Document:

Exhibit 10.7  

November 21,
2002 

Mr. David
Perry 

Dear
David: 

        On
behalf of Anamax, Inc. (the "Company"), I am pleased to offer you the full time position of Chief Executive Officer of
the Company. Speaking for myself, as well as the other members of the Company's Board of Directors, we are all very impressed with your credentials and we look forward to your future success in
this position. 

        The
terms of your new position with the Company are as set forth below: 

        1.     Position.

        a.     You
will become the Chief Executive Officer of the Company, working out of the Company's headquarters office in Palo Alto, California. As Chief Executive Officer, you
will have overall responsibility for the strategy and business affairs of the Company. You will report to the Company's Board of Directors. 

        b.     You
agree to the best of your ability and experience that you will at all times loyally and conscientiously perform all of the duties and obligations required of and from
you pursuant to the express and implicit terms hereof, and to the reasonable satisfaction of the Company. During the term of your employment, except for your commitments to Nexprise, Inc.,
which shall not exceed ten percent (10%) of your business time, you further agree that you will devote all of your business time and attention to the business of the Company, the Company will be
entitled to all of the benefits and profits arising from or incident to all such work services and advice, you will not render commercial or professional services of any nature to any person or
organization, whether or not for compensation, without the prior written consent of the Company's Board of Directors, and you will not directly or indirectly engage or participate in any business that
is competitive in any manner with the business of the Company. Notwithstanding the foregoing, you may serve on the board of directors of up to two (2) other companies (including
Nexprise, Inc.) without the written consent of the Company's Board of Directors, so long as such companies are not competitors to the Company. Nothing in this letter agreement will prevent you
from accepting speaking or presentation engagements in exchange for honoraria, or from owning no more than one percent (1%) of the outstanding equity securities of a corporation whose stock is listed
on a national stock exchange, other than your ownership of securities of Nexprise, Inc. 

        2.     Start Date.    The effective date of your new position with the Company was September 16, 2002. 

        3.     Proof of Right to Work.    For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date
of hire, or our employment relationship with you may be terminated. 

        4.     Compensation.

        a.     Base Salary.    You will be paid a monthly salary of $16,666.67, which is equivalent to $200,000 on an
annualized basis. Your salary will be payable in pursuant to the Company's regular payroll policy. Your base salary will be reviewed annually as part of the Company's normal salary
review process. 

        b.     Bonus.    In addition to your base salary, you will be entitled to receive a bonus of up to $80,000 per year,
based on the attainment of milestones to be determined by the compensation committee of the Board of Directors at the beginning of each fiscal quarter. This bonus will be 

 

payable,
if earned, quarterly as determined mutually by you and the Compensation Committee of the Board of Directors. In the event that your employment with Company terminates before all or part of
such bonus has been paid, you will forfeit the right to receive any unpaid bonus. 

        5.     Stock Options.

        a.     Initial Grant.    In connection with the commencement of your full-time employment, the Board of
Directors will grant you an option to purchase 750,627 shares of the Company's Common Stock ("Base Shares") with an exercise price equal to the
fair market value on the date of the grant. These option shares will vest at the rate of 25% of the shares on the twelve (12) month anniversary of your Vesting Commencement Date
(as defined in the your Stock Option Agreement) and the remaining Base Shares will vest monthly thereafter at the rate of 1/48 of the total number of Base Shares per month,
except as set forth in Section 8 below. Vesting will, of course, depend on your continued employment with the Company. This initial grant is in addition to the 54,728 shares you are
entitled to receive in connection with services already rendered to the Company. 

        b.     Milestone Grant.    In addition to the Initial Grant described above, in connection with the commencement of
your full-time employment, the Board of Directors will grant you an option to purchase 500,418 shares of the Company's Common Stock (the "Milestone
Shares") with an exercise price equal to the fair market value on the date of grant. These options shall vest on the five-year anniversary of your Vesting
Commencement Date, but vesting of the Milestone Shares shall accelerate based on the attainment of the milestones set forth on Exhibit A
to this letter or as set forth in Section 8 below. The options for Base Shares and Milestone Shares will be an incentive stock option to the maximum extent allowed by the tax code and
will be subject to the terms of the Company's 2001 Equity Incentive Plan and the Stock Option Agreement between you and the Company. 

