Document:

exv10w35

 

    Exhibit
    10.35

 

    AMENDED
    AND RESTATED

    EMPLOYMENT AGREEMENT

 

    THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of
    the last date signed by the parties hereto (the “Effective
    Date”), supersedes and replaces the Employment Agreement
    dated October 31, 2005 by and between
    Neurocrine
    Biosciences, Inc., 12790 El Camino Real,
    San Diego, California 92130 (hereinafter the
    “Company”), and Christopher F. O’Brien, MD
    (hereinafter “Executive”) (the “Original
    Employment Agreement”). Once this Agreement is effective,
    the Original Employment Agreement shall have no further force or
    effect.

 

    RECITALS

 

    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 Effective Date
    hereof;

 

    NOW, THEREFORE, the Company and Executive, in consideration of
    the mutual promises set forth herein, agree as follows:

 

    ARTICLE 1

    

 

    NATURE OF
    EMPLOYMENT

 

    1.1  Commencement
    Date.  Executive’s full-time employment
    with the Company under this Agreement shall be deemed to have
    commenced as of August 1, 2007 (“Commencement
    Date”) and this Agreement shall continue from the Effective
    Date until it is terminated by either the Company or Executive
    pursuant to the terms set forth in Article 6.

 

    1.2  At-Will
    Employment.  Executive shall be employed
    at-will by the Company and therefore either Executive or the
    Company may terminate the employment relationship and this
    Agreement at any time, with or without Cause (as defined herein)
    and with or without advance notice, subject to the provisions of
    Article 6.

 

    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 Development and
    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 and Chief Executive
    Officer 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.

    

    1

 

    ARTICLE 3

    

 

    COMPENSATION

 

    3.1  Base Salary.  Executive
    shall receive a Base Salary at an annual rate of three hundred
    fifty thousand and one dollar ($350,001.00), payable
    semi-monthly in equal installments in accordance with the
    Company’s normal payroll practices. The Chief Executive
    Officer shall provide Executive with annual performance reviews,
    and, thereafter, Executive shall be entitled to such increase in
    Base Salary as the Chief Executive Officer and Board of
    Directors may from time to time establish in their sole
    discretion.

 

    3.2  Incentive Bonus.  In
    addition to any other bonus the Executive shall be awarded by
    the Company, Executive shall be eligible to receive an annual
    incentive bonus based upon the achievement in meeting annual
    personal goals established by his immediate supervisor and
    achievement by the Company of annual corporate goals established
    by the Board of Directors. Executives target annual incentive
    bonus will be set forth in the Company’s annual bonus plan
    (the “Target Annual Bonus”). Except as provided in
    Article 6 herein, no pro-rata bonus will be considered
    earned if the Executive leaves the Company for any reason prior
    to the foregoing determination dates. Any annual incentive bonus
    that is earned shall be paid no later than the fifteenth day of
    the third month following the end of the Company’s fiscal
    year for which such bonus was earned.

 

    3.3  Equity.  Except as
    provided in Article 6 in the case of certain terminations
    of employment, this Agreement shall not affect any Stock Awards
    (as such term is defined below) previously granted by the
    Company to Executive. Subject to approval by the Company’s
    Board of Directors, Executive shall be eligible to receive
    additional Stock Awards on terms to be set forth by the Company
    at the time of any such grant. For purposes of this Agreement,
    “Stock Awards” shall mean any rights granted by the
    Company to Executive with respect to the common stock of the
    Company, including, without limitation, stock options, stock
    appreciation rights, restricted stock, stock bonuses and
    restricted stock units.

 

    3.4  Withholdings.  All
    compensation and benefits payable to Executive under this
    Agreement shall be subject to all federal, state, local taxes
    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 participate in the Company’s vacation
    plan pursuant to the terms of that plan.

 

    4.2  Benefits.  During
    Executive’s employment hereunder, the Company shall also
    provide Executive with the 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, 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. With
    respect to long-term disability insurance coverage, the
    Executive will pay all premiums for such coverage with after-tax
    dollars, and the Company will reimburse the Executive for the
    premium costs so paid by the Executive and make an additional
    tax gross-up
    payment to Executive in an amount that shall fully fund the
    payment by Executive of any income and employment taxes on such
    reimbursement payment and tax
    gross-up
    payment. The amount and extent of benefits to which Executive is
    entitled shall be governed by the specific benefit plan as it
    may be amended from time to time.

 

    4.3  Business Expense
    Reimbursement.  During the term of this
    Agreement, Executive shall be entitled to receive proper
    reimbursement for all reasonable out-of-pocket expenses incurred
    by him (in accordance with the policies and procedures
    established by the Company for its senior executive officers) in
    performing services hereunder. Executive agrees to furnish to
    the Company adequate records and other documentary evidence of
    such expense for which Executive seeks reimbursement. Such
    expenses shall be reimbursed and accounted for under the
    policies and procedures established by the Company, and such
    reimbursement shall be made promptly, but in no

    

    2

 

    event later than December 31 of the calendar year following the
    year in which such expenses were incurred by Executive.

 

    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.

 

    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.

 

    5.3  No Use of Prior Confidential
    Information.  Executive will not intentionally
    disclose to the Company or use on its behalf any confidential
    information belonging to any of his former employers or any
    other third party.

 

    ARTICLE 6

    

 

    TERMINATION

 

    6.1  General.  As set forth in
    Section 1.2 herein, Executive shall be employed on an
    at-will basis by the Company. Notwithstanding the foregoing,
    Executive’s employment and this Agreement may be terminated
    in one of six ways as set forth in this Article 6:
    (a) Executive’s Death (Section 6.2);
    (b) Executive’s Disability (Section 6.3);
    (c) Termination by the Company for Cause
    (Section 6.4); (d) Termination by the Company without
    Cause (Section 6.5); (e) Termination by Executive due
    to a Constructive Termination (Section 6.6); or
    (f) Voluntary Resignation (Section 6.7).

 

    6.2  By
    Death.  Executive’s employment and this
    Agreement shall terminate automatically upon the death of
    Executive. In such event:

 

    (a) Stock Awards.  The
    vesting of all outstanding Stock Awards held by Executive shall
    be accelerated so that the amount of shares vested under such
    Stock Awards shall equal that number of shares that would have
    been vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment. All Stock Awards
    held by Executive that are vested at the time of termination
    (including any accelerated Stock Awards) will be exercisable in
    accordance with their terms for a period of one year after the
    termination date.

 

    (b) Bonus.  The Company shall pay
    to Executive’s beneficiaries or his estate, as the case may
    be, a lump sum amount equal to Executive’s Target Annual
    Bonus (as defined in Section 3.2) for the Company’s
    fiscal year in which Executive’s death occurs multiplied by
    a fraction, the numerator of which is the number of full months
    of employment by Executive in such fiscal year and the
    denominator of which is 12. Such amount shall be paid as soon as
    administratively practicable, but in no event later than March
    15 following the year in which Executive’s death occurred.

 

    (c) Accrued Compensation.  The
    Company shall pay to Executive’s beneficiaries or his
    estate, as the case may be, any accrued Base Salary, any vested
    deferred compensation (other than pension plan or profit-sharing
    plan benefits that will be paid in accordance with the
    applicable plan), any benefits under any plans of the Company
    (other than pension and profit-sharing plans) 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”).

    

    3

 

    (d) No Severance Compensation.  The
    compensation and benefits set forth in Sections 6.2(a)
    through (c) herein shall be the only compensation and
    benefits provided by the Company in the event of
    Executive’s death and no other severance compensation or
    benefits shall be provided.

 

    6.3  By Disability.  If
    Executive is prevented from performing his duties hereunder by
    reason of any physical or mental incapacity that results in
    Executive’s satisfaction of all requirements necessary to
    receive benefits under the Company’s long-term disability
    plan due to a total disability, then, to the extent permitted by
    law, the Company may terminate the employment of Executive and
    this Agreement at or after such time. In such event, and if
    Executive signs the General Release set forth as Exhibit A
    or such other form of release as the Company may require
    (the “Release”) on or within the time period set forth
    therein, but in no event later than forty-five (45) days
    after the termination date and allows such Release to become
    effective, then:

 

    (a) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (b) Base Salary Continuation.  The
    Company shall continue to pay Executive’s Base Salary, less
    required withholdings, for a period of 12 months (the
    “Disability Base Salary Payments”); provided that the
    Disability Base Salary Payments shall be reduced by any
    insurance or other payments to Executive under policies and
    plans sponsored by the Company, even if premiums are paid by
    Executive. Subject to the provisions of Section 6.11, the
    Disability Base Salary Payments shall be paid in accordance with
    the Company’s standard payroll practices commencing with
    the first payroll period following the effectiveness of the
    Release.

