NEUROCRINE BIOSCIENCES INC
EXHIBIT 10.9
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>2
<FILENAME>a98523exv10w9.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.9


                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT, dated as of October 27, 2003 by and between
NEUROCRINE BIOSCIENCES, INC., 10555 Science Center Drive, San Diego, California
92121 (hereinafter the "Company"), and KEVIN C. GORMAN, PH.D. (hereinafter
"Executive").

                                    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 date hereof; and

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

                                    ARTICLE 1

                                TERM OF AGREEMENT

         1.1 COMMENCEMENT DATE. Executive's fulltime employment with the Company
under this Agreement shall commence as of September 15, 2003 ("Commencement
Date") and this Agreement shall expire after a period of three (3) years from
the Commencement Date, unless renewed in accordance with paragraph 1.2 or
terminated pursuant to Article 6.

         1.2 RENEWAL. The term of this Agreement shall be automatically renewed
for successive, additional three (3) year terms unless either party delivers
written notice to the other at least ninety (90) days prior to the end of any
term of an intention to terminate this Agreement or to renew it for a term of
less than three (3) years but not less than (1) year. If the term of this
Agreement is renewed for a term of less than three (3) years, then thereafter
the term of this Agreement shall be automatically renewed for successive,
additional identical terms unless either party delivers a written notice to the
other of an intention to terminate this Agreement or to renew it for a different
term of not less than one (1) year, such notice to be delivered at least ninety
(90) days prior to the end of any term. The Company's failure to renew this
Agreement at the end of any term shall be considered a termination without Cause
as set forth in Section 6.4 below.

                                    ARTICLE 2
                                EMPLOYMENT DUTIES

         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, Business Development.
Executive shall have the powers and duties

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commensurate with such position, including but not limited to hiring personnel
necessary to carry out the responsibilities for such position as directed by the
Chief Executive Officer.

         2.2 FULL TIME ATTENTION. Executive shall devote his best efforts and
his full business time and attention to the performance of the services
customarily incident to such office and to such other services as the Chief
Executive Officer or Board may reasonably request. Executive shall discharge his
responsibilities in a diligent and faithful manner, consistent with sound
business practices and in accordance with the directives of the Chief Executive
Officer of the Company.

         2.3 OTHER ACTIVITIES. Except upon the prior written consent of the
Chief Executive Officer, Executive shall not during the period of employment
engage, directly or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage) that is or may be competitive with, or that
might place him in a competing position to that of the Company or any other
corporation or entity that directly or indirectly controls, is controlled by, or
is under common control with the Company (an "Affiliated Company"), provided
that Executive may own less than two percent (2%) of the outstanding securities
of any such publicly traded competing corporation.

                                    ARTICLE 3
                                  COMPENSATION

         3.1 BASE SALARY. Executive shall receive a Base Salary at an annual
rate of two hundred sixty-five ($265,000), payable semi-monthly in equal
installments in accordance with the Company's normal payroll practices. The
Chief Executive Officer shall provide Executive with annual performance reviews,
and, thereafter, Executive shall be entitled to such increase in Base Salary as
the Compensation Committee of the Board and Chief Executive Officer may from
time to time establish in their sole discretion.

         3.2 INCENTIVE BONUS. In addition to any other bonus Executive shall be
awarded by the Company's Board of Directors, the Company shall pay Executive an
annual bonus as determined by the Company's Compensation Committee and Chief
Executive Officer based upon achievement of Executive in meeting personal goals
approved by the Chief Executive Officer and achievement by the Company of
corporate goals approved by the Board of Directors annually. Executive's
personal goals and the Company's corporate goals will be set forth in writing by
Chief Executive Officer and Board, respectively, within ninety (90) days after
the start of the Company's fiscal year. The Chief Executive Officer shall, in
his sole discretion, determine whether Executive's personal goals have been
obtained. The Board of Directors shall, in its sole discretion, determine
whether the corporate goals have been obtained.

