Item 5.02 Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 10, 2018, Assembly Biosciences, Inc. (the
“Company”) entered into amendments to the employment agreements between the Company and Derek A. Small (the
“Small Amendment”) and Richard J. Colonno, Ph.D (the “Colonno Amendment,” and together with the Small
Amendment, the “Amendments”), the Company’s President and Chief Executive Officer and the Company’s
Executive Vice President and Chief Scientific Officer of Virology Operations, respectively. The Amendments, among other
things, provide for (i) an at-will employment arrangement, (ii) an increased protected period in connection with a change in
control separation from six months to 12 months and (iii) a modified economic cutback, which would reduce separation
payments to Mr. Small and Dr. Colonno to the extent necessary to avoid being subject to the excise tax imposed by Section
4999 (the “Excise Tax”) of the Internal Revenue Code of 1986, as amended, in the event that the benefits received
by Mr. Small and Dr. Colonno as a result of such cutback would be greater than if Mr. Small and Dr. Colonno were subject to
and paid the Excise Tax. These provisions are consistent with the provisions that the Company includes in new executive
employment agreements.
In addition, the Small Amendment increases the separation payment
payable to Mr. Small in the event of a change of control separation by increasing the lump sum payable in respect of Mr. Small’s
annual performance-based cash bonus from an amount equal to his full target annual bonus to an amount equal to 1.5 times such bonus.
The foregoing descriptions of the Small Amendment and the Colonno
Amendment are qualified in their entirety by reference to the terms and conditions of the Amendments, which are filed with this
Current Report on Form 8-K as Exhibits 10.1 and 10.2, respectively.
Also on October 10, 2018, the Company entered into an amended
and restated employment agreement with Uri A. Lopatin, M.D., the Company’s Chief Medical Officer (the “A&R Employment
Agreement”). The A&R Employment Agreement provides for an at-will employment arrangement. The A&R Employment Agreement
provides for an initial annualized base salary of $390,000 and an annual performance-based incentive cash bonus in an amount initially
targeted to 35% of Dr. Lopatin’s then-current base salary. Neither term represents a change to Dr. Lopatin’s compensation.
If Dr. Lopatin’s employment is terminated as a result
of his death, then the Company will pay to his estate his then-current base salary for a period of 12 months following such termination.
If Dr. Lopatin’s employment is terminated by the
Company for disability (as defined in the A&R Employment Agreement) or without cause (as defined in the A&R
Employment Agreement) or by Dr. Lopatin for good reason (as defined in the A&R Employment Agreement) within 12 months
following a change of control (as defined in the A&R Employment Agreement), and provided that Dr. Lopatin signs and does
not revoke a general release of claims against the Company, the Company will provide Dr. Lopatin the following benefits: (i)
a lump sum payment equal to 12 months of his then-current base salary; (ii) an amount equal to his full target annual bonus
for the year in which the termination occurred; (iii) immediate vesting in full of all equity awards held by Dr. Lopatin
subject to time-based vesting; (iv) extension of the exercise period for all vested stock options held by Dr. Lopatin to the
end of their term; and (v) if Dr. Lopatin properly elects COBRA, reimbursement of COBRA premiums for 12 months following
termination or the end of his COBRA continuation period, whichever is earlier; provided, however, the Company’s
obligation to pay such premiums will terminate earlier if he becomes eligible for health insurance benefits from another
employer during such period.
If Dr. Lopatin’s employment is terminated as
a result of his disability, by the Company without cause or by Dr. Lopatin for good reason, and such termination does not
occur within 12 months following a change of control and provided that Dr. Lopatin signs and does not revoke a general
release of claims against the Company, the Company will provide him the following benefits: (i) continued payment of
his then-current base salary for 12 months following the date of termination of employment; (ii) all equity awards that would
have time vested during the six months following the termination date shall accelerate and vest; (iii) with respect to
Dr. Lopatin’s vested stock options, (a) the extension of the exercise period for all vested stock options granted prior
to 2018 until term and (b) the extension of the exercise period for all vested stock options granted after January
2018 until the first anniversary of the termination date; and (iv) if Dr. Lopatin properly elects COBRA, reimbursement of
COBRA premiums for 12 months following termination or the end of his COBRA continuation period, whichever is earlier;
provided, however, the Company’s obligation to pay such premiums will terminate earlier if he becomes eligible for
health insurance benefits from another employer during such period. Such benefits are in lieu of, and not in addition to,
the benefits described in the preceding paragraph.
The A&R Employment Agreement
includes non-solicitation covenants that apply during the term of the employment agreement and for one year following the
termination of his employment.
The foregoing description of the A&R Employment Agreement
is qualified in its entirety by reference to the terms and conditions of the A&R Employment Agreement, which is filed with
this Current Report on Form 8-K as Exhibits 10.3.
In addition, the Compensation Committee of the Board of Directors
of the Company approved a form of stock appreciation right award agreement for non-U.S. grantees to grant stock appreciation awards
under the Assembly Biosciences, Inc. 2018 Stock Incentive Plan.