Document:

Unassociated Document

    FirstEnergy
Corp.

    2007
Incentive Compensation Plan

     Performance
Share Award

    

    

    

                                Performance Share
Award No.:

    

                                Grantee:

    

                                Number of Performance
Shares Granted: XXXX

    

                                Performance
Period:  1/1/2008--12/31/2010

    

                                Performance Share
Closing Date:   April [  ], 2008

    

    

    

    This Performance
Share Award ("Award") to the “Grantee” is effective as of the 1st day of
January, 2008, and is not in lieu of salary or any other compensation for
services.  For the purposes of this Award, the term "Company" or "FE"
means FirstEnergy Corp. or its subsidiaries, singularly or
collectively.

    

    

    SECTION
ONE - AWARD

    

    As
of the date of this Award, in accordance with the FirstEnergy Corp. 2007
Incentive Compensation Plan (the “Plan”) and the terms and conditions of this
Award, the Company grants to the Grantee an award of Performance
Shares.  The Performance Shares will be placed into a Performance
Share account until paid out or forfeited.

    

     The
Performance Share account of the Grantee will be credited with an amount per
unit (the “Dividend Equivalent”) equal to the amount per share of any cash
dividends declared by the Board on the outstanding Common Stock of the
Company.  Such Dividend Equivalents will be credited in the form of an
additional number of Performance Shares (which Performance Shares, from the time
of crediting, will be deemed to be in addition to and part of the base number of
Performance Shares awarded in Section One for all purposes hereunder). The
additional number of Performance Shares will be equal to the aggregate amount of
Dividend Equivalents credited on this Award on the respective dividend payment
date divided by the average of the high and low price per share of Common Stock
on the respective dividend payment date. Until the Performance Period
ends pursuant to the terms and conditions described above, the Company will
credit, in additional Performance Shares, to the Grantee’s Performance Share
award, an amount equal to the Dividend Equivalents in the manner set forth
above.  The Performance Shares attributable to the Dividend
Equivalents will be either paid out or forfeited, as appropriate, under the same
terms and conditions under this Award that apply to the other Performance
Shares.

    

    The
value of the Grantee’s account at the end of the three-year Performance Period
will be based on the average of the high and low prices of FE common stock for
the month of December 2010 and may be adjusted upward or downward based upon the
total shareholder return (“TSR”) of FE common stock relative to an energy
services company index during the same three-year period.  If the TSR
rating is at or above the 86th
percentile, the payout will be 150% of the account value. If the TSR is at the
50th percentile, the payout will be 100% of the account value. If the TSR is at
the 40th percentile, the payout will be 50% of the account
value.  Payouts for a ranking above the 40th percentile and below the
86th
percentile will be interpolated.  For a TSR ranking below the 40th
percentile, no payout will be made.

    
      
        
                                                                     

        

         

      

      
         

        
          

        

      

      
         

      

    

    The
payout under this Award will be made between February 15 and March 15, 2011 if
the payout is on account of the completion of the Performance Period and
satisfaction of  the TSR ranking, as specified above, or, otherwise,
on the payment date as specified in Section Two below (all payment dates are
referred to as “Payment Date”). The payout will be made in cash; however, the
Grantee may elect to defer receipt of any payout under the provisions of the FE
Executive Deferred Compensation Plan.  The election shall be made in a
manner as required under administrative rules established by the Company and
shall be made in a manner that complies with Section 409A of the Internal
Revenue Code (“Section 409A”).

    

    SECTION
TWO - GENERAL TERMS

    

    Forfeiture

    

    The
Grantee shall forfeit all or a portion of the Award and any rights hereunder to
receive this Award upon the occurrence of any of the following events before the
expiration of the Performance Period:

     

    

      
        	
                Event of
      Grantee

              	
                Affect on
      Award

              	
                Further
      Information

              	
                Payment
      Date

              
	 
    	 
    	 
    	 
    
	
                Retirement
      (including early retirement)

              	
                   
      Account balance prorated based on full months of 

                   
      service during Performance Period.

              	
                As defined
      under 9.5 of the Plan

              	
                Between
      February 15 and March 15, 2011

              
	
                Disability

              	
                Account
      balance prorated based on full months of service during Performance
      Period.

              	
                As defined
      under 9.5 of the Plan, except as otherwise provided in 409A
      below.

