Document:

Exhibit 10.3

PONIARD
PHARMACEUTICALS, INC.

CHANGE OF CONTROL AGREEMENT (VP)

This Change of Control Agreement (VP) (this “Agreement”),
dated as of June 23, 2006, is entered into by and between PONIARD
PHARMACEUTICALS, INC., a Washington corporation (as supplemented by Section 13,
the “Company”), and Caroline M. Loewy
(the “Executive”).

The Board of
Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its shareholders
to ensure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined in Section 1 hereof) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive arising from
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Executive’s full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with reasonable compensation and benefit
arrangements upon a Change of Control.

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

1.             Definitions

1.1           “Change of Control”
shall have the definition set forth in Appendix A hereto, which is hereby
incorporated by reference.

1.2           “Change of Control Date”
shall mean the first date on which a Change of Control occurs.

1.3           “Employment Period”
shall mean the two (2) year period commencing on the Change of Control
Date and ending on the second anniversary of such date.

1.4           “Severance Agreement”
shall mean the Key Executive Severance Agreement, dated as of the date hereof,
between the parties, as it may be amended from time
to time, that provides for certain benefits related to termination of the
Executive’s employment that are unrelated to a Change of Control.

2.             Term

The initial term
of this Agreement (“Initial Term”)
shall be for a period of one (1) year from the date 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 at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term, and provided further
that if a Change in Control occurs during the Term, the Term shall
automatically

 

 

extend for the duration
of the Employment Period. The “Term” of
this Agreement shall be the Initial Term plus all Renewal Terms and, if
applicable, the duration of the Employment Period. At the end of the Term, this
Agreement shall terminate without further action by either the Company or the
Executive.

3.             Employment

3.1          Employment
Period

During the Employment
Period, the Company hereby agrees to continue the Executive in its employ or in
the employ of its affiliated companies, and the Executive hereby agrees to
remain in the employ of the Company or its affiliated companies, in accordance
with the terms and provisions of this Agreement; provided, however, that either
the Company or the Executive may terminate the employment relationship subject
to the terms of this Agreement.

3.2          Position
and Duties

During the
Employment Period, the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the ninety (90) day period immediately preceding the Change of Control Date.

3.3          Location

During the
Employment Period, the Executive’s services shall be performed at the Company’s
offices on the Change of Control Date at which the Executive was employed or
any office that is subsequently designated by the Company and is less than thirty
(30) miles from such location.

3.4          Employment
at Will

The Executive and
the Company acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the employment
of the Executive by the Company or its affiliated companies is “at will” and
may be terminated by either the Executive or the Company or its affiliated
companies at any time with or without cause. Moreover, if prior to the Change
of Control Date, the Executive’s employment with the Company or its affiliated
companies terminates for any reason, then the Executive shall have no further
rights under this Agreement; provided, however, that the Company may not avoid
liability for any termination payments that would have been required during the
Employment Period pursuant to Section 8 hereof by terminating the
Executive prior to the Employment Period where such termination is carried out
in anticipation of a Change of Control and the principal motivating purpose is
to avoid liability for such termination payments.

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4.             Attention and Effort

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

5.             Compensation

As long as the
Executive remains employed by the Company during the Employment Period, the
Company agrees to pay or cause to be paid to the Executive, and the Executive
agrees to accept in exchange for the services rendered hereunder by her, the
following compensation:

5.1          Salary

The Executive
shall receive an annual base salary (the “Annual Base Salary”),
at least equal to the annual salary established by the Board or the
Compensation Committee of the Board (the “Compensation Committee”)
or the Chief Executive Officer for the fiscal year in which the Change of
Control Date occurs. The Annual Base Salary shall be paid in substantially equal
installments and at the same intervals as the salaries of other executives of
the Company are paid. The Board or the Compensation Committee or the Chief
Executive Officer shall review the Annual Base Salary at least annually and
shall determine in good faith and consistent with any generally applicable
Company policy any increases for future years.

5.2          Bonus

In addition to the
Annual Base Salary, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the average annualized (for
any fiscal year consisting of less than twelve (12) full months) bonus paid or
payable (including by reason of any deferral and including the value of any
stock awards and the compensation expense disclosed in the Company’s financial
statements for the grant of any stock options) to the Executive by the Company
and

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its affiliated companies
in respect of the three fiscal years immediately preceding the fiscal year in
which the Change of Control Date occurs. Each Annual Bonus shall be paid no
later than ninety (90) days after the end of the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of the Annual Bonus.

