Document:

Exhibit 10.17

 

PONIARD
PHARMACEUTICALS, INC.

AMENDED AND RESTATED

CHANGE OF CONTROL AGREEMENT (VP)

 

This Amended and Restated Change of Control Agreement
(VP) (this “Agreement”), dated as of March 3,
2008, is entered into by and between PONIARD PHARMACEUTICALS, INC., a
Washington corporation (formerly known as NeoRx Corporation and as supplemented
by Section 13, the “Company”),
and DAVID KARLIN (the “Executive”).

 

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                                 “Original Agreement” shall mean the Change of Control
Agreement, dated as of June 23, 2005, between the parties.

 

1.5                                 “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 one (1) year from the date this Agreement as first appearing above; provided,
however, that this Agreement shall automatically renew for successive
additional one (1) year periods (“Renewal Terms”)
unless notice of nonrenewal is given by either party to the other at least
ninety (90) days prior to the end of the Initial Term or any Renewal Term, and
provided further that if a Change in 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 

 

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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 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 (a) serve on corporate, civic or charitable boards or
committees, (b) deliver lectures, fulfill speaking engagements or teach at
educational institutions, (c) manage personal investments, or (d) engage
in activities permitted by the policies of the Company or as specifically
permitted by the Company, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities in
accordance with this Agreement.  It is
expressly understood and agreed that to the extent any such activities have
been conducted by the Executive prior to the Employment Period, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) during the Employment Period shall not thereafter 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”) or the Chief Executive Officer 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 or the Chief Executive Officer 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.

 

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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 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 shall survive the termination of this Agreement and
the termination of the Executive’s employment with the Company:

 

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7.1                               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 the Notice of Termination (as defined
below).

 

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 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 the 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,
at the end 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 

 

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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.

 

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)                                 for one year
after the Date of Termination or until the Executive qualifies for comparable
medical and dental insurance benefits from another employer, whichever occurs
first, the Company shall pay the Executive’s premiums for health insurance
benefit continuation for the Executive and the Executive’s family members, if
applicable, which 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;

 

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(d)                                 an amount as
severance pay equal to one (1) times the Annual Base Salary for the fiscal
year in which the Date of Termination occurs; and

 

(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),
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) shall be payable pursuant to the terms
of the deferred compensation program.  Any
payments payable to the Executive pursuant to 

 

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Section 8.1(c) and (d) hereof
shall be made to the Executive in a lump sum within ten (10) working
days of the Date of Termination.  For
purposes of determining the payment schedule, other than for deferred
compensation pursuant to Section 8.1(a)(iii), to the extent that the
payment schedule in this Section 8.5 would subject payments to the
distribution requirements set forth in Section 409A(a)(2) of the
Internal Revenue Code of 1986, as amended (“Code”), because the Date of
Termination is different than the date that a person would be deemed to have
had a separation from service within the meaning of Code Section 409A(a)(2)(i),
the Date of Termination shall be treated as the latest date so as to not
subject such payments to the distribution requirements set forth in Code Section 409A(a)(2).  Notwithstanding the preceding provisions of
this Section 8, if necessary to meet the requirements of subparagraphs (A)(i) and
(B)(i) of Code Section 409A(a)(2), the amounts that would normally be
paid during the first six months after the Executive’s separation from service
within the meaning of Code Section 409A(a)(2) shall not be paid to an
Executive who is a specified employee (as defined in Code Section 409A(a)(2)(B)(i) in
accordance with the procedures established by the Compensation Committee) until
the six-month anniversary of the Executive’s separation from service.

 

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 or senior management of the Company, 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 or senior management 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.

 

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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;

 

(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 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 Section 4999
of the Code 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

 

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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 IRS.

 

8.9                               Release

 

As a condition to receiving the payments and benefits under this Section 8,
the Executive shall execute 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 fifteenth day of the third month of the fiscal year following the year
in which the Date of Termination occurs.

 

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:

 

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 the 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 agreement 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 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 compensation, granting the
Executive any promotions or raises, or entrusting the Executive with any
information that helps the Company compete with others.

