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Exhibit 10.2
SEVERANCE AND
CHANGE IN CONTROL AGREEMENT
This
Agreement (the “Agreement”) is entered into as of the
2nd day of June, 2008 by and between Altus Pharmaceuticals
Inc. , a Delaware corporation (the “Company”), and
Georges Gemayel, Ph.D. (the “Executive”).
WHEREAS Executive is employed by the Company, and because of
such employment, possesses detailed knowledge of the Company and
its business and operations;
WHEREAS Executive’s continued service to the Company
is very important to the future success of the Company;
WHEREAS the Company desires to enter into this Agreement to
provide Executive with certain financial protection in the event
that Executive’s employment terminates under certain
circumstances, and thereby to provide Executive with incentives to
remain with the Company
WHEREAS the Board of Directors of the Company (the
“Board”) acting through the Compensation Committee has
determined that it is in the best interests of the Company to enter
into this Agreement.
NOW
THEREFORE for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and
Executive agree as follows:
1.
Definitions .
(a)
Cause . As used herein, “Cause” shall mean:
(i) Executive’s failure to follow the reasonable
instructions of the Board or otherwise perform Executive’s
duties hereunder for thirty (30) days after a written demand
for performance is delivered to Executive on behalf of the Company,
which demand specifically identifies the manner in which the
Company alleges that Executive has not substantially followed such
instructions or otherwise performed Executive’s duties;
(ii) material violation by Executive of the Company’s
Code of Conduct; (iii) Executive’s willful misconduct
that is materially injurious to the Company (whether from a
monetary perspective or otherwise); (iv) Executive’s
willful commission of an act constituting fraud with respect to the
Company; (v) conviction of Executive for a felony under the
laws of the United States or any state thereof; or
(vi) Executive’s material breach of Executive’s
obligations under Section 8 hereof, provided that the Company
first provides Executive with written notice of such material
breach. A final determination of whether Cause exists under this
Agreement, including but not limited to any determination of
whether any act or omission of Executive constitutes a
“material” violation of the Company’s Code of
Conduct, a “material” breach of this Agreement, or is
“materially injurious” to the Company, shall be made by
the Board.
If
Executive’s employment is terminated by the Company for
Cause, all compensation and benefits provided to Executive by the
Company pursuant to this Agreement or otherwise shall cease as of
the Termination Date, except that the Company shall pay Executive
all Base Salary owed to Executive for work performed prior to the
Termination Date, plus the cash value of any accrued but unused
vacation and paid time off, as of the Termination Date.
(b)
Change In Control . As used herein, a “Change in
Control” shall mean:
(i) the shareholders of the Company approve: (a) any
consolidation or merger of the Company (x) where the
shareholders of the Company, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or
merger, beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of the combined
voting power of all the
outstanding securities of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any) or (y) where the members of the
Board, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, constitute more than
50% of the board of directors of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate
parent corporation, if any); (b) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company; or (c) any
plan or proposal for the liquidation or dissolution of the
Company;
(ii) individuals who, as of the date hereof, constitute the
entire Board (the “Incumbent Directors”) cease for any
reason to constitute at least 50% of the Board, provided that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the
then Incumbent Directors shall be, for purposes of this Agreement,
considered as though such individual were an Incumbent Director;
or
(iii) any “person,” as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (other than the Company, any
employee benefit plan of the Company or any entity organized,
appointed or established by the Company for or pursuant to the
terms of such plan), together with all “affiliates” and
“associates” (as such terms are defined in
Rule 12b-2 under the Exchange Act) of such person, shall
become the “beneficial owner” or “beneficial
owners” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate 25% or more of either: (a) the then
outstanding shares of the Common Stock of the Company or
(b) the combined voting power of all then outstanding
securities of the Company having the right under ordinary
circumstances to vote in an election of the Board (“Voting
Securities”) (in either such case, other than as a result of
acquisitions of such securities directly from the Company).