6.             Benefits

6.1          Incentive,
Retirement and Welfare Benefit Plans; Vacation

During the
Employment Period, the Executive shall be entitled to participate, subject to
and in accordance with applicable eligibility requirements, in such fringe
benefit programs as shall be generally made available to other executives of
the Company and its affiliated companies from time to time during the
Employment Period by action of the Board (or any person or committee appointed
by the Board to determine fringe benefit programs and other emoluments),
including, without limitation, paid vacations; any stock purchase, savings or
retirement plan, practice, policy or program; and all welfare benefit plans,
practices, policies or programs (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans or programs).

6.2          Expenses

During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by her in
accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the executives of the Company and its
affiliated companies during the Employment Period.

7.             Termination

During the Employment
Period, employment of the Executive may be terminated as follows, but, in any
case, the nondisclosure provisions set forth in Section 10 hereof shall
survive the termination of this Agreement and the termination of the Executive’s
employment with the Company:

7.1          By the
Company or the Executive

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

7.2          Automatic
Termination

This Agreement and
the Executive’s employment during the Employment Period shall terminate
automatically upon the death or Total Disability of the Executive. The term

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“Total
Disability” as used herein shall mean the Executive’s inability
(with such accommodation as may be required by law and which places no undue
burden on the Company), as determined by a physician selected by the Company
and acceptable to the Executive, to perform the duties set forth in Section 3.2
hereof for a period or periods aggregating twelve (12) weeks in any three
hundred sixty-five (365) day period as a result of physical or mental illness,
loss of legal capacity or any other cause beyond the Executive’s control,
unless the Executive is granted a leave of absence by the Board. The Executive
and the Company hereby acknowledge that the duties specified in Section 3.2
hereof are essential to the Executive’s position and that Executive’s ability
to perform those duties is the essence of this Agreement.

7.3          Notice of
Termination

Any termination by
the Company or by the Executive during the Employment Period shall be
communicated by the Notice of Termination to the other party given in
accordance with Section 12 hereof. The term “Notice
of Termination” shall mean a written notice that (a) indicates
the specific termination provision in this Agreement relied upon and (b) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive’s
or the Company’s rights hereunder.

7.4          Date of
Termination

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

8.             Termination Payments

In the event of
termination of the Executive’s employment during the Employment Period, all
compensation and benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 8.

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

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

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

(i)            the Annual Base Salary through the
Date of Termination to the extent not theretofore paid;

(ii)           the product of (x) the Annual
Bonus payable with respect to the fiscal year in which the Date of Termination
occurs and (y) a fraction the numerator of which is the number of days in
the current fiscal year through the Date of Termination, and the denominator of
which is three hundred sixty-five (365); provided that, in the event that the
Executive is entitled to an amount in respect of the Annual Bonus under Section 8.1(c),
she shall receive the amount payable under Section 8.1(c) first and
the amount payable under this Section 8.1(a)(ii) only to the extent
it exceeds the amount payable under Section 8.1(c); and

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

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

(c)           an amount equal to fifty percent
(50%) of the Annual Bonus that would have been paid to the Executive for the
fiscal year in which the Date of Termination falls but for the termination of
the Executive’s employment;

(d)           an amount as severance pay equal to
fifty percent (50%) of the Annual Base Salary for the fiscal year in which the
Date of Termination occurs; and

(e)           immediate vesting of all outstanding
stock options previously granted to the Executive by the Company.

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8.2          Termination
for Cause or Other Than for Good Reason

If during the
Employment Period the Executive’s employment shall be terminated by the Company
for Cause or by the Executive for other than Good Reason, this Agreement shall
terminate without further obligation on the part of the Company to the
Executive, other than the Company’s obligation to pay the Executive (a) the
Annual Base Salary through the Date of Termination, (b)  the amount of any
compensation previously deferred by the Executive, and (c) any accrued
vacation pay that would be payable under the Company’s standard policy, in each
case to the extent theretofore unpaid.

8.3          Expiration
of Term

In the event the
Executive’s employment is not terminated prior to expiration of the Term, this
Agreement shall terminate without further obligation on the part of the Company
to the Executive, other than the Company’s obligation to pay the Executive the
product of (a) the Annual Bonus payable with respect to the fiscal year in
which the Term expired and (b) a fraction the numerator of which is the
number of days in the current fiscal year through the end of the Term and the
denominator of which is three hundred sixty-five (365).

