Document:

Exhibit 10.1

 

NEORX
CORPORATION

KEY
EXECUTIVE SEVERANCE AGREEMENT

 

This Key Executive Severance Agreement (VP) (this “Agreement”), effective as of JUNE 23,
2005, is entered into by and between NEORX CORPORATION, a Washington
corporation (as supplemented by Section 10, the “Company”),
and David A. Karlin (the “Executive”).

 

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

 

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

 

1.                                      Term

 

The initial term of this Agreement (the “Initial Term”) shall be for a period
of one (1) year from the date of this Agreement as first appearing;
provided, however, that this Agreement shall automatically renew for successive
additional one (1) year periods (“Renewal Terms”),
unless notice of nonrenewal is given by either party to the other party at
least nine (9) months 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 Removal 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
his productive time, ability, attention and effort to the business and affairs
of the Company and the discharge of the responsibilities assigned to him
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 to deemed to interfere with the performance of the
Executive’s responsibilities to the Company.

 

4.                                      Termination

 

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

 

4.1                               By
the Company or the Executive

 

At any time
during the Term, the Company may terminate the employment of the Executive with
or without Cause (as defined below), and the Executive may terminate his
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 circumstances 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.

 

2

 

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 his duties during such period.

 

5.                                      Termination
Payments

 

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

 

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

 

If during the Term the Company terminates the
Executive’s employment other than for Cause or the Executive terminates his
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 nine (9) months
after the Date of Termination or until the Executive qualifieds 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 his family members, if applicable,
that the Company provides to the Executive under the provisions of the federal
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), to the extent that the
Company would have paid such premiums had the Executive remained employed by
the Company (such continued payment is hereinafter referred to as “COBRA Continuation”); and

 

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

 

3

 

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 his 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.

 

5.5                               Payment
Schedule

 

All Payments of Accrued Obligations, or any
portion thereof payable pursuant to this Section 5, shall be made to the
Executive within ten (10) working days of the Date of Termination. Any
severance payments payable to the Executive pursuant to Section 5.1(c)
shall be made to the Executive in the form of salary continuation, payable at
normal payroll intervals during the nine (9) month period following the
Date of Termination (“Payment Period”).

 

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;

 

4

 

(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;

 

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

 

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

 

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

 

5.8                               General Release of Claims

 

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

 

5

 

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 his 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
determination 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
him from fulfilling his obligations hereunder. The Executive agrees, if the
Company requests, to submit to reasonable periodic medical examinations by a
physician or physicians designated, paid for and arranged by the Company. The
Executive agrees that the examination’s medical report shall be provided to the
Company.

 

6.2                               No Violation
of Other Agreements

 

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

 

7.                                      Nondisclosure;
Return of Materials

 

7.1                               Nondisclosure

 

Except as required by his 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
him compensation, granting him any promotions or raises, or entrusting him with
any information that helps the Company compete with others.

 

6

 

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 his possession, including any and all
copies thereof, shall be the property of the Company and shall be held by the
Executive in trust and solely for the benefit of the Company, and shall be
delivered to the Company by the Executive upon termination of employment or at
any other time upon request by the Company.

 

8.                                      Notice
and Cure of Breach

 

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

 

9.                                      Form of
Notice

 

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

 

	
  If to the Executive:

  	
   

  	
  David A. Karlin

  
	
   

  	
   

  	
  100 Yerba Santa Avenue

  
	
   

  	
   

  	
  Los Altos, California 94022-2214

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  NeoRx Corporation

  
	
   

  	
   

  	
  300 Elliot Avenue West, Suite 500

  
	
   

  	
   

  	
  Seattle, Washington 98119

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Perkins Coie LLP

  
	
   

  	
   

  	
  1201 Third Avenue, 40th Floor

  
	
   

  	
   

  	
  Seattle, Washington 98101-3099

  
	
   

  	
   

  	
  Attn: James R. Lisbakken

  

 

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

 

10.                               Assignment

 

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

 

7

 

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.

 

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

 

8

 

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 attorney’s
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 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

 

9

 

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

 

17.                               Excess
Parachute Payments

 

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

 

18.                               Entire
Agreement

 

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

 

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.

