Document:

Exhibit 10.3

 

 

January 7,
2008

 

Mr. Michael Hale

PO Box 903

Benson, NC 27504

 

 

Re:  Change in Control
Severance Compensation Agreement

 

Dear Mike:

 

The board of directors (the “Board”) of Polymer Group, Inc.
(the “Company”) has determined that it is in the best interests of the Company
and its shareholders to assure the continued dedication to the Company of
certain senior management personnel, notwithstanding any possibility, threat or
occurrence of a Change in Control of the Company (as defined below) or other
situations that could result in the termination of your employment.  Accordingly, in order to encourage your
continued attention and dedication to your assigned duties regardless of any
such possibility, threat or occurrence, the Board has authorized the Company to
enter into this “Change in Control Severance Compensation Agreement” (the “Agreement”)
in order to provide you with certain compensation and other benefits in the
event that your employment with the Company is terminated under the circumstances
set forth below.

 

The terms and conditions of this Agreement are as
follows:

 

1.               Term of the Agreement.  (A) The
Term of this Agreement shall commence on the date executed by the Company below
and shall end on December 31, 2009; subject to any extension under Paragraph 1(B) below.  In addition, the Term of this Agreement shall
automatically end upon the occurrence of any of the following:

 

(i)                                     Your death or receipt of a Notice of
Termination due to Disability;

 

(ii)                                  Your attainment of your Retirement Date;
or

 

(iii)                               A determination by the Board that you are
no longer eligible to receive the benefits set forth in this Agreement in
connection with your Termination prior to a Change in Control of the
Company due to performance-related matters and your receipt of notice of any
such determination; provided, that such a determination shall have no
effect if made in anticipation of a Change in Control of the Company and for
the sole purpose of avoiding application of this Agreement to your
Termination, in which case your Termination shall be deemed to have been a
Termination without Cause pursuant to this Agreement and, if the Change in
Control of the Company occurs during the Term and within twelve (12)
months of your Termination, you shall be entitled to the benefits pursuant
to Paragraph 4 payable on the later of (i) the first business day of the
calendar year following the calendar year in which the 

 

 

 

Termination occurs and (ii) five (5) days
following the date of the Change in Control of the Company, but in any event no
later than the last day of the calendar year following the calendar year in
which the Termination occurs.

 

(B)                                In the event of a Change in Control of
the Company, subject to Paragraph 1(A), the Term of this Agreement shall be
automatically extended to the earlier of: 
(i) the date that is one year from the date such Change in Control
of the Company occurred; or (ii) the occurrence of an event described in
Paragraph 1(A)(i) or 1(A)(ii) above.

 

2.               Change in Control of the Company. 
For purposes of this Agreement, a “Change in Control of the Company”
shall mean any of the following events:

 

(A)                              if any “person” or “group” as those terms
are used in Sections 13(d) and 14(d) of the Exchange Act or any
successors thereto, other than an Exempt Person, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act or any
successor thereto), directly or indirectly, of securities of the Company
representing (A) 50% or more of the combined voting power of the Company’s
then outstanding securities or (B) 30% or more of the combined voting
power of the Company’s then outstanding securities if at such time, such person
or group also beneficially owns more of the combined voting power of the
Company’s then outstanding securities than an Exempt Person; or

 

(B)                                during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new directors whose election by the Board or nomination for election by the
Company’s stockholders was approved by at least two-thirds of the directors
then still in office who either were directors at the beginning of the period
or whose election was previously so approved, cease for any reason to
constitute a majority thereof; or

 

(C)                                the consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation (A) which would result in all or a portion of the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) by which the
corporate existence of the Company is not affected and following which the
Company’s chief executive officer and directors retain their positions with the
Company (and constitute at least a majority of the Board); or

 

(D)                               the consummation of a plan of complete
liquidation of the Company or consummation of the sale or disposition by the
Company of all or substantially all the Company’s assets, other than a sale to
an Exempt Person.

