Document:

exv10w5

 

Exhibit 10.5

Employment Agreement

     This Employment Agreement (the “Agreement”) is entered into by and between Kendall M.
Mohler (the “Executive”) and Trubion Pharmaceuticals, Inc., a Delaware corporation (the
“Company”) as of March 21, 2008 (the “Effective Date”). This Agreement supercedes Executive’s
Genecraft, Inc. Employment Agreement dated November 19, 2002 (the “Prior Agreement”).

     1. Duties and Scope of Employment. For the term of this Agreement (“Employment”), the Company
agrees to employ the Executive in the position of Senior Vice President of Research & Development.
The Executive shall report directly to the Company’s Chief Executive Officer. The Executive shall
have such duties, authority and responsibilities that are commensurate with his being a senior
executive officer of the Company. During his Employment, the Executive shall devote substantially
his full business efforts and time to the Company and, so long as such activities do not interfere
with the performance of his responsibilities to the Company under this Agreement, the Executive may
engage in civic and charitable activities and serve on the boards of directors (or managers or
trustees) of civic or charitable organizations and, subject to the consent of the Board, may serve
on the board of directors of corporations or other businesses. The Executive’s primary work place
shall be at the Company’s corporate headquarters in Seattle, Washington.

     2. Cash and Incentive Compensation.

          (a) Salary. The Company shall pay the Executive as compensation for his services a base
salary at a gross annual rate of not less than $276,000.00. Such salary shall be payable in
accordance with the Company’s standard payroll procedures. The annual compensation specified in
this Section 2(a), together with any increases in such compensation that the Company may grant from
time to time, is referred to in this Agreement as “Base Compensation.”

          (b) Incentive Bonuses. The Executive shall be eligible to receive an annual fiscal year
incentive bonus that the Board or Compensation Committee of the Board (the “Committee”) shall
determine and award in its discretion. Such incentive bonus shall be awarded based upon the
achievement of specific milestones that will be determined by the Board and/or the Committee and
confirmed to the Executive no later than ninety (90) days after the start of each fiscal year.
Payment for each year’s bonus actually earned shall be made to the Executive no later than the
fifteenth day of the third month after the later of the end of the calendar year or the Company’s
taxable year in which the bonus payment is no longer subject to a substantial risk of forfeiture
for purposes of Section 409A of the Internal Revenue Code, as amended (“Section 409A”).

           (c) Equity Terms. During the Executive’s Employment, at the discretion of the Committee, the
Executive shall be entitled to participate in the Company’s equity compensation plans, as in effect
from time to time, and the Executive shall be eligible to receive grants of Company equity
(“Compensatory Equity”), as determined by Committee, in its discretion from time to time.

 

 

          (d) Employee Benefits. During the Executive’s Employment, the Executive will be entitled to
participate in the employee benefit plans of general applicability to other employees of the
Company, as in effect from time to time, including, without limitation, the Company’s group
medical, dental, vision, disability, life insurance, director and officer liability insurance and
flexible-spending account plans. The Company reserves the right to cancel or change the benefit
plans and programs it offers to its employees at any time.

          (e) Service Definition. For purposes of Section 3(b) of this Agreement, “Service” shall mean
service by the Executive as an employee, director and/or consultant of the Company (or any
subsidiary or parent or affiliated entity of the Company).

     3. Vacation and Indemnification.

          (a) Vacation. The Executive will be eligible for paid vacation in accordance with the
Company’s vacation policy. Under the Company’s current vacation policy, the Executive is eligible
for three (3) weeks per year of paid vacation and would become eligible for four (4) weeks per year
of paid vacation commencing on the third anniversary of the Executive’s employment with the
Company.

          (b) Indemnification. The Company shall indemnify the Executive to the maximum extent
permitted by applicable law and the Company’s bylaws with respect to the Executive’s Service.
During the Executive’s Employment, the Company shall maintain directors’ and officers’ liability
insurance for the Executive’s benefit on terms and conditions no less favorable than the terms and
conditions generally applicable to the Company’s other senior executives. The Company’s
obligations under this Section 3(b) shall survive termination of the Executive’s Service and also
termination or expiration of this Agreement.

     4. Business Expenses. During his Employment, the Executive shall be authorized to incur
necessary and reasonable travel, entertainment and other business expenses in connection with his
duties hereunder. The Company shall promptly reimburse the Executive for such expenses upon
presentation of appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.

     5. Term of Employment.

          (a) Employment-at-Will. The Company and the Executive hereby acknowledge that the Executive’s
Employment is at-will. The Company may terminate the Executive’s Employment with or without Cause,
by giving the Executive thirty (30) days advance notice in writing. The Executive may terminate
his Employment by giving the Company thirty (30) days advance notice in writing. The Executive’s
Employment shall terminate automatically in the event of his death.

          (b) Rights Upon Termination. Upon the termination of the Executive’s Employment for any
reason (including death or Disability (as defined below)), the
Executive shall be entitled to the compensation, benefits and reimbursements described in this Agreement through the effective date of
the termination (the “Termination Date”), and the Company shall make the following payments to the
Executive (or his beneficiary) on his

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Termination Date: (i) all unpaid salary and unpaid vacation
accrued through the Termination Date, (ii) any accrued, unpaid bonuses for any fiscal year of the
Company ended prior to the Termination Date and (iii) any unreimbursed business expenses. The
Executive may also be eligible for other post-Employment payments and benefits as provided in this
Agreement or pursuant to other agreements or plans with the Company. Upon the Termination Date,
the Executive shall have no further rights to receive compensation or benefits from the Company
except as set forth in Section 6 and pursuant to the terms of any benefit plans (including without
limitation any equity compensation plans) of the Company in which the Executive is a participant.

     6. Termination Benefits.

          (a) Severance Pay. If there is an Involuntary Termination (as defined below) of the
Executive’s Employment, then subject to the Executive’s execution, delivery and non-revocation of a
Release (defined below) within the time period described below, following the Executive’s
“separation from service” within the meaning of Section 409A, the Company shall pay the Executive a
single lump sum of cash in an amount equal to the sum of twelve (12) months of the Executive’s then
annual Base Compensation (not giving effect to any reduction in Base Compensation made in
connection with such Involuntary Termination or giving rise to Good Reason). The cash lump sum
amount payable under this Section 6(a) shall be made to the Executive on the first payroll date in
the month following the month containing the Release Deadline. The Executive shall also receive
the benefits provided in Sections 6(b) and 6(c), and all such payments and benefits shall not be
subject to mitigation or offset (except as specified in Section 6(b)). In order to be entitled to
receive the severance described in this Section 6(a) (including the benefits provided in Sections
6(b), 6(c) and, if applicable, 6(d)), the Executive must execute, deliver and not revoke the
Release within forty-five (45) calendar days following the Executive’s separation from service (the
date that is forty-five (45) calendar days following the Executive’s separation from service is the
“Release Deadline”). The Company shall furnish the Release to the Executive on the date of his
Involuntary Termination. The “Release” shall be a general release of all litigation and other
claims by the Executive and on Executive’s behalf in a form satisfactory to the Company.
Notwithstanding the foregoing, if the Executive’s Involuntary Termination occurs in 2008, an amount
of the severance pay otherwise payable under this Section 6(a) in a lump sum equal to the amount
that would have been payable under Section 7(a) of the Prior Agreement (had it been in effect on
the date of such Involuntary Termination) shall instead be paid in twelve (12) equal monthly
installments commencing on the first payroll date in the month following the month containing the
Release Deadline.