 

10

 

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

 

	
   

  	
  NEORX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice President; Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  A. Karlin, M.D.

  	
   

  
	
   

  	
  Name:

  	
  DAVID A.
  KARLIN, M.D.

  	
   

  
							

 

11Exhibit 10.2

 

NEORX
CORPORATION

CHANGE
OF CONTROL AGREEMENT

 

This Change of Control Agreement (this “Agreement”), effective as of JUNE 23, 2005,
is entered into by and between NEORX CORPORATION, a Washington corporation (as
supplemented by Section 13, the “Company”), and David A.
Karlin (the “Executive”).

 

The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to ensure that the Company will
have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Section 1
hereof) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive arising from the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage
the Executive’s full attention and dedication to the Company currently and in
the event of any threatened or pending Change of Control, and to provide the
Executive with reasonable compensation and benefit arrangements upon a Change
of Control.

 

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

 

1.                                      Definitions

 

1.1                                 “Change of Control” shall have the definition set forth
in Appendix A hereto, which is hereby incorporated by reference.

 

1.2                                 “Change of Control Date” shall mean the first date
on which a Change of Control occurs.

 

1.3                                 “Employment Period” shall mean the two (2) year
period commencing on the Change of Control Date and ending on the second
anniversary of such date.

 

1.4                                 “Severance Agreement” shall mean the Key Executive
Severance Agreement, dated as of the date hereof, between the parties, as it
may be amended from time to time, that provides for certain benefits related to
termination of the Executive’s employment that are unrelated to a Change of
Control.

 

2.                                      Term

 

The initial term of this Agreement (“Initial Term”) shall be for a period of one (1) year
from the date of this Agreement as first appearing above; provided, however,

 

 

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

 

3.                                      Employment

 

3.1                               Employment
Period

 

During the Employment Period, the Company
hereby agrees to continue the Executive in its employ or in the employ of its
affiliated companies, and the Executive hereby agrees to remain in the employ
of the Company or its affiliated companies, in accordance with the terms and
provisions of this Agreement; provided, however, that either the Company or the
Executive may terminate the employment relationship subject to the terms of
this Agreement.

 

3.2                               Position
and Duties

 

During the Employment Period, the Executive’s
position, authority, duties and responsibilities shall be at least commensurate
in all material respects with the most significant of those held, exercised and
assigned at any time during the ninety (90) day period immediately preceding
the Change of Control Date.

 

3.3                               Location

 

During the Employment Period, the Executive’s
services shall be performed at the Company’s headquarters on the Change of
Control Date or any office that is subsequently designated as the headquarters
of the Company and is less than twenty (20) miles from such location.

 

3.4                               Employment
at Will

 

The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company or its affiliated companies is “at will” and may be terminated by
either the Executive or the Company or its affiliated companies at any time
with or without cause. Moreover, if prior to the Change of Control Date, the
Executive’s employment with the Company or its

 

2

 

affiliated companies terminates for any reason, then the Executive
shall have no further rights under this Agreement; provided, however, that the
Company may not avoid liability for any termination payments that would have
been required during the Employment Period pursuant to Section 8 hereof by
terminating the Executive prior to the Employment Period where such termination
is carried out in anticipation of a Change of Control and the principal
motivating purpose is to avoid liability for such termination payments.

 

4.                                      Attention
And Effort

 

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

 

5                                         Compensation

 

As long as the Executive remains employed by the Company during the
Employment Period, the Company agrees to pay or cause to be paid to the
Executive, and the Executive agrees to accept in exchange for the services
rendered hereunder by him, the following compensation:

 

5.1                               Salary

 

The Executive
shall receive an annual base salary (the “Annual Base
Salary”), at least equal to the annual salary established
by the Board or the Compensation Committee of the Board (the “Compensation Committee”) or
the Chief Executive Officer for the fiscal year in which the Change of Control
Date occurs. The Annual Base Salary shall be paid in substantially equal
installments and at the same intervals as the salaries of other executives of
the Company are paid.  The Board or the

 

3

 

Compensation Committee or the Chief Executive Officer shall review the
Annual Base Salary at least annually and shall determine in good faith and
consistent with any generally applicable Company policy and increases for
future years.

