Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) between Synthetic Biologics, Inc., a
Nevada corporation (the “Company”), and Joseph Sliman, MD, MPH (the “Executive”)
is dated as of January 17, 2017 (the “Effective Date”).

 

WITNESSETH:

 

WHEREAS, the Executive has been employed by the Company as its Senior Vice
President-Clinical & Regulatory Affairs pursuant to the terms of an Employment
Agreement dated November 25, 2013 as amended on December 4, 2015 (the “Prior
Employment Agreement”);

 

WHEREAS, the Company desires to continue to employ the Executive as its Chief
Medical Officer and the Executive desires to accept such employment, on the
terms and conditions set forth in this Agreement; and

 

WHEREAS, the Company and the Executive have mutually agreed that, as of the
Effective Date, this Agreement shall replace the Prior Employment Agreement in
its entirety.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

 

1.          EMPLOYMENT. Effective as of 11:59 p.m. on the day immediately prior
to the Effective Date, the Prior Employment Agreement shall automatically
terminate and be of no further force and effect. The Company hereby offers to
employ the Executive, and the Executive hereby accepts continued employment by
the Company, upon the terms and conditions set forth in this Agreement, for a
term of two years commencing on the Effective Date unless there is an earlier
termination in accordance with Section 10 below (the “Employment Term”).

 

2.          POSITION & DUTIES. During the Employment Term, the Executive shall
serve as the Company’s Chief Medical Officer. As Chief Medical Officer the
Executive shall have such duties, authorities and responsibilities commensurate
with the duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies and such other duties and
responsibilities as the Company’s Chief Executive Officer and the Board of
Directors (the “Board”) shall designate that are consistent with the Executive’s
position as Chief Medical Officer including directing, supervising and having
responsibility for all aspects of the operations and general affairs of the
Company as directed by the Board. The Executive shall report to, and be subject
to, the lawful direction of the Chief Executive Officer. During the Employment
Term, the Executive shall use his best efforts to perform faithfully and
efficiently the duties and responsibilities assigned to the Executive hereunder
and devote all of the Executive’s business time (excluding periods of vacation
and other approved leaves of absence) to the performance of the Executive’s
duties with the Company. During the Employment Term, the Executive shall also
serve, without additional compensation, as a member of the Board and in such
other executive-level positions or capacities as may, from time to time, be
reasonably requested by the Board.

 

 

 

 

3.            LOCATION. Unless the parties otherwise agree in writing, at all
times during the Employment Term, the Executive’s principal place of business
for performance of the services under this Agreement shall be the Company’s
offices in Rockville, Maryland.

  

4.            BASE SALARY. During the Employment Term, the Company agrees to pay
the Executive a base salary (the “Base Salary”) at an annual rate of Three
Hundred Eighty Five Thousand Dollars ($385,000), payable semi-monthly in
accordance with the regular payroll practices of the Company. The Executive’s
Base Salary shall be subject to review and adjustment from time to time by the
Chief Executive Officer and the Board (or a committee thereof) in its sole
discretion, but may not be decreased. The base salary as determined herein from
time to time shall constitute “Base Salary” for purposes of this Agreement.

 

5.           ANNUAL BONUS. With respect to each calendar year during the
Employment Term (beginning in the year of the Effective Date), the Executive
will be eligible to earn an annual performance bonus (the “Annual Bonus”).
Beginning in the 2017 calendar year and for each full calendar year thereafter,
the Executive will be eligible for an Annual Bonus of up to seventy five percent
(75%) of the Base Salary. The Annual Bonus will be based upon the Board’s
assessment of the Executive’s performance and the Company’s attainment of
targeted goals as set by the Board in its sole discretion. The Annual Bonus, if
any, will be subject to applicable payroll deductions and withholdings.
Following the close of each calendar year, the Board will determine whether the
Executive has earned the Annual Bonus, and the amount of any Annual Bonus, based
on the set criteria. No amount of the Annual Bonus is guaranteed, and the
Executive must be an employee in good standing through the end of the applicable
calendar year to be eligible to receive an Annual Bonus; no partial or prorated
bonuses will be provided. The Annual Bonus, if earned, will be paid on or about
December 1, but no later than December 31, of the applicable calendar year for
which the Annual Bonus is being measured. The Executive’s eligibility for an
Annual Bonus is subject to change in the discretion of the Board (or any
authorized committee thereof).

 

6.            EQUITY. The Executive shall receive an incentive option to
purchase one hundred and eighty-eight thousand nine hundred and twenty-seven
(188,927) shares of the Company’s publicly traded common stock. The option shall
be exercisable at the market price per share on the later of the Effective Date
of this Agreement or the date of approval of the grant by the Board of the
Company. The option will vest monthly on each monthly anniversary of the
Effective Date for thirty-six (36) successive months while Executive is employed
by the Company and such option will remain exercisable for a period of seven (7)
years from the date of grant, unless terminated earlier. Other terms of the
option, including the period to exercise such options following termination of
employment, shall be according to the Company’s existing stock option plan and
Section 11 below.