              	
                As soon as
      practicable after the Grantee’s Disability.

              
	
                Death

              	
                Account
      balance prorated based on full months of service during Performance
      Period.

              	
                Payout made to
      beneficiary (per Article 15 of the Plan or by will or by the laws of
      descent and distribution)

              	
                As soon as
      practicable after the Grantee’s
death.

              

      

      

      
        	
                Termination
      for Cause

              	
                Award
      immediately forfeited.

              	
                Termination
      for Cause is defined in section 2.7 of the Plan

              	
                N/A

              
	
                Separation
      from Company in which you qualify for and elect benefits under
      the  FirstEnergy Severance Plan, if offered

              	
                Account
      balance prorated based on full months of service during Performance
      Period.

              	
                Refer to the
      Severance Benefits Plan

              	
                Between
      February 15 and March 15, 2011

              
	
                Other
      Termination (including resignation)

              	
                Award
      immediately forfeited

              	 
    	
                N/A

              
	
                Transfer out
      of an executive eligible position

              	
                Account
      balance prorated based on full months in an executive eligible
      position.

              	 
    	
                Between
      February 15 and March 15, 2011

              

      

      
 

    

    Prorated awards will
be calculated using the average high and low FE stock price for the month of
December 2010 or, in the case of disability or death, a thirty day period prior
to the effective date of the events described above and the most recent
quarterly TSR factor.

    

    In
the event of a Change in Control as defined in the Plan in section 2.8, this
award will pay out as soon as practicable under terms determined by the
Compensation Committee.

    

    
      
        
                                                                         

        

         

      

      
        2

        
          

        

      

      
         

      

    

    Shareholder
Rights

    

    The
Grantee shall have no rights as a shareholder of the Company, including voting
rights, with respect to the Award.

    

    Effect
on the Employment Relationship

    

    This Performance
Share Award is voluntary and made on a one-time basis and does not constitute a
commitment to make any future awards.  Nothing in this Award
guarantees employment with the Company or any Subsidiary, nor does it confer any
special rights or privileges to the Grantee as to the terms of
employment.

    

    Administration

    

    
      	
              1.  

            	
              This Award is
      governed by the laws of the State of Ohio without giving effect to the
      principles of the conflicts of
laws.

            

    

    
      	
              2.  

            	
              The
      administration of this Award and the Plan will be performed in accordance
      with Article 3 of the Plan.  All determinations and decisions
      made by the Committee, the Board, or any delegate of the Committee as to
      the provisions of the Plan shall be final, conclusive, and binding on all
      persons.

            

    

    
      	
              3.  

            	
              The terms of
      this Award are governed at all times by the official text of the Plan and
      in no way alter or modify the Plan.

            

    

    
      	
              4.  

            	
              If a term is
      capitalized but not defined in this Award, it has the meaning given to it
      in the Plan.

            

    

    
      	
              5.  

            	
              To the extent
      a conflict exists between the terms of this Award and the provisions of
      the Plan, the provisions of the Plan shall
  govern.

            

    

    
      	
              6.  

            	
              The terms and
      conditions of this Award may be modified by the
  Committee

            

    

    (a)    In
any case permitted by the terms of the Plan or this Award;

    (b)    With
the written consent of the Grantee; or

    (c)    Without
the consent of the Grantee if the amendment is either not materially adverse to
the interests of the Grantee or is necessary or appropriate in the view of the
Committee to conform with, or to take into account, applicable law, including
either exemption from or compliance with any applicable tax law.

    

    409A

     

    It is intended that
this Award and the compensation and benefits hereunder either be exempt from, or
comply with, Section 409A, and this Award shall be so construed and
administered.  In the event that the Company reasonably determines
that any compensation or benefits payable under this Award may be subject to
taxation under Section 409A, the Company, after consultation with the Grantee,
shall have the authority to adopt, prospectively or retroactively, such
amendments to this Award or to take any other actions it determines necessary or
appropriate to (a) exempt the compensation and benefits payable under this Award
from Section 409A or (b) comply with the requirements of Section
409A.  In no event, however, shall this section or any other
provisions of this Award be construed to require the Company to provide any
gross-up for the tax consequences of any provisions of, or payments under, this
Award and the Company shall have no responsibility for tax consequences to
Grantee (or the Grantee’s beneficiary) resulting from the terms or operation of
this Award.