8.4          Termination
Because of Death or Total Disability

If during the
Employment Period the Executive’s employment is terminated by reason of the
Executive’s death or Total Disability, this Agreement shall terminate
automatically without further obligation on the part of the Company to the
Executive or her legal representatives under this Agreement, other than the
Company’s obligation to pay the Executive the Accrued Obligations (which shall
be paid to the Executive’s estate or beneficiary, as applicable in the case of
the Executive’s death), and to provide COBRA Continuation.

8.5          Payment
Schedule

All payments of
Accrued Obligations, or any portion thereof payable pursuant to this Section 8,
shall be made to the Executive within ten (10) working days of the Date of
Termination. Any payments payable to the Executive pursuant to Section 8.1(c) and
(d) hereof shall be made to the Executive in a lump sum within ten (10) working
days of the Date of Termination.

8.6          Cause

For purposes of
this Agreement, “Cause” means cause given by
the Executive to the Company and shall include, without limitation, the occurrence
of one (1) or more of the following events:

(a)           a clear refusal to
carry out any material lawful duties of the Executive or any directions of the
Board or senior management of the Company, all reasonably consistent with the
duties described in Section 3.2 hereof;

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(b)           persistent failure
to carry out any lawful duties of the Executive described in Section 3.2
hereof or any directions of the Board or senior management reasonably
consistent with the duties herein set forth to be performed by the Executive,
provided, however, that the Executive has been given reasonable notice and
opportunity to correct any such failure;

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

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

(e)           any other material
violation of any provision of this Agreement by the Executive, subject to the
notice and opportunity-to-cure requirements of Section 11 hereof.

8.7          Good Reason

For purposes of
this Agreement, “Good Reason” means

(a)           the assignment to
the Executive of any duties materially inconsistent with the Executive’s
position, authority, duties or responsibilities as contemplated by Section 3.2
hereof or any other action by the Company that results in a material diminution
in such position, authority, duties or responsibilities, excluding for this
purpose an isolated and inadvertent action not taken in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

(b)           any failure by the
Company to comply with any of the provisions of Section 5 or Section 6
hereof, other than an isolated and inadvertent failure not taken in bad faith
and that is remedied by the Company promptly after receipt of notice thereof
given by the Executive;

(c)           the Company’s
requiring the Executive to be based at any office or location other than that
described in Section 3.3 hereof;

(d)           any failure by the
Company to comply with and satisfy Section 13 hereof; provided, however,
that the Company’s successor has received at least ten (10) days’ prior
written notice from the Company or the Executive of the requirements of Section 13
hereof; or

(e)           any other
material violation of any provision of this Agreement by the Company, subject
to the notice and opportunity-to-cure requirements of Section 11 hereof.

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8.8          Excess
Parachute Limitation

If any portion of
the payments or benefits for the Executive under this Agreement, the Severance
Agreement, or any other agreement or benefit plan of the Company (including
stock option plan) would be characterized as an “excess parachute payment” to
the Executive under Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), the Executive shall
be paid any excise tax that the Executive owes under Section 4999 of the
Code as a result of such characterization, such excise tax to be paid to the
Executive at least ten (10) days prior to the date that she 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.

9.             Representations, Warranties and
Other Conditions

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

9.1          Health

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

9.2          No
Violation of Other Agreements

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

10.          Nondisclosure; Return of Materials

10.1        Nondisclosure

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

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10.2        Return of
Materials

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

11.          Notice and Cure of Breach

Whenever a breach
of this Agreement by either party is relied upon as justification for any
action taken by the other party pursuant to any provision of this Agreement,
other than clause (a), (b), (c) or (d) of Section 8.6
hereof, before such action is taken, the party asserting the breach of this
Agreement shall give the other party at least twenty (20) days’ prior written
notice of the existence and the nature of such breach before taking further
action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the twenty (20) day
period.

12.          Form of Notice

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

	
  If to the Executive:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  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, 40th Floor

  
	
   

  	
   

  	
  Seattle, Washington 98101-3099

  
	
   

  	
   

  	
  Attn: James R. Lisbakken

  

 

Except as set forth in Section 7.4 hereof, if notice is mailed, such notice shall be effective
upon mailing.

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13.          Assignment

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

The Company shall
assign to and require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean Poniard
Pharmaceuticals, Inc. and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of
law, or otherwise. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.

14.          Waivers

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

15.          Amendments in Writing

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

16.          Applicable Law

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

17.          Arbitration; Attorneys’ Fees

Except in
connection with enforcing Section 10 hereof, for which legal and equitable
remedies may be sought in a court of law, any dispute arising under this Agreement
shall be subject

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

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

18.          Severability

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

19.          Entire Agreement

Except as described
in Section 22 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 Company and the Executive shall continue in full force and effect
to the extent not superseded by Section 10 hereof.

