Prepared and filed by St Ives Burrups





Exhibit
      10.7

EMPLOYMENT AGREEMENT

Agreement made effective
    as of the 31st day of December, 2003 (the “2003 Agreement”) between
    PROGENICS PHARMACEUTICALS, INC., a Delaware corporation (the “Corporation”)
    with its principal place of business at Old Saw Mill River Road, Tarrytown,
    New York 10591 and PAUL J. MADDON (“MADDON”) residing at                                   ,                                    , New York 10583 (the “Parties”).


RECITALS

A.    The
    Corporation is engaged in the business of developing and marketing pharmaceutical
    products
  in the areas of oncology, virology and symptom management and supportive care.
  
B.    MADDON is
        now serving as Chairman, Chief Executive Officer and Chief Science Officer
        of the Corporation.

    C.    The Corporation
        wishes to continue to employ MADDON as Chairman (subject to Section 3.6
        below), Chief Executive Officer and Chief Science Officer, and MADDON
        wishes to continue to serve the Corporation in such capacities pursuant
to the terms of this 2003 Agreement.


AGREEMENT

In consideration of the facts mentioned above and the mutual promises set forth below, the Parties agree as follows:



   

  

  

   
     


  
1.      EMPLOYMENT.




  The Corporation hereby employs MADDON as Chairman,
    Chief Executive Officer and Chief Science Officer, and MADDON hereby agrees
    to serve the Corporation in such capacities.
    
    
2.      TERM.

      2.1      The “Term” as
          used herein shall mean the Initial Term plus any Renewal Term.



  
    
2.2      This
        2003 Agreement will be for a term of two (2) years (the “Initial
        Term”), commencing on July 1, 2003, unless sooner terminated pursuant
        to Section 8.

  

  2.3      Provided
      MADDON is not in material default under this 2003 Agreement at the time
      the Initial Term expires, this 2003 Agreement shall be renewed for one
      (1) additional period of two (2) years (the “Renewal Term”),
      commencing on July 1, 2005, unless either the Corporation or MADDON gives
      written notice to the other of its or his intention not to renew at least
      Ninety (90) days before the end of the Initial Term or any Renewal Term.
      The Compensation Committee of the Board of Directors of the Corporation
      (the “Board”) (the “Compensation Committee”) will provide
      MADDON in writing with proposed terms relating to salary and minimum options
      for the Renewal Term by February 1, 2005 to enable the Parties, if necessary,
      to engage in good faith negotiations regarding the proposed terms prior
      to the Ninety (90) day notice period provided herein. 


   

  -2-

  

  

  
  


     

  3.      EMPLOYEE’S
        DUTIES.
    
3.1      As
                Chairman and Chief Executive Officer, MADDON will have broad
                management responsibilities for the activities of the Corporation.
                MADDON, while Chairman and Chief Executive Officer, and, after
                relinquishing his position as Chairman pursuant to Section 3.6
                below, while Chief Executive Officer, shall report directly and
                only to the Board, and all senior executives of the Corporation
                shall report directly or indirectly to MADDON. As Chief Science
                Officer, MADDON’s duties shall include, without limitation,
                formulating the scientific strategies of the Corporation in conjunction
                with the Scientific Advisory Board’s presenting such strategies
                to the Board for review and, subject to approval of the Board,
                directing the implementation of such strategies, as well as overseeing
                all aspects of the Corporation’s scientific operations.
    
3.2      Except
                as provided herein, MADDON will devote substantially all of his
                business time and energies to the business and affairs of the
                Corporation during the Term. MADDON’s existing outside
                activities are listed in a letter agreement between MADDON and
                the Compensation Committee, effective as of December 31, 2003
                (the “Letter Agreement”). MADDON may continue the
                activities listed in the Letter Agreement, which shall be periodically
                updated to reflect any additional professional activities approved
                by the Compensation Committee. MADDON shall not, at any time
                during the Term, directly or indirectly, enter the employ of,
                or render any service to, any person, partnership, association,
                corporation or other entity other than the Corporation, without
prior consent of the Board.


  3.3      MADDON
      will use his best efforts, skill and abilities to promote the Corporation’s
      interests and perform any duties that may be reasonably assigned to him
      by the Board, consistent with his roles as Chairman (while he is the Chairman),
      Chief Executive Officer and Chief Science Officer.


   

 

-3-









  

3.4      MADDON consents
  and agrees to cooperate with the Corporation to continue the Key-man life insurance
  on MADDON’s life and to increase such insurance to such amount determined
  appropriate by the Board from time to time.
  
3.5      The
            Corporation shal1 use its best efforts to cause MADDON to be nominated
            to the Board of Directors of the Corporation.

        3.6      After
            the Board completes an external search for an appropriately experienced
            retired pharmaceutical or biotechnology executive who is elected
            as non-executive Chairman, MADDON shall relinquish his position as
            Chairman.

        4.      REMUNERATION.

        4.1      The
            Corporation will pay MADDON, for all services to be rendered under
            this 2003 Agreement, an annual salary (“Salary”), payable
            in accordance with the normal payroll policy of the Corporation,
            of Four Hundred Ninety Nine Thousand Eight Hundred Fifty Nine Dollars
            and Four Cents ($499,859.04), adjusted as hereinafter provided, for
            the Term.

        4.2      Each
            January 1 during the Initial Term of this 2003 Agreement, commencing
            on January 1, 2004, the annual Salary then in effect shall be multiplied
            by 103% (or such higher percentage as the Board shall determine in
            its sole discretion) and the product shall be the adjusted Salary
            for the next succeeding twelve (12) month period during the Initial
            Term.




-4-









  

4.3      During each year
  of the Term of this Agreement, MADDON may receive an annual bonus payment reflecting
  his contribution to the Corporation and the Corporation’s results in an
  amount the Compensation Committee determines appropriate in its sole discretion.
  Such annual bonus shall be determined on a calendar year basis and shall be
  paid between December and February, consistent with the Corporation’s
  practice and schedule for the payment of bonuses to other senior executives
  of the Corporation. 
  