 

    (c) Bonus.  The Company
    shall pay a lump sum amount equal to Executive’s Target
    Annual Bonus (as defined in Section 3.2) for the
    Company’s then-current fiscal year multiplied by a
    fraction, the numerator of which is the number of full months of
    employment by Executive in the current fiscal year and the
    denominator of which is 12. Such payment shall be made within
    ten (10) days following the Effective Date of the Release.

 

    (d) Stock Awards.  The vesting of
    all outstanding Stock Awards held by Executive shall be
    accelerated so that the amount of shares vested under such Stock
    Awards shall equal that number of shares which would have been
    vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment.

 

    (e) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 12 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

 

    (f) Disability Plans.  Nothing in
    this Section 6.3 shall affect Executive’s rights under
    any disability plan in which Executive is a participant.

 

    6.4  Termination by the Company for
    Cause.  

 

    (a) No Liability.  The
    Company may terminate Executive’s employment and this
    Agreement for Cause (as defined below) without liability at any
    time. In such event, the Company shall pay Executive all Accrued
    Compensation (as defined in Section 6.2(c) herein), but no
    other compensation or reimbursement of any kind, including
    without limitation, any severance compensation or benefits shall
    be paid, and thereafter the Company’s obligations hereunder
    shall terminate.

    

    4

 

    (b) Definition of
    “Cause.”  For purposes of this
    Agreement, “Cause” shall mean one or more of the
    following:

 

    (i) Executive’s intentional commission of an act, or
    intentional failure to act, that materially injures the business
    of the Company; provided, however, that in no event shall
    any business judgment made in good faith by Executive and within
    Executive’s defined scope of authority constitute a basis
    for termination for Cause under this Agreement;

 

    (ii) Executive’s intentional refusal or intentional
    failure to act in accordance with any lawful and proper
    direction or order of the Board of Directors, the Chief
    Executive Officer, or the individual to whom Executive reports.

 

    (iii) Executive’s material breach of Executive’s
    fiduciary, statutory, contractual, or common law duties to the
    Company (including any material breach of this Agreement, the
    Proprietary Information and Inventions Agreement, or the
    Company’s written policies);

 

    (iv) Executive’s indictment for or conviction of any
    felony or any crime involving dishonesty; or

 

    (v) Executive’s participation in any fraud or other
    act of willful misconduct against the Company;

 

    provided, however, that in the event that any of the
    foregoing events is reasonably 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.

 

    6.5  Termination by the Company without
    Cause.  

 

    (a) The Company’s Right.  The
    Company may terminate Executive’s employment and this
    Agreement without Cause (as defined in Section 6.4(b)
    herein) at any time by giving thirty (30) days advance
    written notice to Executive.

 

    (b) Severance Benefits.  If the
    Company terminates Executive’s employment without Cause,
    and if Executive signs the Release on or within the time period
    set forth therein (but in no event later than forty-five
    (45) days after the termination date) and allows such
    Release to become effective, then:

 

    (i) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (ii) Cash Compensation Amount
    Payments.  The Company shall pay Executive an
    amount calculated as follows: [Executive’s annual Base
    Salary + Executive’s Target Annual Bonus (as defined in
    Section 3.2 herein)] multiplied by 1.0 (the “Cash
    Compensation Amount”). Subject to the provisions of
    Section 6.11, the Cash Compensation Amount will be paid in
    equal installments on the Company’s standard payroll dates
    over a period of 12 months commencing with the first
    payroll period following the effectiveness of the Release.

 

    (iii) Stock Awards.  The vesting of
    all outstanding Stock Awards held by Executive shall be
    accelerated so that the amount of shares vested under such Stock
    Awards shall equal that number of shares which would have been
    vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment.

 

    (iv) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 12 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

    

    5

 

    6.6  Termination by Executive due to a
    Constructive Termination.  

 

    (a) Executive’s
    Right.  Executive may resign his employment
    and terminate this Agreement at any time as a result of a
    Constructive Termination (as defined in Section 6.6(c)
    herein).

 

    (b) Severance Benefits.  If
    Executive resigns his employment and terminates this Agreement
    as a result of a Constructive Termination, and if Executive
    signs the Release on or within the time period set forth therein
    (but in no event later than forty-five (45) days after the
    termination date) and allows such Release to become effective,
    then Executive shall receive all of the severance benefits set
    forth in Section 6.5(b) herein.

 

    (c) Definition of “Constructive
    Termination.”  For purposes of this
    Agreement, “Constructive Termination” shall mean a
    resignation of employment and termination of this Agreement by
    Executive for one or more of the following reasons:

 

    (i) A material reduction by the Company of Executive’s
    annual Base Salary;

 

    (ii) 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; or

 

    (iii) A material breach by the Company of any provision of
    this Agreement or any other enforceable written agreement
    between Executive and the Company; provided; however,
    that Executive must first provide the Company with written
    notice specifying the condition giving rise to a Constructive
    Termination within ninety (90) days following the initial
    existence of such condition; and Executive’s notice must
    specify that Executive intends to terminate his employment no
    earlier than thirty (30) days after providing such notice,
    and the Company must be given an opportunity to cure such
    condition within thirty (30) days following its receipt of
    such notice and avoid paying benefits.

 

    6.7  Voluntary
    Resignation.  Executive may resign his or her
    employment and terminate this Agreement at any time for any
    reason other than due to a Constructive Termination (as defined
    in Section 6.6(c) herein). In such event, the Company shall
    pay Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein), but no other compensation or
    reimbursement of any kind, including without limitation, any
    severance compensation or benefits shall be paid, and thereafter
    the Company’s obligations hereunder shall terminate.

 

    6.8  Change In Control.  

 

    (a) Severance Benefits.  If
    (i) within six months after the consummation of a Change in
    Control (as defined in Section 6.8(b) herein), (1) the
    Company terminates Executive’s employment and this
    Agreement without Cause pursuant to Section 6.5 herein or
    (2) Executive resigns his employment and terminates this
    Agreement as a result of a Constructive Termination pursuant to
    Section 6.6 herein, and (ii) in either event
    (1) or (2), Executive signs the Release on or within the
    time period set forth therein, but in no event later than
    forty-five (45) days after the termination date and allows
    such Release to become effective, then Executive shall receive
    the following severance benefits in lieu of any severance
    benefits set forth in Section 6.5(b) or Section 6.6(b)
    herein:

 

    (i) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (ii) CIC Cash Compensation Amount
    Payment.  The Company shall pay Executive an
    amount calculated as follows: [Executive’s annual Base
    Salary + Executive’s Target Annual Bonus (as defined in
    Section 3.2 herein)] multiplied by 1.5 (collectively, the
    “CIC Cash Compensation Amount”). The CIC Cash
    Compensation Amount will be paid in one lump sum within ten
    (10) days following the Effective Date of the Release.

 

    (iii) Cash Payment for Stock
    Awards.  Within ten (10) days following
    the Effective Date of the Release, the Company shall pay
    Executive a cash amount equal to the value, as of the date of
    the consummation of the Change in Control, of (1) all Stock
    Awards that are unvested at the time of termination of
    employment, and (2) all Stock Awards that are vested at the
    time of termination of employment and for which the shares
    subject to such Stock Awards have not yet been issued,
    including, without limitation, any unexercised stock options,
    unexercised stock appreciation rights, and unissued shares
    subject to a restricted stock unit award, provided, in either
    case, that such Stock Awards were held by Executive as of the
    date of consummation of the Change in

    

    6

 

    Control, and all rights of Executive in such Stock Awards and
    any unvested shares of stock that previously may have been
    issued thereunder shall be extinguished as a result of such
    payment, with the result that such Stock Awards shall
    automatically terminate unexercised and unvested shares of stock
    previously issued shall automatically be reacquired by the
    Company or its successor. For purposes of the foregoing cash
    payment, (1) stock options and stock appreciation rights
    shall be valued on the basis of the difference between the value
    of the subject stock for purposes of the transaction
    constituting the Change of Control and the exercise or base
    price of the award, and (2) restricted stock, restricted
    stock units or other full value awards and shares of stock
    acquired under Stock Awards shall be valued on the basis of the
    value of the subject stock for purposes of the transaction
    constituting the Change in Control.

