Exhibit 10.15


 


PONIARD PHARMACEUTICALS, INC.

AMENDED AND RESTATED

CHANGE OF CONTROL AGREEMENT (CEO)


 


This Amended
and Restated Change of Control Agreement (CEO) (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 13 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 possibility, threat
or occurrence of a Change of Control (as defined in Section 1 hereof) of
the Company.  The Board believes it is
imperative to diminish the inevitable distraction of the Executive arising from
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Executive’s full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with reasonable compensation and benefit
arrangements upon a Change of Control.


 


In order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.


 


1.                                      Definitions


 


1.1          “Change of Control” shall have the definition
set forth in Appendix A hereto, which is hereby incorporated by reference.


 


1.2          “Change of Control Date” shall mean the first
date on which a Change of Control occurs.


 


1.3          “Employment Period” shall mean the two (2) year
period commencing on the Change of Control Date and ending on the second
anniversary of such date.


 


1.4          “Offer Letter” shall mean the offer letter
dated April 26, 2004 establishing Executive’s employment with the Company.


 


1.5          “Original Agreement” shall mean the Change of
Control Agreement, dated as of May 11, 2004, between the parties, as
attached to the Offer Letter as well as the Amended and Restated Change of
Control Agreement dated March 3, 2008 and the amendment thereto.


 


1.6          “Severance Agreement” shall mean the Amended
and Restated Key Executive Severance Agreement, dated as of the date hereof,
between the parties, as it may be amended from time to time, that provides for
certain benefits related to termination of the Executive’s employment that are
unrelated to a Change of Control.


 

















 


2.                                      Term


 


The initial
term of this Agreement (“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 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 occurs during the Term, the Term
shall automatically extend for the duration of the Employment Period.  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.


 


3.                                      Employment


 


3.1                     Employment Period


 


During the
Employment Period, the Company hereby agrees to continue the Executive in its
employ or in the employ of its affiliated companies, and the Executive hereby
agrees to remain in the employ of the Company or its affiliated companies, in
accordance with the terms and provisions of this Agreement; provided, however,
that either the Company or the Executive may terminate the employment
relationship subject to the terms of this Agreement.


 


3.2                     Position
and Duties


 


During the
Employment Period, the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the ninety (90) day period immediately preceding the Change of Control Date.


 


3.3                     Location


 


During the
Employment Period, the Executive’s services shall be performed at the Company’s
offices on the Change of Control Date at which the Executive was employed or
any office that is subsequently designated by the Company and is less than
thirty (30) miles from such location.


 


3.4                     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 its 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. 
Moreover, if prior to the Change of Control Date, the Executive’s
employment with the Company or its affiliated companies terminates for any
reason, then the Executive shall have no further rights under this Agreement;
provided, however, that the Company may not avoid liability for any termination
payments that would have been required during the Employment Period pursuant to
Section 8 hereof by terminating the Executive prior to the Employment
Period


 


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where such termination is carried out in anticipation of a Change of
Control and the principal motivating purpose is to avoid liability for such
termination payments.


 


4.                                      Attention and Effort


 


During the
Employment Period, 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 use the Executive’s reasonable best efforts 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 the Executive has
previously disclosed the Executive’s appointment to the board of directors of
Trellis Bioscience, Inc.  It is
expressly understood and agreed that such activities specifically approved or
acquiesced in during the Employment Period shall not be deemed to interfere
with the performance of the Executive’s responsibilities to the Company.


 


5.                                      Compensation


 


As long as the
Executive remains employed by the Company during the Employment Period, the
Company agrees to pay or cause to be paid to the Executive, and the Executive
agrees to accept in exchange for the services rendered hereunder by the
Executive, the following compensation:


 


5.1                     Salary


 


The Executive
shall receive an annual base salary (the “Annual Base Salary”), at least equal to the
annual salary established by the Board or the Compensation Committee of the
Board (the “Compensation
Committee”) for the fiscal year in which the Change of Control
Date occurs.  The Annual Base Salary
shall be paid in substantially equal installments and at the same intervals as
the salaries of other executives of the Company are paid.  The Board or the Compensation Committee shall
review the Annual Base Salary at least annually and shall determine in good
faith and consistent with any generally applicable Company policy any increases
for future years.


