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Exhibit 10.7    
    


 
 

NEORX CORPORATION
  KEY EXECUTIVE SEVERANCE AGREEMENT    
    


        This Key Executive Severance Agreement (VP) (this "Agreement"), dated as of February 28, 2003, is entered
into by and between NEORX CORPORATION, a Washington corporation (as supplemented by Section 10, the "Company"), and Melinda Kile (the
"Executive"). 



        The
Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to
ensure that the Company will have the continued dedication of the Executive, notwithstanding the fact that the Executive does not have any form of traditional employment contract or other assurance of
job security. The Board believes it is imperative to diminish any distraction of the Executive arising from the personal uncertainty and insecurity that arises in the absence of any assurance of job
security by providing the Executive with reasonable compensation and benefit arrangements in the event of termination of the Executive's employment by the Company under certain defined circumstances. 



        In
order to accomplish these objectives, the Board has caused the Company to enter into this Agreement. 


1.     Term  


        The initial term of this Agreement (the "Initial Term") shall be for a period of one (1) year from the date
of this Agreement as first appearing; provided, however, that this Agreement shall automatically renew for successive additional one (1) year periods ("Renewal
Terms"), unless notice of nonrenewal is given by either party to the other party at least ninety (90) days prior to the end of the Initial Term or any Renewal Term, and
provided further that if a Change of Control (as defined in the Change of Control Agreement referenced in Section 16 hereof) occurs during the Term, the Term shall automatically extend for the
duration of the Employment Period (as defined in the Change of Control Agreement). The "Term" of this Agreement shall be the Initial Term plus all
Renewal Terms and, if
applicable, the duration of the Employment Period. At the end of the Term, this Agreement shall terminate without further action by either the Company or the Executive. 


2.     Employment  


        The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company or by any affiliated or successor company is "at will" and may be terminated by either the Executive or the Company or its affiliated companies at any time
with or without cause, subject to the termination payments prescribed herein. 


3.     Attention and Effort  


        During any period of time that the Executive remains in the employ of the Company, and excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive will devote all her productive time, ability, attention and effort to the business and affairs of the Company and the discharge of the responsibilities assigned to her
hereunder, and will seek to perform faithfully and efficiently such responsibilities. It shall not be a violation of this Agreement for the Executive to (a) serve on corporate, civic or
charitable boards or committees, (b) deliver lectures, fulfill speaking engagements or teach at educational institutions, (c) manage personal investments, or (d) engage in
activities permitted by the policies of the Company or as specifically permitted by the Company, so long as such activities do not significantly interfere with the performance of the Executive's
responsibilities in accordance with this Agreement. It is expressly understood and agreed that to the extent any such activities have been conducted by the Executive prior to the Term, the continued
conduct of such activities (or the conduct of activities similar in nature and scope thereto) during the 





 



Term
shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. 


4.     Termination  


        During the Term, employment of the Executive may be terminated as follows, but, in any case, the nondisclosure provisions set forth in Section 7 hereof
shall survive the termination of this Agreement and the termination of the Executive's employment with the Company: 


        4.1   By the Company or the Executive  


        At any time during the Term, the Company may terminate the employment of the Executive with or without Cause (as defined below), and the Executive may terminate
her employment for Good Reason (as defined below) or for any reason, upon giving Notice of Termination (as defined below). 



        4.2   Automatic Termination  


        This Agreement and the Executive's employment shall terminate automatically upon the death or Total Disability of the Executive. The term
"Total Disability" as used herein shall mean the Executive's inability (with such accommodation as may be required by law and which places no undue
burden on the Company), as determined by a physician selected by the Company and acceptable to the Executive, to perform the Executive's essential duties for a period or periods aggregating twelve
(12) weeks in any three hundred sixty-five (365) day period as a result of physical or mental illness, loss of legal capacity or any other cause beyond the Executive's
control, unless the Executive is granted a leave of absence by the Board. 


        4.3   Notice of Termination  


        Any termination by the Company or by the Executive during the Term shall be communicated by Notice of Termination to the other party given in accordance with
Section 9 hereof. The term "Notice of Termination" shall mean a written notice that (a) indicates the specific termination provision in
this Agreement relied upon and (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment
under the provision so indicated. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive's or the Company's
rights hereunder. 


