**Exhibit 10.2**

 

**Execution Copy**

 

**AMENDED AND RESTATED EMPLOYMENT AGREEMENT**

 

**THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT** (this “Agreement”)is made and entered into as of April [ ], 2008 (the “Effective Date”), by and between MacroChemCorporation, Inc., a****Delaware****corporation (the “Company”), and DavidP. Luci, an individual who resides at 270 Benedict Road, Staten Island, NewYork 10304 (the “Executive”).

 

**RECITALS:**

 

WHEREAS, the Company is engaged inthe business of acquiring and developing small molecule pharmaceuticals foroncology indications (the “Business”); and

 

WHEREAS,the Company and Executive entered into that certain employment agreement, datedDecember 6, 2007 (the “Original Agreement”), pursuant to which theCompany engaged Executive to serve as the Company’s General Counsel &Vice President, Corporate Development; and

 

WHEREAS,the Company promoted Executive on March 19, 2008 to serve in theadditional capacity as the Company’s Chief Financial Officer, and Executiveagreed to serve in such capacity and has since served in said capacity; and

 

WHEREAS, the Company desires to continueto employ the Executive, and the Executive desires to be employed by theCompany, in several new capacities, in each case, on the terms and subject tothe conditions hereinafter set forth.

 

**NOW, THEREFORE**, in consideration of theforegoing premises and of the respective covenants and agreements herein setforth, the Company and the Executive agree as follows:

 

# 1.                                       **Employment**.  The Companywill employ the Executive, and the Executive will serve as the President &Chief Business Officer of the Company. The Executive will also be a member of the Board of Directors of theCompany (the “Board”) so long as he is employed in this capacity or anyother capacity and Executive will report directly to the Board.  The Executive will be responsible for and performsuch services customary to these offices (e.g. services traditionally performedby a Chief Operating Officer and Chief Financial Officer and General Counsel), andsuch other duties and services as shall from time to time be reasonablyassigned to him by the Board, consistent with such positions and this Agreement,including, without limitation, primary responsibility for day-to-day operatingactivities as well as primary responsibility for the Company’s finance,accounting and legal matters.  It isunderstood that Executive may participate on up to three Boards of Directors orAdvisory Boards of other companies and otherwise participate in personalinvestments, to the extent such activities do not materially interfere with theperformance of his duties with the Company and to the extent that the Executivehas the prior approval of the Board to participate in any such activity.  The Executive will perform his dutieshereunder faithfully and to the best of his abilities and in furtherance of thebusiness of the Company and its subsidiaries, and will devote his time andenergies to the business and affairs of the Company and its subsidiaries.

#  

# 

#  

# 2.                                       **Term**.  TheExecutive’s employment hereunder shall be “at will” and is terminable at anytime by either party, subject to the provisions of Sections 4, 5 and 6 hereof.

#  

# 3.                                       **Compensation and Other Related Matters**.

#  

## (a)                                  **Salary**.  Ascompensation for services rendered under this Agreement, the Executive shallreceive an annual salary of not less than $250,000 (as may be increasedpursuant to the immediately succeeding sentence, the “Base Salary”),which salary shall be paid in accordance with the Company’s then prevailingpayroll practices.  The Executive’sannual salary is eligible for increase annually in accordance with the Company’scompensation practices and increases will be evaluated at the discretion of theCompensation Committee of the Board.

##  

## (b)                                 **Bonus**.  During theterm of this Agreement, and at the sole discretion of the CompensationCommittee of the Board, the Executive shall be eligible to receive an annualbonus up to fiftypercent (50%)****ofthe Executive’s Annual Salary at the conclusion of each fiscal year based onthe Executive and the Company successfully achieving targeted annualperformance objectives (the “Annual Bonus” and, together with the AnnualSalary, the “Annual Compensation”).  Toreceive such Annual Bonus, the Executive must still be employed with theCompany as of December 31 of the year for which the Annual Bonus ispayable and not be in breach of this Agreement. In addition, the parties agree that Executive shall be entitled to aone-time bonus in the amount of seventy-five thousand dollars ($75,000) in theevent the Company consummates an equity financing of $5 million or more ingross proceeds during the term of this Agreement; provided, however, theparties acknowledge and agree such payment shall be a one-time payment onlywhich shall be due promptly upon consummation of the first equity financing soconsummated and such one-time bonus shall be prorated for any portion of suchequity financing which is consummated (for example, if the Company consummatesan equity financing in the amount of $3 million in gross proceeds such bonusshall be equal to $45,000).

