|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended
|
June 30, 2015
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission File Number:
|
001-35076
|
NAVIDEA BIOPHARMACEUTICALS, INC.
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
31-1080091
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
5600 Blazer Parkway, Suite 200, Dublin, Ohio
|
|
43017-7550
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(614) 793-7500
|
(Registrant’s telephone number, including area code)
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
¨
|
Accelerated filer
x
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
PART I – Financial Information
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
|
|
|
Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014
|
|
|
|
|
|
Consolidated Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2015 and 2014 (unaudited)
|
|
|
|
|
|
Consolidated Statement of Stockholders’ Deficit for the Six-Month Period Ended June 30, 2015 (unaudited)
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2015 and 2014 (unaudited)
|
|
|
|
|
|
Notes to the Consolidated Financial Statements (unaudited)
|
|
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
|
Forward-Looking Statements
|
|
|
|
|
|
The Company
|
|
|
|
|
|
Product Line Overview
|
|
|
|
|
|
Outlook
|
|
|
|
|
|
Results of Operations
|
|
|
|
|
|
Liquidity and Capital Resources
|
|
|
|
|
|
Recent Accounting Pronouncements
|
|
|
|
|
|
Critical Accounting Policies
|
|
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
|
|
Item 4.
|
Controls and Procedures
|
|
|
|
|
PART II – Other Information
|
|
|
|
|
|
Item 1A.
|
Risk Factors
|
|
|
|
|
Item 6.
|
Exhibits
|
ASSETS
|
June 30, 2015
|
|
December 31, 2014
|
||||
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
15,790,235
|
|
|
$
|
5,479,006
|
|
Accounts receivable
|
1,829,590
|
|
|
816,544
|
|
||
Inventory, net
|
1,195,109
|
|
|
932,385
|
|
||
Prepaid expenses and other
|
716,118
|
|
|
1,371,210
|
|
||
|
|
|
|
||||
Total current assets
|
19,531,052
|
|
|
8,599,145
|
|
||
|
|
|
|
||||
Property and equipment
|
3,969,677
|
|
|
4,124,028
|
|
||
Less accumulated depreciation and amortization
|
1,748,487
|
|
|
1,614,320
|
|
||
|
|
|
|
||||
|
2,221,190
|
|
|
2,509,708
|
|
||
|
|
|
|
||||
Patents and trademarks
|
216,497
|
|
|
219,558
|
|
||
Less accumulated amortization
|
43,723
|
|
|
38,725
|
|
||
|
|
|
|
||||
|
172,774
|
|
|
180,833
|
|
||
|
|
|
|
||||
Investment in R-NAV, LLC
|
—
|
|
|
241,575
|
|
||
Other assets
|
273,573
|
|
|
299,047
|
|
||
|
|
|
|
||||
Total assets
|
$
|
22,198,589
|
|
|
$
|
11,830,308
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
June 30, 2015
|
|
December 31, 2014
|
||||
|
(unaudited)
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
1,357,661
|
|
|
$
|
1,477,499
|
|
Accrued liabilities and other
|
2,897,698
|
|
|
3,234,120
|
|
||
Deferred revenue, current
|
1,000,000
|
|
|
—
|
|
||
Notes payable, current, net of discounts of $0 and $863,813, respectively
|
333,333
|
|
|
4,348,678
|
|
||
|
|
|
|
||||
Total current liabilities
|
5,588,692
|
|
|
9,060,297
|
|
||
|
|
|
|
||||
Deferred revenue
|
666,667
|
|
|
—
|
|
||
Notes payable, net of discounts of $2,167,545 and $1,585,882, respectively
|
58,836,254
|
|
|
29,484,057
|
|
||
Other liabilities
|
1,725,477
|
|
|
3,089,420
|
|
||
|
|
|
|
||||
Total liabilities
|
66,817,090
|
|
|
41,633,774
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ deficit:
|
|
|
|
|
|
||
Preferred stock; $.001 par value; 5,000,000 shares authorized; 4,519 Series B shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
|
4
|
|
|
4
|
|
||
Common stock; $.001 par value; 200,000,000 shares authorized; 150,711,593 and 150,200,259 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
|
150,712
|
|
|
150,200
|
|
||
Additional paid-in capital
|
324,726,485
|
|
|
323,030,301
|
|
||
Accumulated deficit
|
(369,965,774
|
)
|
|
(352,983,971
|
)
|
||
Total Navidea stockholders' deficit
|
(45,088,573
|
)
|
|
(29,803,466
|
)
|
||
Noncontrolling interest
|
470,072
|
|
|
—
|
|
||
|
|
|
|
||||
Total stockholders’ deficit
|
(44,618,501
|
)
|
|
(29,803,466
|
)
|
||
|
|
|
|
||||
Total liabilities and stockholders’ deficit
|
$
|
22,198,589
|
|
|
$
|
11,830,308
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lymphoseek sales revenue
|
$
|
1,963,548
|
|
|
$
|
1,046,257
|
|
|
$
|
3,798,970
|
|
|
$
|
1,672,888
|
|
Lymphoseek license revenue
|
250,000
|
|
|
—
|
|
|
333,333
|
|
|
—
|
|
||||
Grant and other revenue
|
654,360
|
|
|
28,433
|
|
|
844,061
|
|
|
153,606
|
|
||||
Total revenue
|
2,867,908
|
|
|
1,074,690
|
|
|
4,976,364
|
|
|
1,826,494
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
332,730
|
|
|
270,498
|
|
|
781,787
|
|
|
463,718
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
2,535,178
|
|
|
804,192
|
|
|
4,194,577
|
|
|
1,362,776
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development
|
2,297,074
|
|
|
5,112,098
|
|
|
6,278,362
|
|
|
10,338,892
|
|
||||
Selling, general and administrative
|
4,048,799
|
|
|
4,907,652
|
|
|
9,542,967
|
|
|
8,818,485
|
|
||||
Total operating expenses
|
6,345,873
|
|
|
10,019,750
|
|
|
15,821,329
|
|
|
19,157,377
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
(3,810,695
|
)
|
|
(9,215,558
|
)
|
|
(11,626,752
|
)
|
|
(17,794,601
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
(1,575,741
|
)
|
|
(909,051
|
)
|
|
(2,542,317
|
)
|
|
(1,846,096
|
)
|
||||
Equity in loss of R-NAV, LLC
|
(6,205
|
)
|
|
—
|
|
|
(268,432
|
)
|
|
—
|
|
||||
Change in fair value of financial instruments
|
(1,852,730
|
)
|
|
(92,332
|
)
|
|
(125,627
|
)
|
|
300,151
|
|
||||
Loss on extinguishment of debt
|
(2,440,714
|
)
|
|
—
|
|
|
(2,440,714
|
)
|
|
(2,610,196
|
)
|
||||
Other, net
|
(4,834
|
)
|
|
(5,293
|
)
|
|
21,698
|
|
|
(12,045
|
)
|
||||
Total other income (expense), net
|
(5,880,224
|
)
|
|
(1,006,676
|
)
|
|
(5,355,392
|
)
|
|
(4,168,186
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
(9,690,919
|
)
|
|
(10,222,234
|
)
|
|
(16,982,144
|
)
|
|
(21,962,787
|
)
|
||||
Less loss attributable to noncontrolling interest
|
(241
|
)
|
|
—
|
|
|
(341
|
)
|
|
—
|
|
||||
Deemed dividend on beneficial conversion feature of
MT Preferred Stock
|
—
|
|
|
—
|
|
|
(46,000
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to common stockholders
|
$
|
(9,690,678
|
)
|
|
$
|
(10,222,234
|
)
|
|
$
|
(17,027,803
|
)
|
|
$
|
(21,962,787
|
)
|
|
|
|
|
|
|
|
|
||||||||
Loss per common share (basic and diluted)
|
$
|
(0.06
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.15
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding (basic and diluted)
|
150,107,148
|
|
|
150,019,939
|
|
|
149,951,603
|
|
|
147,416,111
