Exhibit 10.1

 

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July 20, 2020

 

Via Email Only

 

Michael Richman

13503 Sanderling Place

Germantown, MD 20874

 

RE: EXECUTIVE EMPLOYMENT AGREEMENT

 

Dear Michael:

 

On behalf of NextCure, Inc. (“NextCure”, or the “Company”), it is my pleasure to
confirm the terms and conditions on which the Board of Directors of NextCure
(the “Board”) and you have agreed that you will continue your employment with
the Company, serving as the Company’s President and Chief Executive Officer,
reporting to the Board, effective as of the date first set forth above. During
your employment with NextCure, you will devote substantially all of your
professional efforts to the business of NextCure, except that you may engage in
the business activities described on Appendix A of this employment agreement
(this “Agreement”), and other activities that may be approved in advance by the
Board (which may include the for-profit board membership(s) described on
Appendix A), in each case, so long as these activities do not interfere or
conflict with your obligations to the Company. Your employment under the terms
of this Agreement shall continue until it terminates in accordance with Section
5 below.

 

This Agreement supersedes, amends and restates in all respects all prior
agreements and understandings between you and the Company regarding the subject
matter herein.

 

This Agreement is intended to summarize some of the terms and conditions of your
employment.

 

1.               Location. Your place of employment will be at NextCure’s
principal offices, currently located in Beltsville, Maryland.

 

2.              Compensation.

 

a.                   Base Salary. Your initial annualized base salary rate will
be $500,000, less standard deductions and withholding and payable bi-weekly in
accordance with NextCure’s regular payroll practices. Your salary shall be
reviewed annually and may be adjusted in connection with any such review.

 

b.                  Bonus Program. You will be eligible for an annual target
bonus of 50% of your annual base salary as determined by the Board in its sole
discretion based upon, among other things, the achievement of pre-determined
performance milestones. Any annual bonus, if earned, shall be paid no later than
March 15th of the year immediately following the year to which the applicable
annual bonus relates.

 

 

 

 

c.                   Withholding. NextCure shall withhold from any compensation
or benefits payable to you by NextCure any federal, state and/or local income,
employment and/or other similar taxes as may be required to be withheld pursuant
to any applicable law or regulation.

 

3.             Benefits.

 

a.                   Vacation and Holidays. You will be eligible each year for
10 paid vacation days (excluding federal holidays), 2 paid personal days and 8
paid days of sick time, as well as paid time off for work days occurring from
December 26 through December 30.

 

b.                  Other. You will be eligible to participate in the benefits
to be offered by NextCure on the same terms and conditions as it will make such
benefits available to employees in positions similar to your position. The
benefits are currently expected to include health insurance and such other
benefits provided by similar companies of a similar stage, as approved by the
Board.

 

c.                   Expenses. NextCure shall reimburse you for all reasonable
expenses of the type authorized by NextCure and incurred by you in the
performance of your duties under this Agreement, all in accordance with the
Company’s reimbursement policies.

 

As is the case of all employee benefits, such benefits will be governed by the
terms and conditions of applicable NextCure plans or policies, which are subject
to change or discontinuation at any time.

 

4.             Severance.

 

a.              Definitions. For purposes of this Agreement:

 

i.                  “Accrued Benefits” means: (i) any unpaid base salary for
services rendered prior to the date of termination of employment; (ii) any
earned but unpaid annual bonus for any completed fiscal year prior to the year
in which termination of employment occurs; (iii) reimbursement of any
unreimbursed business expenses incurred as of the date of termination of
employment in accordance with NextCure’s reimbursement policy; (iv) accrued but
unused vacation (if applicable), earned through the date of termination of
employment; and (v) all other payments, benefits or fringe benefits to which you
shall be entitled under the terms of any applicable compensation arrangement or
benefit, equity or fringe benefit plan or program or grant with or by NextCure
or this Agreement.

