Item 6. Interest in Securities of the Subject Company.
No transactions with respect to shares of our common stock have been effected by us or, to our knowledge after making reasonable
inquiry, by any of our executive officers, directors or affiliates during the 60 days prior to the date of this Schedule 14D-9, except as set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
Name of Person
|
|
Transaction Date
|
|
Number of Shares
|
|
Sale,
Purchase or
Exercise Price
per Share
(If Applicable)
|
|
Nature of Transaction
|
Matthew Onaitis
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|
|
5/31/2013
|
|
|
100,000
|
|
$
|
7.67
|
|
Initial new hire stock option grant
|
Philippe Prokocimer, M.D.(1)
|
|
|
6/3/2013
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|
|
2,000
|
|
$
|
7.75
|
|
Sale pursuant to 10b5-1 trading plan
|
Kenneth Bartizal
|
|
|
6/4/2013
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|
|
2,000
|
|
$
|
7.90
|
|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
|
|
|
6/11/2013
|
|
|
1,000
|
|
$
|
8.94
|
|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
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|
|
6/12/2013
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|
|
3,000
|
|
$
|
9.0833
|
|
Sale pursuant to 10b5-1 trading plan
|
Philippe Prokocimer, M.D.(1)
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|
|
7/1/2013
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|
|
2,000
|
|
$
|
8.14
|
|
Sale pursuant to 10b5-1 trading plan
|
Kenneth Bartizal
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7/1/2013
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|
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2,000
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|
$
|
8.14
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|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
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|
7/10/2013
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|
|
1,000
|
|
$
|
8.58
|
|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
|
|
|
7/11/2013
|
|
|
500
|
|
$
|
9.32
|
|
Sale pursuant to 10b5-1 trading plan
|
Michael Morneau
|
|
|
7/11/2013
|
|
|
20,000
|
|
$
|
9.75
|
|
Exercise and same-day-sale of stock
options pursuant to 10b5-1 trading
plan
|
John Finn, Ph.D.(2)
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|
|
7/12/2013
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|
|
5,000
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|
$
|
10.10
|
|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
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|
|
7/15/2013
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|
|
3,500
|
|
$
|
10.55
|
|
Sale pursuant to 10b5-1 trading plan
|
John Finn, Ph.D.(2)
|
|
|
7/22/2013
|
|
|
1,000
|
|
$
|
12.10
|
|
Sale pursuant to 10b5-1 trading plan
|
-
(1)
-
Transaction
involved shares held by the Prokocimer Family Trust.
-
(2)
-
Transaction
involved shares held by the John and Debbie Finn Trust.
Item 7. Purposes of the Transaction and Plans or Proposals.
(a) Except
as set forth in this Schedule 14D-9 (including in the exhibits and annexes hereto) or as incorporated in this Schedule 14D-9 by reference, no negotiations are
being undertaken or are underway by us in response to the Offer which relate to a tender offer or other acquisition of our securities by Trius, any subsidiary of Trius or any other person.
(b) Except
as set forth in this Schedule 14D-9 (including in the exhibits and annexes hereto) or as incorporated in this Schedule 14D-9 by reference, no negotiations are
being undertaken or are underway by us in response to the Offer which relate to, or would result in (i) any extraordinary transaction, such as a merger, reorganization or liquidation, involving
Trius or any subsidiary of Trius,
(ii) any purchase, sale or transfer of a material amount of assets by Trius or any subsidiary of Trius or (iii) any material change in the present dividend rate or policy, or
indebtedness or capitalization of Trius.
(c) We
have agreed that from the date of the Merger Agreement to the Effective Time or the date, if any, on which the Merger Agreement is terminated, we will not, among other matters,
solicit alternative acquisition offers. In addition, we have agreed to certain procedures that it must follow in the event Trius receives an unsolicited acquisition proposal. The information set forth
in Section 11 of the Offer to Purchase under the heading "No Solicitation" is incorporated herein by reference.
(d) Except
as set forth in this Schedule 14D-9 (including in the exhibits and annexes hereto) or as incorporated in this Schedule 14D-9 by reference, there are no
transactions, resolutions of our Board of Directors, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the matters referred to in
this Item 7.
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Item 8. Additional Information.
Information Statement
The Information Statement attached as Annex I hereto is being furnished in connection with the possible designation by
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed to our Board of Directors other than at a meeting of our stockholders and is incorporated herein by reference.
Golden Parachute Compensation
See "Item 3. Past Contacts, Transactions, Negotiations and AgreementsArrangements between Trius and its Executive
Officers, Directors and AffiliatesGolden Parachute Compensation."
Contingent Value Rights Agreement
At the Offer Acceptance Time, Parent and Broadridge Corporate Issuer Solutions, Inc. as rights agent will enter into a CVR
Agreement governing the terms of the CVRs. Each holder shall be entitled to one CVR for each Share outstanding (i) that the Purchaser accepts for payment from such holder pursuant to the Offer
or (ii) owned by or issued to such holder as of immediately prior to the Effective Time and converted into the right to receive the Offer Price pursuant to the Merger Agreement. Each holder of
Stock Options or warrants will be entitled to one CVR for each Share underlying an option to purchase Shares that is then outstanding and unexercised, whether or not vested, immediately prior to the
Offer Acceptance Time (without regard to vesting). Each holder of warrants will be entitled to one CVR for each Share underlying a warrant cancelled as of the Effective Time. The CVRs are not
transferable, will not be certificated or evidenced by any instrument and will not be registered or listed for trading.
A
holder of a CVR will be entitled to a cash payment of $1.00 per CVR if net sales of certain products in 2016 are greater than $125 million plus an additional $0.10 per CVR for
each $1 million of net sales of certain products in 2016 that are in excess of $125 million, up to a maximum payment of $2.00 for each CVR then held by such holder.
The
summary of the material provisions of the CVR Agreement contained in Section 12 of the Offer to Purchase is incorporated herein by reference. Such summary is qualified in its
entirety by reference to the CVR Agreement, the form of which is filed as Exhibit (e)(2) and is incorporated herein by reference.
Top-Up Option
We also granted to Parent and Purchaser an irrevocable option (the "Top-Up Option") to purchase at a price per share equal to the
greater of (i) the last reported sale
price of a Share on The NASDAQ Global Market on the last trading day prior to the date on which the Top-Up Option is exercised or (ii) the Closing Amount, newly issued Shares (the "Top-Up
Shares") so that, when added to the number of Shares owned by Purchaser prior to the exercise of the Top-Up Option, Purchaser will own at least 90% of the outstanding shares of each class of capital
stock of Trius entitled to vote on the Merger immediately after the issuance of the Top-Up Shares (not including in the Shares owned by Purchaser any Shares tendered pursuant to unfulfilled guaranteed
delivery procedures);
provided, however
, that the Top-Up Option shall not be exercisable for the number of Shares in excess of the authorized and
unissued Shares less the maximum number of Shares potentially necessary for issuance with respect to Company Equity Plan Awards (as defined in the Merger Agreement) or other obligations of Trius. If
Parent, Purchaser and any of their respective affiliates acquire at least 90% of the outstanding shares of our common stock, including through exercise of the Top-Up Option, the
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parties
have agreed to take all necessary and appropriate action to complete the Merger through the "short form" procedures available under Delaware law.
This
summary is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit (e)(1) hereto and is incorporated herein by reference.
Conditions to the Offer
The information set forth in Section 14 of the Offer to Purchase is incorporated herein by reference.
Vote Required to Approve the Merger
On July 30, 2013, our Board of Directors unanimously (i) determined that the Merger Agreement and the Transactions,
including the Offer and the Merger, are advisable to, and in the best interest of, Trius and its stockholders, (ii) approved the execution, delivery and performance by Trius of the Merger
Agreement and the consummation of the Transactions, including the Offer and the Merger, (iii) authorized and approved the Top-Up and the issuance of the Top-Up Shares and
(iv) resolved to recommend that the stockholders of Trius tender their Shares to Purchaser pursuant to the Offer, and, if applicable, approve the adoption of the Merger Agreement and the
Merger.
Under
Section 253 of the DGCL, if Purchaser acquires, pursuant to the Offer, the Top-Up Option or otherwise, at least 90% of the outstanding Shares, determined on a fully diluted
basis, Purchaser will be able to effect the Merger after consummation of the Offer without a vote by our stockholders. If Purchaser acquires, pursuant to the Offer or otherwise, less than 90% of the
outstanding Shares, the affirmative vote of the holders of a majority of the outstanding Shares will be required under Delaware to effect the Merger.
State Takeover Laws
A number of states (including Delaware, where we are incorporated) have adopted takeover laws and regulations which purport, to varying
degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, stockholders, principal executive offices or
principal places of business therein.
In
general, Section 203 of the DGCL prevents a Delaware corporation from engaging in a "business combination" (defined to include mergers and certain other actions) with an
"interested stockholder" (including a person who owns or has the right to acquire 15% or more of a corporation's outstanding voting stock) for a period of three years following the time such person
became an "interested stockholder" unless, among other things, the "business combination" is approved by the Board of Directors of such corporation before such person became an "interested
stockholder."
In
accordance with the provisions of Section 203, our Board of Directors has approved the Merger Agreement and the Transactions, as described in Item 4 above and, for
purposes of Section 203 of the DGCL.
Appraisal Rights
No appraisal rights are available in connection with the Offer. However, if the Offer is successful and the Merger is consummated,
stockholders of Trius who have not properly tendered in the Offer and have neither voted in favor of the Merger nor consented thereto in writing, and who otherwise comply with the applicable
procedures under Section 262 of the DGCL, will be entitled to receive appraisal rights for the "fair value" of their Shares in accordance with Section 262 of the DGCL. Stockholders
should be aware that the fair value of their Shares could be more than, the
same as or less than the consideration to be received pursuant to the Merger and that an investment banking
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opinion
as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the Offer and the Merger, is not an opinion as to, and does not otherwise
address, fair value under Section 262 of the DGCL. Any stockholder contemplating the exercise of such appraisal rights should review carefully the provisions of Section 262 of the DGCL,
particularly the procedural steps required to perfect such rights.
The
obligations of Trius to notify stockholders of their appraisal rights will depend on how the Merger is effected. If a meeting of Trius' stockholders is held to approve the Merger,
Trius will be required to send a notice not less than 20 days prior to the Merger to each stockholder of record on the record date established for the stockholder meeting that appraisal rights
are available, together with a copy of Section 262 of the DGCL. Within ten days after the date the Merger has became effective, the Surviving Corporation in the Merger will be required to send
a notice that the Merger has become effective to each stockholder who delivered to Trius a demand for appraisal prior to the vote and who did not vote in favor of the Merger. Alternatively, if the
Merger is consummated through a short-form procedure, the Surviving Corporation will be required to send a notice within ten days after the date the Merger has become effective to each stockholder of
record on the effective date of the Merger. The notice will inform stockholders of the effective date of the Merger and of the availability of, and procedure for demanding, appraisal rights, and will
include a copy of Section 262 of the DGCL. FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS. This
summary of appraisal rights under the DGCL is not complete and is qualified in its entirety by reference to Section 262 of the DGCL and the Offer.
APPRAISAL
RIGHTS CANNOT BE EXERCISED AT THIS TIME. THE INFORMATION SET FORTH ABOVE IS FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO ALTERNATIVES AVAILABLE TO STOCKHOLDERS IF THE MERGER
IS COMPLETED. STOCKHOLDERS WHO WILL BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE ADDITIONAL INFORMATION CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE FOLLOWED IN
CONNECTION THEREWITH BEFORE SUCH STOCKHOLDERS HAVE TO TAKE ANY ACTION RELATING THERETO.
STOCKHOLDERS
WHO SELL SHARES IN THE OFFER WILL NOT BE ENTITLED TO EXERCISE APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER, WILL RECEIVE THE OFFER PRICE.
Antitrust Compliance
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the related rules and regulations that
have been issued by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated until required information and documentary material has been furnished for review
by the FTC and the Antitrust Division of the Department of Justice (the "Antitrust Division") and certain waiting period requirements have been satisfied. These requirements apply to Purchaser's
acquisition of the Shares in the Offer and the Merger.
Under
the HSR Act, the purchase of Shares in the Offer may not be completed until the expiration of a 15 calendar day waiting period which begins when Parent files a Premerger
Notification and Report Form under the HSR Act with the FTC and the Antitrust Division, unless such waiting period is earlier terminated by the FTC and the Antitrust Division. If the end of the 15
calendar day waiting period is set to fall on a federal holiday or weekend day, the waiting period is automatically extended until 11:59 P.M., New York City time, the next business day. Parent
filed a Premerger Notification and Report Form under the HSR Act with the FTC and the Antitrust Division in
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connection
with the purchase of Shares in the Offer on August 13, 2013, and the required waiting period with respect to the Offer will expire at 11:59 P.M., New York City time, on
August 28, 2013, unless earlier terminated by the FTC and the Antitrust Division, or Parent receives a request for additional information or documentary material prior to that time. Parent may
elect to withdraw and re-file the Premerger Notification and Report Form, which would result in the initiation of a new 15 calendar day waiting period. If prior to the expiration or termination of
this waiting period either the FTC or the Antitrust Division requests additional information or documentary material from Parent, the waiting period with respect to the Offer would be extended until
the 10
th
calendar day following the date of Parent's substantial compliance with that request. Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act rules. After that time, absent the Parent's and Trius' agreement, they can be prevented from closing only by court order. The FTC or the Antitrust Division may
terminate the additional waiting period before its expiration. In practice, complying with a request for additional information and documentary material can take a significant period of time.
At
any time before or after Parent's acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC could take such action under the antitrust laws as either deems
necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer, or seeking the divestiture of Shares acquired by Parent or the divestiture of
substantial assets of Trius or Parent or
its subsidiaries. State attorneys general may also bring legal action under both state and Federal antitrust laws, as applicable. Private parties may also bring legal action under the antitrust laws
under certain circumstances. There can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, the result thereof.
Legal Proceedings
On August 1, 2013, a putative class-action lawsuit challenging the Merger, captioned
Bemis v. Trius
Therapeutics, Inc.
, Case No. 37-2013-00060593-CU-SL-STL, was filed in the Superior Court of the State of California, County of San Diego (the "Bemis
Case"). On August 6, 2013, a putative class-action lawsuit challenging the Merger, captioned
Phillip Hurst v. Trius Therapeutics, Inc.
,
Case No. 37-2013-00061332-CU-SL-CTL, was filed in the Superior Court of the State of California, County of San Diego (the "Hurst Case"). On August 7, 2013, a putative class-action
lawsuit challenging the Merger, captioned
Collins v. Trius Therapeutics, Inc.
, Case No. 37-2013-00061612-CU-SL-CTL, was filed in the
Superior Court of the State of California, County of San Diego (the "Collins Case"). On August 7, 2013, a putative class-action lawsuit challenging the Merger, captioned
Frazzano v. Trius Therapeutics,
Inc.
, Case No. 37-2013-00061751-CU-BT-CTL, was filed in the Superior Court of the State of
California, County of San Diego (the "Frazzano Case"). On August 9, 2013, a putative class-action lawsuit challenging the Merger, captioned
Cast v. Trius
Therapeutics, Inc.
, Case No. 37-2013-00062038-CU-BT-CTL, was filed in the Superior Court of the State of California, County of San Diego (the "Cast Case"). On
August 9, 2013, a putative class-action lawsuit challenging the Merger, captioned
Greenwald v. Trius Therapeutics, Inc.
, Case
No. 37-2013-00062069-CU-SL-CTL, was filed in the Superior Court of the State of California, County of San Diego (the "Greenwald Case"). On August 9, 2013, a putative class-action lawsuit
challenging the Merger, captioned
Beidler v. Trius Therapeutics, Inc.
, Case No. 8794-, was filed in the Court of Chancery for the State of
Delaware (the "Beidler Case"). On August 12, 2013, a putative class-action lawsuit challenging the Merger, captioned
McPherson v. Trius
Therapeutics, Inc.
, Case No. 37-2013-00062130-CU-SL-CTL, was filed in the Superior Court of the State of California, County of San Diego (the "McPherson Case" and
together with the Bemis Case, the Hurst Case, the Collins Case, the Frazzano Case, the Cast Case, the Greenwald Case and the Beidler Case, collectively, the "Stockholder Litigations").
The
Stockholder Litigations were each filed against: (i) Trius, (ii) each member of our Board of Directors (including our chief executive officer) and (iii) Parent
and Purchaser. The Stockholder
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Litigations
each generally allege that our directors breached their fiduciary duties in connection with the proposed acquisition of Trius by Parent and Purchaser, and that the other defendants aided
and abetted these alleged breaches of fiduciary duty. The Stockholder Litigations also each generally assert that our directors breached their fiduciary duties to our public stockholders by, among
other things,
(a) agreeing to sell Trius to Parent and Purchaser at an unfair price, (b) allowing certain stockholders to control the sale process in order to obtain liquidity for illiquid shares,
(c) implementing an unfair process and (d) agreeing to certain provisions of the merger agreement that are alleged to favor Parent and Purchaser and deter alternative bids. The
plaintiffs in each of the Stockholder Litigations each generally seek, among other things, an injunction against the consummation of the Merger and rescission of the Merger Agreement to the extent
already implemented, and an award of costs and expenses, including a reasonable allowance for attorneys' and experts' fees. We believe that the Stockholder Litigations are without merit.
Cautionary Note Regarding Forward-Looking Statements
This Schedule 14D-9 may contain forward-looking statements. Forward-looking statements include, without limitation, statements
regarding prospective performance and opportunities and the outlook of our business, performance and opportunities, the anticipated timing of filings and approvals relating to the Transactions; the
expected timing of the completion of the Transactions; the ability to complete the Transactions considering the various closing conditions; and any assumptions underlying any of the foregoing. The
actual results of the transaction could vary materially as a result of a number of factors, including: uncertainties as to the timing of the Offer and the Merger; uncertainties as to how many of our
stockholders will tender their stock in the Offer; the possibility that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or
waived; the possibility that the transaction may not be timely completed, if at all; and that, prior to the completion of the transaction, if at all, our business may experience significant
disruptions due to transaction-related uncertainty. Other factors that may cause actual results to differ materially include those set forth in the reports that we file from time to time with the SEC,
including our annual report on Form 10-K for the fiscal year ended December 31, 2012 and quarterly and current reports on Form 10-Q and 8-K, as well as the Tender Offer Statement
on Schedule TO and other tender offer documents filed by Purchaser and Parent. All of these materials related to the Transactions (and all other transaction documents filed with the SEC) will
be available at no charge from the SEC through its website at www.sec.gov. Investors may also obtain free copies of the documents filed by Trius with the SEC by contacting Investor Relations at 6310
Nancy Ridge Drive, Suite 105, San Diego, California 92121, Phone 858-452-0370 or by email through Trius' investor relations page at http://investor.triusrx.com/contactus.cfm. You are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to update any forward-looking statements as a
result of new information, future developments or otherwise, except as expressly required by law.
