Nominees for Election as
Directors
J. Barrie Ward,
Ph.D. Dr. Ward has served as Chairman of the Board of Directors of AVANT since August 1998. Currently Dr. Ward is Chief
Executive Officer and a Director of KuDOS Pharmaceuticals Ltd. in Cambridge, England. Previously, he was Chairman of the Board of Directors and Chief
Executive Officer of Virus Research Institute, Inc. from July 1994 to August 1998. From 1984 to 1994, Dr. Ward was Director of the Microbiology
Division of Glaxo Research and Development Ltd. He is currently Chairman of the Board of Directors of Onyvax Ltd. and on the Board of Directors of
Biotica Technology Ltd.
Una S. Ryan,
Ph.D. Dr. Ryan has been Chief Executive Officer of AVANT since August 1996 and President, Chief Operating Officer and a
director of AVANT since May 1996. Dr. Ryan joined us as Vice President, Research and Chief Scientific Officer in May 1993. She is also Research
Professor of Medicine at the Whitaker Cardiovascular Institute of the Boston University School of Medicine. Prior to joining AVANT, Dr. Ryan was
Director of Health Sciences at Monsanto Company from January 1990 to November 1992 and Research Professor of Surgery, Medicine and Cell Biology at
Washington University School of Medicine from 1990 to 1993. Dr. Ryan is a member of the Governing Body of Biotechnology Industry Organizations
(BIO) Emerging Companies Section and serves on the Board of BIO and she is the Chairman of the Massachusetts Biotechnology Council. She is currently a
director of IQuum, Inc.
Harry H. Penner,
Jr. Mr. Penner has been a director since January 1997. He is currently Chairman, Chief Executive Officer and a director of
Marinus Pharmaceuticals, Inc. He is also President and Chief Executive Officer of Nascent BioScience, LLC, a firm engaged in the creation and
development of new biotechnology companies. In December 2001, he was appointed BioScience Advisor to the Governor and the State of Connecticut. From
1993 to 2001, he was President, Chief Executive Officer and a director of Neurogen Corporation. Previously, he served as Executive Vice President of
Novo Nordisk A/S and President of Novo Nordisk of North America, Inc. from 1988 to 1993. From 1985 to 1988 he was Executive Vice President and General
Counsel of Novo Nordisk A/S. He is Chairman of the Connecticut Board of Governors for Higher Education and has served as Chairman of the Board for the
Connecticut Technology Council and Co-Chairman of Connecticut United for Research Excellence. He currently serves on the Boards of Genaissance
Pharmaceuticals, Inc., BioStratum, Inc., Rib-X Pharmaceuticals, Inc., Ikonisys, Inc., Rhei Pharmaceuticals, Inc. and RxGen, Inc.
Peter A.
Sears. Mr. Sears has been a director since May 1999. Since August 2004, Mr. Sears has served as a consultant to Quaker
BioVentures, a venture capital fund. He retired in 1999 as Vice President, Business Investments, SmithKline Beecham Corporation (now GlaxoSmithKline),
and President and Founder of S.R. One, Limited, SmithKlines venture capital fund. He was with SmithKline from 1963 and S.R. One, Limited from
1985 to 1999. Since 1997 through June 2003, Mr. Sears was Adjunct Professor of Management, Johnson School of Management, Cornell University. He
currently serves on the Board of Directors of Viral Therapeutics, Inc., Pinnacle Pharmaceuticals, Inc. and Immune Control, Inc.
Karen Shoos
Lipton. Ms. Lipton has been a director since May 2001. Ms. Lipton was appointed Chief Executive Officer of the American
Association of Blood Banks in October 1994. Previously she has held senior positions at the American Red Cross since 1984, including Acting Senior Vice
President, Biomedical Services (1993-1994) and Secretary and General Counsel (1990-1993). Prior to the American Red Cross, Ms. Lipton was a lawyer in
private practice. Ms. Lipton currently serves on the Department of Health and Human Services, Advisory Committee on Blood Safety and
Availability.
Larry
Ellberger. Mr. Ellberger has been a director since August 2003. He is currently a Founder and Principal of Healthcare
Ventures Associates, Inc., a consulting firm for the pharmaceutical, biotechnology and medical device industries. From 2000 to 2003, he was Senior Vice
President of Powderject plc. He served as a director of Powderject since 1997. Previously, Mr. Ellberger was an employee of W.R. Grace & Co. from
1995 to 1999, serving as Chief Financial Officer from 1996 and Senior Vice President, Strategic Planning and Development from 1995. From 1975 to 1995,
Mr. Ellberger held numerous senior executive positions at American Cyanamid Company, serving the last four years as Vice President, Corporate
Development for the company. Mr. Ellberger currently serves as a Director and Chairman of the Audit Committee for PDI, Inc.
4
Executive Officers
The following persons are executive officers who are
not directors of AVANT. Officers are elected annually by the Board of Directors until their successors are duly elected and qualified.
Name of Individual
|
|
|
|
Age
|
|
Position and Office
|
M. Timothy
Cooke, Ph.D. |
|
|
|
|
47 |
|
|
Chief Operating Officer |
Avery W.
Catlin |
|
|
|
|
56 |
|
|
Senior Vice President, Chief Financial Officer and Secretary |
Henry C.