        4.4   Date of Termination  



        "Date of Termination" means (a) if the Executive's employment is terminated by reason of death, the last
day of the calendar month in which the Executive's death occurs, (b) if the Executive's employment is
terminated by reason of Total Disability, immediately upon a determination by the Company of the Executive's Total Disability, and (c) in all other cases, ten (10) days after the date of
personal delivery or mailing of the Notice of Termination. The Executive's employment and performance of services will continue during such ten (10) day period; provided, however, that the
Company may, upon notice to the Executive and without reducing the Executive's compensation during such period, excuse the Executive from any or all of her duties during such period. 


5.     Termination Payments  


        In the event of termination of the Executive's employment during the Term, all compensation and benefits shall terminate, except as specifically provided in this
Section 5. 


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        5.1   Termination by the Company Other Than for Cause or by the Executive for Good Reason  


        If during the Term the Company terminates the Executive's employment other than for Cause or the Executive terminates her employment for Good Reason, the
Executive shall be entitled to: 



        (a)   receive
payment of the following accrued obligations (the "Accrued Obligations"): 



        (i)    the
Executive's then current annual base salary through the Date of Termination to the extent not theretofore paid; and 


        (ii)   any
compensation previously deferred by the Executive (together with accrued interest or earnings thereon, if any) and any accrued vacation pay that would be payable
under the Company's standard policy, in each case to the extent not theretofore paid; 




        (b)   for
nine (9) months after the Date of Termination or until the Executive qualifies for comparable medical and dental insurance benefits from another employer,
whichever occurs first, the Company shall pay the Executive's premiums for health insurance benefit continuation for the Executive and her family members, if applicable, that the Company provides to
the Executive under the provisions of the federal Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), to the extent that the
Company would have paid such premiums had the Executive remained employed by the Company (such continued payment is hereinafter referred to as "COBRA
Continuation"); and 


        (c)   an
amount as severance pay equal to seventy five percent (75%) of the Executive's then current annual base salary for the fiscal year in which the Date of Termination
occurs, subject to payment and potential reduction as set forth in Sections 5.5 and 5.9 hereof. 




        5.2   Termination for Cause or Other Than for Good Reason  


        If during the Term the Executive's employment shall be terminated by the Company for Cause or by the Executive for other than Good Reason, this Agreement shall
terminate without further obligation on the part of the Company to the Executive, other than the Company's obligation to pay the Executive the Accrued Obligations to the extent theretofore unpaid. 


        5.3   Expiration of Term  


        In the event the Executive's employment is not terminated prior to expiration of the Term, this Agreement shall terminate without further obligation on the part
of the Company to the Executive. 


        5.4   Termination Because of Death or Total Disability  



        If the Executive's employment is terminated during the Term by reason of the Executive's death or Total Disability, this Agreement shall terminate automatically
without further obligation on the part of the Company to the Executive or her legal representatives under this Agreement, other than the Company's obligation to pay the Executive the Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as applicable in the case of the Executive's death) and to provide COBRA Continuation. 


        5.5   Payment Schedule and Offset for Other Earnings  



        All payments of Accrued Obligations, or any portion thereof payable pursuant to this Section 5, shall be made to the Executive within ten
(10) working days of the Date of Termination. Any severance payments payable to the Executive pursuant to Section 5.1(c) shall be made to the Executive in the form of salary
continuation, payable at normal payroll intervals during the nine (9) month period following the Date of Termination ("Payment Period"). Any
severance payments payable to the 


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Executive
pursuant to Section 5.1(c) on or after the date six (6) months after the Date of Termination ("Offset Period") shall be subject
to offset for other earnings received by the Executive as follows: 



        (a)   The
Executive shall have no affirmative duty to seek other employment or otherwise mitigate lost earnings during any part of the Payment Period. 


        (b)   The
Executive shall disclose to the Company any earnings received (or that the Executive had the right to receive) from employment, consulting or performance of other
personal services during the Offset Period, and the source(s) of such earnings. 


