EXHIBIT 99
MACROCHEM CORPORATION
2001 INCENTIVE PLAN
1. DEFINED TERMS
Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.
2. GENERAL
The Plan has been established to advance the interests of the Company by
giving Stock-based incentives or incentives based on Performance Criteria to
selected Employees, directors and other persons (including both individuals and
entities) who provide services to the Company or any Affiliate.
3. ADMINISTRATION
Unless otherwise determined by the Board, the Plan will be administered by
a Committee of the Board designated for such purpose. The Committee shall
consist of at least two directors. A majority of the members of the Committee
shall constitute a quorum, and all determinations of the Committee shall be made
by a majority of its members. Any determination of the Committee under the Plan
may be made without notice or meeting of the Committee by a writing signed by a
majority of the Committee members. So long as the Stock is registered under the
1934 Act, all members of the Committee shall be non-employee directors within
the meaning of rule 16b-3 under the 1934 Act and outside directors within the
meaning of section 162(m). The Committee will have authority, not inconsistent
with the express provisions of the Plan and in addition to other authority
granted under the Plan, to (a) grant Awards at such time or times as it may
choose; (b) determine the size of each Award, including the number of shares of
Stock subject to the Award; (c) determine the type or types of each Award; (d)
determine the terms and conditions of each Award; (e) waive compliance by a
Participant with any obligations to be performed by the Participant under an
Award and waive any term or condition of an Award; (f) amend or cancel an
existing Award in whole or in part (and if an Award is canceled, grant another
Award in its place on such terms as the Committee shall specify), except that
the Committee may not, without the consent of the holder of an Award, take any
action under this clause with respect to such Award if such action would
adversely affect the rights of such holder; (g) prescribe the form or forms of
instruments that are required or deemed appropriate under the Plan, including
any written notices and elections required of Participants, and change such
forms from time to time; (h) adopt, amend and rescind rules and regulations for
the administration of the Plan; and (i) interpret the Plan and decide any
questions and settle all controversies and disputes that may arise in connection
with the Plan. Such determinations and actions of the Committee, and all other
determinations and actions of the Committee made or taken under authority
granted by any provision of the Plan, will be conclusive and will bind all
parties. Nothing in this paragraph shall be construed as limiting the power of
the Committee to make adjustments under Section 8.
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With respect to persons subject to Section 16 of the 1934 Act, transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. In the case of any Award intended to
be eligible for the performance-based compensation exception under Section
162(m), the Committee shall exercise its discretion consistent with qualifying
the Award for such exception.
4. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective on the date on which it is approved by the
stockholders of the Company. Grants of Awards under the Plan may be made prior
to that date, subject to such approval of the Plan. No Award may be granted
under the Plan after March 22, 2011, but Awards previously granted may extend
beyond that date.
5. LIMITS ON AWARDS UNDER THE PLAN
a) NUMBER OF SHARES. A maximum of 1,200,000 shares of Stock may be
delivered in satisfaction of Awards under the Plan. For purposes of
the preceding sentence, the following shares shall not be considered
to have been delivered under the Plan: (i) shares remaining under an
Award that terminates without having been exercised in full; (ii)
shares subject to an Award, where cash is delivered to a Participant
in lieu of such shares; (iii) shares of Restricted Stock that have
been forfeited in accordance with the terms of the applicable Award;
and (iv) shares held back, in satisfaction of tax withholding
requirements, from shares that would otherwise have been delivered
pursuant to an Award. The number of shares of Stock delivered under an
Award shall be determined net of any previously acquired shares
tendered by the Participant in payment of withholding taxes.
b) TYPE OF SHARES. Stock delivered by the Company under the Plan may be
authorized but unissued Stock or previously issued Stock acquired by
the Company and held in treasury. No fractional shares of Stock will
be delivered under the Plan.
c) OPTION & SAR LIMITS. The maximum number of shares of Stock for which
Stock Options may be granted to any person in any calendar year and
the maximum number of shares of Stock subject to SARs granted to any
person in any calendar year shall each be 600,000. For purposes of the
preceding sentence, the repricing of a Stock Option or SAR shall be
treated as a new grant to the extent required under Section 162(m).