Item 9. Exhibits.
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Exhibit No.
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Description
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(a)(1)(A)
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Offer to Purchase, dated August 13, 2013 (incorporated by reference to Exhibit (a)(1)(A) to the Schedule TO of Cubist Pharmaceuticals, Inc. and BRGO Corporation, filed with the Securities and Exchange
Commission on August 13, 2013 (the "Schedule TO")).
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(a)(1)(B)
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Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(B) to the Schedule TO).
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(a)(1)(C)
|
|
Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit (a)(1)(C) to the Schedule TO).
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Exhibit No.
|
|
Description
|
|
(a)(1)(D)
|
|
Form of Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(D) to the Schedule TO).
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(a)(1)(E)
|
|
Form of Letter to Clients for Use by Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(E) to the Schedule TO).
|
|
(a)(1)(F)
|
|
Information Statement pursuant to Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-1 thereunder (incorporated by reference to Annex I attached to this
Schedule 14D-9).
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(a)(5)(A)
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Joint Press release issued by Cubist Pharmaceuticals, Inc. and Trius Therapeutics, Inc., dated July 30, 2013 (incorporated herein by reference to the press release filed under the cover of
Schedule 14D-9C by Trius Therapeutics, Inc. on July 31, 2013).
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(a)(5)(B)
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|
Summary Advertisement as published on August 13, 2013 (incorporated by reference to Exhibit (a)(5)(E) to the Schedule TO).
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(a)(5)(C)
|
|
Opinion, dated July 30, 2013, of Citigroup Global Markets Inc. to the Board of Directors of Trius Therapeutics, Inc. (incorporated by referenced to Annex II attached to this
Schedule 14D-9).
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(a)(5)(D)
|
|
Opinion, dated July 30, 2013, of Centerview Partners LLC to the Board of Directors of Trius Therapeutics, Inc. (incorporated by referenced to Annex III attached to this
Schedule 14D-9).
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(e)(1)
|
|
Agreement and Plan of Merger, dated as of July 30, 2013, by and among Trius Therapeutics, Inc., Cubist Pharmaceuticals, Inc. and BRGO Corporation (incorporated by reference to Exhibit 2.1 to Trius
Therapeutics, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2013).
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(e)(2)
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Form of Contingent Value Rights Agreement (incorporated by reference to Exhibit 2.3 to Trius Therapeutics, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 1, 2013).
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(e)(3)
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Employment Agreement by and between Trius Therapeutics, Inc. and Jeffrey Stein, Ph.D., dated February 1, 2007 (incorporated by reference to Trius Therapeutics, Inc.'s Registration Statement on
Form S-1 (File No. 333-162945), as amended, filed with the Securities and Exchange Commission).
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(e)(4)
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Offer of Employment dated January 10, 2011 from Trius Therapeutics, Inc. to John Craig Thompson (incorporated herein by reference to Trius Therapeutics, Inc.'s Annual Report on Form 10-K (File
No. 001-34828) for the year ended December 31, 2011, filed with the Securities and Exchange Commission on March 14, 2012).
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(e)(5)
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Amended and Restated Offer of Employment dated February 28, 2007 from Trius Therapeutics, Inc. to John Finn, Ph.D. (incorporated by reference to Trius Therapeutics, Inc.'s Registration Statement on
Form S-1 (File No. 333-162945), as amended, filed with the Securities and Exchange Commission).
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(e)(6)
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|
Offer of Employment dated June 15, 2007 from Trius Therapeutics, Inc. to Philippe G. Prokocimer, M.D. (incorporated by reference to Trius Therapeutics, Inc.'s Registration Statement on Form S-1
(File No. 333-162945), as amended, filed with the Securities and Exchange Commission).
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Exhibit No.
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|
Description
|
|
(e)(7)
|
|
Amended and Restated Offer of Employment dated February 28, 2007 from Trius Therapeutics, Inc. to John P. Schmid (incorporated by reference to Trius Therapeutics, Inc.'s Registration Statement on
Form S-1 (File No. 333-162945), as amended, filed with the Securities and Exchange Commission).
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(e)(8)
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Trius Therapeutics, Inc. Severance Benefit Plan (incorporated herein by reference to Trius Therapeutics, Inc.'s Quarterly Report on Form 10-Q (File No. 001-34828) for the quarter ended
September 30, 2011, filed with the Securities and Exchange Commission on November 10, 2011).
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(e)(9)
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Form of Indemnity Agreement between Trius Therapeutics, Inc. and its directors and executive officers (incorporated by reference to Trius Therapeutics, Inc.'s Registration Statement on Form S-1 (File
No. 333-162945), as amended, filed with the Securities and Exchange Commission).
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(e)(10)
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Form of Tender and Voting Agreement, dated July 30, 2013, by and among Cubist Pharmaceuticals, Inc., BRGO Corporation and certain stockholders of Trius Therapeutics, Inc. (incorporated by reference to
Exhibit 2.3 to Trius Therapeutics, Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2013).
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(e)(11)
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Mutual Non-Disclosure Agreement, dated July 24, 2012, between Trius Therapeutics, Inc. and Cubist Pharmaceuticals, Inc. (incorporated by reference to Exhibit (d)(4) to the
Schedule TO).
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(e)(12)
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Amendment to Mutual Non-Disclosure Agreement, dated June 2013, between Trius Therapeutics, Inc. and Cubist Pharmaceuticals, Inc. (incorporated by reference to Exhibit (d)(5) to the
Schedule TO).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.
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TRIUS THERAPEUTICS, INC.
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By:
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/s/ JEFFREY STEIN
Name: Jeffrey Stein
Title: President and Chief Executive Officer
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Dated: August 13, 2013
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Annex IInformation
Statement, dated August 13, 2013.
Annex IIOpinion,
dated July 30, 2013, of Citigroup Global Markets Inc. to the Board of Directors of Trius Therapeutics, Inc.
Annex IIIOpinion,
dated July 30, 2013, of Centerview Partners LLC to the Board of Directors of Trius Therapeutics, Inc.
Annex IVSection 262
of the Delaware General Corporation Law
48
ANNEX I
TRIUS THERAPEUTICS, INC.
6310 Nancy Ridge Drive, Suite 105
San Diego, California 92121
INFORMATION STATEMENT PURSUANT TO SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
We Are Not Asking You for a Proxy and You Are Requested Not to Send us a Proxy.
Trius Therapeutics, Inc. ("Trius," the "Company," "we" or "our") is mailing this Information Statement on or about
August 13, 2013 to holders of our common stock as part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"). The Schedule 14D-9 relates to
our position with respect to the tender offer by BRGO Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Cubist Pharmaceuticals, Inc., a Delaware corporation
("Parent"), for all of our issued and outstanding shares of common stock. You are receiving this Information Statement in connection with the possible election of persons designated by Parent to at
least a majority of the seats on our Board of Directors. Such designation is to be made pursuant to the Agreement and Plan of Merger, dated as of July 30, 2013, by and among Trius, Parent and
Purchaser (the "Merger Agreement").
Pursuant
to the Merger Agreement, Purchaser commenced a cash tender offer on August 13, 2013 to purchase all of our issued and outstanding shares at a price of (i) $13.50
per share in cash, without interest, plus (ii) one non-transferrable contingent value right for each share, which represents the contractual right to receive up to $2.00 per share upon the
achievement of certain milestones, subject to any required withholding of taxes, if any, upon the terms and conditions set forth in the Offer to Purchase dated July 30, 2013 (the "Offer to
Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements, collectively, constitute the "Offer"). The initial
expiration date of the Offer is 9:00 a.m., Eastern Time, on September 11, 2013, subject to extension in certain circumstances as required or permitted by the Merger Agreement. At that
time, if all conditions to the Offer have been satisfied or waived, Purchaser will purchase all shares validly tendered pursuant to the Offer and not validly withdrawn. Copies of the Offer to Purchase
and the related Letter of Transmittal have been mailed with the Schedule 14D-9 to shareholders and are filed as exhibits to the Schedule 14D-9 filed by Trius with the Securities and
Exchange Commission (the "SEC") on August 13, 2013.
The
Merger Agreement provides that, following the time at which Purchaser accepts, for the first time, for payment and pays for such number of shares validly tendered and not properly
withdrawn that, considered together with all other shares (if any) beneficially owned by Parent and its affiliates, represent one more than 50% of the total number of shares outstanding at the time of
the expiration of the Offer (calculated on a fully-diluted basis), Parent shall be entitled to designate, from time to time, to serve on our Board of Directors, such number of directors as will give
Parent representation equal to at least that number of directors (rounded up to the next whole number) determined by multiplying (i) the total number of directors on our Board of Directors
(giving effect to the directors elected or appointed pursuant to the right of Parent described in this paragraph) by (ii) the percentage that such number of shares so purchased bears to the
total number of then-outstanding shares of a fully diluted basis. Subject to the applicable rules of the NASDAQ Stock Market ("NASDAQ"), we have agreed to, upon Parent's request, promptly increase the
size of our Board of Directors or use commercially reasonable efforts to seek the resignations of such number of directors as is necessary to provide Purchaser with such level of representation and
will use commercially reasonable efforts to cause Purchaser's designees to be so elected or appointed. As a result, Parent will have the ability to designate a majority of our Board of Directors
following the consummation of the Offer.
I-1
This
Information Statement is required by Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1 thereunder, in connection
with the appointment of Parent's designees to our Board of Directors. You are urged to read this Information Statement carefully. You are not, however, required to take any action. The information
contained in this Information Statement, including information incorporated herein by reference, concerning Parent and Purchaser's designees has been furnished to us by Parent, and we assume no
responsibility for the accuracy or completeness of such information.
PARENT DESIGNEES
As of the date of this Information Statement, Purchaser has not determined who will be the Purchaser's designees to the Board of
Directors of Trius. However,
Purchaser has informed us that it will choose its designees to our Board of Directors from among Michael W. Bonney, Robert J. Perez, Steven C. Gilman, Thomas DesRosier, Michael Tomsicek and Patrick
Vink, each of whom is listed in Annex I to the Offer to Purchase (the "Potential Designees"), a copy of which is being mailed to stockholders of Trius. The information with respect to the
Potential Designees is incorporated herein by reference. Purchaser has informed Trius that each of the Potential Designees has consented to act as a director of Trius, if so designated.
Based
solely on the information set forth in Annex I to the Offer to Purchase filed by Purchaser, none of the Potential Designees (i) is currently a director of, or holds
any position with, Trius or (ii) to our knowledge, has a familial relationship with any directors or executive officers of Trius. Trius has been advised that, to the knowledge of Purchaser and
Parent, none of the Potential Designees beneficially owns any equity securities (or rights to acquire such equity securities) of Trius and none have been involved in any transactions with Trius or any
of its directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
Parent
and Purchaser have informed Trius that, to their knowledge, none of the Potential Designees has been convicted in a criminal proceeding (excluding traffic violations or
misdemeanors) or has been a party to any judicial or administrative proceeding during the past ten years (except for matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or
state securities laws.
It
is expected that the Potential Designees may assume office at any time following the purchase by Purchaser of shares of our common stock pursuant to the Offer and the Merger
Agreement, which purchase cannot be earlier than 9:00 A.M., Eastern Time, on September 11, 2013. It is currently not known which, if any, of the current directors of Trius would resign.
CERTAIN INFORMATION CONCERNING OUTSTANDING SECURITIES
The authorized capital stock of Trius consists of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock, par
value $0.0001 per share. As of the close of business on July 30, 2013 there were 48,268,495 shares of common stock outstanding and no shares of preferred stock outstanding. As of the date of
this Information Statement, Parent and its affiliates do not own any shares of our common stock.
The
common stock is the only class of voting securities of Trius outstanding that is entitled to vote at a meeting of stockholders of Trius. Each share of our common stock entitles its
record holder to one vote on all matters submitted to a vote of Trius' stockholders.
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DIRECTORS AND OFFICERS OF THE COMPANY
The Board of Directors of Trius currently consists of nine members. The following table sets forth the current directors and executive
officers of Trius and their ages as of July 30, 2013:
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Name
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Age
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Position
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Jeffrey Stein, Ph.D.
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President, Chief Executive Officer and Director
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David S. Kabakoff, Ph.D.
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65
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Chairman of the Board of Directors
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Brian G. Atwood
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60
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Director
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Karin Eastham
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63
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Director
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Seth H. Z. Fischer
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57
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Director
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Nina Kjellson
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39
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Director
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Brendan O'Leary, Ph.D.
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41
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Director
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Theodore R. Schroeder
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58
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Director
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Paul Truex
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44
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Director
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Kenneth Bartizal, Ph.D.
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62
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Chief Development Officer
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John Finn, Ph.D.
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57
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Chief Scientific Officer
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Michael Morneau
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Vice President, Finance and Chief Accounting Officer
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Matthew Onaitis
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General Counsel and Secretary
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Karen E. Potts, Ph.D.
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Senior Vice President of Regulatory Affairs
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Philippe Prokocimer, M.D.
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63
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Chief Medical Officer
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John P. Schmid
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50
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Chief Financial Officer
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Karen Joy Shaw, Ph.D.
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57
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Senior Vice President of Biology
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J. Craig Thompson
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Chief Commercial Officer
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EXECUTIVE OFFICERS AND DIRECTORS
The following is a brief biography of each of our directors, executive officers and certain key employees as of July 30, 2013.
Non-Employee Directors
Brian G. Atwood.
Mr. Atwood has served on our Board of Directors since February 2007. Mr. Atwood has been a managing
director and
co-founder of Versant Ventures, a venture capital firm, since 1999. Since 1997, he has also been a general partner at Brentwood Venture Capital, a venture capital firm. From 1993 to 1995,
Mr. Atwood served as president and chief executive officer of Glycomed, Inc., a publicly traded biotechnology company, of which he was a founder. Mr. Atwood also co-founded and
served as member of the Board of Directors of Perkin Elmer/Cetus Instruments, a joint venture for robotics automation and genomics research instruments. Mr. Atwood currently serves on the Board
of Directors of Cadence Pharmaceuticals, Inc. and Clovis Oncology, Inc. Mr. Atwood holds a B.S. in Biological Sciences from the University of California, Irvine, a Master's degree
from the University of California, Davis, and an M.B.A. from Harvard Business School. The Nominating and Corporate Governance Committee and the Board of Directors believe that Mr. Atwood's
experience as a director of other publicly traded and privately-held companies, as well as his experience founding and serving as president and chief executive officer for a publicly traded
biopharmaceutical company, give him the qualifications, skills and financial expertise to serve on our Board of Directors.
Karin Eastham.
Ms. Eastham has served on our Board of Directors since November 2009. Ms. Eastham currently serves on
the boards of
directors for several life science companies. From May 2004 to September 2008, she served as Executive Vice President and Chief Operating Officer, and as a member of the Board of Trustees, of Burnham
Institute for Medical Research, a non-profit corporation engaged in basic biomedical research. From 1999 to 2004, Ms. Eastham served as Senior Vice
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President,
Finance, Chief Financial Officer and Secretary of Diversa Corporation, a biotechnology company. She previously held similar positions with CombiChem, Inc., a computational chemistry
company, and Cytel Corporation, a biopharmaceutical company. Ms. Eastham also held several positions, including Vice President, Finance, at Boehringer Mannheim Corporation, a biopharmaceutical
company, from 1976 to 1988. Ms. Eastham also serves as a director for Illumina, Inc., a NASDAQ-listed marketer of life science tools and integrated systems for large-scale analysis of
genetic variation and function; MorphoSys AG, a Frankfurt Stock Exchange-listed biotechnology company; Geron Corporation, a NASDAQ-listed biopharmaceutical company; and Veracyte, Inc., a
privately-held molecular diagnostics company. Ms. Eastham also served as a past director of Amylin Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, from 2005 until its
sale in 2011; Genoptix, Inc., a NASDAQ-listed provider of specialized diagnostic laboratory services, from 2008 until its sale in 2011; Tercica, Inc., a NASDAQ-listed biopharmaceutical
company, from 2003 until its sale in 2008; and SGX Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, from 2005 until its sale in 2008. Ms. Eastham received a B.S. and an
M.B.A. from Indiana University and is a Certified Public Accountant. In selecting Ms. Eastham as a current nominee for election to the Board of Directors, the Nominating and Corporate
Governance Committee and the Board of Directors considered, among other things, Ms. Eastham's understanding of biopharmaceutical companies combined with her business leadership and finance
experience. Ms. Eastham also contributes to the Board of Director's understanding of governance and strategy for life sciences companies through her experience as a director in our industry.
Additionally, Ms. Eastham's extensive senior management experience in the biopharmaceutical industry, particularly in key corporate finance and accounting positions, also provide the
appropriate skills to serve on our Board of Directors.
Seth H. Z. Fischer.
Mr. Fischer has served on our Board of Directors since April 2013. Mr. Fischer has three decades
of healthcare
experience in the pharmaceutical and medical device industry. Mr. Fischer served in positions of increasing responsibility with Johnson & Johnson until his retirement in 2012. Most
recently Mr. Fischer served as Company Group Chairman Johnson & Johnson, Worldwide Franchise Chairman Cordis Corporation from 2008 to 2012, which included responsibility for Cordis and
Biosense Webster. Previously, he served as Company Group Chairman North America Pharmaceuticals from 2004 to 2007. In this position he had responsibilities for Ortho-McNeil Pharmaceuticals, Janssen
and Scios. Prior to this position, Mr. Fischer served as President of Ortho-McNeil Pharmaceuticals from 2000 to 2004. His operating responsibilities encompassed the commercialization of
products in multiple therapeutic categories including oral and IV anti-infectives Levaquin® and Floxin®, cardiovasculars, CNS, analgesics and women's health. Mr. Fischer
holds a Bachelor of General Studies from Ohio University. The Nominating and Corporate Governance Committee and the Board of Directors believe that Mr. Fischer's extensive executive experience
in a major health care company and his specific experience in launching and growing new pharmaceutical products make him an ideal candidate for our Board of Directors.
David S. Kabakoff, Ph.D.
