| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers. |
Vincent Milano
Resignation as CEO and Appointment as Chair
of the Board
As of the Effective Date, the Board approved the
appointment of Vincent Milano, age 58, to serve as a non-employee Chair of the Board pursuant to board resolutions approving such appointment.
Immediately prior to his appointment as Chair of the Board, Mr. Milano resigned as Idera’s President and Chief Executive Officer
(“CEO”), a position he had held since 2014. Mr. Milano has served as a member of the Board since 2014.
Mr. Milano has no family relationship with
any of the executive officers or directors of Idera. There are no arrangements or understandings between Mr. Milano and any other
person pursuant to which he was appointed as a non-employee member of the Board.
Vincent Milano Employee Separation Agreement
On and effective as of the Effective Date, Idera
entered into an employee separation agreement with Mr. Milano (the “Milano Separation Agreement”). Pursuant to
the Milano Separation Agreement, Mr. Milano has transitioned from CEO to the role of non-employee Chair of the Board as described
above and will receive (a) any earned and unpaid base salary through the Effective Date; (b) any earned and unpaid annual incentive
cash bonus payable with respect to any fiscal year which ended prior to the Effective Date; (c) any accrued but unused personal time
off days; (d) reimbursement for any outstanding expenses for which Mr. Milano have not been reimbursed and which are authorized
and (e) any vested benefits under Idera’s employee benefit plans in accordance with the terms of such plans, as accrued through
the Effective Date (collectively, the “Accrued Obligations”). The Accrued Obligations shall be paid following the Effective
Date at such times and in accordance with such plans and policies as would normally apply to such amounts or benefits.
In addition, provided that Mr. Milano does
not revoke the Milano Separation Agreement (including the general release of claims in favor of Idera as set forth therein) and Mr. Milano
continues to comply with the restrictive covenants incorporated into the Milano Separation Agreement, Mr. Milano will receive (i) a
cash payment of $225,000, representing a prorated portion of the 2022 calendar year annual cash incentive award, at target, based
on the period Mr. Milano was employed through the Effective Date (to be paid in a lump sum within thirty days following the Effective
Date); (ii) $606,357, payable in substantially equal installments in accordance with Idera’s payroll practices, over the twelve
months following the Effective Date starting with the first payroll date following such date; and (iii) fully vested shares of Common
Stock with a value of $800,000, based on the volume-weighted average price of Common Stock on the twenty days prior to the grant date,
as soon as practicable, but in no event more than thirty (30) days following the approval of the Charter Amendment Proposal and the Reverse
Stock Split Proposal.
The foregoing description of the Milano Separation
Agreement does not purport to be complete and is qualified in its entirety by reference to the Milano Separation Agreement, which is filed
as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Appointment of Chief Executive Officer
Effective as of the Effective Date, the Board
has approved the appointment of John Taylor, age 52, as CEO of Idera.
Previously, Mr. Taylor was the Co-Founder,
President and CEO of Aceragen, a rare disease biopharmaceutical company, as well as a member of Aceragen’s board of directors from
January 2021 to September 2022. Prior to Aceragen, Mr. Taylor co-founded and was President and CEO of Spyryx Biosciences,
a company developing inhaled peptides as a treatment for cystic fibrosis, between 2013 and February 2018. Prior to co-founding Spyryx
Biosciences, from 2009 to 2013 Mr. Taylor held the position of Vice President, Corporate Development with Synageva BioPharma, a biotechnology
company developing enzyme replacement therapies for untreated lysosomal storage disorders. Prior to that, from 2008 to 2009 Mr. Taylor
was the Vice President of Business Development for Javelin Pharmaceuticals, a company engaged in developing and marketing products for
pain management, and, from 2003 to 2008, a senior business development leader with Eurand Pharmaceuticals, a global specialty pharmaceutical
company. Mr. Taylor holds a B.S. in biological sciences from Clemson University and a M.S. in technology management from the University
of Pennsylvania.
Mr. Taylor is the son-in-law of Andy Jordan,
who was appointed the Chief Strategy Officer of Idera as of the Effective Date. There are no arrangements or understandings between Mr. Taylor
and any other person pursuant to which he was appointed as an officer of Idera.
