Exhibit
10.3


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into as of December 3, 2004,
effective as of October 1, 2004, by and between Maxim Pharmaceuticals,
Inc., (the “Company”), and Sharon A. Tonetta, Ph.D. (“Executive”).  The Company and Executive are hereinafter
collectively referred to as the “Parties,” and individually referred to as a “Party.”


 


RECITALS


 


A.                                    The Company and the
Executive are parties to that certain Employment Agreement dated December 1,
2003 (the “Previous Agreement”).


 


B.                                    Section 5.3 of
the Previous Agreement provides that the Company and the Executive may mutually
agree in writing at any time to terminate the Previous Agreement.


 


C.                                    The Company and the
Executive now desire to terminate the Previous Agreement.


 


D.                                    The Company desires
assurance of the association and services of Executive in order to retain
Executive’s experience, skills, abilities, background and knowledge, and is
willing to engage Executive’s services on the terms and conditions set forth in
this Agreement, such that this Agreement is the sole agreement with respect to
the obligations and rights contained herein.


 


E.                                      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, such that this Agreement
is the sole agreement with respect to the obligations and rights contained
herein.


 


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.                                       TERMINATION OF PRIOR AGREEMENT.


 


1.1                                 The
Company and the Executive hereby terminate the Previous Agreement in its
entirety, such that the Previous Agreement shall have no further force or
effect.


 


2.                                       EMPLOYMENT.


 


2.1                                 The
Company hereby employs Executive, and Executive hereby accepts continued
employment by the Company, upon the terms and conditions set forth in this
Agreement, effective as of October 1, 2004 (“Commencement Date”).  This Agreement shall continue in effect until
terminated pursuant to Section 6 below.


 


2.2                                 Executive
shall be the Vice-President, Drug Development of the Company (or a position of
at least comparable status) and shall serve in such other capacity or
capacities as the


 





















 


Chief Executive Officer and/or the Company’s Board of Directors (“Board”)
may from time to time prescribe.


 


2.3                                 Executive
shall do and perform all services, acts or things necessary or advisable to manage
and conduct the business of the Company, which are (i) consistent with the
Bylaws of the Company and (ii) subject to the direction and policies from time
to time established by the Board and/or the Chief Executive Officer.


 


2.4                                 Unless
the Parties otherwise agree in writing, during the term of this Agreement,
Executive shall perform the services she is required to perform pursuant to
this Agreement at the Company’s offices, located at 8899 University Center
Lane, Suite 400 or at any other place at which the Company maintains an office;
provided, however, that the Company may from time to time require Executive to
travel temporarily to other locations in connection with the Company’s
business.


 


3.                                       LOYAL
AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.


 


3.1                                 During
her employment by the Company, Executive shall devote her full business
energies, interest, abilities and productive time to the proper and efficient
performance of her duties under this Agreement.


 


3.2                                 During
the term of this Agreement, Executive shall not engage in competition with the
Company, either directly or indirectly, in any manner or capacity, as adviser,
principal, agent, partner, officer, director, employee, member of any
association or otherwise, in any phase of the business of developing,
manufacturing and marketing of products which are in the same field of use or
which otherwise compete with the products or proposed products of the Company.


 


3.3                                 Ownership
by Executive, as a passive investment, of less than one percent (1%) of the
outstanding shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or publicly
traded in the over-the-counter market shall not constitute a breach of this
paragraph.


 


4.                                       COMPENSATION OF EXECUTIVE.


 


4.1                                 While
employed by the Company, as compensation for proper and satisfactory
performance of all duties to be performed hereunder, the Company shall pay
Executive an annual base salary of Two Hundred Seventy Five Thousand Dollars,
$275,000 per year (the “Base Salary”), payable in regular periodic payments in
accordance with Company policy.  Such
salary shall be prorated for any partial year of employment on the basis of a
365-day fiscal year.  In addition,
Executive will be eligible for an incentive bonus of up to 25% of base salary,
based upon defined milestones.


 


4.2                                 Executive’s
compensation may be changed from time to time by mutual agreement of Executive
and the Board.


 


4.3                                 All
of 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.


 


4.4                                 Executive
shall be entitled to vacation and illness days consistent with the Company’s
standard practice for its employees generally.


 


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4.5                                 Executive
shall, at the discretion of the Board, be entitled to participate in the
benefits for which she is eligible under the terms and conditions of the
standard Company benefits which may be in effect from time to time and provided
by the Company.


 


5.                                       EXPENSE REIMBURSEMENT.


 


5.1                                 Executive
shall be entitled to receive prompt reimbursement of all reasonable business
and travel expenses incurred by Executive in connection with the business of
the Company.  Such expenses must be
properly accounted for under the policies and procedures established by the
Company.


