Document:

Exhibit 4.1

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS
OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL TO TRANSFEROR IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE COMMON STOCK

	
  Company:

  	
  Poniard Pharmaceuticals, Inc., a
  Washington corporation

  
	
  Number of Shares:

  	
  87,209

  
	
  Class of Stock:

  	
  Common Stock, $0.02 par value

  
	
  Warrant Price:

  	
  $4.30 (Equal to the average of the closing sale
  prices per share reported by the NASDAQ 

  
	
  Capital Market for each of the five trading days
  immediately preceding October 25 (the Closing Date))

  
	
  Issue Date:

  	
  October 25, 2006

  
	
  Expiration Date:

  	
  October 25, 2011

  
	
  Credit Facility:

  	
  This Warrant is issued in connection with the Term
  Loan referenced in the Loan and Security Agreement among the Company, Silicon
  Valley Bank, as Agent, and Silicon Valley Bank and Merrill Lynch Capital
  dated October 25, 2006.

  

 

THIS WARRANT
CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK
(Silicon Valley Bank, together with any registered holder from time to time of
this Warrant or any holder of the shares issuable or issued upon exercise of
this Warrant, “Holder”) is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the “Shares”) of the Company
at the Warrant Price, all as set forth above and as adjusted pursuant to
Article 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth in this Warrant.

ARTICLE 1. EXERCISE.

1.1           Method
of Exercise.  Holder may exercise or
convert this Warrant by delivering a duly executed Notice of Exercise in
substantially the form attached as Appendix 1 to the principal office of the
Company.  Unless Holder is exercising the
conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased.

1.2           Conversion
Right.  In lieu of exercising this
Warrant as specified in Article 1.1, Holder may from time to time convert this
Warrant, in whole or in part,

 

into a
number of Shares determined by dividing (a) the aggregate fair market value of
the Shares or other securities otherwise issuable upon exercise of this Warrant
minus the aggregate Warrant Price of such Shares by (b) the fair market value
of one Share.  The fair market value of a
Share shall be determined pursuant to Article 1.3.

1.3           Fair
Market Value.  The fair market value
of each Share shall be the closing sale price of a Share reported on the Nasdaq
Capital Market (or other public market on which the Shares are traded) for the
trading day immediately preceding the date on which Holder delivers its Notice
of Exercise to the Company.  If the Company’s
common stock is not traded in a public market, the Board of Directors of the
Company shall determine fair market value in its reasonable good faith
judgment.

1.4           Delivery
of Certificate and New Warrant. 
Promptly after Holder exercises or converts this Warrant and, if
applicable, the Company receives payment of the aggregate Warrant Price, the
Company shall deliver to Holder certificates for the Shares acquired and, if
this Warrant has not been fully exercised or converted and has not expired, a
new Warrant representing the Shares not so acquired.

1.5           Replacement
of Warrants.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company or, in the case of mutilation on surrender and cancellation of
this Warrant, the Company shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

1.6           Treatment
of Warrant Upon Acquisition of Company.

1.6.1        “Acquisition”.  For the purpose of this Warrant, “Acquisition”
means any sale, license, or other disposition of all or substantially all of
the assets of the Company (other than the licensing of intellectual property in
the ordinary course of the Company’s business as conducted on the Issue Date),
or any reorganization, consolidation, or merger of the Company where the
holders of the Company’s securities before the transaction beneficially own less
than 50% of the outstanding voting power of the surviving entity after the
transaction.

1.6.2                        Treatment
of Warrant at Acquisition.

A)           In the event of an
Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to
the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will expire upon the consummation of such
Acquisition.  The Company shall provide
Holder with written notice of the proposed Acquisition (an “Acquisition Notice”)
(together with such reasonable information as Holder may request in connection
with such contemplated Acquisition giving rise to such notice), which is to be
delivered to Holder not less than ten (10) days prior to the closing of the
proposed Acquisition.

 

B)            In
the event of an Acquisition that is an “arms length” sale of all or
substantially all of the Company’s assets (and only its assets) to a third
party that is not an Affiliate (as defined below) of the Company (a “True Asset
Sale”), either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to
the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will continue until the Expiration Date if the
Company continues as a going concern following the closing of any such True
Asset Sale.  The Company shall provide
Holder with an Acquisition Notice relating to the foregoing (together with such
reasonable information as Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered
to Holder not less than ten (10) days prior to the closing of the proposed
Acquisition.