 

 

 

 

ii.                      “Cause” means conduct involving one or more of the
following by you: (i) failure to perform a substantial portion of your duties
and responsibilities in accordance with the terms or requirements of this
Agreement and your position, which failure continues for, or is not permanently
cured within, a period of 60 days after written notice given to you by NextCure
except in the case of your physical or mental illness; (ii) disloyalty, gross
negligence, willful misconduct, or dishonesty that materially injures NextCure
or breach of fiduciary duty to NextCure; (iii) the conviction of (x) a felony or
(y) a misdemeanor involving moral turpitude, or fraud; (iv) the commission of an
act of embezzlement or fraud; or (v) the material breach of any agreement
between NextCure and you. No finding of Cause shall be effective until after
giving you a reasonable opportunity (with your counsel present) to be heard by
the Board and, none of the events described in clauses (iii), (iv) or (v) shall
constitute Cause unless the Company shall have notified you in writing
describing the event(s) which it believes constitute Cause and then only if you
shall have failed to cure such events, if reasonably curable, within 10 days
after such written notice is given to you (provided that you commence good faith
efforts to cure such events within 5 days after you are given such notice; and
provided further, that only one cure-period is required under the provisions of
subsection (v) above).

 

iii.                  “Good Reason” means, without your express written consent:
(i) any reduction in your annual base salary other than a reduction which is
proportional to general reductions affecting other senior executive officers of
NextCure generally; (ii) any material reduction in your title or scope of
responsibilities without your consent (other than your removal from the Board);
or (iii) a requirement that the location of the office in which you perform your
principal duties for NextCure be changed to a new location that is outside a
radius of 50 miles from the Company’s corporate headquarters in Beltsville,
Maryland.

 

b.Severance Benefits and Payment.

 

i.Generally. If your employment with NextCure is terminated by NextCure for any
reason other than Cause or by you for Good Reason, NextCure will pay you (1) the
Accrued Benefits; (2) subject to your compliance with Section 4(c) below, after
the execution and delivery of the Separation Agreement and General Release in
the form attached hereto as Appendix B (the “Separation Agreement and General
Release”) and the expiration of any revocation period without the release being
revoked, 12 months’ base salary, less standard deductions, payable in a single
lump sum on the 60th day following the termination of your employment; and (3)
if you elect to continue your health insurance coverage pursuant to your rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), following the termination of your employment, your monthly premium
under COBRA on a monthly basis until the earlier of (x) 12 months following the
effective termination date, or (y) the date upon which you commence full-time
employment (or employment that provides you with eligibility for healthcare
benefits substantially comparable to those provided by NextCure). A termination
of your employment by NextCure due to physical or mental illness which is not a
Disability (as defined herein) shall be treated as an involuntary termination
other than for Cause. The term “Disability” shall mean that you have not been
able to materially engage in your duties and responsibilities by reason of any
medically determinable physical or mental impairment for a period of not less
than 120 consecutive days or not less than 180 days during any one-year period.

 

 

 

 

ii.In connection with the Change in Control Period. If your employment with
NextCure is terminated by NextCure for any reason other than Cause or by you for
Good Reason within 3 months prior to, or 12 months following, a Change in
Control (as defined in the NextCure, Inc. 2019 Omnibus Incentive Plan) (the
“Change in Control Period”), NextCure will pay you (1) the Accrued Benefits; (2)
subject to your compliance with Section 4(c) below, after the execution and
delivery of the Separation Agreement and General Release and the expiration of
any revocation period without the release being revoked, 18 months’ base salary
plus your annual target bonus, less standard deductions, payable in a single
lump sum on the 60th day following the termination of your employment; and (3)
if you elect to continue your health insurance coverage pursuant to your rights
under COBRA following the termination of your employment, your monthly premium
under COBRA on a monthly basis until the earlier of (x) 18 months following the
effective termination date, or (y) the date upon which you commence full-time
employment (or employment that provides you with eligibility for healthcare
benefits substantially comparable to those provided by NextCure). A termination
of your employment by NextCure due to physical or mental illness which is not a
Disability shall be treated as an involuntary termination other than for Cause.

 

c.                   Eligibility for Severance. Eligibility for receipt of the
items in Section 4(b)(i)(2) and 4(b)(ii)(2) above shall be conditioned on your
(i) returning to NextCure promptly upon termination of your employment all of
its property, including confidential information and all electronically stored
information, and (ii) signing and not revoking the Separation Agreement and
General Release.

 

d.                  Accrued Benefits. The Accrued Benefits shall be paid to you
(or your estate in the event of your death) upon termination of employment
regardless of the circumstances giving rise to such termination.