Dr. Kabakoff has served on our Board of Directors since March 2006 and has served as Chairman of
our Board of
Directors since February 2007. From May 2007 to December 2009,
Dr. Kabakoff served as an Executive-in-Residence with Sofinnova Ventures, a venture capital firm, and he has served as an Executive Partner with Sofinnova Ventures since January 2010. Since
August 2000, Dr. Kabakoff has served as the president of Strategy Advisors, LLC, a consulting firm. From January 2001 to June 2005, Dr. Kabakoff also served as the founder,
chairman and chief executive officer of Salmedix, Inc., a biotechnology company, which was acquired by Cephalon, Inc. From May 1996 to August 2000, Dr. Kabakoff served in senior
executive positions at Dura Pharmaceuticals Inc., a specialty pharmaceuticals company. Dr. Kabakoff serves on the Board of Directors of InterMune, Inc. and several private
companies including as Chairman of Cebix, Inc. and Amplimmune Inc. Dr. Kabakoff holds a B.A. in Chemistry from Case Western Reserve University and a Ph.D. in Chemistry from Yale
University. The Nominating and Corporate Governance Committee and the Board of Directors believe that Dr. Kabakoff's expertise in technology and product
I-4
development
programs in the pharmaceutical, biopharmaceutical, and drug delivery fields provides our Board of Directors with complementary expertise and gives him valuable insight into our industry
and the seasoned business judgment and broad strategic vision which enables him to serve as an effective and valuable director and to have the qualifications and leadership and other skills to serve
as the Chairman of our Board of Directors.
Nina Kjellson.
Ms. Kjellson has served on our Board of Directors since February 2007. Ms. Kjellson is a managing
director at InterWest
Partners, a venture capital firm, where she has been employed since 2002. From June 2000 to June 2002, she served as an investment manager at Bay City Capital, a life sciences merchant bank, and from
October 1999 to June 2000, as a research associate at Oracle Partners, a healthcare-focused hedge fund. From August 1997 to September 1999, Ms. Kjellson conducted health policy and survey
research with the Kaiser Family Foundation, a private foundation focusing on healthcare issues. She holds a B.A. in Human Biology from Stanford University. The Nominating and Corporate Governance
Committee and the Board of Directors believe that Ms. Kjellson's extensive healthcare investment experience, knowledge of financial markets and expertise in biopharmaceuticals companies
provides our Board of Directors with complementary expertise and give her the knowledge, qualifications and skills to serve on our Board of Directors.
Brendan O'Leary, Ph.D.
Dr. O'Leary served on our Board of Directors from February 2007 to March 2008 and then re-joined our
board in September
2010. Dr. O'Leary is a managing member of Prism VentureWorks and focuses on investments in the pharmaceutical, medical device, and diagnostic sectors. He was formerly on the boards of several
highly successful venture-backed companies including Atritech, BioRexis Pharmaceutical Corporation, Serica Technologies, Inc. and he currently serves on several other boards in the life
sciences sector. Dr. O'Leary has over a dozen years of experience in the biotechnology and medical technology arenas and has held senior operating positions at companies such as Meso Scale
Discovery and IGEN International. He is also an accomplished scientist with
numerous publications, inventions and commercialized products to his credit. Dr. O'Leary received his Ph.D. in Organic Chemistry from the Massachusetts Institute of Technology. He holds a B.A.
in Chemistry and Economics from Middlebury College. Dr. O'Leary was also a Kauffman Fellow. The Nominating and Corporate Governance Committee and the Board of Directors believe that
Dr. O'Leary's substantial experience in the pharmaceutical industry, including his diversified background as a venture capital investor and as executive in operating roles at pharmaceutical and
medical diagnostics companies, give him the qualifications, skills and expertise to serve on our Board of Directors.
Theodore R. Schroeder.
Mr. Schroeder has served on our Board of Directors since December 2009. Since May 2004,
Mr. Schroeder has served
as President and Chief Executive Officer and as a member of the Board of Directors of Cadence Pharmaceuticals, Inc., a biopharmaceutical company. From August 2002 to February 2004,
Mr. Schroeder served as Senior Vice President, North American Sales and Marketing of Elan Pharmaceuticals, Inc., a neuroscience-based pharmaceutical company. From February 2001 to August
2002, Mr. Schroeder served as General Manager of the Hospital Products Business Unit at Elan. Mr. Schroeder held the position of Senior Director of Marketing Hospital Products at Dura
Pharmaceuticals, Inc., a specialty respiratory pharmaceutical and pulmonary drug delivery company, from May 1999 to November 2000 until its acquisition by Elan. Prior to joining Dura,
Mr. Schroeder held a number of hospital-related sales and marketing positions with Bristol-Myers Squibb Company, a global pharmaceutical company. Mr. Schroeder currently serves on the
Board of Directors of the Sharp Hospital Foundation and holds a B.S. in management from Rutgers University. The Nominating and Corporate Governance Committee and the Board of Directors believe that
Mr. Schroeder's experience in the pharmaceutical industry, including his current role as President and Chief Executive Officer of another publicly-traded biopharmaceutical company, and his
diversified background as an executive make him a valuable addition to our Board of Directors.
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Paul Truex.
Mr. Truex has served on our Board of Directors since February 2008. Since September 2004, Mr. Truex has
been the president
and chief executive officer of Anthera Pharmaceuticals, Inc., a pharmaceutical company, which he founded. From October 2001 to September 2004, Mr. Truex served as a member of the Board
of Directors and president and chief executive officer of Peninsula Pharmaceuticals, Inc., a biopharmaceutical company. From April 2000 to September 2001, Mr. Truex was vice president of
commercial development of Vicuron, Inc., a biopharmaceutical company. From July 1997 to April 2000, Mr. Truex held various positions at Eli Lilly and Company, a pharmaceutical company.
Mr. Truex currently serves on the Board of Directors of Anthera Pharmaceuticals, Inc. and Eiger Biopharmaceuticals, Inc. Mr. Truex holds an M.B.A. in marketing and finance
from Indiana University and a B.A. in economics from the University of Waterloo. The Nominating and Corporate Governance Committee and the Board of Directors believe that Mr. Truex's
substantial experience in the pharmaceutical industry, including his current role as president and chief executive officer of
another publicly traded biopharmaceutical company and his diversified background as an executive make him a valuable addition to our Board of Directors.
Executive Officers
Kenneth Bartizal, Ph.D.
Dr. Bartizal has served as our Chief Development Officer since June 2007. From 1988 to 2007, he
served as executive
director and head of infectious disease research at Merck & Co., Inc., a pharmaceutical company. From 1986 to 1988, Dr. Bartizal served as a research scientist at
Pfizer Inc., a pharmaceutical company. From 1983 to 1986, he was a faculty member and conducted research at the Kirksville College of Osteopathic Medicine and Northeast Missouri State
University. Dr. Bartizal holds a B.S. in Professional Studies, an M.S. in Physiology and a Ph.D. in Microbiology and Biochemistry from the University of Notre Dame. Dr. Bartizal
performed postdoctoral research at the University of Wisconsin from 1981 to 1983.
John Finn, Ph.D.
Dr. Finn has served as our Chief Scientific Officer since February 2007 and is a co-founder of our
company. From July 2004 to
February 2007, he served as our president. From December 2003 to June 2004, Dr. Finn served as the vice president of drug discovery at Elitra Pharmaceuticals Inc., a biopharmaceutical
company. From January 1998 to March 2003, Dr. Finn served as the senior director of lead discovery and optimization at Cubist Pharmaceuticals, Inc., a biopharmaceutical company. From
January 1995 to December 1997, Dr. Finn served as associate director at Synaptic Pharmaceutical Corporation, a biopharmaceutical company. From December 1984 to January 1995, Dr. Finn
served as the senior scientist of American Cyanamid Company. Dr. Finn holds a B.S. in chemistry from Villanova University and a Ph.D. from the University of Illinois.
Michael Morneau.
Mr. Morneau joined the company in December 2009 as Senior Finance Director and Corporate Controller. In
August 2010, he was
promoted to Vice President of Finance and Chief Accounting Officer. Prior to joining Trius, in 2008 and 2009 he was a Finance Director at Eli Lilly and Company within Lilly Research Labs in San Diego.
From 2006 to 2008, Mr. Morneau was Director of Finance and Accounting at SGX Pharmaceuticals, Inc., a biotechnology company that was acquired by Eli Lilly. From 2004 to 2006, he was
Controller at Momenta Pharmaceuticals, Inc., a biotechnology company. From 2003 to 2004, Mr. Morneau was Corporate Controller at Gensym Corporation, a software company. Prior to 2003,
Mr. Morneau spent ten years at PricewaterhouseCoopers LLP, and its predecessors in various positions of continuing responsibility, the last five years of which as a manager of business
assurance in the firm's technology practice. Mr. Morneau is a C.P.A. (expired) and holds a Bachelor's degree in Mathematics from the University of New Hampshire and Master's degrees in
Accounting and Business Administration from Southern New Hampshire University (formerly New Hampshire College).
Matthew Onaitis.
Mr. Onaitis joined us as General Counsel in May 2013. Prior to joining us, Mr. Onaitis spent seven
years at Somaxon
Pharmaceuticals, Inc., a pharmaceutical company, where he
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was
Senior Vice President, General Counsel and Secretary. From January 2006 to May 2006, Mr. Onaitis served as Associate General Counsel at Biogen Idec Inc., a biopharmaceutical company.
From June 2004 to December 2005, Mr. Onaitis was Director, Legal Affairs at Elan Corporation plc, a biopharmaceutical company. Mr. Onaitis practiced corporate and commercial law
in private practice from 1998 to June 2004. Mr. Onaitis holds a J.D. from Stanford Law School and a B.S. in mechanical engineering from Carnegie Mellon University.
Philippe Prokocimer, M.D.
Dr. Prokocimer has served as our Chief Medical Officer since July 2007. From 2003 to 2007, he
served as a vice
president, clinical research at Johnson & Johnson Pharmaceutical Research and Development, L.L.C. From 2001 to 2003, Dr. Prokocimer served as vice president, clinical research at Maxim
Pharmaceuticals, Inc., a biopharmaceutical company, and from 1994 to 2001, he served as vice president of anti-infectives clinical research at Aventis Pharmaceuticals, Inc., a
pharmaceutical company. From 1987 to 1994, Dr. Prokocimer served as associate medical director for Abbott Laboratories, a healthcare company. Dr. Prokocimer is board certified in
Anesthesiology and Critical Care Medicine from Centre Hospitalier-Universitaire Bichat-Beaujon. He holds an M.D. from the School of Medicine (Centre Hospitalier-Universitaire Pitie-Salpetriere) in
Paris, France and undertook his post-doctoral research fellowship in adrenergic pharmacology at Stanford University from 1984 to 1986.
John P. Schmid.
Mr. Schmid has served as our Chief Financial Officer since June 2004 and is a co-founder of our company.
From 1998 to 2003,
Mr. Schmid served as the chief financial officer of GeneFormatics, Inc., a structural proteomics company, where he was a co-founder. From 1995 to 1998, Mr. Schmid served as the
chief financial officer of Endonetics, Inc., a biotechnology company. From 1992 to 1995, Mr. Schmid was an associate with Idanta Partners, a venture capital firm. From 1987 to 1992,
Mr. Schmid served as a vice president at Home Federal Bank. From 1985 to 1986, Mr. Schmid served as a financial analyst for Manufacturers Hanover Trust Company. In addition, from 1994 to
2005, Mr. Schmid served as a member of the board of directors and as president of the San Diego Venture
Group in 1995. Mr. Schmid holds a B.A. in Economics from Wesleyan University and an M.B.A. from the University of San Diego.
Jeffrey Stein, Ph.D.
Dr. Stein has served as our president and Chief Executive Officer since February 2007 and on our Board
of Directors since
2005. He also currently serves as President and Chairman of the Antibiotics Working Group, an industry-led 501 (c)(6) organization. From 2005 through 2007, Dr. Stein was a Kauffman Fellow with
the venture capital firm Sofinnova Ventures. He has also served as a Venture Partner with Sofinnova Ventures from 2007 to 2010 and as Director of Venture Development for the University of California,
San Diego from 2005 to 2006. From 1999 to 2005, Dr. Stein served as executive vice president, chief scientific officer and a member of the Board of Directors of Quorex Pharmaceuticals, an
anti-infectives company he founded in 1999, which was acquired by Pfizer Inc. in 2005. From 1995 to 1999, Dr. Stein was a scientist with Diversa Corporation where he most recently served
as principal scientist and head of the anti-infectives discovery team. From 1993 to 1995, Dr. Stein served as Principal Scientist with the Agouron Institute, a private research institution,
where he conducted research in bacterial genetics. From 1991 to 1993, he was an Alexander Hollaendar Distinguished Postdoctoral Fellow with the California Institute of Technology. Dr. Stein
holds a Ph.D. in biochemistry and microbiology from the University of California, at San Diego. The Nominating and Corporate Governance Committee and the Board of Directors believe that
Dr. Stein's scientific training and business expertise, including his experience as a venture capital investor in our industry and extensive prior experience as an executive officer of
anti-infectives companies, combined with his exceptional leadership skills, strong ability to motivate his team, and over six years of service as our president and chief executive officer, give him
extensive knowledge of our business and provide him the qualifications and skills to serve as an effective leader of our Company and a director.
I-7
J. Craig Thompson.
Mr. Thompson has served as our Chief Commercial Officer since January 2011. From 2003 to 2011,
Mr. Thompson served
in various Global and US Commercial roles with Pfizer Inc., and most recently held the position of Vice President of Marketing for Pfizer's Specialty Care Business Unit where he was directly
responsible for the U.S. commercial strategy for products with over $1.5 billion in annual U.S. sales. From 1992 to 2003, Mr. Thompson served in positions of increasing responsibility at
Merck & Co., Inc., where he most notably worked on the commercial planning and marketing activities for the company's anti-infectives as well as on major cardiovascular brands.
Mr. Thompson holds a Bachelor's degree in Commerce from McMaster University and an MBA from the University of Notre Dame.
Key Employees
Karen E. Potts, Ph.D.
Dr. Potts has served as our Vice President of Regulatory Affairs since September 2009 and was
promoted to Senior Vice
President of Regulatory Affairs in March 2012. From April 2006 to February 2009, she served as senior director, regulatory policy at Allergan, Inc., a specialty pharmaceutical company. From
August 2003 to March 2006, Dr. Potts served as director, regulatory affairs at Isis Pharmaceuticals, Inc., a biopharmaceutical company. From November 1999 to July 2003, she served as
associate director, regulatory affairs at Pfizer Inc., a pharmaceutical company, and from March 1996 to October 1999, she served as senior research scientist, virology at Agouron
Pharmaceuticals, Inc., a biopharmaceutical company. From October 1993 to March 1996, Dr. Potts served as a senior research scientist in infectious disease at G.D. Searle & Company
and before that, from January 1991 to October 1993, Dr. Potts was a post-doctoral fellow at the Center for Disease
Control, Division of HIV/AIDs. Dr. Potts holds a B.A. in Biology from Smith College and a Ph.D. in Microbiology and Immunology from Emory University.
Karen Joy Shaw, Ph.D.
Dr. Shaw has served as our Senior Vice President of Biology since 2007 and served as one of our
scientific advisors from
2005 to 2007. From 1999 to 2005, she served as team leader, infectious diseases at Johnson & Johnson Pharmaceutical Research & Development, L.L.C., a pharmaceutical research and
development company. From 1984 to 1999, she served in roles of increasing responsibility at Schering-Plough Research Institute. From 1981 to 1983, Dr. Shaw was a post-doctoral fellow at
Washington University School of Medicine. Dr. Shaw holds a B.S. in Biology from Brooklyn College and a Ph.D. in genetics from the University of Connecticut.
CORPORATE GOVERNANCE AND BOARD MATTERS
Board and Shareholder Matters
Independence
As required under the NASDAQ listing standards, a majority of the members of a listed company's Board of Directors must qualify as
"independent," as affirmatively determined by the Board of Directors. Our Board of Directors consults with Trius' counsel to ensure that the Board of Directors' determinations are consistent with
relevant securities and other laws and regulations regarding the definition of "independent," including those set forth in pertinent listing standards of the NASDAQ, as in effect from time to time.
Consistent
with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and Trius, its
senior management and its independent auditors, our Board of Directors has affirmatively determined that our directors are independent directors within the meaning of the applicable NASDAQ listing
standards, except for
Dr. Stein, our President and Chief Executive Officer, who is not an independent director by virtue of his employment with Trius. In making this determination, our Board of Directors found that
none of the directors or nominees for director, with the exception of Dr. Stein, had a material or other disqualifying relationship with Trius.
I-8
Board Leadership Structure
Our Board of Directors has an independent chair, Dr. Kabakoff, who has authority, among other things, to call and preside over
Board of Directors meetings, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed to the Board of Directors. Accordingly, the Chairman
of the Board has substantial ability to shape the work of our Board of Directors. We believe that separation of the positions of Chairman of the Board and Chief Executive Officer reinforces the
independence of the Board of Directors in its oversight of the business and affairs of Trius. In addition, Trius believes that having an independent Chairman of the Board creates an environment that
is more conducive to objective evaluation and oversight of management's performance, increasing management accountability and improving the ability of our Board of Directors to monitor whether
management's actions are in the best interests of Trius and its stockholders. As a result, we believe that having an independent Chairman of the Board can enhance the effectiveness of our Board of
Directors as a whole.
Role of our board of directors in Risk Oversight
One of the Board of Directors' key functions is informed oversight of our risk management process. Our Board of Directors does not have
a standing risk management committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various Board of Directors standing
committees that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, including a
determination of the nature and level of risk appropriate for Trius. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management
has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our Nominating and Corporate Governance
Committee monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation
Committee assesses and
monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Board Meetings
Our Board of Directors met nine times during the last fiscal year. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and of the committees on which they served during the portion of the last fiscal year for which they were directors or committee members, respectively. It is our
policy to encourage directors and nominees for director to attend our annual meeting of stockholders.
Stockholder Communications
Historically, we have not provided a formal process related to stockholder communications with the Board of Directors. Nevertheless,
every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to
stockholders in a timely manner. We believe our responsiveness to stockholder communications to the Board of Directors has been excellent.
Code of Ethics
We have adopted the Trius Therapeutics, Inc. Code of Business Conduct and Ethics that applies to all officers, directors and
employees. Our Code of Business Conduct and Ethics is available on our website at
investor.triusrx.com/governance.cfm
. If we make any substantive
amendments to our Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct
I-9
and
Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website.
Accounting and Auditing Matters Open Door Policy
We have adopted an Open Door Policy on Reporting Complaints Regarding Accounting and Auditing Matters to facilitate the receipt,
retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous submission by our employees of concerns regarding
these matters. Information regarding the process for reporting such complaints is available on our website at
investor.triusrx.com/governance.cfm
.