Marsh, Jr., Ph.D. |
|
|
|
|
54 |
|
|
Vice
President, Research |
Taha Keilani,
M.D. |
|
|
|
|
49 |
|
|
Vice
President, Medical and Regulatory Affairs |
M. Timothy Cooke,
Ph.D. Dr. Cooke joined AVANT in August 2004 as Senior Vice President, Commercial Development. In March 2004, he was promoted
to Chief Operating Officer. Prior to joining the company, he was Chief Executive Officer and a Director of Mojave Therapeutics, Inc., an early stage
biopharmaceutical company developing therapeutic vaccines based on heat shock protein technology. Mojave Therapeutics was purchased by Antigenics in
July 2004. From 1991 to 2000, Dr. Cooke held a number of marketing and sales positions at the Merck Vaccine Division, most recently as Senior Director,
Worldwide Marketing Planning. He was a founding member of Merck Vaccine Divisions European and Eastern European operations, negotiated and
launched the Aventis Pasteur-MSD European vaccines joint venture and created a new vaccine-focused sales force in the United States. Dr. Cooke holds a
Ph.D. in bio-organic chemistry from Columbia University and an MBA from Columbia Business School.
Avery W. Catlin. Mr.
Catlin joined AVANT in January 2000. Prior to joining us, he served as Vice President, Operations and Finance, and Chief Financial Officer of Endogen,
Inc., a public life science research products company, from 1996 to 1999. From 1992 to 1996, Mr. Catlin held various financial positions at Repligen
Corporation, a public biopharmaceutical company, serving the last two years as Chief Financial Officer. Earlier in his career, Mr. Catlin held the
position of Chief Financial Officer at MediSense, Inc., a Massachusetts-based medical device company.
Henry C. Marsh, Jr.,
Ph.D. Dr. Marsh joined AVANT as Senior Scientist in 1986 and has been Vice President, Research since May 1998. Prior to
joining us, he was employed as a scientist at Abbott Laboratories of North Chicago and the Research Triangle Institute in North
Carolina.
Taha Keilani, MD, Dr.
Keilani joined AVANT in June 2004 as Vice President of Medical and Regulatory Affairs. Prior to joining AVANT, Dr. Keilani had more than eighteen years
of clinical research experience in the pharmaceutical and biotechnology industries and in academic research. His clinical development experience has
been focused primarily in immunology and chronic inflammatory disease. Previously, he was Medical Director of Clinical Development and Regulatory
Affairs at Serono, Inc. where he was project leader on three global development programs. Between 1996 and 2000, he was leading the transplant R&D
team at Fujisawa Healthcare, Inc. and before that he was Research Assistant Professor of Medicine at Northwestern University Medical School and VA
Lakeside Medical Center in Chicago.
The Board of Directors and Its Committees
Board of
Directors. AVANT is managed by a six member Board of Directors, a majority of whom are independent of our management. Our
Board of Directors met six times in 2004. Each of the Directors attended at least 75% of the aggregate of (i) the total number of meetings of our Board
of Directors (held during the period for which such directors served on the Board of Directors) and (ii) the total number of meetings of all committees
of our Board of Directors on which the Director served (during the periods for which the director served on such committee or committees), except Mr.
Penner, who attended 67% of the Audit Committee meetings in 2004.
5
Audit Committee. The Board of Directors has
established an Audit Committee consisting of Peter A. Sears, Chairman, Harry H. Penner, Jr., and Larry Ellberger. The Audit Committee makes
recommendations concerning the engagement of independent public accountants, reviews with the independent public accountants the scope and results of
the audit engagement, approves professional services provided by the independent public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees, and reviews the adequacy of our internal accounting controls. Each member of the Audit
Committee is independent as that term is defined in the rules of the Securities and Exchange Commission and the applicable listing
standards of Nasdaq. The Board has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on
the Committee. The Board has designated Larry Ellberger as an audit committee financial expert, as defined under the applicable rules of
the Securities and Exchange Commission and the Nasdaq. The Audit Committee met nine times during 2004. Our Board has adopted an Audit Committee
Charter, which is available for viewing at www.avantimmune.com.
Compensation
Committee. The Board of Directors has established a Compensation Committee consisting of J. Barrie Ward, Chairman, Karen
Shoos Lipton and Larry Ellberger. The primary function of the Compensation Committee is to assist the Board in the establishment of compensation for
the Chief Executive Officer and, upon her recommendation, to approve the compensation of other officers and senior employees and to approve certain
other personnel and employee benefit matters. The Compensation Committee met once during 2004. Our Board has adopted a Compensation Committee Charter,
which is available for viewing at www.avantimmune.com.
Nominating and Corporate Governance
Committee. The Board of Directors has established a Nominating and Corporate Governance Committee consisting of Karen Shoos
Lipton, Chairman, Harry H. Penner, Jr., and Peter A. Sears. The primary function of the Nominating and Corporate Governance Committee is to assist the
Board in reviewing, investigating and addressing issues regarding Board composition, policy and structure; membership on Board committees; and other
matters regarding the governance of the Company. The Nominating and Corporate Governance Committee met once during 2004. Our Board has adopted a
Nominating and Corporate Governance Charter, which is available for viewing at www.avantimmune.com. Each member of the Nominating and Corporate
Governance Committee is independent as that term is defined in the rules of the Securities and Exchange Commission and the applicable
listing standards of Nasdaq.
The process followed by the Nominating and Corporate
Governance Committee to identify and evaluate candidates includes requests to Board members and others for recommendations, meetings from time to time
to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the
Committee and the Board. All nominees must have, at a minimum, high personal and professional integrity, exceptional ability and judgment, and be
effective in collectively serving the long-term interests of all stockholders. Other qualifications that may be considered by the Committee are
described in the Nominating and Corporate Governance Charter.
