Document:

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.

 

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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 

 

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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).

 

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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.

 

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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;

 

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(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.

 

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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;

 

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(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 

 

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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.

 

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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.

 

16Exhibit 10.1
 

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT  (the
“Agreement”) is made and entered into effective as of October 18, 2004, by and
between Maxim Pharmaceuticals, Inc., (the “Company”), and John D. Prunty (“Executive”).  The Company and Executive are hereinafter
collectively referred to as the “Parties,” and individually referred to as a “Party.”

 

RECITALS

 

A.            The Company desires assurance of the
association and services of Executive in order to retain Executive’s
experience, skills, abilities, background and knowledge, and is willing to
engage Executive’s services on the terms and conditions set forth in this
Agreement.

 

B.            Executive desires to be in the employ of the
Company, and is willing to accept such employment on the terms and conditions
set forth in this Agreement.

AGREEMENT

 

In consideration of the foregoing recitals and the mutual promises and
covenants herein contained, and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:

 

1.             EMPLOYMENT.

 

1.1           The Company hereby employs Executive, and
Executive hereby accepts continued employment by the Company, upon the terms
and conditions set forth in this Agreement, effective as of the date first set
forth above (“Commencement Date”).  This
Agreement shall continue in effect until terminated pursuant to Section 5
below.

 

1.2           Executive shall be the Vice-President,
Finance, Chief Financial Officer and Corporate Secretary of the Company (or a
position of at least comparable status) and shall serve in such other capacity
or capacities as the Chief Executive Officer and/or the Company’s Board of
Directors (“Board”) may from time to time prescribe.

 

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

 

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

 

 

2.             LOYAL AND
CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.

 

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

 

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

 

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

 

3.             COMPENSATION
OF EXECUTIVE.

 

3.1           While employed by the Company, as
compensation for proper and satisfactory performance of all duties to be
performed hereunder, the Company shall pay Executive an annual base salary of
Two Hundred Ten Thousand Dollars, $210,000 per year (the “Base Salary”),
payable in regular periodic payments in accordance with Company policy.  Such salary shall be prorated for any partial
year of employment on the basis of a 365-day fiscal year.  In addition, Executive will be eligible for
an incentive bonus of up to 25% of base salary, based upon defined milestones.

 

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

 

3.3           All of Executive’s compensation shall be
subject to customary withholding taxes and any other employment taxes as are
commonly required to be collected or withheld by the Company.

 

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

 

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

 

4.             EXPENSE
REIMBURSEMENT.

 

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

 

5.             TERMINATION.

 

5.1           The Company may terminate Executive’s
employment under this Agreement “for cause” by delivery of written notice to
Executive specifying the cause or causes relied upon for such termination.  Any notice of termination delivered pursuant
to this Section 5.1 shall effect termination as of the date specified in such
notice or, in the event no such date is specified, on the 

 

2

 

last day of the month in
which such notice is delivered or deemed delivered as provided in Section 9
below.  If Executive’s employment under
this Agreement is terminated by the Company for cause under this section,
Executive shall be entitled to receive only accrued Base Salary and other
accrued benefits required by law, prorated to the date of termination.  Executive will not be entitled to severance
pay, pay in lieu of notice or any other such compensation.  Grounds for the Company to terminate this
Agreement “for cause” shall be limited to the occurrence of any of the
following events:

 

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

 

5.1.2        Executive’s engaging or in any manner
participating in any activity which is competitive with or intentionally injurious
to the Company or which violates any provision of Section 7 of this Agreement;

 

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

 

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

 

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

 

Any notice of termination
given pursuant to this Section 5.1 shall effect termination as of the date
specified in such notice or, in the event no such date is specified, on the
last day of the month in which such notice is delivered or deemed delivered as
provided in Section 9 below.

 

5.2           The Company may terminate the Executive’s
employment at any time without cause upon delivery of written notice to the
Executive.  Any notice of termination
given pursuant to this Section 5.2 shall effect termination as of the date
specified in such notice or, in the event no such date is specified, on the
last day of the month in which such notice is delivered or deemed delivered as
provided in Section 9 below.  If such
termination shall occur under this Section 5.2, then in lieu of all other
remedies, and upon the Executive’s furnishing to the Company an effective
waiver and release of claims (in a form acceptable to the Company), Executive
shall be entitled to continuation of Base Salary and health benefits for a
period of six (6) months from said date of termination with such Base Salary
continuation to be at the rate set forth in Section 3.1 or, if greater, at
the rate of Executive’s then current salary in effect as of the date of
termination.

 

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

 

5.4           This Agreement shall terminate without notice
upon the date of Executive’s death or the date when Executive becomes “completely
disabled” as that term is defined in Section 6.2.  In the event of termination due to death or
complete disability, Executive or his estate or personal representative, as the
case may be, shall be entitled to receive only accrued Base Salary and other
accrued benefits required by law, prorated to the date of Executive’s death or
the date when Executive becomes completely disabled.