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20.          Withholding

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

21.          Counterparts

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

22.          Coordination with Severance Agreement

The Severance
Agreement that the parties are entering into contemporaneously with this
Agreement provides for certain forms of severance and benefit payments in the
event of termination of the Executive’s employment. This Agreement is in
addition to the Severance Agreement and in no way supersedes or nullifies the
Severance Agreement. Nevertheless, it is possible that termination of
employment by the Company or by the Executive may fall within the scope of both
agreements. In such event, payments made to the Executive under Section 8.1
hereof shall be coordinated with payments made to the Executive under Section 5.1
of the Severance Agreement as follows:

(a)           Accrued Obligations under this
Agreement shall be paid first, in which case Accrued Obligations need not be
paid under the Severance Agreement;

(b)           COBRA Continuation under this
Agreement shall be provided first, in which case COBRA Continuation need not be
provided under the Severance Agreement; and

(c)           the severance payment required under Section 8.1(d) hereof
shall be paid first, in which case only that portion of any severance payment
required under Section 5.1(c) of the Severance Agreement in excess of
the severance payment required under Section 8.1(d) hereof shall be
paid in accordance with the provisions of the Severance Agreement.

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

	
  

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
  By:

  	
  /s/ Gerald McMahon

  
	
   

  	
   

  	
  Name:

  	
  Gerald McMahon

  
	
   

  	
   

  	
  Its:

  	
  Chairman, CEO & President

  
	
   

  	
  EXECUTIVE

  
	
   

  	
  By:

  	
  /s/ Caroline M. Loewy

  
	
   

  	
   

  	
  Name:

  	
  Caroline M. Loewy

  
					

 14

 

APPENDIX
A

For purposes of
this Agreement, a “Change of Control” shall
mean:

(a)           A “Board
Change” that, for purposes of this Agreement, shall have occurred
if a majority (excluding vacant seats) of the seats on the Board are occupied
by individuals who were neither (i) nominated by a majority of the
Incumbent Directors nor (ii) appointed by directors so nominated. An “Incumbent Director” is a member of
the Board who has been either (i) nominated by a majority of the directors
of the Company then in office or (ii) appointed by directors so nominated,
but excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person (as
hereinafter defined) other than the Board; or

(b)           The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of (i) twenty percent (20%) or more of either (A) the
then outstanding shares of Common Stock of the Company (the “Outstanding Company Common Stock”)
or (B) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”),
in the case of either (A) or (B) of this clause (i), which
acquisition is not approved in advance by a majority of the Incumbent
Directors, or (ii) thirty-three percent (33%) or more of either (A) the
Outstanding Company Common Stock or (B) the Outstanding Company Voting
Securities, in the case of either (A) or (B) of this clause
(ii), which acquisition is approved in advance by a majority of the Incumbent
Directors; provided, however, that the following acquisitions shall not
constitute a Change of Control:  (x) any
acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of
this Appendix A are satisfied; or

(c)           Approval by the shareholders of the
Company of a reorganization, merger or consolidation, in each case, unless,
immediately following such reorganization, merger or consolidation, (i) more
than sixty percent (60%) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the

 

 

Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportion as their ownership
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation,
directly or indirectly, thirty-three percent (33%) or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, thirty-three percent (33%)
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were the Incumbent
Directors at the time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or

(d)           Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all the assets of the
Company, other than to a corporation with respect to which immediately
following such sale or other disposition, (A) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (C) at
least a majority of the members of the board of directors of such corporation
were approved by a majority of the Incumbent Directors at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of the Company’s assets.

 3Exhibit 10.4

PONIARD PHARMACEUTICALS,
INC.

CHANGE OF CONTROL AGREEMENT (VP)

This Change of
Control Agreement (VP) (this “Agreement”),
dated as of July 1, 2006, is entered into by and between PONIARD
PHARMACEUTICALS, INC. (formerly NeoRx Corporation), a Washington corporation
(as supplemented by Section 13, the “Company”),
and Cheni Kwok (the “Executive”).

The Board of
Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its shareholders
to ensure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined in Section 1 hereof) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive arising from
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Executive’s full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with reasonable compensation and benefit
arrangements upon a Change of Control.

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

1.             Definitions

1.1           “Change of Control”
shall have the definition set forth in Appendix A hereto, which is hereby
incorporated by reference.

1.2           “Change of Control Date”
shall mean the first date on which a Change of Control occurs.

1.3           “Employment Period”
shall mean the two (2) year period commencing on the Change of Control
Date and ending on the second anniversary of such date.

