Exhibit 10.2


 


NEORX CORPORATION

CHANGE OF CONTROL AGREEMENT


 


This Change of Control Agreement (this “Agreement”),
dated as of October 25, 2004, is entered into by and between NEORX CORPORATION,
a Washington corporation (as supplemented by Section 13, the “Company”), and Susan D. Berland
(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 possibility, threat or occurrence of a Change of Control
(as defined in Section 1 hereof) of the Company.  The Board believes it is imperative to
diminish the inevitable distraction of the Executive arising from the personal
uncertainties and risks created by a pending or threatened Change of Control,
to encourage the Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with reasonable compensation and benefit arrangements
upon a Change of Control.


 


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


 


1.                                      Definitions


 


1.1           “Change of Control” shall have the definition set forth
in Appendix A hereto, which is hereby incorporated by reference.


 


1.2           “Change of Control Date” shall mean the first date on
which a Change of Control occurs.


 


1.3           “Employment Period” shall mean the two (2) year period
commencing on the Change of Control Date and ending on the second anniversary
of such date.


 


1.4           “Severance Agreement” shall mean the Key Executive
Severance Agreement, dated as of the date hereof, between the parties, as it
may be amended from time to time, that provides for certain benefits related to
termination of the Executive’s employment that are unrelated to a Change of
Control.


 


2.                                      Term


 


The initial term of this Agreement (“Initial
Term”) shall be for a period of one (1) year from the date of
this Agreement as first appearing above; 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 at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term, and provided further
that if a Change in Control occurs during the Term, the Term shall
automatically


 





















 


extend for the duration
of the Employment Period.  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.


 


3.                                      Employment


 


3.1                               Employment Period


 


During the Employment
Period, the Company hereby agrees to continue the Executive in its employ or in
the employ of its affiliated companies, and the Executive hereby agrees to
remain in the employ of the Company or its affiliated companies, in accordance
with the terms and provisions of this Agreement; provided, however, that either
the Company or the Executive may terminate the employment relationship subject
to the terms of this Agreement.


 


3.2                               Position and Duties


 


During the Employment
Period, the Executive’s position, authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the ninety (90) day
period immediately preceding the Change of Control Date.


 


3.3                               Location


 


During the Employment
Period, the Executive’s services shall be performed at the Company’s
headquarters on the Change of Control Date, or the cities of San Francisco or
San Mateo, California.


 


3.4                               Employment at Will


 


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 its affiliated companies 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. 
Moreover, if prior to the Change of Control Date, the Executive’s
employment with the Company or its affiliated companies terminates for any
reason, then the Executive shall have no further rights under this Agreement;
provided, however, that the Company may not avoid liability for any termination
payments that would have been required during the Employment Period pursuant to
Section 8 hereof by terminating the Executive prior to the Employment
Period where such termination is carried out in anticipation of a Change of
Control and the principal motivating purpose is to avoid liability for such
termination payments.


 


2





















 


4.                                      Attention And
Effort


 


During the Employment
Period, and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive will devote all of 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 use
her reasonable best efforts 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 Employment Period, the continued conduct of such activities (or the conduct
of activities similar in nature and scope thereto) during the Employment Period
shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.


 


5.                                      Compensation


 


As long as the Executive
remains employed by the Company during the Employment Period, the Company
agrees to pay or cause to be paid to the Executive, and the Executive agrees to
accept in exchange for the services rendered hereunder by him, the following
compensation:


 


5.1                               Salary


 


The Executive shall
receive an annual base salary (the “Annual Base Salary”),
at least equal to the annual salary established by the Board or the
Compensation Committee of the Board (the “Compensation Committee”)
or the Chief Executive Officer for the fiscal year in which the Change of
Control Date occurs.  The Annual Base
Salary shall be paid in substantially equal installments and at the same intervals
as the salaries of other executives of the Company are paid.  The Board or the Compensation Committee or
the Chief Executive Officer shall review the Annual Base Salary at least
annually and shall determine in good faith and consistent with any generally
applicable Company policy any increases for future years.


