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Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of March 1, 1997, is made by and between
NEUROCRINE BIOSCIENCES. INC., a Delaware corporation (hereinafter the
"Company"), and XXXXXXX XXXXXX, MD (hereinafter "Executive") and supersedes in
its entirety the Letter Agreement dated January 13, 1997.
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 I
TERM OF AGREEMENT
1.1 Commencement Date. Executive's employment with the Company under
this Agreement shall commence as of March 1,1997 ("Commencement Date") and this
Agreement shall expire after a period of three (3) years from the Commencement
Date, unless terminated earlier 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 expiration
date of this Agreement 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 at least ninety (90) days prior to a terminate date of this
Agreement of an intention to terminate this Agreement or to renew it for a
different term of not less than one (1) year.
ARTICLE 2
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 Senior Vice President - Clinical & Regulatory
Affairs & Chief Medical Officer. Executive shall have the powers and duties
commensurate with such position, including but not limited to hiring personnel
necessary to carry out the responsibilities for such position as set forth in
the annual business plan approved by the Board of Directors.
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 the President or Board may
reasonably request, provided that Executive may also serve on the Boards of
Directors of one or more other companies with the prior written consent of the
Board at a regularly scheduled meeting of the Board.
2.3 Other Activities. Except upon the prior written consent of the Board
of Directors, 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
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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 of the outstanding securities of any such publicly traded competing
corporation.
ARTICLE 3
COMPENSATION
3.1 Base Salary. Executive shall receive a Base Salary at an annual rate
of two hundred twenty thousand dollars ($220,000), payable semi-monthly in equal
installments in accordance with the Company's normal payroll practices. The
Company's Board of Directors shall provide Executive with annual performance
reviews, and, thereafter, Executive shall be entitled to such increase in Base
Salary as the Board of Directors may from time to time establish in its 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 a
bonus payment of up to fifty thousand dollars ($50,000) annually based upon
achievement by the Company against six to eight impact goals approved by the
Board of Directors annually. For purposes of determining the 1997 bonus payment,
the Executive will be considered having been employed for the full year 1997.
Such goals shall be set forth in writing by the Board within ninety (90) days
after the start of the Company's fiscal year and a copy shall be delivered to
Executive within fifteen (15) days thereafter. The Board of Directors shall, in
their sole discretion, determine whether such impact goals have been obtained.
3.3 Equity. The Executive has been granted an option under the Company's
1992 Stock Incentive Plan, as amended, to purchase one hundred fifty thousand
(150,000) shares of the Company's common stock having an exercise price of $7.86
per share pursuant to a Consulting Agreement dated January 17, 1997, which
Consulting Agreement is hereby terminated, provided that such option shall
continue to vest over a four-year period with 25% of such vesting occurring on
March 1, 1998 and 1/48 per month thereafter.
3.4 Withholdings. All compensation and benefits payable to Executive
hereunder 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
4.1 Vacation. Executive shall be entitled to the greater of three (3)
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 employees of the Company
as such plans and benefits may be adopted by the Company, provided that
Executive shall during the term of this Agreement, be entitled to receive at a
minimum standard medical and dental benefits similar to those afforded to other
Executive Officers of 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.
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4.3 Relocation.
a. The Company will arrange to purchase the Executive's Home in
Maryland ("Maryland Home") through the PH&H Home Equity ("Home Equity")
program. Home Equity will arrange the purchase of your Maryland Home at
the current fair market value.
b. In the event the fair market value of the Maryland Home as
determined by Home Equity, before deducting direct selling expenses or
commissions (the "Sales Price"), is less than the Executive's purchase
price of such home (the "Purchase Price"), the Company will reimburse the
Executive up to $25,000 for such loss.
c. The Company will reimburse the Executive for reasonable and
customary out of pocket expenses relating to:
(i) reasonable and customary house hunting and temporary
living expenses of up to four months;
(ii) reasonable and customary closing costs and fees,
including up to one and one half points (1.5%) of the mortgage
financing amount related to the purchase of a new home in the San
Diego area;
(iii) reasonable and customary moving expenses of household
goods and personal property (including temporary storage) to San
Diego, CA;
(iv) up to $15,000 in other miscellaneous documented
expenses.
