Exhibit 10.26


PONIARD
PHARMACEUTICALS, INC.


KEY EMPLOYEE SEVERANCE
AGREEMENT


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


The Board of Directors of the Company (the “Board”) has determined that it is in
the best interests of the Company and its shareholders to ensure that the
Company will have the continued dedication of the Employee, notwithstanding the
fact that the Employee 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 Employee arising from the
personal uncertainty and insecurity that arises in the absence of any assurance
of job security by providing the Employee with reasonable compensation and
benefit arrangements in the event of termination of the Employee’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;
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. 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 Employee.


2.   Employment


The Employee and the
Company acknowledge that, except as may otherwise be provided under any other
written agreement between the Employee and the Company, the employment of the Employee
by the Company or by any affiliated or successor company is “at will” and may
be terminated by either the Employee 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 Employee remains in the employ of the Company, and excluding any
periods of vacation and sick leave to which the Employee is entitled, the Employee
will devote all his productive time, ability, attention and effort to the
business and affairs of the Company and the discharge of the responsibilities
assigned to him hereunder, and will seek to perform faithfully and efficiently
such responsibilities. It shall not be a violation of this Agreement for the Employee
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 Employee’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 Employee
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 Employee’s
responsibilities to the Company.











4.   Termination


During the Term,
employment of the Employee 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 Employee’s employment
with the Company:


4.1   By the
Company or the Employee


At any time during the
Term, the Company may terminate the employment of the Employee with or without
Cause (as defined below), and the Employee may terminate his employment for
Good Reason (as defined below) or for any reason, upon giving Notice of
Termination (as defined below).


4.2   Automatic
Termination


This Agreement and the Employee’s
employment shall terminate automatically upon the death or Total Disability of
the Employee. The term “Total Disability”
as used herein shall mean the Employee’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 Employee,
to perform the Employee’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 Employee’s control, unless the Employee is granted a leave of absence by
the Board.


4.3   Notice of
Termination


Any termination by the
Company or by the Employee during the Term shall be communicated by Notice of
Termination to the other party given in accordance with Section 9 hereof. The
term “Notice of Termination” shall
mean a written notice that (a) indicates the specific termination
provision in this Agreement relied upon and (b) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of the Employee’s employment under the provision so
indicated. The failure by the Employee 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 Employee or the Company
hereunder or preclude the Employee or the Company from asserting such fact or
circumstance in enforcing the Employee’s or the Company’s rights hereunder.


4.4   Date of
Termination


“Date
of Termination” means (a) if the Employee’s employment is
terminated by reason of death, the last day of the calendar month in which the Employee’s
death occurs, (b) if the Employee’s employment is terminated by reason of
Total Disability, immediately upon a determination by the Company of the Employee’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 Employee’s
employment and performance of services will continue during such ten (10) day
period; provided, however, that the Company may, upon notice to the Employee
and without reducing the Employee’s compensation during such period, excuse the
Employee from any or all of his duties during such period.


5.   Termination
Payments


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



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


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


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


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


(ii)   any
compensation previously deferred by the Employee (together with accrued interest
or earnings thereon, if any) and any accrued vacation pay that would be payable
under the Company’s standard policy, in each case to the extent not theretofore
paid;


(b)   for six (6) months
after the Date of Termination or until the Employee qualifies for comparable
medical and dental insurance benefits from another employer, whichever occurs
first, the Company shall pay the Employee’s premiums for health insurance
benefit continuation for the Employee and his family members, if applicable,
that the Company provides to the Employee 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 Employee remained employed by the
Company (such continued payment is hereinafter referred to as “COBRA Continuation”); and


(c)   an amount as severance pay equal to fifty percent (50%) of the Employee’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 Employee’s
employment shall be terminated by the Company for Cause or by the Employee for
other than Good Reason, this Agreement shall terminate without further
obligation on the part of the Company to the Employee, other than the Company’s
obligation to pay the Employee the Accrued Obligations to the extent
theretofore unpaid.


5.3   Expiration
of Term


In the event the Employee’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 Employee.


5.4   Termination
Because of Death or Total Disability


If the Employee’s
employment is terminated during the Term by reason of the Employee’s death or
Total Disability, this Agreement shall terminate automatically without further
obligation on the part of the Company to the Employee or his legal
representatives under this Agreement, other than the Company’s obligation to
pay the Employee the Accrued Obligations (which shall be paid to the Employee’s
estate or beneficiary, as applicable in the case of the Employee’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,
shall be made to the Employee within ten (10) working days of the Date of
Termination. Any severance payments payable to the Employee pursuant to Section 5.1(c) shall
be made to the Employee in the form of salary continuation, payable at normal
payroll intervals during the six (6) month period following the Date of
Termination.



