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COMMITMENTS
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Dec. 31, 2013
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Text Block] |
12. COMMITMENTS
Consulting and Employment Agreements
On October 4, 2013, Dr. Simon Pedder was appointed as Acting Chief Executive Officer and elected as a Class III Director replacing Harry Palmin. The Company entered into a consulting agreement with Dr. Pedder for the period from October 4, 2013 through March 31, 2014 under which the Company will pay Dr. Pedder a consulting fee of $30,000 per month, granted Dr. Pedder a non-qualified stock option to purchase up to 3,360,000 shares of common stock having an exercise price of $0.33 per share and vesting equally over four years and granted a non-qualified stock option to purchase up to 1,925,573 shares of common stock having an exercise price of $0.75 per share (the “Anti-dilution Option”), exercisable as shares of the Company’s common stock are issued following the exercise of outstanding warrants to purchase up to 36,585,895 shares of the Company’s common stock, in the ratio of one option share for each 19 shares issued upon warrant exercise. Both non-qualified stock options expire on October 4, 2023 unless earlier exercised or terminated. On February 20, 2014, the number of shares subject to the Anti-dilution Option was reduced by 289,473 shares, according to its terms, following the expiration of warrants to purchase 5,500,000 shares of common stock.
The Company also entered into an employment agreement with Dr. Pedder effective as of April 1, 2014, pursuant to which Dr. Pedder will serve as President and Chief Executive Officer of the Company at a base salary rate of $350,000 per year beginning April 1, 2014 and will remain in effect until employment is terminated in accordance with the Employment Agreement. Dr. Pedder will also receive a monthly reimbursement for temporary living costs not to exceed $4,000 per month during the first 6 months of employment. Dr. Pedder will be eligible for an annual bonus, based on performance, of up to 50% of his base salary at the discretion of the compensation committee of the board of directors. The agreement also provides for a continuation of Dr. Pedder’s salary for a period of six months and provides for the continuation of benefits for six months following a termination without cause, as defined. In the event of a termination without cause, contingent upon the execution of a release agreement in favor of the Company, the Company will also provide for a one-year acceleration of unvested options, related to non-qualified options granted on October 4, 2013 to purchase up to 3,360,000 shares of common stock, and such vested options will remain exercisable for a period of 1-year following the termination date. In the event of a change in control event, as defined, 100% of unvested options, related to non-qualified options granted on October 4, 2013 to purchase up to 3,360,000 share of common stock, will be accelerated and will remain exercisable for a period of 1-year following the change in control event.
Real Property Leases
On September 5, 2007, Cellectar, Inc. entered into a 36-month lease for office and manufacturing space, commencing September 15, 2007. The lease provides for the option to extend the lease under its current terms for seven additional two-year terms. Rent was $8,050 per month for the first year and then escalates by 3% per year for the duration of the term including any lease extension terms. The lease also requires the payment of monthly rent of $1,140 for approximately 3,400 square feet of expansion space. The monthly rent for the expansion space is fixed until such time as the expansion space is occupied at which time the rent would increase to the current per square foot rate in effect under the original lease terms. The Company is responsible for certain building-related costs such as property taxes, insurance, and repairs and maintenance. Rent expense is recognized on a straight-line basis and accordingly the difference between the recorded rent expense and the actual cash payments has been recorded as deferred rent as of each balance sheet date. Due to the significant value of leasehold improvements purchased during the initial 3-year lease term and the economic penalty for not extending the building lease, straight-line rent expense and the associated deferred rent has been calculated over 17 years, which represents the full term of the lease, including all extensions.
The Company is required to remove certain alterations, additions and improvements upon termination of the lease that altered a portion of the rentable space. In no event shall the cost of such removal, at commercially reasonable rates, paid by the Company exceed $55,000 (“Capped Amount”). Any amount in excess of the Capped Amount shall be the obligation of the landlord. The Company is required to maintain a certificate of deposit equal to the Capped Amount during the term of the lease, which amount is shown as restricted cash on the accompanying balance sheets.
As of December 31, 2013, future minimum lease payments under this non-cancelable lease are approximately as follows:
In February 2014, the Company exercised its option to extend the lease for an additional two-year term that will commence on September 15, 2014 and continue through September 14, 2016.
The Company also leases office space in Newton, MA for monthly rent payments of $5,300 through March 31, 2014. The Company has classified the related security deposit as a current asset in the accompanying balance sheet as of December 31, 2013.
Rent expense was approximately $229,000 and $227,000 for the years ended December 31, 2013 and 2012, respectively and approximately $1,597,000 from inception to December 31, 2013.
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