Taylor Employment Agreement
In connection with the Merger, Mr. Taylor’s
“at will” employment agreement with Aceragen (the “Taylor Employment Agreement”), dated February 25,
2021, was assumed by Idera on the same terms as entered into by Aceragen except as otherwise described herein. Pursuant to certain approvals
by Aceragen prior to the Merger, Mr. Taylor’s annual base salary was increased to $450,000, effective as of the Effective Date.
In addition, Mr. Taylor is eligible for a discretionary annual incentive bonus, which will be determined by the Board. Additionally,
the target bonus will be fifty percent (50%) of Mr. Taylor’s annual base salary. All other terms of the Taylor Employment Agreement
will remain the same.
Pursuant to the Taylor Employment Agreement, if
Idera terminates Mr. Taylor’s employment for any reason other than Cause or Permanent Disability (each as defined by the Taylor
Employment Agreement) (such termination, a “Taylor Separation”), provided that Mr. Taylor returns all company
property in his possession and executes a general release of claims in favor of Idera, Mr. Taylor will be entitled to severance benefits
in the form of (i) continued payment of his base salary for a period of up to twelve (12) months from the date of Taylor Separation;
(ii) if Mr. Taylor elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”), payment of the company portion of the monthly COBRA premiums for Idera’s medical benefit plan for
twelve (12) months; and (iii) twelve (12) additional months of service-based vesting (in addition to vesting determined by the actual
period of service that has been completed with Idera or with Aceragen, as applicable). Such vested portion of the equity positions will
be exercisable by Mr. Taylor for twelve (12) months following the Taylor Separation. In the event of a change of control, any unvested
portions of equity position owned or controlled by Mr. Taylor shall, as of the closing of such transaction, accelerate and become
fully vested.
Mr. Taylor will participate in Idera-sponsored
employee benefit plans, including its medical, dental, vision and 401(k) plans or similar arrangements. Idera will also provide an
allowance, not to exceed $2,500 per month, for the cost of the health, dental, and vision plans. Mr. Taylor will be entitled to use
paid time off, in accordance with Idera policies. Mr. Taylor also will be entitled to received equity-based awards under Idera’s
2013 Stock Incentive Plan, as amended and restated.
The foregoing description of the Taylor Employment
Agreement does not purport to be complete and is qualified in its entirety by reference to the Taylor Employment Agreement, which is filed
as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Appointment of Chief Operating Officer
On and effective as of the Effective Date, the
Board approved the appointment of Daniel Salain, age 55, as Chief Operating Officer of Idera. Prior to this appointment, Mr. Salain
served as Chief Operating Officer at Aceragen, a rare disease biopharmaceutical company, a position he held since June 2020. Previously,
Mr. Salain was the Chief Operating Officer at Graybug Vision, Inc., clinical-stage biopharmaceutical company focused on developing
medicines for ocular diseases, from December 2017 to May 2020 and was the Senior Vice President, Global Head of Manufacturing &
Supply Chain at Ophthothech, a clinical-stage biotechnology company, from April 2015 to November 2017. Prior to working at Ophthothech,
Mr. Salain was the Vice President of Global Operations, Manufacturing & Supply Chain at Aptalis Pharmaceuticals, a company
that focused on developing products to treat gastrointestinal diseases and disorders, from 1999 to 2014. Mr. Salain has a bachelor
of science degree in Chemistry and Marketing from the University of Indianapolis.
Mr. Salain has no family relationship with
any of the executive officers or directors of Idera. There are no arrangements or understandings between Mr. Salain and any other
person pursuant to which he was appointed as an officer of Idera.
Salain Employment Agreement
In connection with the Merger, Mr. Salain’s
employment agreement with Aceragen (the “Salain Employment Agreement”), dated February 25, 2021, was assumed by
Idera on the same terms as entered into by Aceragen except as otherwise described herein. Pursuant to certain approvals by Aceragen prior
to the Merger, Mr. Salain’s annual base salary was increased to $400,000, effective as of the Effective Date. In addition,
Mr. Salain is eligible for a discretionary annual incentive bonus, which will be determined by the Board. Additionally, the target
bonus will be forty percent (40%) of Mr. Salain’s annual base salary. All other terms of the Salain Employment Agreement will
remain the same.
