Exhibit 10.14


 


PONIARD PHARMACEUTICALS,
INC.

AMENDED AND RESTATED

KEY EXECUTIVE SEVERANCE AGREEMENT (CEO)


 


This Amended
and Restated Key Executive Severance Agreement (this “Agreement”),
dated as of February 24, 2009, is entered into by and between PONIARD
PHARMACEUTICALS, INC., a Washington corporation (formerly known as NeoRx
Corporation and as supplemented by Section 10 hereof, the “Company”),
and GERALD MCMAHON (the “Executive”) to reflect
amendments made in December, 2008.


 


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 assurance
of job security in his Offer Letter dated April 26, 2004 for employment
with the Company (the “Offer Letter”).  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 initial
term of this Agreement (the “Initial Term”)
shall be for a period of two (2) years from the date of this Agreement as first
appearing above; provided, however, that this Agreement shall automatically
renew for successive additional two (2) year periods (“Renewal
Terms”) 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; and provided, further, that if a “Change of
Control” (as defined in the Change of Control Agreement referenced
in Section 16 hereof) occurs during the Term, the Term shall automatically
extend for the duration of the Employment Period (as defined in the Change of
Control Agreement).  The “Term” of this Agreement shall be the
Initial Term plus all Renewal Terms and, if applicable, the duration of the
Employment Period.  At the end of the
Term, this Agreement shall terminate without further action by either the
Company or the Executive.


 


2.                                      Employment
at Will


 


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 any affiliated companies 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 of the Executive’s productive time,
ability, attention and effort to the business and affairs of the Company and
the discharge of the responsibilities assigned to the Executive hereunder, and
will seek to perform faithfully and efficiently such responsibilities.  It shall not be a violation of this Agreement
for the Executive to hold board of director positions with outside civic
organizations or to spend a reasonable amount of time fulfilling the duties of
those positions, or to engage in other outside activities permitted by the
policies of the Company or as specifically permitted by the Board, so long as
such activities do not interfere with the performance of the Executive’s duties
hereunder.  Service on a board of
directors for a commercial entity will be subject to prior approval of the
Board; however, the Company acknowledges and agrees that Executive has
previously disclosed his appointment to the board of directors of Trellis
Bioscience, Inc.  It is understood
and agreed that activities specifically approved or acquiesced in during the
Term shall not 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 Sections 7.1 and 7.2
hereof and certain obligations under the Invention Agreement (as defined in Section 7.3
hereof) and the Offer Letter shall survive the termination of this Agreement
and the termination of the Executive’s employment with the Company:


 


4.1                               Termination 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 the
Executive’s employment for Good Reason (as defined below) or for any reason,
upon giving a Notice of Termination (as defined below).


 


4.2                               Automatic
Termination


 


This Agreement
and the Executive’s employment during the Term 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.


 


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4.3                               Notice of
Termination


 


Any
termination by the Company or by the Executive during the Term shall be
communicated by a 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 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 the Executive’s
duties during such period.  Notwithstanding anything contained in this
Agreement to the contrary, the date on which a “separation from service” (“Separation from Service”)
pursuant to Section 409A of the Internal Revenue Code of 1986, as amended
(“Code Section 409A”),
occurs shall be the “Date of Termination” or termination of employment for
purposes of determining the timing of payments under this Agreement to the
extent necessary to have such payments and benefits under this Agreement be
exempt from the requirements of Code Section 409A or comply with the
requirements of Code Section 409A.


 


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 the Executive’s employment for Good Reason, the
Executive shall be entitled to:


 


(a)                                  receive
payment of the following accrued obligations (the “Accrued
Obligations”):


 


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(i)                                     the Executive’s
then current annual base salary through the Date of Termination to the extent
not theretofore paid;


 


(ii)                                  any
compensation previously deferred by the Executive (together with accrued
interest or earnings thereon, if any); and


 


(iii)                               any accrued
vacation pay that would be payable under the Company’s standard policy, in each
case to the extent not theretofore paid;


 


(b)                                 have
the Company pay for one (1) 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 Executive’s premiums for
health insurance benefit continuation for the Executive and the Executive’s
family members, if applicable, that the Company provides to the Executive under
the provisions of the federal Consolidated Omnibus Budget Reconciliation Act 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 one hundred percent (100%) of 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
Sections 5.5 and 5.9 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 during the
Term the Executive’s employment is terminated 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 the Executive’s
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.


