Unassociated Document
WASHINGTON,
D.C. 20549
FORM
10-K/A
Amendment
No. 1
x
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December
31, 2006
or
o
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
file number 001-16043
ALTEON
INC.
(Exact
name of Registrant as specified in its charter)
Delaware
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13-3304550
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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221
W. Grand Avenue, Montvale, New Jersey 07645
(Address
of principal executive offices)
(Zip
Code)
(201)
934-5000
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
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Name
of Each Exchange
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Title
of Each Class
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On
Which Registered
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Common
Stock, Par Value $.01 per share
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American
Stock Exchange
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Preferred
Stock Purchase Rights
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American
Stock Exchange
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes
o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes
o
No x
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended,
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes
x
No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this
Form 10-K. x
Indicate
by check mark whether the registrant is a
large
accelerated filer, an
accelerated filer,
or a
non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer o Accelerated
filer o Non-accelerated filer
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
o No x
The
aggregate market value of the Registrant’s voting and non-voting common equity
held by non-affiliates of the Registrant, based on the American Stock Exchange
closing price of the common stock ($0.16 per share), as of June 30, 2006, was
$11,033,138.
At
April
30, 2007, 129,318,858 shares of the Registrant’s common stock, par value $.01
per share, were outstanding.
Documents
Incorporated By Reference
None.
TABLE
OF CONTENTS
EXPLANATORY
NOTE
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Page |
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Part
III
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Item
10. Directors, Executive Officers and Corporate Governance
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1 |
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Item
11. Executive Compensation
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4 |
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Item
12. Security Ownership of Certain Beneficial Owners and Management
and
Related Stockholder Matters
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Item
13. Certain Relationships and Related Transactions, and Director
Independence
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Item
14. Principal Accounting Fees and Services
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21 |
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Part
IV
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Item
15. Exhibits, Financial Statement Schedules.
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23 |
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SIGNATURES
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EX-31.1
SECTION 302 CERTIFICATION OF CEO
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EX-31.2
SECTION 302 CERTIFICATION OF CFO
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EXPLANATORY
NOTE
Alteon
Inc. (“Alteon” or the “Company”) is filing this Amendment No. 1 to its Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, originally
filed with the Securities and Exchange Commission on March 22, 2007, for the
purpose of amending and supplementing Part III of the Annual Report on Form
10-K. This Amendment No. 1 on Form 10-K/A does not change the previously
reported financial statements or any of the other disclosure contained in Part
I
or Part II of the Form 10-K. This amendment changes the Annual Report on Form
10-K only by including information required by Part III (Items 10, 11, 12,
13
and 14). Part IV is also being amended to update the Exhibit Index and to add
new certifications in accordance with Rule 13a - 14 under the Exchange Act.
PART
III
Item
10. Directors,
Executive Officers and Corporate Governance.
The
Board of Directors
Pursuant
to our Restated Certificate of Incorporation, our Board of Directors is divided
into three classes, each of which serves
a term
of three years. Class A consists of Mr. Moore and Ms. Breslow, whose
term will expire at our upcoming annual meeting. Class B consists of
Dr. Berkowitz, whose term will expire at the annual meeting of stockholders
in 2008. Class C consists of Ms. Tanner and Mr. Yetter, whose terms
will expire at the annual meeting of stockholders in 2009.
Following
the closing of the financing described in our Preliminary Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on April 19,
2007, for so long as the purchasers in the financing who held convertible
promissory notes that were converted into shares of Series B Preferred Stock
at
the closing of the financing hold fifty percent of the shares purchased at
the
closing of the financing, such purchasers will have the right, but not the
obligation, to designate two directors to our Board of Directors. Promptly
following written notice by such purchasers of their election to exercise the
designation right, and only if there are more than five directors then serving
on the Board of Directors, the Board of Directors shall use its commercially
reasonable efforts to cause two of its then-current members to resign their
positions in order to create vacant seats for the purchaser
designees.
The
current Board of Directors, including the nominees for election at the annual
meeting, is comprised of the following persons:
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Served
as a
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Name
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Age
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Director
Since
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Positions
with Alteon
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Noah
Berkowitz, M.D., Ph.D.
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43
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2006
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President,
Chief Executive Officer
and
Director
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Marilyn
G. Breslow*
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62
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1988
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Director
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Thomas
A. Moore*
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56
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2001
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Director
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Mary
C. Tanner
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56
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2006
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Director
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Wayne
Yetter
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61
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2006
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Director
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*
Ms. Breslow
and Mr. Moore have decided not to stand for re-election to the Board of
Directors at the 2007 annual meeting.
Our
Board has determined that the following members of the Board qualify as
independent under the definition promulgated by the American Stock Exchange:
Ms. Breslow, Mr. Moore, Ms. Tanner and
Mr. Yetter.
The
principal occupations and business experience, for at least the past five years,
of each director are as follows:
Noah
Berkowitz, M.D., Ph.D.,
the Company’s President and Chief Executive Officer, joined the Company
following its merger with HaptoGuard in July 2006. Dr. Berkowitz
earned his B.A., M.D., and Ph.D. from Columbia University and trained at the
National Cancer Institute in medical oncology. Prior to founding HaptoGuard
in
2004, he was a consultant to a variety of biotechnology companies in Israel,
including Predix Pharmaceuticals, IDGene and Teva. He was previously Vice
President of Clinical Development at IMPATH Inc., a NASDAQ-traded, “cancer
information company” where he co-developed a division, IMPATH Predictive
Oncology, focused on biopharmaceutical partnerships supporting the discovery
and
development of cancer-related, targeted diagnostics and therapeutics. Prior
to
IMPATH, Dr. Berkowitz was the founder of Physician Choice Inc., a contract
research organization specializing in pharmacoeconomics and
outcomes.
Mary
C. Tanner
has served as a director of the Company since July 2006. Ms. Tanner is
a Principal and founder of Life Sciences Partners, a healthcare advisory and
investment firm. Previously, from 2000 to 2004, she was Senior Managing Director
at Bear Stearns & Co., and Senior Managing Director and head of the Life
Sciences practice at Lehman Brothers, Inc. During her 25 year career on Wall
Street, Ms. Tanner has worked on or supervised over 550 transactions with a
total value of over $175 billion, including ten large pharmaceutical
mergers. Ms. Tanner received her B.A. from Harvard University.
Wayne
Yetter
has served as a director of the Company since July 2006. Mr. Yetter
has served as Chief Executive Officer of Verispan, LLC, a healthcare information
company founded by Quintiles Transnational Corp. and McKesson Corp, since
September 2005. From November 2004 through September 2005,
Mr. Yetter served as President and Chief Executive Officer of Odyssey
Pharmaceuticals, Inc. to assist Odyssey’s parent, PLIVA d.d., implement its
strategy to exit the proprietary pharmaceutical business. After serving in
Vietnam, Mr. Yetter began his career in the pharmaceuticals industry in
1970 as a sales representative for Pfizer. From Pfizer, he joined Merck & Co
in 1977, where he led the Marketing Operations Group and then became President
of the Asia Pacific region before starting the new company, Astra Merck, in
1991
as President and CEO. Mr. Yetter then joined Novartis Pharmaceuticals in
1997, where he was President and CEO of the U.S. pharmaceutical business. In
1999, he joined IMS and later led its spinout company, Synavant, where he was
Chairman and CEO for three years before the company merged with Dendrite
International in 2003. Following the merger, Mr. Yetter founded and has
acted as principal of BioPharm Advisory LLC since September 2003.
Mr. Yetter was formerly Chairman of the Board for Transkaryotic Therapies
Inc., which was acquired by Shire Pharmaceuticals in 2005. Mr. Yetter
received his B.A. in Biology from the Wilkes University, and his M.B.A.
from Bryant University.
Committees
of the Board of Directors and Meetings
The
Board of Directors has a Compensation Committee, which reviews incentive
compensation for employees of and consultants to Alteon, as well as salaries
and
incentive compensation of executive officers. In 2006, the Compensation
Committee was comprised of Alan J. Dalby, Thomas A. Moore, George M. Naimark,
Ph.D., and Wayne P. Yetter.
The
Board of Directors has a Nominating Committee, which reviews the qualifications
of candidates and proposes nominees to serve as directors on our Board of
Directors and nominees for membership on Board committees. In 2006, the
Nominating Committee was comprised of Edwin D. Bransome, Jr., M.D.,
David K. McCurdy, Thomas A. Moore and Wayne P. Yetter.
The
Board of Directors has an Audit Committee, which oversees the accounting and
financial reporting processes and the audits of our financial statements. In
2006, the Audit Committee was comprised of Edwin D. Bransome, Jr., Marilyn
G. Breslow, David K. McCurdy, Thomas A. Moore, Mark Novitch, M.D. and Mary
Tanner.
During
2006, Edwin D. Bransome, Jr., M.D., Alan J. Dalby, George M. Naimark,
Ph.D., and each resigned from our Board of Directors.
All
of the current members of the Compensation Committee, the Nominating Committee
and the Audit Committee, are independent, as such term is defined by Section
121.A of the American Stock Exchange listing standards. The Board of Directors
does not currently have an “audit committee financial expert,” within the
meaning of applicable regulations of the Securities and Exchange Commission,
serving on its Audit Committee. The Board of Directors believes that one or
more
members of the Audit Committee satisfy the financial sophistication requirement
of the American Stock Exchange and are capable of (i) understanding
generally accepted accounting principles (“GAAP”) and financial statements;
(ii) assessing the application of GAAP in connection with our accounting
for estimates, accruals and reserves; (iii) analyzing and evaluating our
financial statements; (iv) understanding our internal controls and
procedures for financial reporting; and (v) understanding audit committee
functions, all of which are attributes of an audit committee financial expert.
However, the Board of Directors believes that these members may not have
obtained these attributes through the experience specified in the Securities
and
Exchange Commission’s rules with respect to audit committee financial experts,
and therefore, may not qualify to serve in that role.
Please
see the Compensation Committee Report and Compensation Discussion and Analysis
set forth elsewhere in this document for a discussion about the processes
and procedures adopted by the Compensation Committee for the consideration
and
determination of executive and director compensation.
The
Audit Committee held 8 meetings, the Compensation Committee held 4 meetings
and
the Nominating Committee held no meetings during the year ended
December 31, 2006. There were 22 meetings of the Board of Directors in
2006. Each of the incumbent directors attended at least 75% of the aggregate
of
(i) the total number of meetings of the Board of Directors held during the
year ended December 31, 2006 and (ii) the total number of meetings
held by all committees of the Board on which he or she served during the year
ended December 31, 2006, except for Mr. Alan J. Dalby, who attended 1
of the 9 meetings of the Board and committees of the Board held until his
resignation in July 2006. The Board has adopted a written charter for the
Audit Committee, the Compensation Committee and the Nominating Committee. These
written charters are available on our website at www.alteon.com.
