EXHIBIT 10.1
SEVERANCE AND
CHANGE IN CONTROL AGREEMENT
This Agreement (the
“Agreement”) is entered into as of the 30th day of
April, 2009 by and between Altus Pharmaceuticals Inc., a Delaware
corporation (the “Company”), and Thomas J. Phair, Jr.
(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 include (and is not limited to):
(i) dishonesty with respect to the Company or any affiliate, parent
or subsidiary of the Company; (ii) insubordination;
(iii) substantial malfeasance or nonfeasance of duty;
(iv) unauthorized disclosure of confidential information;
(v) Executive’s breach of any material provision of any
employment, consulting, advisory, non-disclosure, non-competition,
or similar material agreement between Executive and the Company,
which breach, where reasonably subject to cure, is not cured to the
satisfaction of the Board within ten (10) days after notice to
Executive by the Company of such breach; or (vi) conduct
substantially prejudicial to the business of the Company or any
affiliate, parent or subsidiary of the Company. The Board shall
have sole discretion to determine the existence of
“Cause,” and its determination will be conclusive on
Executive and the Company; provided that the Board may delegate its
power to act under this paragraph (a) to a committee of the
Board in which case the determination of such committee shall be
conclusive. “Cause” is not limited to events which have
occurred prior to the termination of Executive’s service, nor
is it necessary that the Board’s finding of
“Cause” occur prior to such termination. If the Board
determines, subsequent to Executive’s termination of service,
that either prior or subsequent to Executive’s termination
Executive engaged in conduct which would constitute
“Cause,” then Executive shall have no right to any
benefit or compensation under this Agreement.
(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:
(i) Executive, as a condition of remaining an employee of the
Company, is required to relocate at least 50 miles from
Executive’s then-current location of employment;
(ii) there occurs a material adverse change in
Executive’s duties, authority or responsibilities which
causes Executive’s position with the Company to become of
significantly less responsibility or authority than
Executive’s position was immediately prior to the Change in
Control; or (iii) there occurs a material reduction in
Executive’s base salary from Executive’s base salary
received immediately prior to the Change in Control, provided
that any notice of termination by Executive for Good Reason
shall be given by Executive within fifteen (15) days of
Executive’s becoming aware of the occurrence of the facts
giving rise to such Good Reason. For purposes of this Agreement,
“Good Reason” shall be interpreted in a manner, and
limited to the extent necessary, so that it will not cause adverse
tax consequences for either party with respect to Section 409A
of the Internal Revenue Code of 1986, as amended (“Code
Section 409A”), and any successor statute, regulation
and guidance thereto.
(d) Base Salary . As
used herein, “Base Salary” shall mean Executive’s
annual base salary, 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 involuntarily terminated by action
of the Company other than for Cause, 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 (provided such payments will be made at least
monthly).
(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
fifty percent (50%) of 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, provided any such payments will be made within
forty-five (45) days following Executive’s termination
with the Company.
(c) COBRA Payments .
Upon completion of the appropriate COBRA forms, and subject to all
the requirements of COBRA, the Company shall continue
Executive’s participation in the Company’s health and
dental insurance plans at the Company’s cost (except for
Executive’s co-pay, if any, which shall be deducted from
Executive’s severance compensation) for the 18 month
COBRA eligibility period following termination, to the same extent
that such insurance is provided to similarly situated Company
executives (but in all events on terms not less advantageous than
those applicable to the Executive as of the second business day
preceding the date on which employment terminates), provided
that this benefit will cease and the Company will be under no
obligation to provide it if Executive has become eligible for
coverage under another employer’s group coverage, and
Executive hereby agrees to notify the Company promptly and in
writing should that occur.
(d) No Duplication . In
the event that Executive is eligible for Change in Control
Severance under Section 3 below, Executive shall not
be eligible for and shall not receive the Sta
