Exhibit 10.5


STOCK OPTION GRANT PROGRAM 

FOR

NONEMPLOYEE DIRECTORS UNDER THE 

PONIARD PHARMACEUTICALS, INC. 2004 INCENTIVE 

COMPENSATION PLAN


(as amended June 15, 2005, September 27, 2006 and
February 7, 2007)


The
following provisions set forth the terms of the stock option grant program (the
“Program”) for nonemployee directors of Poniard Pharmaceuticals, Inc. (the
“Company”) under the Company’s 2004 Incentive Compensation Plan (the
“Plan”).  The following terms are intended
to supplement, not alter or change, the provisions of the Plan, and in the
event of any inconsistency between the terms contained herein and in the Plan,
the Plan shall govern.  All capitalized
terms that are not defined herein shall be as defined in the Plan.


1.             Eligibility


Each
director of the Company elected or appointed to the Board who is not otherwise
an employee of the Company or any Related Corporation (an “Eligible Director”)
shall be eligible to receive New Grants and Annual Grants under the Plan, as
discussed below.


2.             New
Grants


Each
Eligible Director shall receive a nonqualified stock option to purchase 20,000
shares of Common Stock (“New Grant”) upon such Eligible Director’s initial
election or appointment to the Board. 
New Grants shall vest and become exercisable in two equal installments
according to the schedule set forth in Section 4 below.


3.             Annual
Grants


Beginning
with the 2004 annual meeting of shareholders, each Eligible Director shall
automatically receive a nonqualified stock option to purchase 10,000 shares of
Common Stock immediately following each year’s annual meeting of shareholders
(each, an “Annual Grant”); provided that any Eligible Director who received a
New Grant within five months prior to an annual meeting of shareholders shall
not receive an Annual Grant until the next year’s annual meeting.  Annual Grants shall vest and become
exercisable in two equal installments according to the schedule set forth in
Section 4.













4.             Vesting
and Exercisability


Options shall vest and
become exercisable according to the following schedule:


(a)           New
Grants


 


 


	
  Period of Optionee’s Continuous

  Service as a Director From

  the Date the Option Is Granted 

  	
   

  	
  Portion of Grant

  That Is Vested and Exercisable

  	
   

  
	
  One year

  	
   

  	
  50

  	
  %

  
	
  Two years

  	
   

  	
  100

  	
  %

  



 


(b)           Annual
Grants


 


 


	
  Period of Optionee’s Continuous

  Service as a Director From

  the Date the Option Is Granted 

  	
   

  	
  Portion of Grant

  That Is Vested and Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Upon first
  annual meeting of shareholders after grant

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Upon second annual
  meeting of shareholders after grant

  	
   

  	
  100

  	
  %

  



 


Subject to the
exercisability schedule described above, each option may be exercised in whole
or in part at any time; provided, however, that an option may not be exercised
for less than a reasonable number of shares at any one time, as determined by
the Plan Administrator.


5.             Option Exercise Price


The
exercise price of an option shall be the fair market value of the Common Stock
on the date of grant.


6.             Manner
of Option Exercise


An option shall be
exercised by giving the required notice to the Company, stating the number of
shares of Common Stock with respect to which the option is being exercised,
accompanied by payment in full for such Common Stock, which payment may be, to
the extent permitted by applicable laws and regulations, in whole or in part
(a) in cash or check, (b) in shares of Common Stock owned by the
Eligible Director for at least six months (or any shorter period necessary to
avoid a charge to the Company’s earnings for financial reporting purposes)
having a fair market value equal to the aggregate option exercise price, or
(c) if and so long as the Common Stock is registered under the Exchange
Act, by delivery of a properly executed 



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exercise notice,
together with irrevocable instructions to a broker, to promptly deliver to the
Company the amount of proceeds to pay the exercise price, all in accordance
with the regulations of the Federal Reserve Board.


7.             Term
of Options


Each
option shall expire upon the earlier of ten years from the date of grant or
five years after an Eligible Director’s termination of service as a director,
as follows:


(a)           In the event that an Eligible
Director ceases to be a director of the Company for any reason other than the
death of the Eligible Director, the unvested portion of any option granted to
such Eligible Director shall terminate immediately and the vested portion of
the option may be exercised by the Eligible Director only within five years
after the date he or she ceases to be a director of the Company or prior to the
date on which the option expires by its terms, whichever is earlier.


(b)           In the event of the death of an
Eligible Director, the unvested portion of any option granted to such Eligible
Director shall terminate immediately and the vested portion of the Option may
be exercised only within five years after the date the Eligible Director ceases
to be a director or prior to the date on which the option expires by its terms,
whichever is earlier, by the personal representative of the Eligible Director’s
estate, the person(s) to whom the Eligible Director’s rights under the option
have passed by will or the applicable laws of descent and distribution or the
beneficiary designated pursuant to Section 12 of the Plan.


8.             Transferability


During an Eligible Director’s
lifetime, an option may be exercised only by the Eligible Director or a
permitted assignee or transferee of the Eligible Director (as provided
below).  No options granted under the
Program may be sold, assigned, pledged or transferred by the Eligible Director
or made subject to attachment or similar proceedings other than by
(a) will or the applicable laws of descent and distribution, (b) gift
or other transfer to either (i) a spouse or other immediate family member
or (ii) any trust, partnership or other entity in which the Eligible
Director or such Eligible Director’s spouse or other immediate family member
has a substantial beneficial interest; or (c) the designation by an
Eligible Director in writing during the Eligible Director’s lifetime of a beneficiary
to receive and exercise options in the event of the Eligible Director’s death
(as provided in Section 12 of the Plan); provided, however, that any option so
assigned or transferred shall be subject to 
the terms and conditions of the Plan and the instrument evidencing the
option.  Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan or of any
right or privilege conferred thereby, contrary to the provisions of the Plan,
or 



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the sale or levy
or any attachment or similar process upon the rights and privileges conferred
hereby, shall be null and void.


9.             Amendment


The
Board may amend the provisions contained herein in such respects as it deems
advisable.  Any such amendment shall not,
without the consent of the Eligible Director, impair or diminish any rights of
an Eligible Director under an outstanding option.


10.          Effective Date


The
Program shall become effective on the date approved by the Company’s Board.


Provisions
of the Plan (including any amendments) that are not discussed above, to the
extent applicable to Eligible Directors, shall continue to govern the terms and
conditions of options granted to Eligible Directors.


Effective:  May 18, 2004


Section 2
amended: June 15, 2005 


Sections
2 and 3 amended:  September 27, 2006 (to
reflect one-for-six reverse 

stock split effective September 22, 2006 and to reflect change of company name)


Sections
2 and 3 amended:  February 7, 2007 (to
increase "New Grant" to 20,000 shares from 8,333 shares and
"Annual Grant" to 10,000 shares from 3,333 shares)



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