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Additional
Paid-In
|
|
Accumulated
|
|
Non-controlling
|
|
Total Stockholders'
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Interest
|
|
Deficit
|
||||||||||||||
Balance, December 31, 2014
|
4,519
|
|
|
$
|
4
|
|
|
150,200,259
|
|
|
$
|
150,200
|
|
|
$
|
323,030,301
|
|
|
$
|
(352,983,971
|
)
|
|
$
|
—
|
|
|
$
|
(29,803,466
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Issued stock upon exercise of stock options, net
|
—
|
|
|
—
|
|
|
120,733
|
|
|
121
|
|
|
49,115
|
|
|
—
|
|
|
—
|
|
|
49,236
|
|
||||||
Issued restricted stock
|
—
|
|
|
—
|
|
|
332,000
|
|
|
332
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332
|
|
||||||
Canceled forfeited restricted stock
|
—
|
|
|
—
|
|
|
(38,750
|
)
|
|
(39
|
)
|
|
39
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Canceled stock to pay employee tax obligations
|
—
|
|
|
—
|
|
|
(7,645
|
)
|
|
(7
|
)
|
|
(12,607
|
)
|
|
—
|
|
|
—
|
|
|
(12,614
|
)
|
||||||
Issued stock in payment of Board retainers
|
—
|
|
|
—
|
|
|
36,839
|
|
|
37
|
|
|
69,586
|
|
|
—
|
|
|
—
|
|
|
69,623
|
|
||||||
Issued stock to 401(k) plan
|
—
|
|
|
—
|
|
|
68,157
|
|
|
68
|
|
|
117,031
|
|
|
—
|
|
|
—
|
|
|
117,099
|
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,519,020
|
|
|
—
|
|
|
|
|
1,519,020
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,981,803
|
)
|
|
(341
|
)
|
|
(16,982,144
|
)
|
||||||
Issuance of MT Preferred Stock, net of deemed dividend on beneficial conversion feature
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,000
|
)
|
|
—
|
|
|
470,413
|
|
|
424,413
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance, June 30, 2015
|
4,519
|
|
|
$
|
4
|
|
|
150,711,593
|
|
|
$
|
150,712
|
|
|
$
|
324,726,485
|
|
|
$
|
(369,965,774
|
)
|
|
$
|
470,072
|
|
|
$
|
(44,618,501
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(16,982,144
|
)
|
|
$
|
(21,962,787
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
299,139
|
|
|
235,356
|
|
||
Loss on disposal and abandonment of assets
|
14,749
|
|
|
28,681
|
|
||
Change in inventory reserve
|
92,751
|
|
|
—
|
|
||
Amortization of debt discount and issuance costs
|
358,924
|
|
|
436,824
|
|
||
Compounded interest on long term debt
|
429,074
|
|
|
—
|
|
||
Stock compensation expense
|
1,519,020
|
|
|
1,559,935
|
|
||
Equity in loss of R-NAV, LLC
|
268,432
|
|
|
—
|
|
||
Change in fair value of financial instruments
|
125,627
|
|
|
(300,151
|
)
|
||
Loss on extinguishment of debt
|
2,440,714
|
|
|
2,610,196
|
|
||
Issued stock to 401(k) plan for employer matching contributions
|
117,099
|
|
|
100,044
|
|
||
Other
|
42,765
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,013,046
|
)
|
|
663,477
|
|
||
Inventory
|
(355,475
|
)
|
|
326,673
|
|
||
Prepaid expenses and other assets
|
680,566
|
|
|
194,694
|
|
||
Accounts payable
|
(119,838
|
)
|
|
(748,278
|
)
|
||
Accrued and other liabilities
|
(377,132
|
)
|
|
(737,089
|
)
|
||
Deferred revenue
|
1,666,667
|
|
|
—
|
|
||
Net cash used in operating activities
|
(10,792,108
|
)
|
|
(17,592,425
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of equipment
|
(27,618
|
)
|
|
(1,108,164
|
)
|
||
Proceeds from sales of equipment
|
20,300
|
|
|
—
|
|
||
Patent and trademark costs
|
(9,993
|
)
|
|
(14,361
|
)
|
||
Net cash used in investing activities
|
(17,311
|
)
|
|
(1,122,525
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from issuance of MT Preferred Stock and warrants
|
500,000
|
|
|
—
|
|
||
Payment of preferred stock issuance costs
|
(12,587
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock and short swing profits
|
60,422
|
|
|
88,064
|
|
||
Payment of tax withholdings related to stock-based compensation
|
(23,468
|
)
|
|
(75,759
|
)
|
||
Proceeds from notes payable
|
54,500,000
|
|
|
30,000,000
|
|
||
Payment of debt-related costs
|
(3,902,487
|
)
|
|
(1,763,526
|
)
|
||
Principal payments on notes payable
|
(30,000,000
|
)
|
|
(25,000,000
|
)
|
||
Payments under capital leases
|
(1,232
|
)
|
|
(1,075
|
)
|
||
Net cash provided by financing activities
|
21,120,648
|
|
|
3,247,704
|
|
||
|
|
|
|
||||
Net increase (decrease) in cash
|
10,311,229
|
|
|
(15,467,246
|
)
|
||
Cash, beginning of period
|
5,479,006
|
|
|
32,939,026
|
|
||
Cash, end of period
|
$
|
15,790,235
|
|
|
$
|
17,471,780
|
|
a.
|
Basis of Presentation:
The information presented as of
June 30, 2015
and for the three-month and
six-month
periods ended
June 30, 2015
and
2014
is unaudited, but includes all adjustments (which consist only of normal recurring adjustments) that the management of Navidea Biopharmaceuticals, Inc. (Navidea, the Company, or we) believes to be necessary for the fair presentation of results for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. The balances as of
June 30, 2015
and the results for the interim periods are not necessarily indicative of results to be expected for the year. The consolidated financial statements should be read in conjunction with Navidea’s audited consolidated financial statements for the year ended
December 31, 2014
, which were included as part of our Annual Report on Form 10-K.
|
b.
|
Financial Instruments and Fair Value:
In accordance with current accounting standards, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
|
(1)
|
Cash, accounts receivable, accounts payable, and accrued liabilities: The carrying amounts approximate fair value because of the short maturity of these instruments.
|
(2)
|
Notes payable: The carrying value of our debt at
June 30, 2015
and
December 31, 2014
primarily consists of the face amount of the notes less unamortized discounts. See Note 8. At
June 30, 2015
and
December 31, 2014
, certain notes payable were also required to be recorded at fair value. The estimated fair value of our debt was calculated using a discounted cash flow analysis as well as a probability-weighted Monte Carlo simulation. These valuation methods include Level 3 inputs such as the estimated current market interest rate for similar instruments with similar creditworthiness. For the debt recorded at fair value, unrealized gains and losses on the fair value of the debt are classified in other expenses as a change in the fair value of financial instruments in the consolidated statements of operations. At
June 30, 2015
, the fair value of our notes payable is approximately
$68.0 million
, compared to the carrying value of
$59.2 million
.
|
(3)
|
Derivative liabilities: Derivative liabilities are related to certain outstanding warrants which are recorded at fair value. Derivative liabilities totaling
$63,000
as of
June 30, 2015
were included in other liabilities on the consolidated balance sheets.