 

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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.

 

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:

  	
  David Karlin

  
	
   

  	
  [Address]

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to the Company:

  	
  Poniard
  Pharmaceuticals, Inc.

  
	
   

  	
  300 Elliott Avenue West,
  Suite 500

  
	
   

  	
  Seattle, Washington 98119

  
	
   

  	
  Attn: Chief Executive
  Officer

  
	
   

  	
   

  
	
  With a copy to:

  	
  Perkins Coie LLP

  
	
   

  	
  1201 Third Avenue, 48th
  Floor

  
	
   

  	
  Seattle, Washington
  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.

 

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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 successor to its business and/or assets as aforesaid that assumes and
agrees to perform this Agreement by 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.

 

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.

 

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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 to by the arbitrator’s award, subject only to an appeal
therefrom in accordance with the laws of the State of Washington.  Either party may obtain judgment upon the
arbitrator’s award in the Superior Court of King, County, Washington.

 

If it becomes necessary to pursue or defend any legal proceeding,
whether in arbitration or court, in order to resolve a dispute arising under
this Agreement, the prevailing party in any such proceeding shall be entitled
to recover its reasonable costs and attorneys’ fees.  To the extent necessary to prevent 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

 

13

 

Company and the Executive with respect to
such subject matter, are hereby superseded and nullified in their entireties,
except that the Proprietary Information and Invention Agreement between the
Company and the Executive shall continue in full force and effect to the extent
not superseded by Section 10 hereof.

 

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 Company
intends that this Agreement fully comply with the payout and other limitations
and restrictions imposed under Code Section 409A if and to the extent such
Code Section 409A is otherwise applicable to payments under this Agreement
and such compliance is necessary to avoid the penalties otherwise imposed under
Code Section 409A.  In this
connection, the Company and Executive agree that the payout timing provisions
and any other terms of this Agreement shall be interpreted and deemed modified,
if and to the extent necessary, to comply with the payout and other limitations
and restrictions imposed under Code Section 409A if and to the extent such
Code Section 409A is otherwise applicable to this Agreement and such
compliance is necessary to avoid the penalties otherwise imposed under Code Section 409A.

 

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; and

 

14

 

(c)                                  the severance
payment required under Section 8.1(d) hereof shall be paid first, 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.

 

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/ Caroline Loewy

  
	
   

  	
   

  	
  Name: Caroline Loewy

  
	
   

  	
   

  	
  Its:  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Karlin

  
	
   

  	
  Name:  David Karlin

  

 

15

 

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 (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 (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 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 and 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.

 

2Exhibit 10.19

 

PONIARD PHARMACEUTICALS,
INC.

AMENDED AND RESTATED

KEY EXECUTIVE SEVERANCE AGREEMENT

 

This Amended and
Restated Key Executive Severance Agreement (this “Agreement”),
dated as of March 3, 2008, is entered into by and between PONIARD PHARMACEUTICALS,
INC., a Washington corporation (formerly known as NeoRx Corporation and as
supplemented by Section 10, the “Company”), and GERALD
MCMAHON (the “Executive”).

 

The Board of
Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its shareholders
to ensure that the Company will have the continued dedication of the Executive,
notwithstanding the fact that the Executive does not have any form of assurance
of job security in his Offer Letter dated April 26, 2004 for employment
with the Company (the “Offer Letter”). 
The Board believes it is imperative to diminish any distraction of the
Executive arising from the personal uncertainty and insecurity that arises in
the absence of any assurance of job security by providing the Executive with
reasonable compensation and benefit arrangements in the event of termination of
the Executive’s employment by the Company under certain defined circumstances.

