Exhibit 10.1


 


Execution Version


 


 


EXECUTIVE TRANSITION
AND SEPARATION AGREEMENT


 


This
Executive Transition and Separation Agreement (this “Agreement”), is entered into as of the date set forth on the
signature page below (the “Execution Date”), by and between Vincent Milano (“you”) and Idera Pharmaceuticals,
Inc., a Delaware corporation (together with its wholly owned subsidiaries and affiliates, the “Company”).


 


BACKGROUND


 


WHEREAS,
you currently serve as President and Chief Executive Officer of the Company;


 


WHEREAS,
you and the Company are parties to that certain Severance and Change of Control Agreement (the “Severance Agreement”)
and that certain Invention, Non-Disclosure and Non-Competition Agreement (the “Restrictive Covenant Agreement”);


 


WHEREAS,
the Company intends to enter into that certain Agreement and Plan of Merger (the “Merger Agreement”) by and among
the Company; Bell Merger Sub I, Inc., a Delaware corporation and wholly-owned subsidiary of Idera; Bell Merger Sub II, LLC, a Delaware
limited liability company and wholly-owned subsidiary of Idera; and Aceragen, Inc., a Delaware corporation (“Aceragen”)
(the transactions contemplated by the Merger Agreement, the “Merger”, and the consummation of the Merger, the “Closing”);


 


WHEREAS,
following the Closing, the stockholders of the Company will vote to approve (i) the issuance of shares of Parent Common Stock (as defined
in the Merger Agreement) to the stockholders of Aceragen upon conversion of any and all shares of Parent Convertible Preferred Stock
(as defined in the Merger Agreement) in accordance with the terms of the Certificate of Designation of Preferences, Rights and Limitations
and (ii) an amendment to the Company’s certificate of incorporation to (x) increase the number of authorized shares of Parent Common
Stock, and (y) effect the a reverse stock split of all outstanding shares of Parent Common Stock (the “Approval”);


 


WHEREAS,
you and the Company have mutually agreed that your employment with the Company will end, and you will resign as an officer of the Company,
upon the Closing (the “Termination Date”);


 


WHEREAS,
you and the Company have mutually agreed that following the Termination Date, you will serve as non-employee chairman of the board of
directors of the Company (the “Board Agreement”); and


 


WHEREAS,
both you and the Company desire to enter into this Agreement to set forth the terms and conditions of the termination of your employment
with the Company, including the severance payable to you following the Termination Date.


 


NOW
THEREFORE, in consideration of the mutual promises set forth in this Agreement and of other good and valuable consideration, the sufficiency
of which you acknowledge, and intending to be legally bound hereby, you and the Company agree as follows:


 


1.           
Recitals.The foregoing recitals are hereby made part of this Agreement and are incorporated herein by reference.


 






     


     


    

 


2.           
General Terms of Separation.Regardless of whether you sign this Agreement, the Company will provide you with (a) any
earned and unpaid base salary through the Termination Date; (b) any earned and unpaid annual incentive bonus payable with respect to
any fiscal year which ended prior to the Termination Date; (c) any accrued but unused personal time off days; (d) reimbursement for any
outstanding expenses for which you have not been reimbursed and which are authorized and (e) any vested benefits under the Company’s
employee benefit plans in accordance with the terms of such plans, as accrued through the Termination Date (collectively, the “Accrued
Obligations”). The Accrued Obligations shall be paid following the Termination Date at such times and in accordance with such
plans and policies as would normally apply to such amounts or benefits. For the avoidance of doubt, all outstanding equity awards you
hold in the Company will continue to be governed by the terms and conditions of the applicable award agreements and/or the Merger Agreement,
as applicable.


 


3.           
Consideration. If you (a) sign and do not revoke this Agreement, (b) comply with the obligations set forth in this Agreement,
and (c) continue to comply with the restrictive covenants in the Restrictive Covenant Agreement, incorporated in Paragraph 7 below, then
the Company will provide you with the following severance payments and benefits (collectively, the “Consideration”),
in lieu of any severance payments and benefits you may be owed pursuant to the Severance Agreement:


 


(i)       
You will receive a prorated portion of your target bonus for the 2022 calendar year based on the period you were employed through
the Termination Date in the aggregate amount of $225,000 (the “Prorated Bonus”). The Prorated Bonus will be paid to
you in a lump sum in accordance with the Company’s regular payroll practices, within thirty (30) days following the Termination
Date.


