OFFER OF EMPLOYMENT

2.3                                 Other Benefits. You shall continue to be eligible to participate in all benefit programs that the Company establishes and generally makes available to its employees, if any, to the extent that your position, tenure, salary, age, health and other qualifications make you eligible to participate, including but not limited to the Company’s health insurance plan, 401(k) plan, and policies governing paid time off.  In addition, you shall continue to be entitled to three (3) weeks paid vacation per year, subject to the Company’s policies and procedures, to be taken at such times as may be approved by the Company’s Chief Executive Officer or his designee.  The Company reserves the right to amend and/or terminate any plan, benefit, or program at any time with or without notice or publication.

2.4                                 Reimbursement of Expenses.  The Company shall reimburse you for all reasonable travel, entertainment and other expenses incurred or paid by you in connection with, or related to, the performance of your duties, responsibilities or services as an employee of the Company, in accordance with policies and procedures, and subject to limitations, adopted by the Company from time to time.

3.                                       Consideration.

If you enter into this letter agreement with the Company, you will be granted, pursuant to the Company’s 1997 Stock Incentive Plan (the “Plan”) (a) an option to purchase 100,000 shares of Common Stock of the Company pursuant to the terms and conditions of the Plan and a stock option agreement issued thereunder, such option to be exercisable at a price per share equal to the closing price of the Company’s Common Stock on the NASDAQ Stock Market on date of grant, such option to vest and become exercisable, subject to your continued employment, at a rate of 20% of the total shares underlying the option on the first anniversary of the date of grant and as to an additional 20% at the end of each full year thereafter and (b) an option, to purchase 50,000 shares of the Company’s Common Stock pursuant to the terms and conditions of the Plan and a stock option agreement issued thereunder, such option to be exercisable at a price per share equal to the closing price of the Company’s Common Stock on the date of grant, such option to vest and become exercisable, subject to your continued employment, at a rate of 33.3333% of the total shares underlying the option on the first anniversary of the date on which the Company books revenue from the commercial sale of its products in excess of $25.0 million (as reflected on the Company’s financial statements prepared in accordance with generally accepted accounting principles in the United States) in any continuous 12-month period and as to an additional 33.3333% at the end of each full year thereafter; provided that such option shall vest, in any event, on the end of the seventh year after the date of grant.

4.                                       Termination Upon or in Anticipation of a Change in Control.

4.1                                 In the event your at-will employment is terminated by the Company without Cause (as defined below) in anticipation of, or within twelve months after, a Change in Control (as defined below), the Company shall continue to pay to you your salary as in effect on the date of termination and the amount of the annual bonus paid to you for the fiscal year immediately preceding the date of termination (payable in annualized monthly installments) and shall, provided you elect to receive group medical insurance pursuant to the federal “COBRA”

law,  29 U.S.C. § 1161 et seq., provide to you reimbursement for the share of the premium for group medical and dental that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, until the date 12 months after the date of termination, provided, however, that the Company’s obligation to make the aforesaid payments or provide the aforesaid benefits shall immediately terminate in the event that you violate the provisions of Section 5 or Section 6 of this letter agreement during such 12 month period.  The payment to you of the amounts payable under this Section 4.1 shall be contingent upon your execution of a release in a form reasonably acceptable to and prepared by the Company and (ii) shall constitute your sole remedy in the event of a termination of your employment in the circumstances set forth in this Section 4.1.

4.2                                 “Cause” shall, for the purposes of Section 4.1, mean (a) a finding by the Company of failure by you to perform your assigned duties for the Company, dishonesty, gross negligence, misconduct, or any act or omission by you that may have an adverse effect on the Company’s business or on your ability to perform services for the Company; or (b) your conviction or the entry of a pleading of guilty or nolo contendere to any crime involving moral turpitude or any felony.

4.3                                 “Change in Control” means an event or occurrence set forth in any one or more of subsections (a) through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection):

(a)                                  the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of subsection (c) of this Section 4.3; or

(b)                                 such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member

of the Board (i) who was a member of the Board on the date of the execution of this letter agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (ii) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(c)                                  the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and (ii) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(d)                                 approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

5.                                       Non-Competition and Non-Solicitation.