4.4      This 2003
        Agreement will not be deemed abrogated or terminated if the Corporation,
        in its discretion, determines to increase the Salary of MADDON for any
        period of time, or if MADDON accepts an increase; but, except as specifically
        provided in this 2003 Agreement, the Corporation shall have no obligation
        to make any increase in the Salary above the 103% minimum increase set
        forth in paragraph 4.2 above. Any increase in MADDON’s Salary by
        the Corporation shall be incorporated into his annual Salary then in
        effect for purposes of future payments of and adjustments to the Salary,
        and no reduction in his salary shall be made without his written consent.

    5.      STOCK
            OPTIONS.

    5.1      As of June
        29, 2003, and in addition to his interest in the Corporation’s 1998
        Non-Qualified Employee Stock Purchase Plan, MADDON is the owner of 637,002
        shares of Common Stock of the Corporation and options to purchase 1,107,774
        shares of such Common Stock, which the Corporation acknowledges are fully
        vested in MADDON and exercisable (except for 33,000 milestone based options
        which were granted on July 1, 2002 and which are subject to vesting and
        becoming exercisable in the future and 37,500 traditional options which
        were granted on July 1, 2002 and which are subject to vesting and becoming
        exercisable on December 22, 2003) and are not subject to any repurchase
        or other restrictions except pursuant to applicable securities and other
        laws (the “Existing Options”). The Corporation hereby agrees
        that for purposes of the Existing Options, except as set forth above,
        the relevant written stock option agreements shall apply to all such
        Existing Options, and nothing in this 2003 Agreement shall be construed
        or interpreted so as to govern the grant, vesting or exercise of any
        Existing Options.




-5-









  

5.2      Traditional
      Non-qualified Options. On June 30, 2003, the Corporation granted to
      MADDON under the Corporation’s 1996 Stock Incentive Plan, as amended,
      irrevocable options to purchase up to 112,500 shares of the Corporation’s
      Common Stock (the “Traditional Options”) in the form of Non-qualified
      options (“NQOs”) at an exercise price of $15.06 per share,
      representing the fair market value per share of the Common Stock as of
      the close of business on June 30, 2003. Subject to the forfeiture and acceleration
      provisions set forth below, the NQOs shall have a duration of ten (10)
      years from June 30, 2003 and vest and become exercisable as follows:


 

-6-










	Tranche	Tranche

Exercisable as to	Cumulative
Exercisable As of
	Vesting Date	Shares	% Total	Vesting Date
	
	
	
	

	June 30, 2004
	28,125	25%	   28,125     Shares

	June 30, 2005
	28,125	25%	   56,250     Shares

	June 30, 2006
	28,125	25%	   84,375     Shares

	June 30, 2007
	28,125	25%	112,500     Shares

	 	 	 	 


5.3      Milestone Based
    Options. In addition to the Traditional Options, on June 30, 2003 the
    Corporation granted to MADDON under the Corporation’s 1996 Stock Incentive
    Plan, as amended, irrevocable NQOs to purchase up to 112,500 shares of the
    Corporation’s Common Stock at a price of $15.06 per share, representing
    the fair market value per share of the Common Stock as of the close of business
    on June 30, 2003 (the “Milestone Based Options”). The Milestone
    Based Options shall vest nine (9) years and eleven (11) months from June
    30, 2003, and have a duration of ten (10) years from June 30, 2003, except
    as otherwise provided herein. In accordance with the terms of the Milestone
    Based Options as set forth in the accompanying option award agreement, the
    vesting of such options shall accelerate upon the achievement of certain
    clinical, financial and operational milestones. 

   


-7-








  

5.4      Subsequent
      Option Grants. On June 30, 2004, the Corporation will grant to MADDON
      irrevocable options to purchase up to 75,000 shares of the Corporation’s
      Common Stock at an exercise price representing the fair market value per
      share of the Common Stock as of the close of business on June 30, 2004
      (the “Future Options”). Fifty percent (50%) of the Future Options
      shall, except for the exercise price, be the same as the Traditional Options
      and shall vest over four (4) years, with twenty-five percent (25%) thereof
      vesting on each of the first, second, third and fourth anniversaries of
      June 30, 2004. The other Fifty percent (50%) of the Future Options shall,
      except for the exercise price and milestones, be the same as the Milestone
      Based Options and shall vest nine (9) years and eleven (11) months from
      June 30, 2004; however, the vesting of such options shall accelerate upon
      the achievement of certain milestones as set forth in the relevant option
      award agreement. In addition, subject to the performance of both MADDON
      and the Corporation, on June 30, 2004 the Compensation Committee may grant
      MADDON additional Future Options (50% will, except for the exercise price
      and the four year vesting period, which will start on June 30, 2004, be
      the same as the Traditional Options and 50% will, except for the exercise
      price and the milestones, be the same as the Milestone Based Options) subject
      to the same terms and conditions as specified in this Section 5.4. If the
      Corporation is meeting its major business objectives in a timely manner
      and MADDON is achieving a high standard of performance, both as determined
      by the Compensation Committee in its sole discretion (provided that the
      Compensation Committee shall set such performance objectives by February
      15, 2004 in its sole discretion after consultation with MADDON), then the
      minimum target level for any such additional Future Options will be 75,000
      shares of the Corporation’s Common Stock. The milestones in the Future
      Options shall be set by the Compensation Committee in the exercise of its
      reasonable discretion after consultation with MADDON.



 

-8-









  

5.5      General Terms
    of Options. The general terms and conditions governing Traditional Options
    and the Milestone Based Options are set forth in written stock option agreements
    that were previously executed and delivered to MADDON and any general terms
    and conditions governing Future Options will be set forth in written stock
    option agreements executed and delivered to MADDON at the time of such grant
    (collectively, the “Options”). The option agreements provide, among
    other things, that in the event MADDON wishes to exercise the exercisable
    portion of an option, MADDON shall send written notice to the Corporation
    specifying a date (not later than twenty (20) business days and not earlier
    than the next business day following the date such notice is given) for the
    closing of such purchase. The exercise price of the Options may be paid by
    MADDON in cash or by the delivery of Common Stock of the Corporation that
    has been held for more than six (6) months. In the latter case the fair market
    value of the Common Stock delivered, determined by reference to the last
    reported sales price of the Common Stock on the NASDAQ National Market (or
    such other exchange as may be the principal exchange on which the Corporation’s
    Common Stock is listed) on the last day prior to such exercise on which trading
    occurred, will be applied to the exercise price.
  
