Document:

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                                                                  EXHIBIT 10.6

                  EMPLOYMENT AGREEMENT FOR DR. GILLES CLOUTIER

         THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st
day of April, 2001 (the "Effective Date"), by and among MoliChem Medicines,
Inc., a Delaware corporation ("MLCM") with its mailing address at 207 South
Elliott Road, PMB No. 231, Chapel Hill, North Carolina 27514, MoliChem R&D,
Inc., a North Carolina corporation (the "Company") with its mailing address at
207 South Elliott Road, PMB No. 231, Chapel Hill, North Carolina 27514 and Dr.
Gilles Cloutier, an individual residing at 100 Chestnut Road, Chapel Hill, North
Carolina 27514 ("Employee"). MLCM, the Company and Employee may be referred to
herein collectively as the "Parties" and individually as a "Party".

                                    RECITALS

         A. The Company wishes to employ Employee and Employee desires to be
employed by the Company in a position of trust and confidence to aid the Company
in its business; and

         B. Prior to employment of Employee, as a condition of employment, and
as part of the initial financial compensation established for Employee, the
parties wish to establish the terms of employment and their respective rights in
and to use certain proprietary and confidential information and intellectual
property, and to enter into an understanding regarding the use of the Company's
assets, information and goodwill to compete with the Company; and

         C. The Company has informed Employee that entering into this Agreement
is a condition of initial employment and the Company would not employ Employee
unless Employee agreed to the terms of this Agreement.

         NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the parties agree
as follows:

         1. Term. The employment created by this Agreement shall be for a two
(2) year term beginning on the Effective Date (the "Term"), and shall
automatically renew for additional one (1) year periods upon the anniversary
date of the initial term and each renewal term, subject, however, to earlier
termination as provided in Section 8 below.

         2. Duties. Employee is initially engaged to act in the capacity of
Chief Business Officer, subject to change as appropriate to the needs of the
Company. Employee's duties and powers as Chief Business Officer shall be
determined from time to time by the Board of Directors of the Company. The
Company and Employee understand and agree that Employee is a part-time employee
and is obligated to provide the Company with a minimum of two (2) days of
service per week. Employee may perform his duties at the Company facilities, the
Employee's home offices (located in both Employee's permanent and temporary
residences) or any other remote location mutually agreed upon by Employee and
Company.

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          3. Base Compensation. Subject to the terms and conditions of this
Agreement, as partial compensation for services rendered and Employee's
covenants and agreements under this Agreement, the Company shall pay to Employee
a base salary of ninety thousand dollars ($90,000) per year, payable in
accordance with the Company's standard practices. All applicable federal and
state taxes and other governmental assessments shall be deducted from Employee's
salary, as required by law.

          4. Additional Compensation. In addition to the compensation specified
in Section 3 above, Employee shall have the opportunity to earn an annual bonus
in the amount of twenty percent (20%) of base compensation and shall be eligible
for other incentive compensation payments, in accordance with such plans as may
be adopted by the Board of Directors of the Company.

          5. Options. In addition to the compensation under Sections 3 and 4
above, Employee shall be awarded a fully vested option for three hundred fifty
thousand (350,000) shares of the common stock of MLCM at a purchase price of one
dollar and fifty cents ($1.50) per share pursuant to the Option Agreement in the
form of Exhibit A.

         6.       Benefit Plans.

                  A. Personal Leave. Employee shall be entitled to six (6) days
(or an equivalent of three weeks of service) of paid personal leave per calendar
year, which shall accrue at the rate of one and one-half (1.5) days per quarter.
Vacation days not used in one calendar year shall not carry over to the
following calendar year. No compensation shall be due for unused vacation days
that do not carry over.

                  B. Sick Leave. Employee shall be entitled to four (4) days of
sick or personal leave each calendar year, which shall accrue at the rate of one
(1) day per quarter. Sick leave may be used with respect to illness of Employee
or to attend to illness of any member of Employee's immediate family who resides
with Employee. No payment shall be made for unused sick and personal leave upon
termination of Employee's employment.

                  C. Leave Policies. The Company may at its sole option change
its vacation or sick and personal leave policy by providing a new policy in
writing to Employee and specifically referencing it as an amendment to this
Agreement, such amendment to be prospective only.

                  D. Holidays. Employee shall be entitled to such paid holidays
as are provided to other employees of the Company.

                  E. Insurance. The Company shall make available, at Employee's
expense, the standard health, life and disability coverage provided to other
employees, which coverage may vary from time to time or may be eliminated
provided that Employee is treated the same as other employees similarly
situated.

                  F. Other Benefits. Employee shall be entitled to participate
in any other group benefit plans or arrangements made available to the Company's
Employees in the future, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and

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arrangements. Nothing paid to Employee under any plan or arrangement shall be
deemed to be in lieu of compensation payable to Employee pursuant to Section 3.
Notwithstanding the foregoing, Employee shall not be entitled to such benefit if
the benefit provided does not provide such coverage to part-time employees
working the amount of time as Employee, and the Company is not reasonably able
to obtain, at comparable cost, another benefit provider.

         7. Expenses. The Company shall reimburse Employee for business expenses
directly and reasonably incurred in the performance of his duties provided that
Employee complies with the Company's policies concerning reimbursement for such
expenses.

         8. Termination.

                  A. Employee may terminate his employment at any time upon
giving one (1) month's prior written notice to the Company.

                  B. The Company may terminate Employee at any time for any
reason upon one (1) month's prior written notice to Employee.

                  C. In the event, (i) Company terminates Employee pursuant to
Section 8.b., (ii) the Employee terminates his employment as a result of his
title or duties being materially diminished, other than for good cause, or (iii)
Employee's position is eliminated as a result of a "change of control" (as
defined below), Employee shall be entitled to a severance payment in the amount
of six (6) months salary to be paid in regular monthly installments.

         For the purpose of this Agreement, "change of control" shall be deemed
to have occurred when, as a result of any merger, consolidation, reorganization
or other similar event, the shareholders of Company immediately prior to such
event own less than fifty percent (50%) of the outstanding securities of the
resulting entity immediately after such event.

                  D. The Company may terminate Employee immediately and without
payment of severance upon the happening of the following:

                           (i) Disability. In the event that (i) Employee is
totally and permanently disabled as determined in accordance with the Company's
long-term disability plan, if any, as in effect at such time, or (ii) if no such
plan is in effect, Employee is unable to perform his duties and responsibilities
hereunder by reason of illness, injury or incapacity for ninety (90) consecutive
days, this Agreement may be terminated by the Company, and the Company shall
have no further liability or obligation to Employee for compensation hereunder;
provided, however, that Employee shall continue to be compensated as provided in
Section 3 of this Agreement during such 90-day period and until termination
under this Section, and provided further, that Employee will be entitled to
receive the payments prescribed under any disability benefits plan in which
Employee was participating.

                           (ii) Death. In the event that Employee dies during
the Term, the Company shall pay to his executors, legal representatives or
administrators an amount equal to the remaining installment of Employee's
compensation set forth in Section 3 hereof for the month in which

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Employee dies, and thereafter the Company shall have no further liability or
obligation hereunder to Employee's executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Employee; provided, however, that Employee's heirs, legal representatives or
administrators will be entitled to receive the payments prescribed under any
death or disability benefits plan of the Company in which Employee was
participating.

                           (iii) Cause. Nothing in this Agreement shall be
construed to prevent Employee's termination by the Company at any time for
"cause". For purposes of this Agreement, "cause" shall mean (i) the failure of
Employee to perform or observe (other than by reason of illness, injury or
incapacity) any of the material terms or provisions of this Agreement, (ii)
dishonesty or misconduct on the part of Employee that is or is reasonably likely
to be materially damaging or materially detrimental to the business of the
Company, (iii) conviction of a felony, (iv) failure to comply with the
reasonable directions of the Board of Directors or officers of the Company in a
way that is materially damaging or materially detrimental to the business of the
Company, or (v) failure to perform his material duties under this Agreement due
to abuse of alcohol or drugs. Prior to terminating this Agreement on account of
Employee's failure to perform or observe any of the material terms and
conditions of this Agreement (as described in clauses (i), (iv) or (v) of the
preceding sentence), the Company shall give Employee thirty (30) days' written
notice and an opportunity to cure such failure to the satisfaction of the
Company. Upon termination for cause, the Company shall pay to Employee all sums
due Employee through the date of such termination. Following such termination,
the Company shall have no further duty or obligation to Employee.

                  D. Notwithstanding any such termination, the obligations and
restrictions imposed on the Employee pursuant to Sections 9 through 14 and
Sections 21, 22, 23 and 27 shall survive termination of this Agreement and shall
exist in accordance with the terms of those Sections.

          9. Confidential Information. Employee may gain access to or knowledge
of information about the Company that is not generally known or available to the
public ("Confidential Information"). Such information may include trade secrets,
research, development, client information, marketing plans, contractual
arrangements, personnel records, finances, and client lists. Employee will not
disclose any Confidential Information during or after the term of this Agreement
to any person, firm, corporation, association or other entity for any reason or
purpose whatsoever or use such information except as directed or authorized by
the Company. All Confidential Information remains the property of the Company
and no license or other rights to Confidential Information is granted hereby. On
demand of the Company, at any time, Employee shall immediately deliver all
printed or written Confidential Information to the Company.

                  The following information shall not be deemed part of the
Confidential Information: (1) that was in the public domain at the time of
disclosure by the Company to the Employee; or (2) that entered the public domain
through no fault of Employee subsequent to the time of disclosure by the Company
to Employee; or (3) that was in the Employee's possession free of any obligation
of confidence at the time of disclosure by the Company; or (4) that was
rightfully communicated by a third party to Employee free of any obligation of
confidence subsequent to the time of disclosure by the Company to Employee; or
(5) that is deemed not confidential by the Board of Directors of the Company or
is not confidential under any confidentiality policies adopted by the Board of
Directors of the Company.

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          10. Ownership of Confidential Information and Work Product. Except as
limited by this Section, Employee agrees that all Confidential Information and
all other work product of any type or nature created by Employee or resulting
from work performed by Employee for the Company, using the Company's facilities,
equipment, supplies or other property, during business hours, or related to the
Company's Business (defined below), even if not Confidential Information (such
Confidential Information and work product being defined as "Work Product"),
shall belong to the Company exclusively and without any additional compensation
to Employee. Employee agrees that any original copyrightable Work Product shall
be considered as "works made for hire," and that the Company shall be deemed the
author thereof, provided that to the extent such Work Product is determined not
to constitute "works made for hire" as a matter of law, Employee hereby
irrevocably assigns and transfers to the Company all rights in and to such Work
Product. For the purpose of this Agreement, it is understood by Employee that
the "Company's Business" includes, without limitation, development and
commercialization of treatments for respiratory diseases, including but not
limited to cystic fibrosis, chronic obstructive pulmonary disorders,
tuberculosis, chronic bronchitis and related diseases and treatment of sepsis,
ARDS and related diseases. Any notification of Employee by the Company, oral or
written, or any reasonable knowledge on the part of Employee that the Company's
Business includes other specific aspects shall expand Employee's obligations
under this Agreement to include those additional aspects of the Company's
Business.