No
derivative liabilities were outstanding as of December 31, 2014. The assumptions used to calculate fair value as of
June 30, 2015
included volatility, a risk-free rate and expected dividends. In addition, we considered non-performance risk and determined that such risk is minimal. Unrealized gains and losses on the derivatives are classified in other expenses as a change in the fair value of financial instruments in the statements of operations. See Note 9.
|
c.
|
Revenue Recognition:
We currently generate revenue primarily from sales of Lymphoseek
®
(technetium Tc 99m tilmanocept) injection. Our standard shipping terms are FOB shipping point, and title and risk of loss passes to the customer upon delivery to a carrier for shipment. We generally recognize sales revenue related to sales of our products when the products are shipped. Our customers have no right to return products purchased in the ordinary course of business, however, we may allow returns in certain circumstances based on specific agreements.
|
d.
|
Change in Accounting Principle:
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability rather than as an asset. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. Entities must apply the amendments in ASU 2015-03 on a retrospective basis.
|
e.
|
Recent Accounting Pronouncements:
In February 2015, the FASB issued ASU No. 2015-02,
Amendments to the Consolidation Analysis
. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, and (iii) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for public entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The amendments may be applied using a modified retrospective approach or a full retrospective approach. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact of our adoption of ASU 2015-02, however we do not expect the adoption of ASU 2015-02 to have a material effect on our consolidated financial statements upon adoption.
|
Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2014
|
||||||||||||||||
Description
|
|
Quoted Prices in Active Markets for Identical Liabilities (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs
(Level 3) |
|
Total
|
||||||||
Platinum notes payable
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,615,764
|
|
|
$
|
5,615,764
|
|
a.
|
Valuation Processes-Level 3 Measurements:
Depending on the instrument, the Company utilizes discounted cash flows, option pricing models, or third-party valuation services to estimate the value of their financial assets and liabilities. Valuations using discounted cash flow methods and certain option pricing models such as Black-Scholes are generally conducted by the Company or by third-party valuation experts. Valuations using complex models such as a Monte Carlo simulation are generally provided to the Company by third-party valuation experts. Each reporting period, the Company provides significant unobservable inputs to the third-party valuation experts based on current internal estimates and forecasts.
|
b.
|
Sensitivity Analysis-Level 3 Measurements:
Changes in the Company’s current internal estimates and forecasts are likely to cause material changes in the fair value of certain liabilities. The significant unobservable inputs used in the fair value measurement of the liabilities include the amount and timing of future draws expected to be taken under the Platinum Loan Agreement based on current internal forecasts, management’s estimate of the likelihood of actually making additional draws, and management's estimate of the likelihood of conversion. Significant increases (decreases) in any of the significant unobservable inputs would result in a higher (lower) fair value measurement. A change in one of the inputs would not necessarily result in a directionally similar change in the others.
|
|
Six Months Ended June 30, 2015
|
|||||||||||
|
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding at beginning of period
|
5,345,764
|
|
|
$
|
2.16
|
|
|
|
|
|
||
Granted
|
1,365,400
|
|
|
1.67
|
|
|
|
|
|
|||
Exercised
|
(141,250
|
)
|
|
0.57
|
|
|
|
|
|
|||
Canceled and Forfeited
|
(99,900
|
)
|
|
2.29
|
|
|
|
|
|
|||
Expired
|
(5,750
|
)
|
|
1.26
|
|
|
|
|
|
|||
Outstanding at end of period
|
6,464,264
|
|
|
$
|
2.09
|
|
|
7.6 years
|
|
$
|
774,822
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at end of period
|
3,169,487
|
|
|
$
|
2.42
|
|
|
6.2 years
|
|
$
|
409,459
|
|
|
Six Months Ended June 30, 2015
|
|||||
|
Number of
Shares
|
|
Weighted
Average
Grant-Date
Fair Value
|
|||
Unvested at beginning of period
|
498,250
|
|
|
$
|
1.91
|
|
Granted
|
332,000
|
|
|
1.73
|
|
|
Vested
|
(240,750
|
)
|
|
1.85
|
|
|
Forfeited
|
(38,750
|
)
|
|
3.15
|
|
|
Unvested at end of period
|
550,750
|
|
|
$
|
1.74
|
|
|
June 30, 2015
|
|
December 31,
2014
|
||||
|
(unaudited)
|
|
|
||||
Materials
|
$
|
510,000
|
|
|
$
|
—
|
|
Work-in-process
|
284,453
|
|
|
1,034,476
|
|
||
Finished goods
|
865,349
|
|
|
436,936
|
|
||
Reserves
|
(464,693
|
)
|
|
(539,027
|
)
|
||
Total
|
$
|
1,195,109
|
|
|
$
|
932,385
|
|
Accrued separation costs, December 31, 2014
|
$
|
449,351
|
|
Payments related to May 2014 reduction in force
|
(405,187
|
)
|
|
Charges incurred with March 2015 reduction in force
|
994,572
|
|
|
Payments related to March 2015 reduction in force
|
(984,072
|
)
|
|
Accrued separation costs, June 30, 2015
|
$
|
54,664
|
|
13.
|
Termination of Sublicense
|
Three Months Ended June 30, 2015
|
Diagnostics
|
Therapeutics
|
Corporate
|
Total
|
||||||||
Lymphoseek sales revenue:
|
|
|
|
|
||||||||
United States
1
|
$
|
1,963,273
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,963,273
|
|
International
|
275
|
|
—
|
|
—
|
|
275
|
|
||||
Lymphoseek license revenue
|
250,000
|
|
—
|
|
—
|
|
250,000
|
|
||||
Grant and other revenue
|
654,360
|
|
—
|
|
—
|
|
654,360
|
|
||||
Total revenue
|
2,867,908
|
|
—
|
|
—
|
|
2,867,908
|
|
||||
Cost of goods sold
|
332,730
|
|
—
|
|
—
|
|
332,730
|
|
||||
Research and development expenses
|
2,120,336
|
|
176,738
|
|
—
|
|
2,297,074
|
|
||||
Selling, general and administrative expenses,
excluding depreciation and amortization
2
|
1,529,042
|
|
64,018
|
|
2,341,838
|
|
3,934,898
|
|
||||
Depreciation and amortization
|
72,289
|
|
—
|
|
77,058
|
|
149,347
|
|
||||
Loss from operations
3
|
(1,151,043
|
)
|
(240,756
|
)
|
(2,418,896
|
)
|
(3,810,695
|
)
|
||||
Other income (expense), excluding
equity in the loss of R-NAV, LLC
4
|
—
|
|
—
|
|
(5,874,019
|
)
|
(5,874,019
|
)
|
||||
Equity in the loss of R-NAV, LLC
|
—
|
|
—
|
|
(6,205
|
)
|
(6,205
|
)
|
||||
Net loss
|
(1,151,043
|
)
|
(240,756
|
)
|
(8,299,120
|
)
|
(9,690,919
|
)
|
||||
Total assets, net of depreciation and amortization:
|
|
|
|
|
|
|||||||
United States
|
4,035,926
|
|
—
|
|
17,690,779
|
|
21,726,705
|
|
||||
International
|
470,033
|
|
—
|
|
1,851