     

     

    Notwithstanding any
other provision in this Award to the contrary, (1) a Grantee shall not be
treated as having a termination of employment unless the Grantee would also be
treated as having a separation of services for purposes of Section 409A, (2) a
Grantee shall not be treated as having a disability unless the Grantee would
also be treated as having a disability for purposes of Section
409A.

     

    
      
        
                                                                          

        

         

      

      
        3

        
          

        

      

      
         

      

    

     

    Withholding

     

    The
Company shall have the right to deduct, withhold or require the Grantee to
surrender a cash amount sufficient to satisfy federal, state and local taxes
required by law to be withheld in connection with the benefits under this
Award.

     

    SECTION
THREE - TRANSFER OF AWARD

     

    This Award is not
transferable during the life of the Grantee.  Only the Grantee shall
have the right to  receive payout of the Award, unless deceased, at
which time the payout may be received by the Grantee's beneficiary (as
designated under Article 15 of the Plan) or by will or by the laws of descent
and distribution.

     

    I
acknowledge receipt of this Performance Share Award and I accept and agree with
the terms and conditions stated above.

    

    

    

    

                ________________________________

                                     
   (Signature of Grantee)

    _____________________

                   (Date)

    

    

    

    
      
        
                                                                         

        

         

      

      
        4exv10w39

 

EXHIBIT 10.39

EMPLOYMENT AGREEMENT

MARCH, 2005

     THIS EMPLOYMENT AGREEMENT (the “AGREEMENT”) is made as of this 11 day of March, 2005 by and
between PHARMION CORPORATION, with principal offices at 2525 28th Street, Boulder, Colorado (the
“COMPANY”), and Steven N. Dupont of 3795 Lakebriar Drive, Boulder, CO 80304 (“EXECUTIVE,” and
together with the Company, the “PARTIES”).

     WHEREAS, as a condition of the Executive’s employment with the Company, on or about January
10, 2005, the Executive executed that certain Confidential Information and Invention Assignment
Agreement (the “Confidentiality Agreement”);

     NOW, THEREFORE, in consideration of the promises, mutual covenants, the above recitals, and
the agreements herein set forth, and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties agree to the following terms and conditions of
Executive’s employment:

     1. EMPLOYMENT. The Company hereby agrees to employ Executive as Vice President and General
Counsel, and Executive hereby accepts such employment upon the terms and conditions set forth
herein and agrees to perform duties as assigned by the Company. Executive’s employment as provided
herein, shall be deemed to have commenced, January 10, 2005 (“EFFECTIVE DATE”), and shall continue
until terminated pursuant to the provisions of Section 10 below (“TERMINATION”).

     2. AT-WILL EMPLOYMENT. IT IS UNDERSTOOD AND AGREED BY THE COMPANY AND EXECUTIVE THAT THIS
AGREEMENT DOES NOT CONTAIN ANY PROMISE OR REPRESENTATION CONCERNING THE DURATION OF EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY. EXECUTIVE SPECIFICALLY ACKNOWLEDGES THAT HIS/HER EMPLOYMENT WITH THE
COMPANY IS AT-WILL AND MAY BE ALTERED OR TERMINATED BY EITHER EXECUTIVE OR THE COMPANY AT ANY TIME,
WITH OR WITHOUT CAUSE AND/OR WITH OR WITHOUT NOTICE. EXECUTIVE ACKNOWLEDGES THAT THE COMPANY’S ONLY
OBLIGATIONS, IF ANY, UPON TERMINATION OF EXECUTIVE’S EMPLOYMENT ARE SET FORTH IN SECTION 10 BELOW,
WHICH SECTION DOES NOT ALTER THE AT-WILL NATURE OF EXECUTIVE’S EMPLOYMENT. THE NATURE, TERMS OR
CONDITIONS OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY CANNOT BE CHANGED BY ANY ORAL REPRESENTATION,
CUSTOM, HABIT OR PRACTICE, OR ANY OTHER WRITING EXCEPT AS PROVIDED FOR IN THE FINAL SENTENCE OF
THIS SECTION 2. IN ADDITION, THAT THE RATE OF SALARY OR OTHER COMPENSATION IS STATED IN UNITS OF
YEARS OR MONTHS DOES NOT ALTER THE AT-WILL NATURE OF THE EMPLOYMENT, AND DOES NOT MEAN AND SHOULD
NOT BE INTERPRETED TO MEAN THAT EXECUTIVE IS GUARANTEED EMPLOYMENT TO THE END OF ANY PERIOD OF TIME
OR FOR ANY PERIOD OF TIME. IN THE EVENT OF CONFLICT BETWEEN THIS DISCLAIMER AND ANY OTHER
STATEMENT, ORAL OR WRITTEN, PRESENT OR FUTURE, CONCERNING TERMS AND CONDITIONS OF EMPLOYMENT,

