EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of January 1, 1998, is made by and between NEUROCRINE
BIOSCIENCES. INC., a Delaware corporation (hereinafter the "Company"), and XXXXX
XXXXXXXX, Ph.D. (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
1.1 Commencement Date. Executive's fulltime employment with the Company
under this Agreement shall commence as of January 1, 1998 ("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 Vice President - Development. 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.
2.3 Other Activities. Except upon the prior written consent of the
President & 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
3.1 Base Salary. Executive shall receive a Base Salary at an annual
rate of two hundred thousand dollars (200,000), 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. In addition, upon signing this Agreement, Executive will receive an
initial bonus of twenty thousand dollars ($20,000).
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. 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. Executive has previously entered into a Consulting
Agreement ("Consulting Agreement") with the Company dated September 9, 1997.
Pursuant to the Consulting Agreement, Executive has received a stock option to
purchase one hundred twenty-five thousand (125,000) shares of the Company's
common stock with an exercise price of six dollars and ninety-one cents ($6.91)
per share, representing the Company's market price at the time of Board
approval. Such option shall continue to vest in accordance with the Consulting
Agreement and in accordance with the terms of the Company's 1992 Incentive Stock
Incentive Plan, as amended. Upon execution of this Agreement, the Consulting
Agreement will terminate.
3.3 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
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. 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 Relocation to San Diego, CA. The Executive shall be reimbursed for
reasonable and customary relocation expenses as follows:
(a) out of pocket expenses related to selling Executive's existing home in
the United Kingdom, including customary real estate commissions not to
exceed one percent (1%) of selling price and associated costs;
(b) reasonable house hunting and up to sixty (60) days temporary living
expenses;
(c) customary closing costs associated with the purchase of a new home
including up to one and one-half points of the mortgage financing
amount related to the purchase of a new home;
(d) reasonable and customary moving expenses of household goods and
personal property (including temporary storage of up the three (3)
months) to San Diego, CA;
(e) up to twenty thousand dollars ($20,000) for miscellaneous documented
relocation expenses, payable upon the purchase or rental of a home in
San Diego, CA.
The Company will reimburse the Executive for the incremental increase in federal
and state income taxes associated with the payment of expenses associated with
items (a) through (d) above. In addition, the Company will retain at Company
expense, for the benefit of Executive, a tax specialist who will provide tax
guidance associated with the Executive's relocation to the United States for the
three tax periods immediately following Executive's relocation to the United
States.
4.4 Relocation Loan: In connection with the purchase of a home in the
San Diego area, the Company will provide to Executive a loan of up to two
hundred and fifty thousand dollars ($250,000) representing the excess over the
purchase price of a home in San Diego over five hundred thousand dollars
($500,000). Such loan will, at the option of the Company, be secured by a second
mortgage deed on the home purchased by Executive. The principal balance of the
loan will bear interest at a rate of one percent per annum (1.0% p.a.) and
principal and interest will be payable upon the first to occur of (i) sale of
the home, (ii) six (6) months following voluntary or involuntary termination of
Executive's employment with the Company, (iii) the exercise, pledge or sale of
all or part of the stock options granted by Company to Executive or (iv)
December 31, 1999.
4.5 Relocation to the Untied Kingdom: Upon termination of Executive's
employment with the Company, the Company will reimburse Executive for costs
associated with relocation back to the United Kingdom including (i) the lesser
of customary closing costs and fees (not to exceed six percent (6%) of the
selling price) related to the sale by Executive of the first home in San Diego
owned by Executive during the term of this Agreement or customary closing costs
and fees (not to exceed six percent (6%) of the selling price) related to the
sale of Executive's home in San Diego on the date of termination of this
Agreement, (ii) documented reasonable and customary moving expenses of household
goods and personal property not to exceed in the aggregate ten thousand dollars
($10,000). The foregoing provision shall not apply in the event (i) at the time
of relocation, Executive has accepted employment with another company or it is
Executive's intention to do so within a period of six (6) months, (ii) Executive
has not completed four (4) full years of employment at the Company (other than
by reason of the failure of the Company to renew the term of this Agreement) or
(iii) termination of Executive's employment with the Company is for Cause as
defined in paragraph 6.3 below.
4.6 Other Relocation Expenses. The Company will provide to the
Executive's wife, mother and mother-in-law, one round trip coach ticket to and
from San Diego and London. The Company will arrange for a Business Class upgrade
for these tickets.
4.7 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 and the Audit
Committee of the Board of Directors.
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.
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'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 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,
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;
(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-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 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 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.
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 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 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn.: President & Chief Executive Officer
To Executive:
Ms. Xxxxxxxx Valeur-Xxxxxx
0000 Xxxxx Xxxx
Xxx Xxx, 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 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.
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 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, 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.
EXECUTIVE NEUROCRINE BIOSCIENCES, INC
By: /s/Xxxxx Xxxxxxxx, Ph.D. By: /s/Xxxx X. Xxxxx
Xxxxx Xxxxxxxx, Ph.D. Xxxx X. Xxxxx
President & Chief Executive Officer
