Exhibit 10.16


 


Level 2 —
Amended & Restated


 


PONIARD PHARMACEUTICALS, INC.

AMENDED AND RESTATED

KEY EXECUTIVE SEVERANCE AGREEMENT


 


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 (as supplemented by Section 10 hereof, the “Company”), and RONALD
A. MARTELL (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 traditional employment contract or other assurance of job
security.  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 one (1) year from the date
of this  Agreement
as first appearing above; provided, however, that this Agreement shall
automatically renew for successive additional one (1) year periods (“Renewal Terms”)
unless notice of nonrenewal is given by either party to the other party at
least nine (9) months 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 (a) serve on corporate, civic or charitable boards or
committees, (b) deliver lectures, fulfill speaking engagements or teach at
educational institutions, (c) manage personal investments, or (d) engage
in activities permitted by the policies of the Company or as specifically
permitted by the Company, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities in
accordance with this Agreement.  It is
expressly understood and agreed that to the extent any such activities have
been conducted by the Executive prior to the Term, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) during the Term shall not thereafter 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 Section 7 hereof 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.


 


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 


 


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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”):


 


(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;


 


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(b)                                 have
the Company pay for nine (9) months 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 seventy-five percent (75%) of the Executive’s
then current annual base salary for the fiscal year in which the Date of
Termination occurs, subject to payment 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.


 


5.5                               Payment
Schedule


 


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 nine (9) month 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 


 


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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.


 


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 or senior management of the Company reasonably
consistent with those duties;


 


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


 


(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 fifty (50) miles from the city in which the Executive is currently
employed by the Company, i.e., San Francisco, California or Seattle,
Washington;


 


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(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, 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:


 


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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 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.


 


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.


 


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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:

  	
  Ronald A. Martell

  
	
   

  	
  3456 Baker Street

  
	
   

  	
  San Francisco, CA 94123

  
	
   

  	
   

  
	
  If to the Company:

  	
  Poniard Pharmaceuticals, Inc.

  
	
   

  	
  300 Elliott Avenue West, Suite 500

  
	
   

  	
  Seattle, Washington 98119

  
	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  
	
  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 


 


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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 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


 


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.


 


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.


 


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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 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 


 


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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 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 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
Proprietary Information and Invention Agreement between the Executive and the
Company 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 


 


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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 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 


 


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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.


 


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/ Gerald McMahon

  
	
   

  	
   

  	
  Name:

  	
  Gerald McMahon

  
	
   

  	
   

  	
  Its:

  	
  Chairman & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald A. Martell

  
	
   

  	
   

  	
  Name: Ronald A. Martell

  



 


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