          (b) Health Insurance. If the Executive is entitled to receive the severance payment in
Section 6(a), and if the Executive elects to continue his (and his dependents’) health insurance
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), then the
Company shall pay up to twelve (12) months of the Executive’s monthly premium under COBRA, provided
that the Company’s obligation to pay the monthly premium shall cease at such time as the Executive
commences receiving substantially
equivalent health insurance coverage in connection with new
employment and that the Company may require that the Executive substantiate his COBRA coverage.

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          (c) Equity Vesting. If the Executive is entitled to receive the payments in Section 6(a),
then the time-based vesting restrictions shall immediately lapse on an additional number of shares
of Company common stock under all of the Executive’s outstanding Compensatory Equity that is equal
to the number of shares that would have time-vested if the Executive had continued in employment
for twelve (12) additional months following the Termination Date. In addition, Executive shall
have three (3) months following the Termination Date to exercise any of his outstanding
Compensatory Equity (subject to the original term duration of each equity grant).

          (d) Effect of Change in Control. If the Company is subject to a Change in Control (as defined
below), then all vesting restrictions shall immediately lapse on all of the Executive’s
Compensatory Equity. Moreover, if there is an Involuntary Termination of the Executive’s
Employment within the period beginning three (3) months before and ending twelve (12) months after
a Change in Control (or more than three (3) months prior to a Change in Control but in connection
with a Change in Control), then following the Executive’s separation from service, the Executive
will be entitled to all benefits described in Sections 6(a) and 6(b) of this Agreement subject to
the same terms and conditions and payment dates described above, except that (x) the cash payment
amount under Section 6(a) shall be an amount equal to the sum of fifteen (15) months of the
Executive’s then annual Base Compensation (not giving effect to any reduction in Base Compensation
made in connection with such Involuntary Termination or giving rise to Good Reason) and (y) the
Company’s payment of monthly COBRA premiums under Section 6(b) shall be for up to fifteen (15)
months. For purposes of the preceding sentence, an Involuntary Termination shall be deemed to be
in connection with a Change in Control if such termination (i) is required by the merger agreement,
purchase agreement or other instrument relating to such Change in Control or (ii) is made at the
express request of the other party (or parties) to the transaction constituting such Change in
Control.

          (e) Parachute Payments. In the event that the payments and benefits provided for in this
Agreement and the payments and/or benefits provided to, or for the benefit of, the Executive under
any other Company plan or agreement (such payments or benefits are hereinafter collectively
referred to as the “Benefits”) (i) constitute “parachute payments” within the meaning of Section
280G of the Internal Revenue Code and (ii) but for this Section 6(e), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise Tax”), then the
Benefits shall either be:

          (i) delivered in full, or

          (ii) delivered as to such lesser extent which would result in no portion of
such Benefits being subject to the Excise Tax (such reduced amount is hereinafter
referred to as the “Limited Amount”),

whichever of the foregoing amounts, taking into account the applicable federal, state and local
income taxes and the Excise Tax, results in the receipt by the Executive on an after-tax basis, of
the greatest amount of Benefits, notwithstanding that all or some portion of such Benefits may be
subject to the Excise Tax. If applicable, in order to effectuate the Limited Amount, the Company
shall first reduce those Benefits which are payable in cash and then reduce non-cash payments,

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in each case in reverse order beginning with Benefits which are to be paid the farthest in time from
the date of determination that the Benefits will be limited by (e)(ii) above. Any calculations and
determinations required under this Section 6(e) shall be made in writing by the Company’s
independent auditor (the “Accountant”) whose determination shall be conclusive and binding. The
Executive and the Company shall furnish the Accountant such documentation as the Accountant may
reasonably request in order to make a determination. The Company shall pay for all costs that the
Accountant may reasonably incur in connection with performing any calculations contemplated by this
Section 6(e).

          (f) “Change in Control” Definition. For purposes of this Agreement, “Change in Control” shall
mean the occurrence of any of the following events:

          (i) the consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if the Company’s stockholders
immediately prior to such merger, consolidation or reorganization cease to directly
or indirectly own immediately after such merger, consolidation or reorganization at
least a majority of the combined voting power of the continuing or surviving
entity’s securities outstanding immediately after such merger, consolidation or
other reorganization;

          (ii) the consummation of the sale, transfer or other disposition of all or
substantially all of the Company’s assets (other than (1) to a corporation or other
entity of which at least a majority of its combined voting power is owned directly
or indirectly by the Company, (2) to a corporation or other entity owned directly or
indirectly by the stockholders of the Company in substantially the same proportions
as their ownership of the common stock of the Company or (3) to a continuing or
surviving entity described in subsection (i) in connection with a merger,
consolidation or corporate reorganization which does not result in a Change in
Control under subsection (i));

          (iii) a change in the composition of the Board, as a result of which fewer than
one-half of the incumbent directors are directors who either (1) had been directors
of the Company on the date twenty-four (24) months prior to the date of the event
that may constitute a Change in Control (the “original directors”) or (2) were
elected, or nominated for election, to the Board with the affirmative votes of at
least a majority of the aggregate of the original directors who were still in office
at the time of the election or nomination and the directors whose election or
nomination was previously so approved;

          (iv) the consummation of any transaction as a result of which any person
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing at least
thirty-five percent (35%) of the total voting power represented by the Company’s
then outstanding voting securities. For purposes of this subsection, the term
“person” shall have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude:

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          (1) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or an affiliate of the Company;

          (2) a corporation or other entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company;

          (3) the Company; and

          (4) a corporation or other entity of which at least a majority of its
combined voting power is owned directly or indirectly by the Company; or

          (v) a complete winding up, liquidation or dissolution of the Company.

     For purposes of this Section 6(f), a transaction shall not constitute a Change in Control if
its sole purpose is to change the state of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons who held the
Company’s securities immediately before such transactions.

          (g) “Cause” Definition. For all purposes under this Agreement, “Cause” shall mean any of the
following committed by the Executive:

          (i) Willful failure to follow the reasonable and lawful directions of the
Board;

          (ii) Conviction of a felony (or a plea of guilty or nolo contendere by the
Executive to a felony) that materially harms the Company;

          (iii) Acts of fraud, dishonesty or misappropriation committed by the Executive;

          (iv) Willful misconduct by the Executive in the performance of the Executive’s
material duties required by this Agreement; or

          (v) A material breach of this Agreement.

