1
EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of March 1, 1997, is made by and between
NEUROCRINE BIOSCIENCE, INC., a Delaware corporation (hereinafter the
"Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter "Executive").
R E C I T A L S
WHEREAS, the Company and Executive entered into an employment agreement
as of May 8, 1993;
WHEREAS, the Company and Executive wish to set forth in this Agreement
the terms and conditions under which Executive is to be continued to be
employed by the Company on and after the date hereof; and
WHEREAS, the Company wishes to be assured that Executive will be
available to the Company for an additional three (3) years after March 1, 1997.
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 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 Renewals. 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
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this Agreement or to renew it for a different term of not less than one (1)
year.
If this Agreement has not been terminated earlier pursuant to Article 6
and this Agreement is not renewed at the end of any term hereof by the Company
for any reason except death, disability or retirement or other voluntary
resignation of Executive, then (a) the Company shall pay to Executive all
"Accrued Compensation" (as such term is defined in Section 6.1); (b) the
Company shall continue to pay Executive as provided herein Executive's Base
Salary over the period equal to twelve (12) months from the date of such
nonrenewal of this Agreement as severance compensation; (c) the nonvested
portion of the one-time contract renewal stock option grant described in
Section 3.2 shall be fully vested; and (d) the Company shall pay all costs which
the Company otherwise would have incurred to maintain all of Executive's health
and welfare, and retirement benefits (either on the same or substantially's
equivalent terms and conditions) if the Executive had continued to render
services to the Company for twelve (12) continuous months after the date of
such nonrenewal of this Agreement. The Company shall have no further
obligations to Executive other than those set forth in the preceding sentence.
During such 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 non-renewal (provided that Executive may own less than two percent
(2%) of the outstanding securities of any publicly traded corporation), or (ii)
solicit or attempt to solicit on behalf of himself or any other party any
employee or exclusive consultant to the Company.
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 and Chief
Financial Officer. Executive shall report to the President and Chief Executive
Officer. Executive shall have the powers and duties commensurate with such
position, including not but 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 of the Company (the "Board").
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
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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 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 (a "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 Nine Thousand Seven Hundred Forty Dollars ($209,740),
payable every two weeks 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 One-Time Renewal Bonus. The Company shall provide Executive a
one-time contract renewal stock option grant in the form of an option to
purchase fifty thousand (50,000) shares of the common stock of the Company, the
maximum number of which shall be pursuant to Incentive Stock Options under the
Neurocrine Biosciences, Inc. Stock Option/Stock Issuance Plan. The entire
number of shares granted under such option, both Incentive and Non-Statutory,
shall vest over four (4) years, with such vesting to be in accordance with the
terms of the Neurocrine BioSciences, Inc. Stock Option/Stock Issuance Plan. The
exercise price of this option shall be equal to the fair market value of the
Company's common stock on the date of grant, which shall be the date this
Agreement is approved by the Board or the Compensation Committee of the Board.
3.3 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 6 to 8 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
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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.
3.4 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 its 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
benefits 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 typically afforded to Chief Financial Officer in similar sized
biotechnology companies. The amount and extend 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 Stock Loans. Certain indebtedness in the aggregate amount of
$15,000, incurred by the Executive in connection with the purchase of
securities from the Company, shall be repaid in accordance with the terms and
conditions of the Promissory Note between the Executive and the Company in the
form attached hereto as Exhibit A.
4.4 Relocation Loan. The Company has previously loaned to
Executive the principal amount of $87,500 relating to certain relocation
expenses. The parties agree that the terms of the loan shall be changed as of
the date of this Agreement such that the loan shall be changed as of the date
of this Agreement such that the loan shall have a term ending March 1, 2000 and
an interest rate of six percent (6%) per annum. Executive agrees to execute a
Promissory Note in the form attached hereto as Exhibit B. Such principal
indebtedness and all interest accrued to that
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date shall be forgiven ratably on each of March 1, 1998, March 1, 1999 and March
1, 2000 as long as Executive continues to provide services for the Company until
the relevant date. If Executive's employment is terminated for Cause (as defined
in Section 6.3 below), or as a result of death, disability, retirement or other
voluntary resignation prior to March 1, 2000, the outstanding balance shall
immediately be due and payable.
4.5 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 expenses for which Executive seeks reimbursement.
Such expenses shall be reimbursed and accounted for under the policies and
procedures 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
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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 continue to pay
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 not 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 any 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 930) days
advance written
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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 twelve (12) 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
rate 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 twelve
(12); (d) the vesting of all outstanding stock options held by Executive shall
be accelerated so that the amount of shares vested under such options shall
equal that number of shares which would have been vested if the Executive had
continued to render services to the Company for twelve (12) 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 twelve (12) 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) solicit, or attempt to solicit on behalf of
himself or any other party 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 voluntary 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,
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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;
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(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 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 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,
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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 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
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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.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman of Compensation
Committee
To Executive: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
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.
