Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal
Officers.
On June 26, 2017, we entered into a Change in Control Severance Agreement with David S. Zaccardelli, Pharm. D., our
Acting Chief Executive Officer, and also entered into an Amended and Restated Change in Control Severance Agreement with each of Mark W. Hahn, our Chief Financial Officer, David W. Oldach, M.D., our Chief Medical Officer, and John D. Bluth, our
Executive Vice President, Investor Relations and Corporate Communications. We entered into the severance agreements because, as announced, we are in the process of exploring potential strategic business opportunities to determine the best use of our
significant cash resources and clinical programs to deliver value to patients and shareholders through internal and/or potential external opportunities. The severance agreements are intended to provide an incentive to our executive officers to
remain with our company before and after any transaction we might pursue. We believe that retaining the knowledge and expertise of our current executive officers, particularly related to solithromycin and our other product candidates and their
related clinical trials, is and will be critical to maintaining the value of our company’s assets both while we explore business opportunities and after any such transaction that we might undertake.
The terms of all of the severance agreements are identical other than Dr. Zaccardellli will receive more salary and bonus than the other
executive officers in the event of a change in control within 12 months of the execution of the severance agreement, as noted below.
Pursuant to the severance agreement, if the executive officer’s employment is terminated without cause or the executive officer resigns
for good reason, but not in connection with a “change in control” of our company (as defined in the severance agreement), then we will pay the executive officer (i) an amount equal to the executive officer’s then-current base
salary for a period of 12 months, (ii) a lump sum payment of a pro rata bonus based upon the executive officer’s target bonus amount for the year of termination, and (iii) the executive officer’s COBRA premiums for the lesser of
12 months or until the executive officer becomes eligible for insurance benefits from another employer (we also have the option to pay a lump sum amount equal to such COBRA payments). In addition, at our board’s discretion, all or a portion of
the executive officer’s equity grants may become immediately and fully exercisable and/or the exercise period for any of executive officer’s vested options may be extended for 12 months following the termination date (but in no event
beyond the original expiration date of any such option).
Pursuant to the severance agreement, if a change in control of our company
occurs either within 12 months or after 12 months of the effective date of the severance agreement, and if the executive officer’s employment is terminated without cause or the executive officer resigns for good reason within 12 months of such
change in control, then we will pay the executive officer (i) an amount equal to the executive officer’s then-current base salary for a period of 18 months (24 months in the case of Dr. Zaccardelli) (if the change of control occurred
after 12 months of the effective date of the severance agreement then the executive receives only 12 months of the executive officer’s then-current base salary), (ii) a lump sum payment of one and one half times the executive
officer’s target bonus amount for the year of termination (two times the target bonus in the case of Dr. Zaccardelli) (if the change of control occurred after 12 months of the effective date of the severance agreement then the lump sum
payment is in the amount of the executive officer’s target bonus amount for the year of termination), and (iii) the executive officer’s COBRA premiums for the lesser of 18 months (12 months if the change of control occurred after 12
months of the effective date of the severance
agreement) or until the executive officer becomes eligible for insurance benefits from another employer (we also have the option to pay a lump sum amount equal to such COBRA payments). In
addition, all of the executive officer’s outstanding and unvested stock options and other equity awards would become immediately and fully exercisable and the exercise period for any of the executive officer’s vested options will be
extended for 12 months following the termination date (but in no event beyond the original expiration date of any such option). We also will provide the executive officer with outplacement assistance for 18 months after the termination date (12
months if the change of control occurred after 12 months of the effective date of the severance agreement).
Each severance agreement has
an initial term of five years and will automatically renew thereafter for additional one-year terms unless we provide the executive officer with notice of nonrenewal at least 90 days prior to the end of the initial five-year term or any additional
one-year term, provided that if a change in control occurs during the term then the term will expire on the last day of the twelfth month after the month in which such change in control occurred.
Pursuant to the terms of the severance agreement, each executive officer is subject to non-competition and non-solicitation provisions that
apply for a period of 12 months immediately following a termination or cessation of employment for any reason (18 months in the event of severance compensation to be paid in the event of a change in control within 12 months of the effective date of
the severance agreement).
The foregoing description of the severance agreements is qualified in its entirety by reference to the full and
complete terms contained therein, which are filed as Exhibits 10.1 and 10.2 to this report and are incorporated herein by reference.