CorMedix(CRMD) - 2025 Q2 - Quarterly Results

The Merger This article outlines the merger process, including transaction structure, closing, and effects on equity and operations The Merger Merger Sub will merge into the Company, which will survive as a wholly owned subsidiary of Parent - Merger Sub will merge into the Company, with the Company surviving as a wholly owned subsidiary of Parent[18] The Closing The merger closing will occur remotely on the second business day after all conditions are met or waived - The closing will take place remotely no later than the second business day after all conditions are satisfied or waived[19] Effective Time The merger becomes effective upon filing the Certificate of Merger with the Delaware Secretary of State - The merger's effective time is established by the filing of the Certificate of Merger with the Delaware Secretary of State[20] Effects of Merger The Surviving Company will assume all assets, rights, debts, and liabilities of both the Company and Merger Sub - Post-merger, the Surviving Company assumes all assets and liabilities of both the Company and Merger Sub[21] Certificate of Formation and Operating Agreement The Surviving Company will adopt Merger Sub's operating agreement and an amended certificate of formation, named "Melinta Therapeutics, LLC" - The Surviving Company will adopt Merger Sub's operating agreement and an amended certificate of formation, and its name will be "Melinta Therapeutics, LLC"[22][23] Manager and Officers Merger Sub's management team will become the manager and initial officers of the Surviving Company - Merger Sub's existing management team will assume leadership roles in the Surviving Company[24][25] Closing Deliveries This section details the specific documents and actions required from both Parent and the Company at or before the closing - Parent is required to deliver executed copies of the Escrow, Contingent Payment, and Registration Rights Agreements, along with evidence of Parent Share issuance[26][27] - The Company must deliver executed payoff letters for all Closing Debt, the executed Certificate of Merger, and Option Treatment Agreements covering at least 85% of underlying shares from options and promised equity grants[28][29][30] Effect on Equity Interests and Company Options This section specifies the treatment of all equity at the merger's effective time, including share conversion and option cancellation - Each Company Share converts into the right to receive a portion of the Merger Consideration as defined in the Allocation Schedule[34] - All outstanding Company Options will be canceled. Holders who sign an Option Treatment Agreement will receive their portion of the Closing Cash Consideration and potential future payments from milestones and net sales[35] - Unvested Company Options for current employees will be fully accelerated immediately prior to closing[35] - The Company Equity Plan will be terminated at the Effective Time[38] Payment of Merger Consideration This section details the payment mechanics at closing, including cash, share issuance, and escrow deposits - At closing, Parent will pay the Closing Cash Consideration to Equityholders and issue the Closing Share Consideration to Consenting Company Members[39] - Parent will deposit the $4,000,000 Adjustment Escrow Amount with the Escrow Agent and the Members' Representative Reserve with the Members' Representative[40][41][319] - Payments to Company Optionholders that are considered compensation will be processed through payroll systems, subject to tax withholding[44] Post-Closing Adjustment This section outlines the process for a post-closing true-up of the merger consideration based on final financial calculations - Within 75 days post-closing, Parent will provide a Closing Statement with final calculations of key financial metrics[51] - The Members' Representative has a 30-day Objection Period to dispute the Closing Statement. Unresolved disputes are submitted to an Independent Expert for a final and binding decision[52][53] - If the final Adjusted Closing Cash Consideration is higher than the estimate, Parent pays the excess; if lower, the shortfall is paid to Parent from the Adjustment Escrow Fund. Adjustments under $50,000 are disregarded[55][56] Members' Representative Deerfield Private Design Fund IV, L.P. is appointed as the exclusive agent for all Equityholders with broad authority - Deerfield Private Design Fund IV, L.P. is appointed as the Members' Representative with exclusive authority to act on behalf of all Equityholders[61] - The representative is authorized to manage post-closing adjustments, tax matters, contingent payments, and any disputes[61] - The Members' Representative is indemnified by the Equityholders for costs and is not liable for actions taken in good faith. Expenses are paid from the Members' Representative Reserve[63][64][65] Representations and Warranties of the Company This article details the Company's assurances regarding its capital structure, financial health, contracts, and regulatory compliance Capital Structure The Company represents its authorized and outstanding membership interests, including preferred shares and options Company Capital Structure (as of Agreement Date) | Security Type | Authorized | Issued and Outstanding | | :--- | :--- | :--- | | Company Preferred Shares | 50,000,000 | 50,000,000 | | Company Common Shares | 8,825,000 | 0 | | - Reserved for Equity Plan | 8,825,000 | N/A | | - Options Outstanding | N/A | 8,338,000 (underlying shares) | | - Available for Future Grants | N/A | 487,000 (underlying shares) | Financial Statements; Undisclosed Liabilities The Company warrants its financial statements comply with GAAP and confirms no undisclosed liabilities exist - The Company has provided audited financial statements for the fiscal year ended December 31, 2024, and unaudited statements for the six-month period ended June 30, 2025[94] - The Company asserts it has no liabilities of any nature other than those reflected on its June 30, 2025 balance sheet, incurred in the ordinary course since that date, or related to the transaction[95] Employee Benefits The Company represents its employee benefit plans comply with laws and the merger will not trigger new benefits or parachute payments - All company