Subject to these limitations, each person eligible to participate in
the Plan shall be eligible in any year to receive awards covering up
to the full number of shares of Stock then available for Awards under
the Plan.
d) OTHER AWARD LIMITS. No more than $1,000,000 may be paid to any
individual with respect to any Cash Performance Award. In applying the
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limitation of the preceding sentence: (A) multiple Cash Performance
Awards to the same individual that are determined by reference to
performance periods of one year or less ending with or within the same
fiscal year of the Company shall be subject in the aggregate to one
limit of such amount, and (B) multiple Cash Performance Awards to the
same individual that are determined by reference to one or more
multi-year performance periods ending in the same fiscal year of the
Company shall be subject in the aggregate to a separate limit of such
amount. With respect to any Performance Award other than a Cash
Performance Award or a Stock Option or SAR, the maximum Award
opportunity shall be 600,000 shares of Stock or their equivalent value
in cash.
6. ELIGIBILITY AND PARTICIPATION
The Committee will select Participants from among those key Employees,
directors and other individuals or entities providing services to the Company or
its Affiliates who, in the opinion of the Committee, are in a position to make a
significant contribution to the success of the Company and its Affiliates.
Eligibility for ISOs is further limited to those individuals whose employment
status would qualify them for the tax treatment described in Sections 421 and
422 of the Code.
7. RULES APPLICABLE TO AWARDS
a. ALL AWARDS
(1) TERMS OF AWARDS. The Committee shall determine the terms of
all Awards subject to the limitations provided herein.
(2) PERFORMANCE CRITERIA. Subject to the conditions set forth in
the definition of "Performance Criteria" in Exhibit A
relating to Performance Awards intended to qualify for the
performance-based compensation exception under Section
162(m), Performance Criteria may be related to personal
performance, corporate performance, departmental performance
or any other category of performance deemed by the Committee
to be important to the success of the Company. The Committee
will determine the Performance Criteria, the period or
periods during which performance is to be measured and all
other terms and conditions applicable to the Award.
(3) TRANSFERABILITY OF AWARDS. Neither ISOs nor Awards may be
transferred other than by will or by the laws of descent and
distribution, and during a Participant's lifetime an Award
requiring exercise may be exercised only by the Participant
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(or in the event of the Participant's incapacity, the person
or persons legally appointed to act on the Participant's
behalf). Notwithstanding the foregoing, Options awarded to
Employees or members of the Board which are not ISOs may be
transferred by a Participant to (i) Immediate Family Members
of the Participant, (ii) a trust or trusts for the exclusive
benefit of Immediate Family Members, or (iii) a partnership
in which such Immediate Family Members are the only
partners, provided that (x) there may be no consideration
for any such transfer and (y) subsequent transfers of
Options shall be prohibited except those in accordance with
this Section 7.a.(3). Following such transfer, the
transferred Option shall continue to be subject to all the
terms and conditions of this Plan, including without
limitation the provisions of Section 7.a.(4) with respect to
exercise of the Option following the death or termination of
employment of the Participant to whom the Option was
originally granted, and Section 7.a.(5) with respect to tax
withholding.
