Exhibit 10.1


 





 


July 16, 2020





 


David P. Meeker, M.D.


 


Dear David:


 


On behalf of Rhythm Pharmaceuticals, Inc.,
(the “Company” or “Rhythm”), I am pleased to offer you employment with the Company on
the following terms.


 


Employment. I am pleased to offer
you the position of President & CEO, beginning July 20, 2020 (the “Start Date”), reporting to
the Board of Directors. You will be responsible for performing the duties and responsibilities as are customarily associated with
the position above or as the Company may otherwise assign to you. Your primary place of employment will be in the Company’s
offices located in Boston, Massachusetts; however, you will be expected to travel as may be necessary to fulfill your responsibilities.
In the course of your employment with the Company, you will be subject to, and required to comply with, all Company policies and
procedures and all applicable laws and regulations.


 


Board Service. You will continue
to serve your current term as Chairman of the Company’s Board of Directors until your earlier resignation or removal. As
an employee of the Company, beginning on the Start Date, you will cease to receive additional compensation for your service as
a member of the Board of Directors, under the Company’s Non-Employee Director Compensation Policy or otherwise. However,
your employment with the Company will constitute continued service for purposes of your outstanding Company stock options in accordance
with the agreements evidencing such stock options.


 


Base Salary. During your employment,
your base salary will be $620,000 annualized, subject to all required and elected taxes and other withholdings. Your salary may
be adjusted from time to time in accordance with normal business practice and in the sole discretion of the Company.


 


Annual Incentive Bonus. Following
the end of each fiscal year and subject to the approval by the Company’s Board of Directors in its sole discretion, you will
be eligible to earn an incentive bonus, based on your performance and the Company’s performance, each during the applicable
fiscal year, and subject to your continued employment in good standing on the date of payment of such incentive bonus. Your target
annual incentive bonus opportunity shall be 60% of your annualized base salary. Your target annual incentive bonus opportunity
for your first fiscal year will be pro-rated in accordance with the Company’s policy.


 


Benefits. You may participate in
any and all benefit programs that the Company establishes and makes available to its similarly situated executive employees from
time to time, subject to the terms and conditions of those programs. The Company’s benefits programs are subject to change
at any time in the Company’s sole discretion.


 


Vacation. You will be eligible for
annual paid vacation of 20 days. Your accrual and use of vacation time will be pursuant and subject to any vacation or time off
policy the Company may establish or modify from time to time. The Company’s vacation policy is subject to change at any time
in the Company’s sole discretion.


 


Equity Grants. Subject to and
upon the approval of the Board of Directors of the Company not later than your Start Date, the Company shall grant to you a
stock option (the “Option”) under the Company’s 2017 Equity Incentive Plan, as it may be amended
from time to time (the “Plan”), to purchase 900,000 shares (subject to any adjustments for any stock
splits, stock dividends, reverse stock splits or recapitalizations that are effected at any time during the period commencing
after the date of this offer letter and ending on the grant date of the Option, the “Option Shares”) of
the Company’s common stock, $0.001 par value per share (the “Common Stock”), at an exercise price
equal to fair market value of the Common Stock, as determined by the Board of Directors of the Company, on the date of the
grant of the Option (the “Grant Date”).


 






    


     


    

 


David P. Meeker, M.D., page 2


July 16, 2020


 


Promptly after the
Grant Date, the Company and you shall execute and deliver to each other the Company’s then standard form of stock option
agreement, evidencing the Option and the terms thereof. 1
The Option shall be subject to, and governed by, the terms, provisions, and restrictions on transfer of the Plan, your stock option
agreement, any other agreement to which you shall become, or are required to become, a party pursuant to the terms of the Plan.


 


Upon termination of
your employment with the Company, you may exercise the Option to the extent then outstanding and exercisable, but only until the
earlier to occur of (i) the expiration of the term of the Option and (ii) the expiration of the limited period of time
set forth in the Plan and/or your stock option agreement for the exercise of the Option following termination of your employment
with the Company.


 


Beginning in 2021,
you will be eligible to be awarded additional equity grants from time to time in accordance with normal business practice and in
the sole discretion of the Company’s Board of Directors. The terms of any future equity grants will be consistent with any
plan under which they are granted and the terms of the applicable agreement under which the awards are granted.


 


Severance.  If the Company terminates
your employment without Cause (as defined below) or you resign your employment with the Company for Good Reason (as defined below)
(in either event, a “Qualifying Termination”), then, subject to your execution of a general release of claims
in a form acceptable to the Company (the “Release”), the expiration of any revocation period provided in the
Release and your continued compliance with the terms of the NDA (as defined below) (collectively, the “Severance Conditions”),
the Company will provide severance pay to you in an amount equal to your then-current base salary rate for a period of 12 months
(the “Severance Amount”). If there is a Qualifying Termination within the three months immediately preceding
or the 12 months immediately following a “Change of Control” (as defined in the Plan), your Severance Amount shall
be increased to an amount equal to your current base salary rate for a period of 18 months (and for the avoidance of doubt, payment
of such increased Severance Amount will be subject to satisfaction of the Severance Conditions).