1.4           “Severance Agreement”
shall mean the Key Executive Severance Agreement, dated as of the date hereof,
between the parties, as it may be amended from time to time, that provides for
certain benefits related to termination of the Executive’s employment that are
unrelated to a Change of Control.

2.             Term

The initial term
of this Agreement (“Initial Term”)
shall be for a period of one (1) year from the date 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 at least ninety (90) days
prior to the end of the Initial Term or any Renewal Term, and provided further
that if a Change in Control occurs during the Term, the Term shall
automatically extend for the duration of the Employment Period. The “Term” of this Agreement shall be the
Initial Term plus all Renewal Terms and, if applicable, the duration of the
Employment Period. At the end of the Term, this Agreement shall terminate
without further action by either the Company or the Executive.

3.             Employment

3.1          Employment Period

During the
Employment Period, the Company hereby agrees to continue the Executive in its
employ or in the employ of its affiliated companies, and the Executive hereby
agrees to remain in the employ of the Company or its affiliated companies, in
accordance with the terms and provisions of this Agreement; provided, however,
that either the Company or the Executive may terminate the employment
relationship subject to the terms of this Agreement.

3.2          Position and Duties

During the
Employment Period, the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the ninety (90) day period immediately preceding the Change of Control Date.

3.3          Location

During the
Employment Period, the Executive’s services shall be performed at the Company’s
offices on the Change of Control Date at which the Executive was employed or
any office that is subsequently designated by the Company and is less than
thirty (30) miles from such location.

3.4          Employment at Will

The Executive and
the Company acknowledge that, except as may otherwise be provided under any
other written agreement between the Executive and the Company, the employment
of the Executive by the Company or its affiliated companies is “at will” and
may be terminated by either the Executive or the Company or its affiliated
companies at any time with or without cause. Moreover, if prior to the Change
of 

 2
 

 

 

Control Date, the Executive’s
employment with the Company or its affiliated companies terminates for any
reason, then the Executive shall have no further rights under this Agreement;
provided, however, that the Company may not avoid liability for any termination
payments that would have been required during the Employment Period pursuant to
Section 8 hereof by terminating the Executive prior to the Employment
Period where such termination is carried out in anticipation of a Change of
Control and the principal motivating purpose is to avoid liability for such
termination payments.

4.             Attention and Effort

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

5.             Compensation

As long as the
Executive remains employed by the Company during the Employment Period, the
Company agrees to pay or cause to be paid to the Executive, and the Executive
agrees to accept in exchange for the services rendered hereunder by her, the
following compensation:

5.1          Salary

The Executive
shall receive an annual base salary (the “Annual Base Salary”),
at least equal to the annual salary established by the Board or the
Compensation Committee of the Board (the “Compensation Committee”)
or the Chief Executive Officer for the fiscal year in which the Change of
Control Date occurs. The Annual Base Salary shall be paid in substantially
equal installments and at the same intervals 

 3
 

 

 

as the salaries of other
executives of the Company are paid. The Board or the Compensation Committee or
the Chief Executive Officer shall review the Annual Base Salary at least
annually and shall determine in good faith and consistent with any generally
applicable Company policy any increases for future years.

5.2          Bonus

In addition to the
Annual Base Salary, the Executive shall be awarded, for each fiscal year ending
during the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the average annualized (for
any fiscal year consisting of less than twelve (12) full months) bonus paid or
payable (including by reason of any deferral and including the value of any stock
awards and the compensation expense disclosed in the Company’s financial
statements for the grant of any stock options) to the Executive by the Company
and its affiliated companies in respect of the three fiscal years immediately
preceding the fiscal year in which the Change of Control Date occurs. Each
Annual Bonus shall be paid no later than ninety (90) days after the end of the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of the Annual Bonus.

6.             Benefits

6.1          Incentive, Retirement and Welfare
Benefit Plans; Vacation

During the
Employment Period, the Executive shall be entitled to participate, subject to
and in accordance with applicable eligibility requirements, in such fringe
benefit programs as shall be generally made available to other executives of
the Company and its affiliated companies from time to time during the
Employment Period by action of the Board (or any person or committee appointed
by the Board to determine fringe benefit programs and other emoluments),
including, without limitation, paid vacations; any stock purchase, savings or
retirement plan, practice, policy or program; and all welfare benefit plans,
practices, policies or programs (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans or programs).

6.2          Expenses

During the
Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses incurred by her in
accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the executives of the Company and its
affiliated companies during the Employment Period.