         Upon request Employee will execute any instrument required to vest in
the Company complete title and ownership to all Work Product, and will, at the
request and expense of the Company, execute any instruments necessary to obtain
legal protection in the United States and foreign countries for all Work Product
and for the purpose of vesting title thereto in the Company, or its nominee, all
without any additional compensation of any kind to Employee.

         11. Disclosure to the Company. Upon the conception of any Work Product
by Employee (either solely or in conjunction with others) and without waiting to
perfect or complete it, Employee promises and agrees immediately to fully
disclose to an officer of the Company, and to no one else, and thereafter to
treat the Work Product as the property and secret of the Company. This shall
include Work Product made, conceived or reduced to practice after the term of
Employee's employment but which belong to the Company pursuant to Sections 10
and 18. Upon request Employee will reduce any concept in the Work Product to
writing and deliver all copies of the writing to the President of the Company,
or if Employee is the President of the Company, such copies shall be delivered
to the Secretary of the Company. These obligations shall continue beyond the
termination of employment with respect to Work Product conceived or made during
the period of employment.

         12. Collaboration. Employee warrants that Employee will disclose the
participation of any other person in any of Employee's work for the Company.
Absent such disclosure, Employee warrants that all work performed by Employee
will be Employee's own and that no other person shall have any right, title, or
interest in any work submitted to the Company.

         13. Records. Employee agrees that Employee will keep and maintain
adequate and current written records of all Work Product created by Employee.
All written records relating to any Work Product, whether in the form of notes,
data, reference materials, sketches, drawings,

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memoranda, correspondence, blueprints, manuals, letters, notebooks, reports,
flowcharts, programs, proposals, or any other form, and whether in written,
electronic or other media, concerning the Company's Business or incorporating or
reflecting any of the Work Product, shall be and remain the property of and
available to the Company at all times, and shall be delivered to the Company on
demand or upon Employee leaving the Company's service. The Company may, at any
time and without notice to Employee, take possession of such records regardless
of their location, including Employee's files, desk, computer or other areas
under the control of the Company.

         14. Assistance After Employment. Employee agrees that if, subsequent to
Employee's employment by the Company, his assistance is needed in regard to
securing, defending, or enforcing any patent or copyright of which Employee is
an inventor, co-inventor, author or co-author Employee shall provide requested
assistance and the Company shall pay reasonable compensation for his time at a
rate to be agreed upon but not higher than 150% of the last salary rate paid to
Employee by the Company during his employment, together with full reimbursement
of reasonable and necessary directly-related expenses.

         15. Third-Party Obligations. Employee acknowledges that the Company
from time to time may have agreements with other person or entities or with
government or other agencies that impose obligations or restrictions on the
Company regarding Inventions, Confidential Information or Work Product created
by Employee or the Company during the course of work thereunder, or regarding
the confidential nature of the work or confidential information of the third
party disclosed during or used as part of such work. Employee agrees to be bound
by all such obligations and restrictions and to take all action necessary to
discharge the obligations of the Company thereunder.

         16. Notices. Any notices to be given hereunder by either Party to the
other may be effected in writing either by personal delivery, via telefacsimile
or by mail, registered or certified, postage prepaid with return receipt
requested to the addresses set forth above, provided however, each Party may
change the address by written notice in accordance with this Section 16. Notices
delivered personally or by telecopier (with answerback received) shall be deemed
communicated as of actual receipt mailed notices shall be deemed communicated as
of three days after mailing.

         17. Noncompetition. Employee agrees that during the term of this
Agreement and for a period of one (1) year after the last payment from the
Company to Employee has been delivered, Employee will not, without the prior
written consent of the Company (which consent may be withheld for any reason),
provide services, within the United States and in locations where Company
customers are located, substantially similar to the services to be provided by
Employee under this Agreement to any person or entity engaged in a business
which is substantially similar to the Company's Business, or which can
reasonably be expected to compete with the Company's Business. Notwithstanding
anything herein which may be construed to the contrary, Employee shall be free
to use and employ Employee's general skills, know-how and expertise, and to use,
disclose and employ any generalized ideas, concepts, know-how, methods,
techniques or skills gained or learned during the course of providing the
services hereunder, so long as Employee acquires and applies this information
without disclosure of any Confidential Information of the Company and without
violating the terms of this Section 17. The term of this noncompetition covenant
shall be tolled during any period of actual competition by the Employee and/or
any period of litigation required to enforce the Employee's obligations under
this Agreement. The Company acknowledges

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that the Employee is a part-time employee of United Therapeutics Corporation and
Northern Therapeutics Corporation, and the Company agrees that Employee's work
for such companies, as of the Effective Date, does not fall within the scope of
services that competes with the Company's Business; provided however, in the
event the scope of the services provided by Employee to such companies or the
scope of the Company's Business change such that the services provided by
Employee to such companies or other third parties compete with the Company's
Business, the provision of this Paragraph with respect to noncompetition will
apply and may be enforced by the Company.

         18. Warranty by Employee. Employee represents and warrants that his
performance of all terms under this Agreement does not result in a breach of any
duty owed by Employee to another, under contract or otherwise, or violate any
confidence of another. Employee agrees not to disclose to the Company or induce
the Company to use any confidential or proprietary information belonging to any
of the Employee's previous employers or others. Employee warrants that Employee
has executed no prior noncompetition, nondisclosure or confidentiality
agreements that would in any way interfere with his work for or employment by
the Company. Employee agrees to notify the Company in writing before Employee
makes any disclosure to or performs any work on behalf of the Company which
appears to threaten or conflict with any proprietary right Employee claims in
any Work Product and in the event of Employee's failure to give such notice,
Employee shall make no claim against the Company with respect to any such Work
Product.

         19. Exit Interview. Employee agrees that upon termination of Employee's
employment for any reason, Employee shall participate in an exit interview with
Company personnel. At or prior to the time of this interview Employee shall
deliver to the Company all notes, data, reference materials, sketches, drawings,
memoranda, correspondence, manuals, letters, notebooks, reports, programs,
proposals, or any other documents, whether in written, electronic or other
media, concerning the Company's Business or incorporating or reflecting any of
the Confidential Information or Work Product. Employee agrees that, upon
request, Employee will execute a sworn statement that Employee has complied with
the terms of this Section, and that should Employee fail to execute such a
statement the Company may withhold any and all amounts due to Employee for any
reason, except minimum compensation required by law.

         20. Extraordinary Relief. Nothing in this Agreement shall be construed
as prohibiting the Company from pursuing all remedies available to the Company
for breach of this Agreement. Employee recognizes and agrees that because of the
unique nature of the Confidential Information and the competitive position of
the Company his breach of this Agreement will irreparably injure the Company,
for which the Company could not adequately be compensated by remedies at law.
Should Employee at any time reveal or use for the benefit of other than the
Company or threaten to so reveal or use any Confidential Information in
violation of Section 9, or during any restricted period violate or threaten to
violate any of the restrictions in Section 17, the Company shall be entitled to
an injunction restraining Employee from doing or continuing to do or performing
any such acts, and Employee hereby consents to the issuance of such injunction
against Employee. Employee further agrees to waive any bond requirement that may
arise if the Company is forced to seek injunctive relief to enforce the terms of
this Agreement.

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         21. Accounting for Profits; Indemnification. Employee covenants and
agrees that if Employee shall violate any of Employee's covenants or agreements
under this Agreement, the Company shall be entitled to an accounting and
repayment of all profits, compensation, royalties, commissions, remunerations or
benefits which Employee directly or indirectly shall have realized or may
realize relating to, growing out of or in connection with any such violation;
such remedy shall be in addition to and not in limitation of any injunctive
relief or other rights or remedies to which the Company is or may be entitled at
law or in equity or otherwise under this Agreement. Employee hereby agrees to
defend, indemnify and hold harmless the Company against and in respect of: (i)
any and all losses and damages resulting from, relating or incident to, or
arising out of any misrepresentation or breach by Employee of any warranty,
covenant or agreement made or contained in this Agreement; and (ii) any and all
actions, suits, proceedings, claims, demands, judgments, payments, costs and
expenses (including reasonable attorneys' fees) incident to the foregoing.

         22. Successor Employers. Employee hereby authorizes the Company to
provide a copy of this Agreement, including any Exhibits, to any and all future
employers, and to notify any and all future employers that the Company intends
to exercise its legal rights arising out of or in conjunction with the Agreement
and/or any breach or any inducement of breach of it.

         23. Reasonableness and Enforceability. EMPLOYEE HAS READ AND CAREFULLY
CONSIDERED THE TERMS OF THIS AGREEMENT, HAS HAD THE OPPORTUNITY TO CONTACT
EMPLOYEE'S OWN LEGAL COUNSEL TO ADVISE EMPLOYEE REGARDING THE TERMS OF THIS
AGREEMENT, AND EMPLOYEE NOW AGREES THAT THE TERMS OF THIS AGREEMENT ARE FAIR AND
REASONABLE AND ARE REASONABLY REQUIRED FOR THE PROTECTION OF THE INTEREST OF THE
COMPANY AND ITS MEMBERS. EMPLOYEE FURTHER AGREES THAT THE RESTRICTIONS AND
COVENANTS OF THIS AGREEMENT WILL NOT IMPAIR THE ABILITY OF EMPLOYEE TO SECURE
EMPLOYMENT SO AS TO BE ABLE TO MAKE A REASONABLE LIVING. The provisions of this
Agreement shall be enforceable notwithstanding the existence of any claim or
cause of action of Employee against the Company whether predicated on this
Agreement or otherwise. Failure of the Company to enforce
at any time or for any period of time any of the conditions or covenants of this
Agreement shall not be construed as a waiver of such provisions or of the right
of the Company to enforce subsequent breaches of the same or other conditions
and covenants, unless such permanent waiver is provided to Employee in writing
and signed by the President of the Company or, if Employee is the President of
the Company, such writing is to be signed by the Secretary of the Company.

         24. Reformation/Severability of Agreement. If any provision of this
Agreement shall for any reason be adjudged by any court of competent
jurisdiction or arbiter to be illegal, invalid or otherwise unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this Agreement
but shall be confined in its operation to the provision of this Agreement
directly involved in the controversy in which such judgment shall have been
rendered. The invalid or unenforceable provision shall be reformed so that each
party shall have the obligation to perform reasonably alternatively to give the
other party the benefit of its bargain. In the event the invalid or
unenforceable provision cannot be reformed, the other provisions or applications
of this Agreement shall be given full effect, and the invalid or unenforceable
provision shall be deemed struck.

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         25. Construction of Terms. Any reference herein to the masculine shall
include the feminine or neuter, and any reference herein to the singular or
plural may be construed as plural or singular wherever the context requires.

