Exhibit 10.28

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into by and
between KOSAN BIOSCIENCES INCORPORATED, a Delaware corporation having an address
at 3832 Bay Center Place, Hayward, CA 94545 (the “Company”), and SUSAN M.
KANAYA, an individual (“Consultant”), effective as of January 1, 2006 (the
“Effective Date”).

RECITALS

WHEREAS, Consultant has skills and knowledge in the Company’s field of endeavor
and thus is well suited to advise the Company; and

WHEREAS, the Company desires that Consultant advise and consult with the Company
in Consultant’s area of expertise and on the terms and conditions set forth
herein.

NOW THEREFORE, in consideration of the mutual obligations specified in this
Agreement, the parties agree to the following:

1. CONSULTING SERVICES. Consultant shall provide consulting services to the
Company, the specific nature and amount of which shall be as described generally
in Exhibit A and in accordance with the Company’s more specific instructions.
Exhibit A lists Consultant’s main contact person for the Services, and this
person will be the primary source of Company’s more specific instructions
regarding the Services. The Company may change Consultant’s main contact upon
written notice. Consultant will perform the Services in strict accordance with
Exhibit A and the Company’s other directions, using Consultant’s highest degree
of professional skill and expertise.

Consultant shall render the Services at such times and in such quantities as are
set forth in Exhibit A. Consultant shall perform the Services at the Company’s
principal place of business, another Company location, or at other places set
forth in Exhibit A.

2. COMPENSATION. Company shall compensate Consultant in accordance with Exhibit
A for Services actually provided by Consultant in accordance with this
Agreement.

3. AMENDMENTS TO EXHIBIT A. Exhibit A sets forth the specifics of the Services,
the location of the Services and compensation for the Services as of the
Effective Date. Exhibit A may only be amended by a writing signed by an
authorized representative of each party (in the case of the Company, a person
having a seniority level of Senior Vice President or higher).

4. INDEPENDENT CONTRACTOR STATUS. It is understood and agreed that Consultant is
an independent contractor, is not an agent or employee of the Company, and is
not

 

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authorized to act on behalf of the Company. Consultant agrees not to hold
Consultant out as, or give any person any reason to believe that Consultant is
an employee, agent, joint venturer or partner of the Company. Consultant will
not be eligible for any employee benefits, nor will the Company make deductions
from any amounts payable to Consultant for taxes or insurance (except to the
extent the Company is required by law to do so). All payroll and employment
taxes, insurance, and benefits shall be the sole responsibility of Consultant.
Consultant retains the right to provide services for others during the term of
this Agreement and is not required to devote Consultant’s services exclusively
for the Company.

5. NO SOLICITATION. During the term of this Agreement and for one (1) year after
its termination, Consultant will not personally or through others recruit,
solicit or induce any employee of the Company to terminate his or her employment
with the Company.

6. CONFIDENTIAL INFORMATION.

6.1 Company Information. During the term of this Agreement and in the course of
Consultant’s performance hereunder, Consultant may receive or otherwise be
exposed to confidential or proprietary information relating to the Company’s
technology know-how, data, inventions, developments, plans, business practices
or strategies. Such confidential or proprietary information of the Company
(collectively referred to as “Information”) may include but not be limited to:
(i) confidential or proprietary information supplied to Consultant with the
legend “Confidential” or equivalent; (ii) the Company’s marketing and customer
support strategies, financial information (including sales, costs, profits and
pricing methods), internal organization, employee information, and customer
lists; (iii) the Company’s technology, including, but not limited to,
discoveries, inventions, research and development efforts, data, software, trade
secrets, processes, samples, media and/or cell lines (and procedures and
formulations for producing any such samples, media and/or cell lines), vectors,
viruses, assays, plasmids, formulas, methods, product and know-how and show-how;
(iv) all derivatives, improvements, additions, modifications, and enhancements
to any of the above, including any such information or material created or
developed by Consultant under this Agreement; or (v) information of third
parties as to which the Company has an obligation of confidentiality. Consultant
agrees that any Information provided to Consultant prior to the Effective Date
shall be considered “Information” and protected hereunder.