 

    (iv) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 18 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

 

    (b) Definition of “Change in
    Control.”  For purposes of this
    Agreement, a “Change in Control” shall have occurred
    if at any time during Executive’s employment hereunder, any
    of the following events shall occur:

 

    (i) 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;

 

    (ii) 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;

 

    (iii) 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;

 

    (iv) 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

 

    (v) During any period of two (2) consecutive years,
    individuals who at the beginning of any such period constitute
    the directors of the Company cease for any reason to constitute
    at least a majority thereof unless the election to the
    nomination for 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.

    

    7

 

 

    (c) Parachute Payments.  

 

    (i) If any payment or benefit (including payments or
    benefits pursuant to this Agreement) that Executive would
    receive in connection with a Change in Control or otherwise (a
    “Payment”) (1) would constitute a “parachute
    payment” within the meaning of Section 280G of the
    Code, and (2) but for this sentence, would be subject to
    the excise tax imposed by Section 4999 of the Code (the
    “Excise Tax”), then the Company shall cause to be
    determined, before any amount of the Payment is paid to
    Executive, whether the total payments exceed 2.99 times
    Executive’s “base amount” within the meaning of
    Section 280G of the Code (the “Base Amount”) by
    15% or less, in which case such Payment shall be reduced to an
    amount that results in no portion of the Payment being subject
    to the Excise Tax (the “Reduced Payment”).

 

    (ii) If a Reduced Payment is made, (x) the Payment
    shall be paid only to the extent permitted under the Reduced
    Payment alternative, and Executive shall have no rights to any
    additional payments
    and/or
    benefits constituting the Payment, and (y) reduction in
    payments
    and/or
    benefits shall occur in the following order unless Executive
    elects in writing a different order (provided, however,
    that such election shall be subject to Company approval if
    made on or after the date on which the event that triggers the
    Payment occurs): (1) reduction of cash payments;
    (2) cancellation of accelerated vesting of equity awards
    other than stock options; (3) cancellation of accelerated
    vesting of stock options; and (4) reduction of other
    benefits paid to Executive. In the event that acceleration of
    compensation from Executive’s equity awards is to be
    reduced, such acceleration of vesting shall be canceled in the
    reverse order of the date of grant unless Executive elects in
    writing a different order for cancellation.

 

    (iii) If it is determined that the Payment exceeds 2.99
    times Executive’s Base Amount by more than 15%, the Company
    shall pay the full amount of the Payment and Executive shall be
    entitled to receive an additional payment (a
    “Gross-Up
    Payment”) from the Company in an amount that after the
    payment of all taxes (including, without limitation,
    (1) any income or employment taxes, (2) any interest
    or penalties imposed with respect to such taxes, and
    (3) any additional Excise Tax on the
    Gross-Up
    Payment, Executive shall retain an amount equal to the full
    Excise Tax. The
    Gross-Up
    Payment shall be paid as soon as practicable following the date
    the Payment is made, but in no event later than the end of the
    Executive’s taxable year following the taxable year in
    which Executive has remitted (by withholding or otherwise) the
    Excise Tax.

 

    (iv) For purposes of determining the amount of the
    Gross-Up
    Payment, Executive shall be deemed to have: (x) paid
    federal income taxes at the highest marginal rate of federal
    income and employment taxation for the calendar year in which
    the Gross-Up
    Payment is to be made, and (y) paid applicable state and
    local income taxes at the highest rate of taxation for the
    calendar year in which the
    Gross-Up
    Payment is to be made, net of the maximum reduction in federal
    income taxes which could be obtained from deduction of such
    state and local taxes.

 

    (v) Except as otherwise provided herein, Executive shall
    not be entitled to any additional payments or other indemnity
    arrangements in connection with the Payment or the
    Gross-Up
    Payment.

 

    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,
    except as provided herein.

 

    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.

 

    6.11  Application of
    Section 409A.  If Executive is a
    “specified employee” within the meaning of
    409A(a)(2)(B)(i) of the Code, any installment payments of
    Disability Base Salary Payments pursuant to Section 6.3(b) or
    Cash Compensation Amounts pursuant to Section 6.5(b) or
    6.6(b) that are triggered by a separation from service shall be
    accelerated to the minimum extent necessary so that (a) the
    lesser of (y) the total cash severance payment amount, or
    (z) six (6) months of such installment payments are
    paid no later than March 15 of the calendar year following such
    termination, and (b) all amounts paid pursuant to the
    foregoing clause (a) will constitute

    

    8

 

    separate payments for purposes of
    Section 1.409A-2(b)(2)
    of the Treasury Regulations and thus will be payable pursuant to
    the “short-term deferral” rule set forth in
    Section 1.409A-1(b)(4)
    of the Treasury Regulations. It is intended that if Executive is
    a “specified employee” within the meaning of
    Section 409A(a)(2)(B)(i) of the Code at the time of such
    separation from service the foregoing provision shall result in
    compliance with the requirements of
    Section 409A(a)(2)(B)(i) of the Code since payments to
    Executive will either be payable pursuant to the
    “short-term deferral” rule set forth in
    Section 1.409A-1(b)(4)
    of the Treasury Regulations or will not be paid until at least
    6 months after separation from service.

 

    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.  

 

    (a) No Assignment.  Executive may
    not assign, pledge or encumber his interest in this Agreement or
    any part thereof.

 

    (b) Assumption by
    Successor.  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.

 

    (c) This Agreement shall inure to the benefit of and be
    enforceable by Executive’s personal or legal
    representatives, executors, administrators, successors, heirs,
    distributee, devisees and legatees. If Executive should die
    while any amount is at such time payable to Executive 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  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.

    12790 El Camino Real

    San Diego, CA 92130

    Attn.: President & Chief Executive Officer

 

    To Executive:

 

    Christopher F. O’Brien, MD

 

    7.4  Modification; Waiver; Entire
    Agreement.  This Agreement constitutes the
    complete, final and exclusive embodiment of the entire agreement
    between Executive and the Company with regard to this subject
    matter. It is entered into without reliance on any promise or
    representation, written or oral, other than those expressly
    contained herein, and it supersedes any other such promises,
    warranties or representations, including, without limitation,
    the Original Employment Agreement which shall have no further
    force or effect. 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.

    

    9

 

 

    7.5  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.

 

    7.6  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.

 

    7.7  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.

 

    7.8  Dispute Resolution.  To
    ensure the rapid and economical resolution of disputes that may
    arise in connection with Executive’s employment, Executive
    and the Company agree that any and all disputes, claims, or
    causes of action, in law or equity, arising from or relating to
    the enforcement, breach, performance, execution, or
    interpretation of this Agreement, Executive’s employment,
    or the termination of that employment, shall be resolved, to the
    fullest extent permitted by law, by final, binding and
    confidential arbitration in San Diego, California conducted
    before a single arbitrator by Judicial Arbitration and Mediation
    Services, Inc. (“JAMS”) or its successor, under the
    then applicable JAMS rules. By agreeing to this arbitration
    procedure, both Executive and the Company waive the right to
    resolve any such dispute through a trial by jury or judge or by
    administrative proceeding. The arbitrator shall: (a) have
    the authority to compel adequate discovery for the resolution of
    the dispute and to award such relief as would otherwise be
    permitted by law; and (b) issue a written arbitration
    decision including the arbitrator’s essential findings and
    conclusions and a statement of the award. The Company shall pay
    all of JAMS’ arbitration fees. Nothing in this letter
    agreement shall prevent either Executive or the Company from
    obtaining injunctive relief in court if necessary to prevent
    irreparable harm pending the conclusion of any arbitration. The
    parties agree that the arbitrator shall award reasonable
    attorneys fees, costs, and all other related expenses to the
    prevailing party in any action brought hereunder, and the
    arbitrator shall have discretion to determine the prevailing
    party in an arbitration where multiple claims may be at issue.

 

    7.9  Remedies.  

 

    (a) Injunctive Relief.  The parties
    agree that the services to be rendered by Executive hereunder
    are of a unique nature and that in the event of any breach or
    threatened breach of any of the covenants contained herein, the
    damage or imminent damage to the value and the goodwill of the
    Company’s business will be irreparable and extremely
    difficult to estimate, making any remedy at law or in damages
    inadequate. Accordingly, the parties agree that the Company
    shall be entitled to injunctive relief against Executive in the
    event of any breach or threatened breach of any such provisions
    by Executive, in addition to any other relief (including damage)
    available to the Company under this Agreement or under law.

