Exhibit 10.21

[GENSTAR LETTERHEAD]

December 18, 2002

Yawen L. Chiang, Ph.D.
GenStar Therapeutics Corporation
10865 Altman Row
San Diego, California  92121

Dear Yawen:

          This letter confirms the agreement between GenStar Therapeutics
Corporation (“GenStar”) and you with respect to your severance rights in the
event of the termination of employment, as well as your retention package in
connection with the pending merger between GenStar and Vascular Genetics Inc.
(“VGI”). 

          If GenStar terminates your employment, other than for Cause (as
hereinafter defined), GenStar will pay you severance compensation in the amount
equal to three (3) months of your current base salary (“Severance Benefit”). The
Severance Benefit is in addition to any accrued salary, vacation or other
benefit that might be due you through the date of termination. 

          For purposes of this agreement, “Cause”shall mean any of the following
as established upon GenStar’s fair and honest determination exercised in good
faith:

 

          (a)          any willful and continuous failure by you to
substantially perform your  duties (other than as a result of your disability as
defined in any GenStar benefit plan in effect at the date of the disability),
after GenStar delivers to you written demand for substantial performance that
specifically identifies the manner in which GenStar  believes that you have not
substantially performed your duties, and you have failed to cure the identified
deficiencies within ten (10) business days of receipt of such notice; or

 

 

 

          (b)          any violation by you of any Federal or state law or
regulation applicable to the business of GenStar, the violation of which can
reasonably be expected to expose GenStar to criminal investigation or
prosecution, material regulatory investigation, material financial loss and/or
significant injury to its business reputation, of any material breach of any
written agreement between you and GenStar or of any other written agreement
GenStar may designate (provided that GenStar has given you written notice of
such violation or breach and you have failed to cure the identified deficiencies
within ten (10) business days of receipt of such notice), or your conviction of
a felony (including any nolo contendere plea), or any adjudication of a
perpetration by you of a common law fraud.

          In connection with the pending merger between GenStar and VGI, GenStar
agrees to pay or grant you the following as retention compensation: 

 

          (a)          $10,000 in cash, to be paid in five (5) consecutive
monthly installments of $2,000 each commencing in January 2003;

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Yawen L. Chiang
December 6, 2002
Page 2

 

          (b)          an additional $15,000 in cash, to be paid upon the
completion of the second of two milestones, which are:  (i)  the consummation of
the GenStar’s merger with VGI, and (ii) the successful completion of the
manufacturing of the VEGF-2 product for the next clinical trials (the
“Milestones”);

 

 

 

          (c)          an option to purchase 75,000 shares of GenStar common
stock at an exercise price equal to the fair market value of GenStar’s common
stock at the time of grant, with vesting acceleration upon the completion of
both Milestones.  These options will be granted to you at least five (5)
business days before the merger.

          We expect that after the consummation of the merger, your employment
agreement will be documented into a formal employment contract.  Until those
agreements are negotiated and signed, however, GenStar wishes to confirm its
assurances to you with respect to your severance and retention benefits. 

          GenStar looks forward to your continued contributions to its business,
and we are pleased to be able to confirm these severance rights. 

 

Sincerely,

 

 

 

Robert F. Sobol, M.D.

 

 

 

President and Chief Executive Officer

The foregoing is accepted and agreed:

/s/    YAWEN L. CHIANG

 

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Yawen L. Chiang