Pursuant to the Salain Employment Agreement, if
Idera terminates Mr. Salain’s employment for any reason other than Cause or Permanent Disability (each as defined by the Salain
Employment Agreement) (“Salain Separation”), provided that Mr. Taylor returns all company property in his possession
and executes a general release of claims in favor of Idera, Mr. Salain will be entitled to severance benefits in the form of (i) continued
payment of his base salary for a period of up to twelve (12) months from the date of Salain Separation, (ii) if Mr. Salain elects
to continue his health insurance coverage under COBRA payment of the company portion of the monthly COBRA premiums for Idera’s medical
benefit plan for twelve (12) months and (iii) twelve additional months of service-based vesting (in addition to the vesting determined
by the actual period of service that had been completed with Idera or with Aceragen, as applicable). Such vested portion of the equity
positions will be exercisable by Mr. Salain for twelve (12) months following the Salain Separation. In the event of a change of control,
any unvested portions of equity position owned or controlled by Mr. Salain shall, as of the closing of such transaction, accelerate
and become fully vested.
Mr. Salain will participate in Idera-sponsored
employee benefit plans, including its medical, dental, vision and 401(k) plans or similar arrangements. Idera will also provide an
allowance, not to exceed $2,500 per month, for the cost of the health, dental, and vision plans. Mr. Salain will be entitled to use
paid time off, in accordance with Idera policies. Mr. Salain also will be entitled to received equity-based awards under Idera’s
2013 Stock Incentive Plan, as amended and restated.
The foregoing description of the Salain Employment
Agreement does not purport to be complete and is qualified in its entirety by reference to the Salain Employment Agreement, which is filed
as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference
Retention Agreements
John Kirby Retention Agreement
In accordance with the Merger Agreement, John
Kirby will remain Chief Financial Officer (“CFO”) of Idera.
As of the Effective Date, Idera and Mr. Kirby
entered into an employment continuation and retention bonus letter agreement (the “Kirby Employee Retention Agreement”),
pursuant to which Mr. Kirby’s annual base salary will increase to $400,000, less applicable taxes and withholdings and Mr. Kirby’s
current target bonus will be pro-rated to reflect the increase in annual base salary. Mr. Kirby had previously entered into an individual
severance agreement with Idera based off of Idera’s form Severance and Change of Control Agreement (“Severance Agreement”),
pursuant to which he is eligible to receive certain severance payments and benefits upon certain terminations of employment with Idera,
including for Good Reason (as defined in the Severance Agreement). Pursuant to the Kirby Employee Retention Agreement, Mr. Kirby
has agreed to waive his right to resign for Good Reason solely in connection with the closing of the Merger. The remaining terms of the
Severance Agreement remain in full force and effect.
Mr. Kirby will be eligible to receive an
amount in stock and/or cash with an aggregate value equal to $766,500 (the “Kirby Retention Bonus”), which will be
paid in two installments. Mr. Kirby will receive fully vested shares of Common Stock in a number of shares calculated by dividing
(a) one-third of the Kirby Retention Bonus by (b) the volume-weighted average price of the Common Stock based on the 20 trading
days prior to the first business day that is within the next available trading window following the Effective Date under Idera’s
applicable trading policies. If Mr. Kirby’s employment with Idera terminates for any reason (other than by Idera for Cause
(as defined in the Severance Agreement)) prior to the six-month anniversary of the approval of the Charter Amendment Proposal and the
Reverse Stock Split Proposal (the “Six-Month Anniversary”), Mr. Kirby will receive a lump sum amount in cash equal
to two-thirds of the Kirby Retention Bonus, less applicable taxes and withholdings (the “Kirby Cash Retention Bonus”).
If Mr. Kirby’s employment with Idera continues following such Six-Month Anniversary, or if Idera terminates Mr. Idera’s
employment for Cause (as defined in the Severance Agreement) prior to such date, Mr. Kirby’s right to receive the Kirby Cash
Retention Bonus will terminate.