 


(ii)     
You will receive $606,357, payable in substantially equal installments in accordance with the Company’s regular payroll
practices, over the twelve (12)-month period starting on the first payroll date following the Termination Date.


 


(iii)     
You will receive fully vested shares of common stock of the Company (“Common Stock”) equal to a number of shares,
calculated by dividing $800,000 by the volume-weighted average price per share of Common Stock based on the twenty (20) trading days
prior to the date of grant, rounded down to the nearest full share (the “Stock Consideration”). The Stock Consideration
will be granted as soon as practicable, but in no event more than thirty (30) days, following the Approval.


 


You
will not be eligible for the Consideration described in this Paragraph 3 unless the Company has received an executed copy of this Agreement,
which has not been revoked. You hereby acknowledge and agree that the Consideration is in full satisfaction of the Company’s obligations
under the Severance Agreement and any other agreement or understanding between you and the Company.


 






    2


     


    




 


4.           
General Release. In exchange for the consideration and other conditions set forth in this Agreement, you hereby generally
and completely release the Company, each of their affiliated entities, and their respective current and former directors, officers, employees,
shareholders, stockholders, partners, general partners, limited partners, managers, members, managing directors, operating affiliates,
agents, attorneys, predecessors, successors, Company and subsidiary entities, insurers, assigns and affiliated entities (collectively,
the “Released Parties”) of and from any and all claims, liabilities and obligations, both known and unknown, arising
from or related to events, acts, or omissions occurring prior to or on the date you sign this Agreement (collectively, the “Released
Claims”). The Released Claims include, but are not limited to: (a) all claims arising from or in any way related to your employment
or other participation in connection with any of the Released Parties, or the termination of that employment or participation, including
all claims under the Severance Agreement; (b) all claims related to compensation or benefits, including salary, bonuses, commissions,
vacation pay, expense reimbursements, severance pay, change-in- control payments, fringe benefits, or profit sharing; (c) all claims
for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (d) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (e) all federal, state,
and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising
under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (the “ADEA”), the Employee Retirement Income Security Act of 1974 (“ERISA”)
(including, but not limited to, claims for breach of fiduciary duty under ERISA), and the Older Workers Benefit Protection Act (the “OWBPA”).
In giving the releases set forth above, which include claims which may be unknown to you at present, you hereby expressly waive and relinquish
all rights and benefits under any law or legal principle in any jurisdiction with respect to your release of claims herein, including
but not limited to the release of unknown and unsuspected claims. Notwithstanding anything to the contrary in this Paragraph 4, you are
not prohibited from making or asserting and you are not waiving: (i) your rights under this Agreement; (ii) any claims for unemployment
compensation, workers’ compensation or state disability insurance benefits pursuant to the terms of applicable state laws; (iii)
any claim for vested benefits under any Company-sponsored retirement or welfare benefit plan; (iv) any other right that may not be released
under applicable law; and (v) your rights, if any, to indemnification pursuant to the Company’s organizational documents or any
D&O insurance policy.


 


5.          
Reports to Government Entities. Nothing in this Agreement or the Severance Agreement restricts or prohibits you from initiating
communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting
possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory
authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the
National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector
General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower
provisions of state or federal law or regulation. However, to the maximum extent permitted by law, you are waiving your right to receive
any individual monetary relief from the Company, or any others covered by the Released Claims resulting from such claims or conduct,
regardless of whether you or another party has filed them, and in the event you obtain such monetary relief the Company will be entitled
to an offset for the payments made pursuant to this Agreement. This Agreement does not limit your right to receive an award from any
Regulator that provides awards for providing information relating to a potential violation of law. You do not need the prior authorization
of the Company to engage in conduct protected by this paragraph, and you do not need to notify the Company that you have engaged in such
conduct. Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation
to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances
that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation
of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law. Pursuant to the Defend Trade
Secrets Act of 2016, you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure
of the trade secrets of the Company or any of its affiliates that is made by you (a) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation
of law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.


 


6.           
No Actions Pending Against the Company. You acknowledge and agree that that: (a) you are not aware of any facts that may
constitute violations of the Company’s policies and/or legal obligations; and (b) you have not filed any discrimination, wrongful
discharge, wage and hour, or any other complaints or charges against the Released Parties in any local, state or federal court, tribunal,
or administrative agency.