This Agreement supersedes and amends and restates the Employment
Agreement dated May 8, 1993 as amended and supplemented between the Company and
the Executive.
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 conditions of this
Agreement and the documents herein referred to, the terms and conditions of
this Agreement shall control.
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7.8 Executive Acknowledgement. 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 damages) 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.
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7.11 Prevailing Party Expenses. In the event that any action or
proceeding is commenced to enforce the provisions of this Agreement, the court
adjudicating such action or proceeding shall award to the prevailing party all
costs and expenses thereof, including, but not limited to, reasonable
attorneys' fees, court costs, and all other related expenses.
Executed by the parties as of the day and year first above written.
NEUROCRINE BIOSCIENCES, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its CEO
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EXECUTIVE:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
PROMISSORY NOTE
$15,000.00 March 1, 1997
- ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Obligor"), for value received, hereby promises to pay
to the order of Neurocrine Biosciences, Inc., a Delaware corporation ("Payee" or
the "Company"), at its principal office, the principal sum of Fifteen Thousand
Dollars ($15,000.00) with interest thereon at the rate of six percent (6%) per
annum on the unpaid balance of the principal sum. Accrued interest shall be due
and payable quarterly on the last day of every March, June, September, and
December. Interest note paid when due shall be added to principal and shall
thereafter likewise bear interest. All principal together with all unpaid
accrued interest shall be due and payable on March 31, 1999. All payments
hereunder shall first be applied towards the payment of accrued and unpaid
interest and then shall be applied towards outstanding principal. This Note may
be prepaid, in whole or in part, at any time without premium or penalty.
This Note shall be due and payable in full ninety (90) days following
the voluntary termination of Obligor's employment with the Company, or the
termination of such employment by the Company for Cause as set forth in the
Employment Agreement dated as of March 1, 1997 between the Company and Obligor.
In the event that Obligor fails to make payment on any date for payment
hereinabove specified of all principal and interest due hereunder on such date,
Obligor shall be deemed to be in default hereunder. In the event of such
default, Payee may, at Payee's option and in Payee's sole discretion, fifteen
(15) days after giving notice of default to Obligor, accelerate the maturity of
all amounts due under this Note by giving notice of such acceleration if such
default has not been cured in such fifteen (15) day period.
This Note is secured by a pledge of 3,750 shares of Common Stock of the
Company (the "Shares"), pursuant to the provisions of the Security Agreement
dated as of the date hereof and in the form attached hereto as Schedule 1. In
the event of a default hereunder, Payee in addition to its rights to foreclose
on the Shares shall have full recourse to all other remedies available to it.
The Company or other holder of this Note shall have full recourse against
obligor, and shall not be required to proceed against the Shares or other
collateral securing this Note in the event of default.
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Obligor waives presentment, demand for performance, notice of
nonperformance, protest, notice of protest, and notice of dishonor. No delay on
the part of Payee in exercising any right hereunder shall operate as a waiver of
such right under this Note. This Note is being delivered in and shall be
construed in accordance with the laws of the State of California.
If the indebtedness represented by this Note or any part thereof is
collected at law or in equity or in bankruptcy, receivership or other judicial
proceedings, or if this Note is placed in the hands of attorneys for collection
after default, Obligor agrees to pay, in addition to the principal and interest
payable hereon, reasonable attorneys' fees and costs incurred by Payee.
Any notice or other communication (except payment) required or permitted
hereunder shall be in writing and shall be deemed to have been given upon
delivery if personally delivered or upon deposit if deposited in the United
States mail for mailing by certified mail, postage prepaid, and addressed as
follows:
If to Payee: Neurocrine Biosciences, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman, Compensation Committee
If to Obligor: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
Any payment shall be deemed made upon receipt by Payee. Payee or Obligor
may change their address for purposes of this paragraph by giving to the other
party notice in conformance with this paragraph of such new address.
OBLIGOR:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
16
Schedule 1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, entered into as of March 1, 1997, between
NEUROCRINE BIOSCIENCES, INC., a Delaware corporation (the "Company"), and ▇▇▇▇
▇. ▇▇▇▇▇▇ (the "Obligor"),
W I T N E S S E T H:
WHEREAS, the Company has loaned to the Obligor the sum of $15,000; and
WHEREAS, the Obligor has executed and delivered to the Company a
full-recourse promissory note dated as of March 1, 1997 evidencing such loan
(the "Note") and has agreed to pledge 3,750 shares of Common Stock of the
Company (the "Shares") as security for the payment of the Note:
NOW, THEREFORE, it is agreed as follows:
1. The Obligor hereby delivers to the Company one or more
certificates representing the Shares, together with two Assignments Separate
From Certificate signed by the Obligor. The Obligor hereby pledges and grants a
security interest in the Shares, including any shares into which the Shares may
be converted and all proceeds of the Shares, as security for the timely payment
of all of the Obligor's obligations under the Note and for the Obligor's
performance of all of its obligations under this Agreement. In the event of a
default in payment of the Note, the Obligor hereby appoints the Company as his
true and lawful attorney to take such action as may be necessary or appropriate
to cause the Shares to be transferred into the name of the Company or any
assignee of the Company and to take any other action on behalf of the Obligor
permitted hereunder or under applicable law.