Stockholders may recommend individuals to the
Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names and background to the
Secretary of the Company at the address set forth below under Stockholder Communications. All such recommendations will be forwarded to the
Nominating and Corporate Governance Committee, which will review and consider only such recommendations if appropriate biographical and other
information is provided, as described below, on a timely basis. All securityholder recommendations for director candidates must be submitted to the
Company not less than 120 calendar days prior to the date on which the Companys proxy statement was released to stockholders in connection with
the previous years annual meeting, and must include the following information:
6
|
|
the name and address of record of the
securityholder; |
|
|
a representation that the securityholder is a record holder of
the Companys securities, or if the securityholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the
Securities Exchange Act of 1934; |
|
|
the name, age, business and residential address, educational
background, current principal occupation or employment, and principal occupation or employment for the preceding five (5) full fiscal years of the
proposed director candidate; |
|
|
a description of the qualifications and background of the
proposed director candidate which addresses the minimum qualifications and other criteria for Board membership approved by the Board from time to time
and set forth in the Committees written charter; |
|
|
A description of any arrangements or understandings between the
securityholder and the proposed director candidate; and |
|
|
The consent of the proposed director candidate to be named in
the proxy statement relating to the Companys annual meeting of stockholders and to serve as a director if elected at such annual
meeting. |
Assuming that appropriate information is provided
for candidates recommended by stockholders, the Committee will evaluate those candidates by following substantially the same process, and applying
substantially the same criteria, as for candidates submitted by Board members or other persons, as described above and as set forth in their written
charter.
Stockholder Communications
The Board will give appropriate attention to written
communications that are submitted by stockholders, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee
charters, and subject to advice from legal counsel, the Secretary of the Company is primarily responsible for monitoring communications from
stockholders and for providing copies or summaries of such communications to the Board as he considers appropriate.
Communications from stockholders will be forwarded
to all directors if they relate to important substantive matters or if they include suggestions or comments that the Secretary considers to be
important for the Board to know. Communication relating to corporate governance and corporate strategy are more likely to be forwarded to the Board
than communications regarding personal grievances, ordinary business matters, and matters as to which the Company tends to receive repetitive or
duplicative communications.
Stockholders who wish to send communications to the
Board should address such communications to: The Board of Directors, AVANT Immunotherapeutics, Inc., 119 Fourth Avenue, Needham, MA 02494, Attention:
Corporate Secretary.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of
1934, as amended, requires AVANTs directors, officers and key employees, and persons who are beneficial owners of more than 10% of a registered
class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the
SEC). Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish AVANT 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, 2004, all Section 16(a) filing requirements applicable to such persons
were satisfied.
7
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and
Ethics that applies to our directors, officers, and employees. The purpose of the Code of Business Conduct and Ethics is to deter wrongdoing and to
promote, among other things, honest and ethical conduct and to ensure to the extent possible that our business is conducted in a consistently legal and
ethical manner. Our Code of Business Conduct and Ethics is publicly available on our website at www.avantimmune.com. If we make any substantive
amendments to the Code of Business Conduct and Ethics or grant any waiver, including any implicit waiver from a provision of the Code of Business
Conduct and Ethics to our directors or executive officers, we will disclose the nature of such amendments or waiver on our website or in a current
report on Form 8-K.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the amount of common
stock beneficially owned as of March 1, 2005 by the following people:
|
|
each director and nominee for director; |
|
|
the Chief Executive Officer and the other most highly
compensated executive officers whose total salary and bonus exceeded $100,000 during 2004; |
|
|
all directors and officers as a group; and |
|
|
each person known by AVANT to hold more than 5% of our
outstanding common stock. |
Name and Business Address of Beneficial Owners*
|
|
|
|
Amount and Nature of Beneficial Ownership (1)
|
|
Percentage of Common Stock (2)
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
J. Barrie
Ward, Ph.D. |
|
|
|
|
496,748 (3 |
) |
|
|
** |
|
Una S. Ryan,
Ph.D. |
|
|
|
|
1,284,413 (4 |
) |
|
|
1.70 |
% |
Harry H.
Penner, Jr. |
|
|
|
|
95,000 (5 |
) |
|
|
** |
|
Peter A.
Sears |
|
|
|
|
142,739 (6 |
) |
|
|
** |
|
Karen Shoos
Lipton |
|
|
|
|
50,000 (7 |
) |
|
|
** |
|
Larry
Ellberger |
|
|
|
|
30,000 (8 |
) |
|
|
** |
|
M. Timothy
Cooke, Ph.D. |
|
|
|
|
|
|
|
|
|
|
Avery W.
Catlin |
|
|
|
|
236,750 (9 |
) |
|
|
** |
|
Henry C.