         3.3 EQUITY. Each year starting in 2004 and continuing for the term of
this Agreement, the Executive will be eligible to receive a Stock Option award
under the Company's 2003 Incentive Stock Option Plan as amended, with the number
of shares and exercise price as shall be determined by the Board of Directors.



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         3.4 WITHHOLDINGS. All compensation and benefits payable to Executive
hereunder and the Agreement shall be subject to all federal, state, local and
other withholdings and similar taxes and payments required by applicable law.

                                    ARTICLE 4
                     EXPENSE ALLOWANCES AND FRINGE BENEFITS

         4.1 VACATION. Executive shall be entitled to the greater of three (3)
weeks of annual paid vacation or the amount of annual paid vacation to which
Executive may become entitled under the terms of Company's vacation policy for
employees during the term of this Agreement.

         4.2 BENEFITS. During the term of this Agreement, the Company shall also
provide Executive with the usual health insurance benefits it generally provides
to its other senior management employees. As Executive becomes eligible in
accordance with criteria to be adopted by the Company, the Company shall provide
Executive with the right to participate in and to receive benefit from life,
accident, disability, medical, pension, bonus, stock, profit-sharing and savings
plans and similar benefits made available generally to executives of the Company
as such plans and benefits may be adopted by the Company. The amount and extent
of benefits to which Executive is entitled shall be governed by the specific
benefit plan as it may be amended from time to time.

         4.3 BUSINESS EXPENSE REIMBURSEMENT. During the term of this Agreement,
Executive shall be entitled to receive proper reimbursement for all reasonable
out-of-pocket expenses incurred by him (in accordance with the policies and
procedures established by the Company for its senior executive officers) in
performing services hereunder. Executive agrees to furnish to the Company
adequate records and other documentary evidence of such expense for which
Executive seeks reimbursement. Such expenses shall be reimbursed and accounted
for under the policies and procedure established by the Company.

                                    ARTICLE 5
                                 CONFIDENTIALITY

         5.1 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Executive
represents and warrants that he has previously executed and delivered to the
Company the Company's standard Proprietary Information and Inventions Agreement
in form acceptable to the Company's counsel.

         5.2 RETURN OF PROPERTY. All documents, records, apparatus, equipment
and other physical property which is furnished to, or obtained by, Executive in
the course of his employment with the Company shall be and remain the sole
property of the Company. Executive agrees that, upon the termination of his
employment, he shall return all such property (whether or not it pertains to
Proprietary Information as defined in the Proprietary Information and Inventions
Agreement), and agrees not to make or retain copies, reproductions or summaries
of any such property.


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         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 BY DEATH. The period of employment shall terminate automatically
upon the death of Executive. In such event, all stock options held by Executive
at the time of termination will continue to vest for a period of six (6) months
following termination. All stock options held by Executive that are vested at
the time of termination or within six (6) months thereafter will be exercisable
in accordance with their terms for a period of one year following termination.
In addition, the Company shall pay to Executive's beneficiaries or his estate,
as the case may be, any accrued Base Salary, any bonus compensation to the
extent earned, any vested deferred compensation (other than pension plan or
profit-sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which Executive
is a participant to the full extent of Executive's rights under such plans, any
accrued vacation pay and any appropriate business expenses incurred by Executive
in connection with his duties hereunder, all to the date of termination
(collectively Accrued Compensation), but no other compensation or reimbursement
of any kind, including, without limitation, severance compensation, and
thereafter, the Company's obligations hereunder shall terminate.

         6.2 BY DISABILITY. If Executive is prevented from properly performing
his duties hereunder by reason of any physical or mental incapacity for a period
of one hundred twenty (120) consecutive days, or for one hundred eighty (180)
days in the aggregate in any three hundred and sixty-five (365) day period,
then, to the extent permitted by law, the Company may terminate the employment
of Executive at such time. In such event, all stock options held by Executive at
the time of termination will continue to vest for a period of six (6) months
following termination. All stock options held by Executive that are vested at
the time of termination or within six (6) months thereafter will be exercisable
in accordance with their terms for a period of one year following termination.
In addition, the Company shall pay to Executive all Accrued Compensation, and
shall continue to pay to Executive the Base Salary until such time as Executive
shall become entitled to receive disability insurance payments under the
disability insurance policy maintained by the Company, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation, and thereafter the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect Executive's rights under any
disability plan in which he is a participant.