C)            Upon
the closing of any Acquisition other than those particularly described in
subsections (A) and (B) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing.  The Warrant Price and/or number of Shares
shall be adjusted accordingly.

As used herein “Affiliate”
shall mean any person or entity that owns or controls directly or indirectly
ten (10) percent or more of the voting power of Company, any person or entity
that controls or is controlled by or is under common control with such persons
or entities, and each of such person’s or entity’s officers, directors, or
partners, as applicable.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

2.1           Stock
Dividends, Splits, Etc.  If the
Company declares or pays a dividend on the Shares payable in common stock or
other securities, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend occurred. 
If the Company subdivides the Shares by reclassification or otherwise
into a greater number of shares or takes any other action which increase the
amount of stock into which the Shares are convertible, the number of shares
purchasable hereunder shall be proportionately increased and the Warrant Price
shall be proportionately decreased.  If
the outstanding shares are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased and the number of Shares shall be proportionately
decreased.

2.2           Reclassification,
Exchange, Combinations or Substitution. 
Upon any reclassification, exchange, substitution, or other event not
covered by Article 1.6 or Article 2.1 that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property

 

that
Holder would have received for the Shares if this Warrant had been exercised
immediately before such reclassification, exchange, substitution, or other
event.  Such an event shall include any
automatic conversion of the outstanding or issuable securities of the Company
of the same class or series as the Shares to common stock pursuant to the terms
of the Company’s Articles or Certificate (as applicable) of Incorporation upon
the closing of a registered public offering of the Company’s common stock.  The Company or its successor shall promptly
issue to Holder an amendment to this Warrant setting forth the number and kind
of such new securities or other property issuable upon exercise or conversion
of this Warrant as a result of such reclassification, exchange, substitution or
other event that results in a change of the number and/or class of securities
issuable upon exercise or conversion of this Warrant.  The amendment to this Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. 
The provisions of this Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

2.3           No
Impairment.  Except to the extent
waived or consented to by Holder, the Company shall not, by amendment of its
Articles or Certificate (as applicable) of Incorporation or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such
commercially reasonable action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment.

2.4           Fractional
Shares.  No fractional Shares shall
be issuable upon exercise or conversion of this Warrant and the number of
Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional share interest arises upon
any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share.

2.5           Certificate
as to Adjustments.  Upon each
adjustment of the Warrant Price, the Company shall promptly notify Holder in
writing, and, at the Company’s expense, promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer or other
authorized officer setting forth such adjustment and the facts upon which such
adjustment is based.  The Company shall,
upon written request, furnish Holder a certificate setting forth the Warrant
Price in effect upon the date thereof and the series of adjustments leading to
such Warrant Price.

2.6           Calculations.  All calculations under Article 1.6 and this
Article 2 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.

 

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1           Representations
and Warranties.  The Company represents and warrants to Holder
that all Shares which are issuable upon the exercise or conversion of this
Warrant pursuant to the terms hereof, shall, upon issuance, be duly authorized,
validly issued, and upon payment of the aggregate Warrant Price, fully paid and
nonassessable, and free of any liens and encumbrances except for restrictions
on transfer provided for herein or under applicable federal and state
securities laws.

3.2           Notice of Certain
Events.  If the Company proposes at
any time to liquidate, dissolve or wind up, the Company shall give Holder at
least 10 days prior written notice of the date when the same will take place
(and specifying the date on which the holders of common stock will be entitled
to exchange their common stock for securities or other property deliverable
upon the occurrence of such event). 
Company will also provide information requested by Holder reasonably
necessary to enable Holder to comply with Holder’s accounting or reporting
requirements.

ARTICLE 4. REPRESENTATIONS,
WARRANTIES OF HOLDER.  Holder
represents and warrants to the Company as follows:

4.1           Purchase for Own
Account.  This Warrant and the
securities to be acquired upon exercise of this Warrant by Holder will be
acquired for investment for Holder’s account, not as a nominee or agent, and
not with a view to the public resale or distribution within the meaning of the
Act.  Holder also represents that Holder
has not been formed for the specific purpose of acquiring this Warrant or the
Shares.