If Mr. Kirby’s employment with Idera
continues past the Six-Month Anniversary, in lieu of the Kirby Cash Retention Bonus, Mr. Kirby will receive (a) a number of
restricted shares of Common Stock calculated by dividing (1) two-thirds of the Kirby Retention Bonus by (2) the volume-weighted
average price per share of Common Stock based on the twenty (20) trading days prior to the date of grant, rounded down to the nearest
full share (the “Restricted Stock”) or (b) a restricted cash award in an amount equal to two-thirds of the Retention
Bonus, less applicable taxes and withholding (“Restricted Cash”) within 30 days of the Six Month Anniversary. The Restricted
Stock or Restricted Cash will vest over two years, with 50% vesting upon the first anniversary and the remainder vesting in equal quarterly
installments thereafter (each, a “Kirby Vesting Date”). Upon termination of Mr. Kirby’s employment or service
with Idera for any reason prior to the final Kirby Vesting Date, Mr. Kirby will forfeit the unvested portion of the Restricted Stock
or Restricted Cash, as applicable.
The foregoing description of the Kirby Employee
Retention Agreement does not purport to be complete and is qualified in its entirety by reference to the Kirby Employee Retention Agreement,
which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Bryant Lim Retention Agreement
In accordance with the Merger Agreement, Bryant
Lim will remain Senior Vice President, Chief Business Officer and General Counsel of Idera.
As of the Effective Date, Idera and Mr. Lim
entered into an employment continuation and retention bonus letter agreement (the “Lim Employee Retention Agreement”),
pursuant to which Mr. Lim’s annual base salary will increase to $400,000, less applicable taxes and withholdings. Further,
Mr. Lim’s current target bonus will be pro-rated to reflect the increase in annual base salary. Mr. Lim and Idera previously
entered into a severance agreement based off the Severance Agreement (the “Lim Severance Agreement”), pursuant to which
he is eligible to receive certain severance payments and benefits upon certain terminations of employment with Idera, including for Good
Reason. Pursuant to the Lim Employee Retention Agreement, Mr. Lim has agreed to waive his right to resign for Good Reason, as defined
in the Lim Severance Agreement, solely in connection with the closing of the Merger. The remaining terms of the Lim Severance Agreement
remain in full force and effect.
Mr. Lim will be eligible to receive an amount
in stock and/or cash with an aggregate value equal to $766,500 (the “Lim Retention Bonus”), which will be paid in two
installments. Mr. Lim will receive fully vested shares of Common Stock in a number of shares calculated by dividing (a) one-third
of the Lim Retention Bonus, by (b) the volume-weighted average price of the Common Stock based on the 20 trading days prior to the
first business day that is within the next available trading window following the Effective Date under Idera’s applicable trading
policies. If Mr. Lim’s employment with Idera terminates for any reason (other than by Idera for Cause (as defined in the Lim
Severance Agreement)) prior to the Six-Month Anniversary, Mr. Lim will receive a lump sum amount in cash equal to two-thirds of the
Lim Retention Bonus, less applicable taxes and withholdings (the “Lim Cash Retention Bonus”). If Mr. Lim’s
employment with Idera continues following the Six-Month Anniversary, or if Idera terminates Mr. Idera’s employment for Cause
(as defined in the Severance Agreement) prior to such date, Mr. Lim’s right to receive the Lim Cash Retention Bonus will terminate.
If Mr. Lim’s employment with Idera
continues past the Six-Month Anniversary, in lieu of the Lim Cash Retention Bonus, Mr. Lim will receive (a) Restricted Stock
or (b) Restricted Cash within 30 days of the Six-Month Anniversary. The Restricted Stock or Restricted Cash will vest over two years,
with 50% vesting upon the first anniversary and the remainder vesting in equal quarterly installments thereafter (each, a “Lim
Vesting Date”). Upon termination of Mr. Lim’s employment or service with Idera for any reason prior to the final
Lim Vesting Date, Mr. Lim will forfeit the unvested portion of the Restricted Stock or Restricted Cash, as applicable.
The foregoing description of the Lim Employee
Retention Agreement does not purport to be complete and is qualified in its entirety by reference to the Lim Employee Retention Agreement,
which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.