     The foregoing is an exclusive list of the acts or omissions that shall be considered “Cause”
for the termination of the Executive’s Employment by the Company. With respect to the acts or
omissions set forth in clauses (i), (iii), (iv) and (v) above, (x) the Board shall provide the
Executive with thirty (30) days advance written notice detailing the basis for the termination of
Employment for Cause, (y) during the 30-day period after the Executive has received such notice,
the Executive shall have an opportunity to cure such alleged Cause events and to present his case
to the full Board (with the assistance of his own counsel) before any termination for Cause is
finalized by a vote of a majority of the Board and (z) the Executive shall continue to receive the
compensation and benefits provided by this Agreement during the 30-day cure period. In addition,
no act or failure to act of Executive shall be willful or intentional if

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performed in good faith
with the reasonable belief that the action or inaction was in the best interest of the Company.

          (h) “Involuntary Termination” Definition. For all purposes under this Agreement, “Involuntary
Termination” shall mean any of the following: (i) termination of the Executive’s Employment by the
Company without Cause or (ii) the Executive’s resignation of Employment for Good Reason.

          (i) “Good Reason” Definition. For all purposes under this Agreement, “Good Reason” shall mean
any of the following that occurs without the Executive’s prior written consent: (i) a material
diminution in Executive’s authority, duties, or responsibilities, (ii) a material diminution in the
Executive’s Base Compensation, other than any such reduction which is a part of, and generally
consistent with, a general reduction of officer or employee salaries, (iii) any material breach by
the Company of any material provision of this Agreement, or (iv) a refusal by Executive, following
a request by the Company, to relocate to a facility or location more than forty (40) miles from the
Company’s current location; provided, that (A) Executive provides notice to the Company of the
existence of the applicable condition described in this Section 6(i) within 90 days of the initial
existence of the condition and the Company fails to remedy the condition within 30 days thereafter
and (C) within the sixty (60) day period immediately following such failure to remedy,
Executive elects to terminate his employment for Good Reason; provided, however,
that none of the foregoing shall constitute Good Reason to the extent that Executive has agreed in
writing to such material change, reduction, breach or refusal.

          (j) “Disability” Definition. For all purposes under this Agreement, “Disability” shall mean
the Executive’s incapacity due to physical or mental illness to perform his full-time duties with
the Company for a continuous period of three months or an aggregate of six (6) months in any
eighteen (18) month period.

     7. Non-Solicitation, Non-Compete and Non-Disparagement.

          (a) Non-Solicitation. During the period commencing on the date of this Agreement and
continuing until the first anniversary of the Termination Date, the Executive shall not directly or
indirectly, personally or through others, solicit, recruit, or attempt to solicit or recruit any
employee, agent, licensor, content provider, supplier, distributor, customer or partner of the
Company to curtail, cancel or terminate such employment, agency or business relationship that it
has with the Company or its affiliates.

          (b)
Non-Compete. During the period commencing on the date of this Agreement and continuing
until the first anniversary of the Termination Date, the Executive shall not directly or
indirectly, personally or through others, own, manage, operate, control, participate in, perform
services for, make any investment in, assist, or otherwise carry on, the Company business or any
business that directly competes with the Company business (other than in the course of performing
duties to Company or any of its affiliates as an employee or other service provider).
Notwithstanding the foregoing, nothing contained in this Section 7(b) shall limit or otherwise
affect the ability of Executive to own not more than 1.0% of the outstanding capital stock of any
entity that is engaged in a business competitive with Company, provided that

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such investment is a
passive investment and the Executive is not directly or indirectly involved in the management or
operation of such business or otherwise providing consulting services to such business.

          (c) Confidential Information. Except as required in the good faith opinion of the Executive
in connection with the performance of the Executive’s duties hereunder or as specifically set forth
in this Section 7(e), the Executive shall, in perpetuity, maintain in confidence and shall not
directly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit or
the benefit of any person, firm, corporation or other entity any confidential or proprietary
information or trade secrets of or relating to the Company, including, without limitation,
information with respect to the Company’s operations, processes, products, inventions, business
practices, finances, principals, vendors, suppliers, customers, potential customers, marketing
methods, costs, prices, contractual relationships, regulatory status, business plans, designs,
marketing or other business strategies, compensation paid to employees or other terms of
employment, or deliver to any person, firm, corporation or other entity any document, record,
notebook, computer program or similar repository of or containing any such confidential or
proprietary information or trade secrets. The Company and the Executive stipulate and agree that
as between them the foregoing matters are important, material and confidential proprietary
information and trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). Upon termination of the Executive’s employment
with the Company for any reason, the Executive shall promptly deliver to the Company all
correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals,
financial documents, or any other documents concerning the Company’s customers, business plans,
designs, marketing or other business strategies, products or processes, provided that the Executive
may retain his rolodex, address book and similar information.

          (d) Confidential Information, Invention Assignment, Non-Competition and Arbitration Agreement.
Sections 7(a), 7(b) and 7(c) hereinabove shall be in addition to and not in lieu of Sections 2 and
section 9 of the Confidential Information, Invention Assignment, Non-Competition and Arbitration
Agreement, dated November 13, 2002 between the Executive and the Company.

          (e) Non-Disparagement. The Executive and the Company mutually agree not to disparage or
defame, in writing or orally, the other party, and as applicable, its or his services, products,
subsidiaries and affiliates, and/or their respective directors, officers, employees, agents, family
members, successors and assigns. This non-disparagement provision shall not apply to statements
made by non-management employees of the Company, so long as such statements did not originate from
and were not induced or encouraged (directly or indirectly) by an officer, director or management
employee of the Company. Notwithstanding the foregoing, nothing in this Section 7(d) shall limit
the ability of the Company or the Executive, as applicable, to provide truthful testimony as
required by law or any judicial or administrative process.

          (e) Remedies. Without limiting the right of the Company to pursue all other legal and
equitable rights available to the for violation of the provisions of Section 7 of

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this Agreement by
Executive, it is agreed that (a) other remedies cannot fully compensate the Company for such a
violation, (b) such a violation will cause the Company irreparable harm which may not be adequately
compensated by money damages and (c) the Company shall each be entitled to temporary, preliminary
and permanent injunctive or other equitable relief, without proving actual damages or posting a
bond therefore, to prevent a violation, continuing violation or threatened violation of the
provisions of Section 7 of this Agreement.

     8. Successors.

          (a)
Company’s Successors. This Agreement shall be binding upon any successor (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all
or substantially all of the Company’s business and/or assets. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s business and/or assets
which becomes bound by this Agreement.

          (b) Employee’s Successors. This Agreement and all rights of the Executive hereunder shall
inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.