        6.     Benefits.

        a.     Insurance Benefits.    The Company will provide you with the opportunity to participate in the standard benefits
plans currently available to other similarly situated employees, subject to any eligibility requirements imposed by such plans. 

        b.     Vacation; Sick Leave.    You will be entitled to vacation and sick leave pursuant to the Company's standard
policies. 

        7.     Confidential Information and Invention Assignment Agreement.    Your acceptance of this offer and commencement
of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company's Confidential Information and Invention Assignment Agreement, a copy of
which is enclosed for your review and execution (the "Confidentiality Agreement"), prior to or on your start date. 

        8.     Terms of Employment.

        a.     At-Will Employment.    Your employment with the Company will be on an "at will" basis, meaning that
either you or the Company may terminate your employment at any time for any reason or no reason, without further obligation or liability, except as set forth below in this Section 8. 

        b.     Voluntary Resignation: Termination for Cause.    If you either voluntarily resign from the Company (other than
as an Involuntary Termination (as defined below)) or the Company terminates your employment for Cause (as defined below), either before or after a Change in Control (as defined
below), then you shall not be entitled to receive any severance or other benefits under this Section 8 or otherwise under this Agreement. Your benefits will be determined in either case
under the Company's then existing benefit plans and policies in accordance with 

2

 

such
plans and policies in effect on the date of termination or as otherwise determined by the Board of Directors of the Company. 

        c.     Severance Benefits.    In the event that you are terminated without Cause or subject to an Involuntary
Termination before a Change in Control (each as defined below) and after the Company's Series B financing, (i) before September 9, 2003, you will entitled to receive your base
salary for six months following the effective date of your termination and vesting of 6/48 of the Base Shares will be accelerated, or (ii) after September 9, 2003, you
will be entitled to receive your base salary for twelve (12) months following the effective date of your termination and vesting of 12/48 of the Base Shares will be accelerated.
The salary payments in the prior sentence will be made according to the Company's regular payroll policy (or in the same manner as other officers of the Company) and subject to applicable
withholding taxes. 

        d.     Change of Control.    Subject to Section 8(g) below, if your employment with the Company is terminated
without Cause or you are subject to an Involuntary Termination in connection with or at any time within twelve (12) months after a Change of control, then in addition to the benefits provided
in Section 8(c) above, you shall become vested in (i) the remaining unvested Base Shares and Milestone Shares if the Change of Control is a Liquidity Event or (ii) fifty percent
(50%) of the remaining unvested Base Shares and Milestone Shares if the Change of Control is not a Liquidity Event. In addition, the Board of Directors may, in its sole discretion, accelerate the
vesting of some or all of the Base Shares or Milestone Shares in connection with a Change of Control. 

        e.     Definitions.    The following terms referred to in this Agreement shall have the following meanings: 

        (i)    Change of Control.    "Change of Control" shall mean a sale of
all or substantially all of the Company's assets, or any merger or consolidation of the Company with or into another corporation other than a merger or consolidation in which the holders of more than
50% of the shares of capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by the voting securities remaining outstanding or by their being converted
into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, or such surviving entity, outstanding immediately after
such transaction. For purposes of clarification, an equity financing will not be a Change of Control, even if equity securities representing greater than 50% of the total voting power of the Company
are sold. 

        (ii)   Cause.    "Cause" means (A) gross negligence or willful
misconduct in the performance of duties to the Company where such gross negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its
subsidiaries; (B) deliberate violation of a Company policy; (C) repeated unexplained or unjustified absence from the Company; (D) a material and willful violation of any federal
or state law; (E) commission of any act of fraud with respect to the Company; (F) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and
reputation of the Company; (G) unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of
non-disclosure as a result of your relationship with the Company or (H) your death or Permanent Disability, in each case as determined in good faith by the Board. 