 

 2 

 

 

7.            EMPLOYEE BENEFITS.

 

(a)          BENEFIT PLANS. The Executive shall, in accordance with Company
policy and the terms of the applicable Company benefit plan documents, be
eligible to participate in any benefit plan or arrangement, including health,
life and disability insurance, retirement plans and the like, that may be in
effect from time to time and made available to the Company’s senior management.
All matters of eligibility for coverage or benefits under any benefit plan shall
be determined in accordance with the provisions of such plan. The Company
reserves the right to change, alter, or terminate any benefit plan in its sole
discretion. Notwithstanding the foregoing, in the event that the terms of this
Agreement differ from or are in conflict with the Company’s general employment
policies or practices, this Agreement shall control.

 

(b)          VACATION. The Executive shall be entitled to twenty-two (22) days
paid vacation and sick leave per year in accordance with the Company’s policies
and shall be entitled to accrue ten (10) days of vacation time during the
Employment Term in accordance with the Company’s vacation policy. Vacation is to
be taken at such intervals as shall be appropriate and consistent with the
proper performance of the Executive’s duties hereunder.

 

(c)          SUPPLEMENTAL DISABILITY BENEFITS. During the Employment Term, the
Company will pay for the applicable premiums for the Executive’s coverage under
its existing supplemental disability policy.

 

(d)          GENERAL EXPENSE REIMBURSEMENTS. The Company will reimburse the
Executive for all reasonable business expenses, including travel, computer and
cellular phone costs that the Executive incurs in performing the services
hereunder pursuant to the Company’s usual expense reimbursement policies and
practices, following submission by the Executive of reasonable documentation
thereof. All reimbursements provided under this Agreement shall be made in
accordance with the requirements of Section 409A (as defined below) to the
extent that such reimbursements are subject to Section 409A, including, as
applicable, the requirements that: (i) any reimbursement is for expenses
incurred during the Employment Term; (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year; (iii) the reimbursement of an eligible
expense shall be made on or before the last day of the calendar year following
the calendar year in which the expense was incurred; and (iv) the right to
reimbursement is not subject to liquidation or exchange for any other benefit.

 

(e)          INDEMNIFICATION. The Company shall provide the Executive with full
advance indemnification to the extent permitted by Nevada law, including
indemnification for activities at all subsidiaries.

 

8.            CONFIDENTIALITY AND POST-EMPLOYMENT OBLIGATIONS. As a condition of
continued employment, the Executive agrees to execute and abide by the Company’s
current form of Proprietary Information, Inventions, Non-Solicitation and
Non-Competition Agreement (the “Confidentiality Agreement”), which may be
amended by the parties from time to time without regard to this Agreement. The
Confidentiality Agreement contains provisions that are intended by the parties
to survive and do survive termination of this Agreement.

 

 3 

 

 

9.             OUTSIDE ACTIVITIES DURING EMPLOYMENT.

 

(a)          NO ADVERSE INTERESTS. The Executive agrees not to acquire, assume
or participate in, directly or indirectly, any position, investment or interest
known by him to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise during the Employment Term without the consent
of the Board. Except with the prior written consent of the Board, during the
Employment Term the Executive will not undertake or engage in any other
employment, occupation or business enterprise. Notwithstanding the foregoing,
nothing shall prevent the Executive from participating in charitable, civic,
educational, professional, community or industry affairs or, with prior approval
of the Board, serving on the board of directors or advisory boards of other
companies; provided that such activities or services do not: (i) create a
conflict with his employment hereunder; (ii) materially interfere with the
performance of his duties; or (iii) violate the terms of the Confidentiality
Agreement.

 

(b)          NONCOMPETITION. Other than as permitted by Section 9(a), during the
Employment Term and for the one year period thereafter (the “Non-Competition
Period”), except on behalf of the Company, the Executive will not directly or
indirectly, whether as an officer, director, stockholder, partner, proprietor,
associate, representative, consultant, or in any capacity whatsoever engage in,
become financially interested in, participate in, be employed by or have any
business connection with any other person, corporation, firm, partnership or
other entity whatsoever which competes with the Company, anywhere throughout the
world, in any line of business engaged in (or planned to be engaged in) by the
Company other than de minimis stock holdings in public companies; provided,
however, that anything above to the contrary notwithstanding, he may own, as a
passive investor, securities of any competitor corporation, so long as his
direct holdings in any one such corporation shall not in the aggregate
constitute more than one percent (1%) of the voting stock of such corporation,
and provided that the Executive promptly discloses to the Board any such
participation, other than such de minimis stock holdings.