Notwithstanding the foregoing, a “Change in Control” of
the Company shall not be deemed to have occurred for purposes of
the foregoing clause (iii) solely as the result of an
acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities
outstanding, increases: (a) the proportionate number of shares
of Common Stock beneficially owned by any person to 25% or more of
the Common Stock then outstanding, or (b) the proportionate
voting power represented by the Voting Securities beneficially
owned by any person to 25% or more of the combined voting power of
all then outstanding Voting Securities; provided, however, that if
any person referred to in clause (a) or (b) of this
sentence shall thereafter become the beneficial owner of any
additional shares of Common Stock or other Voting Securities (other
than pursuant to a stock split, stock dividend or similar
transaction), then a “Change in Control” shall be
deemed to have occurred for purposes of the foregoing clause
(iii).
(c)
Good Reason . As used herein, a “Good Reason”
shall mean any action by the Company without Executive’s
prior written consent which results in (i) any requirement by
the Company that Executive perform Executive’s principal
duties outside a radius of 50 miles from the Company’s
Cambridge or planned Waltham, MA location; (ii) any material
diminution in Executive’s title, position , duties,
responsibilities or authority, including Executive’s ceasing
to serve as the Company’s President and Chief Executive
Officer as determined by the Board of Directors or the Board of
Directors does not recommend he continue to serve as a member of
the Board; (iii) a reduction in Executive’s base salary
(unless such reduction is effected in connection with a general and
proportionate reduction of salaries for all members of the
management team) or any reduction of Executive’s target bonus
amount to less than 50% of Executive’s annual salary or such
higher target amount if increased at the Compensation
Committee’s discretion; (iv) any Change of Control (as
defined in this Agreement) involving the Company which results in
Executive’s ceasing to serve as the Chief Executive Officer
for the surviving entity and for all direct and indirect parent
organizations thereof; or (v) the Company materially breaches
any of its obligations to Executive pursuant to this Agreement
and/or the “Offer Letter” dated May 21, 2008
(incorporated herein by reference). To be eligible for any benefits
under this agreement pursuant to a termination for Good Reason,
Executive shall be required to provide notice to the Company of the
existence of any of the foregoing events within fifteen
(15) days of the initial occurrence of the event. Upon
such notice, the Company shall have a period of fifteen
(15) days to remedy such event and not be required to provide
benefits to Executive on account of such event.
(d)
Base Salary . As used herein, “Base Salary”
shall mean Executive’s annual base salary at the time of
termination, excluding reimbursements, bonuses, benefits, and
amounts attributable to stock options and other non-cash
compensation.
2.
Standard Severance . In the event that
Executive’s employment is either (i) involuntarily terminated
by action of the Company other than for Cause or
(ii) Executive terminates Executive’s employment
voluntarily for Good Reason, Executive shall receive the following
(subject to Executive’s execution of a release of claims as
described in Section 7 ):
(a)
Severance Payments . Continuation of payments in an amount
equal to Executive’s then-current Base Salary for a twelve
(12) month period (the “Severance Period,” if
Section 2 applies) less all customary and required
taxes and employment-related deductions, in accordance with the
Company’s normal payroll practices.
(b)
Separation Bonus . In the Company’s sole discretion,
and conditioned upon appropriate approval from the Compensation
Committee, within forty-five (45) days following
Executive’s termination the Company may pay Executive a
separation bonus not to exceed the target annual bonus to which
Executive may have been entitled for the year in which Executive is
terminated, prorated for the portion of the year in which Executive
was employed.
(c)
Acceleration of Initial Stock Option Grant. In the
Company’s sole discretion, and conditioned upon appropriate
approval from the Compensation Committee, the Company may
accelerate to the date of termination all, a portion, or none of
the Executive’s then unvested stock options related to the
initial stock option grant.
(d)
COBRA Payments . Upon completion of the appropriate COBRA
forms, and subject to all the requirements of COBRA, the Company
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