Unassociated Document


     

     

     

    May
      29,
      2007

     

    Thomas
      C.
      Chesterman

    [HOME
      ADDRESS 

    REDACTED]

     

    
      	
            	Re:	
              Offer
                Letter 

            


    

     

    Dear
      Tom:

     

    I
      am
      pleased to confirm an offer of employment to you to join BioNovo, Inc. (the
      "Company") as its new Chief Financial Officer ("CFO") effective as of July
      9,
      2007. The terms of your offer are as follows:

     

    Annual
      Salary: Your
      Annual Salary will be $305,000, payable in accordance with the Company's
      standard payroll practices. This is subject to review and increase annually
      by
      the Company.

     

    Bonus:
      During
      your employment you will have an opportunity to earn an annual Bonus up to
      a
      maximum amount of 40% of your Annual Salary (the "Potential Bonus").
      The
      Bonus will be subject to your achievement of certain performance criteria,
      provided, however, that the awarding of any such bonus is in the Company's
      sole
      discretion. The Bonus will be considered as follows:

     

    1. 25%
      of
      the Potential Bonus will guaranteed, provided that the Company has sufficient
      cash on hand to fund this portion of the Bonus.

     

    2. For
      success with the Company's financing, as determined by the Company, you will
      be
      eligible to receive the following:

     

      

    	·  
            	10% of the Potential Bonus for each $10,000,000 in
            financing raised. 


    	·  	
            10%
              of the Potential Bonus for signing on certain healthcare specific
              funds.

          


     

    	·  	
            10%
              of the Potential Bonus for closing on or before a pre-specified
              time.

          


     

    3. For
      success in the Company's Investor Relations efforts, as determined by the
      Company, you will be eligible to receive the following:

     

    	·  	
            10%
              of the Potential Bonus for a 25% increase in trading volume over a
              six
              month period.

          


    	·  	
            10%
              of the Potential Bonus for a 25% increase in analyst coverage over
              a six
              month period.

          


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

     

    4.  For
      success in business development, as determined by the Company, you will be
      eligible to receive the following:

     

    	·  	
            10%
              of the Potential Bonus for each confidential disclosure agreement signed
              with potential partner

          


    	·  	
            30%
              of the Potential Bonus for the Company signing a partnering/licensing
              agreement

          


    	·  	
            100%
              of the Potential Bonus in the event the Company enters into a new
              acquisition agreement.

          


     

    5.  For
      success in achieving successful Sarbanes-Oxley compliance with the SEC, you
      will
      be eligible to receive 20% of the Potential Bonus.

     

    6.  Bonus
      will he guaranteed, provided that the Company has sufficient cash on hand
      to:

     

    	·  	
            25%
              will be guaranteed, provide the Company has one year of cash on hand
              to
              execute its business plan.

          


    	·  	
            50%
              will be guaranteed, provide the Company has two years of cash on hand
              to
              execute its business plan.

          


     

    The
      Board
      of Directors may elect to increase or change the conditions, set in this offer,
      in the future, to reflect special situations and events and the changing needs
      of the Company's business.

     

    Equity:
      As
      an
      incentive bonus, you shall receive stock options to purchase 800,000 shares
      of
      the Company's stock ("Options").
      The shares subject to the Options shall vest equally in four (4) yearly
      installments, and in each case pursuant to a customary stock option agreement
      that will contain the terms pertaining to the Options. Except as otherwise
      expressly provided, the Options will expire ten years after they are granted.
      The options will be priced at the greater price of 85% of the closing price
      on
      the 1st
      day of
      employment (July 9, 2007)
      or
      the closing price of June 1st,
      2007.

     

    The
      Board
      of Directors will consider an additional grant of options to purchase shares
      of
      the Company's stock as a result of successful next round of financing, such
      that
      your total options as a percentage of outstanding stock is kept at the same
      level.

     

    Change
      of Control: In
      the
      event of a Change of Control of the Company (as defined herein), you will
      receive severance in the amount of six months Annual Salary. For purposes
      herein, "Change of Control" means the occurrence of any of the following; (a)
      the sale, transfer, conveyance or other disposition in one or a series of
      related transactions, or all or substantially all of the asserts of the Company
      to any entity, person, or group; (b) any entity, person, or group that becomes,
      directly or indirectly, the owner

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    of
      more
      than fifty percent (50%) of the voting stock of the Company by way of merger,
      consolidation, or other business combination, other than a transaction involving
      only the Company or one or more of
      its
      subsidiaries; or (c) during any twenty-four (24) month period, the present
      directors of the Company cease for any reason to constitute the majority of
      the
      Board. Notwithstanding the foregoing, no Change of Control shall be deemed
      to
      have occurred by reason of any actions or events in which you participate in
      a
      capacity other than as an executive of the Company.

     

    Benefits:
      You
      shall
      be eligible for the full complement of fringe benefits available to other
      executives of the Company, including the Company's health, dental, and vision
      coverage. You shall also be entitled to thirty (30) days of vacation each
      year.

     

    At-Will
      Employment: Your
      employment with the Company is "at will", which means your employment may be
      terminated by you or the Company at any time for any reason, with or without
      notice, and in the case of a termination
      of employment by the Company, either with or without cause as deemed appropriate
      by the Company. In addition, this letter is an outline of the terms of our
      offer
      and is not intended to create a contract of employment between you and the
      Company.

     

    Confidential
      Information: During
      your employment and thereafter, you shall hold in a fiduciary capacity all
      secret or confidential information, knowledge or data relating to the Company
      and including but not limited to financial information that you have obtained
      or
      obtain during your employment by the Company that is not public knowledge
      ("Confidential Information"). You shall not communicate divulge or disseminate
      Confidential Information at any time during or after your employment with the
      Company, except with prior written consent of the Company, or as otherwise
      required by law or legal process or as such use or disclosure may be required
      or
      use may be required in the course of performing your duties and
      responsibilities. You may be required to sign a Confidentiality and Restrict
      Covenant Agreement upon commencement of your employment as a condition of
      employment

     

    Best
      Efforts: You
      shall
      use your best efforts, skill, and abilities to promote and protect the interests
      of the Company and its affiliates. You agree to devote your full working time
      and energies to the business and affairs of the Company and/or its affiliates
      and shall not devote any working time or energies (except for volunteer work
      for
      a charity) for the benefit of any other person or entity, unless the Company
      agrees in writing to an exception to this requirement.

     

    No
      Conflict: You
      represent and warrant that you are not party to any agreement or under any
      obligation that would prohibit you from entering into this agreement or
      performing fully your obligations hereunder.

     

    We
      are
      very pleased about the prospects for the future and we look forward to your
      joining us. If you have any questions, please feel free to call me.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    	 	 	 
	 	Very
            truly yours,
	 	 
	 	BioNovo, Inc. 
	 
 	 
 	 
 
	 	By:  	/s/ Isaac
            Cohen
	 	
            
Isaac
            Cohen
	 	President
            and CEO


    	 	 	 
	 	AGREED TO AND
            ACCEPTED: 
	 
 	 
 	 
 
	 	By:  	/s/ Tom
            Chesterman
	 	
            

            Tom
              Chesterman