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Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(the “Agreement”), made as of the 18 th day of September, 2007, is entered into
by and between Curis, Inc., a Delaware corporation (the
“Company”), and Daniel R. Passeri (the
“Employee”). The Agreement is intended to comply with
the applicable provisions of Section 409A of the Internal
Revenue Code of 1986, as amended, and the final Treasury
regulations and guidance issued thereunder (“Section
409A”).
The Company desires to
continue to employ the Employee, and the Employee desires to
continue to be employed by the Company. In consideration of the
mutual covenants and promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
1. Term of Employment
. The Company hereby agrees to continue to employ the Employee, and
the Employee hereby accepts employment with the Company, upon the
terms set forth in this Agreement, for the period commencing on
September 18, 2007 (the “Commencement Date”) and
ending on December 31, 2012 (such period, as it may be
extended, the “Employment Period”), unless sooner
terminated in accordance with the provisions of Section 4.
This Employment Agreement will remain in force and effect
throughout the term of the Employment Period. The Employee’s
employment with the Company may be terminated by either the Company
or the Employee at any time subject only to the severance
provisions contained in Section 5 hereof.
2. Position
.
(a) The Employee shall serve
as President and Chief Executive Officer of the Company. The
Employee shall have duties and authority consistent with his
position as President and Chief Executive Officer and as may be
assigned from time to time by the Board of Directors of the Company
(the “Board”). The Employee shall report to, and be
subject to the supervision of, the Board. The Employee agrees to
devote his entire business time to the business and interests of
the Company during the Employment Period.
(b) During the Employment
Period, the Company shall use its best efforts to cause the
election of the Employee to the Board. Upon termination of the
Employment Period, the Employee shall be deemed to have
automatically resigned as a member of the Board; such resignation
shall be effective immediately without the requirement of any
further written notice.
(c) The Employee agrees to
abide by the rules, regulations, instructions, personnel practices
and policies of the Company and any changes therein which may be
adopted from time to time by the Company.
3. Compensation and
Benefits .
3.1 Salary . The
Company shall pay the Employee, in periodic installments in
accordance with the Company’s customary payroll practices, a
base salary of $400,000 per annum. Such salary shall be subject to
annual review by the Board.
3.2 Bonus . The
Compensation Committee has the authority to award discretionary
annual cash bonuses to the executive officers of the Company,
including the Employee. Any bonus awarded shall be based on the
achievement of specific objectives established by the Board. Such
bonus (if any) will be paid in the form of cash or Company stock,
as determined by the Compensation Committee.
3.3 Fringe Benefits .
The Employee shall be entitled to participate in all medical and
other benefit programs that the Company establishes and makes
available to its employees, if any, to the extent that
Employee’s position, tenure, salary, age, health and other
qualifications make him eligible to participate. The Employee shall
be entitled to four weeks paid vacation per year.
3.4 Reimbursement of
Expenses . The Company shall reimburse the Employee for all
reasonable travel, entertainment and other expenses incurred or
paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Employee of documentation,
expense statements, receipts, vouchers and/or such other supporting
information as the Company may request, provided, however, that the
maximum amount available for such travel, entertainment and other
expenses may be fixed in advance by the Board. Notwithstanding the
foregoing, (i) the expenses eligible for reimbursement in one
taxable year may not affect the expenses eligible for reimbursement
in any other taxable year, (ii) such reimbursement must be
made on or before the last day of the calendar year following the
calendar year in which the expenses were incurred, and
(iii) the right to reimbursement is not subject to liquidation
or exchange for another benefit.
3.5 Withholding . All
salary, bonus and other compensation payable to the Employee shall
be subject to applicable withholdings.
4. Termination of
Employment Period .
(a) The employment of the
Employee by the Company pursuant to this Agreement shall terminate
upon the expiration of the Employment Period.
(b) The Company has the right
to terminate the Employee’s employment under this Agreement,
by notice to the Employee in writing at any time (i) for Cause
(as defined below), (ii) without Cause for any or no reason,
or (iii) due to the Disability (as defined below) of the
Employee. Any such termination shall be effective upon the date of
such notice to the Employee or such other date as may be specified
in such notice.