        (iii)  Involuntary Termination.    "Involuntary Termination" means
your voluntary termination of your employment with the Company within thirty (30) days following the occurrence of any of the following without your consent: (A) a material reduction or
change in job duties, responsibilities and requirements inconsistent with your position with the Company and your prior duties, responsibilities and requirements prior to the Change in Control,
provided that 

3

 

neither
a mere change in title alone nor reassignment following a Change of Control to a position that is substantially similar to the position held prior to the Change of Control in terms of job
duties,
responsibilities or requirements shall constitute a material reduction in job responsibilities; (B) a reduction in your then-current base salary by at least 20%, provided that an
across-the-board reduction in the salary level of all other senior executives by the same percentage amount as part of a general salary level reduction shall not constitute
such a salary reduction or (C) your refusal to relocate the principal place for performance of Company duties to a location more than fifty (50) miles from the Company's then current
location at the time of the Change in Control. 

        (iv)  Liquidity Event.    "Liquidity Event" means a Change of
Control which results in the holders of the Company's Series A Preferred Stock receiving at least $3.5475 per share if before the Series B financing, and which results in the
holders of the Company's Series B Preferred Stock receiving at least three (3) times the original purchase price for such shares if after the Series B financing. For the purposes
of this Section 8, the consideration received by the holders of the Company's Series A Preferred Stock or Series B Preferred Stock shall be valued in the manner set forth in the
Company's Certificate of Incorporation, as it may be amended from time to time. 

        (v)   Permanent Disability.    "Permanent Disability" shall mean your
inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than six months. 

        f.      Release.    If any events occur which entitle you to any benefits under this Section 8, as a condition to
your receiving such benefits, you shall execute the Company's standard form of release releasing the Company from any claims relating to your employment or termination of your employment. 

        g.     Limitation on Payments.    In the event that the severance benefits provided for in this Section 8
(A) constitute "parachute payments" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") and (B) but for this Section, would be subject to the excise tax imposed by Section 4999 of the Code, then your
benefits hereunder shall be payable either: (X) in full, or (Y) as to such lesser amount which would result in no portion of such severance benefits being subject to excise tax under
Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by you on an after-tax basis, of the greatest amount of benefits hereunder, notwithstanding that all or some portion of such benefits may be taxable under
Section 4999 of the Code. Unless the Company and you otherwise agree in writing, any determination required under this Section 8(g) shall be made in writing by the public accountants
designated by the Company (the "Accountants"), whose determination shall be conclusive and binding upon you and the Company for all purposes. For
purposes of making the calculations required by this Section 8(g), 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 you 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 8(g). 

        9.     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 obligations under this Agreement and agree 

4

 

expressly
to perform the 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. The
terms of this Agreement and all of your rights hereunder shall inure to the benefit of, and be enforceable by, your personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. 

        We
are all delighted to be able to extend you this offer and look forward to working with you. To indicate your acceptance of the Company's offer, please sign and date this letter in the
space provided below and return it to me, along with a signed and dated copy of the Confidentiality Agreement. This letter, together with the Confidentiality Agreement, set forth the terms of your
employment with the Company and supersede any prior representations or agreements, whether written or oral. This letter may not be modified or amended except by a written agreement, signed by the
Company and by you. 

 

 

					
	

Very truly yours,	
 	
 ACCEPTED AND AGREED:
	

ANAMAX, INC.	
 	
