Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. NephroGenex, Inc. (1338095) 10-K published on Mar 28, 2016 at 6:11 pm
Reporting Period: Dec 30, 2015
There can be no assurance that the process to identify and evaluate potential business alternatives will result in a successful alternative for our business. If no transactions with respect to potential business alternatives are identified and completed, our Board of Directors may decide to pursue a restructuring, which may include a reorganization or bankruptcy under Federal bankruptcy laws, or a dissolution, liquidation and/or winding up of our company. If our Board of Directors were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation of our company, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders. Our commitments and contingent liabilities may include (i) obligations under our employment and separation agreements with certain members of its management that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of our company, (ii) various claims and legal actions arising in the ordinary course of business and (iii) non-cancelable lease obligations. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of our company. If a dissolution and liquidation were pursued, our Board of Directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock may lose their entire investment in the event of a reorganization, bankruptcy, liquidation, dissolution or winding up of our company.
During 2007, the Company entered into a grant‑back license agreement with BioStratum, Inc. ("BioStratum"), as part of our acquisition of certain of BioStratum’s assets, including certain patent rights. The license grant to BioStratum was made solely to enable BioStratum to exercise its rights and perform its obligations pursuant to a license agreement with Kowa Company, Ltd. ("Kowa") pursuant to which BioStratum granted Kowa an exclusive license (the "Kowa Agreement") to manufacture and use licensed products in Japan, Taiwan, Korea, and China. The Kowa Agreement was terminated by Kowa on December 5, 2007. BioStratum did not exercise its option to assume Kowa's rights under the Kowa agreement. Therefore, the grant-back license agreement automatically terminated on January 15, 2008. However, the grant-back license agreement expressly states that the Company must have the written consent of BioStratum to grant licenses to the manufacture and use licensed products in Japan, Taiwan, Korea and China (the "Surviving Provision"). On June 22, 2015, the Company entered into a termination agreement with BioStratum ("Termination Agreement") to terminate this Surviving Provision under the grant-back license agreement. The Company paid $35,000 in connection with the execution of this Termination Agreement.
Jaikrishna Patel has served as our Chief Medical Officer since July 2015 and Chief Scientific Officer since December 2015. Dr. Patel has a significant role in our PIONEER clinical trial program. He also focuses on new areas and has taken over the activities recently performed by contractors and consultants. Dr. Patel has held numerous positions at GlaxoSmithKline, including his most recent position as Vice President, Metabolic Pathways and Cardiovascular, Global Regulatory Affairs, which he held since April 2012. Prior to that, Dr. Patel served as Vice President, U.S. Regional Regulatory Affairs from September 2010 to April 2012. He has served at GlaxoSmithKline and its predecessor companies in varying roles since 1991. Dr. Patel graduated from the University of London with a BSc (Hons), 1st class, in Experimental Pathology in 1983. He received an MBBS with distinction from St. Bartholomew’s Hospital in 1986, and an MRCP in 1989. Dr. Patel completed his post-graduate medical training at St. Bartholomew’s Hospital and Kings College Hospital in London and is licensed with the UK General Medical Council.
Pursuant to his employment agreement, Mr. Legault received a grant of restricted stock units (“RSUs”) which represent the right to receive 24,000 shares of our common stock, subject to the terms and conditions of a restricted stock unit agreement and grant notice (the "RSU Award"). 25% of the RSUs granted to Mr. Legault vested on October 21, 2014, and the remaining 75% of the RSUs granted to Mr. Legault vest in equal monthly installments, on the first day of each calendar month, beginning on November 1, 2014 and continuing for 36 months thereafter, provided that Mr. Legault remains in service with us. The RSUs will vest in full upon a change in control of the Company, provided that Mr. Legault remains employed with the Company through the date of the change in control. A “change in control” generally means the occurrence of one or more of the following: (i) any person becomes owner, directly or indirectly, of Company securities representing more than 50% of the combined voting power of the Company other than by virtue of a merger, consolidation or similar transaction; (ii) the consummation of a merger, consolidation or similar transaction where immediately after the consummation of such transaction the stockholders of the Company immediately prior to the transaction do not own, directly or indirectly, either 50% or more of the combined voting power of the surviving entity or the parent of the surviving entity; or (iii) the disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries during any 12 month period. We also make special cash bonus payments to Mr. Legault on each date that shares are delivered to Mr. Legault upon vesting of RSUs in an amount equal to the product of the number of shares of common stock delivered on such date and $16.12, less applicable taxes and withholdings; but in no event shall this bonus amount exceed $387,000 in the aggregate, before adjustment for applicable taxes and withholdings. The per share bonus amount shall be equitably adjusted in the event of any capitalization adjustment of the Company.
J. Wesley Fox, Ph.D. Effective as of September 1, 2015, Dr. Fox resigned from his positions as our President and Chief Scientific Officer and became a consultant. On August 6, 2015, the Board approved and entered into the consulting agreement by and between the Company and Dr. Fox. The term of the consulting agreement commences on September 1, 2015 and is effective until terminated by either party upon 30 days advance written notice to the other party. Pursuant to the terms of the consulting agreement, Dr. Fox will be entitled to receive a fee of $12,000 per month in exchange for services to the Company. Additionally, provided Dr. Fox successfully leads a scientific advisory board on behalf of the Company, the Company agrees to pay him an annual $35,000 advisory fee, subject to adjustment by the Board, such amounts to be paid following the termination of the consulting agreement; provided, however, that such termination must be by the Company and not Dr. Fox. Notwithstanding the above, if the Company terminates the consulting agreement on or prior to February 29th, 2016 for reasons unrelated to Consultant’s performance, the Company shall pay Dr. Fox a lump sum amount of $72,000 minus consulting fees previously paid up to the date of termination. Dr. Fox is obligated to comply with various restrictive covenants, including a non-compete, non-solicit and protection of the Company’s confidential information and inventions. In connection with the recent developments in February 2016, the Company terminated the consulting agreement with Dr. Fox effective on February 29, 2016 and, as a result, no additional amounts are owed to Dr. Fox as part of this termination.