Document:

Document

Exhibit 10.5
Avalo Therapeutics, Inc.

Non- Employee Director Compensation Policy

Amended January 24, 2022

Each member of the Board of Directors (the “Board”) who is not also serving as an employee of Avalo Therapeutics, Inc. (the “Company”) or any of its subsidiaries (each such member, an “Eligible Director”) will receive the compensation described in this Non-Employee Director Compensation Policy for his or her Board service on and following the date this policy is adopted by the Compensation Committee of the Board (the “Effective Date”). An Eligible Director may decline all or any portion of his or her compensation by giving notice to the Company prior to the date cash is to be paid or equity awards are to be granted, as the case may be. This policy is effective as of the Effective Date and may be amended at any time in the sole discretion of the Board or the Compensation Committee of the Board.

Annual Cash Compensation

The annual cash compensation amount set forth below is payable in equal quarterly installments, payable in arrears on the last day of each calendar quarter in which service occurred. If an Eligible Director joins the Board or a committee of the Board at a time other than effective as of the first day of a calendar quarter, each retainer set forth below for such quarter will be pro-rated based on days served in the applicable calendar quarter,  with regular full quarterly payments thereafter. Likewise, if an Eligible Director ceases to serve on the Board or a committee of the Board at a time other than effective as of the last day of a calendar quarter, each retainer set forth below for such quarter will be pro-rated based on days served in the applicable calendar quarter.  All annual cash fees are vested upon payment.

1.Annual Board Service Retainer:

a.All Eligible Directors: $40,000

b.Chair of the Board Service Retainer (in addition to Eligible Director Service Retainer):  $30,000

2.Annual Committee Member Service Retainer:

a.Member of the Audit Committee: $7,500

b.Member of the Compensation Committee: $5,000

c.Member of the Nominating and Corporate Governance Committee: $4,000

d.Member of the Science and Technology Advisory Committee: $7,500

3.Annual Committee Chair Service Retainer (in addition to Committee Member Service Retainer):

a.Chair of the Audit Committee: $7,500

b.Chair of the Compensation Committee: $5,000

c.Chair of the Nominating and Corporate Governance Committee: $4,000

d.Chair of the Science and Technology Advisory Committee: $7,500

Election to Receive Stock Options in Lieu of Cash

An Eligible Director may make an election to receive all or a portion of his or her annual cash compensation described above in the form of stock options to purchase shares of the Company’s common stock (the “Common Stock”). Elections must be made in multiples of 5% of an Eligible Director’s aggregate cash retainer.

1.Timing of Elections:

a.Current Eligible Directors: Elections must be made prior to the beginning of each quarter.

b.New Eligible Directors: Elections for the first quarter of service must be made within 30 days of becoming an Eligible Director, provided that such election shall be applicable only to the portion of the cash retainers earned after the date of the election.

c.New committee member or committee chair: Elections for the first quarter of service must be made prior to the date that the Eligible Director becomes a committee member or committee chair (or, if a new Eligible Director, within 30 days of becoming a committee member or committee chair, provided that such election shall be applicable only to the portion of the cash retainer earned after the date of the election).

2.Description of Stock Options: The stock options will be granted under the Company’s 2016 Omnibus Incentive Compensation Plan, as amended (the “Plan”). The stock options will be granted on the date on which the cash would otherwise have been paid (i.e. on the last day of each calendar quarter). All stock options granted will be nonqualified stock options using the Company’s standard form of Nonqualified Stock Option Grant Agreement under the Plan, with an exercise price per share equal to the last reported sale price of the Common Stock on the NASDAQ Capital Market on the date of grant or, if such grant date is not a trading date, on the last trading date prior to the grant date, and with a term of ten years from the date of grant (subject to earlier termination in connection with a termination of service as provided in the Plan). The actual number of shares subject to the stock options will be determined so that the options have a “fair value” on the date of grant, using a Black-Scholes or binominal valuation model consistent with the methodology used by the Company in preparing its financial 
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statements, equal to the amount of cash fees forgone. The stock options will immediately vest and become exercisable in full upon grant.

Equity Compensation

The equity compensation set forth below will be granted under the Plan. All stock options granted under this policy will be nonqualified stock options using the Company’s standard form of Nonqualified Stock Option Grant Agreement under the Plan, with an exercise price per share equal to the last reported sale price of the Common Stock on the NASDAQ Capital Market on the date of grant or, if such grant date is not a trading date, on the last trading date prior to the grant date, and with a term of ten years from the date of grant (subject to earlier termination in connection with a termination of service as provided in the Plan).

1.Initial Grant for New Eligible Directors: For each Eligible Director who is first appointed or elected to the Board following the Effective Date, on the date of such election or appointment (or, if such date is not a market trading day, the first market trading day thereafter), such Eligible Director will be automatically, and without further action by the Board or the Compensation Committee of the Board, be granted a stock option for 80,000 shares of Common Stock.  The stock options will vest and become exercisable in three substantially equal annual installments on the first, second and third anniversary of the date of grant, subject to the Eligible Director’s continued service on each such vesting date.

