Document:

Change of Control Severance Agreement dated December 23, 2004

 Exhibit 10.16 
  
 THRESHOLD PHARMACEUTICALS, INC. 
  
 CHANGE OF CONTROL SEVERANCE AGREEMENT 
  
 The Change of Control Severance Agreement (the “Agreement”) is made and entered into effective as of December 23,
2004 (the “Effective Date”), by and between George Tidmarsh (the “Employee”) and Threshold Pharmaceuticals, Inc., a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in
Section 1 below. 
  
 RECITALS 
  
 A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.

  
 B. The Board believes that it is in the best interests of the
Company and its stockholders to provide the Employee with an incentive to continue Employee’s employment or participation as an advisor to the Company and to maximize the value of the Company upon a Change of Control for the benefit of its
stockholders. 
  
 C. In order to provide the Employee with
enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide the Employee with certain severance benefits upon the
Employee’s termination of employment following a Change of Control. 
  
 AGREEMENT 
  
 In consideration of the mutual
covenants herein contained and the continued employment of Employee by the Company, the parties agree as follows: 
  
 1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: 
  
 (a) Cause. “Cause” shall mean (i) Employee’s gross
negligence or willful failure substantially to perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Employee’s commission of any act of fraud, embezzlement, dishonesty or any other
willful misconduct that has caused or is reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Employee of any proprietary information or trade secrets of the Company or any other party to whom the
Employee owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Employee’s willful breach of any of his or her obligations under any written agreement or covenant with the Company. The determination
as to whether an Employee is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Employee. 

 (b) Change of Control. “Change of Control” shall mean the occurrence of any of the
following events: 
  
 (i) the approval by stockholders of the
Company of a merger or consolidation of the Company with any other corporation, other than 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 of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; 
  
 (ii) the approval by the
stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
  
 (iii) any “person” (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities. 
  
 (c) Involuntary Termination. “Involuntary Termination” shall mean (i) without the Employee’s express written consent, a reduction by the Company of the Employee’s base salary as in effect immediately prior to such
reduction; (ii) without the Employee’s express written consent, a material reduction by the Company in the kind or level of employee benefits to which the Employee is entitled immediately prior to such reduction, with the result that the
Employee’s overall benefits package is significantly reduced; (iii) without the Employee’s express written consent, the imposition of a requirement for the relocation of the Employee to a facility or a location more than fifty (50) miles
from the Employee’s current work location; (iv) any purported termination of the Employee’s employment by the Company which is not effected for Cause or for which the grounds relied upon are not valid; or (v) the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in Section 6 below. 
  
 (d) Termination Date. “Termination Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder. 
  

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 2. Term of Agreement. Other than Section 4(b) of this Agreement which shall survive indefinitely
until all obligations under such Section have been satisfied, this Agreement shall terminate upon the earlier of (i) two (2) years after a Change of Control, or (ii) the date that all obligations of the parties hereto under this Agreement have been
satisfied. 
  
 3. At-Will Employment. The Company and the
Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits,
damages, awards or compensation other than as provided by this Agreement, or as may otherwise be established under the Company’s then existing employee benefit plans or policies at the time of termination. 
  
 4. Severance Benefits. 
  
 (a) Termination of Employment Following a Change of Control. If the
Employee is an Employee of the Company at the time of a Change of Control and the Employee’s employment with the Company terminates as a result of an Involuntary Termination at any time within eighteen (18) months after a Change of Control and
the Employee signs the release of claims pursuant to Section 7 hereto, Employee shall be entitled to the following severance benefits: 
  
 (1) Twelve months of Employee’s base salary and any applicable allowances as in effect as of the date of the termination or, if greater, as in
effect in the year in which the Change of Control occurs, less applicable withholding, payable in a lump sum within thirty (30) days of the Involuntary Termination; 
  
 (2) all stock options granted by the Company to the Employee prior to the Change of Control shall accelerate and become
vested under the applicable option agreements to the extent such stock options are outstanding and unexercisable at the time of such termination and all stock subject to a right of repurchase by the Company (or its successor) that was purchased
prior to the Change of Control shall have such right of repurchase lapse (notwithstanding any provision to the contrary in a “Stock Vesting Agreement” dated November 24, 2004 between Employee and the Company); 
  
 (3) the Employee shall be permitted to exercise all vested (including shares
that vest as a result of this Agreement) stock options granted by the Company to the Employee prior to the Change of Control for a period of two (2) years following the Termination Date; and 
  
 (4) the same level of Company-paid health (i.e., medical, vision and dental)
coverage and benefits for such coverage as in effect for the Employee (and any eligible dependents) on the day immediately preceding the Employee’s Termination Date; provided, however, that (i) the Employee constitutes a qualified
beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and (ii) Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
within the time period prescribed pursuant to COBRA. The Company shall continue to provide Employee with such Company-paid coverage until the earlier 
  

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 of (i) the date Employee (and his/her eligible dependents) is no longer eligible to receive continuation coverage
pursuant to COBRA, or (ii) twelve (12) months from the Termination Date. 
  