        (c)   The
Company, in each payroll period during the Offset Period that a severance payment is due, shall have the right to offset on a
dollar-for-dollar basis all such earnings that the Executive received or had the right to receive during that payroll period. 




        5.6   Cause  



        For purposes of this Agreement, "Cause" means cause given by the Executive to the Company and shall include,
without limitation, the occurrence of one or more of the following events: 



        (a)   a
clear refusal to carry out any material lawful duties of the Executive or any directions of the Board or senior management of the Company reasonably consistent with
those duties; 


        (b)   persistent
failure to carry out any lawful duties of the Executive or any directions of the Board or senior management reasonably consistent with those duties; provided,
however, that the Executive has been given reasonable notice and opportunity to correct any such failure; 



        (c)   violation
by the Executive of a state or federal criminal law involving the commission of a crime against the Company or any other criminal act involving moral
turpitude; 


        (d)   current
abuse by the Executive of alcohol or controlled substances; deception, fraud, misrepresentation or dishonesty by the Executive; or any incident materially
compromising the Executive's reputation or ability to represent the Company with investors, customers or the public; or 


        (e)   any
other material violation of any provision of this Agreement by the Executive, subject to the notice and opportunity to cure requirements of Section 8 hereof. 




        5.7   Good Reason  


        For purposes of this Agreement, "Good Reason" means: 



        (a)   reduction
of the Executive's annual base salary to a level below the level in effect on the date of this Agreement, regardless of any change in the Executive's duties or
responsibilities; 


        (b)   the
assignment to the Executive of any duties materially inconsistent with the Executive's position, authority, duties or responsibilities or any other action by the
Company the results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated and inadvertent action not taken in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the Executive; 


        (c)   the
Company's requiring the Executive to be based at any office or location more than thirty (30) miles from the Company's current location in Seattle,
Washington; 


        (d)   any
failure by the Company to comply with and satisfy Section 10 hereof, provided, however, that the Company's successor has received at least ten
(10) days' prior written notice from the Company or the Executive of the requirements of Section 10 hereof; or 



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        (e)   any
other material violation of any provision of this Agreement by the Company, subject to the notice and opportunity to cure requirements of Section 8 hereof. 




        5.8   General Release of Claims  


        As a condition to the payment contemplated by Section 5.1(c), the Executive shall execute a general release of claims against the Company in a form
satisfactory to the Company in its sole discretion. By way of example and not limitation, the general release of claims will include any claims for wages, bonuses, employment benefits, or damages of
any kind whatsoever, arising out of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any theory of wrongful discharge, any legal restriction on the
Company's right to terminate employment, or any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the federal Age
Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Washington Law Against Discrimination, or any other legal limitation on the employment
relationship. 


        5.9   Dispute regarding existence of Good Reason for Termination  


        In the event the Company disputes whether Good Reason existed for the Executive to terminate her employment for Good Reason, the Company shall pay salary
continuation as provided in Section 5.5 until the earliest of (i) settlement by the parties, (ii) determination by arbitration in accordance with Section 14 hereof that
Good Reason did not exist, and (iii) completion of the payments required by Section 5.5 and Section 5.1(c) hereof. If, pursuant to Section 14 hereof, an arbitrator
determines that Good Reason did not exist, the arbitrator shall also decide whether the Executive had a reasonable, good-faith basis for claiming that there was Good Reason to terminate.
If the arbitrator determines that there was not such a basis, the Executive shall be obligated to repay promptly to the Company the salary continuation payments; if the arbitrator determines that
there was such a basis, the Executive shall not be obligated to repay the salary continuation. 


6.     Representations, Warranties and Other Conditions  


        In order to induce the Company to enter into this Agreement, the Executive represents and warrants to the Company as follows: 


        6.1   Health  


        The Executive is in good health and knows of no physical or mental disability that, with any accommodation that may be required by law and that places no undue
burden on the Company, would prevent her from fulfilling her obligations hereunder. The Executive agrees, if the Company requests, to submit to reasonable periodic medical examinations by a physician
or physicians designated, paid for and arranged by the Company. The Executive agrees that the examination's medical report shall be provided to the Company. 


        6.2   No Violation of Other Agreements  


        The Executive represents that neither the execution nor the performance of this Agreement by the Executive will violate or conflict in any way with any other
agreement by which the Executive may be bound. 