 4
 

 

 

7.             Termination

During the
Employment Period, employment of the Executive may be terminated as follows,
but, in any case, the nondisclosure provisions set forth in Section 10
hereof shall survive the termination of this Agreement and the termination of
the Executive’s employment with the Company:

7.1          By the Company or the Executive

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

7.2          Automatic Termination

This Agreement and
the Executive’s employment during the Employment Period shall terminate
automatically upon the death or Total Disability of the Executive. The term “Total Disability” as used herein shall mean the
Executive’s inability (with such accommodation as may be required by law and
which places no undue burden on the Company), as determined by a physician
selected by the Company and acceptable to the Executive, to perform the duties
set forth in Section 3.2 hereof for a period or periods aggregating twelve
(12) weeks in any three hundred sixty-five (365) day period as a result of
physical or mental illness, loss of legal capacity or any other cause beyond
the Executive’s control, unless the Executive is granted a leave of absence by
the Board. The Executive and the Company hereby acknowledge that the duties
specified in Section 3.2 hereof are essential to the Executive’s position
and that Executive’s ability to perform those duties is the essence of this
Agreement.

7.3          Notice of Termination

Any termination by
the Company or by the Executive during the Employment Period shall be
communicated by the Notice of Termination to the other party given in
accordance with Section 12 hereof. The term “Notice
of Termination” shall mean a written notice that (a) indicates
the specific termination provision in this Agreement relied upon and (b) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of Good Reason or Cause shall not waive any right
of the Executive or the Company hereunder or preclude the Executive or the
Company from 

 5
 

 

 

asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

7.4          Date of Termination

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

8.             Termination Payments

In the event of
termination of the Executive’s employment during the Employment Period, all
compensation and benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 8.

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

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

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

(i)            the Annual Base
Salary through the Date of Termination to the extent not theretofore paid;

(ii)           the product of (x) the
Annual Bonus payable with respect to the fiscal year in which the Date of
Termination occurs and (y) a fraction the numerator of which is the number
of days in the current fiscal year through the Date of Termination, and the
denominator of which is three hundred sixty-five (365); provided that, in the
event that the Executive is entitled to an amount in respect of the Annual
Bonus under Section 8.1(c), she shall receive the amount payable under Section 8.1(c)

 6
 

 

 

first and the amount payable under this Section 8.1(a)(ii) only
to the extent it exceeds the amount payable under Section 8.1(c); and

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

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

(c)           an amount equal to fifty percent
(50%) of the Annual Bonus that would have been paid to the Executive for the
fiscal year in which the Date of Termination falls but for the termination of
the Executive’s employment;

(d)           an amount as severance pay equal to
fifty percent (50%) of the Annual Base Salary for the fiscal year in which the
Date of Termination occurs; and

(e)           immediate vesting of all outstanding
stock options previously granted to the Executive by the Company.

8.2          Termination for Cause or Other Than
for Good Reason

If during the
Employment Period the Executive’s employment shall be terminated by the Company
for Cause or by the Executive for other than Good Reason, this Agreement shall
terminate without further obligation on the part of the Company to the
Executive, other than the Company’s obligation to pay the Executive (a) the
Annual Base Salary through the Date of Termination, (b)  the amount of any
compensation previously deferred by the Executive, and (c) any accrued
vacation pay that would be payable under the Company’s standard policy, in each
case to the extent theretofore unpaid.

 7
 

 

 

8.3          Expiration of Term

In the event the
Executive’s employment is not terminated prior to expiration of the Term, this
Agreement shall terminate without further obligation on the part of the Company
to the Executive, other than the Company’s obligation to pay the Executive the
product of (a) the Annual Bonus payable with respect to the fiscal year in
which the Term expired and (b) a fraction the numerator of which is the
number of days in the current fiscal year through the end of the Term and the
denominator of which is three hundred sixty-five (365).

8.4          Termination Because of Death or Total
Disability

If during the
Employment Period the Executive’s employment is terminated by reason of the
Executive’s death or Total Disability, this Agreement shall terminate
automatically without further obligation on the part of the Company to the
Executive or her legal representatives under this Agreement, other than the
Company’s obligation to pay the Executive the Accrued Obligations (which shall
be paid to the Executive’s estate or beneficiary, as applicable in the case of
the Executive’s death), and to provide COBRA Continuation.

8.5          Payment Schedule

All payments of
Accrued Obligations, or any portion thereof payable pursuant to this Section 8,
shall be made to the Executive within ten (10) working days of the Date of
Termination. Any payments payable to the Executive pursuant to Section 8.1(c) and
(d) hereof shall be made to the Executive in a lump sum within ten (10) working
days of the Date of Termination.

