Exhibit 10.41
CHANGE IN CONTROL AGREEMENT
     This Change in Control Agreement (the “Agreement”) is made and entered into
effective as of April 17, 2006 (the “Effective Date”), by and between Anadys
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Jennifer K.
Crittenden (the “Executive”). The Company and the Executive are hereinafter
collectively referred to as the “Parties”, and individually referred to as a
“Party”.
Agreement
     In consideration of the mutual promises and covenants herein contained, and
for other good and valuable consideration, the Parties, intending to be legally
bound, agree as follows:
1. Employment.
          1.1 Loyalty; At Will Employment. During the Executive’s employment by
the Company, the Executive shall devote Executive’s full business energies,
interest, abilities and productive time to the proper and efficient performance
of Executive’s duties as an officer of the Company. Executive’s employment with
the Company is at-will and not for any specified period and may be terminated at
any time, with or without cause, by either Executive or Company, subject to the
provisions of Section 3 below. Notwithstanding any provisions in this Agreement
to the contrary, including any provisions contained in this Section 1, the
Company’s obligations, and the Executive’s rights, pursuant to Section 3 shall
cease and be rendered a nullity immediately should the Executive violate any
provision of Section 1 herein, or should the Executive violate the terms and
conditions of the Executive’s Agreement for Employees dated January 26, 2005
(proprietary information and inventions agreement) with the Company, attached
hereto as Exhibit B.
          1.2 Termination of Obligations. In the event of the termination of the
Executive’s employment with the Company, the Company shall have no obligation to
pay Executive any base salary, bonus or other compensation or benefits, except
as provided in Section 3 or for benefits due to the Executive (and/or the
Executive’s dependents) under the terms of the Company’s benefit plans. The
Company may offset any amounts Executive owes it or its subsidiaries against any
amount it owes Executive pursuant to Section 3.
          1.3 The term of this Agreement (the “Term”) shall begin on the
Effective Date and shall continue until Executive’s employment with the Company
is terminated for any reason.
     2. Definitions.
          For purposes of this Agreement, the following terms shall have the
following meanings:

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          2.1 Good Reason. “Good Reason” for the Executive to terminate the
Executive’s employment hereunder shall mean the occurrence of any of the
following events without the Executive’s consent:
               (i) a material adverse change in the nature or scope of
Executive’s job responsibilities, or in the case of a Change of Control, the
failure to be offered a substantially equivalent position with the successor
entity; provided, however, that in no event shall a requirement that Executive
report to a Chief Financial Officer of the Company or any successor entity be
deemed an adverse change in the nature or scope of Executive’s job
responsibilities or the failure to be offered a substantially equivalent
position with a successor entity;
               (ii) the relocation (or demand for relocation) of Executive’s
place of employment to a point more than thirty (30) miles from Executive’s then
current place of employment; and
               (iii) a reduction in the annual base compensation paid to
Executive, without Executive’s consent; provided, however, that a reduction in
Executive’s compensation occurring as part of a Company-wide similar reduction
of salary for similarly-situated executives shall not constitute Good Reason.
          2.2 For Cause. “Cause” for the Company to terminate Executive’s
employment hereunder shall mean the occurrence of any of the following events:
               (i) the Executive’s failure, as determined in good faith by the
Board of Directors or the Chief Executive Officer to satisfactorily perform
Executive’s assigned duties with the Company, or any successor thereof, in the
best interest of the Company and as directed by the Company’s Board of Directors
or the Chief Executive Officer (except for the failure resulting from
Executive’s incapacity due to Complete Disability, or any such actual or
anticipated failure resulting from a Good Reason termination);
               (ii) the Executive’s commission of an act that materially injures
the business of the Company;
               (iii) the Executive’s conviction of a felony involving moral
turpitude; and
               (iv) the Executive’s engaging or in any manner participating in
any activity which is directly competitive with or injurious to the Company or
any of its affiliates or which violates any material provisions of the
Executive’s Agreement for Employees dated January 26, 2005 (proprietary
information and inventions agreement) with the Company.
          2.3 Change in Control. For purposes of this Agreement, “Change of
Control” means:
               (i) an acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or subsidiary of the Company or other
entity controlled by the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or

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comparable successor rule) of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction. Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because the level of ownership held by a person,
entity or group exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, a person, entity or group becomes the owner of any
additional voting securities that, assuming the repurchase or other acquisition
had not occurred, increases the percentage of the then outstanding voting
securities owned by such person, entity or group over the designated percentage
threshold, then a Change in Control shall be deemed to occur;
               (ii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not own, directly or
indirectly, outstanding voting securities representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving entity in such
merger, consolidation or similar transaction or more than fifty percent (50%) of
the combined outstanding voting power of the parent of the surviving entity in
such merger, consolidation or similar transaction; or
               (iii) there is consummated a sale or other disposition of all or
substantially all of the consolidated assets of the Company and its
subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its subsidiaries
to an entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale, lease, license or other disposition.
          2.4 Integration. The Parties agree that unless it is determined that
Executive shall be terminated for Cause under this Agreement, there shall be no
termination for Cause under Executive’s Stock Option Agreements dated
February 22, 2005 and December 16, 2005.
     3. Change in Control.
          3.1 Benefits.
               3.1.1 In the event that Executive’s employment with the Company
is terminated without Cause or for Good Reason within the sixty (60) day period
immediately preceding or the thirteen (13) month period immediately following a
Change in Control of the Company, then upon the Executive’s delivery to the
Company of an effective Release and Waiver of Claims, attached hereto as
Exhibit A, the Executive shall be entitled to:

