Item 5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective March 10, 2020, iBio, Inc. (the
“Company”) appointed Thomas F. Isett 3rd, age 55, to serve as Chief Executive Officer and Executive Co-Chairman of
the Board of Directors of the Company. Robert B. Kay retired from his role as Chief Executive Officer of the Company effective
March 10, 2020. Mr. Kay will serve as Executive Co-Chairman of the Board with Mr. Isett and will continue in his role as a director
of the Company.
Mr. Isett, who has served as a director
of the Company since April 2019, is an accomplished executive with decades of successful management and corporate development experience
in the life sciences, including biologics contract development and manufacturing. In 2015, he founded i.e. Advising, LLC, a management
and strategy consulting firm, as well as Commence Bio, Inc., a private, early-stage developer of cellular immunotherapies. He has
advised Fortune 500 companies, private equity firms, biotechnology companies, and standard-setting organizations on key strategy,
M&A, and intellectual property decisions in life sciences and has been involved in transactions cumulatively valued at over
$20 billion. Prior to founding i.e. Advising, Mr. Isett held leadership roles for bioprocess product and service businesses over
his 25 combined years with General Electric, Lonza, and Becton Dickinson (BD). Mr. Isett was the founder of Becton Dickinson’s
BD Advanced Bioprocessing business, which he led from inception to over $60 million in revenues by 2009; by 2018, revenues reached
$100 million and the business was sold for $477 million. At Lonza, he contributed to the rapid growth of the cell & gene therapy
CDMO unit as Head of Cell Processing Technologies. Notably, while with GE Life Sciences, he accelerated growth for the North American
BioProcess business via the introduction of an integrated solutions strategy, along with new commercial and operating mechanisms
to support execution.
There is no arrangement or understanding
between Mr. Isett and any other person, pursuant to which Mr. Isett was selected as an officer.
Pursuant to the terms of an Employment
Agreement between the Company and Mr. Isett, entered into on March 10, 2020 (the “Employment Agreement”), Mr. Isett
will receive an annual base salary of $490,000, and a signing bonus of $450,000. Mr. Isett will be paid an additional signing bonus
in the amount of $250,000 in cash on March 10, 2021, provided he is then employed with the Company and has not given notice of
resignation or been provided with written notice of termination for cause by the Company. For the Company’s fiscal year beginning
July 1, 2019 and ending June 30, 2020, Mr. Isett will be paid a guaranteed bonus in the amount of $80,000. For all fiscal years
beginning on or after July 1, 2020, Mr. Isett will be eligible to receive an incentive bonus of up to 60% of his base salary subject
to achievement of performance criteria to be mutually agreed between the Board of Directors and Mr. Isett by July 31 of each fiscal
year.
In addition, Mr. Isett will be awarded
a cash bonus in the amount of 4.5% of the transaction consideration paid in connection with the consummation of a change in the
ownership or effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets,
within the meaning of Section 409A of the Internal Revenue Code of 1986 (a “Change of Control Transaction”), during
the term of the Employment Agreement, provided that the Change of Control Transaction results in the Company’s stockholders
receiving (or being entitled to receive, whether upon the consummation of the Change of Control Transaction or at a future date)
transaction consideration worth at least 120% of the average closing trading price of the Company’s securities during the
20 trading-day period immediately preceding the consummation of the Change of Control Transaction.
In addition, the Company has agreed to
issue to Mr. Isett options to purchase 975,000 shares of common stock (the “Option Shares”), which will be issued pursuant
to the Company’s 2018 Omnibus Equity Incentive Plan at the current trading price of our common stock. The Options Shares
will vest ratably over a 36-month period (1/36th per month) and will be deemed fully-vested upon any transaction or series of related
transactions that constitutes a Change of Control Transaction. The Company will review the trading price of the Company’s
common stock as of each of June 30, 2020 and June 30, 2021 (each, a “Pricing Date”) and if the average closing trading
price of the Company’s securities during the 20 trading-day period immediately preceding a Pricing Date is below the then-current
exercise price of the Option Shares, the Company will exchange the Option Shares with new Option Shares (but with the same vested
amounts and remaining vesting schedule) with an exercise price equal to the then-current trading price as of such Pricing Date.
Mr. Isett may participate in benefit plans
for which he is eligible as may be established from time to time by the Company for its executive employees, and the Company has
agreed to pay the full cost of all medical, vision, and dental benefits provided to Mr. Isett and his family. The Company also
has agreed to pay for all continuing education expenses incurred by Mr. Isett up to a maximum of $7,500 per year.
Under the terms of the Employment Agreement,
if Mr. Isett’s duties require him to relocate his primary residence to any state in which the Company maintains a physical
office location, the Company will reimburse him for all reasonable and documented relocation expenses incurred by him and the members
of his immediate household in moving to the new location, including moving expenses, rental payments for temporary living quarters
in the area of relocation for a period not to exceed six months, real estate brokerage commissions incurred in connection with
the sale of his existing primary residence, and loan financing charges and closing costs incurred in connection with the acquisition
and financing of a new residence.
Mr. Isett’s employment is on an “at
will” basis and may be terminated at any time by Mr. Isett or the Company. Under the terms of the Employment Agreement, if
Mr. Isett’s employment is terminated for “cause,” as defined in the Employment Agreement, he is entitled to receive
his base salary and benefits accrued through the termination date. If the Company terminates Mr. Isett’s employment for reasons
other than for cause or due to disability, then the Company is required to pay Mr. Isett’s base salary and any accrued annual
bonus and benefits for a period equal to the lesser of 24 months after termination or the remaining balance of the term of the
Employment Agreement.
If Mr. Isett’s employment is terminated
at any time in connection with a Change of Control Transaction, he will be entitled to a lump sum cash payment, within 30 days
after termination, equal to 24 months of his then-current base salary, a lump sum cash payment, within 30 days after termination,
equal to a pro-rated amount of his target annual bonus for the year immediately preceding the termination, payment of the full
amount of all premiums for continued health benefits (including COBRA) under the Company’s health plans for a period of 12
months following the termination, and immediate vesting of 100% of the then-unvested portion of any outstanding equity awards.
The foregoing description of Mr. Isett’s
Employment Agreement is qualified in its entirety by the text of the agreement, a copy of which is attached hereto as Exhibit10.1
and incorporated herein by reference.
Mr. Isett is the Managing Director and
sole owner of i.e. Advising, LLC (“Consultant”), which was retained by the Company as a strategy and management consultant
pursuant to a Consulting Agreement, dated as of February 22, 2019 (the “Consulting Agreement”), with services to be
provided pursuant to statements of work entered into between the Company and Consultant from time to time. Effective as of May
1, 2019, the Company entered into a Statement of Work (the “May 1, 2019 SOW”) pursuant to the Consulting Agreement,
which provided for an engagement to be conducted on a retainer basis with Thomas Isett, as the primary engagement resource, at
a rate of $40,000 per month, and on a time and materials basis for all other engagement resources provided by Consultant,
billable at the rate of $85 to $450 per hour. The Consultant and the Company entered into an additional Statement of Work
on December 1, 2019 (the “December 1, 2019 SOW”), which provided that the Consultant would entitled to a bonus of 3%
to 4.5% of the transaction value if the Company or any of its assets are sold during the term of the Statement of Work. Consultant
and the Company have agreed to terminate the Consulting Agreement and the May 1, 2019 SOW and December 1, 2019 SOW.
Item 9.01 Exhibits