 

    (b) Exclusive.  Both parties agree
    that the remedy specified in Section 7.9(a) above is not
    exclusive of any other remedy for the breach by Executive of the
    terms hereof.

 

    7.10  Counterparts.  This
    Agreement may be executed in one or more counterparts, all of
    which taken together shall constitute one and the same Agreement.

 

    Executed by the parties as follows:

 

	 	 	 
	
    EXECUTIVE
	
 
	
    NEUROCRINE BIOSCIENCES,
    INC

	 

	
 
	
 
	
 

	
 
	
 
	
 

	

    By: /s/  
Christopher
    F. O’Brien

    

	
 
	

    By: /s/  
Richard
    Ranieri

    

	
 
	
 
	
 

	

    Date: August 6, 2007

    

	
 
	

    Date: August 1, 2007

    

    

    10

 

    EXHIBIT A

    GENERAL RELEASE

 

    Pursuant to the terms of the Employment Agreement between
    Neurocrine Biosciences, Inc. (the “Company”) and
    Christopher F. O’Brien, MD (“Executive”) dated
    August 1, 2007 (the “Agreement”), the parties
    hereby enter into the following General Release (the
    “Release”):

 

    1.  Accrued Salary and
    Vacation.  Executive understands that,
    on the last date of Executive’s employment with the
    Company, the Company will pay Executive any accrued salary and
    accrued and unused vacation to which Executive is entitled by
    law, regardless of whether Executive signs this Release.

 

    2.  General
    Release.  Executive hereby generally and
    completely releases the Company and its directors, officers,
    employees, shareholders, partners, agents, attorneys,
    predecessors, successors, parent and subsidiary entities,
    insurers, affiliates, and assigns (collectively the
    “Released Parties”) of and from any and all claims,
    liabilities and obligations, both known and unknown, arising out
    of or in any way related to events, acts, conduct, or omissions
    occurring at any time prior to or at the time that Executive
    signs this Release.

 

    3.  Scope of Release.  This
    general release includes, but is not limited to: (1) all
    claims arising out of or in any way related to Executive’s
    employment with the Company or the termination of that
    employment; (2) all claims related to Executive’s
    compensation or benefits from the Company, including salary,
    bonuses, commissions, vacation pay, expense reimbursements,
    severance pay, fringe benefits, stock, stock options, or any
    other ownership or equity interests in the Company; (3) all
    claims for breach of contract, wrongful termination, and breach
    of the implied covenant of good faith and fair dealing
    (including claims based on or arising under the Agreement);
    (4) all tort claims, including claims for fraud,
    defamation, emotional distress, and discharge in violation of
    public policy; and (5) all federal, state, and local
    statutory claims, including claims for discrimination,
    harassment, retaliation, attorneys’ fees, or other claims
    arising under the federal Civil Rights Act of 1964 (as amended),
    the federal Americans with Disabilities Act of 1990, the federal
    Age Discrimination in Employment Act (as amended)
    (“ADEA”), the federal Family and Medical Leave Act,
    the California Labor Code (as amended), the California Family
    Rights Act, and the California Fair Employment and Housing Act
    (as amended).

 

    4.  ADEA Waiver.  Executive
    acknowledges that Executive is knowingly and voluntarily waiving
    and releasing any rights Executive may have under the ADEA, and
    that the consideration given for the waiver and release in the
    preceding paragraph is in addition to anything of value to which
    Executive is already entitled. Executive further acknowledges
    that Executive has been advised by this writing that:
    (1) Executive’s waiver and release do not apply to any
    rights or claims that may arise after the date Executive signs
    this Release; (2) Executive should consult with an attorney
    prior to signing this Release (although Executive may choose
    voluntarily not to do so); (3) Executive has twenty-one
    (21) days to consider this Release (although Executive may
    choose voluntarily to sign it earlier); (4) Executive has
    seven (7) days following the date Executive signs this
    Release to revoke it by providing written notice of revocation
    to the Company’s Chief Executive Officer; and (5) this
    Release will not be effective until the date upon which the
    revocation period has expired, which will be the eighth calendar
    day after the date Executive signs it provided that Executive
    does not revoke it (the “Effective Date”).

 

    5.  Section 1542
    Waiver.  EXECUTIVE UNDERSTANDS THAT THIS
    AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
    Executive acknowledges that Executive has read and understands
    Section 1542 of the California Civil Code which reads as
    follows: “A general release does not extend to claims which
    the creditor does not know or suspect to exist in his or her
    favor at the time of executing the release, which if known by
    him or her must have materially affected his or her settlement
    with the debtor.” Executive hereby expressly waives and
    relinquishes all rights and benefits under that section and any
    law or legal principle of similar effect in any jurisdiction
    with respect to Executive’s respective release of claims
    herein, including but not limited to Executive’s release of
    unknown and unsuspected claims.

 

    6.  Excluded
    Claims.  Executive understands that
    notwithstanding the foregoing, the following are not included in
    the Released Claims (the “Excluded Claims”):
    (i) any rights or claims for indemnification

    

    11

 

    Executive may have pursuant to any written indemnification
    agreement to which he is a party, the charter, bylaws, or
    operating agreements of any of the Released Parties, or under
    applicable law; or (ii) any rights which are not waivable
    as a matter of law. In addition, Executive understands that
    nothing in this release prevents Executive from filing,
    cooperating with, or participating in any proceeding before the
    Equal Employment Opportunity Commission, the Department of
    Labor, or the California Department of Fair Employment and
    Housing, except that Executive acknowledges and agrees that
    Executive shall not recover any monetary benefits in connection
    with any such claim, charge or proceeding with regard to any
    claim released herein. Executive hereby represents and warrants
    that, other than the Excluded Claims, Executive is not aware of
    any claims he has or might have against any of the Released
    Parties that are not included in the Released Claims.

 

    7.  Executive
    Representations.  Executive hereby represents
    that Executive has been paid all compensation owed and for all
    hours worked; Executive has received all the leave and leave
    benefits and protections for which Executive is eligible,
    pursuant to the Family and Medical Leave Act, the California
    Family Rights Act, or otherwise; and Executive has not suffered
    any on-the-job injury for which Executive has not already filed
    a workers’ compensation claim.

 

    8.  Nondisparagement.  Executive
    agrees not to disparage the Company, its parent, or its or their
    officers, directors, employees, shareholders, affiliates and
    agents, in any manner likely to be harmful to its or their
    business, business reputation, or personal reputation (although
    Executive may respond accurately and fully to any question,
    inquiry or request for information as required by legal process).

 

    9.  Cooperation.  Executive
    agrees not to voluntarily (except in response to legal
    compulsion) assist any third party in bringing or pursuing any
    proposed or pending litigation, arbitration, administrative
    claim or other formal proceeding against the other party, or
    against the Company’s parent or subsidiary entities,
    affiliates, officers, directors, employees or agents. Executive
    further agrees to reasonably cooperate with the other party, by
    voluntarily (without legal compulsion) providing accurate and
    complete information, in connection with such other party’s
    actual or contemplated defense, prosecution, or investigation of
    any claims or demands by or against third parties, or other
    matters, arising from events, acts, or failures to act that
    occurred during the period of Executive’s employment by the
    Company.

 

    10.  No Admission of
    Liability.  The parties agree that this
    Release, and performance of the acts required by it, does not
    constitute an admission of liability, culpability, negligence or
    wrongdoing on the part of anyone, and will not be construed for
    any purpose as an admission of liability, culpability,
    negligence or wrongdoing by any party
    and/or by
    any party’s current, former or future parents,
    subsidiaries, related entities, predecessors, successors,
    officers, directors, shareholders, agents, employees and
    assigns. The parties specifically acknowledge and agree that
    this Release is a compromise of disputed claims and that the
    Company denies any liability for any matter released herein.

 

	 	 	 
	
    Neurocrine
    Biosciences, Inc.:
	
 
	
    Executive:

	 

	
 
	
 
	
 

	
 
	
 
	
 

	

    By: ­
    ­

	
 
	
    By: ­
    ­

	
 
	
 
	
 

	

    Date: ­
    ­

	
 
	
    Date: ­
    ­

    

    12exv10w36

 

    Exhibit
    10.36

 

    EMPLOYMENT
    AGREEMENT

 

    THIS EMPLOYMENT AGREEMENT, effective as of the last date signed
    by the parties hereto (the “Effective Date”) by and
    between Neurocrine
    Biosciences, Inc., 12790 El Camino Real,
    San Diego, California 92130 (hereinafter the
    “Company”), and Dimitri Grigoriadis, 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 Effective Date
    hereof;

 

    NOW, THEREFORE, the Company and Executive, in consideration of
    the mutual promises set forth herein, agree as follows:

 

    ARTICLE 1

    

 

    NATURE OF
    EMPLOYMENT

 

    1.1  Commencement
    Date.  Executive’s full-time employment
    with the Company under this Agreement shall be deemed to have
    commenced as of August 1, 2007 (“Commencement
    Date”) and this Agreement shall continue from the Effective
    Date until it is terminated by either the Company or Executive
    pursuant to the terms set forth in Article 6.