##  

## (c)                                  **Equity Compensation**.  In addition to the option grant in theOriginal Agreement, as of the Effective Date, the Executive shall be grantedStock Options pursuant to the terms and conditions of a Stock Option AwardAgreement in the form approved by the Company’s Board as of the date hereof andsubject to amendment as set forth therein. These options will be issued from a valid stock option plan approved bythe stockholders and registered under an S-8 within eighteen months from thedate hereof (the “Grant Date”).  TheStock Option shall be for the purchase of 2,290,000 shares of the Company’scommon stock, no par value (the “Common Stock”) at a price per share equal tothe closing price on the OTC BB on the Grant Date.  Of the Stock Options to purchase 2,290,000shares of the Company’s Common Stock, stock options to purchase 572,500 sharesof Common Stock shall vest immediately upon execution of this Agreement, and stockoptions to purchase 143,124 shares of Common Stock shall vest and becomeexercisable every 90 days following the Effective Date for the next three yearsfrom the Effective Date and as fully defined in the Stock Option AwardAgreement; provided that Executive is employed by the Company on such vestingdate.

##  

## (d)                                 **Other Benefits**.  Thefringe benefits, perquisites and other benefits of employment to be provided tothe Executive shall be equivalent to such benefits and 

 

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## perquisitesas are provided to other employees of the Company, as those benefits areamended from time to time.  In addition,the Executive shall be entitled to participate in any other executivecompensation or employee bonus plans implemented by the Company on such termsand conditions as shall have been determined by the Board or the CompensationCommittee thereof.  Participation in anysuch benefit programs shall be subject to any applicable probationary orsimilar periods.

##  

## (e)                                  **Expenses**.  TheExecutive will be reimbursed for all reasonable out-of-pocket expenses actuallyincurred by him in the furtherance of his duties under this Agreement andconsistent with the Company’s policies concerning the reimbursement of suchexpenses.  Such expenses shall bereimbursed upon submission to the Company of invoices containing originalreceipts for all such expenditures and upon review by the Company of thereasonable nature of such expenditures.

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# 4.                                       **Termination**.

#  

**All termination provisionsrequire a 60 day written notice.**

 

## (a)                                  **Disability**.  If, as aresult of the incapacity of the Executive due to physical or mental illness,the Executive is unable to perform the duties of his or her position ofemployment or any substantially similar position of employment by reason of anymedically determinable physical or mental impairment that can be expected toresult in death or can be expected to last for a continuous period of not lessthan six months, the Executive will be deemed to have a Disability.  The Company may terminate the Executive’semployment for Disability upon written notice to the Executive or the Executive’slegal representative, and such termination shall not constitute terminationwithout Cause (as defined below) for purposes of this Agreement.

##  

## (b)                                 **Death**.  TheExecutive’s employment shall terminate immediately upon the death of theExecutive.

##  

## (c)                                  **Termination with Cause**.  The Company shall be entitled to terminatethe Executive’s employment for Cause.  “Cause”shall mean (i) the willful and continued failure by the Executive to performsubstantially his duties hereunder, other than by reasons of Disability, afterdemand for substantial performance is delivered by the Company that identifiesthe manner in which the Company believes the Executive has not substantiallyperformed his duties; (ii) the Executive will have been indicted by anyfederal, state or local authority in any jurisdiction for, or will have pleadedguilty or nolo contendere to, an act constituting a felony, (iii) theExecutive will have habitually abused any controlled substance (such asnarcotics or alcohol), or (iv) the Executive will have (A) engaged inacts of fraud, material dishonesty or gross misconduct in connection with thebusiness of the Company, or (B) committed a material breach of thisAgreement which shall remain uncured for a period of at least thirty (30) daysfollowing receipt of written notice thereof which sets forth in reasonabledetail the basis for such claim of material breach.

 

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## (d)                                 **Termination Without Cause**.  The Company shall, in its sole discretion,have the right to terminate the Executive’s employment without Cause at anytime.