 

(E)                                 For purposes of this Agreement, the term (i) “Exempt
Person” means (a) MatlinPatterson Global Opportunities Fund L.P.,
MatlinPatterson Global Opportunities Partners, L.P., MatlinPatterson Global
Opportunities Partners B, L.P., MatlinPatterson LLC, MatlinPatterson Asset
Management LLC, MatlinPatterson Global Advisers LLC, 

 

2

 

MatlinPatterson Global Opportunities Partners (Bermuda), L.P.,
MatlinPatterson Global Partners LLC and any of their respective affiliated
entities, (b) any person, entity or group under the control of any party
included in clause (a), or (c) any employee benefit plan of the Company or
a trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Company.

 

3.               Termination of Employment Following
Change in Control of the Company.

 

(A)                              Termination. 
If a Change in Control of the Company occurs, you shall be entitled,
upon the subsequent termination of your employment (but only if the “termination of your employment” also constitutes a “separation
from service” as defined in Treasury Regulation §1.409A-1(h), as amended or
supplemented from time to time) with the Company (“Termination”), to the
benefits described in Paragraph 4 below, unless such Termination is:  (i) by you other than for Good Reason; (ii) by
the Company for Cause or because of your Disability; or (iii) because of
your death or attainment of your Retirement Date.  Any Termination (except a Termination
resulting from your death) shall be made by written Notice of Termination from
the party initiating such Termination to the other party to this Agreement.

 

(B)                                Notice of Termination. 
A Notice of Termination shall mean a written document stating the
specific provision in this Agreement upon which a Termination is based and
otherwise setting forth the facts and circumstances which provide the basis for
a Termination.

 

(C)                                Date of Termination. 
The Date of Termination shall mean: 
(i) if the Termination occurs as a result of Disability, thirty
(30) days after a Notice of Termination is given; (ii) if the Termination
occurs for Good Reason, the date specified in the Notice of Termination; and (iii) if
the Termination occurs for any other reason, the date on which the Notice of
Termination is given.

 

(D)                               Good Reason. 
A Termination for Good Reason shall mean a Termination as a result of:

 

(i)                                     The assignment to you, without your
express written consent, of any duties reasonably inconsistent with your
position, duties, responsibilities and status with the Company immediately
prior to a Change in Control of the Company, or a change in your titles or
offices (if any) in effect immediately prior to a Change in Control of the
Company, or any removal of you from, or any failure to reelect you to, any of
such positions, except in connection with your Termination for Cause, death,
Disability, or as a result of your attainment of your Retirement Date; or

 

(ii)                                  A reduction by the Company in your base
salary as in effect on the date hereof, or as the same may be increased from
time to time thereafter; or

 

(iii)                               The failure of the Company to continue in
effect any material compensation, welfare or benefit plan in which you are
participating at the time of a Change in 

 

3

 

Control of the Company, without substituting therefor
plans providing you with substantially similar benefits at substantially the
same cost to you; or the taking of any action by the Company which would
adversely affect your participation in or materially reduce your benefits or
materially increase the cost to you under any of such plans or deprive you of
any material fringe benefit enjoyed by you at the time of the Change in Control
of the Company; or

 

(iv)                              Any purported Termination for Cause or
Disability without grounds therefor; or

 

(v)                                 A requirement that you relocate your
principal residence at least 100 miles from that in effect prior to the Change
in Control to continue to provide services to the Company.