Marsh, Jr., Ph. D. |
|
|
|
|
136,935 (10 |
) |
|
|
** |
|
Taha Keilani,
M.D. |
|
|
|
|
500 |
|
|
|
** |
|
|
5%
Holders
|
|
|
|
|
|
|
|
|
|
|
None |
|
|
|
|
|
|
|
|
|
|
|
All
Directors and executive officers as a group |
|
|
|
|
2,473,085 (11 |
) |
|
|
3.24 |
% |
(Consisting
of 10 persons) |
|
|
|
|
|
|
|
|
|
|
* |
|
Unless otherwise indicated, the address is c/o AVANT
Immunotherapeutics, Inc., 119 Fourth Avenue, Needham, Massachusetts 02494-2725. |
(1) |
|
Unless otherwise indicated, the persons shown have sole voting
and investment power over the shares listed. |
(2) |
|
Common stock includes all outstanding common stock plus, as
required for the purpose of determining beneficial ownership (in accordance with Rule 13d-3(d)(1) of the Securities Exchange |
8
|
|
Act of 1934, as amended), all common stock subject to any right
of acquisition, through exercise or conversion of any security, within 60 days of the record date. |
(3) |
|
Includes 128,833 shares of common stock issuable upon exercise
of options, which are vested or will vest within 60 days of the record date. The business address of Dr. Ward is KuDOS Pharmaceuticals Ltd., 327
Cambridge Science Park, Cambridge CB4 OW9, England. |
(4) |
|
Includes 1,085,000 shares of common stock issuable upon exercise
of options, which are vested or will vest within 60 days of the record date. Includes 100,000 Restricted Stock Units, which are vested or will vest
within 60 days of the record date. Includes 32,000 shares owned by Dr. Ryans husband, of which Dr. Ryan disclaims beneficial
ownership. |
(5) |
|
Includes 90,000 shares of common stock issuable upon exercise of
options, which are vested or will vest within 60 days of the record date. The business address of Mr. Penner is Marinus Pharmaceuticals, Inc., 21
Business Park Drive, Branford, Connecticut 06405. |
(6) |
|
Includes 70,000 shares of common stock issuable upon exercise of
options, which are vested or will vest within 60 days of the record date. The business address of Mr. Sears is Quaker BioVentures, 1811 Chestnut
Street, Philadelphia, Pennsylvania 19103. |
(7) |
|
Includes 50,000 shares of common stock issuable upon exercise of
options, which are vested or will vest within 60 days of the record date. The business address of Ms. Lipton is American Association of Blood Banks,
8101 Glenbrook Road, Bethesda, MD 20814. |
(8) |
|
Includes 30,000 shares of common stock issuable upon exercise of
options, which are vested or will vest within 60 days of the record date. The business address of Mr. Ellberger is Healthcare Ventures Associates, 23
Fawn Drive, Suite B, Livingston, NJ 07039. |
(9) |
|
Includes 226,750 shares of common stock issuable upon exercise
of options, which are vested or will vest within 60 days of the record date. |
(10) |
|
Includes 131,100 shares of common stock issuable upon exercise
of options, which are vested or will vest within 60 days of the record date. |
(11) |
|
Includes 1,811,683 shares of common stock issuable upon exercise
of options which are vested or will vest within 60 days of the record date. |
9
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors who are not employees of AVANT are each
entitled to receive a retainer fee of $12,000 each fiscal year. Each Board committee Chairman receives an additional retainer fee of $3,000. In
addition, each non-employee director is entitled to receive $1,500 for attendance at each meeting of the Board of Directors and $750 for attendance at
each meeting of a Board committee. The AVANT 1999 Stock Option and Incentive Plan provides for annual automatic grants to each independent director of
an option to purchase 10,000 shares of common stock with vesting after one year, a ten year term, and an exercise price equal to the fair market value
of the common stock on the day of grant. As of the record date, the current independent directors had the following stock options outstanding: J.
Barrie Ward128,833; Harry H. Penner, Jr.90,000; Peter A. Sears70,000, Karen Shoos Lipton50,000 and Larry
Ellberger30,000.
Executive Compensation
Summary Compensation Table. The following
table shows, for the fiscal years ended December 31, 2004, December 31, 2003 and December 31, 2002, the cash compensation paid by AVANT, as well as
other compensation paid or accrued for these fiscal years, to the Chief Executive Officer and the other most highly compensated officers whose total
compensation for 2004 exceeded $100,000.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation Awards
|
|
|
|
|
|
|
|
Annual Compensation
|
|
Name and Principal Position
|
|
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Restricted Stock Awards ($)
|
|
Securities Underlying Options (#)
|
|
All Other Compensation (1) ($)
|
Una S. Ryan,
Ph.D. |
|
|
|
|
2004 |
|
|
|
380,000 |
|
|
|
45,600 |
|
|
|
832,000 |
(1) |
|
|
|
|
|
|
3,940 |
|
President
and Chief |
|
|
|
|
2003 |
|
|
|
362,000 |
|
|
|
86,880 |
|
|
|
1,104,000 |
(1) |
|
|
100,000 |
|
|
|
3,700 |
|
Executive
Officer |
|
|
|
|
2002 |
|
|
|
350,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,300 |
|
|
M. Timothy
Cooke, Ph.D. (3) |
|
|
|
|
2004 |
|
|
|
96,923 |
|
|
|
6,048 |
|
|
|
|
|
|
|
200,000 |
|
|
|
180 |
|
Chief
Operating Officer |
|
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avery W.
Catlin |
|
|
|
|
2004 |
|
|
|
223,891 |
|
|
|
13,433 |
|
|
|
|
|
|
|
12,000 |
|
|
|
3,045 |
|
Senior
Vice President and
|
|
|
|
|
2003 |
|
|
|
215,280 |
|
|
|
25,834 |
|
|
|
|
|
|
|
10,000 |
|
|
|
2,779 |
|
Chief
Financial Officer |
|
|
|
|
2002 |
|
|
|
208,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,749 |
|
|
Henry C.