 

    1.2  At-Will
    Employment.  Executive shall be employed
    at-will by the Company and therefore either Executive or the
    Company may terminate the employment relationship and this
    Agreement at any time, with or without Cause (as defined herein)
    and with or without advance notice, subject to the provisions of
    Article 6.

 

    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, Research. 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 and Chief Executive
    Officer 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.

    

    1

 

    ARTICLE 3

    

 

    COMPENSATION

 

    3.1  Base Salary.  Executive
    shall receive a Base Salary at an annual rate of two hundred
    sixty thousand and one dollar ($260,001.00), payable
    semi-monthly in equal installments in accordance with the
    Company’s normal payroll practices. The Chief Executive
    Officer shall provide Executive with annual performance reviews,
    and, thereafter, Executive shall be entitled to such increase in
    Base Salary as the Chief Executive Officer and Board of
    Directors may from time to time establish in their sole
    discretion.

 

    3.2  Incentive Bonus.  In
    addition to any other bonus the Executive shall be awarded by
    the Company, Executive shall be eligible to receive an annual
    incentive bonus based upon the achievement in meeting annual
    personal goals established by his immediate supervisor and
    achievement by the Company of annual corporate goals established
    by the Board of Directors. Executives target annual incentive
    bonus will be set forth in the Company’s annual bonus plan
    (the “Target Annual Bonus”). Except as provided in
    Article 6 herein, no pro-rata bonus will be considered
    earned if the Executive leaves the Company for any reason prior
    to the foregoing determination dates. Any annual incentive bonus
    that is earned shall be paid no later than the fifteenth day of
    the third month following the end of the Company’s fiscal
    year for which such bonus was earned.

 

    3.3  Equity.  Except as
    provided in Article 6 in the case of certain terminations
    of employment, this Agreement shall not affect any Stock Awards
    (as such term is defined below) previously granted by the
    Company to Executive. Subject to approval by the Company’s
    Board of Directors, Executive shall be eligible to receive
    additional Stock Awards on terms to be set forth by the Company
    at the time of any such grant. For purposes of this Agreement,
    “Stock Awards” shall mean any rights granted by the
    Company to Executive with respect to the common stock of the
    Company, including, without limitation, stock options, stock
    appreciation rights, restricted stock, stock bonuses and
    restricted stock units.

 

    3.4  Withholdings.  All
    compensation and benefits payable to Executive under this
    Agreement shall be subject to all federal, state, local taxes
    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 participate in the Company’s vacation
    plan pursuant to the terms of that plan.

 

    4.2  Benefits.  During
    Executive’s employment hereunder, the Company shall also
    provide Executive with the 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, 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. With
    respect to long-term disability insurance coverage, the
    Executive will pay all premiums for such coverage with after-tax
    dollars, and the Company will reimburse the Executive for the
    premium costs so paid by the Executive and make an additional
    tax gross-up
    payment to Executive in an amount that shall fully fund the
    payment by Executive of any income and employment taxes on such
    reimbursement payment and tax
    gross-up
    payment. The amount and extent of benefits to which Executive is
    entitled shall be governed by the specific benefit plan as it
    may be amended from time to time.

 

    4.3  Business Expense
    Reimbursement.  During the term of this
    Agreement, Executive shall be entitled to receive proper
    reimbursement for all reasonable out-of-pocket expenses incurred
    by him (in accordance with the policies and procedures
    established by the Company for its senior executive officers) in
    performing services hereunder. Executive agrees to furnish to
    the Company adequate records and other documentary evidence of
    such expense for which Executive seeks reimbursement. Such
    expenses shall be reimbursed and accounted for under the
    policies and procedures established by the Company, and such
    reimbursement shall be made promptly, but in no

    

    2

 

    event later than December 31 of the calendar year following the
    year in which such expenses were incurred by Executive.

 

    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.

 

    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.

 

    5.3  No Use of Prior Confidential
    Information.  Executive will not intentionally
    disclose to the Company or use on its behalf any confidential
    information belonging to any of his former employers or any
    other third party.

 

    ARTICLE 6

    

 

    TERMINATION

 

    6.1  General.  As set forth in
    Section 1.2 herein, Executive shall be employed on an
    at-will basis by the Company. Notwithstanding the foregoing,
    Executive’s employment and this Agreement may be terminated
    in one of six ways as set forth in this Article 6:
    (a) Executive’s Death (Section 6.2);
    (b) Executive’s Disability (Section 6.3);
    (c) Termination by the Company for Cause
    (Section 6.4); (d) Termination by the Company without
    Cause (Section 6.5); (e) Termination by Executive due
    to a Constructive Termination (Section 6.6); or
    (f) Voluntary Resignation (Section 6.7).

 

    6.2  By
    Death.  Executive’s employment and this
    Agreement shall terminate automatically upon the death of
    Executive. In such event:

 

    (a) Stock Awards.  The
    vesting of all outstanding Stock Awards held by Executive shall
    be accelerated so that the amount of shares vested under such
    Stock Awards shall equal that number of shares that would have
    been vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment. All Stock Awards
    held by Executive that are vested at the time of termination
    (including any accelerated Stock Awards) will be exercisable in
    accordance with their terms for a period of one year after the
    termination date.

 

    (b) Bonus.  The Company shall pay
    to Executive’s beneficiaries or his estate, as the case may
    be, a lump sum amount equal to Executive’s Target Annual
    Bonus (as defined in Section 3.2) for the Company’s
    fiscal year in which Executive’s death occurs multiplied by
    a fraction, the numerator of which is the number of full months
    of employment by Executive in such fiscal year and the
    denominator of which is 12. Such amount shall be paid as soon as
    administratively practicable, but in no event later than March
    15 following the year in which Executive’s death occurred.

 

    (c) Accrued Compensation.  The
    Company shall pay to Executive’s beneficiaries or his
    estate, as the case may be, any accrued Base Salary, any vested
    deferred compensation (other than pension plan or profit-sharing
    plan benefits that will be paid in accordance with the
    applicable plan), any benefits under any plans of the Company
    (other than pension and profit-sharing plans) 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”).

    

    3

 

    (d) No Severance Compensation.  The
    compensation and benefits set forth in Sections 6.2(a)
    through (c) herein shall be the only compensation and
    benefits provided by the Company in the event of
    Executive’s death and no other severance compensation or
    benefits shall be provided.

 

    6.3  By Disability.  If
    Executive is prevented from performing his duties hereunder by
    reason of any physical or mental incapacity that results in
    Executive’s satisfaction of all requirements necessary to
    receive benefits under the Company’s long-term disability
    plan due to a total disability, then, to the extent permitted by
    law, the Company may terminate the employment of Executive and
    this Agreement at or after such time. In such event, and if
    Executive signs the General Release set forth as
    Exhibit A or such other form of release as the
    Company may require (the “Release”) on or within the
    time period set forth therein, but in no event later than
    forty-five (45) days after the termination date and allows
    such Release to become effective, then:

 

    (a) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (b) Base Salary Continuation.  The
    Company shall continue to pay Executive’s Base Salary, less
    required withholdings, for a period of 12 months (the
    “Disability Base Salary Payments”); provided that the
    Disability Base Salary Payments shall be reduced by any
    insurance or other payments to Executive under policies and
    plans sponsored by the Company, even if premiums are paid by
    Executive. Subject to the provisions of Section 6.11, the
    Disability Base Salary Payments shall be paid in accordance with
    the Company’s standard payroll practices commencing with
    the first payroll period following the effectiveness of the
    Release.

 

    (c) Bonus.  The Company
    shall pay a lump sum amount equal to Executive’s Target
    Annual Bonus (as defined in Section 3.2) for the
    Company’s then-current fiscal year multiplied by a
    fraction, the numerator of which is the number of full months of
    employment by Executive in the current fiscal year and the
    denominator of which is 12. Such payment shall be made within
    ten (10) days following the Effective Date of the Release.