 DAVID PERRY
	
 	
 	

 	
 	

 
	
 By:	
 	

 	
 	

 
	 	 	 /s/ MARK LESCHLY

 	 	 /s/ DAVID PERRY

  Signature
	
 Title:	
 	

 	
 	

 
	 	 	 Chairman of the Board

 	 	 10/5/02

  Date

 

 5

  
August 30, 2005 

Mr. David
Perry 

        Amendment of Offer Letter dated November 21, 2002  

Dear David: 

        The
Board of Directors of Anacor Pharmaceuticals, Inc. (the "Company") has agreed to amend certain terms of your employment with the Company. Accordingly, your offer letter
from the Company dated November 21, 2002 (the "Offer Letter") is amended as described below. All other provisions of the Offer Letter that are not modified by this Amendment, including
but not limited to, the provision regarding at-will employment, remain in full force and effect. In addition, as described below, the Company is recommending that the Board of Directors
grant to you an additional option to purchase shares of the common stock of the Company. 

        Section 4a.  of
the Offer Letter is hereby amended to provide that effective June 3, 2005, your monthly base salary is increased to $20,833.33, which is
equivalent to $250,000 on an annualized basis. 

        Section 4b.  of
the Offer Letter is hereby amended to provide that effective June 3, 2005, you will be entitled to receive a bonus each year of up to 50% of
your base salary based on the attainment of milestones to be determined by the compensation committee of the Board of Directors at the beginning of each year. This bonus will be payable, if earned,
within 30 days following the end of each fiscal year. In the event that your employment with the Company terminates before all of part of such bonus has been paid, you will forfeit the right to
receive any unpaid bonus. For purposes of fiscal year 2005, your total bonus opportunity at 100% achievement of milestones will be $106,000 (calculated as a maximum of $33,000 for the period of Jan 1
through June 2, 2005 and $73,000 for the period of June 3 through December 31, 2005). 

        Section 5b.  of
the Offer Letter is hereby amended such that the vesting schedule of the Milestone Shares described in Section 5b. is as described in this
paragraph and in the Addendum to Stock Option Grant (the "Addendum") attached to this Amendment. The Company acknowledges and agrees that the Milestone Shares subject to accelerated vesting
based on completion of the first milestone described on Exhibit A of the Offer Letter are fully vested and exercisable by you as of the date of this letter agreement based on the Company's
successful achievement of such milestone. The Company further agrees to revise the vesting schedule for the remaining unvested 50% of the Milestone Shares (the "Unvested Milestone Shares") such
that 1/24 of the Unvested Milestone Shares (20,850 shares) will vest and become exercisable by you on a monthly basis beginning on August 1, 2005 and continuing on each
monthly anniversary thereafter, assuming your continued employment with the Company. 

        In
connection with the execution of this Amendment, the Company will recommend that the Board of Directors grant you an option to purchase 1,427,400 shares of the Company's Common
Stock (the "New Option Shares") with an exercise price equal to the fair market value on the date of the grant. The New Option Shares will vest and become exercisable at the rate
of 25% of the shares on the twelve (12) month anniversary of your Vesting Commencement Date (which shall be June 3, 2005) and the remaining New Option Shares will vest monthly
thereafter at the rate of 1/48 of the total number of New Option Shares per month. Vesting will, of course, depend on your continued employment with the Company. 

 

        Please
sign below to acknowledge and accept the terms of this Amendment and to agree that the terms of this Amendment supersede any conflicting terms of the Offer Letter and taken
together with the Offer Letter constitute your entire agreement with respect to your employment with the Company. 

 

 

			
	 	 	 Sincerely,
	
 	
 	

 
	 	 	 /s/ MARK LESCHLY

  Mark Leschly

Chairman, Board of Directors
	ACCEPTED AND AGREED:	 	 
	
 	
 	

 
	/s/ DAVID PERRY

  David Perry	 	 

 

 2Exhibit 10.8  

October 21,
2003 

Jacob
(Jake) J. Plattner, Ph.D. 

	Re:
	Offer of Employment by Anacor Pharmaceuticals, Inc.  

