EXHIBIT 10.57
Employment Agreement
By and Between
Epimmune Inc.
and
Bonnie Mills

 

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Table of Contents

                      Page    
1.
  EMPLOYMENT     1    
2.
  LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION     2    
3.
  COMPENSATION OF THE EXECUTIVE     3    
4
  TERMINATION     5    
5.
  CONFIDENTIAL AND PROPRIETARY INFORMATION; NONSOLICITATION     10    
6.
  ASSIGNMENT AND BINDING EFFECT     10    
7.
  NOTICES     10    
8.
  CHOICE OF LAW     11    
9.
  INTEGRATION     11    
10.
  AMENDMENT     11    
11.
  WAIVER     11    
12.
  SEVERABILITY     12    
13.
  INTERPRETATION; CONSTRUCTION     12    
14.
  REPRESENTATIONS AND WARRANTIES     12    
15.
  COUNTERPARTS     12    
16.
  ARBITRATION     12    
17.
  TRADE SECRETS OF OTHERS     13    
18.
  ADVERTISING WAIVER     13  

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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is made and entered into as of
June 6, 2005 by and among EPIMMUNE INC., a Delaware corporation (the “Company”)
and Bonnie Mills (the “Executive”). This Agreement shall become effective (the
“Effective Date”) as of the closing date of that certain Share Exchange
Agreement made and entered into as of March 15, 2005 (the “Exchange Agreement”),
as amended, between the Company and certain shareholders of IDM, S.A., a société
anonyme organized under the laws of France (“IDM”). The Company and the
Executive are hereinafter collectively referred to as the “Parties”, and
individually referred to as a “Party”. Those capitalized terms used herein and
not otherwise defined shall have the meanings given to such terms in the
Exchange Agreement.
Recitals
A. The Executive currently serves as Vice President, Executive Director,
Clinical Operations of IDM.
B. The Company desires assurance of the association and services of the
Executive in order to retain the Executive’s experience, skills, abilities,
background and knowledge, and is willing to engage the Executive’s services on
the terms and conditions set forth in this Agreement.
C. The Executive desires to be in the employ of the Company, and is willing to
accept such employment on the terms and conditions set forth in this Agreement.
Agreement
     In consideration of the foregoing Recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
     1. Employment.
          1.1 Term. The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, upon the terms and conditions set
forth in this Agreement. The term of this Agreement shall begin on the Effective
Date and shall continue until it is terminated pursuant to Section 4 herein (the
“Term”).
          1.2 Title. The Executive shall have the title of Vice President,
Clinical Operations and General Manager of U.S. Operations of the Company and
shall serve in such other capacity or capacities as such officer(s) of the
Company to whom the Executive reports may from time to time prescribe.
          1.3 Duties. The Executive shall do and perform all services, acts or
things necessary or advisable to manage and conduct the business of the Company
and which are

 

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normally associated with the position of Vice President, Clinical Operations and
General Manager of U.S. Operations of the Company.
          1.4 Policies and Practices. The employment relationship between the
Parties shall be governed by the policies and practices established by the
Company and the Company’s Board of Directors (the “Board”). The Executive shall
acknowledge in writing that she has read the Company’s Employee Handbook that
will govern the terms and conditions of her employment with the Company, along
with this Agreement. In the event that the terms of this Agreement differ from
or are in conflict with the Company’s policies or practices or the Company’s
Employee Handbook, this Agreement shall control.
          1.5 Location. Unless the Parties otherwise agree in writing, during
the Term, the Executive shall perform the services the Executive is required to
perform pursuant to this Agreement at the Company’s offices, located in Irvine,
California; provided, however, that the Company may from time to time require
the Executive to travel temporarily to other locations in connection with the
Company’s business.
     2. Loyal and Conscientious Performance; Noncompetition.
          2.1 Loyalty. During the Executive’s employment by the Company, the
Executive shall devote the Executive’s full business energies, interest,
abilities and productive time to the proper and efficient performance of the
Executive’s duties under this Agreement.
          2.2 Covenant not to Compete. In exchange for the consideration
provided herein and any benefit the Executive receives as a result of the
Exchange Agreement, the Executive will not, during the Term and during any Good
Reason or Without Cause Severance (as these terms are hereinafter defined)
Period specified by this Agreement, if severance is paid, engage in competition
with the Company and/or any of its controlled Affiliates (as defined below),
either directly or indirectly, in any manner or capacity, as adviser, principal,
agent, affiliate, promoter, partner, officer, director, employee, stockholder,
owner, co-owner, consultant, or member of any association or otherwise, in any
phase of the business of developing, manufacturing and marketing of cancer
vaccines or related products or services, except with the prior written consent
of the Board. For purposes of this Agreement, “Affiliate,” means, with respect
to any specific entity, any other entity that, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with such specified entity.
          2.3 Agreement not to Participate in Company’s Competitors. During the
Term and during any Good Reason or Without Cause Severance Period specified by
this Agreement, if severance is paid, the Executive agrees not to acquire,
assume or participate in, directly or indirectly, any position, investment or
interest known by the Executive to be adverse or antagonistic to the Company,
its business or prospects, financial or otherwise or in any company, person or
entity that is, directly or indirectly, in competition with the business of the
Company or any of its Affiliates. Ownership by the Executive, in professionally
managed funds over which the Executive does not have control or discretion in
investment decisions, or as a passive investment, of less than two percent (2%)
of the outstanding shares of capital stock of any corporation with one or more
classes of its capital stock listed on a national securities