 

5.                  At Will Employment. Your employment with NextCure is at
will, meaning it may be terminated by you or NextCure at any time, subject to
Section 4 above, for any reason with or without Cause. You understand that this
Agreement is not a contract for employment for a definite term.

 

6.                  Confidentiality and Proprietary Rights Agreement. This offer
of employment is subject to the Confidentiality and Proprietary Rights Agreement
attached as Appendix C, which shall be effective as of the date set forth
therein.

 

7.                  No Inconsistent Obligations. By accepting this offer of
employment, you represent and warrant to NextCure that you are under no
obligations or commitments, whether contractual or otherwise, that are
inconsistent with your obligations set forth in this Agreement or that would be
violated by your employment by NextCure. You agree that you will not take any
action on behalf of NextCure or cause NextCure to take any action that will
violate any agreement that you have with a prior employer.

 

 

 

 

8.                  Delayed Commencement Date for Payments and Benefits.

 

a.                  The intent of the parties hereto is that payments and
benefits under this Agreement comply with, or be exempt from, Section 409A of
the Internal Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to
the maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith or exempt therefrom. If you notify NextCure (with
specificity as to the reason therefor) that you believe that any provision of
this Agreement (or of any award of compensation, including equity compensation
or benefits) would cause you to incur any additional tax or interest under Code
Section 409A and NextCure concurs with such belief or NextCure independently
makes such determination, NextCure shall, after consulting with you, reform such
provision to try to comply with Code Section 409A through good faith
modifications to the minimum extent reasonably appropriate to conform with Code
Section 409A. To the extent that any provision hereof is modified in order to
comply with Code Section 409A, such modification shall be made in good faith and
shall, to the maximum extent reasonably possible, maintain the original intent
and economic benefit to you and NextCure of the applicable provision without
violating the provisions of Code Section 409A.

 

b.                  A termination of employment shall not be deemed to have
occurred for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits upon or following a termination of employment
that are considered “nonqualified deferred compensation” under Code Section 409A
unless such termination is also a “separation from service” within the meaning
of Code Section 409A and, for purposes of any such provision of this Agreement,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.” Notwithstanding any provision to the contrary in
this Agreement, no payments or benefits that are considered “nonqualified
deferred compensation” under Code Section 409A to which you otherwise become
entitled under this Agreement in connection with your termination of employment,
shall be made or provided to you prior to the earlier of (i) the expiration of
the 6 month period measured from the date of your “separation from service” with
NextCure (as such term is defined in Code Section 409A) or (ii) the date of your
death, if you are deemed at the time of such separation from service to be a
“specified employee” under Code Section 409A and if, in the absence of such
delay, the payments would be subject to additional tax under Code Section 409A.
Upon the expiration of the applicable Code Section 409A(a)(2) deferral period,
all payments and benefits deferred pursuant to this Section 8(b) (whether they
would have otherwise been payable in a single sum or in installments in the
absence of such deferral) shall be paid or reimbursed to you in a lump sum, and
any remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them herein.

 

c.                   For purposes of Code Section 409A, your right to receive
any installment payment pursuant to this Agreement shall be treated as a right
to receive a series of separate and distinct payments. Whenever a payment under
this Agreement specifies a payment period with reference to a number of days
(e.g., “payment shall be made within 30 days following the date of
termination”), the actual date of payment within the specified period shall be
within the sole discretion of NextCure. Notwithstanding any other provision of
this Agreement to the contrary, in no event shall any payment under this
Agreement that constitutes “nonqualified deferred compensation” for purposes of
Code Section 409A be subject to offset, counterclaim or recoupment by any other
amount payable to you unless otherwise permitted by Code Section 409A.

 

 

 

 

d.                  All in-kind benefits provided and expenses eligible for
reimbursement under this Agreement shall be provided by NextCure or incurred by
you during the time periods set forth in this Agreement. All reimbursements
shall be paid as soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year following the
taxable year in which the expense was incurred. The amount of in-kind benefits
provided or reimbursable expenses incurred in one taxable year shall not affect
the in-kind benefits to be provided or the expenses eligible for reimbursement
in any other taxable year. Such right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.