Separation Agreement
As
of the Effective Date, Idera entered into an executive transition and separation agreement (the “Soland Separation Agreement”)
with Daniel Soland, who until the Effective Date served as Idera’s Senior Vice President and Chief Operating Officer. Under the
Soland Separation Agreement, Mr. Soland will provide certain advisory and transition services to Idera from the Effective Date through
the period of thirty (30) days following the approval of the Charter Amendment Proposal and the Reverse Stock Split Proposal. Further,
Mr. Soland will receive (a) any earned and unpaid base salary through the Effective Date; (b) any earned and unpaid annual
incentive bonus payable with respect to any fiscal year which ended prior to the Effective Date; (c) any accrued but unused personal
time off days; (d) reimbursement for any outstanding expenses for which Mr. Soland has not been reimbursed and which are authorized
and (e) any vested benefits under Idera’s employee benefit plans in accordance with the terms of such plans, as accrued through
the Effective Date.
Under the terms of the Soland Separation Agreement,
Mr. Soland agrees to provide certain advisory and transition services to Idera for a period of thirty days following the approval
of the Merger Agreement Meeting Proposals. In consideration for his services during such a period Mr. Soland will be entitled to
$500 per hour preformed for services requested by Idera in an independent contractor capacity.
In
addition, provided that Mr. Soland does not revoke the Soland Separation Agreement (including the general release of claims
in favor of Idera as set forth therein) and Mr. Soland continues to comply with the restrictive covenants incorporated into the Soland
Separation Agreement, Mr. Soland will receive (i) a cash payment of $127,500, representing the prorated portion of the 2022
calendar year annual cash incentive award, measured at target performance, based on the period Mr. Soland was employed through the
Effective Date (the prorated award will be paid in a lump sum within thirty days following the Effective Date); (ii) $459,754, payable
in substantially equal installments over the twelve (12)-month period starting on the first payroll date following the closing of the
merger; and (iii) fully vested shares of Common Stock equal to a number of shares, calculated by dividing $500,000 based on the volume-weighted
average price of Common Stock on the twenty days prior to the grant date, rounded down to the nearest full share (to be granted as soon
as practicable, but in no event more than thirty (30) days following the approval of the Charter Amendment Proposal and the Reverse Stock
Split Proposal).
The foregoing description of the Soland Separation
Agreement does not purport to be complete and is qualified in its entirety by reference to the Soland Separation Agreement, which is filed
as Exhibit 10.6 to this Current Report on Form 8-K and incorporated herein by reference.
Resignation of Directors
In accordance with the Merger Agreement, on the
Effective Date, immediately prior to the effective time of the Merger (the “Effective Time”), Dr. Mark Goldberg
and Ms. Carol Schafer resigned from the Board. Dr. Goldberg had been the chair of the Science and Technology Committee and a
member of the audit committee. Ms. Schafer had been the chair of the audit committee and a member of the nominating & corporate
governance committee. The resignations were not the result of any disagreements with Idera relating to the Idera’s operations, policies
or practices.
Appointment of Directors
In accordance with the Merger Agreement, effective
immediately after the Effective Time, Mr. Taylor and Mr. Ronald Wooten were appointed to the Board as directors.
Ronald
Wooten, age 63, will serve as a non-employee director of Idera. Prior to the closing of the Merger, Mr. Wooten served as a member
of the board of directors of Aceragen since May 2021. Mr. Wooten has been a partner of NovaQuest Capital Management, L.L.C.,
an investment firm that focuses on the biopharmaceutical sector, since its inception in November 2010. Since 2010, Mr. Wooten
has been a member of the investment committee of NovaQuest Pharma Opportunities Fund III, NovaQuest Pharma Opportunities Fund IV,
NovaQuest Pharma Opportunities Fund V, NovaQuest Private Equity Fund I and NovaQuest Animal Health Fund I. From 2000 until November 2010,
he was president for the NovaQuest business unit of Quintiles Inc., a contract research company. Mr. Wooten was previously Executive
Vice President at Quintiles and served on its board of directors from January 2008 to November 2010. Mr. Wooten’s
previous experience includes nine years with First Union Securities, where he served as a Managing Director of Investment Banking. Mr. Wooten
holds a B.A. degree in Chemistry from the University of North Carolina at Chapel Hill and an M.B.A. from Boston University.
Mr. Wooten
will receive the same benefits and compensation as other non-employee directors of Idera pursuant to Idera’s non-employee director
compensation policy, as described on page 11 of Idera’s definitive proxy statement on Schedule 14A filed with the SEC on April 29, 2022. There are no arrangements or understandings between Mr. Wooten and any other person pursuant to which he
was appointed as a non-employee member of the Board.