2.

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exchange or publicly traded on the Nasdaq Stock Market or in the
over-the-counter market (a “Publicly Traded Company”) shall not constitute a
breach of this Section 2.3.
     3. Compensation of the Executive.
          3.1 Base Salary. The Company shall pay the Executive a base salary at
the annualized rate of two hundred thirty thousand ($230,000) per year (“Base
Salary”), less payroll deductions and all required withholdings, payable in
regular periodic payments in accordance with the Company’s normal payroll
practices. Such base salary shall be prorated for any partial year of employment
on the basis of a 365-day fiscal year.
          3.2 Annual Bonus. The Executive shall be entitled to earn a bonus on
an annual basis, the payment of which shall be based on the satisfaction of
annual performance objectives established by the Board or the Compensation
Committee of the Board in its sole discretion (the “Annual Bonus”). The target
amount for the Annual Bonus with respect to fiscal year 2005 shall be equal to
25% of the Base Salary. The Board or Compensation Committee will have the
discretion to determine the target bonus levels in future years. The Annual
Bonus shall be payable within 60 days following the last day of the Company’s
fiscal year.
          3.3 Changes to Compensation. The Executive’s compensation may be
changed from time to time by mutual agreement of the Executive and the Company.
          3.4 Employment Taxes. All of the Executive’s compensation shall be
subject to customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.
          3.5 Benefits. The Executive shall, in accordance with Company policy
and the terms of the applicable plan documents, be eligible to participate in
benefits under any executive benefit plan or arrangement which may be in effect
from time to time and made available to the Company’s executive or key
management employees.
          3.6 Restricted Stock Grant. Pursuant to the terms of the Company’s
2000 Stock Plan, as amended (the “Plan”), the Company shall grant to the
Executive the right to receive a total of fifty thousand (50,000) shares of the
common stock of the Company (the “Common Stock”) which right shall vest as to
50,000 shares on the date forty-two months following the Effective Date,
provided that the Executive remains a full time employee of the Company without
break or interruption in service. Any shares subject to the restricted stock
grant that have vested will be issued to the Executive on the earlier of (a) the
Executive’s separation from service (as such term is used in
Section 409A(a)(2)(A)(i)) of the Internal Revenue Code of 1986, as amended (the
“Code”)), provided that, if the Executive’s separation occurs on a date during
which executive officers of the Company are prohibited by Company policy or
applicable securities or exchange rules from trading the stock of the Company,
the vested shares shall not be issued until the next business day during which
trading is not prohibited; and (b) forty-eight (48) months from the Effective
Date; provided that, if the forty-eight month anniversary of the Effective Date
occurs on a date during which executive officers of the Company are prohibited
by Company policy or applicable securities or exchange rules from

3.