benefit plans are listed and have been administered in material compliance with ERISA and the Code[125][127] - The merger itself will not trigger any new compensation, accelerated vesting, or other benefits for any Company service provider[131] - The transaction will not result in any "excess parachute payments" as defined by Section 280G of the tax code[133] Material Contracts The Company has provided a list of its material contracts, warranting their validity and absence of default - Material contracts include those with payments or receipts exceeding $300,000 in 2024 or 2025[138] - Contracts with restrictive clauses, such as non-compete or "most favored nations" provisions, are also classified as material[138] - The Company represents that all listed Material Contracts are in full force and effect, and no party is in material default[141] Regulatory Matters The Company represents compliance with Health Laws, proper clinical trials, and manufacturing practices, with a key trial completion date - The Company and its products are in material compliance with all applicable Health Laws, including those from the FDA[147] - All clinical trials have been conducted in compliance with Good Clinical Practices, and manufacturing adheres to Good Manufacturing Practices[149][152] - Enrollment in the phase III trial of Rezzayo for prophylaxis of certain infections in transplant patients is expected to be complete on or before October 31, 2025[164] Intellectual Property The Company warrants sole ownership of its IP, non-infringement, and protection of trade secrets - The Company asserts sole ownership of all Company Owned IP, free and clear of liens (other than Permitted Liens)[171] - The Company's business does not infringe on third-party IP, and to its knowledge, no third party is infringing on the Company's material IP[172] - The merger will not result in the loss, impairment, or required transfer of any Company IP rights[181] Top Customers; Top Suppliers The Company has provided lists of top customers and suppliers, confirming stable relationships - A list of the top 20 customers and top 20 suppliers for the 12 months ended December 31, 2024, has been provided[196] - The Company represents that no top customer or supplier has terminated or indicated an intent to terminate their business relationship in the last 12 months[197] Representations and Warranties of Parent and Merger Sub This article details Parent's assurances regarding its capital structure, financial solvency, and SEC compliance Capital Structure Parent represents its capital structure, including authorized and outstanding stock, and confirms valid issuance of merger shares Parent Capital Structure (as of August 5, 2025) | Security Type | Authorized | Issued and Outstanding | | :--- | :--- | :--- | | Parent Common Shares | 160,000,000 | 74,648,992 | | Parent Preferred Stock | 2,000,000 | 91,623 (Series C-3 and E) | - The Parent Shares to be issued as Closing Share Consideration are duly authorized and will be validly issued, fully paid, and non-assessable[203] Solvency; Financing Parent warrants its solvency and confirms sufficient funds for the merger, with financing not a closing condition - Parent represents it is solvent and will remain so after the merger[212] - Parent has secured sufficient funds for the transaction through a $150,000,000 convertible note offering and cash on hand[214] - The receipt of financing is not a condition precedent to Parent's obligations under the agreement[214] SEC Filings Parent represents its SEC filings are timely, compliant, and free of material misstatements, and its shares are Nasdaq-listed - Parent's SEC reports filed since January 1, 2023, are materially compliant with SEC regulations and do not contain untrue statements of material fact[216] - Parent is in compliance with Nasdaq listing rules and is not aware of any pending action to delist its shares[216] Covenants Relating to Conduct of Business This article outlines the Company's operational restrictions and non-solicitation obligations during the pre-closing period Conduct of Business of the Company Group The Company must conduct business in the ordinary course and is restricted from certain actions without Parent's consent - The Company must operate in the ordinary course of business between signing and closing[225] - Key restrictions on the Company without Parent's consent include: - Declaring dividends or repurchasing equity - Issuing new shares or options - Amending its Certificate of Formation or Operating Agreement - Making capital expenditures over $100,000 - Granting significant increases in employee compensation or benefits[226][227] No Solicitation The Company agrees not to solicit or engage in discussions regarding alternative acquisition proposals - The Company is prohibited from soliciting or negotiating any alternative "Acquisition Proposal"[233] - The Company must immediately cease all existing discussions with other parties and terminate their access to any data rooms[233] Additional Agreements This article covers mutual efforts for regulatory approvals, employee matters, indemnification, and specific pre-closing distributions Filings; Other Actions; Notification Both parties will use best efforts for regulatory approvals, including HSR, and Parent may undertake divestitures - Both parties will use reasonable best efforts to obtain all necessary regulatory approvals, including under the HSR Act[239] - Parent agrees to undertake Remedy Actions, such as asset sales, to gain antitrust clearance, unless such actions would create a Burdensome Condition[240] Employee Matters Parent commits to comparable employee compensation and benefits for one year post-closing, honoring severance and bonuses - For one year post-closing, Company employees will receive a base salary, bonus opportunities, and benefits no less favorable than what they had prior to the merger[252] - Parent will honor the Company Severance Plan and the Equity Value Recognition Bonus Plan[253] - If not paid prior to closing, 2025 annual bonuses will be paid by Parent no later than March 15, 2026[254] Director and Officer Indemnification The Surviving Company will assume existing indemnification rights, and the Company will purchase a six-year D&O tail policy - All rights to