Marsh, Jr., Ph.D. |
|
|
|
|
2004 |
|
|
|
180,876 |
|
|
|
12,000 |
|
|
|
|
|
|
|
12,000 |
|
|
|
2,461 |
|
Vice
President, Research |
|
|
|
|
2003 |
|
|
|
173,919 |
|
|
|
20,870 |
|
|
|
|
|
|
|
10,000 |
|
|
|
2,346 |
|
|
|
|
|
|
2002 |
|
|
|
168,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,093 |
|
|
Taha Keilani,
M.D. (4) |
|
|
|
|
2004 |
|
|
|
128,269 |
|
|
|
6,900 |
|
|
|
|
|
|
|
50,000 |
|
|
|
934 |
|
Vice
President, Medical and |
|
|
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
Affairs |
|
|
|
|
2002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On November 5, 2004, the Company awarded Dr. Ryan 400,000
Restricted Stock Units, which were valued at $832,000 based on $2.08 per share, the closing price of AVANTs common stock on the award date. On
September 18, 2003, the Company awarded Dr. Ryan 400,000 Restricted Stock Units, which were valued at $1,104,000 based on $2.76 per share, the closing
price of AVANTs common stock on the award date. The value of all Restricted Stock Units as of December 31, 2004 was $1,608,000 based |
10
|
|
on $2.01 per share, the closing price of AVANTs common
stock on that date. The Restricted Stock Units vest over four years. In the event that AVANT pays a stock or cash dividend on its common stock,
dividend equivalents will be paid on the Restricted Stock Units. |
(2) |
|
Includes AVANTs matching cash contribution to the 401(k)
Savings Plan of each named executive officer and premiums paid for life insurance under the Companys nondiscriminatory group plan for each named
executive officer. |
(3) |
|
Dr. Cooke joined AVANT on August 2, 2004. |
(4) |
|
Dr. Keilani joined AVANT on June 7, 2004. |
Options Granted in Last Fiscal Year
The following table sets forth each grant of stock
options made during the 2004 fiscal year to each of the executive officers named in the Summary Compensation Table above:
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value at Assumed Annual Rates of Price
Appreciation for Option Term
|
|
|
|
|
|
Individual Grants
|
|
Name
|
|
|
|
Number of Securities Underlying Options Granted (#)
|
|
Percent of Total Options Granted to Employees in Fiscal
Year (1)
|
|
Exercise Per Share Price ($/Sh) (2)
|
|
Expiration Date
|
|
5% ($)
|
|
10% ($)
|
Una S. Ryan,
Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Timothy
Cooke, Ph.D. |
|
|
|
|
200,000 |
|
|
|
41 |
% |
|
|
1.9300 |
|
|
|
08/02/14 |
|
|
|
242,753 |
|
|
|
615,185 |
|
Avery W.
Catlin |
|
|
|
|
12,000 |
|
|
|
2 |
% |
|
|
2.7650 |
|
|
|
01/02/14 |
|
|
|
20,867 |
|
|
|
52,880 |
|
Henry C. Marsh,
Jr., Ph.D. |
|
|
|
|
12,000 |
|
|
|
2 |
% |
|
|
2.7650 |
|
|
|
01/02/14 |
|
|
|
20,867 |
|
|
|
52,880 |
|
Taha Keilani,
M.D. |
|
|
|
|
50,000 |
|
|
|
10 |
% |
|
|
2.5850 |
|
|
|
06/07/14 |
|
|
|
81,285 |
|
|
|
205,991 |
|
(1) |
|
During the 2004 fiscal year, a total of 274,000 stock options
were granted to the executive officers named in the Summary Compensation Table above. These options vest over four years and have a ten-year term.
During 2004, a total of 485,000 stock options were granted to employees of AVANT. |
(2) |
|
Equal to the average of the high and low market prices of the
common stock on the grant date. |
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth, for each of the
executive officers named in the Summary Compensation Table above, the shares of common stock acquired and the value realized in each exercise of stock
options during the 2004 fiscal year and the fiscal year end number and value of unexercised options:
|
|
|
|
|
|
|
|
Number of Securities Underlying Unexercised Options at Fiscal
Year End (#)
|
|
Value of Unexercised In-the-Money Options at Fiscal Year End (1)
($)
|
|
Name
|
|
|
|
Shares Acquired on Exercise (#)
|
|
Value Realized ($)
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
Una S. Ryan,
Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
|
1,060,000 |
|
|
|
100,000 |
|
|
|
258,270 |
|
|
|
65,250 |
|
M. Timothy
Cooke, Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
16,000 |
|
Avery W.
Catlin |
|
|
|
|
|
|
|
|
|
|
|
|
221,250 |
|
|
|
25,750 |
|
|
|
2,175 |
|
|
|
6,525 |
|
Henry C. Marsh,
Jr., Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
|
125,600 |
|
|
|
10,000 |
|
|
|
10,795 |
|
|
|
35,775 |
|
Taha Keilani,
M.D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
(1) |
|
Based on the $2.01 per share closing price of AVANTs
common stock on December 31, 2004. |
11
Employment Contracts, Termination of Employment and Change-of-Control
Arrangements
Dr. Ryan entered into an agreement with AVANT on
August 20, 1998 which was amended and restated as of December 23, 2002 and again as of September 18, 2003. The term of the agreement is for one (1)
year with rolling automatic one-year extensions. If prior to a change in control (as defined in the AVANT Immunotherapeutics, Inc. 1999 Stock Option
and Incentive Plan), Dr. Ryans employment is terminated by the Company without cause (as defined in the agreement), Dr. Ryan will be eligible to
receive a lump sum amount equal to one years salary, at the rate then in effect, and continuation of group health plan benefits for a period of
up to twelve (12) months. If within a year after a change in control, Dr. Ryans employment is terminated by the Company without cause or by Dr.
Ryan for good reason (as defined in the agreement), or if a change in control occurs within one (1) year after Dr. Ryan is terminated without cause by
the Company, Dr. Ryan is entitled to receive a lump sum amount equal to three (3) times the base amount (as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended) applicable to Dr. Ryan, less one dollar ($1.00). Such severance may be further reduced to the extent
necessary to preserve the Companys tax deduction.