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trading the stock of the Company, the vested shares shall not be issued until
the next business day during which trading is not prohibited. Notwithstanding
the foregoing, the issuance of the vested shares shall be made in a manner that
complies with the requirements of Code Section 409A, which may include, without
limitation, deferring the issuance of such shares for six (6) months after the
Executive’s separation from service; provided, however, that nothing in this
sentence shall require the issuance of vested shares to the Executive earlier
than they would otherwise be issued under this Agreement.
               3.6.1 Accelerated Vesting. Notwithstanding the foregoing vesting
schedule, the vesting of shares pursuant to the restricted stock grant shall be
accelerated as follows, provided that on each of the following events the
Executive remains a full time employee of the Company without break or
interruption in service on the applicable vesting date: (i) upon the closing of
a financing which raises net additional capital for the Company of at least five
million dollars ($5,000,000.00) within twelve (12) months after the Effective
Date (the “Initial Financing”) ten thousand (10,000) shares shall immediately
vest; (ii) upon the filing by the Company of a marketing approval application
with the Food and Drug Administration or the European Agency for the Evaluation
of Medicinal Products with respect to the Company’s Mepact product within
eighteen (18) months after the Effective Date, twenty-five thousand (25,000)
shares shall immediately vest; (iii) upon the closing of a second financing
which raises net additional capital for the Company of at least five million
dollars ($5,000,000.00) within twenty-four (24) months after the Effective Date,
five thousand (5,000) shares shall immediately vest; and (iv) upon approval by
the Food and Drug Administration or the European Agency for the Evaluation of
Medicinal Products of the marketing of the Company’s Mepact product prior to the
third anniversary of the Effective Date, ten thousand (10,000) shares shall
immediately vest. For purposes of the additional vesting provided in this
Section 3.6.1, the accelerated vesting, if any, shall be with respect to shares
scheduled to vest last in time.
          3.7 Option Grant. Subject to approval by the Board, the Company shall
grant to the Executive on the Effective Date as soon as practicable following
the Effective Date an Option (the “Option”) to purchase one hundred fifty
thousand (150,000) shares of Common Stock. The Option shall vest over a
four-year period commencing on the date of grant, with 25% of the shares subject
to the Option vesting on the first anniversary of the date of grant, and the
balance of the shares subject to the Option vesting ratably on a daily basis
during the next 36 months thereafter, provided that the Executive remains a full
time employee of the Company without break or interruption in service as of the
vesting dates. Except as provided in this Agreement, the Option shall be granted
pursuant to and be subject to the terms and conditions of the Plan.
          3.8 Prior Stock Options. As to any outstanding options to purchase the
ordinary shares of IDM (the “IDM Ordinary Shares”) granted to the Executive
prior to the Effective Date for which the Executive receives substitute options
under the Plan (the “Pre- Exchange Options”) which have a per share exercise
price that is equal to or greater than the fair market value of the Company
Shares on the Effective Date (the “UnderWater Options”), the UnderWater Options
shall be exercisable by the Executive until the later of (i) December 31, 2007,
or (ii) three (3) months following the effective date of the Executive’s
termination of employment with the Company.

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     4. Termination.
          4.1 Termination By the Company. The Executive’s employment with the
Company may be terminated under the following conditions:
               4.1.1 Termination for Death or Disability. The Executive’s
employment with the Company shall terminate effective upon the date of the
Executive’s death or “Complete Disability” (as defined in Section 4.5.1 hereof),
provided, however, that this Section 4.1.1 shall in no way limit the Company’s
obligations to provide such reasonable accommodations to the Executive as may be
required by law.
               4.1.2 Termination by the Company For Cause. The Company may
terminate the Executive’s employment under this Agreement for “Cause” (as
defined in Section 4.5.3) by delivery of written notice to the Executive
specifying the Cause or Causes relied upon for such termination, provided that
such notice is delivered within two (2) months following the occurrence of the
Company learning of any event or events constituting “Cause”. Any notice of
termination given pursuant to this Section 4.1.2 shall effect termination as of
the date of the notice or such date as specified in the notice.
               4.1.3 Termination by the Company Without Cause. The Company may
terminate the Executive’s employment under this Agreement at any time and for
any reason, or no reason. Such termination shall be effective on the date the
Executive is so informed or as otherwise specified by the Company.
          4.2 Termination By The Executive. The Executive may terminate her
employment with the Company at any time and for any reason or no reason,
including, but not limited, under the following conditions:
               4.2.1 Good Reason. The Executive may terminate her employment
under this Agreement for “Good Reason” (as defined below in Section 4.5.2
hereof) by delivery of written notice to the Company specifying the “Good
Reason” relied upon by the Executive for such termination, provided that such
notice is delivered within two (2) months following the occurrence of any event
or events constituting Good Reason.
               4.2.2 Without Good Reason. The Executive may terminate the
Executive’s employment hereunder for other than “Good Reason” upon sixty
(60) days written notice to the Company.
          4.3 Termination by Mutual Agreement of the Parties. The Executive’s
employment pursuant to this Agreement may be terminated at any time upon a
mutual agreement in writing of the Parties. Any such termination of employment
shall have the consequences specified in such agreement.
          4.4 Compensation Upon Termination.
               4.4.1 Death or Complete Disability. If the Executive’s employment
shall be terminated by death or Complete Disability as provided in Section 4.1.1
hereof, i) the