 

5.5           Notwithstanding any provision to the contrary
herein, unless otherwise provided herein or unless otherwise provided by law,
Executive may at any time terminate his employment with the Company
hereunder.  In such event, the Company
shall not be liable to Executive for the payment of any amount other than
accrued Base Salary and other accrued benefits required by 

 

3

 

law, prorated to the date of
termination.  The effective date of
termination of Executive’s employment under this Section 5.5 shall be
determined by the Board upon its receipt of notice of such termination.  Executive will not be entitled to severance
pay, pay in lieu of notice or any other such compensation.

 

6.             DEATH OR
DISABILITY DURING TERM OF EMPLOYMENT.

 

6.1           Upon termination of Executive’s employment
pursuant to Section 5.4, Executive or his estate or personal representative, as
the case may be, shall be entitled to receive Executive’s Base Salary and
benefits for a period of one month following the date of death or the date when
Executive becomes completely disabled.

 

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

 

7.             CONFIDENTIAL
INFORMATION; NONSOLICITATION.

 

7.1           Executive recognizes that his employment with
the Company will involve contact with information of substantial value to the
Company, which is not generally known in the trade, and which gives the Company
an advantage over its competitors who do not know or use it, including but not
limited to, techniques, designs, drawings, processes, inventions, developments,
equipment, prototypes, sales and customer information, and business and
financial information relating to the business, products, practices and
techniques of the Company (hereinafter referred to as “Confidential Information”).  Executive will at all times regard and
preserve as confidential such Confidential Information obtained by Executive
from whatever source and will not, either during his employment with the
Company or thereafter, publish or disclose any part of such Confidential
Information in any manner at any time, or use the same except on behalf of the
Company, without the prior written consent of the Company.  As a condition of this Agreement, Executive
will sign and return a copy of the Company’s “Proprietary Information and
Inventions Agreement,” attached as Exhibit A.

 

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

 

4

 

8.             ASSIGNMENT
AND BINDING EFFECT.

 

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

 

9.             NOTICES.

 

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

 

	
   

  	
  9.1.1

  	
  If to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Larry Stambaugh

  
	
   

  	
   

  	
  Maxim Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  8899 University Center
  Lane

  
	
   

  	
   

  	
  Suite 400

  
	
   

  	
   

  	
  San Diego, CA 92122

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.2

  	
  If to Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  John D. Prunty

  
	
   

  	
   

  	
  Maxim Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  8899 University Center
  Lane

  
	
   

  	
   

  	
  Suite 400

  
	
   

  	
   

  	
  San Diego, CA 92122

  

 

Any such written notice shall be deemed received when personally
delivered or three (3) days after its deposit in the United States mail as
specified above.  Either Party may change
its address for notices by giving notice to the other Party in the manner
specified in this section.

 

10.           CHOICE OF
LAW.

 

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

 

11.           INTEGRATION.

 

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

 

12.           AMENDMENT.

 

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

 

5

 

13.           WAIVER.

 

13.1         No term, covenant or condition of this
Agreement or any breach thereof shall be deemed waived, except with the written
consent of the Party against whom the wavier is claimed, and any waiver or any
such term, covenant, condition or breach shall not be deemed to be a waiver of
any preceding or succeeding breach of the same or any other term, covenant,
condition or breach.

 

14.           SEVERABILITY.

 

14.1         The finding by a court of competent
jurisdiction of the unenforceability, invalidity or illegality of any provision
of this Agreement shall not render any other provision of this Agreement
unenforceable, invalid or illegal.  Such
court shall have the authority to modify or replace the invalid or
unenforceable term or provision with a valid and enforceable term or provision
which most accurately represents the parties’ intention with respect to the
invalid or unenforceable term or provision.

 

15.           INTERPRETATION;
CONSTRUCTION.

 

15.1         The headings set forth in this Agreement are
for convenience of reference only and shall not be used in interpreting this
Agreement.  This Agreement has been
drafted by legal counsel representing the Company, but Executive has been
encouraged, and has consulted with, his own independent counsel and tax
advisors with respect to the terms of this Agreement.  The Parties acknowledge that each Party and
its counsel has reviewed and revised, or had an opportunity to review and
revise, this Agreement, and the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.

 

16.           REPRESENTATIONS
AND WARRANTIES.

 

16.1         Executive represents and warrants that he is
not restricted or prohibited, contractually or otherwise, from entering into
and performing each of the terms and covenants contained in this Agreement, and
that his execution and performance of this Agreement will not violate or breach
any other agreements between Executive and any other person or entity.

 

17.           COUNTERPARTS.

 

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

 

6

 

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

 

	
   

  	
  The
  Company:

  
	
   

  	
   

  
	
   

  	
  MAXIM PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  /s/  Larry G. Stambaugh

  	
   

  
	
   

  	
  Larry
  G. Stambaugh

  
	
   

  	
  Chairman
  of the Board, President and Chief 

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/  John D. Prunty

  	
   

  
	
   

  	
  John
  D. Prunty

  
				

 

7

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