EXHIBIT 10.3
EXECUTIVE SEVERANCE
SECURITY AGREEMENT
This Agreement, dated as of
April 30, 2009, is between Altus Pharmaceuticals Inc., a
Delaware corporation (the “ Company ”), and
Thomas J. Phair, Jr., in his capacity as an officer of the Company,
as Collateral Agent (the “ Collateral Agent ”)
for the employees covered by the Altus Pharmaceuticals Inc.
Executive Severance Policy effective April 30, 2009 through
June 30, 2010 (the “ Executive Severance Policy
”). The parties agree as follows:
1. Security .
1.1. Grant of Collateral . As
security for the payment and performance of the Company’s
obligations under the Executive Severance Policy (but only to the
extent that amounts payable under the Executive Severance Policy
are exempt from Section 409A of the Internal Revenue Code of
1986, as amended (the “ Code ”)), this Agreement
and the Control Agreement (as defined below) (the “
Secured Obligations ”), the Company hereby creates a
security interest in favor of the Collateral Agent for the benefit
of the Employees (as defined below) and the holders from time to
time of the Secured Obligations in all of the Company’s
right, title and interest in and to (but none of its obligations or
liabilities with respect to) that certain deposit account described
on Schedule 1 hereto (the “ Collateral ”).
For purposes of this agreement, “Employees” shall mean,
as of any date, all employees and former employees of the Company
who are eligible as of such date to receive a severance payment
under the Executive Severance Policy, subject to the terms and
conditions set forth therein, and shall, for the avoidance of
doubt, exclude any such employees or former employees who have
forfeited or who have received the severance payment provided for
under the Executive Severance Policy.
1.2. Covenant with Respect to
Security . The Company shall cause the financial institution
listed on Schedule 1 to enter into an account control
agreement with the Collateral Agent in form and substance
reasonably satisfactory to the Collateral Agent (the “
Control Agreement ”).
1.3. No Liens or Dispositions
. All Collateral shall be free and clear of any liens and
restrictions on the transfer thereof, including contractual
provisions which prohibit the assignment of rights under contracts,
except for nonconsensual liens imposed by law and liens and
restrictions on transfer approved by the Collateral Agent in
writing.
2. Right to Realize upon Collateral . Except to the
extent prohibited by applicable law that cannot be waived, this
Section shall govern the Collateral Agent’s rights to realize
upon the Collateral if the Collateral Agent has delivered a Notice
of Exclusive Control (as defined in the Control Agreement). Such
Notice of Exclusive Control shall be delivered by the Collateral
Agent upon the Company’s failure to make any payment when due
under the Executive Severance Policy, if such failure is not
remedied within 30 days. The provisions of this Section are in
addition to any rights and remedies available at law or in
equity.
2.1. Assembly of Collateral;
Receiver . The Company shall, upon the Collateral Agent’s
request, assemble the Collateral and otherwise make it available to
the Collateral Agent. The Collateral Agent may have a receiver
appointed for all or any portion of the Company’s assets or
business which constitutes the Collateral in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion
of the Collateral.
2.2. Waiver . To the extent it
may lawfully do so, the Company waives and relinquishes the benefit
and advantage of, and covenants not to assert against the
Collateral Agent, any valuation, stay, appraisement, extension,
redemption or similar laws now or hereafter existing which, but for
this provision, might be applicable to the disposition of any
Collateral made under the judgment, order or decree of any court,
or privately under the authority conferred by this Agreement, or
otherwise.
2.3. Application of Proceeds .
All funds collected from the Company and any cash contained in the
Collateral, the application o