 

(c)          NONSOLICITATION. During the Non-Competition Period, Executive shall
not, directly or indirectly: (i) induce or attempt to induce or aid others in
inducing anyone working at or for the Company to cease working at or for the
Company, or in any way interfere with the relationship between the Company and
anyone working at or for the Company except in the proper exercise of
Executive’s authority; or (ii) in any way interfere with the relationship
between the Company and any customer, supplier, licensee or other business
relation of the Company)

 

(d)          SCOPE.  If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.

 

(e)          INDEPENDENT AGREEMENT.  The covenants made in this Section 9 shall
be construed as an agreement independent of any other provisions of this
Agreement, and shall survive the termination of this Agreement.  Moreover, the
existence of any claim or cause of action of Executive against the Company or
any of its affiliates, whether or not predicated upon the terms of this
Agreement, shall not constitute a defense to the enforcement of these covenants.

 

 4 

 

 

10.           TERMINATION. The Executive’s employment and the Employment Term
shall terminate on the first of the following to occur:

 

(a)          DISABILITY. Upon the 30th day following the Executive’s receipt of
notice of the Company’s termination due to Disability (as defined in this
Section); provided that, the Executive has not returned to full-time performance
of his duties within thirty (30) days after receipt of such notice. If the
Company determines in good faith that the Executive’s Disability has occurred
during the term of this Agreement, it will give the Executive written notice of
its intention to terminate his employment.  For purposes of this Agreement,
“Disability” shall occur when the Board determines that the Executive has become
physically or mentally incapable of performing the essential functions of his
job duties under this Agreement with or without reasonable accommodation, for
ninety (90) consecutive days or one hundred twenty (120) nonconsecutive days in
any twelve (12) month period. For purposes of this Section, at the Company’s
request, the Executive agrees to make himself available and to cooperate in a
reasonable examination by an independent qualified physician selected by the
Board.

 

(b)          DEATH. Automatically on the date of death of the Executive.

 

(c)          CAUSE. Immediately upon written notice by the Company to the
Executive of a termination for Cause. For purposes of this Agreement, “Cause”
shall mean the occurrence of any of the following events, as determined by the
Board in its sole and absolute discretion: (i) gross insubordination, acts of
embezzlement or misappropriation of funds, fraud, dereliction of fiduciary
obligations; (ii) conviction of a felony or other crime involving moral
turpitude, dishonesty or theft (including entry of a nolo contendere plea);
(iii) willful unauthorized disclosure of confidential information belonging to
the Company or entrusted to the Company by a client; (iv) material violation of
any provision of this Agreement, of any Company policy, and/or of the
Confidentiality Agreement, which, to the extent it is curable by the Executive,
is not cured by the Executive within thirty (30) days of receiving written
notice of such violation by the Company; (v) being under the influence of drugs
(other than prescription medicine or other medically-related drugs to the extent
that they are taken in accordance with their directions) during the performance
of the Executive’s duties under this Agreement; (vi) engaging in behavior that
would constitute grounds for liability for harassment (as proscribed by the U.S.
Equal Employment Opportunity Commission Guidelines or any other applicable state
or local regulatory body) or other egregious conduct that violates laws
governing the workplace; (vii) willful failure to perform his written assigned
tasks, where such failure is attributable to the fault of the Executive which,
to the extent it is curable by the Executive, is not cured by Executive within
thirty (30) days of receiving written notice of such violation by the Company.

 

(d)          WITHOUT CAUSE. Upon written notice by the Company to the Executive
of an involuntary termination without Cause and other than due to death or
Disability.

 

 5 

 

 

(e)          WITH GOOD REASON. Upon the Executive’s notice following the end of
the Cure Period (as defined in this Section). For purposes of this Agreement,
“Good Reason” for the Executive to terminate his employment hereunder shall mean
the occurrence of any of the following events without the Executive’s consent:
(i) a material reduction in the Executive’s Base Salary (other than an
across-the-board decrease in base salary applicable to all executive officers of
the Company); (ii) a material breach of this Agreement by the Company; (iii) a
material reduction in the Executive’s duties, authority and responsibilities
relative to the Executive’s duties, authority, and responsibilities in effect
immediately prior to such reduction; or (iv) the relocation of the Executive’s
principal place of employment, without the Executive’s consent, in a manner that
lengthens his one-way commute distance by fifty (50) or more miles from his
then-current principal place of employment immediately prior to such relocation;
provided, however, that, any such termination by the Executive shall only be
deemed for Good Reason pursuant to this definition if: (1) the Executive gives
the Company written notice of his intent to terminate for Good Reason within
thirty (30) days following the first occurrence of the condition(s) that he
believes constitute(s) Good Reason, which notice shall describe such
condition(s); (2) the Company fails to remedy such condition(s) within thirty
(30) days following receipt of the written notice (the “Cure Period”); and (3)
the Executive voluntarily terminates his employment within thirty (30) days
following the end of the Cure Period.