     9. Section 409A of the Internal Revenue Code. In the event that the Company determines that
any of the benefits payable under this Agreement would violate Section 409A, then the Company and
the Executive shall, in good faith, agree to implement adjustments needed to comply with Section
409A. Additionally, notwithstanding anything contained in this Agreement to the contrary, if
Executive is deemed by the Company at the time of Executive’s “separation from service” to be a
“specified employee,” each within the meaning of Section 409A, any compensation or benefits to
which Executive becomes entitled under this Agreement (or any agreement or plan referenced in this
Agreement) in connection with such separation that are subject to Section 409A shall not be made or
commence until the date which is six (6) months after Executive’s “separation from service” (or, if
earlier, Executive’s death). Such deferral shall only be effected to the extent required to avoid
adverse tax treatment to Executive, including (without limitation) the additional twenty percent
(20%) tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) in the absence
of such deferral. Upon the expiration of the applicable deferral period, any compensation or
benefits which would have otherwise been paid during that period (whether in a single lump sum or
in installments) in the absence of this Section 9 shall be paid to Executive or Executive’s
beneficiary in one lump sum.

     10. Repayment Provisions. If the Company is required to prepare an accounting restatement
due to its material noncompliance, as a result of the Executive’s misconduct, with any financial
reporting requirement under United States securities laws, then, and only if Section 304 of the
Sarbanes-Oxley Act of 2002, or a successor provision, is then in effect, the Company may require
the Executive to reimburse the Company for (i) any bonus or other incentive-based or equity-based
compensation received by the Executive from the Company during the 12-month period following the
first public issuance or filing with the Securities Exchange Commission (whichever first occurs) of
the financial documents embodying

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such financial reporting requirement and (ii) any profits
realized from the sale of securities of Company during such 12-month period.

     11. Miscellaneous Provisions.

          (a)
Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or when mailed by
overnight courier, U.S. registered or certified mail, return receipt requested and postage prepaid.
In the case of the Executive, mailed notices shall be addressed to him at the home address that he
most recently communicated to the Company in writing. In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.

          (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing and signed by the
Executive and by an authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

          (c) Whole Agreement. Except for those agreements or plans referenced herein (including
without limitation any Employee Benefits Plans in which the Executive is a participant in as of the
Effective Date), this Agreement contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes any other agreements, representations or understandings
(whether oral or written and whether express or implied) with respect to the subject matter hereof.
In the event of any conflict in terms between this Agreement and any other agreement executed by
and between the Executive and the Company, the terms of this Agreement shall prevail and govern.

          (d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction
to reflect taxes or other charges required to be withheld by law.

          (e) Reporting Requirements. As the Executive is a Section 16 officer, the Company will assist
the Executive and facilitate the Executive’s compliance with applicable Section 16 reporting
requirements.

          (f) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Washington (except their provisions
governing the choice of law).

          (g) Severability; Blue-Penciling. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of any other provision
hereof, which shall remain in full force and effect. Furthermore, it is the intent, agreement and
understanding of each party hereto that if, in any action before any court or agency legally
empowered to enforce this Agreement, any term, restriction, covenant or promise in this Agreement
is found to be unreasonable and for that or any other reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the minimum

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extent necessary to make
it enforceable by such court or agency; provided further that any such court or agency shall have
the power to modify such provision, to the extent necessary to make it enforceable (for the maximum
duration and geographic scope permissible), and such provision as so modified shall be enforced.

          (h) Assignment. The Company may assign its rights under this Agreement to any entity that
expressly in writing assumes the Company’s obligations hereunder in connection with any sale or
transfer of all or substantially all of the Company’s assets to such entity.

          (i) Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the Effective Date.

	 	 	 	 	 	 	 
	 	 	/s/ KENDALL M. MOHLER	 	 
	 	 	 	 	 
	 	 	Kendall M. Mohler	 	 
	 
	 	 	 	 	 	 
	 	 	Trubion Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ PETER A. THOMPSON	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Peter A. Thompson	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

12Avax Technologies Exhibit 10.1 to Form 8-K

Exhibit 10.1 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective as of November 1, 2007 (the “Effective Date”) between:

 

AVAX TECHNOLOGIES, INC., a Delaware corporation with offices at 2000 Hamilton Street, Suite 204, Philadelphia, PA 19103 USA (the “Corporation”); and

 

DR. DAVID BERD, an individual (the “Executive”) residing at 125 Heacock Lane, Wyncote, PA  19095.

 

W I T N E S S E T H:

WHEREAS, Executive is currently employed by the Corporation in accordance with that certain letter agreement dated September 2, 2004 (the “Employment Letter”).

WHEREAS, the Corporation and the Executive desire to enter into this Agreement, setting forth certain terms of the Executive’s employment.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants herein contained, it is agreed as follows:

	
            1.
 	
            EMPLOYMENT
 

 (a)       General. The Corporation engages and employs the Executive, and the Executive hereby accepts engagement and employment, as the Chief Medical Officer of the Corporation. The Executive shall faithfully and diligently perform all acts and duties, and furnish services, as are normally attendant with such position and/or as are otherwise duly assigned to the Executive. Subject to Section 10(a)(iv), the Executive agrees that the Company may from time to time modify or change the Executive’s position, duties or responsibilities without any resulting change to the Executive’s compensation.

(b)       Location. The Executive shall perform the Executive’s duties hereunder from the Corporation’s offices and at such other places as shall be necessary according to the needs, business or opportunities of the Corporation; provided, that the Executive acknowledges and agrees that the performance by the Executive of the Executive’s duties hereunder may require significant domestic and international travel by the Executive, consistent with past practices.

(c)       Supervisor. The Executive shall report the President and Chief Executive Officer of the Corporation (the “President”). 

(d)       Hours. The Executive shall devote such of his time and efforts as shall be necessary to the proper discharge of the Executive’s duties and responsibilities under this Agreement. The Executive may engage in other ventures and activities only with the permission of the President. The Corporation acknowledges that the Executive may continue to maintain his staff privileges at Thomas Jefferson University Hospital and his academic appointment at Thomas Jefferson University (collectively, the “Thomas Jefferson University Appointment”) and 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 1
 

provide related services in connection therewith; provided that Executive shall not commit or expend more than one (1) day per week of Executive’s time in connection with the Thomas Jefferson University Appointment.

(e)       Company Policies. The Executive undertakes and agrees to observe and abide by all lawful policies and procedures of the Corporation as the Corporation may determine and amend from time to time.

	
            2.
 	
            TERM
 

The Executive’s employment hereunder shall, unless earlier terminated, be for a term of three (3) years (the “Initial Period”) commencing on the Effective Date of this Employment Agreement. The Initial Period and any Renewal Periods (as defined below) are collectively referred to herein as the “Employment Period”. On a date not less than nine (9) months before the end of the Initial Period or any Renewal Period, the Company and the Employee shall negotiate in good faith whether to extend the Employment Period for a further three year period (each a “Renewal Period”). The Initial Period and each Renewal Period are subject to earlier termination as hereinafter provided.