Dr. Cooke entered into a letter agreement with AVANT
on June 10, 2004 (the Letter Agreement), which provides for the Companys employment of Dr. Cooke, as a Senior Vice President of
Commercial Development, on an at-will basis, beginning on June 21, 2004. Under the terms of the Letter Agreement, if (1) there has been a Change of
Control of the Company (as defined in the Letter Agreement) and Dr. Cookes employment is thereafter terminated by Dr. Cooke for other than Good
Reason (as defined in the Letter Agreement), or (2) there has been a Change of Control of the Company and Dr. Cookes employment is thereafter
terminated for Cause (as defined in the Letter Agreement) by the Company, death, Disability or Retirement (each as defined in the Letter Agreement),
then no benefits shall be payable to Dr. Cooke. If Dr. Cookes employment is terminated within one (1) year following a Change in Control of the
Company by Dr. Cooke for Good Reason or by the Company other than for Cause, death, Disability or Retirement, then Dr. Cookes benefits shall be
those described in the Letter Agreement, including the continuance of Dr. Cookes base salary for 12 months and a 100% vesting of all unvested
options. On June 14, 2004 Dr. Cookes employment terms were amended (the Amended Letter Agreement) such that the Company agreed to pay
Dr. Cooke six months of severance (at the rate of his final base pay) if Dr. Cookes employment is terminated by the Company without cause.
This Amended Letter Agreement also allows for Dr. Cooke to receive health and dental benefits during this severance period. Dr. Cooke has since been
promoted to Chief Operating Officer, however, his employment terms pursuant to this Letter Agreement remain the same.
Mr. Catlin has an agreement with AVANT under which
he is eligible for a severance payment of twelve months base salary, continuation of health insurance benefits and 100% vesting of all stock
option grants in the event of his termination following a change-of-control, as defined in the AVANT Immunotherapeutics, Inc. 1999 Stock Option and
Incentive Plan.
12
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of
Directors, which is comprised of non-employee directors, is responsible for establishing and administering the policies governing the compensation of
AVANTs employees, including salary, bonus and stock option grants. The policy of the Compensation Committee is to compensate our employees with
competitive salaries based on their level of experience and job performance. All permanent employees, including executive officers, are eligible for
annual bonus awards based on achievement of AVANTs strategic corporate goals, and participation in our stock option program. The bonus awards and
stock option grants are made in accordance with the AVANT Performance Plan and 1999 Stock Option and Incentive Plan. The Compensation Committee is also
responsible for the administration of our 1994 Employee Stock Purchase Plan, in which employees participate on a voluntary basis.
In order to both attract and retain experienced and
qualified executives to manage AVANT, the Compensation Committees policy on executive compensation is to (i) pay salaries which are competitive
with the salaries of executives in comparable positions in the biotechnology industry, and (ii) allow for additional compensation upon achievement of
goals under the Performance Plan and through the appreciation of stock-based incentive awards. This policy is designed to have a significant portion of
each executives total compensation be tied to AVANTs progress in order to incentivize the executive to fully dedicate himself or herself to
achievement of corporate goals, and to align the executives interest with those of our stockholders through equity incentive
compensation.
Each executive officer (except the Chief Executive
Officer whose performance is reviewed by the Compensation Committee) has an annual performance review with the Chief Executive Officer who makes
recommendations on salary increases, promotions and stock option grants to the Compensation Committee. The recommended salary increases are based on
the average salary increases expected in the biotechnology industry in the Boston, Massachusetts area, with the salaries in 2004 either at or slightly
above the average of the salaries paid to persons in comparable positions using an independently prepared 2004 employee compensation survey of over 400
biotechnology companies.
The bonus award is based on achievement of
AVANTs strategic goals which are set at the beginning of each fiscal year and measured against performance at the end of the year by AVANT in
accordance with the Performance Plan. For 2004 two sets of goals were applicable to all employees, including the executive officers: (i) overall
corporate goals and (ii) goals applicable to the therapeutic programs. Both sets of goals were allocated between specific product and financial
performance targets.
Dr. Una Ryan, our President and Chief Executive
Officer, received a salary increase of 5% in 2004. Dr. Ryans current base salary, which reflects the salary increase, is within the range of base
salaries paid to other Chief Executive Officers in similar sized, publicly traded companies in the biotechnology industry, based on the previously
referenced 2004 employee compensation survey. As discussed above, the Compensation Committee determined that Dr. Ryan had met certain milestones in
2004 and that a cash payout of $45,600 would be made to Dr. Ryan under the Performance Plan for 2004.
On January 2, 2004, Dr. Marsh and Mr. Catlin were
granted options to purchase 12,000 shares each of AVANT common stock at an exercise price of $2.77. On June 7, 2004, Dr. Keilani was granted options to
purchase 50,000 shares of AVANT common stock at an exercise price of $2.59. On August 2, 2004, Dr. Cooke was granted options to purchase 200,000 shares
of AVANT common stock at an exercise price of $1.93. These options vest over four years and have a ten-year term.
Compensation Committee
J. Barrie Ward,
Chairman
Karen Shoos Lipton
Larry Ellberger
13
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors
was composed of three non-employee directors during the year, Messrs. J. Barrie Ward, Karen Shoos Lipton and Larry Ellberger. None of these
Compensation Committee members is an officer or employee of AVANT. Dr. Ward was formerly an employee of AVANT and was a consultant for the Company
until December 31, 2004. Dr. Ward did not participate in actions or discussions with respect to his own compensation. No Compensation Committee
interlocks between AVANT and another entity exist.
REPORT OF THE AUDIT COMMITTEE
The undersigned members of the Audit Committee of
the Board of Directors of AVANT submit this report in connection with the committees review of the financial reports for the fiscal year ended
December 31, 2004 as follows:
1. |
|
The Audit Committee has reviewed and discussed with management
the audited financial statements for AVANT for the fiscal year ended December 31, 2004. |
2. |
|
The Audit Committee has discussed with representatives of
PricewaterhouseCoopers LLP the matters which are required to be discussed with them under the provisions of SAS 61. That Statement of Accounting
Standards requires the auditors to ensure that the Audit Committee received information regarding the scope and results of the audit.