 

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

 

1.                                      Term

 

The initial term of this Agreement (the “Initial Term”) shall be for a period
of two (2) years from the date of this Agreement
as first appearing above; provided, however, that this Agreement shall automatically
renew for successive additional two (2) year periods (“Renewal Terms”), unless notice of
nonrenewal is given by either party to the other party at least ninety (90)
days prior to the end of the Initial Term or any Renewal Term, and provided
further that if a “Change of Control”
(as defined in the Change of Control Agreement referenced in Section 16
hereof) occurs during the Term, the Term shall automatically extend for the
duration of the Employment Period (as defined in the Change of Control Agreement).  The “Term” of
this Agreement shall be the Initial Term plus all Renewal Terms and, if
applicable, the duration of the Employment Period.  At the end of the Term, this Agreement shall
terminate without further action by either the Company or the Executive.

 

2.                                      Employment

 

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 successor company is “at will” and may be 

 

 

terminated by either the Executive or the Company or its successor
companies at any time with or without cause, subject to the termination
payments prescribed herein.

 

3.                                      Attention and Effort

 

During any period
of time that the Executive remains in the employ of the Company, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive will devote all of the Executive’s productive time, ability,
attention and effort to the business and affairs of the Company and the
discharge of the responsibilities assigned to the Executive hereunder, and will
seek to perform faithfully and efficiently such responsibilities.  It shall not be a violation of this Agreement
for the Executive to hold board of director positions with outside civic organizations
or to spend a reasonable amount of time fulfilling the duties of those
positions, or to engage in other outside activities permitted by the policies
of the Company or as specifically permitted by the Board, so long as such
activities do not interfere with the performance of the Executive’s duties
hereunder.  Service on a board of
directors for a commercial entity will be subject to prior approval of the
Board; however, the Company acknowledges and agrees that Executive has
previously disclosed his appointment to the board of directors of Trellis
Bioscience, Inc.  It is understood
and agreed that activities specifically approved or acquiesced in during the
Term shall not be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.

 

4.                                      Termination

 

During the Term,
employment of the Executive may be terminated as follows, but, in any case, the
nondisclosure provisions set forth in Sections 7.1 and 7.2 hereof and
certain obligations under the Invention Agreement (as defined in Section 7.3
hereof) and the Offer Letter shall survive the termination of this Agreement
and the termination of the Executive’s employment with the Company:

 

4.1                               By the Company or the Executive

 

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

 

4.2                               Automatic Termination

 

This Agreement and
the Executive’s employment shall terminate automatically upon the death or
Total Disability of the Executive.  The
term “Total Disability” as used
herein shall mean the Executive’s inability (with such accommodation as may be
required by law and which places no undue burden on the Company), as determined
by a physician selected by the Company and acceptable to the Executive, to
perform the Executive’s essential duties for a period or periods aggregating
twelve (12) weeks in any three hundred sixty-five (365) day period as a result
of physical or mental illness, loss of legal capacity or any other cause

 

2

 

beyond the Executive’s control, unless the Executive is granted a leave
of absence by the Board.

 

4.3                               Notice of Termination

 

Any termination by
the Company or by the Executive during the Term shall be communicated by Notice
of Termination to the other party given in accordance with Section 9
hereof.  The term “Notice
of Termination” shall mean a written notice that (a) indicates
the specific termination provision in this Agreement relied upon and (b) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. 
The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

4.4                               Date of Termination

 

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

 

5.                                      Termination Payments

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

(b)                                 for one year after the Date of
Termination or until the Executive qualifies for comparable medical and dental
insurance benefits from another employer, whichever occurs first, the Company
shall pay the Executive’s premiums for health insurance benefit continuation
for the Executive and the Executive’s family members, if applicable, that the
Company provides to the Executive under the provisions of the federal
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), to the extent that the Company would have paid
such premiums had the Executive remained employed by the Company (such
continued payment is hereinafter referred to as “COBRA
Continuation”); and

 

(c)                                  an amount as severance pay equal to one
hundred percent (100%) of the Executive’s then current annual base salary for
the fiscal year in which the Date of Termination occurs, subject to payment and
potential reduction as set forth in Sections 5.5 and 5.9 hereof.