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               (i) The equivalent of six (6) months of the Executive’s annual
base salary in effect at the time of termination, less standard deductions and
withholdings; and
               (ii) Accelerated vesting of all unvested shares subject to any
outstanding stock options then held by Executive, such that all shares shall be
vested and fully exercisable as of the date of Executive’s termination.
          3.2 Parachute Payment. If any payment or benefit Executive would
receive pursuant a Change in Control or otherwise (“Payment”) would
(i) constitute a “parachute payment” within the meaning of Section 280G of the
Code, and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced
to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest
portion of the Payment that would result in no portion of the Payment being
subject to the Excise Tax or (y) the largest portion, up to and including the
total, of the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
Executive’s receipt, on an after-tax basis, of the greater amount of the Payment
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If a reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless Executive elects in writing a
different order (provided, however, that such election shall be subject to
Company approval if made on or after the effective date of the event that
triggers the Payment): reduction of cash payments; cancellation of accelerated
vesting of stock awards; reduction of employee benefits. In the event that
acceleration of vesting of stock award compensation is to be reduced, such
acceleration of vesting shall be cancelled in the reverse order of the date of
grant of Executive’s stock awards unless Executive elects in writing a different
order for cancellation.
     The accounting firm engaged by the Company for general audit purposes as of
the day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, then the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall
bear all expenses with respect to the determinations by such accounting firm
required to be made hereunder.
     The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
Executive and the Company within fifteen (15) calendar days after the date on
which Executive’s right to a Payment is triggered (if requested at that time by
Executive or the Company) or such other time as requested by Executive or the
Company. If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish Executive and the Company with an opinion reasonably
acceptable to Executive that no Excise Tax will be imposed with respect to such
Payment. Any good faith determinations of the accounting firm made hereunder
shall be final, binding and conclusive upon Executive and the Company.

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     4. General. This Agreement is made in San Diego, California. This Agreement
shall be construed and interpreted in accordance with the internal laws of the
State of California. This Agreement supercedes and replaces any other agreement
between Executive and the Company regarding change in control benefits and
cannot be amended or modified except by written agreement between Executive and
the Company. This Agreement may be executed in two counterparts, each of which
shall be deemed an original, all of which together shall contribute one and the
same instrument.
     In Witness Whereof, the Parties have executed this Agreement as of the date
first above written.

         
 
       
Anadys Pharmaceuticals, Inc.
   
 
       
By:
  /s/ Kleanthis G. Xanthopoulos, Ph.D.              
Name: Its:
  Kleanthis G. Xanthopoulos, Ph.D.
President and Chief Executive Officer    

     
 
   
Dated: 04/17/06
   
 
   
Executive:
   
 
   
/s/ Jennifer K. Crittenden
         
 
   
Dated: 04/17/06
   

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EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
     In consideration of the payments and other benefits set forth in Section 3
of the Change in Control Agreement dated April 17, 2006, to which this form is
attached, I, Jennifer K. Crittenden, hereby furnish Anadys Pharmaceuticals, Inc.
(the “Company”), with the following release and waiver (“Release and Waiver”).
     In exchange for the consideration provided to me by the Change in Control
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, Affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to my
signing this Release and Waiver. This general release includes, but is not
limited to: (1) all claims arising out of or in any way related to my employment
with the Company or the termination of that employment; (2) all claims related
to my compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (4) all tort
claims, including, but not limited to, claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including, but not limited to, claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended).
     I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: “A general release does not extend
to claims which the creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if known by him or her must
have materially affected his or her settlement with the debtor.” I hereby
expressly waive and relinquish all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to any claims I may
have against the Company.
     I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. If I am 40 years of age or older upon execution of this Release and
Waiver, I further acknowledge that I have been advised, as required by the Older
Workers Benefit Protection Act, that: (a) the release and waiver granted herein
does not relate to claims under the ADEA which may arise after this Release and
Waiver is executed; (b) I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have twenty-one (21) days from the date of termination of my
employment with the Company in which to consider this Release and Waiver
(although I

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may choose voluntarily to execute this Release and Waiver earlier); (d) I have
seven (7) days following the execution of this Release and Waiver to revoke my
consent to this Release and Waiver; and (e) this Release and Waiver shall not be
effective until the seven (7) day revocation period has expired.
     If I am less than 40 years of age upon execution of this Release and
Waiver, I acknowledge that I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have five (5) days from the date of termination of my employment
with the Company in which to consider this Release and Waiver (although I may
choose voluntarily to execute this Release and Waiver earlier).
     I acknowledge my continuing obligations under my Agreement for Employees
dated January 26, 2005 (proprietary information and inventions agreement),
attached hereto as Exhibit B. Pursuant to the Agreement for Employees I
understand that among other things, I must not use or disclose any confidential
or proprietary information of the Company and I must immediately return all
Company property and documents (including all embodiments of proprietary
information) and all copies thereof in my possession or control. I understand
and agree that my right to the change in control benefits I am receiving in
exchange for my agreement to the terms of this Release and Waiver is contingent
upon my continued compliance with my Agreement for Employees.
     This Release and Waiver, including Exhibit B hereto, constitutes the
complete, final and exclusive embodiment of the entire agreement between the
Company and me with regard to the subject matter hereof. I am not relying on any
promise or representation by the Company that is not expressly stated herein.
This Release and Waiver may only be modified by a writing signed by both me and
a duly authorized officer of the Company.

     
Date: 
  By:       

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