         26. Successor and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including without
limitation any entity which may acquire all or substantially all of the
Company's assets and business or into which the Company may be consolidated or
merged, and the Employee, his heirs, executors, administrators and legal
representatives. Employee may not assign any of his obligations under this
Agreement.

         27. Governing Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of North Carolina applicable to contracts
between residents of North Carolina which are wholly executed and performed in
North Carolina. Any lawsuit brought under the terms of this Agreement shall have
exclusive venue in the state and federal courts of Orange County, North
Carolina; provided, however, that with respect to any proceeding for injunctive
relief the Company may, at its option, bring the proceeding before a court where
Employee resides at the time of such proceeding.

         28. Merger. This Agreement constitutes the entire Agreement between the
parties with respect to the subject matter hereof; and supersedes and replaces
any oral or written communications and any undertakings otherwise made between
the parties relating to the subject matter. Except as specified in Section 24,
no changes, modifications, or amendments of any terms and conditions of this
Agreement are valid or binding unless agreed to in a writing signed by Employee
and the President of the Company or, if Employee is the President or the
Secretary of the Company.

         This Agreement is effective as of the date first above written and is
executed in duplicate originals.

                         [Signatures on following page]

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MOLICHEM MEDICINES, INC.                    MOLICHEM R&D, INC.

By: ______________________________          By:_______________________________
         President                                   President

                                            EMPLOYEE:

                                            ----------------------------------
                                            Dr. Gilles Cloutier

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                                                                       Exhibit A

                      NON-STATUTORY STOCK OPTION AGREEMENT

         This Nonstatutory Stock Option Agreement, dated as of June __, 2001
(this "Agreement") is entered into by and between MoliChem Medicines, Inc., a
Delaware corporation (the "Company") and Dr. Gilles Cloutier, an employee of
MoliChem R&D, Inc. ("R&D"), a wholly owned subsidiary of the Company
("Optionee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, Optionee is now an employee of the Company's wholly owned
subsidiary MoliChem R&D, Inc., and the Company desires to afford employees of
its subsidiary the opportunity to acquire, or enlarge, their stock ownership in
the Company so that Optionee may have a direct proprietary interest in the
success of the Company and its subsidiary;

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties mutually covenant
and agree as follows:

         1. Grant of Option. Subject to the terms and conditions set forth
herein, Company grants to Optionee, during the period commencing with the date
of this Agreement and ending June __, 2011, unless terminated in accordance with
Paragraph 8 (the "Option Period"), the option to purchase from the Company (the
"Option"), at a price of one and a half dollars ($1.50) per share (the "Option
Price") three hundred and fifty thousand (350,000) shares of the Company's
Common Stock (the "Shares"). The Option granted herein is in connection with and
in furtherance of the Company's compensatory benefit plan for participation of
the Company's employees, officers, directors and consultants and is intended to
comply with the provisions of Rule 701 promulgated by the Securities and
Exchange Commission under the Securities Act. The Option granted herein is not
intended to be an "incentive stock option" under Section 422 of the Code.

         2. Exercise of Option

         (a) The Option may be exercised, from time to time, during the Option
Period, to purchase all or any portion of the number of Shares as follows:

                                                          Number of Shares that
Period from Date of Grant of the Option                   May be Purchased
---------------------------------------                   -----------------

On or after June __, 2001                                     350,000

         (b) No fewer than one hundred (100) Shares may be purchased upon any
one exercise of the Option, unless the number of Shares to be purchased at such
time is the total number of Shares remaining subject to the Option. Any exercise
of less than the total number of Shares identified in the Option shall be deemed
an exercise in part, and the Option may again be exercised at such time or times
determined by Optionee, provided that at such times the Option is still
exercisable.

         (c) In no event shall any option granted hereunder be exercisable for a
fractional share.

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         (d) The Option is exercised by Optionee delivering to the Secretary of
the Company, on any business day, a written notice signed by Optionee specifying
the number of Shares to be purchased, together with the Option Price, in the
manner specified in Paragraph 4(a).

         (e) The Option, or any unexercised part thereof, shall not be
exercisable after expiration or termination of the Option Period.

         3. Termination of Employment. Termination of Employment shall not
affect the exercisability of this Option.

         4. Payment of Option Price and Related Taxes.

         (a) Payment in full of the Option Price must be made at the time the
Option is exercised, and shall be paid in U.S. dollars in cash or by certified
or bank check; provided, however, that in the discretion of the Committee, but
only after an Initial Public Offering has occurred, payment may be made by
surrendering shares of Common Stock of the Company owned by Optionee in one or
more sequential surrenders, regardless of whether such shares were acquired
pursuant to the exercise or partial exercise of the Option or any other option
and regardless of whether a stock certificate for such shares shall have been
received by Optionee. Shares received in payment shall be valued at Fair Market
Value as of the date of the exercise of the Option. Any overpayment shall
promptly be refunded in cash.

         (b) To the extent Optionee (or other person exercising this Option)
recognizes income as a result of the exercise of the Option, he or she shall pay
the Company an amount equal to the federal, state and local withholding taxes on
income so recognized within ten (10) days of the exercise of the Option.

         5. Issuance of Shares.

         (a) Within fifteen business days after receiving notice of exercise and
payment of the aggregate Option Price, and subject to Optionee's payment or
arrangement for payment of the applicable taxes as specified in Paragraph 4(b),
the Company shall issue to Optionee the number of Shares with respect to which
the Option was exercised, and shall deliver to Optionee, a certificate for such
Shares.

         (b) Notwithstanding anything to the contrary contained in this
Agreement, this Option may not be exercised if at any time the Board of
Directors determines it is necessary or desirable as a condition of, or in
connection with, the issuance of the Shares that (i) the Shares be listed,
registered or qualified upon any securities exchange or under any state or
federal law, or (ii) the consent or approval of any governmental authority be
received, then the issuance of the Shares may not be consummated in whole or in
part unless such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the Board of
Directors. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance of any shares of its Common Stock hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such stock as to which such requisite authority shall not have been obtained.
Notwithstanding the foregoing, the Company shall not be required to register
under the Securities Act any Common Stock to be issued pursuant to exercise of
the Option.

                                     E-120
<PAGE>

         (c) Notwithstanding anything to the contrary contained in this
Agreement, if at any time specified herein for the issuance of shares to
Optionee, any law, or any regulation or requirement of the Securities and
Exchange Commission or any other federal, state or local governmental authority
having jurisdiction, shall require either the Company or Optionee to take any
action in connection with the shares then to be issued, the issuance of such
shares shall be deferred until such action shall have been taken. The Company
shall be under no obligation to take such action and the Company shall have no
liability whatsoever as a result of the non-issuance of such shares as a result
of not taking such action, except to refund to the Optionee any consideration
tendered in respect of the Option Price.

         6. Transfer of Option. This Option is not transferable by Optionee
except by will or intestate succession, and is exercisable during Optionee's
lifetime only by Optionee. No assignment or transfer of this Option or of the
rights represented thereby in contravention of the foregoing, whether voluntary
or involuntary, by operation of law or otherwise, shall vest in the assignee or
transferee any interest or right herein whatsoever. Immediately upon any attempt
to assign or transfer this Option, this Option shall terminate and be of no
force or effect.

         7. Adjustments Upon Changes in Capitalization or Mergers.

         (a) The Shares with respect to which this Option is granted are shares
of the Common Stock of the Company as constituted on the date of this Agreement,
but if, and whenever, prior to the delivery by the Company of all of the Shares
with respect to which this Option is granted, the Company shall pay a stock
dividend or effect a subdivision or combination of shares, or other capital
readjustment, then (i) in the event of any increase in the number of shares of
common stock outstanding, the number of Shares then remaining subject to the
Option shall be proportionately increased (except that any fraction of a share
resulting from any such adjustment shall be excluded from the operation of this
Agreement), and the Option Price payable per share shall be proportionately
reduced, and (ii) in the event of a reduction in the number of shares of Common
Stock outstanding, the number of Shares then remaining subject to the Option
shall be proportionately reduced (except that any fractional share resulting
from any such adjustment shall be excluded from the operation of this
Agreement), and the Option Price payable per share shall be proportionately
increased.

         (b) Upon a merger or consolidation of the Company with or into or with
one or more other corporations, or any other corporate reorganization of any
form involving the Company as a party and an exchange, conversion, adjustment or
other modification of the outstanding Common Stock, Optionee shall thereafter
have the right, upon exercise of the Option, provided that such Option is
currently exercisable and has not otherwise been terminated, to receive the kind
and amount of shares of stock or other securities or property to which Optionee
would have been entitled if Optionee had received Shares by exercise of the
Option immediately prior to or simultaneously with such merger or consolidation
or similar transaction, and the Option Price shall be adjusted accordingly.
Comparable rights shall accrue to Optionee in the event of successive
transactions of the type described above. These adjustments and the manner of
their application shall be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of fractional shares.

         8. Early Termination of Options.

         (a) Anything contained herein to the contrary notwithstanding, upon a
sale or transfer of all or substantially all of the assets of the Company or R&D
to another corporation (other than a

                                     E-121
<PAGE>

wholly-owned subsidiary), person or entity, or upon a distribution by the
Company of its assets as a liquidating or partial liquidating dividend with
respect to its Common Stock, or the happening of any other similar event
affecting its Common Stock, then following a determination by the Board of
Directors to effect or proceed with such event or transaction, the Board of
Directors, upon at least ten (10) days' written notice to the holder, may in its
sole discretion provide that such Option or any unexercised portion thereof
shall terminate as of the effective date of such event or transaction.

         (b) Anything contained herein to the contrary notwithstanding, upon the
happening of an "Initial Public Offering" (defined as an underwritten offering
of the Company's Common Stock pursuant to a registration statement under the
Securities Act of 1933, as amended, in which the net proceeds to the Company are
at least $5,000,000), then following a determination by the Board of Directors
to effect or proceed with the Initial Public Offering, the Board of Directors,
in its sole discretion, upon at least ten (10) days' written notice to the
holder, may provide that such Option or any unexercised portion thereof shall
terminate as of the effective date of the Initial Public Offering.

         (c) Anything contained herein to the contrary notwithstanding, in the
event of a merger or consolidation of the Company with or into any other
corporation or organization as a result of which the holders of the voting
capital stock of the Company prior to such merger or consolidation would receive
or hold less than a majority of the shares of voting capital stock of the
resulting or surviving corporation or organization, then, following a
determination by the Board of Directors to effect or proceed with such merger or
consolidation, the Board of Directors, upon at least ten (10) days' written
notice to the holder, may in its sole discretion provide that such Option or any
unexercised portion thereof shall terminate as of the effective date of such
merger or consolidation.

         9. Optionee Not Stockholder. Optionee shall not be deemed for any
purpose to be a stockholder of the Company with respect to any shares covered by
this Option unless this Option shall have been exercised and the Option Price
paid in the manner provided herein. No adjustment will be made for dividends or
other rights where the record date is prior to the date of exercise and payment.