Information Regarding the Board Of Directors and its Committees
Our Board of Directors has three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance
Committee. The following table provides membership and meeting information for fiscal 2012 for each of the Board of Directors committees:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Audit
|
|
Compensation
|
|
Nominating and
Corporate
Governance
|
|
Brian G. Atwood
|
|
|
X
|
|
|
|
|
|
|
|
Karin Eastham
|
|
|
X
|
*
|
|
|
|
|
|
|
David S. Kabakoff, Ph.D.
|
|
|
X
|
|
|
|
|
|
X
|
|
Nina Kjellson
|
|
|
|
|
|
X
|
|
|
X
|
*
|
Brendan O'Leary, Ph.D.
|
|
|
|
|
|
|
|
|
X
|
|
Michael Powell, Ph.D.(1)
|
|
|
|
|
|
X
|
|
|
|
|
Theodore R. Schroeder
|
|
|
|
|
|
X
|
*
|
|
|
|
Risa Stack, Ph.D.(2)
|
|
|
|
|
|
|
|
|
X
|
|
Paul Truex
|
|
|
|
|
|
X
|
|
|
|
|
Total meetings in fiscal 2012
|
|
|
4
|
|
|
5
|
|
|
3
|
|
-
*
-
Committee
Chairperson
-
(1)
-
Dr. Powell
served on the Board of Directors and the Compensation Committee until May 2012.
-
(2)
-
Dr. Stack
served on the Board of Directors and the Nominating and Corporate Governance Committee until May 2013.
Below
is a description of each committee of the Board of Directors.
Each
of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board of Directors has
determined that each member of each committee meets the applicable NASDAQ rules and regulations regarding "independence" and that each member is free of any relationship that would impair his or her
individual exercise of independent judgment with regard to Trius.
Audit Committee
Our Audit Committee was established by the Board of Directors in accordance with Section 3(a)(58)(A) of the Exchange Act to
oversee our corporate accounting and financial reporting processes and audits of its financial statements. Our Audit Committee is composed of Mr. Atwood, Ms. Eastham and
Dr. Kabakoff, each of whom is a non-employee director of our Board of Directors. Ms. Eastham serves as the chair of our Audit Committee. Our Board of Directors has also determined that
each of the directors serving on our Audit Committee is independent as independence is currently
I-10
defined
in Rule 5605(c)(2)(A)(i) and (ii) of the NASDAQ listing standards. The functions of our Audit Committee include, among other
things:
-
-
Evaluating the performance, independence and qualifications of our independent auditors and determining whether to retain
our existing independent auditors or engage new independent auditors;
-
-
Reviewing and approving the engagement of our independent auditors to perform audit services and any permissible non-audit
services;
-
-
Monitoring the rotation of partners of our independent auditors on our engagement team as required by law;
-
-
Reviewing our annual and quarterly financial statements and reports and discussing the statements and reports with our
independent auditors and management;
-
-
Reviewing with our independent auditors and management significant issues that arise regarding accounting principles and
financial statement presentation, and matters concerning the scope, adequacy and effectiveness of our financial controls;
-
-
Reviewing with management and our auditors any earnings announcements and other public announcements regarding material
developments;
-
-
Establishing procedures for the receipt, retention and treatment of complaints received by us regarding financial
controls, accounting or auditing matters and other matters;
-
-
Preparing the report that the SEC requires in our annual proxy statement;
-
-
Reviewing and providing oversight with respect to any related party transactions and monitoring compliance with our code
of ethics;
-
-
Reviewing our investment policy on a periodic basis;
-
-
Reviewing and conferring with management and our independent auditors regarding the scope, adequacy and effectiveness of
our internal controls over financial reporting;
-
-
Reviewing and discussing with management and, as appropriate, our independent auditors our guidelines and policies with
respect to risk assessment and risk management; and
-
-
Reviewing and evaluating, at least annually, the performance of the Audit Committee, including compliance of the Audit
Committee with its charter.
Our
Audit Committee has adopted a written charter that is available to stockholders on our website at
investor.trius.rx.com/governance.cfm
.
Our
Board of Directors has also determined that Ms. Eastham qualifies as an "audit committee financial expert," within the meaning of SEC regulations and the applicable NASDAQ
rules and regulations. In making this determination, our Board of Directors has considered the formal education and nature and scope of Ms. Eastham's previous experience, coupled with past and
present service on various audit committees.
Report of the Audit Committee of the Board of Directors
The material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be
incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
I-11
The
Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2012 with management of Trius. The Audit Committee has
discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16,
Communications with Audit
Committees
, as adopted by the Public Company Accounting Oversight Board. The Audit Committee has also received the written disclosures and the letter from the independent
registered public accounting firm required by applicable requirements of
the Public Company Accounting Oversight Board regarding the independent accountants' communications with the Audit Committee concerning independence, and has discussed with the independent registered
public accounting firm the accounting firm's independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in
Trius' Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
|
|
|
|
|
Audit Committee
Karin Eastham,
Chair
Brian G. Atwood
David S. Kabakoff, Ph.D.
|
Compensation Committee
Our Compensation Committee is composed of Ms. Kjellson, Mr. Schroeder and Mr. Truex. Mr. Schroeder serves
as the chair of our Compensation Committee. Each member of our Compensation Committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act, is an outside
director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and is independent as independence is currently defined in Rule 5605(a)(2)
of the NASDAQ listing standards. Our Compensation Committee acts on behalf of the Board of Directors to review, recommend for adoption and oversee our compensation strategy, policies, plans and
programs, including:
-
-
Reviewing and recommending to our Board of Directors the compensation and other terms of employment of our executive
officers;
-
-
Reviewing and recommending to our Board of Directors performance goals and objectives relevant to the compensation of our
executive officers and assessing their performance against these goals and objectives;
-
-
Evaluating and approving the equity incentive plans, compensation plans and similar programs advisable for us, as well as
modification or termination of existing plans and programs;
-
-
Evaluating and recommending to our Board of Directors the type and amount of compensation to be paid or awarded to Board
of Directors members;
-
-
Administering our equity incentive plans;
-
-
Establishing policies with respect to equity compensation arrangements;
-
-
Reviewing the competitiveness of our executive compensation programs and evaluating the effectiveness of our compensation
policy and strategy in achieving expected benefits to us;
-
-
Reviewing and recommending to our Board of Directors the terms of any employment agreements, severance arrangements,
change in control protections and any other compensatory arrangements for our executive officers;
-
-
Reviewing with management our disclosures under the caption "Compensation Discussion and Analysis" and recommending to the
full board its inclusion in our periodic reports to be filed with the SEC;
I-12
-
-
Preparing the report that the SEC requires in our annual proxy statement;
-
-
Reviewing the adequacy of our Compensation Committee charter on a periodic basis;
and
-
-
Reviewing and evaluating, at least annually, the performance of the Compensation Committee.
Our
Compensation Committee has adopted a written charter that is available to stockholders on our website at
investor.triusrx.com/governance.cfm
.
Compensation Committee Processes and Procedures
Our Compensation Committee meets as necessary to address executive compensation matters. The agenda for each meeting is usually
developed by the chair of the Compensation Committee, in consultation with our Chief Executive Officer. Our Compensation Committee meets regularly in executive session. However, from time to time,
various members of management and other employees as well as outside advisors or consultants may be invited by our Compensation Committee to make presentations, to provide financial or other
background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in, or be present during, any deliberations or
determinations of our Compensation Committee regarding his compensation. The charter of our Compensation Committee grants the Compensation Committee full access to all of our books, records,
facilities and personnel, as well as authority to obtain, at the expense of Trius, advice and assistance from internal and external legal, accounting or other advisors and consultants and other
external resources that our Compensation Committee considers necessary or appropriate in the performance of its duties. In particular, our Compensation Committee has the sole authority to retain
compensation consultants to assist in its
evaluation of executive and director compensation, including the authority to approve the consultant's reasonable fees and other retention terms.
Under
its charter, our Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. In March 2011, our Compensation Committee formed a Non-Officer Stock
Option Committee, currently comprised of Dr. Stein, to which it delegated authority to grant, without any further action required by the Compensation Committee, stock options to employees who
are not officers of Trius. The purpose of this delegation of authority is to enhance the flexibility of option administration within Trius and to facilitate the timely grant of options to
non-management employees and consultants, particularly new employees and consultants, within specified limits approved by the Compensation Committee. As part of its oversight function, our
Compensation Committee will review on a periodic basis the list of grants made by the subcommittee.
Generally,
our Compensation Committee's process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current
year. However, our Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the
efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. For executives other than
the Chief Executive Officer, our Compensation Committee solicits and considers evaluations and recommendations submitted to the committee by the Chief Executive Officer. In the case of the Chief
Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any recommended adjustments to his compensation as well as awards to be granted. For
all executives and directors, as part of its deliberations, our Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data,
tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership
information, our stock performance data and analyses of historical executive compensation levels and current company-wide compensation levels.
I-13
During
2011, the Compensation Committee engaged Radford, an Aon Hewitt Company, as compensation consultants. The Compensation Committee chose Radford based upon its industry reputation
as well as previous dealings with Radford, both by Trius and many of the Compensation Committee's members. The Compensation Committee requested that Radford:
-
-
evaluate the efficacy of Trius' existing compensation strategy and practices in supporting and reinforcing Trius'
long-term strategic goals; and
-
-
assist in refining Trius' compensation strategy and in developing and implementing an executive compensation program to
execute that strategy.
As
part of its engagement, Radford was requested by our Compensation Committee to develop a comparative group of companies and to perform analyses of competitive performance and
compensation levels for that group. In its analysis, Radford reviewed our current compensation philosophies as compared to the identified peer group and presented recommendations for key decisions
related to our compensation practices. At the request of our Compensation Committee, Radford also conducted individual interviews with members of our Compensation Committee and management and other
employees identified by the Compensation Committee to learn more about Trius' business operations and strategy, key performance metrics and strategic goals, as well as the labor markets in which Trius
competes. Radford ultimately developed recommendations that were presented to our Compensation Committee for its consideration.
During
2012, Radford was engaged once again by the Compensation Committee to reassess the peer group and to provide recommendations to the Compensation Committee regarding 2013
compensation amounts to be paid to our executive officers. These recommendations are discussed in the Compensation Discussion and Analysis section of this Information Statement. At a meeting held
during the first quarter of 2013, our Compensation Committee reviewed our annual compensation and the recommendations of Radford and recommended to our Board of Directors adjustments to the annual
salaries, bonus and equity awards and new performance objectives for our executive officers.
THE SPECIFIC DETERMINATIONS OF OUR COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012 ARE DESCRIBED IN
GREATER DETAIL IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION OF THIS INFORMATION STATEMENT.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consisted of Ms. Kjellson, Dr. Powell (who served until May 2012), Mr. Schroeder and
Mr. Truex during the fiscal year ended December 31, 2012. No member of our Compensation Committee has ever been an executive officer or employee of ours. None of our officers currently
serves, or has served during the last completed year, on the Compensation Committee or Board of Directors of any other entity that has one or more officers
serving as a member of our Board of Directors or Compensation Committee. Prior to establishing the Compensation Committee, our full Board of Directors made decisions relating to compensation of our
officers.
Compensation Committee Report
The material in this report is not "soliciting material," is not deemed "filed" with the SEC and is not to be
incorporated by reference in any filing of Trius under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any
such filing.
The
Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Information Statement. Based on this review and
discussion,
I-14
the
Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Information Statement.
|
|
|
|
|
Compensation Committee
Theodore R. Schroeder,
Chair
Nina Kjellson
Paul Truex
|
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is composed of Dr. Kabakoff, Ms. Kjellson and Dr. O'Leary.
Ms. Kjellson serves as the chair of our Nominating and Corporate Governance Committee. Our Board of Directors has determined that each of the members of the Nominating and Corporate Governance
Committee is independent as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards. The functions of the Nominating and Corporate Governance Committee include,
among other things:
-
-
Identifying, reviewing and evaluating candidates to serve on our Board of Directors;
-
-
Determining the minimum qualifications for service on our Board of Directors;
-
-
Evaluating director performance on the Board of Directors and applicable committees of the Board of Directors;
-
-
Interviewing, evaluating, nominating and recommending individuals for membership on our Board of Directors;
-
-
Considering nominations by stockholders of candidates for election to our Board of Directors;
-
-
Considering and assessing the independence of members of our Board of Directors;
-
-
Developing, as appropriate, a set of corporate governance principles, and reviewing and recommending to our Board of
Directors any changes to such principles;
-
-
Periodically reviewing our policy statements to determine their adherence to our code of business conduct and ethics and
considering any request by our directors or executive officers for a waiver from such code;
-
-
Reviewing the adequacy of its charter on an annual basis; and
-
-
Evaluating, at least annually, the performance of the Nominating and Corporate Governance Committee.
Our
Nominating and Corporate Governance Committee has adopted a written charter that is available to stockholders on the Company's website at
investor.triusrx.com/governance.cfm
.
Our
Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic
financial statements, being over 21 years of age and having the highest personal integrity and ethics. Our Nominating and Corporate Governance Committee also intends to consider such factors as
possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of Trius, demonstrated excellence in his or her field,
having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders. However, our Nominating and Corporate Governance
Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of our Board of Directors, our
operating requirements and the long-term interests of stockholders. In conducting this assessment, our
I-15
Nominating
and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate given the current needs of our Board of Directors and Trius, to
maintain a balance of knowledge, experience and capability. In the case of incumbent directors whose terms of office are set to expire, our Nominating and Corporate Governance Committee reviews these
directors' overall service to Trius during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that
might impair the directors' independence. In the case of new director candidates, our Nominating and Corporate Governance Committee also determines whether the nominee is independent for NASDAQ
purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. Our Nominating and Corporate Governance
Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. Our Nominating and Corporate Governance
Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board of Directors. Our
Nominating and Corporate Governance Committee meets to discuss and consider the candidates' qualifications and then selects a nominee for recommendation to our Board of Directors by majority vote.
Our
Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. Our Nominating and Corporate Governance Committee does not intend to
alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to
recommend individuals for consideration by our Nominating and Corporate Governance Committee to become nominees for election to our Board of Directors may do so by delivering a written recommendation
to our Nominating and Corporate Governance Committee at the following address: 6310 Nancy Ridge Drive, Suite 105, San Diego, California 92121, no later than the close of business on the
90th day nor earlier than the 120th day prior to the first anniversary of the preceding year's annual meeting. Submissions must include the full name of the proposed nominee, a
description of the proposed nominee's business experience for at least the previous five years, complete biographical information, a description of the proposed nominee's qualifications as a director
and a representation that the nominating stockholder is a beneficial or record holder of our stock and has been a holder for at least one year. Additionally, stockholders who wish to recommend
individuals for consideration by our Nominating and Corporate Governance Committee to become nominees for election to our Board of Directors must include in the submission, as to the stockholder
giving the notice, the name and address of such stockholder, the class, series and number of our shares that are owned by such stockholder, and such other information as is specified in our Amended
and Restated Bylaws. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. Stockholders who wish to
recommend individuals for consideration by our Nominating and Corporate Governance Committee to become nominees for election to our Board of Directors should carefully review our Amended and Restated
Bylaws for additional required information with respect to stockholder nominations of director candidates.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of Trius' common stock as of July 30, 2013 by:
(i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of Trius as a
group; and (iv) all those known by Trius to be beneficial owners of more than 5% of its common stock. The table is based upon information supplied by our officers, directors and principal
stockholders and a review of Schedules 13D and 13G, if any, filed with the SEC. Unless otherwise indicated in the footnotes to the table and subject to community property laws where applicable,
we believe that each of the stockholders named in the table has sole voting and investment power with respect to the shares indicated as beneficially owned.
I-16
Applicable
percentages are based on 48,268,495 shares outstanding on July 30, 2013, adjusted as required by rules promulgated by the SEC. These rules generally attribute
beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock
issuable pursuant to the exercise of stock options, warrants or other rights that are either immediately exercisable or exercisable on September 28, 2013, which is 60 days after
July 30, 2013. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but
they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Number of
Shares
Beneficially
Owned
|
|
Percentage of
Shares
Beneficially
Owned
|
|
5% Holders
|
|
|
|
|
|
|
|
InterWest Partners IX, LP(1)
|
|
|
3,548,643
|
|
|
7.4
|
%
|
2710 Sand Hill Road, Second Floor
|
|
|
|
|
|
|
|
Menlo Park, CA 94025
|
|
|
|
|
|
|
|
Versant Venture Capital III, L.P. and its affiliates(2)
|
|
|
3,235,839
|
|
|
6.7
|
%
|
3000 Sand Hill Road, Building 4, Suite 210
|
|
|
|
|
|
|
|
Menlo Park, CA 94025
|
|
|
|
|
|
|
|
Prism Venture Partners V, L.P. and its affiliates(3)
|
|
|
2,958,230
|
|
|
6.1
|
%
|
117 Kendrick Street, Suite 200
|
|
|
|
|
|
|
|
Needham, MA 02494
|
|
|
|
|
|
|
|
Wellington Management Company, LLP(4)
|
|
|
2,738,276
|
|
|
5.7
|
%
|
280 Congress Street
|
|
|
|
|
|
|
|
Boston, MA 02210
|
|
|
|
|
|
|
|
Directors and Executive Officers
|
|
|
|
|
|
|
|
Nina Kjellson(5)
|
|
|
3,598,945
|
|
|
7.4
|
%
|
Brian G. Atwood(6)
|
|
|
3,286,141
|
|
|
6.8
|
%
|
Brendan O'Leary, Ph.D.(7)
|
|
|
3,020,532
|
|
|
6.3
|
%
|
Jeffrey Stein, Ph.D.(8)
|
|
|
758,065
|
|
|
1.6
|
%
|
John Finn, Ph.D.(9)
|
|
|
345,756
|
|
|
*
|
%
|
John P. Schmid(10)
|
|
|
257,204
|
|
|
*
|
%
|
Philippe Prokocimer, M.D.(11)
|
|
|
202,032
|
|
|
*
|
%
|
David S. Kabakoff, Ph.D.(12)
|
|
|
172,366
|
|
|
*
|
%
|
J. Craig Thompson(13)
|
|
|
150,718
|
|
|
*
|
%
|
Karin Eastham(14)
|
|
|
69,828
|
|
|
*
|
%
|
Paul Truex(15)
|
|
|
64,673
|
|
|
*
|
%
|
Theodore R. Schroeder(16)
|
|
|
55,171
|
|
|
*
|
%
|
Seth H. Z. Fischer(17)
|
|
|
4,999
|
|
|
*
|
%
|
All directors and executive officers as a group (17 persons)(18)
|
|
|
12,313,443
|
|
|
24.6
|
%
|
-
*
-
Represents
beneficial ownership of less than one percent.
I-17
-
(1)
-
Bruce
A. Cleveland, Philip T. Gianos, W. Stephen Holmes, Nina Kjellson, Gilbert H. Kliman, Khaled A. Nasr, Arnold L. Oronsky and Douglas A. Pepper share
voting and investment authority over the shares held by InterWest Partners IX, LP.
