Document:

Exhibit 10.17  

Noveon Sales Holland B.V.
  Oosterhorn 4

NL-9936

HD Farmsum

The Netherlands

Tel.: +31 596 648700

Fax.: +31 596 648790

HR Groningen: 27093978

BTW: NL 809 46 44 69 B01 

January 1,
2003 

EMPLOYMENT CONTRACT  

THE
UNDERSIGNED: 

	(1)
	Noveon Sales Holland B.V. (the "Company"), whose registered office is in Farmsum (Oosterhorn 4), and an indirect subsidiary of Noveon,
Inc (the "Parent Company") for these presents lawfully represented by P. Poty, and  

 
	(2)
	 K. Verhaar ("Mr. Verhaar"),
born on August 28, 1953 and residing at Ter Wadding 45b (2253 LZ) Voorschoten. 

WHEREAS:

	(A)
	The
Parent Company intends to enter into an employment contract with Mr. Verhaar in the United States in the course of 2003;

	(B)
	Due
to circumstances beyond control of parties, the exact date of commencement of employment in the United States is uncertain;

	(c)
	Parties
have agreed that employment by the Parent Company in the United States commences in any event as per January 1, 2004;

	(D)
	Parties
have further agreed that prior to (and until) the commencement of aforementioned employment in the United States, Mr. Verhaar shall be employed by the Company in the
Netherlands;

	(E)
	Notwithstanding
the aforementioned, the employment contract between Mr. Verhaar and the Company shall end as per the commencement of employment by the Parent Company in the
United States. 

 

  

HEREBY
AGREE AS FOLLOWS:

	1
	 Commencement and term of employment

	1.1
	As
of 1 January 2003 Mr. Verhaar shall be employed by the Company as Vice President and General Manager Textile Coatings Global Business Unit.

	1.2
	This
Agreement has been entered into for a fixed period of time. This agreement shall commence on January 1, 2003 and shall terminate as per the date Mr. Verhaar enters
into employment with the Parent Company in the United States. Notwithstanding any other provision herein, this agreement shall in any event end on December 31, 2003 without prior notice or
termination being required.  

 
	2
	 Duties and powers

	2.1
	As
Vice President and General Manager Textile Coatings Global Business Unit of the Company, Mr. Verhaar shall devote all his energy and skill to the Company.

	2.2
	In
the performance of his functions Mr. Verhaar shall also observe and comply with the guidelines of the Parent Company in effect from time to time.

	2.3
	Mr. Verhaar
shall also perform the functions reasonably assigned to him by the Company for any companies affiliated with the Company or the Parent Company. Such functions shall
be governed by the terms and conditions contained in this Agreement and shall not entitle Mr. Verhaar to any further remuneration.

	2.4
	Mr. Verhaar
shall perform his functions from the office of the Company in Delfzijl. Mr. Verhaar acknowledges that in the performance of his duties he shall have to
travel frequently throughout Europe and the United States. If so required in the opinion of the Company, Mr. Verhaar may be transferred to another location.  

 
	3
	 Salary and holiday allowance

Mr. Verhaar
shall receive a salary of Euro 263.175 gross per year. This corresponds to a monthly salary of Euro 18.664,89 which will be paid 14.1 times per year (and which does also include the
holiday allowance of 8%). 

	4
	 Bonus

	4.1
	Mr. Verhaar
shall participate in the Parent Company's Management Incentive Program ("MIP"), which is an annual bonus program. The target bonus opportunity for the year 2003
will be 55% of Mr. Verhaar's base salary as specified in Article 3. Metrics and objectives by which Mr. Verhaar will be evaluated for this discretionary bonus program will be
identified in an separate document.

	4.2
	Payment
of the bonus shall be made in accordance with the Parent Company's MIP Plan. 

2

 

  

	5
	 Pension

The
Company has a group pension scheme which Mr. Verhaar may join if and to the extent that he satisfies the requirements set out therein. 

	6
	 Other insurances

	6.1
	Mr. Verhaar
will be eligible to receive the reimbursement for medical insurance applicable to white collar employees of the Company.

	6.2
	Mr. Verhaar
may participate in the Company's Group Accident Insurance Policy. A copy of the insurance policy shall be supplied to Mr. Verhaar. The premium shall be paid
by Mr. Verhaar.  

 
	7
	 Holidays  

For
each full calendar year during which his employment hereunder continues, Mr. Verhaar shall be entitled to 24 work days' holiday on full pay, to be taken in consultation with the Company. 