Board Committees
Audit Committee
In connection with the closing of the
Merger, Dr. Maxine Gowen, Mr. Michael Dougherty, and Mr. Wooten were appointed to the audit committee of the Board, and
Mr. Dougherty was appointed the chair of the audit committee.
Compensation Committee
In connection with the closing of the
Merger, Dr. Gowen and Dr. Cristina Csimma were appointed to the compensation committee of the Board, and Dr. Gowen was
appointed the chair of the compensation committee.
Nominating and Corporate Governance Committee
In connection with the closing of the
Merger, Dr. Csimma and Mr. Dougherty were appointed to the nominating and corporate governance committee of the Board, and
Dr. Csimma was appointed the chair of the nominating and corporate governance committee.
Special Transaction Committee
In connection with the closing of the Merger,
Mr. Milano and Mr. Taylor were appointed to the special transaction committee of the Board.
Indemnification Agreements
In connection with Mr. Taylor’s and
Mr. Wooten’s appointment as directors, Mr. Taylor’s appointment as CEO, and Mr. Salain’s appointment
as Chief Operating Officer, each of Mr. Taylor, Mr. Wooten, and Mr. Salain will enter into Idera’s standard form
of director and officer indemnification agreement, a copy of which was filed as Exhibit 10.7 hereto.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Series Z Preferred Stock
On the Effective Date, Idera filed a Certificate
of Designation of Preferences, Rights and Limitations of Series Z Non-Voting Convertible Preferred Stock with the Secretary of State
of the State of Delaware (the “Series Z Certificate of Designation”) in connection with the Merger referenced
in Item 1.01 above. The Series Z Certificate of Designation provides for the issuance of shares of Series Z Preferred Stock.
Holders
of Series Z Preferred Stock are entitled to receive dividends on shares of Series Z Preferred Stock equal to, on an as-if-converted-to-Common-Stock
basis, and in the same form and manner as, dividends actually paid on shares of Common Stock. Except as otherwise required by law, the
Series Z Preferred Stock does not have voting rights. However, as long as any shares of Series Z Preferred Stock are outstanding, Idera
will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series Z Preferred Stock,
(a) alter or change adversely the powers, preferences or rights given to the Series Z Preferred Stock, (b) alter or amend
the Series Z Certificate of Designation, (c) amend its certificate of incorporation or other charter documents in any manner
that adversely affects any rights of the holders of Series Z Preferred Stock, (d) issue further shares of Series Z Preferred
Stock or increase the number of authorized shares of Series Z Preferred Stock, (e) prior to the stockholder approval of the
Conversion Proposal or at any time while at least 30% of the originally issued Series Z Preferred Stock remains issued and outstanding,
consummate a Fundamental Transaction (as defined in the Series Z Certificate of Designation) or any merger or consolidation of Idera
with or into another entity or any stock sale to, or other business combination in which the stockholders of Idera immediately before
such transaction do not hold at least a majority of the capital stock of Idera immediately after such transaction, or (f) enter into
any agreement with respect to any of the foregoing. The Series Z Preferred Stock shall rank on parity with the Common Stock
as to distributions of assets upon liquidation, dissolution or winding up of Idera, whether voluntarily or involuntarily.
Following
stockholder approval of the Conversion Proposal, each share of Series Z Preferred Stock then outstanding shall automatically convert
into a number of shares of Common Stock equal to the Conversion Ratio (as defined in the Series Z Certificate of Designation), subject
to certain limitations, including that Idera shall not effect any conversion of shares of Series Z Preferred Stock into shares of
Common Stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more 19.99% of the
total number of shares of Common Stock issued and outstanding immediately after giving effect to such conversion. Under the terms
of the Merger Agreement, Idera has agreed to use reasonable best efforts to call and hold the Special Meeting to obtain the requisite
approval for the conversion of all outstanding shares of Series Z Preferred Stock issued in the Merger into shares of Common Stock,
as required by the listing rules of The Nasdaq Stock Market LLC, within 90 days after the date of the Merger Agreement and, if such
approval is not obtained at the Special Meeting, to seek to obtain such approval at an annual or special stockholders meeting to be held
at least every six months thereafter until such approval is obtained, which would be time consuming and costly. If Idera’s stockholders
do not timely approve the conversion of the Series Z Preferred Stock, then the holders of Series Z Preferred Stock may, commencing
six months following the Effective Date, be entitled to require Idera, subject to the approval of the holders of Series X Preferred
Stock, to settle their shares of Series Z Preferred Stock for cash at a price per share equal to the then-current fair value of the
Series Z Preferred Stock, as described in the Series Z Certificate of Designation.
