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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
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On October 22, 2018, Oncobiologics, Inc.
(the “Company”) entered into a revised executive employment agreement with its Chief Executive Officer,
Chief Financial Officer, President and Secretary, Mr. Lawrence A. Kenyon. As previously disclosed and reported on Form 8-K,
in August 2018, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the
Company (the “Board”) and the Board approved certain adjustments to Mr. Kenyon’s compensation arrangement
in light of his appointment as Chief Executive Officer. Namely, these adjustments included an increase in his annual base
salary from $350,000 to $425,000, and an increase in his annual performance bonus percentage from up to 40% of his base
salary as determined by the Board to 50%, in each case retroactively to June 18, 2018 when he began acting as interim Chief
Executive Officer. Mr. Kenyon also was granted stock options to acquire 500,000 shares of the Company’s common stock
under the Company’s 2015 Equity Incentive Plan (the “Plan”), which options are non-qualified stock options
that vest annually over four years, and may be accelerated in the event of a “change in control” (as defined in
the Plan) and achievement of a pre-defined objective. Mr. Kenyon is also eligible for additional stock option grants under
the Plan for up to an aggregate of 1.7 million shares of the Company’s common stock, which grants are subject to,
and will be made effective upon, achievement of certain pre-defined corporate objectives, with four-year vesting
and subject to acceleration in the event of a “change in control.”
On October 22, 2018, following review of Mr.
Kenyon’s severance and change in control benefits, which were not modified in August 2018, the
Compensation Committee recommended, and the Board approved, the amendment of Mr. Kenyon’s executive
employment agreement to reflect the prior compensation determinations regarding his salary, target bonus and equity
incentives, as well as reflect certain modifications to his severance and change in control benefits.
Accordingly, under Mr. Kenyon’s executive employment
agreement, as amended effective October 22, 2018 (the “Executive Employment Agreement”), Mr. Kenyon is entitled
to an annual base salary of $425,000, is eligible to receive an annual performance bonus of up to 50% of his annual base
salary as determined by the Board, and is eligible for reimbursement of expenses. Mr. Kenyon is also eligible for equity
grants under the Company’s equity incentive plans, including the grant of stock options for up to an aggregate 1.7
million shares of the Company’s common stock, which grants are subject to, and will be made effective upon, achievement
of certain pre-defined corporate objectives, in each case with four-year vesting and subject to acceleration in the event of
a “change in control.” Under the Executive Employment Agreement, if Mr. Kenyon’s employment is terminated
without “cause” or if he resigns for “good reason” (as each such term is defined in the Executive
Employment Agreement), subject to his execution of a separation agreement with an effective release of claims in favor of the
Company and continued compliance with certain restrictive covenants set forth in the Executive Employment Agreement and a
proprietary information, inventions, non-solicitation and non-competition agreement (the “PIIA”), Mr. Kenyon
is entitled to continued payment of his base salary for 12 months following the termination, 100% of his target bonus for
the calendar year of termination paid in a lump sum, employee benefit coverage for up to 12 months, full vesting of 50% of
his then unvested equity awards, and reimbursement of expenses owed to him through the date of his termination. If
Mr. Kenyon’s employment is terminated by the Company or any successor entity (provided such successor entity either
assumes Mr. Kenyon’s equity awards or substitutes similar equity awards) without “cause” or if he resigns
for “good reason” within two months prior to or within 12 months following a “change in control,”
subject to his execution of a separation agreement with an effective release of claims in favor of the Company and
continued compliance with certain restrictive covenants set forth in the Executive Employment Agreement and the PIIA, he is
entitled to continued payment of his base salary for 18 months, 150% of his annual target bonus for the calendar year of
termination paid in a lump sum, employee benefit coverage for up to 18 months, and reimbursement of expenses owed to him
through the date of his termination. Additionally, 100% of his then unvested equity awards shall become fully vested.
The foregoing description of Mr. Kenyon’s Executive
Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full
text of such agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.