 

5.2                               Termination for Cause or Other Than for
Good Reason

 

If during the Term
the Executive’s employment shall be terminated by the Company for Cause or by
the Executive for other than Good Reason, this Agreement shall terminate
without further obligation on the part of the Company to the Executive, other
than the Company’s obligation to pay the Executive the Accrued Obligations to
the extent theretofore unpaid.

 

5.3                               Expiration of Term

 

In the event the
Executive’s employment is not terminated prior to expiration of the Term, this
Agreement shall terminate without further obligation on the part of the Company
to the Executive.

 

5.4                               Termination Because of Death or Total
Disability

 

If the Executive’s
employment is terminated during the Term 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

 

4

 

beneficiary, as applicable in the case of the Executive’s death) and to
provide COBRA Continuation.

 

5.5                               Payment Schedule and Offset for Other
Earnings

 

All payments of
Accrued Obligations, or any portion thereof payable pursuant to this Section 5,
other than deferred compensation pursuant to Section 5.1(a)(ii), shall be
made to the Executive within ten (10) working days of the Date of
Termination.  Deferred compensation
pursuant to Section 5.1(a)(ii) shall be payable pursuant to the terms
of the deferred compensation program.  Any
severance payments payable to the Executive pursuant to Section 5.1(c) shall
be made to the Executive in the form of salary continuation, payable at normal
payroll intervals during the one year period following the Date of Termination
(“Payment Period”).  For purposes of determining the payment
schedule, other than for deferred compensation pursuant to Section 5.1(a)(ii),
to the extent that the payment schedule in this Section 5.5 would subject
payments to the distribution requirements set forth in Section 409A(a)(2) of
the Internal Revenue Code of 1986, as amended (“Code”), because the Date of
Termination is different than the date that a person would be deemed to have
had a separation from service within the meaning of Code Section 409A(a)(2)(i),
the Date of Termination shall be treated as the latest date so as to not
subject such payments to the distribution requirements set forth in Code Section 409A(a)(2).  Notwithstanding the preceding provisions of
this Section 5, if necessary to meet the requirements of subparagraphs (A)(i) and
(B)(i) of Code Section 409A(a)(2), the amounts that would normally be
paid during the first six months after the Executive’s separation from service
within the meaning of Code Section 409A(a)(2) shall not be paid to an
Executive who is a specified employee (as defined in Code Section 409A(a)(2)(B)(i) in
accordance with the procedures established by the Compensation Committee) until
the six-month anniversary of the Executive’s separation from service.  Any severance payments payable to the
Executive pursuant to Section 5.1(c) on or after the date of nine (9) months
after the Date of Termination (“Offset Period”)
shall be subject to offset for other earnings received by the Executive as
follows:

 

(a)                                  The Executive shall have no affirmative
duty to seek other employment or otherwise mitigate lost earnings during any
part of the Payment Period.

 

(b)                                 The Executive shall disclose to the Company
any earnings received (or that the Executive had the right to receive) from
employment, consulting or performance of other personal services during the
Offset Period, and the source(s) of such earnings.

 

(c)                                  The Company, in each payroll period
during the Offset Period that a severance payment is due, shall have the right
to offset on a dollar-for-dollar basis all such earnings that the Executive
received during that payroll period.

 

5

 

5.6                               Cause

 

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

 

(a)                                  a clear refusal to carry out any material
lawful duties of the Executive or any directions of the Board reasonably
consistent with those duties;

 

(b)                                 persistent failure to carry out any
lawful duties of the Executive or any directions of the Board reasonably
consistent with those duties; provided, however, that the Executive has been
given reasonable notice and opportunity to correct any such failure;

 

(c)                                  violation by the Executive of a state or
federal criminal law involving the commission of a crime against the Company or
any other criminal act involving moral turpitude;

 

(d)                                 current abuse by the Executive of alcohol
or controlled substances; deception, fraud, misrepresentation or dishonesty by
the Executive; or any incident materially compromising the Executive’s
reputation or ability to represent the Company with investors, customers or the
public; or

 

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

 

5.7                               Good Reason

 

