EMPLOYMENT AGREEMENT
EXHIBIT 10.2
THIS EMPLOYMENT AGREEMENT, dated as of September 18, 2006 by and between NEUROCRINE
BIOSCIENCES, INC., 00000 Xx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 (hereinafter the “Company”),
and Xxxxxxx X. Xxxxxxxx, MBA, CPA (hereinafter “Executive”).
R E C I T A L S
WHEREAS, the Company and Executive wish to set forth in this Agreement the terms and
conditions under which Executive is to be employed by the Company on and after the date hereof; and
NOW, THEREFORE, the Company and Executive, in consideration of the mutual promises set forth
herein, agree as follows:
ARTICLE 1
TERM OF AGREEMENT
TERM OF AGREEMENT
1.1 Commencement Date. Executive’s fulltime employment with the Company under this
Agreement shall commence as of September 18, 2006 (“Commencement Date”) and this Agreement shall
expire after a period of three (3) years from the Commencement Date, unless renewed in accordance
with paragraph 1.2 or terminated pursuant to Article 6.
1.2 Renewal. The term of this Agreement shall be automatically renewed for successive,
additional three (3) year terms unless either party delivers written notice to the other at least
ninety (90) days prior to the end of any term of an intention to terminate this Agreement or to
renew it for a term of less than three (3) years but not less than (1) year. If the term of this
Agreement is renewed for a term of less than three (3) years, then thereafter the term of this
Agreement shall be automatically renewed for successive, additional identical terms unless either
party delivers a written notice to the other of an intention to terminate this Agreement or to
renew it for a different term of not less than one (1) year, such notice to be delivered at least
ninety (90) days prior to the end of any term. The Company’s failure to renew this Agreement at
the end of any term shall be considered a termination without Cause as set forth in Section 6.4
below.
ARTICLE 2
EMPLOYMENT DUTIES
EMPLOYMENT DUTIES
2.1 Title/Responsibilities. Executive hereby accepts employment with the Company
pursuant to the terms and conditions hereof. Executive agrees to serve the Company in the position
of Vice President, Chief Financial Officer. Executive shall have the powers and duties commensurate
with such position, including but not limited to hiring personnel necessary to carry
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out the responsibilities for such position as directed by the Chief Executive Officer (the
“Chief Executive Officer”).
2.2 Full Time Attention. Executive shall devote his best efforts and his full
business time and attention to the performance of the services customarily incident to such office
and to such other services as directed by the Chief Executive Officer. Executive shall discharge
his responsibilities in a diligent and faithful manner, consistent with sound business practices
and in accordance with the directives of the Chief Executive Officer.
2.3 Other Activities. Except upon the prior written consent of the Chief Executive
Officer, Executive shall not during the period of employment engage, directly or indirectly, in any
other business activity (whether or not pursued for pecuniary advantage) that is or may be
competitive with, or that might place him in a competing position to that of the Company or any
other corporation or entity that directly or indirectly controls, is controlled by, or is under
common control with the Company (an “Affiliated Company”), provided that Executive may own less
than two percent (2%) of the outstanding securities of any such publicly traded competing
corporation.
ARTICLE 3
COMPENSATION
COMPENSATION
3.1 Base Salary. Executive shall receive a Base Salary at an annual rate of two
hundred seventy five thousand dollars ($275,000.00), payable semi-monthly in equal installments in
accordance with the Company’s normal payroll practices. The Chief Executive Officer shall provide
Executive with annual performance reviews, and, thereafter, Executive shall be entitled to such
increase in Base Salary as the Compensation Committee of the Board and the Chief Executive Officer
may from time to time establish in their sole discretion.
3.2 Incentive Bonus. In addition to any other bonus Executive shall be awarded by the
Company’s Board of Directors, the Company shall pay Executive an annual bonus as determined by the
Company’s Compensation Committee and the Chief Executive Officer based upon achievement of
Executive in meeting personal goals approved by the Chief Executive Officer and achievement by the
Company of corporate goals approved by the Board of Directors annually. Executive’s personal
goals and the Company’s corporate goals will be set forth in writing by the Chief Executive
Officer, respectively, within ninety (90) days after the start of the Company’s fiscal year. The
Chief Executive Officer, in his sole discretion, shall determine whether Executive’s personal goals
have been obtained. The Board of Directors shall, in its sole discretion, determine whether the
corporate goals have been obtained.