4.2           Disclosure of
Information.  Holder has received or
has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the
acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Holder or to which Holder has
access.

4.3           Investment
Experience.  Holder understands that
the purchase of this Warrant and its underlying securities involves substantial
risk.  Holder has experience as an
investor in securities of companies in the development stage and acknowledges
that Holder can bear the economic risk of such Holder’s investment in this
Warrant and its underlying securities and has such knowledge and experience in
financial or business matters that Holder is capable of evaluating the merits
and risks of its investment in this Warrant and its underlying securities
and/or has a preexisting personal or business relationship with the Company and
certain of its officers, directors or controlling persons of a nature and
duration that enables Holder to be aware of the character, business acumen and
financial circumstances of such persons.

4.4             Accredited
Investor Status.  Holder is an “accredited
investor” within the meaning of Regulation D promulgated under the Act.

 

4.5           The
Act.  Holder understands that this
Warrant and the Shares issuable upon exercise or conversion hereof have not
been registered under the Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Holder’s investment intent as expressed herein. 
Holder understands that this Warrant and the Shares issued upon any
exercise or conversion hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state securities laws,
or unless exemption from such registration and qualification are otherwise
available.  Notwithstanding anything to
the contrary stated herein, in no event shall any Shares be issued, and the
Company is authorized to refuse to honor the exercise of this Warrant, or any
part thereof, if such exercise would result in the opinion of the Company’s
board of directors, upon written advice of counsel, in the violation of any
law, including, without limitation, state and Federal securities laws.

ARTICLE 5. MISCELLANEOUS.

5.1           Term.  This Warrant is exercisable in whole or in
part at any time and from time to time on or before the Expiration Date. 

5.2           Legends.                This Warrant and
the Shares (and the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS
OF ARTICLE 5 OF THE WARRANT, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL TO THE
TRANSFEROR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT
FROM REGISTRATION.

5.3           Compliance
with Securities Laws on Transfer.  This
Warrant and the Shares issued upon exercise of this Warrant (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) may
not be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company).  The Company shall not require Silicon Valley
Bank (“Bank”) to provide an opinion of counsel if the transfer is to Bank’s
parent company, SVB Financial Group (formerly Silicon Valley Bancshares), or
any other

 

affiliate
of Bank, pursuant to Article 5.4 below. 
Additionally, the Company shall not, in connection with the proposed
sale of Shares issued upon exercise of this Warrant, require an opinion of
counsel if there is no material question as to the availability of current
information as referenced in Rule 144(c), Holder represents that it has
complied with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is provided
with a copy of Holder’s notice of proposed sale of the Shares.

5.4           Transfer Procedure.  After receipt by Bank of the executed
Warrant, Bank will transfer all of this Warrant to SVB Financial Group by
execution of an Assignment substantially in the form of Appendix 2.  Subject to the provisions of Article 4.5 and
Article 5, SVB Financial Group and any permitted subsequent Holder may transfer
all or part of this Warrant or any Shares issued upon exercise of this Warrant
(or the Shares issuable directly or indirectly, upon conversion of the Shares,
if any) to any transferee, provided, however, that prior to any such transfer,
SVB Financial Group or any permitted subsequent Holder (i) delivers to the
Company written notice of the portion of the Warrant being transferred with the
name, address and taxpayer identification number of the proposed transferee,
(ii) complies with the provisions of Article 4.5 and Article 5.3 hereof,
including by delivery to the Company of such legal opinions and representation
letters of the transferor and transferee as the Company may reasonably require,
and (iii) if transferring this Warrant, surrenders this Warrant to the Company
for reissuance to the transferee(s) (and Holder if applicable).

5.5           No Shareholder
Rights.  Nothing contained in this
Warrant shall be construed as conferring upon Holder hereof the right to vote,
to consent, or to receive notice as a shareholder of the Company or any other
matters or any rights whatsoever as a shareholder of the Company, except as
expressly provided in this Warrant.  No
dividends or interest shall be payable or accrued in respect of this Warrant or
the interest represented hereby or the shares purchasable hereunder until, and
only to the extent that, this Warrant shall have been exercised.