##  

## (e)                                  **Resignation for Good Reason**.  The Executive shall have the right toterminate his employment for “Good Reason,” which shall mean a resignation ofhis employment and his Separation from Service (as defined for purposes of§409A of the Internal Revenue Code) within less than one year following theinitial existence of one or more of the following conditions arising withouthis consent:

##  

(i) any material reduction in his Base Salaryunder Section 3(a), above;

 

(ii) any other material breach by the Companyof any of its obligations to the Executive under this Agreement; or

 

(iii) any relocation of the Executive’s primaryplace of employment more than 50 miles from Manhattan;

 

(iv) any failure of the Company to have anysuccessor to all or substantially all of the business and properties of theCompany assume all of the liabilities and obligations of the Company under thisAgreement (and any stock option or restricted stock agreement referred toherein, under such awards as have fully vested);

 

provided,in each case, that a prior written notice specifying the reasons within ninety(90) after the initial existence of the condition and an opportunity to curesuch condition (if curable) shall be afforded the Company, and that “GoodReason” shall exist only if the Company shall fail to cure such conditionwithin 31 days after its receipt of such prior written notice.

 

## (f)                                    **Resignation Without Good Reason**.  The Executive shall have the right to resignhis employment without “Good Reason” at any time upon thirty (30) days’ priorwritten notice to the Board (a “Resignation Notice”) in which case theExecutive’s employment shall terminate upon effectiveness of such ResignationNotice unless otherwise terminated earlier pursuant to the terms of thisAgreement.

##  

# 5.                                       **Compensation Upon Termination or During Disability**.

#  

## (a)                                  **Disability**.  During anyperiod of Disability, the Executive shall continue to receive his AnnualSalary, less any compensation payable to the Executive under any applicabledisability insurance plan during such period, until this Agreement isterminated, but in no event longer than 12 months from the date the Disabilitybegan, as determined by the Company. Thereafter, the Executive’s benefits shall be determined under theCompany’s insurance and other compensation programs then in effect, and theCompany shall have no further obligation to the Executive under this Agreement,except that the Company shall pay to the Executive, or the Executive’s legalrepresentative, as appropriate, (i) any accrued but unpaid base salary andvacation, (ii) any earned but unpaid bonus from a prior fiscal year 

 

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## (subject,if applicable, to the terms of any deferred compensation arrangements), and (iii) reimbursementof business expenses incurred prior to the date of termination.

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## (b)                                 **Death**.  In theevent of the Executive’s death, the Company shall pay the Executive’s estatehis Annual Salary through the date of death. Thereafter, the Company shall have no further obligation to theExecutive or the Executive’s beneficiary under this Agreement, except that theCompany shall pay to the Executive’s estate (i) any earned but unpaidbonus from a prior fiscal year (subject, if applicable, to the terms of anydeferred compensation arrangements), and (ii) reimbursement of businessexpenses incurred prior to the date of the Executive’s death.

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## (c)                                  **Cause**.  If theCompany terminates the Executive’s employment for “Cause” as defined inParagraph 4(c) of this Agreement, the Company shall continue to pay theExecutive his Annual Salary through the date of termination of the Executive’semployment and shall pay for all accrued but unused vacation time.  All Stock Options which have vested prior tothe effective time of the termination for “Cause” shall remain vested andexercisable for the period of time set forth in Executive’s Option AwardAgreement. At the effective time of the termination for Cause, all unvestedStock Options shall immediately be terminated.  Thereafter, the Company shall have no furtherobligation to the Executive under this Agreement.

##  

## (d)                                 **Termination Without Cause by the Company**.  During the term of this Agreement, if theCompany terminates the Executive’s employment without Cause pursuant toParagraph 4(d) of this Agreement (a “Termination without Cause”), undercircumstances that constitute a Involuntary Separation from Service with theCompany (as defined for purposes of §409A of the Internal Revenue Code), theCompany shall pay the Executive the total amount of Executive’s AnnualCompensation (then-current base salary plus Executive’s target bonus level) (the“Severance Payment”).  Executive shallcontinue to participate in all other benefit plans during the twelve (12) monthperiod following the Termination without Cause (the “Severance Period”), exceptto the extent prohibited by law or any applicable employee benefit plan.  All Stock Options granted to Executive whichhave vested prior to the final day of Executive’s employment under thisAgreement (the “Termination Date”) shall remain vested and exercisable for theexercise period set forth in Executive’s Option Award Agreement.  The Company will continue to vest StockOptions and stock awards during the Severance Period in accordance with thefollowing vesting schedule:

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## (1)                      If aTermination without Cause occurs during the first year of the term of thisAgreement, all unvested Stock Options that would have vested during thecalendar quarter within which the Termination without Cause occurs shall vestand become exercisable on the Termination Date for the exercise period setforth in Executive’s Option Award Agreement and, in addition, all unvestedStock Options that would have vested during the calendar quarter after theoccurrence of the Termination without Cause also shall vest and becomeexercisable for the exercise period set forth in Executive’s Option AwardAgreement; and

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## (2)                      If aTermination without Cause occurs during the second year of the term of thisAgreement, all unvested Stock Options that would have vested during thecalendar quarter within which the Termination without Cause occurs shall vestand become exercisable on the 

 

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## Termination Date for theexercise period set forth in Executive’s Option Award Agreement and, inaddition, all unvested Stock Options that would have vested during the two (2) calendarquarters after the occurrence of the Termination without Cause also shall vestand become exercisable for the exercise period set forth in Executive’s OptionAward Agreement; and

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## (3)                      If aTermination without Cause occurs during the third year of the term of thisAgreement or thereafter, all unvested Stock Options that would have vestedduring the calendar quarter within which the Termination without Cause occursshall vest and become exercisable on the Termination Date for the exerciseperiod set forth in Executive’s Option Award Agreement and, in addition, allunvested Stock Options that would have vested during the three (3) calendarquarters after the occurrence of the Termination without Cause also shall vestand become exercisable for the exercise period set forth in Executive’s OptionAward Agreement.

##  

## Payment of the Executive’sseparation pay benefit under this Section 5(d) shall be made asfollows:

##  

(i) Payment of the separation pay benefit shall commence as of the 30th day afterthe Executive’s Separation from Service (as defined in the IRC, as amended),and shall continue in monthly installments thereafter until all 6 payments aremade.

 

(ii) In the event the value of the separation pay benefit shall exceed two times thelesser of the Executive’s annualized compensation or the maximum amount thatmay be taken into account for qualified plan purposes (in each case, asdetermined in accordance with Treas. Reg. §1.409A-1(b)(9)(iii)(A)), the excessshall not be paid as provided in (i), above, but instead shall be paid in 6equal monthly installments commencing as of the first of the month after thedate that is six months after the Executive’s Separation from Service date.

 

(iii) In no event shall payments be accelerated, nor shall the Executive be eligibleto defer payments to a later date.

 

## (e)                                  **Resignation With Good Reason**.  If the Executive resigns his employment for “GoodReason” pursuant to Paragraph 4(e) of this Agreement, then the Companyshall pay the Executive the Severance Payment described in Section 5(d) above...  Following the resignation for GoodReason, Executive shall continue to participate in all other benefit plans ofthe Company during the Severance Period, except to the extent prohibited by lawor any applicable employee benefit plan. All Stock Options granted to Executiveprior to Executive’s departure for “Good Reason” shall remain vested andexercisable for the period of time set forth in Executive’s Option AwardAgreement.  The Company shall continue tovest options and stock awards during the Severance Period in accordance withthe vesting schedule set forth in Section 5(d) above (e.g. the sameas if Executive were Terminated for Cause). Thereafter, the Company shall have no further obligation to theExecutive under this Agreement.  Paymentof the Executive’s separation pay benefit under this Section 5(e) shallbe made in accordance with the payment provisions of Section 5(d),above.  Payment of the Executive’sseparation pay benefit under this Section 5(e) shall be made inaccordance with the payment provisions of Section 5(d), above.

 

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## (f)                                    **Resignation Without Good Reason**.  If the Executive resigns his employmentwithout “Good Reason” pursuant to Paragraph 4(f) of this Agreement, theCompany shall continue to pay the Executive his Annual Salary through theeffective date of the Resignation Notice unless the Executive is otherwiseterminated earlier pursuant to the terms of this Agreement.  At that time, Stock Options which have beengranted and have vested prior to the date of the Resignation Notice shallremain vested and exercisable for the period of time specified in Executive’sOption Award Agreement.  At the effectivetime of the resignation without Good Reason, all unvested Stock Options shallimmediately be terminated.  Thereafter,the Company shall have no further obligation to the Executive under thisAgreement.