indemnification for the Company's directors and officers for pre-closing acts will survive the merger for a period of six years[263] - The Company will purchase a six-year "tail" D&O liability insurance policy, with the cost included as a Transaction Expense[264] R&W Policy Parent will maintain the R&W insurance policy as the sole recourse for breaches, waiving subrogation except for fraud - Parent will maintain the R&W Policy, which will be the sole recourse for breaches of the Company's representations and warranties post-closing[279][311] - The R&W insurer will waive subrogation rights against Equityholders, except in the case of actual fraud[279] Pre-Closing Distribution The Company will distribute its rights to the Feptanbli Product and License Agreement to its members before closing - The Company will assign its rights to the Feptanbli Product and License Agreement to its members before the merger closes[281] Conditions Precedent to the Merger This article outlines the mutual and individual conditions that must be satisfied for the merger to close Conditions to Each Party's Obligation Mutual closing conditions include no legal restraints, Company Member Approval, and HSR Act waiting period expiration - Mutual closing conditions include: - No legal prohibitions on the merger - Company Member Approval has been obtained - HSR Act waiting period has expired or been terminated[284][285][286] Additional Conditions to Obligations of the Company The Company's closing obligation depends on Parent's representations remaining true, covenant compliance, and no Parent Material Adverse Effect - The Company is not obligated to close if Parent has breached its representations or covenants in a material way[288] - A Parent Material Adverse Effect that is continuing would relieve the Company of its obligation to close[289] Additional Conditions to the Obligations of Parent Parent's closing obligation depends on the Company's representations, covenant compliance, Feptanbli distribution, and no Company Material Adverse Effect - Parent is not obligated to close if the Company has breached its representations or covenants in a material way[292] - The Pre-Closing Distribution of the Feptanbli asset must have occurred[294] - A Company Material Adverse Effect that is continuing would relieve Parent of its obligation to close[294] Termination, Amendment and Waiver This article details the conditions under which the merger agreement can be terminated by either party Termination The agreement can be terminated by mutual consent, if closing is delayed past the Outside Date, or due to material breach - The agreement can be terminated by either party if the merger does not close by the Outside Date of November 3, 2025[296] - Termination is also possible due to a final, non-appealable legal prohibition or an uncured material breach by the other party[297] - Parent may terminate if the Company fails to deliver the required member approval within 12 hours of signing[297] Effect of Termination Termination voids the agreement, but liability for fraud or willful material breach prior to termination survives - Upon termination, the agreement becomes void, but liability for fraud or a willful and material breach prior to termination survives[299] General Provisions This article covers the survival of covenants, governing law, and specific enforcement rights for the agreement Survival; Non-Recourse Representations and warranties do not survive closing, with the R&W policy as Parent's sole recourse for breaches - All representations and warranties made by both parties in the agreement do not survive the closing[304][305] - Parent's sole recourse for any breach of the Company's representations and warranties after closing is limited to claims under the R&W Policy[311] Governing Law The agreement and related disputes will be governed by the laws of the State of Delaware - The governing law for the agreement is the State of Delaware[431] Specific Enforcement; Jurisdiction Parties agree to seek specific performance and submit to the exclusive jurisdiction of Delaware courts for disputes - Parties are entitled to seek specific performance to enforce the terms of the agreement, as monetary damages are considered inadequate[433] - All legal proceedings related to the agreement must be brought exclusively in the courts of the State of Delaware[434] Exhibits This article contains supplementary documents detailing contingent payments, registration rights, and warrant terms Exhibit E: Form of Contingent Payment Agreement This exhibit outlines terms for future milestone and net sales payments to former Company members for specific products Rezzayo Product Milestone Payments | Milestone Event | Payment Amount | | :--- | :--- | | FDA approval includes Candida | $20,000,000 | | FDA approval includes Aspergillus | $2,500,000 | | FDA approval includes Pneumocystis | $2,500,000 | - Net Sales Payments will be made quarterly based on a tiered percentage of U.S. Net Sales for the Rezzayo Product and a flat percentage for the Minocin Product[492] - Parent is obligated to use Commercially Reasonable Efforts to achieve the milestones and to commercialize, promote, and sell each Product[528][531] Exhibit F: Form of Registration Rights Agreement This agreement grants registration rights for shares received in the merger and includes lock-up provisions - The Company must file a resale registration statement on Form S-3 covering all Registrable Securities[610] - A Lock-Up Period of up to 120 days applies to certain "Restricted Shares," with releases scheduled at 60 days and 120 days post-closing[656] - The Company is responsible for all expenses related to the registration, including up to $35,000 in fees for the Holders' legal counsel per registration[643] Exhibit M: Form of Closing Share Warrants This exhibit provides the form for pre-funded warrants to purchase Parent's common stock, detailing exercise and limitations - The warrants are pre-funded with a remaining exercise price of only $0.001 per share[707] - Warrants can be exercised on a cash or cashless basis at the holder's option[708][709][710] - An exercise limitation prevents the holder from beneficially owning more than a specified percentage (e.g., 4.9%) of the Company's outstanding common stock[729]