(4) VESTING, ETC. Without limiting the generality of Section 3,
the Committee may determine the time or times at which an
Award will vest (I.E., become free of forfeiture
restrictions) or become exercisable and the terms on which
an Award requiring exercise will remain exercisable. Unless
the Committee expressly provides otherwise, immediately upon
the cessation of the Participant's employment or other
service relationship with the Company and its Affiliates, an
Award requiring exercise will cease to be exercisable, and
all Awards to the extent not already fully vested will be
forfeited, except that:
(A) Subject to (B) and (C) below and except as otherwise determined by
the Committee, all Options and SARs originally issued to the Participant
that were not exercisable immediately prior to the cessation of the
Participant's employment or other service relationship shall terminate at
the time of the cessation of the Participant's employment or other service
relationship. Any Options or SARs that were exercisable immediately prior
to the cessation of the Participant's employment or other service
relationship will continue to be exercisable for a period of six (6)
months (or such longer period as the Committee may determine), and shall
thereupon terminate, unless (i) the Award provides by its terms for
immediate termination in the event of a cessation of the Participant's
employment or other service relationship, or (ii) the cessation of the
Participant's employment or other service relationship results from (w)
retirement of the Participant at or after age 65, (x) retirement of the
Participant at or after age 55 and with at least ten (10) years of
continuous employment by the Company, (y) disability (as determined by the
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Company), or (z) termination of the Participant's service as a
director if the Participant is a non-Employee director, in which cases
that portion of the Option originally issued to the Participant that was
exercisable immediately prior to the cessation of the Participant's
employment or other service relationship will continue to be exercisable
for the original term of the Option. In no event, however, shall an Option
or SAR remain exercisable beyond the latest date on which it could have
been exercised without regard to this Section 7. For purposes of this
Section 7, in the case of a Participant who is an Employee, a cessation of
the Participant's employment shall not be deemed to have resulted by
reason of (i) a sick leave or other bona fide leave of absence approved
for purposes of the Plan by the Committee, so long as the Employee's right
to reemployment is guaranteed either by statute or by contract, or (ii) a
transfer of employment between the Company and a subsidiary or between
subsidiaries, or to the employment of a corporation (or a parent or
subsidiary corporation of such corporation) issuing or assuming an Option
in a transaction to which section 424(a) of the Code applies.
(B) All Stock Options and SARs held by a Participant immediately prior
to his or her death, to the extent then exercisable, will remain
exercisable by such Participant's executor or administrator or the person
or persons to whom the Stock Option or SAR is transferred by will or the
applicable laws of descent and distribution, and all Options originally
issued to the Participant and transferred pursuant to Section 7.a.(3)
hereof may be exercised by the person or persons to whom the Option has
been so transferred, at any time within a one-year period ending with the
first anniversary of the Participant's death and shall thereupon
terminate. In no event, however, shall an Option or SAR remain exercisable
beyond the latest date on which it could have been exercised without
regard to this Section 7.
(C) All Stock Options and SARs, whether or not transferred pursuant to
Section 7.a.(3) hereof, issued to a Participant whose cessation of
employment or other service relationship is determined by the Committee in
its sole discretion to be for reasons that cast such discredit on the
Participant as to justify immediate termination of the Award, shall
immediately terminate upon such cessation of employment or other service
relationship.
Unless the Committee expressly provides otherwise, a Participant's "employment
or other service relationship" with the Company and its Affiliates will be
deemed to have ceased, in the case of an employee Participant, upon termination
of the Participant's employment with the Company and its Affiliates (whether or
not the Participant continues in the service of the Company or its Affiliates in
some capacity other than that of an employee of the Company or its Affiliates),
and in the case of any other Participant, when the service relationship in
respect of which the Award was granted terminates (whether or not the
Participant continues in the service of the Company or its Affiliates in some
other capacity).
(5) TAXES. The Committee will make such provision for the
withholding of taxes as it deems necessary. In the case of
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an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the
Participant or other appropriate person remit to the
Committee an amount sufficient to satisfy the withholding
requirements or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the
delivery of any Stock. The Committee may, but need not, hold
back shares of Stock from an Award or permit a Participant
to tender previously owned shares of Stock in satisfaction
of tax withholding requirements. The Committee may make such
share withholding mandatory with respect to any Award at the
time such Award is made to a Participant.
If at the time an ISO is exercised the Committee determines
that the Company could be liable for withholding
requirements with respect to a disposition of the Stock
received upon exercise, the Committee may also require as a
condition of exercise that the person exercising the ISO
agree (a) to inform the Company promptly of any disposition
(within the meaning of Section 424(c) of the Code) of Stock
received upon exercise, and (b) to give such security as the
Committee deems adequate to meet the potential liability of
the Company for the withholding requirements and to augment
such security from time to time in any amount reasonably
deemed necessary by the Committee to preserve the adequacy
of such security.
(6) RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS. Except as
specifically provided by the Plan, the receipt of an Award
will not give a holder rights as a stockholder; the holder
will obtain such rights, subject to any limitations imposed
by the Plan or the instrument evidencing the Award, upon
actual issuance of the Stock. However, the Committee may, on
such conditions as it deems appropriate, provide that a
holder will receive a benefit in lieu of cash dividends that
would have been payable on any or all Stock subject to the
holder's Award had such Stock been outstanding. Without
limitation, the Committee may provide for payment to the
holder of amounts representing such dividends, either
currently or in the future, or for the investment of such
amounts on behalf of the holder.