Director
Nomination Process
The
Nominating Committee reviews the qualifications of candidates and proposes
nominees to serve as directors on our Board of Directors and nominees for
membership on Board committees. It is the Nominating Committee’s policy to
consider potential candidates for Board membership recommended by its members,
management, stockholders and others. The Nominating Committee has not
established any specific minimum qualifications that must be met for a
recommendation for a position on the Board of Directors. Instead, the Nominating
Committee conducts appropriate and necessary inquiries into the backgrounds
and
qualifications of possible candidates for nomination to the Board of Directors
giving due consideration to such criteria, including without limitation,
diversity, experience, skill set and the ability to act on behalf of
stockholders, as it believes appropriate and in the best interests of Alteon
and
its stockholders. All potential director candidates are evaluated based upon
the
same criteria, and the Nominating Committee makes no distinction in its
evaluation of candidates based upon whether such candidates are recommended
by
stockholders or others. Once the evaluation is complete, the Nominating
Committee recommends the nominees to the Board of Directors, which makes the
final determination. If a stockholder wishes to nominate a candidate to be
considered for election as a director at the 2008 annual meeting of stockholders
using the procedures set forth in our amended and restated by-laws, it must
follow the procedures described in “Advance Notice of Stockholder Nominees for
Director and Other Stockholder Proposals” set forth in our amended and restated
by-laws. If a stockholder wishes simply to propose a candidate for consideration
as a nominee by the Nominating Committee, it should follow the procedures set
forth in Appendix B, “Procedures for Shareholders Submitting Nominating
Recommendations,” to our Nominating Committee Charter, which is available on our
website at www.alteon.com.
Stockholder
Communications to the Board
Stockholders
and other parties interested in communicating directly with the Chairman or
with
the Board of Directors as a group may do so by writing to Chairman, Alteon
Inc.,
221 West Grand Avenue, Suite 200, Montvale, New Jersey 07645. All correspondence
received by Alteon and addressed to the Chairman is forwarded directly to the
Board of Directors.
Director
Attendance at Annual Meeting
Our
incumbent Directors, except for Ms. Tanner and Mr. Yetter, attended
our annual meeting of stockholders in 2006. Ms. Tanner and Mr. Yetter
were not serving on our Board of Directors at the time of our 2006 annual
meeting. Each Director is expected to dedicate sufficient time, energy and
attention to ensure the diligent performance of his or her duties, including
attending meetings of the stockholders, the Board and committees of which he
or
she is a member.
Executive
Officers
The
following table sets forth certain information regarding our executive officer
who is not also a director. We have employment agreements with Noah Berkowitz,
M.D., Ph.D., and Malcolm MacNab, M.D., Ph.D., the terms of which are described
elsewhere in this document.
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Name
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Age
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Position
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Malcolm
W. MacNab, M.D., Ph.D.
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60
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Vice
President, Clinical Development
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Dr. MacNab
has
served as our Vice President, Clinical Development since July 2006.
Dr. MacNab received his M.D. and Ph.D. in vascular pharmacology from Temple
University in Philadelphia, and received post-graduate training in Internal
Medicine and Hematology at the Medical College of Pennsylvania. Prior to joining
Alteon, from 2004 to 2006, Dr. MacNab served as Vice President, Clinical
Development of HaptoGuard and Vice President of Cardiovascular and Metabolism
Clinical Development and Medical Affairs at Novartis, where he was instrumental
in the development, approval and marketing of Diovan, an angiotensin receptor
blocker used for the treatment of hypertension and heart failure, and Lotrel,
a
combination product for the treatment of hypertension. Prior to Novartis,
Dr. MacNab was Vice President in Cardiovascular Development at CIBA
Pharmaceuticals.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers
and directors, and persons who own more than 10% of a registered class of our
equity securities, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission. Officers,
directors and greater than 10% stockholders are required by Securities and
Exchange Commission regulation to furnish us with copies of all Forms 3, 4
and
5, and any amendments thereto, they file.
Based
solely on our review of the copies of such forms we have received and written
representations from certain reporting persons that they were not required
to
file Forms 5 for specified fiscal years, we believe that all of our officers,
directors, and greater than 10% beneficial owners complied with all filing
requirements applicable to them with respect to transactions in our equity
securities during fiscal year 2006.
CODE
OF BUSINESS CONDUCT AND ETHICS
Alteon
has adopted a code of business conduct and ethics that applies to all of its
employees, including its chief executive officer and chief financial and
accounting officers. The text of the code of business conduct and ethics is
posted on Alteon’s website at www.alteon.com.
Disclosure regarding any amendments to, or waivers from, provisions of the
code
of business conduct and ethics that apply to Alteon’s directors, principal
executive and financial officers will be included in a Current Report on Form
8-K within four business days following the date of the amendment or waiver,
unless website posting of such amendments or waivers is then permitted by the
rules of the American Stock Exchange, Inc.
Item
11. Executive
Compensation.
Compensation
Discussion and Analysis
We
have prepared the following Compensation Discussion and Analysis to provide
you
with information that we believe is necessary to understand our executive
compensation policies and decisions as they relate to the compensation of our
named executive officers.
We
have developed and implemented compensation policies, plans and programs which
(1) provide a total compensation package that is intended to be competitive
with the compensation arrangements used by our peer companies within the
biotechnology industry, in order to enable us to attract and retain high-caliber
executive personnel, and (2) seek to align the financial interests of our
employees with those of our stockholders by relying heavily on long-term
incentive compensation, in the form of stock options, for which the number
of
shares to be granted is based on performance. To achieve these objectives,
the
Compensation Committee of our Board of Directors has implemented compensation
plans that tie a portion of executive officers’ overall compensation to meeting
specific research, clinical, regulatory and operational goals. Because we
believe the performance of every employee is important to our success, we are
mindful of the effect our executive compensation and incentive programs have
on
all of our employees.
Our
management develops our compensation plans by analyzing publicly-available
compensation data for national and regional companies in the biotechnology
and
pharmaceutical industries that are at a similar size and stage of development
as
we are. We believe that the practices of this group of companies provide us
with
appropriate compensation benchmarks because these companies have similar
organizational structures and tend to compete with us for executives and other
key personnel in the clinical, financial and administrative areas, among others.
As part of the process of benchmarking executive compensation, we review
biopharmaceutical companies that have specified criteria that we believe will
give us the most accurate comparison, including market capitalization, revenue
and location of offices. Specifically, we conducted an analysis of proxy
statement information for comparable companies meeting the following criteria:
“Biopharmaceutical company, market capitalization of in a range of
$20 million to $200 million, little or no revenue and located on
either the East or West Coast.” Approximately 30 companies met these criteria.
Information on executive compensation from each of these companies was gathered
from their individual proxy statements and outlined for comparison. The
information gathered included annual base salary, annual cash bonus, and other
annual compensation and stock option grants. At the time at which our
analysis was conducted, our market capitalization was greater than
$20 million. It has since been reduced due to a decrease in our price per
share.
Based
on an analysis of the data gathered, the average points of the data are
calculated and a comparison of our executive officers’ total compensation
package, including long-term stock options, is made. We believe that analyzing
the compensation packages of companies with whom we compete for talent enables
us to create compensation packages that are fair and competitive to attract
and
retain top talent. We have engaged an experienced consultant to help us analyze
these data and to compare our compensation programs with the practices of the
companies represented in the compensation data we review.
Based
on management’s analyses and recommendations, the Compensation Committee has
approved a pay-for-performance compensation philosophy, which is intended to
bring base salaries and total executive compensation in line with approximately
the 50th percentile of the companies in our industry with a similar market
capitalization, financial status and geographic location, represented in the
compensation data we review.
We
work within the framework of a pay-for-performance philosophy to determine
each
component of an executive officer’s initial and ongoing compensation package
based on numerous factors, including:
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the
individual’s particular background and circumstances, including prior
relevant work experience and depth of
experience;
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the
individual’s role with us and the compensation paid to persons with
similar roles and responsibilities in the companies represented in
the
compensation data that we have
reviewed;
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the
demand for individuals with the individual’s specific expertise and
experience at the time of hire; performance goals and other expectations
for the position;
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comparison
to other executives within our company having similar levels of expertise
and experience; and uniqueness of industry
skills.
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The
Compensation Committee of our Board of Directors also has implemented an annual
performance management program, under which annual performance goals are
determined and set forth in writing at the beginning of each calendar year
for
the corporation as a whole and each individual employee. Annual corporate goals
are proposed by management and approved by the Compensation Committee and set
during the first quarter of each calendar year. These corporate goals
target the achievement of specific research, clinical, regulatory and
operational milestones. Annual individual goals focus on contributions that
are
expected to facilitate the achievement of the corporate goals and are set during
the first quarter of each calendar year. The Chief Executive Officer establishes
the individual goals for the executive officers who directly report to him.
The
Chief Executive Officer’s individual goals are approved by the Compensation
Committee. With respect to non-executive employees, individual goals are
proposed by the individual’s direct supervisor. Annual salary increases, annual
cash bonuses and annual stock option awards granted to employees are tied to
the
achievement of these corporate and each individual’s performance
goals.
At
the end of each calendar year, we evaluate corporate and individual performance
against the written goals for the recently completed year. Consistent with
our compensation philosophy, the supervisor prepares a written evaluation of
the
employee’s performance, and receives input from other employees. The employee
then has the opportunity to evaluate him or herself. The supervisor and employee
meet to review and discuss the evaluation, with an emphasis on clear and strong
communication by both parties. This process leads to a recommendation for annual
employee salary increases, annual stock option awards and bonuses, if any,
which
are then reviewed and approved by the Compensation Committee. The Chief
Executive Officer prepares written evaluations of the other executive officers
and gives such executive officers the opportunity to complete a written
self-evaluation. Both parties then meet to discuss the evaluations. The Chief
Executive Officer then submits recommendations to the Compensation Committee
for
salary increases, stock option awards and bonuses, if any. With respect to
the
Chief Executive Officer, corporate and individual goals for the upcoming year
are established by the Compensation Committee. The Chief Executive Officer’s
individual performance evaluation is conducted by the Compensation Committee,
which determines his compensation adjustments and awards. The performance review
process begins in October and concludes at the December meeting of our Board
of
Directors. For all employees, including our executive officers, annual base
salary increases, annual stock option awards and annual cash bonuses, to the
extent granted, are implemented during the fourth quarter of the calendar
year.
Compensation
Components
The
primary components of executive compensation include base salary and long-term
equity incentives in the form of stock options. We primarily rely on long-term
incentive compensation, in the form of stock options, to motivate the executive
officers and other employees. This allows us to retain cash for research and
development projects.
Executive
officers also are eligible to earn an annual cash incentive award, the amount
of
which is based upon (1) the position level of the executive officer, and
(2) the attainment of specific individual non-financial performance
objectives. The Committee sets these performance objectives at the beginning
of
the fiscal year.