The Company will reimburse the Executive for federal and state income
taxes associated with items (i) through (iii), except for those expenses
which are: (a) deductible for federal and state income tax purposes,
including but not limited to mortgage financing points, travel from
Maryland to San Diego and movement of household goods and (b) temporary
housing costs following the elimination of the Executive's carrying costs
(including but not limited to mortgage payments, tax payments, utilities,
etc.) of the Maryland Home.
4.4 Mortgage Equalization. In connection with the purchase of a home in
the San Diego area for a price at least equal to the cost of the Maryland Home,
the Company will provide an annual mortgage equalization payment over a three
year period. Such payments will be based on the interest associated with an
amount equal to the difference between your purchase price of your new home in
San Diego and the selling price of your existing home. Such annual equalization
payments will be as follows from the date of purchase and payable semi-monthly
(i) Year One - $16,000; (ii) Year Two - $10,560; (iii) Year Three - $5,280
ARTICLE 5
CONFIDENTIALITY
5.1 Proprietary Information. Executive represents and warrants that he
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,
he 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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ARTICLE 6
TERMINATION
6.1 By Death. The period of employment shall terminate automatically
upon the death of Executive. In such event, 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 120 consecutive days, or for 180 days in the aggregate in any 365-day period,
then, to the extent permitted by law, the Company may terminate the employment
of Executive at such time. In such event, the Company shall pay to Executive all
Accrued Compensation, and shall continue to pay to Executive the Base Salary
until such time (but not more than 90 days following termination), 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 he 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 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 Board; (c) Executive willfully 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) if Executive's
employment terminates in the second half of the Company's fiscal year, 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 divided by nine (9); (d) the
vesting of all outstanding stock options held by Executive shall be accelerated
so that the amount of shares vested under such option 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<, 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
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further obligations to Executive other than those set forth in the preceding
sentence. During the period when such Base Salary 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.
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 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 or adverse change of Executive's position,
status or circumstances of employment; or any removal of Executive from or
any failure to re-elect Executive to any of such positions, including, but
not limited to, Executive's membership on the Board, 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;
(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
non-renewal of this Agreement, a termination without Cause or a Constructive
Termination within eighteen (18) months following a Change in Control, Executive
shall receive the same benefits package as Executive would have-received upon-a-
termination-without-Cause (except that the payment of Base Salary shall be made
in the form of a lump sum) and in addition, the vesting of all outstanding stock
options held by Executive shall be accelerated so that the options are
immediately exercisable in full.
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 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;
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(b) The Company sells all or substantially all of its assets or
any other corporation or other legal person and thereafter, less than 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-l (or any successor schedule, form or
report), each as promulgated pursuant to the Securities Exchange Act of
1934 (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 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 8X 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 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 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
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.
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7.2 Assignment. Successors Binding Agreement.
7.2.1 Executive may not assign, pledge or encumber his interest in
this Agreement or any part thereof.
7.2.2 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.
7.2.3 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 him
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.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attn.: President & Chief Executive Officer
To Executive:
Dr. Xxxxxxx Xxxxxx
00000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
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 subsequent time. No agreements or representations, oral
or otherwise, express or implied,
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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.
7.7 Controlling Document. Except to the extent described in Section
6.10, 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 he 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 he 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
7.9.1 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.
7.9.2 Exclusive. Both parties agree that the remedy specified in
Section 7.9.1 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 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.
EXECUTIVE
By:_______________________________
Xxxxxxx Xxxxxx, MD
NEUROCRINE BIOSCIENCES, INC
By:_______________________________
Xxxx X. Xxxxx
President & Chief Executive Officer
