Exhibit
10.1


 


NEORX CORPORATION

KEY EXECUTIVE SEVERANCE AGREEMENT


 


This Key Executive
Severance Agreement (VP) (this “Agreement”), dated
as of October 25, 2004, is entered into by and between NEORX CORPORATION, a
Washington corporation (as supplemented by Section 10, 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 fact that the Executive does not have any form of
traditional employment contract or other assurance of job security.  The Board believes it is imperative to
diminish any distraction of the Executive arising from the personal uncertainty
and insecurity that arises in the absence of any assurance of job security by
providing the Executive with reasonable compensation and benefit arrangements
in the event of termination of the Executive’s employment by the Company under
certain defined circumstances.


 


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


 


1.                                      Term


 


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


 


2.                                      Employment


 


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


 





















 


3.                                      Attention and
Effort


 


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


 


4.                                      Termination


 


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


 


4.1                               By the Company or the
Executive


 


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


 


4.2                               Automatic Termination


 


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


 


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4.3                               Notice of Termination


 


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


 


4.4                               Date of Termination


 


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


 


5.                                      Termination
Payments


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


5.2                               Termination for Cause or
Other Than for Good Reason


 


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


 


5.3                               Expiration of Term


 


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


 


5.4                               Termination Because of
Death or Total Disability


 


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


 


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5.5                               Payment Schedule and
Offset for Other Earnings


 


All payments of Accrued
Obligations, or any portion thereof payable pursuant to this Section 5,
shall be made to the Executive within ten (10) working days of the Date of
Termination.  Any severance payments
payable to the Executive pursuant to Section 5.1(c) shall be made to the
Executive in the form of salary continuation, payable at normal payroll
intervals during the nine (9) month period following the Date of Termination (“Payment Period”).  Any severance payments payable to the
Executive pursuant to Section 5.1(c) on or after the date six (6) months
after the Date of Termination (“Offset Period”)
shall be subject to offset for other earnings received by the Executive as
follows:


 


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


 


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


 


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


 


5.6                               Cause


 


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


 


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


 


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


 


(c)           violation
by the Executive of a state or federal criminal law involving the conviction of
a crime against the Company, or a guilty plea related to such conviction, 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


 


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


 


5.7                               Good Reason


 


For purposes of this
Agreement, “Good Reason” means:


 


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


 


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


 


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


 


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


 


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


 


5.8                               General Release of
Claims


 


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


 


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5.9                               Dispute regarding
existence of Good Reason for Termination


 


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


 


6.                                      Representations,
Warranties and Other Conditions


 


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


 


6.1                               Health


 


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


 


6.2                               No Violation of Other
Agreements


 


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


 


7.                                      Nondisclosure;
Return of Materials


 


7.1                               Nondisclosure


 


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


 


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granting her any
promotions or raises, or entrusting her with any information that helps the
Company compete with others.


 


7.2                               Return of Materials


 


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


 


8.                                      Notice and Cure
of Breach


 


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


 


9.                                      Form of Notice


 


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


 


	
  If to the
  Executive:

  	
  Susan D. Berland

  
	
   

  	
  321 North San
  Mateo Drive

  
	
   

  	
  San Mateo,
  California 94401

  
	
   

  	
   

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


 


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10.                               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, the “Company” shall mean NeoRx Corporation and any affiliated
company or successor to its business and/or assets as aforesaid that assumes
and agrees to perform this Agreement by contract, operation of law or otherwise;
and as long as such successor assumes and agrees to perform this Agreement, the
termination of the Executive’s employment by one such entity and the immediate
hiring and continuation of the Executive’s employment by the succeeding entity
shall not be deemed to constitute a termination or trigger any severance
obligation under this Agreement.  All the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective successors
and permitted assigns.


 


11.                               Waivers


 


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


 


12.                               Amendments In Writing


 


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


 


13.                               Applicable Law


 


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


 


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14.                               Arbitration; Attorneys’
Fees


 


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


 


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


 


15.                               Severability


 


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


 


16.                               Coordination With Change
of Control Agreement


 


The Company and the
Executive are contemporaneously with this Agreement entering into a Change of
Control Agreement (the “Change of Control Agreement”),
which agreement provides for certain forms of severance and benefit payments in
the event of termination of Executive’s employment under certain defined
circumstances.  This Agreement is in
addition to the Change of Control Agreement, providing certain assurances to
the Executive in circumstances that the Change of Control Agreement does not
cover, and in no way supersedes or nullifies the Change of Control Agreement.  Nevertheless, it is


 


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possible that a
termination of employment by the Company or by the Executive may fall within
the scope of both agreements.  In such
event, payments made to the Executive under Section 5.1 hereof shall be
coordinated with payments made to the Executive under Section 8.1 of the
Change of Control Agreement as follows:


 


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


 


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


 


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


 


17.                               Excess Parachute
Payments


 


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


 


18.                               Entire Agreement


 


Except as described in
Section 16 hereof, this Agreement constitutes the entire agreement between
the Company and the Executive with respect to the subject matter hereof, and
all prior or contemporaneous oral or written communications, understandings or
agreements between the Company and the Executive with respect to such subject
matter, are hereby superseded and nullified in their entireties, except that
the Proprietary Information and Invention Agreement between the Executive and
the Company shall continue in full force and effect to the extent not
superseded by Section 10 hereof.


 


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19.                               Withholding


 


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


 


20.                               Counterparts


 


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


 


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


 


	
   

  	
  NEORX
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda T.
  Findlay

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Its: 

  	
  Vice President,
  Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan D.
  Berland

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: 

  	
  Susan D. Berland

  	
   

  
							



 


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