	
            3.
 	
            COMPENSATION
 

 (a)       Salary and Bonus. As compensation for the performance of his duties on behalf of the Corporation, the Executive shall be compensated during the Employment Period as follows:

	
             
  	
            (i)
 	
            A base salary of not less than $255,000 per annum (the “Base Salary”), subject to annual review commencing 12 months from the Effective Date; 
 

	
             
  	
            (ii)
 	
            At the sole and absolute discretion of the Board, the Executive may be eligible to receive an annual incentive bonus (targeted to be 35% of Base Salary, the “Target”), beginning with the first anniversary of the Effective Date during the Employment Period. The Executive shall meet with the President to establish such objectives and performance standards pursuant to the compensation plan of the Corporation. All bonuses shall be paid as determined by the Board of Directors of the Corporation and only if the President reasonably determines that the Executive has met all of the agreed to objectives and performance standards. The bonus may be more or less than the Target amount based upon the degree to which the relevant objectives and performance standards are met or
exceeded, and shall be calculated pursuant to the then-current compensation plan of the Corporation as approved by the Compensation Committee of the Board of Directors.
 

(b)       Withholdings. The Corporation shall withhold all applicable federal, state and local taxes, social security and workers’ compensation contributions and such other amounts as may be required by law or agreed upon by the parties with respect to the compensation payable to the Executive pursuant to this Section 3(a) or otherwise in connection with his employment by the Corporation.

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 2
 

(c)       Expense Reimbursements. The Corporation shall reimburse the Executive for all normal, usual and necessary expenses incurred by the Executive in furtherance of the business and affairs of the Corporation, including reasonable travel and entertainment, against receipt by the Corporation of appropriate vouchers or other proof of the Executives expenditures and otherwise in accordance with such Expense Reimbursement Policy as may from time to time be adopted by the Board of Directors of the Corporation.

(d)       Vacation. The Executive shall be entitled, during the Employment Period, to not less than Four (4) weeks per year of paid vacation time, so long as it does not, in the discretion of the President, disrupt operations. The days selected for the Executive’s vacation must be mutually agreeable to the Corporation and the Executive.

(e)       Benefits. During the Employment Period, the Executive shall be entitled to participate in any group insurance, hospitalization, medical, dental, health and accident, disability or similar plan or program of Corporation (collectively, the “Corporation Benefit Plans”) now existing or established hereafter to the extent that he is eligible under the general provisions thereof. During the term of this Agreement, the Executive shall be entitled to benefits at a level comparable to the Corporation Benefit Plans in place as of the Effective Date.

(f)        Life Insurance. The Corporation shall at all times during the term of this Agreement maintain (subject to Executive complying with the requirements of the relevant insurance company(ies), including medical examinations) at its expense life insurance on the life of the Executive with death benefits of at least Five Hundred and Ten Thousand Dollars ($510,000) in the form of a policy owned by the Executive, the beneficiaries of which are the Executive’s estate or other beneficiaries designated by the Executive. Upon termination of this Agreement, the Corporation shall transfer the policy and all accrued benefits thereunder to the Executive at no cost to the Executive such that thereafter the Executive may maintain the full benefits of the policy by paying premiums that become due for
periods after termination at levels not greater than those being paid by the Corporation during the term of this Agreement.

(g)       Sick Leave. The Executive shall continue to be entitled to receive his salary and benefits hereunder during any period (up to a maximum of 10 business days (or such greater number of days as are consistent with the Corporation’s sick leave policies) per year) during which he is unable to perform his duties hereunder because of ill health or Disability (as defined below).

(h)       Condition. Except as expressly provided in Section 10 below, the Executive must be an employee of the Corporation at the time that any compensation is due in order to receive such compensation.

(i)        Stock Options. As of the Effective Date, the Executive has been granted the following vested stock options: 11/1/04 – 200,000 shares at $0.15 per share, expiring 11/1/2011; 6/7/05 - 250,000 shares at $0.30 per share, expiring 6/7/2012; and 8/27/07 - 750,000 shares at $0.19 per share, expiring 8/27/2014, and may be entitled to additional grants during the Employment Period including any in connection with any stock option agreements the parties may enter into during the Employment Period.

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 3
 

	
            4.
 	
            REPRESENTATIONS AND WARRANTIES BY EXECUTIVE AND CORPORATION
 

 (a)       By the Executive. The Executive hereby represents and warrants to the Corporation as follows:

	
             
  	
            (i)
 	
            No Conflict. Neither the execution and delivery of this Agreement nor the performance by the Executive of his duties and other obligations hereunder violate or will violate any statute, law, determination or award, or conflict with or constitute a default under (whether immediately, upon the giving of notice or lapse of time or both) any prior employment agreement, contract, or other instrument to which the Executive is a party or by which he is bound. The Executive shall additionally be subject to the policies of the Thomas Jefferson University Appointment.
 

	
             
  	
            (ii)
 	
            Binding Effect. The Executive has the full right, power and legal capacity to execute and deliver this Agreement and to perform his duties and other obligations hereunder. This Agreement constitutes the legal, valid and binding obligation of the Executive enforceable against him in accordance with its terms. No approvals or consents of any persons or entities are required for the Executive to execute and deliver this Agreement or perform his duties and other obligations hereunder.
 

(b)       By the Corporation. The Corporation hereby represents and warrants to the Executive as follows:

	
             
  	
            (i)
 	
            Corporate Organization. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, which has all requisite corporate power and authority to own its properties and conduct its business in the manner presently contemplated.
 

	
             
  	
            (ii)
 	
            Binding Effect. The Corporation has full power and authority to enter into this Agreement and to incur and perform its obligations hereunder. This Agreement constitutes the legal, valid and binding obligation of the Corporation enforceable against the Corporation in accordance with its terms.
 

	
             
  	
            (iii)
 	
            No Conflict. The execution, delivery and performance by the Corporation of this Agreement does not conflict with or result in a breach or violation of or constitute a default under (whether immediately, upon the giving of notice or lapse of time or both) the certificate of incorporation or by-laws of the Corporation, or any agreement or instrument to which the Corporation is a party or by which the Corporation or any of its properties may be found or affected.
 

	
             
 	
            (iv)
 	
            Indemnification. During the Employment Period, the Corporation’s governing documents provide and will provide for the indemnification of the Corporation, directors and officers (including Chief Medical Officer) consistent with the Corporation’s obligations at Section 11, below.
 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 4
 

	
            5.
 	
