EPIMMUNE INC
EXHIBIT 10.98
<DOCUMENT>
<TYPE>EX-10.98
<SEQUENCE>3
<FILENAME>a81468ex10-98.txt
<DESCRIPTION>EXHIBIT 10.98
<TEXT>
<PAGE>
                                                                   Exhibit 10.98


March 29, 2002



Mr. Michael McClurg
11988 Wilmington Road
San Diego, California 92128

Dear Mike,

This letter defines the benefits to which you will be entitled upon termination
of your employment with Epimmune Inc. (the "Company") under the circumstances
described in this Agreement.

We agree that you are employed by the Company as an "at-will" employee and that
either you or the Company has the right at any time to terminate your employment
with the Company, with or without cause or advance notice, for any reason or for
no reason.

For purposes of this Agreement, the following terms will have the meanings set
forth below:

        "BASE SALARY" means your salary (excluding bonus, any other incentive or
        other payments and stock option exercises) paid by the Company in
        consideration for your service during the 12 months prior to the
        termination of your employment which is includable in your gross income
        for federal income tax purposes or which would have been includable in
        gross income except for an election either under Section 125 or
        402(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"),
        or under the terms of a nonqualified deferred compensation arrangement
        sponsored by the Company.

        "BENEFIT" means any payment received or to be received by you pursuant
        to this Agreement.

        "CAUSE" means (i) your material breach of any provision of this
        Agreement; or (ii) your engaging or in any manner participating in any
        activity which is directly competitive with or intentionally injurious
        to the Company or which violates any provision of any confidential
        information agreement or nonsolicitation agreement between you and the
        Company; or (iii) your commission of any fraud against the Company; or
        (iv) your intentional improper use or appropriation for your personal
        use or benefit of any funds or properties of the Company not authorized
        by the Board of Directors of the Company or an authorized committee of
        such Board of Directors to be so used or appropriated; or (v) your
        conviction of any crime involving dishonesty or moral turpitude.


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Mr. Michael McClurg
March 29, 2002
Page 2


       "CHANGE IN CONTROL" of the Company will be deemed to have occurred if and
       when (i) any person or entity (other than the Company) or group of
       persons and/or entities acting in concert acquires, directly or
       indirectly, beneficial ownership of more than 50% of the outstanding
       shares of voting stock of the Company; or (ii) the Company is a
       participant in a merger or consolidation in which it does not survive as
       an independent company; or (iii) the business or businesses of the
       Company for which your services are principally performed are disposed of
       by the Company pursuant to a partial or complete liquidation of the
       Company.

       "COMPANY" for the purposes of this Agreement shall include the Company's
       successor if a Change in Control occurs.

       "EXCISE TAX" means the excise tax imposed by Section 4999 of the Code.

       "GOOD REASON" means (i) reduction of your rate of compensation as in
       effect immediately prior to the effective date of this Agreement; or (ii)
       the Company's failure to provide to you a package of welfare benefit
       plans which, taken as a whole, provide substantially similar benefits to
       those in which you are entitled to participate immediately prior to the
       occurrence of the termination of your employment (except that employee
       contributions may be raised to the extent of any cost increases imposed
       by third parties) or any action by the Company which would adversely
       affect your participation or reduce your benefits under any of such
       plans; or (iii) a change in your responsibilities, authority, title or
       office resulting in diminution of your position, excluding for this
       purpose an isolated, insubstantial and inadvertent action not taken in
       bad faith which is remedied by the Company promptly after written notice
       thereof is given to you; or (iv) a request that you relocate to a
       worksite that is more than 35 miles from your prior worksite, unless you
       accept such relocation opportunity; or (v) a material reduction in your
       duties; or (vi) a failure or refusal of a successor to the Company to
       assume the Company's obligations under this Agreement; or (vii) a
       material breach by the Company or any successor to the Company of any of
       the material provisions of this Agreement.

Although the Company has no policy or procedure for providing severance
benefits, in exchange for the promises and covenants set forth herein, and in
consideration thereof, the Company agrees that if, within 365 days following the
occurrence of a Change in Control, your employment is involuntarily terminated
without Cause or you voluntarily terminate your employment for Good Reason, then
(1) within 30 days of such termination you will receive a lump-sum payment equal
to twelve (12) months of your then current base salary subject to any applicable
withholding of federal, state or local taxes and (2) the vesting of any stock
option for Company stock and the time during which such option may be exercised
immediately will be accelerated as to 100% of the then unvested shares, so that
all such unvested shares will be immediately vested and exercisable as of the
date of termination.


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Mr. Michael McClurg
March 29, 2002
Page 3


If any Benefit received or to be received by you pursuant to this Agreement
would constitute a "parachute payment" within the meaning of Section 280G of the
Code and but for this paragraph be subject to the Excise Tax, then, upon written
request to the Company by you, such Benefit shall be reduced to the extent
necessary so that no portion of the Benefit would be subject to the Excise Tax,
as determined in good faith by the Company; provided, however, that if, in the
absence of any such reduction (or after such reduction), you believe that the
Benefit or any portion thereof (as reduced, if applicable) would be subject to
the Excise Tax, the Benefit shall be reduced (or further reduced) to the extent
determined by you in your discretion so that the Excise Tax would not apply.
Your determination of any required reduction pursuant to this paragraph shall be
conclusive and binding on the Company. If, notwithstanding any such reduction
(or in the absence of such reduction), the Internal Revenue Service determines
that you are liable for the Excise Tax as a result of the Benefit, you shall be
obligated to return to the Company, within 30 days of such determination by the
Internal Revenue Service, a portion of the Benefit sufficient such that none of
the Benefit retained by you constitutes a "parachute payment" within the meaning
of Code Section 280G that is subject to the Excise Tax (the "Repayment Amount").
The Repayment Amount shall be the smallest such amount, if any, as shall be
required to be paid to the Company so that your net proceeds with respect to the
Benefit (after taking into account the payment of the Excise Tax imposed on such
Benefit) shall be maximized. Notwithstanding the foregoing, the Repayment Amount
with respect to the Benefit shall be zero if a Repayment Amount of more than
zero would not eliminate the Excise Tax imposed on such Benefit. If the Excise
Tax is not eliminated pursuant to your compliance with this paragraph, you agree
to pay the Excise Tax.

This Agreement may be changed or terminated only upon the mutual written consent
of the Company and you. Nothing in this Agreement will prevent or limit your
continuing or future participation in any benefit, bonus, incentive or other
plans, programs, policies or practices provided by the Company and for which you
may otherwise qualify, nor will anything herein limit or otherwise affect such
rights as you may have under any stock option or other agreements with the
Company.

If either party hereto brings any action to enforce such party's rights
hereunder, the prevailing party in any such action will be entitled to recover
such party's reasonable attorneys' fees and costs incurred in connection with
such action.


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Mr. Michael McClurg
March 29, 2002
Page 4


This Agreement constitutes the entire agreement between you and the Company
regarding the subject matter herein. It is entered into without reliance on any
promise or representation other than those expressly contained herein. All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by law of the State of California.

Very truly yours,


/s/ Robert De Vaere

Robert J. De Vaere
Vice President, Finance & Administration
Chief Financial Officer

RJDV/dw

Agreed and Accepted:

/s/ Michael McClurg
------------------------------------
Michael McClurg

Dated: March 29, 2002


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