Avalo Therapeutics Inc.
06/12/2026 | Press release | Distributed by Public on 06/12/2026 14:08
Corporate Action, Management Change/Compensation (Form 8-K)
Item 3.03 Material Modification to rights of Security Holders.
To the extent required by Item 3.03 of this Form 8-K, the information contained in Item 3.02 of this Form 8-K is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 12, 2026 (the "Effective Date"), the Company entered into amendments to employment agreements with Garry A. Neil, M.D., the Company's Chief Executive Officer, Christopher Sullivan, the Company's Chief Financial Officer, Mittie Doyle, M.D., FACR, the Company's Chief Medical Officer and Taylor Boyd, Chief Business Officer (together, the "Employment Agreement Amendments").
The Employment Agreement Amendments amend the provisions of the employment agreements with each of Dr. Neil, Mr. Sullivan, Dr. Doyle and Mr. Boyd that relate to potential payments and benefits in connection with certain employment terminations and a change in control. These provisions, as amended by the Employment Agreement Amendments, are summarized below:
•In the event of a termination without Cause or for Good Reason: Each of Dr. Neil, Mr. Sullivan, Dr. Doyle and Mr. Boyd will be entitled to (i) twelve (12) months of his or her respective base salary as in effect immediately prior to such termination (or, in the case of Dr. Neil, eighteen (18) months), payable in substantially equal installments over the applicable severance period; (ii) if not yet paid, any unpaid bonus for the fiscal year preceding the year in which such termination occurs, based upon the achievement of Company goals as determined by the Compensation Committee of the Company's Board of Directors, payable when such annual bonuses are paid to other executive employees of the Company; (iii) the annual bonus earned for the fiscal year in which such termination occurs, based upon the achievement of Company goals as determined by the Compensation Committee of the Company's Board of Directors, prorated to reflect his or her completed days of employment during such year, payable when such annual bonuses are paid to other executive employees of the Company (but in no event later than March 15 of the calendar year following the year in which the termination occurs), and (iv) upon timely COBRA election, the Company-paid portion of his or her health coverage premiums during the applicable severance period.
In addition, consistent with the terms of the employment agreements prior to the Employment Agreement Amendments and solely with respect to options granted prior to the Effective Date, such options will vest in full as of such termination, and all vested options held as of the date of termination will remain exercisable thereafter for a period of twelve (12) months in the case of Dr. Neil and Mr. Sullivan and six (6) months in the case of Dr. Doyle and Mr. Boyd.
•In the event of a termination without Cause or For Good Reason in the period beginning three months prior to a Change in Control and ending on the twelve month anniversary following a Change in Control): In lieu of the benefits provided above, each of Dr. Neil, Mr. Sullivan, Dr. Doyle and Mr. Boyd will be entitled to (i) the sum of (A) 1.0x of his or her respective base salary as in effect immediately prior to such termination (or, in the case of Dr. Neil, 1.5x) and (B) 1.0x of his or her annual target bonus in the year of termination; (ii) if not yet paid, any
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unpaid bonus for the fiscal year preceding the year in which such termination occurs, based upon the achievement of Company goals as determined by the Compensation Committee of the Company's Board of Directors, payable when such annual bonuses are paid to other executive employees of the Company; (iii) full acceleration of all outstanding and unvested time-based equity awards, which will become fully vested and exercisable or nonforfeitable as of the later of (A) the date of termination or (B) the effective date of a general release in favor of the Company, and any vested options shall remain exercisable for twelve (12) months in the case of Dr. Neil and Mr. Sullivan and six (6) months in the case of Dr. Doyle and Mr. Boyd; (iv) the annual bonus earned for the fiscal year in which such termination occurs, based upon the achievement of Company goals as determined by the Compensation Committee of the Company's Board of Directors, prorated to reflect his or her completed days of employment during such year, payable when such annual bonuses are paid to other executive employees of the Company (but in no event later than March 15 of the calendar year following the year in which the termination occurs); and (v) upon timely COBRA election, the Company-paid portion of his or her health coverage premiums during the applicable severance period. The payments pursuant to clauses (i)-(ii) will be made promptly after the closing of the Change in Control or his or her termination, whichever is later.
Notwithstanding anything to the contrary in the employment agreement, the Company's Fourth Amended and Restated 2016 Equity Incentive Plan (as amended), or applicable award agreement, in the event of a Change in Control, all outstanding and unvested time-based equity awards held by such executive immediately prior to the Change in Control (including any replacement, substitute or successor awards issued in respect thereof in connection with the Change in Control), to the extent not previously vested in accordance with their terms or clause (iii) above, shall become fully vested and exercisable or nonforfeitable (as applicable) upon the first anniversary of the Change in Control, provided that such executive remains continuously employed by the Company or its successor through such first anniversary.
•280G Limitation: In the event any compensation, payment or distribution by the Company to each of Dr. Neil, Mr. Sullivan, Dr. Doyle and Mr. Boyd, or for their respective benefit, whether paid or payable or distributed or distributable pursuant to the terms of their respective employment agreements, as amended, or otherwise, calculated in a manner consistent with Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the applicable regulations thereunder (the "Aggregate Payments"), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which each of Dr. Neil, Mr. Sullivan, Dr. Doyle and Mr. Boyd become subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction will only occur if it would result in the executive receiving a higher After Tax Amount (as defined in the respective Employment Agreement Amendment (i.e., the Aggregate Payments net of all applicable taxes, determined using the highest applicable marginal tax rates)) than what such executive would receive if the Aggregate Payments were not subject to such reduction.
The foregoing description of the Employment Agreement Amendments is qualified in its entirety by reference to the A&R Employment Agreements, copies of which are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4 to this current report on Form 8-K and are incorporated by reference herein.
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