 

 

THE AT-WILL RELATIONSHIP CONFIRMED BY THIS DISCLAIMER SHALL CONTROL. THIS AT-WILL STATUS
CANNOT BE ALTERED EXCEPT IN WRITING SIGNED BY EXECUTIVE AND THE COMPANY, WITH EXPLICIT APPROVAL OF
THE BOARD OF DIRECTORS.

     3. DUTIES. Executive shall render exclusive, full-time services (except if and to the extent
otherwise agreed to in advance by the Company’s CEO or COO) to the Company as its Vice President
and General Counsel. Executive shall render such services diligently. At the outset of employment
with the Company, Executive shall report to the Company’s Chief Executive Officer, who is now
Patrick Mahaffy. Executive shall perform services under this Agreement at the Boulder, Colorado
office of the Company, from such other locations as directed by the Company, and from locations
necessary to perform the duties of Vice President and General Counsel under this Agreement.
Executive’s responsibilities, title, working conditions, location, duties and/or any other aspect
of Executive’s employment may be changed, added to or eliminated during Executive’s employment at
the sole discretion of the Company. While employed by the Company under this Agreement, Executive
shall devote his/her best efforts and his/her full business time, skill and attention to the
performance of his/her duties on behalf of the Company.

     4. POLICIES AND PROCEDURES. Executive agrees that he/she is subject to and will comply with
the policies and procedures of the Company, as such policies and procedures may be modified, added
to or eliminated from time to time at the sole discretion of the Company, except to the extent any
such policy or procedure specifically conflicts with the express terms of this Agreement. Executive
further agrees and acknowledges that any written or oral policies and procedures of the Company do
not constitute contracts between the Company and Executive.

     5. COMPENSATION.

          (a) BASE SALARY. For services rendered under this Agreement, the Company agrees to pay to
Executive, and Executive agrees to accept a salary of $250,000.00 per annum (“Base Salary”). Such
Base Salary shall be payable in installments in accordance with the Company’s normal payroll
practices and shall be subject to such deductions or withholdings as the Company is required to
make pursuant to law, or by further agreement with Executive. Executive’s Base Salary will be
reviewed annually by the Company’s Board of Directors beginning March 1, 2006, and may be adjusted
from time to time as the Board, in its sole discretion, deems appropriate.

          (b) BONUS. Executive will be eligible to participate in a bonus plan pursuant to which he/she
may be entitled to receive an annual bonus of his/her Base Salary based upon the achievement by
Executive and the Company of certain milestones as determined solely in the discretion of the
Company’s Board of Directors.

     6. OTHER BENEFITS. While employed by the Company as provided herein:

          (a) EMPLOYEE BENEFITS. Executive shall be entitled to participate in the Company’s various
employee benefit plans as such plans are established pursuant to the terms and

2

 

conditions of such plans. Currently, the Company has adopted the following plans: Group
health, vision and dental insurance plan; short and long term disability plan; life insurance plan;
and 401(k) plan. The Company reserves the right to alter, amend and/or terminate the benefits
provided to Executive from time to time at the Company’s sole discretion, and nothing in this
Section shall require that the Company adopt, amend, maintain or terminate any employee benefit
plan.

          (b) EXPENSE REIMBURSEMENT. Executive shall receive, against presentation of proper receipts
and vouchers, reimbursement for direct and reasonable out-of-pocket expenses incurred in connection
with the performance of his/her duties hereunder, according to the policies of the Company.

          (c) PAID VACATION TIME. Executive shall be entitled to 4 weeks paid vacation time per year in
accordance with the Company’s vacation time policy.

     7. CONFIDENTIAL INFORMATION AND OTHER OBLIGATIONS. Executive understands, acknowledges and
agrees that he/she continues to be bound by the terms and conditions of the Confidentiality
Agreement and agrees to comply in all respects with his/her obligations under the Confidentiality
Agreement.