 

(E)                                 Cause.  A Termination
for Cause shall mean a Termination as a result of one or more of the
following:  (i) a material breach of
this Agreement by you; provided, that if such breach is capable of being cured,
you shall be provided 15 days notice to cure such breach, (ii) a breach of
your duty of loyalty to the Company or any of its Subsidiaries or any act of
dishonesty or fraud with respect to the Company or any of its Subsidiaries, (iii) the
commission by you of a felony, a crime involving moral turpitude or other act
or omission causing material harm to the standing and reputation of the Company
and its Subsidiaries, (iv) reporting to work under the influence of
alcohol or illegal drugs, the use of illegal drugs (whether or not at the
workplace) or other repeated conduct causing the Company or any of its
Subsidiaries substantial public disgrace or disrepute or economic harm, or (v) any
act or omission aiding or abetting a competitor, supplier or customer of the
Company or any of its Subsidiaries to the material disadvantage or detriment of
the Company and its Subsidiaries.  The
burden for establishing the validity of any termination for Cause shall rest
upon the Company.  No Termination shall
be deemed to be for Cause unless and until there shall have been delivered to
you a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board called and held for
such purpose (after reasonable notice is provided to you and you are given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, you are guilty of the conduct
described above, and specifying the particulars thereof in reasonable detail.

 

(F)                                 Disability.  A “Disability”
shall mean that, as a result of your incapacity due to physical or mental
illness, you shall have been unable to perform your duties with the Company for
a period of six (6) months, and have no prospect of returning to
employment with the Company within an additional six (6) months; provided,
that the Company shall have made a reasonable accommodation of any such
incapacity pursuant to, and shall otherwise have complied in all respects with,
the provisions of the Americans with Disabilities Act of 1990 or any successors
thereto.

 

(G)                                Retirement Date. 
Your “Retirement Date” shall mean the date on which you attain age
70-1/2.

 

4.               Benefits.  Subject in each case to Paragraph 3(A),

 

4

 

(A)                              The Company shall pay to you in a lump sum payment within five (5) business
days following the Date of Termination, an amount that is the sum of (i) twenty-four (24) times your monthly
base salary at the rate in effect at the time a Notice of Termination is given and (ii) two times the greater of (x) your
annual bonus earned for the most-recently completed fiscal year of the Company
and (y) your annual target bonus for the year which includes the Date of
Termination; provided, that you shall have executed a reasonable
and customary release in favor of the Company and its subsidiaries releasing
all claims related to or arising out of the termination of your employment.

 

(B)                                In addition to any rights you may have
under the 2005 Employee Restricted Stock Plan, all of your then-unvested shares
of Restricted Stock issued under such Plan shall vest as of the Date of Termination and, 90 days thereafter, you shall
be free to sell such shares without restriction.

 

(C)                                The Company shall maintain in full force
and effect, for a period of twelve (12) months following your Date of
Termination, all life insurance and medical insurance plans and programs (the “Company
Programs”) in which you are entitled to participate immediately prior to the
Date of Termination; provided that your continued participation is
possible under the terms and provisions of such Company Programs.  In the event that your participation in any
Company Program is not permitted under the terms and provisions thereof, the
Company will use its commercially reasonable efforts to provide you with, or
arrange coverage for you which is substantially similar to (including
comparable terms), the coverage that you would have received under the
applicable Company Program. 
Notwithstanding the foregoing, the Company’s obligations under this
Paragraph 4(C) shall terminate with respect to any Company Program on the
date that you first become eligible, after your Date of Termination, for the
same type of coverage under another employer’s plan.

 

(D)                               The Company shall pay all reasonable
legal fees and expenses incurred by you as a result of your Termination
(including all such reasonable fees and expenses, if any, incurred in
contesting or disputing your Termination or in seeking to obtain or enforce any
rights or benefits provided by this Agreement).

 

(E)                                 The Company shall pay the costs of
reasonable outplacement services until you are employed on a full-time basis; provided
that payment by the Company of such costs shall not exceed $15,000.

 

(F)                                 You shall not be required to mitigate the
amount of any payment provided for in this Paragraph 4 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Paragraph 4 be reduced by any compensation earned by you as a result of
employment by another employer after the Date of Termination, or otherwise,
except as specifically provided in Paragraph 4(C).