5.

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Company shall pay to the Executive, and/or the Executive’s heirs, the
Executive’s Base Salary and accrued and unused vacation benefits earned through
the date of termination at the rate in effect at the time of termination, less
standard deductions and withholdings, ii) any shares subject to the restricted
stock grant that have vested as of the Executive’s death or Complete Disability
as provided under Section 3.6 hereof shall be delivered to the Executive’s
estate as soon as practicable, iii) the Executive shall fully vest in her
Pre-Exchange Options and the Executive’s outstanding stock options shall expire
in accordance with the terms of the applicable award agreements (as amended by
Section 3.8 hereof), and iv) the Company shall thereafter have no further
obligations to the Executive and/or the Executive’s heirs under this Agreement,
except to the extent that the Executive is eligible for benefits pursuant to any
insurance policies maintained by the Company in connection with her death or
Complete Disability, and except as otherwise provided by law.
               4.4.2 For Cause. If the Executive’s employment shall be
terminated by the Company for Cause, then i) the Company shall pay the
Executive’s Base Salary and accrued and unused vacation benefits earned through
the date of termination at the rate in effect at the time of termination, less
standard deductions and withholdings, ii) the Executive’s right to receive
unvested shares as provided in Section 3.6 hereof immediately shall expire, iii)
the Executive’s outstanding stock options shall expire in accordance with the
terms of the applicable award agreements (as amended by Section 3.8 hereof), and
iv) the Company shall thereafter have no further obligations to the Executive
under this Agreement, except as provided by law.
               4.4.3 Resignation Without Good Reason. If the Executive’s
employment hereunder shall be terminated by the Executive without Good Reason,
then i) the Company shall pay the Executive’s Base Salary and accrued and unused
vacation benefits earned through the date of termination at the rate in effect
at the time of termination, less standard deductions and withholdings, ii) the
Executive’s right to receive unvested shares as provided in Section 3.6 hereof
immediately shall expire, iii) the Executive shall fully vest in her Pre-
Exchange Options and the Executive’s outstanding stock options shall expire in
accordance with the terms of the applicable award agreements (as amended by
Section 3.8 hereof), and iv) the Company shall thereafter have no further
obligations to the Executive under this Agreement, except as provided by law and
with respect to the delivery of vested shares under Section 3.6 hereof.
               4.4.4 With Good Reason. If the Executive resigns with Good
Reason, then the Company shall pay the Executive’s Base Salary and accrued and
unused vacation earned through the date of termination, at the rate in effect at
the time of termination subject to standard deductions and withholdings. In
addition, subject to the limitations stated in Section 4.4.6 herein and upon the
Executive’s furnishing to the Company, and not revoking, an effective waiver and
release of claims (a form of which is attached hereto as Exhibit A) (the
“Release”), the Executive shall be entitled to:
               (i) continued payment of the Executive’s annual Base Salary in
effect at the time of termination for a period beginning upon the Effective Date
specified in Exhibit A and continuing until the earlier of i) twelve (12) months
thereafter or, ii) the date on which the Executive begins full-time employment
with or in an entity or endeavor other than the Company

6.