 (b) Termination of Clinical or Scientific Advisory Board Service Following a Change of Control. If the Employee has terminated his employment with the company but remains a participant on the Company’s
Clinical or Scientific Advisory Board at the time of a Change of Control and his participation is terminated by the Company without Cause at any time within eighteen (18) months after a Change of Control and the Employee signs the release of claims
pursuant to Section 7 hereto, Employee shall be entitled to the following severance benefits: 
  
 (1) all stock options granted by the Company to the Employee prior to the Change of Control shall accelerate and become vested under the applicable
option agreements to the extent such stock options are outstanding and unexercisable at the time of such termination and all stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of Control
shall have such right of repurchase lapse (notwithstanding any provision to the contrary in the Stock Vesting Agreement) and 
  
 (2) the Employee shall be permitted to exercise all vested (including shares that vest as a result of this Agreement) stock options granted by the
Company to the Employee prior to the Change of Control for a period of two (2) years following the Termination Date. 
  
 (c) Termination Apart from a Change of Control. If (but without duplication with the provisions set forth above in subsection 4(a) or 4(b)) the
Employee’s employment with the Company terminates as a result of an Involuntary Termination, the Employee shall be entitled to severance benefits in the form of twelve (12) months of Employee’s base salary as in effect as of the date of
termination, less applicable withholding, payable in a lump sum within thirty (30) days of the Involuntary Termination. 
  
 (d) Accrued Wages and Vacation, Expenses. Without regard to the reason for, or the timing of, Employee’s termination of employment: (i) the
Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company shall reimburse the-Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the Company prior to the Termination Date. These
payments shall be made promptly upon termination and within the period of time mandated by law. 
  
 5. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee
(i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s benefits under this
Agreement shall be either 
  
 (a) delivered in full, or

  

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 (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to
the Excise Tax, 
  
 whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. 
  
 Unless the Company and
the Employee otherwise agree in writing, any determination required under this Section shall be made in- writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding
upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section. 
  
 6. Successors. 
  
 (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in
the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. 
  
 (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer
this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 
  

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 7. Execution of Release Agreement upon Termination. As a condition of entering into this Agreement
and receiving the benefits under Section 4, the Employee agrees to execute and not revoke a general release of claims upon the termination of employment with the Company, and to execute and not revoke a general release of claims upon the termination
of participation as a clinical or scientific advisor with the Company. 
  
 8. Notices. 
  
 (a) General. Notices and
all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In
the case of the Employee, mailed notices shall be addressed to Employee at the home address which Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its Chief Executive Officer. 
  
 (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation shall be communicated
by a notice of termination to the other party hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to provide the notice or to
include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights
hereunder. 
  
 9. Arbitration. 
  
 (a) Any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be settled by binding arbitration to be held in Santa Clara, California, in accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The arbitrator may require one party to pay the costs and attorney fees of the prevailing party. 
  
 (b) The arbitrator(s) shall apply California law to the merits of any dispute
or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state arbitration law. Employee hereby consents to the personal jurisdiction of
the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants. 
  

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 (c) Employee understands that nothing in this Section modifies Employee’s at-will employment status.
Either Employee or the Company can terminate the employment relationship at any time, with or without Cause. 
  
 (d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION
OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS: 
  
 (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR
DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

  
 (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, 1 AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 20 1, et seq; 
  
 (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION. 
  
 10. Miscellaneous Provisions. 
  
 (a) Effect of Statutory Benefits. To the extent that any severance benefits are required to be paid to the Employee upon termination of employment
with the Company as a result of any requirement of law or any governmental entity in any applicable jurisdiction, the aggregate amount of severance benefits payable pursuant to Section 4 hereof shall be reduced by such amount. 
  
 (b) No Duty to Mitigate. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source. 
  
 (c) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by 
  

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 either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. 
  
 (d) Integration. This Agreement, the Stock Vesting Agreement and any outstanding stock option agreements and any restricted stock purchase
agreements referenced herein or therein represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or oral, with respect to this
Agreement and any stock option agreement or any restricted stock purchase agreement, provided, that, for clarification purposes, this agreement shall not affect any agreements between the Company and Employee regarding intellectual property
matters or confidential information of the Company. 
  
 (e)
Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California. 
  
 (f) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. 
  
 (g) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes.

  
 (h) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. 
  
 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year
first above written. 
  

					
	COMPANY:	 	Threshold Pharmaceuticals, Inc.
			