The
components of our compensation package are as follows:
Base
Salary
Base
salaries for our executive officers are established based on the scope of their
responsibilities, their prior relevant background and depth of experience,
taking into account competitive market compensation paid by companies
represented in the compensation data we review for similar positions and the
overall market demand for such executives at the time of hire. As with total
executive compensation, we believe that executive officers’ base salaries should
generally target the average, or 50%, calculation of the range of salaries
for
executives in similar positions and responsibilities in the companies of similar
market capitalization, financial status, and geographic location to us
represented in the compensation data we review. An executive officer’s base
salary also is evaluated together with other components of the executive
officer’s compensation to ensure that the executive officer’s total compensation
is in line with our overall compensation philosophy.
The
Chief Executive Officer is responsible for developing the annual salary plan
for
our other executive officers. This plan is presented for review and approval
by
the Compensation Committee. The compensation packages of comparable companies
are evaluated to determine whether and to what extent that compensation is
comparable to the present compensation packages of the executive officers.
Taking into account this analysis and the above factors, the Chief Executive
Officer is able to make a qualified decision regarding any increases to the
executive officer’s compensation. Other executive officers are responsible only
for the compensation decisions of the non-executive employees who directly
report to them.
The
same criteria are used by the Compensation Committee in deciding the Chief
Executive Officer’s compensation. Data from comparable companies’ chief
executive officers is evaluated, along with factors such as level of
responsibility, depth of experience, achievement of goals and expected future
contributions, before making a final decision on the Chief Executive Officer’s
compensation package. Our Chief Executive Officer’s compensation is governed in
part by the employment agreement that he has entered into with us, which we
assumed as part of the merger that we engaged in with HaptoGuard in
July 2006. Under that agreement, Dr. Berkowitz is entitled to a base
salary of $264,000 per year.
Base
salaries are reviewed annually as part of our performance management program
and
increased for merit reasons, based on the executive officer’s success in meeting
or exceeding individual performance objectives and an assessment of whether
significant corporate goals were achieved. If necessary, we also realign base
salaries with market levels for the same positions in the companies of similar
market capitalization, financial status, and geographic location to us
represented in the compensation data we review, if we identify significant
market changes in our data analysis. Additionally, we may adjust base salaries
as warranted throughout the year for promotions or other changes in the scope
or
breadth of an executive officer’s role or responsibilities. The factors used for
setting compensation and decision making are the same factors used to evaluate
whether an executive officer’s compensation should be increased or
decreased.
Annual
Cash Bonus
Our
compensation program provides executive officers with the opportunity to earn
an
annual cash incentive award, the amount of which is based upon (1) the
position level of the executive officer, and (2) the attainment of specific
individual non-financial performance objectives. The Compensation Committee
sets
these performance objectives at the beginning of the fiscal year. Currently,
executive officers and certain senior non-executive employees may be eligible
for annual performance-based cash bonuses in amounts ranging from 15%-35% of
their base salaries, as set forth in their employment offer letters. In its
discretion, the Compensation Committee may, however, award bonus payments to
our
executive officers above or below the amounts specified in their respective
offer letters, depending on the achievement by the executive officers of
performance goals as set and determined by the Committee. As provided in his
employment agreement, our Chief Executive Officer is eligible for an annual
performance-based bonus of up to 35% of his annual base salary, the specific
amount of which, if any, will be determined by the Board of Directors or the
Compensation Committee in their sole discretion.
Stock
Options
Initial
Stock Option Awards
Executive
officers who join us are awarded initial stock option grants. These grants
have
an exercise price equal to the fair market value of our common stock on the
day
the grant is approved by the Compensation Committee and a four-year vesting
schedule with 25% of the shares vesting on the first anniversary of the date
of
hire and annually thereafter for the next three years. All options granted
to
employees follow this vesting schedule. The amount of the initial stock option
award is determined based on the executive’s position with us and analysis of
the competitive practices of companies of similar market capitalization,
financial status, and geographic location to us represented in the compensation
data we review with the goal of creating a total compensation package for new
employees that is competitive with other similarly situated biotechnology
companies and that we believe will enable us to attract high quality
people.
Annual
and Periodic Stock Option Awards
Our
practice is to make annual stock option awards part of our overall performance
management program. We intend that the annual aggregate value of these awards
will be set near competitive median levels for companies represented in the
compensation data we review. As is the case when the amounts of base salary
and
initial equity awards are determined, a review of all components of the
executive officer’s compensation is conducted when determining annual equity
awards to ensure that an executive officer’s total compensation conforms to our
overall philosophy and objectives.
The
Compensation Committee may also, in its discretion, grant periodic option awards
to our executive officers if it deems such awards to be warranted as a result
of
extraordinary service or achievements. For example, on November 1, 2006,
Dr. Malcolm MacNab was granted an option to purchase 1,000,000 shares of
our common stock in recognition of his significant contributions in developing
plans and strategy to support our clinical research projects during the 2006
fiscal year, as well as to target ownership of 1.5% of the Company. This was
the
only option grant made by us to one of our executive officers during the 2006
fiscal year.
In
determining the size of stock option grants to individual executives, the
Compensation Committee determines the type, amount, grant date and vesting
schedule for all grants of stock options to executive officers. The Compensation
Committee considers a number of factors, including the level of an executive
officer’s job responsibilities, the executive officer’s past performance, the
size and frequency of grants by comparable companies, the executive officer’s
salary level, the need to provide an incentive for the purpose of retaining
qualified personnel in light of our current conditions and prospects, the size
of any prior grants, and the achievement of designated milestones by the
executive officer.
All
stock grants to executive officers, except the Chief Executive Officer, are
proposed by the Chief Executive Officer to the Compensation Committee for
approval. All proposals of stock option grants to the Chief Executive Officer
are made and approved by our Compensation Committee. The terms of the initial
stock option grants to executive officers were incorporated into their
employment agreements.
Other
Compensation
Our
executive officers receive the same benefit package as our other employees,
which includes medical, dental, long-term disability, life insurance and a
401(k) plan with an employer contribution that matches 25% of the employee’s
contribution, up to 5% of his or her base salary.
Perquisites
for executive officers are limited to an annual car allowance that only the
Chief Executive Officer is eligible to receive in an amount of up to $1,000
per
month. Our Board of Directors and Compensation Committee believe that these
payments are appropriate as the Chief Executive Officer is required to travel
frequently in the conduct of significant business activities on our
behalf.
Termination
Based Compensation
Severance
Noah
Berkowitz, M.D., Ph.D.
President
and Chief Executive Officer
Upon
termination of employment, our Chief Executive Officer is entitled to receive
severance payments under his employment agreement. In determining whether to
approve and in setting the terms of severance arrangements, the Compensation
Committee recognizes that executive officers, especially highly ranked executive
officers, often face challenges securing new employment following termination.
Our Chief Executive Officer’s employment agreement provides for salary and
benefits for 12 months from the date of termination if his employment is
terminated without cause. In addition, the monthly vesting of his options shall
continue for an additional 12 months from such termination date. The
Compensation Committee approved the severance package based on the continuation
of the employment agreement that was assumed upon the merger with HaptoGuard,
Inc.
Malcolm
MacNab, M.D., Ph.D.
Vice
President, Clinical Development
Upon
termination of employment, Dr. MacNab is not entitled to receive severance
under his employment agreement. Dr. MacNab may exercise those options which
have vested up to 90 days following his termination.
Kenneth
I. Moch
Former
President and Chief Executive Officer
We
entered into a three-year amended and restated employment agreement with Kenneth
I. Moch, dated as of December 15, 2004. At meetings of our Board of
Directors held on November 4, 2005 and December 7, 2005, the Board
agreed that Mr. Moch should also be paid an amount equal to six months of
his then-current annual salary upon the closing of a strategic transaction
or
liquidation, in a manner that was designed to maximize the tax benefit to
Mr. Moch and us. Under the terms of an amended and restated employment
agreement, Mr. Moch served as our Chief Executive Officer and was entitled
to an annual salary for the 2006 fiscal year of $382,454 and a bonus of up
to
$150,000. Mr. Moch resigned as our President and Chief Executive Officer on
July 21, 2006, as a result of our merger with HaptoGuard, Inc. In
connection with his resignation, Mr. Moch received a lump sum payment of
$863,159, which represented 30 months of his annual base salary under his
employment agreement and change of control arrangements. See “—Employment
Agreements” and “Potential Payments Upon Termination or Change in Control”
below.
Judith
S. Hedstrom
Former
Chief Operating Officer
We
entered into a three-year amended and restated employment agreement with Judith
S. Hedstrom, dated as of February 11, 2005. At meetings of our Board of
Directors held on November 4, 2005 and December 7, 2005, the Board
confirmed that Ms. Hedstrom would receive an amount equal to one year of
her then-current annual salary if she was terminated without cause prior to
a
change in control transaction. Further, the Board agreed to offer her a
consulting contract for three months following her termination, under which
she
would be available to us for up to 15 days during that period.
Ms. Hedstrom’s compensation under this agreement was an extension of her
right, set forth in her employment agreement, to exercise her stock options
for
a two-year period commencing on April 30, 2006. The Board also agreed that
she would remain entitled to receive benefits allocated to her under the Change
in Control Severance Plan (discussed below) upon a change in control.
Ms. Hedstrom resigned as our Chief Operating Officer on January 31,
2006. In connection with her resignation, Ms. Hedstrom received a lump sum
payment of $294,088 on January 31, 2006 pursuant to her employment
agreement and received a lump sum payment of $293,202 on July 21, 2006, in
connection with her change of control arrangements as a result of our merger
with HaptoGuard, Inc. See “—Employment Agreements” and “Potential Payments Upon
Termination or Change in Control” below.
Severance
and Change in Control Arrangements
In
February 1996, we adopted the Alteon Inc. Change in Control Severance
Benefits Plan (“Change in Control Severance Plan”) to protect and retain
qualified employees and to encourage their full attention, free from
distractions caused by personal uncertainties and risks in the event of a
pending or threatened change in control. The Change in Control Severance Plan
provided for severance benefits to certain employees upon certain terminations
of employment after or in connection with a change in control as defined in
the
Change in Control Severance Plan. Following a qualifying termination that
occurred as a result of a change in control, our executive officers would be
entitled to continuation of (1) their base salary for a period of 24
months, and (2) all benefit programs and plans providing for health and
insurance benefits for a period of up to 18 months. In addition, upon a change
in control, all outstanding unexercisable stock options held by certain
employees that were participants in the Change in Control Severance Plan would
become exercisable. The Change in Control Severance Plan was terminated in
November 2005. However, as described above, such provisions remained in
effect for Mr. Moch and Ms. Hedstrom pursuant to the terms of their
employment agreements.
Acceleration
of Vesting of Stock Option Awards
Pursuant
to our stock option agreement with Dr. MacNab, in the event of a change in
control, as defined in his agreement, any portion of Dr. MacNab’s options
which are not vested and exercisable, shall vest and become exercisable
immediately prior to a change in control. See “—Employment Agreements” and
“Potential Payments Upon Termination or Change in Control” below.