For purposes of
this Agreement, “Good Reason” means:

 

(a)                                  reduction of the Executive’s annual base
salary to a level below the level in effect on the date of this Agreement,
regardless of any change in the Executive’s duties or responsibilities;

 

(b)                                 the assignment to the Executive of any
duties materially inconsistent with the Executive’s position, authority, duties
or responsibilities or any other action by the Company that results in a
material diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated and inadvertent action not taken in bad
faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;

 

(c)                                  the Company’s requiring the Executive to
be based at any office or location more than thirty (30) miles from the Company’s
current location in Seattle, Washington or from the city of San Francisco,
California;

 

(d)                                 any failure by the Company to comply with
and satisfy Section 10 hereof, provided, however, that the Company’s
successor has received at least ten (10) days’ prior 

 

6

 

written notice from the Company or the Executive of the requirements of
Section 10 hereof; or

 

(e)                                  any other material violation of any
provision of this Agreement by the Company;

 

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

 

5.8                               General Release of Claims

 

As a condition to
the payment contemplated by Section 5.1(c), the Executive shall execute a
general release and waiver 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 and waiver of
claims will include any claims for wages, bonuses, employment benefits, or
damages of any kind whatsoever, arising out of any contracts, express or
implied, any covenant of good faith and fair dealing, express or implied, any
theory of wrongful discharge, any legal restriction on the Company’s right to
terminate employment, or any federal, state or other governmental statute or
ordinance, including, without limitation, Title VII of the Civil Rights Act of
1964, the federal Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Washington Law Against
Discrimination or similar California law, or any other legal limitation on the
employment relationship.  Such release
and waiver shall be delivered to the Company no later than the fifteenth day of
the third month of the fiscal year following the year in which the Date of
Termination occurs.

 

5.9                               Dispute Regarding Existence of Good
Reason for Termination

 

In the event the
Company disputes whether Good Reason existed for the Executive to terminate the
Executive’s employment for Good Reason, the Company shall pay salary
continuation as provided in Section 5.5 until the earliest of (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 Executive had a reasonable, good-faith basis for claiming
that there was Good Reason to terminate. 
If the arbitrator determines that there was not such a basis, the
Executive shall be obligated to repay promptly to the Company the salary
continuation payments; if the arbitrator determines that there was such a
basis, the Executive shall not be obligated to repay the salary continuation.

 

7

 

6.                                      Representations, Warranties and Other
Conditions

 

In order to induce
the Company to enter into this Agreement, the Executive represents and warrants
to the Company as follows:

 

6.1                               Health

 

The Executive is
in good health and knows of no physical or mental disability that, with any
accommodation that may be required by law and that places no undue burden on
the Company, would prevent the Executive from fulfilling the Executive’s obligations
hereunder.  The Executive agrees, if the
Company requests, to submit to reasonable periodic medical examinations by a
physician or physicians designated, paid for and arranged by the Company.  The Executive agrees that the examination’s
medical report shall be provided to the Company.

 

6.2                               No Violation of Other Agreements

 

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

 

7.                                      Nondisclosure; Return of Materials

 

7.1                               Nondisclosure

 

Except as required
by the Executive’s employment with the Company, the Executive will not, at any
time during the term of employment by the Company, or at any time thereafter,
directly, indirectly or otherwise, use, communicate, disclose, disseminate,
lecture upon or publish articles relating to any confidential, proprietary or
trade secret information without the prior written consent of the Company.  The Executive understands that the Company will
be relying on this covenant in continuing the Executive’s employment, paying
the Executive’s compensation, granting the Executive any promotions or raises,
or entrusting the Executive with any information that helps the Company compete
with others.

 

7.2                               Return of Materials

 

All documents,
records, notebooks, notes, memoranda, drawings or other documents made or
compiled by the Executive at any time while employed by the Company, or in the
Executive’s possession, including any and all copies thereof, shall be the
property of the Company and shall be held by the Executive in trust and solely
for the benefit of the Company, and shall be delivered to the Company by the
Executive upon termination of employment or at any other time upon request by
the Company.