	8
	 Illness or disablement

	8.1
	In
the event of Mr. Verhaar's incapacity to work on account of illness or disablement the Company shall for a maximum period of twelve months, but until no later than the date
when Mr. Verhaar's employment hereunder ends (if that date is the earlier), continue to pay 100 per cent of the salary as specified in Article 3 of this Agreement, subject to deduction
of any benefits to be received by Mr. Verhaar under the social security laws and/or benefits under any other relevant insurances taken out by the Company.

	8.2
	During
the period specified in 8.1 the Company shall continue to pay the premiums referred to in Articles 5 and 6, at any rate to the extent that such premiums are under said Articles
to be borne by the Company and are not on any other account not payable.

	8.3
	For
the purposes of this Article and Article 4, periods of incapacity to work following each other at intervals of less than four weeks shall be regarded as one consecutive
period of incapacity to work.

	8.4
	On
pain of forfeiture of his entitlement to continued payment of salary pursuant to this Article, Mr. Verhaar must strictly comply with the guidelines and instructions given by
or on behalf of the Company regarding sick leave (of which Mr. Verhaar declares to be familiar with) and if so requested must co-operate in any medical examination with regard
thereto. Forfeiture of the right on continued payment as provided above shall not prejudice the application of other sanctions in this respect.  

 
	9
	
Side activities/remuneration from third parties

	9.1
	During
his employment Mr. Verhaar shall not perform any paid or unpaid side activities without prior written approval of the Company. 

3

 

  

	9.2
	During
his employment hereunder Mr. Verhaar shall not be permitted to have or take in any way, whether directly or indirectly, any interest in companies pursuing activities in
competition with or similar or related to the activities of the Company and/or the companies affiliated with the Company, or any interest in companies who are suppliers and/or licensors and/or
principals and/or buyers and/or licensees of the Company and/or the companies affiliated with the Company.

	9.3
	Mr. Verhaar
shall not accept any monies or other remuneration from third parties in connection with his activities for the Company and/or the companies affiliated with the
Company.  

 
	10
	 Confidentiality and non-disclosure

	10.1
	During
his employment hereunder as well as after its termination -irrespective of the manner in which and the reasons for which his employment may be terminated- Mr. Verhaar
shall treat as strictly confidential and not disclose to third parties, whether directly or indirectly, in any form or manner whatsoever, any information which comes to his knowledge regarding the
business and interests of the Company (including the Parent Company and its subsidiaries and affiliates) and/or the companies affiliated with the Company and/or its customers and other business
relations, all this in the broadest sense, unless the discharge of his duties requires the disclosure of such information to third parties on a need-to-know basis.

	10.2
	In
the event that Mr. Verhaar is suspended and upon termination of his employment hereunder - irrespective of the manner in which and the reasons for which his employment may
be terminated-Mr. Verhaar shall at the Company's first request to that effect surrender to the Company all property of the Company in his possession as well as all documents which in any way
whatever relate to the Company and/or the companies affiliated with the Company and/or its customers and other business relations, all this in the broadest sense, as well as all copies of such
documents (whether or not recorded on data carriers) and property.  

 
	11
	 Intellectual property rights

	11.1
	All
intellectual property nghts, including but not limited to copyright and patent, design and trade mark rights, in any products, works and/or services developed by
Mr. Verhaar during or in connection with his employment hereunder shall vest in the Company.

	11.2
	Mr. Verhaar
hereby, in so far as necessary, assigns to the Company, which assignment is hereby accepted by the Company, all intellectual property rights in any products, works
and/or services developed (completely or in part) by Mr. Verhaar during or in connection with his employment hereunder. Mr. Verhaar agrees that where this assignment (or part thereof)
should at any time prove to be legally invalid, he shall at such time assign said rights -without imposing any condition thereon- to the Company by a separate deed. 

4

 

  

	11.3
	In
respect of the products, works and/or services referred to in this Article, Mr. Verhaar hereby waives any and all moral rights as defined in Section 25 of the
Copyright Act.

	11.4
	The
provisions of this Article imply that both during his employment hereunder and at any time thereafter Mr. Verhaar shall not be permitted to commercially exploit or cause
others to commercially exploit in whatever manner and/or to register or cause others to register any products, works and/or services developed by him during or in connection with his employment
hereunder. 

