Document:

Exhibit 10.11

 

 

	
  Dr. Neil Kurtz

  	
   

  	
  September 19, 2001

  

160 West 66th Street

Apt. 48E

New York, NY 10023

 

Re:                             Employment Terms

 

Dear Neil:

 

NEUROGENETICS INC. (the “Company”) is pleased to offer you the position of President and
Chief Executive Officer (“CEO”), pursuant to the terms of this letter agreement
(“Agreement”), and contingent upon written approval from an authorized
representative from UnitedHealth Group Corporation (“United Health”), as
further defined in paragraph 1 herein. This Agreement is made and entered into
as of the last day either party executes the Agreement (the “Effective Date”). You
and the Company hereby agree as follows:

 

1.                                      Commencement
of Employment.

 

In accordance with certain contractual restrictions that you have with
UnitedHealth, your employment with Neurogenetics will commence on April 1,
2002. You understand that this offer of employment is contingent upon the
Company’s receipt of written authorization from an authorized representative of
United Health acknowledging and approving your right to presently accept
employment with the Company for April 1, 2002. You further agree that
following your acceptance of this employment offer, the Company may disclose
that you have accepted employment as President and CEO as of April 1, 2002,
as well as the circumstances surrounding your inability to begin employment
with the Company until April 1, 2002. The Company agrees that such
information will only be disclosed as reasonably necessary for legitimate
business reasons.

 

2.                                      Duties.

 

Upon commencement of employment, you will be expected to do and perform all
services, acts or things necessary or advisable to manage and conduct the
business of the Company, including those duties normally associated with the
position of President and Chief Executive Officer. You will report to the
Company’s Board of Directors, unless otherwise assigned by the Company. You
will work at our facility located in San Diego, California.

 

11085 NORTH TORREY
PINES ROAD • SUITE 300 •LA JOLLA, CA 92037 •
TEL 858-623-5665 • FAX 858-623-5666

 

 

3.                                      Board
of Directors.

 

The Company agrees that it will nominate you as a member of the Board
of Directors and recommend that you be elected as a member of the Board of
Directors on or before your commencement of employment with the Company.

 

4.                                      Base
Salary/Benefits.

 

Upon commencement of employment, your base salary will be three hundred
thousand dollars ($300,000) per year, less payroll deductions and all required
withholdings. Your base salary shall be reviewed annually by the Board of
Directors and may be increased at the sole discretion of the Board of
Directors. Your base salary shall not be reduced unless the Board of Directors
deems in good faith that a percentage reduction of all executive salaries is
warranted for legitimate business reasons. Your base salary shall be prorated
for any partial year of employment on the basis of a 365-day fiscal year. You
will be paid in regular periodic payments in accordance with Company policy,
but in no event less frequent than semi-monthly.

 

You will also be eligible for standard Company benefits, including
medical insurance, dental insurance, life insurance, long term disability
insurance, accidental death and dismemberment insurance, 401k, paid time off
(PTO) and paid holidays. Details about these benefit plans are available for
your review. You will be entitled to accrue twenty (20) days of PTO per year,
pursuant to Company policy. The Company may modify your compensation and
benefits from time to time as it deems necessary.

 

5.                                      Loyal
and Conscientious Performance.

 

During your employment with the Company, you agree that you shall
devote your full business energies, interests, abilities and productive time to
the proper and efficient performance of your duties to the Company. Notwithstanding
the above, you shall be permitted to provide services, as reasonably necessary,
for UnitedHealth in accordance with the Separation and Release Agreement
entered into between you and the UnitedHealth Group; provided that, such
obligations do not interfere with the proper and efficient performance of your
duties as determined by the Company’s Board of Directors. You shall also be
permitted to engage in civic, charitable or religious activities that do not
present any conflict of interest with the Company or affect your performance of
duties for the Company.