|
|
471,884
|
|
||||
Capital expenditures
|
25,492
|
|
—
|
|
2,126
|
|
27,618
|
|
Six Months Ended June 30, 2015
|
Diagnostics
|
Therapeutics
|
Corporate
|
Total
|
||||||||
Lymphoseek sales revenue:
|
|
|
|
|
||||||||
United States
1
|
$
|
3,793,920
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,793,920
|
|
International
|
5,050
|
|
—
|
|
—
|
|
5,050
|
|
||||
Lymphoseek license revenue
|
333,333
|
|
—
|
|
—
|
|
333,333
|
|
||||
Grant and other revenue
|
844,061
|
|
—
|
|
—
|
|
844,061
|
|
||||
Total revenue
|
4,976,364
|
|
—
|
|
—
|
|
4,976,364
|
|
||||
Cost of goods sold
|
781,787
|
|
—
|
|
—
|
|
781,787
|
|
||||
Research and development expenses
|
6,015,610
|
|
262,752
|
|
—
|
|
6,278,362
|
|
||||
Selling, general and administrative expenses,
excluding depreciation and amortization
2
|
3,571,217
|
|
78,384
|
|
5,665,304
|
|
9,314,905
|
|
||||
Depreciation and amortization
|
144,397
|
|
—
|
|
154,742
|
|
299,139
|
|
||||
Loss from operations
3
|
(5,465,571
|
)
|
(341,136
|
)
|
(5,820,045
|
)
|
(11,626,752
|
)
|
||||
Other income (expense), excluding
equity in the loss of R-NAV, LLC
4
|
—
|
|
—
|
|
(5,086,960
|
)
|
(5,086,960
|
)
|
||||
Equity in the loss of R-NAV, LLC
|
—
|
|
—
|
|
(268,432
|
)
|
(268,432
|
)
|
||||
Net loss
|
(5,465,571
|
)
|
(341,136
|
)
|
(11,175,437
|
)
|
(16,982,144
|
)
|
||||
Total assets, net of depreciation and amortization:
|
|
|
|
|
||||||||
United States
|
4,035,926
|
|
—
|
|
17,690,779
|
|
21,726,705
|
|
||||
International
|
470,033
|
|
—
|
|
1,851
|
|
471,884
|
|
||||
Capital expenditures
|
25,492
|
|
—
|
|
2,126
|
|
27,618
|
|
•
|
general economic and business conditions, both nationally and in our markets;
|
•
|
our history of losses, negative net worth and uncertainty of future profitability;
|
•
|
our ability to successfully complete research and further development of our drug candidates;
|
•
|
the timing, cost and uncertainty of obtaining regulatory approvals of our drug candidates;
|
•
|
our ability to successfully commercialize our drug candidates;
|
•
|
our expectations and estimates concerning future financial performance, financing plans and the impact of competition;
|
•
|
our ability to raise capital sufficient to fund our development and commercialization programs;
|
•
|
our ability to implement our growth strategy;
|
•
|
anticipated trends in our business;
|
•
|
advances in technologies; and
|
•
|
other risk factors set forth in this report and detailed in our most recent Annual Report on Form 10-K and other SEC filings.
|
•
|
NAV4694 is a fluorine-18 (F-18) radiolabeled PET imaging agent being developed as an aid in the diagnosis of patients with signs or symptoms of Alzheimer’s disease (AD) and mild cognitive impairment (MCI). NAV4694 is in Phase 3 clinical development. The Company is currently engaged in discussions related to the potential partnering or divestiture of NAV4694.
|
•
|
NAV5001 is an iodine-123 (I-123) radiolabeled SPECT imaging agent being developed as an aid in the diagnosis of Parkinson’s disease (PD) and other movement disorders, with potential use as a diagnostic aid in dementia. NAV5001 is in Phase 3 clinical development. In April 2015, the Company entered into an agreement with Alseres
|
•
|
KS tissue based cells take up Cy3-Manocept or Cy3-Manocept-doxorubicin into both KS tumor cells and TAMs.
|
•
|
Manocept conjugate uptake is dose and time dependent in CD206+ macrophages.
|
•
|
Cy3-Manocept and Cy3-Manocept-doxorubicin bind to CD206 positive macrophages equivalently indicating that the linkage of a drug conjugate did not lessen the CD206 binding ability.
|
•
|
Manocept-doxorubicin killed CD206 expressing macrophages. After 24 hours, Cy3-Manocept-doxorubicin killed 70% of CD206 positive macrophages in tissue cultures. Doxorubicin alone showed no toxicity.
|
•
|
KS organ culture treated with Manocept-doxorubicin resulted in the loss of macrophages and induced programmed tumor cell death and apoptosis in KS HHV8+ spindle cells, and showed anti-HIV activity in HIV infected macrophage cultures.
|
|
|
Six Months Ended
June 30,
|
||||||
Development Program
|
|
2015
|
|
2014
|
||||
Lymphoseek
|
|
$
|
896,244
|
|
|
$
|
1,047,298
|
|
Manocept Platform
|
|
359,523
|
|
|
345,794
|
|
||
Macrophage Therapeutics
|
|
181,918
|
|
|
—
|
|
||
NAV4694
|
|
1,590,246
|
|
|
3,705,056
|
|
||
NAV5001
|
|
159,845
|
|
|
920,722
|
|
||
NAV1800
|
|
—
|
|
|
31,393
|
|
•
|
Stock-Based Compensation
. Stock-based payments to employees and directors, including grants of stock options and restricted stock, are recognized in the statements of operations based on their estimated fair values on the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model to value share-based payments and the portion that is ultimately expected to vest is recognized as compensation expense over either (1) the requisite service period or (2) the estimated performance period. The determination of fair value using the Black-Scholes option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option behaviors. We estimate the expected term based on the contractual term of the awards and employees' exercise and expected post-vesting termination behavior. The restricted stock awards are valued based on the closing stock price on the date of grant and amortized ratably over the estimated life of the award.
|
•
|
Inventory Valuation.
We record our inventory at the lower of cost (first-in, first-out method) or market. Our valuation reflects our estimates of excess and obsolete inventory as well as inventory with a carrying value in excess of its net realizable value. Write-offs are recorded when product is removed from saleable inventory. We review inventory on hand at least quarterly and record provisions for excess and obsolete inventory based on several factors, including current assessment of future product demand, anticipated release of new products into the market and product expiration. Our industry is characterized by rapid product development and frequent new product introductions. Regulations regarding use and shelf life, product recalls and variation in product utilization all impact the estimates related to excess and obsolete inventory.
|
•
|
Fair Value of Derivative Instruments.
Derivative instruments embedded in contracts, to the extent not already a free-standing contract, are bifurcated and accounted for separately. All derivatives are recorded on the consolidated balance sheets at fair value in accordance with current accounting guidelines for such complex financial instruments. Unrealized gains and losses on the derivatives are classified in other expenses as a change in derivative liabilities in the consolidated statements of operations. We do not use derivative instruments for hedging of market risks or for trading or speculative purposes.