5.6      Acceleration
            of Exercise Schedule Upon a Change in Control. All Options shall
            vest and become fully exercisable immediately upon any “Change
            in Control” . For purposes of this Agreement, a “Change
in Control” shall mean:




-9-









  

	 	 	(i)      a change
        in the composition of the Board such that during any period of two consecutive
        years, individuals who at the beginning of such period constitute the
        Board, and any new director (other than a director designated by a person
        who has entered into an agreement with the Corporation to effect a transaction
        described in clause (ii) or (iii) of this paragraph) whose election by
        the Board or nomination for election by the Corporation’s stockholders
        was approved by a vote of at least two-thirds of the directors then still
        in office who either were directors at the beginning of the period or
        whose election or nomination for election was previously so approved,
        cease for any reason to constitute at least a majority of the members
        thereof; 
      
(ii)      the
              approval by the stockholders of the Corporation of a merger, consolidation,
              reorganization or similar corporate transaction, whether or not
              the Corporation is the surviving corporation in such transaction,
              in which outstanding shares of Common Stock are converted into
              (A) shares of stock of another company, other than a conversion
              into shares of voting common stock of the successor corporation
              (or a holding company thereof) representing more than 50% of the
              voting power of all capital stock thereof outstanding immediately
              after the merger or consolida­tion, or (B) other securities
              (of either the Corpora­tion or another company) or cash or
              other property; or

          (iii)      any “Person” (as
              defined in Section 3(a)(9) of the Securities Exchange Act of 1934,
              as amended (the “Exchange Act”), as modified and used
              in Sections 13(d) and 14(d) thereof, except that such term shall
              not include (1) the Corporation, (2) a trustee or other fiduciary
              holding securities under an employee benefit plan of the Corporation,
              (3) an underwriter temporarily holding securities pursuant to an
              offering of such securities or (4) a corporation owned, directly
              or indirectly, by the shareholders of the Corporation in substantially
              the same proportions as their ownership of stock of the Corporation,
              who is or becomes the “Beneficial Owner” (as defined
              in Rule 13d-3 under the Exchange Act), directly or indirectly,
              of securities of the Corporation (not including in the securities
              Beneficially Owned by such Person any securities acquired directly
              from the Corporation) representing 30% or more of the voting power
              of all capital stock thereof outstanding, excluding any Person
              who is an officer or director of the Corporation or who becomes
              such a Beneficial Owner in connection with a transaction described
              in subparagraph (ii) of this Section 5.6, or

      


 



 


-10-





 

 

	 	(iv)      the
          approval by the stockholders of the Corporation of (A) the sale
          or other disposition of all or substantially all of the assets of the
          Corpora­tion, or (B) a complete liquidation or dissolution
          of the Corporation.


	 	 


5.7      No Options shall
  be subject to any limitations under any stock option plan or otherwise in the
  post-employment period during which such Options may be exercised, except as
  provided in Section 8 hereof.
  
5.8      Notwithstanding
        the foregoing, in the event of a conflict between the provisions of any
        Option agreement described in Sections 5.2 through 5.7 (the Traditional
        Options, the Milestone Based Options and the Future Options) and this
        2003 Agreement, the terms of this 2003 Agreement shall prevail.

    6.      EMPLOYEE
            BENEFITS.

    6.1      During the
        Term of this 2003 Agreement, MADDON shall be eligible to participate
        in all employee benefit plans and programs of the Corporation in which
        other senior executives of the Corporation are eligible to participate
        from time to time, including, without limitation, any qualified or non-qualified
        pension, 401(k), profit sharing and savings plans, any welfare benefit
        plans (including, without limitation, medical, dental, vision and health
        plans and disability and group life insurance coverages) (hereafter,
        collectively, the “Welfare Benefits”), subject to and on a
        basis consistent with the terms, conditions and overall administration
        of such plans and programs. MADDON shall be entitled to participate in
        such plans and programs on terms no less favorable to MADDON than those
        on which senior executives of the Corporation generally participate.
        Without limiting the generality of the foregoing, the Corporation shall
        provide MADDON with such long-term disability and life insurance benefits
        as are made generally available to senior executives of the Corporation.




 

-11-





 

 

6.2      During the Term
  of this 2003 Agreement, MADDON shall be entitled to such fringe benefits and
  perquisites as are made generally available to senior executives of the Corporation
  from time to time. Notwithstanding the foregoing, in each calendar year of
  the Term MADDON shall accrue four weeks’ paid vacation. In each calendar
  year commencing with the calendar year ending December 31, 2003, MADDON
  may carry over and use up to two weeks of such vacation during the next calendar
  year.
  
6.3      MADDON acknowledges
        and agrees that the Corpora­tion does not guarantee the adoption
        or continuance of any particular employee benefit plan or program or
        other fringe benefit during the terms of this Agreement, and participation
        by MADDON in any such plan or program shall be subject to the rules and
        regulations applicable thereto.

    7.      REIMBURSEMENT
            OF EXPENSES.

    The Corporation
        shall provide MADDON with reimbursement of all reasonable travel (including
        car leasing expenses) and other business expenses and disbursements incurred
        by MADDON in the performance of his duties under this 2003 Agreement,
        upon proper accounting in accordance with the Corporation’s normal
        practices and procedures for reimbursement of business expenses.