            NON-COMPETITION
 

 (a)       Restrictions. The Executive understands and recognizes that his services to the Corporation are special and unique and agrees that, during the Employment Period and for a period of two (2) years from the date of termination of his employment for any reason hereunder, he shall not in any manner, directly or indirectly, on behalf of himself or any person, firm, partnership, joint venture, corporation or other business entity (“Person”):

	
             
  	
            (i)
 	
            enter into or engage in any business directly competitive with the Corporation’s business or relating to immunotherapies for the treatment of cancer, or other therapies, treatments or matters within the scope of, or research and development relating to, the Corporation’s business, either as an individual for his own account, or as a partner, joint venturer, executive, agent, consultant, salesperson, officer, director or shareholder of a Person operating or intending to operate within the area that the Corporation is, at the date of termination, conducting its business; it being expressly understood that at any and all times after the termination of the Executive’s employment for any reason, the Executive shall be free to engage in medical research for or with any Person engaged in academic medical research (such
as a research hospital or institution) (collectively, “Restricted Business”);
 

	
             
  	
            (ii)
 	
            interfere with, disrupt or attempt to disrupt any past, present or prospective relationship, contractual or otherwise, between the Corporation and any of its licensors, licensees, clients, customers, suppliers, employees or other related parties; 
 

	
             
  	
            (iii)
 	
            solicit or accept employment or be retained by any party who, at any time during the term of this Agreement, was a customer, licensor, licensee, client or supplier of the Corporation where his or her position will be related to the business of the Corporation; or
 

	
             
  	
            (iv)
 	
            solicit or accept the business of any customer, licensor, licensee, client or supplier of the Corporation with respect to products or services similar to those supplied by the Corporation, provided that those products or services are not generally available to the public.
 

This paragraph 5(a) shall be null and void if the Executive is terminated by the Corporation for any reason other than that pursuant to Section 10(a)(iii).

(b)       Equitable Remedies. In the event that the Executive breaches any provisions of this Section 5 or there is a threatened breach, then, in addition to any other rights which the Corporation may have, the Corporation shall be entitled, without the posting of a bond or other security, to injunctive relief to enforce the restrictions contained herein. In the event that an actual proceeding is brought in equity to enforce the provisions of this Section 5, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Corporation be prevented from seeking any other remedies that may be available.

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 5
 

	
            6.
 	
            CONFIDENTIAL INFORMATION
 

 (a)       Non-Disclosure and Non-Use. The Executive agrees that during the Employment Period and after the termination (for whatever reason) of the Employment Period, he will not disclose or make accessible to any other person, and shall use solely for the benefit of the Corporation, Confidential Information. 

(b)       Definition of “Confidential Information”. As used in this Agreement, “Confidential Information” means information which is:

	
             
  	
            (i)
 	
            the confidential, technical or business information or material of the Corporation, its clients or any other party to whom the Corporation owes an obligation of confidence, including without limitation information related to the Corporation’s products, services or technology, both current and under development, promotion and marketing programs, lists, trade secrets and other confidential and proprietary business information; or
 

	
             
  	
            (ii)
 	
            Proprietary Information (as such term is defined below);
 

except to the extent the same have become generally known to the public other than through a breach of this Section 6. 

 

(c)       Copies. The Executive agrees to not take any such material or reproductions containing Confidential Information from the Corporation’s facilities at any time during or after his employment by the Corporation, except as required in the Executive’s duties to the Corporation. The Executive agrees immediately to return all such material and reproductions thereof in his possession to the Corporation upon request and in any event upon termination of employment.

	
            7.
 	
            OWNERSHIP OF PROPRIETARY INFORMATION
 

 (a)       Ownership. The Executive agrees that all information that has been created, discovered or developed by the Corporation, its subsidiaries, affiliates, successors or assigns (collectively, the “Affiliates”) (including, without limitation, information relating to the development of the Corporation’s business created by, discovered by, developed by or made known to the Corporation or the Affiliates by Executive during the Employment Period and information relating to Corporation’s customers, suppliers, consultants, and licensees) and/or in which property rights have been assigned or otherwise conveyed to the Corporation or the Affiliates, shall be the sole property of the Corporation or the Affiliates, as applicable, and the
Corporation or the Affiliates, as the case may be, shall be the sole owner of all patents, copyrights and other rights in connection therewith, including but no limited to the right to make application for statutory protection. All of the aforementioned information is hereinafter called “Proprietary Information”. Byway of illustration but without limitation, Proprietary Information shall include all discoveries, structures, inventions, designs, ideas, works of authorship, copyrightable works, trademarks, copyrights, formulas, data, know-how, show-how, improvements, inventions, product concepts, techniques, information or statistics contained in, or relating to, marketing plans, strategies, forecasts, blueprints, sketches, records, notes, devices, 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
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drawings, customer lists, patent applications, continuation applications, continuation-in-part applications, file wrapper continuation applications and divisional applications and information about the Corporation’s or the Affiliates’ employees and/or consultants (including, without limitation, the compensation, job responsibility and job performance of such employees and/or consultants).

(b)       Equitable Remedies. The Executive acknowledges that the Proprietary Information constitutes a unique and valuable asset of the Corporation and each Affiliate acquired at great time and expense, which is secret and confidential and which will be communicated to the Executive, if at all, in confidence in the course of his performance of his duties hereunder, and that any disclosure or other use of the Proprietary Information other than for the sole benefit of the Corporation or the Affiliates would be wrongful and could cause irreparable harm to the Corporation or the Affiliates, as the case may be.

(c)       Activities Not Restricted. Notwithstanding the foregoing, the parties agree that, at all such times, the Executive is free to use (i) information in the public domain not as a result of a breach of this Agreement, (ii) information lawfully received from a third party, and (iii) the Executive’s own skill, knowledge, know-how and experience to whatever extent and in whatever way he wishes, in each case consistent with his obligations as the Executive and that, at all times, the Executive is free to conduct any non-commercial research not relating to the Corporation’s business.

	
            8.
 	
            DISCLOSURE AND OWNERSHIP OF INVENTIONS
 

 (a)       Disclosure. During the Employment Period, the Executive agrees that he will promptly disclose to the Corporation, or any persons designated by the Corporation, all improvements, inventions, designs, ideas, works of authorship, copyrightable works, discoveries, trademarks, copyrights, trade secrets, formulas, processes, structures, product concepts, marketing plans, strategies, customer lists, information about the Corporation’s or the Affiliates’ employees and/or consultants (including, without limitation, job performance of such employees and/or consultants), techniques, blueprints, sketches, records, notes, devices, drawings, know-how, data, whether or not patentable, patent applications, continuation applications, continuation-in-part applications, file wrapper continuation
applications and divisional applications, made or conceived or reduced to practice or learned by him, either alone or jointly with others, during the Employment Period (all said improvements, inventions, designs, ideas, works of authorship, copyrightable works, discoveries, trademarks, copyrights, trade secrets, formulas, processes, structures, product concepts, marketing plans, manufacturing or other strategies, customer lists, information about the Corporation’s or the Affiliates’ employees and/or consultants, techniques, blueprints, sketches, records, notes, devices, drawings, know-how, data, patent applications, continuation applications, continuation-in-part applications, file wrapper continuation applications and divisional applications shall be collectively hereinafter called “Inventions”).