2. The Company agrees to hold the Shares as security for the
timely payment of all of the Obligor's obligations under the Note and for the
Obligor's performance of all of its obligations under this Agreement, as
provided herein. At no time shall the Company dispose of or encumber the Shares,
except as otherwise provided in this Agreement.
3. Subject to the rights of Obligor provided for in this Agreement,
Obligor hereby irrevocably appoints the Company as Obligor's attorney-in-fact,
coupled with an interest, with full authority in the place and stead of Obligor
and in the name of Obligor, the Company or otherwise, from time to time in the
Company's sole discretion, to take any action, execute any document, instrument
or other agreement which the Company may deem necessary or advisable, in its
sole discretion, to accomplish the purposes of this Agreement, including
without
17
limitation, to arrange for the transfer of the Pledged Shares on the books of
the issuer to the name of the Company.
4. At all times while the Company is holding the Shares as
security under this Agreement, the Company shall:
(a) Collect any dividends that may be declared on the Shares
and credit such dividends against any accrued interest or unpaid
principal under the Note, as part payment;
(b) Collect and hold any shares that may be issued upon
conversion of the Shares; and
(c) Collect and hold any other securities or other property
that may be distributed with respect to the Shares.
Such shares and other securities or property shall be subject to the security
interest granted in Section 1 of this Agreement and shall be held by the
Company under this Agreement.
5. While the Company holds the Shares as security under this
Agreement, the Obligor shall have the right to vote the Shares at all meetings
of the Company's shareholders; provided that the Obligor is not in default in
the performance of any term of this Agreement or in any payment due under the
Note. The Company shall execute due and timely proxies in favor of Obligor to
this end. In the event of such a default, the Company shall have the right to
the extent permitted by law to vote and to give consents, ratifications and
waivers and take any action with respect to the Shares with the same force and
effect as if the Company were the absolute and sole owner of the Shares.
6. Upon payment in full of the outstanding principal balance of the
Note and all interest and other charges due under the Note, the Company shall
release from pledge and redeliver to the Obligor the certificate(s) representing
the Shares and the Assignment Separate From Certificate forms. If the Company
has had the Shares transferred on the books of the issuer in order to perfect
its security interest, the Company shall execute upon such release the necessary
Assignments Separate From Certificate to transfer the Shares to Obligor.
7. In the event that the Obligor fails to perform any terms of this
Agreement or fails to make any payment when due under the Note, the Company
shall have all of the rights and remedies of a creditor and secured party at law
and in equity, including (without limitation) the rights and remedies provided
under the California Uniform Commercial Code. Without limiting the foregoing,
the Company may, after giving ten (10) days' prior written notice to the Obligor
by certified mail at his residence or business address, sell any or all of the
Shares in such
2
18
manner and for such price as the Company may determine, including (without
limitation) through a public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery. The Company
is authorized at any such sale, if it deems it advisable to do so, to restrict
the prospective bidders or purchasers of any of the Shares to persons who will
represent and agree that they are purchasing for their own account for
investment, and not with a view to the distribution or sale of any of the
Shares, to restrict the prospective bidders or purchasers and the use any
purchaser may make of the Shares and impose any other restriction or condition
that the Company deems necessary or advisable under the federal and state
securities laws. Upon any such sale the Company shall have the right to deliver,
assign and transfer to the purchaser thereof the Shares so sold. Each purchaser
at any such sale shall hold the Shares so sold absolute, free from any claim or
right of any kind. In case of any sale of any or all of the Shares on credit or
for future delivery, the Shares so sold may be retained by the Company until the
selling price is maid by the purchaser thereof, but the Company shall not incur
any liability in case of the failure of such purchaser to take up and Day for
the Shares so sold and, in case or any such failure, such Shares may again be
sold under the terms of this section. The Obligor hereby agrees that any
disposition of any or all of the Shares by way of a private placement or other
method which in the opinion of the Company is required or advisable under
Federal and state securities laws is commercially reasonable. At any public
sale, the Company may (if it is the highest bidder) purchase all or any part of
the Shares at such price as the Company deems proper. Out of the proceeds of any
sale, the Company may retain an amount sufficient to pay all amounts then due
under the Note, together with the expenses of the sale and reasonable attorneys'
fees. The Company shall Day the balance of such proceeds, if any, to the
Obligor. The Obligor shall be liable for any deficiency that remains after the
Company has exercised its rights under this Agreement.
