**Exhibit 10.26**

**PONIARDPHARMACEUTICALS, INC.**

**KEY EMPLOYEE SEVERANCEAGREEMENT**

This Key Employee Severance Agreement (this “***Agreement***”), dated as of July 11,2006, is entered into by and between PONIARD PHARMACEUTICALS, INC., aWashington corporation (as supplemented by Section 10, the “***Company***”), and Mike Jackson (the “***Employee***”).

The Board of Directors of the Company (the “***Board***”) has determined that it is inthe best interests of the Company and its shareholders to ensure that theCompany will have the continued dedication of the Employee, notwithstanding thefact that the Employee does not have any form of traditional employmentcontract or other assurance of job security. The Board believes it isimperative to diminish any distraction of the Employee arising from thepersonal uncertainty and insecurity that arises in the absence of any assuranceof job security by providing the Employee with reasonable compensation andbenefit arrangements in the event of termination of the Employee’s employmentby the Company under certain defined circumstances.

In order to accomplishthese objectives, the Board has caused the Company to enter into thisAgreement.

**1.   Term**

The initial term of thisAgreement (the “***Initial Term***”) shall be for aperiod of one (1) year from the date of this Agreement as first appearing;provided, however, that this Agreement shall automatically renew for successiveadditional one (1) year periods (“***Renewal Terms***”),unless notice of nonrenewal is given by either party to the other party atleast nine (9) months prior to the end of the Initial Term or any RenewalTerm. The “***Term***” of this Agreement shallbe the Initial Term plus all Renewal Terms and, if applicable, the duration ofthe Employment Period. At the end of the Term, this Agreement shall terminatewithout further action by either the Company or the Employee.

**2.   Employment**

The Employee and theCompany acknowledge that, except as may otherwise be provided under any otherwritten agreement between the Employee and the Company, the employment of the Employeeby the Company or by any affiliated or successor company is “at will” and maybe terminated by either the Employee or the Company or its affiliated companiesat any time with or without cause, subject to the termination paymentsprescribed herein.

**3.   Attentionand Effort**

During any period of timethat the Employee remains in the employ of the Company, and excluding anyperiods of vacation and sick leave to which the Employee is entitled, the Employeewill devote all his productive time, ability, attention and effort to thebusiness and affairs of the Company and the discharge of the responsibilitiesassigned to him hereunder, and will seek to perform faithfully and efficientlysuch responsibilities. It shall not be a violation of this Agreement for the Employeeto (a) serve on corporate, civic or charitable boards or committees, (b) deliverlectures, fulfill speaking engagements or teach at educational institutions, (c) managepersonal investments, or (d) engage in activities permitted by thepolicies of the Company or as specifically permitted by the Company, so long assuch activities do not significantly interfere with the performance of the Employee’sresponsibilities in accordance with this Agreement. It is expressly understoodand agreed that to the extent any such activities have been conducted by the Employeeprior to the Term, the continued conduct of such activities (or the conduct ofactivities similar in nature and scope thereto) during the Term shall notthereafter be deemed to interfere with the performance of the Employee’sresponsibilities to the Company.

----

**4.   Termination**

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

**4.1   By theCompany or the Employee**

At any time during theTerm, the Company may terminate the employment of the Employee with or withoutCause (as defined below), and the Employee may terminate his employment forGood Reason (as defined below) or for any reason, upon giving Notice ofTermination (as defined below).

**4.2   AutomaticTermination**

This Agreement and the Employee’semployment shall terminate automatically upon the death or Total Disability ofthe Employee. The term “***Total Disability***”as used herein shall mean the Employee’s inability (with such accommodation asmay be required by law and which places no undue burden on the Company), asdetermined by a physician selected by the Company and acceptable to the Employee,to perform the Employee’s essential duties for a period or periods aggregatingtwelve (12) weeks in any three hundred sixty-five (365) day period as a resultof physical or mental illness, loss of legal capacity or any other cause beyondthe Employee’s control, unless the Employee is granted a leave of absence bythe Board.