3.3 Equity. Each year starting in 2007 and continuing for the term of this Agreement,
the Executive will be eligible to receive a Stock Equity award under the Company’s 2003 Incentive
Stock Option Plan as amended, with the number of shares and exercise price as shall be determined
by the Board of Directors.
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3.4 Withholdings. All compensation and benefits payable to Executive hereunder and
the Agreement shall be subject to all federal, state, local and other withholdings and similar
taxes and payments required by applicable law.
ARTICLE 4
EXPENSE ALLOWANCES AND FRINGE BENEFITS
EXPENSE ALLOWANCES AND FRINGE BENEFITS
4.1
Vacation. Executive shall be entitled to the
greater of four (4) weeks of annual
paid vacation or the amount of annual paid vacation to which Executive may become entitled under
the terms of Company’s vacation policy for employees during the term of this Agreement.
4.2 Benefits. During the term of this Agreement, the Company shall also provide
Executive with the usual health insurance benefits it generally provides to its other senior
management employees. As Executive becomes eligible in accordance with criteria to be adopted by
the Company, the Company shall provide Executive with the right to participate in and to receive
benefit from life, accident, disability, medical, pension, bonus, stock, profit-sharing and savings
plans and similar benefits made available generally to executives of the Company as such plans and
benefits may be adopted by the Company. The amount and extent of benefits to which Executive is
entitled shall be governed by the specific benefit plan as it may be amended from time to time.
4.3 Business Expense Reimbursement. During the term of this Agreement, Executive
shall be entitled to receive proper reimbursement for all reasonable out-of-pocket expenses
incurred by him (in accordance with the policies and procedures established by the Company for its
senior Executive Officers) in performing services hereunder. Executive agrees to furnish to the
Company adequate records and other documentary evidence of such expense for which Executive seeks
reimbursement. Such expenses shall be reimbursed and accounted for under the policies and
procedure established by the Company.
ARTICLE 5
CONFIDENTIALITY
CONFIDENTIALITY
5.1 Proprietary Information and Inventions Agreement. Executive represents and
warrants that she has previously executed and delivered to the Company the Company’s standard
Proprietary Information and Inventions Agreement in form acceptable to the Company’s counsel.
5.2 Return of Property. All documents, records, apparatus, equipment and other
physical property which is furnished to, or obtained by, Executive in the course of his employment
with the Company shall be and remain the sole property of the Company. Executive agrees that, upon
the termination of his employment, she shall return all such property (whether or not it pertains
to Proprietary Information as defined in the Proprietary Information and Inventions Agreement), and
agrees not to make or retain copies, reproductions or summaries of any such property.
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5.3 No use of Prior Confidential Information. Executive will not intentionally
disclose to the Company or use on its behalf any confidential information belonging to any of his
former employers or any other third party.
ARTICLE 6
TERMINATION
TERMINATION
6.1 By Death. The period of employment shall terminate automatically upon the death
of Executive. In such event, all stock based awards held by Executive at the time of termination will
continue to vest for a period of six (6) months following
termination. All stock based awards held by
Executive that are vested at the time of termination or within six (6) months thereafter will be
exercisable in accordance with their terms for a period of one year following termination. In
addition, the Company shall pay to Executive’s beneficiaries or his estate, as the case may be, any
accrued Base Salary, any bonus compensation to the extent earned, any vested deferred compensation
(other than pension plan or profit-sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which Executive is a participant
to the full extent of Executive’s rights under such plans, any accrued vacation pay and any
appropriate business expenses incurred by Executive in connection with his duties hereunder, all to
the date of termination (collectively Accrued Compensation), but no other compensation or
reimbursement of any kind, including, without limitation, severance compensation, and thereafter,
the Company’s obligations hereunder shall terminate.
6.2 By Disability. If Executive is prevented from properly performing his duties
hereunder by reason of any physical or mental incapacity for a period of one hundred twenty (120)
consecutive days, or for one hundred eighty (180) days in the aggregate in any three hundred and
sixty-five (365) day period, then, to the extent permitted by law, the Company may terminate the
employment of Executive at such time. In such event, all stock based
awards held by Executive at the
time of termination will continue to vest for a period of six (6) months following termination.
