
application of the laws of a jurisdiction other than such state.
B-10
IDERA PHARMACEUTICALS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of Idera Pharmaceuticals, Inc. (the
Company) and certain of its subsidiaries with opportunities to purchase shares of the Companys
Common Stock (the Common Stock). Two Hundred Fifty
Thousand (250,000) shares of Common
Stock in the aggregate have been approved for this purpose.
1. Administration. The Plan will be administered by the Companys Board of Directors
(the Board) or by a Committee appointed by the Board (the Committee). The Board or the
Committee has authority to make rules and regulations for the administration of the Plan and its
interpretation and decisions with regard thereto shall be final and conclusive.
2. Eligibility. Participation in the Plan will neither be permitted nor denied
contrary to the requirements of Section 423 of the Internal Revenue Code of 1986, as amended (the
Code), and regulations promulgated thereunder. All employees of the Company, including directors
who are employees, and all employees of any subsidiary of the Company (as defined in Section 424(f)
of the Code) designated by the Board or the Committee from time to time (a Designated
Subsidiary), are eligible to participate in any one or more of the offerings of Options (as
defined below) to purchase Common Stock under the Plan, provided that:
(a) they are regularly employed by the Company or a Designated Subsidiary for more than
20 hours a week and for more than five months in a calendar year; and
(b) they have been employed by the Company or a Designated Subsidiary for at least
three months prior to enrolling in the Plan; and
(c) they are employees of the Company or a Designated Subsidiary on the first day of
the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee, immediately after the option
is granted, owns 5% or more of the total combined voting power or value of the stock of the Company
or any subsidiary. For purposes of the preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply in determining the stock ownership of an employee, and all stock which the
employee has a contractual right to purchase shall be treated as stock owned by the employee.
3. Offerings. The Company will make one or more offerings (Offerings) to employees
to purchase Common Stock under this Plan. The Board or the Committee shall determine the
commencement dates of each of the Offerings (the Offering Commencement Dates). Each Offering
Commencement Date will begin a period (a Plan Period) during which payroll deductions will be
made and held for the purchase of Common Stock at the end of the Plan Period. The Board or the
Committee shall choose a Plan Period of twelve (12) months or less for each of the Offerings and
may, at its discretion, choose a different Plan Period for each Offering.
1
4. Participation. An employee eligible on the Offering Commencement Date of any
Offering may participate in such Offering by completing and forwarding a payroll deduction
authorization form to the Controller of the Company at least 14 days prior to the applicable
Offering Commencement Date. The form will authorize a regular payroll deduction from the
Compensation received by the employee during the Plan Period. Unless an employee files a new form
or withdraws from the Plan, his deductions and purchases will continue at the same rate for future
Offerings under the Plan as long as the Plan remains in effect. The term Compensation means the
amount of money reportable on the employees Federal Income Tax Withholding Statement, excluding
overtime, shift premium, incentive or bonus awards, allowances and reimbursements for expenses such
as relocation allowances for travel expenses, income or gains on the exercise of Company stock
options or stock appreciation rights, and similar items, whether or not shown on the employees
Federal Income Tax Withholding Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the Committee.
5. Deductions.
(a) The Company will maintain payroll deduction accounts for all participating employees.
With respect to any Offering made under this Plan, an employee may authorize a payroll deduction in
any dollar amount up to a maximum of 10% of the Compensation he or she receives during the Plan
Period or such shorter period during which deductions from payroll are made. Payroll deductions
may be at the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of Compensation.
(b) No employee may be granted an Option which permits his rights to purchase Common Stock
under this Plan and any other stock purchase plan of the Company and its subsidiaries, to accrue at
a rate which exceeds $25,000 of the fair market value of such Common Stock (determined at the
Offering Commencement Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue his payroll deduction
once during any Plan Period by filing a new payroll deduction authorization form. However, an
employee may not increase his payroll deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to discontinue will be applied
to the purchase of Common Stock on the Exercise Date (as defined below).
7. Interest. Interest will not be paid on any employee payroll deduction accounts,
except to the extent that the Board or its Committee, in its sole discretion, elects to credit such
accounts with interest at such per annum rate as it may from time to time determine.