Conclusion
We
believe that to attract, motivate and retain high-performing executives a
competitive base salary and stock option package are necessary for top
performance and attainment of long-term goals. We believe that our compensation
policies are designed to accomplish these goals and to ultimately reward our
key
personnel for outstanding individual and corporate performance.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table shows the total compensation paid or accrued during the fiscal
year ended December 31, 2006 to (1) our Chief Executive Officer,
(2) our Vice President of Clinical Development, (3) our former Chief
Executive Officer and (4) two other former executive officers who earned
more than $100,000 during the fiscal year ended December 31,
2006.
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Option
Awards
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noah
Berkowitz, M.D., Ph.D.
|
|
|
2006
|
|
|
240,000
|
|
|
54,000
|
(1)
|
|
—
|
|
|
3,558(2
|
)
|
297,558
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malcolm
W. MacNab, M.D., Ph.D.
|
|
|
2006
|
|
|
240,000
|
|
|
36,000
|
|
|
58,206
|
|
|
—
|
|
334,206
|
Vice
President, Clinical Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
I. Moch
|
|
|
2006
|
|
|
230,934
|
(5)
|
|
—
|
|
|
—
|
|
|
883,863
|
|
1,114,797
|
Former
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judith
S. Hedstrom
|
|
|
2006
|
|
|
40,761
|
|
|
—
|
|
|
—
|
|
|
604,190
|
(8)
|
644,951
|
Former
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary
Phelan
|
|
|
2006
|
|
|
68,785(9
|
)
|
|
28,000
|
(10)
|
|
—
|
|
|
—
|
|
96,785
|
Former
Director of Finance and Financial Reporting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
——————
(1) Represents
a cash bonus for performance during the fiscal year ended December 31,
2006, which was paid in 2007.
(2) Represents
an expense for a car allowance.
(3) Represents
a cash bonus for performance during the fiscal year ended December 31,
2006, which was paid in 2007.
(4) Represents
the dollar amount recognized for financial statement reporting purposes for
the
fiscal year ended December 31, 2006, in accordance with FAS 123(R), of
awards pursuant to the stock option program. Assumptions used in the
calculations of this amount are included in Note 9 - Stockholders’ Equity to our
audited consolidated financial statements for the fiscal year ended
December 31, 2006 included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 22, 2007.
(5) Mr. Moch
resigned as our President and Chief Executive Officer on July 21,
2006.
(6) Represents
(i) a lump sum payment of $863,159 representing 30 months of
Mr. Moch’s annual base salary under his employment agreement and change in
control arrangements paid on July 21, 2006, as a result of our merger with
HaptoGuard, Inc., (ii) COBRA coverage in the amount of $10,200,
(iii) car allowance of $5,504, and (iv) matching 401(k) contribution of
$5,000.
(7) Ms. Hedstrom
resigned as our Chief Operating Officer on January 31, 2006.
(8) Represents
(i) a lump sum payment of $294,088 paid on January 31, 2006 under
Ms. Hedstrom’s employment agreement, (ii) a lump sum payment of
$293,202 paid on July 21, 2006 under Ms. Hedstrom’s change in control
arrangements, as a result of our merger with HaptoGuard, Inc., (iii) COBRA
coverage in the amount of $11,900, and (iv) matching
401(k) contribution of $5,000.
(9) Ms. Phelan
resigned from her position with us on May 31, 2006.
(10) Represents
a retention bonus.
2006
Grants of Plan-Based Awards
The
following table shows information regarding grants of non-equity incentive
plan
awards and grants of equity awards that we made during the fiscal year ended
December 31, 2006 to each of the executive officers named in the Summary
Compensation Table.
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
All Other
Option Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or
Base
Price
of Option
Awards ($/Sh)
(1)
|
|
Grant
Date
Fair
Value
of
Stock and
Option Awards
(2)
|
|
|
|
|
|
|
|
|
|
|
Noah
Berkowitz, M.D., Ph.D.
|
|
—
|
|
—
|
|
—
|
|
|
—
|
President
and
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malcolm
W. MacNab, M.D., Ph.D.
|
|
11/1/2006
|
|
1,000,000(3)
|
|
0.15
|
|
$
|
142,100
|
Vice
President, Clinical Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
I. Moch
|
|
—
|
|
—
|
|
—
|
|
|
—
|
Former
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judith
S. Hedstrom
|
|
—
|
|
—
|
|
—
|
|
|
—
|
Former
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary
Phelan
|
|
—
|
|
—
|
|
—
|
|
|
—
|
Former
Director of Finance and
Financial
Reporting
|
|
|
|
|
|
|
|
|
|
——————
(1) The
Company’s 2005 Stock Option Plan as amended on July 19, 2006 provides that
the exercise price shall be determined by using the fair market value of the
Company’s common stock, which is defined under the 2005 Stock Option Plan as the
closing price of the Company’s common stock on the date of grant, as determined
by our board of directors.
(2) Represents
the grant date fair value in accordance with FAS 123(R). Assumptions used in
this calculation are included in Note 9 - Stockholders’ Equity to our audited
consolidated financial statements for the fiscal year ended December 31,
2006 included in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 22, 2007.
(3) Represents
annual stock option grant as part of annual compensation for performance during
2006.
Employment
Agreements
Noah
Berkowitz, M.D., Ph.D.
President
and Chief Executive Officer
On
February 1, 2007, we entered into an amendment to Dr. Berkowitz’s
Employment Agreement dated March 1, 2005. Pursuant to the amendment,
Dr. Berkowitz is entitled to receive an annual base salary of $264,000. He
is also eligible to receive an annual cash bonus in an amount up to 35% of
his
annual base salary, based upon the achievement of certain milestones and
objectives. The percentage amount associated with each of these milestones
will
be established in the first quarter of the year by the Compensation Committee.
Dr. Berkowitz also receives a car allowance in the amount of $1,000 per
month.
Dr. Berkowitz
is entitled to certain benefits in connection with a termination of his
employment or a change in control discussed below under “—Potential Payments
Upon Termination of Change in Control.”
Malcolm
MacNab, M.D., Ph.D.
Vice
President, Clinical Development
The
Board of Directors has amended Dr. MacNab’s Employment Agreement dated
February 7, 2005. Pursuant to this amendment, Dr. MacNab is entitled
to receive an annual base salary of $240,000, and in lieu of an increase in
base
salary, we are obligated to pay travel expenses to our offices in New Jersey
from his home in Massachusetts. He is also eligible to receive an annual cash
bonus in an amount up to 14% of his annual base salary. One-half of his bonus
is
dependent on the achievement of corporate milestones and one-half of his bonus
is dependent on the achievement of individual milestones. The annual milestones,
as well as the specified percentage of the total bonus of each specific
milestone, shall be established by the Chief Executive Officer and/or the Board
of Directors.
On
November 1, 2006, Dr. MacNab received 1,000,000 shares of common stock
subject to options which was based on targeting 1.5% ownership of the Company
on
a fully diluted basis. The fair value of this award using the Black-Scholes
model is $142,100. These options will vest and become exercisable in four equal
annual installments commencing on January 1, 2007 until fully
vested.
Dr. MacNab
is entitled to certain benefits in a change in control discussed below under
“—Potential Payments Upon Termination of Change in Control.”
Kenneth
I. Moch
Former
President and Chief Executive Officer
On
December 15, 2004, we entered into an Amended and Restated Employment
Agreement with Mr. Moch. The term of the Employment Agreement was for a
period of three years, terminating on December 31, 2007. As our President
and Chief Executive Officer, Mr. Moch was entitled to receive an annual
base salary of $382,454 and an annual bonus amount of up to $150,000 dependent
on the attainment of stated goals and objectives by the Compensation
Committee.
Mr. Moch
resigned as our President and Chief Executive Officer on July 21, 2006, as
a result of our merger with HaptoGuard, Inc. According to Mr. Moch’s
Employment Agreement, because he was terminated without cause prior to the
termination of his Employment Agreement, he was entitled to a base salary amount
equal to his then current annual salary in equal installments over a 12-month
period. In addition, we entered into a consulting agreement with him for a
period of 12 months for an annual consulting fee equal to one-half of his annual
salary at the time of his termination of employment. In addition, we amended
the
terms of his stock option grant agreements to provide that all options which
are
vested on the effective date of the termination of his employment are
exercisable until the earlier of the expiration date set forth in the stock
option grant agreement (without regard to the effect of the termination of
his
employment on the term of the option) or the second anniversary of the effective
date of his resignation from the Board of Directors. After resigning from our
Board of Directors, Mr. Moch provided strategic advisory services to the
Company, focused, in particular on financing activities, for which he was paid
an aggregate of $60,000 in the first and second quarters of 2007.
Mr. Moch
is entitled to certain benefits in connection with a termination of his
employment or a change in control discussed below under “—Potential Payments
Upon Termination of Change in Control.”
Judith
S. Hedstrom
Former
Chief Operating Officer
On
February 11, 2005, we entered into an Amended and Restated Employment
Agreement with Ms. Hedstrom. The term of the Employment Agreement was for a
period of three years, terminating on February 11, 2008. As the Company’s
Chief Operating Officer, Ms. Hedstrom was entitled to receive an annual
base salary of $300,000 and an annual bonus amount of up to $75,000 dependent
on
the attainment of stated goals and objectives by the Compensation
Committee.
Ms. Hedstrom
resigned as Chief Operating Officer on January 31, 2006. Pursuant to
Ms. Hedstrom’s Employment Agreement, because she was terminated without
cause prior to the termination of the Employment Agreement, she was entitled
to
receive her base salary amount equal to her then current annual salary in equal
installment over a twelve-month period. For a period of 18 months following
the
effective date of the termination of employment, we will provide her with
all health, dental and hospital insurance benefits to which she is entitled
under the federal law, without cost, as long as reasonable comparable coverage
is not provided to her by another person or entity with which she has commenced
employment. In addition, we amended the terms of her stock option grant
agreements to provide that all options which are vested on the effective date
of
the termination of her employment are exercisable until the earlier of the
expiration date set forth in the stock option grant agreement (without regard
to
the effect of the termination of her employment on the term of the option)
or
the second anniversary of the effective date of the termination of her
employment.
Ms. Hedstrom
is entitled to certain benefits in connection with a termination of her
employment or a change in control discussed below under “—Potential Payments
Upon Termination of Change in Control.”
In
addition to provisions in the above-described agreements requiring each
individual to maintain the confidentiality of our information and assign
inventions to us, the above named executive officers have agreed that during
the
terms of their agreements and for one year thereafter, they will not compete
with us by engaging in any capacity in any business that is competitive with
our
business.