5.6           Notices.  All notices and other communications from the
Company to Holder, or vice versa, shall be deemed delivered and effective when
given personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or Holder,
as the case may (or on the first business day after transmission by facsimile)
be, in writing by the Company or such Holder from time to time.  Effective upon receipt of the fully executed
Warrant and the initial transfer described in Article 5.4 above, all notices to
Holder shall be addressed as follows until the Company receives notice of a
change of address in connection with a transfer or otherwise:

SVB Financial
Group

Attn: Treasury
Department

3003 Tasman Drive,
HA 200

Santa Clara, CA
95054

Facsimile: 408-496-2405

 

Notice to the Company shall be addressed
as follows until Holder receives notice of a change in address:

Poniard Pharmaceuticals,
Inc.

Attn: Chief Financial
Officer

7000 Shoreline Blvd.,
Suite 270

South San Francisco, CA
94080

Facsimile:
(650) 583-5710

5.6           Waiver.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

5.7           Attorneys’
Fees.  In the event of any dispute
between the parties concerning the terms and provisions of this Warrant, the
party prevailing in such dispute shall be entitled to collect from the other
party all reasonable costs incurred in such dispute, including reasonable
attorneys’ fees.

5.8           Automatic
Conversion upon Expiration.  In the
event that, upon the Expiration Date, the fair market value of one Share (or
other security issuable upon the exercise hereof) as determined in accordance
with Article 1.3 above is greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to
be converted pursuant to Article 1.2 above as to all Shares (or such other
securities) for which it shall not previously have been exercised or converted,
and the Company shall promptly deliver a book entry statement or certificate
representing the Shares (or such other securities) issued upon such conversion
to Holder.

5.9           Counterparts.  This Warrant may be executed in counterparts,
all of which together shall constitute one and the same agreement.  Headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed part of
this Warrant.

5.10         Governing Law.  This Warrant shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to its principles regarding conflicts of law.

[Signature
page follows.]

 

“COMPANY”

PONIARD
PHARMACEUTICALS, INC.

	
  By:

  	
  /S/
  GeraldMcMahon

  	
   

  	
  By:

  	
  /S/ Caroline
  Loewy

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Gerald McMahon

  	
   

  	
  Name:

  	
  Caroline Loewy

  
	
   

  	
  (Print)

  	
   

  	
   

  	
  (Print)

  
	
  Title:

  	
  Chairman of the Board, President and

  Chief Executive Officer

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
							

 

“HOLDER”

SILICON VALLEY BANK

	
  By:

  	
   

  	
  /S/ Peter Scott

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Peter Scott

  	
   

  	
   

  
	
   

  	
  (Print)

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Senior Vice
  President

  	
   

  	
   

  
						

 

 

 

APPENDIX 1

NOTICE
OF EXERCISE

1.             Holder elects to purchase                    
shares of the Common Stock of Poniard Pharmaceuticals, Inc. pursuant to the
terms of the attached Warrant, and tenders payment of the purchase price of the
shares in full.

[or]

1.             Holder
elects to convert the attached Warrant into Shares in the manner specified in
the Warrant.  This conversion is
exercised for                                          
of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2.             Please
issue a book entry statement or certificate or certificates representing the
shares in the name specified below:

 

	
  

  	
   

  	
   

  
	
   

  	
  Holder’s Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

 

3.             By
its execution below and for the benefit of the Company, Holder hereby restates
each of the representations and warranties in Article 4 of the Warrant as the
date hereof.

	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Date):

  	
   

  	
   

  
								

 

 

 

APPENDIX
2

ASSIGNMENT

For value received, Silicon
Valley Bank hereby sells, assigns and transfers unto

	
   

  	
  Name:

  	
  SVB Financial Group

  
	
   

  	
  Address:

  	
  3003 Tasman Drive (HA-200)

  
	
   

  	
   

  	
  Santa Clara, CA 95054

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax ID:

  	
  91-1962278

  

 

that certain Warrant to
Purchase Stock issued by Poniard Pharmaceuticals, Inc. (the “Company”), on
October 25, 2006 (the “Warrant”) together with all rights, title and interest
therein.

	
  

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
						

 

By its execution below, and for the
benefit of the Company, SVB Financial Group makes each of the representations
and warranties set forth in Article 4 of the Warrant and agrees to all other
provisions of the Warrant as of the date hereof.