(7) RIGHTS LIMITED. Neither the adoption of the Plan nor the
grant of Awards will confer upon any person any right to
continued retention by the Company or any Affiliate as an
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Employee or otherwise, or affect in any way the right of the
Company or any Affiliate to terminate an employment, service
or similar relationship at any time. Except as specifically
provided by the Committee in any particular case, the loss
of existing or potential profit in Awards granted under the
Plan will not constitute an element of damages in the event
of termination of an employment, service or similar
relationship even if the termination is in violation of an
obligation of the Company or an Affiliate to the
Participant.
(8) SECTION 162(M). In the case of an Award intended to be
eligible for the performance-based compensation exception
under Section 162(m), the Plan and such Award shall be
construed to the maximum extent permitted by law in a manner
consistent with qualifying the Award for such exception. In
the case of a Performance Award intended to qualify as
performance-based for the purposes of Section 162(m) (other
than a Stock Option or SAR with an exercise price at least
equal to the fair market value of the underlying Stock on
the date of grant), the Committee shall in writing
pre-establish one or more specific Performance Criteria no
later than ninety (90) days after the commencement of the
period of service to which the performance relates (or at
such earlier time as is required to qualify the Award as
performance-based under Section 162(m)). Prior to payment of
any Performance Award (other than a Stock Option or SAR with
an exercise price at least equal to the fair market value of
the underlying Stock on the date of grant) intended to
qualify as performance-based under Section 162(m), the
Committee shall certify whether the Performance Criteria
have been attained and such determination shall be final and
conclusive. If the Performance Criteria with respect to any
such Award are not attained, no other Award shall be
provided in substitution of the Performance Award.
b. AWARDS REQUIRING EXERCISE
(1) TIME AND MANNER OF EXERCISE. Unless the Committee expressly
provides otherwise, an Award requiring exercise by the
holder will not be deemed to have been exercised until the
Company receives a written notice of exercise (in a form
acceptable to the Company) signed by the appropriate person
and accompanied by any payment required under the Award; and
(b) if the Award is exercised by any person other than the
Participant, the Company may require satisfactory evidence
that the person exercising the Award has the right to do so.
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(2) EXERCISE PRICE. The Committee shall determine the exercise
price of each Stock Option, provided that each Stock Option
intended to qualify for the performance-based exception
under Section 162(m) of the Code and each ISO must have an
exercise price that is not less than the fair market value
of the Stock subject to the Stock Option, determined as of
the date of grant. An ISO granted to an Employee described
in Section 422(b)(6) of the Code must have an exercise price
that is not less than 110% of such fair market value.
(3) PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of an
Award is to be accompanied by payment, the Committee may
determine the required or permitted forms of payment,
subject to the following: (a) all payments will be by cash,
money order or check acceptable to the Company, or, if so
permitted by the Committee (with the consent of the optionee
of an ISO if permitted after the grant), (i) through the
delivery of shares of Stock which have been outstanding for
at least six (6) months (unless the Committee approves a
shorter period) and which have a fair market value equal to
the exercise price, (ii) by delivery of a promissory note of
the person exercising the Award to the Company, payable on
such terms as are specified by the Committee, (iii) by
delivery of an unconditional and irrevocable undertaking by
a broker to deliver promptly to the Company sufficient funds
to pay the exercise price, or (iv) by any combination of the
foregoing permissible forms of payment; and (b) where shares
of Stock issued under an Award are part of an original issue
of shares, the Award shall require that at least so much of
the exercise price as equals the par value of such shares is
paid other than by delivery of a personal check or
promissory note of the person exercising the Award.
c. AWARDS NOT REQUIRING EXERCISE
Awards of Restricted Stock and Unrestricted Stock may be made in return for
either (i) services determined by the Committee to have a value not less than
the par value of the awarded shares of Stock, or (ii) cash or other property
having a value not less than the par value of the awarded shares of Stock plus
such additional amounts (if any) as the Committee may determine payable in such
combination and type of cash, other property (of any kind) or services as the
Committee may determine.