8.6          Cause

For purposes of
this Agreement, “Cause” means cause given by
the Executive to the Company and shall include, without limitation, the
occurrence of one (1) or more of the following events:

(a)           a clear refusal to
carry out any material lawful duties of the Executive or any directions of the
Board or senior management of the Company, all reasonably consistent with the
duties described in Section 3.2 hereof;

(b)           persistent failure
to carry out any lawful duties of the Executive described in Section 3.2
hereof or any directions of the Board or senior management reasonably
consistent with the duties herein set forth to be performed by the

 8

 

 

Executive, provided, however, that the Executive has
been given reasonable notice and opportunity to correct any such failure;

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

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

(e)           any other material
violation of any provision of this Agreement by the Executive, subject to the
notice and opportunity-to-cure requirements of Section 11 hereof.

8.7          Good Reason

For purposes of
this Agreement, “Good Reason” means

(a)           the assignment to the Executive of
any duties materially inconsistent with the Executive’s position, authority,
duties or responsibilities as contemplated by Section 3.2 hereof or any
other action by the Company that results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated and inadvertent action not taken in bad faith and that is remedied by
the Company promptly after receipt of notice thereof given by the Executive;

(b)           any failure by the Company to comply
with any of the provisions of Section 5 or Section 6 hereof, other
than an isolated and inadvertent failure not taken in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

(c)           the Company’s requiring the Executive
to be based at any office or location other than that described in Section 3.3
hereof;

(d)           any failure by the Company to comply
with and satisfy Section 13 hereof; provided, however, that the Company’s
successor has received at least ten (10) days’ prior written notice from
the Company or the Executive of the requirements of Section 13 hereof; or

 9
 

 

 

(e)           any other material violation of any
provision of this Agreement by the Company, subject to the notice and
opportunity-to-cure requirements of Section 11 hereof.

8.8          Excess Parachute Limitation

If any portion of
the payments or benefits for the Executive under this Agreement, the Severance
Agreement, or any other agreement or benefit plan of the Company (including
stock option plan) would be characterized as an “excess parachute payment” to
the Executive under Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), the Executive shall
be paid any excise tax that the Executive owes under Section 4999 of the
Code as a result of such characterization, such excise tax to be paid to the
Executive at least ten (10) days prior to the date that she 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.

9.             Representations, Warranties and
Other Conditions

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

9.1          Health

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

9.2          No Violation of Other Agreements

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

 10
 

 

 

10.          Nondisclosure; Return of Materials

10.1        Nondisclosure

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

10.2        Return of Materials

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

11.          Notice and Cure of Breach

Whenever a breach
of this Agreement by either party is relied upon as justification for any
action taken by the other party pursuant to any provision of this Agreement,
other than clause (a), (b), (c) or (d) of Section 8.6
hereof, before such action is taken, the party asserting the breach of this
Agreement shall give the other party at least twenty (20) days’ prior written
notice of the existence and the nature of such breach before taking further
action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the twenty (20) day
period.

12.          Form of Notice

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

 11
 

 

 

	
  If to the Executive:

  	
  Cheni Kwok

  
	
   

  	
  10 Scenic Way #108

  
	
   

  	
  San Mateo, California 94403

  
	
   

  	
   

  
	
  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, 40th Floor

  
	
   

  	
  Seattle, Washington 98101-3099

  
	
   

  	
  Attn: James R. Lisbakken

  

 

Except as set forth in Section 7.4 hereof, if notice is mailed,
such notice shall be effective upon mailing.

13.          Assignment

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

The Company shall
assign to and require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used in this
Agreement, “Company” shall mean Poniard
Pharmaceuticals, Inc. and any successor to its business and/or assets as
aforesaid that assumes and agrees to perform this Agreement by operation of
law, or otherwise. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.

14.          Waivers

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

 12
 

 

 

15.          Amendments in Writing

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

16.          Applicable Law

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

17.          Arbitration; Attorneys’ Fees

Except in
connection with enforcing Section 10 hereof, for which legal and equitable
remedies may be sought in a court of law, any dispute arising under this
Agreement shall be subject to arbitration. The arbitration proceeding shall be
conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the “AAA Rules”) then
in effect, conducted by one arbitrator either mutually agreed upon or selected
in accordance with the AAA Rules. The arbitration shall be conducted in King
County, Washington, under the jurisdiction of the Seattle office of the
American Arbitration Association. The arbitrator shall have authority only to
interpret and apply the provisions of this Agreement, and shall have no
authority to add to, subtract from or otherwise modify the terms of this
Agreement. Any demand for arbitration must be made within sixty (60) days of
the event(s) giving rise to the claim that this Agreement has been
breached. The arbitrator’s decision shall be final and binding, and each party
agrees to be bound to by the arbitrator’s award, subject only to an appeal
therefrom in accordance with the laws of the State of Washington. Either party
may obtain judgment upon the arbitrator’s award in the Superior Court of King,
County, Washington.

