To:  Paul J. Schechter, M.D., Ph.D.
     263 Dedham St.
     Dover, MA  02030                                             June 8, 1999

     The undersigned, MacroChem Corporation, a Delaware corporation (the
"Company"), hereby agrees with you as follows:

     1.  POSITION AND RESPONSIBILITIES.

         1.1 You shall serve as Vice President, Drug Development and Regulatory
Affairs of the Company, (or in such other executive capacity as shall be
designated by the Board of Directors and reasonably acceptable to you) and shall
perform the duties customarily associated with such capacity from time to time
and at such place or places as the Company shall designate are appropriate and
necessary in connection with such employment.

         1.2 You will, to the best of your ability, devote your full time and
best efforts to the performance of your duties hereunder and the business and
affairs of the Company. You agree to perform such executive duties as may be
assigned to you by or on authority of the Company's Board of Directors from time
to time.

         1.3 You will duly, punctually and faithfully perform and observe any
and all reasonable rules and regulations which the Company may now or shall
hereafter establish governing the conduct of its business.

     2.  TERM OF EMPLOYMENT.

         2.1 Subject to the provisions hereof, specifically including,
without  limitation,   Section  2.2,  the  term  of  your  employment  shall  be
indefinite.

         2.2 The Company shall have the right to terminate your employment at
any time under this Agreement in any of the following ways:

         (a) on thirty (30) days prior written notice to you upon your
disability  (disability  shall be defined as your  inability  to perform  duties
under this  Agreement  for an  aggregate  of sixty (60) days,  which need not be
consecutive,  out of any one  hundred  twenty  (120) day period due to mental or
physical  disability or  incapacity);  you shall be provided  benefits under the
Company's workers compensation and disability insurance policies,  to the extent
and upon the terms and conditions of such plans that are in effect at the time;

         (b) immediately without prior notice to you by the Company for "Cause",
as hereinafter defined, provided however, that prior to any such termination for
Cause, you have had a reasonable opportunity to be heard thereon;
                                      -1-
<PAGE>

         (c) immediately without prior notice to you in the event of the
bankruptcy or liquidation of the Company or the appointment of a receiver of the
assets of the Company instigated by a creditor of the Company that is not an
affiliate thereof.

         (d) at any time without Cause, provided the Company shall be obligated
to pay to you after such termination an amount equal to six (6) months' Base
Salary, plus benefits provided by the Company to you at the time of such
termination for such period, less applicable taxes and other required
withholdings and any amounts you may owe to the Company. If the financial
condition of the Company so warrants, the Board of Directors of the Company may,
in its sole discretion, delay payment of such amounts due under this paragraph
2.2(d) until such time as the Board of Directors deems that such monies are
available.

         2.3 You shall have the right to terminate your employment hereunder for
any reason, upon not less than four (4) weeks' prior written notice to the
Company.

         2.4 "Cause" for the purpose of Section 2 of this Agreement shall
include: (i) the falseness or material inaccuracy of any of your warranties or
representations herein; (ii) your willful failure or refusal to comply with
explicit directives of the Board of Directors of the Company or to render the
services required herein; (iii) fraud or embezzlement involving assets of the
Company, its customers, suppliers or affiliates or other misappropriation of the
Company's assets or funds; (iv) your conviction for a criminal offense carrying
a potential sentence of more than twelve months in jail; (v) the willful breach
or habitual neglect of your obligations under this Agreement or your duties as
an employee of the Company; and (vi) use of non-prescription or illegal drugs
affecting your ability to perform the duties hereunder.

         2.5 If your employment is terminated because of your death, all
obligations of the Company hereunder shall cease, except with respect to amounts
and obligations accrued to you, including accrued vacation pay, insurance,
vested stock options, and out-of-pocket expenses, through the last day of the
month during which your death has occurred.

     3.  COMPENSATION. You shall receive the compensation and benefits set forth
on Exhibit A hereto ("Compensation") for all services to be rendered by you
hereunder and for your transfer of property rights if any, pursuant to an
agreement relating to proprietary information and inventions of even date
herewith attached hereto as Exhibit B between you and the Company (the
"Confidential Information, Inventions and Noncompetition Agreement").

     4.  CONFIDENTIAL INFORMATION, INVENTIONS AND NONCOMPETITION. You agree to
execute, deliver and be bound by the provisions of the Confidential Information,
Inventions and Noncompetition Agreement attached hereto as Exhibit B.