The
parties agree that the salary of Mr. Verhaar is deemed to include compensation for deprivation (if any) of intellectual property rights. 

	12
	 Remedy for breach of contract

	12.1
	In
the event that Mr. Verhaar commits any breach of Articles 9, 10 and/or 11 he shall, in variance from the provisions of Section 7:650 subsections 3, 4 and 5 of the
Civil Code, forfeit to the Company an immediately payable penalty of EUR 50,000 for each such breach, to be increased by EUR 5,000 for each day that any such breach continues, without prior notice or
judicial intervention being required and entirely without prejudice to the Company's right to demand full compensation for the loss actually suffered by it and/or to demand specific performance
instead of the aforesaid penalty.

	12.2
	Payment
of the penalty referred to in 12.1 shall not release Mr. Verhaar from his obligations specified in Articles 9, 10 and 11.  

 
	13
	 Final
provisions

	13.1
	This
Agreement and any and all disputes which may arise from or in connection with this Agreement shall be governed by the laws of the Netherlands.

	13.2
	Any
and all disputes which may arise from or in connection with this Agreement shall be submitted to the Dutch competent court.

	13.3
	All
income tax and social security contributions which an employer must by law deduct from his employees' salaries and pay to the relevant authorities shall be so deducted from and
paid in respect of all amounts to be paid to Mr. Verhaar under this Agreement, unless it follows from the nature of the payment that it may be made tax-free.

	13.4
	If
at any time it is determined by the Inspector of Taxes and/or the Implementing Authority Employees Insurances ("UVVV") that any of the payments to be made to Mr. Verhaar
under Article 4 are (in part) subject to the levy of income tax and/or social security contributions, the compulsory deductions shall be made yet and charged to the debit of Mr. Verhaar. As
from such time the amounts of the relevant future payments under Article 4 shall be reduced to the level at which such payments may be made tax-free. 

5

 

  

	13.5
	Within
the limits of reasonableness the Company reserves the right to modify and/or supplement this Agreement and all arrangements made hereunder between the parties, if in the
Company's judgement circumstances warrant such modification or supplementation.

	13.6
	Except
for the non-competition agreement executed with the Parent Company, the foregoing constitutes the entire agreement between the parties and supersedes all
agreements and undertakings previously made and given by and between Mr. Verhaar and the (bodies of the) Company and/or companies affiliated with the Company. Variations from or supplements to
this Agreement shall be valid only if based on a resolution of the General Meeting of Shareholders of the Company.  

 
	14
	 Severance
pay

	14.1
	If
the employment is terminated (i) by the Company prior to the expiration of this Contract and for any reason other than for cause or (ii) because of the expiration of
the Contract at the end of its term, in either case without Mr. Verhaar being offered employment by the Parent Company, then in order to prevent a situation of unfair dismissal and to settle in
advance any dispute thereon the Company shall by way of a hereby fixed compensation pay to Mr. Verhaar on the effective date of termination a sum equal to the amount paid by the Company to
Mr. Verhaar's salary (as referred to in Article 3) in the last twelve months of his employment, including his benefits.

	14.2
	The
parties expressly consider the arrangements described in this Article to be a "vaststellingsovereenkoms!" (agreement establishing
the parties' existing legal relationship) in the terms of Section 7:900 of the Netherlands Civil Code. 

In
witness whereof this Agreement was executed in three originals and signed by the parties effective as of January 1, 2003. 

NOVEON
SALES HOLLAND B.V. 

	

 
 P. Poty

Director Human Resources and Regulatory Affairs EMEAI	 	 
	

	 	 
	

 
 K. VERHAAR	 	 

6

 

  

Noveon Sales Holland B.V.
  Oosterhorn 4

NL-9936

HD Farmsum

The Netherlands

Tel.: +31 596 648700

Fax.: +31 596 648790

HR Groningen: 27093978

BTW: NL 809 46 44 69 B01 

ADDENDUM
  to the employment contract with
 NOVEON SALES HOLLAND B.V. AND KEES VERHAAR
  signed on January 1, 2003 

With
respect to the application of the 30%-facility, the following will be taken into account: 

	1.
	If,
and insofar, Kees Verhaar is, based on article 9 of the 'Uitvoeringsbesluit loonbelasting 1965', entitled to receive a tax-free cost reimbursement for
extraterritorial costs, it has been agreed with Kees Verhaar that his current employment income ('loon uit tegenwoordige dienstbetrekking') as described in article 9 of the 'Uitvoeringsbesluit
loonbelasting 1965', will be reduced according to labour law so that 100/70 of his current employment income equals the originally agreed employment income.

