Exhibit
10.5


 


EMPLOYMENT AGREEMENT


 


EMPLOYMENT AGREEMENT made
as of the 17th day of November, 2003 between Maxim Pharmaceuticals, Inc.
(“Company”) and Larry G. Stambaugh (“Executive”).


 


Preliminary
Statement


 


WHEREAS, the Company
wishes to retain the Executive as Chairman of the Board of Directors, President
and Chief Executive Officer of the Company, and the Executive wishes to
continue in such positions, all on the terms and conditions set forth in this
Agreement;


 


NOW, THEREFORE, in
consideration of the premises, and for other good and valuable consideration,
the Company and the Executive agree as follows:


 


1.                                       Term
of Agreement.  This Agreement shall
commence on October 1, 2003 and shall continue in effect until terminated
pursuant to Section 5 hereof.


 


2.                                       Position
and Duties.  Except as may otherwise
be agreed upon between the Company and the Executive, the Company agrees to
employ the Executive, and the Executive agrees to serve the Company, as
Chairman of the Board of Directors, President and Chief Executive Officer.  The Executive shall render such services to
the Company as are customary for such positions and perform all other services
incident thereto.  At all times, the Executive
shall report directly to the Board of Directors of the Company.  The Executive shall devote substantially all
of his working time and efforts to the business and affairs of the Company,
except for time spent for service on the boards of directors of other
corporations, vacations as defined by Company policy and civic and charitable
activities, and shall represent the Company within its industry.


 


3.                                       Place
of Performance.  In connection with
his employment by the Company, the Executive shall, except as the Executive may
otherwise agree, perform his principal activities at the offices of the Company
located in San Diego, California, subject to travel reasonably required for the
Company’s business.


 


4.                                       Compensation
and Related Matters.


 


4.1                                 Base
Salary.  During the Term, the
Company shall pay to the Executive, in approximately equal installments not
less often than twice per month, a base salary of not less than $450,000 per
year and such base salary shall


 

















 


be subject to increase,
but not reduction, from time to time based upon recommendations from the
Compensation Committee to the Board of Directors.  All amounts payable to the Executive pursuant to this Agreement
shall be paid subject to such reporting and withholding requirements, if any,
as may be imposed by applicable law and applicable Company policy.


 


4.2           Incentive Plan.  The Executive shall be eligible to receive
bonus payments pursuant to a plan to be prepared by the Company’s Board of
Directors with the Executive’s participation (“Bonus Plan”).  The Bonus Plan shall provide that, assuming
reasonable satisfaction of the performance criteria to be set forth in the
Bonus Plan, the Executive shall be eligible to earn an annual bonus with
respect to each of the Company’s fiscal years during the Term in an amount up
to 35% of the Executive’s annualized base salary hereunder, such bonus to be
payable within ninety days after the end of each such fiscal year.  The bonus will be based upon the annualized
base salary for the year in which the bonus applies.


 


4.3                                 Benefit
Plans and Arrangement.  The
Executive shall be entitled to participate in and receive benefits under the
Company’s employee benefit plans and arrangements in effect during the
Term.  The Company shall pay the entire
cost of the Executive’s health, life and disability insurance coverage under
the Company’s plans and policies during the Term, notwithstanding anything to
the contrary in such plans and policies.


 


4.4                                 Perquisites.  During the Term, the Executive shall be
entitled to receive fringe benefits ordinarily and customarily provided by the
Company to its senior officers.


 


4.5                                 Expenses.  The Company shall promptly reimburse the
Executive for all normal out-of-pocket expenses related to the Company’s
business actually paid or incurred by him in the performance of his services
under this Agreement.


 


5.                                       Termination.  The Executive’s employment hereunder may be
terminated under the following circumstances (without impairing the Executive’s
rights under benefit plans and arrangements and the Company’s policies and
procedures):


 


5.1                                 Termination
Upon Death or Permanent Disability. 
The Term shall automatically terminate in the event of the death or
permanent disability of Executive.  For
purposes of this Agreement, “permanent disability” shall mean the inability to
perform services hereunder for a period of six consecutive months.


 


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5.2                                 Termination
by Company for Cause.  The Company
shall have the option to terminate the Term (a) for cause in the event the
Executive engages in grossly negligent conduct or willful misconduct in
connection with the execution of his duties hereunder which materially and
adversely affects the Company, after written notice by the Company to the
Executive of the specific acts that form the basis for the termination, and (b)
for the Executive’s material nonperformance of his duties hereunder, provided
the nonperformance continues uncorrected for a period of thirty days after
written notice thereof by the Company to the Executive specifically identifying
the manner in which the Company believes the Executive has not performed his
duties.  For purposes of this
Section 5.2, no act, or failure to act, on the Executive’s part shall be
considered “willful” unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act or omission was in the best
interests of the Company.


 


5.3                                 Severance.  If the Company terminates Executive’s
employment other than for cause pursuant to Section 5.2, Executive, in
lieu of all other remedies and as liquidated damages, shall be entitled to
receive continuation of his then annual base salary plus health care insurance
coverage for a period of three (3) years from said date of termination, with
such base salary continuation to be at the rate set forth in section 4.1
or, if greater, the rate of the Executive’s current base salary at the date of
termination.


 


Nothing herein shall
derogate from the Executive’s rights under employee benefit plans, programs and
arrangements or under applicable law.


 


5.4                                 Constructive
Discharge.  Any significant reduction
or adverse change in the nature or scope of the Executive’s authority, duties,
status or position contemplated by Section 2 hereof, including an
involuntary relocation, or a reduction the base salary and/or benefits of the
Executive from those provided for in Section 4 hereof as they may from
time to time be in effect, will be the basis for the Executive’s termination of
this Agreement by giving at least 30 days prior notice to the Company and in
such event the termination will be treated as a termination by the Company
without cause under Section 5.3.


 


5.5                                 Benefits
Upon Termination for Cause or Voluntary Termination by Executive.  In the event the Company properly terminates
Executive’s employment under this Agreement for cause pursuant to Section 5.2
or Executive voluntary resigns from his employment during the Term:


 


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a.                                       all
salary shall be prorated as of the date of termination and such prorated amount
shall be paid to Executive;


 


b.                                      all
stock options or stock appreciation rights granted to Executive shall be
governed by the instruments granting such rights; and


 


c.                                       the
Company shall (i) make such other and further payment to Executive, his
designated beneficiaries and his dependents as may be provided pursuant to the
terms of any employee benefit plan and other compensation plans, programs and
structures, or fringe benefit programs in which Executive is a participant at
the time of the termination of his employment with the Company and (ii) promptly
reimburse the Executive for any then unreimbursed out-of-pocket expenses
pursuant to Section 4.6.


 


6.                                       Attorneys
Fees.  If litigation shall be
instituted to enforce or interpret any provision hereof the prevailing party
will reimburse the other part for his reasonable attorneys’ fees and
disbursements incurred in such proceeding and will pay prejudgment interest at
the legal rate then in effect on any money judgment or award obtained in such
proceeding.


 


7.                                       Notice.  For the purposes of this Agreement, notices,
demands and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed as follows:


 


 


If to the Executive:


 


Larry G. Stambaugh


Maxim Pharmaceuticals


8899 University Center
Lane, Suite 400


San Diego, California
92122


 


If to the Company:


 


Maxim Pharmaceuticals,
Inc.


8899 University Center
Lane, Suite 400


San Diego, California
92122


Attn:  Corporate Secretary


 


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or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notices of change in address shall be effective only upon
receipt.


 


8.                                       Miscellaneous.  No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provision or conditions at the same or at any
proper or subsequent time.  No
agreements or representations, oral otherwise, expressed or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly or referred to in this Agreement.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California relating to contracts to be performed entirely therein.


 


9.                                       Validity.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.


 


10.                                 Headings.  The headings of the paragraphs herein are
for convenience only and shall have no significance in the interpretation of
this Agreement.


 


11.                                 Bind
and Inure.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their heirs,
personal representatives and successors, including any successor of the Company
by reason of any dissolution, merger, consolidation, sale of assets or other
reorganization of the Company.


 


12.                                 Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.


 


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IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed and its seal to be affixed
hereunto by its officer thereunto duly authorized, and Executive has signed
this Agreement, as of the day and year first above written.


 


MAXIM PHARMACEUTICALS,
INC.


 


 


	
  By:

  	
  /s/ Anthony E. Altig

  	
   

  
	
  Anthony E. Altig

  
	
  Vice President,
  Finance,

  
	
  Chief Financial Officer
  and

  
	
  Corporate Secretary

  
	
   

  
	
   

  
	
  Date:  November 17, 2003

  
	
   

  
	
   

  
	
   

  
	
  /s/ Larry G. Stambaugh

  	
   

  
	
  Executive

  
				



 


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