-12-









  

8.      TERMINATION.
  
8.1      The Term
        and this 2003 Agreement, except those provisions specified to survive
        termination, shall termi­nate before the expiration date set forth
above in Section 2 on the occurrence of the earlier of the following:


8.1.1      On the dissolution
  of the Corpora­tion;
  8.1.2      On the
        death or disability of MADDON. Disability shall mean the failure by MADDON,
        because of illness or incapacity, to render for One Hundred Twenty (120)
        days consecutively or One Hundred Eighty (180) days cumulatively during
        any twelve (12) month period of the Term, services of the character contemplated
        by this 2003 Agreement;

    8.1.3      On the
        dismissal of MADDON for Good Cause. For purposes of this 2003 Agreement, “Good
        Cause” shall mean: 


    	 	 	(i)      the
              continual failure to perform substantially his duties with the
              Corporation or follow the reasonable instructions of the Board
              (other than any such failure(s) resulting from incapacity due to
              physical or mental illness) after a demand in writing is delivered
              to MADDON by the Board, specifying the claimed basis of such failure(s)
              and providing MADDON with a sixty (60) day opportunity to cure;


        
	 	 	 


 

-13-





 

 

	 	 	
      
(ii)      conviction
                of a felony or a guilty or nolo contendere plea with respect
                thereto; 

            (iii)      habitual
                drunkenness or habitual use of illegal narcotics; 

            (iv)      excessive
                absenteeism not related to sick leave or vacations (but only
                after sixty (60) days prior written notice is received by MADDON
                from the Board) followed by a repetition of such excessive absenteeism;

            (v)      continuous
                conflict of interest after MADDON receives notice in writing
                from the Board;

            (vi)      material
                breach of any of the Corporation’s written policies that
                are material to the business or reputation of the Corporation
                and applicable to senior executives of the Corporation or any
                of the material provisions of this 2003 Agreement; or

            (vii) engagement in illegal conduct
                that is directly and materially injurious to the Corporation;

      

    
	 	 	 


provided, however,
      that in addition to any and all notices specified in this Section 8.1.3,
      any dismissal for Good Cause shown must be effected by the Board after
      a Board meeting for which MADDON has at least (10) days prior written notice
      and at which MADDON has the opportunity to have counsel present to represent
him in connection with the issues concerning such removal for Good Cause;

8.1.4      On
    the dismissal of MADDON without cause (that is, for any reason the Corporation
    shall determine
  other than for Good Cause shown or death or disability); and
  8.1.5      On the
        resignation of MADDON.

    8.2.1     Upon
        termination of the Term and this 2003 Agreement at the expiration of
the Initial Term or Renewal Term, the following shall occur:




 

-14-





 

 

	 	 	a.    If (x) the Corporation
    proposes salary and option grant terms for the Renewal Term that are reasonably
    consistent with this 2003 Agreement (i.e., an annual minimum salary increase
    of three percent (3%), an initial grant on July 1, 2005 of 75,000 traditional
    options (which will, except for the exercise price and the four year vesting
    period which will start on July 1, 2005, be the same as the Traditional Options)
    and 75,000 milestone based options (which will, except for the exercise price
    and the milestones, be the same as the Milestone Based Options) and an additional
    grant on July 1, 2006 of at least 75,000 options and a minimum target of
    an additional 75,000 options) and such terms are proposed to be incorporated
    in this 2003 Agreement, but MADDON rejects the Corporation’s proposal
    and either party delivers to the other party a notice of non-renewal pursuant
    to Section 2 hereof or (y) the Term ends at the end of the Renewal Term,
    MADDON shall (i) be entitled to receive any salary, expense reimbursements
    or other amounts from the Corporation then due but unpaid (which in the case
    of the salary shall be prorated to the date of termination) together with
    such annual bonus in respect of the period from the end of the period in
    respect of which the last annual bonus was paid to such date of termination,
    as the Compensation Committee determines appropriate in its sole discretion
    as contemplated by Section 4.3 (an “Ending Bonus”), and (ii) have
    the right to exercise the Options granted pursuant to Section 5 hereof in
    accordance with Section 5 hereof, except that if MADDON’s employment
    by the Corporation shall cease for any reason upon the termination of the
    Term or thereafter, except as set forth below any Options not vested at the
    date such employment shall cease shall be forfeited.

  


 

-15-





 

 

	 	 	b.      If
          (x) the Corporation does not propose terms for a Renewal Term and either
          party delivers to the other party a notice of non-renewal pursuant
          to Section 2 hereof or (y) the Corporation proposes salary and option
          grant terms for a Renewal Term that are not reasonably consistent with
          this 2003 Agreement (see Section 8.2.1(a)) and MADDON delivers to the
          Corporation a notice of non-renewal pursuant to Section 2 hereof (either
          (x) or (y) a “Specified Non-Renewal”), MADDON shall (i) be
          entitled to receive any salary, expense reimbursements or other amounts
          from the Corporation then due but unpaid (which in the case of the
          salary shall be prorated to the date of termination), (ii) be paid
          a lump sum amount equal to the sum
of MADDON’s current annual Salary plus the average annual regular bonus
paid to MADDON over the three (3) years preceding the year in which such termination
occurs (the “Average Bonus”), (iii) for a period of one (1) year following
such termination, continue to receive all Welfare Benefits (or the cash equivalent
thereof, which shall be the same level of Welfare Benefits as offered by the
Corporation that can be obtained by MADDON privately (hereafter, the “Welfare
Cash Equivalent”) in the discretion of the Corporation) described in Section
6 hereof, (iv) be fully vested with all of the Traditional Options granted under
Section 5 hereof, (v) have the right to exercise any Traditional Options in accordance
with Section 5, and (vi) have the right to exercise any Milestone Based Options
vested or whose vesting shall accelerate in accordance with Section 5 hereof
within two and one-half (2.5) years from the date of termination (or the end
of the acceleration period under Section 5, if earlier) in accordance with Section
5 hereof and the balance of such Milestone Based options not so vested or vesting
within such period shall be forfeited. 


    


 



-16-









  

8.2.2      Upon
    the dismissal of MADDON for Good Cause or on the resignation of MADDON other
    than for Good Reason (as defined below), MADDON shall (i) be entitled
    to receive any salary, expense reimbursements or other amounts from the Corporation
    then due but unpaid (which in the case of the salary shall be prorated to
    the date of termination), (ii) have the right to exercise any Milestone
    Based Options then vested in MADDON only for a period of three (3) months
    after the date of termination, (iii) have the right to exercise any
    other Options then vested in MADDON in accordance with Section 5 hereof,
    and (iv) any Options not vested at the date of termination shall be
    forfeited. 