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
10.1
|
Employment Agreement between the Company and Thomas J. Klima, dated January 1, 2015.*
|
|
|
10.2
|
Employment Agreement between the Company and Michael Tomblyn, M.D., dated January 1, 2015.*
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
|
|
32.1
|
Certification of Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**
|
|
|
32.2
|
Certification of Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**
|
|
|
101.INS
|
XBRL Instance Document*
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
NAVIDEA BIOPHARMACEUTICALS, INC.
|
|
|
(the Company)
|
|
|
August 10, 2015
|
|
|
|
|
|
|
|
|
By:
|
/s/ Ricardo J. Gonzalez
|
|
|
|
|
Ricardo J. Gonzalez
|
|
|
President and Chief Executive Officer
|
|
|
(duly authorized officer; principal executive officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Brent L. Larson
|
|
|
|
|
Brent L. Larson
|
|
|
Executive Vice President and Chief Financial Officer
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(principal financial and accounting officer)
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10.1
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Employment Agreement between the Company and Thomas J. Klima, dated January 1, 2015.*
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10.2
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Employment Agreement between the Company and Michael Tomblyn, M.D., dated January 1, 2015.*
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
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32.1
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Certification of Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**
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32.2
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Certification of Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**
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101.INS
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XBRL Instance Document*
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101.SCH
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XBRL Taxonomy Extension Schema Document*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document*
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document*
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document*
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*
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Filed herewith.
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**
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Furnished herewith.
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2.
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Term of this Agreement.
Subject to Section 4 hereof, the Term of this Agreement shall be for a period commencing on January 1, 2015 and terminating January 1, 2017 (the “Term”), unless terminated earlier pursuant to the termination provisions set forth in Section 4 of this Agreement. At the end of the Term, and at the end of each Term thereafter, the Term of this Agreement shall automatically renew for a like two-year Term, unless either Party to this Agreement provides sixty (60) calendar days advanced written notice to the other Party, prior to the end of any Term, of the Party’s intent not to renew the Agreement for another Term. The Parties also understand and agree that any termination of this Agreement, whether at the end of a Term or as otherwise set forth in Section 4 of this Agreement, shall also terminate the Executive’s employment with the Company, unless otherwise agreed to in writing by the Company.
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A.
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Salary.
Beginning on the first day of the Term, the Company shall pay the Executive a salary of Three Hundred Thousand Dollars ($270,000) per year (the “Base Salary”), subject to all applicable tax withholdings and deductions and payable in semi-monthly or monthly installments as requested by the Executive. The Compensation, Nominating and Governance Committee of the Board of Directors (the “Committee”) shall review the Executive's Base Salary on an annual basis and may increase or decrease the Base Salary based on its business judgment.
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B.
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Bonus.
For each complete calendar year of the Term, the Executive shall have the opportunity to earn an annual bonus (the “Annual Bonus”) equal to 30% of Base Salary (the "Target Bonus"), as in effect at the beginning of the applicable calendar year, based on achievement of annual corporate and individual target performance goals established by the Committee. The Committee will, on an annual basis, review the performance of the Company and of the Executive in relation to the target performance goals and will pay such Annual Bonus, as it deems appropriate, in its discretion, to the Executive based upon such review. Any bonus earned in any calendar year will be payable in the first calendar quarter of the following calendar year.
I
n order to be eligible to receive payment of an Annual Bonus, the Executive must be employed by the Company as of the day of the applicable calendar year on which the Company pays the Annual Bonuses.
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C.
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Benefits.
During the Term of this Agreement, the Executive will receive such employee benefits as are generally available to all employees of the Company.
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D.
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Stock Options and Incentives.
The Committee may, from time to time, grant to the Executive stock options, restricted stock purchase opportunities and such other forms of equity-based incentive compensation as it deems appropriate, in its discretion, under the Company’s applicable plans which are then in effect. Additionally, in consideration of entering into this Agreement and as an inducement to Executive joining the Company, the Committee will grant Executive the stock options and shares of restricted stock as set forth in Exhibit A hereto and subject to the terms and conditions of the Company’s applicable plans. All awards of equity incentives shall be governed by a separate equity incentive award agreement, the equity incentive terms of which shall govern the rights of the Executive and the Company in the event of any conflict between such agreement and this Agreement; otherwise, this Agreement shall control the Executive’s employment with, termination from, and post-termination covenants owed to, the Company.
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E.
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Vacation and Sick/Personal Leave.
The Executive shall be entitled to four (4) weeks of vacation and up to eighty (80) hours of sick/personal leave during each calendar year (prorated for partial years) during the Term of this Agreement, in accordance with the Company's vacation policies, as in effect from time to time.
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F.
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Expenses.
The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by him in the performance of his duties hereunder, including expenses for travel, entertainment and similar items, promptly after the timely presentation (preferably within no longer than two weeks of incurring the expense) by the Executive of an itemized account of such expenses.
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G.
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Clawback Policy
. The Company’s obligation to pay any bonus or stock-based incentive compensation under paragraphs B. or D. of this Section 3, and the Executive’s right to receive or retain such compensation, shall be subject to any policy adopted by the Board of Directors or the Committee (or any successor committee of the Board of Directors with authority over executive compensation) pursuant to the “clawback” provisions of Section 304 of the Sarbanes-Oxley Act of 2002, Section 10D of the Securities Exchange Act of 1934, or regulations promulgated thereunder, or pursuant to any rule of any national securities exchange on which the equity securities of the Company are listed implementing Section 10D of the Securities Exchange Act of 1934, or regulations promulgated thereunder.
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4.
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Termination.
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A.
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For Cause
. The Company may terminate the employment of the Executive prior to the end of the Term of this Agreement “for cause.” Termination “for cause” shall be defined as a termination by the Company of the employment of the Executive occasioned by:
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i.
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the failure by the Executive to cure a breach of a material duty imposed on the Executive under this Agreement or any other written agreement between Executive and the Company within 15 days after written notice thereof by the Company;
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ii.
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the continuation by the Executive after written notice by the Company of a violation of any Company personnel policy, work rule or directive, or continued neglect of a duty imposed on the Executive under this Agreement;
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iii.
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acts by Executive of fraud, embezzlement, theft or other material dishonesty directed against Navidea;
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iv.
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the Executive is formally charged with a felony (other than a traffic offense), or a crime involving moral turpitude, that in the reasonable good faith judgment of the Board of Directors, may result in material damage to the Company or its reputation, or would materially interfere with the performance of Executive’s obligations under this Agreement; or
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v.
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any condition which either results from the Executive’s substantial dependence, as reasonably determined in good faith by the Board of Directors, on alcohol, or on any narcotic drug or other controlled or illegal substance.
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B.
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Resignation
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If the Executive resigns for any reason (except as otherwise defined in paragraph G of this Section 4), all salary, benefits, and any other payments by the Company shall cease at the time such resignation becomes effective. At the time of any such resignation, the Company shall pay the Executive the value of any accrued but unused vacation time, and the amount of all accrued but previously unpaid base salary through the date of such termination. The Company shall promptly reimburse the Executive for the amount of any expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3 above.
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C.
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Disability,
Death.
The Company may terminate the employment of the Executive prior to the end of the Term of this Agreement if the Executive has been unable to perform his duties hereunder
or a similar job
for a continuous period of six (6) months due to a physical or mental condition that, in the opinion of a licensed physician, will be of indefinite duration or is without a reasonable probability of recovery
for a period of at least six (6) months
. The Executive agrees to submit to an examination by a licensed physician of his choice in order to obtain such opinion, at the request of the Company, made after the Executive has been absent from his place of employment for at least six (6) months. The Company shall pay for any requested examination. However, this provision does not abrogate either the Company’s or the Executive’s rights and obligations pursuant to the Family and Medical Leave Act of 1993, and a termination of employment under this paragraph C shall not be deemed to be a termination “for cause.”
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D.
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Termination Without Cause.
