EXHIBIT
4.2

    NONQUALIFIED
STOCK OPTION AGREEMENT

    


    TALON
THERAPEUTICS, INC.

    2010
EQUITY INCENTIVE PLAN

    


    THIS AGREEMENT, made effective as of
this        
 day of ___________, 20__, by and between Talon Therapeutics, Inc.,
a Delaware corporation (the “Company”), and _________________
(“Participant”).

    


    WITNESSETH:

    


    WHEREAS, Participant on the date hereof
is a key employee, officer, director of or consultant or advisor to the Company
or one of its Subsidiaries; and

    


    WHEREAS, the Company wishes to grant a
nonqualified stock option to Participant to purchase shares of the Company’s
Common Stock pursuant to the Company’s 2010 Equity Incentive Plan, as amended
(the “Plan”); and

    


    WHEREAS, the Administrator of the Plan,
or its duly authorized designee, has authorized the grant of a nonqualified
stock option to Participant and has determined that, as of the effective date of
this Agreement, the fair market value of the Company’s Common Stock is $____ per
share;

    


    NOW, THEREFORE, in consideration of the
premises and of the mutual covenants herein contained, the parties hereto agree
as follows:

    


    1.           Grant of
Option.  The Company hereby grants to Participant on the date
set forth above (the “Date of Grant”), the right and option (the “Option”) to
purchase all or portions of an aggregate of  (                             
) shares of Common Stock at a per share price of $                 
 on the terms and conditions set forth herein, and subject to
adjustment pursuant to Section 14 of the Plan.  This Option is a
nonqualified stock option and will not be treated as an incentive stock option,
as defined under Section 422, or any successor provision, of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder.

     

    2.           Duration and
Exercisability.

     

    (a)           General.  The
term during which this Option may be exercised shall terminate on [10 years from Date of
Grant], except as otherwise
provided in Paragraphs 2(b) through 2(d) below.  [FOR
EMPLOYEES:  [This Option shall become exercisable in
forty-eight (48) equal monthly installments commencing on the first month
anniversary from the Date of Grant.]] [FOR DIRECTORS: [This
Option shall become exercisable in its entirety on the first anniversary of the
Date of Grant.]

     

    Once the Option becomes exercisable to
the extent of one hundred percent (100%) of the aggregate number of shares
specified in Paragraph 1, Participant may continue to exercise this Option under
the terms and conditions of this Agreement until the termination of the Option
as provided herein.  If Participant does not purchase upon an exercise
of this Option the full number of shares which Participant is then entitled to
purchase, Participant may purchase upon any subsequent exercise prior to this
Option’s termination such previously unpurchased shares in addition to those
Participant is otherwise entitled to purchase.

    


    (b)           Termination
of Relationship (other than Disability or Death).  If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
for any reason other than disability or death, this Option shall completely
terminate on the earlier of (i) the close of business on the three-month
anniversary of the date of termination of Participant’s relationship, and
(ii) the expiration date of this Option stated in Paragraph 2(a)
above.  In such period following such termination of Participant’s
relationship, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding the date on which
Participant’s relationship with the Company or Subsidiary has terminated, but
had not previously been exercised.  To the extent this Option was not
exercisable upon the termination of such relationship, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all
rights of Participant under this Option shall be forfeited.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (c)           Disability.  If
Participant ceases to be [an
employee] [a consultant] [a director] of the Company or any Subsidiary
because of disability (as defined in Code Section 22(e), or any successor
provision), this Option shall completely terminate on the earlier of (i) the
close of business on the twelve-month anniversary of the date of termination of
Participant’s relationship, and (ii) the expiration date of this Option
stated in Paragraph 2(a) above.  In such period following such
termination of Participant’s relationship, this Option shall be exercisable only
to the extent the Option was exercisable on the vesting date immediately
preceding the date on which Participant’s relationship with the Company or
Subsidiary has terminated, but had not previously been exercised.  To
the extent this Option was not exercisable upon the termination of such
relationship, or if Participant does not exercise the Option within the time
specified in this Paragraph 2(c), all rights of Participant under this Option
shall be forfeited.