 

e.                   If under this Agreement an amount is to be paid in
installments, each installment shall be treated as a separate payment for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

9.             280G. In the event that the amount of any compensation, payment
or distribution by NextCure or its affiliates to or for your benefit, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, calculated in a manner consistent with Section 280G of
the Code and the applicable regulations thereunder (the “Aggregate Payments”)
would be subject to the excise tax imposed by Section 4999 of the Code, then the
Aggregate Payments shall be reduced (but not below zero) so that the sum of all
of the Aggregate Payments shall be $1.00 less than the amount at which you
become subject to the excise tax imposed by Section 4999 of the Code; provided
that such reduction shall only occur if it would result in you receiving a
higher After Tax Amount (as defined below) than you would receive if the
Aggregate Payments were not subject to such reduction. In such event, the
Aggregate Payments shall be reduced in the following order, in each case, in
reverse chronological order beginning with the Aggregate Payments that are to be
paid the furthest in time from consummation of the transaction that is subject
to Section 280G of the Code: (i) cash payments not subject to Section 409A of
the Code; (ii) cash payments subject to Section 409A of the Code; (iii)
equity-based payments and acceleration; and (iv) non-cash forms of benefits;
provided that in the case of all the foregoing Aggregate Payments all amounts or
payments that are not subject to calculation under Treas. Reg. § 1.280G-1,
Q&A-24(b) or (c) shall be reduced before any amounts that are subject to
calculation under Treasury Regulation §1.280G-1, Q&A- 24(b) or (c). For purposes
of this Section 9, the “After Tax Amount” means the amount of the Aggregate
Payments less all federal, state, and local income, excise and employment taxes
imposed on you as a result of your receipt of the Aggregate Payments. For
purposes of determining the After Tax Amount, you shall be deemed to pay federal
income taxes at the highest marginal rate of federal income taxation applicable
to individuals for the calendar year in which the determination is to be made,
and state and local income taxes at the highest marginal rates of individual
taxation in each applicable state and locality, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. The determination as to whether a reduction in the Aggregate
Payments shall be made pursuant to this Section 9 shall be made by a nationally
recognized accounting firm or a firm specializing in Section 280G calculations
selected by NextCure, which shall provide detailed supporting calculations both
to NextCure and you. 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 NextCure. Notwithstanding the foregoing, if (i)
NextCure is not publicly traded prior to the occurrence of a change in control
such that the private company exception pursuant to Q & A #7 of the regulations
promulgated under Section 280G of the Code is applicable and (ii) you request
that NextCure seek shareholder approval of the portion of any payments to be
made to you which are parachute payments under Section 280G and exceed 2.99
times your “base amount” (as such term is defined in Section 280G) in order
that, upon obtaining such approval, all of the payments will be exempt from the
excise taxes imposed under Sections 280G and 4999 of the Code, NextCure shall
use its reasonable best efforts to obtain such approval.

 

 

 

 

10.              Miscellaneous.

 

a.                   This offer of employment is made subject to you having the
legal right to work in the United States.

 

b.                  Your employment with NextCure is subject to all Company
policies and procedures, and NextCure retains the right to change its policies
or procedures at any time.

 

c.                   This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

d.                  Neither this Agreement nor any of your rights or obligations
hereunder shall be assignable by you. NextCure may assign this Agreement or any
of its obligations hereunder to any subsidiary of NextCure, or to any successor
(whether by merger, purchase or otherwise) to all or substantially all of the
equity, assets or businesses of NextCure. This Agreement is intended to bind and
inure to the benefit of and be enforceable to you and NextCure and NextCure’s
permitted successors and assigns.

 

e.                   No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by you and such officer or director as may be designated by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

 

f.                    The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Maryland without
regard to the choice of law principles thereof.

 

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If the foregoing is acceptable, please indicate your agreement by signing below
and returning the original signed Agreement (keeping a copy for your own
records) to me on or before July 27, 2020. If you have any further questions or
require additional information, please feel free to contact me.

 

Sincerely,       NEXTCURE, INC.        By: /s/ Timothy Mayer     Timothy Mayer  
  Chief Operating Officer        ACCEPTED AND AGREED:        /s/ Michael Richman
  Michael Richman       Date: July 27, 2020  

  

Appendices: Appendix A — Approved Activities

Appendix B — Separation Agreement and General Release

Appendix C — Confidentiality and Proprietary Rights Agreement