 


Any Severance Amount
to which you may be entitled under this letter will be paid in substantially equal installments in accordance with the Company’s
ordinary payroll practices, beginning on the first payroll date following the date that is sixty (60) days after the date of your
Separation from Service and with the first installment to include any amounts that would otherwise have been payable prior to such
first payroll date. To be eligible for the Severance Amount, you must execute and deliver the Release to the Company and allow
it to become effective within thirty (30) days of your Separation from Service.


 


In addition, if following
your Separation from Service, you are eligible for and timely elect continued medical insurance coverage pursuant to COBRA, subject
to the satisfaction of the Severance Conditions, the Company will reimburse you for the applicable premiums for you and your eligible
dependents during the period commencing on the date of your Separation from Service and ending on the earlier to occur of (a) the
final day of the applicable severance period and (b) the date you otherwise become ineligible for continued coverage under
COBRA. Notwithstanding the foregoing, if the Company determines that it cannot provide such reimbursement of premiums to you without
potentially violating applicable law, the Company shall not be obligated to make any such payments or reimbursements to you.


 





 






1
The terms to be reflected in the stock option agreement will include the following:


-The Option shall be exercisable for twenty-five percent (25%)
of the Option Shares as of the first anniversary of your Start Date, and the remainder of the Option Shares shall become exercisable
thereafter in a series of twelve (12) equal quarterly installments until such Option shall have become fully vested and exercisable.


-The vesting and exercisability of the Option shall accelerate
in the event the Company terminates your employment without Cause (as defined below) or you resign your employment with the Company
for “Good Reason” (as defined below), in either case, within three months immediately preceding or 12 months immediately
following a “Change of Control” (as defined below).



 






    


     


    

 


David P. Meeker, M.D., page 3


July 16, 2020



 


To the extent permitted
by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any severance to which you
are otherwise entitled pursuant to this offer letter shall be (i) reduced by amounts outstanding under any indebtedness, obligations
or liabilities owed by you to the Company; (ii) paid in lieu of any severance pay or benefits under any other severance pay
plan, program, or policy of the Company, and (iii) reduced and offset by any severance pay or benefits, or similar amounts,
payable to you due to your termination of employment under any labor, social or other governmental plan, program, law or policy,
and should such other payments or benefits described above be payable, the Severance Amount shall be reduced accordingly or, alternatively,
payments of Severance Amounts previously made or provided will be treated as having been paid or provided to satisfy such other
obligations.


 


409A Matters.     Each
installment payment provided under this letter shall at all times be considered a separate and distinct payment for purposes of
Section 409A of the Code. Notwithstanding anything in this letter to the contrary, to the extent required to avoid a prohibited
distribution under Section 409A of the Code, the benefits provided under this letter will not be provided to you until the
earlier of (a) the expiration of the six-month period measured from the date of your Separation from Service with the Company
or (b) the date of your death. Upon the first business day after expiration of the relevant period, all payments delayed pursuant
to the preceding sentence will be paid in a lump sum and any remaining payments due will be paid as otherwise provided herein.
In no event may you, directly or indirectly, designate the calendar year of any payment to be made to you under this letter, to
the extent such payment is subject to Section 409A of the Code. The Company makes no representations or warranty and shall
have no liability to you or any other person if any provisions of this letter are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, Section 409A of the Code.


 


Withholding Taxes.     All
payments and benefits described in this letter agreement or that you may otherwise be entitled or eligible to receive as a result
of your employment with the Company will be subject to applicable federal, state and local tax withholdings.


 


Definitions


 


Separation from Service.
For purposes of this letter, “Separation from Service” means a “separation from service” within
the meaning of Section 409A of the Code.


 


Cause. “Cause”
shall mean the good faith determination by the Board of Directors that any of the following events have occurred: (i) your
commission of any crime involving the Company, or any crime involving fraud, breach of trust, physical or emotional harm to any
person, moral turpitude or dishonesty; (ii) any unauthorized use or disclosure by you of the Company’s proprietary information
(other than any such use or disclosure that is not intentional and is not material); (iii) any intentional misconduct or gross
negligence by you that has a material adverse effect on the Company’s business or reputation; (iv) any material breach
by you of any agreement between you and the Company that is not cured within thirty (30) days after receipt of written notice from
the Company describing any such breach; or (v) your repeated and willful failure to perform the duties, functions and responsibilities
of your position after a written warning from the Company.


