Document:

Exhibit 10.5

 

 

Rhythm Pharmaceuticals, Inc.

500 Boylston Street — 11th Floor

Boston, MA  02116

Main Telephone:  617-585-2090

www.rhythmtx.com

 

November 16, 2016

 

Dr. Fred Fiedorek

c/o Rhythm Pharmaceuticals

500 Boylston Street, 11th Floor

Boston, MA 02116

 

Dear Fred:

 

On behalf of Rhythm Pharmaceuticals, Inc., formerly known as Rhythm Metabolic, Inc. (the “Company” or “Rhythm”), I am pleased to set forth below the terms of your employment with the Company.

 

Employment.  You are currently the Chief Medical Officer of the Company but are an employee of Motus Therapeutics, Inc., an affiliate of the Company (“Motus”).  Your employment with Motus will terminate, and your employment with the Company will begin, on November 16, 2016 (the “Start Date”).  During the term of your employment with the Company, you will continue to hold the position and title of Chief Medical Officer, reporting to the Chief Executive Officer.  While your employment is with the Company, you will also hold the title of Chief Medical Officer of Rhythm Holding Company, LLC (the “Parent”) and Motus.  During the term of your employment with the Company, you will be responsible for performing the duties associated with the position above or as the Company may otherwise assign to you. Your primary place of employment will initially 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 Company, you will be subject to, and required to comply with, all Company policies and all applicable laws and regulations.

 

Base Salary.  During your employment, your salary will be $344,400 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 Target Cash Incentive.  Following the end of each fiscal year and subject to the approval by the Company’s Board of Directors, you will be eligible to earn a performance and retention bonus, based on your performance and the Company’s performance, each during the applicable fiscal year, and your continued employment in good standing on the date of incentive distribution.  Your target annual incentive opportunity is 35% of your annualized base salary.

 

 

Equity Grant.  Any existing grants of equity you have in the Parent or the Company will be treated consistent with the terms of the applicable agreements under which such awards have been granted.  You may 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 or the Parent’s Board of Managers, as the case may be. The terms of any future equity grant will be consistent with any plan under which they are granted and the terms of the applicable agreement under which the award(s) are granted.

 

Benefits.  You may participate in any and all benefit programs that the Company establishes and makes available to its 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.  You currently are eligible to receive reimbursement from the Company for 80% of the actual amounts of your medical insurance premiums for yourself and your eligible dependents, until such time as the Company establishes a medical insurance plan.

 

Vacation.  You are eligible for a maximum of 20 paid vacation days per calendar year.  Your accrual and use of vacation time will be pursuant 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.

 

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”), subject to your execution of a release 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), the Company will pay you an amount equal to your then-current base salary rate (or, if greater, your base salary rate prior to any reduction) for a period of six (6) months (the “Regular Severance Amount”).

 

If there is a Qualifying Termination within the three (3) months immediately preceding or the twelve (12) months immediately following a “Sale of the Company” (as such term is defined in the Operating Agreement of the Parent, as amended and in effect from time to time), subject to your execution of a Release following your Separation from Service (as defined below), the expiration of any revocation period provided in the Release and your continued compliance with the terms of the NDA, in lieu of any Regular Severance Amount, the Company will pay you an amount equal to your then-current base salary rate for a period of twelve (12) months (the “Sale of the Company Severance Amount”) plus an amount equal to 100% of your annual target cash incentive.

 

Notwithstanding anything express or implied in this letter to the contrary, if your employment with the Company is terminated by the Company or you at any time prior to or after a Sale of the Company and at the time of such termination you are offered employment on the same terms with either Parent or any subsidiary of Parent and neither Parent nor such subsidiary is at that time itself subject to a Sale of the Company, then the termination of your employment with the Company shall not be deemed or treated as a Qualifying Termination for any purposes of this letter.

 

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 either (i) 60 days after the date of your Separation from Service, or (ii) in

 

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the case of a Separation from Service that is a Qualifying Termination that occurs within the three (3) months immediately preceding a Sale of the Company, 60 days after the date of such Sale of the Company. To be eligible for either the Regular Severance Amount or the Sale of the Company Severance Amount, as applicable, you must execute and deliver the Release to the Company and allow it to become effective within 30 days of your Separation from Service or, if later, a Sale of the Company giving rise to a Sale of the Company Severance Amount entitlement.

 

In addition, if following your Separation from Service, you are eligible for and timely elect continued medical insurance coverage pursuant to COBRA, 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 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.