         10. No Effect. Neither the Option granted hereunder nor this Agreement
shall affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalization, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issuance of bonds, debentures, preferred
or prior preference stocks ahead of or convertible into, or otherwise affecting
the common stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

         11. Notices. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be delivered
personally or by mail, postage prepaid, addressed as follows: (a) if to the
Company: MoliChem Medicines, Inc., 207 South Elliot Road, PMB No. 231, Chapel
Hill, North Carolina 27514, Attention President, or at such other address as the
Company, by notice to Optionee, may designate in writing from time to time; and
(b) if to Optionee, to Optionee's address appearing below or at such other
address as Optionee, by notice to the Company, may designate in writing from
time to time.

         12. Entire Agreement; Rights and Interest. This Non-Statutory Stock
Option Agreement, including its exhibits, and the Plan pursuant to which it was
issued, constitute the entire agreement of the parties with respect to the
matters covered hereby, and supersede any previous agreements,

                                     E-122
<PAGE>

whether written or oral. Each party hereby stipulates and acknowledges that
there are no other understandings, expectations or agreements, either written or
oral, respecting Optionee's rights and entitlements as a stockholder or option
holder of the Company, including, without limitation, any understandings,
expectations, or agreements regarding any employment, compensation or other
benefits, governance of the Company or the payment of dividends, except as
expressly set forth in Optionee's employment agreement with the Company, if any.
Optionee hereby covenants and agrees, for himself or herself and for his or her
successors and assigns, that no such understandings, expectations or agreements
which may hereafter arise shall be cognizable or enforceable unless the same
shall be reduced to a writing signed by the parties to be charged.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Optionee has hereunto set his or
her hand and seal, all on the day and year first above written.

                                              Molichem Medicines, Inc.
(CORPORATE SEAL)

                                              --------------------------------
                                              President

ATTEST:

---------------------------
Secretary
                                              OPTIONEE:

                                                                        (SEAL)
                                              --------------------------
                                              Dr. Gilles Cloutier
                                              100 Chestnut Road
                                              Chapel Hill, North Carolina 27514

                                     E-123<PAGE>

                                                                   EXHIBIT 10.7

                               MOLICHEM R&D, INC.
                          STANDARD TERMS OF EMPLOYMENT

         THIS AGREEMENT is made as of the 17th day of September, 2001, by and
among Molichem Medicines, Inc., a Delaware corporation, with its mailing address
at 100 Europa Drive, Suite 421, Chapel Hill, North Carolina 27514 ("MLCM"),
MoliChem R&D, Inc., a North Carolina corporation with its mailing address at 100
Europa Drive, Suite 421, Chapel Hill, North Carolina 27514 (the "Employer"), and
Ronald E. Keeney, an individual residing at 1433 Princess Ann Drive, Raleigh,
North Carolina 27607 ("Employee").

         The following terms of employment are agreed to by the Parties:

         1. Engagement. Employer agrees to engage Employee and Employee accepts
an engagement from Employer to serve initially as Executive Vice President and
Chief Medical Officer, subject to change as appropriate to the needs of the
Employer.

         2. Commitment. During and throughout the term of this Agreement,
Employee will devote Employee's entire working time, attention, and energies to
carry out, fulfill and perform the duties and responsibilities to be performed
by Employee under the terms of this Agreement, and as assigned to Employee by
Employer from time to time, and shall not, during the term of this Agreement,
engage in any other business activity unless specifically sanctioned by the
President of Employer. Employee's commitment under this Agreement shall be
full-time. This provision shall not be construed as preventing Employee from
investing Employee's assets in other businesses provided that the investment
does not require significant services or time commitments on the part of
Employee in the affairs of the businesses in which the investments are made;
provided, however, that Employee shall not devote any time to any business
related to or likely to be competitive with the business of Employer, as that
business is defined in Employee's Special Terms and Conditions of Employment,
which are ancillary to this Agreement, without written authorization from the
President of Employer.

         Notwithstanding the foregoing, Employer agrees that Employee may engage
in consulting activities for third parties for up to ten (10) hours per week
provided such activities do not detract from Employee's obligations to Employer,
and are not in violation of the terms of confidentiality or non-competition set
forth in this Agreement or in the "Special Terms of Employment" entered into by
Employee in connection herewith, and provided Employee assumes responsibility
for all of his expenses and taxes in connection with such consulting.

         3. Compensation.

         A. Employee shall be paid an initial salary at the annual rate of one
hundred twenty-five thousand dollars ($125,000), payable in monthly installments
or in such other intervals during the year as Employer regularly pays its other
employees. Employer and Employee shall

                                     E-124
<PAGE>

review Employee's performance on an annual basis in accordance with Employer's
standard practice, and at that time shall determine whether Employee's salary
should be increased.

         B. Employee shall be paid a signing bonus in the amount of thirty
thousand dollars ($30,000). Such payment is in consideration of Employees' start
date in advance of his prior employer's bonus payment date. Such bonus shall be
due upon the commencement of employment, provided however, if Employee receives
his annual bonus from his previous employer prior to his commencement date with
Employer, no signing bonus shall be due to Employee. In the event Employee
receives his annual bonus from his previous employer after his commencement date
with Employer, Employee shall reimburse Employer for the amount of the signing
bonus.

         C. Upon the approval of the Board of Directors, Employee shall have the
opportunity to earn an annual bonus in the amount of twenty percent (20%) of
base compensation and shall be eligible for other incentive compensation
payments, in accordance with such plans as may be adopted by the Board of
Directors of Employer.

         D. In addition to the compensation under Sections 3.a., 3.b. and 3.c.,
Employee shall be awarded an option to purchase one hundred thousand (100,000)
shares of the common stock of MLCM at a purchase price of one dollar and fifty
cents ($1.50) per share pursuant to the terms and conditions of the Option
Agreement in the form of Exhibit A, which agreement provides for vesting of the
options at a rate of 1/36 per month for three years beginning October 1, 2001.
In addition, at the discretion of the Board of Directors of MLCM, Employee may
be granted additional options for the common stock of MLCM upon the completion
of minimum revenue and funding targets to be established by MLCM.

         E. All applicable federal and state taxes and other governmental
assessments shall be deducted from Employee's salary or bonus payments, as
required by law.

         4. Benefits.

         A. Vacation. Employee shall be entitled to fifteen (15) days of paid
vacation each calendar year, which shall accrue at the rate of 3.25 days per
quarter, and to compensation in respect of earned but unused vacation. Vacation
days not used in one calendar year shall carry over to the following calendar
year up to a maximum amount of five (5) days. No compensation shall be due for
unused vacation days that do not carry over.

         B. Sick and Personal Leave. Employee shall be entitled to ten (10) days
of sick and personal leave each calendar year, which shall accrue at the rate of
2.5 days per quarter. Sick leave may be used with respect to illness of Employee
or to attend to illness of any member of his or her immediate family who resides
with Employee. Personal leave may be used to attend to personal matters such as
medical appointments, or funerals of family members. Sick and personal leave
days not used in one calendar year shall carry over to the following calendar
year up to a maximum of thirty (30) days of such leave. No payment shall be made
for unused sick and personal leave.

                                     E-125
<PAGE>

         C. Leave Policies. Employer may at its sole option change its vacation
or sick and personal leave policy by providing a new policy in writing to
Employee and specifically referencing it as an amendment to this Agreement, such
amendment to be prospective only.

         D. Holidays. Employee shall be entitled to such paid holidays as are
provided to the other Employer employees.

         E. Insurance. Employer agrees to Employee's individual health, life and
disability insurance premiums for Employee's Glaxo Retirement Medical coverage,
American Medical Association excess major medical coverage, American Medical
Association Life Insurance and American Express Financial long term disability
insurance; provided however, Employer may at any time at its option elect to
discontinue payment of part of all of such premiums and to instead provide
Employee with the standard health, life and disability coverage provided to
other employees, which coverage may vary from time to time or may be eliminated,
provided that Employee is treated the same as other employees similarly
situated. If the Employer offers family coverage on any such policy and Employee
elects such coverage, Employee shall be responsible for payment of the premiums
for Employee's family members other than Employee.

         F. Membership Fees. Employer shall pay Employee's following membership
fees during the term of employment: American Medical Association, American
Academy of Pediatrics, American Academy of Pharmaceutical Physicians,
Association of Clinical Research Professionals, Drug Information Association,
Faculty of Pharmaceutical Physicians of the Royal College of Physicians U.K.,
Ambulatory Pediatric Association and any other organizations as are mutually
agreed upon by Employer and Employee.

         G. Other Benefits. Employee shall be entitled to participate in any
other group benefit plans or arrangements made available to Employer's employees
in the future, subject to and on a basis consistent with the terms, conditions
and overall administration of such plans and arrangements. Nothing paid to
Employee under any plan or arrangement shall be deemed to be in lieu of
compensation payable to Employee pursuant to Paragraph 4.

         H. Expenses. During the term of this Agreement Employee shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
Employee in performing services on behalf of Employer, including all expenses of
travel, provided that such expenses are documented by proper receipts and in
accordance with the travel and reimbursement policies established by Employer.

         5. Drug and Alcohol Use. Employee acknowledges that the use,
possession, or sale of narcotics, hallucinogens, depressants, stimulants,
marijuana, or other controlled substances on Employer premises or while in
pursuit of Employer business is prohibited. (This does not apply to medication
prescribed by a licensed physician and taken in accordance with such
prescription). The use of the above substances on or away from Employer premises
or of any other substance such as alcohol, which adversely affects Employee's
job performance, or which may reflect unfavorably on public confidence in the
manner in which Employer carries out its responsibilities, as determined by
Employer, is also prohibited.

                                     E-126
<PAGE>

         6. Term and Termination.

         A. Employee may terminate his employment at any time upon giving two
week's written notice to Employer.

         B. Employer may terminate Employee at any time, at?will, and with or
without cause, upon two weeks' prior notice, or upon immediate notice with
payment of two weeks' salary in accordance with subparagraph (d) below; provided
however, in the event Employee is terminated for other than cause, Employer
shall pay Employee a severance payment in the amount of six (6) months salary in
accordance with subparagraph (d) below. For the purpose of this Agreement,
"cause" shall mean (i) the failure of Employee to perform or observe (other than
by reason of illness, injury or incapacity) any of the material terms or
provisions of this Agreement, (ii) dishonesty or misconduct on the part of
Employee that is or is reasonably likely to be materially damaging or materially
detrimental to the business of the Company, (iii) conviction of a felony, (iv)
failure to comply with the reasonable directions of the Board of Directors or
officers of the Company in a way that is materially damaging or materially
detrimental to the business of the Company, or (v) failure to perform his
material duties under this Agreement due to abuse of alcohol or drugs. Prior to
terminating this Agreement on account of Employee's failure to perform or
observe any of the material terms and conditions of this Agreement (as described
in clauses (i), (iv) or (v) of the preceding sentence), the Company shall give
Employee thirty (30) days' written notice and an opportunity to cure such
failure to the satisfaction of the Company.