 

5.2                               Bonus

 

In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, and annual bonus (the “Annual Bonus”)
in cash at least equal to the average annualized (for any fiscal year
consisting of less than twelve (12) full months) bonus paid or payable (including
by reason of any deferral and including the value of any stock awards and the
compensation expense disclosed in the Company’s financial statements for the
grant of any stock options) to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately preceding the fiscal
year in which the Change of Control Date occurs. Each Annual Bonus shall be
paid no later than ninety (90) days after the end of the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of the Annual Bonus.

 

6.                                      Benefits

 

6.1                               Incentive,
Retirement and Welfare Benefit Plans; Vacation

 

During the Employment Period, the Executive
shall be entitled to participate, subject to and in accordance with applicable
eligibility requirements, in such fringe benefit programs as shall be generally
made available to other executives of the Company and its affiliated companies
from time to time during the Employment Period by action of the Board (or any
person or committee appointed by the Board to determine fringe benefit programs
and other emoluments), including, without limitation, paid vacations; any stock
purchase, savings or retirement plan, practice, policy or program; and all
welfare benefit plans, practices, policies or programs (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
or programs).

 

6.2                               Expenses

 

During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by her in accordance with the policies, practices and
procedures of the Company and its affiliated companies in effect for the
executives of the Company and its affiliated companies during the Employment
Period.

 

4

 

7.                                      Termination

 

During the Employment Period, employment of
the Executive may be terminated as follows, but, in any case, the nondisclosure
provisions set forth in Section 10 hereof shall survive the termination of
this Agreement and the termination of the Executive’s employment with the
Company:

 

7.1                               By
the Company or the Executive

 

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

 

7.2                               Automatic
Termination

 

This Agreement and the Executive’s employment
during the Employment Period shall terminate automatically upon the death or
Total Disability of the Executive. The term “Total Disability” as used herein shall mean the
Executive’s inability (with such accommodation as may be required by law and
which places no undue burden on the Company), as determined by a physician
selected by the Company and acceptable to the Executive, to perform the duties
set forth in Section 3.2 hereof for a period or periods aggregating twelve
(12) weeks in any three hundred sixty-five (365) day period as a result of
physical or mental illness, loss of legal capacity or any other cause beyond
the Executive’s control, unless the Executive is granted a leave of absence by
the Board. The Executive and the Company hereby acknowledge that the duties
specified in Section 3.2 hereof are essential to the Executive’s position
and that Executive’s ability to perform those duties is the essence of this
Agreement.

 

7.3                               Notice
of Termination

 

Any termination by the Company or by the
Executive during the Employment Period shall be communicated by the Notice of
Termination to the other party given in accordance with Section 12 hereof.
The term “Notice of Termination”
shall mean a written notice that (a) indicates the specific termination
provision in this Agreement relied upon and (b) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Executive’s employment under the provision so
indicated. The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance that contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from

 

5

 

asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

7.4                               Date
of Termination

 

During the Employment Period, “Date of Termination”
means (a) if the Executive’s employment is terminated by reason of death,
at the end of the calendar month in which the Executive’s death occurs, (b) if
the Executive’s employment is terminated by reason of Total Disability,
immediately upon a determination by the Company of the Executive’s Total
Disability, and (c) in all other cases, ten (10) days after the date
of personal delivery or mailing of the Notice 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 his duties during such period.

 

8.                                      Termination
Payments

 

In the event of termination of the Executive’s
employment during the Employment Period, all compensation and benefits set
forth in this Agreement shall terminate except as specifically provided in this
Section 8.

 

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

 

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

 

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

 

(i)                                     the Annual Base
Salary through the Date of Termination to the extent not theretofore paid;

 

(ii)                                  the product of (x)
the Annual Bonus payable with respect to the fiscal year in which the Date of
Termination occurs and (y) a fraction the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the
denominator of which is three hundred sixty-five (365); provided that, in the
event that the Executive is entitled to an amount in respect of the Annual
Bonus under Section 8.1(c), he shall receive the amount payable under Section 8.1(c) first
and the amount payable under this Section 8.1(a)(ii) only to the
extent it exceeds the amount payable under Section 8.1(c); and

 

6

 

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

 

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

 

(c)                                  an
amount equal to fifty percent (50%) of the Annual Bonus that would have been
paid to the Executive for the fiscal year in which the Date of Termination
falls but for the termination of the Executive’s employment;

 

(d)           an amount as severance pay equal to
fifty percent (50%) of the Annual Base Salary for the fiscal year in which the
Date of Termination occurs; and

 

(e)                                  immediate vesting of
all outstanding stock options previously granted to the Executive by the
Company.