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## (g)                                 **Release of Claims**.  As a condition for the payments as providedin Sections 5(d) and 5(e) above, the Executivemust execute a release of all claims (including but not limited to state,federal and foreign laws) that the Executive has or may have against theCompany, its directors, officers, employees, agents, representatives, itsaffiliated companies (incorporated or otherwise) and the members of its boardof directors.  Such release shall be insuch form and include such provisions as the Company may require in itsreasonable discretion.  The payments providedfor in Sections 5(d) and 5(e) shall not be made until such release iseffective and is no longer subject to rescission under any applicable law.

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# **6.****             ****Change in Control****.**

#  

## (a)                                  In the event that the Executive’s employment hereunder ends eithervoluntarily or by termination, in each case, upon, in anticipation of, orwithin six (6) months following, a Change in Control (defined in AppendixA), then in lieu of the benefits described in Section 5, the Executiveshall be entitled to receive the following benefits, provided, however that forpurposes of this Section 6(a), a termination will be deemed to occur “inanticipation of a Change in Control” only if it occurs after the date on whicha Change in Control is formally proposed to the Company’s Board of Directors:

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### (i)                         any outstanding Stock Options shall become fully vested and exercisableat the effective time of the Change of Control and shall remain exercisable forat least the lesser of one year following such event and the maximum statedterm of such Stock Option;

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### (ii)                      any outstanding Restricted Shares shall become fully vested;

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### (iii)                   theExecutive shall be entitled to additional or other benefits (if any) inaccordance with the applicable terms of applicable plans, programs andarrangements of the Company and its Affiliates.

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### (iv)                  theCompany shall promptly pay the Executive two times Executive’s then-currentAnnual Compensation (based upon Executive’s then-current base salary and targetbonus) (two years constituting the “Amended Severance Period”) in lieu of theseverance governed by Section 5(d) or 5(e).

 

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### (b)                                             Payment of the Executive’s separation pay benefit under this Section 6shall be made as follows:

###  

(i)  Payment of the separation pay benefitshall commence as of the 30th day after the Executive’s Separation from Service,and shall continue in monthly installments thereafter until all 18 payments aremade.

 

(ii)  In the event the value of theseparation pay benefit shall exceed two times the lesser of the Executive’sannualized compensation or the maximum amount that may be taken into accountfor qualified plan purposes (in each case, as determined in accordance withTreas. Reg. §1.409A-1(b)(9)(iii)(A)), the excess shall not be paid as providedin (i), above, but instead shall be paid in 18 equal monthly installments commencingas of the first of the month after the date that is six months after theExecutive’s Separation from Service date.

 

(iii)  In no event shall payments beaccelerated, nor shall the Executive be eligible to defer payments to a laterdate.

 

## (c)                                  If any portion of the payments which the Executive has the right toreceive from the Company, or any affiliated entity or successor, hereunderwould constitute “excess parachute payments” (as defined in Section 280Gof the Internal Revenue Code) subject to the excise tax imposed by Section 4999of the Internal Revenue Code, such excess parachute payments shall be reducedto the largest amount that will result in no portion of such excess parachutepayments being subject to the excise tax imposed by Section 4999 of theInternal Revenue Code.

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# **7.****                         ****Agreement Not to Compete or Solicit**

#  

## (a)                                  **Covenant Not to Compete****.**  The Employee hereby covenants and agrees thatat no time during the Term of Employment nor for a period of six (6) months(such period to be eighteen (18) months in the case of a termination resultingin payments pursuant to Section 6(a)(iv) ) immediately following thetermination of the Employee’s employment will he for himself or on behalf ofany other person, partnership, company or corporation, directly or indirectly,acquire any financial or beneficial interest in (except as provided in the nextsentence), provide consulting or other services to, be employed by, or own,manage, operate or control any entity engaged in the Business.  Notwithstanding the preceding sentence, theEmployee will not be prohibited from owning less than five percent (5%) of anycorporation, whether or not such corporation is in competition with theCompany.

