Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 3, 2022, Synthetic Biologics, Inc. (the "Company") entered into a
three-year employment agreement with Steven A. Shallcross (the "Employment
Agreement"), who has served as the Company's Chief Executive Officer since
December 6, 2018 and as the Company's Chief Financial Officer since June 1, 2015
to continue to serve as the Chief Executive Officer and Chief Financial Officer
of the Company. The Employment Agreement replaced the prior employment agreement
with the Company that Mr. Shallcross entered into on December 6, 2018, as
amended December 5, 2019. The material terms of the Employment Agreement are set
forth below.
Pursuant to the Employment Agreement, Mr. Shallcross is entitled to an annual
base salary of $585,000 and an annual cash performance bonus of up to fifty
percent (50%) of his annual base salary as well as discretionary annual equity
awards pursuant to the Company's incentive plans. The annual bonus will be based
upon the assessment of the Board of Mr. Shallcross's performance. The Employment
Agreement also includes confidentiality obligations and inventions assignments
by Mr. Shallcross and non-solicitation and non-competition provisions.
The Employment Agreement has a stated term of three years but may be terminated
earlier pursuant to its terms. If Mr. Shallcross's employment is terminated for
any reason, he or his estate as the case may be, will be entitled to receive the
unpaid base salary through the date of termination and accrued vacation, any
unpaid annual bonus earned with respect to any calendar year ending on or
preceding the date of termination, expense reimbursement and any other
entitlements accrued by him to the extent not previously paid (the "Accrued
Obligations"); provided, however, that if his employment is terminated (i) by
the Company without Cause or by Mr. Shallcross for Good Reason (as each is
defined in the Employment Agreement) then, subject to him executing a general
release in form acceptable to the Company that becomes effective, in addition to
paying the Accrued Obligations, (a) the Company will continue to pay his then
current base salary and if the Executive timely elects continued coverage under
COBRA, the Company will continue to provide benefits at least equal to those
that were provided at the time of termination for a period of twelve (12) months
and (b) all unvested equity awards will vest and he shall have the right to
exercise any such vested equity awards until the earlier of eighteen (18) months
after termination or the remaining term of the awards; or (ii) by reason of his
death or Disability (as defined in the Employment Agreement), then in addition
to paying the Accrued Obligations, Mr. Shallcross or his estate would have the
right to exercise any vested options until the earlier of six (6) months after
termination or the remaining term of the awards. In such event, if Mr.
Shallcross commenced employment with another employer and becomes eligible to
receive medical or other welfare benefits under another employer-provided plan,
the medical and other welfare benefits to be provided by the Company as
described herein would terminate.
The Employment Agreement provides that upon the closing of a "Change in Control"
(as defined in the Employment Agreement), all unvested options shall immediately
vest and the time period that Mr. Shallcross will have to exercise all vested
stock options and other awards that Mr. Shallcross may have will be equal to the
shorter of: (i) eighteen (18) months after termination, or (ii) the remaining
term of the award(s). If within one (1) year after the occurrence of a Change in
Control, Mr. Shallcross terminates his employment for "Good Reason" or the
Company terminates Mr. Shallcross's employment for any reason other than death,
disability or Cause, Mr. Shallcross will be entitled to receive: (i) the portion
of his base salary for periods prior to the effective date of termination
accrued but unpaid (if any); (ii) all unreimbursed expenses (if any); (iii) an
aggregate amount (the "Change in Control Severance Amount") equal to two (2)
times the sum of his base salary plus an amount equal to the bonus that would be
payable if the "target" level performance were achieved under the Company's
annual bonus plan (if any) in respect of the fiscal year during which the
termination occurs (or the prior fiscal year if bonus levels have not yet been
established for the year of termination) subject to him executing a general
release in form acceptable to the Company that becomes effective. If within two
(2) years after the occurrence of a Change in Control, Mr. Shallcross terminates
his employment for "Good Reason" or the Company terminates Mr. Shallcross's
employment for any reason other than death, disability or Cause, Mr. Shallcross
will be entitled to also receive for the period of two (2) consecutive years
commencing on the date of such termination of his employment, medical, dental,
life and disability insurance coverage for him and the members of his family
that are not less favorable to him than the group medical, dental, life and
disability insurance coverage carried by the Company for him subject to him
executing a general release in form acceptable to the Company that becomes
effective. The Change in Control Severance Amount is to be paid in a lump sum if
the Change in Control event constitutes a "change in the ownership" or a "change
in the effective control" of the Company or a "change in the ownership of a
substantial portion of a corporation's assets" (each within the meaning of
Section 409A of the Internal Revenue Code ("Rule 409A")), or in 48 substantially
equal payments, if the Change in Control event does not so comply with Section
409A.
The information contained in this Item 5.02 regarding the Employment Agreement
is qualified in its entirety by a copy of the Employment Agreement attached to
this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
10.1 Employment Agreement with Steven Shallcross dated January 3, 2022
104 Cover Page Interactive Data File (embedded within the XBRL document)
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