If it becomes
necessary to pursue or defend any legal proceeding, whether in arbitration or
court, in order to resolve a dispute arising under this Agreement, the 

 13
 

 

 

prevailing party in any
such proceeding shall be entitled to recover its reasonable costs and attorneys’
fees.

18.          Severability

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

19.          Entire Agreement

Except as
described in Section 22 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 Company and the Executive shall continue in full force and effect
to the extent not superseded by Section 10 hereof.

20.          Withholding

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

21.          Counterparts

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

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22.          Coordination with Severance Agreement

The Severance
Agreement that the parties are entering into contemporaneously with this
Agreement provides for certain forms of severance and benefit payments in the
event of termination of the Executive’s employment. This Agreement is in
addition to the Severance Agreement and in no way supersedes or nullifies the
Severance Agreement. Nevertheless, it is possible that termination of
employment by the Company or by the Executive may fall within the scope of both
agreements. In such event, payments made to the Executive under Section 8.1
hereof shall be coordinated with payments made to the Executive under Section 5.1
of the Severance Agreement as follows:

(a)           Accrued Obligations under this
Agreement shall be paid first, in which case Accrued Obligations need not be
paid under the Severance Agreement;

(b)           COBRA Continuation under this
Agreement shall be provided first, in which case COBRA Continuation need not be
provided under the Severance Agreement; and

(c)           the severance payment required under Section 8.1(d) hereof
shall be paid first, in which case only that portion of any severance payment
required under Section 5.1(c) of the Severance Agreement in excess of
the severance payment required under Section 8.1(d) hereof shall be
paid in accordance with the provisions of the Severance Agreement.

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

	
  

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald McMahon

  
	
   

  	
   

  	
  Name:

  	
  Gerald McMahon

  
	
   

  	
   

  	
  Its:

  	
  Chairman, CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cheni Kwok

  
	
   

  	
   

  	
  Name:

  	
  Cheni Kwok

  

 

 15

 

APPENDIX
A

For purposes of
this Agreement, a “Change of Control” shall
mean:

(a)           A “Board
Change” that, for purposes of this Agreement, shall have
occurred if a majority (excluding vacant seats) of the seats on the Board are
occupied by individuals who were neither (i) nominated by a majority of
the Incumbent Directors nor (ii) appointed by directors so nominated. An “Incumbent Director” is a member of the Board who has
been either (i) nominated by a majority of the directors of the Company
then in office or (ii) appointed by directors so nominated, but excluding,
for this purpose, any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person (as hereinafter defined) other than the
Board; or

(b)           The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of (i) twenty percent (20%) or more of either (A) the
then outstanding shares of Common Stock of the Company (the “Outstanding
Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”), in the case of either (A) or (B) of
this clause (i), which acquisition is not approved in advance by a majority of
the Incumbent Directors, or (ii) thirty-three percent (33%) or more of
either (A) the Outstanding Company Common Stock or (B) the
Outstanding Company Voting Securities, in the case of either (A) or (B) of
this clause (ii), which acquisition is approved in advance by a majority of the
Incumbent Directors; provided, however, that the following acquisitions shall
not constitute a Change of Control:  (x) any
acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (z) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of
this Appendix A are satisfied; or

 

 

(c)           Approval by the shareholders of the
Company of a reorganization, merger or consolidation, in each case, unless,
immediately following such reorganization, merger or consolidation, (i) more
than sixty percent (60%) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportion as their ownership
immediately prior to such reorganization, merger or consolidation of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation,
directly or indirectly, thirty-three percent (33%) or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, thirty-three percent (33%)
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were the Incumbent
Directors at the time of the execution of the initial agreement providing for
such reorganization, merger or consolidation; or

(d)           Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all the assets of the
Company, other than to a corporation with respect to which immediately
following such sale or other disposition, (A) more than sixty percent
(60%) of, respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company 

 2
 

 

 

Common Stock and
the Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company, any employee benefit plan (or related trust) of
the Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, thirty-three percent (33%) or more of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (C) at
least a majority of the members of the board of directors of such corporation
were approved by a majority of the Incumbent Directors at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of the Company’s assets.

 3

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