 

6.                                      Discretionary
Bonus.

 

In addition to your base salary, you will be eligible to earn a
performance bonus (“Bonus”) based on your achievement of certain specified
milestones, as mutually agreed upon by you and the Company’s Board of Directors.
An early assignment for you will be to develop a performance bonus plan for the
Company for approval by the Board of Directors. You must be employed on the
date the Bonus is awarded to be eligible for the Bonus. The Bonus will not be
pro-rated in the event your employment is terminated with or without Cause (as
defined below) prior to the date on which the Bonus is awarded.

 

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7.                                      Stock.

 

Within 30 days of your start date and subject to the approval of the
Company’s Board of Directors, you will be granted a stock option under the
Company’s 2000 Equity Incentive Plan to purchase five percent (5%) of the
outstanding shares of the Company’s common stock on a fully-diluted basis as of
September 19, 2001 (the “Option”). The Option will be governed by and
granted pursuant to a separate Stock Option Agreement. The exercise price per
share of the Option will be equal to the fair market value of the Company’s
common stock established on the date of grant, subject to approval by the Board
of Directors. The Option will be subject to vesting over four (4) years,
so long as you continue to be employed with the Company, with twenty-five
percent (25%) of the Option vesting on your one (1) year anniversary of
the date of grant and the remainder vesting monthly thereafter.

 

8.                                      Termination.

 

The Company may terminate your employment at any time and for any
or no reason, with or without Cause (as defined herein) or advance notice by
giving you written notice of such termination. Similarly, you may terminate
your employment with the Company at any time at your election, in your sole
discretion, for any or no reason upon thirty (30) days notice to the Company,
during which time you shall provide reasonable transition assistance to the
Company.

 

Notwithstanding the at-will nature of the employment relationship, if
the Company terminates your employment without Cause (as defined herein), then
upon your furnishing to the Company an executed release and waiver of claims (a
form of which is attached hereto as Exhibit A) you shall be entitled
to: (i) severance payments in the form of continuation of your base
salary in effect at the time of your termination, subject to standard payroll
deductions and withholdings, for twelve (12) months, and (ii) twelve (12)
months of accelerated vesting of the unvested shares under the Option. If you
voluntarily resign or your employment is terminated for Cause (as defined
herein), all compensation and benefits will cease immediately and you will
receive no additional payments from the Company other than your accrued base
salary and accrued and unused vacation benefits earned through the date of your
termination.

 

For purposes of this Agreement, “Cause” shall mean (i) willful
misconduct by you including, but not limited to, dishonesty which materially
and adversely reflects upon your ability to perform your duties for the
Company, (ii) your conviction of, or the entry of a pleading of guilty or
nolo contendere by you to, any crime involving moral turpitude or any felony,
including but not limited to, fraud, embezzlement or theft against the Company,
(iii) a material breach by you of any material provision of the
Proprietary Information and Inventions Agreement between you and the Company (a
copy of which is attached hereto as Exhibit B), or (iv) your willful
and habitual failure to attend to your duties as assigned by the Board of
Directors or officers of the Company to whom you report, which is not cured by
you within thirty (30) days after you receive written notice from the Company
of such misconduct or non-performance.

 

3

 

9.                                      Change
in Control.

 

If your employment is terminated by the Company or its successor
Company without Cause (as defined herein) at any time within the six (6) months
following a Change in Control (as defined herein), then upon your furnishing to
the Company an executed release and waiver of claims (a form of which is
attached hereto as Exhibit A): (i) the vesting of the Option will be
immediately accelerated such that one hundred percent (100%) of the Option will
be vested as of the Expiration Date of the release and waiver attached hereto
as Exhibit A, and (ii) you will receive a lump sum payment equivalent
to one (1) year of base salary in effect at the time of termination, less
applicable deductions and withholdings.