 


5.2                     Bonus


 


In addition to
the Annual Base Salary, the Executive shall be awarded, for each fiscal year
ending during the Employment Period, an annual performance bonus (the “Annual Performance Bonus”)
in cash at least equal to the average annualized (for any fiscal year consisting
of less than twelve (12) full months) bonus paid or payable to the Executive by
the Company and its affiliated companies in respect of the Executive’s
performance during the three fiscal years (or such shorter period of
employment) immediately preceding the fiscal year in which the Change of
Control Date occurs.  Each Annual
Performance Bonus shall be paid in the


 


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fiscal year following the fiscal year for which the Annual Performance
Bonus is awarded, but no later than the fifteenth day of the third month of
such subsequent fiscal year, unless the Executive shall elect to defer the
receipt of the Annual Performance Bonus in accordance with the terms of the
Company’s deferred compensation program.


 


6.                                      Benefits


 


6.1                     Incentive,
Retirement and Welfare Benefit Plans; Vacation


 


As long as the
Executive remains employed by the Company during the Employment Period, the
Executive shall be entitled to participate, subject to and in accordance with
applicable eligibility requirements, in such fringe benefit programs as shall
be generally made available to other executives of the Company and its
affiliated companies from time to time during the Employment Period by action
of the Board (or any person or committee appointed by the Board to determine
fringe benefit programs and other emoluments), including, without limitation,
paid vacations; any stock purchase, savings or retirement plan, practice,
policy or program; and all welfare benefit plans, practices, policies or
programs (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans or programs).


 


6.2                     Expenses


 


As long as the
Executive remains employed by the Company during the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
employment expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies in effect
for the executives of the Company and its affiliated companies during the
Employment Period.  Without limitation on
the foregoing, reimbursement shall be made no later than the end of the fourth
month of the year following the year in which the expense was incurred.


 


7.                                      Termination


 


During the
Employment Period, employment of the Executive may be terminated as follows,
but, in any case, the nondisclosure provisions set forth in Section 10
hereof and certain obligations under the Invention Agreement (as defined in Section 10.3
hereof) and the Offer Letter shall survive the termination of this Agreement
and the termination of the Executive’s employment with the Company:


 


7.1                     Termination
by the Company or the Executive


 


At any time
during the Employment Period, 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).


 


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7.2                     Automatic
Termination


 


This Agreement
and the Executive’s employment during the Employment Period 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 duties set forth in Section 3.2 hereof 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.  The Executive
and the Company hereby acknowledge that the duties specified in Section 3.2
hereof are essential to the Executive’s position and that the Executive’s
ability to perform those duties is the essence of this Agreement.


 


7.3                     Notice of
Termination


 


Any
termination by the Company or by the Executive during the Employment Period
shall be communicated by a Notice of Termination to the other party given in
accordance with Section 12 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.


 


7.4                     Date of
Termination


 


During the
Employment Period, “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.


 


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8.                                      Termination Payments


 


In the event
of termination of the Executive’s employment during the Employment Period, all
compensation and benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 8.


 


8.1                     Termination
by the Company Other Than for Cause or by the Executive for Good Reason


 


If during the
Employment Period 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 Annual Base Salary through the
Date of Termination to the extent not theretofore paid;


 


(ii)           the product of (x) the Annual
Performance Bonus payable with respect to the fiscal year in which the Date of
Termination occurs and (y) a fraction the numerator of which is the number
of days in the current fiscal year through the Date of Termination, and the
denominator of which is three hundred sixty-five (365);


 


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


 


(iv)          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 eighteen (18)
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”);


 


(c)           an amount as severance pay equal to
one (1) times the Annual Performance Bonus payable with respect to the
fiscal year in which the Date of Termination occurs;


 


(d)          an amount as severance pay equal to
two (2) times the Annual Base Salary for the fiscal year in which the Date
of Termination occurs; and


 


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(e)           immediate vesting of all outstanding
stock options previously granted to the Executive by the Company.


 


8.2                     Termination
for Cause or Other Than for Good Reason


 


If during the
Employment Period 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 (a) the
Annual Base Salary through the Date of Termination, (b)  the amount of any
compensation previously deferred by the Executive in accordance with the terms
of the Company’s deferred compensation program, and (c) any accrued
vacation pay that would be payable under the Company’s standard policy, in each
case to the extent theretofore unpaid.


 


8.3                     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, other than the Company’s obligation to pay the Executive the
product of (a) the Annual Performance Bonus payable with respect to the
fiscal year in which the Term expired and (b) a fraction the numerator of
which is the number of days in the current fiscal year through the end of the
Term and the denominator of which is three hundred sixty-five (365).  Such payment will be made in the fiscal year
following the fiscal year in which the Term expired no later than the fifteenth
day of the third month of such subsequent fiscal year.