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(the “Good Reason Severance Period”), less standard deductions and withholdings,
paid pursuant to the Company’s standard payroll practices; and
               (ii) in the event the Executive elects continued coverage under
COBRA in accordance with applicable law, the Company will reimburse the
Executive for the same portion of Executive’s COBRA health insurance premium as
the percentage of health insurance premiums that it paid during the Executive’s
employment during the Good Reason Severance Period; and
               (iii) the accelerated and full vesting of all Pre-Exchange
Options such that the Pre-Exchange Options shall be fully vested and exercisable
as of the Effective Date specified in Exhibit A (the Pre-Exchange Option will
otherwise be governed by the terms of the applicable stock option agreement and
plan, as amended by Section 3.8 hereof); and
               (iv) with respect to any unvested portion of the restricted stock
grant specified in Section 3.6 above and the Option specified in Section 3.7
above (collectively, the “Awards”),the accelerated vesting of the Awards such
that the Awards shall be fully vested and exercisable as of the effective date
of the Release.
               4.4.5 Without Cause. If the Company terminates the Executive’s
employment without Cause, the Company shall pay the Executive’s Base Salary and
accrued and unused vacation earned through the date of termination, at the rate
in effect at the time of termination subject to standard deductions and
withholdings. In addition, subject to the limitations stated in Section 4.4.6
herein and upon the Executive’s furnishing to the Company, and not revoking, an
effective waiver and release of claims (a form of which is attached hereto as
Exhibit A), the Executive shall be entitled to:
               (i) continuation of the Executive’s annual Base Salary in effect
at the time of termination for a period beginning upon the Effective Date of the
Release and continuing for twelve (12) months thereafter (the “Without Cause
Severance Period”), less standard deductions and withholdings, paid pursuant to
the Company’s standard payroll practices, or, at the Executive’s option, payment
in a lump sum of the Executive’s annual Base Salary, less standard deductions
and withholdings, within five (5) business days following the Effective Date of
the Release; and
               (ii) in the event the Executive elects continued coverage under
COBRA in accordance with applicable law, the Company will reimburse the
Executive for the same portion of Executive’s COBRA health insurance premium as
the percentage of health insurance premiums that it paid during the Executive’s
employment for up to the maximum period permitted under COBRA or Cal-COBRA, or
the Without Cause Severance Period, whichever is shorter, or, if earlier, until
the Executive begins full-time employment with or in an entity or endeavor other
than the Company;
               (iii) the accelerated and full vesting of all Pre-Exchange
Options such that the Pre-Exchange Options shall be fully vested and exercisable
as of the Effective Date of

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the Release (the Pre-Exchange Option will otherwise be governed by the terms of
the applicable stock option agreement and plan, as amended by Section 3.8
hereof); and
               (iv) with respect to any unvested portion of the Awards, the
accelerated vesting of the Awards such that the Awards shall be fully vested and
exercisable as of the Effective Date of the Release.
               4.4.6 Covenant Not to Compete. Notwithstanding any provisions in
this Agreement to the contrary, the Company’s obligations and the Executive’s
rights pursuant to Sections 4.4.3, 4.4.4 and 4.4.5 shall cease and be rendered a
nullity immediately should the Executive violate any provision of Section 2.2
herein, or should the Executive violate the terms and conditions of the
Executive’s Proprietary Information and Inventions Agreement.
          4.5 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
               4.5.1 Complete Disability. “Complete Disability” shall mean the
inability of the Executive to perform the Executive’s duties under this
Agreement, whether with or without reasonable accommodation, because the
Executive has become permanently disabled within the meaning of any policy of
disability income insurance covering employees of the Company then in force. In
the event the Company has no policy of disability income insurance covering
employees of the Company in force when the Executive becomes disabled, the term
“Complete Disability” shall mean the inability of the Executive to perform the
Executive’s duties under this Agreement, whether with or without reasonable
accommodation, by reason of any incapacity, physical or mental, which the Board,
based upon medical advice or an opinion provided by a licensed physician
acceptable to the Board, determines to have incapacitated the Executive from
satisfactorily performing all of the Executive’s usual services for the Company,
with or without reasonable accommodation, for a period of at least one hundred
twenty (120) days during any twelve (12) month period (whether or not
consecutive). Based upon such medical advice or opinion, the determination of
the Board shall be final and binding and the date such determination is made
shall be the date of such Complete Disability for purposes of this Agreement.
               4.5.2 Good Reason. “Good Reason” for the Executive to terminate
the Executive’s employment hereunder shall mean the occurrence of any of the
following events:
               (i) without the Executive’s consent, a significant reduction in
the Executive’s duties, position, authority, or responsibilities relative to the
duties, position, authority, or responsibilities in effect immediately prior to
such reduction;
               (ii) without the Executive’s consent, the relocation of the
Executive’s principal place of business to a point more than thirty-five
(35) miles from its location in Irvine, California;
               (iii) a reduction by the Company of the Executive’s base salary
as initially set forth herein or as the same may be increased from time to time,
provided that if such