-
(2)
-
Includes
3,216,842 shares held by Versant Venture Capital III, L.P. and 18,997 shares held by Versant Side Fund III, L.P. Brian G. Atwood,
Ross A. Jaffe, M.D., Samuel D. Colella, Donald B. Milder, Rebecca B. Robertson, Bradley J. Bolzon, Ph.D., William J. Link, Ph.D., Charles M. Warden, and Barbara N. Lubash, as managing directors of
Versant Ventures III, LLC, share voting and investment authority over the shares held by Versant Venture Capital III, L.P. and Versant Side Fund III, L.P.
-
(3)
-
Includes
2,032,600 shares held by Prism Venture Partners V, L.P. and 925,630 shares held by Prism Venture Partners V-A, L.P. James A.
Counihan, Brendan O'Leary and Steven J. Benson share voting and investment authority over the shares held by Prism Venture Partners V, L.P. and Prism Venture Partners V-A, L.P.
-
(4)
-
Based
on Schedule 13G filed by Wellington Management Company, LLP on February 14, 2013, reporting ownership as of December 31,
2012.
-
(5)
-
Includes
the shares of capital stock held by InterWest Partners IX, LP and 50,302 shares that Ms. Kjellson has the right to acquire from us
within 60 days of July 30, 2013 pursuant to the exercise of stock options. Bruce A. Cleveland, Philip T. Gianos, W. Stephen Holmes, Ms. Kjellson, Gilbert H. Kliman, Khaled A.
Nasr, Arnold L. Oronsky and Douglas A. Pepper share voting and investment authority over the shares held by InterWest Partners IX, LP. Ms. Kjellson disclaims beneficial ownership of the
shares held by InterWest Partners IX, LP, except to the extent of her proportionate pecuniary interest in these shares.
-
(6)
-
Includes
the shares of capital stock held by Versant Venture Capital III, L.P. and Versant Side Fund III, L.P. and 50,302 shares that
Mr. Atwood has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of stock options. Brian G. Atwood, Ross A. Jaffe, M.D., Samuel D. Colella,
Donald B. Milder, Rebecca B. Robertson, Bradley J. Bolzon, Ph.D., William J. Link, Ph.D., Charles M. Warden, and Barbara N. Lubash, as managing directors of Versant Ventures III, LLC, share
voting and investment authority over the shares held by Versant Venture Capital III, L.P. and Versant Side Fund III, L.P. Mr. Atwood disclaims beneficial ownership of the shares
held by Versant Venture Capital III, L.P. and Versant Side Fund III, L.P., except to the extent of his proportionate pecuniary interest in these shares.
-
(7)
-
Includes
the shares of capital stock held by Prism Venture Partners V, L.P. and Prism Venture Partners V-A, L.P., 21,302 shares held by
Dr. O'Leary and 41,000 shares that Dr. O'Leary has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of stock options. James A.
Counihan, Brendan O'Leary and Steven J. Benson share voting and investment authority over the shares held by Prism Venture Partners V, L.P. and Prism Venture Partners V-A, L.P.
Dr. O'Leary disclaims beneficial ownership of the shares held by Prism Venture Partners V, L., except to the extent of his pro rata interest in these shares.
-
(8)
-
Includes
547,608 shares that Dr. Stein has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of
stock options and 210,457 shares held by the Jeff Stein and Catherine Naughton Revocable Trust.
-
(9)
-
Includes
176,745 shares that Dr. Finn has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of
stock options, 2,151 shares of common stock held by Dr. Finn and 166,860 shares of common stock held by the John and Deborah Finn Trust.
-
(10)
-
Includes
107,639 shares held by Mr. Schmid and 149,565 shares that Mr. Schmid has the right to acquire from us within 60 days of
July 30, 2013 pursuant to the exercise of stock options.
-
(11)
-
Includes
82,022 shares of common stock held by the Philippe and Maria Prokocimer Family Trust, 10,865 shares held by Dr. Prokocimer and 109,145
shares that Dr. Prokocimer has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of stock options.
I-18
-
(12)
-
Includes
106,081 shares held by the David S. & Susan O. Kabakoff Family Trust, 61,000 shares that Dr. Kabakoff has the right to acquire from
us within 60 days of July 30, 2013 pursuant to the exercise of stock options and 5,285 shares held by Strategy Advisors, LLC Defined Benefit Plan.
-
(13)
-
Includes
1,344 shares held by Mr. Thompson and 149,374 shares that Mr. Thompson has the right to acquire from us within 60 days of
July 30, 2013 pursuant to the exercise of stock options.
-
(14)
-
Includes
12,114 shares held by the Karin Eastham Defined Benefit Plan, 6,000 shares held by Ms. Eastham and 51,714 shares that Ms. Eastham
has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of stock options, 727 unvested shares of which are subject to a right of repurchase in our favor
as of July 30, 2013.
-
(15)
-
Includes
11,270 shares held by the 2005 Truex Family Trust u/d/t April 20, 2005 and 53,403 shares that Mr. Truex has the right to acquire
from us within 60 days of July 30, 2013 pursuant to the exercise of stock options.
-
(16)
-
Includes
55,171 shares that Mr. Schroeder has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of
stock options, 945 unvested shares of which are subject to a right of repurchase in our favor as of July 30, 2013.
-
(17)
-
Includes
4,999 shares that Mr. Fischer has the right to acquire from us within 60 days of July 30, 2013 pursuant to the exercise of
stock options. Mr. Fischer was appointed to our Board of Directors on April 3, 2013.
-
(18)
-
Includes
1,718,905 shares subject to options that will be exercisable within 60 days of July 30, 2013 pursuant to the exercise of stock
options, 1,672 unvested shares of which are subject to a right of repurchase in our favor as of July 30, 2013.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish Trius with copies of all Section 16(a) forms they file.
To
our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended
December 31, 2012, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis explains our compensation philosophy, policies and practices with respect to our named
executive officers, as well as our other executive officers. Our Board of Directors has delegated responsibility for creating and reviewing the compensation of our executive officers to the
Compensation Committee of our Board of Directors, which is composed entirely of independent directors. The role of the Compensation Committee is to oversee our compensation and benefit plans and
policies, to administer our equity incentive plans and to review and make recommendations to our Board of Directors, generally on an annual basis, regarding all compensation decisions for our
executive officers.
Compensation Objectives
We believe in providing a competitive total compensation package to our executive management team through a combination of base salary,
annual cash bonuses, grants under our long-term equity
I-19
incentive
compensation plan, severance and change of control benefits and broad-based benefits programs. Our executive compensation programs are designed to achieve the following
objectives:
-
-
Attract and retain talented and experienced executives;
-
-
Motivate and reward executives whose knowledge, skills and performance are critical to our success;
-
-
Align the interests of our executive officers and stockholders by motivating executive officers to increase stockholder
value and rewarding executive officers when stockholder value increases;
-
-
Provide a competitive compensation package in which total compensation is primarily determined by company and individual
results and the creation of stockholder value;
-
-
Ensure fairness among the executive management team by recognizing the contributions each executive makes to our success;
and
-
-
Compensate our executives to manage our business to meet our long-term objectives.
More
generally, we believe it is important that our executive compensation programs place significant emphasis on pay-for-performance and encourage the achievement of both near-term and
long-term objectives in a way that is aligned with the interests of our stockholders. For that reason, our executive compensation can be highly variable, and is heavily influenced by our achievement
of corporate goals and the performance of our stock price over time. For example, cash bonus awards to our named executive officers are determined primarily based on our achievement of corporate goals
for the applicable year. With respect to equity-based compensation, because we rely on stock options with time-based vesting, and not restricted stock, our named executive officers will only benefit
from these equity-based awards if our stock price increases over an extended period following the date of the award. Overall, we believe our cash and equity-based compensation programs provide
appropriate incentives for the achievement of both near-term and long-term business objectives.
In
addition, the Compensation Committee evaluates both performance and compensation to make sure that the compensation provided to executives remains competitive as compared to
compensation paid by companies of similar size and stage of development operating in the pharmaceutical industry, taking into account our relative performance and our own strategic objectives.
Setting Executive Compensation
When setting executive compensation, our Compensation Committee and Board of Directors consider our overall company performance,
including our progress towards our research and development goals. They also consider compensation paid by similarly situated biotechnology companies. As part of this process, our Compensation
Committee conducts an annual review of the aggregate level of our executive compensation, as well as the mix of elements used to compensate our executive officers.
Compensation Benchmarking and Peer Group
In 2012, our Compensation Committee retained the services of Radford, an independent executive compensation consultant, to review and
provide comparative data on the base salary, bonus, equity compensation and total direct compensation of our executive officers as compared against 19 public biotechnology companies at similar stages
of clinical development, with generally fewer than 100 employees, with market capitalizations of between $100 million to $600 million, that are located on the west coast and in other
biotechnology hubs. Radford also assisted us with a similar review of our non-employee director compensation. Radford was retained by and reported directly to our Compensation Committee and did not
provide any other services to us.
I-20
The
Compensation Committee has considered whether the work of Radford as a compensation consultant has raised any conflict of interest, taking into account the following factors:
(i) the amount of fees from us paid to Radford as a percentage of the firm's total revenue; (ii) the provision of other services to us by Radford; (iii) Radford's policies and
procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee;
(v) any business or personal relationship of Radford or the individual compensation advisors employed by the firm with any of our executive officers; and (vi) any of our stock owned by
the individual compensation advisors employed by the firm. Based on the above factors, the Compensation Committee has concluded that the work of Radford and the individual compensation advisors
employed by Radford as compensation consultants to us has not created any conflict of interest. Going forward, the Compensation Committee intends to assess the independence of any of our compensation
advisors consistent with applicable NASDAQ listing standards.
The
companies in the peer group were as follows:
|
|
|
Affymax,
Inc.
|
|
MAP Pharmaceuticals,
Inc.
|
Anacor Pharmaceuticals,
Inc.
|
|
Neurocrine Biosciences,
Inc.
|
Anthera
Pharmaceuticals, Inc.
|
|
Omeros
Corporation
|
Ardea Biosciences,
Inc.
|
|
OncoGenex Pharmaceuticals,
Inc.
|
ArQule, Inc.
|
|
Oncothyreon Inc.
|
Astex Pharmaceuticals,
Inc.
|
|
Osiris Therapeutics,
Inc.
|
Depomed,
Inc.
|
|
Vanda
Pharmaceuticals Inc.
|
Dynavax
Technologies Corporation
|
|
Vical
Incorporated
|
Infinity Pharmaceuticals,
Inc.
|
|
ZIOPHARM Oncology,
Inc.
|
Ligand Pharmaceuticals,
Inc.
|
|
|
Based
on previous recommendations of Radford, over the past several years, we have been focused on transitioning all elements of compensation to target the
50
th
percentile of our identified peer group by the end of 2012. Consistent with that goal, the Compensation Committee set 2012 base salary, total cash compensation and long-term
compensation for our executive officers to target overall compensation at the 50
th
percentile of our 2012 peer group.
In
September 2012, our Compensation Committee, with the assistance of Radford, reviewed our peer group for purposes of setting 2013 compensation, and approved the following companies as
our 2013 peer group:
|
|
|
Anacor Pharmaceuticals,
Inc.
|
|
Omeros
Corporation
|
Anthera Pharmaceuticals,
Inc.
|
|
OncoGenex Pharmaceuticals,
Inc.
|
ArQule, Inc.
|
|
Oncothyreon Inc.
|
Astex Pharmaceuticals,
Inc.
|
|
Osiris Therapeutics,
Inc.
|
Cempra, Inc.
|
|
Sunesis Pharmaceuticals,
Inc.
|
Depomed,
Inc.
|
|
Supernus Pharmaceuticals,
Inc.
|
Durata Therapeutics,
Inc.
|
|
Vanda
Pharmaceuticals Inc.
|
Infinity Pharmaceuticals,
Inc.
|
|
Vical
Incorporated
|
MAP Pharmaceuticals,
Inc.
|
|
ZIOPHARM Oncology,
Inc.
|
Neurocrine Biosciences,
Inc.
|
|
|
The
2013 peer group is comprised of 19 public biotechnology companies at similar stages of clinical development, with generally fewer than 150 employees, with market capitalizations of
between $100 million to $600 million, that are located on the west coast and in other biotechnology hubs.
I-21
For
2013, the Compensation Committee set base salary, total cash compensation and long-term compensation for our executive officers with the same goal of targeting overall compensation
at the 50
th
percentile of our updated 2013 peer group.
Our
Compensation Committee generally believes that gathering appropriate benchmark information is an important part of our compensation-related decision-making process and while this
exercise does not perfectly capture all the unique aspects of our business, it typically provides a solid foundation upon which to base executive compensation decisions. In addition, our Compensation
Committee continues to consider performance, the changing roles and responsibilities of our executive officers and the expected future contributions of our executive officers, and has typically taken
into account advice from other independent members of our Board of Directors.
Role of Chief Executive Officer in Compensation Decisions
Our Chief Executive Officer typically evaluates the performance of other executive officers and employees on an annual basis and makes
recommendations to the Compensation Committee with respect to annual salary adjustments, bonuses and annual stock option grants. Our Compensation Committee exercises its own discretion in recommending
salary adjustments and discretionary cash and equity-based awards for all executive officers to our Board of Directors. Our Chief Executive Officer is not present during deliberations or voting with
respect to compensation for the Chief Executive Officer.
Elements of Executive Compensation
The compensation program for our executive officers consists principally of base salary, annual cash incentive compensation and
long-term compensation in the form of stock options as well as severance protection through an executive severance benefit plan. Our compensation program has been weighted toward long-term
compensation as opposed to short-term or cash-based compensation. If we achieve our corporate goals, we expect the equity awards held by our executives to be the major component of overall
compensation. As discussed in more detail below, base salary is based primarily on market factors and annual cash incentive compensation is generally a performance-based cash bonus that is a
percentage of base salary. The amount of cash compensation
and the amount of equity awards granted to our executives are both considered in determining total compensation for our executive officers.
Base Salary.
Base salaries for our executives are established based on the scope of their responsibilities and individual experience.
Base salaries
are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries with our targets within our peer group, after taking into
account individual responsibilities, performance and experience. The Compensation Committee does not apply specific formulas to determine increases, although it has generally awarded increases as a
percentage of an executive officer's then current base salary.
Based
upon the Compensation Committee's determination of the performance of our executive officers, individually and as a group, and our overall success, and consistent with the goal of
targeting the 50
th
percentile of our peer group, in March 2012, our Compensation Committee recommended to the Board of Directors and the Board of Directors approved base salary
adjustments for each of our
I-22
executive
officers, which were effective as of March 1, 2012. The adjusted 2012 base salaries for each named executive officer were as follows:
|
|
|
|
|
Name
|
|
Base Salary
|
|
Jeffrey Stein, Ph.D.
|
|
$
|
431,000
|
|
John P. Schmid
|
|
$
|
305,000
|
|
Philippe Prokocimer, M.D.
|
|
$
|
350,000
|
|
J. Craig Thompson
|
|
$
|
305,000
|
|
John Finn, Ph.D.
|
|
$
|
305,000
|
|
In
March 2013, in connection with our annual performance review process, our Board of Directors, based on the recommendation of our Compensation Committee and again consistent with the
goal of targeting the 50
th
percentile of our peer group, approved increases in base salary for our executive officers, effective as of February 25, 2013. The following
table sets forth 2013 base salaries for our named executive officers.
|
|
|
|
|
Name
|
|
Base Salary
|
|
Jeffrey Stein, Ph.D.
|
|
$
|
456,000
|
|
John P. Schmid
|
|
$
|
320,000
|
|
Philippe Prokocimer, M.D.
|
|
$
|
374,500
|
|
J. Craig Thompson
|
|
$
|
314,150
|
|
John Finn, Ph.D.
|
|
$
|
305,000
|
|
Annual Cash Incentive Compensation.
In addition to base salaries, we believe that performance-based cash bonuses play an important role
in providing
appropriate incentives to our executives to achieve our strategic objectives. As part of our annual performance reviews, the Compensation Committee reviews and determines each executive officer's
overall performance and our performance generally. Final determinations as to bonus levels are based on the Compensation Committee's assessment as to the overall performance of our company against
established corporate goals and on the executive officer's individual performance.
In
March 2012, our Board of Directors, based on the recommendation of our Compensation Committee, approved our 2012 Executive Bonus Plan (the "2012 Bonus Plan"). Under the 2012 Bonus
Plan, our executives were provided with the opportunity to earn bonus payments conditioned upon the achievement of specified corporate and individual goals. Under the 2012 Bonus Plan, each individual
was assigned a target bonus opportunity, calculated as a percentage of that individual's 2012 base salary, based on the person's role and title in the company. In addition, the payout for all of our
officers was calculated based on our achievement of corporate and individual goals during 2012, with each officer being assigned a corporate and individual goal weighting.
Under
the 2012 Bonus Plan, the target bonus opportunity as a percentage of 2012 base salary and corporate and individual goal weighting for each of our named executive officers was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Target Bonus
|
|
Corporate
|
|
Individual
|
|
Jeffrey Stein, Ph.D.
|
|
Chief Executive Officer
|
|
|
65
|
%
|
|
100
|
%
|
|
0
|
%
|
John P. Schmid
|
|
Chief Financial Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
Philippe Prokocimer, M.D.
|
|
Chief Medical Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
J. Craig Thompson
|
|
Chief Commercial Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
John Finn, Ph.D.
|
|
Chief Scientific Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
I-23
The
details of our 2012 corporate goals were as follows:
|
|
|
|
|
Corporate Goal
|
|
Weighting
|
|
Complete enrollment of 113 Phase 3 study and initiate all supportive studies for planned 2013 NDA filing
|
|
|
40
|
%
|
Support tedizolid development, indication expansion and commercialization through appropriate financing and/or partnering activities
|
|
|
35
|
%
|
Complete all IND enabling studies for Gyrase B clinical candidate
|
|
|
15
|
%
|
Stay on or ahead of 2012 financial plan
|
|
|
10
|
%
|
In
March 2013, our Board of Directors, based on the recommendation of our Compensation Committee, approved 2012 incentive cash bonus payments under the 2012 Bonus Plan based on the
assessment of both corporate and individual performance during 2012 discussed above. The 2012 cash bonuses under the 2012 Bonus Plan approved for each of our named executive officers were as follows:
|
|
|
|
|
Name
|
|
2012 Cash Bonus
|
|
Jeffrey Stein, Ph.D.
|
|
$
|
224,120
|
|
John P. Schmid
|
|
$
|
103,700
|
|
Philippe Prokocimer, M.D.
|
|
$
|
140,000
|
(1)
|
J. Craig Thompson
|
|
$
|
103,700
|
|
John Finn, Ph.D.
|
|
$
|
88,450
|
|
-
(1)
-
Includes
a one-time discretionary bonus in the amount of $21,000 in recognition of Dr. Prokocimer's extraordinary achievements relating to the
ESTABLISH 2 trial of tedizolid phosphate and other clinical trial matters during 2012.