 


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5.5                               Payment
Schedule and Offset for Other Earnings


 


All payments
of Accrued Obligations, or any portion thereof payable pursuant to this Section 5,
other than deferred compensation pursuant to Section 5.1(a)(ii) hereof,
shall be made to the Executive within ten (10) working days of the Date of
Termination.  Deferred compensation
pursuant to Section 5.1(a)(ii) hereof shall be payable pursuant to
the terms of the deferred compensation program. 
Any severance payments payable to the Executive pursuant to Section 5.1(c) hereof
shall be made to the Executive in the form of salary continuation, payable at
normal payroll intervals during the one year period following the Date of Termination.  Notwithstanding the preceding provisions of this Section 5, if any payment or
benefit pursuant to this Agreement constitutes a “deferral of compensation”
subject to Code Section 409A (after taking into account, to the maximum
extent possible, any applicable exemptions) (a “409A
Payment”) treated as payable to a Specified Employee (as defined
in Section 20.1 hereof) upon Separation from Service, the provisions of Section 20.1
hereof shall apply.  Section 5.8
hereof must be satisfied to receive payments and benefits under this
Agreement.  Any severance payments
payable to the Executive pursuant to Section 5.1(c) hereof on or
after the date of nine (9) months after the Date of Termination (“Offset Period”) shall be 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 any part of the Payment 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 other personal services during the Offset Period, and the source(s) of
such earnings.


 


(c)                                  The
Company, in each payroll period during the Offset 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 during that payroll period.


 


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 (1) 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 reasonably consistent with those duties;


 


(b)                                 persistent
failure to carry out any lawful duties of the Executive or any directions of
the Board 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;


 


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(d)                                 current
abuse by the Executive of alcohol or controlled substances; deception, fraud,
misrepresentation or dishonesty by the Executive; or any incident materially
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)                                  material
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 that 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 thirty (30) miles from the Company’s current location in Seattle,
Washington or from the city of San Francisco, California;


 


(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;
provided, however, that the Executive has notified the Company of such salary
reduction, assignment, failure, situation or violation within ninety (90) days
of its occurrence and there has been compliance with the notice and
opportunity-to-cure requirements of Section 8 hereof.


 


5.8                               General Release of Claims


 


As a condition
to receiving the payments and benefits under this Section 5 other than
Accrued Obligations set forth in Sections 5.1(a)(i) and 5.1(a)(iii) hereof,
the Executive shall execute (and not later revoke) a general release and waiver
of all claims against the Company, which release and waiver shall be in a form
satisfactory to the Company, in its sole discretion, and delivered to the
Company no later than the seventh day of the third month of the fiscal year
following the year in which the Date of Termination occurs.  By way of example and not limitation, the
general release and waiver of claims will include any claims for wages,
bonuses, employment benefits, or damages of any kind whatsoever, arising out of
any contracts, express or implied, any covenant of good faith and fair dealing,
express or implied, any theory of wrongful discharge, any legal restriction on
the Company’s right to terminate employment, or any federal, 


 


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state or other governmental
statute or ordinance, including, without limitation, Title VII of the Civil
Rights Act of 1964, the federal Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act, the
Washington Law Against Discrimination, or any other legal limitation on the
employment relationship.  To the extent
any payment or benefit is a 409A Payment, the provisions of Section 20.3
hereof shall apply.


 


5.9                               Dispute Regarding Existence
of Good Reason for Termination


 


In the event
the Company disputes whether Good Reason existed for the Executive to terminate
the Executive’s employment for Good Reason, the Company shall pay salary
continuation as provided in Section 5.5 until the earliest of (a) settlement
by the parties, (b) determination by arbitration in accordance with Section 14
hereof that Good Reason did not exist, and (c) completion of the payments
required by 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.


 


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 the Executive from fulfilling the Executive’s
obligations hereunder.  The Executive
agrees, if the Company requests, to submit to reasonable periodic medical
examinations by a physician or physicians designated by, paid for and arranged
by the Company.  The Executive agrees
that each 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 agreements or
obligations by which the Executive may be bound.


 


7.                                      Nondisclosure;
Return of Materials


 


7.1                               Nondisclosure


 


Except as
required by the Executive’s 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 


 


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articles relating to any
confidential, proprietary or trade secret information of the Company without
the prior written consent of the Company. 
The Executive understands that the Company will be relying on this Agreement
in continuing the Executive’s employment, paying the Executive’s compensation,
granting the Executive any promotions or raises, or entrusting the Executive
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 the
Executive’s 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.


