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Subsequent Events
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12 Months Ended | ||
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Dec. 31, 2013
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| Subsequent Events [Abstract] | |||
| Subsequent Events |
17. Subsequent Events
Executive Officer and Board of Directors Matters
Kevin Horgan
Effective January 28, 2014, Dr. Kevin Hogan, our Chief Medical Officer, was separated from service from the Company. The Company will pay him $340,000 in severance.
Michael Weiss
Mr. Michael Weiss has served as a director of our Company since December 19, 2013 and from that time until February 19, 2014 served as the Co-Vice Chairman of our board of directors. On February 20, 2014, Mr. Weiss was appointed Executive Vice Chairman, Strategic Development. The Company does not intend to enter into any employment contract with Dr. Weiss addressing his officer positions with the Company and the Company will pay Mr. Weiss an annual base salary of $28,275, the lowest salary permissible under New York State law. Mr. Weiss will also be eligible for a discretionary bonus based on his achievement of performance goals and objectives as established by our board of directors. On December 19, 2013, the Company issued Mr. Weiss 1,979,346 shares of restricted stock for services to be rendered to the Company. In addition, on February 20, 2014, the Company issued Mr. Weiss 3,958,692 shares of restricted stock as an inducement to employment and for services to be rendered to the Company. Such shares shall vest at a rate of 16.67% for the first three annual anniversaries and 10% will vest, in five equal installments upon certain events occurring.
Malcolm Hoenlein
On February 20, 2014, the Company appointed Mr. Malcolm Hoenlein to the vacant seat on its board of directors. Mr. Hoenlein was granted 30,000 shares of restricted stock vesting one-third on each annual anniversary of grant.
Strategic Transaction Committee
On February 20, 2014, The Company established a Strategic Transaction Committee of the board of directors. Messrs Lobell, Rowinsky, Harvey and Barrett were appointed to the Committee. Each member was granted 50,000 shares of Restricted Stock vesting one third on each annual anniversary of grant.
Shareholders’ Agreement
On February 20, 2014, Drs. Harvey, Rosenwald and Rowinsky and Messrs. Barrett, Lobell and Weiss, entered into a Shareholders’ Agreement, pursuant to which they agreed that, until the end of the Company’s annual meeting held in calendar year 2016 and so long as Dr. Rosenwald and Mr. Weiss are on the proposed slate of directors to be nominated, they each will vote all of their shares of Company common stock in favor of electing those individuals, and only those individuals, to the board of directors whom the Company’s Nominating and Corporate Governance Committee proposes. Until that time, they also agreed to not publicly or otherwise advocate for or encourage in any way (outside of fulfilling their director duties) the election of any individual to our board whom is not proposed by the Nominating and Corporate Governance Committee.
IDB Note
On February 13, 2014, the Company executed a Promissory Note (the “Note”) with Israel Discount Bank of New York (the “Bank”) in the amount of $15.0 million. The Company used certain proceeds from the Note to repay its prior loan from Hercules Technology Growth Capital, Inc. and fund its general working capital needs. The Company may request revolving advances under the Note in a minimum amount of $100,000 (or the remaining amount of the undrawn balance under the Note if such amount is less than $100,000). All amounts advanced under the Note are due in full at the earlier of: (i) February 13, 2016, or (ii) on the Bank’s election following the occurrence and continuation of an event of default. The unpaid principal amount of each advance shall bear interest at a rate per annum equal to the rate payable on the Company’s money market account plus a margin of 150 basis points. The Note contains various representations and warranties customary for financings of this type.
The obligations of the Company under the Note are collateralized by a security interest in, a general lien upon, and a right of set-off against the Company’s money market account of $15.0 million pursuant to the Assignment and Pledge of Money Market Account, dated as of February 13, 2014 (the “Pledge Agreement”). Pursuant to the Pledge Agreement, the Bank may, after the occurrence and continuation of an event of default under the Note, recover from the money market account all amounts outstanding under the Note. The Pledge Agreement contains various representations, warranties, and covenants customary for pledge agreements of this type.
The Company will default on the Note if, among other things, it fails to pay outstanding principal or interest when due. Following the occurrence of an event of default under the Note, the Bank may: (i) declare the entire outstanding principal balance of the Note, together with all accrued interest and other sums due under the Note, to be immediately due and payable; (ii) exercise its right of setoff against any money, funds, credits or other property of any nature in possession of, under control or custody of, or on deposit with the Bank; (iii) terminate the commitments of the Bank; and (iv) liquidate the money market account to reduce the Company’s obligations to the Bank.
Hercules Payoff
On February 13, 2014, the Company repaid its Hercules Note in full. Early Payment of the Note was $14.0 million, consisting of principal of $13.2 million, end of term charge of $0.4 million, a prepayment fee of $0.3 million and interest of $0.1 million.
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