	
  

  	
  SVB FINANCIAL GROUP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:Exhibit 4.2

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS
OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL TO TRANSFEROR IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

WARRANT TO PURCHASE COMMON STOCK

	
  Company:

  	
  Poniard Pharmaceuticals, Inc.,
  a Washington corporation

  
	
  Number of Shares:

  	
  87,209

  
	
  Class of Stock:

  	
  Common Stock, $0.02 par value

  
	
  Warrant Price:

  	
  $4.30 (Equal to the average of the closing sale
  prices per share reported by the NASDAQ 

  
	
  Capital Market for each of the five trading days
  immediately preceding October 25, 2006 (the Closing Date).)

  
	
  Issue Date:

  	
  October 25, 2006

  
	
  Expiration Date:

  	
  October 25, 2011

  
	
  Credit Facility:

  	
  This Warrant is issued in connection with the Term
  Loan referenced in the Loan and Security Agreement among the Company, Silicon
  Valley Bank, as Agent, and Silicon Valley Bank and Merrill Lynch Capital
  dated October 25, 2006.

  

 

THIS WARRANT
CERTIFIES THAT, for good and valuable consideration, MERRILL LYNCH CAPITAL, a
division of Merrill Lynch Business Financial Services Inc. (Merrill Lynch
Capital, together with any registered holder from time to time of this Warrant
or any holder of the shares issuable or issued upon exercise of this Warrant, “Holder”)
is entitled to purchase the number of fully paid and nonassessable shares of
the class of securities (the “Shares”) of the Company at the Warrant Price, all
as set forth above and as adjusted pursuant to Article 2 of this Warrant,
subject to the provisions and upon the terms and conditions set forth in this
Warrant. 

ARTICLE 1. EXERCISE.

1.1           Method
of Exercise.  Holder may exercise or
convert this Warrant by delivering a duly executed Notice of Exercise in
substantially the form attached as Appendix 1 to the principal office of the
Company.  Unless Holder is exercising the
conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased.

 

1.2           Conversion
Right.  In lieu of exercising this
Warrant as specified in Article 1.1, Holder may from time to time convert this
Warrant, in whole or in part, into a number of Shares determined by dividing
(a) the aggregate fair market value of the Shares or other securities otherwise
issuable upon exercise of this Warrant minus the aggregate Warrant Price of
such Shares by (b) the fair market value of one Share.  The fair market value of a Share shall be
determined pursuant to Article 1.3.

1.3           Fair
Market Value.  The fair market value
of each Share shall be the closing sale price of a Share reported on the Nasdaq
Capital Market (or other public market on which the Shares are traded) for the
trading day immediately preceding the date on which Holder delivers its Notice
of Exercise to the Company.  If the
Company’s common stock is not traded in a public market, the Board of Directors
of the Company shall determine fair market value in its reasonable good faith
judgment.

1.4           Delivery
of Certificate and New Warrant. 
Promptly after Holder exercises or converts this Warrant and, if
applicable, the Company receives payment of the aggregate Warrant Price, the
Company shall deliver to Holder certificates for the Shares acquired and, if
this Warrant has not been fully exercised or converted and has not expired, a
new Warrant representing the Shares not so acquired.

1.5           Replacement
of Warrants.  On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company or, in the case of mutilation on surrender and cancellation of
this Warrant, the Company shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

1.6           Treatment
of Warrant Upon Acquisition of Company.

1.6.1        “Acquisition”.  For the purpose of this Warrant, “Acquisition”
means any sale, license, or other disposition of all or substantially all of
the assets of the Company (other than the licensing of intellectual property in
the ordinary course of the Company’s business as conducted on the Issue Date),
or any reorganization, consolidation, or merger of the Company where the holders
of the Company’s securities before the transaction beneficially own less than
50% of the outstanding voting power of the surviving entity after the
transaction.  

1.6.2                        Treatment
of Warrant at Acquisition. 

A)           In the event of an Acquisition that is not an asset sale
and in which the sole consideration is cash, either (a) Holder shall exercise
its conversion or purchase right under this Warrant and such exercise will be
deemed effective immediately prior to the consummation of such Acquisition or
(b) if Holder elects not to exercise the Warrant, this Warrant will expire upon
the consummation of such Acquisition. 
The Company shall provide Holder with written notice of the proposed
Acquisition (an “Acquisition Notice”) (together with such reasonable information
as Holder may request in connection with

 

such contemplated
Acquisition giving rise to such notice), which is to be delivered to Holder not
less than ten (10) days prior to the closing of the proposed Acquisition.