     8. TERMINATION. Executive’s employment hereunder may be terminated without any breach of this
Agreement under the following circumstances (each, a “Termination”):

          (a) TERMINATION UPON EXECUTIVE’S DEATH. This Agreement shall terminate upon the death of
Executive.

          (b) TERMINATION UPON EXECUTIVE’S DISABILITY. Subject to any applicable state or federal law or
regulation, governing employees with disabilities, the Company may terminate this Agreement upon
the Disability of Executive. For purposes of this Agreement, ‘Disability” shall mean that
Executive, due to illness, accident, or other physical or mental incapacity, has been substantially
unable to perform the duties required of him/her under this Agreement, either with or without
reasonable assistance, for a continuous period of more than three months.

          (c) TERMINATION BY THE COMPANY FOR JUST CAUSE. The Company may terminate Executive’s
employment under this Agreement for Just Cause. For purposes of this Agreement, “Just Cause” for
termination shall mean that the Company, acting in good faith based upon the information then known
to it, determines that:

               (i) Executive has committed or engaged in negligent or willful conduct that is likely to be
detrimental to the Company;

               (ii) Executive has engaged in acts which constitute theft, fraud, or other illegal or
dishonest conduct;

3

 

               (iii) Executive has willfully disobeyed the reasonable and lawful directives of the Company’s
Chief Executive Officer, Chief Operating Officer, or the Company’s President or Board of Directors;

               (iv) Executive has refused or is unwilling to perform his/her job duties;

               (v) Executive has failed adequately to perform his/her job duties (provided, however, that the
Company shall first provide Executive with written notice of the deficiencies in his/her
performance and Executive shall be given 45 days to remedy such deficiencies);

               (vi) Executive has demonstrated habitual absenteeism;

               (vii) Executive is substantially dependent on alcohol or any controlled substance or violates
any general Company policy with regard to alcohol or controlled substances;

               (viii) Executive has engaged in acts which constitute sexual or other forms of illegal
harassment or discrimination;

               (ix) Executive makes public remarks that disparage the Company, its Board of Directors,
officers, directors, advisors, executives, affiliates or subsidiaries;

               (x) Executive violates his/her fiduciary duty to the Company, or his/her duty of loyalty to
the Company; or

               (xi) Executive breaches any term of this Agreement or the Confidentiality Agreement.

     The Parties acknowledge that this definition of “Just Cause” is not intended and does not
apply to any aspect of the relationship between the Company and any of its employees, including
Executive, beyond determining Executive’s eligibility for severance pay pursuant to Section 10
below.

          (d) TERMINATION BY THE COMPANY WITHOUT JUST CAUSE. The Company may terminate Executive’s
employment without Just Cause upon written notice to Executive.

          (e) TERMINATION BY EXECUTIVE FOR GOOD REASON. Upon written notice to the Company, Executive
may terminate his/her employment under this Agreement for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean:

               (i) The Company becoming insolvent, as evidenced by its inability to meet its obligations in
the ordinary course of business;

               (ii) A reduction in Executive’s Base Salary of more than 10% per year, without Executive’s
consent;

4

 

               (iii) Executive being required to relocate his residence further than 45 miles from the
Company’s office, without Executive’s consent; or

               (iv) A material reduction in the scope of Executive’s duties or a material change in the
content of Executive’s duties.

     Executive must provide the Company with written notice of his/her decision to terminate
his/her employment for Good Reason pursuant to this Section 9(e) no later than 90 days following
the receipt of a notice from the Company that an act or event constituting Good Reason has
occurred.

          (f) TERMINATION BY EXECUTIVE FOR OTHER THAN GOOD REASON. Executive may terminate his/her
employment under this Agreement other than for Good Reason upon 30 days’ advance written notice to
the Company.

     9. COMPENSATION AND OTHER BENEFITS UPON TERMINATION. Executive shall be entitled to the
following compensation and benefits upon Termination:

          (a) TERMINATION AS A RESULT OF EXECUTIVE’S DEATH OR DISABILITY. Upon Termination pursuant to
Section 9(a) [termination as a result of Executive’s death], or Section 9(b) [termination as a
result of Executive’s Disability], Executive shall be entitled to receive any Base Salary and
prorated bonus earned but unpaid as of the date of Termination, accrued but unused vacation
benefits as of the date of Termination pursuant to the Company’s vacation policy, and any business
expenses that were incurred but not reimbursed as of the date of Termination.