Dear Jake: 

        I
am very pleased to confirm to you our offer of employment with Anacor Pharmaceuticals, Inc. (the "Company") as our Senior Vice President, Research and Development, a
full-time, exempt level position reporting directly to me and working in our Bay Area location. Subject to fulfillment of all conditions imposed by this offer letter, including the
completion of services to the Company as outlined in Anacor Pharmaceuticals, Inc. Consulting Agreement between you and the
Company (copy enclosed), we would like your start date to be as soon after January 1, 2004 as possible, but no later than February 25, 2004, as mutually agreed to by you and the Company.
In this key position and as part of the senior management team, you will provide strategic scientific leadership with primary responsibility for selecting, prioritizing, and accelerating the
development of novel anti-invective drug candidates. You will plan, organize, and manage the discovery and pre-clinical programs for the Company, ensuring that appropriate drug
candidates are selected for development and sufficient resources are committed for success. You will also participate in related tasks as assigned by the Company. The terms of our offer and the
benefits currently provided by the Company are as follows: 

        1.     Your
starting base salary will be $12,083.33 per semi-monthly pay period, which is equivalent to $290,000 annually, and will be paid per the Company's
standard payroll process and less all applicable taxes and withholdings. In addition, you will be eligible for a performance bonus of up to twenty percent (20%) of your base salary ("Performance
Bonus"). Fifty percent (50%) of the Performance Bonus is contingent on your achievement of individual performance objectives as mutually established by you and the Company ("Individual Component").
The remaining fifty percent (50%) of the Performance Bonus is contingent on the Company's achievement of its corporate objectives ("Company Component"). The Individual Component of the Performance
Bonus will be assessed on, and if earned, paid on a quarterly basis and prorated for your length of service. The Company Component of the Performance Bonus will be assessed on, and if earned, paid on
an annual basis, and prorated for your length of service. The Company will determine in its sole discretion, the level of achievement of each Performance Bonus component. The Performance Bonus, if
earned, will be paid less all applicable taxes and withholdings. 

        2.     As
a full-time employee you will be eligible to participate in health insurance, and other employee benefit plans established by the Company, subject to any
eligibility requirements imposed by such plans. You will also be eligible for paid time off ("PTO") equal to four (4) weeks or twenty (20) working days accrued per year of service, which
will accrue on a prorated basis each pay period during which you are an active employee. 

        3.     In
an effort to facilitate your relocation closer to the Company headquarters, upon commencing employment with the Company, the Company will provide you with a
one-time moving bonus of $30,000 ("Moving Bonus"). The Moving Bonus will be paid to you in your first regular paycheck, less all applicable taxes and withholdings. If your employment with
the Company terminates by reason of voluntary resignation or for cause (as defined below), within one year of your effective start date, you agree to repay the Company, the pro-rated
portion of the total Moving Bonus corresponding to the remaining period in the one year. Such repayment will be due to the Company upon termination of employment. For purposes of this agreement
"cause" is defined as failure or refusal to comply in any material respect with the reasonable policies, standards or regulations of the Company; causing material loss or damage to the Company; a good
faith determination by the 

1

 

Company's
Chief Executive Officer of substandard performance or failure to perform duties determined by the Company; unethical or fraudulent conduct; material breach of a term of this offer
agreement or of the Confidential Information and Invention Assignment Agreement, including, without limitation, theft of the Company's proprietary information; or an unlawful or criminal act which
would reflect badly on the Company in the Company's reasonable judgment. 

        4.     As
a full-time employee of the Company, you agree that you will devote all of your business time and attention to the business of the Company, and that the
Company will be entitled to all of the benefits and profits arising from or incident to all such work services and advice. You further agree that during the course of your employment with the Company,
you will not render commercial or professional services of any nature to any person or organization, whether or not for compensation, without the prior written consent of the Company's Chief Executive
Officer, and you will not directly or indirectly engage or participate in any business that is competitive in any manner with the business of the Company, as determined by the Company. 

        5.     As
an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment, develop certain
information or inventions, which will be the property of the Company. To protect the interests of the Company, you will be required to sign the Company's standard "Confidential Information and
Invention Assignment Agreement" as a condition of your employment. We wish to impress upon you that we do not want you to bring with you any confidential or proprietary material of any former employer
or to violate any other obligations you may have to any former employer. 