 

8.2                               Termination
for Cause or Other Than for Good Reason

 

If during the
Employment Period the Executive’s employment shall be terminated by the Company
for Cause or by the Executive for other than Good Reason, this Agreement shall
terminate without further obligation on the part of the Company to the
Executive, other than the Company’s obligation to pay the Executive (a) the
Annual Base Salary through the Date of Termination, (b) the amount of any
compensation previously deferred by the Executive, and (c) any accrued
vacation pay that would be payable under the Company’s standard policy, in each
case to the extent theretofore unpaid.

 

8.3                               Expiration
of Term

 

In the event
the Executive’s employment is not terminated prior to expiration of the Term,
this Agreement shall terminate without further obligation on the part of the
Company to the Executive, other than the Company’s obligation to pay the
Executive the product of (a) the Annual Bonus payable with respect to the
fiscal year

 

7

 

in which the Term expired and (b) a fraction the numerator of
which is the number of days in the current fiscal year through the end of the
Term and the denominator of which is three hundred sixty-five (365).

 

8.4                               Termination
Because of Death or Total Disability

 

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

 

8.5                               Payment
Schedule

 

All payments of Accrued Obligations, or any
portion thereof payable pursuant to this Section 8, shall be made to the
Executive within ten (10) working days of the Date of Termination. Any
payments payable to the Executive pursuant to Section 8.1(c) and (d) hereof
shall be made to the Executive in a lump sum within ten (10) working days
of the Date of Termination.

 

8.6                               Cause

 

For purposes of this Agreement, “Cause” means
cause given by the Executive to the Company and shall include, without
limitation, the occurrence of one (1) or more of the following events:

 

(a)          a clear refusal to carry out any material
lawful duties of the Executive or any directions of the Board or senior
management of the Company, all reasonably consistent with the duties described
in Section 3.2 hereof;

 

(b)         persistent failure to carry out any lawful
duties of the Executive described in Section 3.2 hereof or any directions
of the Board or senior management reasonably consistent with the duties herein
set forth to be performed by the Executive, provided, however, that the
Executive has been given reasonable notice and opportunity to correct any such
failure;

 

(c)          violation by the Executive of a state or
federal criminal law involving the commission of a crime against the Company or
any other criminal act involving moral turpitude;

 

8

 

(d)         current abuse by the Executive of alcohol or
controlled substances; deception, fraud, misrepresentation or dishonesty by the
Executive; or any incident materially compromising the Executive’s reputation
or ability to represent the Company with investors, customers or the public; or

 

(e)          any other material
violation of any provision of this Agreement by the Executive, subject to the
notice and opportunity-to-cure requirements of Section 11 hereof.

 

8.7                               Good
Reason

 

For purposes of this Agreement, “Good Reason” means

 

(a)                                  the assignment to the
Executive of any duties materially inconsistent with the Executive’s position,
authority, duties or responsibilities as contemplated by Section 3.2
hereof or any other action by the Company that results in a material diminution
in such position, authority, duties or responsibilities, excluding for this purpose
an isolated and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of notice thereof given by the Executive;

 

(b)                                 any failure by the
Company to comply with any of the provisions of Section 5 or Section 6
hereof, other than an isolated and inadvertent failure not taken in bad faith
and that is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

 

(c)                                  the Company’s
requiring the Executive to be based at any office or location other than that
described in Section 3.3 hereof;

 

(d)                                 any failure by the
Company to comply with and satisfy Section 13 hereof; provided, however,
that the Company’s successor has received at least ten (10) days’ prior
written notice from the Company or the Executive of the requirements of Section 13
hereof; or

 

(e)                                  any
other material violation of any provision of this Agreement by the Company,
subject to the notice and opportunity-to-cure requirements of Section 11
hereof.