A termination “without cause” is a termination of the employment of the Executive by the Company that is not “for cause” and not occasioned by the resignation, death or disability of the Executive. If the Company terminates the employment of the Executive without cause before the end of the Term of this Agreement, the Company shall, at the time of such termination, pay to the Executive the severance payment provided in paragraph F of this Section 4 together with the value of any accrued but unused vacation time and the amount of all accrued but previously unpaid base salary through the date of such termination, and shall provide Executive with all benefits to which he is entitled under paragraph C of Section 3 above for the longer of eighteen (18) months or the full unexpired Term of this Agreement. The Company shall promptly reimburse the Executive for the amount of any expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3.
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E.
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End of the Term of this Agreement.
Upon sixty (60) calendar days advance written notice to Executive of the Company’s intent not to renew the Term of this Agreement, the Company may terminate the Agreement and the employment of the Executive at the end of the Term of this Agreement without any further payment obligation to Executive other than as set forth in this Section 4. E. he shall be an employee at will and his employment may be terminated at any time by either the Company or the Executive without notice and for any reason not prohibited by law or no reason at all. If the Company terminates the employment of the Executive at the end of the Term of this Agreement, the Company shall, at the time of its next regularly scheduled payroll cycle, pay to the Executive the value of any accrued but unused vacation time and the amount of all accrued but previously unpaid base salary through the date of such termination. The Company shall also promptly reimburse the Executive for the amount of any reasonable expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3 above. At the discretion of the Company, the Company may offer to employ Executive as an at-will employee whose employment may be terminated at any time by either the Company or the Executive without notice and for any reason not prohibited by law, including for no reason. If Executive agrees to such at-will employment, the Company will establish the Executive’s duties, compensation, employee benefits, any bonus eligibility, any stock-incentive rights, vacation and sick/personal leave rights, and Sections 1., 2., 3.A. through 3.E., and 4.A. through 4.H. of this Agreement shall no longer apply to the Parties and will be null and void. All other provisions of this Agreement will remain in full force and effect, including all of Executive’s post-termination obligations and restrictive covenants set forth in this Agreement.
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H.
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Benefit and Stock Plans.
In the event that a benefit plan, Stock Plan or award agreement which covers the Executive has specific provisions concerning termination of employment, or the death or disability of an employee (
e.g.,
life insurance or disability insurance), then such benefit plan, Stock Plan or award agreement shall control the disposition of the benefits or stock options.
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I.
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Resignation of All Other Positions
. Upon termination of the Executive's employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the board of directors (or a committee thereof) of the Company or any of its related entities or affiliates.
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J.
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Cooperation
. The parties agree that certain matters in which the Executive will be involved during the Term may necessitate the Executive's cooperation following termination of his employment. Accordingly, following the termination of the Executive's employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive's service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive's other activities. The Company shall reimburse the Executive for reasonable and pre-approved expenses incurred in connection with such cooperation and, to the extent that the Executive is required to spend substantial time on such matters, the Company shall compensate the Executive at an hourly rate based on the Executive's Base Salary on the date of termination.
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5.
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Proprietary Information Agreement.
Executive has executed a Proprietary Information Agreement as a condition of employment with the Company. The Proprietary Information Agreement shall not be limited by this Agreement in any manner, and the Executive shall act in accordance with the provisions of the Proprietary Information Agreement at all times during the Term of this Agreement.
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6.
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Non-Competition.
Executive agrees that for so long as he is employed by the Company under this Agreement and for one (1) year thereafter, the Executive will not:
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A.
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enter into the employ of or render any services to any person, firm, or corporation, which is engaged, in any part, in a Competitive Business (as defined below);
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B.
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engage in any directly Competitive Business for his own account;
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C.
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become associated with or interested in through retention or by employment any Competitive Business as an individual, partner, shareholder, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor, or in any other relationship or capacity; or
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D.
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solicit, interfere with, or endeavor to entice away from the Company, any of its customers, strategic partners, or sources of supply.
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a.
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which is engaged in the development, commercialization or distribution of drugs and/or systems for use in detection, diagnosis or treatment of cancer, inflammatory or immune-related diseases, including without limitation the development, commercialization or distribution of radiopharmaceuticals for such purposes, or
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b.
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which reasonably could be understood to be competitive in the relevant market with products and/or systems described in clause
a
above, or
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c.
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in which the Company engages in during the Term of this Agreement pursuant to a determination of the Board of Directors and from which the Company derives a material amount of revenue or in which the Company has made a material capital investment.
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9.
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Governing Law.
The Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its conflicts of laws principles.
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10.
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Jurisdiction; Service of Process
. Except as otherwise provided in Section 7, any action or proceeding arising out of or relating to this Agreement, or arising out of or relating to Executive’s employment with or termination from the Company, shall be brought exclusively in the state or federal courts located in Franklin County, Ohio, and each of the parties irrevocably submits to the jurisdiction of each such court in any such action or proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the action or proceeding shall be heard and determined only in any such court and agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. The parties agree that either or both of them may file a copy of this Section with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum. Process in any action or proceeding referred to in the first sentence of this section may be served on any party anywhere in the world
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11.
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Waiver of Jury Trial
. THE PARTIES HEREBY UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING DIRECTLY OR INDIRECTLY OUT OF, RELATED TO, OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OR BREACH OF THIS AGREEMENT, AND/OR THE EMPLOYMENT OR BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN THEM. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court or other tribunal (including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND RELATED DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court
.
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12.
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Validity
. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of the Agreement, which shall remain in full force and effect.
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13.
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Compliance with Section 409A of the Internal Revenue Code.
It is intended that this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and any guidance thereunder (“Section 409A”). If, when the Executive's employment with the Company terminates, the Executive is a "specified employee" as defined in Section 409A(a)(1)(B)(i), and if any payments under this Agreement, including payments under Section 4, will result in additional tax or interest to the Executive under Section 409A(a)(1)(B) ("Section 409A Penalties"), then despite any provision of this Agreement to the contrary, the Executive will not be entitled to payments until the earliest of (a) the date that is at least six months after termination of the Executive's employment for reasons other than the Executive's death, (b) the date of the Executive's death, or (c) any earlier date that does not result in Section 409A Penalties to the Executive. As soon as practicable after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a lump sum. Additionally, if any provision of this Agreement would subject the Executive to Section 409A Penalties, the Company will apply such provision in a manner consistent with Section 409A during any period in which an arrangement is permitted to comply operationally with Section 409A and before a formal amendment to this Agreement is required. For purposes of this Agreement, any reference to the Executive's termination of employment will mean that the Executive has incurred a "separation from service" under Section 409A. No payments to be made under this Agreement may be accelerated or deferred except as specifically permitted under Section 409A. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A of the Code shall be paid under the applicable exception. Each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of Section 409A. To the extent that any reimbursements provided under this Agreement constitute deferred compensation subject to Section 409A, such amounts shall be paid or reimbursed to Executive promptly, but in no event later than December 31 of the year following the year in which the expense is incurred. The amount of any such payments eligible for reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any other taxable year, and Executive’s right to such payments or reimbursement shall not be subject to liquidation or exchange for any other benefit.
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14.
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Entire Agreement
. This Agreement, together with the Proprietary Information Agreement referenced above, constitutes the entire understanding between the parties with respect to the subject matter hereof, and supersedes all negotiations, prior discussions, and preliminary agreements to this Agreement. This Agreement may not be amended except in writing executed by the parties hereto.
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15.
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Effect on Successors of Interest.
This Agreement shall inure to the benefit of and be binding upon heirs, administrators, executors, successors and assigns of each of the parties hereto. Notwithstanding the above, the Executive recognizes and agrees that his obligation under this Agreement may not be assigned without the written consent of the Company. The Company, however, may assign its rights and obligations under this Agreement without any prior notice to the Executive.
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2.
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Term of this Agreement.
