MAXIM PHARMACEUTICALS INC
EXHIBIT 10.3
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<TYPE>EX-10.3
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<FILENAME>a2068735zex-10_3.txt
<DESCRIPTION>EXHIBIT 10.3
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                                                                    Exhibit 10.3


                              EMPLOYMENT AGREEMENT


         EMPLOYMENT AGREEMENT made as of the 16th day of November, 2001 between
Maxim Pharmaceuticals, Inc. ("Company") and Larry G. Stambaugh ("Executive").

                              PRELIMINARY STATEMENT

         WHEREAS, the Company wishes to retain the Executive as Chairman of the
Board of Directors, President and Chief Executive Officer of the Company, and
the Executive wishes to continue in such positions, all on the terms and
conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the Company and the Executive agree as follows:

         1.       TERM OF AGREEMENT. This Agreement shall commence on October 1,
2001 and shall continue in effect until terminated pursuant to Section 5 hereof.

         2.       POSITION AND DUTIES. Except as may otherwise be agreed upon
between the Company and the Executive, the Company agrees to employ the
Executive, and the Executive agrees to serve the Company, as Chairman of the
Board of Directors, President and Chief Executive Officer. The Executive shall
render such services to the Company as are customary for such positions and
perform all other services incident thereto. At all times, the Executive shall
report directly to the Board of Directors of the Company. The Executive shall
devote substantially all of his working time and efforts to the business and
affairs of the Company, except for time spent for service on the boards of
directors of other corporations, vacations as defined by Company policy and
civic and charitable activities, and shall represent the Company within its
industry.

         3.       PLACE OF PERFORMANCE. In connection with his employment by the
Company, the Executive shall, except as the Executive may otherwise agree,
perform his principal activities at the offices of the Company located in San
Diego, California, subject to travel reasonably required for the Company's
business.

         4.       COMPENSATION AND RELATED MATTERS.

                  4.1      BASE SALARY. During the Term, the Company shall pay
to the Executive, in approximately equal installments not less often than twice
per month, a base salary of not less than $425,000 per year and such base salary
shall


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be subject to increase, but not reduction, from time to time based upon
recommendations from the Compensation Committee to the Board of Directors. All
amounts payable to the Executive pursuant to this Agreement shall be paid
subject to such reporting and withholding requirements, if any, as may be
imposed by applicable law and applicable Company policy.

                  4.2      Incentive Plan. The Executive shall be eligible to
receive bonus payments pursuant to a plan to be prepared by the Company's Board
of Directors with the Executive's participation ("Bonus Plan"). The Bonus Plan
shall provide that, assuming reasonable satisfaction of the performance criteria
to be set forth in the Bonus Plan, the Executive shall be eligible to earn an
annual bonus with respect to each of the Company's fiscal years during the Term
in an amount up to 35% of the Executive's annualized base salary hereunder, such
bonus to be payable within ninety days after the end of each such fiscal year.
The bonus will be based upon the annualized base salary for the year in which
the bonus applies. In addition, Executive will receive $150,000 upon approval of
the U.S. NDA for Ceplene if such approval is obtained by November 17, 2002.

                  4.3      BENEFIT PLANS AND ARRANGEMENT. The Executive shall be
entitled to participate in and receive benefits under the Company's employee
benefit plans and arrangements in effect during the Term. The Company shall pay
the entire cost of the Executive's health, life and disability insurance
coverage under the Company's plans and policies during the Term, notwithstanding
anything to the contrary in such plans and policies.

                  4.4      PERQUISITES. During the Term, the Executive shall be
entitled to receive fringe benefits ordinarily and customarily provided by the
Company to its senior officers.

                  4.5      EXPENSES. The Company shall promptly reimburse the
Executive for all normal out-of-pocket expenses related to the Company's
business actually paid or incurred by him in the performance of his services
under this Agreement.

         5.       TERMINATION. The Executive's employment hereunder may be
terminated under the following circumstances (without impairing the Executive's
rights under benefit plans and arrangements and the Company's policies and
procedures):

                  5.1      TERMINATION UPON DEATH OR PERMANENT DISABILITY. The
Term shall automatically terminate in the event of the death or permanent
disability of Executive. For purposes of this Agreement, "permanent disability"


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shall mean the inability to perform services hereunder for a period of six
consecutive months.