 


5.2                               Bonus


 


In addition to the Annual
Base Salary, the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the average annualized (for
any fiscal year consisting of less than twelve (12) full months) bonus paid or
payable (including by reason of any deferral and including the value of any
stock awards and the compensation expense disclosed in the Company’s financial
statements for the grant of any stock options) to the Executive by the Company
and 


 


3





















 


its affiliated companies
in respect of the three fiscal years immediately preceding the fiscal year in
which the Change of Control Date occurs. 
Each Annual Bonus shall be paid no later than ninety (90) days after the
end of the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of the Annual Bonus.


 


6.                                      Benefits


 


6.1                               Incentive, Retirement
and Welfare Benefit Plans; Vacation


 


During the Employment
Period, the Executive shall be entitled to participate, subject to and in
accordance with applicable eligibility requirements, in such fringe benefit
programs as shall be generally made available to other executives of the
Company and its affiliated companies from time to time during the Employment
Period by action of the Board (or any person or committee appointed by the
Board to determine fringe benefit programs and other emoluments), including,
without limitation, paid vacations; any stock purchase, savings or retirement
plan, practice, policy or program; and all welfare benefit plans, practices,
policies or programs (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans or programs).


 


6.2                               Expenses


 


During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by her in accordance with the policies,
practices and procedures of the Company and its affiliated companies in effect
for the executives of the Company and its affiliated companies during the
Employment Period.


 


7.                                      Termination


 


During the Employment
Period, employment of the Executive may be terminated as follows, but, in any
case, the nondisclosure provisions set forth in Section 10 hereof shall
survive the termination of this Agreement and the termination of the Executive’s
employment with the Company:


 


7.1                               By the Company or the
Executive


 


At any time during the
Employment Period, 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
the Notice of Termination (as defined below).


 


4





















 


7.2                               Automatic Termination


 


This Agreement and the
Executive’s employment during the Employment Period 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 duties set forth in Section 3.2 hereof 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.  The Executive and the Company hereby
acknowledge that the duties specified in Section 3.2 hereof are essential
to the Executive’s position and that Executive’s ability to perform those
duties is the essence of this Agreement.


 


7.3                               Notice of Termination


 


Any termination by the
Company or by the Executive during the Employment Period shall be communicated
by the Notice of Termination to the other party given in accordance with
Section 12 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.


 


7.4                               Date of Termination


 


During the Employment
Period, “Date of Termination” means
(a) if the Executive’s employment is terminated by reason of death, at the
end 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





















 


8.                                      Termination
Payments


 


In the event of termination
of the Executive’s employment during the Employment Period, all compensation
and benefits set forth in this Agreement shall terminate except as specifically
provided in this Section 8.


 


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


 


If during the Employment
Period 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
Annual Base Salary through the Date of Termination to the extent not
theretofore paid;


 


(ii)           the
product of (x) the Annual Bonus payable with respect to the fiscal year in
which the Date of Termination occurs and (y) a fraction the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is three hundred sixty-five (365);
provided that, in the event that the Executive is entitled to an amount in
respect of the Annual Bonus under Section 8.1(c), she shall receive the
amount payable under Section 8.1(c) first and the amount payable under
this Section 8.1(a)(ii) only to the extent it exceeds the amount payable under
Section 8.1(c); and


 


(iii)          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
one year 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, which 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”);


 


(c)           an
amount equal to fifty percent (50%) of the Annual Bonus that would have been
paid to the Executive for the fiscal year in which the Date of Termination
falls but for the termination of the Executive’s employment;


 


6





















 


(d)           an
amount as severance pay equal to fifty percent (50%) of the Annual Base Salary
for the fiscal year in which the Date of Termination occurs; and


 


(e)           immediate
vesting of all outstanding stock options previously granted to the Executive by
the Company.