 

If the Qualifying Termination occurs within the three (3) months immediately preceding or the twelve (12) months immediately following a Sale of the Company, then each outstanding equity award in the Parent or the Company held by you shall immediately vest and, if applicable, become exercisable with respect to one hundred percent (100%) of the shares of equity of the Parent or the Company subject thereto.  For purposes of clarity, if at the time of any such Qualifying Termination at least one half of all equity awards granted to you by the Parent or the Company and then held by you are then vested, there will be no further acceleration of vesting as a result of the provisions of this paragraph upon any such Qualifying Termination.  The foregoing provisions of this paragraph shall apply notwithstanding anything express or implied to the contrary in any agreement or award between you and the Company or the Parent, or in any plan of the Company or the Parent, that is applicable to such outstanding equity award.

 

Notwithstanding anything herein to the contrary, in the event that any compensation or benefit that constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), becomes payable upon the occurrence of a Sale of the Company, such compensation or benefit shall not be paid unless such Sale of the Company constitutes a “change in control event” within the meaning of Section 409A of the Code.

 

If any payment or benefit you would receive under this letter, when combined with any other payment or benefit you receive pursuant to the termination of your employment with the Company (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) the full amount of such Payment or (y) such lesser amount (with your choice of whether to reduce cash payments or stock option compensation or both) as would result in no portion of the Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Taxes results in your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.

 

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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. 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.

 

Cause.  “Cause” shall mean the occurrence of any of the following events by the individual: (i) commission of any crime involving the Company, or any crime involving fraud, breach of trust, or physical or emotional harm to any person, moral turpitude or dishonesty; (ii) any unauthorized use or disclosure 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 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) repeated and willful failure to perform the duties, functions and responsibilities of the individual’s 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 authorities, duties, or authority; (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 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 Executive Officer, 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. “Good Reason” shall also mean your resignation on the one year anniversary of a Sale of the Company from all positions you then hold with the Company or its successor if by that date you have not entered into a written letter or agreement with the Company or such successor that provides for your continued employment with the Company or such successor.  For purposes of clarification, any Qualifying Termination that occurs on the first anniversary of a Sale of the Company shall be deemed and treated as occurring within the twelve (12) months immediately following a Sale of the Company for all purposes of this letter.

 

Invention, Non-Disclosure, Non-Competition and Non-Solicitation Obligations.  At or prior to the Start Date, you will be required to execute and deliver the Company’s standard form of Employee Confidentiality, Assignment of Inventions, Non-Competition and Non-Solicitation Agreement (the “NDA”), a copy of which has been or will be provided to you separately.

 

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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, including, without limitation, your current employment agreement, with respect to the subject matter of this letter.

 

Please indicate your acceptance of this letter agreement by signing a copy of this offer letter below in the space provided for your signature.

 

Sincerely,

 

	
/s/ Keith Gottesdiener
    	
 
    
	
Keith Gottesdiener
    	
 
    
	
Chief Executive Officer
    	
 
    

 

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

 

	
/s/ Fred Fiedorek
    	
 
    	
11/16/16
    	
 
    
	
 
    	
 
    
	
Fred Fiedorek, MD
    	
Date
    

 

5Exhibit 10.9

 

AMENDED AND RESTATED

 

PAYROLL SERVICES AGREEMENT

 

This AMENDED AND RESTATED PAYROLL SERVICES AGREEMENT, dated as of March 21, 2013 (the “Agreement”), by and between RHYTHM METABOLIC, INC., a Delaware corporation (“Metabolic”) and RHYTHM PHARMACEUTICALS, INC., a Delaware corporation (“Pharmaceuticals”).

 

WHEREAS, Metabolic desires to contract with Pharmaceuticals to share certain employees, Scientific Advisory Board (“SAB”) Members, or other consultants of Pharmaceuticals, in whole or in part, and to reimburse Pharmaceuticals in full for Metabolic’s portion of such shared employees’, SAB Members’, or consultants’ compensation and benefits, all in accordance with the terms and provisions of this Agreement; and

 

WHEREAS, Metabolic and Pharmaceuticals desire to amend and restate the Payroll Services Agreement, to be retroactively effective as of March 21, 2103;

 

NOW, THEREFORE, in consideration of the premises, the foregoing recitals, and the mutual agreements herein contained, the parties hereto agree as follows:

 

SECTION 1. EMPLOYEES, SAB MEMBERS, AND CONSULTANTS

 

1.1          (a)           Core Employees. Subject to the terms of this Agreement, Pharmaceuticals hereby agrees to provide to Metabolic certain of its employees on a full time or shared basis under Metabolic’s direction and control in the functional areas set forth on a list to be maintained by Metabolic and Pharmaceuticals (as the same may be updated from time to time, the “List”) (collectively, the “Core Employees”).