 

For purposes of this Agreement, “Change in Control” is defined as
follows: (i) a sale of substantially all of the assets of the Company; (ii) a
merger or consolidation in which the Company is not the surviving corporation
(other than a merger or consolidation in which stockholders immediately before
the merger or consolidation have, immediately after the merger or
consolidation, equal or greater stock voting power); (iii) a reverse
merger in which the Company is the surviving corporation but the shares of the
Common Stock outstanding immediately preceding the merger are otherwise (other
than a reverse merger in which stockholders immediately before the merger have,
immediately after the merger, equal or greater stock voting power); or (iv) any
transaction or series of related transactions in which in excess of fifty
percent (50%) of the Company’s voting power is transferred.

 

In the event that any payments and other benefits provided for in this
Agreement or otherwise payable to you (the “Benefits”) would (i) constitute
“parachute payments” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), and (ii) but for this subsection would
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then, the Benefits to which you are entitled pursuant to this Agreement
shall be either:

 

(a)                                  Provided
to you in full, or

 

(b)                                  Provided
to you at such lesser extent that would result in no portion of the Benefits
being subject to the Excise Tax,

 

 whichever of the foregoing
amounts, when taking into account applicable federal, state, local and foreign
income and employment taxes, the Excise Tax, and any other applicable taxes,
results in the receipt by you, on an after tax basis, of the greatest amount of
the Benefits, notwithstanding that all or some portion of the Benefits may be
taxable under the Excise Tax. Unless you and the Company otherwise agree in
writing, any determination required under this subsection shall be made in
writing in good faith by an accountant selected by you. In the event of a
reduction of the Benefits under this Agreement, you shall be given the choice
of which of the Benefits to reduce. For purposes of making the calculations
required by this subsection, the accountant that you select may make
reasonable assumptions and approximations concerning applicable taxes and may rely
on reasonable, good faith interpretations concerning the application of the
Code, and other applicable legal authority. You and the Company shall furnish

 

4

 

your accountant such information and documents as he may reasonably
request in order to make a determination under this subsection.

 

Any payment and benefits received by you in connection with a Change in
Control shall be in lieu of any other severance payment to you, including the
severance payment provided in subsection 8 herein. In the event that you
become entitled to payment and benefits upon a Change in Control, the Company
shall have no further obligation to pay you any base salary, bonus or other
compensation or benefits under this Agreement, except for benefits due to you
(or your dependents) under the terms of your benefit plans.

 

10.                               Company
Policy.

 

As a Company employee, you will be expected to abide by Company rules and
regulations and acknowledge in writing that you have read the Company’s
Employee Handbook, which you will be expected to establish and which will
govern the terms and conditions of your employment. The Company’s Employee
Handbook may be modified from time to time at the sole discretion of the
Company.

 

11.                               Proprietary
Information and Inventions Agreement.

 

As a condition of employment, you will be required to sign and comply
with the Proprietary Information and Inventions Agreement attached hereto as Exhibit B,
which prohibits unauthorized use or disclosure of the Company’s proprietary
information, among other things.

 

In your work for the Company, you will be expected not to use or
disclose any confidential information, including trade secrets, of any former
employer or other person to whom you have an obligation of confidentiality. Rather,
you will be expected to use only that information which is generally known and
used by persons with training and experience comparable to your own, which is
common knowledge in the industry or otherwise legally in the public domain, or
which is otherwise provided or developed by the Company. During our discussions
about your proposed job duties, you assured us that you would be able to perform those
duties within the guidelines just described. Accordingly, you agree that you
will not bring onto Company premises any unpublished documents or property
belonging to any former employer or other person to whom you have an obligation
of confidentiality.

 

12.                               Entire
Agreement.

 

This Agreement, together with your Proprietary Information and
Inventions Agreement and the stock option documents referred to herein, forms
the complete and exclusive statement of the terms of your employment with the
Company. The employment terms in this Agreement supersede any other agreements
or promises made to you by anyone, whether oral or written.

 

13.                               Governing
Law.

 

This Agreement will be governed by and construed according to the laws
of the State of California. You hereby expressly consent to the personal
jurisdiction of the state and federal

 

5

 

courts located in San Diego, California for any lawsuit filed there
against you by the Company arising from or related to this Agreement.

