In MT, our previously wholly-owned subsidiary, entered into a Securities Purchase Agreement to sell up to shares of its Series A Convertible Preferred Stock (“MT Preferred Stock”) and warrants to purchase up to common shares of MT (“MT Common Stock”) to Platinum and Dr. Michael Goldberg (the “MT Investors”) for a purchase price of per unit. A unit consists of share of MT Preferred Stock and warrants to purchase MT Common Stock. Under the agreement, of the MT Preferred Stock and warrants were committed to be purchased by Dr. Goldberg, and the balance by Platinum. The full shares of MT Preferred Stock and warrants that be sold under the agreement are convertible into, and exercisable for, MT Common Stock representing an aggregate interest on a fully converted and exercised basis. Navidea owns the remainder of the MT Common Stock. On definitive agreements with the MT Investors were signed for the sale of the tranche of shares of MT Preferred Stock and warrants to purchase shares of MT Common Stock to the MT Investors, with gross proceeds to MT of The MT Common Stock held by parties other than Navidea is reflected on the consolidated balance sheets as a noncontrolling interest.

 

The warrants had certain characteristics including a net settlement provision that required the warrants to be accounted for as a derivative liability at fair value, with subsequent changes in fair value included in earnings. The fair value of the warrants was estimated to be at issuance. At the fair value of the warrants was determined to be due to their expiration date and MT's insolvency. In addition, certain provisions of the Securities Purchase Agreement obligate the MT Investors to acquire the remaining MT Preferred Stock and related warrants for million at the option of MT. The estimated relative fair value of this put option was at issuance based on the Black-Scholes option pricing model and is classified within stockholders' equity.

 

In addition, we entered into a Securities Exchange Agreement with the MT Investors providing them an option to exchange their MT Preferred Stock for our Common Stock in the event that MT has completed a public offering with gross proceeds to MT of at least million by the anniversary of the closing of the initial sale of MT Preferred Stock, at an exchange rate per share obtained by dividing by the greater of (i) of the -day volume weighted average price per share of our Common Stock on the anniversary of the initial closing or (ii) To the extent that the MT Investors do timely exercise their exchange right, MT has the right to redeem their MT Preferred Stock for a price equal to per share. We also granted MT an exclusive sublicense for certain therapeutic applications of the Manocept technology.

 

In and Platinum contributed a total of to MT. MT was obligated to provide anything in return, although it was considered likely that the MT Board would ultimately authorize some form of compensation to Platinum. The Company initially recorded the entire as a current liability pending determination of the form of compensation.

 

In MT's Board of Directors authorized modification of the original investments of by Platinum and by Dr. Goldberg to a convertible preferred stock with a PIK coupon retroactive to the time the initial investments were made. The conversion price of the preferred stock will remain at the million initial market cap but a full ratchet was added to enable the adjustment of conversion price, warrant number and exercise price based on the valuation of the institutional investment round. In addition, the MT Board authorized issuance of additional convertible preferred stock with the same terms to Platinum as compensation for the additional of investments made in and Based on the MT Board's authorization of additional equity, the Company reclassified the additional from a current liability to equity. As of the date of filing of this Annual Report on Form -K, final documents related to the above transactions authorized by the MT Board have been completed.

 

 

In Dr. Michael Goldberg resigned from his positions as an executive officer and a director of Navidea. In connection with Dr. Goldberg's resignation, Navidea and Dr. Goldberg entered into an Agreement (the “Goldberg Agreement”), with the intent of entering into or more additional Definitive Agreements, which set forth the terms of the separation from service. Among other things, the Goldberg Agreement provided that Dr. Goldberg would be entitled to shares of our Common Stock, representing in part payment of accrued bonuses and payment of the balance of the Platinum debt. A portion of the shares to be issued to Dr. Goldberg would be held in escrow for up to months in order to reimburse Navidea in the event that Navidea is obligated to pay any portion of the Platinum debt to a party other than Dr. Goldberg. Further, the Goldberg Agreement provided that the Company's subsidiary, MT, would redeem all of Dr. Goldberg's preferred stock and issue to Dr. Goldberg super voting common stock equal to of the outstanding shares of MT. In the Company issued shares of our Common Stock to Dr. Goldberg, of which were placed in escrow in accordance with the Goldberg Agreement.

 

On Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On Navidea notified MT that it was terminating the sublicense in accordance with its terms, effective due to MT's insolvency. On the MT Board removed Dr. Goldberg as President and Chief Executive Officer of MT and from any other office of MT to which he have been appointed or in which he was serving. Dr. Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and Dr. Bruck remain members of the board of directors of Navidea. The MT Board then appointed Jed A. Latkin to serve as President and Chief Executive Officer of MT. On or about the Joint Official Liquidators and Foreign Representatives of Platinum Partners Value Arbitrage Fund L.P. sent a letter to MT directing that Dr. Goldberg be removed from the MT Board.  The MT Board has taken action in response.

 

 

On Navidea filed a complaint against Dr. Goldberg in the United States District Court, Southern District of New York (the “District Court”), alleging breach of the Goldberg Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a declaratory judgment that Navidea's performance under the Goldberg Agreement is excused and that Navidea is entitled to terminate the Goldberg Agreement as a result of Dr. Goldberg's actions. On Navidea filed an amended complaint against Dr. Goldberg which added a claim for breach of fiduciary duty seeking damages related to certain actions Dr. Goldberg took while CEO of Navidea. On Dr. Goldberg answered the amended complaint and asserted counterclaims against Navidea and -party claims against MT for breach of the Goldberg Agreement, wrongful termination, injunctive relief, and quantum meruit.