 


6.                                       TERMINATION.


 


6.1                                 The
Company may terminate Executive’s employment under this Agreement “for cause”
by delivery of written notice to Executive specifying the cause or causes
relied upon for such termination.  Any
notice of termination delivered pursuant to this Section 6.1 shall effect
termination as of the date specified in such notice or, in the event no such
date is specified, on the last day of the month in which such notice is
delivered or deemed delivered as provided in Section 10 below.  If Executive’s employment under this
Agreement is terminated by the Company for cause under this section, Executive
shall be entitled to receive only accrued Base Salary and other accrued
benefits required by law, prorated to the date of termination.  Executive will not be entitled to severance
pay, pay in lieu of notice or any other such compensation.  Grounds for the Company to terminate this
Agreement “for cause” shall be limited to the occurrence of any of the
following events:


 


6.1.1                        Executive’s
material breach of any provision of this Agreement;


 


6.1.2                        Executive’s engaging or in any
manner participating in any activity which is competitive with or intentionally
injurious to the Company or which violates any provision of Section 8 of
this Agreement;


 


6.1.3                        Executive’s commission of any
fraud against the Company or use or appropriation for her personal use or
benefit of any funds or properties of the Company;


 


6.1.4                        Executive’s conviction of any
crime involving dishonesty or moral turpitude;


 


6.1.5                        Conduct by Executive which in
good faith and reasonable determination of the Board demonstrates gross
unfitness to serve.


 


Any notice of
termination given pursuant to this Section 6.1 shall effect termination as
of the date specified in such notice or, in the event no such date is
specified, on the last day of the month in which such notice is delivered or
deemed delivered as provided in Section 10 below.


 


6.2                                 The Company may
terminate the Executive’s employment at any time without cause upon delivery of
written notice to the Executive.  Any
notice of termination given pursuant to this Section 6.2 shall effect
termination as of the date specified in such notice or, in the event no such
date is specified, on the last day of the month in which such notice is
delivered or deemed delivered as provided in Section 10 below.  If such termination shall occur under this Section 6.2,
then in lieu of all other remedies, and upon the Executive’s furnishing to the
Company an effective waiver and release of claims (in a form acceptable to the
Company), Executive shall be entitled to continuation of Base Salary and health
benefits for a period of six (6) months from said date of


 


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termination with such Base Salary continuation to be at the rate set
forth in Section 4.1 or, if greater, at the rate of Executive’s then
current salary in effect as of the date of termination.


 


6.3                                 The
parties may mutually agree at any time to terminate this Agreement upon such
terms and conditions as may be agreed upon in writing.


 


6.4                                 This
Agreement shall terminate without notice upon the date of Executive’s death or
the date when Executive becomes “completely disabled” as that term is defined
in Section 7.2.  In the event of
termination due to death or complete disability, Executive or her estate or
personal representative, as the case may be, shall be entitled to receive only
accrued Base Salary and other accrued benefits required by law, prorated to the
date of Executive’s death or the date when Executive becomes completely
disabled.


 


6.5                                 Notwithstanding
any provision to the contrary herein, unless otherwise provided herein or
unless otherwise provided by law, Executive may at any time terminate her
employment with the Company hereunder. 
In such event, the Company shall not be liable to Executive for the
payment of any amount other than accrued Base Salary and other accrued benefits
required by law, prorated to the date of termination.  The effective date of termination of
Executive’s employment under this Section 6.5 shall be determined by the
Board upon its receipt of notice of such termination.  Executive will not be entitled to severance
pay, pay in lieu of notice or any other such compensation.


 


7.                                       DEATH
OR DISABILITY DURING TERM OF EMPLOYMENT.


 


7.1                                 Upon
termination of Executive’s employment pursuant to Section 6.4, Executive
or her estate or personal representative, as the case may be, shall be entitled
to receive Executive’s Base Salary and benefits for a period of one month
following the date of death or the date when Executive becomes completely
disabled.


 


7.2                                 The
term “completely disabled” as used in this Agreement shall mean the inability
of Executive to perform the essential functions of her position under this
Agreement by reason of any incapacity, physical or mental, which the Board of
the Company, based upon medical advice or an opinion provided by a licensed
physician acceptable to the Board of the Company and approved by the Executive,
which approval shall not be unreasonably withheld, determines to have
incapacitated Executive from satisfactorily performing any or all essential
functions of her position for the Company during the foreseeable future.  Based upon such medical advice or opinion,
the determination of the Board of the Company 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.