All stock based awards held by Executive that are vested at the time of termination or within six (6)
months thereafter will be exercisable in accordance with their terms for a period of one year
following termination. In addition, the Company shall pay to Executive all Accrued Compensation,
and shall continue to pay to Executive the Base Salary until such time as Executive shall become
entitled to receive disability insurance payments under the disability insurance policy maintained
by the Company, but no other compensation or reimbursement of any kind, including without
limitation, severance compensation, and thereafter the Company’s obligations hereunder shall
terminate. Nothing in this Section shall affect Executive’s rights under any disability plan in
which she is a participant.
6.3 By Company for Cause. The Company may terminate the Executive’s employment for
Cause (as defined below) without liability at any time with or without advance notice to Executive.
The Company shall pay Executive all Accrued Compensation, but no other compensation or
reimbursement of any kind, including without limitation, severance compensation, and thereafter the
Company’s obligations hereunder shall terminate. Termination shall be for “Cause” in the event of
the occurrence of any of the following: (a) any intentional
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action or intentional failure to act by Executive which was performed in bad faith and to the
material detriment of the Company; (b) Executive intentionally refuses or intentionally fails to
act in accordance with any lawful and proper direction or order of the Chief Executive Officer; (c)
Executive and habitually neglects the duties of employment; or (d) Executive is convicted of a
felony crime involving moral turpitude, provided that in the event that an of the foregoing events
is capable of being cured, the Company shall provide written notice to Executive describing the
nature of such event and Executive shall thereafter have ten (10) business days to cure such event.
6.4 Termination Without Cause. At any time, the Company may terminate the employment
of Executive without liability other than as set forth below, for any reason not specified in
Section 6.3 above, by giving thirty (30) days advance written notice to Executive. If the Company
elects to terminate Executive pursuant to this Section 6.4:
(a) the Company shall pay to Executive all Accrued Compensation;
(b) the Company shall continue to pay to Executive as provided herein Executive’s Base
Salary over the period equal to nine (9) months from the date of such termination as
severance compensation;
(c) the Company shall make a lump sum payment to Executive in an amount equal to a pro
rata portion of the Executive’s annual actual cash incentive bonus for Company’s fiscal year
preceding the year of termination based on the number of completed months of Executive’s
employment in the fiscal year plus nine (9);
(d)
the vesting of all outstanding stock based awards held by Executive shall be accelerated
so that the amount of shares vested under such awards shall equal that number of shares
which would have been vested if the Executive had continued to render services to the
Company for nine (9) continuous months after the date of his termination of employment; and
(e) the Company shall pay all costs which the Company would otherwise have incurred to
maintain all of Executive’s health and welfare, and retirement benefits (either on the same
or substantially equivalent terms and conditions) if the Executive had continued to render
services to the Company for nine (9) continuous months after the date of his termination of
employment.
The Company shall have no further obligations to Executive other than those set forth in the
preceding subparagraphs. During the period when such severance compensation is being paid to
Executive, Executive shall not (i) engage, directly or indirectly, in providing services to any
other business program or project that is competitive to a program or project being conducted by
the Company or any Affiliated Company at the time of such employment termination (provided that
Executive may own less than two percent (2%) of the outstanding securities of any publicly traded
corporation), or (ii) hire, solicit, or attempt to solicit on behalf of himself or any other party
or any employee or exclusive consultant of the Company. If the Company terminates this
Agreement or the employment of Executive with the Company other than pursuant to Section 6.1, 6.2
or 6.3, then this section 6.4 shall apply.
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6.5 Constructive Termination A Constructive Termination shall be deemed to be a
termination of employment of Executive without cause pursuant to Section 6.4. For Purposes of this
Agreement, a “Constructive Termination” means that the Executive voluntarily terminates his
employment except in connection with the termination of his employment for death, disability,
retirement, fraud, misappropriation, embezzlement (or any other occurrence which constitutes
“Cause” under section 6.3) or any other voluntary termination of employment by Executive other than
a Constructive Termination after any of the following are undertaken without Executive’s express
written consent:
(a) the assignment to Executive of any duties or responsibilities which result in any
diminution of position as judged against the duties and responsibilities assigned to
executives with Executive’s position in the Company’s peer group of companies and shall not
include (i) duties and responsibilities assigned to Executive with the understanding that as
the Company grows and management staff increases in number, such duties and responsibilities
will eventually be reassigned in a manner consistent with the Company’s peer group of
companies, (ii) change in reporting relationship that does not change in any material way
the Executive’s duties and responsibilities or (iii) any change in duties or
responsibilities or reporting relationships that Executive does not identify as Constructive
Termination to the Chief Executive Officer in writing within 15 days following the Chief
Executive Officer’s proposal of such change to Executive;
(b) a reduction by the Company in Executive’s annual Base Salary by greater than five
percent (5%);
(c) a relocation of Executive or the Company’s principal executive offices if
Executive’s principal office is at such offices, to a location more than forty (40) miles
from the location at which Executive is then performing his duties, except for an
opportunity to relocate which is accepted by Executive in writing;
(d) any material breach by the Company of any provision of this Agreement; or
(e) any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company.