         C. In addition, Employer may terminate Employee's employment
immediately upon the happening of any of the following:

         (1) Employee's death; or

         (2) Except as may otherwise be provided under the Americans with
Disabilities Act, Employee's disability defined as Employee becoming ill or
injured or otherwise so incapacitated that Employee cannot, in the opinion of
the Board, carry out and perform Employee's duties, and such incapacity
continues for a period in excess of three (3) months; or

         (3) Dissolution of Employer or discontinuance of its business; or

         (4) Employee's violation of representations or obligations under
Paragraph 3 of this Agreement, or of Employee's Special Terms and Conditions of
Employment; or

         (5) Misconduct, including, but not limited to violation of Employer
policies or procedures, unwillingness to perform, insubordination, or a
reasonably based suspicion of dishonesty or other material breach of ethical or
professional standards.

         D. Upon termination, Employer shall make a final payment of all amounts
due for any reason no later than three (3) months after the termination date,
provided that any salary due and payable to Employee shall be paid no later than
the next pay period net of any amounts due from Employee to Employer and
provided further that any severance payment due to Employee shall be paid in
regular monthly installments. Employee agrees that to the extent Employee owes
money or

                                     E-127
<PAGE>

property to Employer, such amounts can be offset by the amounts due to Employee.
As a condition to final payment, Employee shall sign a release indicating that
no further compensation of any type is due prior to receiving the final payment.

         E. Notwithstanding any such termination, the obligations and
restrictions imposed on the Employee pursuant to the Special Terms and
Conditions of Employment shall survive termination of this Agreement and shall
exist in accordance with the terms of that document.

         7. Employee Handbook. From time to time, Employer may distribute
employee manuals or handbooks, and officers or other representatives of Employer
may make written or oral statements relating to Employer's policies and
procedures. Employee shall abide by such policies, procedures and statements. No
policies, procedures, or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any formal employee
manual or handbook) shall be construed to modify this Agreement or Employee's
Special Terms and Conditions of Employment.

         This Agreement is effective as of the date first above written and is
executed in duplicate originals.
                                        MOLICHEM R&D, INC.

                                        By:
----------------------------               ------------------------------
Employee
                                        Its:
                                           ------------------------------

                                        MOLICHEM MEDICINES, INC.

----------------------------
Witness                                 By:
                                           -------------------------------

                                        Its:
                                            ------------------------------

                                     E-128
<PAGE>

                                                                       Exhibit A

                      NON-STATUTORY STOCK OPTION AGREEMENT

         This Nonstatutory Stock Option Agreement, dated as of September 17,
2001 (this "Agreement") is entered into by and between MoliChem Medicines, Inc.,
a Delaware corporation (the "Company") and Ronald E. Keeney, an employee of
MoliChem R&D, Inc. ("R&D"), a wholly owned subsidiary of the Company
("Optionee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, Optionee is now an employee of the Company's wholly owned
subsidiary MoliChem R&D, Inc., and the Company desires to afford employees of
its subsidiary the opportunity to acquire, or enlarge, their stock ownership in
the Company so that Optionee may have a direct proprietary interest in the
success of the Company and its subsidiary;

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties mutually covenant
and agree as follows:

         1. Grant of Option. Subject to the terms and conditions set forth
herein, Company grants to Optionee, during the period commencing with the date
of this Agreement and ending September 16, 2011, unless terminated in accordance
with Paragraph 3 or accelerated or terminated in accordance with Paragraph 8
(the "Option Period"), the option to purchase from the Company (the "Option"),
at a price of one and a half dollars ($1.50) per share (the "Option Price") one
hundred thousand (100,000) shares of the Company's Common Stock (the "Shares").
The Option granted herein is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
employees, officers, directors and consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act. The Option granted herein is not intended to be an
"incentive stock option" under Section 422 of the Code.

         2. Exercise of Option

         (a) The Option may be exercised, from time to time, during the Option
Period, to purchase all or any portion of the number of Shares as follows:

                                                              CumulativeMaximum
                                                                Percentage of
                                                                  Shares that
         Period from Date of Grant of the Option               may be Purchased
         ---------------------------------------               ----------------

         Before October 1, 2001                                    0%

         On the first day of each month beginning October 1, 2001 and on the
         first day of each of the next thirty-five (35) months, 1/36 of the
         remaining unvested Option shall vest such that 1/36 of 100% each such
         month shall be added to the cumulative maximum percentage of shares
         that may be purchased.

                                     E-129
<PAGE>

The maximum number of Shares that may be purchased during each time period
specified above shall be reduced by the number of Shares purchased prior to the
beginning of such period, such that the cumulative maximum for each time period
is not exceeded.

         (b) No fewer than one hundred (100) Shares may be purchased upon any
one exercise of the Option, unless the number of Shares to be purchased at such
time is the total number of Shares remaining subject to the Option. Any exercise
of less than the total number of Shares identified in the Option shall be deemed
an exercise in part, and the Option may again be exercised at such time or times
determined by Optionee, provided that at such times the Option is still
exercisable.

         (c) In no event shall any option granted hereunder be exercisable for a
fractional share.

         (d) The Option is exercised by Optionee delivering to the Secretary of
the Company, on any business day, a written notice signed by Optionee specifying
the number of Shares to be purchased, together with the Option Price, in the
manner specified in Paragraph 4(a).

         (e) The Option, or any unexercised part thereof, shall not be
exercisable after expiration or termination of the Option Period.

         3. Termination of Employment. Vesting of the Option, as set forth in
Paragraph 2(a), shall terminate as of the date of termination of Optionee's
employment such that the Option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of Paragraph 2(a) of
this Agreement and also that number of shares as to which the exercise of the
Option is accelerated under Section 8. For the purpose of this Agreement,
termination of employment means cessation of Optionee's employment relation with
the Company or an Affiliate for any reason, including without limitation,
termination by death, disability, retirement, for cause, without cause,
voluntary or involuntary; termination shall not be deemed to have occurred if
Optionee changes employment from employment with the Company or an Affiliate to
employment with another Affiliate or the Company provided that Optionee is
working at least fifty percent (50%) of the time for the Company or an
Affiliate.

         4. Payment of Option Price and Related Taxes.

         (a) Payment in full of the Option Price must be made at the time the
Option is exercised, and shall be paid in U.S. dollars in cash or by certified
or bank check; provided, however, that in the discretion of the Committee, but
only after an Initial Public Offering has occurred, payment may be made by
surrendering shares of Common Stock of the Company owned by Optionee in one or
more sequential surrenders, regardless of whether such shares were acquired
pursuant to the exercise or partial exercise of the Option or any other option
and regardless of whether a stock certificate for such shares shall have been
received by Optionee. Shares received in payment shall be valued at Fair Market
Value as of the date of the exercise of the Option. Any overpayment shall
promptly be refunded in cash.

         (b) To the extent Optionee (or other person exercising this Option)
recognizes income as a result of the exercise of the Option, Optionee shall pay
the Company an amount equal to the federal, state and local withholding taxes on
income so recognized within ten (10) days of the exercise of the Option.

                                     E-130
<PAGE>

         5. Issuance of Shares.

         (a) Within fifteen business days after receiving notice of exercise and
payment of the aggregate Option Price, and subject to Optionee's payment or
arrangement for payment of the applicable taxes as specified in Paragraph 4(b),
the Company shall issue to Optionee the number of Shares with respect to which
the Option was exercised, and shall deliver to Optionee, a certificate for such
Shares.

         (b) Notwithstanding anything to the contrary contained in this
Agreement, this Option may not be exercised if at any time the Board of
Directors determines it is necessary or desirable as a condition of, or in
connection with, the issuance of the Shares that (i) the Shares be listed,
registered or qualified upon any securities exchange or under any state or
federal law, or (ii) the consent or approval of any governmental authority be
received. In no event may the Shares be issued in whole or in part unless such
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions not acceptable to the Board of Directors. The
inability of the Company to obtain from any regulatory body having jurisdiction
the authority deemed by the Company's counsel to be necessary to the lawful
issuance of any shares of its Common Stock hereunder shall relieve the Company
of any liability in respect of the nonissuance or sale of such stock as to which
such requisite authority shall not have been obtained. Notwithstanding the
foregoing, the Company shall not be required to register under the Securities
Act any Common Stock to be issued pursuant to exercise of the Option.

         (c) Notwithstanding anything to the contrary contained in this
Agreement, if at any time specified herein for the issuance of shares to
Optionee, any law, or any regulation or requirement of the Securities and
Exchange Commission or any other federal, state or local governmental authority
having jurisdiction, shall require either the Company or Optionee to take any
action in connection with the shares then to be issued, the issuance of such
shares shall be deferred until such action shall have been taken. The Company
shall be under no obligation to take such action and the Company shall have no
liability whatsoever as a result of the non-issuance of such shares as a result
of not taking such action, except to refund to the Optionee any consideration
tendered in respect of the Option Price.

         6. Transfer of Option. This Option is not transferable by Optionee
except by will or intestate succession, and is exercisable during Optionee's
lifetime only by Optionee. No assignment or transfer of this Option or of the
rights represented thereby in contravention of the foregoing, whether voluntary
or involuntary, by operation of law or otherwise, shall vest in the assignee or
transferee any interest or right herein whatsoever. Immediately upon any attempt
to assign or transfer this Option, this Option shall terminate and be of no
force or effect.

         7. Adjustments Upon Changes in Capitalization or Mergers.

         (a) The Shares with respect to which this Option is granted are shares
of the Common Stock of the Company as constituted on the date of this Agreement,
but if, and whenever, prior to the delivery by the Company of all of the Shares
with respect to which this Option is granted, the Company shall pay a stock
dividend or effect a subdivision or combination of shares, or other capital
readjustment, then (i) in the event of any increase in the number of shares of
common stock outstanding, the number of Shares then remaining subject to the
Option shall be proportionately increased (except that any fraction of a share
resulting from any such adjustment shall be excluded from the operation of this
Agreement), and the Option Price payable per share shall be proportionately
reduced, and (ii) in the event of a reduction in the number of shares of Common

                                     E-131
<PAGE>

Stock outstanding, the number of Shares then remaining subject to the Option
shall be proportionately reduced (except that any fractional share resulting
from any such adjustment shall be excluded from the operation of this
Agreement), and the Option Price payable per share shall be proportionately
increased.

         (b) Upon a merger or consolidation of the Company with or into or with
one or more other corporations, or any other corporate reorganization of any
form involving the Company as a party and an exchange, conversion, adjustment or
other modification of the outstanding Common Stock, Optionee shall thereafter
have the right, upon exercise of the Option, provided that such Option is
currently exercisable and has not otherwise been terminated, to receive the kind
and amount of shares of stock or other securities or property to which Optionee
would have been entitled if Optionee had received Shares by exercise of the
Option immediately prior to or simultaneously with such merger or consolidation
or similar transaction, and the Option Price shall be adjusted accordingly.
Comparable rights shall accrue to Optionee in the event of successive
transactions of the type described above. These adjustments and the manner of
their application shall be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of fractional shares.