 


8.                                       CONFIDENTIAL
INFORMATION; NONSOLICITATION.


 


8.1                                 Executive
recognizes that her employment with the Company will involve contact with
information of substantial value to the Company, which is not generally known
in the trade, and which gives the Company an advantage over its competitors who
do not know or use it, including but not limited to, techniques, designs,
drawings, processes, inventions, developments, equipment, prototypes, sales and
customer information, and business and financial information relating to the
business, products, practices and techniques of the Company (hereinafter
referred to as “Confidential Information”). 
Executive will at all times regard and preserve as confidential such
Confidential Information obtained by Executive from whatever source and will
not, either during her employment with the Company or thereafter, publish or
disclose any part of such Confidential 


 


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Information in any manner at any time, or use the same except on behalf
of the Company, without the prior written consent of the Company.  As a condition of this Agreement, Executive
will sign and return a copy of the Company’s “Proprietary Information and
Inventions Agreement,” attached as Exhibit A.


 


8.2                                 While
employed by the Company and for one (1) year thereafter, the Executive agrees
that in order to protect the Company’s confidential and proprietary information
from unauthorized use, that Executive will not, either directly or through
others, solicit or attempt to solicit any employee, consultant or independent
contractor of the Company to terminate his or her relationship with the Company
in order to become an employee, consultant or independent contractor to or for
any other person or business entity; or the business of any customer, vendor or
distributor of the Company which, at the time of termination or one (1) year
immediately prior thereto, was listed on Company’s customer, vendor or
distributor list.


 


9.                                       ASSIGNMENT AND BINDING EFFECT.


 


9.1                                 This
Agreement shall be binding upon and inure to the benefit of Executive and
Executive’s heirs, executors, personal representatives, assigns, administrators
and legal representatives.  Because of
the unique and personal nature of Executive’s duties under this Agreement,
neither this Agreement nor any rights or obligations under this Agreement shall
be assignable by Executive.  This
Agreement shall be binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.


 


10.                                 NOTICES.


 


10.1                           All notices
or demands of any kind required or permitted to be given by the Company or
Executive under this Agreement shall be given in writing and shall be
personally delivered (and receipted for) or mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:


 


	
  10.1.1

  	
  If to the Company:

  
	
   

  	
   

  
	
   

  	
  Larry Stambaugh

  
	
   

  	
  Maxim
  Pharmaceuticals, Inc.

  
	
   

  	
  8899 University Center Lane

  
	
   

  	
  Suite 400

  
	
   

  	
  San Diego, CA 92122

  
	
   

  	
   

  
	
  10.1.2

  	
  If to Executive:

  
	
   

  	
   

  
	
   

  	
  Sharon A. Tonetta

  
	
   

  	
  Maxim
  Pharmaceuticals, Inc.

  
	
   

  	
  8899 University Center Lane

  
	
   

  	
  Suite 400

  
	
   

  	
  San Diego, CA 92122

  



 


Any such written notice shall be deemed received when 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.


 


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11.                                 CHOICE OF
LAW.


 


11.1                           This
Agreement is made in San Diego, California. 
This Agreement shall be construed and interpreted in accordance with the
laws of the State of California.


 


12.                                 INTEGRATION.


 


12.1                           This
Agreement contains the complete, final and exclusive agreement of the Parties
relating to the subject matter of this Agreement, and supersedes all prior oral
and written employment agreements or arrangements between the Parties.


 


13.                                 AMENDMENT.


 


13.1                           This
Agreement cannot be amended or modified except by a written agreement signed by
Executive and the Company.


 


14.                                 WAIVER.


 


14.1                           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 in 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.


 


15.                                 SEVERABILITY.


 


15.1                           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.


 


16.                                 INTERPRETATION;
CONSTRUCTION.


 


16.1                           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 Executive has been encouraged, and has
consulted with, her 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.


 


17.                                 REPRESENTATIONS
AND WARRANTIES.


 


17.1                           Executive
represents and warrants that she 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 her execution and performance of this
Agreement will not violate or breach any other agreements between Executive and
any other person or entity.


 


18.                                 COUNTERPARTS.


 


18.1                           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.


 


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IN WITNESS WHEREOF, the Parties have executed
this Agreement as of the date first above written.


 


	
   

  	
  The Company:

  
	
   

  	
   

  
	
   

  	
  MAXIM PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: /s/ Larry G. Stambaugh

  
	
   

  	
  Larry G. Stambaugh

  
	
   

  	
  Chairman of the Board, President and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
  Date: December 3, 2004

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/ Sharon A. Tonetta

  
	
   

  	
  Sharon A. Tonetta

  



 


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