 

8.8                               Excess
Parachute Limitation

 

If any portion of the payments or benefits
for the Executive under this Agreement, the Severance Agreement, or any other
agreement or benefit plan of the Company (including stock option plan) would be
characterized as an “excess parachute payment” to the Executive under Section 280G
of the Internal Revenue

 

9

 

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 he is
obligated to make the excise tax payment. The determination of whether and to
what extent any payments or benefits would be “excess parachute payments” and
the date by which any excise tax shall be due, shall be determined in writing
by recognized tax counsel selected by the Company and reasonably acceptable to
the Executive.

 

9.                                      Representations,
Warranties and Other Conditions

 

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

 

9.1                               Health

 

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

 

9.2                               No
Violation of Other Agreements

 

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

 

10.                               Nondisclosure;
Return of Materials

 

10.1                        Nondisclosure

 

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

 

10

 

10.2                        Return of
Materials

 

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

 

11.                               Notice
and Cure of Breach

 

Whenever a breach of this Agreement by either
party is relied upon as justification for any action taken by the other party
pursuant to any provision of this Agreement, other than clause (a), (b), (c) or
(d) of Section 8.6 hereof, before such action is taken, the party
asserting the breach of this Agreement shall give the other party at least
twenty (20) days’ prior written notice of the existence and the nature of such
breach before taking further action hereunder and shall give the party
purportedly in breach of this Agreement the opportunity to correct such breach
during the twenty (20) day period.

 

12.                               Form of
Notice

 

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

 

	
  If to the Executive:

  	
   

  	
  David A. Karlin

  
	
   

  	
   

  	
  100 Yerba Santa Avenue

  
	
   

  	
   

  	
  Los Altos, California 94022-2214

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  NeoRx Corporation

  
	
   

  	
   

  	
  300 Elliott Avenue West, Suite 500

  
	
   

  	
   

  	
  Seattle, Washington 98119

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Perkins Coie LLP

  
	
   

  	
   

  	
  1201 Third Avenue, 40th Floor

  
	
   

  	
   

  	
  Seattle, Washington 98101-3099

  
	
   

  	
   

  	
  Attn: James R. Lisbakken

  

 

11

 

Except as set forth in Section 7.4 hereof, if notice is mailed,
such notice shall be effective upon mailing.

 

13.                               Assignment

 

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

 

The Company shall assign to and require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, “Company”
shall mean NeoRx Corporation and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of
law, or otherwise.  All the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.

 

14.                               Waivers

 

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

 

15.                               Amendments
In Writing

 

No amendment, modification, waiver,
termination or discharge of any provision of this Agreement, or consent to any
departure therefrom by either party hereto, shall in any event be effective
unless the same shall be in writing, specifically identifying this Agreement
and the provision intended to be amended, modified, waived, terminated or
discharged and signed by the Company and the Executive, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific 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.

 

12

 

16.                               Applicable
Law

 

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

 

17.                                                       Arbitration;
Attorneys’ Fees

 

Except in connection with enforcing Section 10
hereof, for which legal and equitable remedies may be sought in a court of law,
any dispute arising under this Agreement shall be subject to arbitration. The
arbitration proceeding shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the “AAA
Rules”) then in effect, conducted by one arbitrator either
mutually agreed upon or selected in accordance with the AAA Rules. The
arbitration shall be conducted in King County, Washington, under the
jurisdiction of the Seattle office of the American Arbitration Association. The
arbitrator shall have authority only to interpret and apply the provisions of
this Agreement, and shall have no authority to add to, subtract from or
otherwise modify the terms of this Agreement. Any demand for arbitration must
be made within sixty (60) days of the event(s) giving rise to the claim that
this Agreement has been breached. The arbitrator’s decision shall be final and
binding, and each party agrees to be bound to by the arbitrator’s award,
subject only to an appeal therefrom in accordance with the laws of the State of
Washington.  Either party may obtain
judgment upon the arbitrator’s award in the Superior Court of King, County,
Washington.

 

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

 

18.                               Severability

 

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

 

13

 

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.