	2.
	If,
and insofar, article 1 is applicable, Kees Verhaar receives a cost reimbursement for extraterritorial costs from Noveon Sales Holland B.V. equal to 30/70 of
the current employment income as agreed in article 1.

	3.
	Kees
Verhaar acknowledges the fact that an adjustment of the agreed remuneration of article 1 can influence all employment income related payments and benefits like pension and
social security benefits. Nevertheless above-mentioned, pension will be built up over the reduced employment income as mentioned under article 1 increased with the cost reimbursement for
extraterritorial cost as mentioned in article 2. 

Herewith,
Noveon Sales Holland B.V. and Kees Verhaar acknowledge the above. 

	Kees Verhaar	 	Noveon Sales Holland B.V.

P. Poty
	 	 	 
	

 	 	

 
	
	 	

	(signature)	 	(signature)
	 	 	 
	Date: January 1, 2003	 	Date: January 1, 2003

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Exhibit 10.3    
    

 
 

NEORX CORPORATION
  KEY EXECUTIVE SEVERANCE AGREEMENT    
    

        This Key Executive Severance Agreement (VP) (this "Agreement"), dated as of May 13, 2003, is entered into
by and between NEORX CORPORATION, a Washington corporation (as supplemented by Section 10, the "Company"), and KAREN AUDITORE-HARGREAVES (the
"Executive"). 

        The
Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to
ensure that the Company will have the continued dedication of the Executive, notwithstanding the fact that the Executive does not have any form of traditional employment contract or other assurance of
job security. The Board believes it is imperative to diminish any distraction of the Executive arising from the personal uncertainty and insecurity that arises in the absence of any assurance of job
security by providing the Executive with reasonable compensation and benefit arrangements in the event of termination of the Executive's employment by the Company under certain defined circumstances. 

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

1.     Term  

        The initial term of this Agreement (the "Initial Term") shall be for a period of two (2) years from the
date of this Agreement as first appearing; provided, however, that this Agreement shall automatically renew for successive additional two (2) year periods ("Renewal
Terms"), unless notice of nonrenewal is given by either party to the other party at least ninety (90) days prior to the end of the Initial Term or any Renewal Term, and
provided further that if a Change of Control (as defined in the Change of Control Agreement referenced in Section 16 hereof) occurs during the Term, the Term shall automatically extend for the
duration of the Employment Period (as defined in the Change of Control Agreement). The "Term" of this Agreement shall be the Initial Term plus all
Renewal Terms and, if
applicable, the duration of the Employment Period. At the end of the Term, this Agreement shall terminate without further action by either the Company or the Executive. 

2.     Employment  

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

3.     Attention and Effort  

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

 

Term
shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. 

4.     Termination  

        During the Term, employment of the Executive may be terminated as follows, but, in any case, the nondisclosure provisions set forth in Sections 7.1 and 7.2 hereof
and certain obligations under the Invention Agreement (as defined in Section 7.3 hereof) shall survive the termination of this Agreement and the termination of the Executive's employment with
the Company: 

        4.1   By the Company or the Executive  

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

        4.2   Automatic Termination  

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

        4.3   Notice of Termination  

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

        4.4   Date of Termination  

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

2

 

5.     Termination Payments  

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

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

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

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

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

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

        (b)   for
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, that the Company provides to the Executive
under the provisions of the federal Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), to the extent that
the Company would have paid such premiums had the Executive remained employed by the Company (such continued payment is hereinafter referred to as "COBRA
Continuation"); and 

        (c)   an
amount as severance pay equal to one hundred percent (100%) of the Executive's then current annual base salary for the fiscal year in which the Date of Termination
occurs, subject to payment and potential reduction as set forth in Sections 5.5 and 5.9 hereof. 

        5.2   Termination for Cause or Other Than for Good Reason  

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

        5.3   Expiration of Term  

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

        5.4   Termination Because of Death or Total Disability  

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

3

 

        5.5   Payment Schedule and Offset for Other Earnings  

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

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

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

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

        5.6   Cause  

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

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

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

        (c)   violation
by the Executive of a state or federal criminal law involving the 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 8 hereof. 