        6.     We
will recommend to the Board of Directors of the Company (the "Board") that you be granted the opportunity to purchase 175,000 options of Common Stock of the Company
("Options"), under its 2001 Equity Incentive Plan (the "Plan") at the fair market value of the Company's Common Stock, as determined by the Board upon their approval of such grant.
Twenty-five percent (25%) of the Options will vest on the one year anniversary date of your employment, and the remaining Options will vest monthly in equal portions over the following
three years for a total vesting term of four years. However, should you engage in and complete a consulting assignment with the Company immediately prior to your employment with the Company, per the
terms of the Anacor Pharmaceuticals, Inc. Consulting Agreement signed by you and the Company, upon your employment, we will recommend to the Board that your Options commence vesting as if your
effective date of hire had been January 1, 2004, such that the commensurate portion of the Options will be vested on your February 2004 employment date. The Options will be governed by
the terms and conditions of the Plan and corresponding option agreement. Further details on the Plan and any specific option granted to you will be provided upon approval of such grant by the
Company's Board. 

        7.     Contingent
upon the Board's further approval, you will be eligible for certain acceleration benefits for the vesting of restricted stock and/or stock options held by you
in the event of a "Change of Control" of the Company, per the enclosed Change of Control Provisions (Exhibit A), which is a summary of the key provisions of this acceleration benefit. 

        8.     While
we look forward to a mutually satisfying relationship, should you decide to accept our offer, your employment is for no specific period of time and you will be an
at-will employee of the Company, which means the employment relationship can be terminated by either you or the Company for any or no reason, at any time, with or without notice. Any
statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) should be regarded by you as ineffective. This at-will provision may
only be amended in a writing signed by both you and the Company's Chief Executive Officer. Further, your participation in any stock option or benefit programs is not to be regarded as assuring you of
continuing employment for any particular period of time. As always, the Company reserves the right to modify, delete, or otherwise amend its benefits, compensation and incentive programs from time to
time as it deems necessary in its sole discretion. 

2

 

        9.     For
purposes of federal immigration law, and as a requirement of employment with the Company, within three (3) business days of starting your new position you will
need to present documentation demonstrating your identity and eligibility to work in the United States. If you have questions about this requirement, which applies to U.S. citizens and
non-U.S. citizens alike, you may contact Human Resources. 

        10.   This
offer supersedes and replaces any prior representations or agreements, written, verbal or otherwise, between you and the Company regarding the terms described in
this letter. This offer, if not accepted, will expire on October 24, 2003. Please sign this letter below and return one original, along with executed originals of the referenced and enclosed
documents as applicable, to Anacor Pharmaceuticals, Inc., Attention: Human Resources. Your signature will acknowledge that you have read and understood and agreed to the terms and conditions of
this offer letter as well as the referenced and enclosed documents. A duplicate letter is enclosed for your files. Should you have anything else that you wish to discuss, please do not hesitate to
call us. 

We
look forward to the opportunity to welcome you to the Company. 

Very
truly yours, 

/s/
DAVID PERRY 

David
Perry

Chief Executive Officer 

I
have read and understood this offer letter and hereby acknowledge, accept and agree to the terms set forth above. No further commitments were made to me as a condition of employment. 

 

 

					
	/s/ JACOB PLATTNER  	 	 Date Signed:	 	 10/24/03
	

  	 	 	 	

  
	Jacob (Jake) J. Plattner, Ph.D.	 	 	 	 
	

 	
 	
 Effective Start Date:	
 	
 2/25/04
	 	 	 	 	

  

 

 3

 

  Exhibit A  

 Anacor Pharmaceuticals, Inc.  

 Change of Control Provisions  

        The effectiveness of the Change of Control Provisions is contingent upon approval by the Board of Directors of Anacor
Pharmaceuticals, Inc. (the "Company"). 

