Royalties, License and Employment Agreements

12 Months Ended

Dec. 31, 2015

Royalties License And Employment Agreements

Royalties, License and Employment Agreements

(11) Royalties, License and Employment Agreements

The Company had contractual agreements with Named Executive Officers ("Officers") in 2015, 2014 and 2013. The aggregate annual base compensation for these Officers under their respective contractual agreements for 2015, 2014 and 2013 was $2,259,000, $2,249,000 and $2,788,000 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 2015, 2014 and 2013, Officers’ bonuses of $0, $386,000 and $0 respectively were granted. Additionally, in November 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 $262,000, $641,000, and $12,000 in 2015, 2014 and 2013, respectively, to each Dr. Carter and Mr. Equels.

On November 23, 2015, Dr. Carter and Mr. Equels waived their rights under their respective employment agreements to any future payment of any incentive bonus related to the sale of the Company’s stock or other securities by, or on behalf of, the Company pursuant to the Maxim Equity Distribution Agreement or any similar or successor ATM equity distribution agreement. Dr. Carter and Mr. Equels voluntarily provided these waivers in an effort to preserve cash and to help the Company to ensure its short term commercialization goals.

On December 23, 2015, pursuant to a resolution of the Compensation Committee of our Board, we notified Dr. William A. Carter, our chairman of the board, chief executive officer and chief scientific officer, that we were not renewing his Amended and Restated Engagement Agreement dated June 11, 2010 (the “Agreement”). As a result, the Agreement terminated on December 31, 2015 per its terms. We have agreed to continue to pay Dr. Carter a base fee at the rate of $332,000 per year, payable monthly, for services that he renders to us as a consultant. We have the right to terminate these payments on 30 days’ written notice. Pursuant to the Agreement, Dr. Carter provided consulting services related to patent development. Dr. Carter’s employment agreement remains unchanged.

In 2015, 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 $0.25 per share which vest in entirety in one year; and

• General Counsel was granted 300,000 ten year options to purchase common stock at $0.25 per share which vest in entirety in one year.

In 2014, 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 $0.36 per share which vest in entirety in one year and 320,000 ten year options to purchase common stock at $2.60 which vest in entirety in one year; and

• General Counsel was granted 300,000 ten year options to purchase common stock at $0.36 per share which vest in entirety in one year, and;

In 2013, 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 $0.31 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.

After reviewing the terms of our 2009 Equity Incentive Plan, the Company had issued to Dr. Carter in excess of the number of securities permitted under the Plan. The Plan permits a maximum of 3,000,000 shares covered by the Plan to be issued pursuant to Plan Awards to any one Plan Participant. While this limitation was imposed to comply with the requirements for the exception for qualified performance-based compensation under Section 162(m) of the Internal Revenue Code, none of the Awards granted to Dr. Carter were Section 162(m) qualified performance-based compensation. To rectify this issue, on December 8, 2015, Dr. Carter graciously returned to the Company a sufficient number of securities issued under the Plan to bring it back into compliance with the terms of the Plan. The Company has agreed in the future to consider some form of non-stock compensation to Dr. Carter for his return of these securities.

The Company recorded stock compensation expense of $121,000, $223,000 and $219,000, respectively, during the years ended December 31, 2015, 2014 and 2013 respectively with regard to these issuances.