 


7.3                               Invention and Proprietary
Information Agreement


 


The parties
have executed an Invention and Proprietary Information Agreement, in the form
attached as Exhibit C to the Offer Letter (“Invention
Agreement”) and acknowledge that their respective obligations
thereunder shall apply to the entire period of Executive’s employment with the
Company and shall survive the execution of this Agreement, the termination of
this Agreement and the termination of the Executive’s employment with 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
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:

  	
  Gerald McMahon

  
	
   

  	
  55
  West Clay Street

  
	
   

  	
  San
  Francisco, CA 94121

  



 


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  If to the Company:

  	
  Poniard
  Pharmaceuticals, Inc.

  
	
   

  	
  300 Elliott Avenue West,
  Suite 500

  
	
   

  	
  Seattle, Washington 98119

  
	
   

  	
  Attn: Corporate Secretary

  
	
   

  	
   

  
	
  With a copy to:

  	
  Perkins Coie LLP

  
	
   

  	
  1201 Third Avenue,
  Suite 4800

  
	
   

  	
  Seattle, Washington
  98101-3099

  
	
   

  	
  Attn: James R. Lisbakken

  



 


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, “Company”
shall mean Poniard Pharmaceuticals, Inc. 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 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 


 


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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 and Venue


 


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.  Executive irrevocably
consents to the jurisdiction and venue of the state and federal courts located
in King County, Washington, and agrees not to bring any action, or seek to
remove or transfer any action, relating to this Agreement in or to any other
court, other than a state or federal court located in King County, Washington.


 


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.  To the extent necessary to prevent the Executive
from being subject to any additional tax pursuant to Code Section 409A(a)(1)(B),
any amounts payable to the Executive pursuant to this paragraph shall be paid
in no event later than the year following the year during which such costs and
fees were incurred.


 


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 


 


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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


 


Contemporaneously with this Agreement, the Company and the Executive
are entering into an Amended and Restated 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 the 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 need not be paid if paid under the Change of
Control Agreement;


 


(b)                                 COBRA
Continuation under this Agreement need not be provided if provided under the
Change of Control Agreement; and


 


(c)                                  the
severance payment required under Section 5.1(c) hereof (and paid
pursuant to Section 5.5 hereof) need not be paid to the extent a severance
payment is made under Section 8.1(d) of the Change of Control
Agreement in connection with a Change of Control under the Change of Control
Agreement that constitutes a change in the ownership or effective control of
the Company or in the ownership of a substantial portion of the assets of the
Company within the meaning of subsection (a)(2)(A)(v) of Code Section 409A,
i.e., the credit from Section 8.1(d) of the Change of Control
Agreement is applied as amounts become due under Section 5.5 hereof.


 


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 Code Section 4999
as a result of such characterization, such excise tax to be paid to the
Executive at least ten (10) days prior to the date that the Executive 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.  Without limitation on the foregoing, the
payments made pursuant to 


 


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this Section 17 shall be made no later than the end of the year
following the year in which the Executive remits such excise tax to the
Internal Revenue Service.


 


18.                               Entire Agreement


 


This Agreement
supersedes and replaces the Amended and Restated Key Executive Severance
Agreement, dated as of March 3, 2008, between the parties, and 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 Invention Agreement between the Executive and the Company and
the Offer Letter, shall continue in full force and effect to the extent not
superseded by Section 7 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.                               409A Interpretation
Provision


 


The parties intend that this Agreement and the payments and benefits provided
hereunder be exempt from the requirements of Code Section 409A to the
maximum extent possible, whether pursuant to the short-term deferral exception
described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary
separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii),
or otherwise.  To the extent Code Section 409A
is applicable to this Agreement, the parties intend that this Agreement comply
with the deferral, payout and other limitations and restrictions imposed under
Code Section 409A.  Notwithstanding
anything herein to the contrary, this Agreement is intended to be interpreted
and operated to the fullest extent possible so that the payments and benefits
under this Agreement either shall be exempt from the requirements of Code Section 409A
or shall comply with the requirements of such provision; provided, however,
that notwithstanding anything to the contrary in this Agreement in no event
shall the Company be liable to the Executive
for or with respect to any taxes, penalties or interest that may be
imposed upon the Executive pursuant
to Code Section 409A.


