Vallon Pharmaceuticals, Inc. appointed new CEO

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Resignation of Directors

In accordance with the Merger Agreement and effective as of the Effective Time, all of the Company's directors other than David Baker resigned from the Board and any respective committees of the Board of which they were members. The resignations were not the result of any disagreements with the Company relating to the Company's operations, policies or practices.

Appointment of Directors

In accordance with the Merger Agreement and effective as of the Effective Time, the Board appointed W. Marc Hertz, Ph.D., David Szekeres, Roelof Rongen and Camilla V. Simpson, M.Sc. to the Board. David Baker, existing director, remained on the Board. Mr. Szekeres was appointed as the Chairperson of the Board.

Other than pursuant to the Merger Agreement, there were no arrangements or understandings between the Company's newly appointed directors and any person pursuant to which they were elected. None of the Company's newly appointed directors has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Class Designations

Following the Merger, the classes of the Board are as follows:

-Class I Directors: David Baker

-Class II Directors: Roelof Rongen and Camilla V. Simpson, M.Sc.

-Class III Directors: W. Marc Hertz, Ph.D. and David Szekeres

The terms of the Company's Class I, Class II, and Class III directors will expire upon the election and qualification of successor directors at the annual meetings of stockholders to be held in 2023, 2024, and 2025, respectively.

Biographical information for the newly appointed directors and disclosure regarding related party transactions involving GRI and the newly appointed directors are included in the Registration Statement under the sections titled "Management Following the Merger" and "Related Party Transactions of the Combined Company" and incorporated herein by reference.


Board Committees

In connection with the Closing, Mr. Szekeres (Chairperson), Ms. Simpson and Mr. Rongen were appointed to the Audit Committee of the Board; Ms. Simpson (Chairperson) and Mr. Szekeres were appointed to the Compensation Committee of the Board; and Mr. Rongen (Chairperson) and Ms. Simpson were appointed to the Nominating and Corporate Governance Committee of the Board.

Indemnification Agreements

In connection with the Closing, each of the Company's directors and executive officers entered into the Company's standard form of Indemnification Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Resignation of Officers and Separation and Release Agreement

In accordance with the Merger Agreement and effective as of the Effective Time, all of the Company's current executive officers other than Leanne Kelly resigned from the Company. The resignations were not the result of any disagreements with the Company relating to the Company's operations, policies or practices.

In connection with the resignation for David Baker, the Company and Mr. Baker entered into a Separation and Release Agreement on April 21, 2023 (the "Separation Agreement"). Pursuant to the terms of the Separation Agreement and his current employment agreement, Mr. Baker will receive continuation of his current salary for 18 months payable in accordance with the Company's payroll practices and a lump sum payment equal to 150% of his target bonus within 15 days of execution of his release and certain COBRA benefits. Mr. Baker also agreed to reduce amounts payable with respect to certain future milestone payments as further described in the Separation Agreement. The forgoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Separation Agreement, which is filed as Exhibit 10.9 to this Current Report on Form 8-K and incorporated herein by reference.

Appointment of Principal Officers

In accordance with the Merger Agreement and an action of the Board at the Board meeting held on April 20, 2023, the Board appointed W. Marc Hertz, Ph.D. as the Company's Chief Executive Officer (principal executive officer), Leanne Kelly as the Company's Chief Financial Officer (principal financial and accounting officer), Vipin Kumar Chaturvedi, Ph.D. as the Company's Chief Scientific Officer, and Albert Agro, Ph.D. as the Company's Chief Medical Officer, each effective as of the Closing and to hold office until his or her respective successor(s) shall have been duly elected and qualified or until his or her earlier resignation or removal.

There are no familial relationships among any of the Company's newly appointed principal officers. None of the Company's newly appointed principal officers has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Biographical information for the newly appointed officers and disclosure regarding related party transactions involving GRI and the newly appointed officers are included in the proxy statement/prospectus/information statement forming part of the Registration Statement under the sections titled "Management Following the Merger" and "Related Party Transactions of the Combined Company" and incorporated herein by reference.

