Exhibit 10.3
MACROCHEM CORPORATION
110 Hartwell Avenue
Lexington, Massachusetts 02421-3134
September 12, 2005
BY HAND DELIVERY
Mr. Thomas C. K. Chan, Ph.D
Vice President of Research and Development,
Chief Technology Officer
c/o MacroChem Corporation
110 Hartwell Avenue
Lexington, Massachusetts 02421-3134
Dear Thomas:
The purpose of this letter is to confirm the agreement between you and
MacroChem Corporation ("MACROCHEM" or the "COMPANY") concerning your remaining
employment, your separation from the Company, and your severance arrangements,
as follows:
1. TRANSITION PERIOD. From the date of this Agreement until November 30, 2005
(the "SEPARATION DATE"), you will continue to be employed by the Company in your
current position (the "TRANSITION PERIOD"). You agree not to resign from your
employment prior to November 30, 2005, without the prior written consent of the
Company, which consent will not be unreasonably withheld.
2. SALARY. Within five (5) business days of the effective date of this
Agreement, as defined below, you will receive a lump sum payment equal to
$35,351.92, which amount consists of (i) $29,436.92 representing pay, at your
rate of pay in effect on August 31, 2005, for the vacation days you have earned
but not used as of the date hereof, PLUS (ii) $5,915.00 representing base
salary, which as of September 1, 2005 shall be $455 per week, for the period
beginning September 1, 2005 and ending November 30, 2005 (the "SALARY PAYMENT").
3. DUTIES DURING THE TRANSITION PERIOD. During the Transition Period, you agree
to cooperate fully with the Company and to devote to the Company your best
efforts, professional judgment, skill and knowledge, and such professional time
as is necessary to assist the Company in winding down and selling its business
and assets. The Company acknowledges that you will be actively seeking new
employment during the Transition Period and agrees that you may arrange
reasonable time off to pursue such new employment, provided that it does not
interfere with your obligations to the Company under this Agreement .
4. SEVERANCE. In consideration of your acceptance of this Agreement, the
Company will provide you, within five business days of the effective date of
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this Agreement, as defined below, with a lump sum severance payment equivalent
to nine (9) months of your base salary in effect on August 31, 2005, LESS an
amount equal to the Salary Payment.
5. HEALTH AND DENTAL BENEFIT. Subject to your meeting in full your obligations
under this Agreement and executing in a timely manner (and without revocation)
the release of claims attached hereto as EXHIBIT A following, but within
forty-five days of, the Separation Date (or following, but within 45 days of,
such earlier date as may be specified by the Company), the Company will pay you
a lump sum payment on the Separation Date equal to $14,781.60 (the "BENEFIT
PAYMENT"). The Benefit Payment shall be made to you within 5 days of the later
of (i) the effective date of said release of claims (that is, the day after the
expiration of the seven day revocation period provided for in the release) and
(ii) the Company's receipt of a signed release of claims.
6. DEDUCTIONS. All payments by the Company under this Agreement will be reduced
by all taxes and other amounts that the Company is required to withhold under
applicable law and all other deductions authorized by you.
7. ACKNOWLEDGMENT OF FULL PAYMENT, STATUS OF BENEFITS AND OTHER MATTERS.
(a) You agree that except as provided under this Agreement, no further
compensation is owed to you, whether for services provided to the Company or
otherwise. Without limiting the generality of the preceding sentence, you
also acknowledge that you will not be eligible to receive any further bonus
or other incentive compensation. The parties expressly agree that the Key
Employee Agreement between you and the Company dated as of September 24,
2001 (the "EMPLOYMENT AGREEMENT"), and the Severance Agreement between you
and the Company dated as of October 25, 2002 (the "SEVERANCE AGREEMENT) are
terminated and of no further force or effect as of September 1, 2005, and
that payment by the Company in accordance with the terms of this Agreement
shall be in full and complete satisfaction of any and all compensation that
may be due to you in the nature of severance or separation pay, whether
pursuant to the Employment Agreement, the Severance Agreement or otherwise,
and that you shall have no claim to compensation or benefits under the
Employment Agreement, Severance Agreement or any other agreement or
arrangement with, or plan, policy program or practice of, the Company
providing compensation or benefits in the event of termination of employment
except as expressly set forth in this Agreement.
(b) You will not continue to earn vacation or other paid time off after the
date hereof. If you were participating immediately prior to the Transition
Period then, during the Transition Period, the Company will contribute the
full amount of the premium cost of participation for you and your eligible
dependents in the Company's group health and dental plans. Except as
expressly provided herein or by federal or state law, your participation in
all employee benefit plans and programs of the Company will end as of the
Separation Date, in accordance with the terms of those plans and programs.