 

(b)           Additional Employees. In addition to the Core Employees, Pharmaceuticals hereby agrees to provide to Metabolic certain of its employees on a full time or shared basis under Metabolic’s direction and control in certain additional functional areas outside of those addressed by the Core Employees upon which the parties acting in good faith may mutually agree in writing (collectively, the “Additional Employees”).

 

(c)           SAB Members. Subject to the terms of this Agreement, Pharmaceuticals hereby agrees now and from time to time in the future to provide to Metabolic certain of its SAB members, as set forth the List to be maintained by Metabolic and Pharmaceuticals (as the same may be updated from time to time), on a shared basis under Metabolic’s direction and control upon which the parties acting in good faith may mutually agree in writing (collectively, the “SAB Members”).

 

(d)           Consultants. Subject to the terms of this Agreement, Pharmaceuticals hereby agrees now and from time to time in the future to provide to Metabolic certain of its consultants, as set forth on the List to be maintained by Metabolic and Pharmaceuticals (as the same may be updated from time to time), on a shared basis under Metabolic’s direction and control upon

 

 

which the parties acting in good faith may mutually agree in writing (collectively, the “Consultants”).

 

1.2          Other Outside Employees. Notwithstanding anything to the contrary contained in Section 1.1 of this Agreement, Metabolic from time to time, at its sole discretion, may retain its own employees, SAB Members, or consultants.

 

1.3          Personnel. Pharmaceuticals shall initially provide those employees, SAB Members, and Consultants of Pharmaceuticals, as set forth on the List maintained by Metabolic and Pharmaceuticals (as the same may be updated from time to time).

 

1.4          Intellectual Property. For the avoidance of doubt, each of Pharmaceuticals and Metabolic hereby confirm and agree that any intellectual property developed by any shared Core Employee, Additional Employee, SAB Member, or Consultant in the course of performing his or her services for Metabolic shall be the sole and exclusive property of Metabolic, and Metabolic is an express third party beneficiary of the provisions of such Core Employee’s, Additional Employee’s, SAB Member’s, or Consultant’s agreement(s) with Pharmaceuticals relating to such intellectual property.

 

SECTION 2. REIMBURSEMENT

 

2.1          Payment. Metabolic shall reimburse Pharmaceuticals for the full cost of each Core Employee or Additional Employee provided to Metabolic on a full-time basis, and the applicable pro rata portion of time spent by any shared Core Employee, Additional Employee, SAB Member, or Consultant (such reimbursement shall be for the fully burdened employment cost of the personnel (including but not limited to, compensation, benefits and taxes)).

 

2.2          Out-of-Pocket Expenses. Pharmaceuticals shall be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by Pharmaceuticals in the providing the Core Employees, Additional Employees, SAB Members, and Consultants hereunder.

 

SECTION 3. TERM AND TERMINATION

 

3.1          Term of Agreement. The term of this Agreement shall commence on March 21, 2013, and shall expire on March 21, 2018, unless earlier terminated pursuant to the terms hereof. Not less than thirty (30) days prior to the expiration of this Agreement, Metabolic may deliver written notice to Pharmaceuticals requesting that this Agreement be renewed, in whole or in part, for an additional one (1) year term. Such notice shall include an amended List, if necessary. Within fifteen (15) days of receipt of such written notice (if any), Pharmaceuticals shall provide written notice to Metabolic stating whether or not it wishes to renew the Agreement.

 

3.2          Elective Termination. Metabolic or Pharmaceuticals may terminate this Agreement for any reason upon thirty (30) days’ notice. In the event that Metabolic elects pursuant to this Section 3.2 to terminate this Agreement, Metabolic shall reimbursed Pharmaceuticals all

 

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amounts then unreimbursed pursuant to Section 2 of this Agreement at the time of termination, which fees shall be due fifteen (15) days after the date of such termination.

 

3.3           Remedies Upon Termination. Upon termination of this Agreement, neither party shall have any further obligations under this Agreement except as provided in this Section 3 and Section 4.1. Pharmaceuticals shall be entitled to receive payment of all unreimbursed amounts up to the date of termination, which payment shall be due fifteen (15) days after the date of termination or the date on which such payment was due, whichever is earlier.

 

SECTION 4. MISCELLANEOUS

 

4.1          Confidentiality.

 

(a)           Neither party hereto shall use for its own benefit or disclose to any other person (other than its employees and agents who need to know such information to perform the obligations set forth herein) any Confidential Information (as defined herein) of the other party without the prior express written consent of such other party. Each party shall at all times take measures to protect such Confidential Information that are at least as protective as the measures used by it to protect its own confidential information.