 

(G)                                Notwithstanding
the above and unless exempt under Treasury Regulation §1.409A-1(b)(9), if you
are a “specified employee” within the meaning of Code §416(i) and Treasury
Regulation §1.409A-1(i), no payments may be made under this Agreement before
the 

 

5

 

date that is six months after the Termination
(or, if earlier, the date of death of the specified employee).  In such case, all payments to which you are
entitled during the first six months shall be accumulated and paid on the first
date of the seventh month following Termination.

 

(H)                               If it is
determined that any payments hereunder, either separately or in conjunction
with any other payments, benefits and entitlements received by you hereunder,
would constitute an “excess parachute payment” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), and thereby be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then in such event, the Company shall be obligated to pay to you
promptly following such determination and upon notice thereof a “gross-up”
payment in an amount equal to the amount of such Excise Tax, plus all federal
and state income or other taxes with respect to the payment of the amount of
such Excise Tax, including all such taxes (including any additional Excise Tax)
with respect to any such gross-up payment.

 

5.                                       Confidential Information.

 

(A)                              Obligation to Maintain Confidentiality. 
You acknowledge that the continued success of the Company and its
Subsidiaries, depends upon the use and protection of a large body of
confidential and proprietary information. 
All of such confidential and proprietary information existing prior
hereto, now existing or to be developed in the future will be referred to in
this Agreement as “Confidential Information.”  Confidential Information will be interpreted
as broadly as possible to include all information of any sort (whether merely
remembered or embodied in a tangible or intangible form) that is (i) related
to the Company’s or its Subsidiaries’ current or potential business and (ii) is
not generally or publicly known. 
Confidential Information includes, without specific limitation, the
information, observations and data obtained by you during the course of your
performance under this Agreement concerning the business and affairs of the
Company and its Subsidiaries, information concerning acquisition opportunities
in or reasonably related to the Company’s or it Subsidiaries’ business or
industry of which you become aware during your employment, the persons or entities that are current, former
or prospective suppliers or customers of any one or more of them during your
course of performance under this Agreement, as well as development, transition
and transformation plans, methodologies and methods of doing business,
strategic, marketing and expansion plans, including plans regarding planned and
potential sales, financial and business plans, employee lists and telephone
numbers, locations of sales representatives, new and existing programs and
services, prices and terms, customer service, integration processes,
requirements and costs of providing service, support and equipment.  Therefore, you agree that you shall not
disclose to any unauthorized person or use for your own account any of such
Confidential Information without the Board’s prior written consent, unless and
to the extent that any Confidential Information (i) becomes generally
known to and available for use by the public other than as a result of your
acts or omissions to act or (ii) is required to be disclosed pursuant to
any applicable law or court order.  You
agree to deliver to the Company at the end of your employment, or at any other time the Company may request in
writing, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the business of the Company or its 

 

6

 

Subsidiaries (including, without limitation, all Confidential
Information) that you may then possess or have under your control.

 

(B)                                Ownership of Intellectual Property. 
You agree to make prompt and full disclosure to the Company or its
Subsidiaries, as the case may be, of all ideas, discoveries, trade secrets,
inventions, innovations, improvements, developments, methods of doing business,
processes, programs, designs, analyses, drawings, reports, data, software,
firmware, logos and all similar or related information (whether or not
patentable and whether or not reduced to practice) that relate to the Company’s
or its Subsidiaries’ actual or anticipated business, research and development,
or existing or future products or services and that are conceived, developed,
acquired, contributed to, made, or reduced to practice by you (either solely or
jointly with others) while employed by the Company or it Subsidiaries and for a
period of one (1) year thereafter (collectively, “Work Product”).  Any copyrightable work falling within the
definition of Work Product shall be deemed a “work made for hire” under the
copyright laws of the United States, and ownership of all right therein shall
vest in the Company or its Subsidiary. 
To the extent that any Work Product is not deemed to be a “work made for
hire,” you hereby assign and agree to assign to the Company or such Subsidiary
all right, title and interest, including without limitation, the intellectual
property rights that you may have in and to such Work Product.  You shall promptly perform all actions reasonably
requested by the Board (whether during or after your employment) to establish and confirm the Company’s or such
Subsidiary’s ownership (including, without limitation, providing testimony and
executing assignments, consents, powers of attorney, and other instruments).