 

    (d) Stock Awards.  The vesting of
    all outstanding Stock Awards held by Executive shall be
    accelerated so that the amount of shares vested under such Stock
    Awards shall equal that number of shares which would have been
    vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment.

 

    (e) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 12 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

 

    (f) Disability Plans.  Nothing in
    this Section 6.3 shall affect Executive’s rights under
    any disability plan in which Executive is a participant.

 

    6.4  Termination by the Company for
    Cause.  

 

    (a) No Liability.  The
    Company may terminate Executive’s employment and this
    Agreement for Cause (as defined below) without liability at any
    time. In such event, the Company shall pay Executive all Accrued
    Compensation (as defined in Section 6.2(c) herein), but no
    other compensation or reimbursement of any kind, including
    without limitation, any severance compensation or benefits shall
    be paid, and thereafter the Company’s obligations hereunder
    shall terminate.

    

    4

 

    (b) Definition of
    “Cause.”  For purposes of this
    Agreement, “Cause” shall mean one or more of the
    following:

 

    (i) Executive’s intentional commission of an act, or
    intentional failure to act, that materially injures the business
    of the Company; provided, however, that in no event shall
    any business judgment made in good faith by Executive and within
    Executive’s defined scope of authority constitute a basis
    for termination for Cause under this Agreement;

 

    (ii) Executive’s intentional refusal or intentional
    failure to act in accordance with any lawful and proper
    direction or order of the Board of Directors, the Chief
    Executive Officer, or the individual to whom Executive reports.

 

    (iii) Executive’s material breach of Executive’s
    fiduciary, statutory, contractual, or common law duties to the
    Company (including any material breach of this Agreement, the
    Proprietary Information and Inventions Agreement, or the
    Company’s written policies);

 

    (iv) Executive’s indictment for or conviction of any
    felony or any crime involving dishonesty; or

 

    (v) Executive’s participation in any fraud or other
    act of willful misconduct against the Company;

 

    provided, however, that in the event that any of the
    foregoing events is reasonably 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.

 

    6.5  Termination by the Company without
    Cause.  

 

    (a) The Company’s Right.  The
    Company may terminate Executive’s employment and this
    Agreement without Cause (as defined in Section 6.4(b)
    herein) at any time by giving thirty (30) days advance
    written notice to Executive.

 

    (b) Severance Benefits.  If the
    Company terminates Executive’s employment without Cause,
    and if Executive signs the Release on or within the time period
    set forth therein (but in no event later than forty-five
    (45) days after the termination date) and allows such
    Release to become effective, then:

 

    (i) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (ii) Cash Compensation Amount
    Payments.  The Company shall pay Executive an
    amount calculated as follows: [Executive’s annual Base
    Salary + Executive’s Target Annual Bonus (as defined in
    Section 3.2 herein)] multiplied by 1.0 (the “Cash
    Compensation Amount”). Subject to the provisions of
    Section 6.11, the Cash Compensation Amount will be paid in
    equal installments on the Company’s standard payroll dates
    over a period of 12 months commencing with the first
    payroll period following the effectiveness of the Release.

 

    (iii) Stock Awards.  The vesting of
    all outstanding Stock Awards held by Executive shall be
    accelerated so that the amount of shares vested under such Stock
    Awards shall equal that number of shares which would have been
    vested if Executive had continued to render services to the
    Company for 12 continuous months after the date of
    Executive’s termination of employment.

 

    (iv) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 12 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

    

    5

 

    6.6  Termination by Executive due to a
    Constructive Termination.  

 

    (a) Executive’s
    Right.  Executive may resign his employment
    and terminate this Agreement at any time as a result of a
    Constructive Termination (as defined in Section 6.6(c)
    herein).

 

    (b) Severance Benefits.  If
    Executive resigns his employment and terminates this Agreement
    as a result of a Constructive Termination, and if Executive
    signs the Release on or within the time period set forth therein
    (but in no event later than forty-five (45) days after the
    termination date) and allows such Release to become effective,
    then Executive shall receive all of the severance benefits set
    forth in Section 6.5(b) herein.

 

    (c) Definition of “Constructive
    Termination.”  For purposes of this
    Agreement, “Constructive Termination” shall mean a
    resignation of employment and termination of this Agreement by
    Executive for one or more of the following reasons:

 

    (i) A material reduction by the Company of Executive’s
    annual Base Salary;

 

    (ii) 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; or

 

    (iii) A material breach by the Company of any provision of
    this Agreement or any other enforceable written agreement
    between Executive and the Company; provided; however,
    that Executive must first provide the Company with written
    notice specifying the condition giving rise to a Constructive
    Termination within ninety (90) days following the initial
    existence of such condition; and Executive’s notice must
    specify that Executive intends to terminate his employment no
    earlier than thirty (30) days after providing such notice,
    and the Company must be given an opportunity to cure such
    condition within thirty (30) days following its receipt of
    such notice and avoid paying benefits.

 

    6.7  Voluntary
    Resignation.  Executive may resign his or her
    employment and terminate this Agreement at any time for any
    reason other than due to a Constructive Termination (as defined
    in Section 6.6(c) herein). In such event, the Company shall
    pay Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein), but no other compensation or
    reimbursement of any kind, including without limitation, any
    severance compensation or benefits shall be paid, and thereafter
    the Company’s obligations hereunder shall terminate.

 

    6.8  Change In Control.  

 

    (a) Severance Benefits.  If
    (i) within six months after the consummation of a Change in
    Control (as defined in Section 6.8(b) herein), (1) the
    Company terminates Executive’s employment and this
    Agreement without Cause pursuant to Section 6.5 herein or
    (2) Executive resigns his employment and terminates this
    Agreement as a result of a Constructive Termination pursuant to
    Section 6.6 herein, and (ii) in either event
    (1) or (2), Executive signs the Release on or within the
    time period set forth therein, but in no event later than
    forty-five (45) days after the termination date and allows
    such Release to become effective, then Executive shall receive
    the following severance benefits in lieu of any severance
    benefits set forth in Section 6.5(b) or Section 6.6(b)
    herein:

 

    (i) Accrued
    Compensation.  The Company shall pay to
    Executive all Accrued Compensation (as defined in
    Section 6.2(c) herein).

 

    (ii) CIC Cash Compensation Amount
    Payment.  The Company shall pay Executive an
    amount calculated as follows: [Executive’s annual Base
    Salary + Executive’s Target Annual Bonus (as defined in
    Section 3.2 herein)] multiplied by 1.5 (collectively, the
    “CIC Cash Compensation Amount”). The CIC Cash
    Compensation Amount will be paid in one lump sum within ten
    (10) days following the Effective Date of the Release.

 

    (iii) Cash Payment for Stock
    Awards.  Within ten (10) days following
    the Effective Date of the Release, the Company shall pay
    Executive a cash amount equal to the value, as of the date of
    the consummation of the Change in Control, of (1) all Stock
    Awards that are unvested at the time of termination of
    employment, and (2) all Stock Awards that are vested at the
    time of termination of employment and for which the shares
    subject to such Stock Awards have not yet been issued,
    including, without limitation, any unexercised stock options,
    unexercised stock appreciation rights, and unissued shares
    subject to a restricted stock unit award, provided, in either
    case, that such Stock Awards were held by Executive as of the
    date of consummation of the Change in

    

    6

 

    Control, and all rights of Executive in such Stock Awards and
    any unvested shares of stock that previously may have been
    issued thereunder shall be extinguished as a result of such
    payment, with the result that such Stock Awards shall
    automatically terminate unexercised and unvested shares of stock
    previously issued shall automatically be reacquired by the
    Company or its successor. For purposes of the foregoing cash
    payment, (1) stock options and stock appreciation rights
    shall be valued on the basis of the difference between the value
    of the subject stock for purposes of the transaction
    constituting the Change of Control and the exercise or base
    price of the award, and (2) restricted stock, restricted
    stock units or other full value awards and shares of stock
    acquired under Stock Awards shall be valued on the basis of the
    value of the subject stock for purposes of the transaction
    constituting the Change in Control.

 

    (iv) Health Insurance
    Benefits.  To the extent provided by
    the federal COBRA law or, if applicable, state insurance laws,
    and by the Company’s current group health insurance
    policies, Executive will be eligible to continue
    Executive’s group health insurance benefits at
    Executive’s own expense. If Executive timely elects
    continued coverage under COBRA, the Company shall pay
    Executive’s COBRA premiums, and any applicable Company
    COBRA premiums, necessary to continue Executive’s
    then-current coverage for a period of 18 months after the
    date of Executive’s termination of employment; provided,
    however, that any such payments will cease if Executive
    voluntarily enrolls in a health insurance plan offered by
    another employer or entity during the period in which the
    Company is paying such premiums. Executive agrees to immediately
    notify the Company in writing of any such enrollment.