8. STOCK OPTIONS. Your rights and obligations with respect to any stock options
granted to you by the Company that are exercisable on the Separation Date shall
be governed by the applicable stock option grants, agreements and plans and
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other restrictions or provisions generally applicable to options granted to
Company employees, as these may be amended from time to time by the Company. All
stock options, if any, granted to you by the Company which are not exercisable
on the Separation Date will be forfeited and cancelled as of that date.
9. CONFIDENTIAL INFORMATION. Notwithstanding anything to the contrary herein,
you and the Company hereby agree the Confidential Information, Inventions and
Noncompetition Agreement, dated as of September 24, 2001, by and between you and
the Company (the "NON-COMPETITION AGREEMENT"), shall remain in full force and
effect following the execution of this Agreement.
10. NON-DISPARAGEMENT AND CONFIDENTIALITY. You agree that you will not disparage
or criticize the Company or its business, product candidates, officers,
directors or employees, and that you will not otherwise do or say anything that
could harm the interests or reputation of the Company or its employees.
11. RETURN OF DOCUMENTS. In signing this Agreement, you give the Company
assurance that you will return to it, no later than the Separation Date, any and
all documents, materials and information related to the business, whether
present or otherwise, of the Company and all keys and other property of the
Company in your possession or control. Further, you agree that after the
Separation Date, you will not, for any purpose, attempt to access or use any
computer or computer network or system of the Company, including without
limitation their electronic mail systems. Further, you acknowledge that you have
disclosed to the Company all passwords necessary or desirable to enable the
Company to access all information which you have password-protected on its
computer network or system.
12. ENTIRE AGREEMENT. This Agreement and the Noncompetition Agreement contain
the entire agreement between you and the Company and replace all prior and
contemporaneous agreements, communications and understandings, whether written
or oral, with respect to your employment and its termination and all related
matters, including, without limitation, the Employment Agreement and the
Severance Agreement.
13. RELEASE OF CLAIMS.
(a) In order to be certain that this Agreement will resolve any and all
concerns that you might have, the Company requests that you carefully
consider its terms, including the release of claims set forth below, and, in
that regard encourages you to seek the advice of an attorney before signing
this Agreement.
(b) For and in consideration of the special pay and benefits to be provided
to you under this Agreement, and as a condition of your receipt of such
benefits, to which you would not otherwise be entitled, you, on your own
behalf and on behalf of your heirs, beneficiaries, executors,
administrators, representatives and assigns, and all others connected with
or claiming through you, hereby release and forever discharge the Company
and all of its past, present and future officers, directors, shareholders,
general and limited partners, joint venturers, members, managers, employees,
agents, predecessors, successors and assigns, and all others connected with
any of them, and any and all benefit plans maintained by the Company and all
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past, present and future representatives, agents, trustees, fiduciaries and
administrators of such plans, both individually and in their official
capacities, from any and all causes of action, rights or claims of any name
or nature whatsoever (all, collectively, "Claims"), whether known or
unknown, which you had in the past, now have, or might now have, through the
date on which you sign this Agreement, including without limitation Claims
in any way resulting from, arising out of or connected with your employment
or its termination or pursuant to any federal, state or local law,
regulation or other requirement, including without limitation Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act and the fair employment practices statutes
of the state or states in which you have provided services to the Company.
(c) This Agreement, including the release of claims set forth the paragraph
immediately above, creates legally binding obligations and the Company
therefore encourages and advises you to consult an attorney before signing
this Agreement. In signing this Agreement, you give the Company assurance
that you have signed it voluntarily and with a full understanding of its
terms; that you have had sufficient opportunity, before signing this
Agreement, to consider its terms and to consult with an attorney, if you
wished to do so, or to consult with any other legal or tax advisors or
members of your immediate family; and that, in signing this Agreement, you
have not relied on any promises or representations, express or implied, that
are not set forth expressly in this Agreement. You acknowledge that in
accordance with the requirements of the Older Workers Benefit Protection
Act, the Company is providing you, in EXHIBIT B, a list of the job
titles and ages of all employees who have been selected for layoff at this
time and therefore are eligible for severance benefits, together with the
job classifications and ages of all individuals who have not been selected
for layoff and therefore are not eligible for severance benefits.