Consultant acknowledges the confidential and secret character of the Information
and agrees that the Information (with the exception of information in category
(v)) is the sole, exclusive and extremely valuable property of the Company.
Accordingly, Consultant shall not reproduce any of the Information without the
applicable prior written consent of the Company, use the Information except in
the performance of this Agreement, nor disclose all or any part of the
Information in any form to any third party, either during or after the term of
this Agreement. Upon termination of this Agreement for any reason, including
expiration of term, Consultant agrees to cease using and to return to the
Company all whole and partial copies of the Information.

 

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Consultant shall not remove from the premises of Company or otherwise transfer
to any third party any materials to which Company provides Consultant access,
unless Consultant has express advance written consent from Company.

6.2 Other Employer Information. Consultant agrees that Consultant will not,
during Consultant’s engagement with the Company, improperly use or disclose any
proprietary information or trade secrets of Consultant’s former or concurrent
employers or companies with which Consultant has or has had a consulting or
other relationship, if any, and that Consultant will not bring onto the premises
of the Company any unpublished documents or any property belonging to
Consultant’s former or concurrent employers or companies unless consented to in
writing by said employers or companies.

6.3 Third Party Information. Consultant recognizes that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company’s part to maintain the
confidentiality of such information and, in some cases, to use it only for
certain limited purposes. Consultant agrees that Consultant owes the Company and
such third parties, both during the term of Consultant’s engagement and
thereafter, a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation (except in a manner that is consistent with the Company’s agreement
with the third party) or use it for the benefit of anyone other than the Company
or such third party (consistent with the Company’s agreement with the third
party).

7. INVENTIONS.

7.1 Disclosure of Inventions. Consultant shall promptly and fully disclose to
the Company any and all ideas, improvements, inventions, know-how, techniques
and works of authorship learned, conceived or developed by Consultant pursuant
to Consultant’s performance of the Services for the Company or pursuant to any
services provided to the Company prior to the Effective Date (together with all
intellectual property rights therein (including without limitation patent
applications and patents), the “Consulting Inventions”). Consultant shall keep
and maintain adequate and current records (in the form of notes, sketches,
drawings or in any other form that may be required by the Company) of all work
performed relating to the Services, including all proprietary information
developed relating thereto. Such records shall be available to and remain the
sole property of the Company at all times.

7.2 Inventions Assigned to the Company. Consultant agrees that any and all
Consulting Inventions shall be the sole and exclusive property of the Company.
Accordingly, Consultant hereby assigns to the Company all Consultant’s right,
title and interest in and to the Consulting Inventions, and agrees to execute
and deliver all documents and take all reasonable, lawful actions to assist the
Company to evidence or record such assignment or perfect or enforce the
Consulting Inventions. Further, if Company is unable, after making reasonable
inquiry, to obtain Consultant’s signature on any such documents, Consultant
hereby appoints Company as Consultant’s attorney-in-fact to execute and deliver
such documents.

 

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Consultant explicitly acknowledges and agrees that all works of authorship
contained in the Consulting Inventions are “works for hire” under the copyright
laws of the United States, and that the Company shall own the copyright in all
such works of authorship.

7.3 Proprietary Information and Inventions of Concurrent Employers. The Company
acknowledges that Consultant may be concurrently employed by other employers
during the course of this Agreement. The Company shall have no rights to
the proprietary information or inventions developed by Consultant during the
course of her employment with such concurrent employers.

8. TERMINATION. Either party may terminate this Agreement at any time by giving
the other party thirty (30) days written notice. Either party may terminate this
Agreement upon written notice in the case of material breach of the terms of
this Agreement by the other party, if such breach remains uncured thirty (30)
days after written notice of such breach is sent by the terminating party. In
the event of any termination, Consultant shall cease work immediately, unless
otherwise advised by the Company, shall return to the Company all Information,
Consulting Inventions, and other materials belonging to the Company, and shall
notify the Company of costs incurred up to the termination date. Sections 5, 6,
7, 8, 10, 11 and 12 of this Agreement shall survive any termination of this
Agreement.

9. COMPLIANCE WITH APPLICABLE LAWS. Consultant warrants that all material
supplied and work performed under this Agreement complies with or will comply
with all applicable United States and foreign laws and regulations.

10. ASSIGNMENT; BENEFIT. This Agreement is for the personal services of
Consultant and may not be assigned by Consultant. Consultant may not delegate
any of Consultant’s duties under this Agreement nor shall it be assignable by
Consultant by operation of law, without the prior written consent of the
Company. This Agreement may be assigned at any time by the Company in its
discretion, provided that Consultant would not be required to perform personal
services for any entity other than an entity (a) affiliated with the Company or
(b) that has merged with or acquired all or substantially all of the Company’s
assets to which the Services relate. The parties’ rights and obligations under
this Agreement will bind and inure to the benefit of their respective
successors, heirs, executors, and administrators and permitted assigns.