(b)       Ownership. The Executive agrees that all Inventions shall be the sole property of the Corporation to the maximum extent permitted by applicable law and to the extent permitted by law shall be “works made for hire” as that term is defined in the United States Copyright act (17 USCA, Section 101). The Corporation shall be the sole owner of all patents, copyrights, 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 7
 

trade secret rights, and other intellectual property or other rights in connection therewith. The Executive hereby assigns to the Corporation all right, title and interest he may have or acquire in all Inventions. The Executive further agrees to assist the Corporation in every possible way (but at the Corporation’s expense) to obtain and from time to time, enforce patents, copyrights or other rights on said Inventions in any and all countries, and to that end the Executive will execute all documents necessary (i) to apply for, obtain and vest in the name of the Corporation alone (unless the Corporation otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same, and (ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or
applications for revocation of such letters, patent, copyright or other analogous protection.

(c)       Assistance. The Executive’s obligation to assist the Corporation in obtaining and enforcing patents and copyrights for the Inventions in any and all countries shall continue beyond the Employment Period, but the Corporation agrees to compensate the Executive a reasonable rate after the expiration of the Employment Period for time actually spent by the Executive at the Corporation’s request on such assistance.

	
            9.
 	
            NON-SOLICITATION
 

During the Employment Period, and for eighteen (18) months thereafter, Executive shall not, directly or indirectly, without the prior written consent of the Corporation (i) solicit or induce any employee, agent, consultant or advisor of the Corporation or any Affiliate to leave the employ of the Corporation or any Affiliate or (ii) hire for any purpose any present or former employee of the Corporation or any Affiliate, unless said employee has been terminated by the Corporation for any reason or the employee has terminated his or her employment for cause.

	
            10.
 	
            TERMINATION
 

 (a)       Events of Termination. The Executive’s Employment Period hereunder shall begin on the Effective Date and shall continue for the period set forth in Section 2 hereof unless sooner terminated upon the first to occur of the following events:

	
             
  	
            (i)
 	
            the death of the Executive;
 

	
             
  	
            (ii)
 	
            the Disability (as defined below in Section 10(b)) of the Executive;
 

	
             
  	
            (iii)
 	
            termination by the President for Just Cause; any of the following actions by the Executive shall constitute “Just Cause” for termination of the Executive’s employment by the Corporation:
 

	
             
  	
            (A)
 	
            material breach by the Executive of Sections 5, 6, 7, 8, or 9 of this Agreement;
 

	
             
  	
            (B)
 	
            material breach by the Executive of any provision of this Agreement other than Sections 5, 6, 7, 8, or 9 which is not cured by the Executive within thirty (30) days of written notice thereof from the Corporation;
 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 8
 

	
             
  	
            (C)
 	
            Grossly negligent in the performance by the Executive of his duties, as determined by the President or the Board, after notice to the Executive and an opportunity for the Executive to be heard by the President or the Board;
 

	
             
  	
            (D)
 	
            Any misconduct or omission on the part of the Executive intended to cause harm to the Corporation; or
 

	
             
  	
            (E)
 	
            The conviction of the Executive of (i) any felony or (ii) any other crime involving moral turpitude;
 

	
             
  	
            (iv)
 	
            termination by the Executive for Good Reason; any of the following actions or omissions by the Corporation shall constitute “Good Reason” for termination of the Executive’s employment by the Executive:
 

	
             
 	
            (A)
 	
            failure to pay the Executive in accordance with paragraph 3(a)(1) that is not cured by the Corporation within 5 days of written notice thereof from the Executive to the Corporation, specifying in reasonable detail the basis for such claimed failure;
 

	
             
  	
            (B)
 	
material breach by the
Corporation of any provision of this Agreement
(other than paragraph 3(a)(1) which should be governed by subparagraph 10(a)(iv)(A)) that is not cured by the Corporation within 30 days of written
notice thereof from the Executive to the Corporation, specifying in reasonable detail the basis for such claimed breach; or
 

	
             
  	
            (C)
 	

The failure of the Corporation to provide the Executive with a position at least equivalent to the position previously held by the
Executive during the Employment Period, or any reduction of the salary paid by the Corporation to the Executive (but not bonus
amounts or benefits) given by the Corporation to the Executive, unless such salary reduction is deemed necessary by the Board with
the consent of the Executive. The Corporation shall have the right to cure within 30 days of written notice thereof from the
Executive to the Corporation, specifying in reasonable detail the basis for such claimed breach;

 

	
             
  	
            (v)
 	
            termination by the Corporation or by the Executive without cause or for any reason not specified in subparagraphs (i) to (iv) of this paragraph (a). The parties acknowledge and agree that the Executive’s employment with the Corporation is on an at will basis, and that this letter agreement does not provide a guarantee of continued employment, subject only to the provisions for severance compensation specified in Section 10(d) hereof.
 

(b)     Disability. For purposes hereof, a “Disability” of the Executive shall be deemed to have occurred in the event (i) the Executive is absent from work or otherwise substantially unable to assume his normal duties for a period of thirty (30) successive days or an aggregate of 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 9
 

sixty (60) days during any twelve (12) month period because of physical or mental disability, accident, illness or other cause other than approved vacation or leave of absence or (ii) the Executive is deemed by a licensed physician designated by the Corporation and reasonably acceptable to the Executive to have a permanent disability such that Executive will be unable to perform his duties under this agreement. The Corporation shall have the right to have the Executive examined by a competent physician for purposes of determining his physical or mental incapacity.

(c)     Accrued Base Salary. Upon termination by Corporation pursuant to either subparagraphs (i), (ii) or (iii) of paragraph (a) above or by Executive other than pursuant to subparagraph (iv) of paragraph (a) above, the Executive (or his estate in the event of termination pursuant to subparagraph (i)), shall be entitled to receive the Base Salary accrued but unpaid as of the date of termination.

(d)     Severance Compensation. Upon termination by the Corporation for any reason other than as set forth in subparagraphs (i), (ii) or (iii) of paragraph (a) above or by the Executive for any reason set forth in subparagraphs (iv) of paragraph (a) above, then the Corporation shall continue to pay the Executive, as the Executive’s sole damages for such termination, for eighteen (18) months following such termination, the Base Salary (at the rate in effect at the date of termination) which the Executive would have received during the one (1) year period following the termination of this Agreement had his employment not been so terminated. In addition, any stock options granted to the Executive, including, but not limited to Section 3(i), shall continue to vest according to the provisions of
Section 3(i) during such eighteen (18) month severance period.