     

    (d)           Death.  In
the event of Participant’s death, this Option shall terminate on the earlier of
(i) the close of business on the twelve-month anniversary of the date of
Participant’s death, and (ii) the expiration date of this Option stated in
Paragraph 2(a) above.  In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on the
vesting date immediately preceding the date of Participant’s death, but had not
previously been exercised.  To the extent this Option was not
exercisable upon the date of Participant’s death, or if such person or persons
fail to exercise this Option within the time specified in this Paragraph 2(d),
all rights under this Option shall be forfeited.

     

    3.           Manner of
Exercise.

     

    (a)           General.  The
Option may be exercised only by Participant (or other proper party in the event
of death or incapacity), subject to the conditions of the Plan and subject to
such other administrative rules as the Administrator may deem advisable, by
delivering within the option period written notice of exercise to the Company at
its principal office.  The notice shall state the number of shares as
to which the Option is being exercised and shall be accompanied by payment in
full of the option price for all shares designated in the notice.  The
exercise of the Option shall be deemed effective upon receipt of such notice by
the Company and upon payment that complies with the terms of the Plan and this
Agreement.  The Option may be exercised with respect to any number or
all of the shares as to which it can then be so exercised and, if partially
exercised, may be exercised as to the unexercised shares any number of times
during the option period as provided herein.

     

    (b)           Form of
Payment.  Subject to the approval of the Administrator, payment
of the option price by Participant shall be in the form of cash, personal check,
certified check or previously acquired shares of Common Stock of the Company, or
any combination thereof.  Any stock so tendered as part of such
payment shall be valued at its Fair Market Value as provided in the
Plan.  For purposes of this Agreement, “previously acquired shares of
Common Stock” shall include shares of Common Stock that are already owned by
Participant at the time of exercise.

     

    (c)           Stock
Transfer Records.  As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to Participant one or more duly issued stock
certificates evidencing such ownership.  All requisite original issue
or transfer documentary stamp taxes shall be paid by the Company.

     

    4.           Miscellaneous.

     

    (a)           Employment
or Other Relationship; Rights as Shareholder.  This Agreement shall not
confer on Participant any right with respect to the continuance of employment or
any other relationship with the Company or any of its Subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
or relationship.  Participant shall have no rights as a shareholder with respect
to shares subject to this Option until such shares have been issued to
Participant upon exercise of this Option.  No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such shares are issued, except as provided in Section 14 of the
Plan.


    
      
         


      

      
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    (b)           Securities
Law Compliance.  The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other
laws.  Participant may be required by the Company, as a condition of
the effectiveness of any exercise of this Option, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held, until such
time that such Common Stock is registered and freely tradable under applicable
state and federal securities laws, for Participant’s own account without a view
to any further distribution thereof, that the certificates for such shares shall
bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws.

     

    (c)           Mergers,
Recapitalizations, Stock Splits, Etc.  Except as otherwise
specifically provided in any employment, change of control, severance or similar
agreement executed by the Participant and the Company, pursuant and subject to
Section 14 of the Plan, certain changes in the number or character of the Common
Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Participant’s rights
with respect to any unexercised portion of the Option (i.e., Participant
shall have such “anti-dilution” rights under the Option with respect to such
events, but shall not have “preemptive” rights).

     

    (d)           Shares
Reserved.  The Company shall at all times during the option
period reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.

     

    (e)           Withholding Taxes.  To
permit the Company to comply with all applicable federal and state income tax
laws or regulations, the Company may take such action as it deems appropriate to
ensure that, if necessary, all applicable federal and state payroll, income or
other taxes are withheld from any amounts payable by the Company to
Participant.  If the Company is unable to withhold such federal and
state taxes, for whatever reason, Participant hereby agrees to pay to the
Company an amount equal to the amount the Company would otherwise be required to
withhold under federal or state law.  Subject to such rules as the
Administrator may adopt, the Administrator may, in its sole discretion, permit
Participant to satisfy such withholding tax obligations, in whole or in part (i)
by delivering shares of Common Stock, or (ii) by electing to have the Company
withhold shares of Common Stock otherwise issuable to Participant, in either
case having a Fair Market Value, as of the date the amount of tax to be withheld
is determined under applicable tax law, equal to the minimum amount required to
be withheld for tax purposes.  Participant’s request to deliver shares
or to have shares withheld for purposes of such withholding tax obligations
shall be made on or before the date that triggers such obligations or, if later,
the date that the amount of tax to be withheld is determined under applicable
tax law.  Participant’s request shall be approved by the Administrator
and otherwise comply with such rules as the Administrator may adopt to assure
compliance with Rule 16b-3 or any successor provision, as then in effect, of the
General Rules and Regulations under the Securities and Exchange Act of 1934, if
applicable.