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reduction occurs in connection with a Company-wide decrease in Executive
salaries and the percent decrease in the Executive’s base salary does not exceed
the percent decrease in base salary of any other executive of the Company such
reduction will not constitute Good Reason to terminate Executive’s employment
for purposes of this Agreement; or
               (iv) without the Executive’s consent, a failure by the Company to
obtain from any successor, before the succession takes place, an agreement to
assume the obligations and perform all of the terms and conditions of this
Agreement.
               4.5.3 Cause. “Cause” for the Company to terminate Executive’s
employment hereunder shall mean the occurrence of any of the following events,
as determined reasonably and in good faith by the Board or a committee
designated by the Board:
               (i) the Executive’s willful and habitual failure to attend to her
duties as assigned by the Board or officers of the Company to whom she reports;
               (ii) misconduct by the Executive which materially and adversely
reflects upon her ability to perform her duties for the Company;
               (iii) the Executive’s conviction of, or plea of guilty or nolo
contendere to, a felony that is likely to inflict or has inflicted material
injury on the business of the Company;
               (iv) the Executive’s engaging or in any manner participating in
any activity which violates any provisions of Section 2 hereof or the
Executive’s Proprietary Information and Inventions Agreement with the Company;
or
               (v) the Executive’s commission of any fraud against the Company,
its controlled Affiliates, employees, agents or customers or use or intentional
appropriation for her personal use or benefit of any funds or properties of the
Company not authorized by the Board to be so used or appropriated.
          4.6 Survival of Certain Sections. Sections 2.2, 4.4.3, 4.4.4, 4.4.5,
and 4.4.6, and 16 of this Agreement will survive the termination of this
Agreement.
          4.7 Parachute Payment. If any payment or benefit the Executive would
receive pursuant to this Agreement, any other agreement or arrangement or
otherwise (“Payment”) would (i) constitute a “parachute payment” within the
meaning of Code Section 280G, and (ii) but for this sentence, be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such
Payment shall be reduced to the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax or (y) the largest portion of the
Payment, which such amount, after taking into account all applicable federal,
state and local employment taxes, income taxes, and the Excise Tax (all computed
at the highest applicable marginal rate), results in the Executive’s receipt, on
an after-tax basis, of the greater amount of the Payment notwithstanding that
all or some portion of the Payment may be subject to the Excise Tax. If a
reduction in payments or benefits constituting “parachute payments” is necessary
so that the

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Payment equals the Reduced Amount, reduction shall occur in the following order
unless the Executive elects in writing a different order (provided, however,
that such election shall be subject to Company approval if made on or after the
effective date of the event that triggers the Payment): reduction of cash
payments; cancellation of accelerated vesting of stock awards; reduction of
employee benefits. In the event that acceleration of vesting of stock award
compensation is to be reduced, such acceleration of vesting shall be cancelled
in the reverse order of the date of grant of the Executive’s stock awards unless
the Executive elects in writing a different order for cancellation.
     An accounting firm agreed upon by the Company and the Executive shall
perform the foregoing calculations. The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made
hereunder.
     The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
the Executive and the Company within fifteen (15) calendar days after the date
on which the Executive’s right to a Payment is triggered (if requested at that
time by the Executive or the Company) or such other time as requested by the
Executive or the Company. If the accounting firm determines that no Excise Tax
is payable with respect to a Payment, either before or after the application of
the Reduced Amount, it shall furnish the Executive and the Company with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to such Payment. Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon the
Executive and the Company.
     5. Confidential And Proprietary Information; Nonsolicitation.
          As a condition of employment the Executive agrees to execute and abide
by the Proprietary Information and Inventions Agreement attached hereto as
Exhibit B.
     6. Assignment and Binding Effect.
          This Agreement shall be binding upon and inure to the benefit of the
Executive and the Executive’s heirs, executors, personal representatives,
assigns, administrators and legal representatives. Because of the unique and
personal nature of the Executive’s duties under this Agreement, neither this
Agreement nor any rights or obligations under this Agreement shall be assignable
by the Executive. This Agreement shall be binding upon and inure to the benefit
of the Company and its successors, assigns and legal representatives. Any such
successor of the Company will be deemed substituted for the Company under the
terms of this Agreement for all purposes. For this purpose, “successor” means
any person, firm, corporation or other business entity which at any time,
whether by purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.
     7. Notices.
          All notices or demands of any kind required or permitted to be given
by the Company or the Executive under this Agreement shall be given in writing
and shall be personally