 

(b)           Both parties agree not to disclose the Confidential Information to any person or entity not a party to this Agreement other than such of recipient’s contractors, agents or employees who (i) have a need to know the Confidential Information in connection with this Agreement or the services provided hereunder; (ii) are apprised of the confidential nature of the Confidential Information; and (iii) execute a confidentiality agreement restricting disclosure of the Confidential Information in a manner consistent with the provisions of this Agreement (except that such contractors, agents and employees shall not be permitted to disclose the Confidential Information to their contractors, agents or employees under any circumstances).

 

(c)           For purposes hereof, “Confidential Information” is any information not of a public nature concerning the terms of this Agreement or the business, business plans, historical and current client information, trade secrets or other properties of the other party, or any information designated as confidential in writing by such other party at the time of disclosure. Confidential Information does not include any information (i) to the extent that the same is required to be disclosed by law, (ii) known generally to the trade or public at the time of the disclosure or (iii) which becomes so known without violation of this Agreement.

 

(d)           If any Confidential Information is obtained by or disclosed to an unauthorized party, in addition to any other remedies available hereunder the parties hereto will cooperate in determining the source of such disclosure and in taking reasonable steps to prevent further such disclosures.

 

4.2          Indemnification. Metabolic shall indemnify, hold harmless and defend Pharmaceuticals, its officers, directors, shareholders, employees, agents and subcontractors from and against any and all liability, loss, damage, claim, causes of action and expenses (including

 

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reasonable attorneys’ fees) (“Claims”), whether or not covered by insurance, cause or asserted to have been caused, directly or indirectly, by or as a result of the performance of any intentional acts, negligent acts or omissions by Metabolic and/or its agents, employees (including employees of Pharmaceuticals under the control and direction of Metabolic at the time of the events giving rise to the Claims) and/or subcontractors during the term hereof. Pharmaceuticals shall indemnify, hold harmless and defend Metabolic, its officers, directors, shareholders and employees, from and against any and all Claims, whether or not covered by insurance, caused or asserted to have been caused, directly or indirectly, by or as a result of the performance of any intentional acts, negligent acts or omissions by Pharmaceuticals and/or its shareholders, agents, employees (other than employees of Pharmaceuticals under the control and direction of Metabolic at the time of the events giving rise to the Claims), and/or subcontractors during the term of this Agreement.

 

4.3          Waiver. No purported waiver by either party of any term or provision contained herein shall be deemed to be a waiver of such term or provision unless the waiver is in writing and signed by the waiving party. No such waiver shall in any event be deemed a waiver of any subsequent default under the same or other term or provision contained herein.

 

4.4          Severability. If any provision of this Agreement or its application to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and application of its provisions to other persons or circumstances shall not be affected and shall be enforced to the greatest extent permitted by law.

 

4.5          Successors and Assigns. Neither party shall assign or transfer any rights or obligations hereunder without the prior written consent of the other party. Subject to the foregoing, this Agreement is binding upon the parties and their respective successors and assigns.

 

4.6          Entire Agreement; Modification. This Agreement (together with any appendices) constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be amended or modified nor any provisions waived except in a writing signed by the parties hereto.

 

4.7          Relationship of the Parties. Metabolic and Pharmaceuticals acknowledge and agree that Pharmaceuticals intends to act and perform as independent contractor, and the provisions hereof are not intended to create any partnership, joint venture, agency or employment relationship between the parties.

 

4.8          Notices. Any notice or other communications required or permitted hereunder shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by national overnight courier service or first class certified mail, postage prepaid, or by facsimile addressed to such party at the address or facsimile number set forth below:

 

(a)    if to Rhythm Metabolic, Inc. to it at:

 

Rhythm Metabolic, Inc.

 

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855 Boylston Street

11th Floor

Facsimile: (857) 264-4299

Attention: Bart Henderson

 

(b)     if to Rhythm Pharmaceuticals, Inc. to it at:

 

Rhythm Pharmaceuticals, Inc.

855 Boylston Street

11th Floor

Facsimile: (857) 264-4299

Attention: Bart Henderson

 

4.9          Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

 

4.10        Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
 
    	
RHYTHM   METABOLIC, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Keith   Gottesdiener
    
	
 
    	
 
    	
Name:
    	
Keith   Gottesdiener
    
	
 
    	
 
    	
Title:
    	
Chief Executive   Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RHYTHM   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Keith   Gottesdiener
    
	
 
    	
 
    	
Name:
    	
Keith Gottesdiener
    
	
 
    	
 
    	
Title:
    	
Chief Executive   Officer
    

 

[Signature Page to Amended and Restated Payroll Services Agreement]

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