 

(C)                                Third Party Information. 
You understand that the Company and its Subsidiaries will receive from
third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s and its Subsidiaries’ part
to maintain the confidentiality of such information and to use it only for
certain limited purposes.  During your employment and thereafter, and
without in any way limiting the provisions of Paragraph 5(A) above, you
will hold Third Party Information in the strictest confidence and will not
disclose to anyone (other than personnel of the Company or its Subsidiaries who
need to know such information in connection with their work for the Company or
such Subsidiaries) or use, except in connection with his work for the Company
or its Subsidiaries, Third Party Information unless expressly authorized by a
member of the Board in writing.

 

6.               Non-Compete, Non-Solicitation.

 

(A)                              In further consideration of the
compensation to be paid to you hereunder, whether under Article 4 or
Paragraph 6(E), you acknowledge that during the course of your employment with
the Company and its Subsidiaries you shall become familiar with the Company’s
trade secrets and with other Confidential Information concerning the Company
and its predecessors and its Subsidiaries and that your services shall be of
special, unique and extraordinary value to the Company and its Subsidiaries,
and therefore, you agree that, during the time you are employed by the Company
and for a period of time equal to twenty-four
(24) months thereafter (the “Noncompete Period”), you shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner 

 

7

 

engage in any business competing with the businesses of the Company or
its Subsidiaries, as such businesses exist or are in process during your employment on the date of the
termination or expiration of your employment,
within any geographical area in which the Company or its Subsidiaries engage or
plan to engage in such businesses. 
Nothing herein shall prohibit you from being a passive owner of not more
than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as you have no active participation in the business of
such corporation.

 

(B)                                During the Noncompete Period, you shall
not directly or indirectly through another person or entity (i) induce or
attempt to induce any employee of the Company or any Subsidiary to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof, (ii) hire
any person who was an employee of the Company or any Subsidiary at any time
during your employment or (iii) induce
or attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary (including, without limitation, making any
negative or disparaging statements or communications regarding the Company or
its Subsidiaries).

 

(C)                                If, at the time of enforcement of this Paragraph 6, a court shall hold that
the duration, scope or area restrictions stated herein are unreasonable under
circumstances then existing, the parties agree that the maximum duration, scope
or area reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.

 

(D)                               In the event of the breach or a
threatened breach by you of any of the provisions of this Paragraph 6, the Company would suffer
irreparable harm, and in addition and supplementary to other rights and
remedies existing in its favor, the Company shall be entitled to specific
performance and/or injunctive or other equitable relief from a court of
competent jurisdiction in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).  In addition, in the event of an alleged
breach or violation by you of this Paragraph
6, the Noncompete Period shall be tolled until such breach or violation has
been duly cured.  You acknowledge that
the restrictions contained in Paragraph
6 are reasonable and that you have been
given the opportunity to review the provisions of this Agreement with
legal counsel.

 

(E)                                 Absent a Change in Control of the
Company, you shall be entitled, upon your Termination (unless such Termination
is (i) by you other than for Good Reason; (ii) by the Company for
Cause or because of your Disability; or (iii) because of your death or
attainment of your Retirement Date), to those Company benefits to which you
would otherwise be entitled; provided that you shall receive an amount of
severance pay equal to no less than the amount set forth in Paragraph 4(A).

 

8

 

7.               Miscellaneous.

 

(A)                              Limitation of Effect. 
Except as may otherwise be provided in Paragraph 1(A)(iii) or
Paragraph 6(E), notwithstanding any other provision in this Agreement, this
Agreement shall have no effect on any Termination of your employment prior to a
Change in Control of the Company, or upon any Termination of your employment at
any time as a result of your Disability, attainment of your Retirement Date, or
death; and upon the occurrence of any such events, you shall receive only those
benefits to which you would have been otherwise entitled prior to a Change in
Control of the Company.