10.

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delivered (and receipted for) or faxed during normal business hours or mailed by
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:

Epimmune Inc.
5820 Nancy Ridge Drive
San Diego, California 92121
(858) 860-2500
(858) 860-2600 fax
Attention: Jean-Loup Romet-Lemonne
If to the Executive:
at the Executive’s last known residential address on file with the Company.
Any such written notice shall be deemed given on the earlier of the date on
which such notice is personally delivered or three (3) days after its deposit in
the United States mail as specified above. Either Party may change its address
for notices by giving notice to the other Party in the manner specified in this
section.
     8. Choice of Law.
          This Agreement is made in San Diego, California. This Agreement shall
be construed and interpreted in accordance with the internal laws of the State
of California.
     9. Integration.
          This Agreement, including Exhibits A and B, the Executive’s stock
option agreements, and the Plan, as well as the Employee Handbook contains the
complete, final and exclusive agreement of the Parties relating to the terms and
conditions of the Executive’s employment and the termination of the Executive’s
employment, and supersedes all prior and contemporaneous oral and written
employment agreements or arrangements between the Parties. To the extent this
Agreement conflicts with the terms of the Employee Handbook, this Agreement
controls.
     10. Amendment.
          This Agreement cannot be amended or modified except by a written
agreement signed by the Executive and the Company.
     11. Waiver.
          No term, covenant or condition of this Agreement or any breach thereof
shall be deemed waived, except with the written consent of the Party against
whom the wavier is claimed, and any waiver or any such term, covenant, condition
or breach shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other term, covenant, condition or breach.

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     12. Severability.
          The finding by a court of competent jurisdiction of the
unenforceability, invalidity or illegality of any provision of this Agreement
shall not render any other provision of this Agreement unenforceable, invalid or
illegal. Such court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision,
which most accurately represents the Parties’ intention with respect to the
invalid or unenforceable term, or provision.
     13. Interpretation; Construction.
          The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement. This
Agreement has been drafted by legal counsel representing the Company, but the
Executive has been encouraged to consult with, and has consulted with, the
Executive’s own independent counsel and tax advisors with respect to the terms
of this Agreement. The Parties acknowledge that each Party and its counsel has
reviewed and revised, or had an opportunity to review and revise, this
Agreement, and the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.
     14. Representations and Warranties.
          The Executive represents and warrants that the Executive is not
restricted or prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this Agreement, and that
the Executive’s execution and performance of this Agreement will not violate or
breach any other agreements between the Executive and any other person or
entity.
     15. Counterparts.
          This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall contribute one and the
same instrument.
     16. Arbitration.
          To ensure the rapid and economical resolution of disputes that may
arise in connection with the Executive’s employment with the Company, the
Executive and the Company agree that any and all disputes, claims, or causes of
action, in law or equity, arising from or relating to Executive’s employment, or
the termination of that employment, will be resolved, to the fullest extent
permitted by law, by final, binding and confidential arbitration in San Diego,
California conducted by the Judicial Arbitration and Mediation
Services/Endispute, Inc. (“JAMS”), or its successors, under the then current
rules of JAMS for employment disputes; provided that 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. Accordingly, the
Executive and the Company hereby waive any right to a jury trial. Both the
Executive and the Company shall be entitled to all rights and remedies that
either the Executive or the Company would be entitled to pursue in a court of