 


8.2                               Termination for Cause or
Other Than for Good Reason


 


If during the Employment
Period 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 (a) the Annual Base Salary
through the Date of Termination, (b)  the amount of any compensation
previously deferred by the Executive, and (c) any accrued vacation pay
that would be payable under the Company’s standard policy, in each case to the
extent theretofore unpaid.


 


8.3                               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, other than the Company’s obligation to pay the Executive the
product of (a) the Annual Bonus payable with respect to the fiscal year in
which the Term expired and (b) a fraction the numerator of which is the
number of days in the current fiscal year through the end of the Term and the
denominator of which is three hundred sixty-five (365).


 


8.4                               Termination Because of
Death or Total Disability


 


If during the Employment
Period the Executive’s employment is terminated 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.


 


8.5                               Payment Schedule


 


All payments of Accrued
Obligations, or any portion thereof payable pursuant to this Section 8,
shall be made to the Executive within ten (10) working days of the Date of
Termination.  Any payments payable to the
Executive pursuant to Section 8.1(c) and (d) hereof shall be made to the
Executive in a lump sum within ten (10) working days of the Date of
Termination.


 


7





















 


8.6                               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 (1) 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, all reasonably
consistent with the duties described in Section 3.2 hereof;


 


(b)           persistent
failure to carry out any lawful duties of the Executive described in Section
3.2 hereof or any directions of the Board or senior management reasonably
consistent with the duties herein set forth to be performed by the Executive,
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 11 hereof.


 


8.7                               Good Reason


 


For purposes of this
Agreement, “Good Reason” means


 


(a)           the
assignment to the Executive of any duties materially inconsistent with the
Executive’s position, authority, duties or responsibilities as contemplated by
Section 3.2 hereof or any other action by the Company that 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;


 


(b)           any
failure by the Company to comply with any of the provisions of Section 5
or Section 6 hereof, other than an isolated and inadvertent failure not
taken in bad faith and that is remedied by the Company promptly after receipt
of notice thereof given by the Executive;


 


8





















 


(c)           the
Company’s requiring the Executive to be based at any office or location more
than fifty (50) miles from the city of San Francisco, California;


 


(d)           any
failure by the Company to comply with and satisfy Section 13 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 13 hereof; or


 


(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 11
hereof.


 


8.8                               Excess Parachute
Limitation


 


If any portion of the
payments or benefits for the Executive under this Agreement, the Severance
Agreement, or any other agreement or benefit plan of the Company (including
stock option plan) 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 be due, shall be
determined in writing by recognized tax counsel selected by the Company and
reasonably acceptable to the Executive.


 


9.                                      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:


 


9.1                               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 by, paid for and arranged by the Company.  The Executive agrees that the examination’s
medical report shall be provided to the Company.


 


9.2                               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.


 


9





















 


10.                               Nondisclosure; Return of
Materials


 


10.1                        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 Agreement 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.


 


10.2                        Return of Materials


 


All documents, records,
notebooks, notes, memoranda, drawings or other documents made or compiled by
the Executive at any time, 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.


 


11.                               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 8.6 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.


 


12.                               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:

  	
   

  	
  Susan D. Berland

  
	
   

  	
   

  	
  321 North San
  Mateo Drive

  
	
   

  	
   

  	
  San Mateo,
  California 94401

  
	
   

  	
   

  	
   

  



 


10





















 


	
  If to the
  Company:

  	
   

  	
  NeoRx
  Corporation

  
	
   

  	
   

  	
  300 Elliott
  Avenue West, Suite 500

  
	
   

  	
   

  	
  Seattle,
  Washington  98119

  
	
   

  	
   

  	
  Attn:  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  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 7.4 hereof, if notice is mailed, such notice shall be effective
upon mailing.


 


13.                               Assignment


 


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


 


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, “Company”
shall mean NeoRx Corporation and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of
law, or otherwise.  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.