 

 

-17-









  

8.2.3      Upon
    the termination of the Term and this 2003 Agreement on the death or disability
    of MADDON, MADDON’s estate or MADDON, as the case may be, shall (i) be
    entitled to receive any salary, expense reimbursements or other amounts from
    the Corporation then due but unpaid (which in the case of the salary shall
    be prorated to the date of termination) together with an Ending Bonus, (ii) for
    a period of two years following such termination, continue to receive all
    Welfare Benefits (or the Welfare Cash Equivalent thereof, in the discretion
    of the Corporation) described in Section 6 hereof, (iii) have the
    right to exercise the Traditional Options vested in MADDON in accordance
    with Section 5, (iv) have the right to exercise any Milestone Based
    Options vested or whose vesting shall accelerate in accordance with Section 5
    hereof within one year from the date of termination (or the end of the acceleration
    period under Section 5, if earlier) in accordance with Section 5
    hereof and the balance of such Milestone Based Options not so vested or vesting
    within such period shall be forfeited, and (v) any Traditional Options
    not vested at the date of termination shall be forfeited. 


 

 

-18-





 

 

8.2.4      Upon
    termination of the Term and this 2003 Agreement on the dismissal of MADDON
    without Good Cause during the Term hereof or on the resignation of MADDON
    for Good Reason, MADDON shall (i) be entitled to receive any salary,
    expense reimbursements and other amounts from the Corporation then due but
    unpaid (which in the case of the salary shall be prorated to the date of
    termination) together with an Ending Bonus, (ii) be paid a lump sum
    amount equal to two times the sum of MADDON’s current annual Salary
    and the Average Bonus, (iii) for a period of two years following such termination,
    continue to receive all Welfare Benefits (or the Welfare Cash Equivalent
    thereof, in the discretion of the Corporation) described in Section 6
    hereof, (iv) be vested with all of the Options granted under Section 5
    hereof, (v) have the right to exercise any Traditional Options in accordance
    with Section 5, and (vi) have the right to exercise any Milestone
    Based Options in accordance with Section 5 hereof. Notwithstanding the foregoing,
    in the event that (x) within two (2) years after a Change in Control MADDON
    is dismissed without Good Cause or MADDON resigns for Good Reason or (y)
    within three (3) months preceding a Change in Control MADDON is dismissed
    without Good Cause, all of the terms of this Section 8.2.4 shall apply, except
    that the lump sum payment in (ii) above shall be three (3) times (not two
    times) and the Welfare Benefits (or the Welfare Cash Equivalent thereof,
    in the discretion of the Corporation) shall continue for three (3) years
    (not two years). 


 

-19-









  

8.3      For
    the purposes of this Agreement, “Good Reason” shall exist if there
    shall occur (a) a material diminution during the Term in MADDON’s
    position, title, responsibilities, authority or reporting relationship from
    that provided for in this 2003 Agreement (including his failure to be a director
    of the Corporation other than by reason of his resignation), (b) a material
    breach by the Corpora­tion of its obligations under this Agreement,
    that contin­ues after notice in writing to the Corporation specifying
    such breach for sixty (60) days or such longer period (not to exceed
    sixty (60) additional days) as is required for the Corporation to effect
    a cure or remedy of the situation or (c) the Corporation’s material
    adverse change to the directors and officers insurance arrangement applicable
    to MADDON on June 30, 2003 or the terms of the Indemnification Agreement
    entered into between the Corporation and MADDON dated as of June 1, 1995.


 

 

-20-





 

 

8.4      All lump sum payments
  to MADDON contemplated under any provision of Section 8 of this 2003 Agreement
  shall be payable no later than ten (10) calendar days following the event triggering
  the Corporation’s obligation to make such lump sum payment. All other
  payments from the Corporation to MADDON pursuant to any provision of Section
  8 of this 2003 Agreement shall be payable in accordance with the Corporation’s
  policies and the terms of any applicable Welfare Benefits or any other Corporation
  plan.
  
8.5      The Corporation
        agrees that if MADDON’s employment with the Corporation is terminated
        during the Term for any reason whatsoever, MADDON is not required to
        seek other employment or to attempt in any way to reduce any amounts
        payable to him by the Corporation pursuant to this 2003 Agreement. Furthermore,
        the amount of any payment or benefit provided for in this 2003 Agreement
        shall not be reduced by any compensation earned by MADDON or benefit
        provided to him as the result of employment by another employer or otherwise.
        In addition, the amounts payable hereunder shall not be subject to setoff,
        counterclaim, recoupment, defense or any other right which the Corporation
        may have against MADDON or others, except upon obtaining by the Corporation
of a final nonappealable judgment against MADDON. 




-21-





 

 

8.6     (a)     If
  it shall be determined that any amount paid, distributed or treated as paid
  or distributed by the Corporation (or by any individual, entity or group effecting
  a change in ownership or control of the Corporation within the meaning of Code
  Section 280G) to or for the benefit of MADDON (whether paid or payable or distributed
  or distributable pursuant to the terms of this 2003 Agreement or otherwise,
  including but not limited to payments in an employment agreement or otherwise
  to MADDON), but determined without regard to any additional payments required
  under this provision (the “Payment”) would be subject to the excise
  tax imposed by Section 4999 of the Internal Revenue Code (the “Code”)
  or any similar or successor tax that may hereafter be imposed by the Code or
  any similar state or local tax provision or any interest or penalties are incurred
  by MADDON with respect to such excise tax (such excise tax, together with any
  such interest and penalties, hereafter collectively referred to as the “Excise
  Tax”), then MADDON shall be entitled to receive an additional payment
  (a “Gross-Up Payment”) in an amount such that after payment by
  MADDON of all federal, state and local taxes (including any interest or penalties
  imposed with respect to such taxes), including, without limitation, any income
  and employment taxes (and any interest and penalties imposed with respect thereto)
  and Excise Tax, imposed upon the Gross-Up Payment, MADDON retains an amount
  of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
  
Notwithstanding the foregoing, if it shall be
      determined that MADDON is entitled to a Gross-Up Payment, but if the Payment
      (other than that portion valued under Q&A 24(c) of the final regulations
      under Section 280G of the Code (the “Stock Vesting Value”))
      (the “Cash Payment”) is reduced by the minimum amount necessary
      such that the receipt of the Payment would not give rise to any excise
      tax (the “Reduced Payment”) and the Reduced Payment (other
      than the Stock Vesting Value) would not be less than 90% of the Cash Payment,
      then no Gross-Up Payment shall be made to MADDON and the Cash Payment,
      in the aggregate, shall be reduced to the Reduced Payment (other than the
      Stock Vesting). If the Reduced Payment is to be effective, payments shall
      be reduced as mutually agreed between the Corporation and MADDON.