     5.  REMEDIES. Your obligations under the Confidential Information,
Inventions and Noncompetition Agreement and the provisions of Sections 5 and 6
of this Agreement (as modified by Section 7, if applicable) shall survive the
expiration or termination of your employment with the Company in accordance with
the terms thereof. You acknowledge that a remedy at law for any breach or
threatened breach by you of the provisions of the Confidential Information,

                                      -2-
<PAGE>

Inventions and Noncompetition Agreement would be inadequate and you therefore
agree that the Company shall be entitled to injunctive relief in case of any
such breach or threatened breach.

     6.  ASSIGNMENT. Subject to Section 2.2(c), this Agreement and the rights
and obligations of the parties hereto shall bind and inure to the benefit of any
successor or successors of the Company by reorganization, merger or
consolidation and any assignee of all or substantially all of its business and
properties, but, except as to any such successor or assignee of the Company,
neither this Agreement nor any rights or benefits hereunder may be assigned by
the Company or by you, except by operation of law or by a further written
agreement by the parties hereto.

     7.  INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in case any one or
more of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. MOREOVER, IT IS THE
INTENT OF THE PARTIES THAT if any one or more of the provisions contained in
this Agreement is or becomes or is deemed invalid, illegal or unenforceable or
in case any provision shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
construed by amending, limiting and/or reducing it to conform to applicable laws
so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.

     8.  NOTICES. Any notice which the Company is required to or may desire to
give you shall be given by personal delivery or registered or certified mail,
return receipt requested, addressed to you at your address of record with the
Company, or at such other place as you may from time to time designate in
writing. Any notice which you are required or may desire to give to the Company
hereunder shall be given by personal delivery or by registered or certified
mail, return receipt requested, addressed to the Company at its principal
office, or at such other office as the Company may from time to time designate
in writing. The date of personal delivery or five (5) days after the date of
mailing any notice under this Section 8 shall be deemed to be the date of
delivery thereof.

     9.  WAIVERS. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.

     10. COUNSEL. You acknowledge that you have had the opportunity to read this
Agreement in its entirety and to obtain the advice of counsel regarding its
terms and conditions.
                                      -3-
<PAGE>

     11. COMPLETE AGREEMENT; AMENDMENTS. The foregoing, including Exhibits A
and B attached  hereto,  is the entire  agreement of the parties with respect to
the  subject   matter   hereof,   superseding   any  previous  oral  or  written
communications, representations,  understandings, or agreements with the Company
or any officer or  representative  thereof.  Any amendment to this  Agreement or
waiver  by the  Company  of any  right  hereunder  shall  be  effective  only if
evidenced  by  a  written  instrument  executed  by  the  parties  hereto,  upon
authorization of the Company's Board of Directors.

     12. HEADINGS. The headings of the Sections contained in this Agreement are
inserted for convenience and reference only and in no way define, limit, extend
or describe the scope of this Agreement or the intent of any provisions hereof,
and shall not be deemed to constitute a part hereof or to affect the meaning of
this Agreement in any way.

     13. COUNTERPARTS. This Agreement may be signed in two counterparts, each of
which shall be deemed an original and both of which shall together constitute
one agreement.

     14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance  with  the  internal  laws  of  the  Commonwealth  of  Massachusetts,
excluding its conflict of law principles.

     If you are in agreement with the foregoing, please sign your name below and
also at the bottom of the Confidential Information, Inventions and
Noncompetition Agreement, whereupon both Agreements shall become binding in
accordance with their terms. Please then return this Agreement to the Company.
(You may retain for your records the accompanying counterpart of this Agreement
enclosed herewith).

                                                     Very truly yours,


                                                     MACROCHEM CORPORATION, a
                                                     Delaware  corporation

                                                     By:/s/ Alvin J. Karloff
                                                        --------------------
                                                            Alvin J. Karloff
                                                            President & C.E.O.


Read, Accepted and Agreed:

/s/ Paul J. Schechter
---------------------
Paul J. Schechter, M.D., Ph.D.


                                      -4-
<PAGE>
                                                                      EXHIBIT A

                            COMPENSATION AND BENEFITS

                         OF PAUL SCHECHTER, M.D., Ph.D.


COMPENSATION. Your initial Base Salary, commencing on May 1, 1998, shall be
$175,000 per year,  less applicable  deductions,  payable in accordance with the
Company's  payroll  policies.  An increase in your Base Salary shall be reviewed
and adjusted from time to time by the Board of Directors of the Company.

VACATION. You shall be entitled to all state statutory holidays, and four (4)
weeks paid vacation for the first year of employment. Thereafter, any additional
vacation time, over and above the vacation time already referred to herein shall
be determined by the Board of Directors.