**4.3   Notice ofTermination**

Any termination by theCompany or by the Employee during the Term shall be communicated by Notice ofTermination to the other party given in accordance with Section 9 hereof. Theterm “***Notice of Termination***” shallmean a written notice that (a) indicates the specific terminationprovision in this Agreement relied upon and (b) to the extent applicable,sets forth in reasonable detail the facts and circumstances claimed to providea basis for termination of the Employee’s employment under the provision soindicated. The failure by the Employee or the Company to set forth in theNotice of Termination any fact or circumstance that contributes to a showing ofGood Reason or Cause shall not waive any right of the Employee or the Companyhereunder or preclude the Employee or the Company from asserting such fact orcircumstance in enforcing the Employee’s or the Company’s rights hereunder.

**4.4   Date ofTermination**

“***Dateof Termination***” means (a) if the Employee’s employment isterminated by reason of death, the last day of the calendar month in which the Employee’sdeath occurs, (b) if the Employee’s employment is terminated by reason ofTotal Disability, immediately upon a determination by the Company of the Employee’sTotal Disability, and (c) in all other cases, ten (10) days after thedate of personal delivery or mailing of the Notice of Termination. The Employee’semployment and performance of services will continue during such ten (10) dayperiod; provided, however, that the Company may, upon notice to the Employeeand without reducing the Employee’s compensation during such period, excuse theEmployee from any or all of his duties during such period.

**5.   TerminationPayments**

In the event oftermination of the Employee’s employment during the Term, all compensation andbenefits shall terminate, except as specifically provided in this Section 5.

2

----

**5.1   Terminationby the Company Other Than for Cause or by the Employee for Good Reason**

If during the Termthe Company terminates the Employee’s employment other than for Cause or the Employeeterminates his employment for Good Reason, the Employee shall be entitled to:

(a)   receivepayment of the following accrued obligations (the “***AccruedObligations***”):

(i)    the Employee’sthen current annual base salary through the Date of Termination to the extentnot theretofore paid; and

(ii)   anycompensation previously deferred by the Employee (together with accrued interestor earnings thereon, if any) and any accrued vacation pay that would be payableunder the Company’s standard policy, in each case to the extent not theretoforepaid;

(b)   for six (6) monthsafter the Date of Termination or until the Employee qualifies for comparablemedical and dental insurance benefits from another employer, whichever occursfirst, the Company shall pay the Employee’s premiums for health insurancebenefit continuation for the Employee and his family members, if applicable,that the Company provides to the Employee under the provisions of the federalConsolidated Omnibus Budget Reconciliation Act of 1985, as amended (“***COBRA***”), to the extent that theCompany would have paid such premiums had the Employee remained employed by theCompany (such continued payment is hereinafter referred to as “***COBRA Continuation***”); and

(c)   an amount as severance pay equal to fifty percent (50%) of the Employee’sthen current annual base salary for the fiscal year in which the Date ofTermination occurs, subject to payment as set forth in Sections 5.5 and5.9 hereof.

**5.2   Terminationfor Cause or Other Than for Good Reason**

If during the Term the Employee’semployment shall be terminated by the Company for Cause or by the Employee forother than Good Reason, this Agreement shall terminate without furtherobligation on the part of the Company to the Employee, other than the Company’sobligation to pay the Employee the Accrued Obligations to the extenttheretofore unpaid.

**5.3   Expirationof Term**

In the event the Employee’semployment is not terminated prior to expiration of the Term, this Agreementshall terminate without further obligation on the part of the Company to the Employee.

**5.4   TerminationBecause of Death or Total Disability**

If the Employee’semployment is terminated during the Term by reason of the Employee’s death orTotal Disability, this Agreement shall terminate automatically without furtherobligation on the part of the Company to the Employee or his legalrepresentatives under this Agreement, other than the Company’s obligation topay the Employee the Accrued Obligations (which shall be paid to the Employee’sestate or beneficiary, as applicable in the case of the Employee’s death) andto provide COBRA Continuation.