          (b) TERMINATION BY THE COMPANY FOR JUST CAUSE; TERMINATION BY EXECUTIVE FOR OTHER THAN GOOD
REASON. Upon Termination pursuant Section 9(c) [termination by the Company for Just Cause] or
Section 9(f) [termination by Executive for other than Good Reason], Executive shall be entitled to
receive any Base Salary earned but unpaid as of the date of Termination, accrued but unused
vacation benefits as of the date of Termination pursuant to the Company’s vacation policy, and any
business expenses that were incurred but not reimbursed as of the date of Termination.

          (c) TERMINATION BY THE COMPANY WITHOUT JUST CAUSE, TERMINATION BY EXECUTIVE FOR GOOD REASON.
Upon Termination pursuant to Section 9(d) [termination by the Company without Just Cause] or
Section 9(e) [termination by Executive for Good Reason], Executive shall be entitled to receive
any Base Salary earned but unpaid as of the date of Termination, accrued but unused vacation
benefits as of the date of Termination pursuant to the Company’s vacation policy, and any business
expenses that were incurred but not reimbursed as of the date of Termination. In addition, upon
the execution by Executive and delivery to the Company of a General Release of all claims that
Executive may have against the Company, its officers, directors, employees and shareholders, in a
form provided by and acceptable to the Company, Executive shall be entitled to receive severance
pay (“SEVERANCE PAY”) made either in a lump sum or in twelve equal monthly installments, in the
Company’s sole discretion,

5

 

equal to twelve (12) months’ of Executive’s Base Salary (calculated at the same rate of Base
Salary most recently applicable to Executive immediately prior to the date of termination), and 12
months COBRA benefit coverage for health, dental and vision insurance (at a coverage level equal to
or below elected coverage on the day before the termination date). The Severance Pay shall be
subject to such deductions or withholdings as the Company is required to make pursuant to law.
Executive shall not be entitled to receive any Severance Pay from the Company until Executive’s
general release of claims has become effective pursuant to its terms.

          (d) TERMINATION AFTER CHANGE IN CONTROL. Upon a Termination pursuant to Section 9(d)
[termination by the Company without Just Cause] or Section 9(e) [termination by Executive for Good
Reason] occurring on or within twenty-four (24) months after a Change in Control (as defined
below), (i) the vesting and exercisability of all of Executive’s stock options and other
equity-based awards will be accelerated in full so that all such stock options will be immediately
exercisable for fully vested stock and any other stock awards will be fully vested as of the date
of such Termination, and (ii) Executive’s stock options will remain exercisable in accordance with
the plan document. For purposes of this Agreement, “Change of Control” shall mean (1) a sale of
all or substantially all the assets of the Company; (2) a merger into or consolidation of the
Company with any other corporation, except any such merger or consolidation involving the Company
or a subsidiary of the Company in which the holders of capital stock of the Company immediately
prior to such merger or consolidation continue to hold immediately following such merger or
consolidation at least 50% by voting power of the capital stock of (a) the surviving or resulting
corporation or (b) if the surviving or resulting corporation is a wholly owned subsidiary of
another corporation immediately following such merger or consolidation, the parent corporation of
such surviving or resulting corporation, (3) the acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any parent or subsidiary corporation of
the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the election of directors, or
(4) individuals who, on the date of execution of this Agreement, are members of the Company’s Board
of Directors (the “Incumbent Board”), cease for any reason to constitute at least a majority of the
members of the Board of Directors; provided, however, that if the appointment or election (or
nomination for election) of any new Board of Directors member was approved or recommended by a
majority vote of the members of the Incumbent Board then still in office, such new member shall,
for purposes of this Agreement, be considered as a member of the Incumbent Board.