 

(B)                                Successors.  (i)  The
Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform this Agreement if no such succession had taken place.  Failure of the Company to obtain such
assumption or agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement.

 

(ii)                                  This Agreement shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amounts would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
be no such designee, to your estate.

 

(C)                                Notice.  Notices
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered in person or mailed by United States registered
mail, return receipt requested, postage prepaid, to you at the address set
forth on the first page of this Agreement, or to the Company at Polymer
Group, Inc., 9335 Harris Corners Parkway, Suite 300, Charlotte, NC
28269, Attn: Vice President, Global Human Resources, or to such other address
as either party may have furnished to the other in writing, except that notices
of change of address shall be effective only upon receipt by the other party.

 

(D)                               Modifications. 
No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver, or discharge is agreed to in writing and is
signed by you and the Company.  No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

 

(E)                                 Interpretation. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of North Carolina.  The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

 

9

 

(F)                                 Other Agreements. 
This Agreement shall supercede all other agreements, arrangements,
understandings or policies, related to the payment of severance amounts between
you and the Company that are in existence on the date hereof, and shall be the
exclusive agreement between you and the Company with respect to the subject
matter hereof; provided, that if you would otherwise be entitled to
receive any payments in the nature of severance or separation pay from the
Company, whether by separate agreement, Company policy, statutory provision or
otherwise, any amounts otherwise to be received hereunder shall be reduced on a
dollar-for-dollar basis by the amount of such other payments you receive.

 

(G)                                Consequences of Termination or Expiration. 
The provisions of this Agreement that by their nature are intended to
survive termination or expiration of this Agreement shall survive termination
or expiration.

 

If you agree that the foregoing correctly sets forth
the agreement between us, please sign both copies of this Agreement in the
space indicated below and return both copies to the Company.  This Agreement will not become effective
until signed by the Company in the space indicated below.  Following proper execution of this Agreement
by you and the Company, the Company will return one fully-executed copy to you
for your files.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Polymer
  Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/Daniel L. Rikard

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Daniel L. Rikard

  
	
   

  	
   

  	
  Vice President, General
  Counsel & Secretary

  

 

10

 

Agreed to as of the date
executed by Polymer Group, Inc. below:

 

	
  EMPLOYEE

  	
   

  	
  POLYMER GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Michael W. Hale

  	
   

  	
  /s/Mary Tomasello

  
	
  Name: 

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Date Signed:

  	
  1-17-08

  	
   

  	
  Title: VP Global HR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Effective Date:

  	
  1/23/08

  
					

 

11Exhibit 10.14

 

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 ANNA
WIGHT (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
traditional employment contract or other assurance of job security.  The Board believes it is imperative to
diminish any distraction of the Executive arising from the personal uncertainty
and insecurity that arises in the absence of any assurance of job security by
providing the Executive with reasonable compensation and benefit arrangements
in the event of termination of the Executive’s employment by the Company under
certain defined circumstances.

 

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

 

1.                                      Term

 

The initial term of this Agreement (the “Initial
Term”) shall be for a period of one (1) year from the date
of this  Agreement as first appearing
above; provided, however, that this Agreement shall automatically renew for
successive additional one (1) year periods (“Renewal
Terms”), unless notice of nonrenewal is given by either party to
the other party at least nine (9) months prior to the end of the Initial
Term or any Renewal Term, and provided further that if a Change of Control (as
defined in the Change of Control Agreement referenced in Section 16
hereof) occurs during the Term, the Term shall automatically extend for the
duration of the Employment Period (as defined in the Change of Control
Agreement).  The “Term”
of this Agreement shall be the Initial Term plus all Renewal Terms and, if
applicable, the duration of the Employment Period.  At the end of the Term, this Agreement shall
terminate without further action by either the Company or the Executive.