 


20.1  Payments to Specified Employees


 


To the extent that any payment or benefit pursuant to this Agreement
constitutes a 409A Payment treated as payable upon Separation from Service,
then, if on the date of the Executive’s
Separation from Service, the Executive is
a Specified Employee, then to the extent required for the Executive not to incur additional
taxes pursuant to Code Section 409A, no such 409A Payment shall be made to
the Executive earlier than the
earlier of (a) six (6) months after the Executive’s Separation from Service or (b) the date of the
Executive’s death.  Should this Section 20
result in the delay of benefits, any such benefit shall be made available to
the Executive by the Company
during such delay period at the Executive’s
expense.  Should this Section 20.1
result in a delay of payments or benefits to the Executive, on the first day any such payments or benefits 


 


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may be made without incurring additional tax pursuant to Code Section 409A
(“409A Payment Date”), the Company
shall make such payments and provide such benefits as provided for in this
Agreement, provided that any amounts that would have been payable earlier but
for the application of this Section 20.1 as well as reimbursement of the
amount the Executive paid for
benefits pursuant to the preceding sentence, shall be paid in a lump sum on the
409A Payment Date.  For purposes of this Section 20.1,
the term “Specified Employee” shall
have the meaning set forth in Code Section 409A, as determined in
accordance with the methodology established by the Company.


 


20.2  Reimbursements


 


For purposes of complying with Code Section 409A
and without extending the payment timing otherwise provided in this Agreement,
taxable reimbursements under this Agreement, subject to the following sentence
and to the extent required to comply with Code Section 409A, will be made
no later than the end of the calendar year following the calendar year the
expense was incurred.  To the extent
required to comply with Code Section 409A, any taxable reimbursements and
any in-kind benefit under this Agreement will be subject to the following:  (a) payment of such reimbursements or
in-kind benefits during one calendar year will not affect the amount of such
reimbursements or in-kind benefits provided during any other calendar year
(other than for medical reimbursement arrangements as excepted under Treasury
Regulation Section 1.409A-3(i)(1)(iv)(B) solely because the
arrangement provides for a limit on the amount of expenses that may be
reimbursed under such arrangement over some or all of the period the
arrangement remains in effect); (b) such right to reimbursements or
in-kind benefits is not subject to liquidation or exchange for another form of
compensation to the Executive;
and (c) the right to reimbursements under this Agreement will be in effect
for the lesser of the time specified in this Agreement or ten (10) years
plus the lifetime of the Executive.  Any taxable reimbursements or in-kind
benefits shall be treated as not subject to Code Section 409A to the
maximum extent provided by Treasury Regulation Section 1.409A-1(b)(9)(v) or
otherwise under Code Section 409A.


 


20.3  Release


 


Subject to Section 20.1 hereof, (a) to
the extent that the Executive is
required to execute and deliver a release to receive a 409A Payment and (b) this
Agreement provides for such 409A Payment to be provided prior to the 55th day
following the Executive’s
Separation from Service, such 409A Payment will be provided upon the 55th day
following the Executive’s
Separation from Service, provided that the release in the form acceptable to
the Company, in its sole discretion, has been executed, delivered and effective
prior to such time.  To the extent there
is a delay in providing a 409A Payment because of the provisions of this Section 20.3,
interest for the delay and the opportunity for the Executive to pay for benefits in the interim with subsequent
reimbursement from the Company shall be provided in a manner consistent with
that set forth in Section 20.1 hereof. 
If a release is required for a 409A Payment and such release is not
executed, delivered and effective by the 55th day following the Executive’s Separation from Service,
such 409A Payment shall not be provided to the Executive to the extent that providing such 409A Payment would
cause such 409A Payment to fail to comply with Code Section 409A.


 


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20.4  No Acceleration; Separate Payments


 


No 409A Payment payable under this Agreement
shall be subject to acceleration or to any change in the specified time or
method of payment, except as otherwise provided under this Agreement and consistent
with Code Section 409A.  If under
this Agreement, a 409A Payment is to be paid in two (2) or more
installments, for purposes of Section 409A, each installment shall be
treated as a separate payment.


 


21.                               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.


 


 


	
   

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald A. Martell

  
	
   

  	
   

  	
  Name:

  	
  Ronald A. Martell

  
	
   

  	
   

  	
  Its:

  	
  President & COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald McMahon

  
	
   

  	
   

  	
  Name: Gerald McMahon

  



 


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