 


14.                               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.


 


15.                               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 


 


11





















 


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.


 


16.                               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.


 


17.                               Arbitration; Attorneys’
Fees


 


Except in connection with
enforcing Section 10 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 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 to by the arbitrator’s award,
subject only to an appeal 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.


 


18.                               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.


 


12





















 


19.                               Entire Agreement


 


Except as described in
Section 22 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, are hereby superseded and nullified in their entireties, except that
the Proprietary Information and Invention Agreement between the Company and the
Executive shall continue in full force and effect to the extent not superseded
by Section 10 hereof.


 


20.                               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.


 


21.                               Counterparts


 


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


 


22.                               Coordination With
Severance Agreement


 


The Severance Agreement
that the parties are entering into contemporaneously with this Agreement
provides for certain forms of severance and benefit payments in the event of
termination of the Executive’s employment. 
This Agreement is in addition to the Severance Agreement and in no way
supersedes or nullifies the Severance Agreement.  Nevertheless, it is possible that 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 8.1 hereof shall be coordinated with
payments made to the Executive under Section 5.1 of the Severance
Agreement as follows:


 


(a)           Accrued
Obligations under this Agreement shall be paid first, in which case Accrued
Obligations need not be paid under the Severance Agreement;


 


(b)           COBRA
Continuation under this Agreement shall be provided first, in which case COBRA
Continuation need not be provided under the Severance Agreement; and


 


(c)           the
severance payment required under Section 8.1(d) hereof shall be paid first, in
which case only that portion of any severance payment required under
Section 5.1(c) of the Severance Agreement in excess of the severance
payment required under Section 8.1(d) hereof shall be paid in accordance
with the provisions of the Severance Agreement.


 


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


 


13





















 


	
   

  	
  NEORX
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda T.
  Findlay

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice President,
  Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan D.
  Berland

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Susan D. Berland

  	
   

  
						



 


14





















 


APPENDIX A


 


For purposes of this
Agreement, a “Change of Control” shall
mean:


 


(a)           A
“Board Change” that, for purposes of this Agreement,
shall have occurred if a majority (excluding vacant seats) of the seats on the
Board are occupied by individuals who were neither (i) nominated by a
majority of the Incumbent Directors nor (ii) appointed by directors so
nominated.  An “Incumbent
Director” is a member of the Board who has been either
(i) nominated by a majority of the directors of the Company then in office
or (ii) appointed by directors so nominated, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person (as hereinafter defined) other than the Board; or


 


(b)           The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of (i) twenty percent (20%) or more of either (A) the
then outstanding shares of Common Stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”), in the case of either (A) or
(B) of this clause (i), which acquisition is not approved in advance by a
majority of the Incumbent Directors, or (ii) thirty-three percent (33%) or
more of either (A) the Outstanding Company Common Stock or (B) the
Outstanding Company Voting Securities, in the case of either (A) or (B) of
this clause (ii), which acquisition is approved in advance by a majority of the
Incumbent Directors; provided, however, that the following acquisitions shall
not constitute a Change of Control: 
(x) any acquisition by the Company, (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (z) any acquisition by
any corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of this
Appendix A are satisfied; or


 


(c)           Approval
by the shareholders of the Company of a reorganization, merger or
consolidation, in each case, unless, immediately following such reorganization,
merger or consolidation, (i) more than sixty percent (60%) of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all the individuals and
entities who were 


 


15





















 


the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportion as their ownership
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation,
directly or indirectly, thirty-three percent (33%) or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, thirty-three percent (33%)
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
the Incumbent Directors at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or


 


(d)           Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all the assets
of the Company, other than to a corporation with respect to which immediately
following such sale or other disposition, (A) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and
(C) at least a majority of the members of the board of directors of such
corporation were approved by a majority of the Incumbent Directors at the time
of the execution of the initial agreement or action of the Board providing for
such sale or other disposition of the Company’s assets.


 


16