 

    (b) Definition of “Change in
    Control.”  For purposes of this
    Agreement, a “Change in Control” shall have occurred
    if at any time during Executive’s employment hereunder, any
    of the following events shall occur:

 

    (i) 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;

 

    (ii) 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;

 

    (iii) 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;

 

    (iv) 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

 

    (v) During any period of two (2) consecutive years,
    individuals who at the beginning of any such period constitute
    the directors of the Company cease for any reason to constitute
    at least a majority thereof unless the election to the
    nomination for 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.

    

    7

 

    (c) Parachute Payments.  

 

    (i) If any payment or benefit (including payments or
    benefits pursuant to this Agreement) that Executive would
    receive in connection with a Change in Control or otherwise (a
    “Payment”) (1) would constitute a “parachute
    payment” within the meaning of Section 280G of the
    Code, and (2) but for this sentence, would be subject to
    the excise tax imposed by Section 4999 of the Code (the
    “Excise Tax”), then the Company shall cause to be
    determined, before any amount of the Payment is paid to
    Executive, whether the total payments exceed 2.99 times
    Executive’s “base amount” within the meaning of
    Section 280G of the Code (the “Base Amount”) by
    15% or less, in which case such Payment shall be reduced to an
    amount that results in no portion of the Payment being subject
    to the Excise Tax (the “Reduced Payment”).

 

    (ii) If a Reduced Payment is made, (x) the Payment
    shall be paid only to the extent permitted under the Reduced
    Payment alternative, and Executive shall have no rights to any
    additional payments
    and/or
    benefits constituting the Payment, and (y) reduction in
    payments
    and/or
    benefits shall occur in the following order unless Executive
    elects in writing a different order (provided, however,
    that such election shall be subject to Company approval if
    made on or after the date on which the event that triggers the
    Payment occurs): (1) reduction of cash payments;
    (2) cancellation of accelerated vesting of equity awards
    other than stock options; (3) cancellation of accelerated
    vesting of stock options; and (4) reduction of other
    benefits paid to Executive. In the event that acceleration of
    compensation from Executive’s equity awards is to be
    reduced, such acceleration of vesting shall be canceled in the
    reverse order of the date of grant unless Executive elects in
    writing a different order for cancellation.

 

    (iii) If it is determined that the Payment exceeds 2.99
    times Executive’s Base Amount by more than 15%, the Company
    shall pay the full amount of the Payment and Executive shall be
    entitled to receive an additional payment (a
    “Gross-Up
    Payment”) from the Company in an amount that after the
    payment of all taxes (including, without limitation,
    (1) any income or employment taxes, (2) any interest
    or penalties imposed with respect to such taxes, and
    (3) any additional Excise Tax on the
    Gross-Up
    Payment, Executive shall retain an amount equal to the full
    Excise Tax. The
    Gross-Up
    Payment shall be paid as soon as practicable following the date
    the Payment is made, but in no event later than the end of the
    Executive’s taxable year following the taxable year in
    which Executive has remitted (by withholding or otherwise) the
    Excise Tax.

 

    (iv) For purposes of determining the amount of the
    Gross-Up
    Payment, Executive shall be deemed to have: (x) paid
    federal income taxes at the highest marginal rate of federal
    income and employment taxation for the calendar year in which
    the Gross-Up
    Payment is to be made, and (y) paid applicable state and
    local income taxes at the highest rate of taxation for the
    calendar year in which the
    Gross-Up
    Payment is to be made, net of the maximum reduction in federal
    income taxes which could be obtained from deduction of such
    state and local taxes.

 

    (v) Except as otherwise provided herein, Executive shall
    not be entitled to any additional payments or other indemnity
    arrangements in connection with the Payment or the
    Gross-Up
    Payment.

 

    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,
    except as provided herein.

 

    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.

 

    6.11  Application of
    Section 409A.  If Executive is a
    “specified employee” within the meaning of
    409A(a)(2)(B)(i) of the Code, any installment payments of
    Disability Base Salary Payments pursuant to Section 6.3(b)
    or Cash Compensation Amounts pursuant to Section 6.5(b) or
    6.6(b) that are triggered by a separation from service shall be
    accelerated to the minimum extent necessary so that (a) the
    lesser of (y) the total cash severance payment amount, or
    (z) six (6) months of such installment payments are
    paid no later than March 15 of the calendar year following such
    termination, and (b) all amounts paid pursuant to the
    foregoing clause (a) will

    

    8

 

    constitute separate payments for purposes of
    Section 1.409A-2(b)(2)
    of the Treasury Regulations and thus will be payable pursuant to
    the “short-term deferral” rule set forth in
    Section 1.409A-1(b)(4)
    of the Treasury Regulations. It is intended that if Executive is
    a “specified employee” within the meaning of
    Section 409A(a)(2)(B)(i) of the Code at the time of such
    separation from service the foregoing provision shall result in
    compliance with the requirements of
    Section 409A(a)(2)(B)(i) of the Code since payments to
    Executive will either be payable pursuant to the
    “short-term deferral” rule set forth in
    Section 1.409A-1(b)(4)
    of the Treasury Regulations or will not be paid until at least
    6 months after separation from service.

 

    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.  

 

    (a) No Assignment.  Executive may
    not assign, pledge or encumber his interest in this Agreement or
    any part thereof.

 

    (b) Assumption by
    Successor.  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.

 

    (c) This Agreement shall inure to the benefit of and be
    enforceable by Executive’s personal or legal
    representatives, executors, administrators, successors, heirs,
    distributee, devisees and legatees. If Executive should die
    while any amount is at such time payable to Executive 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  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.

    12790 El Camino Real

    San Diego, CA 92130

    Attn.: President & Chief Executive Officer

 

    To Executive:

 

    Dimitri Grigoriadis, Ph.D.

 

    7.4  Modification; Waiver; Entire
    Agreement.  This Agreement constitutes the
    complete, final and exclusive embodiment of the entire agreement
    between Executive and the Company with regard to this subject
    matter. It is entered into without reliance on any promise or
    representation, written or oral, other than those expressly
    contained herein, and it supersedes any other such promises,
    warranties or representations, including, without limitation,
    the Original Employment Agreement which shall have no further
    force or effect. 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

    

    9

 

    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.

 

    7.5  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.

 

    7.6  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.

 

    7.7  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.

 

    7.8  Dispute Resolution.  To
    ensure the rapid and economical resolution of disputes that may
    arise in connection with Executive’s employment, Executive
    and the Company agree that any and all disputes, claims, or
    causes of action, in law or equity, arising from or relating to
    the enforcement, breach, performance, execution, or
    interpretation of this Agreement, Executive’s employment,
    or the termination of that employment, shall be resolved, to the
    fullest extent permitted by law, by final, binding and
    confidential arbitration in San Diego, California conducted
    before a single arbitrator by Judicial Arbitration and Mediation
    Services, Inc. (“JAMS”) or its successor, under the
    then applicable JAMS rules. By agreeing to this arbitration
    procedure, both Executive and the Company waive the right to
    resolve any such dispute through a trial by jury or judge or by
    administrative proceeding. The arbitrator shall: (a) have
    the authority to compel adequate discovery for the resolution of
    the dispute and to award such relief as would otherwise be
    permitted by law; and (b) issue a written arbitration
    decision including the arbitrator’s essential findings and
    conclusions and a statement of the award. The Company shall pay
    all of JAMS’ arbitration fees. Nothing in this letter
    agreement shall prevent either Executive or the Company from
    obtaining injunctive relief in court if necessary to prevent
    irreparable harm pending the conclusion of any arbitration. The
    parties agree that the arbitrator shall award reasonable
    attorneys fees, costs, and all other related expenses to the
    prevailing party in any action brought hereunder, and the
    arbitrator shall have discretion to determine the prevailing
    party in an arbitration where multiple claims may be at issue.