8. Withdrawal of Funds. An employee may on any one occasion during a Plan Period and
for any reason withdraw all or part of the balance accumulated in the employees payroll deduction
account. Any such withdrawal must be effected prior to the close of business on the last day of
the Plan Period. If the employee withdraws all of such balance, the employee shall thereby
withdraw from participation in the Offering and may not begin participation again
2
during the remainder of the Plan Period. Any employee withdrawing all or part of such balance
may participate in any subsequent Offering in accordance with terms and conditions established by
the Board or the Committee, except that, unless otherwise permitted under Section 16 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules promulgated
thereunder, any employee who is also a director and/or officer of the Company within the meaning of
Section 16 of the Exchange Act may not (a) withdraw less than all of the balance accumulated in
such employees payroll deduction account or (b) participate again for a period of at least six
months as provided in Rule 16b-3(d)(2)(i) or any successor provision under the Exchange Act.
9. Purchase of Shares.
(a) On the Offering Commencement Date of each Plan Period, the Company will grant to each
eligible employee who is then a participant in the Plan an option (an Option) to purchase on the
last business day of such Plan Period (the Exercise Date), at the Option Price hereinafter
provided for, such number of whole shares of Common Stock of the Company reserved for the purposes
of the Plan as does not exceed the number of shares determined by dividing 15% of such employees
annualized Compensation for the immediately prior six-month period by the price determined in
accordance with the formula set forth in the following paragraph but using the closing price on the
Offering Commencement Date of such Plan Period.
(b) The Option Price for each share purchased will be 85% of the closing price of the Common
Stock on (i) the first business day of such Plan Period or (ii) the Exercise Date, whichever
closing price shall be less. Such closing price shall be (A) the closing price of the Common Stock
on any national securities exchange on which the Common Stock is listed, or (B) the closing price
of the Common Stock on the Nasdaq National Market (Nasdaq) or (C) the average of the closing bid
and asked prices in the over-the-counter market, whichever is applicable, as published in The
Wall Street Journal. If no sales of Common Stock were made on such a day, the price of the
Common Stock for purposes of clauses (A) and (B) above shall be the reported price for the next
preceding day on which sales were made.
(c) Each employee who continues to be a participant in the Plan on the Exercise Date shall be
deemed to have exercised his Option at the Option Price on such date and shall be deemed to have
purchased from the Company the number of full shares of Common Stock reserved for the purpose of
the Plan that his accumulated payroll deductions on such date will pay for pursuant to the formula
set forth above (but not in excess of the maximum number determined in the manner set forth above).
(d) Any balance remaining in an employees payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except that any balance which is less than
the purchase price of one share of Common Stock will be carried forward into the employees payroll
deduction account for the following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employees account shall be
refunded.
10. Issuance of Certificates. Certificates representing shares of Common Stock
purchased under the Plan may be issued only in the name of the employee, in the name of the
3
employee and another person of legal age as joint tenants with rights of survivorship, or (in
the Companys sole discretion) in the street name of a brokerage firm, bank or other nominee holder
designated by the employee.
11. Rights on Retirement, Death or Termination of Employment. In the event of a
participating employees termination of employment prior to the last business day of a Plan Period
(whether as a result of the employees voluntary or involuntary termination, retirement, death or
otherwise), no payroll deduction shall be taken from any pay due and owing to the employee and the
balance in the employees payroll deduction account shall be paid to the employee or, in the event
of the employees death, (a) to a beneficiary previously designated in a revocable notice signed by
the employee (with any spousal consent required under state law) or (b) in the absence of such a
designated beneficiary, to the executor or administrator of the employees estate or (c) if no such
executor or administrator has been appointed to the knowledge of the Company, to such other
person(s) as the Company may, in its discretion, designate. If, prior to the last business day of
the Plan Period, the Designated Subsidiary by which an employee is employed shall cease to be a
subsidiary of the Company, or if the employee is transferred to a subsidiary of the Company that is
not a Designated Subsidiary, the employee shall be deemed to have terminated employment for the
purposes of this Plan.