-22-





 

 

(b)     Subject
    to the provisions of subsection (c) hereof, all determinations required to
    be made under this Section 8.6, including whether and when a Gross-Up Payment
    is required and the assumptions to be utilized in arriving at such determination,
    and whether the Payment shall be reduced in the event and manner provided
    herein, shall be made by a nationally recognized accounting firm (the “Accounting
    Firm”) which shall provide detailed supporting calculations both to
    the Corporation and to MADDON within fifteen (15) business days of the receipt
    of notice from MADDON that there has been a Payment, or such earlier time
    as is reasonably requested by the Corporation (collectively, the “Determination”).
    All fees and expenses of the Accounting Firm shall be borne solely by the
    Corporation. The Accounting Firm shall be selected by the Corporation, subject
    to the consent of MADDON which consent shall not be unreasonably withheld.
    The Accounting Firm shall not be an accounting firm serving as accountant
    or auditor for the individual, entity or group effecting the change in ownership
    or control of the Corporation. Any Gross-Up Payment determined pursuant to
    this Section 8.6 shall be paid by the Corporation to MADDON within five (5)
    days of the receipt of the Determination. If the Accounting Firm determines
    that no Excise Taxes are payable by MADDON or that the Payment should be
    reduced as prescribed herein, it shall furnish MADDON with a written opinion
    that failure to report the Excise Tax on MADDON’s applicable federal
    income tax return would not result in the imposition of a negligence or similar
    penalty, or the basis for determining that the Payment should be reduced
    as provided herein. The Determination by the Accounting Firm shall be binding
    upon the Corporation and MADDON. As a result of any uncertainty in the application
    of Section 4999 of the Code at the time of the Determination, it is possible
    that Gross-Up Payments which will not have been made by the Corporation should
    have been made (“Underpayment”) consistent with the calculations
    required to be made hereunder. In the event that the Corporation exhausts
    its remedies pursuant to this Section 8.6 or otherwise determines to make
    the Payment contemplated hereunder and MADDON thereafter is required to make
    a payment of any Excise Tax, the Accounting Firm shall determine the amount
    of the Underpayment that has occurred and any such Underpayments shall be
    promptly paid by the Corporation to or for the benefit of MADDON. 


 

 

-23-





 

 

(c)     MADDON
    shall notify the Corporation in writing of any claim by the Internal Revenue
    Service that, if successful, would require payment by the Corporation of
    the Gross-Up Payment. Such notification shall be given as soon as practicable
    but no later than ten (10) business days after MADDON is informed in writing
    of such claim and shall apprise the Corporation of the nature of such claim
    and the date on which such claim is requested to be paid. MADDON shall not
    pay such claim prior to the expiration of the thirty (30) day period following
    the date on which MADDON gives such notice to the Corporation (or such shorter
    period ending on the date that any payment of taxes with respect to such
    claim is due). If the Corporation notifies MADDON in writing prior to the
    expiration of such period that it desires to contest such claim, MADDON shall:
    (i) give the Corporation any information reasonably requested by the Corporation
    relating to such claim; (ii) take such action in connection with contesting
    such claim as the Corporation shall reasonably request in writing from time
    to time, including, without limitation, accepting legal representation with
    respect to such claim by an attorney reasonably selected by the Corporation;
    (iii) cooperate with the Corporation in good faith in order to effectively
    contest such claim; and (iv) permit the Corporation to participate in any
    proceeding relating to such claim; provided, however, that the Corporation
    shall bear and pay directly all costs and expenses (including attorney’s
    fees and any additional interest and penalties) incurred in connection with
    such contest and shall indemnify and hold MADDON harmless, on an after-tax
    basis, for any Excise Tax or income or employment tax (including interest
    and penalties with respect thereto) imposed as a result of such representation
    and payment of costs and expenses, and provided further that if the Corporation
    directs MADDON to pay such claim and sue for a refund, the Corporation shall
    advance the amount of such payment to MADDON, on an interest-free basis,
    and shall indemnify and hold MADDON harmless, on an after-tax basis, from
    any Excise Tax or income tax (including interest or penalties with respect
    thereto) imposed with respect to such advance or with respect to any imputed
    income with respect to such advance; and provided further that any extension
    of the statute of limitations relating to payment of taxes for MADDON’s
    taxable year with respect to which such contested amount is claimed to be
    due is limited solely to such contested amount. Furthermore, the Corporation’s
    control of the contest shall be limited to issues with respect to which a
    Gross-Up Payment would be payable hereunder and MADDON shall be entitled
    to settle or contest, as the case may be, any other issue raised by the Internal
    Revenue Service or any other taxing authority, so long as such action does
    not have a material adverse effect on the contest being pursued by the Corporation.


 

 

 

-24-





 

 

(d)     If, after the receipt
  by MADDON of an amount advanced by the Corporation pursuant to this Section
  8.6, MADDON becomes entitled to receive, and receives, any refund with respect
  to such claim (including by reason of a redetermination of the value of any
  accelerated vesting of stock options held by MADDON pursuant to Treasury Reg.
  Section 1.280G-1 Q/A 33), MADDON shall (subject to the Corporation’s
  complying with the requirements of this Section 8.6), promptly pay to the Corporation
  the amount of such refund (together with any interest paid or credited thereon
  after taxes applicable thereto). If, after the receipt by MADDON of an amount
  advanced by the Corporation pursuant to this Section 8.6, a determination is
  made that MADDON shall not be entitled to any refund with respect to such claim
  and the Corporation does not notify MADDON in writing of its intent to contest
  such denial of refund prior to the expiration of thirty (30) days after such
  determination, then such advance shall be forgiven and shall not be required
  to be repaid and the amount of such advance shall offset, to the extent thereof,
  the amount of Gross-Up Payment required to be paid.
  