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7.     Nondisclosure; Return of Materials  


        7.1   Nondisclosure  


        Except as required by her employment with the Company, the Executive will not, at any time during the term of employment by the Company, or at any time
thereafter, directly, indirectly or otherwise, use, communicate, disclose, disseminate, lecture upon or publish articles relating to any confidential, proprietary or trade secret information without
the prior written consent of the Company. The Executive understands that the Company will be relying on this covenant in continuing the Executive's employment, paying her compensation, granting her
any promotions or raises, or entrusting her with any information that helps the Company compete with others. 


        7.2   Return of Materials  


        All documents, records, notebooks, notes, memoranda, drawings or other documents made or compiled by the Executive at any time while employed by the Company, or
in her possession, including any and all copies thereof, shall be the property of the Company and shall be held by the Executive in trust and solely for the benefit of the Company, and shall be
delivered to the Company by the Executive upon termination of employment or at any other time upon request by the Company. 


8.     Notice and Cure of Breach  


        Whenever a breach of this Agreement by either party is relied upon as justification for any action taken by the other party pursuant to any provision of this
Agreement, other than clause (a), (b), (c) or (d) of Section 5.6 hereof, before such action is taken, the party asserting the breach of this Agreement shall give the other
party at least twenty (20) days' prior written notice of the existence and the nature of such breach before taking further action hereunder and shall give the party purportedly in breach of
this Agreement the opportunity to correct such breach during the twenty (20) day period. 


9.     Form of Notice  


        Every notice required by the terms of this Agreement shall be given in writing by serving the same upon the party to whom it was addressed personally or by
registered or certified mail, return receipt requested, at the address set forth below or at such other address as may hereafter be designated by notice given in compliance with the terms hereof: 



	If to the Executive:	 	Melinda Kile

1928 63rd Street NE

Tacoma, Washington 98422
	

If to the Company:	
 	

NeoRx Corporation

410 West Harrison

Seattle, Washington 98119

Attn: President
	

With a copy to:	
 	

Perkins Coie LLP

1201 Third Avenue, 40th Floor

Seattle, Washington 98101-3099

Attn: James R. Lisbakken






Except
as set forth in Section 4.4 hereof, if notice is mailed, such notice shall be effective upon mailing. 


10.   Assignment  


        This Agreement is personal to the Executive and shall not be assignable by the Executive. 


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        The
Company shall assign to and require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all the business and/or assets
of the Company to assume expressly 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.
As used in this Agreement, the "Company" shall mean NeoRx Corporation and any affiliated company or successor to its business and/or assets as aforesaid
that assumes and agrees to perform this Agreement by contract, operation of law or otherwise; and as long as such successor assumes and agrees to perform this Agreement, the termination of the
Executive's employment by one such entity and the immediate hiring and continuation of the Executive's employment by the succeeding entity shall not be deemed to constitute a termination or trigger
any severance obligation under this Agreement. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns. 


11.   Waivers  


        No delay or failure by any party hereto in exercising, protecting or enforcing any of its rights, titles, interests or remedies hereunder, and no course of
dealing or performance with respect thereto, shall constitute a waiver thereof. The express waiver by a party hereto of any right, title, interest or remedy in a particular instance or circumstance
shall not constitute a waiver thereof in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any other rights or remedies. 


12.   Amendments In Writing  


        No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or consent to any departure therefrom by either party hereto,
shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and
signed by the Company and the Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing
and signed by the Company and the Executive. 


13.   Applicable Law  


        This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance
with, the laws of the State of Washington, without regard to any rules governing conflicts of laws. 



