Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As described in further detail under Item 5.02 below, on March 23, 2020, the Board of Directors (the “Board”) of Urovant Sciences Ltd. (“we,” “our,” “us” or the “Company”) appointed James A. Robinson to serve as our Principal Executive Officer. Mr. Robinson replaces Keith A. Katkin, who resigned as our Principal Executive Officer and as a member of our Board, effective as of March 23, 2020. As a result of Mr. Robinson’s employment as our Principal Executive Officer, the Board has determined that Mr. Robinson no longer qualifies as an independent director of the Company pursuant to the listing rules (the “Listing Rules”) of The Nasdaq Stock Market LLC (“Nasdaq”) and Rule10A-3 (“Rule10A-3”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Because the charter of the Audit Committee of the Board (the “Audit Committee”) requires all members of such committee to be independent directors as defined under the applicable Nasdaq Listing Rules and applicable independence requirements of the Securities and Exchange Commission, the Board has removed Mr. Robinson as a member of the Audit Committee, effective as of March 23, 2020. In addition, effective as of March 23, 2020, the Board also removed Mr. Robinson as a member of its Nominating, Corporate Governance and Compliance Oversight Committee (the “Nominating Committee”).
The Board and the Nominating Committee are currently in the process of identifying a qualified, independent director candidate who can join the Board and the Audit Committee. While this search is pending, due to Mr. Robinson’s removal from the Audit Committee, our Audit Committee has two members, and there is one vacancy. Accordingly, the Company no longer complies with the audit committee composition requirements set forth in Rule 5605(c)(1) of the Listing Rules (“Rule 5605(c)(1)”), and we are utilizing the cure period set forth in Rule 5605(c)(4)(B) of the Listing Rules (“Rule 5605(c)(4)(B)”) while we conduct our search. As a result, this noncompliance has no immediate effect on the listing or trading of the Company’s shares on Nasdaq. Pursuant to Rule 5605(c)(4)(B), to the extent our next annual meeting of shareholders will take place after September 19, 2020, the Company has until the earlier of (i) our next annual meeting of shareholders or (ii) March 23, 2021, to regain compliance with Rule 5605(c)(1). Alternatively, if our next annual meeting of shareholders takes place on or before September 19, 2020, we will have until September 19, 2020 to regain compliance with Rule 5605(c)(1).
On March 23, 2020, we notified Nasdaq that we are relying on the cure period set forth in Rule 5605(c)(4)(B). The Company intends to regain compliance with Rule 5601(c)(1) as soon as practicable, and in any event within the cure period set forth in Rule 5605(c)(4)(B).
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Keith A. Katkin as Principal Executive Officer and Director
On March 19, 2020, Mr. Katkin, the Principal Executive Officer of the Company and a member of our Board, delivered a notice to the Company of his resignation as the Principal Executive Officer of the Company and as a member of our Board, effective as of March 23, 2020.
In connection with Mr. Katkin’s resignation, Urovant Sciences, Inc. (“USI”), our wholly owned subsidiary, entered into a separation, release and consulting agreement with Mr. Katkin (the “Separation & Consulting Agreement”). Under the terms of the Separation & Consulting Agreement, Mr. Katkin’s right to receive any payments or benefits under his employment agreement with USI, dated September 14, 2017, has been terminated. In lieu of such payments and benefits, Mr. Katkin will receive (i) a lump sum payment of $230,000, minus standard payroll deductions and withholdings; (ii) continued medical benefits (or cash payments in lieu thereof) for up to 18 months; and (iii) after the end of the18-month period for continued medical benefits, monthly payments equal to the premium the Company would have had to pay to continue Mr. Katkin’s medical benefits for such month, for up to 18 months. In addition, Mr. Katkin’s vested options to purchase our common shares will remain exercisable until October 1, 2021.
Pursuant to the Separation & Consulting Agreement, until April 1, 2025 Mr. Katkin will also provide certain consulting services to the Company as may be reasonably requested by the Board from time to time, including without limitation, (i) reasonable transition and integration services related to business and financial reporting, (ii) providing strategic advice to the Board, and (iii) advising and assisting on our relationships with third parties. As compensation for such consulting services, Mr. Katkin will receive an annual consulting fee equal to $349,000 for a period of five years.
In addition to the foregoing, under the Separation & Consulting Agreement, Mr. Katkin also provided a customary release of claims for the benefit of the Company and agreed to abide by certain customary confidentiality and cooperation provisions following his resignation, along with certainnon-compete andnon-solicit restrictions during the period of his consulting services.
The foregoing description of the Separation & Consulting Agreement is qualified in its entirety by reference to the complete text of the Separation & Consulting Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