PricewaterhouseCoopers LLP has also communicated with the Audit Committee on matters required by Rule 2-07 of Regulation S-X. |
3. |
|
The Audit Committee has discussed with PricewaterhouseCoopers
LLP, the independent public accounting firm, the auditors independence from management and AVANT including the matters in the written disclosures
and the letter from the independent auditors required by the Independence Standards Board, Standard No. 1. |
In addition, the Audit Committee considered whether
the provision of information technology services or other non-audit services by PricewaterhouseCoopers LLP is compatible with maintaining its
independence. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board
has approved) that the audited financial statements be included in AVANTs Annual Report on Form 10-K for the fiscal year ended December 31, 2004
for filing with the Securities and Exchange Commission.
Audit Committee
Peter A. Sears,
Chairman
Harry H. Penner, Jr.
Larry Ellberger
14
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has approved the engagement of
PricewaterhouseCoopers, LLP as the Companys independent registered public accounting firm. We expect that a representative from
PricewaterhouseCoopers, LLP will be present at the annual meeting to make a statement if he or she desires to do so and to respond to appropriate
questions.
Audit Fees
Represents fees for professional services provided
in connection with the audit of the Companys annual audited financial statements and reviews of the Companys quarterly financial
statements, advice on accounting matters directly related to the audit and audit services provided in connection with other statutory or regulatory
filings. Fees, including out of pocket expenses, for the fiscal year 2004 audit and the quarterly reviews of Forms 10-Q during fiscal 2004 were
$248,320, of which an aggregate amount of $79,400 had been billed through December 31, 2004. Fiscal 2004 includes $148,070 for assurance services
provided in connection with the assessment and testing of internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Audit fees for
fiscal 2003, including out of pocket expenses, were $90,300.
Audit-Related Fees
Audit-related fees are for assurance and other
activities not explicitly related to the audit of the Companys financial statements, and consisted principally of fees for consultations
concerning financial accounting and reporting standards. Audit-related fees, including out of pocket expenses, for fiscal year 2004 were $39,500, of
which an aggregate amount of $39,500 had been billed through December 31, 2004. Audit-related fees for fiscal 2003, including out of pocket expenses,
were $23,000.
Tax Fees
Tax fees are associated with tax compliance, tax
advice, tax planning and tax preparation services. In 2004, we engaged another public accounting firm to perform these services. For fiscal year 2003,
tax fees, including out of pocket expenses, billed by PricewaterhouseCoopers, LLP were $25,220.
All Other Fees
No other fees were billed by PricewaterhouseCoopers,
LLP in fiscal years 2004 and 2003.
The Audit Committee is responsible for appointing,
setting compensation and overseeing the work of the independent auditors. The Audit Committee has established a policy regarding pre-approval of all
auditing services and the terms thereof and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or
the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to the Company by the independent auditor. However,
the pre-approval requirement may be waived with respect to the provision of non-audit services for the Company if the de minimus provisions
of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
The Audit Committee has considered whether the
provision of Audit-Related Fees, Tax Fees, and all other fees as described above is compatible with maintaining PricewaterhouseCoopers, LLPs
independence and has determined that such services for fiscal years 2004 and 2003 were compatible. All such services were approved by the Audit
Committee pursuant to Rule 2-01 of Regulation S-X under the Exchange Act to the extent that rule was applicable.
15
STOCK PERFORMANCE GRAPH
The graph below represents a comparison of the
cumulative shareholder return on the common stock for AVANTs last five fiscal years, including the fiscal year ended December 31, 2004, with the
cumulative total stockholder return of the Nasdaq Stock Market (U.S.) Index and Nasdaq Pharmaceutical Stock Index (which is made up of companies quoted
on the Nasdaq National Market whose Primary Industrial Classification Code is 283, Pharmaceutical Companies). The graph assumes an investment of $100
made on December 31, 1999 in AVANTs common stock and in the two indexes.
|
|
|
|
12/31/99
|
|
12/29/00
|
|
12/31/01
|
|
12/31/02
|
|
12/31/03
|
|
12/31/04
|
AVANT
Immunotherapeutics, Inc. |
|
|
|
$ |
100 |
|
|
$ |
278 |
|
|
$ |
162 |
|
|
$ |
46 |
|
|
$ |
111 |
|
|
$ |
81 |
|
Nasdaq Stock
Market (U.S.) Index |
|
|
|
$ |
100 |
|
|
$ |
60 |
|
|
$ |
48 |
|
|
$ |
33 |
|
|
$ |
49 |
|
|
$ |
54 |
|
Nasdaq
Pharmaceutical Stock Index |
|
|
|
$ |
100 |
|
|
$ |
125 |
|
|
$ |
106 |
|
|
$ |
69 |
|
|
$ |
101 |
|
|
$ |
107 |
|
16
OTHER
MATTERS
Expenses of Solicitation
The expense of preparing, printing and mailing the
notice of annual meeting of stockholders and proxy material, and all other expenses of soliciting proxies will be borne by AVANT. We have retained ADP
Financial Services, Inc. as agent for soliciting proxies. Officers or other employees of AVANT may, without additional compensation therefore, solicit
proxies in person, by telephone, facsimile, mail or the Internet. We may also reimburse brokerage firms, banks, trustees, nominees and other persons
for their expenses in forwarding proxy material to the beneficial owners of shares held by them of record.
Stockholder Proposals for 2006 Annual Meeting
Any stockholder proposals submitted pursuant to
Exchange Act Rule 14a-8 for inclusion in AVANTs proxy statement and form of proxy for our 2006 annual meeting must be received by AVANT on or
before December 24, 2005 in order to be considered for inclusion in our proxy statement and form of proxy. Such proposal must also comply with the
requirements as to form and substance established by the SEC if such proposals are to be included in the proxy statement and form of proxy. Any such
proposal shall be mailed to: AVANT Immunotherapeutics. Inc., 119 Fourth Avenue, Needham, MA 02494-2725, Attn.: Secretary.