Subject to Section 4 hereof, the Term of this Agreement shall be for a period commencing on January 1, 2015 and terminating January 1, 2017 (the “Term”), unless terminated earlier pursuant to the termination provisions set forth in Section 4 of this Agreement. At the end of the Term, and at the end of each Term thereafter, the Term of this Agreement shall automatically renew for a like two-year Term, unless either Party to this Agreement provides sixty (60) calendar days advanced written notice to the other Party, prior to the end of any Term, of the Party’s intent not to renew the Agreement for another Term. The Parties also understand and agree that any termination of this Agreement, whether at the end of a Term or as otherwise set forth in Section 4 of this Agreement, shall also terminate the Executive’s employment with the Company, unless otherwise agreed to in writing by the Company.
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A.
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Salary.
Beginning on the first day of the Term, the Company shall pay the Executive a salary of Three Hundred Thousand Dollars ($300,000) per year (the “Base Salary”), subject to all applicable tax withholdings and deductions and payable in semi-monthly or monthly installments as requested by the Executive. The Compensation, Nominating and Governance Committee of the Board of Directors (the “Committee”) shall review the Executive's Base Salary on an annual basis and may increase or decrease the Base Salary based on its business judgment.
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B.
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Bonus.
For each complete calendar year of the Term, the Executive shall have the opportunity to earn an annual bonus (the “Annual Bonus”) equal to 35% of Base Salary (the "Target Bonus"), as in effect at the beginning of the applicable calendar year, based on achievement of annual corporate and individual target performance goals established by the Committee. The Committee will, on an annual basis, review the performance of the Company and of the Executive in relation to the target performance goals and will pay such Annual Bonus, as it deems appropriate, in its discretion, to the Executive based upon such review. Any bonus earned in any calendar year will be payable in the first calendar quarter of the following calendar year.
I
n order to be eligible to receive payment of an Annual Bonus, the Executive must be employed by the Company as of the day of the applicable calendar year on which the Company pays the Annual Bonuses.
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C.
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Benefits.
During the Term of this Agreement, the Executive will receive such employee benefits as are generally available to all employees of the Company.
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D.
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Stock Options and Incentives.
The Committee may, from time to time, grant to the Executive stock options, restricted stock purchase opportunities and such other forms of equity-based incentive compensation as it deems appropriate, in its discretion, under the Company’s applicable plans which are then in effect. Additionally, in consideration of entering into this Agreement and as an inducement to Executive joining the Company, the Committee will grant Executive the stock options and shares of restricted stock as set forth in Exhibit A hereto and subject to the terms and conditions of the Company’s applicable plans. All awards of equity incentives shall be governed by a separate equity incentive award agreement, the equity incentive terms of which shall govern the rights of the Executive and the Company in the event of any conflict between such agreement and this Agreement; otherwise, this Agreement shall control the Executive’s employment with, termination from, and post-termination covenants owed to, the Company.
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E.
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Vacation and Sick/Personal Leave.
The Executive shall be entitled to four (4) weeks of vacation and up to eighty (80) hours of sick/personal leave during each calendar year (prorated for partial years) during the Term of this Agreement, in accordance with the Company's vacation policies, as in effect from time to time.
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F.
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Expenses.
The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by him in the performance of his duties hereunder, including expenses for travel, entertainment and similar items, promptly after the timely presentation (preferably within no longer than two weeks of incurring the expense) by the Executive of an itemized account of such expenses.
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G.
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Clawback Policy
. The Company’s obligation to pay any bonus or stock-based incentive compensation under paragraphs B. or D. of this Section 3, and the Executive’s right to receive or retain such compensation, shall be subject to any policy adopted by the Board of Directors or the Committee (or any successor committee of the Board of Directors with authority over executive compensation) pursuant to the “clawback” provisions of Section 304 of the Sarbanes-Oxley Act of 2002, Section 10D of the Securities Exchange Act of 1934, or regulations promulgated thereunder, or pursuant to any rule of any national securities exchange on which the equity securities of the Company are listed implementing Section 10D of the Securities Exchange Act of 1934, or regulations promulgated thereunder.
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4.
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Termination.
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A.
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For Cause
. The Company may terminate the employment of the Executive prior to the end of the Term of this Agreement “for cause.” Termination “for cause” shall be defined as a termination by the Company of the employment of the Executive occasioned by:
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i.
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the failure by the Executive to cure a breach of a material duty imposed on the Executive under this Agreement or any other written agreement between Executive and the Company within 15 days after written notice thereof by the Company;
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ii.
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the continuation by the Executive after written notice by the Company of a violation of any Company personnel policy, work rule or directive, or continued neglect of a duty imposed on the Executive under this Agreement;
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iii.
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acts by Executive of fraud, embezzlement, theft or other material dishonesty directed against Navidea;
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iv.
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the Executive is formally charged with a felony (other than a traffic offense), or a crime involving moral turpitude, that in the reasonable good faith judgment of the Board of Directors, may result in material damage to the Company or its reputation, or would materially interfere with the performance of Executive’s obligations under this Agreement; or
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v.
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any condition which either results from the Executive’s substantial dependence, as reasonably determined in good faith by the Board of Directors, on alcohol, or on any narcotic drug or other controlled or illegal substance.
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B.
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Resignation
.
If the Executive resigns for any reason (except as otherwise defined in paragraph G of this Section 4), all salary, benefits, and any other payments by the Company shall cease at the time such resignation becomes effective. At the time of any such resignation, the Company shall pay the Executive the value of any accrued but unused vacation time, and the amount of all accrued but previously unpaid base salary through the date of such termination. The Company shall promptly reimburse the Executive for the amount of any expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3 above.
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C.
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Disability,
Death.
The Company may terminate the employment of the Executive prior to the end of the Term of this Agreement if the Executive has been unable to perform his duties hereunder
or a similar job
for a continuous period of six (6) months due to a physical or mental condition that, in the opinion of a licensed physician, will be of indefinite duration or is without a reasonable probability of recovery
for a period of at least six (6) months
. The Executive agrees to submit to an examination by a licensed physician of his choice in order to obtain such opinion, at the request of the Company, made after the Executive has been absent from his place of employment for at least six (6) months. The Company shall pay for any requested examination. However, this provision does not abrogate either the Company’s or the Executive’s rights and obligations pursuant to the Family and Medical Leave Act of 1993, and a termination of employment under this paragraph C shall not be deemed to be a termination “for cause.”
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D.
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Termination Without Cause.
A termination “without cause” is a termination of the employment of the Executive by the Company that is not “for cause” and not occasioned by the resignation, death or disability of the Executive. If the Company terminates the employment of the Executive without cause before the end of the Term of this Agreement, the Company shall, at the time of such termination, pay to the Executive the severance payment provided in paragraph F of this Section 4 together with the value of any accrued but unused vacation time and the amount of all accrued but previously unpaid base salary through the date of such termination, and shall provide Executive with all benefits to which he is entitled under paragraph C of Section 3 above for the longer of eighteen (18) months or the full unexpired Term of this Agreement. The Company shall promptly reimburse the Executive for the amount of any expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3.
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E.
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End of the Term of this Agreement.