 


8.4                     Termination
Because of Death or Total Disability


 


If during the
Employment Period 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.


 


8.5                     Payment
Schedule


 


All payments
of Accrued Obligations, or any portion thereof payable pursuant to this Section 8,
other than deferred compensation pursuant to Section 8.1(a)(iii) hereof,
shall be made to the Executive within ten (10) working days of the Date of
Termination.  Deferred compensation
pursuant to Section 8.1(a)(iii) hereof shall be payable pursuant to
the terms of the deferred compensation program. 
Any severance payments payable to the Executive pursuant to Sections 8.1(c) and
8.1(d) hereof shall be made to the Executive in a lump sum within ten (10) working
days of the Date of Termination. 
Notwithstanding the preceding provisions of this Section 8, 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 21.1 hereof) upon Separation
from Service, the provisions of


 


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Section 21.1 hereof shall apply. 
Section 8.9 hereof must be satisfied to receive payments and
benefits under this Agreement.


 


8.6                     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, all
reasonably consistent with the duties described in Section 3.2 hereof;


 


(b)           persistent failure to carry out any
lawful duties of the Executive described in Section 3.2 hereof or any
directions of the Board reasonably consistent with the duties herein set forth
to be performed by the Executive; 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 11 hereof.


 


8.7                     Good
Reason


 


For purposes
of this Agreement, “Good
Reason” means


 


(a)           the assignment to the Executive of
any duties materially inconsistent with the Executive’s position, authority,
duties or responsibilities as contemplated by Section 3.2 hereof 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;


 


(b)           any failure by the Company to comply
with any of the provisions of Section 5 or Section 6 hereof, other
than an isolated and inadvertent failure not taken in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;


 


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(c)           the Company’s requiring the Executive
to be based at any office or location other than that described in Section 3.3
hereof;


 


(d)           any failure by the Company to comply
with and satisfy Section 13 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 13 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 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 11 hereof.


 


8.8                     Excess Parachute Limitation


 


If any portion
of the payments or benefits for the Executive under this Agreement, the
Severance Agreement, or any other agreement or benefit plan of the Company
(including a stock option plan) 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 this Section 8.8 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.


 


8.9                     General Release of Claims


 


As a condition
to receiving the payments and benefits under this Section 8 other than
Accrued Obligations set forth in Sections 8.1(a)(i) and 8.1(a)(iv) 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
acceptable to the Company, in its reasonable 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.  To the extent any payment or benefit is a
409A Payment, the provisions of Section 21.3 hereof shall apply.


 


9.                                      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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9.1                     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.


 


9.2                     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.


 


10.                               Nondisclosure; Return of
Materials


 


10.1                   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.


 


10.2                   Return
of Materials


 


All documents,
records, notebooks, notes, memoranda, drawings or other documents made or
compiled by the Executive at any time, 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.


 


10.3                   Invention and Proprietary
Information Agreement


 


The parties
have executed concurrently with the Original Agreement the NeoRx Corporation
Invention and Proprietary Information Agreement, in the form attached to the
Offer Letter as Exhibit C (“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.


 


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11.                               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 8.6
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.


 


12.                               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

  
	
   

  	
   

  
	
  If to the
  Company:

  	
  Poniard
  Pharmaceuticals, Inc. 

  300 Elliott Avenue West, Suite 500 

  Seattle, WA 98119 

  Attn: Corporate Secretary

  
	
   

  	
   

  
	
  With a copy
  to:

  	
  Perkins Coie
  LLP 

  1201 Third Avenue, Suite 4800 

  Seattle, WA 98101-3099 

  Attn: James R. Lisbakken

  



 


Except as set
forth in Section 7.4 hereof, if notice is mailed, such notice shall be
effective upon mailing.


 


13.                               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.  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.


 


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14.                               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.


 


15.                               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.


 


16.                               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.  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.


 


17.                               Arbitration; Attorneys’ Fees


 


Except in
connection with enforcing Section 10 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 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.


 


12

















 


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.


 


18.                               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.


 


19.                               Entire Agreement


 


This Agreement
supersedes and replaces the Original Agreement, and except as described in Section 23
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 and the Offer Letter to which
it and the Original Agreement are Exhibits shall continue in full force and
effect to the extent not specifically superseded herein.


 


20.                               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.


 


21.                               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


 


13

















 


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.


 


21.1                   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 21
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 21.1
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 (the “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 21.1 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 21.1, 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.


 


21.2                   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.