B)            In
the event of an Acquisition that is an “arms length” sale of all or
substantially all of the Company’s assets (and only its assets) to a third
party that is not an Affiliate (as defined below) of the Company (a “True Asset
Sale”), either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to
the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will continue until the Expiration Date if the
Company continues as a going concern following the closing of any such True
Asset Sale.  The Company shall provide
Holder with an Acquisition Notice relating to the foregoing (together with such
reasonable information as Holder may request in connection with such contemplated
Acquisition giving rise to such notice), which is to be delivered to Holder not
less than ten (10) days prior to the closing of the proposed Acquisition.

C)            Upon
the closing of any Acquisition other than those particularly described in
subsections (A) and (B) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing.  The Warrant Price and/or number of Shares
shall be adjusted accordingly.

As used herein “Affiliate”
shall mean any person or entity that owns or controls directly or indirectly
ten (10) percent or more of the voting power of Company, any person or entity
that controls or is controlled by or is under common control with such persons
or entities, and each of such person’s or entity’s officers, directors, or
partners, as applicable.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

2.1           Stock
Dividends, Splits, Etc.  If the
Company declares or pays a dividend on the Shares payable in common stock or
other securities, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend occurred. 
If the Company subdivides the Shares by reclassification or otherwise
into a greater number of shares or takes any other action which increase the
amount of stock into which the Shares are convertible, the number of shares
purchasable hereunder shall be proportionately increased and the Warrant Price
shall be proportionately decreased.  If
the outstanding shares are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased and the number of Shares shall be proportionately
decreased.

2.2           Reclassification,
Exchange, Combinations or Substitution. 
Upon any reclassification, exchange, substitution, or other event not
covered by Article 1.6 or

 

Article
2.1 that results in a change of the number and/or class of the securities
issuable upon exercise or conversion of this Warrant, Holder shall be entitled
to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for the Shares if this
Warrant had been exercised immediately before such reclassification, exchange,
substitution, or other event.  Such an
event shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company’s Articles or Certificate (as
applicable) of Incorporation upon the closing of a registered public offering
of the Company’s common stock.  The
Company or its successor shall promptly issue to Holder an amendment to this
Warrant setting forth the number and kind of such new securities or other
property issuable upon exercise or conversion of this Warrant as a result of
such reclassification, exchange, substitution or other event that results in a
change of the number and/or class of securities issuable upon exercise or
conversion of this Warrant.  The
amendment to this Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 2 including, without limitation, adjustments to the Warrant Price and
to the number of securities or property issuable upon exercise of the new
Warrant.  The provisions of this Article
2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events. 

2.3           No
Impairment.  Except to the extent
waived or consented to by Holder, the Company shall not, by amendment of its
Articles or Certificate (as applicable) of Incorporation or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such
commercially reasonable action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment. 

2.4           Fractional
Shares.  No fractional Shares shall
be issuable upon exercise or conversion of this Warrant and the number of
Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional share interest arises upon
any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share.

2.5           Certificate
as to Adjustments.  Upon each
adjustment of the Warrant Price, the Company shall promptly notify Holder in
writing, and, at the Company’s expense, promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer or other
authorized officer setting forth such adjustment and the facts upon which such
adjustment is based.  The Company shall,
upon written request, furnish Holder a certificate setting forth the Warrant
Price in effect upon the date thereof and the series of adjustments leading to
such Warrant Price.

2.6           Calculations.  All calculations under Article 1.6 and this
Article 2 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.

 

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1           Representations and Warranties.  The Company represents and warrants to Holder
that all Shares which are issuable upon the exercise or conversion of this
Warrant pursuant to the terms hereof, shall, upon issuance, be duly authorized,
validly issued, and upon payment of the aggregate Warrant Price, fully paid and
nonassessable, and free of any liens and encumbrances except for restrictions
on transfer provided for herein or under applicable federal and state
securities laws.