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8. EFFECT OF CERTAIN TRANSACTIONS
a. MERGERS, ETC.
In the event of a Covered Transaction in which there is an acquiring or
surviving entity, the Committee may provide for the assumption of some or all
outstanding Awards, or for the grant of new awards in substitution therefor, by
the acquiror or survivor or an affiliate of such acquiror or survivor, in each
case on such terms and subject to such conditions as the Committee determines;
PROVIDED, that in the absence of such an assumption, or if there is no surviving
or acquiring entity, each Stock Option, SAR and other Award requiring exercise
shall become fully exercisable prior to the Covered Transaction and shall
terminate upon consummation of the Covered Transaction. If an outstanding Award
is subject to performance or other conditions (other than conditions relating
only to the passage of time and continued employment) that will not have been
satisfied at the time of the Covered Transaction, the Committee may in its sole
discretion remove such conditions. In the case of Stock outstanding at the time
of a Covered Transaction that is subject to restrictions under the Plan, the
Committee may require that any amounts delivered, exchanged or otherwise paid in
respect of such Stock in connection with the Covered Transaction be subject to
such restrictions as the Committee deems appropriate to carry out the intent of
the Plan.
b. CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK
(1) BASIC ADJUSTMENT PROVISIONS. In the event of a stock
dividend, stock split or combination of shares,
recapitalization or other change in the Company's capital
structure, the Committee will make appropriate adjustments
to the maximum number of shares that may be delivered under
the Plan under Section 5.a. and to the maximum share limits
described in Sections 5.c. and 5.d., and will also make
appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or
subsequently granted, any exercise prices relating to Awards
and any other provision of Awards affected by such change.
(2) CERTAIN OTHER ADJUSTMENTS. The Committee may also make
adjustments of the type described in paragraph (1) above to
take into account distributions to common stockholders other
than those provided for in Section 8.a. and 8.b.(1), or any
other event, if the Committee determines that adjustments
are appropriate to avoid distortion in the operation of the
Plan and to preserve the value of Awards made hereunder;
PROVIDED, that no such adjustment shall be made to the
individual share limits described in Section 5.c. or 5.d.,
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or otherwise to an Award intended to be eligible for the
performance-based exception under Section 162(m), except to
the extent consistent with that exception, nor shall any
change be made to ISOs except to the extent consistent with
their continued qualification under Section 422 of the Code.
(3) CONTINUING APPLICATION OF PLAN TERMS. References in the Plan
to shares of Stock shall be construed to include any stock
or securities resulting from an adjustment pursuant to this
Section 8.
9. LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove any restriction from shares of Stock previously
delivered under the Plan until the Company's counsel has approved all legal
matters in connection with the issuance and delivery of such shares; if the
outstanding Stock is at the time of delivery listed on any stock exchange or
national market system, the shares to be delivered have been listed or
authorized to be listed on such exchange or system upon official notice of
issuance; and all conditions of the Award have been satisfied or waived. If the
sale of Stock has not been registered under the Securities Act of 1933, as
amended, the Company may require, as a condition to exercise of the Award, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act. The Company may require that
certificates evidencing Stock issued under the Plan bear an appropriate legend
reflecting any restriction on transfer applicable to such Stock.
10. AMENDMENT AND TERMINATION
The Committee may at any time or times amend the Plan or any outstanding
Award for any purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of Awards; PROVIDED, that
(except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify under Section 422 of the Code and for Awards to be
eligible for the performance-based exception under Section 162(m).
11. NON-LIMITATION OF THE COMPANY'S RIGHTS
The existence of the Plan or the grant of any Award shall not in any way
affect the Company's right to award a person bonuses or other compensation in
addition to Awards under the Plan.
12. GOVERNING LAW
The Plan shall be construed in accordance with the laws of the Commonwealth
of Massachusetts.
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EXHIBIT A
DEFINITION OF TERMS
The following terms, when used in the Plan, shall have the meanings and be
subject to the provisions set forth below:
"1934 ACT": The Securities Exchange Act of 1934
"AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in which the
Company or any such corporation or other entity owns, directly or indirectly,
50% of the outstanding capital stock (determined by aggregate voting rights) or
other voting interests.