401(k)
Plan
We
have a tax-qualified employee savings and retirement plan (the “401(k) Plan”)
covering all of our employees. Pursuant to the 401(k) Plan, employees may elect
to reduce their current compensation by up to the statutorily prescribed annual
limit, which was $15,000 in 2006, and have the amount of such reduction
contributed to the 401(k) Plan. The 401(k) Plan does not require that we make
additional matching contributions to the 401(k) Plan on behalf of participants
in the 401(k) Plan. However, in 1998, we began making discretionary
contributions at a rate of 25% of employee contributions up to a maximum of
5%
of their base salary. Contributions by employees to the 401(k) Plan and income
earned on such contributions are not taxable to employees until the
contributions are withdrawn from the 401(k) Plan. The Trustees under the 401(k)
Plan invest the assets of the 401(k) Plan at the direction of each
participant.
Outstanding
Equity Awards at Fiscal Year-End
The
following table shows grants of stock options outstanding on the last day of
the
fiscal year ended December 31, 2006, including both awards subject to
performance conditions and non-performance-based awards, to each of the
executive officers named in the Summary Compensation Table.
|
|
Option
Awards
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
Noah
Berkowitz, M.D., Ph.D.
|
|
—
|
|
—
|
|
—
|
|
—
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Malcolm
W. MacNab, M.D., Ph.D.
|
|
—
|
|
1,000,000
|
(1)
|
0.15
|
|
11/1/2016
|
Vice
President, Clinical Development
|
|
528,150
|
|
528,150
|
(2)
|
0.16
|
|
2/07/2015
|
|
|
|
|
|
|
|
|
|
Kenneth
I. Moch
|
|
—
|
|
—
|
|
—
|
|
—
|
Former
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Judith
S. Hedstrom
|
|
—
|
|
—
|
|
—
|
|
—
|
Former
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary
Phelan
|
|
—
|
|
—
|
|
—
|
|
—
|
Former
Director of Finance and
Financial
Reporting
|
|
|
|
|
|
|
|
|
——————
(1) The
options will vest and become exercisable in four equal annual installments
commencing on January 1, 2007 until fully vested.
(2) The
option vested and will continue to vest semi-annually over three years
commencing on February 7, 2005.
Option
Exercises and Stock Vested
There
were no exercises of stock options held by the executive officers named in
the
Summary Compensation Table during the fiscal year ended December 31,
2006.
Pension
Benefits
We
do not have any qualified or non-qualified defined benefit plans.
Nonqualified
Deferred Compensation
We
do not have any qualified or non-qualified defined benefit plans.
Potential
Payments upon Termination or Change-In-Control
Noah
Berkowitz, M.D., Ph.D.,
President
and Chief Executive Officer
The
employment agreement with Dr. Berkowitz provides for two types of
terminations:
Ø |
“Termination
of Employment by the Company.” In the event that Dr. Berkowitz is
terminated due to “Disability,” we are obligated to pay his salary and
benefits for 12 months following the date of termination in equal,
monthly
installments. For a termination constituting “Cause,” we are obligated to
pay only his accrued and unpaid salary and benefits through the date
of
such termination. All unvested options on the termination date will
be
cancelled. In the event of a termination “Without Cause” is determined by
a majority vote by the Board of Directors, Dr. Berkowitz is entitled
to receive his salary and benefits for a period of 12 months after
the
termination date. In addition, the monthly vesting of his options
shall
continue for an additional 12 months from the termination date. If
Dr. Berkowitz had been terminated under the above circumstance on
December 31, 2006, he would have been eligible to receive an
aggregate of approximately $242,400, which in inclusive of his annual
salary and life insurance premium
benefit.
|
Ø |
“Termination
of Employment by the Executive.” Dr. Berkowitz may choose to resign
from his position for “Good Reason.” Events that qualify as “Good Reason”
include (i) a change in his title or responsibilities, (ii) our
failure to provide executive salary or benefits, or (iii) the
relocation of our primary office to a location, or the requirement
to
perform a majority of his duties at any location to which the commute
time
exceeds one hour and fifteen minutes. If Dr. Berkowitz elects to
terminate his employment due to event (i) or (ii), we are obligated
to pay his salary and benefits for a period of 12 months after the
termination date. The monthly vesting of his options shall continue
for an
additional 12 months from the termination date. If he elects to terminate
his employment due to event (iii), we would be obligated to pay his
salary
and benefits for a period of six months after the termination date.
If
Dr. Berkowitz had been terminated under the above circumstance on
December 31, 2006, he would have been eligible to receive an
aggregate of approximately $121,200, which in inclusive of six months
of
salary and life insurance premium benefit. The monthly vesting of
his
options shall continue for an additional six months from the termination
date.
|
If
Dr. Berkowitz elects to terminate his employment for any other reason than
those stated above, his employment agreement will terminate immediately and
he
would receive the accrued and unpaid salary benefits through the date of such
termination.
Malcolm
MacNab, M.D., Ph.D.,
Vice
President, Clinical Development
Pursuant
to our Stock Option Grant Agreement with Dr. MacNab dated November 1,
2006, upon a change in control, any portion of Dr. MacNab’s options, which
are not vested and exercisable, shall vest and become exercisable immediately
prior to a change in control. As defined in the Stock Option Grant Agreement,
a
change in control shall be deemed to occur if (i) we are merged with or
into or consolidated with another corporation or other entity under
circumstances where our stockholders immediately prior to such merger or
consolidation do not own after such merger or consolidation shares representing
at least 50% of the voting power of us or the surviving or resulting corporation
or other entity, as the case may be, or (ii) we are liquidated, sell or
otherwise dispose of substantially all of our assets to another corporation
or
entity, or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of 40% or more of our common stock other than pursuant to a plan
or arrangement entered into by such person and us or otherwise approved by
our
Board of Directors, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board
of
Directors shall cease for any reason to constitute a majority of the Board
unless the election or nomination for election by our stockholders of each
new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period. If
Dr. MacNab had been terminated under the above circumstance on
December 31, 2006, he would have been eligible to purchase 2,056,300 shares
of common stock subject to options.
Kenneth
I. Moch, Former President and Chief Executive Officer
Judith
S. Hedstrom, Former Chief Operating Officer
In
February 1996, we adopted the Alteon Inc. Change in Control Severance
Benefits Plan (the “Change in Control Severance Plan”) to protect and retain
qualified employees and to encourage their full attention, free from
distractions caused by personal uncertainties and risks in the event of a
pending or threatened change in control. The Change in Control Severance Plan
provides for severance benefits to certain employees upon certain terminations
of employment after or in connection with a change in control as defined in
the
Change in Control Severance Plan. Following a qualifying termination that occurs
as a result of a change in control, our executive officers would be entitled
to
continuation of (i) their base salary for a period of 24 months, and
(ii) all benefit programs and plans providing for health and insurance
benefits for a period of up to 18 months. In addition, upon a change in control,
all outstanding unexercisable stock options held by certain employees that
are
participants in the Change in Control Severance Plan would become exercisable.
The Change in Control Severance Plan was terminated in November 2005.
However, such provisions remained in effect for Mr. Moch and
Ms. Hedstrom pursuant to the terms of their employment
agreements.
Director
Compensation
The
following table shows the total compensation paid or accrued during the fiscal
year ended December 31, 2006 to each of our directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(2)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noah
Berkowitz, M.D., Ph.D.(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Edwin
Bransome, M.D.(4)
|
|
$
|
9,000
|
|
|
—
|
|
|
—
|
|
$
|
9,000
|
Marilyn
Breslow(5)
|
|
$
|
20,000
|
|
$
|
3,573
|
|
$
|
2,708
|
|
$
|
26,281
|
Alan
Dalby(6)
|
|
$
|
3,500
|
|
|
—
|
|
|
—
|
|
$
|
3,500
|
David
K. McCurdy(7)
|
|
$
|
6,500
|
|
|
—
|
|
|
—
|
|
$
|
6,500
|
Kenneth
I. Moch(8)
|
|
$
|
7,000
|
|
$
|
3,616
|
|
$
|
2,708
|
|
$
|
13,324
|
Thomas
A. Moore(9)
|
|
$
|
19,000
|
|
$
|
3,616
|
|
$
|
2,708
|
|
$
|
25,324
|
George
Naimark, Ph.D.(10)
|
|
$
|
17,500
|
|
|
—
|
|
$
|
2,708
|
|
$
|
20,208
|
Mark
Novitch, M.D.(11)
|
|
$
|
8,000
|
|
|
—
|
|
|
—
|
|
$
|
8,000
|
Mary
C. Tanner
|
|
$
|
11,500
|
|
$
|
3,573
|
|
$
|
21,121
|
(12)
|
$
|
36,194
|
Wayne
Yetter(13)
|
|
$
|
9,000
|
|
$
|
3,573
|
|
$
|
2,708
|
|
$
|
15,281
|
——————
(1) Represents
the closing price of our common stock on the American Stock Exchange on
July 19, 2006, for 160,000 shares granted in the form of restricted stock
on July 19, 2006 to each non-employee director, the grant date fair value
of which was $24,000, in accordance with FAS 123(R). Assumptions used in the
calculation are included in Note 9 - Stockholders’ Equity to our audited
consolidated financial statements for the fiscal year ended December 31,
2006 included in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 22, 2007.
(2) Represents
the dollar amount recognized for financial statement reporting purposes for
the
fiscal year ended December 31, 2006 in accordance with FAS 123(R), the
grant date fair value of which was $12,526. Assumptions used in the calculation
are included in Note 9 - Stockholders’ Equity to our audited consolidated
financial statements for the fiscal year ended December 31, 2006 included
in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 22, 2007.
(3) Dr. Berkowitz,
our President and Chief Executive Officer, receives no compensation for his
services as Director.
(4) Dr. Bransome
resigned effective July 19, 2006. As of December 31, 2006, there are
outstanding options to purchase 120,000 shares of common stock issued to
Dr. Bransome.
(5) As
of December 31, 2006, there are outstanding 160,000 shares of restricted
stock and options to purchase 244,867 shares of common stock issued to
Ms. Breslow.
(6) Mr. Dalby
resigned effective July 19, 2006. As of December 31, 2006, there are
outstanding options to purchase 142,400 shares of common stock issued to
Mr. Dalby.
(7) Mr. McCurdy
resigned effective July 19, 2006. As of December 31, 2006, there are
outstanding options to purchase 166,067 shares of common stock issued to
Mr. McCurdy.
(8) Mr. Moch
resigned effective February 5, 2007. As of December 31, 2006, there
are outstanding 160,000 shares of restricted stock and options to purchase
2,792,000 shares of common stock issued to Mr. Moch.
(9) As
of December 31, 2006, there are outstanding 160,000 shares of restricted
stock and options to purchase 185,000 shares of common stock issued to
Mr. Moore.
(10) Dr. Naimark
resigned effective November 17, 2006. As of December 31, 2006, there
are outstanding options to purchase 133,337 shares of common stock issued to
Dr. Naimark.
(11) Dr. Novitch
resigned effective July 19, 2006. As of December 31, 2006, there are
outstanding options to purchase 416,067 shares of common stock issued to
Dr. Novitch.
