Exhibit 10.1


 







EMPLOYMENT AGREEMENT


 


This EMPLOYMENT AGREEMENT
(the “Agreement”) between Synthetic Biologics, Inc., a Nevada corporation (the “Company”),
and Steven A. Shallcross (the “Executive”) is dated as of April 28, 2015.


 


W I T N E S S E T H:


 


WHEREAS, the
Company desires to employ the Executive as its Chief Financial Officer, Treasurer and Secretary and the Executive desires to accept
such employment, on the terms and conditions set forth in this Agreement.


 


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.
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 June 1, 2015 (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 Financial Officer, Treasurer
and Secretary. As Chief Financial Officer, Treasurer and Secretary 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 Financial Officer, Treasurer and Secretary 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 and the Board.
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 Fifteen Thousand Dollars ($315,000), 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
2015 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 Nine Hundred Thousand (900,000) 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 ten (10) 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.


 


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.


 






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(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 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.


 


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 not 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.


 






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(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.


 


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.


 






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(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.


 


(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.


 






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(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).


 


(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).


 






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(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.


 


(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


 


(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.


 






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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.


 


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).


 






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(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); (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); and (iv) the payment
or provision of any Other Benefits. 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.


 






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(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.


 


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:


 






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If to the
Company:


 


Synthetic
Biologics, Inc.


Attn: Board
of Directors


155 Gibbs
Street, Suite 412


Rockville,
MD 20850


(734) 332-7878
(fax)





 


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.


 






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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.


 


(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.


 






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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


 


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.


 






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28.CHOICE
OF LAW. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware
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.


 






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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:
	 	 	 
	 	/s/ Steven A. Shallcross
	 	Steven A. Shallcross
	 	Date:
	 	 	 


 






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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).