"AWARD": Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Deferred Stock.
(vi) Securities (other than Stock Options) that are
convertible into or exchangeable for Stock on such terms and conditions as
the Committee determines.
(vii) Cash Performance Awards.
(viii) Performance Awards.
(ix) Grants of cash, or loans, made in connection with other
Awards in order to help defray in whole or in part the economic cost
(including tax cost) of the Award to the Participant.
"BOARD": The Board of Directors of the Company.
"CASH PERFORMANCE AWARD": A Performance Award payable in cash.
"CODE": The U.S. Internal Revenue Code of 1986 as from time to time amended
and in effect, or any successor statute as from time to time in effect.
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"COMMITTEE": One or more committees of the Board designated by the Board to
administer the Plan, which in the case of Awards granted to officers of the
Company, shall be composed solely of two or more outside directors within the
meaning of Section 162(m).
"COMPANY": MacroChem Corporation.
"COVERED TRANSACTION": Any of (i) a consolidation, merger or other
transaction in which the Company is not the surviving corporation or which
results in the acquisition of all or substantially all of the Company's then
outstanding common stock by a single person or entity or by a group of persons
and/or entities acting in concert, (ii) a sale or transfer of all or
substantially all the Company's assets, or (iii) a dissolution or liquidation of
the Company.
"DEFERRED STOCK": A promise to deliver Stock or other securities in the
future on specified terms.
"EMPLOYEE": Any person who is employed by the Company or an Affiliate.
"IMMEDIATE FAMILY MEMBERS": The spouse, children and grandchildren of the
Participant.
"ISO": A Stock Option intended to be an "incentive stock option" within the
meaning of Section 422 of the Code. No Stock Option Awarded under the Plan will
be an ISO unless the Committee expressly provides for ISO treatment.
"PARTICIPANT": An Employee, director or other person or entity providing
services to the Company or its Affiliates who is granted an Award under the
Plan.
"PERFORMANCE AWARD": An Award subject to Performance Criteria. The
Committee in its discretion may grant Performance Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m)
and Performance Awards that are not intended so to qualify.
"PERFORMANCE CRITERIA": Specified criteria the satisfaction of which is a
condition for the exercisability, vesting or full enjoyment of an Award. For
purposes of Performance Awards that are intended to qualify for the
performance-based compensation exception under Section 162(m), a Performance
Criterion shall mean an objectively determinable measure of performance relating
to any of the following (determined either on a consolidated basis or, as the
context permits, on a divisional, subsidiary, line of business, project or
geographical basis or in combinations thereof): (i) sales; revenues; assets;
expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, amortization or other items, whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; one or more operating ratios; borrowing levels, leverage
ratios or credit rating; market share; capital expenditures; cash flow; stock
price; stockholder return; technology licensing; licensing of particular
products; or any combination of the foregoing; or (ii) acquisitions and
divestitures (in whole or in part); joint ventures and strategic alliances;
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spin-offs, split-ups and the like; reorganizations; recapitalizations,
restructurings, financings (issuance of debt or equity) and refinancings;
transactions that would constitute a change of control; or any combination of
the foregoing. A Performance Criterion measure and targets with respect thereto
determined by the Committee need not be based upon an increase, a positive or
improved result or avoidance of loss.
"PLAN": The MacroChem Corporation 2001 Incentive Plan as from time to time
amended and in effect.
"RESTRICTED STOCK": An Award of Stock subject to restrictions requiring
that such Stock be redelivered to the Company if specified conditions are not
satisfied.
"SECTION 162(M)": Section 162(m) of the Code.
"SARS": Rights entitling the holder upon exercise to receive cash or Stock,
as the Committee determines, equal to a function (determined by the Committee
using such factors as it deems appropriate) of the amount by which the Stock has
appreciated in value since the date of the Award.
"STOCK": Common Stock of the Company, par value $0.01 per share.
"STOCK OPTIONS" OR "OPTIONS": Options entitling the recipient to acquire
shares of Stock upon payment of the exercise price.
"UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions
under the Plan.
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