(12) Represents
the dollar amount recognized for financial statement reporting purposes for
the
fiscal year ended December 31, 2006 in accordance with FAS 123(R), the
grant date fair value of which was $79,394. Assumptions used in the calculation
are included in Note 9 - Stockholders’ Equity to our audited consolidated
financial statements for the fiscal year ended December 31, 2006 included
in our Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 22, 2007. As of December 31, 2006, there are
outstanding 160,000 shares of restricted stock and options to purchase 1,271,300
shares of common stock issued to Ms. Tanner.
(13) As
of December 31, 2006, there are outstanding 160,000 shares of restricted
stock and options to purchase 442,100 shares of common stock issued to
Mr. Yetter.
Director
Compensation Policy
All
of our Board of Directors are reimbursed for their expenses for each Board
meeting attended. Directors who are not also compensated as our employees
receive $1,500 per Board meeting attended in person and $1,000 for each Board
meeting attended by telephone.
Pursuant
to Alteon 2005 Stock Plan, as amended on July 19, 2006, non-employee
directors also receive, upon the date of their election or re-election to the
Board and on the dates of the next two annual meetings of stockholders (subject
to their continued service on the Board of Directors), a stock option to
purchase 20,000 shares of our common stock (subject to adjustment if they
received stock options upon appointment to the Board between annual meetings
of
stockholders to fill a vacancy or newly created directorship) at an exercise
price equal to the fair market value of our common stock on the date of grant.
Each of these options will vest and become exercisable upon completion of one
full year of service and shall have a term of ten years regardless of whether
the director ceases to be a director.
Pursuant
to the Annual Meeting of Stockholders held on July 19, 2006, each member of
the Board of Directors received a stock option to purchase 70,000 shares of
our
common stock at an exercise price equal to the fair market value of our common
stock on the date of grant which will vest and become exercisable over a period
of three years in three annual installments of 23,000, 23,000 and 24,000
options, respectively, until fully vested, each on the anniversary of the date
of grant.
In
addition, each member of the Board of Directors also received 160,000 shares
of
our common stock with a lapsing repurchase right and annual vesting over three
years on the anniversary of the grant date until fully vested at a purchase
price equal to the fair market value on the date of grant.
The
Chairman of the Audit Committee receives $1,000 per meeting attended and the
other members of the Audit Committee receive $250 per meeting
attended.
Indemnification;
Directors’ and Officers’ Insurance
The
Delaware General Corporation Law authorizes corporations to limit or eliminate,
subject to certain conditions, the personal liability of directors to
corporations and their stockholders for monetary damages for breach of their
fiduciary duties. Our restated certificate of incorporation and restated bylaws
limit the liability of our directors to the fullest extent permitted by Delaware
law.
We
have obtained director and officer liability insurance to cover liabilities
our
directors and officers may incur in connection with their services to us,
including matters arising under the Securities Act of 1933, as amended (the
“Securities Act”). Our restated certificate of incorporation and restated bylaws
also provide that we will indemnify any of our directors and officers who,
by
reason of the fact that he or she is one of our officers or directors, is
involved in a legal proceeding of any nature. We will repay certain expenses
incurred by a director or officer in connection with any civil or criminal
action or proceeding, specifically including actions by us or in our name
(derivative suits). Such indemnifiable expenses include, to the maximum extent
permitted by law, attorneys’ fees, judgments, civil or criminal fines,
settlement amounts and other expenses customarily incurred in connection with
legal proceedings. A director or officer will not receive indemnification if
he
or she is found not to have acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, our best interest. We believe
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and officers.
Such
limitation of liability and indemnification does not affect the availability
of
equitable remedies. In addition, we have been advised that in the opinion of
the
Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act is against public policy as expressed in the Securities
Act and is therefore unenforceable.
There
is no pending litigation or proceeding involving any of our directors, officers,
employees or agents in which indemnification will be required or permitted.
We
are not aware of any threatened litigation or proceeding that may result in
a
claim for such indemnification.
Compensation
Committee Interlocks and Insider Participation
The
persons who served as members of the Compensation Committee of the Board of
Directors during 2006 were Alan J. Dalby, Edwin D. Bransome, Jr., M.D., Marilyn
G. Breslow, David K. McCurdy, Thomas A. Moore, George M. Naimark, Ph.D., Mark
Novitch, M.D and Wayne Y. Yetter. None of the members of the Compensation
Committee was an officer, former officer or employee of ours or had any
relationship with us that requires disclosure under Item 404 of the Securities
and Exchange Commission’s Regulation S-K.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee of our Board of Directors has reviewed and discussed
the
Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K,
which appears elsewhere in this document, with our management. Based on this
review and discussion, the Committee has recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this Amendment
to
our Form 10-K.
Compensation
Committee
Wayne
Yetter
Thomas
A. Moore
.
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder
Matters.
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2007, except as otherwise set
forth below, by (i) each person who is known by us to own beneficially more
than 5% of the common stock, (ii) each director, (iii) each named
executive officer and (iv) all current directors and named executive
officers as a group. Unless otherwise indicated, the address for each director
and executive officer listed is 221 West Grand Avenue, Suite 200, Montvale,
NJ
07645.
|
|
|
|
|
|
Name
of Beneficial Owner(1)
|
|
Amount and
Nature of
Beneficial
Ownership(1)
|
|
Percent
of
Class(2)
|
|
|
|
|
|
|
|
Genentech,
Inc.
1
DNA Way
South
San Francisco, CA 94080-4990
|
|
14,290,663
|
|
11
|
%
|
|
|
|
|
|
|
Noah
Berkowitz, M.D., Ph.D.
|
|
8,931,700
|
|
7
|
%
|
Noah
C. Berkowitz Family Trust
|
|
6,337,800
|
(3)
|
5
|
%
|
Marilyn
G. Breslow
|
|
154,867
|
(4)
|
*
|
|
Thomas
A. Moore
|
|
119,000
|
(5)
|
*
|
|
Malcolm
MacNab, M.D., Ph.D.
|
|
704,200
|
(6)
|
1
|
%
|
Mary
C. Tanner
|
|
6,980,754
|
(7)
|
6
|
%
|
Wayne
P. Yetter
|
|
541,060
|
(8)
|
*
|
|
All
current directors and officers as a group (6 persons)
|
|
17,431,581
|
(9)
|
14
|
%
|
——————
*Less
than one percent
(1) Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission, and generally includes voting or investment power with
respect to securities. Shares of common stock subject to stock options and
warrants currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage ownership of the person holding such
options and the percentage ownership of any group of which the holder is a
member, but are not deemed outstanding for computing the percentage ownership
of
any other person. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Applicable
percentage of ownership is based on 129,318,858 shares of common stock
outstanding.
(3) Dr. Berkowitz’s
wife is the trustee and has the power to vote and dispose of the shares.
Dr. Berkowitz disclaims beneficial ownership of the shares.
(4) Includes
154,867 shares of common stock subject to options that were exercisable as
of
March 31, 2007.
(5) Includes
24,000 shares of common stock held directly by Mr. Moore and 95,000 shares
of common stock subject to options which were exercisable as of March 31,
2007.
(6) Includes
704,200 shares of common stock subject to options that were exercisable as
of
March 31, 2007.
(7) Includes
5,212,146 shares of common stock held directly by Ms. Tanner and 1,768,608
shares of common stock subject to options and warrants which were exercisable
as
of March 31, 2007.
(8) Includes
306,327 shares of common stock Mr. Yetter and 234,733 shares of common
stock subject to options that were exercisable as of March 31,
2007.
(9) Includes
14,474,173 shares of common stock held directly by all current officers and
directors and 2,957,408 shares of common stock subject to options and warrants
which were exercisable as of March 31, 2007.
Equity
Compensation Plan Information
The
following table provides certain aggregate information with respect to all
of
our equity compensation plans in effect as of December 31,
2006.
Plan
Category
|
|
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
|
|
Weighted-Average
Exercise Price
of Outstanding
Options,
Warrants
and Right
|
|
Number of
Securities
Remaining Available
For Future Issuance
Under Existing Equity
Compensation Plans
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders(1)
|
|
|
10,790,137
|
|
$
|
1.25
|
|
|
5,186,200
|
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
|
10,790,137
|
|
$
|
1.25
|
|
|
5,186,200
|
|
——————
(1) These
plans consist of our Amended and Restated 1987 Stock Option Plan, our Amended
1995 Stock Option Plan and our 2005 Stock Plan as amended on July 19,
2006.
Item
13. Certain
Relationships and Related Transactions, and Director
Independence.
Our
Audit Committee reviews and approves, in advance, all related party
transactions.
In
a private placement conducted in September 2006, Ms. Tanner, a member
of our Board of Directors, purchased 800,333 shares of our common stock and
warrants to purchase 800,333 shares of our common stock that are exercisable
beginning six months after September 13, 2006 for a period of five years
for $0.1875 per share, at an aggregate purchase price of $120,050. Such
transaction was approved by our entire Board of Directors.
Director
Independence
Our
Board has determined that the following members of the Board qualify as
independent under the definition promulgated by the American Stock Exchange:
Ms. Breslow, Mr. Moore, Ms. Tanner and
Mr. Yetter.
Item
14. Principal
Accountant Fees and Services.
J.H.
Cohn served as our independent registered public accounting firm for the fiscal
years ended December 31, 2006, December 31, 2005, and
December 31, 2004.
If
the stockholders do not ratify the decision to appoint J.H. Cohn, the Audit
Committee may reconsider its selection. The affirmative vote of a majority
of
the shares voted at the annual meeting is required for
ratification.
Representatives
of J.H. Cohn are expected to be present at the annual meeting to respond to
appropriate questions from our stockholders. They will be given the opportunity
to make a statement if they wish to do so.
The
following table summarizes the fees paid or payable to J.H. Cohn for services
rendered for the fiscal year ended December 31, 2006:
Type
of Fees
|
|
|
Fiscal Year
Ended
December 31,
2006
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
97,925
|
|
Audit-Related
Fees
|
|
|
46,142
|
|
Tax
Fees
|
|
|
—
|
|
All
Other Fees
|
|
|
—
|
|
Total
Fees
|
|
$
|
144,067
|
|
The
following table summarizes the fees paid or payable to J.H. Cohn for services
rendered for the fiscal year ended December 31, 2005:
Type
of Fees
|
|
|
Fiscal Year
Ended
December 31,
2005
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
288,966
|
*
|
Audit-Related
Fees
|
|
|
7,150
|
|
Tax
Fees
|
|
|
—
|
|
All
Other Fees
|
|
|
—
|
|
Total
Fees
|
|
$
|
296,116
|
|
*
2005 Audit Fees to J.H. Cohn LLP included $196,239 for work related to the
audit
of our internal controls over financial reporting and related attestation to
management’s report on the effectiveness of our internal controls over financial
reporting which was required by Section 404 of the Sarbanes-Oxley Act of 2002
for fiscal 2004.
Information
set forth above under the caption “Audit Fees” relates to fees we paid the
independent registered public accountants for professional services for the
audit of our financial statements included in our Form 10-K, review of our
financial statements included in our Forms 10-Q and for the issuance of comfort
letters and/or consents in connection with registration statements.