These
bonuses represent the Compensation Committee's approval of an overall 2012 corporate goal achievement level of 80%. Achievement of individual goals for 2012 was based on the
Compensation Committee's subjective assessment of each executive officer's performance against their applicable goals.
Also
in March 2013, our Board of Directors, based on the recommendation of our Compensation Committee, approved our 2013 Executive Bonus Plan (the "2013 Bonus Plan"). Under the 2013
Bonus
Plan, our executives are again provided with the opportunity to earn bonus payments conditioned upon the achievement of specified corporate and individual goals. Under the 2013 Bonus Plan, each
individual is assigned a target bonus opportunity, calculated as a percentage of that individual's 2013 base salary, based on the person's role and title in the company. In addition, the payout for
all of our officers is calculated based on our achievement of corporate and individual goals during 2013, with each officer being assigned a corporate and individual goal weighting.
Under
the 2013 Bonus Plan, the target bonus opportunity as a percentage of 2013 base salary and corporate and individual goal weighting for each of our named executive officers is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Target Bonus
|
|
Corporate
|
|
Individual
|
|
Jeffrey Stein, Ph.D.
|
|
Chief Executive Officer
|
|
|
65
|
%
|
|
100
|
%
|
|
0
|
%
|
John P. Schmid
|
|
Chief Financial Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
Philippe Prokocimer, M.D.
|
|
Chief Medical Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
J. Craig Thompson
|
|
Chief Commercial Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
John Finn, Ph.D.
|
|
Chief Scientific Officer
|
|
|
40
|
%
|
|
75
|
%
|
|
25
|
%
|
I-24
The
details of our 2013 corporate goals are as follows:
|
|
|
|
|
Corporate Goal
|
|
Weighting
|
|
File tedizolid phosphate NDA for ABSSSI
|
|
|
45
|
%
|
Support product pipeline development and commercialization through appropriate funding and/or partnering activities
|
|
|
20
|
%
|
Implement pre-commercial activities to prepare for timely launch of tedizolid phosphate in the United States
|
|
|
10
|
%
|
Initiate tedizolid phosphate Phase 3 lung study
|
|
|
15
|
%
|
Initiate all IND enabling GLP studies for Gyrase clinical candidate
|
|
|
10
|
%
|
Achievement
of individual goals for 2013 will be based on a subjective assessment of each executive officer's performance against their applicable goals over the course of the year.
Long-term Incentive Program.
We believe that by providing our executives the opportunity to increase their ownership of our stock, the
best interests
of stockholders and executives will be more aligned and we will encourage long-term performance. The stock awards enable our executive officers to benefit from the appreciation of stockholder value,
while personally participating in the risks of business setbacks. Our equity benefit plans have provided our executive officers the primary means to acquire equity or equity-linked interests in Trius.
We
grant equity awards primarily through our 2010 Equity Incentive Plan (as amended, the "2010 Plan"), which was adopted by our Board of Directors and stockholders to permit the grant of
stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other stock awards to our officers, directors, employees and consultants.
In
March 2013, our Board of Directors, based on the recommendation of our Compensation Committee, approved the grant of stock options under our 2010 Plan to our named executive officers
in the amounts indicated below:
|
|
|
|
|
Name
|
|
Stock Options
|
|
Jeffrey Stein, Ph.D.
|
|
|
275,000
|
|
John P. Schmid
|
|
|
140,000
|
|
Philippe Prokocimer, M.D.
|
|
|
150,000
|
|
J. Craig Thompson
|
|
|
125,000
|
|
John Finn, Ph.D.
|
|
|
80,000
|
|
In
determining the stock option grants, our Compensation Committee sought to set the equity compensation of our executive officers to be consistent with our philosophy of targeting our
total executive compensation at the 50
th
percentile of our identified peer group, after taking into account individual responsibilities, performance and experience, and are
intended to provide additional long-term retention incentive for the continuation of service of our executive officers.
The
exercise price of equity awards to our employees, consultants and directors is set at the closing price of our common stock as reported on NASDAQ on the date of grant of each award.
In
general, option grants made in connection with commencement of employment vest over four years, with one quarter of the shares subject to the stock option vesting on the one-year
anniversary of the vesting commencement date and the remaining shares vesting in equal monthly installments thereafter over three years, and option grants made in connection with our annual
performance review process vest in equal monthly installments over four years. All of our stock options granted prior to our initial public offering, with the exception of stock options held by
Dr. Stein, are exercisable at any time but, if
exercised, are subject to a lapsing right of repurchase until fully vested. None of our stock options granted after our initial public offering are exercisable prior to the date they are fully vested.
I-25
All
options have a 10-year term. Additional information regarding accelerated vesting prior to, upon or following a change in control is discussed below under "Post Employment Compensation." We do not
have any program, plan or obligation that requires us to grant equity compensation on specified dates and we have not made equity grants in connection with the release or withholding of material
non-public information. Equity grants to executive officers are recommended by our Compensation Committee to the full Board of Directors. In making that recommendation to the full Board of Directors,
our Compensation Committee considers the recommendations of our Chief Executive Officer for officers other than himself.
Severance and Change in Control Benefits.
Our executive officers, who are designated below under "Summary Compensation Table," are
entitled to
certain severance and change in control benefits, the terms of which are described below under "Post Employment Compensation." We believe these severance and change in control benefits are an
essential element of our overall executive compensation package and assist us in recruiting and retaining talented individuals and aligning the executives' interests with the best interests of the
stockholders.
Other Compensation.
In addition, consistent with our compensation philosophy, we intend to continue to maintain the current benefits
for our
executive officers, which are also available to all of our other employees; however, our Compensation Committee, in its discretion, may in the future revise, amend or add to the benefits of any
executive officer if it deems it advisable.
Deductibility of Compensation under Section 162(m).
Section 162(m) of the Code limits our deduction for federal income tax
purposes to
not more than $1.0 million of compensation paid to certain executive officers in a calendar year. Compensation above $1.0 million may be deducted if it is "performance-based
compensation." The Compensation Committee has not yet established a policy for determining which forms of incentive compensation awarded to our executive officers will be designed to qualify as
"performance-based compensation." To maintain flexibility in compensating our executive officers in a manner designed to promote our objectives, the Compensation Committee has not adopted a policy
that requires all compensation to be deductible. However, the Compensation Committee intends to evaluate the effects of the compensation limits of Section 162(m) on any
compensation it proposes to grant, and the Compensation Committee intends to provide future compensation in a manner consistent with the best interests of our stockholders.
I-26
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information regarding the compensation earned during the years ended December 31, 2012, 2011 and
2010 by our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Option
Awards(1)
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Other
|
|
Total
|
|
Jeffrey Stein, Ph.D.
|
|
|
2012
|
|
$
|
427,102
|
|
$
|
|
|
$
|
785,625
|
|
$
|
224,120
|
(6)
|
$
|
252
|
(3)
|
$
|
1,437,099
|
|
President and
|
|
|
2011
|
|
$
|
410,000
|
|
$
|
175,275
|
(5)
|
$
|
230,256
|
|
$
|
|
|
$
|
1,888
|
(3)
|
$
|
817,419
|
|
Chief Executive Officer
|
|
|
2010
|
|
$
|
320,817
|
|
$
|
182,000
|
(2)
|
$
|
222,482
|
|
$
|
|
|
$
|
450
|
(3)
|
$
|
725,749
|
|
John P. Schmid
|
|
|
2012
|
|
$
|
299,432
|
|
$
|
|
|
$
|
267,112
|
|
$
|
103,700
|
(6)
|
$
|
248
|
(3)
|
$
|
670,492
|
|
Chief Financial Officer
|
|
|
2011
|
|
$
|
275,000
|
|
$
|
79,406
|
(5)
|
$
|
120,015
|
|
$
|
|
|
$
|
630
|
(3)
|
$
|
475,051
|
|
|
|
|
2010
|
|
$
|
253,125
|
|
$
|
100,000
|
(2)
|
$
|
51,636
|
|
$
|
|
|
$
|
|
|
$
|
404,761
|
|
Philippe Prokocimer, M.D.
|
|
|
2012
|
|
$
|
346,288
|
|
$
|
21,000
|
(7)
|
$
|
282,825
|
|
$
|
119,000
|
(6)
|
$
|
252
|
(3)
|
$
|
769,365
|
|
Chief Medical Officer
|
|
|
2011
|
|
$
|
330,000
|
|
$
|
79,406
|
(5)
|
$
|
57,898
|
|
$
|
|
|
$
|
687
|
(3)
|
$
|
467,991
|
|
|
|
|
2010
|
|
$
|
321,250
|
|
$
|
80,000
|
(2)
|
$
|
27,173
|
|
$
|
|
|
$
|
|
|
$
|
428,423
|
|
J. Craig Thompson
|
|
|
2012
|
|
$
|
302,216
|
|
$
|
|
|
$
|
282,825
|
|
$
|
103,700
|
(6)
|
$
|
2,051
|
(3)
|
$
|
690,792
|
|
Chief Commercial Officer
|
|
|
2011
|
|
$
|
277,917
|
|
$
|
133,738
|
(5)(8)
|
$
|
104,903
|
|
$
|
|
|
$
|
227,050
|
(4)
|
$
|
743,608
|
|
John Finn, Ph.D.
|
|
|
2012
|
|
$
|
301,288
|
|
$
|
|
|
$
|
298,537
|
|
$
|
88,450
|
(6)
|
$
|
250
|
(3)
|
$
|
688,525
|
|
Chief Scientific Officer
|
|
|
2011
|
|
$
|
285,000
|
|
$
|
64,125
|
(5)
|
$
|
84,776
|
|
$
|
|
|
$
|
653
|
(3)
|
$
|
434,554
|
|
|
|
|
2010
|
|
$
|
271,875
|
|
$
|
91,000
|
(2)
|
$
|
55,223
|
|
$
|
|
|
$
|
|
|
$
|
418,098
|
|
-
(1)
-
Amounts
shown in this column do not reflect dollar amounts actually received by our named executive officers. Instead, these amounts represent the aggregate
grant date fair value of stock option awards determined in accordance with FASB ASC Topic 718. The valuation assumptions used in determining 2012 and 2011 amounts are described in Management's
Discussion and Analysis of Financial Condition and Results of Operations and Note 10 to our financial statements included in our Annual Reports on Form 10-K for the fiscal years ended
December 31, 2012, 2011, and 2010. Our named executive officers will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such
stock options.
-
(2)
-
As
a result of our initial public offering process, the Compensation Committee delayed the award of discretionary bonuses for 2009. Accordingly, the
incentive cash bonuses granted to each of our executive officers in November 2010 consisted of a 2009-10 bonus designed to compensate each executive officer for his or her performance and achievements
during 2009 and 2010, and in some cases an additional one-time bonus in recognition of extraordinary services to our Company.
-
(3)
-
Represents
a combination of tax gross-up on premiums for short-term and long-term disability insurance and/or the payment of a health insurance rebate to
employees who were not enrolled in Trius' group health insurance plan.
-
(4)
-
Represents
$224,735 paid to Mr. Thompson for relocation expenses, $665 for a tax gross-up on premiums for short-term and long-term disability
insurance, and $1,650 represents the payment of a health insurance rebate to employees who were not enrolled in Trius' group health insurance plan.
-
(5)
-
These
amounts represent bonuses earned during the 2011 fiscal year. Annual bonuses earned during a fiscal year are paid in the first quarter of the
subsequent fiscal year.
-
(6)
-
These
amounts represent bonuses earned during the 2012 fiscal year under the 2012 Executive Bonus Plan. Annual bonuses earned during a fiscal year are paid
in the first quarter of the subsequent fiscal year.
-
(7)
-
This
amount represents a one-time discretionary bonus in the amount of $21,000 in recognition of Dr. Prokocimer's extraordinary achievements relating
to the ESTABLISH 2 trial of tedizolid phosphate and other clinical trial matters during 2012.
-
(8)
-
Included
in Mr. Thompson's bonus is a one-time payment of $50,000 which was paid in connection with entering into his employment agreement with Trius
in January 2011.
I-27
Post Employment Compensation
The amount of compensation payable to each named executive officer upon voluntary termination, involuntary termination without cause,
resignation for good reason or termination following a change of control is shown below.
Payments Made Upon Termination
Regardless of the manner in which a named executive officer's employment terminates, the named executive officer is entitled to receive
amounts earned during his term of employment, including salary and unused vacation pay.
Potential Payment Under Executive Severance Benefit Plan
In August 2011, we adopted an Executive Severance Benefit Plan (the "Severance Plan") providing for certain severance and change of
control benefits, on terms recommended by the Compensation Committee, to the following executive officers of Trius:
-
-
Jeffrey Stein, Ph.D., Chief Executive Officer
-
-
John P. Schmid, Chief Financial Officer
-
-
Philippe Prokocimer, M.D., Chief Medical Officer
-
-
J. Craig Thompson, Chief Commercial Officer
-
-
Kenneth Bartizal, Ph.D., Chief Development Officer
-
-
John Finn, Ph.D., Chief Scientific Officer
The
Severance Plan provides for the payment of certain benefits to each eligible Severance Plan participant upon a termination by Trius without cause or resignation by the Severance Plan
participant for good reason, both in connection with a change of control and not in connection with a change of control, and subject to the Severance Plan participant's effective release of claims and
compliance with the other terms of the Severance Plan. In addition, to be eligible for the benefits under the Severance Plan, each participant must timely execute and return a participation agreement,
in the form prescribed by the Severance Plan, pursuant to which the participant agrees to be bound by the terms of the Severance Plan. Under the Severance Plan, resignation for good reason is defined
as a material reduction in the participant's compensation, duties, authority or responsibilities, or a relocation of the participant's place of employment by more than 50 miles without the
participant's written consent, and cause is defined as a repeated failure to satisfactorily perform the participant's duties after notice and an opportunity to cure such failure, an act that
materially injures our business, the commission of a felony or any crime involving fraud, dishonesty or moral turpitude that has inflicted or is likely to inflict a material injury to our business, or
a material violation of the participant's proprietary information and inventions agreement. In addition, a change of control is defined generally as a transaction in which one person or a group
acquires stock that, combined with stock previously owned, controls more than 50% of our value or voting power; a merger, consolidation or similar transaction in which the stockholders of the company
immediately before the transaction do not own at least 50% of the outstanding securities following such transaction; the majority of the Board of Directors is replaced by persons whose appointment or
election is not endorsed by a majority of the Board of Directors; a complete liquidation or dissolution of the company; or a sale, lease, license or other disposition of all or substantially all of
our assets.
I-28
The
material benefits under the Severance Plan are summarized below:
Benefits payable for a covered termination not involving a change in control
|
|
|
|
|
|
|
|
|
|
|
Cash Payment
|
|
|
|
|
Executive Officer
|
|
Salary(1)
|
|
Bonus Payment
Eligible
|
|
Extended
Health Plan
Benefits(3)
|
|
Vesting
Acceleration(4)
|
Chief Executive Officer
|
|
12 months
|
|
Not applicable
|
|
12 months
|
|
6 months
|
Chief Financial Officer
|
|
6 months
|
|
Not applicable
|
|
6 months
|
|
Not applicable
|
Chief Medical Officer
|
|
6 months
|
|
Not applicable
|
|
6 months
|
|
Not applicable
|
Chief Commercial Officer
|
|
6 months
|
|
Not applicable
|
|
6 months
|
|
6 months
|
Chief Development Officer
|
|
6 months
|
|
Not applicable
|
|
6 months
|
|
Not applicable
|
Chief Scientific Officer
|
|
6 months
|
|
Not applicable
|
|
6 months
|
|
Not applicable
|
Benefits payable for a covered termination involving a change in control
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payment
|
|
|
|
|
|
Executive Officer
|
|
Salary(1)
|
|
Bonus Payment
Eligible(2)
|
|
Extended
Health Plan
Benefits(3)
|
|
Vesting
Acceleration(4)
|
|
Chief Executive Officer
|
|
18 months
|
|
Yes
|
|
18 months
|
|
|
100
|
%
|
Chief Financial Officer
|
|
12 months
|
|
Yes
|
|
12 months
|
|
|
100
|
%
|
Chief Medical Officer
|
|
12 months
|
|
Yes
|
|
12 months
|
|
|
100
|
%
|
Chief Commercial Officer
|
|
12 months
|
|
Yes
|
|
12 months
|
|
|
100
|
%
|
Chief Development Officer
|
|
12 months
|
|
Yes
|
|
12 months
|
|
|
100
|
%
|
Chief Scientific Officer
|
|
12 months
|
|
Yes
|
|
12 months
|
|
|
100
|
%
|
-
(1)
-
The
Severance Plan provides for a lump-sum cash payment that is equal to the specified number of months of the officer's base salary.
-
(2)
-
The
Severance Plan provides for a lump-sum cash payment of a pro-rated portion of the officer's target bonus based upon the amount of time served prior to
the covered termination and during the officer's then-current bonus period.
-
(3)
-
The
Severance Plan provides for the continuation of the participant's health, dental and vision plan benefits for the specified number of months following a
covered termination and a deferral of COBRA coverage until such time as the extended coverage has terminated.
-
(4)
-
The
Severance Plan provides for accelerated vesting of certain outstanding unvested stock options for the specified number of monthly vesting installments
upon a covered termination.
The
Severance Plan supersedes any and all severance and change of control benefits eligible Severance Plan participants are entitled to pursuant to their existing employment agreements
and offer letters
with Trius and pursuant to any other agreement, plan, policy or practice maintained or entered into by Trius prior to the adoption of the Severance Plan.
The
following tables set forth potential payments payable to our named executive officers upon a termination of employment without cause or resignation for good reason or termination of
employment without cause or resignation for good reason in connection with a change in control. Our Compensation Committee may in its discretion revise, amend or add to the benefits if it deems
I-29
advisable.