 

(f)          WITHOUT GOOD REASON. Upon the expiration of the Transition Period
(as defined in this Section) unless otherwise provided by the Company as
provided herein. The Executive shall provide thirty (30) days’ prior written
notice (the “Transition Period”) to the Company of the Executive’s intended
termination of employment without Good Reason (“Voluntary Termination”). During
the Transition Period, the Executive shall assist and advise the Company in any
transition of business, customers, prospects, projects and strategic planning,
and the Company shall continue to pay Executive’s Base Salary and benefits
through the end of the Transition Period. The Company may, in its sole
discretion, upon five (5) days prior written notice to the Executive, make such
termination of employment effective earlier than the expiration of the
Transition Period (“Early Termination Right”), but it shall pay the Executive’s
Base Salary and benefits through the earlier of: the end of the Transition
Period, or the date that the Executive accepts full-time employment or a
full-time consulting engagement from a third party.

 

11.          CONSEQUENCES OF TERMINATION. Any termination payments made and
benefits provided under this Agreement to the Executive shall be in lieu of any
termination or severance payments or benefits for which the Executive may be
eligible under any of the plans, policies or programs of the Company or its
affiliates as may be in effect from time to time. Subject to satisfaction of
each of the conditions set forth in Section 12, the following amounts and
benefits shall be due to the Executive. Any Accrued Amounts (as defined in
Section 11(a)) shall be payable on the next regularly scheduled Company payroll
date following the date of termination or earlier if required by applicable law.

 

(a)          DISABILITY. Upon employment termination due to Disability, the
Company shall pay or provide the Executive: (i) any unpaid Base Salary through
the date of termination and any accrued vacation; (ii) any unpaid Annual Bonus
earned with respect to any calendar year ending on or preceding the date of
termination; (iii) reimbursement for any unreimbursed expenses incurred through
the date of termination; and (iv) all other payments and benefits to which the
Executive may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or perquisite plan or program or grant or this
Agreement, including but not limited to any applicable insurance benefits
(collectively, “Accrued Amounts”). In addition, upon the Executive’s termination
due to Disability, the Executive shall be entitled to exercise any vested equity
award(s) granted to the Executive for a period equal to the shorter of: (i) six
(6) months after termination, or (ii) remaining term of the award(s).

 

 6 

 

 

(b)          DEATH. In the event the Employment Term ends on account of the
Executive’s death, the Executive’s estate (or to the extent a beneficiary has
been designated in accordance with a program, the beneficiary under such
program) shall be entitled to any Accrued Amounts, including but not limited to
proceeds from any Company sponsored life insurance programs. In addition, upon
the Executive’s death, the Company will extend the time period that the
Executive’s estate (or to the extent a beneficiary has been designated in
accordance with a program, the beneficiary under such program) shall be entitled
to exercise any vested equity award(s) granted to the Executive for a period
equal to the shorter of: (i) six (6) months after termination, or (ii) remaining
term of the award(s).

 

(c)          TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If the Executive’s
employment should be terminated: (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, the Company shall pay to the Executive any
Accrued Amounts only, and shall not be obligated to make any additional payments
to the Executive. In addition, upon the Executive’s termination by the Company
for Cause, or by the Executive without Good Reason, all options not exercised
shall terminate.

 

(d)          TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the Executive’s
employment by the Company is terminated by the Company without Cause (and not
due to Disability or death) or by the Executive for Good Reason, then the
Company shall pay or provide the Executive with the Accrued Amounts and subject
to compliance with Section 12:

 

(i)          continue payment of the Executive’s Base Salary as in effect
immediately preceding the last day of the Employment Term (ignoring any decrease
in Base Salary that forms the basis for Good Reason), for a period of twelve
(12) months following the termination date (the “Severance Period”) on the
Company’s regular payroll dates; provided, however, that any payments otherwise
scheduled to be made prior to the effective date of the General Release (namely,
the date it can no longer be revoked) shall accrue and be paid in the first
payroll date that follows such effective date with subsequent payments occurring
on each subsequent Company payroll date;

 

(ii)         if the Executive timely elects continued coverage under COBRA for
himself and his covered dependents under the Company’s group health plans
following such termination, then the Company shall pay the COBRA premiums
necessary to continue the Executive’s and his covered dependents’ health
insurance coverage in effect for himself (and his covered dependents) on the
termination date until the earliest of: (i) twelve (12) months following the
termination date; (ii) the date when the Executive becomes eligible for
substantially equivalent health insurance coverage in connection with new
employment or self-employment; or (iii) the date the Executive ceases to be
eligible for COBRA continuation coverage for any reason, including plan
termination (such period from the termination date through the earlier of
(i)-(iii), the “COBRA Payment Period”). Notwithstanding the foregoing, if at any
time the Company determines that its payment of COBRA premiums on the
Executive’s behalf would result in a violation of applicable law (including but
not limited to the 2010 Patient Protection and Affordable Care Act, as amended
by the 2010 Health Care and Education Reconciliation Act), then in lieu of
paying COBRA premiums pursuant to this Section, the Company shall pay the
Executive on the last day of each remaining month of the COBRA Payment Period, a
fully taxable cash payment equal to the COBRA premium for such month, subject to
applicable tax withholding (such amount, the “Special Severance Payment”), such
Special Severance Payment to be made without regard to the Executive’s payment
of COBRA premiums and without regard to the expiration of the COBRA period prior
to the end of the COBRA Payment Period. Nothing in this Agreement shall deprive
the Executive of his rights under COBRA or ERISA for benefits under plans and
policies arising under his employment by the Company; and

