Exhibit 10.5


 


	
  March 8, 2005

  	
   

  	
  Confidential

  



 


 


 


 


Dr. Ben Tseng


Maxim Pharmaceuticals, Inc.


8899 University Center Lane, Suite 400


San Diego, CA 92122


 


Dear Ben:


 


Maxim Pharmaceuticals, Inc. (the “Company”) values the
contributions that you have made to date, your qualifications and the skills
you have demonstrated.  We feel that you
can continue to make a serious and valuable contribution to the Company and
help the Company achieve success in its new strategic initiatives.


 


RETENTION BONUS:  The Company
wishes to retain your services and to incentivize you to continue as an
employee.  Accordingly, subject to the
limitations contained herein, if you remain continuously employed with the
Company through the earlier of the consummation of a Change of Control or September
30, 2005 (such earlier date referred to hereinafter as the “Target Date”), and
provided that you have not received any type of Disciplinary Action, the
Company will pay you a bonus in an amount
equal to $100,250.00, minus the standard withholdings and deductions (the “Retention Bonus”).  The Retention Bonus will be paid in six equal
monthly installments on the last day of each month starting on the Target Date,
and is in addition to your base salary.


 


RETENTION OPTION:  In addition,
subject to the limitations contained herein, if you remain continuously
employed with the Company through the date of grant (which will be within the
next sixty (60) days), the Company will grant you a nonstatutory stock option
under the Company’s 2001 Incentive Stock Option Plan to purchase 50,000 shares
of the Company’s Common Stock, at an exercise price equal to the fair market
value of the Company’s Common Stock on the date of grant (the “Retention Option”).  Thereafter, provided that you remain
continuously employed by the Company, the Retention Option will vest in six
equal monthly installments on the last day of each month starting on the Target
Date.  If your employment with the
Company is terminated for any reason, then the Retention Option shall cease
vesting from the date of such termination. 
All vested options shall be exercisable for five years from the date of
grant without regard to your continued employment with the Company.


 





















 


Notwithstanding the foregoing, if, at any
time following a Change in Control (as defined below), your employment with the
Company is involuntarily terminated by the Company without Cause (as defined
below) or you voluntarily terminate your employment with the Company for Good
Reason (as defined below), then the Retention Bonus shall be paid to you in a
lump sum (to the extent not already paid to you prior to such time) and your
Retention Option shall become fully vested and exercisable (to the extent not
already fully vested and exercisable prior to such time).


 


For purposes of this letter the terms Change
in Control, Cause and Good Reason shall be defined as follows:


 


                “Change in Control”
shall mean a transaction (excluding in each case transactions in which
securities are purchased from the Company for the principal purpose of raising
capital for the Company) in which one of the following occurs: (i) any person or related group of persons
(other than the Company or an affiliate of the Company) directly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities; (ii) (A) a
merger or consolidation occurs in which the Company is not the surviving
entity, or (B) any reverse merger occurs in which the Company is the surviving
entity, or (C) any merger involving a subsidiary of the Company occurs in which
the Company is a surviving entity, but in each case in which holders of the
Company’s outstanding voting securities immediately prior to such transaction,
as such, do not hold, immediately following such transaction, securities
possessing fifty percent (50%) or more of the total combined voting power of
the surviving entity’s outstanding securities (in the case of clause (A)) or
the Company’s outstanding voting securities (in the case of clauses (B) and
(C)); or (iii) all or substantially all of the Company’s assets are sold of
transferred other than in connection with an internal reorganization of the
Company or the Company’s complete liquidation (other than a liquidation of the
Company into a wholly-owned subsidiary).


 


“Cause”  shall mean of any of the following events:
(i) your material breach
of any provision of this Agreement or any other agreement you have entered into
with the Company; (ii) your engaging or in any manner participating in any
activity which is competitive with or intentionally injurious to the Company or
which violates any material provision of an agreement between you and the
Company; (iii) your commission of any fraud against the Company or use or
appropriation for your personal use or benefit of any funds or properties of
the Company; (iv) your conviction of any crime involving dishonesty or moral
turpitude; or (v) conduct by you which in good faith and reasonable
determination of the Board demonstrates gross unfitness to serve.


 


                “Good Reason” shall
mean the occurrence of one or more of the following, without your express
written consent:  (i) a significant
reduction in your base salary as in effect immediately prior to such reduction
for any reason other than in connection with, and proportionate to, a
company-wide pay reduction; and (ii) a relocation of your principal workplace
by more than fifty (50) miles.


 





















 


                “Disciplinary Action”
shall mean a notice provided to you in writing by the Company’s Chief Executive
Officer stating that (i) you have violated a written policy of the Company; (ii) you have
engaged or participated in an activity which is competitive with or
intentionally injurious to the Company or which violates a material provision
of an agreement between you and the Company; (iii) you have used, or
appropriated for your personal use or benefit, funds or properties of the
Company; (iv) you have repeatedly failed to satisfactorily perform your job
duties; or (v) you have refused or failed to follow lawful and reasonable
directions of the Board of Directors or the Chief Executive Officer of the
Company.  The determination with respect
to each of these matters shall be made by the Chief Executive Officer, acting
in his sole discretion.


 


We believe that you will be able to make a
significant contribution to the Company’s future efforts.  One of the critical factors in the Company’s
future success will be the contribution of key employees such as you.


 


Please
keep in mind that you will continue to be bound by the Company’s policies and
this letter is not intended to change your status as an at-will employee with
the Company.  As with all employees at
the Company, you or the Company may terminate your employment at any time for
any reason whatsoever, with or without cause or advance notice.


 


This
agreement constitutes the full and complete expression of our arrangement with
respect to the Retention Bonus and the Retention Option and supersedes any
prior oral commitments or representations and also supercedes the written
retention bonus opportunity between Maxim and you entered into January 20,
2003.  This agreement cannot be modified
except by a written instrument approved and signed by both you and the
Company’s Chief Executive Officer.


 


Sincerely,


 


	
  /s/ Larry G. Stambaugh

  	
   

  	
   

  	
   

  
	
   

  Larry
  G. Stambaugh

  	
   

  	
   

  



President and Chief Executive Officer


 


Accepted:


 


 


 


 


	
  /s/ Ben Tseng

  	
   

  	
  Date:

  	
  3/8/05