INSURANCE AND BENEFITS. You shall be eligible to receive medical, dental, life,
short and long term disability insurance, currently offered through the
Company's insurance carriers. The Company currently pays 70% of these premiums.

SICK DAYS AND EXCUSED ABSENCE DAYS. You shall be entitled to compensation for
sick days and excused absence days in accordance with Company policy.

STOCK OPTIONS. You have been granted incentive stock options to purchase shares
of the Common Stock of the Company, $.01 par value per share. Future stock
options may be granted by the Company based in part on your performance.



                                      -A1-
<PAGE>
                                                                      EXHIBIT B

        CONFIDENTIAL INFORMATION, INVENTIONS AND NONCOMPETITION AGREEMENT

To:  MacroChem Corporation                          Date: June 8, 1999
     110 Hartwell Avenue
     Lexington, Massachusetts 02421-3134

     The undersigned, in consideration of and as a condition of my employment or
continued employment by you and/or by companies that you own, control, or are
affiliated with or their successors in business (collectively, the "Company"),
hereby agrees as follows:

     1.  CONFIDENTIALITY. I agree to keep confidential, except as the Company
may otherwise consent in writing, and except for the Company's benefit, not to
disclose or make any use of at any time either during or subsequent to my
employment, any Inventions (as hereinafter defined), trade secrets, confidential
information, knowledge, data or other information of the Company relating to
products, franchises, processes, know-how, techniques, methods, designs,
formulas, test data, customer lists, business plans, marketing plans and
strategies, pricing strategies, or other subject matter pertaining to any
business of the Company or any of its affiliates, which I may produce, obtain,
or otherwise acquire during the course of my employment, except as herein
provided. I further agree not to deliver, reproduce or in any way allow any such
trade secrets, confidential information, knowledge, data or other information,
or any documentation relating thereto, to be delivered to or used by any third
parties without specific direction or consent of the Chairman of the Board or
the Chief Executive Officer of the Company. The provisions of this Section 1
shall not apply to such knowledge, data or other information that is generally
known to the public.

     2.  CONFLICTING EMPLOYMENT; RETURN OF CONFIDENTIAL MATERIAL. I agree that
during my employment with the Company I will not engage in any other employment,
occupation, consulting or other activity relating to the business in which the
Company is now or may hereafter become engaged, or which would otherwise
conflict with my obligations to the Company. In the event my employment with the
Company terminates for any reason whatsoever, I agree to promptly surrender and
deliver to the Company all trade secrets, confidential information, processes
and records, including, but not limited to, designs, formulae, test data,
customer lists, business plans and strategies, Inventions or other written
memoranda, materials, equipment, drawings, documents and data that I may obtain
or produce during the course of my employment, and I will not take with me any
description containing or pertaining to any confidential information, knowledge
or data of the Company that I may produce or obtain during the course of my
employment.


                                      -B1-
<PAGE>


     3.  ASSIGNMENT OF INVENTIONS.

         3.1 I hereby acknowledge and agree that the Company is the owner of all
Inventions. In order to protect the Company's rights to such Inventions, by
executing this Agreement I hereby irrevocably assign to the Company all my
right, title and interest in and to all Inventions to the Company.

         3.2 For purposes of this Agreement, "Inventions" shall mean all
discoveries, processes, designs, technologies, methods, techniques, devices, or
improvements in any of the foregoing or other ideas, whether or not patentable
or copyrightable and whether or not reduced to practice, made or conceived by me
(whether solely or jointly with others) during the period of my employment with
the Company that relate to the actual or demonstrably anticipated business,
work, or research and development of the Company, or result from or are
suggested by any task assigned to me or any work performed by me for or on
behalf of the Company.

         3.3 Any discovery, process, design, method, technique, technology,
device, or improvement in any of the foregoing or other ideas, whether or not
patentable or copyrightable and whether or not reduced to practice, made or
conceived by me (whether solely or jointly with others) that I develop entirely
on my own time not using any of the Company's equipment, supplies, facilities,
or trade secret information ("Personal Invention") is excluded from this
Agreement provided such Personal Invention (a) does not relate to the actual or
demonstrably anticipated business, research and development of the Company, and
(b) does not result, directly or indirectly, from any work performed by me for
the Company.

     4. DISCLOSURE OF INVENTIONS. I agree that in connection with any
Invention, I will promptly disclose such Invention to the Board of Directors of
the Company in order to permit the Company to enforce its property rights to
such Invention in accordance with this Agreement. My disclosure shall be
received in confidence by the Company. If the Company in good faith decides not
to use an Invention, it will advise me of same and the rights to such Invention
will revert to me within a reasonable period of time.