 

2.                                      Employment

 

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 by any affiliated or successor company is 

 

 

“at will” and may be
terminated by either the Executive or the Company or its affiliated companies
at any time with or without cause, subject to the termination payments
prescribed herein.

 

3.                                      Attention and
Effort

 

During any period of time
that the Executive remains in the employ of the Company, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive will devote all of the Executive’s productive time, ability,
attention and effort to the business and affairs of the Company and the
discharge of the responsibilities assigned to the Executive hereunder, and will
seek to perform faithfully and efficiently such responsibilities.  It shall not be a violation of this Agreement
for the Executive to (a) serve on corporate, civic or charitable boards or
committees, (b) deliver lectures, fulfill speaking engagements or teach at
educational institutions, (c) manage personal investments, or (d) engage
in activities permitted by the policies of the Company or as specifically
permitted by the Company, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities in
accordance with this Agreement.  It is
expressly understood and agreed that to the extent any such activities have
been conducted by the Executive prior to the Term, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) during the Term shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

 

4.                                      Termination

 

During the Term,
employment of the Executive may be terminated as follows, but, in any case, the
nondisclosure provisions set forth in Section 7 hereof shall survive the
termination of this Agreement and the termination of the Executive’s employment
with the Company:

 

4.1                               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 nine (9) months after the
Date of Termination or until the Executive qualifies for comparable medical and
dental insurance benefits from another employer, whichever occurs first, the
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
seventy five percent (75%) of the Executive’s then current annual base salary
for the fiscal year in which the Date of Termination occurs, subject to payment
as set forth in Sections 5.5 and 5.9 hereof.

 

5.2                               Termination for Cause or
Other Than for Good Reason

 

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

 

5.3                               Expiration of Term

 

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

 

5.4                               Termination Because of
Death or Total Disability

 

If 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

 

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 nine (9) month 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.

 

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

 

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

 

5

 

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

 

6

 

5.8                               General Release of
Claims

 

As a condition to the
payment contemplated by this Section 5, 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 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.

 

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.

 

7

 

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.                                      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:

 

8

 

	
  If to the
  Executive:

  	
   

  	
  Anna Wight

  
	
   

  	
   

  	
  [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 4.4
hereof, if notice is mailed, such notice shall be effective upon mailing.

 

10.                               Assignment

 

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

 

The Company shall assign
to and require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all the business and/or
assets of the Company to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.  As used in this Agreement, 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.

 

9

 

12.                               Amendments In Writing

 

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

 

13.                               Applicable Law

 

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

 

14.                               Arbitration; Attorneys’
Fees

 

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

 

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

 

10

 

15.                               Severability

 

If any provision of this
Agreement shall be held invalid, illegal or unenforceable in any jurisdiction,
for any reason, including, without limitation, the duration of such provision,
its geographical scope or the extent of the activities prohibited or required
by it, then, to the full extent permitted by law, (a) all other provisions
hereof shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intent of the parties hereto as
nearly as may be possible, (b) such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision hereof, and (c) any court or arbitrator having jurisdiction
thereover shall have the power to reform such provision to the extent necessary
for such provision to be enforceable under applicable law.

 

16.                               Coordination With Change
of Control Agreement

 

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

 

11

 

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 Severance Agreement, dated as of February 28,
2003, between the parties, and except as described in Section 16 hereof,
this Agreement constitutes the entire agreement between the Company and the
Executive with respect to the subject matter hereof, and all prior or
contemporaneous oral or written communications, understandings or agreements
between the Company and the Executive with respect to such subject matter, are
hereby superseded and nullified in their entireties, except that the
Proprietary Information and Invention Agreement between the Executive and the
Company shall continue in full force and effect to the extent not superseded by
Section 10 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.

 

12

 

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/ Anna Wight

  
	
   

  	
  Name:   Anna Wight

  
				

 

13

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