        5.7   Good Reason  

        For purposes of this Agreement, "Good Reason" means: 

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

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

4

 

        (c)   the
Company's requiring the Executive to be based at any office or location more than thirty (30) miles from the Company's current location in Seattle,
Washington; 

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

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

        5.8   General Release of Claims  

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

        5.9   Dispute regarding existence of Good Reason for Termination  

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

6.     Representations, Warranties and Other Conditions  

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

        6.1   Health  

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

5

 

        6.2   No Violation of Other Agreements  

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

7.     Nondisclosure; Return of Materials  

        7.1   Nondisclosure  

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

        7.2   Return of Materials  

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

        7.3   Invention and Proprietary Information Agreement  

        The parties have executed concurrently herewith the NeoRx Corporation Invention and Proprietary Information Agreement, in the form attached as Exhibit A
("Invention Agreement") and acknowledge that their respective obligations thereunder, including, without limitation, Executive's obligation not to
compete with the Company set forth in Section 7 thereof, shall apply to the entire period of Executive's employment with the Company and shall survive the execution of this Agreement, the
termination of this Agreement and the termination of the Executive's employment with the Company. 

8.     Notice and Cure of Breach  

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

9.     Form of Notice  

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

	If to the Executive:	 	Karen Auditore-Hargreaves

15438 SE 47th Street

Bellevue, WA 98006
	 	 	 

6

 

	

If to the Company:	
 	

NeoRx Corporation

300 Elliott Avenue West

Seattle, Washington 98119

Attn: President
	

With a copy to:	
 	

Perkins Coie LLP

1201 Third Avenue, 40th Floor

Seattle, Washington 98101-3099

Attn: James R. Lisbakken

Except
as set forth in Section 4.4 hereof, if notice is mailed, such notice shall be effective upon mailing. 

10.   Assignment  

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

        The
Company shall assign to and require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all the business and/or assets
of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
As used in this Agreement, the "Company" shall mean NeoRx Corporation and any affiliated company or successor to its business and/or assets as aforesaid
that assumes and agrees to perform this Agreement
by contract, operation of law or otherwise; and as long as such successor assumes and agrees to perform this Agreement, the termination of the Executive's employment by one such entity and the
immediate hiring and continuation of the Executive's employment by the succeeding entity shall not be deemed to constitute a termination or trigger any severance obligation under this Agreement. All
the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. 

11.   Waivers  

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

12.   Amendments In Writing  

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

13.   Applicable Law  

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

7

 

14.   Arbitration; Attorneys' Fees  

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

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

15.   Severability  

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

16.   Coordination With Change of Control Agreement  

        The Company and the Executive are contemporaneously with this Agreement entering into a Change of Control Agreement (the "Change of
Control Agreement"), which agreement provides for certain forms of severance and benefit payments in the event of termination of Executive's employment under certain defined
circumstances. This Agreement is in addition to the Change of Control Agreement, providing certain assurances to the Executive in circumstances that the Change of Control Agreement does not cover, and
in no way supersedes or nullifies the Change of Control Agreement. Nevertheless, it is possible that a termination of employment by the Company or by the Executive may fall within the scope of both
agreements. In such event, payments made to the Executive under Section 5.1 hereof shall be coordinated with payments made to the Executive under Section 8.1 of the Change of Control
Agreement as follows: 

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

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

        (c)   The
severance payment required under Section 5.1(c) hereof need not be paid if a severance payment is made under Section 8.1(d) of the Change of Control
Agreement. 

8

 

17.   Excess Parachute Payments  

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

18.   Entire Agreement  

        Except as described in Section 16 hereof, this Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject
matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and the Executive with respect to such subject matter, including,
without limitation, the Key Executive Severance Agreement, dated May 13, 1999 between the parties, are hereby superseded and nullified in their entireties, except that the Invention Agreement
shall continue in full force and effect to the extent not superseded by Sections 7.1 and 7.2 hereof. 