If the terms of this Agreement are acceptable to you, please sign, date
and return it to me within 45 days of the date you receive it. You may revoke
this Agreement at any time during the seven-day period immediately following the
date of your signing by sending written revocation to the Company's Board of
Directors. If you do not do so, then, at the expiration of that seven-day
period, this letter will take effect as a legally-binding agreement between you
and the Company on the basis set forth above. The enclosed copy of this letter,
which you should also sign and date, is for your records.
Sincerely,
MACROCHEM CORPORATION
By: /s/ Robert J. DeLuccia
Accepted and agreed:
Signature: /s/ T. Chan
Date: 9/13/05
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EXHIBIT A
RELEASE OF CLAIMS
For and in consideration of the Benefit Payment, as defined in the
Agreement between me and MacroChem Corporation (the "COMPANY") dated
September ___, 2005, and as a condition of my receipt of such benefits, to
which I would not otherwise be entitled, I, on my own behalf and on behalf
of my heirs, beneficiaries, executors, administrators, representatives and
assigns, and all others connected with or claiming through me, hereby
release and forever discharge the Company and all of its past, present and
future officers, directors, shareholders, general and limited partners,
joint venturers, members, managers, employees, agents, predecessors,
successors and assigns, and all others connected with any of them, and any
and all benefit plans maintained by the Company and all past, present and
future representatives, agents, trustees, fiduciaries and administrators of
such plans, both individually and in their official capacities, from any and
all causes of action, rights or claims of any name or nature whatsoever
(all, collectively, "CLAIMS"), whether known or unknown, which I had in the
past, now have, or might now have, through the date on which I sign this
Release of Claims, including without limitation Claims in any way resulting
from, arising out of or connected with my employment or its termination or
pursuant to any federal, state or local law, regulation or other
requirement, including without limitation Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act and the fair employment practices statutes of the state or
states in which I have provided services to the Company .
In signing this Release of Claims, I acknowledge that I have had at
least forty five (45) days from the later of the date I received it or the
date I gave or received notice of termination of my employment to consider
the terms of this Release of Claims; that I have signed it following my last
day of employment with the Company; that I am advised and encouraged by the
Company to seek the advice of an attorney prior to signing this Release of
Claims; and that I am signing this Release of Claims voluntarily and with a
full understanding of its terms. I also acknowledge receipt of the list of
the job titles and ages of all employees selected for layoff and therefore
eligible for severance benefits, together with the job titles and ages of
those not so selected, appended as EXHIBIT B. I understand that I may revoke
this Release of Claims at any time within seven (7) days of the date of my
signing by written notice to the Board of Directors of the Company and that
this Release of Claims will take effect only upon the expiration of such
seven-day revocation period and only if I have not timely revoked it.
Intending to be legally bound, I have signed this Release of Claims
under seal as of the date written below.
Signature: ________________________________________
Date Signed: ______________________________________
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EXHIBIT B
INFORMATION PROVIDED UNDER THE OLDER WORKER BENEFITS PROTECTION ACT
The following information is being provided to you by MacroChem Corporation
(the "COMPANY") in accordance with the Older Workers Benefit Protection Act
(the "OWBPA") and in conjunction with the termination of your employment and
the Company's offer to you of severance benefits under the Agreement between
you and the Company dated September__ 2005 (the "AGREEMENT"), which benefits
are conditioned on your signing (both as of the effective date of the Agreement
and again as of the termination of your employment with the Company) effective
waivers of claims in favor of the Company (as defined in the Agreement).
All employees of the Company other than its Chief Executive Officer are
eligible for severance benefits if their employment with the Company is
permanently terminated and they otherwise meet the eligibility requirements set
by the Company, which include a requirement that the employee signs a release
of claims such as that contained in your Agreement with the Company.
The OWBPA requires that the Company to inform you of the "decisional unit" used
in determining who would be laid off at this time and to provide you a listing
of the job titles and ages of all persons in that decisional unit selected for
separation and those who were not. In this case, the decisional unit is the
Company in its entirety.
Following is a listing of the job titles and ages of all employees in the
decisional unit who were selected for termination at this time and the job
titles and ages of all employees in that unit who were not so selected:
- --------------------------------------------------------------------------------
JOB TITLE AGE # SELECTED # NOT SELECTED
- --------------------------------------------------------------------------------
Vice President of Research and 49 1 0
Development, Chief Technology
Officer
- --------------------------------------------------------------------------------
Vice President and General Counsel 38 1 0
- --------------------------------------------------------------------------------
Vice President, Chief Financial 61 1 0
Officer and Treasurer
- --------------------------------------------------------------------------------
Vice President, Market Development 62 1 0
- --------------------------------------------------------------------------------
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