We are subject to legal proceedings and claims that arise in the ordinary course of business.

 

 

On Hainan Sinotau Pharmaceutical Co., Ltd. (“Sinotau”) filed a suit for damages, specific performance, and injunctive relief against the Company in the United States District Court for the District of Massachusetts alleging breach of a letter of intent for licensing to Sinotau of the Company’s product candidate and technology. In the Court denied the Company’s

motion to dismiss. The Company filed its answer to the complaint and on the parties filed a joint motion to stay the case for days pending settlement discussion. At this time, it is possible to determine with any degree of certainty the ultimate outcome of this legal proceeding, including making a determination of liability.  The Company intends to vigorously defend the case.

 

 

 

During the course of CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas. On CRG exercised control over of the Company’s primary bank accounts and took possession of million that was on deposit, applying million of the cash to various fees, including collection fees, a prepayment premium and an end-of-term fee. The remaining was applied to the principal balance of the debt. Multiple motions, actions and hearings followed over the remainder of and into

 

On the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health to effectuate the terms of a settlement previously entered into by the parties on In accordance with the Global Settlement Agreement, on the Company repaid the million Deposit Amount of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the Final Payoff Amount. The Company and CRG further agreed that the Final Payoff Amount would be less than million and more than million. In addition, CRG agreed that Navidea had the right to assert all affirmative defenses to its claim of default.  In the underlying case the district court had entered summary judgment in favor of CRG finding unspecified events of default but refusing to consider affirmative defenses raised by Navidea as before the Court.  Subsequent to the settlement CRG moved again for entry of judgment in its favor; Navidea objected that the Settlement Agreement specifically allowed it to raise affirmative defenses and the district court agreed with Navidea setting the case for trial in CRG has once again indicated it intends to move for summary judgment, a motion Navidea intends to vigorously dispute.

 

Concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health posted a million letter of credit in favor of CRG (at the Company’s cost and expense to be deducted from the closing proceeds due to the Company, and subject to Cardinal Health indemnification rights under the Purchase Agreement) as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health for the costs incurred by Cardinal Health in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of million shall be paid by the Company without resort to the letter of credit posted by Cardinal Health and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health further agree that Cardinal Health can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health incurs any cost associated with payment to CRG under the settlement. The million being held in escrow pursuant to court order in the Ohio case and the million being held in escrow pursuant to court order in the Texas case were released to the Company at closing of the Asset Sale. The Texas hearing is currently set for early See Notes and

 

 

On the Company received a demand for arbitration through the American Arbitration Association, Columbus, Ohio, from Ricardo J. Gonzalez, the Company’s then Chief Executive Officer, claiming that he was terminated without cause and, alternatively, that he resigned in accordance with Section of his Employment Agreement pursuant to a notice received by the Company on On the Company notified Mr. Gonzalez that his failure to undertake responsibilities assigned to him by the Board of Directors and otherwise work after being ordered to do so on multiple occasions constituted an effective resignation, and the Company accepted that resignation. The Company rejected the resignation of Mr. Gonzalez pursuant to Section of his Employment Agreement. Also, the Company notified Mr. Gonzalez that, alternatively, his failure to return to work after the expiration of the cure period provided in his Employment Agreement constituted cause for his termination under his Employment Agreement. Mr. Gonzalez was seeking severance and other amounts claimed to be owed to him under his Employment Agreement. In response, the Company filed counterclaims against Mr. Gonzalez alleging malfeasance by Mr. Gonzalez in his role as Chief Executive Officer. Mr. Gonzalez had withdrawn his claim for additional severance pursuant to Section of his Employment Agreement, and the Company had withdrawn its counterclaims. On the Company received a ruling in favor of Mr. Gonzalez finding that he was terminated by the Company without cause on Mr. Gonzalez was awarded salary, bonus, and benefits in the aggregate amount of plus interest, attorneys’ fees, and other costs. The arbitration award is final and binding on the parties. The Company paid an aggregate of to Mr. Gonzalez on

 

 

On FTI Consulting, Inc. (“FTI”) commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in excess of comprised of: (i) for investigative and consulting services FTI alleges to have provided to the Company pursuant to an Engagement Agreement, and (ii) in excess of for purported interest due on unpaid invoices, plus attorneys’ fees, costs and expenses.  On the Company filed an Answer and Counterclaim denying the allegations of the Complaint and seeking damages on its Counterclaim, in an amount to be determined at trial, for intentional overbilling by FTI. On a preliminary conference was held by the Court at which time a scheduling order governing discovery was issued. On the Company and FTI entered into a settlement agreement. According to FTI, as of FTI was owed including interest charges and legal fees. Under the terms of the settlement agreement, the Company paid an aggregate of to FTI on

 

 

On Navidea filed suit against Sinotau in the U.S. District Court for the Southern District of Ohio. The Company's complaint included claims seeking a declaration of the rights and obligations of the parties to an agreement regarding rights for the Tc tilmanocept product in China and other claims. The complaint sought a temporary restraining order ("TRO") and preliminary injunction to prevent Sinotau from interfering with the Company’s Asset Sale to Cardinal Health On the Court granted the TRO and extended it until The Asset Sale closed on On the Court dissolved the TRO as moot. The Ohio case remains open because all issues raised in the complaint have been resolved but the parties submitted a stipulation to stay the case for days pending settlement discussions, which was entered by the Court on

 

Sinotau also filed a suit against the Company and Cardinal Health in the U.S. District Court for the District of Delaware on On the District of Delaware case was transferred to the Southern District of Ohio. On the Ohio Court determined that both cases in the Southern District of Ohio are related and the case was stayed for days pending settlement discussions.

 

 

In accordance with ASC Topic , we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In the case of the CRG litigation, we could still be required to pay up to an additional million to CRG depending upon the outcome of the Texas litigation, which would have a material negative impact on our financial position. Although the outcome of any litigation is uncertain, in our opinion, the amount of ultimate liability, if any, with respect to any of these actions other than CRG will materially affect our financial position.