Shareholder proposals to be presented at
AVANTs 2006 annual meeting, other than stockholder proposals submitted pursuant to Exchange Act Rule 14a-8, must be received in writing at the
principal executive office of AVANT Immunotherapeutics, Inc., 119 Fourth Avenue, Needham, MA 02494-2725 not earlier than January 19, 2006 nor later
than March 5, 2006 unless our 2006 annual meeting of stockholders is scheduled to take place before April 19, 2006 or after July 18, 2006. Our by-laws
state that the stockholder must provide timely written notice of such nomination or proposal and supporting documentation as well as be present at such
meeting, either in person or by a representative. A stockholders notice shall be timely received by AVANT at our principal executive office not
less than seventy-five (75) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting
(the Anniversary Date); provided, however, that in the event the annual meeting is scheduled to be held on a date more than thirty (30)
days before the Anniversary Date or more than sixty (60) days after the Anniversary Date, a stockholders notice shall be timely if received by
AVANT at our principal executive office not later than the close of business on the later of (1) the seventy-fifth (75th) day prior to the
scheduled date of such annual meeting or (2) the fifteenth (15th) day following the day on which such public announcement of the date of
such annual meeting is first made by AVANT. Proxies solicited by our Board of Directors will confer discretionary voting authority with respect to
these proposals, subject to SEC rules and regulations governing the exercise of this authority. Any such proposal shall be mailed to: AVANT
Immunotherapeutics. Inc., 119 Fourth Avenue, Needham, MA 02494-2725, Attn.: Corporate Secretary.
17
|
VOTE BY INTERNET - www.proxyvote.com |
AVANT
IMMUNOTHERAPEUTICS, INC.
119 FOURTH AVENUE
NEEDHAM, MASSACHUSETTS 02494 |
Use the Internet
to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you access the web site
and follow the instructions to obtain your records and to create an electronic
voting instruction form. |
|
|
|
ELECTRONIC
DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS |
|
If you would like
to reduce the costs incurred by AVANT Immunotherapeutics, Inc. in mailing
proxy materials, you can consent to receiving all future proxy statements,
proxy cards and annual reports electronically via e-mail or the Internet.
To sign up for electronic delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate that you agree to
receive or access shareholder communications electronically in future years. |
|
|
|
VOTE
BY PHONE - 1-800-690-6903 |
|
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card
in hand when you call and then follow the instructions. |
|
|
|
VOTE
BY MAIL |
|
Mark, sign and
date your proxy card and return it in the postage-paid envelope we have
provided or return it to AVANT Immunotherapeutics, Inc., c/o ADP, 51 Mercedes
Way,Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
AVANT1 |
KEEP THIS PORTION FOR YOUR RECORDS |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
DETACH AND RETURN THIS PORTION ONLY |
|
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|
|
AVANT
IMMUNOTHERAPEUTICS, INC. |
|
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1. |
Election of Directors. |
|
|
|
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Nominees: |
For |
|
Withhold |
|
For All |
|
To withhold authority to vote, mark For All Except and
write the nominee's number on the line below. |
|
|
|
(01) J. Barrie Ward |
All |
|
All |
|
Except |
|
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|
|
(02) Una S. Ryan |
|
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|
(03) Harry H. Penner, Jr. |
o |
|
o |
|
o |
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(04) Peter A. Sears |
|
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(05) Karen Shoos Lipton |
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(06) Larry Ellberger |
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|
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint owners should each sign personally. Trustees and other fiduciaries should indicate
the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who should state his or her title. |
|
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|
Please be sure to sign and date this Proxy. |
|
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|
Yes |
|
No |
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|
HOUSEHOLDING
ELECTION - Please indicate if you consent to receive certain future investor
communications in a single package per household |
|
o |
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o |
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Signature
[PLEASE SIGN WITHIN BOX] |
Date |
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Signature
(Joint Owners) |
Date |
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AVANT IMMUNOTHERAPEUTICS, INC. |
|
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Proxy
Solicited by the Board of Directors for the |
|
|
|
|
|
Annual
Meeting of Stockholders |
|
|
|
|
|
on May 19,
2005 |
|
|
|
|
|
The
undersigned hereby appoints J. Barrie Ward and Una S. Ryan, and each of them, as the true and lawful attorneys,
agents and proxies of the undersigned, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated on the
reverse, all shares of Common Stock held of record by the undersigned on
April 7, 2005, at the Annual Meeting of Stockholders (the Meeting) to be
held at 2:00 p.m. on May 19, 2005 at the Companys offices located at 119
Fourth Avenue, Needham, Massachusetts 02494, or at any adjournment or
postponement thereof. |
|
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|
When properly executed, this proxy will be
voted in the manner directed herein by the undersigned stockholder(s). If no direction is given in connection
with Proposal 1, this proxy will be voted FOR the election of the nominees
for director and, in their discretion, the proxies are each authorized to
vote upon such other business as may properly come before the Meeting and any
adjournments or postponements thereof.
Any stockholders wishing to vote in accordance with the Board of
Directors recommendations need only sign and date this proxy and return it
in the postage-paid envelope provided. |
|
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|
The undersigned hereby acknowledges(s) receipt of a copy of the
accompanying Notice of Annual Meeting of Stockholders, the Proxy Statement
with respect thereto and the Companys 2004 Annual Report to Stockholders,
and hereby revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at any time
before it is executed. |
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PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE |
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AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. |
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