12. Optionees Not Stockholders. Neither the granting of an Option to an employee nor
the deductions from his pay shall constitute such employee a stockholder of the shares of Common
Stock covered by an Option under this Plan until such shares have been purchased by and issued to
him.
13. Rights Not Transferable. Rights under this Plan are not transferable by a
participating employee other than by will or the laws of descent and distribution, and are
exercisable during the employees lifetime only by the employee.
14. Application of Funds. All funds received or held by the Company under this Plan
may be combined with other corporate funds and may be used for any corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event of a
subdivision of outstanding shares of Common Stock, or the payment of a dividend in Common Stock,
the number of shares approved for this Plan, and the share limitation set forth in Section 9, shall
be increased proportionately, and such other adjustment shall be made as may be deemed equitable by
the Board or the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the Committee to give proper
effect to such event.
16. Merger.
(a) If the Company shall at any time merge or consolidate with another corporation and the
holders of the capital stock of the Company immediately prior to such merger or consolidation
continue to hold at least 80% by voting power of the capital stock of the surviving corporation
(Continuity of Control), the holder of each Option then outstanding will thereafter be entitled
to receive at the next Exercise Date upon the exercise of such Option for each share as to which
such Option shall be exercised the securities or property which a holder of
4
one share of the Common Stock was entitled to upon and at the time of such merger, and the
Board or the Committee shall take such steps in connection with such merger as the Board or the
Committee shall deem necessary to assure that the provisions of Section 15 shall thereafter be
applicable, as nearly as reasonably may be, in relation to the said securities or property as to
which such holder of such Option might thereafter be entitled to receive thereunder.
(b) In the event of a merger or consolidation of the Company with or into another corporation
which does not involve Continuity of Control, or of a sale of all or substantially all of the
assets of the Company while unexercised Options remain outstanding under the Plan, (i) subject to
the provisions of clauses (ii) and (iii), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities as the holders of shares of Common
Stock received pursuant to the terms of such transaction; or (ii) all outstanding Options may be
cancelled by the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating employees; or (iii)
all outstanding Options may be cancelled by the Board or the Committee as of the effective date of
any such transaction, provided that notice of such cancellation shall be given to each holder of an
Option, and each holder of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the Board or the
Committee, which date shall not be less than ten (10) days preceding the effective date of such
transaction.
17. Amendment of the Plan. The Board may at any time, and from time to time, amend
this Plan in any respect, except that (a) if the approval of any such amendment by the stockholders
of the Company is required by Section 423 of the Code or by Rule 16b-3 under the Exchange Act, such
amendment shall not be effected without such approval, and (b) in no event may any amendment be
made which would cause the Plan to fail to comply with Section 16 of the Exchange Act and the rules
promulgated thereunder, as in effect from time to time, or Section 423 of the Code.
18. Insufficient Shares. In the event that the total number of shares of Common Stock
specified in elections to be purchased under any Offering plus the number of shares purchased under
previous Offerings under this Plan exceeds the maximum number of shares issuable under this Plan,
the Board or the Committee will allot the shares then available on a pro rata basis.
19. Termination of the Plan. This Plan may be terminated at any time by the Board.
Upon termination of this Plan all amounts in the payroll deduction accounts of participating
employees shall be promptly refunded.
20. Governmental Regulations.
(a) The Companys obligation to sell and deliver Common Stock under this Plan is subject to
listing on a national stock exchange or quotation on Nasdaq and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of such stock.
5
(b) The Plan shall be governed by the laws of the State of Delaware except to the extent that
such law is preempted by federal law.
(c) The Plan is intended to comply with the provisions of Rule 16b-3 promulgated under the
Exchange Act. Any provision inconsistent with such Rule shall to that extent be inoperative and
shall not affect the validity of the Plan.
21. Issuance of Shares. Shares may be issued upon exercise of an Option from
authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any
other proper source.
22. Notification upon Sale of Shares. Each employee agrees, by entering the Plan, to
promptly give the Company notice of any disposition of shares purchased under the Plan where such
disposition occurs within two years after the date of grant of the Option pursuant to which such
shares were purchased.