         8. Termination and Acceleration of Options.

         (a) Anything contained herein to the contrary notwithstanding, upon a
sale or transfer of all or substantially all of the assets of the Company or R&D
to another corporation (other than a wholly-owned subsidiary), person or entity,
or upon a distribution by the Company of its assets as a liquidating or partial
liquidating dividend with respect to its Common Stock, or the happening of any
other similar event affecting its Common Stock, then following a determination
by the Board of Directors to effect or proceed with such event or transaction,
and in any event at least ten (10) days' prior to the effective date of such
event or transaction, the exercisability of the Option shall be accelerated such
that even if certain conditions must be met for the exercise of a portion of the
Option, the Option shall be exercisable for the full remaining amount of the
Shares. Further, in the event of such event or transaction, the Board of
Directors, upon at least ten (10) days' written notice to the holder, may in its
sole discretion provide that such Option or any unexercised portion thereof
shall terminate as of the effective date of such event or transaction.

         (b) Anything contained herein to the contrary notwithstanding, upon the
happening of an "Initial Public Offering" (defined as an underwritten offering
of the Company's Common Stock pursuant to a registration statement under the
Securities Act of 1933, as amended, in which the net proceeds to the Company are
at least $5,000,000), then following a determination by the Board of Directors
to effect or proceed with the Initial Public Offering, the Board of Directors,
in its sole discretion and upon at least ten (10) days' written notice to the
holder of all or any portion of any Option previously granted and unexercised,
shall either (i) accelerate the exercisability of all or any portion of such
Option to a date prior to the effective date of the Initial Public Offering,
even if any other provisions of this Agreement require such Option or any
portion thereof be outstanding for a minimum amount of time prior to exercise,
or (ii) accelerate the exercisability of all or any portion of such Option as
provided in the preceding clause (i) and provide that such Option or any
unexercised portion thereof shall terminate as of the effective date of the
Initial Public Offering.

         (c) Anything contained herein to the contrary notwithstanding, in the
event of a merger or consolidation of the Company with or into any other
corporation or organization as a result of which the holders of the voting
capital stock of the Company prior to such merger or consolidation would receive
or hold less than a majority of the shares of voting capital stock of the
resulting or surviving

                                     E-132
<PAGE>

corporation or organization, then, following a determination by the Board of
Directors to effect or proceed with such merger or consolidation, and in any
event at least ten (10) days' prior to the effective date of such merger or
consolidation, the exercisability of the Option shall be accelerated such that
even if certain conditions must be met for the exercise of a portion of the
Option, the Option shall be exercisable for the full remaining amount of the
Shares. Further, in the event of such merger or consolidation, the Board of
Directors, upon at least ten (10) days' written notice to the holder, may in its
sole discretion provide that such Option or any unexercised portion thereof
shall terminate as of the effective date of such merger or consolidation.

         (d) Anything contained herein to the contrary notwithstanding, in the
event Optionee's position of employment with the Company is terminated as a
result of (i) a merger or consolidation of R&D with or into any other
corporation or any other event or series of events, as a result of which R&D
ceases to be an Affiliate of the Company, or (ii) the sale or transfer of all or
substantially all of the assets of R&D to another corporation (other than a
wholly-owned subsidiary), person or entity or a distribution by R&D of its
assets as a liquidating or partial liquidating dividend with respect to its
Common Stock, or the happening of any other similar event affecting its Common
Stock, then following a determination by the Board to effect or proceed with
such event or transaction, and in any event at least ten (10) days' prior to the
effective date of such event or transaction, the exercisability of the Option
shall be accelerated such that even if certain conditions must be met for the
exercise of a portion of the Option, the Option shall be exercisable for the
full remaining amount of the Shares.

         9. Optionee Not Stockholder. Optionee shall not be deemed for any
purpose to be a stockholder of the Company with respect to any shares covered by
this Option unless this Option shall have been exercised and the Option Price
paid in the manner provided herein. No adjustment will be made for dividends or
other rights where the record date is prior to the date of exercise and payment.

         10. No Effect. Neither the Option granted hereunder nor this Agreement
shall affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issuance of bonds, debentures, preferred
or prior preference stocks ahead of or convertible into, or otherwise affecting
the common stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

         11. Notices. Any notice which either party hereto may be required or
permitted to give to the other shall be in writing, and may be delivered
personally or by mail, postage prepaid, addressed as follows: (a) if to the
Company: MoliChem Medicines, Inc., 100 Europa Drive, Suite 421, Chapel Hill,
North Carolina 27514, Attention President, or at such other address as the
Company, by notice to Optionee, may designate in writing from time to time; and
(b) if to Optionee, to Optionee's address appearing below or at such other
address as Optionee, by notice to the Company, may designate in writing from
time to time.

         12. Entire Agreement; Rights and Interest. This Non-Statutory Stock
Option Agreement, including its exhibits, and the Plan pursuant to which it was
issued, constitute the entire agreement of the parties with respect to the
matters covered hereby, and supersede any previous agreements, whether written
or oral. Each party hereby stipulates and acknowledges that there are no other
understandings, expectations or agreements, either written or oral, respecting
Optionee's rights and

                                     E-133
<PAGE>

entitlements as a stockholder or option holder of the Company, including,
without limitation, any understandings, expectations, or agreements regarding
any employment, compensation or other benefits, governance of the Company or the
payment of dividends, except as expressly set forth in Optionee's employment
agreement with the Company, if any. Optionee hereby covenants and agrees, for
himself or herself and for his or her successors and assigns, that no such
understandings, expectations or agreements which may hereafter arise shall be
cognizable or enforceable unless the same shall be reduced to a writing signed
by the parties to be charged.

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and Optionee has hereunto set his or
her hand and seal, all on the day and year first above written.

                                              MoliChem Medicines, Inc.
(CORPORATE SEAL)

                                              By:
                                                  ------------------------------
                                                       President

ATTEST:

---------------------------
Secretary
                                              OPTIONEE:

                                                                        (SEAL)
                                              --------------------------
                                              Ronald E. Keeney
                                              1433 Princess Ann Drive
                                              Raleigh, North Carolina 27607

                                     E-134
<PAGE>

                               MOLICHEM R&D, INC.
                   SPECIAL TERMS AND CONDITIONS OF EMPLOYMENT

         This Agreement is made the 17th day of September, 2001, between
MoliChem R&D, Inc., a North Carolina corporation with its mailing address at 100
Europa Drive, Suite 421, Chapel Hill, North Carolina 27514, (the "Company"), and
Ronald E. Keeney, an individual residing at 1433 Princess Ann Drive, Raleigh,
North Carolina 27607 ("Employee").

         This Agreement is based on the following understandings:

         A. The Company wishes to employ Employee and Employee desires to be
employed by the Company in a position of trust and confidence to aid the Company
in its Business; and

         B. Prior to employment of Employee, as a condition of employment, and
as part of the initial financial compensation established for Employee, the
Parties wish to establish their respective rights in and to the use of certain
proprietary and confidential information and intellectual property and to the
work product of Employee, and to enter into an understanding regarding the use
of the Company's assets, information and goodwill to compete with the Company;
and

         C. The Company has informed Employee that entering into this Agreement
is a condition of initial employment and the Company would not employ Employee
unless Employee agreed to the terms herein; and

         D. Nothing contained in this Agreement shall be deemed to give Employee
the right to be employed by the Company for any specific length of time or at
any specific wage, it being understood that this Agreement is ancillary to the
understandings between the Company and Employee related to compensation,
benefits and other terms of employment.

         Therefore, the Parties to this Agreement, affirming the correctness of
each recital above, contract and agree as follows:

         1. Consideration. This Agreement is executed by Employee in
consideration of initial employment of Employee by the Company, it being
understood and agreed that the execution of this Agreement by Employee was
contemplated in accepting employment and agreeing to the compensation the
Company is to pay to Employee. Employee acknowledges that this consideration is
sufficient and adequate consideration for all covenants and commitments made by
Employee to the Company in this Agreement.

         2. Reasonableness and Enforceability. EMPLOYEE HAS READ AND CAREFULLY
CONSIDERED THE TERMS OF THIS AGREEMENT, HAS HAD THE OPPORTUNITY TO CONTACT
EMPLOYEE'S OWN LEGAL COUNSEL TO ADVISE EMPLOYEE REGARDING THE TERMS OF THIS
AGREEMENT, AND EMPLOYEE NOW AGREES THAT THE TERMS OF THIS AGREEMENT ARE FAIR AND
REASONABLE AND ARE REASONABLY REQUIRED FOR THE PROTECTION OF THE INTEREST OF THE
COMPANY AND THE COMPANY'S SHAREHOLDERS. EMPLOYEE FURTHER AGREES THAT THE
RESTRICTIONS AND COVENANTS OF THIS AGREEMENT WILL NOT IMPAIR

                                     E-135
<PAGE>

THE ABILITY OF EMPLOYEE TO SECURE EMPLOYMENT SO AS TO BE ABLE TO MAKE A
REASONABLE LIVING. The provisions of this Agreement shall be enforceable
notwithstanding the existence of any claim or cause of action of Employee
against the Company whether predicated on this Agreement or otherwise. Failure
of the Company to enforce at any time or for any period of time any of the
conditions or covenants of this Agreement shall not be construed as a waiver of
such provisions or of the right of the Company to enforce subsequent breaches of
the same or other conditions and covenants, unless such permanent waiver is
provided to Employee in writing and signed by President of the Company.

         3. The Company's Business. It is understood by Employee that the
"Company's Business" includes, without limitation, research, development and
commercialization of treatments for respiratory diseases, including but not
limited to cystic fibrosis, chronic obstructive pulmonary disorders,
tuberculosis, chronic bronchitis and related diseases and treatment of sepsis,
ARDS and related diseases. Any notification of Employee by the Company, oral or
written, or any reasonable knowledge on the part of Employee that the Company's
Business includes other specific aspects shall expand Employee's obligations
under this Agreement to include those additional aspects of the Company's
Business.