“Audit-Related Fees” are fees we paid for assurance and related services by the
independent registered public accountants that are reasonably related to the
performance of the audit or review of our financial statements, including
special procedures required to meet certain regulatory
requirements.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services
of
Independent Auditors
Consistent
with SEC policies regarding auditor independence, the Audit Committee has
responsibility for appointing, setting compensation and overseeing the work
of
the independent registered public accounting firm. In recognition of this
responsibility, the Audit Committee has established a policy to pre-approve
all
audit and permissible non-audit services provided by the independent
auditor.
Prior
to engagement of the independent auditor for the next year’s audit, management
will submit an aggregate of services expected to be rendered during that year
for each of four categories of services to the Audit Committee for
approval.
1.
Audit
services include audit work performed in connection with annual financial
statements, as well as work that generally only the independent auditor can
reasonably be expected to provide, including comfort letters, statutory audits,
and attest services and consultation regarding financial accounting and/or
reporting standards.
2.
Audit-Related
services are for assurance and related services that are traditionally performed
by the independent auditor, including due diligence related to mergers and
acquisitions, employee benefit plan audits, and special procedures required
to
meet certain regulatory requirements.
3.
Tax
services include all services performed by the independent auditor’s tax
personnel except those services specifically related to the audit of the
financial statements, and includes fees in the areas of tax compliance, tax
planning, and tax advice.
4.
Other
Fees
are those associated with services not captured in the other categories. The
Company generally does not request such services from the independent registered
public accounting firm.
Prior
to engagement, the Audit Committee pre-approves these services by category
of
service. The fees are budgeted and the Audit Committee requires the independent
auditor and management to report actual fees versus the budget periodically
throughout the year by category of service. During the year, circumstances
may
arise when it may become necessary to engage the independent auditor for
additional services not contemplated in the original pre-approval. In those
instances, the Audit Committee requires specific pre-approval before engaging
the independent auditor.
The
Audit Committee may delegate pre-approval authority to one or more of its
members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting.
PART
IV
Item
15. Exhibits,
Financial Statement Schedules.
(a)
Consolidated
Financial Statements.
Our audited consolidated financial statements and the Report of Independent
Registered Public Accounting Firms were filed as part of our original Annual
Report on Form 10-K.
(b) Exhibits.
The
exhibits required to be filed are listed on the “Exhibit Index” attached hereto,
which is incorporated herein by reference.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on
its
behalf by the undersigned, thereunto duly authorized this 30th day of April
2007.
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|
|
|
|
|
|
ALTEON
INC. |
|
|
/s/ Noah
Berkowitz |
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Noah
Berkowitz, M.D., Ph.D. |
|
Title President
and Chief Executive Officer |
EXHIBIT
INDEX
No.
|
|
Description
of Exhibit
|
2.1
|
|
Agreement
and Plan of Merger by and among Alteon Inc., Alteon Merger Sub,
Inc.,
HaptoGuard, Inc. and Genentech, Inc., dated as of April 19, 2006.
(Incorporated by reference to Annex A to the Company’s Schedule 14A filed
on June 22, 2006, SEC File Number
000-16043.)
|
3.1
|
|
Restated
Certificate of Incorporation, as amended. (Incorporated by reference
to
Exhibit 3.1 to the Company's Report on Form 10-Q filed on November
10,
1999, SEC File Number 000-19529.)
|
3.2
|
|
Certificate
of the Voting Powers, Designations, Preference and Relative Participating,
Optional and Other Special Rights and Qualifications, Limitations
or
Restrictions of Series F Preferred Stock of Alteon Inc. (Incorporated
by
reference to Exhibit 3.2 to the Company's Annual Report on Form
10-K for
the year ended December 31, 2000, SEC File Number
001-16043.)
|
3.3
|
|
Certificate
of Retirement of Alteon Inc., dated September 10, 2000. (Incorporated
by
reference to Exhibit 3.1 to the Company's Report on Form 10-Q filed
on
November 10, 1999, SEC File Number
000-19529.)
|
3.4
|
|
Certificate
of Designations of Series G Preferred Stock of Alteon Inc. (Incorporated
by reference to Exhibit 3.4 to the Company's Annual Report on Form
10-K
for the year ended December 31, 1997, SEC File Number
000-19529.)
|
3.5
|
|
Certificate
of Amendment of Certificate of Designations of Series G Preferred
Stock of
Alteon Inc. (Incorporated by reference to Exhibit 3.4 to the Company's
Report on Form 10-Q filed on August 14, 1998, SEC File Number
000-19529.)
|
3.6
|
|
Certificate
of Designations of Series H Preferred Stock of Alteon Inc. (Incorporated
by reference to Exhibit 3.5 to the Company's Annual Report on Form
10-K
for the year ended December 31, 1997, SEC File Number
000-19529.)
|
3.7
|
|
Amended
Certificate of Designations of Series H Preferred Stock of Alteon
Inc.
(Incorporated by reference to Exhibit 3.6 to the Company's Report
on Form
10-Q filed on August 14, 1998, SEC File Number
000-19529.)
|
3.8
|
|
Certificate
of Retirement of Alteon Inc., dated November 20, 2000. (Incorporated
by
reference to Exhibit 3.8 to the Company's Annual Report on Form
10-K for
the year ended December 31, 2000, SEC File Number
001-16043.)
|
3.9
|
|
Certificate
of Amendment to Restated Certificate of Incorporation of Alteon
Inc.,
dated June 7, 2001. (Incorporated by reference to Exhibit 3.8 to
the
Company’s Report on Form 10-Q filed on August 14, 2001, SEC File Number
001-16043.)
|
3.10
|
|
By-laws,
as amended. (Incorporated by reference to Exhibit 3.10 to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2002,
SEC File
Number 001-16043.)
|
3.11
|
|
Certificate
of Amendment to Restated Certificate of Incorporation of Alteon
Inc.,
dated September 17, 2004. (Incorporated by reference to Exhibit
3.1 to the
Company’s Report on Form 10-Q filed on November 9, 2004, SEC File Number
001-16043.)
|
3.12
|
|
Amended
Certificate of Designations of Series G Preferred Stock of Alteon
Inc.,
dated October 6, 2004. (Incorporated by reference to Exhibit 3.2
to the
Company’s Report on Form 10-Q filed on November 9, 2004, SEC File Number
001-16043.)
|
EXHIBIT
INDEX
Exhibit
No.
|
|
Description of
Exhibit
|
3.13
|
|
Amended
Certificate of the Voting Powers, Designations, Preferences and
Relative
Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions or Series F Preferred Stock of Alteon
Inc.
(Incorporated by reference to Exhibit 3.1.1 to the Company’s Report on
Form 10-Q filed on August 9, 2005, SEC File Number
001-16043.)
|
3.14
|
|
Certificate
of Amendment to Restated Certificate of Incorporation of Alteon
Inc.,
dated October 24, 2005. (Incorporated by reference to Exhibit 3.14
to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2005,
SEC File Number 001-16043.)
|
3.15
|
|
Certificate
of Amendment to the Corrected Certificate of Designations of Series G
Preferred Stock of Alteon Inc., dated July 20, 2006. (Incorporated
by
reference to Exhibit 3.14 to the Company’s Registration Statement on Form
S-8 filed on September 5, 2006, SEC File Number
333-137115.)
|
3.16
|
|
Certificate
of Amendment to the Corrected Certificate of Designations of Series
H
Preferred Stock of Alteon Inc., dated July 20, 2006. (Incorporated
by
reference to Exhibit 3.15 to the Company’s Registration Statement on Form
S-8 filed on September 5, 2006, SEC File Number
333-137115.)
|
3.17
|
|
Form
of Amended and Restated Certificate of Incorporation of the Company.
(Incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K filed on April 11, 2007, SEC File No.
001-16043.)
|
4.1
|
|
Stockholders'
Rights Agreement between Alteon Inc. and Registrar and Transfer
Company,
as Rights Agent, dated as of July 27, 1995. (Incorporated by reference
to
Exhibit 4.1 to the Company's Annual Report on Form 10-K for the
year ended
December 31, 2000, SEC File Number
001-16043.)
|
4.2
|
|
Amendment
to Stockholders' Rights Agreement between Alteon Inc. and Registrar
and
Transfer Company, as Rights Agent, dated as of April 24, 1997.
(Incorporated by reference to Exhibit 4.4 to the Company's Current
Report
on Form 8-K filed on May 9, 1997, SEC File Number
000-19529.)
|
4.3
|
|
Registration
Rights Agreement between Alteon Inc. and the investors named on
the
signature page thereof, dated as of April 24, 1997. (Incorporated
by
reference to Exhibit 4.1 to the Company's Current Report on Form
8-K filed
on May 9, 1997, SEC File Number
000-19529.)
|
4.4
|
|
Form
of Common Stock Purchase Warrant. (Incorporated by reference to
Exhibit
4.2 to the Company's Current Report on Form 8-K filed on May 9,
1997, SEC
File Number 000-19529.)
|
4.5
|
|
Amendment
to Stockholders' Rights Agreement between Alteon Inc. and Registrar
and
Transfer Company, as Rights Agent, dated as of December 1, 1997.
(Incorporated by reference to Exhibit 4.1 to the Company's Current
Report
on Form 8-K filed on December 10, 1997, SEC File Number
000-19529.)
|
4.6
|
|
Registration
Rights Agreement, dated September 29, 2000. (Incorporated by reference
to
Exhibit 4.1 to the Company's Current Report on Form 8-K filed on
October
5, 2000, SEC File Number
001-16043.)
|
4.7
|
|
Form
of Series 1 Common Stock Purchase Warrant. (Incorporated by reference
to
Exhibit 4.2 to the Company's Current Report on Form 8-K filed on
October
5, 2000, SEC File Number
001-16043.)
|
4.8
|
|
Form
of Series 2 Common Stock Purchase Warrant. (Incorporated by reference
to
Exhibit 4.3 to the Company's Current Report on Form 8-K filed on
October
5, 2000, SEC File Number
001-16043.)
|
EXHIBIT
INDEX
No.
|
|
Description
of Exhibit
|
4.9
|
|
Notice
of Appointment of The American Stock Transfer & Trust Company as
successor Rights Agent, dated August 29, 2002, pursuant to Stockholders’
Rights Agreement, dated as of July 27, 1995. (Incorporated by reference
to
Exhibit 4.4 of the Company’s Report on Form 10-Q filed on November 13,
2002, SEC File Number 001-16043.)
|
4.10
|
|
Form
of Common Stock Purchase Warrant, dated July 2, 2004. (Incorporated
by
reference to Exhibit 4.10 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005, SEC File Number
000-16043.)
|
4.11
|
|
Form
of Common Stock Purchase Warrant, dated January 5, 2005. (Incorporated
by
reference to Exhibit 4.11 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005, SEC File Number 000-16043.)
|
4.12
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|
Amended
and Restated Stockholder Rights Agreement between Alteon Inc. and
American
Stock Transfer & Trust Company as Rights Agent, dated as of July 27,
2005. (Incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form 8-A/A filed on July 27, 2005, SEC
File
Number 001-16043.)
|
4.13
|
|
Registration
Rights Agreement by and between Alteon Inc. and the Purchasers
named
therein, dated as of April 19, 2006. (Incorporated by reference
to Exhibit
10.2 to the Company’s Registration Statement on Form S-3 filed on May 31,
2006, SEC File No. 333-134584.)
|
4.14
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|
Form
of Common Stock Purchase Warrant issued to Investors pursuant to
the
Securities Purchase Agreement by and between Alteon Inc. and the
Purchasers named therein, dated as of April 19, 2006. (Incorporated
by
reference to Exhibit 10.27 to the Company’s Registration Statement on Form
S-3 filed on May 31, 2006, SEC File No.