**5.5   PaymentSchedule**

All payments of AccruedObligations, or any portion thereof payable pursuant to this Section 5,shall be made to the Employee within ten (10) working days of the Date ofTermination. Any severance payments payable to the Employee pursuant to Section 5.1(c) shallbe made to the Employee in the form of salary continuation, payable at normalpayroll intervals during the six (6) month period following the Date ofTermination.

3

----

**5.6   Cause**

For purposes ofthis Agreement, “***Cause***” means cause given bythe Employee to the Company and shall include, without limitation, theoccurrence of one or more of the following events:

(a)   a clearrefusal to carry out any material lawful duties of the Employee or anydirections of the Board or senior management of the Company reasonablyconsistent with those duties;

(b)   persistentfailure to carry out any lawful duties of the Employee or any directions of theBoard or senior management reasonably consistent with those duties; provided,however, that the Employee has been given reasonable notice and opportunity tocorrect any such failure;

(c)   violationby the Employee of a state or federal criminal law involving the commission ofa crime against the Company or any other criminal act involving moralturpitude;

(d)   currentabuse by the Employee of alcohol or controlled substances; deception, fraud,misrepresentation or dishonesty by the Employee; or any incident materiallycompromising the Employee’s reputation or ability to represent the Company withinvestors, customers or the public; or

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

**5.7   GoodReason**

For purposes ofthis Agreement, “***Good Reason***” means:

(a)   reductionof the Employee’s annual base salary to a level below the level in effect onthe date of this Agreement, regardless of any change in the Employee’s dutiesor responsibilities;

(b)   theassignment to the Employee of any duties materially inconsistent with the Employee’sposition, authority, duties or responsibilities or any other action by theCompany the results in a material diminution in such position, authority,duties or responsibilities, excluding for this purpose an isolated andinadvertent action not taken in bad faith and that is remedied by the Companypromptly after receipt of notice thereof given by the Employee;

(c)   the Company’srequiring the Employee to be based at any office or location more than fifty (50)miles from the Seattle, Washington;

(d)   any failureby 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 Employee of the requirements of Section 10hereof; or

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

**5.8   GeneralRelease of Claims**

As a condition to thepayment contemplated by Section 5.1(c), the Employee shall execute ageneral release of claims against the Company in a form satisfactory to theCompany in its sole discretion. By way of example and not limitation, thegeneral release of claims will include any claims for wages, bonuses,employment benefits, or damages of any kind whatsoever, arising out of anycontracts, express or implied, any covenant of good faith and fair dealing,express or implied, any theory of wrongful discharge, any legal restriction onthe Company’s right to terminate employment, or any federal, state or othergovernmental statute or ordinance, including, without limitation, Title VII ofthe Civil Rights Act of 1964, the federal Age Discrimination in Employment Act,the Americans with Disabilities Act, the Family and Medical 

4

----

LeaveAct, the Washington Law Against Discrimination, or any other legal limitationon the employment relationship.

**5.9   Disputeregarding existence of Good Reason for Termination**

In the event the Companydisputes whether Good Reason existed for the Employee to terminate hisemployment for Good Reason, the Company shall pay salary continuation asprovided in Section 5.5 until the earliest of (i) settlement by theparties, (ii) determination by arbitration in accordance with Section 14hereof that Good Reason did not exist, and (iii) completion of thepayments required by Section 5.5 and Section 5.1(c) hereof. If,pursuant to Section 14 hereof, an arbitrator determines that Good Reasondid not exist, the arbitrator shall also decide whether the Employee had areasonable, good-faith basis for claiming that there was Good Reason toterminate. If the arbitrator determines that there was not such a basis, the Employeeshall be obligated to repay promptly to the Company the salary continuationpayments; if the arbitrator determines that there was such a basis, the Employeeshall not be obligated to repay the salary continuation.