 


7.          
Restrictive Covenants. You expressly acknowledge that a condition your receipt of the Consideration set forth in Paragraph
3 is your continued compliance with the restrictive covenants set forth in the Restrictive Covenant Agreement, including, but not limited
to, the invention assignment, non-disclosure and non-competition provisions therein, which remain in full force and are incorporated
herein by reference.


 






    3


     


    




 


8.          
Withholding. All payments under this Agreement are subject to applicable tax withholding. You agree to remit the Company,
on the date you receive the Stock Consideration, an amount sufficient to satisfy any federal, state, and local taxes of any kind which
are due with respect to the Stock Consideration.


 


9.           
Compliance with Section 409A of the Code. This Agreement is intended to comply with the requirements of section 409A of
the Code or an exception, and shall be administered accordingly. Notwithstanding anything in the Agreement to the contrary, distributions
may only be made under the Agreement upon an event and in a manner permitted by section 409A to the extent applicable. Payments to be
made upon termination of employment under this Agreement may only be made upon a “separation from service” under section
409A. For purposes of section 409A, each payment shall be treated as a separate payment. In no event may you, directly or indirectly,
designate the calendar year of a payment.


 


10.         
Governing Law. This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.


 


11.         
Entire Agreement. This Agreement, the Board Agreement, and the Restrictive Covenant Agreement constitute the entire agreement
between the parties relating to the matters contained herein and supersedes any and all prior representations, agreements, written or
oral, expressed or implied.


 


12.        
Severability. In the event a court, arbitrator, or other entity with jurisdiction determines that any portion of this Agreement
(other than the general release clause) is invalid or unenforceable, the remaining portions of the Agreement shall remain in full force
and effect.


 


13.        
Headings; Days. Headings contained in this Agreement are for convenience of reference only and are not intended, and shall
not be construed, to modify, define, limit, or expand the intent of the parties as expressed in this Agreement, and they shall not affect
the meaning or interpretation of this Agreement. All references to a number of days throughout this Agreement refer to calendar days.


 


14.         
Representations. You agree and represent that (a) you have read carefully the terms of this Agreement, including the general
release; (b) you have had an opportunity to and have been advised by the Company to review this Agreement, including the general release,
with an attorney; (c) you understand the meaning and effect of the terms of this Agreement, including the general release; (d) you were
given twenty- one (21) days to determine whether you wished to sign this Agreement, including the general release; (e) your decision
to sign this Agreement, including the general release, is of your own free and voluntary act without compulsion of any kind; (f) no promise
or inducement not expressed in this Agreement has been made to you; and (g) you have adequate information to make a knowing and voluntary
waiver.


 


15.         
Revocation Period. If you sign this Agreement, you will retain the right to revoke it for seven (7) days (“Revocation
Period”). If you revoke this Agreement, you are indicating that you have changed your mind and do not want to be legally bound
by this Agreement. This Agreement shall not be effective until after the Revocation Period has expired without your having revoked it.
To revoke this Agreement, you must send a letter to the attention of the General Counsel of the Company. The letter must be received
within seven (7) days of your execution of this Agreement. If the seventh day is a Sunday or federal holiday, then the letter must be
received by the following business day. If you revoke this Agreement on a timely basis, you shall not be eligible for the Consideration
set forth in Paragraph 3 above.


 


16.         
Expiration Date. As noted above, you have twenty-one (21) days to decide whether you wish to sign this Agreement. If you
do not sign this Agreement on or before that time, then this Agreement is withdrawn and you will not be eligible for the Consideration
set forth in Paragraph 3 above.


 


[Signature Page Follows]


 






    4


     


    







 


IN
WITNESS WHEREOF, and intending to be legally bound hereby, you and the Company hereby execute the foregoing Executive Transition and
Separation Agreement as of the Execution Date set forth below.


 


	VINCENT MILANO	 	IDERA PHARMACEUTICALS,
    INC.
	 	 	 
	/s/ Vincent Milano	 	/s/ Bryant D. Lim 
	 	 	By:	Bryant D. Lim
	 	 	Title: 	Senior Vice President, General
    Counsel and Secretary
	 	 	 	 
	Date: 	September
    28, 2022 	 	Date:	September
    28, 2022 




 


[Signature Page to Separation
Agreement]