(e)     The respective
        obligations and rights of the Corporation and MADDON under this Section
        8.6 shall survive any termination of MADDON’s employment and the
        termination of this 2003 Agreement.




 

-25-





 

 

9.      COVENANT
      NOT TO COMPETE AND NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
  
9.1      During or
        after the Term of this 2003 Agreement and/or MADDON’s employment
        by the Corporation, MADDON shall not without the Corporation’s prior
        written consent use or disclose any “Proprietary Information” (as
        defined in Section 10.1.1) or any other confidential information
        relat­ing to the Corporation (including, but not limited to, data
        on which patents have been applied for or issued or other proprietary
        intellectual property, customer lists, finan­cial information, sales
        and marketing data), or its business, obtained during the course of his
        employment.

    9.2      MADDON shall
        not during the Term hereof and for a period of one (1) year after the
        expiration or earlier termination of the Term, directly or indirectly,
        own, manage, operate, or control, any business in competi­tion with
        or substantially similar to the type of business conducted by the Corporation,
        and will not render services, directly or indirectly, to any “Conflicting
        Organization” (as herein­after defined), provided, however,
        that the period shall only run for six (6) months (not one year) if the
        termination of employment occurs within two (2) years after, or three
        (3) months before, a Change in Control. The foregoing shall not apply
        to the ownership by MADDON of less than One percent (1%) of the securities
        of a publicly traded organization. “Conflicting Organization” means
        any person or organization engaged in or about to become engaged in servicing,
        production, marketing or selling of, a “Conflicting Product” (as
        hereinafter defined); provided, however, the foregoing shall not prohibit
        MADDON from working for a division or other business unit of an organization
        involved with a Conflicting Product provided such division or business
        unit is not itself involved with a Conflicting Product. “Conflicting
        Product” means any product, process, or service, in existence or
        under development, of any person or organization other than the Corporation
        that is substantially similar to or competes with a product, process,
        or service of the Corporation, in existence or under development at the
        time of termination. In the event that (i) the Corporation terminates
        MADDON’s employment under this Agreement without Good Cause during
        the term hereof, (ii) MADDON terminates his employment for Good Reason,
        or (iii) there is a Specified Non-Renewal, MADDON’s obligation
        under the foregoing with respect to non-competition with the Corporation
        for a period of one (1) year after such termination shall no longer be
applicable. 




 

-26-





 

 

9.3      During and for
  a period of one (1) year after the Term of this 2003 Agreement and/or MADDON’s
  employment by the Corporation, MADDON shall not solicit or induce any employees
  of the Corporation to leave the Corporation to work for any entity or person
  engaged in the same business as the Corporation, either directly or indirectly.
  
10.      PROPRIETARY
              INFORMATION.

      10.1      MADDON
          understands that the Corporation possesses and will continue to possess “Proprietary
          Information” (as defined below) and/or “Inventions” (as
          defined below) that have been created, discovered, or developed, or
          have otherwise become known to the Corporation.




 

-27-





 

 

	 	
        10.1.1      For
            purposes of this Agreement, particularly for this Section 10, “Proprietary
            Information” shall include, but not be limited to, trade secrets,
            processes, formulae, data and know-how, improvements, “Inventions” (as
            defined below), techniques, marketing plans, strategies, forecasts
            and customer lists, including without limitation, information created,
            discovered, developed or made known by MADDON and within the scope
            of this 2003 Agreement or to MADDON during the period of or arising
            out of his retention by the Corporation, and/or in which property
            rights have been assigned or otherwise conveyed to the Corporation,
            which information has commercial value in the business in which the
            Corporation is engaged. “Proprietary Information” shall
            not include information that is now known by or is or becomes available
            to the public or otherwise is or becomes generally known in the trade
            or industry, other than through the breach of this 2003 Agreement
        by MADDON. 

        10.1.2      For
            purposes of this 2003 Agreement, particularly for this Section 10, “Inventions” shall
            mean any improvements, inventions, formulae, processes, tech­niques,
            know-how and data, whether or not patentable, made or conceived or
            reduced to practice or learned by MADDON, either alone or jointly
            with others, during the period of his employment (whether or not
            during normal working hours), together with all patent applications,
            patents, copyrights and reissues thereof that may at any time be
            granted for or upon any such improvements, inventions, formulae,
            processes, techniques, know-how or data, and/or during the twelve
            (12) months immediately following termination of his employment which:


    
	 	 	 


 


 


 

-28-





 

 

	 	 	
      
a.      are within
          the scope of the duties to be performed by MADDON under this 2003 Agreement
          and are related to or useful in the business of the Corporation, or

      b.      result
          from tasks assigned to MADDON by the Corporation, or

      c.      are funded
          by the Corporation, or

      d.      result
          from use of premises owned, leased or contracted for by the Corporation.

    

    
	 	 	 


	 	10.2      In
            consideration of his employment by the Corporation and the compensation
        received by MADDON from the Corporation, MADDON agrees as follows:


    
	 	
	 	
        10.2.1      All
            Proprietary Information including, but not limited to, all “Inventions” as
            defined above, shall be the sole property of the Corporation and
            its assigns and MADDON assigns to the Corporation any rights he may
            have or acquire in all Proprietary Information.

        10.2.2      All
            documents, data, records, apparatus, equipment, and other physical
            property, whether or not pertaining to Proprietary Information, furnished
            to MADDON by the Corporation or produced by MADDON or others in connection
            with his employment, shall be and remain the sole property of the
            Corporation and shall be returned promptly to the Corporation as
            and when requested by the Corporation. At the Corporation’s
            request, MADDON shall return and deliver all such property upon termination
            of his employment with the Corporation for any reason and MADDON
            will not take with him any such property or any reproduction of such
            property upon such termination but this shall not apply to MADDON’s
            personal diaries and papers provided same do not contain information
            relating to Proprietary Information or Inventions.


    
	 	 	 


 

 

-29-









  

	 	
        10.2.3      MADDON
            will promptly disclose all Inventions to the Corporation, or any
            persons designated by it. Such disclosures shall continue for one
            (1) year after termination of this 2003 Agreement with respect to
            anything that would be an Invention if made, conceived, reduced to
        practice or learned during the Term. 