6.6 Termination Following Change in Control. In the event of a termination Without
Cause or Constructive Termination within six (6) months after a Change in Control (as defined
below) or Executive’s voluntary termination within thirty (30) days following the six (6) month
anniversary of a Change in Control, the Company shall pay to Executive a lump sum severance payment
in an amount equal to one (1) times Executive’s then Base Salary plus annual actual
cash incentive bonus for Company’s fiscal year preceding the year of termination. In
addition, the Executive will receive at Executive’s option
(i) accelerated vesting of all stock based
awards held
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by
Executive by reason of the assumption or substitution of successor
corporation stock based
awards for the Executive’s unvested Company stock based awards at the time of the Change in Control
pursuant to the terms of the Company’s equity incentive plans, as applicable, or (ii) a cash
payment equal to the cash value of all unvested Company stock based awards held by Executive at the time
of the Change in Control. In addition, the Executive will be reimbursed for the increase in
federal and state income taxes payable by Executive by reason of the benefits provided under this
Section 6.6.
6.7 Change in Control. For purposes of this Agreement, a “Change in Control” shall
have occurred if at any time during the term of Executive’s employment hereunder, any of the
following events shall occur:
(a) The Company is merged, or consolidated. or reorganized into or with another
corporation or other legal person, and as a result of such merger, consolidation or
reorganization less than fifty percent (50%) of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such transaction
are held in the aggregate by the holders of voting securities of the Company immediately
prior to such transaction;
(b) The Company sells all or substantially all of its assets or any other corporation
or other legal person and thereafter, less than fifty percent (50%) of the combined voting
power of the then-outstanding voting securities of the acquiring or consolidated entity are
held in the aggregate by the holders of voting securities of the Company immediately prior
to such sale;
(c) There is a report filed after the date of this Agreement on Schedule 13 D or
schedule 14 D-1 (or any successor schedule, form or report), each as promulgated pursuant to
the Securities Exchange Act of l934 (the “Exchange Act”) disclosing that any person (as the
term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the exchange Act) has
become the beneficial owner (as the term beneficial owner is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) representing fifty percent
(50%) or more of the combined voting power of the then-outstanding voting securities of the
Company;
(d) The Company shall file a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to item 1 of Form 8-X
thereunder or Item 5(f) of Schedule 14 A thereunder (or any successor schedule, form or
report or item therein) that the change in control of the Company has or may have occurred
or will or may occur in the future pursuant to any then-existing contract or transaction; or
(e) During any period of two (2) consecutive years, individuals who at the beginning of
any such period constitute the directors of the Company cease for any reason to constitute
at least a majority thereof unless the election to the nomination for
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election by the
Company’s shareholders of each director of the Company first elected during such period was
approved by a vote of at least two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of such period.
6.8 Termination by Executive. At any time, Executive may terminate his employment by
giving thirty (30) days advance written notice to the Company. The Company shall pay Executive all
Accrued Compensation, but no other compensation or reimbursement of any kind, including without
limitation, severance compensation, and thereafter the Company’s obligations hereunder shall
terminate.
6.9 Mitigation. Except as otherwise specifically provided herein, Executive shall not
be required to mitigate the amount of any payment provided under this Agreement by seeking other
employment or self-employment, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by Executive as a result of employment by another
employer or through self-employment or by retirement benefits after the date of Executive’s
termination of employment from the Company.