11. LEGAL AND EQUITABLE REMEDIES. Consultant hereby acknowledges and agrees that
if Consultant breaches this Agreement, including, without limitation, by the
actual or threatened disclosure of Information or Consulting Inventions without
the prior express written consent of the Company, the Company will suffer an
irreparable injury, such that no remedy at law will afford it adequate
protection against, or appropriate compensation for, such injury. Accordingly,
Consultant hereby agrees that the Company shall be entitled to specific
performance of Consultant’s obligations under this Agreement, as well as such
further relief as may be granted by a court of competent jurisdiction.

 

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12. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed according to the laws of California, without giving effect to its
conflict of laws rules. If any provision of this Agreement is found by a court
of competent jurisdiction to be unenforceable, that provision shall be severed
and the remainder of this Agreement shall continue in full force and effect. Any
disputes arising under this Agreement shall be resolved by trial to a judge as
the finder of fact seated in a court of competent subject matter jurisdiction in
San Mateo or San Francisco counties, California. Each party hereby consents to,
and waives any defenses that party may have to or conflicting with, the personal
jurisdiction and venue of all such courts or relating to trial to a judge
(including without limitation the defense of forum non conveniens).

13. COMPLETE UNDERSTANDING; MODIFICATION. This Agreement constitutes the final,
exclusive and complete understanding and agreement of the Company and Consultant
with respect to the subject matter hereof. There are no other understandings,
agreements, representations or warranties between the parties with respect to
that subject matter other than those set forth in this Agreement. Any waiver,
modification or amendment of any provision of this Agreement shall be effective
only if in writing and signed by a Company officer.

14. NOTICES. Any notices required or permitted hereunder shall be given to the
appropriate party at the address specified below or at such other address as the
party shall specify in writing. Such notice shall be deemed given upon personal
delivery to the appropriate address or sent by certified or registered mail,
three days after the date of mailing. Either party may update its notice address
by written notice to the other party.

 

If to the Company:

   If to the Consultant:

Kosan Biosciences Incorporated

   Susan M. Kanaya

3832 Bay Center Place

  

Hayward, CA 94545

  

Attention: General Counsel

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.

 

KOSAN BIOSCIENCES INCORPORATED

    

/s/ DANIEL V. SANTI

 

    

/s/ SUSAN M. KANAYA

PRINTED NAME: DANIEL V. SANTI, M.D., PH.D.

     PRINT NAME: SUSAN M. KANAYA

TITLE: CHAIRMAN AND CEO

     SOCIAL SECURITY NUMBER:

 

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EXHIBIT A

WORK PLAN, COMPENSATION

Work Plan:

Consultant will provide general consulting services as requested from time to
time. Consultant’s primary contact at the Company shall be Daniel V. Santi,
M.D., Ph.D., Chairman and Chief Executive Officer.

Term of Service:

For one (1) year unless earlier terminated in accordance with this Agreement, or
extended by mutual written agreement of Consultant and an officer of the
Company.

Compensation:

Consultant shall be paid $250 per hour actually spent performing the Services
(excluding de minimis Services), not to exceed ten (10) hours per month without
the Company’s prior written approval. Payments will be processed within thirty
(30) days after receipt by Company of Consultant’s itemized invoice therefor.

Stock Option Awards:

Consultant and the Company agree to the following regarding the stock option
grants provided to Consultant in connection with Consultant’s former employment
with the Company:

Notwithstanding any provision to the contrary contained in the applicable stock
option grant notices, applicable stock option agreement, and governing stock
option plan, and notwithstanding Consultant’s continued service to the Company
during the term of this Agreement, Consultant and the Company agree that
Consultant’s option grants will cease to vest as of Consultant’s resignation
date, January 1, 2006, and Consultant’s option on all unvested shares as of that
date will terminate. Notwithstanding the preceding, Consultant and the Company
agree that Consultant will be entitled to exercise any vested shares on or
within thirty (30) days after the termination of this Agreement, pursuant to the
terms of the applicable stock option grant notice, applicable stock option
agreement, and governing stock option plan.