                  5.2      TERMINATION BY COMPANY FOR CAUSE. The Company shall
have the option to terminate the Term (a) for cause in the event the Executive
engages in grossly negligent conduct or willful misconduct in connection with
the execution of his duties hereunder which materially and adversely affects the
Company, after written notice by the Company to the Executive of the specific
acts that form the basis for the termination, and (b) for the Executive's
material nonperformance of his duties hereunder, provided the nonperformance
continues uncorrected for a period of thirty days after written notice thereof
by the Company to the Executive specifically identifying the manner in which the
Company believes the Executive has not performed his duties. For purposes of
this Section 5.2, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act or omission was in the best
interests of the Company.

                  5.3      SEVERANCE. If the Company terminates Executive's
employment other than for cause pursuant to Section 5.2, Executive, in lieu of
all other remedies and as liquidated damages, shall be entitled to receive
continuation of his then annual base salary plus health care insurance coverage
for a period of three (3) years from said date of termination, with such base
salary continuation to be at the rate set forth in section 4.1 or, if greater,
the rate of the Executive's current base salary at the date of termination.

Nothing herein shall derogate from the Executive's rights under employee benefit
plans, programs and arrangements or under applicable law.

                  5.4      CONSTRUCTIVE DISCHARGE. Any significant reduction or
adverse change in the nature or scope of the Executive's authority, duties,
status or position contemplated by Section 2 hereof, including an involuntary
relocation, or a reduction the base salary and/or benefits of the Executive from
those provided for in Section 4 hereof as they may from time to time be in
effect, will be the basis for the Executive's termination of this Agreement by
giving at least 30 days prior notice to the Company and in such event the
termination will be treated as a termination by the Company without cause under
Section 5.3.

                  5.5      BENEFITS UPON TERMINATION FOR CAUSE OR VOLUNTARY
TERMINATION BY EXECUTIVE. In the event the Company properly terminates
Executive's employment under this Agreement for cause pursuant to Section 5.2 or
Executive voluntary resigns from his employment during the Term:


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                           a.       all salary shall be prorated as of the date
of termination and such prorated amount shall be paid to Executive;

                           b.       all stock options or stock appreciation
rights granted to Executive shall be governed by the instruments granting such
rights; and

                           c.       the Company shall (i) make such other and
further payment to Executive, his designated beneficiaries and his dependents as
may be provided pursuant to the terms of any employee benefit plan and other
compensation plans, programs and structures, or fringe benefit programs in which
Executive is a participant at the time of the termination of his employment with
the Company and (ii) promptly reimburse the Executive for any then unreimbursed
out-of-pocket expenses pursuant to Section 4.6.

         6.       ATTORNEYS FEES. If litigation shall be instituted to enforce
or interpret any provision hereof the prevailing party will reimburse the other
part for his reasonable attorneys' fees and disbursements incurred in such
proceeding and will pay prejudgment interest at the legal rate then in effect on
any money judgment or award obtained in such proceeding.

         7.       NOTICE. For the purposes of this Agreement, notices, demands
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed as
follows:


         If to the Executive:

         Larry G. Stambaugh
         Maxim Pharmaceuticals
         8899 University Center Lane, Suite 400
         San Diego, California 92122


         If to the Company:

         Maxim Pharmaceuticals, Inc.
         8899 University Center Lane, Suite 400
         San Diego, California 92122
         Attn:  Corporate Secretary


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or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change in address shall
be effective only upon receipt.

         8.       MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provision or
conditions at the same or at any proper or subsequent time. No agreements or
representations, oral otherwise, expressed or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly or referred to in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California relating to contracts to be performed entirely therein.

         9.       VALIDITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.

         10.      HEADINGS. The headings of the paragraphs herein are for
convenience only and shall have no significance in the interpretation of this
Agreement.

         11.      BIND AND INURE. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, personal representatives
and successors, including any successor of the Company by reason of any
dissolution, merger, consolidation, sale of assets or other reorganization of
the Company.

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


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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its
seal to be affixed hereunto by its officer thereunto duly authorized, and
Executive has signed this Agreement, as of the day and year first above written.

MAXIM PHARMACEUTICALS, INC.





By:     /s/ DALE A. SANDER
   -----------------------------
Dale A. Sander
Vice President, Finance and
Chief Financial Officer


Date:  November 16, 2001




 /s/ LARRY G. STAMBAUGH
---------------------------------
Executive


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