3.2           Notice of Certain Events.  If the Company proposes at any time to
liquidate, dissolve or wind up, the Company shall give Holder at least 10 days
prior written notice of the date when the same will take place (and specifying
the date on which the holders of common stock will be entitled to exchange
their common stock for securities or other property deliverable upon the
occurrence of such event).  Company will
also provide information requested by Holder reasonably necessary to enable
Holder to comply with Holder’s accounting or reporting requirements.             

ARTICLE 4. REPRESENTATIONS,
WARRANTIES OF HOLDER.  Holder
represents and warrants to the Company as follows:

4.1           Purchase for Own Account.  This Warrant and the securities to be
acquired upon exercise of this Warrant by Holder will be acquired for
investment for Holder’s account, not as a nominee or agent, and not with a view
to the public resale or distribution within the meaning of the Act.  Holder also represents that Holder has not
been formed for the specific purpose of acquiring this Warrant or the Shares.

4.2           Disclosure of Information.  Holder has received or has had full access to
all the information it considers necessary or appropriate to make an informed
investment decision with respect to the acquisition of this Warrant and its
underlying securities.  Holder further
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of this Warrant and its
underlying securities and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to Holder or
to which Holder has access.

4.3           Investment Experience.  Holder understands that the purchase of this
Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in
securities of companies in the development stage and acknowledges that Holder
can bear the economic risk of such Holder’s investment in this Warrant and its
underlying securities and has such knowledge and experience in financial or
business matters that Holder is capable of evaluating the merits and risks of
its investment in this Warrant and its underlying securities and/or has a
preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables Holder to be aware of the character, business acumen and financial
circumstances of such persons.

 

4.4             Accredited Investor Status.  Holder is an “accredited investor” within the
meaning of Regulation D promulgated under the Act.

4.5           The
Act.  Holder understands that this
Warrant and the Shares issuable upon exercise or conversion hereof have not
been registered under the Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Holder’s investment intent as expressed herein. 
Holder understands that this Warrant and the Shares issued upon any
exercise or conversion hereof must be held indefinitely unless subsequently
registered under the Act and qualified under applicable state securities laws,
or unless exemption from such registration and qualification are otherwise
available.  Notwithstanding anything to
the contrary stated herein, in no event shall any Shares be issued, and the
Company is authorized to refuse to honor the exercise of this Warrant, or any
part thereof, if such exercise would result in the opinion of the Company’s
board of directors, upon written advice of counsel, in the violation of any
law, including, without limitation, state and Federal securities laws.

ARTICLE 5. MISCELLANEOUS.

5.1           Term.  This Warrant is exercisable in whole or in
part at any time and from time to time on or before the Expiration Date. 

5.2           Legends.                This Warrant and the Shares (and
the securities issuable, directly or indirectly, upon conversion of the Shares,
if any) shall be imprinted with a legend in substantially the following form:

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS
OF ARTICLE 5 OF THE WARRANT, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL TO THE
TRANSFEROR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT
FROM REGISTRATION.

5.3           Compliance
with Securities Laws on Transfer. 
This Warrant and the Shares issued upon exercise of this Warrant (and
the securities issuable, directly or indirectly, upon conversion of the Shares,
if any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as

 

reasonably
requested by the Company).  The Company
shall not require Merrill Lynch Capital, a division of Merrill Lynch Business
Financial Services Inc. (“Merrill”) to provide an opinion of counsel if the
transfer is to any affiliate of Merrill, pursuant to Article 5.4 below.  Additionally, the Company shall not, in
connection with the proposed sale of Shares issued upon exercise of this
Warrant, require an opinion of counsel if there is no material question as to
the availability of current information as referenced in Rule 144(c), Holder
represents that it has complied with Rule 144(d) and (e) in reasonable detail,
the selling broker represents that it has complied with Rule 144(f), and the
Company is provided with a copy of Holder’s notice of proposed sale of the
Shares.

5.4           Transfer Procedure.  Subject to the provisions of Article 4.5 and
Article 5, Merrill and any permitted subsequent Holder may transfer all or part
of this Warrant or any Shares issued upon exercise of this Warrant (or the
Shares issuable directly or indirectly, upon conversion of the Shares, if any)
to any transferee, provided, however, that prior to any such transfer, Merrill
or any permitted subsequent Holder (i) delivers to the Company written notice
of the portion of the Warrant being transferred with the name, address and
taxpayer identification number of the proposed transferee, (ii) complies with
the provisions of Article 4.5 and Article 5.3 hereof, including by delivery to
the Company of such legal opinions and representation letters of the transferor
and transferee as the Company may reasonably require if and as consistent with
Article 5.3, and (iii) if transferring this Warrant, surrenders this Warrant to
the Company for reissuance to the transferee(s) (and Holder if
applicable).  