         6.3 BY COMPANY FOR CAUSE. The Company may terminate the Executive's
employment for Cause (as defined below) without liability at any time with or
without advance notice to Executive. The Company shall pay Executive all Accrued
Compensation, but no other compensation or reimbursement of any kind, including
without limitation, severance compensation, and thereafter the Company's
obligations hereunder shall terminate. Termination shall be for "Cause" in the
event of the occurrence of any of the following: (a) any intentional action or
intentional failure to act by Executive which was performed in bad faith and to
the

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material detriment of the Company; (b) Executive intentionally refuses or
intentionally fails to act in accordance with any lawful and proper direction or
order of the Chief Executive Officer; (c) Executive and habitually neglects the
duties of employment; or (d) Executive is convicted of a felony crime involving
moral turpitude, provided that in the event that an of the foregoing events is
capable of being cured, the Company shall provide written notice to Executive
describing the nature of such event and Executive shall thereafter have ten (10)
business days to cure such event.

         6.4 TERMINATION WITHOUT CAUSE. At any time, the Company may terminate
the employment of Executive without liability other than as set forth below, for
any reason not specified in Section 6.3 above, by giving thirty (30) days
advance written notice to Executive. If the Company elects to terminate
Executive pursuant to this Section 6.4:

                  (a) the Company shall pay to Executive all Accrued
         Compensation;

                  (b) the Company shall continue to pay to Executive as provided
         herein Executive's Base Salary over the period equal to nine (9) months
         from the date of such termination as severance compensation;

                  (c) the Company shall make a lump sum payment to Executive in
         an amount equal to a pro rata portion of the Executive's annual actual
         cash incentive bonus for Company's fiscal year preceding the year of
         termination based on the number of completed months of Executive's
         employment in the fiscal year plus nine (9);

                  (d) the vesting of all outstanding stock options held by
         Executive shall be accelerated so that the amount of shares vested
         under such option shall equal that number of shares which would have
         been vested if the Executive had continued to render services to the
         Company for nine (9) continuous months after the date of his
         termination of employment; and

                  (e) the Company shall pay all costs which the Company would
         otherwise have incurred to maintain all of Executive's health and
         welfare, and retirement benefits (either on the same or substantially
         equivalent terms and conditions) if the Executive had continued to
         render services to the Company for nine (9) continuous months after the
         date of his termination of employment.

The Company shall have no further obligations to Executive other than those set
forth in the preceding subparagraphs. During the period when such severance
compensation is being paid to Executive, Executive shall not (i) engage,
directly or indirectly, in providing services to any other business program or
project that is competitive to a program or project being conducted by the
Company or any Affiliated Company at the time of such employment termination
(provided that Executive may own less than two percent (2%) of the outstanding
securities of any publicly traded corporation), or (ii) hire, solicit, or
attempt to solicit on behalf of himself or any other party or any employee or
exclusive consultant of the Company. If the Company terminates this Agreement or
the employment of Executive with the Company other than pursuant to Section 6.1,
6.2 or 6.3, then this section 6.4 shall apply.



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         6.5 CONSTRUCTIVE TERMINATION A Constructive Termination shall be deemed
to be a termination of employment of Executive without cause pursuant to Section
6.4. . For Purposes of this Agreement, a "Constructive Termination" means that
the Executive voluntarily terminates his employment except in connection with
the termination of his employment for death, disability, retirement, fraud,
misappropriation, embezzlement (or any other occurrence which constitutes
"Cause" under section 6.3) or any other voluntary termination of employment by
Executive other than a Constructive Termination after any of the following are
undertaken without Executive's express written consent:

                  (a) the assignment to Executive of any duties or
         responsibilities which result in any diminution of position as judged
         against the duties and responsibilities assigned to executives with
         Executive's position in the Company's peer group of companies and shall
         not include (i) duties and responsibilities assigned to Executive with
         the understanding that as the Company grows and management staff
         increases in number, such duties and responsibilities will eventually
         be reassigned in a manner consistent with the Company's peer group of
         companies, (ii) change in reporting relationship that does not change
         in any material way the Executive's duties and responsibilities or
         (iii) any change in duties or responsibilities or reporting
         relationships that Executive does not identify as Constructive
         Termination to the Chief Executive Officer in writing within 15 days
         following the Chief Executive Officer's proposal of such change to
         Executive;

                  (b) a reduction by the Company in Executive's annual Base
         Salary by greater than five percent (5%);

                  (c) a relocation of Executive or the Company's principal
         executive offices if Executive's principal office is at such offices,
         to a location more than forty (40) miles from the location at which
         Executive is then performing his duties, except for an opportunity to
         relocate which is accepted by Executive in writing;

                  (d) any material breach by the Company of any provision of
         this Agreement; or

                  (e) any failure by the Company to obtain the assumption of
         this Agreement by any successor or assign of the Company.

         6.6 TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of a
termination Without Cause or Constructive Termination within six (6) months
after a Change in Control (as defined below) or Executive's voluntary
termination within thirty (30) days following the six (6) month anniversary of a
Change in Control, the Company shall pay to Executive a lump sum severance
payment in an amount equal to one (1) times Executive's then Base Salary plus
annual actual cash incentive bonus for Company's fiscal year preceding the year
of termination). In addition, the Executive will receive at Executive's option
(i) accelerated vesting of all stock options held by Executive by reason of the
assumption or substitution of successor corporation stock options for the
Executive's unvested Company stock options at the time of the Change in Control
pursuant to the terms of the Company's 1992 and/or 2003 Stock Incentive Plans,
as amended,


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or (ii) a cash payment equal to the cash value of all unvested Company stock
options held by Executive at the time of the Change in Control. In addition, the
Executive will be reimbursed for the increase in federal and state income taxes
payable by Executive by reason of the benefits provided under this Section 6.6.

         6.7 CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall have occurred if at any time during the term of Executive's
employment hereunder, any of the following events shall occur:

                  (a) The Company is merged, or consolidated. or reorganized
         into or with another corporation or other legal person, and as a result
         of such merger, consolidation or reorganization less than fifty percent
         (50%) of the combined voting power of the then-outstanding securities
         of such corporation or person immediately after such transaction are
         held in the aggregate by the holders of voting securities of the
         Company immediately prior to such transaction;

                  (b) The Company sells all or substantially all of its assets
         or any other corporation or other legal person and thereafter, less
         than fifty percent (50%) of the combined voting power of the
         then-outstanding voting securities of the acquiring or consolidated
         entity are held in the aggregate by the holders of voting securities of
         the Company immediately prior to such sale;

                  (c) There is a report filed after the date of this Agreement
         on Schedule 13 D or schedule 14 D-1 (or any successor schedule, form or
         report), each as promulgated pursuant to the Securities Exchange Act of
         1934 (the "Exchange Act") disclosing that any person (as the term
         "person" is used in Section 13(d)(3) or Section 14(d)(2) of the
         exchange Act) has become the beneficial owner (as the term beneficial
         owner is defined under Rule 13d-3 or any successor rule or regulation
         promulgated under the Exchange Act) representing fifty percent (50%) or
         more of the combined voting power of the then-outstanding voting
         securities of the Company;

                  (d) The Company shall file a report or proxy statement with
         the Securities and Exchange Commission pursuant to the Exchange Act
         disclosing in response to item 1 of Form 8-X thereunder or Item 5(f) of
         Schedule 14 A thereunder (or any successor schedule, form or report or
         item therein) that the change in control of the Company has or may have
         occurred or will or may occur in the future pursuant to any
         then-existing contract or transaction; or

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


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         6.8 TERMINATION BY EXECUTIVE. At any time, Executive may terminate his
employment by giving thirty (30) days advance written notice to the Company. The
Company shall pay Executive all Accrued Compensation, but no other compensation
or reimbursement of any kind, including without limitation, severance
compensation, and thereafter the Company's obligations hereunder shall
terminate.