 

 7 

 

 

(iii)        Executive shall be entitled to exercise any vested equity award(s)
granted to the Executive for a period equal to the shorter of: (i) six (6)
months after termination , or (ii) the remaining term of the award(s).If the
Executive’s employment by the Company is terminated by the Company without Cause
(and not due to Disability or death) or by the Executive for Good Reason, then
the Executive will be eligible to receive additional severance benefits
including, but not limited to, a pro-rata portion of the Executive’s Annual
Bonus, as determined by the Board, for the performance year in which the
Executive’s termination occur.

 

12.          CONDITIONS. Any payments or benefits made or provided pursuant to
Section 11 (other than Accrued Amounts) are subject to the Executive’s (or, in
the event of the Executive’s death, the beneficiary’s or estate’s, or in the
event of the Executive’s Disability, the guardian’s):

 

(a)          compliance with the provisions of Section 8 hereof;

 

(b)          delivery to the Company of an executed waiver and general release
of any and all known and unknown claims, and other provisions and covenants, in
the form acceptable to the Company (which shall be delivered to the Executive
within five (5) business days following the termination date) (the “General
Release”) within twenty one (21) days of presentation thereof by the Company to
the Executive (or a longer period of time if required by law), and permitting
the General Release to become effective in accordance with its terms; and

 

(c)          delivery to the Company of a resignation from all offices,
directorships and fiduciary positions with the Company, its affiliates and
employee benefit plans effective as of the termination date.

 

Notwithstanding the due date of any post-employment payments, any amounts due
following a termination under this Agreement (other than Accrued Amounts) shall
not be due until after the expiration of any revocation period applicable to the
General Release without the Executive having revoked such General Release, and
any such amounts shall be paid or commence being paid to the Executive within
fifteen (15) days of the expiration of such revocation period without the
occurrence of a revocation by the Executive (or such later date as may be
required under Section 19 of this Agreement). Nevertheless (and regardless of
whether the General Release has been executed by the Executive), upon any
termination of the Executive’s employment, the Executive shall be entitled to
receive any Accrued Amounts, payable after the date of termination in accordance
with the Company’s applicable plan, program, policy or payroll procedures.
Notwithstanding anything to the contrary in this Agreement, if any severance pay
or benefits are deferred compensation under Section 409A (as defined below), and
the period during which the Executive may sign the General Release begins in one
calendar year and the first payroll date following the period during which the
Executive may sign the General Release occurs in the following calendar year,
then the severance pay or benefit shall not be paid or the first payment shall
not occur until the later calendar year.

 

 8 

 

 

13.          CONSEQUENCES OF A CHANGE IN CONTROL.

 

(a)          Upon the closing of a Change in Control (as defined below), all
unvested stock options shall immediately vest and the time period that the
Executive shall have to exercise all vested stock options and other awards that
the Executive may have under the Plan (including the Initial Grant) or any
successor equity compensation plan as may be in place from time to time shall be
equal to the shorter of: (i) six (6) months days after termination, or (ii) the
remaining term of the award(s).

 

