Exhibit 10.5


 


Execution Copy


 


EMPLOYMENT
AGREEMENT


 


THIS EMPLOYMENT
AGREEMENT (the “Agreement”) is made as of January 1, 2014 by and between Cyclacel Pharmaceuticals, Inc. (the “Company”),
a Delaware corporation, and Paul McBarron (the “Executive”).


 


WHEREAS, Company
and Executive were parties to an Employment Agreement dated January 1, 2011, which expires by its terms on January 1, 2014;


 


WHEREAS, Company
desires to continue to retain the Executive’s services as its Executive Vice President,
Finance, Chief Financial Officer, Chief Operating Officer and Secretary; and 


 


WHEREAS, Company
and the Executive are desirous of agreeing the terms and conditions of the Executive’s employment with the Company as set
forth herein.


 


NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and conditions herein contained, the parties hereby agree as follows:


 


1.          Employment.       Company
hereby employs the Executive and the Executive accepts such employment according to the terms and conditions set forth in this
Agreement.


 


2.          Term.   Except
for earlier termination as hereinafter provided for, the term of the Executive’s employment hereunder shall be for a period
commencing on January 1, 2014 (the “Commencement Date”) and continuing through January 1, 2017; the third anniversary
of the Commencement Date. It is the intention of the Executive and Company that Executive has no entitlement to severance payments
or any other benefits for non-renewal at the end of the Employment Term. Notwithstanding the foregoing, the Executive’s
employment by the Company hereunder may be earlier terminated, subject to Section 9 hereof, upon the occurrence of any
one of the following events: (i) the Company’s decision to terminate the Executive, (ii) the Executive’s decision
to voluntarily resign or retire at any time or (iii) the parties’ mutual agreement in writing to terminate the Executive’s
employment hereunder at any time. The period of time between the Commencement Date and termination of the Executive’s employment
hereunder shall be referred to herein as the “Employment Period”.


 


3.          Position
and Services.   (i)   The Executive will hold the position of Executive Vice President,
Finance, Chief Financial Officer, Chief Operating Officer and Secretary. The Executive will report directly to the Company’s
President and Chief Executive Officer and shall have such duties, responsibilities and authority with respect to such positions
as are set forth in the Bylaws of the Company, which duties and responsibilities shall in all events include, but not be limited
to, management responsibility for the operations, finance and administration of the Company.


 


(ii)          The Executive
will be expected to be in the full-time employment of the Company, to devote substantially all of his business time, attention
and efforts to the performance of his duties hereunder. Notwithstanding the foregoing, the Executive may make


 




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and manage personal business
investments of his choice and serve in any capacity with any civic, educational or charitable organization, or any trade association,
without seeking or obtaining approval from the Board and/or the President and Chief Executive Officer, provided such activities
and service do not materially interfere or conflict with the performance of his duties hereunder or violate the non-competition
provisions of Section 12 hereof.


 


(iii)          The Executive
expressly agrees that during the Employment Period he will not be interested, directly or indirectly, in any form, fashion or manner,
as a partner, officer, director, advisor, employee, consultant, controlling stockholder or in any other form or capacity, in any
other business or company, except that he would not be prohibited by Section 12 hereof to serve as (a) member of one other
Board of Directors of a commercial organization, or (b) a member of one or more Boards of Directors or Trustees of a charitable
organization, as may, upon advance notice from the Executive be approved by the Board in its discretion after consideration of
possible conflicts, reputation(al) effects, time requirements and other interests of the Company.


 


The Executive is currently serving as a
Class 3 director on the Company’s Board for a term ending at the 2015 annual meeting. At the 2015 annual meeting of the Company’s
shareholders, the Board will use its best efforts to cause the nomination of the Executive to serve as a Class 3 director of the
Board for a term ending at the 2018 annual meeting. The Board will use its best efforts to cause the nomination of the Executive
thereafter for reelection as a Class 3 director to the Board for successive terms, at every time at which Class 3 directors are
nominated to the stockholders for election, as long as the Executive serves as Executive Vice
President, Finance, Chief Financial Officer, Chief Operating Officer and Secretary unless the Executive declines such nomination
in writing to the Board. As with all members of the Board, the Executive’s continuation as a director requires election as
a director by the stockholders whenever directors are to be elected by the stockholders. If the Executive ceases to serve as Executive
Vice President, Finance, Chief Financial Officer, Chief Operating Officer and Secretary for any reason, the Executive shall immediately
resign as a director of the Board.


 


4.          Base
Salary.    Company shall pay to the Executive an initial base salary at an annual rate of £208,859, subject to applicable
income and employment tax withholdings and all other required and authorized payroll deductions and withholdings. The Executive’s
salary shall be payable at the same time and basis as the Company pays its payroll in general. Increases in the Executive’s
annual base salary during the Employment Period may be effected from time to time based upon the review and approval of the Compensation
Committee of the Board (the “Compensation Committee”). During the Employment Period, the Executive’s base salary
rate shall not be reduced below the initial base salary rate provided hereunder, nor below any increased base salary rate that
may be effected as provided hereunder, except if the Board, in response to exceptionally adverse business circumstances makes
a general temporary reduction in the compensation of the executives of the Company.


