The patent is a technology or compositional - not product specific. So they would lose out on using the technology for other drugs that would benefit from time release improvements.
Even if they have a performance clause (which I'm guessing not), it would probably still require them to payback the $1M upfront payment. Depending on who they hire as the new CEO (hopefully an industry heavy weight) it's going to cost them more in salary than Khosla IMO (again if Zerbe does it right and hires someone with true experience). Add in the fact that they won't have any new revenue streams until late 2016, I don't know if they have the money to pay back the $1M even if they wanted to.
As the saying goes - you simply can't make this stuff up, no one would believe someone could be as incompetent as Zerbe has been.
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