GRI has entered into employment agreements with Dr. Hertz, Ms. Kelly and Dr. Chaturvedi providing for the employment of Dr. Hertz, Ms. Kelly and Dr. Chaturvedi as executive officers (collectively, the "Employment Agreements") and a consulting agreement with Dr. Agro (the "Consulting Agreement"). The Employment Agreements include the following terms:

-an annual base salary of $375,000 for Dr. Hertz, $312,500 for Ms. Kelly and $312,500 for Dr. Chaturvedi, in each case, to be effective as of the Closing;

-an annual target cash bonus of 50% for Dr. Hertz, 20% for Ms. Kelly for the first year of the Term (as defined in the applicable Employment Agreement) and 35% for the following Terms, and 35% for Dr. Chaturvedi, in each case, to be effective as of the Closing;

-a bonus payment of $250,000 for Dr. Hertz and $100,000 for Ms. Kelly, which was paid upon the Closing; and

-in the case of Ms. Kelly, the grant of an option to purchase 750,000 shares of Company Common Stock, which will be granted within 180 calendar days following the Effective Date.

The Consulting Agreement includes the following terms:

-a monthly fee of $25,000 for Dr. Agro, provided that Dr. Agro provides consulting services for a minimum of 100 hours a month.


The Employment Agreements also provide that if the Company terminates the executive's employment without "cause" or if the executive resigns his employment for "good reason," each as defined in the Employment Agreements, the executive will be entitled to receive salary continuation and COBRA premium reimbursement (for 12 months in the case of Dr. Hertz and Ms. Kelly and nine months in the case of Dr. Chaturvedi) and equity vesting. In the case of a termination without cause or resignation for good reason that occurs during the period beginning three months before a "change in control" (as defined in the agreement) and ending 12 months thereafter, (a) these severance-related periods will be increased to 18 months in the case of Dr. Hertz and 12 months in the case of Ms. Kelly and Dr. Chaturvedi, (b) the equity award acceleration will apply in full to all of the executive's outstanding time-based awards and (c) the executive will receive an additional payment equal to his target bonus.

The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreements that were filed as Exhibits 10.40, 10.41 and 10.42 to the amended Registration Statement filed with the SEC on February 24, 2023 and incorporated herein by reference. The forgoing description of the Consulting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Consulting Agreement, which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.

Amended and Restated 2018 Equity Incentive Plan

At the Special Meeting, the stockholders of the Company approved the Amended and Restated GRI Bio, Inc. 2018 Equity Incentive Plan (formerly the Vallon Pharmaceuticals, Inc. 2018 Equity Incentive Plan) (the "A&R 2018 Plan"). The A&R 2018 Plan had previously been approved by the Company's board of directors, subject to stockholder approval. The A&R 2018 Plan became effective on April 21, 2023, with the stockholders approving the amendment to the A&R 2018 Plan (i) to increase the aggregate number of shares by 1,520,151 shares to 1,950,000 shares of Company Common Stock for issuance as awards under the A&R 2018 Plan, (ii) to increase the aggregate maximum number of shares of Company Common Stock that may be issued pursuant to the exercise of incentive stock options under the A&R 2018 Plan to 24,000,000 shares, (iii) to extend the term of the A&R 2018 Plan through January 1, 2033, (iv) to prohibit any action that would be treated as a "repricing" of an award without further approval by the stockholders of Company, and (v) to revise the limits on awards to non-employee directors as follows: the aggregate grant date fair value of shares granted to any non-employee director under the 2018 Plan and any other cash compensation paid to any non-employee director in any calendar year may not exceed $0.75 million; increased to $1.0 million in the year in which such non-employee director initially joins the board of directors.

For a description of the A&R 2018 Plan, please refer to "Proposal No. 4: Approval of Amended and Restated 2018 Equity Incentive Plan to, among other things, increase the aggregate number of shares of Company Common Stock available for issuance thereunder to 6,500,000" in the proxy statement/prospectus/information statement making up part of the Registration Statement, which information is incorporated herein by reference. The description of the A&R 2018 Plan is subject to and qualified in its entirety by reference to the A&R 2018 Plan, which is attached as Exhibit 10.8 hereto and incorporated herein by reference.