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law. The Company shall pay all fees in excess of those which would be required
for filing a dispute if the dispute was decided in a court of law. Nothing in
this Agreement is intended to prevent either the Executive or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. Notwithstanding the foregoing, the Executive
and the Company each have the right to resolve any issue or dispute involving
confidential, proprietary or trade secret information, or intellectual property
rights, by Court action instead of arbitration.
     17. Trade Secrets Of Others.
          It is the understanding of both the Company and the Executive that the
Executive shall not divulge to the Company and/or its subsidiaries any
confidential information or trade secrets belonging to others, including the
Executive’s former employers, nor shall the Company and/or its Affiliates seek
to elicit from the Executive any such information. Consistent with the
foregoing, the Executive shall not provide to the Company and/or its Affiliates,
and the Company and/or its Affiliates shall not request, any documents or copies
of documents containing such information.
     18. Advertising Waiver.
          For so long as she remains employed, the Executive agrees to permit
the Company, and persons or other organizations authorized by the Company to
use, publish and distribute advertising or sales promotional literature
concerning the products and/or services of the Company, or the machinery and
equipment used in the provision thereof, in which the Executive’s name and/or
pictures of the Executive taken in the course of the Executive’s provision of
services to the Company appear. The Executive hereby waives and releases any
claim or right the Executive may otherwise have arising out of such use,
publication or distribution.

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     In Witness Whereof, the Parties have executed this Agreement as of the date
first above written.

          Epimmune Inc.    
 
       
By:
  /s/ Robert J. De Vaere              
Title:
  Chief Financial Officer              
Dated:
  June 6, 2005              
 
        Executive:    
 
        /s/ Bonnie Mills           Bonnie Mills    
 
        Dated: July 21, 2005    

14.

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EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
     In consideration of the payments and other benefits set forth in the
Employment Agreement dated June 6, 2005 (the “Employment Agreement”), to which
this form is attached, I, Bonnie Mills, hereby furnish Epimmune Inc., a Delaware
Corporation (the “Company”), with the following release and waiver (“Release and
Waiver”).
     In exchange for the consideration provided to me by the Employment
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, Affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to my
signing this Release and Waiver. This general release includes, but is not
limited to: (1) all claims arising out of or in any way related to my employment
with the Company or the termination of that employment; (2) all claims related
to my 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 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; (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 of 1967 (as amended) (“ADEA”), and the California Fair
Employment and Housing Act (as amended).
     I also acknowledge that I have read and understand 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 her favor at
the time of executing the release, which if known by him must have materially
affected her settlement with the debtor.” I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
     I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. If I am 40 years of age or older upon execution of this Release and
Waiver, I further acknowledge that I have been advised, as required by the Older
Workers Benefit Protection Act, that: (a) the release and waiver granted herein
does not relate to claims under the ADEA which may arise after this Release and
Waiver is executed; (b) I should consult with an attorney prior to executing
this Release and Waiver; and (c) I have twenty-one (21) days from the date of
termination of my employment with the Company in which to consider this Release
and Waiver (although I may choose voluntarily to execute this Release and Waiver
earlier); (d) I have seven (7) days following the execution of this Release and
Waiver to

 

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revoke my consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period has expired,
which shall be the eighth day following my execution of this Release and Waiver
(the “Effective Date”).
     I acknowledge my continuing obligations under my Proprietary Information
and Inventions Agreement, a copy of which is attached to the Employment
Agreement as Exhibit B. Pursuant to the Proprietary Information and Inventions
Agreement I understand that among other things, I must not use or disclose any
confidential or proprietary information of the Company and I must immediately
return all Company property and documents (including all embodiments of
proprietary information) and all copies thereof in my possession or control. I
understand and agree that my right to the severance pay and other benefits I am
receiving in exchange for my agreement to the terms of this Release and Waiver
is contingent upon my continued compliance with my Proprietary Information &
Inventions Agreement.
     This Release and Waiver, including Exhibit B to the Employment Agreement,
constitutes the complete, final and exclusive embodiment of the entire agreement
between the Company and me with regard to the subject matter hereof. I am not
relying on any promise or representation by the Company that is not expressly
stated herein. This Release and Waiver may only be modified by a writing signed
by both me and a duly authorized officer of the Company.

                     
Date:
          By:        
 
 
 
         
 
   
 
              Bonnie Mills    

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