 

8

 

7.3                               Invention and Proprietary Information
Agreement

 

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

 

8.                                      Notice and Cure of Breach

 

Whenever a breach
of this Agreement by either party is relied upon as justification for any
action taken by the other party pursuant to any provision of this Agreement,
other than clause (a), (b), (c) or (d) of Section 5.6
hereof, before such action is taken, the party asserting the breach of this
Agreement shall give the other party at least twenty (20) days’ prior written
notice of the existence and the nature of such breach before taking further
action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the twenty (20) day
period.

 

9.                                      Form of Notice

 

Every notice
required by the terms of this Agreement shall be given in writing by serving
the same upon the party to whom it was addressed personally or by registered or
certified mail, return receipt requested, at the address set forth below or at
such other address as may hereafter be designated by notice given in compliance
with the terms hereof:

 

	
  If to the Executive:

  	
  Gerald McMahon

  
	
   

  	
  [Address]

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to the Company:

  	
  Poniard Pharmaceuticals, Inc.

  
	
   

  	
  300 Elliott Avenue West, Suite 500

  
	
   

  	
  Seattle, Washington 98119

  
	
   

  	
  Attn: Corporate Secretary

  
	
   

  	
   

  
	
  With a copy to:

  	
  Perkins Coie LLP

  
	
   

  	
  1201 Third Avenue, 48th 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.

 

9

 

10.                               Assignment

 

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

 

The Company shall
assign to and require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.  As used in this Agreement, 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 Executive’s employment by one such entity and
the immediate hiring and continuation of the Executive’s employment by the
succeeding entity shall not be deemed to constitute a termination or trigger
any severance obligation under this Agreement. 
All the terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.

 

11.                               Waivers

 

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

 

12.                               Amendments in Writing

 

No amendment,
modification, waiver, termination or discharge of any provision of this
Agreement, or consent to any departure therefrom by either party hereto, shall
in any event be effective unless the same shall be in writing, specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by the Company and the Executive,
and each such amendment, modification, waiver, termination or discharge shall
be effective only in the specific instance and for the specific purpose for
which given.  No provision of this
Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the Company and the Executive.

 

13.                               Applicable Law and Venue

 

This Agreement
shall in all respects, including all matters of construction, validity and
performance, be governed by, and construed and enforced in accordance with, the
laws of the State of Washington, without regard to any rules governing
conflicts of laws.  Executive

 

10

 

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

 

14.                               Arbitration; Attorneys’ Fees

 

Except in
connection with enforcing Section 7 hereof, for which legal and equitable
remedies may be sought in a court of law, any dispute arising under this
Agreement shall be subject to arbitration. 
The arbitration proceeding shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the “AAA Rules”) then in effect, conducted by one (1) arbitrator
either mutually agreed upon or selected in accordance with the AAA Rules.  The arbitration shall be conducted in King
County, Washington, under the jurisdiction of the Seattle office of the
American Arbitration Association.  The arbitrator
shall have authority only to interpret and apply the provisions of this
Agreement, and shall have no authority to add to, subtract from or otherwise
modify the terms of this Agreement.  Any
demand for arbitration must be made within sixty (60) days of the event(s) giving
rise to the claim that this Agreement has been breached.  The arbitrator’s decision shall be final and
binding, and each party agrees to be bound by the arbitrator’s award, subject
only to an appeal therefrom in accordance with the laws of the State of
Washington.  Either party may obtain
judgment upon the arbitrator’s award in the Superior Court of King County,
Washington.

 

If it becomes
necessary to pursue or defend any legal proceeding, whether in arbitration or
court, in order to resolve a dispute arising under this Agreement, the
prevailing party in any such proceeding shall be entitled to recover its
reasonable costs and attorneys’ fees.  To
the extent necessary to prevent Executive from being subject to any additional
tax pursuant to Code Section 409A(a)(1)(B), any amounts payable to the
Executive pursuant to this paragraph shall be paid in no event later than the
year following the year during which such costs and fees were incurred.