(c) Employee’s
employment under this Agreement shall terminate immediately upon
the Employee’s death.
(d) The Employee shall have
the right to terminate his employment under this Agreement
(i) for any reason or no reason upon sixty
(60) days’ prior written notice to the Company or
(ii) for Good Reason (as defined below) upon thirty
(30) days’ prior written notice specifying such Good
Reason.
(e) As used in this
Agreement, the terms below shall have the following
meanings:
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(i) “Cause” shall
mean (a) a good faith finding by the Company that (i) the
Employee has breached this Agreement and has failed to remedy such
failure within thirty (30) days after notice thereof to the
Employee, or (ii) the Employee has engaged in dishonesty,
gross negligence or misconduct, or (b) the conviction of the
Employee of, or the entry of a pleading of guilty or nolo
contendere by the Employee to, any crime involving moral turpitude
or any felony.
(ii) “Good
Reason” shall mean (a) any material diminution in the
Employee’s authority, duties or responsibilities;
(b) any material reduction in his annual base salary;
(c) any material breach by the Company of this Agreement; or
(d) any requirement by the Company or of any person in control
of the Company that the location at which the Employee performs his
principal duties for the Company be changed to a new location that
is more than forty (40) miles from the current principal
location of the Company, provided that (i) the Employee
provides the Company with notice of the condition described above
within 90 days after the initial existence of the condition;
(ii) such condition is not remedied by the Company within 30
days after receiving the notice and (iii) the Employee
separates from service with the Company within 2 years following
the initial existence of the condition.
(iii)
“Disability” shall be deemed to occur if, as a result
of the Employee’s incapacity due to physical or mental
illness, the Employee shall have been absent from the full-time
performance of his duties with the Company for six
(6) consecutive months.
(iv) “Change in Control
Event” shall mean:
(1) The acquisition by an
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially
owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 50% or more of either (x) the then-outstanding
shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power
of the then-outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (1), the following acquisitions shall
not constitute a Change in Control Event: (A) any acquisition
directly from the Company (excluding an acquisition pursuant to the
exercise, conversion or exchange of any security exercisable for,
convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising, converting
or exchanging such security acquired such security directly from
the Company or an underwriter or agent of the Company),
(B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (C) any acquisition by any
corporation pursuant to a Business Combination (as defined below)
which complies with clauses (x) and (y) of subsection
(3) of this definition; or
(2) Such time as the
Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of
a
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successor corporation to the
Company), where the term “Continuing Director” means at
any date a member of the Board (x) who was a member of the
Board on the date of the initial adoption of this Agreement by the
Board or (y) who was nominated or elected subsequent to such
date by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a
majority of the directors who were Continuing Directors at the time
of such nomination or election; or
(3) The consummation of a
merger, consolidation, reorganization, recapitalization or share
exchange involving the Company or a sale or other disposition of
all or substantially all of the assets of the Company (a
“Business Combination”), unless, immediately following
such Business Combination, each of the following two conditions is
satisfied: (x) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation or other
form of entity in such Business Combination (which shall include,
without limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation or entity is
referred to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business
Combination and (y) no Person (excluding the Acquiring
Corporation or any employee benefit plan (or related trust)
maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 50% or more
of the then-outstanding shares of common stock of the Acquiring
Corporation, or of the combined voting power of the
then-outstanding securities of such corporation entitled to vote
generally in the election of directors (except to the extent that
such ownership existed prior to the Business
Combination).
5. Compensation upon
Termination .
(a) Subject to
Section 5(e), in the event the Employee’s employment
terminates as a result of a voluntary termination by the Employee
for Good Reason, or a termination by the Company without Cause,
upon execution of a general release of all claims against the
Company, its employees, officers, directors and agents, in a form
drafted by the Company, the Employee shall receive: (i) his
base salary accrued through the last day of his employment with the
Company payable in a lump sum amount with the next regular payroll
cycle following his termination of employment, (ii) twelve
(12) monthly payments each equal in amount to one-twelfth
(1/12th) of the Employee’s then base salary, reduced by
all applicable taxes and withholdings, in accordance with the
Company’s then current payroll policies and
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practices and (iii) the medical and
other benefits provided to him pursuant to the first sentence of
Section 3.3 as an Employee of the Company will cease upon
termination and the Employee will immediately become eligible for
continuation of medical/dental coverage pursuant to COBRA. The
Company will pay any difference between the COBRA premium and the
amount the Employee would otherwise be responsible for with respect
to the medical and dental coverage elected for a period of twelve
(12) months from the date of such termination or as long as
the Employee is eligible for COBRA, whichever period is shorter. At
the end of this period, the Employee is eligible to continue
coverage for the balance of the statutory period under COBRA,
provided that the Employee pays the COBRA premium.