The table below reflects amounts payable to our named executive officers assuming the termination occurred on, and their employment was terminated on, December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon Termination Without Cause or
Resignation for Good ReasonNo Change of Control(1)
|
|
Name
|
|
Salary
|
|
Continuation
of Medical
Benefits
|
|
Value of
Accelerated
Vesting
|
|
Total
|
|
Jeffrey Stein, Ph.D.
|
|
$
|
431,000
|
|
$
|
16,185
|
|
$
|
1,180,569
|
|
$
|
1,627,754
|
|
John P. Schmid
|
|
$
|
152,500
|
|
$
|
5,091
|
|
$
|
|
|
$
|
157,591
|
|
Philippe Prokocimer, M.D.
|
|
$
|
175,000
|
|
$
|
5,680
|
|
$
|
|
|
$
|
180,680
|
|
J. Craig Thompson
|
|
$
|
152,500
|
|
$
|
|
|
$
|
43,500
|
|
$
|
196,000
|
|
John Finn, Ph.D.
|
|
$
|
152,500
|
|
$
|
8,772
|
|
$
|
|
|
$
|
161,272
|
|
The
table below reflects amounts payable to our named executive officers assuming the termination occurred on, and their employment was terminated on, December 31, 2012 and a
change of control also occurred on such date:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upon Termination Without Cause or
Resignation for Good ReasonChange of Control(1)
|
|
Name
|
|
Salary
|
|
Bonus
|
|
Continuation
of Medical
Benefits
|
|
Value of
Accelerated
Vesting
|
|
Total
|
|
Jeffrey Stein, Ph.D.
|
|
$
|
646,500
|
|
$
|
280,150
|
|
$
|
24,277
|
|
$
|
1,257,636
|
|
$
|
2,208,563
|
|
John P. Schmid
|
|
$
|
305,000
|
|
$
|
122,000
|
|
$
|
10,183
|
|
$
|
224,634
|
|
$
|
661,817
|
|
Philippe Prokocimer, M.D.
|
|
$
|
350,000
|
|
$
|
140,000
|
|
$
|
11,360
|
|
$
|
127,912
|
|
$
|
629,272
|
|
J. Craig Thompson
|
|
$
|
305,000
|
|
$
|
122,000
|
|
$
|
|
|
$
|
72,000
|
|
$
|
499,000
|
|
John Finn, Ph.D.
|
|
$
|
305,000
|
|
$
|
122,000
|
|
$
|
17,544
|
|
$
|
415,406
|
|
$
|
859,950
|
|
In
addition, in November 2012, the Compensation Committee approved the provision of 100% accelerated vesting of outstanding unvested stock options held by our senior vice presidents and
vice presidents upon a termination by Trius without cause or resignation by such officers for good reason in connection with a change of control.
Grants of Plan-Based Awards
All stock options granted to our named executive officers are incentive stock options, to the extent permissible under the Code. The
exercise price per share of each stock option granted to our named executive officers was equal to the fair market value of our common stock as determined in good faith by our Board of Directors on
the date of the grant. Prior to February 2010, all stock options listed below were granted under our 2006 Plan and all subsequent stock options have been granted under our 2010 Plan.
I-30
The
following table sets forth certain information regarding grants of plan-based awards to our named executive officers for 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Option
Awards:
|
|
Name
|
|
Grant Date
|
|
Estimated Target
Payout Under Non-
Equity Incentive Plan
Awards(4)
|
|
Number of
Securities
Underlying Options
(#)(1)
|
|
Exercise or
Base Price of
Option Awards
($/share)(2)
|
|
Grant Date Fair
Value of Option
Awards
($)(3)
|
|
Jeffrey Stein, Ph.D.
|
|
|
3/8/2012
|
|
$
|
280,150
|
|
|
250,000
|
|
$
|
4.80
|
|
$
|
785,625
|
|
John P. Schmid
|
|
|
3/8/2012
|
|
$
|
122,000
|
|
|
85,000
|
|
$
|
4.80
|
|
$
|
267,112
|
|
Philippe Prokocimer, M.D.
|
|
|
3/8/2012
|
|
$
|
140,000
|
|
|
90,000
|
|
$
|
4.80
|
|
$
|
282,825
|
|
J. Craig Thompson
|
|
|
3/8/2012
|
|
$
|
122,000
|
|
|
90,000
|
|
$
|
4.80
|
|
$
|
282,825
|
|
John Finn, Ph.D.
|
|
|
3/8/2012
|
|
$
|
122,000
|
|
|
95,000
|
|
$
|
4.80
|
|
$
|
298,538
|
|
-
(1)
-
The
option vests in 48 successive equal monthly installments over the four year period beginning on March 8, 2012.
-
(2)
-
Represented
the per share fair market value of our common stock, as determined by the closing market price of our common stock as quoted on the NASDAQ
Global Market on the grant date.
-
(3)
-
Calculated
in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see the section entitled "Stock-Based Compensation" in
"Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012
and note 10 to our consolidated financial statements also included therein.
-
(4)
-
The
amounts shown in this column represent the estimated target payout under our 2012 Bonus Plan and are based upon the assumption that each named executive
officer achieved 100% of both their corporate and individual goals. The actual amount of incentive bonus earned by each named executive officer in 2012 is reported in the Summary Compensation Table.
I-31
Outstanding Equity Awards at December 31, 2012
The following table sets forth certain information regarding outstanding equity awards granted to our named executive officers that
remain outstanding as of December 31, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Jeffrey Stein, Ph.D.
|
|
|
81,280
|
|
|
|
|
$
|
0.52
|
|
|
3/20/2017
|
(1)
|
|
|
|
156,976
|
|
|
|
|
$
|
1.29
|
|
|
5/20/2018
|
(1)
|
|
|
|
23,255
|
|
|
|
|
$
|
1.29
|
|
|
1/8/2019
|
(1)
|
|
|
|
7,558
|
|
|
|
|
$
|
1.29
|
|
|
1/8/2019
|
(3)
|
|
|
|
88,541
|
|
|
81,459
|
|
$
|
3.50
|
|
|
11/2/2020
|
(6)
|
|
|
|
30,000
|
|
|
|
|
$
|
3.50
|
|
|
11/2/2020
|
(7)
|
|
|
|
46,875
|
|
|
203,125
|
|
$
|
4.80
|
|
|
3/7/2022
|
(6)
|
John P. Schmid
|
|
|
28,720
|
|
|
|
|
$
|
1.29
|
|
|
5/20/2018
|
(2)
|
|
|
|
5,813
|
(4)
|
|
|
|
$
|
1.29
|
|
|
1/08/2019
|
(2)(8)
|
|
|
|
2,325
|
|
|
|
|
$
|
1.29
|
|
|
1/08/2019
|
(3)
|
|
|
|
20,833
|
|
|
19,167
|
|
$
|
3.50
|
|
|
11/2/2020
|
(6)
|
|
|
|
35,000
|
|
|
|
|
$
|
3.50
|
|
|
11/2/2020
|
(7)
|
|
|
|
15,937
|
|
|
69,063
|
|
$
|
4.80
|
|
|
3/7/2022
|
(6)
|
Philippe Prokocimer, M.D.
|
|
|
16,569
|
|
|
|
|
$
|
1.29
|
|
|
5/20/2018
|
(2)
|
|
|
|
1,744
|
|
|
|
|
$
|
1.29
|
|
|
1/8/2019
|
(3)
|
|
|
|
20,833
|
|
|
19,167
|
|
$
|
3.50
|
|
|
11/2/2020
|
(6)
|
|
|
|
10,000
|
|
|
|
|
$
|
3.50
|
|
|
11/2/2020
|
(7)
|
|
|
|
16,875
|
|
|
73,125
|
|
$
|
4.80
|
|
|
3/7/2022
|
(6)
|
J. Craig Thompson
|
|
|
71,875
|
|
|
78,125
|
|
$
|
4.30
|
|
|
1/9/2021
|
(2)
|
|
|
|
16,875
|
|
|
73,125
|
|
$
|
4.80
|
|
|
3/7/2022
|
(6)
|
John Finn, Ph.D.
|
|
|
35,813
|
|
|
|
|
$
|
0.52
|
|
|
3/20/2017
|
(2)
|
|
|
|
48,837
|
|
|
|
|
$
|
1.29
|
|
|
5/20/2018
|
(2)
|
|
|
|
5,813
|
(5)
|
|
|
|
$
|
1.29
|
|
|
1/8/2019
|
(2)(8)
|
|
|
|
2,325
|
|
|
|
|
$
|
1.29
|
|
|
1/8/2019
|
(3)
|
|
|
|
20,833
|
|
|
19,167
|
|
$
|
3.50
|
|
|
11/2/2020
|
(6)
|
|
|
|
10,000
|
|
|
|
|
$
|
3.50
|
|
|
11/2/2020
|
(7)
|
|
|
|
17,812
|
|
|
77,188
|
|
$
|
4.80
|
|
|
3/7/2022
|
(6)
|
-
(1)
-
1/36
th
of
the shares vest monthly after the vesting commencement date.
-
(2)
-
1/4
th
of
the shares vest one year after the vesting commencement date; 1/48
th
of the shares vest monthly
thereafter over the next three years.
-
(3)
-
All
shares were vested on the grant date.
-
(4)
-
Includes
122 unvested shares in the aggregate.
-
(5)
-
Includes
122 unvested shares in the aggregate.
-
(6)
-
1/48
th
of
the shares vest monthly over four years.
I-32
-
(7)
-
1/12
th
of
the shares vest monthly over one year.
-
(8)
-
Stock
options are exercisable at any time but, if exercised, are subject to a lapsing right of repurchase until fully vested.
Option Exercises and Stock Vested
The following table shows certain information regarding option exercises and stock vested during 2012 with respect to our named
executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
Value Realized
on Exercise
($)
|
|
Number of
Shares
Acquired
on Vesting
(#)(1)
|
|
Value Realized
on Vesting
($)(2)
|
|
Jeffrey Stein, Ph.D.
|
|
|
38,462
|
|
$
|
176,925
|
|
|
|
|
$
|
|
|
John P. Schmid
|
|
|
5,000
|
|
$
|
19,150
|
|
|
|
|
$
|
|
|
Philippe Prokocimer, M.D.
|
|
|
10,244
|
|
$
|
47,088
|
|
|
|
|
$
|
|
|
John Finn, Ph.D.
|
|
|
20,000
|
|
$
|
92,400
|
|
|
|
|
$
|
|
|
-
(1)
-
Represents
shares issued upon early exercise of unvested options that are subject to a lapsing right of repurchase until fully vested.
-
(2)
-
The
value realized on vesting is equal to the number of shares acquired on vesting multiplied by the closing market price as of the vesting date for each
month through December 31, 2012.
Option Repricings
We did not engage in any repricings or other modifications to any of our named executive officers' outstanding equity awards during the
year ended December 31, 2012.
Pension Benefits
None of our named executive officers participate in or have account balances in qualified or non-qualified defined benefit plans
sponsored by us. Our Compensation Committee may elect to adopt qualified or non-qualified benefit plans in the future if it determines that doing so is in our best interests.
Nonqualified Deferred Compensation
None of our named executive officers participate in or have account balances in nonqualified defined contribution plans or other
nonqualified deferred compensation plans maintained by us. Our Compensation Committee may elect to provide our officers and other employees with non-qualified defined contribution or other
nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interests.
401(k) Plan
We maintain a defined contribution employee retirement plan for our employees. The plan is intended to qualify as a tax-qualified plan
under Section 401(k) of the Code so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the
401(k) plan. The 401(k) plan provides that each participant may contribute up to 100% of his or her pre-tax compensation, up to a statutory limit, which was $17,000 for 2012. Participants who are at
least 50 years old can also make "catch-up" contributions, which in 2012 was up to an additional $5,500 above the statutory limit. Under the 401(k) plan, each employee is
I-33
fully
vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan's trustee. The 401(k) plan also permits us to make discretionary contributions and
matching contributions, subject to established limits and a vesting schedule. To date, we have not made any discretionary or matching contributions to the plan on behalf of participating employees.
NON-EMPLOYEE DIRECTOR COMPENSATION
The following table sets forth in summary form information concerning the compensation that we paid or awarded during the year ended
December 31, 2012 to each of our non-employee directors:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or Paid
in Cash ($)
|
|
Option Awards
($)(1)(2)(3)(4)
|
|
Total ($)
|
|
David S. Kabakoff, Ph.D.
|
|
$
|
82,000
|
|
$
|
82,723
|
|
$
|
164,723
|
|
Brian G. Atwood
|
|
$
|
42,000
|
|
$
|
51,494
|
|
$
|
93,494
|
|
Karin Eastham
|
|
$
|
50,000
|
|
$
|
82,565
|
|
$
|
132,565
|
|
Nina Kjellson
|
|
$
|
46,000
|
|
$
|
51,494
|
|
$
|
97,494
|
|
Brendan O'Leary, Ph.D.
|
|
$
|
34,000
|
|
$
|
71,296
|
|
$
|
105,296
|
|
Michael Powell, Ph.D.(5)
|
|
$
|
15,833
|
|
$
|
25,555
|
|
$
|
41,388
|
|
Theodore R. Schroeder
|
|
$
|
42,000
|
|
$
|
78,368
|
|
$
|
120,368
|
|
Risa Stack, Ph.D.(6)
|
|
$
|
34,000
|
|
$
|
54,662
|
|
$
|
88,662
|
|
Paul Truex
|
|
$
|
38,000
|
|
$
|
55,149
|
|
$
|
93,149
|
|
-
(1)
-
Amounts
shown in this column do not reflect dollar amounts actually received by our non-employee directors. Instead, these amounts reflect the dollar amount
recognized for financial statement reporting purposes for the referenced fiscal year, in accordance with the provisions of FASB ASC Topic 718. Assumptions used in the calculation of these amounts are
discussed in our Annual Report on Form 10-K for the year ended December 31, 2012 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
Note 10,
Share-Based Compensation
, of the Notes to our Financial Statements. As required by SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions.
-
(2)
-
The
aggregate number of shares subject to each director's outstanding option awards as of December 31, 2012 was as follows: Dr. Kabakoff,
54,000 shares; Mr. Atwood, 45,302 shares; Ms. Eastham, 47,441 shares; Ms. Kjellson, 45,302 shares; Dr. O'Leary, 36,000 shares; Dr. Powell, 11,000 shares;
Mr. Schroeder, 51,116 shares; Dr. Stack, 45,302 shares; Mr. Truex, 48,403 shares.
-
(3)
-
The
full grant date fair value of the option awards shown above that were granted during fiscal 2012 is as follows: Dr. Kabakoff, $64,044;
Mr. Atwood, $42,696; Ms. Eastham, $42,696; Ms. Kjellson, $42,696; Dr. O'Leary, $42,696; Dr. Powell, $0; Mr. Schroeder, $42,696; Dr. Stack, $42,696;
Mr. Truex, $42,696.
-
(4)
-
Option
awards vest in equal installments on a monthly basis over three years for initial stock option awards or chairperson initial stock option awards and
over one year for annual stock option awards and chairperson annual stock option awards.
-
(5)
-
Dr. Powell
served on the Board of Directors until May 2012.
-
(5)
-
Dr. Stack
served on the Board of Directors until May 2013.
We
have reimbursed and will continue to reimburse our non-employee directors for their travel, lodging and other reasonable expenses incurred in attending meetings of our Board of
Directors and committees of the Board of Directors.
In
November 2009, our Board of Directors adopted a compensation program for our non-employee directors (the "Non-Employee Director Compensation Policy"). The Non-Employee
I-34
Director
Compensation Policy was effective for all of our non-employee directors on the effective date of our initial public offering in August 2010. Pursuant to the Non-Employee Director Compensation
Policy, each member of our Board of Directors who is not our employee receives the following cash compensation for Board of Director services, as
applicable:
-
-
$30,000 per year for service as a Board of Director member, payable quarterly;
-
-
$12,000 per year for service as a member of the Audit Committee, $8,000 per year for service as a member of the
Compensation Committee and $4,000 per year for service as a member of the corporate governance and nominating committee, each payable quarterly;
-
-
an additional $36,000 per year for service as Chairman of the Board, payable quarterly;
and
-
-
an additional $8,000 per year for service as chair of the Audit Committee, an additional $4,000 per year for service as
chair of the Compensation Committee and an additional $4,000 per year for service as chair of the Nominating and Corporate Governance Committee, payable quarterly.
In
addition, our non-employee directors receive initial and annual automatic, non-discretionary grants of nonqualified stock options under the terms and provisions of our Amended and
Restated 2010 Non-Employee Directors' Stock Option Plan (as amended, the "2010 Directors' Plan").
Each
new non-employee director joining our Board of Directors is automatically granted a non-statutory stock option to purchase 24,000 shares of common stock with an exercise price equal
to the then fair market value of our common stock under our 2010 Directors' Plan. On the date of each annual meeting of our stockholders, each non-employee director is also automatically granted a
non-statutory stock option to purchase 12,000 shares of our common stock on that date with an exercise price equal to the then fair market value of our common stock under our 2010 Directors' Plan.
In
addition to the initial and annual grants, any person who becomes a chairperson of our Board of Directors is automatically granted a non-statutory stock option to purchase 12,000
shares of our common stock, upon his or her election as chairperson of our Board of Directors with an exercise price equal to the then fair market value of our common stock under our 2010 Directors'
Plan. Any person who is a chairperson of our Board of Directors on the date of each annual meeting of our stockholders is also automatically granted a non-statutory stock option to purchase 6,000
shares of our common stock on that date with an exercise price equal to the then fair market value of our common stock under our 2010 Directors' Plan.
Initial
grants and chairperson initial grants vest monthly over three years and annual grants and chairperson annual grants vest in twelve equal monthly installments. All stock options
granted under our 2010 Directors' Plan have a term of ten years and vesting automatically accelerates upon the closing of a change in control transaction.
In
March 2013, our Board of Directors met, and based upon the recommendations of the Compensation Committee and Radford, who based their recommendations on current market data for our
peers, agreed to increase certain aspects of the compensation policy for non-employee directors noted above. Effective January 1, 2013, the $30,000 per year cash compensation for service as a
non-employee Board of Director member was increased to $40,000 per year; the initial option grant for a new non-employee director joining our Board of Directors was increased from 24,000 shares to
30,000 shares; and the annual option grant for each non-employee director was increased from 12,000 shares to 15,000 shares. All other aspects of the compensation policy for non-employee directors
remain the same.
I-35
TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures for Transactions with Related Persons
We have adopted a written Related-Person Transactions Policy that sets forth our policies and procedures regarding the identification,
review, consideration and oversight of "related-person transactions." For purposes of our policy only, a "related-person transaction" is a transaction, arrangement or relationship (or any series of
similar transactions, arrangements or relationships) in which we and any "related person" are participants involving an amount that exceeds $120,000. Transactions involving compensation for services
provided to us as an employee, director, consultant or similar capacity by a related person are not covered by this policy. A related person is any executive officer, director or a holder of more than
five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.
Under
the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to our
Audit Committee (or, where review by our Audit Committee would be inappropriate, to another independent body of our Board of Directors) for review. The presentation must include a description of,
among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available. To
identify related-person transactions in advance, we rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-person transactions,
our Audit Committee or other independent body of our Board of Directors takes into account the relevant available facts and circumstances including, but not limited
to:
-
-
The risks, costs and benefits to us;
-
-
The impact on a director's independence in the event the related person is a director, immediate family member of a
director or an entity with which a director is affiliated;
-
-
The terms of the transaction;
-
-
The availability of other sources for comparable services or products;
and
-
-
The terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.