 

15.                               Severability

 

If any provision
of this Agreement shall be held invalid, illegal or unenforceable in any
jurisdiction, for any reason, including, without limitation, the duration of
such provision, its geographical scope or the extent of the activities
prohibited or required by it, then, to the full extent permitted by law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the intent
of the parties 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.

 

11

 

16.                               Coordination with Change of Control
Agreement

 

The Company and
the Executive are entering into an Amended and Restated Change of Control
Agreement (the “Change of Control Agreement”),
which agreement provides for certain forms of severance and benefit payments in
the event of termination of Executive’s employment under certain defined
circumstances.  This Agreement is in
addition to the Change of Control Agreement, providing certain assurances to
the Executive in circumstances that the Change of Control Agreement does not
cover, and in no way supersedes or nullifies the Change of Control
Agreement.  Nevertheless, it is possible
that a termination of employment by the Company or by the Executive may fall
within the scope of both agreements.  In
such event, payments made to the Executive under Section 5.1 hereof shall
be coordinated with payments made to the Executive under Section 8.1 of
the Change of Control Agreement as follows:

 

(a)                                  Accrued Obligations under this Agreement
need not be paid if paid under the Change of Control Agreement;

 

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

 

(c)                                  the severance
payment required under Section 5.1(c) hereof (and paid pursuant to Section 5.5
hereof) need not be paid to the extent a severance payment is made under Section 8.1(d) of
the Change of Control Agreement, i.e., the credit from Section 8.1(d) of
the Change of Control Agreement is applied as amounts become due under Section 5.5
hereof.

 

17.                               Excess Parachute Payments

 

Unless provided by
Section 8.8 of the Change of Control Agreement, if any portion of the
payments or benefits under this Agreement or any other agreement or benefit
plan of the Company (including stock options) would be characterized as an “excess
parachute payment” to the Executive under Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), the
Executive shall be paid any excise tax that the Executive owes under Section 4999
of the Code 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 17 shall be made no later than the
end of the year following the year in which the Executive remits such excise
tax to the IRS.

 

18.                               Entire Agreement

 

This Agreement
supersedes and replaces the Key Executive SeveranceAgreement, dated as of May 11,
2004, between the parties, and except as described in Section 16 hereof, 

 

12

 

this Agreement constitutes the entire agreement between the Company and
the Executive with respect to the subject matter hereof, and all prior or
contemporaneous oral or written communications, understandings or agreements
between the Company and the Executive with respect to such subject matter are
hereby superseded and nullified in their entireties, except that the Invention
Agreement between the Executive and the Company and the Offer Letter, shall
continue in full force and effect to the extent not superseded by Sections 7.1
and 7.2 hereof.

 

19.                               Withholding

 

The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.

 

20.                               409A Interpretation Provision

 

The Company intends that this
Agreement fully comply with the payout and other limitations and restrictions
imposed under Code Section 409A if and to the extent such Code Section 409A
is otherwise applicable to payments under this Agreement and such compliance is
necessary to avoid the penalties otherwise imposed under Code Section 409A.
In this connection, the Company and Executive agree that the payout timing
provisions and any other terms of this Agreement shall be interpreted and
deemed modified, if and to the extent necessary, to comply with the payout and
other limitations and restrictions imposed under Code Section 409A if and
to the extent such Code Section 409A is otherwise applicable to this
Agreement and such compliance is necessary to avoid the penalties otherwise
imposed under Code Section 409A.

 

21.                               Counterparts

 

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

 

IN WITNESS
WHEREOF, the parties have executed and entered into this Agreement effective on
the date first set forth above.

 

 

	
   

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Caroline Loewy

  
	
   

  	
   

  	
  Name: Caroline Loewy

  
	
   

  	
   

  	
  Its:  Chief
  Financial Officer

  

 

13

 

	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald McMahon

  
	
   

  	
   

  	
  Name:  Gerald McMahon

  

 

14

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