     

    (f)           Nontransferability.  Except
as otherwise provided in the Plan, during the lifetime of Participant, the
accrued Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.  The Company shall not be required
to recognize any assignment or transfer of the Option in violation of the terms
of this Agreement or the Plan.

     

    (g)           2010
Equity Incentive Plan.  The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement.  This
Agreement is subject to and in all respects limited and conditioned as provided
in the Plan. All defined terms of the Plan shall have the same meaning when used
in this Agreement.  The Plan governs this Option and, in the event of
any questions as to the construction of this Agreement or in the event of a
conflict between the Plan and this Agreement, the Plan shall govern, except as
the Plan otherwise provides.

     

    (h)           Lockup
Period Limitation.  Participant agrees that in the event the
Company advises Participant that it plans an underwritten public offering of its
Common Stock in compliance with the Securities Act of 1933, as amended, and that
the underwriter(s) seek to impose restrictions under which certain shareholders
may not sell or contract to sell or grant any option to buy or otherwise dispose
of part or all of their stock purchase rights of the underlying Common Stock,
Participant hereby agrees that for a period not to exceed 180 days from the
prospectus, Participant will not sell or contract to sell or grant an option to
buy or otherwise dispose of this Option or any of the underlying shares of
Common Stock without the prior written consent of the underwriter(s) or its
representative(s).


    
      
         


      

      
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    (i)           Blue Sky
Limitation.
Notwithstanding anything in this Agreement to the contrary, in the event
the Company makes any public offering of its securities and it is determined
that it is necessary to reduce the number of issued but unexercised stock
purchase rights so as to comply with any state securities or Blue Sky law
limitations with respect thereto, and such determination is affirmed by the
Board of Directors, unless the Board of Directors determines otherwise, (i) the
exercisability of this Option and the date on which this Option must be
exercised shall be accelerated, provided that the Company agrees to give
Participant 15 days’ prior written notice of such acceleration, and (ii) any
portion of this Option or any other option granted to Participant pursuant to
the Plan which is not exercised prior to or contemporaneously with such public
offering shall be canceled.  Notice shall be deemed given when
delivered personally or when deposited in the United States mail, first class
postage prepaid and addressed to Participant at the address of Participant on
file with the Company.

     

    (j)           Accounting
Compliance.  Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 14 of
the Plan occurs and Participant is an “affiliate” of the Company or any
Affiliate (as defined in applicable legal and accounting principles) at the time
of such transaction, Participant will comply with all requirements of Rule 145
of the Securities Act of 1933, as amended, and the requirements of such other
legal or accounting principles, and will execute any documents necessary to
ensure such compliance.

     

    (k)           Stock
Legend.  The Administrator may require that the certificates
for any shares of Common Stock purchased by Participant (or, in the case of
death, Participant’s successors) shall bear an appropriate legend to reflect the
restrictions of Paragraph 4(b) and Paragraphs 4(g) through 4(i) of this
Agreement; provided, however, that
failure to so endorse any of such certificates shall not render invalid or
inapplicable Paragraph 4(b) or Paragraphs 4(g) through 4(i).

     

    (l)           Scope of
Agreement.  This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and Participant and any successor
or successors of Participant permitted by Paragraph 2 or Paragraph 4(e)
above.

     

    5.           [FOR DIRECTORS] [Change of
Control.  Notwithstanding anything in the Plan or this
Agreement to the contrary, this Option shall become fully vested and exercisable
upon a Change of Control, as such term is defined in the Plan.]

    


    ACCORDINGLY, the parties hereto have
caused this Agreement to be executed on the day and year first above
written.

    


    
      
        	 
      	
                TALON
      THERAPEUTICS, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Its:

              	 
      
	 
      	 
      	 
      
	 
      	 
      
	 
      	
                Participant

              


      

    


    
      
         


      

      
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