 

14.                               Successors
and Assigns.

 

This Agreement will be binding upon your heirs, executors,
administrators and other legal representatives and will be for the benefit of
the Company, its successors, and its assigns.

 

As required by law, this offer is subject to satisfactory proof of your
right to work in the United States. Please sign and date this Agreement, and
return it to me by October 5, 2001, if you wish to accept employment with
the Company under the terms described above. After October 5, 2001, this
offer will be null and void and will have no further force or effect. If you
accept our offer, we would like you to start on April 1, 2002.

 

We look forward to your favorable reply and to a productive and
enjoyable work relationship.

 

Sincerely,

 

	
  /s/ William T. Comer

  	
   

  

WILLIAM T. COMER, PH.D.

CHAIRMAN OF THE BOARD OF NEUROGENETICS INC.

 

Accepted:

 

	
  /s/Neil Kurtz

  	
   

  

DR. NEIL KURTZ

 

 

	
  September 26, 2001

  	
   

  

Date

 

	
  Attachment:

  	
  Exhibit A:

  	
  Waiver and Release

  
	
   

  	
  Exhibit B:

  	
  Proprietary Information and Inventions Agreement

  

 

6

 

EXHIBIT A

 

RELEASE AND WAIVER OF CLAIMS

 

In
consideration of the payments and other benefits set forth in the Agreement
dated               ,
to which this form is attached, I, DR. NEIL KURTZ,
hereby furnish NEUROGENETICS INC. (the “Company”),
with the following release and waiver (“Release and Waiver”).

 

I
hereby release, and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns affiliates and Benefit
Plans, of and from any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys’ fees, damages, indemnities and obligations of every
kind and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising at any time prior to and
including my employment termination date, including, but not limited to any
claims relating to my employment and the termination of my employment,
including but not limited to, claims pursuant to any federal, state or local
law relating to employment, including, but not limited to, discrimination
claims, claims under the California Fair Employment and Housing Act, and the
Federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”), or
claims for wrongful termination, breach of the covenant of good faith, contract
claims, tort claims, and wage or benefit claims, including but not limited to,
claims for salary, bonuses, commissions, stock, stock options, vacation pay,
fringe benefits, severance pay or any form of compensation.

 

I
also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: “A general
release does not extend to claims which the creditor does not know or suspect
to exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor.” I
hereby expressly waive and relinquish all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to any claims I may have
against the Company.

 

I
acknowledge that, among other rights, I am waiving and releasing any rights I may have
under ADEA, that this Release and Waiver is knowing and voluntary, and that the
consideration given for this Release and Waiver is in addition to anything of
value to which I was already entitled as an executive of the Company. I further
acknowledge that I have been advised, as required by the Older Workers Benefit
Protection Act, that: (a) the Release and Waiver granted herein does not
relate to claims which may arise after this Release and Waiver is
executed; (b) I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not
to do so); and if I am over 40 years of age upon execution of this Release and
Waiver: (c) I have twenty-one (21) days from the date of termination of my
employment with the Company in which to consider this Release and Waiver
(although I may choose voluntarily to execute this Release and Waiver
earlier); (d) I have seven (7) days following the execution of this
Release and Waiver to revoke my consent to this Release and Waiver; and (e) this
Release and Waiver shall not be effective until the seven (7) day
revocation period has expired (the “Expiration Date”).

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
  DR. NEIL KURTZ

  
					

 

7Exhibit 10.12

 

 

November 17, 2003

 

Craig Johnson

7998 Paseo Membrillo

Carlsbad, CA 92009

 

Re:                             Employment Terms

 

 

Dear Craig:

 

Neurogenetics, Inc. (“Neurogenetics” or the “Company”) is pleased
to offer you the position of Chief Financial Officer reporting to Neil Kurtz. You
will work at our facility at 11085 N. Torrey Pines Road, La Jolla, CA.

