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Exhibit 10.7    
    


CYDEX, INC..

SEVERANCE COMPENSATION AGREEMENT FOLLOWING

CHANGE IN CONTROL  


        This Severance Compensation Agreement (the "Agreement") is made as of January 1, 2004, by and between  CYDEX, INC., a Delaware corporation (the "Company") and JOHN
SIEBERT ("Executive"). 


        WHEREAS, the Company believes it to be in its best interest to reinforce and encourage the continued attention and dedication of selected
members of the Company's management, including Executive, to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a change in control of
the Company; and 


        WHEREAS, this Agreement sets forth the severance compensation which the Company agrees it will pay to Executive if Executive's employment
with the Company terminates following a Change in Control, as defined herein. 


        NOW, THEREFORE, in consideration of these premises, the parties agree that the following shall constitute the agreement between the
Company and Executive: 


        1.    DEFINITIONS.    


        (a)   Base Salary. For purposes of this Agreement, "Base Salary" means the
salary of record paid to Executive as annual salary, excluding amounts received under any incentive or other bonus plan, whether or not deferred and whether paid in cash or in stock or stock options. 


        (b)   Change in Control. For purposes of this Agreement, a "Change in Control"
shall be deemed to occur if the conditions set forth in any of the following are satisfied: 



          (i)  any "person", as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") (other than the Company, any trustee. or other fiduciary holding securities under an employee benefit plan of the Company or any
corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), or group of persons, together with its
affiliates, are or become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly from the Company) representing more than fifty percent (50%) of the combined voting power of the Company's then
outstanding securities (calculated in accordance with Section 13(d)(3) or 14(d) of the Exchange Act) entitled to vote for the election of the Company's Board of Directors (the
"Board"); 


         (ii)  during any period of two (2) consecutive years (not including any period beginning prior to the effective date of
this Agreement), individuals who at the beginning of such period constitute the Board, and any new Board member (other than a Board member designated by a person who has entered into an agreement with
the Company to effect a transaction described in paragraph (i), (ii) or (iii) of this subsection 1(b)) whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the Board members then still in office who either were Board members at the beginning of the period or whose election or
nomination for election previously was so approved, cease for any reason to constitute at least two-thirds of the Board; 


       (iii)  the closing of a merger or consolidation of the Company with any other person, other than (1) a merger or
consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities for the surviving entity) more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (2) a merger in which no 








 




"person"(as
defined in subsection 1(b)(i)) acquires more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities; or 



        (iv)  the closing of a complete liquidation of the Company or the sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a similar effect). 




        (c)   Qualifying Termination. For purposes of this Agreement, "Qualifying
Termination" means any of the following events: 



          (i)  within six (6) months prior to a Change in Control, an involuntary termination of Executive's employment by the
Company that is in contemplation of, and caused by, such Change in Control, such Change in Control is pending at the time of such termination and such Change in Control actually occurs; provided that
such termination shall not be a Qualifying Termination if circumstances constituting Cause exist; 


         (ii)  within two (2) years following a Change in Control, an involuntary termination of Executive's employment by the
Company for reasons other than Cause, the failure or refusal by a successor company to assume the Company's obligations under this Agreement, as required by Section 5(d) herein, or a breach by
the Company or any successor company of any of the provisions of this Agreement; or 



       (iii)  a voluntary termination of employment by the Executive within ninety (90) days following the occurrence of Good
Reason, if such Good Reason occurs within two (2) years following a Change in Control. 




        (d)   Good Reason. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following, without the Executive's express written consent, within two (2) years after a Change in Control: 



          (i)  any reduction of the Executive's Base Salary or any Company incentive compensation plan target participation level in
comparison to the highest Base Salary or target participation level in effect for the Executive during the twelve (12) months preceding a Change in Control; 


         (ii)  any failure to continue in effect the Executive's eligibility for any retirement, deferred compensation, vacation, life
insurance, medical, dental, accident, disability or other employee benefit arrangement, policy, program or plan, other than the Company's short-term and/or long-term incentive
compensation plans (which arrangements, policies, programs or plans shall be referred to herein as "plans"), in which the Executive was entitled to participate immediately prior to the Change in
Control; provided, however, that reductions in the levels of participation in any such plans or substitution of a different plan shall not be deemed to
be Good Reason if the Executive's reduced level of participation in each such plan remains, or the substitution is, substantially consistent with the average level of participation of other Executives
in positions commensurate with the Executive's, position; and further provided, that an increase in the Executive's contributions in any such plan shall
not be deemed to be Good Reason if the Executive's increased level of contribution in each such plan remains substantially consistent with the average level of contribution of other Executives in
positions commensurate with the Executive's position; or 


       (iii)  the Executive is requested to relocate to an office outside of the metropolitan area in which the Executive was
principally located immediately prior to the Change in Control. 



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        (e)   Cause. For purposes of this Agreement, "Cause" means: 



          (i)  the Executive's willful violation of any reasonable rule or direct order of the Board or the Company's Chief Executive
Officer, which, after written notice to do so, the Executive fails to make reasonable efforts to correct within a reasonable time, 


         (ii)  conviction of a crime, or entry of a plea of nolo contendere with regard
to a crime, involving actual moral turpitude or dishonesty of or by the Executive; 


       (iii)  any action or omission constituting cause or reason under any written employment agreement between the Executive and
the Company in effect immediately prior to the Change in Control. 