(b)          If within one (1) year after the occurrence of a Change in Control,
the Executive terminates his employment with the Company for Good Reason or the
Company terminates the Executive's employment for any reason other than death,
Disability or Cause, the Company (or the then former Company subsidiary
employing the Executive), or the consolidated, surviving or transferee person in
the event of a Change in Control pursuant to a consolidation, merger or sale of
assets, the Executive shall be entitled to receive from the Company: (i) the
portion of the Base Salary for periods prior to the effective date of
termination accrued but unpaid (if any); (ii) all unreimbursed expenses (if
any), subject to Section 7(b); and (iii) an aggregate amount (the “Change in
Control Severance Amount”) equal to two times the sum of the 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);. The Change in Control Severance Amount shall 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), or in 48 substantially equal payments, if the Change in Control
event does not so comply with Section 409A. The lump sum amount shall be paid,
or the installment payments shall commence, as applicable, on the first
scheduled payroll date (in accordance with the Company's payroll schedule in
effect for the Executive immediately prior to such termination) that occurs on
or following the date that is thirty (30) days after the Executive's termination
of employment; provided, however, that the payment of such severance amount is
subject to the Executive's compliance with the requirement to deliver the
General Release contemplated pursuant to Section 12(b). Any such installment
payment shall be treated as a separate payment as defined under Treasury
Regulation §1.409A-2 (b)(2). If the Executive is a “specified employee” (as
determined under the Company's policy for identifying specified employees) on
the date of his “separation from service” (within the meaning of Section 409A)
and if any portion of the severance amount described in clause (iii) would be
considered “deferred compensation” under Section 409A, such severance amount
shall not be paid or commence to be paid on any date prior to the first business
day after the date that is six (6) months following the Executive's separation
from service (unless any such payment(s) shall satisfy the short-term deferral
rule, as defined in Treasury Regulation §1.409A-1(b)(4), or shall be treated as
separation pay under Treasury Regulation §1.409A-1(b)(9)(iii) or
§1.409A-1(b)(9)(v)). If paid in installments, the first payment that can be made
shall include the cumulative amount of any amounts that could not be paid during
such six-month period. In addition, interest will accrue at the 10-year T-bill
rate (as in effect as of the first business day of the calendar year in which
the separation from service occurs) on such lump sum amount or installment
payments, as applicable, not paid to the Executive prior to the first business
day after the sixth month anniversary of his separation from service that
otherwise would have been paid during such six-month period had this delay
provision not applied to the Executive and shall be paid at the same time at
which the lump sum payment or the first installment payment, as applicable, is
made after such six-month period. Notwithstanding the foregoing, a payment
delayed pursuant to the preceding three sentences shall commence earlier in the
event of the Executive's death prior to the end of the six-month period. Upon
the termination of employment with the Company for Good Reason by the Executive
or upon the involuntary termination of employment with the Company of the
Executive for any reason other than death, Disability or Cause, in either case
within two years after the occurrence of a Change in Control, the Company (or
the then former Company subsidiary employing the Executive), or the
consolidated, surviving or transferee person in the event of a Change in Control
pursuant to a consolidation, merger or sale of assets, shall also provide, for
the period of two (2) consecutive years commencing on the date of such
termination of employment, medical, dental, life and disability insurance
coverage for the Executive and the members of his family which is not less
favorable to the Executive than the group medical, dental, life and disability
insurance coverage carried by the Company for the Executive and the members of
his family at the time of termination.

 

 9 

 

 

(c)          For purposes of this Agreement, “Change in Control” means:

 

(i)           any person or entity becoming the beneficial owner, directly or
indirectly, of securities of the Company representing fifty percent (50%) of the
total voting power of all its then outstanding voting securities;

 

(ii)          a merger or consolidation of the Company in which its voting
securities immediately prior to the merger or consolidation do not represent, or
are not converted into securities that represent, a majority of the voting power
of all voting securities of the surviving entity immediately after the merger or
consolidation; or

 

(iii)          a sale of substantially all of the assets of the Company or a
liquidation or dissolution of the Company.

 

14.         ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Executive and the Executive’s heirs, executors, personal
representatives, assigns, administrators and legal representatives. Because of
the unique and personal nature of the Executive’s duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assignable by the Executive. This Agreement shall be binding upon and inure
to the benefit of the Company and its successors, assigns and legal
representatives. Any such successor or assign of the Company will be deemed
substituted for the Company under the terms of this Agreement for all purposes.
For this purpose, “successor” means any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly acquires all or substantially all of the assets or
business of the Company.

 

 10 

 

 

15.         NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given: (a) on the date of delivery if delivered by
hand; (b) on the date of transmission, if delivered by confirmed facsimile, (c)
on the first business day following the date of deposit if ;delivered by
guaranteed overnight delivery service; or (d) on the fourth business day
following the date delivered or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Company:

 

Synthetic Biologics, Inc.

9605 Medical Center Drive,
Suite 270
Rockville, MD 20850
Attn: Board of Directors

 

and a copy (which shall not constitute notice) shall also be sent to:

 

Leslie Marlow, Esq.

Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

(212) 208-4657 (fax)

 

If to the Executive:

 

To the most recent address of the Executive set forth in the personnel records
of the Company or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.

 

16.         SECTION HEADINGS; INCONSISTENCY. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement. If there is any
inconsistency between this Agreement and any other agreement (including but not
limited to any option, stock, long-term incentive or other equity award
agreement), plan, program, policy or practice (collectively, “Other Provision”)
of the Company the terms of this Agreement shall control over such Other
Provision.

 

17.         SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity of unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

 

18.         COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instruments. One or more counterparts of this
Agreement may be delivered by facsimile, with the intention that delivery by
such means shall have the same effect as delivery of an original counterpart
thereof.