 

    7.9  Remedies.  

 

    (a) Injunctive Relief.  The parties
    agree that the services to be rendered by Executive hereunder
    are of a unique nature and that in the event of any breach or
    threatened breach of any of the covenants contained herein, the
    damage or imminent damage to the value and the goodwill of the
    Company’s business will be irreparable and extremely
    difficult to estimate, making any remedy at law or in damages
    inadequate. Accordingly, the parties agree that the Company
    shall be entitled to injunctive relief against Executive in the
    event of any breach or threatened breach of any such provisions
    by Executive, in addition to any other relief (including damage)
    available to the Company under this Agreement or under law.

 

    (b) Exclusive.  Both parties agree
    that the remedy specified in Section 7.9(a) above is not
    exclusive of any other remedy for the breach by Executive of the
    terms hereof.

 

    7.10  Counterparts.  This
    Agreement may be executed in one or more counterparts, all of
    which taken together shall constitute one and the same Agreement.

 

    Executed by the parties as follows:

 

	 	 	 
	
    EXECUTIVE
	
 
	
    NEUROCRINE BIOSCIENCES,
    INC

	 

	
 
	
 
	
 

	
 
	
 
	
 

	

    By: /s/  
Dimitri
    Grigoriadis

    

	
 
	

    By: /s/  
Richard
    Ranieri

    

	
 
	
 
	
 

	

    Date: August 23, 2007

    

	
 
	

    Date: August 1, 2007

    

    

    

    10

 

    EXHIBIT A

    GENERAL RELEASE

 

    Pursuant to the terms of the Employment Agreement between
    Neurocrine Biosciences, Inc. (the “Company”) and
    Dimitri Grigoriadis, Ph.D. (“Executive”) dated
    August 1, 2007 (the “Agreement”), the parties
    hereby enter into the following General Release (the
    “Release”):

 

    1.  Accrued Salary and
    Vacation.  Executive understands that,
    on the last date of Executive’s employment with the
    Company, the Company will pay Executive any accrued salary and
    accrued and unused vacation to which Executive is entitled by
    law, regardless of whether Executive signs this Release.

 

    2.  General
    Release.  Executive hereby generally and
    completely releases the Company and its directors, officers,
    employees, shareholders, partners, agents, attorneys,
    predecessors, successors, parent and subsidiary entities,
    insurers, affiliates, and assigns (collectively the
    “Released Parties”) of and from any and all claims,
    liabilities and obligations, both known and unknown, arising out
    of or in any way related to events, acts, conduct, or omissions
    occurring at any time prior to or at the time that Executive
    signs this Release.

 

    3.  Scope of Release.  This
    general release includes, but is not limited to: (1) all
    claims arising out of or in any way related to Executive’s
    employment with the Company or the termination of that
    employment; (2) all claims related to Executive’s
    compensation or benefits from the Company, including salary,
    bonuses, commissions, vacation pay, expense reimbursements,
    severance pay, fringe benefits, stock, stock options, or any
    other ownership or equity interests in the Company; (3) all
    claims for breach of contract, wrongful termination, and breach
    of the implied covenant of good faith and fair dealing
    (including claims based on or arising under the Agreement);
    (4) all tort claims, including claims for fraud,
    defamation, emotional distress, and discharge in violation of
    public policy; and (5) all federal, state, and local
    statutory claims, including claims for discrimination,
    harassment, retaliation, attorneys’ fees, or other claims
    arising under the federal Civil Rights Act of 1964 (as amended),
    the federal Americans with Disabilities Act of 1990, the federal
    Age Discrimination in Employment Act (as amended)
    (“ADEA”), the federal Family and Medical Leave Act,
    the California Labor Code (as amended), the California Family
    Rights Act, and the California Fair Employment and Housing Act
    (as amended).

 

    4.  ADEA Waiver.  Executive
    acknowledges that Executive is knowingly and voluntarily waiving
    and releasing any rights Executive may have under the ADEA, and
    that the consideration given for the waiver and release in the
    preceding paragraph is in addition to anything of value to which
    Executive is already entitled. Executive further acknowledges
    that Executive has been advised by this writing that:
    (1) Executive’s waiver and release do not apply to any
    rights or claims that may arise after the date Executive signs
    this Release; (2) Executive should consult with an attorney
    prior to signing this Release (although Executive may choose
    voluntarily not to do so); (3) Executive has twenty-one
    (21) days to consider this Release (although Executive may
    choose voluntarily to sign it earlier); (4) Executive has
    seven (7) days following the date Executive signs this
    Release to revoke it by providing written notice of revocation
    to the Company’s Chief Executive Officer; and (5) this
    Release will not be effective until the date upon which the
    revocation period has expired, which will be the eighth calendar
    day after the date Executive signs it provided that Executive
    does not revoke it (the “Effective Date”).

 

    5.  Section 1542
    Waiver.  EXECUTIVE UNDERSTANDS THAT THIS
    AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
    Executive acknowledges that Executive has read and understands
    Section 1542 of the California Civil Code which reads as
    follows: “A general release does not extend to claims which
    the creditor does not know or suspect to exist in his or her
    favor at the time of executing the release, which if known by
    him or her must have materially affected his or her settlement
    with the debtor.” Executive hereby expressly waives and
    relinquishes all rights and benefits under that section and any
    law or legal principle of similar effect in any jurisdiction
    with respect to Executive’s respective release of claims
    herein, including but not limited to Executive’s release of
    unknown and unsuspected claims.

 

    6.  Excluded
    Claims.  Executive understands that
    notwithstanding the foregoing, the following are not included in
    the Released Claims (the “Excluded Claims”):
    (i) any rights or claims for indemnification

    

    11

 

    Executive may have pursuant to any written indemnification
    agreement to which he is a party, the charter, bylaws, or
    operating agreements of any of the Released Parties, or under
    applicable law; or (ii) any rights which are not waivable
    as a matter of law. In addition, Executive understands that
    nothing in this release prevents Executive from filing,
    cooperating with, or participating in any proceeding before the
    Equal Employment Opportunity Commission, the Department of
    Labor, or the California Department of Fair Employment and
    Housing, except that Executive acknowledges and agrees that
    Executive shall not recover any monetary benefits in connection
    with any such claim, charge or proceeding with regard to any
    claim released herein. Executive hereby represents and warrants
    that, other than the Excluded Claims, Executive is not aware of
    any claims he has or might have against any of the Released
    Parties that are not included in the Released Claims.

 

    7.  Executive
    Representations.  Executive hereby represents
    that Executive has been paid all compensation owed and for all
    hours worked; Executive has received all the leave and leave
    benefits and protections for which Executive is eligible,
    pursuant to the Family and Medical Leave Act, the California
    Family Rights Act, or otherwise; and Executive has not suffered
    any on-the-job injury for which Executive has not already filed
    a workers’ compensation claim.

 

    8.  Nondisparagement.  Executive
    agrees not to disparage the Company, its parent, or its or their
    officers, directors, employees, shareholders, affiliates and
    agents, in any manner likely to be harmful to its or their
    business, business reputation, or personal reputation (although
    Executive may respond accurately and fully to any question,
    inquiry or request for information as required by legal process).

 

    9.  Cooperation.  Executive
    agrees not to voluntarily (except in response to legal
    compulsion) assist any third party in bringing or pursuing any
    proposed or pending litigation, arbitration, administrative
    claim or other formal proceeding against the other party, or
    against the Company’s parent or subsidiary entities,
    affiliates, officers, directors, employees or agents. Executive
    further agrees to reasonably cooperate with the other party, by
    voluntarily (without legal compulsion) providing accurate and
    complete information, in connection with such other party’s
    actual or contemplated defense, prosecution, or investigation of
    any claims or demands by or against third parties, or other
    matters, arising from events, acts, or failures to act that
    occurred during the period of Executive’s employment by the
    Company.

 

    10.  No Admission of
    Liability.  The parties agree that this
    Release, and performance of the acts required by it, does not
    constitute an admission of liability, culpability, negligence or
    wrongdoing on the part of anyone, and will not be construed for
    any purpose as an admission of liability, culpability,
    negligence or wrongdoing by any party
    and/or by
    any party’s current, former or future parents,
    subsidiaries, related entities, predecessors, successors,
    officers, directors, shareholders, agents, employees and
    assigns. The parties specifically acknowledge and agree that
    this Release is a compromise of disputed claims and that the
    Company denies any liability for any matter released herein.

 

	 	 	 
	
    Neurocrine
    Biosciences, Inc.:
	
 
	
    Executive:

	 

	
 
	
 
	
 

	
 
	
 
	
 

	

    By: ­
    ­

	
 
	
    By: ­
    ­

	
 
	
 
	
 

	

    Date: ­
    ­

	
 
	
    Date: ­
    ­

    

    12

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