**6.   Representations,Warranties and Other Conditions**

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

**6.1   Health**

The Employee is in goodhealth and knows of no physical or mental disability that, with anyaccommodation that may be required by law and that places no undue burden onthe Company, would prevent him from fulfilling his obligations hereunder. The Employeeagrees, if the Company requests, to submit to reasonable periodic medicalexaminations by a physician or physicians designated, paid for and arranged bythe Company. The Employee agrees that the examination’s medical report shall beprovided to the Company.

**6.2   NoViolation of Other Agreements**

The Employee representsthat neither the execution nor the performance of this Agreement by the Employeewill violate or conflict in any way with any other agreement by which the Employeemay be bound.

**7.   Nondisclosure;Return of Materials**

**7.1   Nondisclosure**

Except as required by hisemployment with the Company, the Employee will not, at any time during the termof employment by the Company, or at any time thereafter, directly, indirectlyor otherwise, use, communicate, disclose, disseminate, lecture upon or publisharticles relating to any confidential, proprietary or trade secret informationwithout the prior written consent of the Company. The Employee understands thatthe Company will be relying on this covenant in continuing the Employee’semployment, paying his compensation, granting him any promotions or raises, orentrusting him with any information that helps the Company compete with others.

**7.2   Return ofMaterials**

All documents, records,notebooks, notes, memoranda, drawings or other documents made or compiled bythe Employee 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 andshall be held by the Employee in trust and 

5

----

solelyfor the benefit of the Company, and shall be delivered to the Company by the Employeeupon termination of employment or at any other time upon request by theCompany.

**8.   Notice andCure of Breach**

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

**9.   Form ofNotice**

Everynotice required by the terms of this Agreement shall be given in writing byserving the same upon the party to whom it was addressed personally or byregistered or certified mail, return receipt requested, at the address setforth below or at such other address as may hereafter be designated by noticegiven in compliance with the terms hereof:

| If to the Employee: | Mike Jackson                            |
|---------------------|-----------------------------------------|
|                | 11719 NE 105th Lane                     |
|                | Kirkland, WA 98033-5039                 |
|                |                                    |
| If to the  Company: | Poniard Pharmaceuticals, Inc.      |
|                | 300 Elliott Avenue West, Suite 500 |
|                | Seattle, Washington 98119               |
|                | Attn: Chief Employee 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 4.4hereof, if notice is mailed, such notice shall be effective upon mailing.

**10.   Assignment**

This Agreement is personal to the Employee and shallnot be assignable by the Employee.

The Company shall assignto and require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all the business and/orassets of the Company to assume expressly and agree to perform this Agreementin the same manner and to the same extent that the Company would be required toperform it if no such succession had taken place. As used in this Agreement,the “***Company***” shall mean Poniard Pharmaceuticals, Inc.and any affiliated company or successor to its business and/or assets asaforesaid that assumes and agrees to perform this Agreement by contract,operation of law or otherwise; and as long as such successor assumes and agreesto perform this Agreement, the termination of the Employee’s employment by onesuch entity and the immediate hiring and continuation of the Employee’semployment by the succeeding entity shall not be deemed to constitute atermination or trigger any severance obligation under this Agreement. All theterms and provisions of this Agreement shall be binding upon and inure to thebenefit of and be enforceable by the parties hereto and their respectivesuccessors and permitted assigns.

6

----

**11.   Waivers**

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

**12.   AmendmentsIn Writing**

No amendment,modification, waiver, termination or discharge of any provision of thisAgreement, or consent to any departure therefrom by either party hereto, shallin any event be effective unless the same shall be in writing, specificallyidentifying this Agreement and the provision intended to be amended, modified,waived, terminated or discharged and signed by the Company and the Employee,and each such amendment, modification, waiver, termination or discharge shallbe effective only in the specific instance and for the specific purpose forwhich given. No provision of this Agreement shall be varied, contradicted orexplained by any oral agreement, course of dealing or performance or any othermatter not set forth in an agreement in writing and signed by the Company andthe Employee.