19.   Withholding  

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

20.   Counterparts  

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

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

	 	 	NEORX CORPORATION
	

 	
 	

By:	

/s/  JACK L. BOWMAN      
 Name: Jack L. Bowman

Its: Executive Chairman
	

 	
 	
EXECUTIVE
	

 	
 	

By:	

/s/  KAREN AUDITORE-HARGREAVES      
 Name: Karen Auditore-Hargreaves

9

  

 
 

EXHIBIT A    
    
    NEORX CORPORATION    
    
    INVENTION AND PROPRIETARY INFORMATION AGREEMENT    
    

        In an effort to define and clarify my rights and obligations as an employee and the rights and obligations of NeoRx Corporation and any of its subsidiaries and
affiliates to which its employees are assigned (the "Company") and 

        In
recognition of the importance of confidential information, trade secrets and inventions to the Company and 

        In
consideration of my employment by the Company, any opportunities for advancement or reassignment that the Company may from time to time offer me, the training, contacts, experience
and confidential information I will receive within the first month and throughout the course of such employment, the compensation paid to me in connection with such employment and any stock and/or
stock options which have been or may be granted to me by the Company, 

        I
agree as follows: 

        1.     For
purposes of this Agreement the terms: 

        (a)   "Inventions"
means discoveries, developments, designs, improvements, inventions and works of authorship, whether or not patentable, copyrightable or otherwise legally
protectable. This includes, but is not limited to, any new machine, article of manufacture, biological material, method, process, technique, use, equipment, device, apparatus, system, compound,
formulation, composition of matter, design or configuration of any kind, or any improvement thereon, whether or not reduced to writing or practice, and 

        (b)   "Proprietary
Information" means information and materials (biological, chemical or otherwise) not generally known or available outside the Company and information and
materials entrusted to the Company by third parties. This includes, but is not limited to, trade secrets, confidential knowledge, ideas, mask works, source and object codes, biological materials such
as nucleic acids, proteins, organisms, cell lines, antibodies or antigen source materials, or fragments thereof, and information which may relate, for example, to Inventions, research, development,
manufacturing, business plans, personnel, purchasing, financial data, marketing or selling. Proprietary Information may include or may be contained in material such as drawings, samples, prototypes,
data, procedures, specifications, reports, studies, customer or supplier lists, budgets, cost or price lists, compilations or computer programs, or may be in the nature of unwritten knowledge or
know-how. 

        2.     All
Proprietary Information which is made available to me or which I conceive, create, develop, reduce to practice, or compile, either alone or with others, during the
term of my employment shall be the exclusive property of the Company, and I hereby assign to the Company my entire right, title and interest in all such Proprietary Information. I will preserve in
confidence and will not disclose or use, either during or after the term of my employment, any Proprietary Information, except as required in my work for the Company or as authorized in writing by the
Company. With respect to Proprietary Information received by the Company from a third party, I will abide by any additional terms and conditions (including limitations on use) imposed upon the Company
by the third party of which I am aware. Upon termination of my employment or upon request, I will deliver to the Company all forms of materials in my possession that contain or embody any Proprietary
Information. 

        3.     I
will not use in performance of my work for the Company or disclose to the Company any trade secret, confidential or proprietary information of any prior employer or
other person or entity if and to the extent that such disclosure may cause any breach, default or violation of any obligation or 

10

 

duty
that I owe to such other person or entity (e.g., under any agreement or applicable law). My compliance with this paragraph will not prohibit, restrict or impair the performance of my work,
obligations and duties to the Company. 

        4.     I
hereby assign to the Company my entire right, title and interest in and to all Inventions that I conceive, create, develop or reduce to practice, either alone or with
others, during the term of my employment. I will promptly and fully record and disclose to the Company in writing any such Inventions and Proprietary Information that I make, conceive, or develop, in
whole or in part, and either solely or jointly with others during the entire term of my employment by the Company. 

        NOTICE: Any assignment of Inventions required by this Agreement does not apply to an Invention for which no equipment, supplies, facility
or trade secret information of the Company was used and which was developed entirely on the employee's own time, unless (a) the Invention relates (i) directly to the
business of the Company or (ii) to the Company's actual or demonstrably anticipated research or development or (b) the Invention results from any work performed by the employee for the
Company. 

        5.     During
or after my employment, upon the Company's request and at the Company's expense, I will execute all papers in a timely manner and do all acts necessary to apply
for, secure, maintain, defend or enforce patents, copyrights and any other legal rights in the United States and foreign countries in Inventions and Proprietary Information covered by Paragraphs 2 and
4, and I will execute all papers and do any and all acts necessary to document the assignment and transfer to the Company of my entire right, title and interest in and to such Inventions and
Proprietary Information. If, for any reason, the Company is unable to secure my signature on any paper required under this Paragraph 4, I hereby irrevocably designate and appoint the Company
and its duly authorized officers and agents as my agent and attorney-in-fact to act for me, and in my behalf, to execute and process any such papers and to do all other lawful
acts to further the intent of this Paragraph 5. 