23. Effective Date and Approval of Stockholders. The Plan shall take effect upon the
closing of the Companys initial public offering of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, subject to approval by the
stockholders of the Company as required by Rule 16b-3 under the Exchange Act and by Section 423 of
the Code, which approval must occur within twelve months of the adoption of the Plan by the Board.
6
FOLD AND DETACH HERE
IDERA PHARMACEUTICALS, INC.
|
|
|
|
|
This Proxy when properly executed will be
voted in the manner directed by the
undersigned stockholder(s). If no indication
is made, the proxies shall vote FOR the
director nominees and FOR proposals numbered
2, 3, 4 and 5.
|
|
Please mark your
votes as
indicated in
this example
|
|
þ |
A vote FOR the director nominees and FOR proposals numbered 2, 3, 4 and 5 is recommended by the Board
of Directors.
|
|
|
|
|
|
|
1) Election of Class I Directors
|
|
FOR
o
|
|
WITHHELD
o
|
|
FOR ALL EXCEPT
o |
Nominees:
01 Mr. C. Keith Hartley, 02 Dr. Hans Mueller and 03 Mr. William S. Reardon
If you do not wish your shares voted FOR a particular nominee, mark the
For All Except box and strike a line through the nominee(s)s name(s)
as listed above. Your shares will be voted for the remaining nominee(s).
|
|
|
|
|
|
|
2. Approval of amendment to our Restated
Certificate of Incorporation to increase
the authorized common stock from 40,000,000
to 70,000,000 shares
|
|
FOR
o
|
|
AGAINST
o
|
|
ABSTAIN
o |
|
|
|
|
|
|
|
3. Approval of our 2008 Stock Incentive Plan
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
4. Approval of amendment to our 1995
Employee Stock Purchase Plan to increase
the number of shares of common stock
authorized for issuance thereunder from
125,000 shares to 250,000 shares
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
5. Ratification of the selection of Ernst &
Young LLP as our independent registered
public accountants
|
|
o
|
|
o
|
|
o
|
Mark box at right if an address change has been noted on reverse side of this card.
o
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual
Meeting or any adjournment thereof.
PLEASE BE SURE TO SIGN
AND DATE THIS PROXY
Please sign this proxy exactly as your name appears hereon. Joint Owners should each sign
personally. Trustees and other fiduciaries should indicate the capacity in which they sign. If a
corporation or partnership, this signature should be that of an authorized officer who should state
his or her title.
5 FOLD AND DETACH HERE 5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK:
Internet and telephone voting is available through 11:59 PM Eastern Time on the day prior to
the annual meeting day. Your Internet or telephone vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet
http://www.proxyvoting.com/IDRA
Use the Internet to vote your
proxy. Have your proxy card in
hand when you access the web
site.
|
|
|
OR
|
|
|
Telephone
1-866-540-5760
Use any touch-tone telephone to
vote your proxy. Have your
proxy card in hand when you
call. |
|
|
|
|
|
|
|
|
|
|
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
IDERA PHARMACEUTICALS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Stockholders June 4, 2008
Those signing on the reverse side, revoking all prior proxies, hereby appoint(s) Dr. Sudhir
Agrawal and Mr. Louis J. Arcudi, III or each or any of them with full power of substitution, as
proxies for those signing on the reverse side to act and vote all shares of stock of Idera
Pharmaceuticals, Inc. which the undersigned would be entitled to vote if personally present at the
2008 Annual Meeting of Stockholders of Idera Pharmaceuticals, Inc. and at any adjournments thereof
as indicated upon all matters referred to on the reverse side and described in the Proxy Statement
for the Meeting, and, in their discretion, upon any other matters which may properly come before
the Meeting. Attendance of the undersigned at the Meeting or at any adjournment thereof will not be
deemed to revoke this proxy unless those signing on the reverse side shall revoke this proxy in
writing.
HAS YOUR ADDRESS CHANGED?
|
|
|
|
|
PLEASE VOTE, DATE AND SIGN ON |
|
|
OTHER
SIDE AND RETURN PROMPTLY IN |
|
|
ENCLOSED ENVELOPE. |
|
|
|
|
|
|
|
|
|