        4.  Confidential Information.

         (a) For the purposes of this Agreement, "Confidential Information"
shall mean each of the following: (i) any information or material proprietary to
the Company or designated as confidential either orally or in writing by the
Company; (ii) any information not generally known by non?Company personnel
(other than persons subject to an obligation of confidentiality); (iii) any
information which Employee should know the Company would not care to have
revealed to others or used in competition with the Company; and (iv) any
information which Employee made or makes, conceived or conceives, developed or
develops or obtained or obtains knowledge or access through or as a result of
Employee's relationship with the Company (including information received,
originated, discovered or developed in whole or in part by Employee) from the
initial date of Employee's employment with the Company. The Confidential
Information includes but is not limited to the following types of information
and other information of a similar nature (whether or not reduced to writing):
Inventions (as defined below), development procedures, test methodologies,
research results, know-how, specifications, models, software in various stages
of development, technical, user and product documentation under development,
internal documentation, diagrams, data, flowcharts, spreadsheets, marketing and
development plans, customer (licensee) names and other information related to
current and potential customers (licensees) (including without limitation names,
addresses, phone and fax numbers, hardware configurations, computer software
licenses, support required, terms of dealing, and other customer information
acquired in the course of providing products or services to customers), price
lists, pricing policies, supplier lists, financial information and employee
files. Confidential Information shall also include, without limitation, data,
notes, records, files, memoranda, email, reports, designs, drawings, plans,
sketches, documents, print?outs, and the like, in any way or in any medium
incorporating or reflecting any of the Confidential Information, or relating to
the Company's Business, or to any client, vendor, licensor, licensee or other
party transacting business with the Company. Confidential Information also
includes any information described above which the Company obtains from another
party and which the Company treats as proprietary or designates as Confidential
Information, whether or not owned

                                     E-136
<PAGE>

or developed by the Company, including without limitation information of or
concerning the Company's customers. The failure of the Company to mark any of
the above-described information as proprietary, confidential, or secret shall
not affect its status as part of the Confidential Information protected by this
Agreement.

         (b) For the purposes of this Agreement, "Inventions" shall mean ideas,
designs, creations, concepts, techniques, inventions, improvements, discoveries,
and works of authorship, whether or not patentable or protectable by copyright
or patent, whether or not fixed in a tangible medium of expression and whether
or not reduced to practice, including but not limited to the nature and results
of research and development activities, processes, formulae, devices, designs,
processes, computer programs, and methods, together with any improvements
thereon or thereto, derivative works or applications derived therefrom, and
know?how related thereto.

         (c) Information publicly known that is generally employed by the
industry of the Company (the "Company's Industry") at or after the time Employee
first learns of such information, or generic information or knowledge which
Employee would have learned in the course of similar employment or work
elsewhere in the Company's Industry shall not be deemed part of the Confidential
Information.

         5. Nondisclosure and Non-use of Confidential Information.

         (a) Employee agrees that Employee has a fiduciary duty to the Company
and that Employee shall hold in confidence and shall not, except in the course
of performing Employee's employment obligations or pursuant to written
authorization from the Company: (i) directly or indirectly reveal, report,
publish, disclose or transfer the Confidential Information or any part thereof
to any person or entity; (ii) use any of the Confidential Information or any
part thereof for any purpose other than for the benefit of the Company; or (iii)
assist any person or entity other than the Company to secure any benefit from
the Confidential Information or any part thereof.

         (b) This Paragraph 5 shall remain in effect from Employee's initial
employment with the Company and at all times during Employee's employment with
the Company and for ten (10) years after termination of Employee's relationship
with the Company, except that this Paragraph 5 shall remain in effect
indefinitely as to Confidential Information that is a trade secret (as defined
by statute and common law).

         6. Ownership of Confidential Information and Work Product.

         (a) Except as limited by this Paragraph, Employee agrees that all
Confidential Information and all other work product of any type or nature
created by Employee or resulting from work performed by Employee for the
Company, using the Company's facilities, equipment, supplies or other property,
during business hours, or related to the Company's Business, even if not
Confidential Information (such Confidential Information and work product being
defined as "Work Product"), shall belong to the Company exclusively and without
any additional compensation to Employee. Employee agrees that any original
copyrightable Work Product shall be considered as "works made for hire," and
that the Company shall be deemed the author thereof, provided that to the extent
such Work Product is determined not to constitute "works made for hire"

                                     E-137
<PAGE>

as a matter of law, Employee hereby irrevocably assigns and transfers to the
Company all rights in and to such Work Product.

         (b) The Company's ownership right to such Work Product shall extend
regardless of the hours during which or facilities at which the Work Product is
made or the resources or ownership of resources used in making it; provided
however that the assignment of rights shall not apply to creations developed
entirely on Employee's own time without using the Company's facilities,
equipment, supplies or other property, Confidential Information or Work Product,
provided that the creations do not (a) relate to the Company's Business or
actual or demonstrably anticipated research or development, or (b) result from
any work performed by Employee for the Company. This Agreement is not intended
to, and shall not be interpreted to, assign or vest in the Company rights not
assignable pursuant to North Carolina General Statutes Section 66-57.1.

         (c) Upon request Employee will execute any instrument required to vest
in the Company complete title and ownership to all Work Product, and will, at
the request and expense of the Company, execute any instruments necessary to
obtain legal protection in the United States and foreign countries for all Work
Product and for the purpose of vesting title thereto in the Company, or its
nominee, all without any additional compensation of any kind to Employee. Only
if the Company executes a written statement that it does not desire to obtain
protection for a particular Invention or copyrightable creation is Employee free
to obtain protection in Employee's own name and at Employee's own expense,
provided, however, that the Company shall have a royalty-free nonexclusive
irrevocable license under any patent or copyright so obtained by Employee.

         7. Disclosure to the Company. Upon the conception of any Work Product
by Employee (either solely or in conjunction with others) and without waiting to
perfect or complete it, Employee promises and agrees immediately to fully
disclose to an officer of the Company, and to no one else, and thereafter to
treat the Work Product as the property and secret of the Company. This shall
include Work Product made, conceived or reduced to practice after the term of
Employee's employment but which belong to the Company pursuant to Paragraphs 6
and 14. Upon request Employee will reduce any concept in the Work Product to
writing and deliver all copies of the writing to the President of the Company,
or if Employee is the President of the Company, such copies shall be delivered
to the Secretary of the Company. These obligations shall continue beyond the
termination of employment with respect to Work Product conceived or made during
the period of employment.

         8. Collaboration. Employee warrants that Employee will disclose the
participation of any other person in any of Employee's work for the Company.
Absent such disclosure, Employee warrants that all work performed by Employee
will be Employee's own and that no other person shall have any right, title, or
interest in any work submitted to the Company.

         9. Records. Employee agrees that Employee will keep and maintain
adequate and current written records of all Work Product created by Employee.
All written records relating to any Work Product, whether in the form of notes,
data, reference materials, sketches, drawings, memoranda, correspondence,
blueprints, manuals, letters, notebooks, reports, flowcharts, programs,
proposals, or any other form, and whether in written, electronic or other media,
concerning the

                                     E-138
<PAGE>

Company's Business or incorporating or reflecting any of the Work Product, shall
be and remain the property of and available to the Company at all times, and
shall be delivered to the Company on demand or upon Employee leaving the
Company's service. The Company may, at any time and without notice to Employee,
take possession of such records regardless of their location, including
Employee's files, desk, computer or other areas under the control of the
Company.

         10. Assistance After Employment. Employee agrees that if, subsequent to
Employee's employment by the Company, his assistance is needed in regard to
securing, defending, or enforcing any patent or copyright of which Employee is
an inventor, co-inventor, author or co-author Employee shall provide requested
assistance and the Company shall pay reasonable compensation for his time at a
rate to be agreed upon but not higher than 150% of the last salary rate paid to
Employee by the Company during his employment, together with full reimbursement
of reasonable and necessary directly-related expenses.

         11. Third-Party Obligations. Employee acknowledges that the Company
from time to time may have agreements with other person or entities or with
government or other agencies that impose obligations or restrictions on the
Company regarding work to be created by Employee or the Company during the
course of work thereunder, or regarding the confidential nature of the work or
Confidential Information of the third party disclosed during or used as part of
such work. Employee agrees to be bound by all such obligations and restrictions
and to take all action necessary to discharge the obligations of the Company
thereunder.

         12. Non-Competition. Employee will obtain access to Confidential
Information and to the Company's clients and goodwill immediately or within a
very short period of time after employment, all of which can be used to provide
Employee with an unfair advantage if used to compete against the Company.
Employee recognizes that the Company has invested substantial amounts of money
and other resources to place the Company in a position where the Company and its
employees are accorded respect as a member of a premiere organization in the
areas of the Company's Business, that Employee by reason of Employee's
affiliation with the Company has acquired a high stature and goodwill in the
industry related to the Company's Business, and that it would be unfair for
Employee to trade on this stature and goodwill to the competitive disadvantage
of the Company. Employee further acknowledges that the nature of the Company's
Business results in activities and customers located throughout the United
States and the world. The Company's Business could be performed and its goodwill
used in any location in the United States or the world; the fact that a customer
or employee is not currently located in a city or state does not mean that the
undertaking of activities by Employee in such city or state in competition with
the Company's Business would have a different impact than undertaking of the
activity in a city or state where customers or employees are located. The
Parties also recognize that it is the intent of the Company, to the fullest
extent permitted by law, to protect the unique aspects of the Company's Business
and to prevent specialized knowledge, skills and relationships acquired by
Employee during the course of Employee's employment with the Company from being
used in a manner that interferes with the Company's goodwill or customer
relations or gives an unfair advantage to the former Employee and/or Employee's
new employer, or places Employee or the new employer in an unfair competitive
position. Employee recognizes that in order to protect the legitimate business
interests and goodwill of the Company and the investments of its Shareholders,
it is reasonable and necessary for Employee to restrict certain of Employee's
actions during Employee's employment and for the period of time

                                     E-139
<PAGE>

after the date of Employee's termination of employment as specified below.
Therefore Employee agrees as follows:

         (a) Employee (i) will not consult with or accept employment with a
business which competes with the Company's Business if such consulting or
employment will require Employee to engage in actions similar to those actions
undertaken by Employee in the course and scope of Employee's employment with the
Company, draw upon specialized training or knowledge received at the Company,
utilize specialized skills developed at the Company, draw upon the Company's
goodwill, draw upon industry or current or potential customer contacts developed
at the Company, or utilize procedures developed by the Company; and (ii) will
not accept consult or accept employment with a business that competes with the
Company's Business if such employment will require Employee to engage in actions
similar to those actions undertaken by Employee in the course and scope of
Employee's employment with the Company; and (iii) will not engage in, or take
action for the purpose of enabling Employee to engage in, either as an
individual, employee, consultant, independent contractor, advisor, or otherwise,
or be interested in (as present or prospective owner, partner, investor,
shareholder (except in a publicly traded company), advisor, or otherwise), a
business which engages in or competes with the Company's Business, except that
Employee may be employed by such a competing business provided that Employee
does not work in the section or division of the competing business which
competes with the Company's Business and that such employment will not require a
breach of the non-disclosure and non-use requirements of Paragraph 5.

         (b) Employee will not, either individually or through any other person
or entity: (i) employ or seek to employ or engage as an independent contractor
or seek to engage as an independent contractor in any business competitive with
the Company's Business, any person who is an employee of the Company or is an
independent contractor engaged in the provision of services to the Company, or
any person who was an employee of the Company or was an independent contractor
engaged in provision of services to the Company (x) within six months prior to
such employment or engagement of such person by Employee, or (y) within seven to
twelve months prior to such employment or engagement of such person by Employee,
or (y) within thirteen to eighteen months prior to such employment or engagement
of such person by Employee; or (ii) knowingly take any action detrimental to the
relationship between the Company and its present and future employees or
independent contractors.

