NOTE 8 RESTRUCTURING

In July 2012, the Company, at the direction of its Board of Directors, conducted a corporate restructuring under which the number of employees was significantly reduced, retaining only those employees necessary to continue the Company’s efforts to obtain marketing approval for Northera in the United States. This reduction in force primarily, but not exclusively, impacted those positions that had been filled in 2011 and 2012 to support the planned commercialization of Northera in the United States. In addition, the Company’s Chief Executive Officer, or CEO, and its Vice President of Sales and Marketing left the Company. The Company’s Vice President of Operations was appointed Interim President and CEO as the Board evaluated candidates for that position. At the Board level, the Chairman of the Board stepped down, but remains a director, while another existing director assumed the role of Chairman. The former CEO and two other directors also resigned from the Board.

As a component of the former CEO’s departure, the Company accelerated the vesting of all unvested options that had been previously granted to its former CEO and extended the period in which those options could be exercised from 90 days from the date of termination of July 10, 2012, to two years from that date. For the directors that resigned from the Board, the Company accelerated the vesting of all unvested options that had been previously granted and extended the period in which those options can be exercised from 180 days from the date of separation of July 9, 2012, to one year from that date. During that period, those former directors exercised options for the purchase of 100,210 shares while options for the purchase of 335,000 shares remained unexercised and expired.

In March 2014, the Company was notified by the former CEO that he had been offered and had accepted another full-time position and that such employment would begin on April 1, 2014. Per the terms of his severance agreement, the Company is entitled to a dollar for dollar offset from the severance pay of any amounts earned by the former CEO in his new employment. The Company adjusted the remaining restructuring reserve related to the former CEO’s severance accordingly.

During 2012, the Company established a reserve related to the costs of the restructuring totaling approximately $2.5 million. As of March 31, 2014, the Company had made cash payments of approximately $2.2 million related to this reserve and had made other non-cash adjustments of approximately $0.2 million. The activity associated with the reserve established by the Company for restructuring charges associated with these actions as of March 31, 2014 was as follows:

	Restructuring						Adjustments,		Restructuring
	Liabilities as of						Non-cash items		Liabilities as of
	December 31,		Charges to the		Cash		and Changes		March 31,
	2013		Reserve		Payments		to Estimates		2014
Employee related costs:
Severance, salary continuation and related costs	$	270,419	$	-	$	(132,208)	$	(98,049)	$	40,162
Other costs		-		-		-		-		-
Totals	$	270,419	$	-	$	(132,208)	$	(98,049)	$	40,162