In
the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. Our policy requires that, in
reviewing a related-person transaction, our Audit Committee or other independent body of our Board of Directors must consider, in light of known circumstances, whether the transaction is in, or is not
inconsistent with, the best interests of us and our stockholders, as our Audit Committee or other independent body of our Board of Directors determines in the good faith exercise of its discretion. We
did not previously have a formal policy concerning transactions with related persons.
Registration Rights
In connection with our various preferred stock financings prior to our initial public offering, we entered into an amended and restated
investor rights agreement under which our 5% or greater stockholders InterWest Partners IX, LP, Versant Venture Capital III, L.P. and its affiliates, Prism Venture Partners
V, L.P. and its affiliates, and entities affiliated with Kleiner Perkins, Caufield & Byers hold registration rights. In addition, the David S. & Susan O. Kabakoff Family Trust
dated 2/24/00 for which Dr. Kabakoff shares voting and investment power and the Jeff Stein and Catherine Naughton Revocable Trust, for which Dr. Stein has shared voting and investment
power, are parties to the amended and restated investor rights agreement and hold registration rights.
I-36
Employment Agreements
We have entered into an Executive Severance Benefit Plan with our executive officers, as more fully described under "Post Employment
CompensationPotential Payment Under Executive Severance Benefit Plan."
Stock Options Granted to Executive Officers and Directors
We have granted stock options to our executive officers and directors, as more fully described under "Non-Employee Director
Compensation" and "Executive Compensation" above.
Indemnification Agreements
We have entered into separate indemnification agreements with our directors and executive officers, in addition to the indemnification
provided for in our Amended and Restated Bylaws. These agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys' fees,
judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors or executive officers, or any of
our subsidiaries or any other company or enterprise to which the person provides services at our request.
I-37
ANNEX II
[LETTERHEAD
OF CITIGROUP GLOBAL MARKETS INC.]
July 30,
2013
The
Board of Directors
Trius Therapeutics, Inc.
6310 Nancy Ridge Drive, Suite 105
San Diego, California 92121
The
Board of Directors:
You
have requested our opinion as to the fairness, from a financial point of view, to holders of the common stock of Trius Therapeutics, Inc. ("Trius"), other than as specified
herein, of the Consideration (defined below) to be received by such holders pursuant to the terms and subject to the conditions set forth in an Agreement and Plan of Merger (the "Agreement") proposed
to be entered into among Cubist Pharmaceuticals, Inc. ("Cubist"), BRGO Corporation, a wholly owned subsidiary of Cubist ("Sub"), and Trius. As more fully described in the Agreement,
(i) Sub will commence a tender offer to purchase all outstanding shares of the common stock, par value $0.0001 per share, of Trius ("Trius Common Stock" and, such tender offer, the "Tender
Offer") for total per share consideration consisting of (a) $13.50 in cash payable upon consummation of the Tender Offer (the "Upfront Consideration") and (b) one contingent value right
which will entitle the holder thereof to receive up to an additional $2.00 in cash payable contingent upon Trius achieving certain milestones with respect to its net product sales for the fiscal year
ended December 31, 2016 as specified in the Agreement (the "CVR" and, together with the Upfront Consideration, the "Consideration") and (ii) subsequent to consummation of the Tender
Offer, Sub will be merged with and into Trius (the "Merger" and, together with the Tender Offer, the "Transaction") and each outstanding share of Trius Common Stock not previously tendered will be
converted into the right to receive the Consideration.
In
arriving at our opinion, we reviewed an execution version, provided to us on July 30, 2013, of the Agreement and form of Contingent Value Rights Agreement attached thereto and
held discussions with certain senior officers, directors and other representatives and advisors of Trius concerning the business, operations and prospects of Trius. We reviewed certain publicly
available business and financial information relating to Trius as well as certain financial forecasts and other information and data relating to Trius, including certain base case financial forecasts
and sensitivities thereto reflecting alternative business scenarios, provided to or discussed with us by the management of Trius. We reviewed the financial terms of the Transaction as set forth in the
Agreement in relation to, among other things: current and historical market prices and trading volumes of Trius Common Stock; the projected earnings and other operating data of Trius; and the
capitalization and financial condition of Trius. We analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of Trius. In connection with our engagement and at the direction of Trius, we were requested to approach, and we held discussions with, selected third parties
to solicit indications of interest in the possible acquisition of Trius. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and
financial, economic and market criteria as we deemed appropriate in arriving at our opinion. The issuance of our opinion has been authorized by our fairness opinion committee.
In
rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly
available or provided to or otherwise reviewed by or discussed with us and upon the assurances of the managements of Trius and Cubist that they are not aware of any relevant information that has been
omitted or that remains undisclosed to us. With respect to the financial forecasts and other information
II-1
The
Board of Directors
Trius Therapeutics, Inc.
July 30, 2013
Page 2
and
data provided to or otherwise reviewed by or discussed with us relating to Trius, we have been directed, based on the assessments of the management of Trius, to rely upon management's base case
forecasts for purposes of our financial analyses and opinion and to assume, consistent with such base case forecasts and other information and data, that the CVR milestones will be fully achieved. We
have been advised by the management of Trius and, with your consent, we have assumed that management's base case forecasts and other information and data relied upon for purposes of our financial
analyses and opinion were reasonably prepared on bases reflecting the best currently available estimates and judgments of such management as to the future financial performance of Trius. We have
relied, with your consent, upon the assessments of the management of Trius as to (i) the potential impact on Trius of governmental and regulatory policies and matters affecting the
pharmaceutical industry and (ii) the validity of, and risks associated with, the product candidates of Trius and related indications therefor (including, without limitation, the timing and
probability of successful development and marketing of such product candidates and related indications, approval thereof by appropriate governmental authorities and the validity and life of patents
relating thereto).
We
have not made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Trius nor have we made any physical inspection of
the properties or assets of Trius. We have assumed, with your consent, that the Transaction will be consummated in accordance with its terms without waiver, modification or amendment of any material
term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents, releases and waivers for the Transaction, no delay, limitation,
restriction or condition will be imposed that would have an adverse effect on Trius or the Transaction. Representatives of Trius have advised us, and we further have assumed, that the final terms of
the Agreement (and form of Contingent Value Rights Agreement attached thereto) will not vary materially from those set forth in the execution version (or form thereof) reviewed by us.
Our
opinion does not address any terms (other than the Consideration to the extent expressly specified herein) or other aspects or implications of the Transaction, including, without
limitation, the form or structure of the Transaction, the form or terms of the CVR with respect to transferability, illiquidity or otherwise or any tender and voting or other agreement, arrangement or
understanding to be entered into in connection with or contemplated by the Transaction or otherwise. We were not requested to consider, and our opinion does not address, the underlying business
decision of Trius to effect the
Transaction, the relative merits of the Transaction as compared to any alternative business strategies or opportunities that might exist for Trius or the effect of any other transaction in which Trius
might engage. We also express no view as to, and our opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers,
directors or employees of any parties to the Transaction, or any class of such persons, relative to the Consideration or otherwise. In addition, we are not expressing any opinion as to the actual
value of the CVR upon the issuance thereof or as to the prices at which Trius Common Stock will trade at any time. Our opinion is necessarily based upon information available to us, and financial,
stock market and other conditions and circumstances existing and disclosed to us, as of the date hereof. As you are aware, the credit, financial and stock markets have been experiencing unusual
volatility and we express no opinion or view as to any potential effects of such volatility on Trius or the Transaction.
Citigroup
Global Markets Inc. has acted as financial advisor to Trius in connection with the proposed Transaction and will receive a fee for such services, the principal portion
of which is contingent upon consummation of the Tender Offer. We also will receive a fee in connection with the delivery of this opinion. We and our affiliates in the past have provided and in the
future may provide
II-2
The
Board of Directors
Trius Therapeutics, Inc.
July 30, 2013
Page 3
investment
banking and other financial services to Trius and Cubist unrelated to the proposed Transaction, for which services we and our affiliates have received and expect to receive compensation,
including, during the past two years, having acted as joint bookrunning manager for public offerings of Trius Common Stock in January 2012 and January 2013. In the ordinary course of business, we and
our affiliates may actively trade or hold the securities of Trius and Cubist for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in
such securities. In addition, we and our affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with Trius, Cubist and their respective affiliates.
Our
advisory services and the opinion expressed herein are provided for the information of the Board of Directors of Trius (in its capacity as such) in its evaluation of the proposed
Transaction, and our opinion is not intended to be and does not constitute a recommendation as to whether any stockholder
should tender shares of Trius Common Stock in the Tender Offer or how any stockholder should act on any matters relating to the proposed Transaction or otherwise.
Based
upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, we are of the opinion that, as of the
date hereof, the Consideration to be received in the Transaction by holders of Trius Common Stock (other than Cubist, Sub and their respective affiliates) is fair, from a financial point of view, to
such holders.
Very
truly yours,
/s/
Citigroup Global Markets Inc.
CITIGROUP
GLOBAL MARKETS INC.
II-3
ANNEX III
[LETTERHEAD
OF CENTERVIEW PARTNERS LLC]
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Centerview Partners LLC
31 West 52nd Street
New York, NY 10019
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July 30, 2013
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The
Board of Directors
Trius Therapeutics, Inc.
6310 Nancy Ridge Drive, Suite 105
San Diego, California 92121
The
Board of Directors:
You
have requested our opinion as to the fairness, from a financial point of view, to the holders of the outstanding shares of common stock, par value $0.0001 per share (the "Shares"),
other than Excluded Shares, as defined below, of Trius Therapeutics, Inc., a Delaware corporation (the "Company"), of the Consideration (defined below) proposed to be paid to such holders
pursuant to an Agreement and Plan of Merger to be entered into (the "Agreement") among the Company, Cubist Pharmaceuticals, Inc., a Delaware corporation ("Parent") and BRGO Corporation, a
Delaware corporation and wholly owned subsidiary of Parent ("Purchaser"). The Agreement provides for, among other things, (i) the commencement by Purchaser of a tender offer to purchase all
outstanding Shares (the "Tender Offer") for total per Share consideration consisting of (a) $13.50 in cash payable upon consummation of the Tender Offer (the "Upfront Consideration") and
(b) one contingent value right which will entitle the holder thereof to receive up to an additional $2.00 in cash payable contingent upon the Company achieving certain milestones with respect
to its net product sales for the fiscal year ended December 31, 2016 as specified in the Agreement (the "CVR" and, together with the Upfront Consideration, the "Consideration") and
(ii) following completion of the Tender Offer, the merger of Purchaser with and into the Company (the "Merger" and, collectively with the Tender Offer and the other transactions contemplated by
the Agreement, the "Transaction") as a result of which the Company will become a wholly owned subsidiary of Parent and each issued and outstanding Share immediately prior to the effective time of the
Merger (other than Dissenting Shares (as defined in the Agreement), any Shares held by the Company or in the Company's treasury and any Shares then held by Parent, Purchaser or any other wholly owned
subsidiary of Parent (together with any Shares held by any affiliate of Parent or Purchaser, "Excluded Shares") will be converted into the right to receive the Consideration. The terms and conditions
of the Transaction are more fully set forth in the Agreement.
We
have acted as financial advisor to the Company in connection with, and have participated in certain of the negotiations leading to, the Transaction. We will receive a fee for our
services in connection with the Transaction, a portion of which is payable upon the rendering of this opinion and a principal portion of which is contingent upon the consummation of the Transaction.
In addition, the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement.
We
are a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the past
two years, we have not provided investment banking services to the Company or Parent for which we have received compensation. We may provide investment banking and other services to or with respect to
the Company, Parent or their respective affiliates in the future, for which we may receive compensation. Certain (i) of our and our affiliates' directors, officers, members and employees, or
family members of such persons, (ii) of our affiliates or related investment funds and (iii) investment funds or other
III-1
The
Board of Directors
Trius Therapeutics, Inc.
July 30, 2013
Page 2
persons
in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities of, or
investments in, the Company, Parent or any of their respective affiliates, or any other party that may be involved in the Transaction.
In
connection with this opinion, we have reviewed, among other things: (i) an execution version, dated July 30, 2013, of the Agreement and form of Contingent Value Rights
Agreement attached thereto; (ii) Annual Reports on Form 10-K of the Company for the years ended December 31, 2012, December 31, 2011 and December 31, 2010;
(iii) certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company; (iv) certain publicly available research analyst reports for the Company;
(v) certain other communications from the Company to its stockholders; and (vi) certain financial forecasts and other internal information and data relating to the business, operations,
projected earnings, cash flow, assets, liabilities and prospects of the Company, including certain base case
financial forecasts, analyses and projections (the "Base Case Forecasts") relating to the Company and sensitivities thereto reflecting alternative business scenarios, prepared by management of the
Company and furnished to us by the Company for purposes of our analysis (collectively, the "Forecasts" and, together with such other internal information and data, the "Internal Data"). We have
conducted discussions with members of the senior management and representatives of the Company regarding their assessment of the Internal Data and the strategic rationale for the Transaction. In
addition, we reviewed publicly available financial and stock market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies, the
securities of which are publicly traded, in lines of business that we deemed relevant. We also conducted such other financial studies and analyses and took into account such other information as we
deemed appropriate. In connection with our engagement and at the direction of the Company, we were requested to approach, and we held discussions with, selected third parties to solicit indications of
interest in the possible acquisition of the Company.
We
have assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information
supplied to, discussed with, or reviewed by us for purposes of this opinion and have, with your consent, relied upon such information as being complete and accurate. With respect to the Internal Data
(including, without limitation, the Forecasts), we have been directed, based on the assessments of the management of the Company, to rely upon the Base Case Forecasts for purposes of our analysis and
this opinion. In that regard, we have assumed, at your direction, that the Base Case Forecasts and other Internal Data that we have been directed to rely upon for purposes of our analysis and this
opinion have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the matters covered thereby. We express no view or
opinion as to the Internal Data, the assumptions on which it is based or any alternative business scenarios reflected therein. In addition, at your direction, we have not made any independent
evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance sheet or otherwise) of the Company, nor have we been furnished with any such evaluation or appraisal,
and we have not been asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company. We have assumed, at your direction, that the final executed Agreement (and
form of Contingent Value Rights Agreement attached thereto) will not differ in any respect material to our analysis or this opinion from the execution version (or form thereof) reviewed by us. We have
also assumed, at your direction, that the Transaction will be consummated on the terms set forth in the Agreement, without delay or the waiver, modification or amendment of any term, condition or
agreement, the effect of which would be material to our analysis or this opinion and that, in the course of obtaining the necessary governmental,
III-2
The
Board of Directors
Trius Therapeutics, Inc.
July 30, 2013
Page 3
regulatory
and other approvals, consents, releases and waivers for the Transaction, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material
to our analysis or this opinion. We have not evaluated and do not express any opinion as to the solvency or fair value of the Company, or the ability of the Company to pay its obligations when they
come due, or as to the impact of the Transaction on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. We are not legal, regulatory, tax or
accounting advisors, and we express no opinion as to any legal, regulatory, tax or accounting matters.
We
express no view as to, and our opinion does not address, the Company's underlying business decision to proceed with or effect the Transaction, or the relative merits of the
Transaction as compared to any alternative business strategies or transactions that might be available to the Company or in which the Company might engage. This opinion is limited to and addresses
only the fairness, from a financial point of view, as of the date hereof, to the holders of the Shares (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the
Agreement. We have not been asked to, nor do we, express any view on, and our opinion does not address, any other term or aspect of the Agreement or the Transaction, including, without limitation, the
structure or form of the Transaction, the form or terms of the CVR with respect to transferability, illiquidity or otherwise, or any tender and voting or other agreements or arrangements contemplated
by the Agreement or entered into in connection with or otherwise contemplated by the Transaction, including, without limitation, the fairness of the Transaction or any other term or aspect of the
Transaction to, or any consideration to be received in connection therewith by, or the impact of the Transaction on, the holders of any other class of securities, creditors or other constituencies of
the Company or any other party. In addition, we express no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or
payable to any of the officers, directors or employees of the Company or any party, or class of such persons in connection with the Transaction, whether relative to the Consideration to be paid to the
holders of the Shares (other than Excluded Shares) pursuant to the Agreement or otherwise. Our opinion is necessarily based on financial, economic, monetary, currency, market and other conditions and
circumstances as in effect on, and the information made available to us as of, the date hereof, and we do not have any obligation or responsibility to update, revise or reaffirm this opinion based on
circumstances, developments or events occurring after the date hereof. Our opinion does not constitute a recommendation to any stockholder of the Company as to whether or not such holder should tender
Shares in connection with the Tender Offer, or to any stockholder of the Company or any other person as to how such stockholder or other person should vote (if applicable) with respect to the Merger
or otherwise act with respect to the Transaction or any other matter.
Our
financial advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company (in their capacity as directors
and not in any other capacity) in connection with and for purposes of its consideration of the Transaction. The issuance of this opinion was approved by the Centerview Partners LLC Fairness
Opinion Committee.
Based
upon and subject to the foregoing, including the various assumptions and limitations set forth herein, we are of the opinion, as of the date hereof, that the Consideration to be
paid to the holders of
Shares (other than Excluded Shares) pursuant to the Agreement is fair, from a financial point of view, to such holders.
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Very truly yours,
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/s/ Centerview Partners LLC
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CENTERVIEW PARTNERS LLC
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III-3
ANNEX IV
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW RIGHTS OF APPRAISAL
§ 262. Appraisal rights
(a) Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a
holder of record of stock in a corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of
this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or
§ 264 of this title:
(1) Provided,
however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be available for the
shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of
stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and
further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the
stockholders of the Surviving Corporation as provided in § 251(f) of this title.
(2) Notwithstanding
paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a. Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
(3) In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or
§ 267 of this title is not owned by the
parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) In
the event of an amendment to a corporation's certificate of incorporation contemplated by § 363(a) of this title, appraisal rights shall be
available as contemplated by § 363(b) of this title,
IV-1
and
the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word "amendment" substituted for
the words "merger or consolidation", and the word "corporation" substituted for the words "constituent corporation" and/or "surviving or resulting corporation".
(c) Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this
section, shall apply as nearly as is practicable.
(d) Appraisal
rights shall be perfected as follows:
(1) If
a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in
accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a
demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If
the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of
this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each
of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a
merger approved pursuant to § 251(h) of this title, within the later of the consummation of the tender or exchange offer contemplated by § 251(h) of this title
and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or
consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation
or (ii) the surviving or resulting corporation shall send such a second notice to all
IV-2
such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the
case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the tender or exchange offer contemplated by § 251(h) of
this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of
such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the
notice is given.
(e) Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation,
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later.
Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such
person's own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within
20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At
the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by
IV-3
certificates
to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such stockholder.
(h) After
the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court
shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment
of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the
effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e)
of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who
has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or
consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.
(l) The
shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
IV-4
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