          (e) PARACHUTE PAYMENT GROSS-UP. If any payment or benefit Executive would receive from the
Company or otherwise would constitute a parachute payment that would subject Executive to an excise
tax (“Excise Tax”) under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)
(or any successor provision), Executive shall be entitled to receive an additional lump sum payment
in cash (the “Tax Gross-Up”), subject to mandatory tax withholding, which, when added to all
payments and benefits allocable to Executive that constitute parachute payments, provides Executive
with the same after-tax compensation that he would have received from such parachute payments had
none of such compensation constituted a

6

 

parachute payment. The amount of any such Tax Gross-Up to which Executive becomes entitled
under this paragraph will be determined pursuant to the following formula:

	 	 	X = Y divided by (1 - (A + B + C)), where
	 
	 	 	X is the total dollar amount of the Tax Gross-Up payable to Executive;
	 
	 	 	Y is the total Excise Tax imposed on Executive;
	 
	 	 	A is the Excise Tax rate applicable to Executive’s parachute payments;
	 
	 	 	B is the highest combined marginal federal income and applicable state income tax
rate in effect for Executive, after taking into account the deductibility of state
income taxes against federal income taxes to the extent allowable, for the calendar
year in which the Tax Gross-Up is paid; and
	 
	 	 	C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for Executive
with respect to the Tax Gross-Up payment for the calendar year in which the Tax
Gross-Up is paid;

provided if there is a change in the tax laws after the date hereof that would render the amount
determined above insufficient to fully reimburse Executive on an after-tax basis for the amount of
any Excise Tax, Executive shall be entitled to such additional amount as may be necessary to
provide him/her with such reimbursement.

     Within ninety (90) days after a determination is made by the Internal Revenue Service or
Executive’s tax advisor that an item of compensation or benefit payable hereunder constitutes a
parachute payment under Code Section 280G for which Executive is liable for an Excise Tax,
Executive shall identify the nature of the payment to the Company and submit to the Company the
calculation of the Excise Tax attributable to that payment and the Tax Gross-Up to which Executive
is entitled with respect to such tax liability. The Company will pay such Tax Gross-Up to
Executive (net of all applicable withholding taxes, including any taxes required to be withheld
under Code Section 4999) within ten (10) business days after Executive’s submission of the
calculation of such Excise Tax and the resulting Tax Gross-Up, provided such calculations represent
a reasonable interpretation of the applicable law and regulations.

     In the event that Executive’s actual Excise Tax liability is determined by a Final
Determination to be greater than the Excise Tax liability previously taken into account for
purposes of the Tax Gross-Up paid to Executive pursuant to this Section 10(e), then within ninety
(90) days following the Final Determination, Executive shall submit to the Company a new Excise Tax
calculation based upon the Final Determination. Within ten (10) business days after receipt of such
calculation, the Company shall pay Executive the additional Tax Gross-Up attributable to such
excess Excise Tax liability.

     In the event that Executive’s actual Excise Tax liability is determined by a Final
Determination to be less than the Excise Tax liability previously taken into account for purposes
of

7

 

the Tax Gross-Up paid to Executive pursuant to this Section 10(e), then Executive shall refund
to the Company, promptly upon receipt, any federal or state tax refund attributable to the Excise
Tax overpayment.

     For purposes of this Section 10(e), a “Final Determination” means an audit adjustment by the
Internal Revenue Service that is either (i) agreed to by both Executive (or his estate) and the
Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a
court of competent jurisdiction in a decision with which Executive and the Company concur (such
concurrence by the Company to be not unreasonably withheld) or with respect to which the period
within which an appeal may be filed has lapsed without a notice of appeal being filed.

     10. RESTRICTIVE COVENANT; NON-COMPETE. Executive acknowledges and agrees that the agreements
and covenants contained in this Section 11 are (i) reasonable and valid in geographical and
temporal scope and in all other respects, and (ii) essential to protect the value of the Company’s
business and assets, and by his employment with the Company, Executive will obtain knowledge,
contacts, know-how, training and experience and there is a substantial probability that such
knowledge, know-how, contacts, training and experience could be used to the substantial advantage
of a competitor of the Company and to the Company’s substantial detriment. For purposes of this
Section 11, references to the Company shall be deemed to include its subsidiaries.