         (c) Employee will not, either individually or through any other person
or entity, solicit, (i) influence, or attempt to influence any customer
(licensee) or potential customer (licensee) of the Company with regard to the
customer's purchase (or licensing) of products or services from the Company or
from any competing business offering the same or substitutable products or
services if such business is a customer or prospective (under negotiation)
customer of the Company or was a customer or prospective (under negotiation)
customer of the Company (x) within six months prior to the termination of
Employee's employment with the Company, or (y) within seven to twelve months
prior to the termination of Employee's employment with the Company, or (z)
within thirteen to eighteen months prior to the termination of Employee's
employment with the Company; or (ii) take any action detrimental to the existing
or prospective (under negotiation) relationships between the Company and any
customer or potential customer.

                                     E-140
<PAGE>

         (d) Employee will not, either individually or through any other person
or entity, (i) solicit, influence, or attempt to influence any provider of
services or products to the Company, with regard to the provision of services or
products to the Company, nor shall Employee do so with respect to any person or
entity which was a provider of services or products to the Company (x) within
six months prior to the termination of Employee's employment with the Company,
or (y) within seven to twelve months prior to the termination of Employee's
employment with the Company, or (z) within thirteen to eighteen months prior to
the termination of Employee's employment with the Company; or (ii) take any
action detrimental to the existing or prospective (under negotiation)
relationships between the Company and any provider of services or products.

         (e) The term of the restrictions specified in this Paragraph 12 is the
period of Employee's employment by the Company and for one (1) year after the
termination of Employee's employment by the Company. The term specified in this
subparagraph (e) shall be tolled during any period of actual competition by the
Employee and/or any period of litigation required to enforce the Employee's
obligations under this Agreement.

         (f) The geographic scope of the restriction set forth in this Paragraph
12 is: (i) a fifty mile radius of the corporate headquarters of the Company; and
(ii) a fifty mile radius of Employee's residence; and (iii) a fifty mile radius
of all cities where the Company is conducting research, development,
manufacturing or commercialization activities related to the Company's products;
(iv) a fifty mile radius of all cities where the Company has contracted to do
business; and (v) a fifty mile radius of all cities where the Company has
contracts pertaining to license, research, development, manufacture or sales of
the Company's products, or has or had negotiations related to the same; and (vi)
the United States; and (vii) Canada; and (viii) the world.

         The provisions and clauses of this Paragraph 12 are separate and
independent covenants, and the invalidity or unenforceability of one or more of
the provisions or clauses hereof shall not affect the validity or enforceability
of the remaining provisions or clauses.

       13.  Change of Noncompetition Restrictions.

         (a) The parties recognize that the law relating to noncompetition has
been and is evolving, and what may be permitted as restrictions change with
decisions of the courts and new statutes. Therefore, the parties agree that to
the extent the law changes the Company may, without the prior consent of
Employee or any further compensation to Employee, amend any provision or clause
of Paragraph 12 to meet the requirements of the change; provided, however, that
no such amendment shall impose any greater restrictions on Employee than those
in Paragraph 12.

         (b) Employee agrees that if Employee believes the provisions and
clauses of Paragraph 12 are unreasonable, based on the circumstances existing at
the relevant time and the legitimate interests of the Company, Employee will
request that the Company waive or modify such provisions and clauses so as to
reasonably protect the Company's legitimate interests, which request shall
include an explanation of the how and to what extent the provisions and clauses
of Paragraph 12 are unreasonable. The Company may, but shall not be required to,
waive or modify the provisions and clauses of Paragraph 12.

                                     E-141
<PAGE>

         14. Warranty by Employee. Employee represents and warrants that his
performance of all terms under this Agreement does not result in a breach of any
duty owed by Employee to another, under contract or otherwise, or violate any
confidence of another. Employee agrees not to disclose to the Company or induce
the Company to use any confidential or proprietary information belonging to any
of the Employee's previous employers or others. Employee warrants that Employee
has executed no prior noncompetition, nondisclosure or confidentiality
agreements that would in any way interfere with his work for or employment by
the Company. Employee represents and warrants that Exhibit A attached hereto,
entitled "List of Work Product," is a true and complete list of all creations,
if any, whether or not patented or copyrighted and whether or not reduced to
practice, made by Employee prior to his employment with the Company, and which
therefore are not subject to the provisions of Paragraph 6; provided, however,
that any improvements, whether or not patentable or reduced to practice, made to
or on, or any derivative work made from, any of the listed confidential and
propriety information after Employee's commencement of employment by the Company
are subject to the terms of Paragraph 6.

         Employee agrees to notify the Company in writing before Employee makes
any disclosure to or performs any work on behalf of the Company which appears to
threaten or conflict with any proprietary right Employee claims in any Work
Product and in the event of Employee's failure to give such notice, Employee
shall make no claim against the Company with respect to any such Work Product.

         15. Exit Interview. Employee agrees that upon termination of Employee's
employment for any reason, Employee shall participate in an exit interview with
Company personnel. At or prior to the time of this interview Employee shall
deliver to the Company all materials or media referenced in Paragraph 4 of this
Agreement containing Confidential Information, as well as all records referenced
in Paragraph 9 of this Agreement, in Employee's possession or control, or which
the Employee has otherwise removed from the premises of the Company. Employee
agrees that, upon request Employee will execute a sworn statement that Employee
has complied with the terms of the Agreement. Should Employee fail to execute
such a statement, in addition to any other remedies the Company may have, the
Company may withhold any and all amounts due to Employee for any reason, except
minimum compensation required by law.

         16. Extraordinary Relief. Nothing in this Agreement shall be construed
as prohibiting the Company from pursuing all remedies available to the Company
for breach of this Agreement. Employee recognizes and agrees that because of the
unique nature of the Confidential Information and the competitive position of
the Company, his breach of this Agreement will irreparably injure the Company
for which the Company could not adequately be compensated by remedies at law.
Should Employee at any time reveal or use for the benefit of other than the
Company or threaten to so reveal or use any Confidential Information, or during
any restricted period violate or threaten to violate any of the restrictions in
Paragraph 12, the Company shall be entitled to an injunction restraining
Employee from doing or continuing to do or performing any such acts, and
Employee hereby consents to the issuance of such injunction against Employee.
Employee further agrees to waive any bond requirement that may arise if the
Company is forced to seek injunctive relief to enforce the terms of this
Agreement. Employee agrees that the existence of any other claim or cause of
action, whether predicated on any other provision of this Agreement; or
otherwise as a result of the relationship between the parties, shall not
constitute a defense to the

                                     E-142
<PAGE>

enforcement of the restrictions in Paragraph 12 or any provisions protecting the
Confidential Information.

         17. Accounting for Profits; Indemnification. Employee covenants and
agrees that, if Employee shall violate any of Employee's covenants or agreements
under this Agreement, the Company shall be entitled to an accounting and
repayment of all profits, compensation, royalties, commissions, remunerations or
benefits which Employee directly or indirectly shall have realized or may
realize relating to, growing out of or in connection with any such violation;
such remedy shall be in addition to and not in limitation of any injunctive
relief or other rights or remedies to which the Company is or may be entitled at
law or in equity or otherwise under this Agreement. Employee hereby agrees to
defend, indemnify and hold harmless the Company against and in respect of: (i)
any and all losses and damages resulting from, relating or incident to, or
arising out of any misrepresentation or breach by Employee of any warranty,
covenant or agreement made or contained in this Agreement; and (ii) any and all
actions, suits, proceedings, claims, demands, judgments, payments, costs and
expenses (including reasonable attorneys' fees) incident to the foregoing.

         18. Successor Employers. Employee hereby authorizes the Company to
provide a copy of this Agreement, including any Exhibits, to any and all future
employers, and to notify any and all future employers that the Company intends
to exercise its legal rights arising out of or in conjunction with the Agreement
and/or any breach or any inducement of breach of it.

         19. Reformation/Severability of Agreement. If any provision of this
Agreement shall for any reason be adjudged by any court of competent
jurisdiction or arbiter to be illegal, invalid or otherwise unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this Agreement
but shall be confined in its operation to the provision of this Agreement
directly involved in the controversy in which such judgment shall have been
rendered. The invalid or unenforceable provision shall be reformed so that each
party shall have the obligation to perform reasonably alternatively to give the
other party the benefit of its bargain. In the event the invalid or
unenforceable provision cannot be reformed, the other provisions or applications
of this Agreement shall be given full effect, and the invalid or unenforceable
provision shall be deemed struck.

         20. Successor and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, including without
limitation any entity which may acquire all or substantially all of the
Company's assets and business or into which the Company may be consolidated or
merged, and the Employee, his/her heirs, executors, administrators and legal
representatives. Employee may not assign any of his obligations under this
Agreement.

         21. Governing Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of North Carolina applicable to contracts
between residents of North Carolina which are wholly executed and performed in
North Carolina and no conflict of law provisions shall be invoked to permit the
laws of any other state or jurisdiction to apply. Any lawsuit brought under the
terms of this Agreement shall have exclusive venue in the state and federal
courts of Orange County, North Carolina; provided, however, that with respect to
any proceeding for injunctive relief the Company may, at its option, bring the
proceeding before a court where Employee resides at the time of such proceeding.

                                     E-143
<PAGE>

         22. Merger. This Agreement (together with my other employment
agreement(s) that may exist between the Company and Employee (the "Additional
Agreements")) constitutes the entire Agreement between the Parties with respect
to the subject matter hereof; and supersedes and replaces any oral or written
communications and any undertakings otherwise made between the Parties relating
to the subject matter. The Additional Agreements (if any) shall remain in full
force and effect except that to the extent this Agreement and any Additional
Agreement are inconsistent, this Agreement shall prevail. Except as specified in
Paragraph 13 or 19, no changes, modifications, or amendments of any terms and
conditions of this Agreement are valid or binding unless agreed to in a writing
signed by Employee and the President of the Company or, if Employee is the
President, the Secretary of the Company.

         This Agreement is effective as of the date first above written and is
executed in duplicate originals.

MOLICHEM R&D, INC.

By:
     --------------------------
             President

EMPLOYEE                                  WITNESS

-------------------------------           -------------------------------
         (Signature)                               (Signature)

-------------------------------           -------------------------------
        (Print Name)                              (Print Name)

                                     E-144
<PAGE>

                                    EXHIBIT A

                              LIST OF WORK PRODUCT
                 NOT SUBJECT TO OWNERSHIP BY MOLICHEM R&D, INC.

         The following is a complete list of all confidential information,
inventions, improvements or creations relevant to the subject matter of my
employment by the Company that has been made or conceived or first reduced to
practice by me alone or jointly with others prior to my employment by the
Company that I desire to remove from the operation of the Company's Special
Terms and Conditions of Employment, to which this is attached as Exhibit A.

_______  No confidential information, inventions, improvements or creations.

_______  Any and all such confidential information, inventions, improvements or
creations as is described below:

_______  Additional sheets attached.

---------------------
Employee

                                     E-145

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