 

 11 

 

 

19.          SECTION 409A.

 

(a)          Notwithstanding anything to the contrary herein, the following
provisions apply to the extent severance benefits provided herein are subject to
Section 409A of the Internal Revenue Code (the “Code”) and the regulations and
other guidance thereunder and any state law of similar effect (collectively
“Section 409A”). Severance benefits shall not commence until the Executive has a
“separation from service” (as defined under Treasury Regulation Section
1.409A-1(h), without regard to any alternative definition thereunder, a
“separation from service”). Each installment of severance benefits is a separate
“payment” for purposes of Treas. Reg. Section 1.409A-2(b)(2)(i), and the
severance benefits are intended to satisfy the exemptions from application of
Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4) and
1.409A-1(b)(9). However, if such exemptions are not available and the Executive
is, upon separation from service, a “specified employee” for purposes of Section
409A, then, solely to the extent necessary to avoid adverse personal tax
consequences under Section 409A, the timing of the severance benefits payments
shall be delayed until the earlier of (i) six (6) months and one day after the
Executive’s separation from service, or (ii) the Executive’s death. The parties
acknowledge that the exemptions from application of Section 409A to severance
benefits are fact specific, and any later amendment of this Agreement to alter
the timing, amount or conditions that will trigger payment of severance benefits
may preclude the ability of severance benefits provided under this Agreement to
qualify for an exemption.

 

(b)          It is intended that this Agreement shall comply with the
requirements of Section 409A, and any ambiguity contained herein shall be
interpreted in such manner so as to avoid adverse personal tax consequences
under Section 409A. Notwithstanding the foregoing, the Company shall in no event
be obligated to indemnify the Executive for any taxes or interest that may be
assessed by the Internal Revenue Service pursuant to Section 409A of the Code to
payments made pursuant to this Agreement.

 

20.          SECTION 4999 EXCISE TAX.

 

(a)          If any payments, rights or benefits (whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement of the Executive
with the Company or any person affiliated with the Company) (the “Payments”)
received or to be received by the Executive will be subject to the tax (the
“Excise Tax”) imposed by Section 4999 of the Code (or any similar tax that may
hereafter be imposed), then, except as set forth in Section 20(b) below, the
Company shall pay to the Executive an amount in addition to the Payments (the
“Gross-Up Payment”) as calculated below. The Gross Up Payment shall be in an
amount such that, after deduction of any Excise Tax on the Payments and any
federal, state and local income and employment tax and Excise Tax on the Gross
Up Payment, but before deduction for any federal, state or local income and
employment tax on the Payments, the net amount retained by the Executive shall
be equal to the Payments.

 

 12 

 

 

(b)          The process for calculating the Excise Tax, determining the amount
of any Gross-Up Payment and other procedures relating to this Section 20,
including the time period for making the Gross-Up Payment, are set forth in
Appendix A attached hereto. For purposes of making the determinations and
calculations required herein, the Accounting Firm (as defined in Appendix A) may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code, provided that the Accounting Firm shall make
such determinations and calculations on the basis of “substantial authority”
(within the meaning of Section 6662 of the Code) and the Company shall use
reasonable efforts to cause the Accounting Firm to provide opinions to that
effect to both the Company and Executive.

 

21.          REPRESENTATIONS. The Executive represents and warrants to the
Company that the Executive has the legal right to enter into this Agreement and
to perform all of the obligations on the Executive’s part to be performed
hereunder in accordance with its terms and that the Executive is not a party to
any agreement or understanding, written or oral, which could prevent the
Executive from entering into this Agreement or performing all of the Executive’s
obligations hereunder. The Executive further represents and warrants that he has
been advised to consult with an attorney and that he has been represented by the
attorney of his choosing during the negotiation of this Agreement, that he has
consulted with his attorney before executing this Agreement, that he has
carefully read and fully understand all of the provisions of this Agreement and
that he is voluntarily entering into this Agreement.

 

22.          WITHHOLDING. The Company may withhold from any and all amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.

 

23.          SURVIVAL. The respective obligations of, and benefits afforded to,
the Company and the Executive which by their express terms or clear intent
survive termination of the Executive’s employment with the Company, including,
without limitation, the provisions of Section 8 and Sections 10 through 29,
inclusive of this Agreement, will survive termination of the Executive’s
employment with the Company, and will remain in full force and effect according
to their terms.

 

24.          AGREEMENT OF THE PARTIES. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. Neither the Executive
nor the Company shall be entitled to any presumption in connection with any
determination made hereunder in connection with any arbitration, judicial or
administrative proceeding relating to or arising under this Agreement.

 

25.          INTEGRATION. This Agreement, together with the Confidentiality
Agreement, contains the complete, final and exclusive agreement of the parties
relating to the terms and conditions of the Executive’s employment and the
termination of the Executive’s employment, and supersedes all prior and
contemporaneous oral and written employment agreements or arrangements between
the parties.

 

 13 

 

 

26.         AMENDMENT. This Agreement cannot be amended or modified except by a
written agreement signed by the Executive and a duly authorized officer of the
Company.

 

27.         WAIVER. No term, covenant or condition of this Agreement or any
breach thereof shall be deemed waived, except with the written consent of the
party against whom the wavier is claimed, and any waiver or any such term,
covenant, condition or breach shall not be deemed to be a waiver of any
preceding or succeeding breach of the same or any other term, covenant,
condition or breach.

