Exhibit 10.1

 

AGREEMENT

 

THIS AGREEMENT (this “Agreement”) is made as of the 19th day of August, 2005
(the “Effective Date”) by and between MAXIM PHARMACEUTICALS, INC., a Delaware
corporation (the “Company”), and LARRY G. STAMBAUGH, an individual
(“Stambaugh”).

 

BACKGROUND

 

A.                                   Stambaugh is currently the Chairman,
President and Chief Executive Officer of the Company, and has served in these
capacities since 1993.

 

B.                                     On or about December 8, 2000, the Company
entered into a $2.85 million full recourse, interest bearing, secured revolving
promissory note with Stambaugh, which was amended as of December 8, 2001 (the
“Loan”).  The purpose of the Loan was to avoid the necessity of any officer
selling the Company’s stock during periods of volatility and was viewed at the
time to be in the best interest of the Company and its shareholders.  Since the
original date of the Loan to the Effective Date, Stambaugh has paid
approximately $394,000 in interest on the Loan, and has additionally forfeited
to the Company all security pledged for the Loan.  The Loan is currently in
default, but the Loan has not (and will not) be in any manner modified or
extended by the Company.  The current amount owed by Stambaugh under the Loan,
including accrued interest, is referred to herein as the “Aggregate Loan
Indebtedness”.

 

C.                                     The Compensation Committee of the
Company’s Board of Directors, together with the Company’s full Board of
Directors (other than Stambaugh),  has extensively reviewed and analyzed, among
other matters and factors, the Loan, all related facts and circumstances,
including the Company’s current needs, prospects and contingency plans,
Stambaugh’s current assets and liabilities and the Company’s resulting ability
or inability to collect the Aggregate Loan Indebtedness, and the best interests
of the Company’s stockholders and creditors.

 

D.                                    In the context of the foregoing
background, the parties are entering into this Agreement.

 

AGREEMENT

 

1.                                       Forgiveness.  Based on the factors set
forth above, and in consideration of such factors, the Company does hereby
forgive all remaining Aggregate Loan Indebtedness, including any accrued and/or
unpaid interest, under the Loan as of the Effective Date of this Agreement (the
“Note Forgiveness”).  The Loan is not amended, modified or extended as a result
of such Note Forgiveness, but instead is hereby extinguished and no amounts
remain outstanding.

 

2.                                       Release.

 

(a)                                  Except for the obligations created by this
Agreement, Stambaugh hereby forever releases and discharges the Company and its
past and present officers, directors, agents, employees, shareholders,
attorneys, accountants, consultants, successors, assignees and representatives
from any and all causes of action, actions, judgments, liens, indebtedness,
damages, losses, claims, claims for relief, claims in bankruptcy, liabilities
and demands of every

 

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kind and character, whether known or unknown, in any way arising out of or in
connection with the Loan, including, without limitation, any claim arising out
of or relating to any discussions or negotiations pertaining to the Loan, the
request of the Company that Stambaugh enter into the Loan in lieu of selling
Company stock or Stambaugh’s decision to borrow (or the Company’s actions in
lending) any amount thereunder.

 

(b)                                 In furtherance of these intentions,
Stambaugh hereby expressly waives any and all rights or benefits conferred by
the provisions of Section 1542 of the California Civil Code and any similar
provisions under the laws of any other state or under federal law and expressly
consents that this Agreement shall be given full force and effect according to
each and all of its express terms and conditions, including those relating to
unknown and unsuspected claims, demands, and causes of action, if any, in any
way relating to the Loan.  Section 1542 of the California Civil Code provides as
follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

(c)                                  Stambaugh represents and warrants that he
has not assigned or transferred, or purported to assign or transfer, to any
person or entity any claim, right, or cause of action released hereunder, and
further agrees to indemnify the Company and all of the other released persons
and entities against any liability, loss, damage, cost or expense, and including
actual attorneys fees, arising out of any breach of this representation and
warranty.

 

4.                                       Miscellaneous.

 

(a)                                  Construction.  The language of this
Agreement has been negotiated between the parties and shall be construed simply,
according to its plain meaning, and not strictly for or against either party
regardless of the source of draftsmanship.

 

(b)                                 Counterparts.  This Agreement may be
executed in counterparts, and each counterpart, once executed, shall have the
efficacy of a signed original.  True and correct copies of signed counterparts
may be used in place of originals for any purpose.  Signatures transmitted
electronically or via facsimile shall be deemed to be original signatures.

 

(c)                                  Attorneys’ Fees And Costs.  In the event of
future litigation in connection with or concerning the subject matter of this
Agreement or any breach of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses incurred by that party, including
actual attorneys fees, expert and consultant fees, and costs in addition to any
other relief to which it may be entitled.  The parties further agree that the
prevailing party shall be entitled to recover all costs, including actual
attorney’s fees and costs, of collecting any costs and expenses awarded pursuant
to the prior provision.

 

(d)                                 Independent Legal Advice.  The parties
acknowledge that they have been advised by their own independently selected
counsel and other advisors in connection with this Agreement and enter into this
Agreement solely on the basis of that advice and on the basis of their own
independent investigation of all of the facts, laws, and circumstances material
to this

 

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Agreement or any provision hereof and not in any manner or to any degree based
upon any statement or omission by any other party and/or their counsel.

 

(e)                                  Authority To Execute Agreement.  Each
person whose signature appears hereon represents, warrants and guarantees that
he has been duly authorized and has full authority to execute this Agreement on
behalf of the party on whose behalf this Agreement is executed.

 

(f)                                    Binding Agreement.  This Agreement shall
be binding upon the parties and their successors in interest and assigns.

 

(g)                                 No Modification.  No term of this Agreement
shall be modified, waived, or changed except by an instrument in writing signed
by both parties.

 

(h)                                 Severability.  If for any reason any clause
or provision of this Agreement should be held unenforceable, invalid or in
violation of law by any court or other tribunal, then the remaining clauses and
provisions hereof shall nevertheless remain in full force and effect.

 

BY EXECUTING THIS AGREEMENT, EACH OF THE PARTIES ACKNOWLEDGES THAT IT OR HE HAS
READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ITS TERMS AND PROVISIONS.

 

IN WITNESS WHEREOF, the parties have entered into and delivered this Agreement
as of the Effective Date.

 

MAXIM PHARMACEUTICALS, INC.

LARRY G. STAMBAUGH

 

 

 

 

By:

/s/ F. Duwaine Townsen

 

By:

/s/ Larry G. Stambaugh

 

 

F. Duwaine Townsen

 

Larry G. Stambaugh

 

Lead Independent Director of
the Board of Directors

 

 

 

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