     5.  PATENTS AND COPYRIGHTS; EXECUTION OF DOCUMENTS.

         5.1 Upon request, I agree to assist the Company or its nominee (at its
expense) during and at any time subsequent to my employment in every reasonable
way to obtain for its own benefit patents and copyrights for Inventions in any
and all countries. Such patents and copyrights shall be and remain the sole and
exclusive property of the Company or its nominee. I agree to perform such lawful
acts as the Company deems to be necessary to allow it to exercise all right,
title and interest in and to such patents and copyrights.

         5.2 In connection with this Agreement, I agree to execute, acknowledge
and deliver to the Company or its nominee upon request and at its expense all
documents, including assignments of title, patent or copyright applications,
assignments of such applications, assignments of patents or copyrights upon
issuance, as the Company may determine necessary or desirable to protect the
Company's or its nominee's interest in Inventions, and/or to use in obtaining
patents or copyrights in any and all countries and to vest title thereto in the
Company or its nominee to any of the foregoing.

                                      -B2-
<PAGE>

     6.  MAINTENANCE OF RECORDS. I agree to keep and maintain adequate and
current written records of all Inventions made by me (in the form of notes,
sketches, drawings, flowcharts, printouts, diskettes and other records as may be
specified by the Company), which records shall be available to and remain the
sole property of the Company at all times.

     7.  PRIOR INVENTIONS. It is understood that all Personal Inventions, if
any, whether patented or unpatented, which I made prior to my employment by the
Company, are excluded from this Agreement. To preclude any possible uncertainty,
I have set forth on Schedule A attached hereto a complete list of all of my
prior Personal Inventions, including numbers of all patents and patent
applications and a brief description of all unpatented Personal Inventions that
are not the property of a previous employer. I represent and covenant that the
list is complete and that, if no items are on the list, I have no such prior
Personal Inventions. I agree to notify the Company in writing before I make any
disclosure or perform any work on behalf of the Company that appears to threaten
or conflict with proprietary rights I claim in any Personal Invention. In the
event of my failure to give such notice, I agree that I will make no claim
against the Company with respect to any such Personal Invention.

     8.  OTHER OBLIGATIONS. I acknowledge that the Company from time to time may
have agreements with other persons, companies, entities, Governments or agencies
thereof, that impose obligations or restrictions on the Company regarding
Inventions made during the course of work thereunder or regarding the
confidential nature of such work. I agree to be bound by all such obligations
and restrictions and to take all actions necessary to discharge the Company's
obligations.

     9.  TRADE SECRETS OF OTHERS. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep confidential proprietary information, knowledge, or
data acquired by me in confidence or in trust prior to my employment with the
Company, and I will not disclose to the Company, or induce the Company to use,
any confidential or proprietary information or material belonging to any
previous employer or others. I agree not to enter into any agreement either
written or oral in conflict herewith.

     10. OTHER ACTIVITIES DURING EMPLOYMENT.

         10.1 Except for any outside employments and directorships currently
held by me as listed on Schedule B hereto, and except with the prior written
consent of a majority of the Company's Board of Directors, which consent will
not be unreasonably withheld, I will not, during my employment by the Company,
undertake or engage in any other employment, occupation or business enterprise,
other than one in which I am an inactive investor, that would interfere with my
obligations to the Company.

                                      -B3-
<PAGE>

         10.2 I hereby agree, that except as disclosed on Schedule B hereto,
during my employment by the Company, I will not, directly or indirectly, engage
(a) individually, (b) as an officer, (c) as a director, (d) as an employee, (e)
as a consultant, (f) as an advisor, (g) as an agent (whether a salesperson or
otherwise), (h) as a broker, or (i) as a partner, coventurer, stockholder or
other proprietor owning directly or indirectly more than five percent (5%)
interest in any firm, corporation, partnership, trust, association, or other
organization which is engaged in the development and licensing of transdermal
delivery products or any other line of business in competition with, or engaged
in or under demonstrable development by the Company (such firm, corporation,
partnership, trust, association, or other organization being hereinafter
referred to as a "Prohibited Enterprise"), without the consent of the Company,
which consent will not be unreasonably withheld. Except as may be shown on
Schedule B hereto, I hereby represent that I am not engaged in any of the
foregoing capacities (a) through (i) in any Prohibited Enterprise.