 


Good Reason. “Good
Reason” shall mean your resignation from all positions you then hold with the Company if: (A) without your written
consent (i) there is a material diminution in the nature or scope of your responsibilities, duties, authority, or title, provided
that the cessation of your service as Chairman of the Company’s Board of Directors will not constitute such a diminution;
(ii) there is a material reduction of your base salary; provided, however, that a material reduction in your base salary pursuant
to a salary reduction program affecting all or substantially all of the employees of the Company and that does not adversely affect
you to a proportionally greater extent than other similarly situated employees shall not constitute Good Reason; or (iii) you
are required to relocate your primary work location to a facility or location that would increase your one way commute distance
by more than thirty-five (35) miles from your primary work location as of immediately prior to such change, (B) you provide
written notice outlining such conditions, acts or omissions to the Company’s Chief Financial Officer or General Counsel within
thirty (30) days immediately following such material change or reduction, (C) such material change or reduction is not remedied
by the Company within thirty (30) days following the Company’s receipt of such written notice and (D) your resignation
is effective not later than thirty (30) days after the expiration of such thirty (30) day cure period.


 






    


     


    

 


David P. Meeker, M.D., page 4


July 16, 2020



 


Invention, Non-Disclosure, Non-Competition
and Non-Solicitation Obligations. At or prior to the Start Date, you shall execute and deliver for the benefit of the Company
the Employee Confidentiality, Assignment of Inventions, Non-Competition and Non-Solicitation Agreement in the form attached hereto
as Exhibit A (the “NDA”).


 


At-Will Employment. This letter
shall not be construed as an agreement, either express or implied, to employ you for any stated term, and shall in no way alter
the Company’s policy of employment at-will. Similarly, nothing in this letter shall be construed as an agreement, either
express or implied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company, except
as otherwise explicitly set forth in this letter. This letter supersedes all prior understandings, whether written or oral, with
respect to the subject matter of this letter.


 


Cooperation. During your employment
with the Company and thereafter, you shall cooperate with the Company and be reasonably available to the Company with respect to
continuing and/or future matters relating to your employment period with the Company and/or its affiliates, whether such matters
are business-related, legal, regulatory or otherwise (including, without limitation, your appearing at the Company’s request
to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information
and turning over to the Company all relevant documents which are or may come into your possession). Following your employment term
with the Company, the Company shall reimburse you for all reasonable out of pocket travel expenses incurred by you in rendering
such services that are approved by the Company.


 


Representations. You hereby represent
and warrant to the Company that the execution, delivery and performance of this offer letter by you do not and shall no conflict
with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which you are
a party or by which you are bound.


 


Entire Agreement. This letter constitutes
the entire agreement and understanding between you and the Company with respect to the subject matter hereof and terminates and
supersedes any and all prior agreements, understandings and representations, whether written or oral, by or between you and the
Company which may have related to the subject matter hereof in any way, any of which are hereby terminated and cancelled and of
no further force or effect without the payment of any consideration by or to either you or the Company.


 


Amendment. The provisions of this
letter may be amended or waived only with the prior written consent of the Company and you, and no course of conduct or course
of dealing or failure or delay by you or the Company in enforcing or exercising any of the provisions of this letter shall affect
the validity, binding effect or enforceability of the letter or be deemed to be an implied waiver of any similar or dissimilar
requirement, provision or condition of this letter at the same or any prior or subsequent time.


 


Parachute Payments. Notwithstanding
any other provisions of this letter, any Company plan or any other agreement, in the event that any payment or benefit by the Company
or otherwise to or for the benefit of you, whether paid or payable or distributed or distributable pursuant to the terms of this
letter or otherwise (all such payments and benefits, including the severance payments and benefits hereunder, being hereinafter
referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999
of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided below) to the
minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of
such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes
on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable
to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount
of the Excise Tax to which you would be subject in respect of such unreduced Total Payments and after taking into account the phase
out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).


 






    


     


    

 


David P. Meeker, M.D., page 5


July 16, 2020



 


The Total Payments shall be reduced in
the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A
of the Code, (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A
of the Code, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A
of the Code and (iv) reduction of any payments or benefits otherwise payable to you on a pro-rata basis or such other manner
that complies with Section 409A of the Code; provided, in case of clauses (ii), (iii) and (iv), that reduction of any
payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that
would otherwise vest last in time.


 


All determinations regarding the application
of this Parachute Payments section shall be made by an accounting firm or consulting group with experience in performing calculations
regarding the applicability of Section 280G of the Code and the Excise Tax selected by the Company (the “Independent
Advisors”). For purposes of determinations, no portion of the Total Payments shall be taken into account which, in the
opinion of the Independent Advisors, (i) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of
the Code (including by reason of Section 280G(b)(4)(A) of the Code) or (ii) constitutes reasonable compensation
for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base
amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation. The costs of
obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit)
shall be borne by the Company.


 


In the event it is later determined that
a greater reduction in the Total Payments should have been made to implement the objective and intent of this Parachute Payments
section, you agree to promptly return the excess amount to the Company.


 


David, I look forward to working with
you in your new role on the Rhythm team. Please indicate your acceptance of this letter of employment by signing a copy of this
offer letter and returning it to us.


 


Sincerely,


 


Todd T. Foley


On behalf of the Compensation Committee of the Board


 


The foregoing correctly sets forth the terms of my at-will employment
with Rhythm. I am not relying on any representations other than those set forth above.


 


	    /s/ David P. Meeker	 	7/16/2020
	David P. Meeker, M.D.	 	Date