The foregoing description of the Series Z
Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Series Z Certificate of Designation,
a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Series X Preferred Stock
On the Effective Date, Idera filed a Certificate
of Designation of Preferences, Rights and Limitations of the Series X Preferred Stock with the Secretary of State of the State of
Delaware (the “Series X Certificate of Designation”) in connection with the Merger referenced in Item 1.01 above.
The Series X Certificate of Designation provides for the issuance of shares of Series X Preferred Stock.
Holders of Series X Preferred Stock are entitled
to receive distributions on shares of Series X Preferred Stock as set forth in (a) that certain Stock and Warrant Purchase Agreement
dated as of March 24, 2021, by and among Aceragen and the other parties thereto, as amended by that Amendment, dated October 25,
2021, and as such agreement may be amended from time to time (the “Purchase Agreement”), and (b) that certain
Sales Distribution and PRV Agreement dated as of October 25, 2021, by and among Aceragen and the other parties thereto, as such agreement
may be amended from time to time (the “PRV Agreement” and any such distributions under the Purchase Agreement and the
PRV Agreement, the “Preferred Distributions”), prior and in preference to any declaration or payment of any other distribution
or dividend (other than dividends on shares of Common Stock payable in shares of Common Stock).
Pursuant
to the terms and conditions of the Purchase Agreement and the PRV Agreement, Aceragen must make a distribution to holders of
Series X Preferred Stock in the event either (i) Aceragen receives any proceeds from the sale of a priority review
voucher granted by the United States Federal Drug Administration in connection with regulatory approval of a ACG-801 (recombinant
human acid ceramidase) or ACG-701 (sodium fusidate) product (each, a “Product”) or (ii) Aceragen does not receive
such a priority review voucher or does not complete a priority review voucher sale within a certain period after receipt. In
addition, Aceragen agreed to make net sales distributions to holders of Series X Preferred Stock based upon future net sales of
the Products under the Purchase Agreement and the PRV Agreement. Upon a Change of Control (as defined in the Purchase Agreement or
PRV Agreement) or Product Divestiture (as defined in the PRV Agreement) of a ACG-701 (sodium fusidate) product, Aceragen may, and
NovaQuest may require Aceragen to, redeem the Series X Preferred Stock at a price equal to the fair market value thereof or
make certain other distributions to the holders of Series X Preferred Stock, in each case as further described in the Purchase
Agreement and PRV Agreement.
Except as otherwise required by law, the
Series X Preferred Stock does not have voting rights. However, as long as any shares of Series X Preferred Stock are
outstanding, Idera will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the
Series X Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series X
Preferred Stock, (b) alter or amend the Series X Certificate of Designation, (c) amend its certificate of
incorporation or other charter documents in any manner that adversely alters or affects any rights of the holders of Series X
Preferred Stock, (d) issue further shares of Series X Preferred Stock or increase or decrease the number of authorized
shares of Series X Preferred Stock or any additional classes or series of capital stock unless the same ranks junior to the
Series X Preferred Stock, (e) create or authorize the creation of any capital stock unless such capital stock is junior in
rights, preferences and privileges to the Series X Preferred Stock or (f) purchase or redeem any shares of the
Company’s capital stock, subject to certain exceptions. The Series X Preferred Stock shall rank senior to the
Series Z Preferred Stock, Idera's existing Series A Convertible Preferred Stock and Common Stock as to distributions of
assets upon liquidation, dissolution or winding up of Idera, whether voluntarily or involuntarily.