        6.     I
have prepared and attached hereto a list of all Inventions, patent applications and patents conceived, created, developed or reduced to practice by me or with others
prior to my employment with the Company, which are subject to prior agreements or which I desire to exclude from this Agreement, or if no such list is attached, I hereby represent and warrant that
there are no such Inventions, patent applications or patents. If in the course of my employment with the Company, I use or incorporate into a product or process an Invention not assigned by
Paragraph 4 of this Agreement in which I have an interest, the Company is hereby granted a nonexclusive, fully paid-up, royalty-free, perpetual, worldwide license of my
interest (with right to sublicense) to make, have made, use, sell, offer to sell and import such Invention without restriction. 

        7.     In
order to aid in the protection of the Inventions and Proprietary Information of the Company, during the term of my employment and for one (1) year thereafter, I
will not, for my benefit or the benefit of others without the Company's written consent (a) engage in research or development with respect to the same or similar projects on which I was
performing research or development for the Company or (b) directly or indirectly be employed or involved with any business unit developing or exploiting any products or services that are
competitive with products or services (i) being developed or exploited by the Company during my employment and (ii) on which I worked or about which I learned Proprietary Information
during my employment with the Company. 

        8.     During
the term of my employment and for one (1) year thereafter, I will not, directly or indirectly, recruit, solicit or induce in any way any employee, advisor
or consultant of the Company to terminate his or her relationship with the Company, to engage in activities competitive with the Company or not to provide future services to the Company. During the
term of my employment and for one (1) year thereafter, I will not, directly or indirectly, solicit, induce or encourage in any way any strategic partners, customers, suppliers or vendors to
terminate or reduce there relationship with the Company or not to enter into any business or relationship with the Company. 

11

 

        9.     I
acknowledge that any violation of this Agreement by me will cause irreparable injury to the Company and I agree that the Company will be entitled to extraordinary
relief in court, including, but not limited to, temporary restraining orders, preliminary injunctions and permanent injunctions without the necessity of posting a bond or other security and without
prejudice to any other rights and remedies that the Company may have for a breach of this Agreement. 

        10.   This
Agreement will be governed by and construed in accordance with the laws of the state of Washington (regardless of its choice-of-law
provisions). I irrevocably consent to the jurisdiction and venue of the state and federal courts located in King County, Washington, in connection with any action relating to this Agreement. Further,
I will not bring any action relating to this Agreement in any other court. 

        11.   My
execution, delivery and performance of this Agreement and the performance of my other obligations and duties to the Company will not cause any breach, default or
violation of any employment, nondisclosure, confidentiality, consulting or other agreement to which I am a party or by which I may be bound. 

        12.   I
will not (a) make any false, misleading or disparaging representations or statements with regard to the Company or the products or services of the Company, or
(b) make any statement that may impair or otherwise adversely affect the goodwill or reputation of the Company. 

        13.   I
agree and understand that nothing in this Agreement will confer any right with respect to continuation of my employment by the Company, nor will it interfere with the
Company's right to terminate my employment at any time. 

        14.   The
obligations of this Agreement will continue beyond the termination of my employment and will be binding on my heirs, assigns and legal representatives. If any
obligation herein is held to be too broad to be enforced, it will be construed to be enforceable only to the full extent permitted by law. This Agreement is for the benefit of the Company, its
successors and assigns (including all present and future subsidiaries, affiliates, joint ventures and associated companies) and is not conditioned on my employment for any period of time or
compensation therefor. 

        I
HAVE READ AND FULLY UNDERSTOOD THIS AGREEMENT. 

	 	 	 
 Signature of Employee
	

 	
 	

 	

 
	

 	
 	

 Name of Employee (Please Print)
	

 	
 	

 	

 
	

 	
 	

 Date
	

Inventions listed on attached:    o Yes        o No	

 
	

 
 Signature of Witness for NeoRx Corporation	
 	

 	

 
	

 	
 	

 	

 
	

 Name of Witness (Please Print)	
 	

 	

 

12

QuickLinks

Exhibit 10.3

NEORX CORPORATION KEY EXECUTIVE SEVERANCE AGREEMENT

EXHIBIT A NEORX CORPORATION INVENTION AND PROPRIETARY INFORMATION AGREEMENT

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