 

On the District Court ruled on several motions related to Navidea and MT and Dr. Goldberg that substantially limited the claims that Dr. Goldberg can pursue against Navidea and MT. Specifically, the District Court found that certain portions of Dr. Goldberg's counterclaims against Navidea and -party claims against MT failed to state a claim upon which relief can be granted. Additionally, the District Court ruled that actions taken by Navidea and MT, including reconstituting the MT board of directors, replacing Dr. Goldberg with Mr. Latkin as Chief Executive Officer of MT, terminating the sublicense between Navidea and MT, terminating certain research projects, and allowing MT intellectual property to revert back to Navidea, were breaches of the Goldberg Agreement.

 

The District Court also rejected Dr. Goldberg's claim for wrongful termination as Chief Executive Officer of MT. In addition, the District Court found that Dr. Goldberg lacked standing to seek injunctive relief to force the removal of Dr. Claudine Bruck and Michael Rice from MT's Board of Directors, to invalidate all actions taken by the MT Board on or after the date upon which Dr. Bruck and Mr. Rice were appointed by Navidea to the Board of MT), or to reinstate the terminated sublicense between Navidea and MT.

 

In addition, the District Court found Navidea's breach of fiduciary duty claim against Dr. Goldberg for conduct occurring more than years prior to the filing of the complaint to be time-barred and that Dr. Goldberg is entitled to an advancement of attorneys' fees solely with respect to that claim. The parties have briefed the issue to the District Court for resolution on how much in fees Dr. Goldberg is owed under the District Court's order.

 

On Goldberg filed a motion for leave to amend his complaint to add back in claims for breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit and injunctive relief. On the District Court denied Dr. Goldberg's motion for leave to amend in its entirety.

 

On Dr. Goldberg filed a motion seeking additional advancement from Navidea for fees in connection with the New York Action and the Delaware Action. Navidea opposed the motion and the District Court referred the matters to a Magistrate Judge. On the Magistrate Judge issued her Report and Recommendation which recommended that: () the District Court decline to exercise jurisdiction over Dr. Goldberg's motion as it pertained to expenses and fees incurred in defense of the Delaware Action; () the District Court decline to award any fees to Dr. Goldberg for the breach of fiduciary duty without additional motion practice on the issue; () the District Court find that Dr. Goldberg is entitled to advancement of his expenses and fees reasonably incurred in the defense of the remainder of the New York action subject to Dr. Goldberg's posting of an undertaking; and () establish a protocol by which Dr. Goldberg could establish the amounts due for advancement.

 

On in connection with Dr. Goldberg's motion for advancement, the District Court adopted the Magistrate Judge's report and recommendation and found that while Dr. Goldberg was being granted advancement of fees and expenses incurred in connection with either the Delaware Action or the assertion of -party claims against MT, the Court ruled that Dr. Goldberg was entitled to advancement for the defense of the remaining claims asserted against him by Navidea in the New York action.  The Court adopted a protocol by which additional motion practice will occur to determine the appropriate amount of fees to be advanced. Once that decision is made by the Magistrate Judge, subject to review by the District Court, Navidea will need to advance those fees to Dr. Goldberg conditioned upon Dr. Goldberg agreeing to pay those fees back to Navidea if it is determined that he is entitled to indemnification.  Dr. Goldberg is also asking the Court to accelerate the timeline by which advancement will occur, is asking the Court to expand the scope of issues to which Dr. Goldberg would be entitled to advancement, and is seeking to hold Navidea in contempt for failing to advance fees to date. The Company has opposed Dr. Goldberg's requests.

 

Fact discovery in the New York Action has been completed and the parties and the Court anticipate meeting in the future to address remaining case deadlines.

 

 

On MT initiated a suit against Dr. Goldberg in the Court of Chancery of the State of Delaware (the “Delaware Court”), alleging, among other things, breach of fiduciary duty as a director and officer of MT and conversion, and to obtain a declaratory judgment that the transactions Dr. Goldberg caused MT to effect are void. On the Delaware Court found that Dr. Goldberg's actions were authorized in compliance with the Delaware General Corporate Law. Specifically, the Delaware Court found that Dr. Goldberg's creation of a new subsidiary of MT and the purported assignment by Dr. Goldberg of MT's intellectual property to that subsidiary were void. The Delaware Court's ruling follows the order on in the case, in which it found Dr. Goldberg in contempt of its prior order holding Dr. Goldberg responsible for the payment of MT's fees and costs to cure the damages caused by Dr. Goldberg's contempt. MT's claims for breach of fiduciary duty and conversion against Dr. Goldberg remain pending. As a result of the Delaware Court's ruling and Navidea's prior termination of the sublicense between itself and MT, all of the intellectual property related to the Manocept platform is now directly controlled by Navidea. A trial on MT's claims against Goldberg for breach of fiduciary duty and conversion was held on through The Delaware Court requested post-trial briefing and a post-trial hearing. In addition, Dr. Goldberg filed additional requests for relief – seeking to hold MT's directors in contempt and seeking to challenge the appointment of certain individuals to the MT board of directors. MT opposed Dr. Goldberg's filings. The Delaware Court conducted oral argument on all remaining issues on and indicated that a written opinion will be forthcoming.

 

 

On Dr. Goldberg served shareholder demands on the Boards of Directors of Navidea and MT repeating many of the claims made in the lawsuits described above. On or about Dr. Goldberg commenced a derivative action purportedly on behalf of MT in the District Court against Dr. Claudine Bruck, Y. Michael Rice, and Jed Latkin alleging a claim for breach of fiduciary duty based on the actions alleged in the demands. On Dr. Goldberg dismissed the derivative action in New York without prejudice, and the Court approved the dismissal. Dr. Goldberg retains the ability to re-file the action in Delaware. Dr. Goldberg has yet re-filed his derivative complaint. See Notes and