          (a) NON-COMPETE. Executive covenants and agrees that during Executive’s employment with the
Company (the “Employment Period”) and for a period extending to the first anniversary of
Executive’s Termination for any reason or for no reason (the “Restricted Period”), with respect to
any state or foreign country in which the Company is engaged in business at the time of such
Termination, Executive shall not, directly or indirectly, individually or jointly, own any
interest in, operate, join, control or participate as a partner, director, principal, officer, or
agent of, enter into the employment of, act as a consultant to, or perform any services for any
entity which competes to a material extent with the business activities in which the Company is
engaged at the time of such termination or in which business activities the Company has documented
plans to become engaged in and as to which Executive has knowledge at the time of Termination, or
any entity in which any such relationship with Executive would result in the inevitable use or
disclosure of Confidential Information (as defined in the Confidentiality Agreement).
Notwithstanding anything herein to the contrary, this Section 11(a) shall not prevent Executive
from acquiring as an investment securities representing not more than one percent (1%) of the
outstanding voting securities of any publicly-held corporation.

          (b) EXTENSION. If Executive violates the provisions of Section 11(a) above, Executive shall
continue to be bound by the restrictions set forth in Section 11(a) until a period of one year has
expired without any violation of such provisions.

          (c) BLUE PENCIL. If any court of competent jurisdiction shall at any time deem the duration
or the geographic scope of any of the provisions of this Section 11 unenforceable, the other
provisions of this Section 11 shall nevertheless stand and the duration and/or geographic scope set
forth herein shall be deemed to be the longest period and/or greatest

8

 

size permissible by law under the circumstances, and the parties hereto agree that such court
shall reduce the time period and/or geographic scope to permissible duration or size.

     11. MISCELLANEOUS.

          (a) TAXES. Executive acknowledges that the Company will withhold all taxes required by law
with respect to any and all compensation or benefits provided by the Company pursuant to this
Agreement. Executive acknowledges that the Company has not made, nor herein makes, any
representation about the tax consequences of any consideration provided by the Company to Executive
pursuant to this Agreement, except as expressly provided herein.

          (b) MODIFICATION/WAIVER. This Agreement may not be amended, modified, superseded, canceled,
renewed or expanded, or any terms or covenants hereof waived, except by a writing executed by each
of the Parties hereto or, in the case of a waiver, by the party waiving compliance. Failure of any
party at any time or times to require performance of any provision hereof shall in no manner affect
their or its right at a later time to enforce the same. No waiver by a party of a breach of any
term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver of agreement
contained in the Agreement.

          (c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the
benefit of any successor or assignee of the business of the Company. This Agreement shall not be
assignable by the Executive.

          (d) NOTICES. All notices given hereunder shall be given by certified mail, addressed, or
delivered by hand, to the other party at his/her or its address as set forth herein, or at any
other address hereafter furnished by notice given in like manner. Executive promptly shall notify
Company of any change in Executive’s address. Each notice shall be dated the date of its mailing or
delivery and shall be deemed given, delivered or completed on such date.

          (e) GOVERNING LAW; PERSONAL JURISDICTION AND VENUE. This Agreement and all disputes relating
to this Agreement shall be governed in all respects by the laws of the State of Colorado. The
Parties acknowledge that this Agreement constitutes the minimum contacts to establish personal
jurisdiction in Colorado and agree to Colorado courts’ exercise of personal jurisdiction. The
Parties further agree that if they are unable to reach an agreement concerning the nature and terms
of alternative dispute resolution, any disputes relating to this Agreement shall be brought in the
District Court of the 20th Judicial District, Boulder, Colorado, and they hereby consent to the
jurisdiction of such Court.

          (f) ENTIRE AGREEMENT. This Agreement together with the Confidentiality Agreement, set forth
the entire agreement and understanding of the Parties hereto with regard to the employment of
Executive by the Company and supersedes any and all prior agreements, arrangements and
understandings, written or oral, pertaining to the subject matter hereof. No representation,
promise or inducement relating to the subject matter hereof has been made to a party that is not
embodied in this Agreement or the Confidentiality Agreement, and no party shall be bound by or
liable for any alleged representation, promise or inducement not so set forth.

9

 

[Signature Page Follows]

10

 

     IN WITNESS WHEREOF, the Parties have each duly executed this Amended and Restated Employment
Agreement as of the day and year first above written.

	 	 	 	 	 
	 	PHARMION CORPORATION

 	 
	 	/s/ PATRICK J. MAHAFFY
 	 
	 	By: Patrick Mahaffy 	 
	 	Its: Chief Executive Officer 	 
	 
	 	EXECUTIVE

 	 
	 	/s/ STEVEN N. DUPONT
 	 
	 	Steven N. Dupont 	 
	 	 	 
	 

11

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