**13.   ApplicableLaw**

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

**14.   Arbitration;Attorneys’ Fees**

Except in connection with enforcing Section 7hereof, 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. Thearbitration proceeding shall be conducted in accordance with the CommercialArbitration Rules of the American Arbitration Association (the “***AAA Rules***”) then in effect,conducted by one (1) arbitrator either mutually agreed upon or selected inaccordance with the AAA Rules. The arbitration shall be conducted in KingCounty, Washington, under the jurisdiction of the Seattle office of theAmerican Arbitration Association. The arbitrator shall have authority only tointerpret and apply the provisions of this Agreement, and shall have noauthority to add to, subtract from or otherwise modify the terms of thisAgreement. Any demand for arbitration must be made within sixty (60) days ofthe event(s) giving rise to the claim that this Agreement has beenbreached. The arbitrator’s decision shall be final and binding, and each partyagrees to be bound by the arbitrator’s award, subject only to an appealtherefrom in accordance with the laws of the State of Washington. Either partymay obtain judgment upon the arbitrator’s award in the Superior Court of KingCounty, Washington.

If it becomes necessary topursue or defend any legal proceeding, whether in arbitration or court, inorder to resolve a dispute arising under this Agreement, the prevailing partyin any such proceeding shall be entitled to recover its reasonable costs andattorneys’ fees.

**15.   Severability**

If any provision of thisAgreement 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 requiredby it, then, to the full extent permitted by law, (a) all other provisionshereof shall remain in full force and effect in such jurisdiction and shall beliberally construed in order to carry out the intent of the parties hereto asnearly as may be possible, (b) such invalidity, illegality 

7

----

orunenforceability shall not affect the validity, legality or enforceability ofany other provision hereof, and (c) any court or arbitrator havingjurisdiction thereover shall have the power to reform such provision to theextent necessary for such provision to be enforceable under applicable law.

**16.**   ExcessParachute Payments

If any portion of thepayments or benefits under this Agreement or any other agreement or benefitplan of the Company (including stock options) would be characterized as an “excessparachute payment” to the Employee under Section 280G of the InternalRevenue Code of 1986, as amended (the “***Code***”), theEmployee shall be paid any excise tax that the Employee owes under Section 4999of the Code as a result of such characterization, such excise tax to be paid tothe Employee at least ten (10) days prior to the date that he is obligatedto make the excise tax payment. The determination of whether and to what extentany payments or benefits would be “excess parachute payments” and the date bywhich any excise tax shall be due, shall be determined in writing by recognizedtax counsel selected by the Company and reasonably acceptable to the Employee.

**17.**   EntireAgreement

Except as described in Section 16hereof, this Agreement constitutes the entire agreement between the Company andthe Employee with respect to the subject matter hereof, and all prior orcontemporaneous oral or written communications, understandings or agreementsbetween the Company and the Employee with respect to such subject matter, arehereby superseded and nullified in their entireties, except that theProprietary Information and Invention Agreement between the Employee and theCompany shall continue in full force and effect to the extent not superseded bySection 10 hereof.

**18.**   Withholding

The Company may withholdfrom any amounts payable under this Agreement such federal, state or localtaxes as shall be required to be withheld pursuant to any applicable law orregulation.

**19.**   Counterparts

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

8

----

IN WITNESS WHEREOF, theparties have executed and entered into this Agreement effective on the datefirst set forth above.
|        | **PONIARD PHARMACEUTICALS, INC.** |
|--------|-----------------------------------|
|   | By:                               | /s/ GERALD MCMAHON |   |
|   |                              | Name: | Gerald McMahon |   |
|   |                              | Its: | *Chief  Executive Officer* |   |
|   | **EMPLOYEE**                      |
|   | By:                               | /s/ MIKE JACKSON |   |
|   |                              | Name: Mike  Jackson |
|        |                                   |  |  |  |  |

 

9

----