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5.6   Cause


For purposes of
this Agreement, “Cause” means cause given by
the Employee to the Company and shall include, without limitation, the
occurrence of one or more of the following events:


(a)   a clear
refusal to carry out any material lawful duties of the Employee 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 Employee or any directions of the
Board or senior management reasonably consistent with those duties; provided,
however, that the Employee has been given reasonable notice and opportunity to
correct any such failure;


(c)   violation
by the Employee 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 Employee of alcohol or controlled substances; deception, fraud,
misrepresentation or dishonesty by the Employee; or any incident materially
compromising the Employee’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 Employee, 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)   reduction
of the Employee’s annual base salary to a level below the level in effect on
the date of this Agreement, regardless of any change in the Employee’s duties
or responsibilities;


(b)   the
assignment to the Employee of any duties materially inconsistent with the Employee’s
position, authority, duties or responsibilities or any other action by the
Company the 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 Employee;


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


(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 Employee of the requirements of Section 10
hereof; or


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


5.8   General
Release of Claims


As a condition to the
payment contemplated by Section 5.1(c), the Employee shall execute a
general release of claims against the Company in a form satisfactory to the
Company in its sole discretion. By way of example and not limitation, the
general release 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 



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Leave
Act, the Washington Law Against Discrimination, or any other legal limitation
on the employment relationship.


5.9   Dispute
regarding existence of Good Reason for Termination


In the event the Company
disputes whether Good Reason existed for the Employee to terminate his
employment for Good Reason, the Company shall pay salary continuation as
provided in Section 5.5 until the earliest of (i) settlement by the
parties, (ii) determination by arbitration in accordance with Section 14
hereof that Good Reason did not exist, and (iii) 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 Employee 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 Employee
shall be obligated to repay promptly to the Company the salary continuation
payments; if the arbitrator determines that there was such a basis, the Employee
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 Employee represents and warrants to
the Company as follows:


6.1   Health


The Employee 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 him from fulfilling his obligations hereunder. The Employee
agrees, if the Company requests, to submit to reasonable periodic medical
examinations by a physician or physicians designated, paid for and arranged by
the Company. The Employee agrees that the examination’s medical report shall be
provided to the Company.


6.2   No
Violation of Other Agreements


The Employee represents
that neither the execution nor the performance of this Agreement by the Employee
will violate or conflict in any way with any other agreement by which the Employee
may be bound.


7.   Nondisclosure;
Return of Materials


7.1   Nondisclosure


Except as required by his
employment with the Company, the Employee 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
without the prior written consent of the Company. The Employee understands that
the Company will be relying on this covenant in continuing the Employee’s
employment, paying his compensation, granting him any promotions or raises, or
entrusting him 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 Employee at any time while employed by the Company, or in his possession,
including any and all copies thereof, shall be the property of the Company and
shall be held by the Employee in trust and 



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solely
for the benefit of the Company, and shall be delivered to the Company by the Employee
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.


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 Employee:

  	
  Mike Jackson

  
	
   

  	
  11719 NE 105th Lane

  
	
   

  	
  Kirkland, WA 98033-5039

  
	
   

  	
   

  
	
  If to the
  Company:

  	
  Poniard Pharmaceuticals, Inc.

  
	
   

  	
  300 Elliott Avenue West, Suite 500

  
	
   

  	
  Seattle, Washington 98119

  
	
   

  	
  Attn: Chief Employee Officer

  
	
   

  	
   

  
	
  With a copy to:

  	
  Perkins Coie LLP

  
	
   

  	
  1201 Third Avenue, 40th Floor

  
	
   

  	
  Seattle, Washington 98101-3099

  
	
   

  	
  Attn: James R. Lisbakken

  






 


Except as set forth in Section 4.4
hereof, if notice is mailed, such notice shall be effective upon mailing.


10.   Assignment


This Agreement is personal to the Employee and shall
not be assignable by the Employee.


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,
the “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 Employee’s employment by one
such entity and the immediate hiring and continuation of the Employee’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.



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11.   Waivers


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


12.   Amendments
In Writing


No amendment,
modification, waiver, termination or discharge of any provision of this
Agreement, or consent to any departure therefrom by either party hereto, shall
in any event be effective unless the same shall be in writing, specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by the Company and the Employee,
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 Employee.


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.


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 



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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.   Excess
Parachute Payments


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 Employee under Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), the
Employee shall be paid any excise tax that the Employee owes under Section 4999
of the Code as a result of such characterization, such excise tax to be paid to
the Employee at least ten (10) days prior to the date that he 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 Employee.


17.   Entire
Agreement


Except as described in Section 16
hereof, this Agreement constitutes the entire agreement between the Company and
the Employee with respect to the subject matter hereof, and all prior or
contemporaneous oral or written communications, understandings or agreements
between the Company and the Employee with respect to such subject matter, are
hereby superseded and nullified in their entireties, except that the
Proprietary Information and Invention Agreement between the Employee and the
Company shall continue in full force and effect to the extent not superseded by
Section 10 hereof.


18.   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.


19.   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.



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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:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
  By:

  	
  /s/ MIKE JACKSON

  	
   

  
	
   

  	
   

  	
  Name: Mike
  Jackson

  
						



 



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