8. This Agreement shall be governed by and construed in accordance with
the laws of the State of California. This Agreement shall inure to the benefit
of, and be binding upon, the Company and its successors and assigns and be
binding upon the purchaser and the Obligor's legal representative, heirs,
legatees, distributees, assigns and transferees by operation of law. This
Agreement contains the entire security agreement between the Company and the
Obligor. The Obligor will execute any additional agreements, assignments or
documents or take any other actions reasonably required by the Company to
preserve and
-3-
19
perfect the security interest in the Shares granted to the Company herein and
otherwise to effectuate this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer, and the Obligor has personally
executed this Agreement.
"Company" NEUROCRINE BIOSCIENCES, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
"Obligor" /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
-4-
20
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, and pursuant to that certain Security Agreement
dated as of March 1, 1997, ▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby sells, assigns and transfers
unto _______________________________________________________________________
(name of transferee)
___________________________(_______) shares of Common Stock of Neurocrine
Biosciences, Inc. , a Delaware Corporation (the "Company") standing in
____________ name on the books of the Company represented by Certificate No.
__________ herewith and hereby irrevocably constitutes and appoints
_______________ Attorney to transfer said stock on the books of the Corporation
with full power of substitution in the premises.
Dated:______________
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
21
EXHIBIT B
PROMISSORY NOTE
$87,500.00 March 1, 1997
▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Obligor"), for value received, hereby promises to pay
to the order of Neurocrine Biosciences, Inc., a Delaware corporation ("Payee" or
the "Company"), at its principal office, the principal sum of Eighty-Seven
Thousand Five Hundred Dollars ($87,500.00) with interest thereon at the rate of
six percent (6%) per annum on the unpaid balance of the principal sum. All
principal together with all unpaid accrued interest shall be due and payable on
March 1, 2000. All payments hereunder shall first be applied towards the payment
of accrued and unpaid interest and then shall be applied towards outstanding
principal. This Note may be prepaid, in whole or in part, at any time without
premium or penalty.
The principal sum of this Note and all interest accrued to that date
shall be forgiven ratably on each of March 1, 1998, March 1, 1999 and March 1,
2000 as long as Obligor continues to provide services for the Company until the
relevant date. This Note shall be due and payable in full immediately following
the termination of Obligor's employment with the Company prior to March 1, 2000
as a result of death, disability, retirement or other voluntary resignation, or
for Cause as set forth in the Employment Agreement dated as of March 1, 1997
between the Company and Obligor.
In the event that Obligor fails to make payment on any date for payment
hereinabove specified of all principal and interest due hereunder on such date,
Obligor shall be deemed to be in default hereunder. In the event of such
default, Payee may, at Payee's option and in Payee's sole discretion, fifteen
(15) days after giving notice of default to Obligor, accelerate the maturity of
all amounts due under this Note by giving notice of such acceleration if such
default has not been cured in such fifteen (15) day period.
This Note currently is unsecured. However, the Company at its discretion
may secure this Note with a deed of trust encumbering Obligor's principal
residence. In the event of a default hereunder, Payee in addition to its rights
to foreclose on such principal residence shall have full recourse to all other
remedies available to it. The Company or other holder of this Note shall have
full recourse against Obligor, and shall not be required to proceed against such
principal residence or other collateral securing this Note in the event of
default.
22
Obligor waives presentment, demand for performance, notice of
nonperformance, protest, notice of protest, and notice of dishonor. No delay on
the part of Payee in exercising any right hereunder shall operate as a waiver of
such right under this Note. This Note is being delivered in and shall be
construed in accordance with the laws of the State of California.
If the indebtedness represented by this Note or any part thereof is
collected at law or in equity or in bankruptcy, receivership or other judicial
proceedings, or if this Note is placed in the hands of attorneys for collection
after default, Obligor agrees to pay, in addition to the principal and interest
payable hereon, reasonable attorneys' fees and costs incurred by Payee.
Any notice or other communication (except payment) required or permitted
hereunder shall be in writing and shall be deemed to have been given upon
delivery if personally delivered or upon deposit if deposited in the United
States mail for mailing by certified mail, postage prepaid, and addressed as
follows:
If to Payee: Neurocrine Biosciences, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chairman, Compensation Committee
If to Obligor: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇▇
Any payment shall be deemed made upon receipt by Payee. Payee or Obligor
may change their address for purposes of this paragraph by giving to the other
party notice in conformance with this paragraph of such new address.
OBLIGOR:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