The foregoing description of the Series X
Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Series X Certificate of Designation,
a copy of which is filed as Exhibit 3.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Forward Looking Statements
This
Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to, statements regarding: uses of proceeds; projected cash runways; future product development plans;
and stockholder approval of the conversion rights of the Series Z Preferred Stock. The use of words such as, but not limited to,
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,”
“should,” “target,” “will,” or “would” and similar words expressions are intended to identify
forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they
are based on Idera’s current beliefs, expectations and assumptions regarding the future of its business, future plans and strategies,
clinical results and other future conditions. There are a number of important factors that could cause Idera's actual results to differ
materially from those indicated or implied by such forward-looking statements including, without limitation: whether Idera will be able
to successfully integrate the Aceragen operations and realize the anticipated benefits of the acquisition of Aceragen; whether Idera is
able to resolve the clinical hold affecting the ACG-801 program; whether Idera’s stockholders approve the conversion of the Series Z
Preferred Stock and the required cash payment of the then-current fair value of the Series Z Preferred Stock if such approval
is not provided; whether Idera’s cash resources will be sufficient to fund Idera’s continuing operations and the newly acquired
Aceragen operations, including the liabilities of Aceragen incurred in connection with the completion of the Merger; whether Idera’s
products will advance into or through the clinical trial process when anticipated or at all or warrant submission for regulatory approval;
whether such products will receive approval from the U.S. Food and Drug Administration or equivalent foreign regulatory agencies; whether,
if Idera’s products receive approval, they will be successfully distributed and marketed; whether Idera’s collaborations will
be successful; and whether Idera will be able to comply with the continued listing requirements of the Nasdaq Capital Market. New risks
and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. No representations or warranties
(expressed or implied) are made about the accuracy of any such forward-looking statements. Idera may not actually achieve the forecasts
disclosed in such forward-looking statements, and you should not place undue reliance on such forward-looking statements. Such forward-looking
statements are subject to a number of material risks and uncertainties including but not limited to those set forth under the caption
“Risk Factors” in Idera’s most recent Annual Report on Form 10-K filed with the SEC, as well as discussions of
potential risks, uncertainties, and other important factors in its subsequent filings with the SEC. Any forward-looking statement speaks
only as of the date on which it was made. Neither Idera, nor any of its affiliates, advisors or representatives, undertake any obligation
to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise, except as
required by law. These forward-looking statements should not be relied upon as representing Idera’s views as of any date subsequent
to the date hereof.
Important Additional Information and Where
to Find It
Idera
Pharmaceuticals, Inc., its directors and certain of its executive officers are deemed to be participants in the solicitation of proxies
from Idera Pharmaceuticals’ stockholders in connection with the matters to be considered at Idera Pharmaceuticals 2022 Special Meeting
of Stockholders. Information regarding the names of Idera Pharmaceuticals’ directors and executive officers and their respective
interests in Idera Pharmaceuticals by security holdings or otherwise can be found in Idera Pharmaceuticals’ proxy statement for
its 2022 Annual Meeting of Stockholders, filed with the SEC on April 29, 2022. To the extent holdings of Idera Pharmaceuticals’ securities have changed since the amounts set forth in
Idera Pharmaceuticals’ proxy statement for the 2022 Annual Meeting of Stockholders, such changes have been reflected on Initial
Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. These documents
are available free of charge at the SEC’s website at www.sec.gov. Idera Pharmaceuticals intends to file a proxy statement and accompanying
proxy card with the SEC in connection with the solicitation of proxies from Idera Pharmaceuticals stockholders in connection with the
matters to be considered at Idera Pharmaceuticals’ 2022 Special Meeting of Stockholders. Additional information regarding the identity
of participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in Idera Pharmaceuticals’
proxy statement for its 2022 Special Meeting, including the schedules and appendices thereto. INVESTORS AND STOCKHOLDERS ARE STRONGLY
ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND ANY AMENDMENTS AND SUPPLEMENTS THERETO AS WELL AS ANY
OTHER DOCUMENTS FILED BY IDERA PHARMACEUTICALS WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Stockholders will be able to obtain copies of the proxy statement, any amendments or supplements to the proxy
statement, the accompanying proxy card, and other documents filed by Idera Pharmaceuticals with the SEC for no charge at the SEC’s
website at www.sec.gov. Copies will also be available at no charge at the Investor Relations section of Idera Pharmaceuticals’ corporate
website at https://ir.iderapharma.com/ or by contacting Idera Pharmaceuticals’ Investor Relations at Idera Pharmaceuticals, Inc.,
505 Eagleview Blvd., Suite 212 Exton, Pennsylvania 19341 or by calling Idera Pharmaceuticals’ Investor Relations at (877) 888-6550.