6.10 Coordination. If upon termination of employment, Executive becomes entitled to
rights under other plans, contracts or arrangements entered into by the Company, this Agreement
shall be coordinated with such other arrangements so that Executive’s rights under this Agreement
are not reduced, and that any payments under this Agreement offset the same types of payments
otherwise provided under such other arrangements, but do not otherwise reduce any payments or
benefits under such other arrangements to which Executive becomes entitled.
ARTICLE 7
GENERAL PROVISIONS
GENERAL PROVISIONS
7.1 Governing Law. The validity, interpretation, construction and performance of this
Agreement and the rights of the parties thereunder shall be interpreted and enforced under
California law without reference to principles of conflicts of laws. The parties expressly agree
that inasmuch as the Company’s headquarters and principal place of business are located in
California, it is appropriate that California law govern this Agreement.
7.2 Assignment; Successors Binding Agreement.
(a) Executive may not assign, pledge or encumber his interest in this Agreement or any
part thereof.
(b) The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by operation of law or by agreement in form and substance
reasonably satisfactory to Executive, to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform it if
no such succession had taken place.
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(c) This Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributee, devisees and legatees. If Executive should die while any amount is at such
time payable to his hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to Executive’s devisee, legates or other
designee or, if there be no such designee, to his estate.
7.3 Certain Reduction of Payments. In the event that any payment or benefit received
or to be received by Executive under this Agreement would result in all or a portion of such
payment to be subject to the excise tax on “golden parachute payments” under Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), then Executive’s payment shall be either
(a) the full payment or (b) such lesser amount which would result in no portion of the payment
being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts,
taking into account the applicable Federal, state and local employment taxes, income taxes, and the
excise tax imposed by Section 4999 of the Code, results in the receipt by Executive on an after-tax
basis, of the greatest amount of the payment notwithstanding that all or some portion of the
payment may be taxable under Section 4999 of the Code.
7.4 Notice. For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
To the Company:
Neurocrine Biosciences, Inc.
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn.: President & Chief Executive Officer
Neurocrine Biosciences, Inc.
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn.: President & Chief Executive Officer
To Executive:
Xxxxxxx X. Xxxxxxxx, MBA, CPA
Xxxxxxx X. Xxxxxxxx, MBA, CPA
7.5 Modification; Waiver; Entire Agreement. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Executive and such officer as may be specifically designated by the Board of the
Company. No waiver by either party hereto at any time of any breach by the other party 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 any prior
or subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
7.6 Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
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7.7 Controlling Document. Except to the extent described in Section 6.l0, in case of
conflict between any of the terms and condition of this Agreement and the document herein referred
to, the terms and conditions of this Agreement shall control.
7.8 Executive Acknowledgment. Executive acknowledges (a) that she has consulted with
or has had the opportunity to consult with independent counsel of his own choice concerning this
Agreement, and has been advised to do so by the Company, and (b) that she has read and understands
the Agreement, is fully aware of its legal effect, and has entered into it freely based on his own
judgment.
7.9 Remedies.
(a) Injunctive Relief. The parties agree that the services to be rendered by
Executive hereunder are of a unique nature and that in the event of any breach or threatened
breach of any of the covenants contained herein, the damage or imminent damage to the value
and the goodwill of the Company’s business will be irreparable and extremely difficult to
estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree
that the Company shall be entitled to injunctive relief against Executive in the event of
any breach or threatened breach of any such provisions by Executive, in addition to any
other relief (including damage) available to the Company under this Agreement or under law.
(b) Exclusive. Both parties agree that the remedy specified in Section 7.9(a)
above is not exclusive of any other remedy for the breach by Executive of the terms hereof.
7.10 Counterparts. This Agreement may be executed in one or more counterparts, all of
which taken together shall constitute one and the same Agreement.
7.11 Prevailing Party Expenses. In the event that any action or proceeding is
commenced to enforce the provisions of the Agreement, the court adjudicating such action or
proceeding shall award to the prevailing party all costs and expenses thereof, including, but not
limited to, all reasonable attorneys’ fees, court costs, and all other related expenses.
Executed by the parties as of the day and year first above written.
| XXXXXXX X. XXXXXXXX | NEUROCRINE BIOSCIENCES, INC | |||||
| By: | /s/ Xxxx X. Xxxxx | |||||
| /s/ Xxxxxxx X. Xxxxxxxx |
||||||
| President & Chief Executive Officer | ||||||
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