Upon sixty (60) calendar days advance written notice to Executive of the Company’s intent not to renew the Term of this Agreement, the Company may terminate the Agreement and the employment of the Executive at the end of the Term of this Agreement without any further payment obligation to Executive other than as set forth in this Section 4. E. he shall be an employee at will and his employment may be terminated at any time by either the Company or the Executive without notice and for any reason not prohibited by law or no reason at all. If the Company terminates the employment of the Executive at the end of the Term of this Agreement, the Company shall, at the time of its next regularly scheduled payroll cycle, pay to the Executive the value of any accrued but unused vacation time and the amount of all accrued but previously unpaid base salary through the date of such termination. The Company shall also promptly reimburse the Executive for the amount of any reasonable expenses incurred prior to such termination by the Executive as required under paragraph F of Section 3 above. At the discretion of the Company, the Company may offer to employ Executive as an at-will employee whose employment may be terminated at any time by either the Company or the Executive without notice and for any reason not prohibited by law, including for no reason. If Executive agrees to such at-will employment, the Company will establish the Executive’s duties, compensation, employee benefits, any bonus eligibility, any stock-incentive rights, vacation and sick/personal leave rights, and Sections 1., 2., 3.A. through 3.E., and 4.A. through 4.H. of this Agreement shall no longer apply to the Parties and will be null and void. All other provisions of this Agreement will remain in full force and effect, including all of Executive’s post-termination obligations and restrictive covenants set forth in this Agreement.
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H.
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Benefit and Stock Plans.
In the event that a benefit plan, Stock Plan or award agreement which covers the Executive has specific provisions concerning termination of employment, or the death or disability of an employee (
e.g.,
life insurance or disability insurance), then such benefit plan, Stock Plan or award agreement shall control the disposition of the benefits or stock options.
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I.
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Resignation of All Other Positions
. Upon termination of the Executive's employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the board of directors (or a committee thereof) of the Company or any of its related entities or affiliates.
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J.
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Cooperation
. The parties agree that certain matters in which the Executive will be involved during the Term may necessitate the Executive's cooperation following termination of his employment. Accordingly, following the termination of the Executive's employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive's service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive's other activities. The Company shall reimburse the Executive for reasonable and pre-approved expenses incurred in connection with such cooperation and, to the extent that the Executive is required to spend substantial time on such matters, the Company shall compensate the Executive at an hourly rate based on the Executive's Base Salary on the date of termination.
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5.
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Proprietary Information Agreement.
Executive has executed a Proprietary Information Agreement as a condition of employment with the Company. The Proprietary Information Agreement shall not be limited by this Agreement in any manner, and the Executive shall act in accordance with the provisions of the Proprietary Information Agreement at all times during the Term of this Agreement.
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6.
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Non-Competition.
Executive agrees that for so long as he is employed by the Company under this Agreement and for one (1) year thereafter, the Executive will not:
|
A.
|
enter into the employ of or render any services to any person, firm, or corporation, which is engaged, in any part, in a Competitive Business (as defined below);
|
B.
|
engage in any directly Competitive Business for his own account;
|
C.
|
become associated with or interested in through retention or by employment any Competitive Business as an individual, partner, shareholder, creditor, director, officer, principal, agent, employee, trustee, consultant, advisor, or in any other relationship or capacity; or
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D.
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solicit, interfere with, or endeavor to entice away from the Company, any of its customers, strategic partners, or sources of supply.
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a.
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which is engaged in the development, commercialization or distribution of drugs and/or systems for use in detection, diagnosis or treatment of cancer, inflammatory or immune-related diseases, including without limitation the development, commercialization or distribution of radiopharmaceuticals for such purposes, or
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b.
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which reasonably could be understood to be competitive in the relevant market with products and/or systems described in clause
a
above, or
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c.
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in which the Company engages in during the Term of this Agreement pursuant to a determination of the Board of Directors and from which the Company derives a material amount of revenue or in which the Company has made a material capital investment.
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9.
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Governing Law.
The Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its conflicts of laws principles.
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10.
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Jurisdiction; Service of Process
. Except as otherwise provided in Section 7, any action or proceeding arising out of or relating to this Agreement, or arising out of or relating to Executive’s employment with or termination from the Company, shall be brought exclusively in the state or federal courts located in Franklin County, Ohio, and each of the parties irrevocably submits to the jurisdiction of each such court in any such action or proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of the action or proceeding shall be heard and determined only in any such court and agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. The parties agree that either or both of them may file a copy of this Section with any court as written evidence of the knowing, voluntary and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum. Process in any action or proceeding referred to in the first sentence of this section may be served on any party anywhere in the world
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11.
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Waiver of Jury Trial
. THE PARTIES HEREBY UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING DIRECTLY OR INDIRECTLY OUT OF, RELATED TO, OR IN ANY WAY CONNECTED WITH THE PERFORMANCE OR BREACH OF THIS AGREEMENT, AND/OR THE EMPLOYMENT OR BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN THEM. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court or other tribunal (including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND RELATED DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court
.
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12.
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Validity
. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of the Agreement, which shall remain in full force and effect.
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13.
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Compliance with Section 409A of the Internal Revenue Code.
It is intended that this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and any guidance thereunder (“Section 409A”). If, when the Executive's employment with the Company terminates, the Executive is a "specified employee" as defined in Section 409A(a)(1)(B)(i), and if any payments under this Agreement, including payments under Section 4, will result in additional tax or interest to the Executive under Section 409A(a)(1)(B) ("Section 409A Penalties"), then despite any provision of this Agreement to the contrary, the Executive will not be entitled to payments until the earliest of (a) the date that is at least six months after termination of the Executive's employment for reasons other than the Executive's death, (b) the date of the Executive's death, or (c) any earlier date that does not result in Section 409A Penalties to the Executive. As soon as practicable after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a lump sum. Additionally, if any provision of this Agreement would subject the Executive to Section 409A Penalties, the Company will apply such provision in a manner consistent with Section 409A during any period in which an arrangement is permitted to comply operationally with Section 409A and before a formal amendment to this Agreement is required. For purposes of this Agreement, any reference to the Executive's termination of employment will mean that the Executive has incurred a "separation from service" under Section 409A. No payments to be made under this Agreement may be accelerated or deferred except as specifically permitted under Section 409A. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A of the Code shall be paid under the applicable exception. Each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of Section 409A. To the extent that any reimbursements provided under this Agreement constitute deferred compensation subject to Section 409A, such amounts shall be paid or reimbursed to Executive promptly, but in no event later than December 31 of the year following the year in which the expense is incurred. The amount of any such payments eligible for reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any other taxable year, and Executive’s right to such payments or reimbursement shall not be subject to liquidation or exchange for any other benefit.
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14.
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Entire Agreement
. This Agreement, together with the Proprietary Information Agreement referenced above, constitutes the entire understanding between the parties with respect to the subject matter hereof, and supersedes all negotiations, prior discussions, and preliminary agreements to this Agreement. This Agreement may not be amended except in writing executed by the parties hereto.
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15.
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Effect on Successors of Interest.
This Agreement shall inure to the benefit of and be binding upon heirs, administrators, executors, successors and assigns of each of the parties hereto. Notwithstanding the above, the Executive recognizes and agrees that his obligation under this Agreement may not be assigned without the written consent of the Company. The Company, however, may assign its rights and obligations under this Agreement without any prior notice to the Executive.
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August 10, 2015
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/s/ Ricardo J. Gonzalez
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Ricardo J. Gonzalez
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Chief Executive Officer
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August 10, 2015
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/s/ Brent L. Larson
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Brent L. Larson
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Executive Vice President and Chief Financial Officer
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August 10, 2015
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/s/ Ricardo J. Gonzalez
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Ricardo J. Gonzalez
|
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Chief Executive Officer
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August 10, 2015
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/s/ Brent L. Larson
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Brent L. Larson
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Executive Vice President and Chief Financial Officer
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