5.5           No Shareholder Rights.  Nothing contained in this Warrant shall be
construed as conferring upon Holder hereof the right to vote, to consent, or to
receive notice as a shareholder of the Company or any other matters or any
rights whatsoever as a shareholder of the Company, except as expressly provided
in this Warrant.  No dividends or
interest shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.

5.6           Notices.  All notices and other communications from the
Company to Holder, or vice versa, shall be deemed delivered and effective when
given personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or Holder,
as the case may (or on the first business day after transmission by facsimile)
be, in writing by the Company or such Holder from time to time.  Effective upon receipt of the fully executed
Warrant and the initial transfer described in Article 5.4 above, all notices to
Holder shall be addressed as follows until the Company receives notice of a
change of address in connection with a transfer or otherwise:

Merrill Lynch
Capital

Attn:  Account Manager for MLC/SVB/Poniard
transaction

222 N. LaSalle
Street, 16th Floor

Chicago, IL 60601

Facsimile: (866) 231-8408

 

Notice to the Company shall be addressed
as follows until Holder receives notice of a change in address:

Poniard Pharmaceuticals,
Inc.

Attn: Chief Financial
Officer

7000 Shoreline Blvd.,
Suite 270

South San Francisco, CA
94080

Facsimile:
(650) 583-5710

5.6           Waiver.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

5.7           Attorneys’
Fees.  In the event of any dispute
between the parties concerning the terms and provisions of this Warrant, the
party prevailing in such dispute shall be entitled to collect from the other
party all reasonable costs incurred in such dispute, including reasonable
attorneys’ fees.

5.8           Automatic
Conversion upon Expiration.  In the
event that, upon the Expiration Date, the fair market value of one Share (or
other security issuable upon the exercise hereof) as determined in accordance
with Article 1.3 above is greater than the Warrant Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to
be converted pursuant to Article 1.2 above as to all Shares (or such other
securities) for which it shall not previously have been exercised or converted,
and the Company shall promptly deliver a book entry statement or certificate
representing the Shares (or such other securities) issued upon such conversion
to Holder. 

5.9           Counterparts.  This Warrant may be executed in counterparts,
all of which together shall constitute one and the same agreement.  Headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed part of
this Warrant.

5.10         Governing Law.  This Warrant shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to its principles regarding conflicts of law.

[Signature
page follows.]

 

“COMPANY”

PONIARD
PHARMACEUTICALS, INC.

	
  By:

  	
  /S/
  GeraldMcMahon

  	
   

  	
  By:

  	
  /S/ Caroline
  Loewy

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Gerald McMahon

  	
   

  	
  Name:

  	
  Caroline Loewy

  
	
   

  	
  (Print)

  	
   

  	
   

  	
  (Print)

  
	
  Title:

  	
  Chairman of the Board, President and

  Chief Executive Officer

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
							

 

“HOLDER”

MERRILL LYNCH CAPITAL, a
division of
 Merrill Lynch Business Financial
Services Inc.

	
  By:

  	
   

  	
  /S/ Chris York

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Chris York

  	
   

  	
   

  
	
   

  	
  (Print)

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Vice President

  	
   

  	
   

  
						

 

 

APPENDIX 1

NOTICE
OF EXERCISE

1.             Holder elects to purchase                       
shares of the Common Stock of Poniard Pharmaceuticals, Inc. pursuant to the
terms of the attached Warrant, and tenders payment of the purchase price of the
shares in full.

[or]

1.             Holder
elects to convert the attached Warrant into Shares in the manner specified in
the Warrant.  This conversion is
exercised for                                                 
of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2.             Please
issue a book entry statement or certificate or certificates representing the
shares in the name specified below:

 

	
  

  	
   

  	
   

  
	
   

  	
  Holder’s Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

 

3.             By
its execution below and for the benefit of the Company, Holder hereby restates
each of the representations and warranties in Article 4 of the Warrant as the
date hereof.

	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Date):

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