Separation Agreement

12 Months Ended

Dec. 31, 2016

Separation Agreement

Separation Agreement

12. Separation Agreement

        On April 22, 2015, John Carbona ceased to be an employee of the Company. In connection with the termination of his employment, the Company agreed to pay Mr. Carbona the amount of $535,000, consisting of a $500,000 severance benefit (the "Severance") and $35,000 of accrued and unused vacation (the "Vacation Pay").

        The Severance was to be paid over a 12 month period in equal monthly installments. However, per the terms of the separation agreement, following Mr. Carbona's removal from the Board in June 2015, (i) 50% of the then unpaid portion of Severance due to Mr. Carbona was paid to Mr. Carbona in a lump sum within 30 days from the termination of his service on the Board and (ii) the remaining 50% of the unpaid Severance due Mr. Carbona was paid in equal installments over the lesser of (a) six months or (b) the remainder of the original 12 month period. The Vacation Pay was paid in a lump sum in May 2015.

        In connection with the transactions described above, the Company recorded a charge of $535,000 in its consolidated statements of operations for the year ended December 31, 2015. Such amount is included within general and administrative expense in the consolidated statement of operations.

        Additionally, the Company agreed to fully accelerate the vesting of 53,820 unvested stock options held by Mr. Carbona at the time of the termination of his employment. The Company determined that the acceleration of vesting was a Type III modification pursuant to ASC 718. Therefore, the Company recognized the incremental fair value of the awards as of the modification date and recognized the amount immediately since the awards did not require further service. In connection with this modification, the Company recorded a charge of $503,502 in its consolidated statement of operations for the year ended December 31, 2015. Such amount is included within general and administrative expense.

        In connection with the termination of his employment, Mr. Carbona also agreed to transfer to the Company all shares of Sixeva, Inc., a variable interest entity that the Company dissolved in October 2015, held by entities affiliated with him and to terminate the Cross Option.