	 	 	By:	 	 /s/ Harold E. Selick

			
	 	 	Title:	 	 Chief Executive Officer

		
	EMPLOYEE:	 	 /s/ George F. Tidmarsh

	 	 	Signature
		
	 	 	 George F. Tidmarsh

	 	 	Printed Name

  

 8Stock Vesting Agreement by and between the Registrant and George F. Tidmarsh

 Exhibit 10.17 
  
 THRESHOLD PHARMACEUTICALS, INC 
  
 STOCK VESTING AGREEMENT 
  
 This Stock Vesting Agreement (the “Agreement”) is entered into effective December 23, 2004, between Threshold Pharmaceuticals, Inc.
(“Threshold” or the “Company”) and George F. Tidmarsh, M.D., Ph.D. (“Tidmarsh”). 
  
 RECITALS 
  
 A. Tidmarsh is a founder of Threshold and currently serves as the Company’s President and as a member of the Company’s Board of Directors.

  
 B. Tidmarsh has acquired or may acquire the following shares
of the Company’s Common Stock: (1) 250,000 shares (after giving effect to a 1:10 reverse split) acquired pursuant to a Founder Stock Purchase Agreement dated October 24, 2001 (the “Founder Shares”); (2) 882,500 shares acquired
on April 20, 2004, upon exercise of an option granted on August 6, 2002 (the “August 2002 Shares”); (3) 525,000 shares acquired on April 20, 2004, upon exercise of an option granted on March 10, 2004 (the “March 2004
Shares”); and (4) 200,000 shares Tidmarsh may acquire, upon exercise of an option granted on May 12, 2004 (the “May 2004 Shares” and together with the Founder Shares, August 2002 Shares and March 2004 Shares, the
“Shares”). 
  
 C. All of the Shares are subject
to a repurchase right by the Company that lapses according to schedules and conditions set forth in the respective agreements or grant notices with respect to such shares (the “Share Agreements”). As of December 31, 2005, provided
that the conditions for the release of shares from the Company’s repurchase right set forth in the respective Share Agreements shall have been satisfied, the repurchase right shall have lapsed with respect to 199,350 of the Founder Shares,
703,706 of the August 2002 Shares, 229,320 of the March 2004 Shares and 79,162 of the May 2004 Shares. 
  
 D. Threshold and Tidmarsh each acknowledge Tidmarsh’s contributions to the Company and desire to enter into this Agreement to provide additional
incentives for Tidmarsh to complete certain activities and continue full time employment with the Company until at least December 31, 2005. 

 Now therefore in consideration of the covenants set forth below, and for good and valuable consideration
receipt of which is hereby acknowledged, the parties agree as follows: 
  
 AGREEMENT 
  
 1. Acceleration of Vesting for
Full-Time Employment Through December 31, 2005. Notwithstanding anything to the contrary set forth in any of the Share Agreements, in the event that (a) (x) Tidmarsh remains a full-time employee of the Company until December 31, 2005, and
(y) as of such date the activities set forth on Exhibit A shall have been completed by or under the supervision of Tidmarsh to the satisfaction of the Company’s Chief Executive Officer, or (b) prior to December 31, 2005, Tidmarsh suffers an
Involuntary Termination as defined in his Change of Control Severance Agreement with the Company, then: 
  
 (i) effective as of December 31, 2005 (or as of the date of termination with respect to (b) above), the Company’s repurchase right
with respect to all of the Founder Shares, the August 2002 shares and the May 2004 Shares shall terminate in its entirety, and the Company shall no longer have any right to repurchase such shares. 
  
 (ii) after December 31, 2005, the Company’s repurchase
right shall continue to lapse with respect to the March 2004 Shares according to the schedule set forth in the respective Share Agreement, provided that Continuous Service shall be deemed to include membership in good standing on the Company’s
Scientific or Clinical Advisory Board. 
  
 2. No Guarantee
of Employment. This Agreement is not to be interpreted as a guarantee or contract of continuing employment. Tidmarsh’s employment remains “at will” notwithstanding anything in this Agreement. The Company agrees that if
Tidmarsh’s full-time employment with the Company terminates, and Tidmarsh has performed satisfactorily as determined by the Company’s Chief Executive Officer, he will be given the opportunity to participate as a member of the
Company’s Clinical or Scientific Advisory Board. 
  
 3.
No Other Amendments. Except as expressly provided herein, the Share Agreements shall remain in full force and effect according to their respective terms. 
  
 4. Miscellaneous. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument. The benefits and obligations of this Agreement will be binding on the executors, administrators, heirs, legal representatives, successors, and assigns of the parties. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of California excluding those laws that direct the application of the laws of another jurisdiction. 
  
 [Signature Page Follows] 
  

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 The parties have executed this Agreement effective as of the first date written above. 
  

			
	THRESHOLD PHARMACEUTICALS, INC.
		
	 By:
	 	 /s/ Harold E. Selick

	 Title:
	 	Chief Executive Officer
	
	 /s/ George F. Tidmarsh

	 George F. Tidmarsh, M.D., Ph.D.

  

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