14.   Arbitration; Attorneys' Fees  


        Except in connection with enforcing Section 7 hereof, for which legal and equitable remedies may be sought in a court of law, any dispute arising under
this Agreement shall be subject to arbitration. The arbitration proceeding shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA Rules") then in effect, conducted by one (1) arbitrator either mutually agreed upon or selected in accordance with the AAA Rules. The
arbitration shall be conducted in King County, Washington, under the jurisdiction of the Seattle office of the American Arbitration Association. The arbitrator shall have authority only to interpret
and apply the provisions of this Agreement, and shall have no authority to add to, subtract from or otherwise modify the terms of this Agreement. Any demand for arbitration must be made within sixty
(60) days of the event(s) giving rise to the claim that this Agreement has been breached. The arbitrator's decision shall be final and binding, and each party agrees to be bound by the
arbitrator's award, subject only to an appeal 


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therefrom
in accordance with the laws of the State of Washington. Either party may obtain judgment upon the arbitrator's award in the Superior Court of King County, Washington. 



        If
it becomes necessary to pursue or defend any legal proceeding, whether in arbitration or court, in order to resolve a dispute arising under this Agreement, the prevailing party in any
such proceeding shall be entitled to recover its reasonable costs and attorneys' fees. 


15.   Severability  


        If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including, without limitation, the
duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intent of the parties hereto as nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision hereof, and (c) any court or arbitrator having jurisdiction thereover shall have
the power to reform such provision to the extent necessary for such provision to be enforceable under applicable law. 


16.   Coordination With Change of Control Agreement  


        The Company and the Executive are contemporaneously with this Agreement entering into a Change of Control Agreement (the "Change of
Control Agreement"), which agreement provides for certain forms of severance and benefit payments in the event of termination of Executive's employment under certain defined
circumstances. This Agreement is in addition to the Change of Control Agreement, providing certain assurances to the Executive in circumstances that the Change of Control Agreement does not cover, and
in no way supersedes or nullifies the Change of Control Agreement. Nevertheless, it is possible that a termination of employment by the Company or by the Executive may fall within the scope of both
agreements. In such event, payments made to the Executive under Section 5.1 hereof shall be coordinated with payments made to the Executive under Section 8.1 of the Change of Control
Agreement as follows: 



        (a)   Accrued
Obligations under this Agreement need not be paid if paid under the Change of Control Agreement; 


        (b)   COBRA
Continuation under this Agreement need not be provided if provided under the Change of Control Agreement; and 


        (c)   the
severance payment required under Section 5.1(c) hereof need not be paid during the first six (6) months of the Payment Period if a severance payment is
made under Section 8.1(d) of the Change of Control Agreement; provided that the remaining one-third balance of the severance payment required under Section 5.1(c) hereof
shall be paid during the Offset Period as provided herein. 




17.   Excess Parachute Payments  


        Unless provided by Section 8.8 of the Change of Control Agreement, if any portion of the payments or benefits under this Agreement or any other agreement
or benefit plan of the Company (including stock options) would be characterized as an "excess parachute payment" to the Executive under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), the Executive shall be paid any excise tax that the Executive owes under Section 4999 of the Code as a result of such
characterization, such excise tax to be paid to the Executive at least ten (10) days prior to the date that she is obligated to make the excise tax payment. The determination of whether and to
what extent any payments or benefits would be "excess parachute payments" and the date by which any excise tax shall 


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be
due, shall be determined in writing by recognized tax counsel selected by the Company and reasonably acceptable to the Executive. 


18.   Entire Agreement  


        Except as described in Section 16 hereof, this Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject
matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and the Executive with respect to such subject matter, including,
without limitation, the Key Executive Severance Agreement, dated October 20, 2001, between the parties, are hereby superseded and nullified in their entireties, except that the Proprietary
Information and Invention Agreement between the Executive and the Company shall continue in full force and effect to the extent not superseded by Section 10 hereof. 


19.   Withholding  


        The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation. 


20.   Counterparts  


        This Agreement may be executed in counterparts, each of which counterpart shall be deemed an original, but all of which together shall constitute one and the same
instrument. 


        IN
WITNESS WHEREOF, the parties have executed and entered into this Agreement effective on the date first set forth above. 



	 	 	NEORX CORPORATION
	

 	
 	

By:	

/s/  DOUG B. GIVEN      
 Name: Doug B. Given

Its: President & CEO
	

 	
 	
EXECUTIVE
	

 	
 	

By:	

/s/  MELINDA G. KILE      
 Name: Melinda Kile




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Exhibit 10.7

NEORX CORPORATION KEY EXECUTIVE SEVERANCE AGREEMENT