 

19.                               Entire
Agreement

 

Except as
described in Section 22 hereof, this Agreement constitutes the entire
agreement between the Company and the Executive with respect to the subject
matter hereof, and all prior or contemporaneous oral or written communications,
understandings or agreements between the Company and the Executive with respect
to such subject matter are hereby superseded and nullified in their entireties,
except that the Proprietary Information and Invention Agreement between the
Company and the Executive shall continue in full force and effect to the extent
not superseded by Section 10 hereof.

 

20.                               Withholding

 

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

 

21.                               Counterparts

 

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

 

22.                               Coordination With Severance Agreement

 

The Severance Agreement that the parties are
entering into contemporaneously with this Agreement provides for certain forms
of severance and benefit payments in the event of termination of the Executive’s
employment. This Agreement is in addition to the Severance Agreement and in no
way supersedes or nullifies the Severance Agreement. Nevertheless, it is
possible that termination of employment by the Company or by the Executive may
fall within the scope of both agreements. In such event, payments made to the
Executive under Section 8.1 hereof shall be coordinated with payments made
to the Executive under Section 5.1 of the Severance Agreement as follows:

 

(a)                                  Accrued Obligations
under this Agreement shall be paid first, in which case Accrued Obligations
need not be paid under the Severance Agreement;

 

14

 

(b)                                 COBRA Continuation
under this Agreement shall be provided first, in which case COBRA Continuation
need not be provided under the Severance Agreement; and

 

(c)                                  the severance payment
required under Section 8.1(d) hereof shall be paid first, in which
case only that portion of any severance payment required under Section 5.1(c) of
the Severance Agreement in excess of the severance payment required under Section 8.1(d) hereof
shall be paid in accordance with the provisions of the Severance Agreement.

 

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

 

	
   

  	
  NEORX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda T. Findlay

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice President, Human Resources

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Alan Karlin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David Alan
  Karlin

  	
   

  
							

 

15

 

APPENDIX
A

 

For purposes of this Agreement, a “Change of Control” shall
mean:

 

(a)                                  A “Board Change” that, for
purposes of this Agreement, shall have occurred if a majority (excluding vacant
seats) of the seats on the Board are occupied by individuals who wee neither (i) nominated
by a majority of the Incumbent Directors nor (ii) appointed by directors
so nominated. An “Incumbent Director”
is a member of the Board who has been either (i) nominated by a majority
of the directors of the Company then in office or (ii) appointed by
directors so nominated, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”))
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person (as hereinafter defined) other than the Board; or

 

(b)                                 The acquisition
by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of (i) twenty percent (20%) or more of
either (A) the then outstanding shares of Common Stock of the Company (the
“Outstanding Company Common
Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding
Company Voting Securities”), in the case of either (A) or
(B) of this clause (i), which acquisition is not approved in advance by a
majority of the Incumbent Directors, or (ii) thirty-three percent (33%) or
more of either (A) the Outstanding Company Common Stock or (B) the
Outstanding Company Voting Securities, in the case of either (A) or (B) of
this clause (ii), which acquisition is approved in advance by a majority of the
Incumbent Directors; provided, however, that the following acquisitions shall
not constitute a Change of Control: (x) any acquisition by the Company, (y) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (z)
any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of
this Appendix A are satisfied; or

 

(c)                                  Approval by the
shareholders of the Company of a reorganization, merger or consolidation, in
each case, unless, immediately following such

 

16

 

reorganization, merger or consolidation, (i) more than sixty
percent (60%) of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation and
the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such reorganization, merger or consolidation in
substantially the same proportion as their ownership immediately prior to such
reorganization, merger or consolidation of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding the Company, any employee benefit plan (or related trust) of
the Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (iii) at least a majority of
the members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were the Incumbent Directors at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

 

(d) Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all the assets of the
Company, other than to a corporation with respect to which immediately
following such sale or other disposition, (A) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of  directors is then beneficially owned,
directly of indirectly, by all or substantially all the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities immediately
prior to such sale or other disposition is substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation and any
Person

 

17

 

beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, thirty-three percent (33%) or more of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, thirty-three
percent (33%) or more of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors, and (C) at least a majority of the members of the
board of directors of such corporation were approved by a majority of the
Incumbent Directors at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition of the Company’s
assets.

 

18

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