2.Annual Grant: On the date of each annual stockholders meeting of the Company held after the Effective Date, each Eligible Director who continues to serve as a non-employee member of the Board following such stockholders meeting will be automatically, and without further action by the Board or the Compensation Committee of the Board, be granted a stock option for 40,000 shares of Common Stock. The stock options will vest and become exercisable in full on the first anniversary of the grant date, subject to the Eligible Director’s continued service on such vesting date.
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72358609v1  FIRST AMENDMENT TO   CITIZENS COMMUNITY BANCORP, INC.  2018 EQUITY INCENTIVE PLAN  THIS FIRST AMENDMENT TO THE CITIZENS COMMUNITY BANCORP,  INC. 2018 EQUITY INCENTIVE PLAN (this “Amendment”) is made effective as of March 2,  2022.  RECITALS  A. Citizens Community Bancorp, Inc., a Maryland corporation (the “Company”), adopted that certain 2018 Equity Incentive Plan (the “Plan”).  B. Section 10.2 of the Plan permits the Board of Directors of the Company (the “Board”) to amend the Plan. C. On the date hereof, the Board approved an amendment to change the definition of a Change in Control under the Plan.   NOW, THEREFORE, in consideration of the foregoing and for other good and valuable  consideration, the receipt and sufficiency of which are hereby acknowledged, the Plan is hereby  amended as follows:  1. Change in Control.  The definition of “Change in Control” in Article II of the Plan is hereby amended and restated in its entirety to read as follows:  “Change in Control means any of the following events:  a change-in-control of a nature that would be required to be reported in response  to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities  Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is  then subject to such reporting requirement; or  the public announcement (which, for purposes of this definition, shall include,  without limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the  Company or any “person” (as such term is used in Sections 13(d) and 14(d) of the  Exchange Act) that such person has become the “beneficial owner” (as defined in Rule  13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the  Company (i) representing 30% or more, but not more than 50%, of the combined voting  power of the Company’s then outstanding securities unless the transaction resulting in  such ownership has been approved in advance by the Continuing Directors (as hereinafter  defined); or (ii) representing more than 50% of the combined voting power of the  Company’s then outstanding securities (regardless of any approval by the Continuing  Directors); provided, however, that notwithstanding the foregoing, no Change-in-Control  shall be deemed to have occurred for purposes of this Plan by reason of the ownership of  30% or more of the total voting capital stock of the Company then issued and outstanding  by the Company, any subsidiary of the Company or any employee benefit plan of the  Company or of any subsidiary of the Company or any entity holding shares of the  Exhibit 10.5 

 

72358609v1  Common Stock organized, appointed or established for, or pursuant to the terms of, any  such plan (any such person or entity described in this clause is referred to herein as a  “Company Entity”); or  the Continuing Directors (as hereinafter defined), cease to constitute a majority of  the Company’s Board of Directors; or  the shareholders of the Company approve (i) any consolidation or merger of the  Company in which the Company is not the continuing or surviving company or pursuant  to which shares of Company stock would be converted into cash, securities or other  property, other than a merger of the Company in which shareholders immediately prior to  the merger have the same proportionate ownership of stock of the surviving company  immediately after the merger; (ii) any sale, lease, exchange or other transfer (in one  transaction or a series of related transactions) of all or substantially all of the assets of the  Company; or (iii) any plan of liquidation or dissolution of the Company.  For purposes of this definition, “Continuing Director” shall mean any person who is a  member of the Board of Directors of the Company, while such person is a member of the Board  of Directors, who is not an Acquiring Person (as defined below) or an Affiliate or Associate (as  defined below) of an Acquiring Person, or a representative of an Acquiring Person or of any such  Affiliate or Associate, and who (i) was a member of the Board of Directors on the date of this  Amendment; or (ii) subsequently becomes a member of the Board of Directors, if such person’s  initial nomination for election or initial election to the Board of Directors is recommended or  approved by a majority of the then Continuing Directors. For purposes of this definition,  “Acquiring Person” shall mean any “person” (as such term is used in Sections 13(d) and 14(d) of  the Exchange Act) who or which, together with all Affiliates and Associates of such person, is  the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act) directly  or indirectly, of securities of the Company representing 30% or more of the combined voting  power of the Company’s then outstanding securities, but shall not include any Company Entity;  and “Affiliate” and “Associate” shall have their respective meanings ascribed to such terms in  Rule 12b-2 promulgated under the Exchange Act.”  2. Remaining Terms.  Except as expressly set forth in this Amendment, all other  terms and provisions of the Plan shall remain in full force and effect.  3. Governing Law.  This Amendment and the rights of the parties hereunder will be  governed by, interpreted, and enforced in accordance with the internal laws, without regard to  the law pertaining to choice or conflict of laws, of the State of Wisconsin.  4. Method of Execution.  This Amendment may be executed by pdf or other  electronic means.   5. Binding Effect.  This Amendment shall be binding upon the Company and  recipients of awards under the Plan, and their respective successors and permitted assigns.  [SIGNATURE PAGE FOLLOWS]  

 

72358609v1  IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the  date first written above.  Citizens Community Bancorp, Inc.  By:  ______________________________________  Name:    Its:

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