 Terms: 

        In
the event your employment with the Company is terminated without Cause or you are subject to an Effective Termination in connection with or at any time
within twelve (12) months following a Change of Control, and contingent on you executing a Release Agreement at that time, all restricted stock and stock options granted to you and held by you
(the "Shares") shall immediately vest if the Change of Control is a Liquidity Event, or (ii) 50% of the remaining unvested Shares shall become vested if the Change of Control is not a Liquidity
Event. In addition, the Company's Board of Directors (the "Board") may, in its sole discretion, accelerate the vesting of some or all of the Shares in connection with a Change of Control. 

 Definitions: 

         Change of Control. "Change of Control" shall mean a sale of all or substantially all of the Company's assets, or any merger or consolidation of the
Company with or into another corporation other than a merger or consolidation in which the holders of more than 50% of the shares of capital stock of the Company outstanding immediately prior to such
transaction continue to hold (either by voting securities remaining outstanding or by their being converted into voting securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity, outstanding immediately after such transaction. For purposes of clarification, an equity financing will not be a Change
of Control, even if equity securities representing greater than 50% of the total voting power of the Company are sold. 

         Cause. "Cause", for the purposes of the Change of Control Provisions, means (A) gross negligence or willful misconduct in the performance of
duties to the Company where such gross negligence or willful misconduct has resulted or is likely to result in substantial and material damage to the Company or its subsidiaries; (B) deliberate
violation of a Company policy; (C) repeated unexplained or unjustified absence from the Company; (D) a material and willful violation of any federal or state law; (E) commission
of any act of fraud with respect to the Company; (F) conviction of a felony or a crime involving moral turpitude causing material harm to the standing and reputation of the Company;
(G) unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of non-disclosure as a result of
your relationship with the Company; or (H) your death or Permanent Disability, in each case as determined in good faith by the Board. 

         Effective Termination. "Effective Termination" means your voluntary termination of your employment with the Company within thirty (30) days
following the occurrence of any of the following without your consent: (A) a material reduction or change in job duties, responsibilities and requirements inconsistent with your position with
the Company and your prior duties, responsibilities and requirements prior to the Change of Control, provided that neither a mere change in title along nor reassignment following a Change of Control
to a position that is substantially similar to the position held prior to the Change of Control in terms of job duties, responsibilities or requirements shall constitute a material reduction in job
responsibilities; (B) any material reduction of your then current base salary (other than in connection with a general decrease in base salaries for most employees or other senior executives of
the successor corporation); or (C) your refusal to relocate to 

1

 

the
principal place for performance of Company duties to a location more than fifty (50) miles from the Company's then current location at the time of the Change of Control. 

         Liquidity Event. "Liquidity Event" means a Change of Control which results in the holders of the Company's Series B Preferred Stock receiving
at least three (3) times the original purchase price for such shares if after the Series B financing. For purposes of this section, the consideration received by the holders of
Series B Preferred Stock shall be valued in the manner set forth in the Company's Certificate of Incorporation, as it may be amended from time to time. 

         Permanent Disability. "Permanent Disability" shall mean your inability to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six (6) months. 

         Release Agreement. If any events occur which entitle you to any benefits under the Change of Control Provisions, as a condition to your receiving
such benefits, you shall execute the Company's standard form of "Release Agreement" releasing the Company from any claims relating to your employment or termination of your employment. 

 Other Terms:  

        You shall be entitled to receive the acceleration benefit to the extent of the maximum after-tax benefit to you, after
taking into account any excise tax that may be imposed upon the benefit that is characterized as an "excess parachute payment" under applicable law. You are advised to consult with your own tax or
financial advisor to understand the possible financial and tax implications as a result of receiving any such benefits. 

        The
terms of this agreement amend and supercede any prior change of control agreements. 

 

 

			
	AGREED AND ACCEPTED:	 	 
	
 /s/ JACOB J. PLATTNER

  Jacob (Jake) J. Plattner, Ph.D.	
 	
 10/27/06

  Date

 

 2

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