     11. POST-EMPLOYMENT ACTIVITIES.

         11.1 For a period of two (2) years after the termination, for any
reason, of my employment with the Company, absent the Company's prior written
approval, I will not directly or indirectly engage in activities similar or
reasonably related to those in which I shall have engaged for the Company during
the two years immediately preceding termination, nor render services similar or
reasonably related to those which I shall have rendered during such time to, any
person or entity whether existing or hereafter established that directly
competes with (or proposes or plans to directly compete with) the Company, or in
other areas where the Company carries on a substantial amount of business
("Direct Competitor"). In addition, I shall not entice, induce or encourage any
of the Company's other employees to engage in any activity that, were it done by
me, would violate any provision of this Agreement.

         11.2 No provision of this Agreement shall be construed to preclude me
from performing the same services that the Company retains me to perform for any
person or entity that is not a Direct Competitor of the Company upon the
termination of my employment (or any post-employment consultation) so long as I
do not thereby violate any term of this Agreement.

     12. REMEDIES. My obligations under this Agreement shall survive the
termination of my employment with the Company. I acknowledge that a remedy at
law for any breach or threatened breach by me of the provisions of this
Agreement would be inadequate and I therefore agree that the Company shall be
entitled to injunctive relief in case of any such breach or threatened breach.

     13. MODIFICATION. I agree that any subsequent change or changes in my
employment duties, salary or compensation or, if applicable, in any Employment
Agreement between the Company and me, shall not affect the validity or scope of
this Agreement.

     14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon my heirs,
executors, administrators or other legal representatives and is for the benefit
of the Company, its successors and assigns.

                                      -B4-
<PAGE>

     15. INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in case any one or
more of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein. MOREOVER, IT IS THE
INTENT OF THE PARTIES THAT if any provision of this Agreement is or becomes or
is deemed invalid, illegal or unenforceable or in case any one or more of the
provisions contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject, such
provision shall be construed by amending, limiting and/or reducing it to conform
to applicable laws so as to be valid and enforceable or, if it cannot be so
amended without materially altering the intention of the parties, it shall be
stricken and the remainder of this Agreement shall remain in full force and
effect.

     16. WAIVERS. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
shall be deemed to be a waiver of any future such right or of any other right
arising under this Agreement. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.

     17. COMPLETE AGREEMENT, AMENDMENTS. The foregoing including Schedules A
and B attached hereto is the entire agreement of the parties with respect to the
subject matter hereof,  superseding any previous oral or written communications,
representations,  understandings,  or agreements with the Company or any officer
or  representative  thereof.  Any  amendment to this  Agreement or waiver by the
Company of any right hereunder shall be effective only if evidenced by a written
instrument  executed by the parties hereto,  upon authorization of the Company's
Board of Directors.

     18. HEADINGS. The headings of the Sections contained in this Agreement are
inserted for convenience and reference only and in no way define, limit, extend
or describe the scope of this Agreement, or the intent of any provision hereof,
and shall not be deemed to constitute a part hereof nor to affect the meaning of
this Agreement in any way.

     19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts,
excluding its conflict of law principles.

     20. NOTICES. All notices, requests, demands and communications which are or
may be required to be given hereunder shall be deemed effectively given if and
when sent by registered or certified mail, return receipt requested, postage
prepaid, to the following addresses:

         If to the Company:  Mr. Alvin J. Karloff, President
                             MacroChem Corporation
                             110 Hartwell Avenue
                             Lexington, MA  02421

                                      -B5-
<PAGE>

         If to Employee:     Paul J. Schechter, M.D., Ph.D.
                             263 Dedham St.
                             Dover, MA  02030

     21. CONFLICTS. In the event of any conflict between the provisions of this
agreement and the provisions of the Employment Agreement, the provisions of the
Employment Agreement will govern.



                                           Very truly yours,



                                           /s/  Paul J. Schechter
                                           ----------------------------------
                                           Paul J. Schechter, M.D., Ph.D.
                                           Vice President of Drug Development
                                           & Regulatory Affairs

Agreed:
MacroChem Corporation

By:/s/ Alvin J. Karloff
   -----------------------
       Alvin J. Karloff
       President & C.E.O.



                                      -B6-
<PAGE>
                                                                     SCHEDULE A


                            LIST OF PRIOR INVENTIONS
                       OF PAUL J. SCHECHTER, M.D., Ph.D.

TITLE                               DATE                   IDENTIFYING NUMBER
-----                               ----                   ------------------
                                                           or BRIEF DESCRIPTION
                                                           --------------------















                                      -B7-

<PAGE>

                                                                     SCHEDULE B

                     OUTSIDE EMPLOYMENTS AND DIRECTORSHIPS

                       OF PAUL J. SCHECHTER, M.D., Ph.D.


Medical Advisory Board - Personal MD.com











                                      -B8-
<PAGE>