 

You will be primarily responsible for the financial strategy of the
company, direction of private equity financings with venture capital firms,
defining and executing an M&A strategy, and taking the lead role in the
company’s IPO. You will also be responsible for the direction and management of
the company’s finance and accounting departments. In addition, you will be a
member of the Company’s Executive Committee.

 

This is a full-time exempt position. Your starting salary will be
$15,125.00 per month ($181,500.00 annualized), less payroll deductions and all
required withholdings. You will be paid semi-monthly and you will be eligible
for the following standard Company benefits: medical insurance, dental
insurance, life insurance, long term disability insurance, accidental death and
dismemberment insurance, 401(k) retirement savings plan, paid time off (PTO)
and holidays. Details about these benefit plans are attached for your review. hi
addition, the Company will make a commitment to finalize a contract of
employment with you within six (6) months of your start date to include
all of the above plus the addition of a severance clause which will pay you in
full for a period of nine (9) months should you be terminated without
cause, or should your position be eliminated or adversely effected by change of
control of the Company.

 

After your acceptance of this offer, and commencement of employment at
Neurogenetics, I will recommend to the Company’s Board of Directors, that you
be granted an option to purchase 150,000 shares of Neurogenetics Common Stock. The
shares will be subject to the terms and conditions of the Company’s Stock
Option Plan. This stock option grant is intended as an incentive and also
recognition of the important role that you are expected to play in the Company.

 

As a condition of employment you will need to sign and comply with the
attached Proprietary Information and Inventions Agreement, which prohibits unauthorized
use or disclosure of Company proprietary information. In your work for the
Company, you will be expected not to use or disclose any confidential
information, including trade secrets, of any former employer or other person to
whom you have an obligation of confidentiality. Rather, you will be expected to
use only that information which is generally known and used by persons with
training and experience comparable to your own, which is common knowledge in
the industry or otherwise legally in the public domain, or which is otherwise
provided or developed by the Company. During our 

 

11085 NORTH TORREY PINES ROAD • SUITE 300 •LA JOLLA, CA 92037 • TEL 858-623-5665 • FAX 858-623-5666

 

 

discussions about your proposed job duties, you assured us that you
would be able to perform those duties within the guidelines just
described.

 

You agree that you will not bring onto Company premises any unpublished
documents or property belonging to any former employer or other person to whom
you have an obligation of confidentiality.

 

Our normal working hours are Monday through Friday 8:00AM to 5:00PM. As
an exempt, salaried employee you will be expected to work additional hours as
required by the nature of your work assignments.

 

Both you and Neurogenetics have the right to terminate your employment
at any time for any reason, with or without cause, and with or without notice. This
at-will employment relationship cannot be changed except in writing signed by
the CEO of the Company. Similarly, promotions, transfers, demotions,
suspensions and employee discipline may be effected or administered at the
will of Neurogenetics at any time for any reason, with or without cause, and
with or without notice. Neurogenetics may change your position, duties,
and work location and may modify compensation and benefits from time to
time, as it deems necessary.

 

This letter, together with your Proprietary Information and Inventions
Agreement, forms the complete and exclusive statement of your employment
agreement with Neurogenetics. The employment terms in this letter supersede any
other agreements or promises made to you by anyone, whether oral or written. As
required by law, this offer is subject to satisfactory proof of your right to
work in the United States and is contingent on our confirming the background
and employment history you have provided to us.

 

We would like to have your decision regarding this offer by December 1,
2003 and would like to anticipate a start date of January 1, 2004. To
formally accept this offer on the above terms, please sign one copy of this
letter and return it to me.

 

The management of Neurogenetics and I look forward to working with you.

 

Sincerely,

 

	
  /s/ Neil Kurtz

  	
   

  
	
   

  
	
  Neil Kurtz

  
	
  President & CEO

  

 

 

Accepted:

 

 

	
  /s/ Craig Johnson

  	
   

  	
  November 26, 2003

  	
   

  
	
  Craig Johnson

  	
  Date

  	
   

  

 

 

Attachments: Benefits Summary and Proprietary Information and Inventions
Agreement

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