        "Cause"
shall not include any matter other than those specified in (i) through (iii) above. 



        2.    TERMINATION AFTER CHANGE IN CONTROL.    Upon the occurrence of any Qualifying
Termination (as defined above): 


        (a)   The Company shall pay, as severance pay in a lump sum on the tenth (10th) business day following the date of termination,
an amount equal to: 



          (i)  the Base Salary; plus 



         (ii)  one-twelfth (1/12) of the Base Salary for each Year of Employment of such Executive by the
Company up to an aggregate amount payable under this clause (ii) of one times Base Salary; plus 


       (iii)  any and all bonuses, if applicable, paid by the Company to Executive for the fiscal year ending immediately before the
Change in Control of the Company. 




        For
purposes of this section, "Year of Employment" shall include a period of less than twelve (12) months. 



        (b)   Executive, at the Company's cost, shall be entitled to continuation of coverage for twelve (12) months (beginning
with the month subsequent to the effective date of the termination) under all Company paid or partially paid health, disability or group life insurance plans or any retirement, pension or profit
sharing plans, in each case at such level as had been available to and selected by Executive immediately prior to the Change in Control. 


        (c)   If any of the payments contemplated by this Agreement or any other compensation, benefit or other amount
("Parachute Payments") will be subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986 (including any interest and
penalties, the "Excise Tax"), no Parachute Payment shall be reduced (except for required tax withholdings) and the Company shall pay to Executive by the
earlier of the date such Excise Tax is withheld from payments made to Executive or the date such Excise Tax becomes due and payable by Executive, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive, after deduction of any Excise Tax and any taxes on the Excise Tax, shall
be equal to the amount Executive would have received if no Excise Tax had been imposed. For purposes of determining the Gross-Up Payment, Executive shall be deemed to pay taxes at the tax
rate applicable at the time of the Gross-Up Payment. In the event that the Excise Tax is subsequently determined to be a different amount than the amount taken into account hereunder at
the time a Parachute Payment is made, the Gross-Up Payment shall be adjusted accordingly at the time that the amount of such difference is finally determined. The Company shall reimburse
Executive for all reasonable fees, expenses and costs incurred by Executive related to the Excise Tax or the Gross-Up Payment, including but not limited to (i) the determination of
the reasonableness of any Company position, (ii) the preparation of any tax return or other tax filing, or (iii) any audit, litigation or other proceeding. 


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        3.    ARBITRATION OF DISPUTES.    


        (a)   Any dispute or claim arising out of or relating to this Agreement or any termination of Executive's employment shall be
settled by final and binding arbitration in Overland Park, Kansas in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof. 


        (b)   The Company shall reimburse Executive for any attorneys' fees and expenses incurred by Executive related to any
arbitration hereunder, including any actions taken by either party to appeal or enforce the judgment rendered therein. Such reimbursement shall be made by direct payment to Executive upon delivery to
the Company of valid invoices and/or receipts relating to such attorneys' fees and expenses. 



        (c)   Except as contemplated in subparagraph (d), the fees and expenses of the arbitration panel shall be borne by the Company. 


        (d)   In the event Executive does not submit to arbitration hereunder or submits to arbitration but later seeks to nullify or
reverse the effect of such arbitration by alleging that arbitration is unenforceable against him, the Company shall be relieved of all payment obligations under subparagraph (b) and (c), above. 



        4.    MITIGATION.    Executive shall have no duty to attempt to mitigate the level of benefits
payable by the Company to him hereunder, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as the result of employment by another
employer after the date of any Qualifying Termination or otherwise. 


        5.    GENERAL PROVISIONS.    



        (a)   Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas. 


        (b)   Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised
a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and still be legal, valid or enforceable. 


        (c)   Entire Agreement. This Agreement sets forth the entire understanding of
the parties and supersedes all prior agreements or understandings, whether written or oral, with respect to the subject matter hereof. No terms, conditions or warranties, other than those contained
herein, and no amendments or modifications hereto shall be binding unless made in writing and signed by the parties hereto. 



        (d)   Binding Effect. This Agreement shall extend to and be binding upon and
inure to the benefit of the parties hereto, their respective heirs, representatives, successors and assigns. This Agreement may not be assigned by Executive. 


        (e)   Waiver. The waiver by either party hereto of a breach of any term or
provision of this Agreement shall not operate or be construed as a waiver of a subsequent breach of the same provision by any party or of the breach of any other term or provision of this Agreement. 



        (f)    Titles. Titles of the paragraphs herein are used solely for convenience
and shall not be used for interpretation or construing any work, clause, paragraph or provision of this Agreement. 


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        (g)   Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but which together shall constitute one and the same instrument. 


        IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the date and year first written above. 


        THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.



	EXECUTIVE:	 	CYDEX, INC.
	

/s/  JOHN M. SIEBERT      
 Name John M. Siebert

Title: President and Chief Executive Officer	
 	

/s/  JIM O'BRIEN      
 By: Jim O'Brien

Title: Director




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Exhibit 10.7