        10.2.4      The
            Inventions shall become and remain the property of the Corporation,
            whether or not patent applications are filed thereon. Upon request
            and at the expense of the Corporation, MADDON shall make application
            through the patent attorneys or agents of the Corporation for letters
            patent of the United States and any and all other countries at the
            reasonable discretion of the Corporation on the Inventions and to
            assign all such applications to the Corporation or its order immediately,
            all without additional payment, during MADDON’s period of employment
            by the Corporation and for one year after the termination of employment.
            MADDON shall give the Corporation, its attorneys and agents all reasonable
            assistance in preparing and prosecuting such applications and, on
            request of the Corporation, MADDON shall execute all papers and do
            all things, at the Corporation’s sole expense, that may be
            reasonably necessary to protect the rights of the Corporation and
            vest in it or its assigns the inventions, applications, and letters
            patent herein contemplated.


    
	 	 	 






-30-





 

 

11.      RETURN OF
      DOCUMENTS.
  
On the expiration or earlier termination of
        the Term or MADDON’s resignation, discharge or earlier departure
        from the Corporation, MADDON shall promptly surrender to the Corporation
        all of the Corporation’s books, records, documents and customer
        lists and/or other of the Corporation’s materials or records he
        may have in his possession, including but not limited to the materials
        described in Section 10.2.2.

    12.      INDEMNIFICATION
          AND INSURANCE.

    The Corporation shall provide MADDON with
        the same indemnification provisions and directors and officers insurance
        as that which is provided to other directors and senior executives of
        the Corporation. Notwithstanding anything in this 2003 Agreement to the
        contrary, the Indemnification Agreement entered into between the Corporation
        and MADDON dated as of June 1, 1995 shall remain in full force and effect. 

    13.      REMEDIES.

    13.1      MADDON
        agrees that his services are of a special, unique and extraordinary character,
        that it would be extremely difficult to replace such services, and that,
        in the event of a breach or threatened breach of any of the pro­visions
        of this 2003 Agreement, the Corporation will not have an adequate remedy
        at law. Accordingly, the Corporation shall be entitled to enforce such
        provisions by means of injunctive relief as may be available to restrain
        MADDON and any business, firm, partnership, individual, corpora­tion
        or entity participating in such breach or threatened breach from the
        violation of the provisions hereof, without thereby waiving any other
        legal or equitable remedies available to the Corporation. Likewise, MADDON
        shall be entitled to enforce the provisions of this Agreement by means
        of injunctive relief as may be available to restrain the Corporation
        from the violation or threatened violation of the provisions hereof,
        without thereby waiving any other legal or equitable remedies available
        to him.







-31-





 

 


  
13.2      If
      any of the covenants contained in this Agreement or any part thereof is
      held to be unenforceable because of the duration thereof or the area or
      scope
      covered thereby, the parties hereby agree that the court making such determination
      shall have the power to reduce the duration, area and/or scope of such
      covenant so that in its reduced form, the covenant shall be enforceable. 



14.      TRANSFER
      AND ASSIGNMENT.
  
This 2003 Agreement shall be binding upon
        and inure to the benefit of (i) MADDON, his legal representatives, heirs,
        and distributees, and (ii) the Corporation, its successors, affiliates
        and assigns. The term “Corporation” as used in this 2003 Agreement
        will include all such successors, affiliates and assigns.

    15.      MODIFICATIONS.

    This 2003 Agreement (including the option
        agreements and Indemnification Agreement referenced herein) contains
        the entire agreement of the Parties and the Parties have made no other
        agreements, representations or warranties relating to the subject matter
        of this 2003 Agreement. No modification, amendment or waiver of all or
        any part of this 2003 Agreement will be valid unless made in writing
and signed by the Parties.




 

-32-





 

 

16.      NOTICES.
  
Any notices required or permitted to be given
        under this Agreement must be in writing, by certified mail, return receipt
        requested to the Parties, at the addresses given herein.

    17.      ADVERSE
            PUBLIC STATEMENTS AND DISCLOSURES.

    The Parties hereto agree that at no time during
        or subsequent to the Term of this Agreement will either party directly
        or indirectly make or facilitate the making of any adverse public statements
        or disclosures with respect to the other (including, with respect to
        the Corporation, regarding its business or securities or its Board, management
        or other personnel), except such truthful statements as may be required
        pursuant to statute, legal proceeding or other enforcement or regulatory
        proceeding, process or requirement.

    18.      WAIVER
            AND BREACH.

    The waiver or breach of any term or condition
        of this 2003 Agreement will not be deemed to constitute the waiver of
any other breach of the same or any other term or condition.




 

-33-





 

 

19.      GOVERNING
      LAW AND JURY TRIAL WAIVER.
  
This Agreement shall be governed by and construed
        in accordance with the laws of the State of New York applicable
        to contracts made and to be performed entirely within that State. The
        Parties agree that the courts of the State of New York shall have exclusive
        jurisdiction of all actions arising out of or relating in any way to
        this 2003 Agreement or any breach thereof, agree to waive trial by jury
        and expressly consent to personal jurisdiction in the courts of the State
        of New York.

    20.      SEVERABILITY.

    In the event
        that any provision or portion of this 2003 Agreement shall be determined
        to be invalid or unenforceable for any reason, in whole or in part, the
        remaining provisions of this 2003 Agreement shall be unaffected thereby
        and shall remain in full force and effect to the fullest extent permissible
        by law and in accordance with the original intent of the Parties. 




-34-








 

21.      EMPLOYMENT
      AGREEMENT DATED AS OF DECEMBER 22, 1998 SUPERSEDED.
  
Effective as of July 1, 2003, this 2003 Agreement
      supersedes the Employment Agreement between MADDON and the Corporation
      dated as of December 22, 1998, which superseded the Employment Agreement
      between MADDON and the Corporation dated as of December 15, 1993.





  

  PROGENICS PHARMACEUTICALS, INC.

        

        

        

  By: /s/Robert A. McKinney

        Vice President,
  Finance &

          Administration

    

    

    

    /s/Paul J. Maddon                

    PAUL J. MADDON





-35-