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## (b)                                 **Non-Solicitation****.**  The Employee hereby covenants and agreesthat, at all times during the Term of Employment and for a period of six (6) months(such period to be one (1) year in the case of a termination resulting inpayments pursuant to Section 6(a)(ii)) immediately following thetermination thereof, the Employee will not directly or indirectly employ orseek to employ any person or entity employed at that time by the Company or anyof its subsidiaries, or otherwise encourage or entice such person or entity toleave such employment.

 

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## (c)                                  **Intellectual Property**.  The Executive assigns to theCompany, without additional compensation, all right, title and interest in allcreations, inventions, ideas, designs, copyrightable materials, trademarks, andother technology and rights (and any related improvements or modifications),whether or not subject to patent or copyright protection (collectively, “Inventions”),relating to the Business or any other activities of the Company that areconceived or developed by the Executive in the course of his employment,whether alone or with others, and, if based on Confidential Information, afterthe termination of this Agreement for any reason.  Such Inventions shall be the sole property ofthe Company and, to the maximum extent permitted by applicable law, shall bedeemed “works made for hire” as the term is used in the United StatesCopyright Act.   The Executive may listspecific technologies that are to be excluded from Intellectual Property, aslisted in Exhibit A. The Executive shall provide evidence to the Companyof any assignment of any specific Invention as may be requested by the Companyfrom time to time.

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# **8.****                         ****Confidential Information.**

#  

The Employee agrees to keep secret and retainin the strictest confidence all confidential matters which relate to theCompany or any affiliate of the Company, including, without limitation,customer lists, client lists, trade secrets, pricing policies and otherbusiness affairs of the Company and any affiliate of the Company learned by himfrom the Company or any such affiliate or otherwise before or after the date ofthis Agreement, and not to disclose any such confidential matter to anyoneoutside the Company, or any of its affiliates, whether during or after hisperiod of service with the Company, except as may be required in the course ofa legal or governmental proceeding.  Uponrequest by the Company, the Employee agrees to deliver promptly to the Companyupon termination of his services for the Company, or at any time thereafter asthe Company may request, all Company or affiliate memoranda, notes, records,reports, manuals, drawings, designs, computer files in any media and otherdocuments (and all copies thereof) relating to the Company’s or any affiliate’sbusiness and all property of the Company or any affiliate associated therewith,which he may then possess or have under his control.

 

# 9.                           **Remedy.**

#  

## (a)                                  Should the Employee engage in or perform, either directly orindirectly, any of the acts prohibited by Sections 7 or 8 hereof, it is agreedthat any and all severance payments and related benefits hereunder shallimmediately terminate and the Company will also be entitled to full injunctiverelief, to be issued by any competent court of equity, enjoining andrestraining the Employee and each and every other person, firm, organization,association, or corporation concerned therein, from the continuance of suchviolative acts. The foregoing remedies available to the Company will not bedeemed to limit or prevent the exercise by the Company of any or all furtherrights and remedies which may be available to the Company hereunder or at lawor in equity.

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## (b)                                 The Employee acknowledges and agrees that the covenants contained inthis Agreement are fair and reasonable in light of the consideration paidhereunder, and the invalidity or unenforceability of any particular provision,or part of any provision, of this Agreement will not affect the otherprovisions or parts hereof.  If anyprovision hereof is 

 

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## determined to be invalid or unenforceable andif any such provision will be so determined to be invalid or unenforceable byreason of the duration or geographical scope of the covenants containedtherein, such duration or geographical scope, or both, will be reduced to aduration or geographical scope solely to the extent necessary to cure suchinvalidity.

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# 10.                     **Miscellaneous**.

#  

## (a)                                  **Successors; Binding Agreement**.  This Agreement and theobligations of the Company under this Agreement and all rights of the Executiveunder this Agreement shall inure to the benefit of the parties hereto and theirrespective heirs, personal representatives, successors and assigns; provided,however, that the duties of the Executive under this Agreement are personal tothe Executive and may not be delegated or assigned by him.

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## (b)                                 **Notice**.  All notices of termination and othercommunications provided for in this Agreement shall be in writing and shall bedeemed to have been duly given when delivered by hand or mailed by UnitedStates registered mail, return receipt requested, addressed as follows:

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If to the Company:

 

MacroChem Corporation

80 Broad Street, 22nd Floor

New York, NY 10004

Attn: General Counsel

Tel: (212) 514-8094

Fax: (212) 514-8613

 

with a copy to:

 

Luke P. Iovine, III, Esq.