 


5.          Annual
Incentive Bonus.    In addition to the Executive’s base salary as provided above, the Executive will be eligible for
an annual cash incentive bonus for each calendar year of the Employment Period. The bonus for which the Executive is eligible
for each such year will be based on a target percentage of the then current base salary, which target percentage


 




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shall be at least 50%,
and may be increased for above-plan performance as established by the Compensation Committee in its discretion and upon consultation
with the Executive at the beginning of each year. The annual bonus hereunder will be payable based upon the satisfaction of performance
criteria that will be established by the Compensation Committee in its discretion and upon consultation with the Executive at the
beginning of each year, subject to the approval of the Board. Such performance criteria will include corporate performance goals
consistent with the Company’s business plan for the year, as well as individual objectives for the Executive’s performance
that may be separate from, but are consistent with, the Company’s business plan. The final determinations as to the actual
corporate and individual performance against the pre-established goals and objectives, and the amount of the bonus payout in relationship
to such performance, will be made by the Compensation Committee in its sole discretion. To the extent the Company awards the Executive
a cash bonus, the bonus, if payable, shall be calculated and paid no later than two and a half months following the later of the
close of the calendar or Company fiscal year to which such bonus relates.


 


6.          Executive
Benefits.    The Executive shall be entitled to receive employment benefits in accordance with the Company’s benefit
policies in effect from time to time, including, without limitation, personal pension plan, medical, dental and life insurance,
accidental death, travel accident, short and long-term disability insurance, profit sharing, long-term incentive plans and 25 working
days of paid vacation annually and 10 days of UK public holidays as laid down from time to time by the Company.


 


7.          Expenses.  The
Company shall reimburse the Executive for all reasonable and necessary expenses incurred by him in connection with the performance
of his services for the Company upon submission of expense reports and documentation in accordance with the Company’s policies.
The Company may request additional documentation or a further explanation to substantiate any expense submitted for reimbursement,
and retains the discretion to approve or deny a request for reimbursement.


 


8.          Indemnification.   The
Company shall indemnify the Executive in accordance with the Company’s By-laws. The Company agrees that it will make all
commercially reasonable efforts to keep in full force and effect, for the duration of all applicable statute of limitations periods,
directors and officers liability insurance policies on terms at least as favorable to the Executive as those in effect on the
date hereof.


 


9.          Termination.    This
Agreement does not grant the Executive any right or entitlement to be retained by the Company. In the event of termination by
the Company of the Executive’s employment under the circumstances described below in this Section 9, the Executive
shall be entitled to the severance pay and benefits so specified.


 


(a)          Certain Definitions.   For purposes of this Section 9, the following terms shall have the meanings given below:


 


(i)          Termination
For Cause.    The employment of the Executive hereunder shall be deemed to have been terminated “For Cause” if the
Company shall have terminated the Executive as a result of any of the following: (A) any act committed by the Executive which shall
represent a breach in any material respect of any of the terms of this


 




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Agreement and which breach
is not cured within thirty (30) days of receipt by the Executive of written notice from the Company of such breach; (B) improper
conduct, consisting of any willful act or omission with the intent of obtaining, to the material detriment of the Company, any
benefit to which the Executive would not otherwise be entitled; (C) gross negligence, consisting of wanton and reckless acts or
omissions in the performance of the Executive’s duties to the material detriment of the Company; (D) addiction to drugs or
chronic alcoholism or (E) any conviction of, or plea of nolo contendere to, a crime (other than a traffic violation) under the
laws of the United States or any political subdivision thereof provided that the Executive receives a copy of a resolution duly
adopted by a two thirds majority affirmative vote of the membership of the Board excluding the Executive, at a meeting of the Board
called and held for such purpose after the Executive has been given reasonable notice of such meeting and has been given an opportunity,
together with his counsel, to be heard by the Board, finding that in the good faith opinion of the Board the Executive was guilty
of the conduct set forth and specifying the particulars thereof in detail.


 


(ii)          Termination
Without Cause.     The employment of the Executive hereunder shall be deemed to have been terminated “Without Cause”
upon (A) termination of employment by the Company for any reason other than the reasons specified in Section 9(a)(i) hereof
as termination “For Cause”, the reasons specified in Section 9(a)(iii) hereof as termination because of the
Executive’s Death or Disability, or termination by virtue of the expiry of the Employment Period on 1 January 2017 or any
specific extension thereof and the non-renewal of the Executive’s employment on the same terms, or (B) termination of employment
by the Executive within thirty (30) days following a “Constructive Termination” event. For purposes hereof, the following
shall constitute Constructive Termination events: (1) any removal of the Executive from the position of Executive Vice
President, Finance, Chief Financial Officer and Chief Operating Officer, (2) any material reduction of the Executive’s
duties, responsibilities or authority, including any change in the Executive’s positions as Executive Vice
President, Finance, Chief Financial Officer and Chief Operating Officer that results in such a reduction, (3) a material
reduction by the Company in the Executive’s base salary in effect on the date hereof or as may be increased from time to
time except if the Board in response to exceptional adverse business circumstances makes a general temporary reduction in the compensation
of the executives of the Company, (4) the Company’s requiring the Executive without the Executive’s express written
consent to be based anywhere other than within 50 miles of the Executive’s present office location, except for required travel
on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations,
or (5) a material breach of this Agreement by the Company.


 


The foregoing shall
be treated as Constructive Termination events hereunder following the expiration of 30 days from the date the Executive has notified
Company (within 90 days) of the occurrence of such event and the Executive’s intention to treat such event as a constructive
termination and terminate the Executive’s employment on the basis thereof, provided that Company has not cured the constructive
termination event before the expiration of such 30-day period. The Executive’s termination will be effective upon the expiration
of the 30-day period.


 


(iii)          Disability.    The
Executive shall be treated as having suffered a “Disability” if the Executive is prevented from performing his duties
hereunder by reason of


 







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illness or injury
for a period of either (A) six or more consecutive months from the First Date of Disability (as defined below) or (B) eight months
in the aggregate during any 12-month period. The date as of which the Executive is first absent from employment as a result of
such illness or injury shall be referred to herein as the “First Date of Disability”.


 


(iv)          Change in
Control.   A “Change in Control” shall be deemed to have taken place if:


 


(A)          there
shall be consummated any consolidation or merger of the Company in which Company is not the continuing or surviving corporation
or pursuant to any transaction in which shares of the Company’s capital stock are converted into cash, securities or other
property, or any sale, lease, exchange or other transfer in one transaction or a series of transactions contemplated or arranged
by any party as a single plan of all or substantially all of the assets of the Company, or the approval of a plan of complete liquidation
or dissolution of the Company adopted by the stockholders of the Company; or


 


(B)          any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) shall after the date hereof become the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or more of the voting power of all then outstanding securities
of the Company having the right under ordinary circumstances to vote in an election of the Board (including, without limitation,
any securities of the Company that any such person has the right to acquire pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise, shall be deemed beneficially owned by such person); or


 


(C)          individuals
who at the date hereof constitute the entire Board and any new directors whose election by the Board, or whose nomination for election
by the Company’s stockholders, shall have been approved by a vote of at least a majority of the directors then in office
who either were directors at the date hereof or whose election or nomination for election shall have been so approved (the “Continuing
Directors”) shall cease for any reason to constitute a majority of the members of the Board; and


 


provided further
that in each of the foregoing cases, the Change of Control also meets all of the requirements of a “change in the ownership
of a corporation” within the meaning of Treasury Regulation §1.409A-3(i)(5)(v), a “change in the effective control
of a corporation” within the meaning of Treasury Regulation §1.409A-3(i)(5)(vi) or a “a change in the ownership
of a substantial portion of the corporation’s assets” within in the meaning of Treasury Regulation §1.409A-3(i)(5)(vii).


 


(b)          Termination
Without Cause.    In the event of termination of the Executive’s employment hereunder by Company “Without Cause”
(other than for a Termination for a Change of Control hereinafter separately provided for) the Executive shall be entitled to the
following severance pay and benefits:


 




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(i)          Severance
Pay - severance payments in the form of continuation of the Executive’s base salary as in effect immediately prior to
such termination for a period of 12 months following the effective date of such termination.


 


(ii)          Benefits
Continuation - continued coverage under the Company’s medical care and life insurance benefit plans in which the Executive
is participating at the time of termination, on the same terms as applicable to other executive employees of the Company from time
to time, over the same period with respect to which the Executive’s base salary is continued as provided in Section 9(b)(i)
hereof; provided, however, that the Company’s obligation to provide such coverages shall be terminated if the
Executive obtains substitute coverage from another employer of the Executive at any time during the continuation period; the Executive
shall be obligated to notify Company of any such substitute coverage and the date of commencement thereof promptly upon obtaining
any such coverage; and


 


(iii)          Stock Options
- all options to purchase shares of the Company’s common stock held by the Executive and which are vested immediately prior
to termination of employment shall become exercisable for a period of six months following the effective date of termination of
employment.


 


(c)          Termination
following Change in Control.   In the event of termination of the Executive’s employment within six months following a
Change of Control the Executive shall be entitled to the following severance pay and benefits:


 


(i)          Severance
Pay - Severance payments in the form of continuation as the Executive’s base salary as in effect immediately prior to
such termination for a period of twelve (12) months following the effective date of termination.


 


(ii)          Benefits
Continuation - continued coverage under the company’s medical care and life insurance benefit plans in which the Executive
is participating at the time of termination, or the same terms as applicable to other executives of employees of the Company from
time to time over the same period with respect to which the Executive’s base salary is continued as provided in Section
9(c)(i) hereof provided, however that the Company’s obligation to provide such coverages shall be terminated if the Executive
attains substitute coverage from another employer at any time during the continuation period; the Executive shall be obligated
to notify Company of any such substitute coverage and the date of commencement thereof promptly upon attaining any such coverage.


 


(iii)          Stock Options
- all options to purchase shares of the Company’s common stock held by the Executive shall be vested and be exercisable for
a period of 18 months following the effective date of termination.


 


(iv)          280G Excise
Tax - it is the intention of Executive and the Company that no payments made or benefits provided by the Company to or for
the benefit of Executive under this Agreement or any other agreement or plan pursuant to which Executive is entitled to receive
payments or benefits shall be subject to the excise tax imposed on the Executive by Section 4999 of the Code (the “280G Excise
Tax”), relating to golden parachute payments.


 




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(A)          The
Company agrees that in the event any payments to Executive pursuant to this Agreement would result in a payment to Executive that
would trigger any 280G Excise Tax, if appropriate and permissible, the Company shall first submit to its stockholders for approval
the transaction that may result in the imposition of the 280G Excise Tax upon Executive in accordance with the regulations of the
Internal Revenue Code governing shareholder approval of transactions giving rise to 280G Excise Tax liability.


 


(B)          If
the procedure set forth in Section 9(c)(iv)(A) is not available, if any payment, award, benefit or distribution by the Company
to or for the benefit of Executive would be subject to the 280G Excise Tax or any corresponding provisions of state or local tax
laws as a result of payment to Executive, or any interest or penalties are incurred by Executive with respect to such 280G Excise
Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes) imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the 280G Excise Tax imposed upon the payments. The
Company shall make any Gross-Up Payment due to the Executive no later than the end of the tax year following the tax year in which
the Executive pays the Excise Tax to the applicable government taxing authority.


 


(d)          Termination
Upon Disability or Death.   In the event of termination of the Executive’s employment hereunder on account of the Executive’s
“Disability” or death, the Executive or the Executive’s heirs, estate or personal representatives under law,
as applicable, shall be entitled to the following severance pay and benefits:


 


(i)          Severance
Pay - severance payments in the form of continuation of the Executive’s base salary as in effect immediately prior to
such termination for a period of 12 months following the First Date of Disability, reduced by the amounts of any payments received
from any short-term or long-term disability plan of the Company;


 


(ii)          Benefits
Continuation - the same benefits as provided in Section 9(c)(ii) above, to be provided during the Employment Period
while the Executive is suffering from Disability and for a period of twelve (12) months following the effective date of termination
of employment by reason of Disability; and


 


(iii)          Stock Options
- all options to purchase shares of the Company’s common stock held by the Executive which are exercisable immediately prior
to termination of employment shall remain exercisable for a period of 12 months following the effective date of termination of
employment.


 


(e)          Other Terminations.    In the event of termination of the Executive’s employment hereunder for any reason other than those specified in subsections
(b) through (d) of this Section 9, but including termination by virtue of the expiry of the Employment Period and non-renewal
of the Executive’s employment on the same terms, the Executive shall not be entitled to any severance pay, benefits continuation
or stock option rights contemplated by the foregoing provisions of this Section 9, except as otherwise provided in the applicable
benefit plans of the Company that cover the Executive.


 




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(f)          Accrued Rights.    Notwithstanding the foregoing provisions of this Section 9, in the event of termination of the Executive’s employment
hereunder for any reason, the Executive shall be entitled to payment of any unpaid portion of his base salary, computed on a pro-rata
basis through the effective date of termination, and payment of any accrued but unpaid rights in accordance with the terms of any
incentive bonus or employee benefit plan or program of the Company.


 


(g)          Conditions
to Severance Benefits.    (i)   As conditions of the Executive’s entitlement and continued entitlement to the severance payments
and benefits provided by this Section 9, the Executive is required to (i) honor in accordance with their terms the provisions
of Sections 10, 11 and 12 hereof and (ii) execute and honor the terms of a waiver and release of claims against the Company
substantially in the form attached hereto as Exhibit A (as may be modified consistent with the purposes of such waiver and
release to reflect changes in law following the date hereof) and compromise agreement in the form attached hereto as Exhibit
B (as may be modified consistent with the purposes of such compromise agreement to reflect changes in law following the date
hereof). The parties hereto agree that the Executive is under no affirmative obligation to seek to mitigate or offset the severance
payments and benefits provided by this Section 9.


 


(ii)          For purposes
only of this Section, the Executive shall be treated as having failed to honor the provisions of Sections 10, 11 or 12 hereof
only upon the passing of a resolution by a majority of the Board making such a determination following notice of the alleged failure
by Company to the Executive, an opportunity for the Executive to cure the alleged failure for a period of thirty (30) days from
the date of such notice and the Executive’s opportunity to be heard on the issue by the Board.


 


(iii)          Stock Options
- Notwithstanding any other provisions of this Agreement to the contrary, in the event that the Executive continues to serve as
a member of the Board following his termination of employment from Company, his rights with respect to the vesting and exercisability
of the options shall continue in the same manner as other non-executive members of the Board.


 


10.          Confidentiality.    The
Executive agrees that he will not at any time during the term hereof or thereafter for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other business entity, in
any manner whatsoever, any confidential information or trade secrets concerning the business of the Company (including the business
of any unit thereof), including, without limiting the generality of the foregoing, the names of any of its customers, the prices
at which it obtains or has obtained any products or services, the techniques, methods or systems of its operation or management,
any customer proposals or other business opportunities, any information regarding its financial matters, or any other material
information concerning the business of the Company, its manner of operation, its plans or other material data. The provisions
of this paragraph shall not apply to (i) information disclosed in the performance of the Executive’s duties to the Company
based on his good faith belief that such a disclosure is in the best interests of the Company; (ii) information that is public
knowledge; (iii) information disseminated by the Company to others in the ordinary course of the Company’s business, in


 




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order to further such
business, provided the recipient of such information agrees to be subject to a confidentiality obligation at least comparable to
that herein; (iv) information or knowledge lawfully received by the Executive from a third party who, based upon due inquiry by
the Executive, is not bound by a confidential relationship to the Company; or (v) information disclosed under a requirement of
law or as directed by applicable legal authority having jurisdiction over the Executive.


 


11.        Inventions.    (i)    To the extent that any of the Company’s current or future products or services relate to, embody or incorporate concepts,
technology or products of any kind relevant to the Company or its subsidiaries or affiliates that the Executive directly or indirectly
conceived or developed prior to the date hereof during the period of his employment by Company (“Prior Technology”),
the Executive assigns in perpetuity to Company any and all of his rights, title and interests, if any, to utilize, without any
cost to the Company, such Prior Technology, and the Executive agrees to assist Company in taking all action that may be reasonably
required, at the Company’s expense, to secure for the Company the benefits of the Executive’s ownership or rights,
if any, to use all such Prior Technology.


 


(ii)          The Executive
is hereby retained in a capacity such that the Executive’s responsibilities include the making of technical, managerial and
promotional contributions of value to the Company. The Executive hereby assigns to Company all rights, title and interest in such
contributions and inventions made or conceived by the Executive alone or jointly with others which relate to the business of the
Company. This assignment shall include (a) the right to file and prosecute patent applications on such inventions in any and all
countries, (b) the patent applications filed and patents issuing thereon, and (c) the right to obtain copyright, trademark or trade
name protection for any such work product. The Executive shall promptly and fully disclose all such contributions and inventions
to the Company and assist the Company in obtaining and protecting the rights therein (including patents thereon), in any and all
countries; provided, however, that said contributions and inventions will be the property of the Company, whether or not patented
or registered for copyright, trademark or trade name protection, as the case may be. Inventions conceived by the Executive which
are not related to the business of the Company (as determined in good faith by the Board), will remain the property of the Executive.


 


12.        Non-Competition.    (i)    the Executive agrees that he shall not during the Employment Period and for a period of one year after the termination or end
thereof for any reason, without the approval of the Board which, after the end of the Employment Period, shall not unreasonably
be withheld or delayed, directly or indirectly, alone or as partner, joint venturer, officer, director, employee, consultant, agent,
independent contractor or controlling stockholder (other than as provided below) of any Company or business, engage in any “Competitive
Business” within the United States or within the United Kingdom and which directly competes with the business of the Company
and/or Cyclacel Limited. For purposes of the foregoing, the term “Competitive Business” shall mean any business involved
in the research, development, or sale of anticancer targeted therapeutics that are nucleoside analogues, CDK inhibitors or Aurora/VEGFR2
inhibitors and/or medicines for the treatment of radiation dermatitis or xerostomia or any other business in which the Company
has been engaged up to and until the relevant time (as determined by the Board of Directors); provided that, this


 




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provision shall in no
way prevent the Executive, after the end of the Employment Period, from being employed as a consultant.


 


(ii)          Notwithstanding
the provisions of clause (i) above or any other provision of this Agreement to the contrary, the Executive shall not be prohibited
during the period applicable under clause (i) above from acting as a passive investor where (a) in the case of a Competitive Business
being a public corporation, the Executive owns not more than five percent (5%) of the issued and outstanding capital stock or such
higher percentage or amount as may be approved by the Board upon notice from the Executive prior to obtaining such interest; provided,
however, that the Executive shall not be treated as having violated the provisions of this Section 12 if in good faith
he is unaware that an entity in which he has an investment interest would be treated as a Competitive Business and, upon becoming
aware of such involvement, the Executive makes reasonable efforts to divest himself of his interest in such business; (b) in the
case of any employer or entity other than a Competitive Business that is engaged in, or whose affiliates are engaged in, the development
or marketing of products or technologies that are directly or indirectly competitive with any product or technology that is developed
or marketed or proposed to be developed or marketed by Company during the Employment Period, the Executive owns not more than five
percent (5%) of the issued and outstanding capital stock; or (c) receiving stock, options or warrants from any entity with which
the Executive can have a relationship pursuant to clause (i) above as part of the Executive’s compensation for services rendered
or to be rendered.


 


13.        Breach
of Restrictive Covenants.    The parties agree that a breach or violation of Sections 10, 11 or 12 hereof will result
in immediate and irreparable injury and harm to the innocent party, who shall have, in addition to any and all remedies of law
and other consequences under this Agreement, the right to an injunction, specific performance or other equitable relief to prevent
the violation of the obligations hereunder.


 


14.        Non-Disparagement.    The Executive agrees that he will not, whether during his provision of services to the Company or thereafter, directly or indirectly,
make, cause to be made, or ratify any statement, public or private, oral or written, to any person that disparages, either professionally
or personally, the Company or any of its affiliates, past and present, and each of them, as well as its and their trustees, directors,
officers, agents, attorneys, insurers, employees, stockholders, representatives, assigns, and successors, past and present, and
each of them.


 


15.        Notices.    Any
notice required to be given pursuant to the provisions of this Agreement shall be in writing and, if mailed, sent by registered
mail, postage prepaid, to the party named at the address set forth below, or at such other address as each party may hereafter
designate in writing to the other party:


 


	 	Company:	200 Connell Drive #1500
	 	 	Berkeley Heights, NJ 07922
	 	 	Attention:  Chairman of the Board


 




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	 	Executive:	c/o Cyclacel Pharmaceuticals, Inc.
	 	 	200 Connell Drive #1500
	 	 	Berkeley Heights, NJ  07922


 


Any such notices shall be deemed to have
been delivered when served personally in the manner specified above.


 


16.        Dispute
Resolution.   The parties shall waive trial by jury in any dispute between them.


 


17.        Entire
Agreement.    (a)    Change, Modification, Waiver.    No change or modification of this Agreement shall be valid unless it
is in writing and signed by each of the parties hereto. No waiver of any provision of this Agreement shall be valid unless it is
in writing and signed by the party against whom the waiver is sought to be enforced. The failure of a party to insist upon strict
performance of any provision of this Agreement in any one or more instances shall not be construed as a waiver or relinquishment
of the right to insist upon strict compliance with such provision in the future.


 


(b)     Integration
of All Agreements.    This Agreement constitutes the entire Agreement between the parties and is intended to be an integration
of all agreements between the parties with respect to the Executive’s service with Company. Except as provided in Section
8 hereof concerning the Indemnification Agreement, any and all prior agreements between the Executive and the Company with
respect to the Executive’s service with the Company are hereby revoked.


 


(c)    Severability
of Provisions.    If for any reason any provision of this Agreement should be declared void or invalid, such declaration shall
not affect the validity of the rest of this Agreement, which shall remain in force as if executed with the void or invalid provision
eliminated.


 


18.        Binding
Effect.    This Agreement shall be binding upon all parties hereto and their heirs, successors and assigns. This Agreement
shall be assignable by Company to any entity acquiring all or substantially all of the assets of the Company.


 


19.       Governing
Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, except that,
and only to the extent applicable, England law shall govern the working conditions and the like.


 


20.       Miscellaneous.   (a)   Form.    As employed in this Agreement, the singular form shall include, if appropriate, the plural.


 


(b)       Headings.   The headings employed in this Agreement are solely for the convenience and reference of the parties and are not intended to be
descriptive of the entire contents of any paragraph and shall not limit or otherwise affect any of terms, provisions, or construction
thereof.


 




    	11



    	 



    

  


(c)       Modifications.
Notwithstanding any other provision with respect to the timing of payments under this Agreement, if, at the time of Executive’s
expiration of the Employment Period, the non-renewal of the Executive’s employment is deemed to be dismissal or termination
(within the meaning of the UK law or any other applicable law), limited only to the extent necessary to comply with the requirements
of the UK law, any payment to which Executive may become entitled under the UK law will be withheld, but no later than the first
(1st) business day of the 11th week following the expiration of the Employment Period, at which time the parties to this Agreement
will be negotiate in good faith a mechanism effective under the UK law to carry out the intent and purpose of this Agreement.


 


21.       Additional
Terms of Statement of Main Terms and Conditions of Employment.   The parties shall execute and deliver a Statement of Main
Terms and Conditions of Employment as required by UK law and conforming, to the extent practicable, with the terms and conditions
of the foregoing .


 


[signature page follows]


  




    	12



    	 



    

 





IN WITNESS WHEREOF,
this Agreement is executed as of the date first above written.


 





	 	Cyclacel Pharmaceuticals, Inc.:
	 	 
	 	 




 






	 	By:	/s/ Spiro Rombotis











	 	 	Name: 	Spiro Rombotis





	 	 	Title: 	President & CEO


 


	 	Paul McBarron:
	 	 
	 	/s/ Paul McBarron


 




    	13



    	 



    

 


Execution Copy 


 


Exhibit A


 


Waiver and Release


 


1.            Your
Release of Claims. You hereby agree and acknowledge that by signing this Agreement, and for other good and valuable consideration,
you are waiving your right to assert any and all forms of legal claims against the Company1/
of any kind whatsoever, whether known or unknown, arising from the beginning of time through the date you execute this Agreement
(the “Execution Date”). Except as set forth below, your waiver and release herein is intended to bar any form of legal
claim, complaint or any other form of action (jointly referred to as “Claims”) against the Company seeking any form
of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any
damages, or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, compensatory damages,
emotional distress damages, punitive damages, attorneys fees and any other costs) against the Company, for any alleged action,
inaction or circumstance existing or arising through the Execution Date.


 


Without limiting the foregoing general waiver
and release, you specifically waive and release the Company from any Claim arising from or related to your prior employment relationship
with the Company or the termination thereof, including, without limitation:


 


		**	Claims under any state or federal discrimination, fair employment practices or other employment related statute, regulation
or executive order (as they may have been amended through the Execution Date) prohibiting discrimination or harassment based upon
any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status
or sexual orientation. Without limitation, specifically included in this paragraph are any Claims arising under the Age Discrimination
in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act
and any similar Federal and state statute.



 


		**	Claims under any other state or federal employment related statute, regulation or executive order (as they may have been amended
through the Execution Date) relating to wages, hours or any other terms and conditions of employment.



 


		**	Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or
implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public
policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion
of privacy,



 





 






	1/		For purposes of this Agreement, the Company includes the Company and any of its divisions,
affiliates (which means all persons and entities directly or indirectly controlling, controlled by or under common control with
the Company), subsidiaries and all other related entities, and its and their directors, officers, employees, trustees, agents,
successors and assigns.



  




    	A-1



    	 



    

  


misrepresentation, deceit, fraud or negligence.


 


		**	Any other Claim arising under state or federal law.



 


Notwithstanding the foregoing, nothing contained
in this Release constitutes a waiver of any Claims you may have against the Company arising from or related to the Indemnification
Agreement and By-laws provisions referenced in Section 8 of the Employment Agreement, dated January 1, 2014, entered into between
you and the Company.


 


You acknowledge and agree that, but for
providing this waiver and release, you would not be receiving the economic benefits being provided to you under the terms of this
Agreement.


 


It is the Company’s desire and
intent to make certain that you fully understand the provisions and effects of this Agreement. To that end, you have been encouraged
and given the opportunity to consult with legal counsel for the purpose of reviewing the terms of this Agreement. Also, because
you are over the age of 40 and consistent with the provisions of the Age Discrimination in Employment Act (“ADEA”),
which prohibits discrimination on the basis of age, the Company is providing you with twenty-one (21) days in which to consider
and accept the terms of this Agreement by signing below and returning it to me at: [name], [address].


 


You may rescind your assent to this Agreement
if, within seven (7) days after you sign this Agreement, you deliver by hand or send by mail (certified, return receipt and postmarked
within such 7 day period) a notice of rescission to me at the Company. The eighth day following your signing of this Agreement
is the Effective Date.


 


Also, consistent with the provisions of
Federal and state discrimination laws, nothing in this release shall be deemed to prohibit you from challenging the validity of
this release under such discrimination laws (the “ Discrimination Laws”) or from filing a charge or complaint of age
or other employment related discrimination with the Equal Employment Opportunity Commission (“EEOC”) or state equivalent,
or from participating in any investigation or proceeding conducted by the EEOC or state equivalent. Further, nothing in this release
or Agreement shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the
basis that your signing of this Agreement constitutes a full release of any individual rights under the Discrimination Laws, or
to seek restitution to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that
you successfully challenge the validity of this release and prevail in any claim under the Discrimination Laws.


 


	 	By: 	 	 
	 	 	Paul McBarron	 


 


	 	Date signed:  	 	 


 




    	A-2



    	 



    

  


Exhibit B


 


Compromise Agreement


 





COMPROMISE AGREEMENT


 


THIS COMPROMISE AGREEMENT (the “Agreement”)
is made as of [•] by and between Cyclacel Pharmaceuticals,
Inc. (the “Employer”) and Paul McBarron (the “Executive”).


 


WHEREAS, the Employer has employed the
Executive as Executive Vice President, Finance, Chief Financial Officer, Chief Operating Officer and Secretary since [•];
and


 


WHEREAS, the Executive may have certain
claims against the Employer in respect of the Executive’s employment during the period of the Executive’s employment
with the Employer and up to the date of signing of this Agreement by the parties, and


 


WHEREAS, without admitting the validity
of all or any of these claims, the Employer wishes to settle with the Executive;


 


NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:-


 


		1.	Claims against the Employer



 


		a.	The Executive asserts that the Executive may have the following particular claims (the “Asserted
Claims”), and no other claims, against the Employer, its directors, officers or employees, or against any associated
company or person, or any affiliates of the Employer (collectively, the “Affiliates”) arising from the Executive’s
employment with the Employer or the termination thereof:



 


		i.	Any claim for damages for breach of contract for notice or pay in lieu of notice;



		ii.	Any claim for holiday pay; or payment of an accrued untaken holiday entitlement;



		iii.	Any claim for outstanding pay, overtime, expenses, ex-gratia or discretionary payments, use of
Company vehicle, Directors’ fees, bonuses or commission and also including a claim under the Equal Pay Act 1970 or Article
119 of the Treaty of Rome (as amended by the Treaty of Amsterdam);



		iv.	A claim by the Executive for breach of contract by the Employer;



		v.	Any claim for unfair dismissal; or unfair constructive dismissal;



		vi.	Any claim for unlawful deduction from wages under Part II of the Employment Rights Act 1996;



 




    	B-1



    	 



    

  


		vii.	Any claim for redundancy payment whether statutory or otherwise;



		viii.	Any claim for a failure to follow the statutory dispute resolution procedures under the Employment
Act 2002 and the Employment Act 2002 (Dispute Resolution) Regulations 2004;



		ix.	Any claim for breach of the Working Time Regulations 1998 including non-payment of holiday pay;



		x.	Any claim for failure to give a Statement of Main Terms and Conditions of Employment or dispute
resolution procedures in terms of Part I of the Employment Rights Act 1996;



 


		b.	The Executive confirms that the Executive’s only claims or complaints against the Employer
or Affiliates are the Asserted Claims and that the Executive is aware of no other claim or grounds to make a claim against the
Employer or Affiliates in relation to any other matters howsoever arising.



 


		c.	The Executive accepts the terms of this Agreement in full and final settlement of the Asserted
Claims and all other claims, complaints, costs, expenses or rights of action of any kind, present, future or contingent, which
the Executive may have against the Employer or Affiliates, whether under statute, contract or at common law or under legislation
or directives of the European Union, arising from the Executive’s employment with the Employer or the termination thereof,
including, but not limited to:



 


		i.	Any claim for sex discrimination or victimisation, or harassment under the Sex Discrimination Act
1975;



		ii.	Any claim for race discrimination or victimisation, or harassment under the Race Relations Act
1976;



		iii.	Any claim for disability discrimination or victimisation or harassment under the Disability Discrimination
Act 1995;



		iv.	Any claim for discrimination, victimisation or harassment under the Employment Equality (Sexual
Orientation) Regulations 2003;



		v.	Any claim for discrimination, victimisation or harassment under the Employment Equality (Religion
or Belief) Regulations 2003;



		vi.	Any claim for discrimination, victimisation or harassment under the Employment Equality (Age) Regulations
2006;



 




    	B-2



    	 



    

  


		vii.	Any claim for less favourable treatment, detriment, unfair dismissal or victimisation under the
Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000;



		viii.	Any claim for less favourable treatment, detriment, unfair dismissal or victimisation under the
Fixed Term Executives (Prevention of Less Favourable Treatment) Regulations 2002;



		ix.	Any claim under the National Minimum Wage Act 1998;



		x.	Any claim in relation to trade union membership, unfair dismissal or detriment on the grounds they
are a trade union member under the Trade Union and Labour Relations (Consolidation) Act 1992;



		xi.	Any claim for a protective award under Trade Union and Labour Relations (Consolidation) Act 1992;



		xii.	Any claim for harassment under the Protection from Harassment Act 1997;



		xiii.	Any claim under Part VII of the Transnational Information and Consultation of Executives Regulations
1999;



		xiv.	Any claim for compensation under the Data Protection Act 1998;



		xv.	Any claim under Part VIII of the Information and Consultation of Executives Regulations 2004;



		xvi.	Any claim for a protective award under the Transfer of Undertakings (Protection of Employment)
Regulations 2006;



		xvii.	       Any claim for a guarantee payment in terms of Part III of the Employment Rights Act 1996;



		xviii.	      Any claim by the Executive that they have suffered a detriment on the grounds of provisions relating
to:



		(a)	health and safety;



		(b)	Sunday working;



		(c)	the Working Time Regulations 1998;



		(d)	undertaking duties of an Occupational Pension Scheme Trustee;



		(e)	undertaking duties as an Executive representative;



		(f)	time off work for study or training;



		(g)	protected disclosures;



		(h)	family leave;



		(i)	dependant leave;



		(j)	flexible working;



		(k)	enforcing or securing the benefit of or right conferred under the Tax Credits Act 2002.



 




    	B-3



    	 



    

 


all in terms of Sections 44
to 48 of the Employment Rights Act 1996;


 


		xix.	Any claim for compensation under Section 80H of the Employment Rights Act 1996 (flexible working),
but excluding any claims in relation to accrued pension rights or any claims for damages for personal injuries, in respect of the
latter of which the Executive warrants that the Executive is not aware of any such claims.



 


		d.	The Executive warrants that, at the date of this Agreement, the Executive has not issued any proceedings
against the Employer or Affiliates, whether in an Employment Tribunal or otherwise, and agrees to withdraw any such proceedings
instituted on their behalf.



 


		e.	If the waiver of the Asserted Claims or any other claims contained in this Clause is judged to
be void or unenforceable, but would be valid if any one or more of the waivers were reduced, the waiver(s) shall be deemed to apply
with such modification(s) as may be necessary to make them valid and effective. Any such modification of any one waiver of a claim
shall not affect the validity of any other waiver of claim contained in this contract.



 


		2.	Executive warranties



 


		a.	The Executive warrants that he is not aware of any matters relating his employment which if disclosed
to the Employer might affect the Employer’s decision to enter into this Agreement.



 


		b.	The Executive warrants that the Executive has complied with all of his obligations to the Employer
and have not done or failed to do anything which would have allowed the Employer to terminate the Executive employment with immediate
effect.



 


		3.	Legal Advice



 


		a.	The Executive warrants to the Employer that before signing this Agreement the Executive received
independent legal advice from [                                            ]
Solicitor, [                                                      ]
a qualified lawyer (“The Advisor”), as to the terms and effects of this Agreement, and, in particular, its effect on
the Executive’s ability to pursue the Executive’s rights before an Employment Tribunal or a Court. The Advisor has
in force a Policy of Insurance covering the risk of a claim by the Executive in respect of any loss arising in consequence of the
said legal advice.



 




    	B-4



    	 



    

  


		b.	The Executive warrants to the Employer that the Executive has provided the Advisor with all available
information which the Advisor requires or may require to advise whether the Executive has any claims, and in particular any of
the claims listed in Clause 1 of this Agreement, against the Employer or Affiliates.



 


		c.	The Executive warrants to the Employer that the Advisor has advised the Executive that on the basis
of the information available to the Advisor the Executive’s only claims or particular complaints against the Employer or
Affiliates are the Asserted Claims and that he has no other claim against the Employer whether statutory or otherwise.



 


		4.	Compliance with statutory provisions



 


		a.	The Executive declares and acknowledges that the Executive has carefully read and fully understands
all of the provisions of this Agreement and voluntarily agrees to and intends to be legally bound by all its terms and in particular
the Executive acknowledges that this Agreement is a Compromise Agreement within the meaning of s.203(2)(f) of the Employment Rights
Act 1996 and that by entering into this Agreement the Executive has agreed not to institute or continue any proceedings before
an Employment Tribunal or the Courts arising out of the termination of the Executive’s employment.



 


		b.	The Employer and the Executive agree and acknowledge that the conditions regulating Compromise
Agreements under Section 203(3) of the Employment Rights Act 1996, Section 288 of the Trade Union and Labour Relations (Consolidation)
Act 1992; Section 77(4A) of the Sex Discrimination Act 1975; Section 72(4A) of the Race Relations Act 1976; Schedule 3A of the
Disability Discrimination Act 1995 and Regulation 35(3) of the Working Time Regulations 1998, Section 49 of the National Minimum
Wage Act 1998, Regulation 10 of the Fixed Term Executives (Prevention of less favourable Treatment) Regulations 2002; Regulation
9 of the Part Time Workers (Prevention of Less favourable Treatment) Regulations 2000, Schedule 4 of the Employment Equality (Religion
or Belief) Regulations 2003, Schedule 4 of the Employment Equality (Sexual Orientation) Regulations 2003; Schedule 5 of the Employment
Equality (Age) Regulations 2006; Regulation 40 of the Information and Consultation of Executives Regulations 2004; and Regulation
41 of the Transnational information and Consultation of Executives Regulations 1998 all as maybe re-enacted or amended are intended
to be and have been satisfied and that the Executive has intimated the foregoing claims.



 




    	B-5



    	 



    

  


IN WITNESS
WHEREOF these presents consisting of this and the [        ] preceding pages are executed
as follows:


 




    	B-6



    	 



    

  


They are
subscribed for and on behalf of the Employer at [               ]


on the                         day
of [                  ] 20__ the presence
of the following witness by:-


 


	 	 	 
	(Witness)	 	 
	 	 	 
	 	 	(Authorised Signatory)
	 	 	 
	(Full Name)	 	 
	 	 	 
	(Address)	 	 
	 	 	 
	 	 	 
	 	 	 
	(Occupation)	 	 
	 	 	 
	They are subscribed by the Executive at [          ]	 	 
	on the                day of [             ] 20__ in 	 	 
	the presence of the following witness:-	 	 
	 	 	 
	 	 	 
	(Witness)	 	 
	 	 	 
	 	 	[Executive’s name]
	 	 	 
	(Full Name)	 	 
	 	 	 
	(Address)	 	 
	 	 	 
	 	 	 
	 	 	 
	(Occupation)	 	 


 




    	B-7



    	 



    

  


22.        Solicitor’s
Certificate under Section 203 of the Employment Rights Act 1996


 


I, [                               ]
hereby certify as follows:-


 


		1.	I am a solicitor holding a current Practising Certificate.



 


		2.	I have advised [       Executive              ]
of the terms and effects of the attached Agreement and in particular its effect on the Executive’s ability to pursue a claim
to an Employment Tribunal and/or the Courts following its signing.



 


		3.	I am not acting and have not acted in relation to this matter for [              employer                        ]



 


		4.	There is in force a policy of insurance covering the risk of a claim by the Executive in respect
of loss arising in consequence of the advice I have given.



 


		5.	The conditions regulating Compromise Agreements under Section 203(3) of the Employment Rights Act
1996, Section 288 of the Trade Union and Labour Relations (Consolidation) Act 1992; Section 77(4A) of the Sex Discrimination Act
1975; Section 72(4A) of the Race Relations Act 1976; Schedule 3A of the Disability Discrimination Act 1995 and Regulation 35(3)
of the Working Time Regulations 1998, Section 49 of the National Minimum Wage Act 1998, Regulation 10 of the Fixed Term Executives
(Prevention of less favourable Treatment) Regulations 2002; Regulation 9 of the Part Time Workers (prevention of Less favourable
Treatment) Regulations 2000, Schedule 4 of the Employment Equality (Religion or Belief) Regulations 2003, Schedule 4 of the Employment
Equality (Sexual Orientation) Regulations 2003; Schedule 5 of the Employment Equality (Age) Regulations 2006; Regulation 40 of
the Information and Consultation of Executives Regulations 2004; and Regulation 41 of the Transnational Information and Consultation
of Executives Regulations 1998 have accordingly been satisfied.



 


	(Sgd.)______________________________	Date____________________________


 






    	B-8