(e)     Other Severance Compensation. As used in this Agreement, “Change of Control Event” shall mean any (i) corporate transaction, including the acquisition of shares in the Corporation by a third party or the merger of the Corporation into another corporation, which results in a majority of the Corporation’s Board of Directors changing within a six (6) month period or (ii) any other corporate transaction with a third party (other than the issuance of additional shares by the Corporation to new or existing investors) that results in the sale or exchange of greater than fifty percent (50%) of the shares in the Corporation. Upon a Change of Control Event, the Executive shall be entitled to (i) receive his severance compensation, as defined in 10(d), in one (1) lump sum payment and
(ii) the immediate vesting without further action of the corporation or the Executive of the nontransferable stock options referenced in Section 3(i). In addition to the severance compensation referenced in Sections 10(e)(i) and 10(e)(ii), the Executive may or may not be entitled to additional severance compensation, based upon a Change of Control Event or otherwise, as may be specified in the then-current policies of the Corporation as determined by the Board from time to time.

(f)      Release. It shall be a condition to the Executive’s right to receive the benefits provided for in Section 3 and paragraphs (d) and (e) of this Section 10 that the Executive shall have delivered to the Corporation a general release dated as of the date of termination of the Executive’s employment hereunder.

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 10
 

	
            11.
 	
            INDEMNIFICATION
 

The Corporation shall indemnify and hold the Executive harmless to the fullest extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, for all amounts, (including without limitation, judgements, fines, settlement payments, expenses and attorneys’ fees) incurred or paid by the Executive in connection with any action, suit, investigation or proceeding arising out of or relating to the performance by the Executive of services for, or acting by the Executive as a director, officer or employee of, the Corporation or any other person or enterprise at the Corporation’s request, and shall to the fullest extent permitted by the General Corporation Law of the State of Delaware, as amended from time to time, advance all expenses incurred or paid by the Executive in connection with, and until disposition of, any action, suit, investigation or
proceeding arising out of or relating to the performance by the Executive of services for, or acting by the Executive as a director, officer or employee of, the Corporation or any other person or enterprise at the Corporation’s request.

	
            12.
 	
            INSURANCE
 

If requested by the Corporation, the Executive agrees to cooperate with the Corporation in obtaining for the Corporation’s benefit, at the Corporation’s expense, life insurance on his life. Such cooperation shall include completing and signing such forms or applications, undergoing physical examinations, and such other acts as may be required in order to obtain such insurance.

	
            13.
 	
            NOTICES
 

Any notice or other communication under this Agreement shall be in writing and shall be deemed to have been given: when delivered personally against receipt therefor; one (1) day after being sent by Federal Express or similar overnight delivery; or three (3) days after being mailed registered or certified mail, postage prepaid, return receipt requested, to either party at the address set forth below, or to such other address as such party shall give by notice hereunder to the other party.

	
            If to Corporation:
 	
            If to Executive:
 

	
            AVAX Technologies, Inc.
 	
            Dr. David Berd
 

	
            Attention: President
 	
            125 Heacock Lane
 

	
            2000 Hamilton Street, Suite 204
 	
            Wyncote, PA  19095
 

	
            Philadelphia, PA 19103 USA
 

 

With a copy to:

 

Randall Pratt

Life Sciences Legal

214 S. Spring Street

Independence, MO  64050

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 11
 

	
            14.
 	
            SEVERABILITY OF PROVISIONS
 

If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provision shall be deemed dependent upon any other covenant or provision unless so expressed herein.

	
            15.
 	
            ENTIRE AGREEMENT; MODIFICATION
 

 (a)    Entire Agreement. This Agreement and the agreements and instruments referenced in Section 3(i) hereof contain the entire agreement of the parties relating to the subject matter hereof and supersede in their entirety any previous employment agreement, letter agreement related to employment or offer letter, and the parties hereto have made no agreements, representations or warranties relating to the Executive’s employment within the Corporation which are not set forth herein or in the agreements and instruments referenced in said Section 3(i). 

(b)     Modification. No modification of this Agreement shall be valid unless made in writing and signed by the parties hereto.

(c)     Previous Payments. The Executive acknowledges that any cash and non-cash compensation received by him prior to the execution of this Agreement shall be applied to the obligations of the Corporation hereunder and that the execution of this Agreement after the Effective Date is not intended to entitle the Executive to any greater compensation.

	
            16.
 	
            BINDING EFFECT
 

The rights, benefits, duties and obligations under this Agreement shall inure to, and be binding upon, the Corporation, its successors and assigns, and upon the Executive and his legal representatives. This Agreement constitutes a personal service agreement, and the performance of the Executive, s obligations hereunder may not be transferred or assigned by the Executive.

	
            17.
 	
            NON-WAIVER
 

The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and said terms, conditions and provisions shall remain in full force and effect. No waiver of any term or condition of this Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.

	
            18.
 	
            REMEDIES FOR BREACH
 

The Executive understands and agrees that any breach of Sections 5, 6, 7, 8 and 9 of this Agreement by the Executive could cause irreparable damage to the Corporation and to the Affiliates, and that monetary damages alone would not be adequate and, in the event of such breach, the Corporation shall have, in addition to any and all remedies of law, the right to an 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 12
 

injunction, specific performance or other equitable relief to prevent or redress the violation of the Executive’s obligations under such Sections.

	
            19.
 	
            GOVERNING LAW
 

This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware without regard to principles of conflict of laws.

	
            20.
 	
            ARBITRATION
 

Any dispute between the Corporation and the Executive arising from or related to this Agreement or the employment by the Corporation of the Executive shall be finally and exclusively resolved by binding arbitration in Philadelphia before one arbitrator under the rules of the American Arbitration Association.

	
            21.
 	
            SUBSTANCE ABUSE TESTING
 

The Executive acknowledges and agrees: (i) that this Agreement is contingent on Executive passing a pre-employment drug-screening test (whether conducted before or after the Effective Date); (ii) that the Corporation may terminate the Executive’s employment if he declines to cooperate with a drug-screening test or if the test result is positive; (iii) to undergo drug-screening tests in connection with this Section 21; (iv) that the Corporation may use and disclose the results of such tests for purposes of this Agreement and to enforce the rights of the Corporation hereunder; and (v) that the Corporation may require as a condition of continued employment that he be tested from time to time for illegal drug or alcohol use in violation of the Corporation’s Substance Abuse Policy, including if management suspects that he is under the influence of illegal drugs or using alcohol in
violation of Corporation policy, or if he is involved in an on-the-job accident.

	
            22.
 	
            HEADINGS
 

The headings of paragraphs are inserted for convenience and shall not affect any interpretation of this Agreement.

[Remainder of this page left blank intentionally]

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 13
 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

 

	
            The Executive
 	
             
 	
            The Corporation:
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            AVAX TECHNOLOGIES, INC.
 
	
            
 /s/  David Berd, MD
 	
             
 	
            By: 
 	
            
 /s/  Francois Martelet, MD
 
	
            Name:   Dr. David Berd
 	
             
 	
            Name:
 Title:
 	
            Dr. Francois Martelet
 President & Chief Executive Officer
 

 

 

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION

WHICH MAY BE ENFORCED BY THE PARTIES.

 

 

	
             
 	
            EMPLOYMENT AGREEMENT
 	
            PAGE 14

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