Royalties, License and Employment Agreements

The Company had contractual agreements with the same five Officers in 2013, 2012 and 2011. The aggregate annual base compensation for these Officers under their respective contractual agreements for 2013, 2012 and 2011 was $2,788,000, $2,578,000 and $2,299,000 respectively. The 2013 officers compensation includes $238,000 of severance salary to the former CFO due to his resignation effective December 27, 2013. In addition, certain of these Officers were entitled to receive performance bonuses of up to 25% or 20% of their respective annual base salary, at the sole discretion of the Compensation Committee of the Board of Directors. In 2013, 2012 and 2011, Executive Officers’ bonuses of $0, $478,000 and $486,000 respectively were granted. Additionally, on November 26, 2012, the Company’s Compensation Committee authorized bonuses per Section 3(c)(ii) of their respective Employment Agreements to Dr. Carter and Mr. Equels based on the contractual obligation and opinion of independent legal counsel of approximately $12,000 and $1,159,000 in 2013 and 2012, respectively, to each Dr. Carter and Mr. Equels.

In 2013, equity was granted as a form of compensation to these Officers:


•	Senior Vice President of Operations was granted 50,000 ten year options to purchase common stock at $0.24 per share which vest in entirety in one year; and


•	Chief Executive Officer was granted 500,000 ten year options to purchase common stock at $0.31 per share which vest in entirety in one year; and


•	Chief Executive Officer was granted 150,000 ten year options to purchase common stock at $0.25 per share which vest in entirety in one year; and


•	General Counsel was granted 300,000 ten year options to purchase common stock at $0.31 per share which vest in entirety in one year, and;


•	General Counsel was granted 150,000 ten year options to purchase common stock at $0.25 per share which vest in entirety in one year.

In 2012, equity was granted as a form of compensation to these Officers:


•	Chief Executive Officer was granted 100,000 ten year options to purchase common stock at $0.29 per share which vest in entirety in one year;


•	Chief Executive Officer was granted 500,000 ten year options to purchase common stock at $0.31 per share which vested immediately;


•	Chief Executive Officer was granted 10,000 ten year options, as replacement for similar options that had expired, to purchase common stock at $4.03 per share which vested immediately;


•	General Counsel was granted 100,000 ten year options to purchase common stock at $0.29 per share which vest in entirety in one year;


•	General Counsel was granted 300,000 ten year options to purchase common stock at $0.31 per share;


•	Chief Medical Officer was granted 10,000 ten year options, as replacement for similar options that had expired, to purchase common stock at $4.03 per share which vested immediately;


•	Senior Vice President of Operations was granted 50,000 ten year options to purchase common stock at $0.29 per share which vest in entirety in one year;


•	Senior Vice President was granted 50,000 ten year options to purchase common stock at $0.29 per share which vest in entirety in one year; and


•	Vice President of Quality Control was granted 30,000 ten year options to purchase common stock at $0.85 per share which vest in entirety in one year.

In 2011, equity was granted as a form of compensation to these Officers:


•	Chief Executive Officer was granted 500,000 ten year options to purchase common stock at $0.41 per share which vested immediately;


•	General Counsel was granted 300,000 ten year options to purchase common stock at $0.41 per share;


•	Chief Financial Officer was granted 100,000 ten year options to purchase common stock at $0.31 per share which vests in entirety in one year;


•	Senior Vice President of Operations was granted 90,000 ten year options to purchase common stock at $0.55 per share; and


•	Vice President of Quality Control was granted 40,000 ten year options to purchase common stock at $0.37 per share which vest over one year.

The Company recorded stock compensation expense of $219,000, $262,000 and $271,000, respectively, during the years ended December 31, 2013, 2012 and 2011 respectively with regard to these issuances.

An agreement was made and entered into as of the 31st day of December, 2008 with Robert E. Peterson. Mr. Peterson was previously engaged by the Company as its Chief Financial Officer pursuant to an Amended And Restated Engagement Agreement (“Engagement Agreement”) made as of March 11, 2005.

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For a period of thirty-six (36) months following the Effective Date of December 31, 2008, shall engage Peterson as a part time advisor to the Company’s Chief Executive Officer and shall pay to Peterson for such services (“Advisory Services”) the sum of four thousand dollars ($4,000) per month, payable monthly with the first monthly payment being due and payable one month after the Effective Date. These payments and services concluded on December 31, 2011;

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On the occurrence of a “Change In Control, the Company shall pay to Peterson three times the amount of compensation paid to Peterson by the Company for calendar year 2008. A “Change In Control” shall be deemed to have occurred as set forth the Engagement Agreement Regarding Change In Control made as of March 11, 2005 between the Company and Peterson, with the definition of “Change In Control” as therein set forth;


•	Peterson is to receive Options to purchase 20,000 shares of the Company’s common stock at the end of each calendar quarter following the Effective Date. Peterson may terminate the Advisory Services at any time. The issuance of Options concluded on December 31, 2011;

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Upon executing a “Financial Transaction”, the Company shall pay to Peterson one (1) percent (the “Peterson One Per Cent Fee”) of the cash to be received by the Company from each Financial Transaction. Provided, however, the Peterson One Per Cent Fee shall in no event exceed in the aggregate two times the amount of compensation paid to Peterson by the Company for calendar year 2008. A “Financial Transaction” shall be any agreements entered into by the Company in which the Company is to receive cash from such third parties. A Financial Transaction does not include agreements whereby the Company receives cash as a result of (i) the Company only being reimbursed for expenses, not including expenses for prior research conducted by the Company, incurred by the Company, (ii) an agreement in which the only economic benefit to the Company is a loan or loans to the Company, (iii) any transactions with Fusion pursuant to the July 2, 2008, Common Stock Purchase Agreement between the Company and Fusion; and


•	This Agreement shall terminate upon Peterson having received full payment for a change in control or upon receiving the maximum one percent fee. The Agreement provides for a “gross-up” payment to make Peterson whole for any Federal taxes imposed as a result of change of control or one percent payments to him.

As a result of Financial Transactions completed through the sale of Company Stock, in accordance with the Peterson One Per Cent Fee, and his monthly consulting fee, Mr. Peterson was due $2,489, $$231,839 and $48,000 for 2013, 2012 and 2011.