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, NY 10022

Tel: (212) 318-6000

Fax: (212) 319-4090

 

If to Executive:

 

David P. Luci, Esq.

270 Benedict Road

Staten Island, NY 10304

 

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With a copy to:

 

William J. McSherry, Jr.

Crowell & Moring LLP

153 East 53rd Street, 31stFloor

New York, New York 10022

Tel: (212) 895-4200

Fax: (212) 895-4201

 

or to such other address as either party maydesignate by notice to the other, which notice shall be deemed to have beengiven upon receipt.

 

## (c)                                  **Choice of Law; Disputes**.  The validity, interpretation,construction and performance of this Agreement shall be governed by andconstrued in accordance with the laws of the State of New York without regard tothe conflict of law rules thereof. Regardless of which party hereto initiates any dispute which may ariseunder this Agreement, the non-prevailing party in any dispute hereunder shallpromptly pay and/or reimburse the prevailing party for any and all reasonablecosts and expenses incurred in bringing or defending such dispute, asapplicable, upon receipt of an order provided by a court of competentjurisdiction whether or not such order is subject to further appeal. Anyaccrued but unpaid amounts under this section shall accrue interest at the rateof 12% per annum until such amounts are fully paid.

##  

## (d)                                 **Waivers**.  The waiver of either party hereto of anyright under this Agreement or of any failure to perform or breach by the otherparty hereto shall not be deemed a waiver of any other right under thisAgreement or of any other failure or breach by the other party hereto, whetherof the same or a similar nature or otherwise. No waiver shall be deemed to have occurred unless set forth in writingexecuted by or on behalf of the waiving party. No such written waiver shall be deemed a continuing waiver unlessspecifically stated therein, and each such waiver shall operate only as to thespecific term or condition waived and shall not constitute a waiver of suchterm or condition for the future or as to any act other than that specificallywaived.

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## (e)                                  **Severability**.  The invalidity or unenforceability of anyprovision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement, which shall otherwise remain in fullforce and effect.  Moreover, if any oneor more of the provisions contained in this Agreement is held to be excessivelybroad as to duration, scope or activity, such provisions shall be construed bylimiting and reducing them so as to be enforceable to the maximum extentcompatible with applicable law.

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## (f)                                    **Counterparts**.  This Agreement may be executed in severalcounterparts, each of which shall be deemed an original, but all of which shallconstitute one and the same instrument.

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## (g)                                 **Entire Agreement**.  This Agreement sets forth the entireagreement and understanding of the parties in respect of the subject mattercontained herein, and supersedes all prior agreements, promises, covenants,arrangements, communications, representations or warranties, whether oral orwritten, by any officer, employee or representative of either party in respectof said subject matter.

 

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## (h)                                 **Modifications**.  This Agreement may only be modified in awriting signed by both the Company and the Executive.

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## (i)                                     **Headings Descriptive**.  The headings of the severalparagraphs of this Agreement are inserted for convenience only and shall not inany way affect the meaning or construction of any of this Agreement.

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## (j)                                     **Capacity**.  The Executive represents and warrants that heis not a party to any agreement that would prohibit him from entering into thisAgreement or performing fully his obligations under this Agreement.

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## (k)                                  **Survival**.  The obligations and rights set forth inParagraphs 6, 7 and 8 shall survive the termination of this Agreement for anyreason.

 

**[Signature Page Follows]**

 

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IN WITNESS WHEREOF, the Company and theExecutive have executed this Agreement as of the date first written above.

 
| The Company:                 |                             |
|------------------------------|----------------------------------|
|                         |                             |
| MACROCHEM CORPORATION        |                             |
|                         |                             |
| By:                          | /s/ Jeffrey B. Davis             |   |
| Name:                        | Jeffrey B. Davis                 |   |
| Title:                       | Chairman, Compensation Committee |   |
|                         |                             |
|                         |                             |
| Executive:                   |                             |
|                         |                             |
| /s/ David P. Luci, Esq. |                             |
|                         |                             |
| David P. Luci, Esq.     |                             |
|                              |                                  |  |  |

 

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##### APPENDIXA

#####  

##### (1)          **“Affiliate”**of a Person shall mean any Person that directly or indirectly controls, iscontrolled by, or is under common control with, such Person.