 


14

















 


21.3                   Release


 


Subject to Section 21.1
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 reasonable
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 21.3, 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 21.1 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.


 


21.4                   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 or more installments, for purposes of Section 409A, each
installment shall be treated as a separate payment.


 


22.                               Counterparts


 


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


 


23.                               Coordination With Severance
Agreement


 


The Severance
Agreement that the parties entered into provides for certain forms of severance
and benefit payments in the event of termination of the Executive’s
employment.  This Agreement is in
addition to the Severance Agreement and in no way supersedes or nullifies the
Severance Agreement.  Nevertheless, it is
possible that 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 8.1
hereof shall be coordinated with payments made to the Executive under Section 5.1
of the Severance Agreement as follows:


 


(a)           Accrued Obligations under this
Agreement shall be paid first, in which case Accrued Obligations need not be
paid under the Severance Agreement;


 


(b)           COBRA Continuation under this
Agreement shall be provided first, in which case COBRA Continuation need not be
provided under the Severance Agreement;


 


(c)           the severance payment required under Section 8.1(d) hereof
shall be paid first in connection with a Change of Control that constitutes a
change in ownership or effective control of the Company or in the ownership of
a substantial portion of the assets


 


15

















 


of the Company within the
meaning of subsection (a)(2)(A)(v) of Code Section 409A, in which
case only that portion of any severance payment required under Section 5.1(c) of
the Severance Agreement that is in excess of the severance payment required
under Section 8.1(d) hereof shall be paid in accordance with the
provisions of the Severance Agreement; and


 


(d)           the severance payment required under Section 8.1(d) hereof
(and paid pursuant to Section 8.5 hereof) need not be paid to the extent a
severance payment is made under Section 5.1(c) of the Severance
Agreement in connection with a Change of Control that does not constitute a
change in 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 5.1(c) of
the Severance Agreement is applied to the amount due under Section 8.1(d) hereof
and therefore only that portion of any severance payment required under Section 8.1(d) hereof
that is in excess of the total severance payment required under Section 5.1(c) of
the Severance Agreement shall be paid in accordance with the provisions of this
Agreement.


 


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

  



 


16

















 


APPENDIX A


 


For purposes
of this Agreement, a “Change
of Control” shall mean:


 


(a)           A “Board Change” that,
for purposes of this Agreement, shall have occurred if a majority (excluding
vacant seats) of the seats on the Board are occupied by individuals who were
neither (i) nominated by a majority of the Incumbent Directors nor (ii) appointed
by directors so nominated.  An “Incumbent Director”
is a member of the Board who has been either (i) nominated by a majority
of the directors of the Company then in office or (ii) appointed by
directors so nominated, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in former Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”)) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person (as hereinafter defined) other than the
Board; or


 


(b)           The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of (i) twenty
percent (20%) or more of either (A) the then outstanding shares of Common
Stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”),
in the case of either subclause (A) or (B) of this clause (i), which
acquisition is not approved in advance by a majority of the Incumbent
Directors, or (ii) thirty-three percent (33%) or more of either (A) the
Outstanding Company Common Stock or (B) the Outstanding Company Voting
Securities, in the case of either subclause (A) or (B) of this clause
(ii), which acquisition is approved in advance by a majority of the Incumbent
Directors; provided, however, that the following acquisitions shall not constitute
a Change of Control:  (x) any
acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of
this Appendix A are satisfied; or


 


(c)           Approval by the
shareholders of the Company of a reorganization, merger or consolidation, in
each case, unless, immediately following such reorganization, merger or
consolidation, (i) more than sixty percent (60%) of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportion as
their ownership immediately prior to such reorganization, merger or
consolidation of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding
the Company, any employee


 


A-1

















 


benefit
plan (or related trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, thirty-three percent (33%) or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, thirty-three percent (33%) or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were the Incumbent
Directors at the time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or


 


(d)           Approval by the
shareholders of the Company of (i) a complete liquidation or dissolution
of the Company or (ii) the sale or other disposition of all or
substantially all the assets of the Company, other than to a corporation with
respect to which immediately following such sale or other disposition, (A) more
than sixty percent (60%) of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly,
by all or substantially all the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition, directly or
indirectly, thirty-three percent (33%) or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, thirty-three percent (33%) or more
of, respectively, the then outstanding shares of common stock of such
corporation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, and (C) at least a majority of the members of the board of
directors of such corporation were approved by a majority of the Incumbent
Directors at the time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of the Company’s assets.


 


A-2