         6.9 MITIGATION. Except as otherwise specifically provided herein,
Executive shall not be required to mitigate the amount of any payment provided
under this Agreement by seeking other employment or self-employment, nor shall
the amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or through self-employment or by retirement benefits after the date of
Executive's termination of employment from the Company.

         6.10 COORDINATION. If upon termination of employment, Executive becomes
entitled to rights under other plans, contracts or arrangements entered into by
the Company, this Agreement shall be coordinated with such other arrangements so
that Executive's rights under this Agreement are not reduced, and that any
payments under this Agreement offset the same types of payments otherwise
provided under such other arrangements, but do not otherwise reduce any payments
or benefits under such other arrangements to which Executive becomes entitled.

                                    ARTICLE 7
                               GENERAL PROVISIONS

         7.1 GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement and the rights of the parties thereunder shall be
interpreted and enforced under California law without reference to principles of
conflicts of laws. The parties expressly agree that inasmuch as the Company's
headquarters and principal place of business are located in California, it is
appropriate that California law govern this Agreement.

         7.2 ASSIGNMENT; SUCCESSORS BINDING AGREEMENT.

                  (a) Executive may not assign, pledge or encumber his interest
         in this Agreement or any part thereof.

                  (b) The Company will require any successor (whether direct or
         indirect, by purchase, merger, consolidation or otherwise) to all or
         substantially all of the business and/or assets of the Company, by
         operation of law or by agreement in form and substance reasonably
         satisfactory to Executive, to assume and agree to perform this
         Agreement in the same manner and to the same extent that the Company
         would be required to perform it if no such succession had taken place.

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

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         shall be paid in accordance with the terms of this Agreement to
         Executive's devisee, legates or other designee or, if there be no such
         designee, to his estate.

         7.3 CERTAIN REDUCTION OF PAYMENTS. In the event that any payment or
benefit received or to be received by Executive under this Agreement would
result in all or a portion of such payment to be subject to the excise tax on
"golden parachute payments" under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), then Executive's payment shall be either (a) the
full payment or (b) such lesser amount which would result in no portion of the
payment being subject to excise tax under Section 4999 of the Code, whichever of
the foregoing amounts, taking into account the applicable Federal, state and
local employment taxes, income taxes, and the excise tax imposed by Section 4999
of the Code, results in the receipt by Executive on an after-tax basis, of the
greatest amount of the payment notwithstanding that all or some portion of the
payment may be taxable under Section 4999 of the Code.

         7.4 NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

         To the Company:

         Neurocrine Biosciences, Inc.
         10555 Science Center Drive
         San Diego, CA 92121
         Attn.: President & Chief Executive Officer

         To Executive:

         Kevin C. Gorman, Ph.D.

         7.5 MODIFICATION; WAIVER; ENTIRE AGREEMENT. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by Executive and such officer as may
be specifically designated by the Board of the Company. No waiver by either
party hereto at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.

         7.6 VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.



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         7.7 CONTROLLING DOCUMENT. Except to the extent described in Section
6.10, in case of conflict between any of the terms and condition of this
Agreement and the document herein referred to, the terms and conditions of this
Agreement shall control.

         7.8 EXECUTIVE ACKNOWLEDGMENT. Executive acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.

         7.9 REMEDIES.

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

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

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

         7.11 PREVAILING PARTY EXPENSES. In the event that any action or
proceeding is commenced to enforce the provisions of the Agreement, the court
adjudicating such action or proceeding shall award to the prevailing party all
costs and expenses thereof, including, but not limited to, all reasonable
attorneys' fees, court costs, and all other related expenses.




EXECUTED BY THE PARTIES AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.

KEVIN C. GORMAN, PH.D.                NEUROCRINE BIOSCIENCES, INC

/s/ Kevin C. Gorman                   By: /s/ Gary A. Lyons
-------------------------                 -----------------------------------
                                          Gary A. Lyons
                                          President & Chief Executive Officer



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