#####  

##### (2)          **“Agreement”**shall mean this Employment Agreement, which includes for all purposes itsExhibits.

#####  

##### (3)          **“Base Salary”**shall have the meaning set forth in Section 3(a).

#####  

##### (4)          **“Board**shall mean the Board of Directors of the Company.

#####  

##### (5)          **“Change in Control”** shall mean the occurrence of any of the following events:

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###### a.                                       any “person,” as such term is currently used in Section 13(d) ofthe 1934 Act, becomes (directly or indirectly) a “beneficial owner,” assuch term is currently used in Rule 13d-3 promulgated under that Act, of apercentage of the Voting Securities of the Company, measured either by numberof Voting Securities or by number of votes entitled to be cast, that is atleast **30** percentage points largerthan the percentage (if any) of the Voting Securities of the Company, measuredin either fashion, that such person beneficially owned (directly or indirectly)on the Effective Date, unless the acquisition of such Voting Securities isapproved by a majority of Incumbent Directors (as defined below);

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###### b.                                      a majority of the Board consists of individuals other than “IncumbentDirectors,” which term means the members of the Board on the EffectiveDate; provided that any individual becoming a director subsequent tosuch date whose election or nomination for election was supported by two-thirdsof the directors who then comprised the Incumbent Directors shall be consideredto be an Incumbent Director; or

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###### c.                                       (x) the Company combines with another entity and is the survivingentity, or (y) all or substantially all of the assets or business of theCompany is disposed of pursuant to a sale, merger, consolidation, liquidationor other transaction or series of transactions, in each of cases (x) or(y), unless the holders of Voting Securities of the Company immediatelyprior to such combination, sale, merger, consolidation, liquidation or othertransaction or series of transactions (collectively, a “Triggering Event”) own,directly or indirectly and immediately following such Triggering Event, morethan fifty percent (50%) of the Voting Securities (measured both by number ofsecurities and by voting power) of: (q) in the case of a combination inwhich the Company is the surviving entity, the surviving entity and (r) inany other case, the entity (if any) that succeeds to substantially all of thebusiness and assets of the Company.

 

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##### (6)          **“Code”**shall mean the Internal Revenue Code of 1986, as amended.  Any reference to a particular section of theCode shall include any provision that modifies, replaces or supersedes suchsection.

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##### (7)          **“Company”**shall have the meaning set forth in the preamble to this Agreement.

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##### (8)          **“Effective Date”**shall have the meaning specified in the preamble of this Agreement.

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##### (9)          **“Executive”**shall have the meaning set forth in the preamble to this Agreement.

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##### (10)    **“Person”**shall mean any individual, corporation, partnership, limited liability company,joint venture, trust, estate, board, committee, agency, body, employee benefitplan, or other person or entity.

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##### (11)    **“Proceeding”**shall mean any actual, threatened or reasonably anticipated action, suit orproceeding, whether civil, criminal, administrative, investigative, appellate,formal, informal or other.

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##### (12)    **“Restricted Shares”**shall mean any compensatory restricted securities of the Company or any of itsAffiliates; any compensatory share units, phantom securities or analogousrights granted by or on behalf of the Company or any of its Affiliates; and anysecurity or right received in respect of any of the foregoing securities orrights.

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##### ** **(13)                         **“Stock Option”**or “**Stock Options**” shall mean anycompensatory option to acquire securities of the Company or of any of itsAffiliates; any compensatory stock appreciation right, phantom stock option oranalogous right granted by or on behalf of the Company or any of its Affiliates;and any security or right received in respect of any of the foregoing optionsor rights.

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##### (14)    **“Term of Employment”**shall mean the period specified in Section 2.

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##### (15)    **“Termination Date”**shall mean the date on which the Executive’s employment hereunder terminates inaccordance with this Agreement.

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##### (16)    **“Voting Securities”**shall mean issued and outstanding securities of any class or classes havinggeneral voting power, under ordinary circumstances in the absence ofcontingencies, to elect one or more members of the Board of the issuer.

 

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