EXHIBIT 10.38
NEORX CORPORATION
KEY EXECUTIVE SEVERANCE AGREEMENT
This Key Executive Severance Agreement (this "Agreement"), dated and
effective as of _____________, ______, is between NEORX CORPORATION, a
Washington corporation (the "Company"), and _____________________ (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 term of this Agreement (the "Term") shall be for a period of two (2)
years from the date of this Agreement as first appearing; provided, however,
that the Term shall automatically renew for additional two (2) year periods,
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, at the end of which 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 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 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 circumstance
-2-
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 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 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, that the Company provides to
the Executive under the provisions of the federal Consolidated Omnibus Budget
Reconciliation Act
-3-
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 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 Section 5.5 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 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 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 (1) year severance period, and 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 the one (1) year
severance 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
-4-
other personal services during the one (1) year severance period, and the
source(s) of such earnings;
(c) The disclosures of earnings shall be made by Executive within
two (2) weeks of any period of time in which Executive received payment from
NeoRx and also received earnings from another source (or had a right to
receive earnings);
(d) The Company, in each payroll 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; and
(e) 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 above in this 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 this 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.
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
-5-
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 twenty (20) 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.
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
-6-
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.
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
-7-
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: --------------------------
--------------------------
--------------------------
If to the Company: NeoRx Corporation
000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
With a copy to: Xxxxxxx Coie
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx
or such other address as shall be provided in accordance with the terms
hereof. 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
-8-
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 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.
-9-
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 shall be paid first,
in which case Accrued Obligations need not be paid under the Change of
Control Agreement;
(b) COBRA Continuation under this Agreement shall be provided
first, in which case COBRA Continuation need not be provided under the Change
of Control Agreement; and
(c) The severance payment required under Section 5.1(c) hereof
shall be paid in addition to any severance payment required under Section
8.1(c) of the Change of Control Agreement.
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
-10-
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.
IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement effective on the date first set forth above.
NEORX CORPORATION EXECUTIVE
By:
-------------------------- ----------------------------------
Its:
---------------------- ----------------------------
-11-