(b) In the event the
Employee’s employment terminates as a result of the
expiration of the Employment Period, by the Company for Cause, by
the Employee without Good Reason or due to the death or Disability
of the Employee, the Company shall pay to the Employee only his
base salary accrued through the last day of his employment. Such
payment will be paid in a lump sum with the next regular payroll
cycle following his termination of employment.
(c) Subject to
Section 5(e), in the event the Employee’s employment
terminates as a result of termination of the Employee by the
Company or its successor without Cause, or by the Employee for Good
Reason, within twelve (12) months following a Change in
Control Event, upon execution by the Employee of a general release
of all claims against the Company, its employees, officers,
directors and agents, in a form drafted by the Company, the
Employee shall receive (i) his base salary accrued through the
last day of his employment with the Company payable in a lump sum
amount with the next regular payroll cycle following his
termination of employment; (ii) twelve (12) monthly
payments each equal in amount to one-twelfth (1/12th) of the
Employee’s then base salary, reduced by all applicable taxes
and withholdings, in accordance with the Company’s then
current payroll policies and practices and (iii) the medical
and other benefits provided to him pursuant to the first sentence
of Section 3.3 as an Employee of the Company will cease upon
termination and the Employee will immediately become eligible for
continuation of medical/dental coverage pursuant to COBRA. The
Company will pay any difference between the COBRA premium and the
amount the Employee would otherwise be responsible for with respect
to the medical and dental coverage elected for a period of twelve
(12) months from the date of such termination or as long as
the Employee is eligible for COBRA, whichever period is shorter. At
the end of this period, the Employee is eligible to continue
coverage for the balance of the statutory period under COBRA,
provided that Employee pays the COBRA premium. For purposes of this
paragraph, the Employee’s “Base Salary” shall be
the greater of the amount in effect either immediately prior to the
Change in Control Event or the termination date of Employee’s
employment. The benefits provided under this Section 5(c)
shall be in lieu of any benefits the Employee would have otherwise
been entitled to pursuant to Section 5(a).
(d) The Employee shall not be
required to mitigate the amount of any payment provided for in this
Section 5 by seeking other employment or otherwise.
(e) The following rules shall
apply with respect to distribution of the payments and benefits, if
any, to be provided to the Employee under this
Section 5:
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(i) It is intended that each
installment of the payments and benefits provided under
Section 5 shall be treated as a separate “payment”
for purposes of Section 409A. Neither the Company nor the
Employee shall have the right to accelerate or defer the delivery
of any such payments or benefits except to the extent specifically
permitted or required by Section 409A;
(ii) If, as of the date of
the “separation from service” of the Employee from the
Company, the Employee is not a “specified employee”
(each within the meaning of Section 409A), then each
installment of the payments and benefits shall be made on the dates
and terms set forth in Section 5; and
(iii) If, as of the date of
the “separation from service” of the Employee from the
Company, the Employee is a “specified employee” (each,
for purposes of this Agreement, within the meaning of
Section 409A), then:
(1) Each installment of the
payments and benefits due under Section 5 that, in accordance
with the dates and terms set forth herein, will in all
circumstances, regardless of when the separation from service
occurs, be paid within the Short-Term Deferral Period (as
hereinafter defined) shall be treated as a short-term deferral
within the meaning of Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent permissible under
Section 409A. For purposes of this Agreement, the
“Short-Term Deferral Period” means the period ending on
the later of the 15th day of the third month following the end of
the Employee’s tax year in which the Employee’s
separation from service occurs and the
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