 

28.         CHOICE OF LAW. This Agreement shall be construed and interpreted in
accordance with the internal laws of the State of Maryland without regard to its
conflict of laws principles.

 

29.         DISPUTE RESOLUTION. To ensure the rapid and economical resolution of
disputes that may arise in connection with the Executive’s employment with the
Company, the Executive and the Company both agree that any and all disputes,
claims, or causes of action, in law or equity, including but not limited to
statutory claims, arising from or relating to the enforcement, breach,
performance, or interpretation of this Agreement, the Executive’s employment
with the Company, or the termination of the Executive’s employment from the
Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C.
§1-16, and to the fullest extent permitted by law, by final, binding and
confidential arbitration conducted in Delaware by JAMS, Inc. (“JAMS”) or its
successors. Both the Executive and the Company acknowledge that by agreeing to
this arbitration procedure, each waives the right to resolve any such dispute
through a trial by jury or judge or administrative proceeding. Any such
arbitration proceeding will be governed by JAMS’ then applicable rules and
procedures for employment disputes, which can be found at
http://www.jamsadr.com/rules-clauses/, and which will be provided to the
Executive upon request. In any such proceeding, the arbitrator shall: (i) have
the authority to compel adequate discovery for the resolution of the dispute and
to award such relief as would otherwise be permitted by law; and (ii) issue a
written arbitration decision including the arbitrator’s essential findings and
conclusions and a statement of the award. The Executive and the Company each
shall be entitled to all rights and remedies that either would be entitled to
pursue in a court of law; provided, however, that in no event shall the
arbitrator be empowered to hear or determine any class or collective claim of
any type. Nothing in this Agreement is intended to prevent either the Company or
the Executive from obtaining injunctive relief in court to prevent irreparable
harm pending the conclusion of any such arbitration pursuant to applicable law.
The Company shall pay all filing fees in excess of those which would be required
if the dispute were decided in a court of law, and shall pay the arbitrator’s
fees and any other fees or costs unique to arbitration.

 

 14 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective
as of the date first written above.

 

  SYNTHETIC BIOLOGICS, INC.       By: /s/ Jeffrey Riley           Name: Jeffrey
Riley     Title: President and Chief Executive Officer       Date: January 17,
2017       /s/ Joseph Sliman   Joseph Sliman, MD, MPH   Date: January 17, 2017

 

 15 

 

 

APPENDIX A

 

TAX GROSS-UP PAYMENT RULES AND PROCEDURES

 

1.          Subject to Paragraph 3 below, all determinations required to be made
under Section 20 of this Agreement, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by an accounting
firm (the “Accounting Firm”) selected in accordance with Paragraph 2 below. The
Company shall use reasonable efforts to cause the Accounting Firm to provide
detailed supporting calculations both to the Company and Executive within 15
business days before the event that results in the potential for an excise tax
liability for the Executive, which could include but is not limited to a Change
in Control and the subsequent vesting of any cash payments or awards, or the
Executive’s termination of employment, or such earlier time as is required by
the Company. The initial Gross-Up Payment, if any, as determined pursuant to
this Paragraph 1, shall be paid on the Executive’s behalf to the applicable
taxing authorities by no later than the date the Executive is required to remit
the taxes to such taxing authority. If the Accounting Firm determines that no
Excise Tax is payable to the Executive, the Company shall use reasonable efforts
to cause the Accounting Firm to furnish the Executive with a written report
indicating that he has substantial authority not to report any Excise Tax on his
federal income tax return. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Paragraph 3 below and the
Executive thereafter is required to make a payment or additional payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment, increased by all applicable
interest and penalties associated with the Underpayment, shall be promptly paid
by the Company to or for the benefit of the Executive. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes on earned income at the highest marginal rate of taxation in
the state and locality of the Executive’s residence on the effective date of
Termination, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.

 

2.          The Accounting Firm shall be a public accounting firm proposed by
the Company and agreed upon by the Executive. If the Executive and the Company
cannot agree on the firm to serve as the Accounting Firm within ten (10) days
after the date on which the Company proposed to the Executive a public
accounting firm to serve in such capacity, then the Executive and the Company
shall each select one accounting firm and those two firms shall jointly select
the accounting firm to serve as the Accounting Firm within ten (10) days after
being requested by the Company and the Executive to make such selection. The
Company shall pay the fees of the Accounting Firm.

 

 

 

 

3.          The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after the Executive
knows of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the period ending on the date that
any payment of taxes with respect to such claim is due or the thirty day period
following the date on which the Executive gives such notice to the Company,
whichever period is shorter. If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall: (i) give the Company any information reasonably requested
by the Company relating to such claim; (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company; (iii)
cooperate with the Company in good faith in order effectively to contest such
claim; and (iv) permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including attorneys’ fees and any additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation of the
foregoing provisions of this Paragraph 3, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect to such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax and income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other authority.

 

4.          If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Paragraph 3 above, the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company’s complying with the requirements of Paragraph 3), promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto).