Document:

Exhibit 10.3

 

SERVICE AGREEMENT

 

 

DATED 1 July, 2004

 

 

CYCLACEL GROUP PLC

 

and

 

SPIRO ROMBOTIS

 

 

 

London

 

 

CONTENTS

 

	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Interpretation

  	
   

  
	
  2.

  	
  Appointment and Duration

  	
   

  
	
  3.

  	
  Executive’s
  Duties

  	
   

  
	
  4.

  	
  Place
  of Performance

  	
   

  
	
  5.

  	
  Salary

  	
   

  
	
  6.

  	
  Bonus

  	
   

  
	
  7.

  	
  Expenses

  	
   

  
	
  8.

  	
  Car

  	
   

  
	
  9.

  	
  Pensions

  	
   

  
	
  10.

  	
  Insurances

  	
   

  
	
  11.

  	
  Medical
  and Sickness

  	
   

  
	
  12.

  	
  Holidays

  	
   

  
	
  13.

  	
  Confidential Information

  	
   

  
	
  14.

  	
  Gratuities

  	
   

  
	
  15.

  	
  Codes of
  Conduct

  	
   

  
	
  16.

  	
  Termination of Appointment

  	
   

  
	
  17.

  	
  Protective
  Covenants

  	
   

  
	
  18.

  	
  Intellectual
  Property

  	
   

  
	
  19.

  	
  Reconstructions

  	
   

  
	
  20.

  	
  General

  	
   

  
	
  21.

  	
  Governing Law

  	
   

  
	
  22.

  	
  Other
  Documents

  	
   

  
	
  23.

  	
  Third
  Party Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Statement of
  Employment Particulars

  	
   

  

 

 

THIS AGREEMENT is made on 1 July,
2004

 

BETWEEN:

 

(1)                                  CYCLACEL
GROUP PLC (registered number 5090795) whose registered office is at 6-8
Underwood Street, London N1 7JQ (the Company);
and

 

(2)                                  Spiro
Rombotis of 2 Waterford House, 100 Kensington Park Road, London, W11 2PJ (the Executive).

 

IT IS AGREED as follows:

 

1.                                      INTERPRETATION

 

1.1                                 In this
agreement:

 

Associated Company
means:

 

(a)                                  a company
which is not a Subsidiary of the Company but whose issued equity share capital
(as defined in section 744 of the Companies Act 1985) is owned as to at
least 20 per cent. by the Company or one of its Subsidiaries; and

 

(b)                                 a
Subsidiary of a company within (a) above;

 

Board means the directors
of the Company present at a duly convened and quorate meeting of the directors
or of a committee of the directors duly appointed for the purpose in question;

 

Commencement Date means the date of
admission of the Company to the London Stock Exchange;

 

Group means the Company,
its Subsidiaries and Associated Companies for the time being (including the
Company), and Group Company means
any one of them;

 

Recognised Investment Exchange means a
relevant EEA market as defined in, or a market established under, the rules of
any investment exchange specified in Schedule 3 to the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2001;

 

Subsidiary means a subsidiary
within the meaning of section 736 of the Companies Act 1985; and

 

Working Day means a day other
than a Saturday, Sunday or bank or other public holiday in England.

 

1.2                                 References
in this agreement to a person include a body corporate and an unincorporated
association of persons, and references to a company include any body corporate.

 

1.3                                 Any
reference in this agreement to a statutory provision includes any statutory
modification or re-enactment of it for the time being in force.

 

1.4                                 Subclauses
1.1 to 1.3 above apply unless the contrary intention appears.

 

1.5                                 The
headings in this agreement do not affect its interpretation.

 

1.6                                 Where
appropriate, references to the Executive include his personal representatives.

 

1

 

1.7                                 The terms
set out in the Schedule in accordance with the requirements of the
Employment Rights Act 1996 form part of this agreement.

 

2.                                      APPOINTMENT AND DURATION

 

2.1                                 The
Company will continue to employ the Executive and the Executive will continue
to serve the Company as its full time Chief Executive Officer and a Director of
the Company, or in such other capacity within the Group as may be agreed
between the Executive and the Company from time to time, for the period and on
the terms set out in this agreement (the Appointment).

 

2.2                                 The
Appointment shall commence on the Commencement Date and, unless previously
terminated in accordance with this agreement, will continue until terminated by
either party giving to the other party not less than 12 months’ notice in
writing. For the avoidance of doubt the Executive’s continuous employment is
specified in the Schedule to this agreement.

 

2.3                                 Unless
previously terminated in accordance with this agreement, the Appointment will
automatically terminate at the end of the day on which the Executive attains
the age of 65.

 

3.                                      EXECUTIVE’S DUTIES

 

3.1                                 The
Executive must use his best endeavours to promote and protect the interests of
the Group and must not do anything which is harmful to those interests.  The Executive must diligently and faithfully
perform such duties and exercise such powers as may from time to time be
assigned to or vested in him in relation to the conduct and management of the
affairs of the Group by the Board.  The
Executive must comply with all proper instructions of the Board.

 

3.2                                 At any
time during any period of notice of termination served in accordance hereunder
(whether given by the Company or the Executive), or where the Company suspects
that the Executive has committed any of the offences set out in Clause 16.1
below, the Board may suspend all or any of the Executive’s duties and powers
for such periods and on such terms as it considers expedient and this may
include a term that the Executive must stay away from all or any of the Company’s
premises and/or will not be provided with any work and/or will have no business
contact with all or any of the Group’s agents, employees, customers, clients,
distributors and suppliers.  During any
period of suspension the Appointment will continue and the Executive will
continue to be bound by his obligations under this agreement.

 

3.3                                 The
Executive must give to the Board such information regarding the affairs of the
Group as it shall reasonably require.

 

3.4                                 The
Executive must (unless prevented by ill-health or accident or otherwise
directed by the Board) devote the whole of his time during normal business
hours to the duties of the Appointment and such additional time as is necessary
for the proper fulfilment of those duties.

 

3.5                                 The
Executive must not accept any appointment to any office in relation to any
body, whether corporate or not (other than a Group Company) or directly or
indirectly be interested in any manner in any other business except:

 

(a)                                  as holder
or beneficial owner (for investment purposes only) of any class of securities
in a company if those securities are listed or dealt in on a Recognised
Investment Exchange and if the Executive (together with his spouse, children,
parents and parents’ issue) neither holds nor is beneficially interested in
more than three per cent. of the securities of that class; or

 

2

 

(b)                                 with the
consent in writing of the Company which shall not be unreasonably withheld but
which may be given subject to any terms which the Company requires.

 

3.6                                 The
Executive must not resign as a director of the Company except at the request or
direction of the Board.

 

4.                                      PLACE OF PERFORMANCE

 

4.1                                 The
Executive’s normal place of work shall initially be the Company’s premises in
Dundee but the Company may from time to time require the Executive to change
his normal place of work to such other places within the United Kingdom as it
may decide.

 

4.2                                 The
Executive may at the reasonable request of the Board be required to travel
aboard.

 

4.3                                 If the
Company requires the Executive to relocate from the Dundee area, it will
reimburse the Executive for his reasonable removal and other expenses, provided
that the Executive has received the prior approval of the Board to such
expenses.

 

5.                                      SALARY

 

5.1                                 The
Company will pay to the Executive a salary at the rate of £210,000 per
annum.  The salary will accrue from day
to day during the continuance of the Appointment and will be payable by equal
instalments in arrears on or about the 28th day of each calendar month
inclusive of any fees receivable by the Executive as a director of any Group
Company.

 

5.2                                 The
Executive’s salary will be reviewed by the Company’s Remuneration Committee at
least once every year.  The Company has
no obligation to increase the Executive’s salary and accordingly at the review
the Company’s Remuneration Committee may in its absolute discretion maintain
the then existing level of salary or increase it by an amount and subject to
any terms as it may in its absolute discretion decide.  The Company must not reduce the Executive’s
salary without his prior written consent.

 

6.                                      BONUS

 

The
Remuneration Committee of the Company may in its absolute discretion award to
the Executive an annual bonus to reflect his performance and the financial
performance of the Group.

 

7.                                      EXPENSES

 

The
Company will reimburse the Executive (on production of such evidence as it may
reasonably require) the amount of all travelling and other expenses properly
and reasonably incurred by him in the discharge of his duties.

 

8.                                      CAR

 

8.1                                 Subject to
the Executive holding a current driving licence for motor cars valid in the
United Kingdom, the Company will provide the Executive with an annual car
allowance of £9,000, such allowance to be paid monthly, in arrears.

 

8.2                                 The
Executive must inform the Company immediately if he is disqualified from
holding a driving licence or if any other charges of driving offences are made
against the Executive and this Clause may not apply during any period of
disqualification.

 

3

 

9.                                      PENSIONS

 

The
Executive is eligible to participate in the Company’s Group Personal Pension
Scheme (the Scheme) subject to the
rules of the Scheme as may be in force from time to time.  The terms of the Scheme provide for matched
individual contribution up to a maximum of six per cent. of salary, subject to
the maximum statutory allowance.

 

10.                               INSURANCES

 

10.1                           The
Executive is entitled to membership of the following schemes (each referred to
below as an insurance scheme):

 

(a)                                  a medical
expenses insurance scheme providing cover for the Executive (and his spouse and
dependent children under 18 years of age) as the Company may from time to time
notify to him;

 

(b)                                 a salary
continuance on a permanent health insurance scheme providing cover for the
Executive as the Company may from time to time notify to him; and

 

(c)                                  a life
insurance scheme under which a lump sum benefit shall be payable on the
Executive’s death while the Appointment continues; the benefit will be paid to
such dependants of the Executive or other beneficiary as the trustees of the
scheme select at their discretion, after considering any beneficiaries
identified by the Executive in any expression of his wishes delivered to the
trustees before his death.  The benefit
is equal to 4 times the Executive’s basic annual salary at his death.

 

10.2                           Benefits
under any insurance scheme are subject to the rules of the scheme and the terms
of any applicable insurance policy and are conditional on the Executive complying
with and satisfying any applicable requirements of the insurer.  Copies of these rules and policies and
particulars of the requirements (when notified to the Company) will be provided
to the Executive on request.  The
Company will not have any liability to pay any benefit to the Executive under
any insurance scheme unless it receives payment of the benefit from the
insurer.

 

10.3                           Any
insurance scheme which is provided for the Executive is also subject to the
Company’s right to alter the cover provided or any term of the scheme or to
cease to provide (without replacement) the scheme at any time if in the
reasonable opinion of the Board the state of health of the Executive is or
becomes such that the Company is unable to insure the benefits under the scheme
at the normal premiums applicable to a person of the Executive’s age.

 

10.4                           The
Company will indemnify you out of the assets of the Company against any
liability incurred by you in respect of any negligence, default, breach of duty
or breach of trust in relation to the Company provided that:

 

(i)                                     in
defending any proceedings relating to the relevant liability (whether civil or
criminal) judgment is given in your favour or you are acquitted; or

 

(ii)                                  the
liability is in connection with any application under section 144(3) or
(4) (acquisition of shares by innocent nominee) or section 727 (general
power to grant relief in case of honest and reasonable conduct) of the
Companies Act 1985 in which relief is granted to you by the court.

 

10.5                           During the
Executive’s employment hereunder the Company will maintain, for the benefit of
the Executive, a policy of Directors and Officers liability insurance.

 

4

 

11.                               MEDICAL AND SICKNESS

 

11.1                           If the
Executive is unable to come to work for any reason and his absence has not
previously been authorised by the Company the Executive must inform the Company
immediately and keep the Company informed. 
The Executive must confirm the reasons for his absence in writing as
soon as practicable.

 

11.2                           Following
the Executive’s return to work after a period of absence due to sickness or
injury of seven calendar days or less he will be obliged to complete a
self-certification form.  These forms
will be retained by the Company for its records.

 

11.3                           If the
Executive is absent from work due to sickness or injury for more than seven
calendar days (including weekends) he must provide the Company with a medical
certificate by the eighth day of sickness or injury.  The Executive must provide medical certificates to the Company to
cover any further absence.

 

11.4                           The
Company may at any time require the Executive to be examined by a medical
adviser nominated by the Company.  The
Executive consents to the medical adviser disclosing the results of the
examination to the Company and will provide the Company with formal consents as
may be necessary for this purpose.

 

11.5                           Provided
the Executive complies with the requirements in Subclauses 11.1, 11.2 and 11.3
above, he will be paid his full basic salary during any period of absence from
work due to sickness or injury not exceeding 26 weeks in any period of 36
consecutive months or due to one cause. No payment of salary will be made in
respect of any subsequent period of absence but, if the Executive is eligible,
benefits may be payable under the insurance scheme referred to in Subclause
10.1(b).

 

11.6                           The
Executive’s salary during any period of absence due to sickness or injury will
be inclusive of any statutory sick pay to which he is entitled and the Company
may deduct from his salary the amount of any social security benefits and any
benefits under any insurance scheme referred to in Clause 10 that he may be
entitled to receive.

 

11.7                           If the
Executive is incapable of performing his duties by reason of injury sustained
wholly or partly as a result of negligence, nuisance or breach of any statutory
duty on the part of a third party and the Executive recovers an amount by way
of compensation for loss of earnings from that third party, he will pay to the Company
a sum equal to the amount recovered or, if less, the amount paid to him by the
Company under Subclause 11.5 above in respect of the relevant period of absence
as a result of that injury.

 

12.                               HOLIDAYS

 

12.1                           The
Company’s holiday year runs from 1st January to 31st December (Holiday Year).  The Executive is entitled to 25 Working Days’ holiday, plus such
statutory or public holidays as the Company may specify each year, with pay in
every Holiday Year at times convenient to the Company.

 

12.2                           Any
entitlement to holiday remaining at the end of a Holiday Year will lapse except
in exceptional circumstances and with the prior written approve of the
Remuneration Committee.

 

12.3                           The
Company reserves the right to require the Executive to take any outstanding holiday
during any period of notice of termination of the Appointment (whether given by
the Company or the Executive) or to make a payment in lieu of that outstanding
holiday.

 

5

 

12.4                           The
entitlement to holiday (and on termination of employment to holiday pay in lieu
of holiday) accrues pro rata throughout each Holiday Year (on the basis of a
year of 261 Working Days, disregarding fractions of days).

 

13.                               CONFIDENTIAL INFORMATION

 

13.1                           The
Executive must not make use of or divulge to any person, and must use his best
endeavours to prevent the use, publication or disclosure of, any information of
a confidential or secret nature:

 

(a)                                  concerning
the business of the Company or any Group Company and which comes to his
knowledge during the course of or in connection with his employment or his
holding any office within the Group from any source within the Company or any
Group Company; or

 

(b)                                 concerning
the business of any person having dealings with the Company or any Group
Company and which is obtained directly or indirectly in circumstances in which
the Company or any Group Company is subject to a duty of confidentiality in
relation to that information.

 

For
the purposes of Subclause (a) above, information of a confidential or secret
nature includes but is not limited to all and any information about business
plans, maturing new business opportunities, research and development projects,
product formulae, processes, inventions, designs, discoveries or know-how, sales
statistics, marketing surveys and plans, costs, prices and discount structures,
the names, addresses and contact details of customers and potential customers
or suppliers and potential suppliers (whether or not recorded in writing or on
computer disk or tape) which the Company or any Group Company treats as
confidential.

 

13.2                           This
Clause does not apply to information which:

 

(a)                                  is used or
disclosed in the proper performance of the Executive’s duties or with the prior
written consent of the Company or any Group Company; or

 

(b)                                 is or
comes to be in the public domain (except as a result of a breach of the
Executive’s obligations under Subclause 13.1); or

 

(c)                                  is ordered
to be disclosed by a court of competent jurisdiction or otherwise required to
be disclosed by law.

 

13.3                           This
Clause continues to apply after the termination of the Appointment (whether
terminated lawfully or not) without limit of time.

 

13.4                           Each of
the restrictions in each Clause or Subclause above will be enforceable
independently of each of the others and its validity will not be affected if
any of the others is invalid.  If any of
those restrictions is void but would be valid if some part of the restriction
were deleted, the restriction in question will apply with such modification as
may be necessary to make it valid.

 

13.5                           The
obligations under this Clause 13 are in addition to those obligations of
confidentiality contained in the Cyclacel Standard Terms and Conditions of
Employment which, for the avoidance of doubt, form part of the Executive’s
terms and conditions of employment.

 

6

 

14.                               GRATUITIES

 

The
Executive must not directly or indirectly accept any commission, rebate,
discount or gratuity, in cash or in kind, from any person who has or is likely
to have a business relationship with any Group Company.

 

15.                               CODES OF CONDUCT

 

The
Executive must comply with all codes of conduct from time to time adopted by
the Board and with all applicable rules and regulations of the London Stock
Exchange and any other relevant regulatory body including (without limitation)
the Stock Exchange’s model code on directors dealings in securities and the FSA
Code of Market Conduct.

 

16.                               TERMINATION OF APPOINTMENT

 

16.1                           If the
Executive:

 

(a)                                  is guilty
of any serious or repeated breach of his obligations under this agreement and
any consent granted under it (including neglecting to diligently discharge his
duties); or

 

(b)                                 is guilty
of serious misconduct or any other conduct which affects or is likely
materially prejudice the interests of the Company or the Group or is convicted
of an arrestable offence (other than a road traffic offence for which a
non-custodial penalty is imposed); or

 

(c)                                  becomes
bankrupt or makes any arrangement or composition with his creditors; or

 

(d)                                 is
disqualified from being a director of any company by reason of an order made by
any competent court; or

 

(e)                                  resigns as
a director without the prior consent of the Board; or

 

(f)                                    is guilty
of any material breach or non-observance of any code of conduct, rule or
regulation referred to in Clause 15 or fails or ceases to be registered (where
such registration is, in the reasonable opinion of the Board, necessary for the
performance of his duties) by any regulatory body in the United Kingdom or elsewhere,

 

the
Company may (whether or not any notice of termination has been given under
Subclause 2.2) by written notice to the Executive terminate the Appointment
with immediate effect.

 

16.2                           The
Company may at any time (whether or not any notice of termination has been
given under Subclause 2.2) terminate the Appointment with immediate effect by
giving notice in writing to the other party on terms that the Company will pay
to the Executive, in lieu of notice under Subclause 2.2, a sum equal to the salary
and the value of contractual benefits in respect of that part of the period of
notice in Clause 2.2 which the Company has not given the Executive..  If the Executive is paid salary and benefits
in lieu of notice he will not be entitled to any additional payment in respect
of holiday or bonus which he would otherwise have accrued during the notice
period or the remainder of the notice period.

 

16.3                           If the
Appointment is terminated in accordance with Clause 16.2 above, on or before
the first anniversary of this agreement and the Executive has not secured
alternative employment reasonably suitable to his abilities and experience
despite his best endeavours to do so at the

 

7

 

end
of the period which the Company has paid for under Clause 16.2, the Company
will continue to pay the Executive twelve monthly payments equivalent to one
twelfth of his annual salary and benefits as at the date of termination of his
employment.

 

16.4                           Clause 3.2
allows the Company to suspend any of the Executive’s duties and powers during
any period after notice of termination of the Appointment has been given by the
Company or the Executive.  In
particular, the Company may exercise this right where the Executive leaves the
Company’s employment in circumstances where it is reasonable for the Company to
believe that he is or is about to become concerned in a business, carried on,
or about to commence, which is, or is likely to be, competitive with any part
of the business of any Group Company with which the Executive was engaged or
concerned in the 12 months before the suspension started.  In addition or alternatively, the Company
may during the whole or any part of such period of notice require the Executive
to perform duties (including any modified duties arising from an exercise by
the Company of its rights under Subclause 3.2) at such locations as the Company
may reasonably require consistent with Clause 4.  Throughout any such period of suspension the Executive’s salary
and other benefits to which he is entitled under this agreement shall continue
to be paid or provided by the Company. 
At any time during such period the Executive will, at the request of the
Board, immediately resign, without claim for compensation, his office as a
director of the Company and any directorship or other office held by him in any
Group Company.

 

16.5                           On the
termination of the Appointment in any way (whether lawfully or otherwise) or on
either party giving notice to terminate the Appointment or on the Company exercising
its right of suspension as mentioned in Subclause 16.4, the Executive will at
the request of the Board immediately:

 

(a)                                  resign all
offices held by him in any Group Company (without prejudice to the rights of
any party arising out of this agreement or the termination of the Appointment);

 

(b)                                 deliver to
the Company all other property in his possession, custody or under his control
belonging to any Group Company including (but not limited to) computer
equipment, mobile phones, any electrical equipment supplied to the Executive
during the course of his employment, business cards, credit and charge cards,
security and computer passes, original and copy documents or other media on
which information is held in his possession relating to the business or affairs
of any Group Company; and

 

(c)                                  transfer
(without payment) to the Company (or as the Company may direct) any qualifying
or nominee shares provided by it or any third party in any Group Company to
him.

 

16.6                           With
effect from the date of termination of the Appointment, all the rights and
obligations of the parties under this agreement will cease except for those
which are expressed to continue after that date and except in relation to any
breach of any provision of this agreement before that date.  Termination of the Appointment will not
prejudice any other rights of the Company or the Executive.

 

16.7                           If the
Executive’s remuneration falls to be assessed for the purpose of calculating
compensation or damages for breach of this agreement, the parties acknowledge
and agree that he has no right to or legitimate expectation of any future
increase in remuneration or any future payment of a bonus.

 

16.8                           If during
the Appointment or during the period in which any of the restrictions in this
Clause operate after the Termination Date, any person makes any offer to the
Executive of

 

8

 

employment
or of a contract for services or of consultancy or any other contract which
would or might involve the Executive in being in breach of any of those
restrictions, the Executive must bring the terms of this Clause to the
attention of that person.

 

16.9                           If during
the Appointment the Executive is granted participation in a share option or
share incentive scheme, any extinction or curtailment of any rights or benefits
under the scheme by reason of any transfer of his employment or its
termination, howsoever arising, will not form part of any claim for damages for
breach of this agreement or compensation under any statutory provision.  The effect of any such transfer, suspension
or termination on the Executive’s rights or benefits under the scheme will be
determined in accordance with the rules, terms and conditions of the scheme and
not in accordance with the provisions (other than this Subclause) of this
agreement.

 

17.                               PROTECTIVE COVENANTS

 

17.1                           In this
Clause:

 

(a)                                  Relevant Period means the period of 12 months ending on the
Termination Date;

 

(b)                                 Relevant Business means a business in any country operating in
the field of cell cycle therapeutics. 
For the avoidance of doubt, the Relevant Business includes not only the
cell cycle therapeutic area of oncology but all other cell cycle therapeutic
fields that the Company or another Group Company is involved in on the
Termination Date;

 

(c)                                  Termination Date means the date on which the Appointment
terminates; and

 

(d)                                 references
to the Company or another Group Company include its successors in business if
the succession occurs after the Termination Date.

 

17.2                           The
Executive covenants with the Company that he will not for a period of 12 months
after the Termination Date be concerned in any Relevant Business.  For this purpose, the Executive is concerned
in a Relevant Business if:

 

(a)                                  he carries
it on as principal or agent; or

 

(b)                                 he is a partner,
director, employee, secondee, consultant or agent in, of or to any person who
carries on the business; or

 

(c)                                  he has any
direct or indirect financial interest (as shareholder or otherwise) in any
person who carries on the business,

 

disregarding
any financial interest of a person in securities which are listed or dealt in
on any Recognised Investment Exchange if that person, the Executive and any
person connected with him (within the meaning of section 839 of the Income
and Corporation Taxes Act 1988) are interested in securities which amount to
less than three per cent. of the issued securities of that class and which, in
all circumstances, carry less than three per cent. of the voting rights (if
any) attaching to the issued securities of that class.

 

If
the Company exercises its right to suspend the Executive’s duties and powers
under Subclause 16.4 during any period after notice of termination of the
Appointment has been given by the Company or the Executive, the aggregate of
the period of the suspension and the period after the Termination Date for
which the covenant in this Subclause applies will not

 

9

 

exceed
12 months and, if the aggregate of the two periods would exceed 12 months, the
period after the Termination Date for which the covenant in this Subclause
applies will be reduced accordingly.

 

17.3                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date (except on behalf of the Company or any
Group Company):

 

(a)                                  canvass or
solicit Relevant Business from any person who has been at any time during the
Relevant Period a customer of the Company or any Group Company with whom the
Executive was actively involved in the course of his employment during the
Relevant Period; or

 

(b)                                 deal with
any such person.

 

17.4                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date induce or attempt to induce any
supplier of the Company or any Group Company or distributor of the Company’s or
any Group Company’s products with whom the Executive was actively involved in
the course of his employment during the Relevant Period, to cease to supply, or
to restrict or vary the terms of supply to, the Company or any Group Company or
to cease to distribute any of the Company’s or any Group Company’s products or
restrict or vary the terms of the distributorship or otherwise interfere with
the relationship between a supplier or distributor and the Company or any Group
Company.

 

17.5                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date induce or attempt to induce any
employee to whom this Subclause applies to leave the employment of the Company
or any Group Company (whether or not this would be a breach of contract by the
employee).  This Subclause applies to an
employee of the Company or any Group Company with whom the Executive had
material dealings in the course of his employment during the Relevant Period
and who is employed wholly or mainly in the capacity of a director, a scientist
or some other senior role.

 

17.6                           The
covenants in this Clause are for the benefit of the Company itself and as
trustee for each other Group Company.

 

17.7                           Each of the
restrictions in each Clause or Subclause above are enforceable independently of
each of the others and its validity is not affected if any of the others is
invalid.  If any of those restrictions
is void but would be valid if some part of the restriction (including part of
any of the definitions in Subclause 17.1) were deleted, the restriction in
question applies with such modification as may be necessary to make it valid.

 

17.8                           The
Executive acknowledges that his senior position with the Company and any Group
Company gives him access to and the benefit of confidential information vital
to the continuing business of the Company and any Group Company and influence
over and connection with the Company’s customers, suppliers, distributors,
agents, employees, workers, consultants and directors and those of any Group
Company in or with which the Executive is engaged or in contact and
acknowledges and agrees that the provisions of this Clause are reasonable in
their application to him and necessary but no more than sufficient to protect
the interests of the Company and any Group Company.

 

17.9                           If any
person, during the Appointment or any period during which the covenants in this
Clause apply, offers to the Executive any arrangement or contract which might
or would

 

10

 

cause
the Executive to breach any of the covenants, he will notify that person of the
terms of this Clause.

 

18.                               INTELLECTUAL PROPERTY

 

18.1                           For
purposes of this Agreement, the following definitions apply:

 

(a)                                  Intellectual Property Rights means (i) copyright, patents, know-how,
confidential information, database rights, and rights in trademarks and designs
(whether registered or unregistered), (ii) applications for registration, and
the right to apply for registration, for any of the same, and (iii) all other
intellectual property rights and equivalent or similar forms of protection
existing anywhere in the world;

 

(b)                                 IP Materials means all documents, software, photographic or
graphic works of any type, and other materials in any medium or format which
are created by or on behalf of the Executive in the course of performing his
obligations under this agreement and which are protected by or relate to
Intellectual Property Rights.

 

18.2                           To the
extent that ownership of Intellectual Property Rights does not vest in the
Company by operation of law, the Executive hereby assigns to the Company all
Intellectual Property Rights which arise in the course of performing his
obligations under this agreement (including all present and future copyright,
and copyright revivals and extensions). 
This assignment shall take effect upon the creation of each of the
Intellectual Property Rights.

 

18.3                           The
Executive agrees to sign all documents and do all other acts which the Company
requests (at its expense) to enable the Company to enjoy the full benefit of
this Clause.  This includes joining in
any application, which may be made by the Company’s sole name for registration
of any Intellectual Property Rights (such as a patent, trademark or registered
design).

 

18.4                           The
Executive may only use the Intellectual Property Rights and IP Materials to
perform his obligations under this Agreement, and shall not disclose any
Intellectual Property Rights or IP Materials to any third party without the
express prior written consent of the Company.

 

18.5                           The
Executive waives all moral rights in IP Materials to which he would otherwise
be entitled under the law of any relevant jurisdiction.

 

18.6                           The
Executive shall immediately transfer to the company all IP Materials in his
possession or under his control when this agreement expires or terminates for
any reason, or at any time when the Company requests transfer.  No copies or other record of any IP Materials
may be retained by the Executive except with the prior written consent of the
Company.

 

18.7                           This
Clause shall survive expiry of this agreement, or its termination for any
reason.

 

18.8                           The
obligations under this Clause 18 are in addition to those obligations relating
to intellectual property contained in the Cyclacel Standard Terms and
Conditions of Employment which, for the avoidance of doubt, form part of the
Executive’s terms and conditions of employment.

 

19.                               RECONSTRUCTIONS

 

If
the Company is to be wound up for the purpose of a reconstruction or
amalgamation or the Company transfers all or a substantial part of its business
to another company and the Company procures that the Executive is offered
employment by the reconstructed or amalgamated or transferee company on similar
terms to the terms of this agreement for the

 

11

 

remainder
of the Appointment, the Executive will have no claim against the Company in
respect of the termination of his employment under this agreement.

 

20.                               GENERAL

 

20.1                           As from
the effective date of the Appointment all other agreements or arrangements
between the Executive and the Company or any Group Company relating to the
employment of the Executive will cease to have effect.  Accordingly, any remuneration or other
benefit paid or provided to or for the Executive under any other agreements or
arrangements in respect of any periods since that date are deemed to have been
received by the Executive on account of the relevant amounts payable or
benefits to be provided to him under this agreement.

 

20.2                           The
Executive warrants to the Company that by entering into this agreement and
performing his duties under it he will not be in breach of any contract or
other obligation binding on him.

 

21.                               GOVERNING LAW

 

This
agreement is governed by and construed in accordance with English law.

 

22.                               OTHER DOCUMENTS

 

22.1                           The
following documents have been issued to the Executive and together form the
Executive’s Contract of Employment:

 

(a)                                  Cyclacel’s
Standard Terms and Conditions of Employment;

 

(b)                                 a side
letter between the Company and the Executive dated 1 July, 2004 relating to the
Executive’s entitlement to a bonus upon the achievement by the Company of a
listing on the London Stock Exchange or similar major stock market;

 

(c)                                  the Company’s
Staff Handbook: The contents of section A of the handbook form part of the
contracts of employment of the Company’s employees (including the
Executive).  For the avoidance of doubt,
section B of the handbook provides information as to the Company’s current
practices and policies in certain areas but it is not contractually binding;

 

(d)                                 The
Company also operates a redundancy policy and this does apply to the Executive.

 

22.2                           In the
event of any discrepancy between the Executive’s Service Agreement and any of
the documents set out in this Clause 22, the Executive’s Service Agreement
shall take precedence.

 

23.                               THIRD PARTY RIGHTS

 

A
person who is not a party to this agreement may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999.

 

AS WITNESS the hands of the
Executive and of the duly authorised representatives of the Company on the date
which appears first on page 1.

 

12

 

SCHEDULE

 

STATEMENT OF EMPLOYMENT PARTICULARS

 

The
following constitutes the statement of the particulars of the Executive’s
employment issued pursuant to the Employment Rights Act 1996.  The particulars are those which apply on the
date of this agreement:

 

Name of employer - the Company as
defined on page 1 above.

 

Name of employee - the Executive as
defined on page 1 above.

 

Date of commencement of continuous employment - 1st
August, 1997

 

Scale or rate of remuneration or method of calculating
remuneration - see Clause 5.1.

 

Intervals at which remuneration is paid - monthly
- see Clause 5.1.

 

Hours of work - there are no fixed
hours of work - see Clause 3.4.  The
Executive agrees that Regulations 4(1) and (2), 6(1), (2) and (7), 10(1), 11(1)
and (2) and 12(1) of the Working Time Regulations 1998 (48 hour week, night
work, rest periods etc.) do not apply to the Appointment.

 

Holidays (including public holidays) and holiday pay - see
Clause 12.  The Company holiday policy
applies to the Executive.

 

Sickness or injury and sick pay - see
Clause 11.

 

Pension - see Clause 9.  A contracting-out certificate within the meaning of Part III of
the Pension Schemes Act 1993 is not in force.

 

Notice - see Clause 2.2.

 

Job title - Chief Executive
Officer.

 

Place of work - see Clause 4.  The employer’s address is as stated on page
1 above.

 

Collective agreements - the Company is not
a party to any collective agreement which affects the Executive’s employment.

 

Working overseas - the Executive may
be required to work overseas at the reasonable request of the Board.

 

Grievance procedure - if the Executive is
dissatisfied with any disciplinary decision or seeks to redress any grievance
relating to his employment, he should raise this in the first instance with the
Company Chairman.  If the matter is not
satisfactorily resolved, the Executive should then apply in writing to the
Board and the Board will endeavour to propose a solution within 14 days.

 

Discipline - the Company expects
the highest standards of performance and conduct from the members of its Board
of Directors.  There are no specific
disciplinary rules applicable to the Executive’s employment.

 

13

 

SIGNATORIES

 

 

	
  SIGNED
  by 

  	
  )

  
	
  on
  behalf of CYCLACEL GROUP PLC

  	
  )  /s/ John Banham

  
	
  in
  the presence of:  /s/ Melissa Corbin

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED
  by SPIRO ROMBOTIS

  	
  )

  
	
  in
  the presence of:  /s/ Paul McBarron

  	
  )  /s/ S. Rombotis

  
	
   

  	
   

  

 

14

 

	
  

  	
   

  	
   

  
	
  â

  	
  Cyclacel
  Group plc

  
	
   

  	
   

  

 

Spiro Rombotis

2 Waterford House

100 Kensington Park Road

London

W11 2PJ

 

1 July, 2004

 

Dear Mr Rombotis,

 

This letter is to confirm that on achievement by Cyclacel Group plc(the
Company)
of a listing on the London Stock Exchange or similar major stock market you
shall be entitled to a bonus payment of £100,000 (one hundred thousand pounds).

 

This bonus will be payable by the Company within 30 days of the first
day of dealings in respect of the listing.

 

To be eligible for this bonus, you must be employed by the Company and
not under notice on the date that the bonus is payable.

 

Yours sincerely,

 

 

/s/ John Banham

Sir John Banham

For and on behalf of Cyclacel Group plc

 

 

I have read and agree to the terms of the bonus payment as set out in
this letter.

 

 

	
  /s/
  Spiro Rombotis

  	
   

  	
  1
  July, 2004

  	
   

  
	
   

  	
   

  
	
  Signed:  Spiro Rombotis

  	
  Date

  

 

 

Cyclacel Group plc, Dundee Technopole, James Lindsay
Place, Dundee DD1 5JJ   Tel: (01382)
206062   Fax: (01382) 206067

Registered Office: 6-8 Underwood Street, London N1
7JQ  No: 5090795Exhibit 10.4

 

SERVICE AGREEMENT

 

 

DATED 1 July, 2004

 

 

CYCLACEL GROUP PLC

 

and

 

PAUL McBARRON

 

 

 

London

 

 

CONTENTS

 

	
  Clause

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Interpretation

  	
   

  
	
  2.

  	
  Appointment and Duration

  	
   

  
	
  3.

  	
  Executive’s
  Duties

  	
   

  
	
  4.

  	
  Place
  of Performance

  	
   

  
	
  5.

  	
  Salary

  	
   

  
	
  6.

  	
  Bonus

  	
   

  
	
  7.

  	
  Expenses

  	
   

  
	
  8.

  	
  Car

  	
   

  
	
  9.

  	
  Pensions

  	
   

  
	
  10.

  	
  Insurances

  	
   

  
	
  11.

  	
  Medical
  and Sickness

  	
   

  
	
  12.

  	
  Holidays

  	
   

  
	
  13.

  	
  Confidential Information

  	
   

  
	
  14.

  	
  Gratuities

  	
   

  
	
  15.

  	
  Codes of
  Conduct

  	
   

  
	
  16.

  	
  Termination of Appointment

  	
   

  
	
  17.

  	
  Protective
  Covenants

  	
   

  
	
  18.

  	
  Intellectual
  Property

  	
   

  
	
  19.

  	
  Reconstructions

  	
   

  
	
  20.

  	
  General

  	
   

  
	
  21.

  	
  Governing Law

  	
   

  
	
  22.

  	
  Other
  Documents

  	
   

  
	
  23.

  	
  Third
  Party Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Statement of
  Employment Particulars

  	
   

  

 

 

THIS AGREEMENT is made on 1 July,
2004

 

BETWEEN:

 

(1)                                  CYCLACEL
GROUP PLC (registered number 5090795) whose registered office is at 6-8
Underwood Street, London N1 7JQ (the Company);
and

 

(2)                                  PAUL
McBARRON of 17 Cant Crescent, St Andrews, Fife KY16 8NF (the Executive).

 

IT IS AGREED as follows:

 

1.                                      INTERPRETATION

 

1.1                                 In this
agreement:

 

Associated Company means:

 

(a)                                  a company
which is not a Subsidiary of the Company but whose issued equity share capital
(as defined in section 744 of the Companies Act 1985) is owned as to at
least 20 per cent. by the Company or one of its Subsidiaries; and

 

(b)                                 a
Subsidiary of a company within (a) above;

 

Board means the directors
of the Company present at a duly convened and quorate meeting of the directors
or of a committee of the directors duly appointed for the purpose in question;

 

Commencement Date means the date of admission
of the Company to the London Stock Exchange;

 

Group means the Company,
its Subsidiaries and Associated Companies for the time being (including the
Company), and Group Company means
any one of them;

 

Recognised Investment Exchange means a
relevant EEA market as defined in, or a market established under, the rules of
any investment exchange specified in Schedule 3 to the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2001;

 

Subsidiary means a subsidiary
within the meaning of section 736 of the Companies Act 1985; and

 

Working Day means a day other
than a Saturday, Sunday or bank or other public holiday in England.

 

1.2                                 References
in this agreement to a person include a body corporate and an unincorporated
association of persons, and references to a company include any body corporate.

 

1.3                                 Any
reference in this agreement to a statutory provision includes any statutory
modification or re-enactment of it for the time being in force.

 

1.4                                 Subclauses
1.1 to 1.3 above apply unless the contrary intention appears.

 

1.5                                 The
headings in this agreement do not affect its interpretation.

 

1.6                                 Where
appropriate, references to the Executive include his personal representatives.

 

1

 

1.7                                 The terms
set out in the Schedule to this agreement in accordance with the
requirements of the Employment Rights Act 1996 form part of this agreement.

 

2.                                      APPOINTMENT AND DURATION

 

2.1                                 The
Company will continue to employ the Executive and the Executive will continue
to serve the Company as a full time Chief Financial Officer and Company
Secretary of the Company, or in such other capacity within the Group as the
Company may from time to time require, for the period and on the terms set out
in this agreement (the Appointment).

 

2.2                                 The
Appointment shall commence on the Commencement Date and, unless previously
terminated in accordance with this agreement, will continue until terminated by
either party giving to the other party not less than six months’ notice in
writing.  For the avoidance of doubt,
the Executive’s continuous employment is specified in the Schedule to this
agreement.

 

2.3                                 Unless
previously terminated in accordance with this agreement, the Appointment will
automatically terminate at the end of the day on which the Executive attains
the age of 65.

 

3.                                      EXECUTIVE’S DUTIES

 

3.1                                 The
Executive must use his best endeavours to promote and protect the interests of
the Group and must not do anything which is harmful to those interests.  The Executive must diligently and faithfully
perform such duties and exercise such powers as may from time to time be
assigned to or vested in him in relation to the conduct and management of the
affairs of the Group by the Board.  The
Executive must comply with all proper instructions of the Board.

 

3.2                                 At any
time during any period of notice of termination served in accordance hereunder
(whether given by the Company or the Executive), or where the Company suspects
that the Executive has committed any of the offences set out in Clause 16.1
below, the Board may suspend all or any of the Executive’s duties and powers
for such periods and on such terms as it considers expedient and this may
include a term that the Executive must stay away from all or any of the
Company’s premises and/or will not be provided with any work and/or will have
no business contact with all or any of the Group’s agents, employees,
customers, clients, distributors and suppliers.  During any period of suspension the Appointment will continue and
the Executive will continue to be bound by his obligations under this
agreement.

 

3.3                                 The
Executive must give to the Board such information regarding the affairs of the
Group as it shall reasonably require.

 

3.4                                 The
Executive must (unless prevented by ill-health or accident or otherwise
directed by the Board) devote the whole of his time during normal business
hours to the duties of the Appointment and such additional time as is necessary
for the proper fulfilment of those duties.

 

3.5                                 The
Executive must not accept any appointment to any office in relation to any
body, whether corporate or not (other than a Group Company) or directly or
indirectly be interested in any manner in any other business except:

 

(a)                                  as holder
or beneficial owner (for investment purposes only) of any class of securities
in a company if those securities are listed or dealt in on a Recognised
Investment Exchange and if the Executive (together with his spouse, children,
parents and parents’ issue) neither holds nor is beneficially interested in
more than three per cent. of the securities of that class; or

 

2

 

(b)                                 with the
consent in writing of the Company which shall not be unreasonably withheld but
which may be given subject to any terms which the Company requires.

 

3.6                                 The
Executive must not resign as a director of the Company, except at the request
or direction of the Board.

 

4.                                      PLACE OF PERFORMANCE

 

4.1                                 The
Executive’s normal place of work shall initially be the Company’s premises in
Dundee but the Company may from time to time require the Executive to change
his normal place of work to such other places within the United Kingdom as it
may decide.

 

4.2                                 The
Executive may at the reasonable request of the Board be required to travel
aboard.

 

4.3                                 If the
Company requires the Executive to relocate from the Dundee area, it will
reimburse the Executive for his reasonable removal and other expenses, provided
that the Executive has received the prior approval of the Board to such
expenses.

 

5.                                      SALARY

 

5.1                                 The
Company will pay to the Executive a salary at the rate of £142,293 per
annum.  The salary will accrue from day
to day during the continuance of the Appointment and will be payable by equal
instalments in arrears on or about the 28th day of each calendar month
inclusive of any fees receivable by the Executive as a director of any Group
Company.

 

5.2                                 The
Executive’s salary will be reviewed by the Company’s Remuneration Committee at
least once in every year.  The Company
has no obligation to increase the Executive’s salary and accordingly at the
review the Company’s Remuneration Committee may in its absolute discretion
maintain the then existing level of salary or increase it by an amount and
subject to any terms as it may in its absolute discretion decide.  The Company must not reduce the Executive’s
salary without his prior written consent.

 

6.                                      BONUS

 

The
Remuneration Committee of the Company may in its absolute discretion award to
the Executive an annual bonus to reflect his performance and the financial
performance of the Group.

 

7.                                      EXPENSES

 

The
Company will reimburse the Executive (on production of such evidence as it may
reasonably require) the amount of all travelling and other expenses properly
and reasonably incurred by him in the discharge of his duties.

 

8.                                      CAR

 

8.1                                 Subject to
the Executive holding a current driving licence for motor cars valid in the
United Kingdom, the Company will provide the Executive with an annual car
allowance of £8,000, such allowance to be paid monthly, in arrears.

 

8.2                                 The
Executive must inform the Company immediately if he is disqualified from
holding a driving licence or if any other charges of driving offences are made
against the Executive and this Clause may not apply during any period of
disqualification.

 

3

 

9.                                      PENSIONS

 

The
Executive is eligible to participate in the Company’s Group Personal Pension
Scheme (the Scheme) subject to the
rules of the Scheme as may be in force from time to time.  The terms of the Scheme provide for matched
individual contribution up to a maximum of six per cent. of salary, subject to
the maximum statutory allowance.

 

10.                               INSURANCES

 

10.1                           The
Executive is entitled to membership of the following schemes (each referred to
below as an insurance scheme):

 

(a)                                  a medical
expenses insurance scheme providing cover for the Executive (and his spouse and
dependent children under 18 years of age) as the Company may from time to time
notify to him;

 

(b)                                 a salary
continuance on a permanent health insurance scheme providing cover for the
Executive as the Company may from time to time notify to him; and

 

(c)                                  a life
insurance scheme under which a lump sum benefit shall be payable on the
Executive’s death while the Appointment continues; the benefit will be paid to
such dependants of the Executive or other beneficiary as the trustees of the
scheme select at their discretion, after considering any beneficiaries
identified by the Executive in any expression of his wishes delivered to the
trustees before his death.  The benefit
is equal to 2 times the Executive’s basic annual salary at his death.

 

10.2                           Benefits
under any insurance scheme are subject to the rules of the scheme and the terms
of any applicable insurance policy and are conditional on the Executive
complying with and satisfying any applicable requirements of the insurer.  Copies of these rules and policies and
particulars of the requirements (when notified to the Company) will be provided
to the Executive on request.  The
Company will not have any liability to pay any benefit to the Executive under
any insurance scheme unless it receives payment of the benefit from the
insurer.

 

10.3                           Any
insurance scheme which is provided for the Executive is also subject to the
Company’s right to alter the cover provided or any term of the scheme or to
cease to provide (without replacement) the scheme at any time if in the
reasonable opinion of the Board the state of health of the Executive is or
becomes such that the Company is unable to insure the benefits under the scheme
at the normal premiums applicable to a person of the Executive’s age.

 

10.4                           The
Company will indemnify you out of the assets of the Company against any
liability incurred by you in respect of any negligence, default, breach of duty
or breach of trust in relation to the Company provided that:

 

(i)                                     in
defending any proceedings relating to the relevant liability (whether civil or
criminal) judgment is given in your favour or you are acquitted; or

 

(ii)                                  the
liability is in connection with any application under section 144(3) or
(4) (acquisition of shares by innocent nominee) or section 727 (general
power to grant relief in case of honest and reasonable conduct) of the
Companies Act 1985 in which relief is granted to you by the court.

 

10.5                           During the
Executive’s employment hereunder the Company will maintain, for the benefit of
the Executive, a policy of Directors and Officers liability insurance.

 

4

 

11.                               MEDICAL AND SICKNESS

 

11.1                           If the
Executive is unable to come to work for any reason and his absence has not
previously been authorised by the Company the Executive must inform the Company
immediately and keep the Company informed. 
The Executive must confirm the reasons for his absence in writing as
soon as practicable.

 

11.2                           Following
the Executive’s return to work after a period of absence due to sickness or
injury of seven calendar days or less he will be obliged to complete a
self-certification form.  These forms
will be retained by the Company for its records.

 

11.3                           If the Executive
is absent from work due to sickness or injury for more than seven calendar days
(including weekends) he must provide the Company with a medical certificate by
the eighth day of sickness or injury. 
The Executive must provide medical certificates to the Company to cover
any further absence.

 

11.4                           The
Company may at any time require the Executive to be examined by a medical
adviser nominated by the Company.  The
Executive consents to the medical adviser disclosing the results of the
examination to the Company and will provide the Company with formal consents as
may be necessary for this purpose.

 

11.5                           Provided
the Executive complies with the requirements in Subclauses 11.1, 11.2 and 11.3
above, he will be paid his full basic salary during any period of absence from
work due to sickness or injury not exceeding 13 weeks in any period of 36
consecutive months or due to one cause. 
No payment of salary will be made in respect of any subsequent period of
absence but, if the Executive is eligible, benefits may be payable under the
insurance scheme referred to in Subclause 10.1(b).

 

11.6                           The
Executive’s salary during any period of absence due to sickness or injury will
be inclusive of any statutory sick pay to which he is entitled and the Company
may deduct from his salary the amount of any social security benefits and any
benefits under any insurance scheme referred to in Clause 10 that he may be
entitled to receive.

 

11.7                           If the
Executive is incapable of performing his duties by reason of injury sustained
wholly or partly as a result of negligence, nuisance or breach of any statutory
duty on the part of a third party and the Executive recovers an amount by way
of compensation for loss of earnings from that third party, he will pay to the
Company a sum equal to the amount recovered or, if less, the amount paid to him
by the Company under Subclause 11.5 above in respect of the relevant period of
absence as a result of that injury.

 

12.                               HOLIDAYS

 

12.1                           The
Company’s holiday year runs from 1st January to 31st December (Holiday Year).  The Executive is entitled to 25 Working Days’ holiday, plus such
statutory or public holidays as the Company may specify each year, with pay in
every Holiday Year at times convenient to the Company.

 

12.2                           Any
entitlement to holiday remaining at the end of a Holiday Year will lapse except
in exceptional circumstances and with the prior written approve of the
Remuneration Committee.

 

5

 

12.3                           The
Company reserves the right to require the Executive to take any outstanding
holiday during any period of notice of termination of the Appointment (whether
given by the Company or the Executive) or to make a payment in lieu of that
outstanding holiday.

 

12.4                           The
entitlement to holiday (and on termination of employment to holiday pay in lieu
of holiday) accrues pro rata throughout each Holiday Year (on the basis of a
year of 261 Working Days, disregarding fractions of days).

 

13.                               CONFIDENTIAL INFORMATION

 

13.1                           The
Executive must not make use of or divulge to any person, and must use his best
endeavours to prevent the use, publication or disclosure of, any information of
a confidential or secret nature:

 

(a)                                  concerning
the business of the Company or any Group Company and which comes to his
knowledge during the course of or in connection with his employment or his
holding any office within the Group from any source within the Company or any
Group Company; or

 

(b)                                 concerning
the business of any person having dealings with the Company or any Group
Company and which is obtained directly or indirectly in circumstances in which
the Company or any Group Company is subject to a duty of confidentiality in
relation to that information.

 

For
the purposes of Subclause (a) above, information of a confidential or secret nature
includes but is not limited to all and any information about business plans,
maturing new business opportunities, research and development projects, product
formulae, processes, inventions, designs, discoveries or know-how, sales
statistics, marketing surveys and plans, costs, prices and discount structures,
the names, addresses and contact details of customers and potential customers
or suppliers and potential suppliers (whether or not recorded in writing or on
computer disk or tape) which the Company or any Group Company treats as
confidential.

 

13.2                           This
Clause does not apply to information which:

 

(a)                                  is used or
disclosed in the proper performance of the Executive’s duties or with the prior
written consent of the Company or any Group Company; or

 

(b)                                 is or
comes to be in the public domain (except as a result of a breach of the
Executive’s obligations under Subclause 13.1); or

 

(c)                                  is ordered
to be disclosed by a court of competent jurisdiction or otherwise required to
be disclosed by law.

 

13.3                           This
Clause continues to apply after the termination of the Appointment (whether
terminated lawfully or not) without limit of time.

 

13.4                           Each of
the restrictions in each Clause or Subclause above will be enforceable
independently of each of the others and its validity will not be affected if
any of the others is invalid.  If any of
those restrictions is void but would be valid if some part of the restriction
were deleted, the restriction in question will apply with such modification as
may be necessary to make it valid.

 

6

 

13.5                           The
obligations under this Clause 13 are in addition to those obligations of
confidentiality contained in the Cyclacel Standard Terms and Conditions of
Employment which, for the avoidance of doubt, form part of the Executive’s
terms and conditions of employment.

 

14.                               GRATUITIES

 

The
Executive must not directly or indirectly accept any commission, rebate,
discount or gratuity, in cash or in kind, from any person who has or is likely
to have a business relationship with any Group Company.

 

15.                               CODES OF CONDUCT

 

The
Executive must comply with all codes of conduct from time to time adopted by
the Board and with all applicable rules and regulations of the London Stock
Exchange and any other relevant regulatory body including (without limitation)
the Stock Exchange’s model code on directors dealings in securities and the FSA
Code of Market Conduct.

 

16.                               TERMINATION OF APPOINTMENT

 

16.1                           If the
Executive:

 

(a)                                  is guilty
of any serious or repeated breach of his obligations under this agreement and
any consent granted under it (including neglecting to diligently discharge his
duties); or

 

(b)                                 is guilty
of serious misconduct or any other conduct which affects or is likely to
materially prejudice the interests of the Company or the Group or is convicted
of an arrestable offence (other than a road traffic offence for which a
non-custodial penalty is imposed); or

 

(c)                                  becomes
bankrupt or makes any arrangement or composition with his creditors; or

 

(d)                                 is disqualified
from being a director of any company by reason of an order made by any
competent court; or

 

(e)                                  resigns as
a director without the prior consent of the Board; or

 

(f)                                    is guilty
of any material breach or non-observance of any code of conduct, rule or
regulation referred to in Clause 15 or fails or ceases to be registered (where
such registration is, in the reasonable opinion of the Board, necessary for the
performance of his duties) by any regulatory body in the United Kingdom or
elsewhere,

 

the
Company may (whether or not any notice of termination has been given under
Subclause 2.2) by written notice to the Executive terminate the Appointment
with immediate effect.

 

16.2                           The
Company may at any time (whether or not any notice of termination has been
given under Subclause 2.2) terminate the Appointment with immediate effect by
giving notice in writing to the other party on terms that the Company will pay
to the Executive, in lieu of notice under Subclause 2.2, a sum equal to the
salary and the value of contractual benefits in respect of that part of the
period of notice in Clause 2.2 which the Company has not given the Executive.
If the Executive is paid salary and benefits in lieu of notice he will not be
entitled to any additional payment in respect of holiday or bonus which he
would otherwise have accrued during the notice period or the remainder of the
notice period.

 

7

 

16.3                           Clause 3.2
allows the Company to suspend any of the Executive’s duties and powers during
any period after notice of termination of the Appointment has been given by the
Company or the Executive.  In
particular, the Company may exercise this right where the Executive leaves the
Company’s employment in circumstances where it is reasonable for the Company to
believe that he is or is about to become concerned in a business, carried on,
or about to commence, which is, or is likely to be, competitive with any part
of the business of any Group Company with which the Executive was engaged or
concerned in the 12 months before the suspension started.  In addition or alternatively, the Company
may during the whole or any part of such period of notice require the Executive
to perform duties (including any modified duties arising from an exercise by
the Company of its rights under Subclause 3.2) at such locations as the Company
may reasonably require consistent with Clause 4.  Throughout any such period of suspension the Executive’s salary
and other benefits to which he is entitled under this agreement shall continue
to be paid or provided by the Company. 
At any time during such period the Executive will, at the request of the
Board, immediately resign, without claim for compensation, his office as a director
of the Company and any directorship or other office held by him in any Group
Company.

 

16.4                           On the
termination of the Appointment in any way (whether lawfully or otherwise) or on
either party giving notice to terminate the Appointment or on the Company
exercising its right of suspension as mentioned in Subclause 16.3, the
Executive will at the request of the Board immediately:

 

(a)                                  resign all
offices held by him in any Group Company (without prejudice to the rights of
any party arising out of this agreement or the termination of the Appointment);

 

(b)                                 deliver to
the Company all other property in his possession, custody or under his control
belonging to any Group Company including (but not limited to) computer
equipment, mobile phones, any electrical equipment supplied to the Executive
during the course of his employment, business cards, credit and charge cards,
security and computer passes, original and copy documents or other media on
which information is held in his possession relating to the business or affairs
of any Group Company; and

 

(c)                                  transfer
(without payment) to the Company (or as the Company may direct) any qualifying
or nominee shares provided by it or any third party in any Group Company to
him.

 

16.5                           With
effect from the date of termination of the Appointment, all the rights and obligations
of the parties under this agreement will cease except for those which are
expressed to continue after that date and except in relation to any breach of
any provision of this agreement before that date.  Termination of the Appointment will not prejudice any other
rights of the Company or the Executive.

 

16.6                           If the
Executive’s remuneration falls to be assessed for the purpose of calculating
compensation or damages for breach of this agreement, the parties acknowledge
and agree that he has no right to or legitimate expectation of any future
increase in remuneration or any future payment of a bonus.

 

16.7                           If during
the Appointment or during the period in which any of the restrictions in this
Clause operate after the Termination Date, any person makes any offer to the
Executive of employment or of a contract for services or of consultancy or any
other contract which would or might involve the Executive in being in breach of
any of those restrictions, the Executive must bring the terms of this Clause to
the attention of that person.

 

8

 

16.8                           If during
the Appointment the Executive is granted participation in a share option or
share incentive scheme, any extinction or curtailment of any rights or benefits
under the scheme by reason of any transfer of his employment or its
termination, howsoever arising, will not form part of any claim for damages for
breach of this agreement or compensation under any statutory provision.  The effect of any such transfer, suspension
or termination on the Executive’s rights or benefits under the scheme will be
determined in accordance with the rules, terms and conditions of the scheme and
not in accordance with the provisions (other than this Subclause) of this
agreement.

 

17.                               PROTECTIVE COVENANTS

 

17.1                           In this
Clause:

 

(a)                                  Relevant Period means the period of 12 months ending on the
Termination Date;

 

(b)                                 Relevant Business means a business in any country operating in
the field of cell cycle therapeutics. 
For the avoidance of doubt, the Relevant Business includes not only the
cell cycle therapeutic area of oncology but all other cell cycle therapeutic
fields that the Company or another Group Company is involved in on the
Termination Date;

 

(c)                                  Termination Date means the date on which the Appointment
terminates; and

 

(d)                                 references
to the Company or another Group Company include its successors in business if
the succession occurs after the Termination Date.

 

17.2                           The
Executive covenants with the Company that he will not for a period of 12 months
after the Termination Date be concerned in any Relevant Business.  For this purpose, the Executive is concerned
in a Relevant Business if:

 

(a)                                  he carries
it on as principal or agent; or

 

(b)                                 he is a
partner, director, employee, secondee, consultant or agent in, of or to any
person who carries on the business; or

 

(c)                                  he has any
direct or indirect financial interest (as shareholder or otherwise) in any
person who carries on the business,

 

disregarding
any financial interest of a person in securities which are listed or dealt in
on any Recognised Investment Exchange if that person, the Executive and any
person connected with him (within the meaning of section 839 of the Income
and Corporation Taxes Act 1988) are interested in securities which amount to
less than three per cent. of the issued securities of that class and which, in
all circumstances, carry less than three per cent. of the voting rights (if
any) attaching to the issued securities of that class.

 

If
the Company exercises its right to suspend the Executive’s duties and powers
under Subclause 16.3 during any period after notice of termination of the
Appointment has been given by the Company or the Executive, the aggregate of
the period of the suspension and the period after the Termination Date for
which the covenant in this Subclause applies will not exceed 12 months and, if
the aggregate of the two periods would exceed 12 months, the period after the
Termination Date for which the covenant in this Subclause applies will be
reduced accordingly.

 

9

 

17.3                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date (except on behalf of the Company or any
Group Company):

 

(a)                                  canvass or
solicit Relevant Business from any person who has been at any time during the
Relevant Period a customer of the Company or any Group Company with whom the
Executive was actively involved in the course of his employment during the
Relevant Period; or

 

(b)                                 deal with
any such person.

 

17.4                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date induce or attempt to induce any
supplier of the Company or any Group Company or distributor of the Company’s or
any Group Company’s products with whom the Executive was actively involved in
the course of his employment during the Relevant Period, to cease to supply, or
to restrict or vary the terms of supply to, the Company or any Group Company or
to cease to distribute any of the Company’s or any Group Company’s products or
restrict or vary the terms of the distributorship or otherwise interfere with
the relationship between a supplier or distributor and the Company or any Group
Company.

 

17.5                           The
Executive covenants with the Company that he will not directly or indirectly on
his own account or on behalf of or in conjunction with any person for a period
of 12 months after the Termination Date induce or attempt to induce any
employee to whom this Subclause applies to leave the employment of the Company
or any Group Company (whether or not this would be a breach of contract by the
employee).  This Subclause applies to an
employee of the Company or any Group Company with whom the Executive had
material dealings in the course of his employment during the Relevant Period
and who is employed wholly or mainly in the capacity of a director, a scientist
or some other senior role.

 

17.6                           The
covenants in this Clause are for the benefit of the Company itself and as
trustee for each other Group Company.

 

17.7                           Each of
the restrictions in each Clause or Subclause above are enforceable
independently of each of the others and its validity is not affected if any of
the others is invalid.  If any of those
restrictions is void but would be valid if some part of the restriction
(including part of any of the definitions in Subclause 17.1) were deleted, the
restriction in question applies with such modification as may be necessary to
make it valid.

 

17.8                           The
Executive acknowledges that his senior position with the Company and any Group
Company gives him access to and the benefit of confidential information vital
to the continuing business of the Company and any Group Company and influence
over and connection with the Company’s customers, suppliers, distributors,
agents, employees, workers, consultants and directors and those of any Group
Company in or with which the Executive is engaged or in contact and
acknowledges and agrees that the provisions of this Clause are reasonable in
their application to him and necessary but no more than sufficient to protect
the interests of the Company and any Group Company.

 

17.9                           If any
person, during the Appointment or any period during which the covenants in this
Clause apply, offers to the Executive any arrangement or contract which might
or would cause the Executive to breach any of the covenants, he will notify
that person of the terms of this Clause.

 

10

 

18.                               INTELLECTUAL PROPERTY

 

18.1                           For
purposes of this Agreement, the following definitions apply:

 

(a)                                  Intellectual Property Rights means (i) copyright, patents, know-how,
confidential information, database rights, and rights in trademarks and designs
(whether registered or unregistered), (ii) applications for registration, and
the right to apply for registration, for any of the same, and (iii) all other
intellectual property rights and equivalent or similar forms of protection
existing anywhere in the world;

 

(b)                                 IP Materials means all documents, software, photographic or
graphic works of any type, and other materials in any medium or format which
are created by or on behalf of the Executive in the course of performing his
obligations under this agreement and which are protected by or relate to
Intellectual Property Rights.

 

18.2                           To the
extent that ownership of Intellectual Property Rights does not vest in the
Company by operation of law, the Executive hereby assigns to the Company all
Intellectual Property Rights which arise in the course of performing his
obligations under this agreement (including all present and future copyright,
and copyright revivals and extensions). 
This assignment shall take effect upon the creation of each of the
Intellectual Property Rights.

 

18.3                           The
Executive agrees to sign all documents and do all other acts which the Company
requests (at its expense) to enable the Company to enjoy the full benefit of
this Clause.  This includes joining in
any application, which may be made by the Company’s sole name for registration
of any Intellectual Property Rights (such as a patent, trademark or registered
design).

 

18.4                           The
Executive may only use the Intellectual Property Rights and IP Materials to
perform his obligations under this Agreement, and shall not disclose any
Intellectual Property Rights or IP Materials to any third party without the
express prior written consent of the Company.

 

18.5                           The
Executive waives all moral rights in IP Materials to which he would otherwise
be entitled under the law of any relevant jurisdiction.

 

18.6                           The
Executive shall immediately transfer to the company all IP Materials in his
possession or under his control when this agreement expires or terminates for
any reason, or at any time when the Company requests transfer.  No copies or other record of any IP
Materials may be retained by the Executive except with the prior written
consent of the Company.

 

18.7                           This
Clause shall survive expiry of this agreement, or its termination for any
reason.

 

18.8                           The
obligations under this Clause 18 are in addition to those obligations relating
to intellectual property contained in the Cyclacel Standard Terms and
Conditions of Employment which, for the avoidance of doubt, form part of the
Executive’s terms and conditions of employment.

 

19.                               RECONSTRUCTIONS

 

If
the Company is to be wound up for the purpose of a reconstruction or
amalgamation or the Company transfers all or a substantial part of its business
to another company and the Company procures that the Executive is offered
employment by the reconstructed or amalgamated or transferee company on similar
terms to the terms of this agreement for the remainder of the Appointment, the
Executive will have no claim against the Company in respect of the termination
of his employment under this agreement.

 

11

 

20.                               GENERAL

 

20.1                           As from
the effective date of the Appointment all other agreements or arrangements
between the Executive and the Company or any Group Company relating to the
employment of the Executive will cease to have effect.  Accordingly, any remuneration or other
benefit paid or provided to or for the Executive under any other agreements or
arrangements in respect of any periods since that date are deemed to have been
received by the Executive on account of the relevant amounts payable or
benefits to be provided to him under this agreement.

 

20.2                           The Executive
warrants to the Company that by entering into this agreement and performing his
duties under it he will not be in breach of any contract or other obligation
binding on him.

 

21.                               GOVERNING LAW

 

This
agreement is governed by and construed in accordance with English law.

 

22.                               OTHER DOCUMENTS

 

22.1                           The
following documents have been issued to the Executive and together form the
Executive’s Contract of Employment:

 

(a)                                  an Offer
Letter dated 4th October, 2001;

 

(b)                                 Cyclacel’s
Standard Terms and Conditions of Employment;

 

(c)                                  a side
letter between the Company and the Executive dated 1 July, 2004 relating to the
Executive’s entitlement to a bonus upon the achievement by the Company of a
listing on the London Stock Exchange or similar major stock market;

 

(d)                                 the
Company’s Staff Handbook: The contents of section A of the handbook form
part of the contracts of employment of the Company’s employees (including the
Executive). For the avoidance of doubt, section B of the handbook provides
information as to the Company’s current practices and policies in certain areas
but it is not contractually binding;

 

(e)                                  The
Company also operates a redundancy policy and this does apply to the Executive.

 

22.2                           In the
event of any discrepancy between the Executive’s Service Agreement and any of
the documents set out in this Clause 22, the Executive’s Service Agreement
shall take precedence.

 

23.                               THIRD PARTY RIGHTS

 

A
person who is not a party to this agreement may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999.

 

AS WITNESS the hands of the
Executive and of the duly authorised representatives of the Company on the date
which appears first on page 1.

 

12

 

SCHEDULE

 

STATEMENT OF EMPLOYMENT PARTICULARS

 

The
following constitutes the statement of the particulars of the Executive’s
employment issued pursuant to the Employment Rights Act 1996.  The particulars are those which apply on the
date of this agreement:

 

Name of employer - the Company as
defined on page 1 above.

 

Name of employee - the Executive as
defined on page 1 above.

 

Date of commencement of continuous employment - 1st
January, 2002

 

Scale or rate of remuneration or method of calculating
remuneration - see Clause 5.1.

 

Intervals at which remuneration is paid - monthly
- see Clause 5.1.

 

Hours of work - there are no fixed
hours of work - see Clause 3.4.  The
Executive agrees that Regulations 4(1) and (2), 6(1), (2) and (7), 10(1), 11(1)
and (2) and 12(1) of the Working Time Regulations 1998 (48 hour week, night
work, rest periods etc.) do not apply to the Appointment.

 

Holidays (including public holidays) and holiday pay - see
Clause 12.The Company holiday policy applies to the Executive.

 

Sickness or injury and sick pay - see
Clause 11.

 

Pension - see Clause 9.  A contracting-out certificate within the meaning of Part III of
the Pension Schemes Act 1993 is not in force.

 

Notice - see Clause 2.2.

 

Job titles - Chief Financial
Officer and Company Secretary.

 

Place of work - see Clause 4.  The employer’s address is as stated on page
1 above.

 

Collective agreements - the Company is not
a party to any collective agreement which affects the Executive’s employment.

 

Working overseas - the Executive may
be required to work overseas at the reasonable request of the Board.

 

Grievance procedure - if the Executive is
dissatisfied with any disciplinary decision or seeks to redress any grievance
relating to his employment, he should raise this in the first instance with the
Chief Executive.  If the matter is not
satisfactorily resolved, the Executive should then apply in writing to the
Board and the Board will endeavour to propose a solution within 14 days.

 

Discipline - the Company expects
the highest standards of performance and conduct from the members of its Board
of Directors.  There are no specific
disciplinary rules applicable to the Executive’s employment.

 

13

 

SIGNATORIES

 

	
  SIGNED
  by

  	
  )

  
	
  on
  behalf of CYCLACEL GROUP PLC

  	
  )  /s/ S. Rombotis

  
	
  in
  the presence of:  /s/ R. Jackson

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED
  by PAUL McBARRON

  	
  )

  
	
  in
  the presence of:  /s/ G. Christie

  	
  )  /s/ Paul McBarron

  
	
   

  	
   

  

 

14

 

	
  

  	
   

  	
   

  
	
  â

  	
  Cyclacel
  Group plc

  
	
   

  	
   

  

 

Paul McBarron

17 Cant Crescent

St Andrews

Fife

KY16 8NF

 

1 July, 2004

 

 

Dear Mr McBarron,

 

This letter is to confirm that on achievement by Cyclacel Group plc(the
Company)
of a listing on the London Stock Exchange or similar major stock market you
shall be entitled to a bonus payment of £50,000 (fifty thousand pounds).

 

This bonus will be payable by the Company within 30 days of the first
day of dealings in respect of the listing.

 

To be eligible for this bonus, you must be employed by the Company and
not under notice on the date that the bonus is payable.

 

Yours sincerely,

 

 

/s/ John Banham

Sir John Banham

For and on behalf of Cyclacel Group plc

 

 

I have read and agree to the terms of the bonus payment as set out in
this letter.

 

 

	
  /s/
  Paul McBarron

  	
   

  	
  1
  July, 2004

  	
   

  
	
   

  	
   

  
	
  Signed:  Paul McBarron

  	
  Date

  

 

 

Cyclacel Group plc, Dundee Technopole, James Lindsay
Place, Dundee DD1 5JJ   Tel: (01382)
206062   Fax: (01382) 206067

Registered Office: 6-8 Underwood Street, London N1
7JQ  No: 5090795

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