333-134584.)
|
4.15
|
|
Registration
Rights Agreement by and between Alteon Inc. and the Purchasers
named
therein, dated as of September 13, 2006. (Incorporated by reference
to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on
September 19, 2006, SEC File No. 001-16043.)
|
4.16
|
|
Form
of Common Stock Purchase Warrant issued to Investors pursuant to
the
Securities Purchase Agreement by and between the Company and the
Purchasers named therein, dated as of September 13, 2006. (Incorporated
by
reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
filed on September 19, 2006, SEC File No.
001-16043.)
|
4.17
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|
Registration
Rights Agreement among Alteon Inc. and the Purchasers named therein,
dated
as of January 11, 2007. (Incorporated by reference to Exhibit 10.4
to the
Company’s Current Report on Form 8-K filed on January 16, 2007, SEC File
No. 001-16043.)
|
4.18
|
|
Form
of Senior Convertible Secured Promissory Note issued to Lenders
pursuant
to the Note and Warrant Purchase Agreement, dated as of January
11, 2007.
(Incorporated by reference to Exhibit 10.5 to the Company’s Current Report
on Form 8-K filed on January 16, 2007, SEC File No.
001-16043.)
|
4.19
|
|
Form
of Common Stock Purchase Warrant issued to Lenders pursuant to
the Note
and Warrant Purchase Agreement, dated as of January 11, 2007.
(Incorporated by reference to Exhibit 10.6 to the Company’s Current Report
on Form 8-K filed on January 16, 2007, SEC File No.
001-16043.)
|
4.20
|
|
Amendment
No. 1 to Stockholder Rights Agreement by and between Alteon Inc.
and American
Stock Transfer & Trust Company, dated as of January 11, 2007.
(Incorporated by reference to Exhibit 10.7 to the Company’s Current Report
on Form 8-K filed on January 16, 2007, SEC File No.
001-16043.)
|
EXHIBIT
INDEX
No.
|
|
Description
of Exhibit
|
4.21
|
|
Form
of Registration Rights Agreement among Alteon Inc. and each Purchaser
identified on the signature pages thereto. (Incorporated by reference
to
Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April
11, 2007, SEC File No. 001-16043.)
|
4.22
|
|
Form
of Preferred Stock Purchase Warrant to be issued to the Purchasers
pursuant to the Series B Preferred Stock and Warrant Purchase Agreement,
dated as of April 5, 2007. (Incorporated by reference to Exhibit
10.4 to
the Company’s Current Report on Form 8-K filed on April 11, 2007, SEC File
No. 001-16043.)
|
10.1
|
|
Amended
and Restated 1987 Stock Option Plan. (Incorporated by reference
to Exhibit
10.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, SEC File Number
000-19529.)
|
10.2
|
|
Amended
1995 Stock Option Plan. (Incorporated by reference to Exhibit 10.2
to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2001,
SEC File Number 001-16043.)
|
10.3†
|
|
Form
of Employee's or Consultant's Invention Assignment, Confidential
Information and Non-Competition Agreement executed by all key employees
and consultants as employed or retained from time to time. (Incorporated
by Reference to Exhibit 10.1 to the Company's Registration Statement
on
Form S-1, SEC File Number 33-42574, which became effective on November
1,
1991.)
|
10.4†
|
|
Alteon
Inc. Change in Control Severance Benefits Plan. (Incorporated by
reference
to Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year
ended December 31, 2000, SEC File Number
001-16043.)
|
10.5
|
|
Preferred
Stock Investment Agreement between Alteon Inc. and the investors
named on
the signature page thereof, dated as of April 24, 1997. (Incorporated
by
reference to Exhibit 10.1 to the Company's Current Report on Form
8-K
filed on May 9, 1997, SEC File Number
000-19529.)
|
10.6
|
|
Common
Stock and Warrants Purchase Agreement among Alteon Inc. and EGM
Medical
Technology Fund, L.P., EGM Technology Offshore Fund, Narragansett
I, L.P.,
Narragansett Offshore, Ltd., S.A.C. Capital Associates, LLC, SDS
Merchant
Fund, LP and Herriot Tabuteau, dated as of September 29, 2000.
(Incorporated by reference to Exhibit 10.1 to the Company's Current
Report
on Form 8-K filed on October 5, 2000, SEC File Number
001-16043.)
|
10.7
|
|
Stock
Purchase Agreement between Alteon Inc. and the Purchasers named
therein,
dated January 4, 2002. (Incorporated by reference to the Company’s Current
Report on Form 8-K filed on January 7, 2002, SEC File Number
001-16043.)
|
10.8
|
|
Stock
Purchase Agreement between Alteon Inc. and the Purchasers named
therein,
dated December 20, 2002. (Incorporated by reference to Exhibit
10.1 of the
Company’s Current Report on Form 8-K filed on December 24, 2002, SEC File
Number 001-16043.)
|
10.9
|
|
Stock
Purchase Agreement, dated October 15, 2003. (Incorporated by reference
to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October
20, 2003, SEC File Number
001-16043.)
|
10.10
|
|
Amendment
to Stock Purchase Agreement, dated October 24, 2003. (Incorporated
by
reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q
filed on November 13, 2003, SEC File Number
001-16043.)
|
EXHIBIT
INDEX
No.
|
|
Description
of Exhibit
|
10.11
|
|
Alteon
Inc. Description of Director Compensation Arrangements. (Incorporated
by
reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K
filed on March 22, 2007, SEC File Number 001-16043.)
|
10.12
|
|
Alteon
Inc. Description of Executive Officer Compensation Arrangements.
(Incorporated by reference to Exhibit 10.12 to the Company’s Annual Report
on Form 10-K filed on March 22, 2007, SEC File Number 001-16043.)
|
10.13†
|
|
Alteon
Inc. 2005 Stock Plan. (Incorporated by reference to Exhibit 99.1
to the
Company’s Current Report on Form 8-K filed on July 6, 2005, SEC File
Number 001-16043.)
|
10.14†
|
|
Form
of Employee’s Stock Option Grant Agreement. (Incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on
August 9, 2005, SEC File Number
001-16043.)
|
10.15
|
|
Form
of Director’s Formula Award Non-Qualified Stock Option Grant Agreement.
(Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly
Report on Form 10-Q filed on August 9, 2005, SEC File Number
001-16043.)
|
10.16
|
|
Form
of Consultant’s Non-Qualified Stock Option Grant Agreement. (Incorporated
by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form
10-Q filed on August 9, 2005, SEC File Number
001-16043.)
|
10.17
|
|
Notice
of Option Acceleration. (Incorporated by reference to Exhibit 10.27
to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2005,
SEC File Number 001-16043.)
|
10.18†
|
|
Alteon
Inc. Severance Plan and Summary Plan Description. (Incorporated
by
reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005, SEC File Number
001-16043.)
|
10.19
|
|
Voting
Agreement by and between the stockholders named therein, HaptoGuard,
Inc.
and Alteon Inc., dated as of April 19, 2006. (Incorporated by
reference to Annex B to the Company’s Schedule 14A filed on June 22, 2006,
SEC File Number 000-16043.)
|
10.20†
|
|
Employment
Agreement between HaptoGuard, Inc. and Noah Berkowitz, dated March
1,
2005. (Incorporated by reference to Exhibit 99.2 to the Company’s Current
Report on Form 8-K filed on July 25, 2006, SEC File Number
000-16043.)
|
10.21†
|
|
Alteon
Inc. Stock Plan as amended on July 19, 2006. (Incorporated by reference
to
Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed on
September 5, 2006, SEC File Number
333-137115.)
|
10.22
|
|
Securities
Purchase Agreement among Alteon Inc. and each Purchaser identified
on the
signature pages thereto, dated as of September 13, 2006. (Incorporated
by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed on September 19, 2006, SEC File No.
001-16043.)
|
10.23
|
|
Convertible
Note and Warrant Purchase Agreement among Alteon Inc. and each
Lender
identified on the signature pages thereto, dated as of January
11, 2007.
(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on January 16, 2007, SEC File No.
001-16043.)
|
10.24
|
|
Security
& Guaranty Agreement by and between Alteon Inc., HaptoGuard, Inc.,
and
Baker Bros Advisors, LLC, dated as of January 11, 2007. (Incorporated
by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed on January 16, 2007, SEC File No.
001-16043.)
|
EXHIBIT
INDEX
No.
|
|
Description
of Exhibit
|
10.25
|
|
Intellectual
Property Security Agreement by and between Alteon Inc., HaptoGuard,
Inc.,
and Baker Bros Advisors, LLC., dated as of January 11, 2007. (Incorporated
by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
filed on January 16, 2007, SEC File No.
001-16043.)
|
10.26
|
|
Lease
Agreement by and between Alteon Inc. and DS Montvale, LLC, dated
as of
January 19, 2007. (Incorporated by reference to Exhibit 10.1 to
the
Company’s Current Report on Form 8-K filed on January 22, 2007, SEC File
No. 001-16043.)
|
10.27†
|
|
Letter
Amendment to Employment Agreement between HaptoGuard, Inc. and
Noah
Berkowitz, dated as of February 1, 2007. (Incorporated by reference
to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February
2, 2007, SEC File Number
000-16043.)
|
10.28
|
|
Waiver
and Acknowledgement, dated as of March 30, 2007, by the Lenders
identified
in the Convertible Note and Warrant Purchase Agreement, dated as
of
January 11, 2007. (Incorporated by reference to Exhibit 10.1 to
the
Company’s Current Report on Form 8-K filed on April 5, 2007, SEC File
Number 000-16043.)
|
10.29
|
|
Series
B Preferred Stock and Warrant Purchase Agreement among Alteon Inc.
and
each Purchaser identified on the signature pages thereto, dated
as of
April 5, 2007. (Incorporated by reference to Exhibit 10.1 to the
Company’s
Current Report on Form 8-K filed on April 11, 2007, SEC File No.
001-16043.)
|
31.1*
|
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2*
|
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
______________
*
Filed
herewith.
†
Denotes
a
management contract or compensatory plan or arrangement required to be
filed as
an exhibit pursuant to Item 15(b) to this Form 10-K/A.