As Amended February 11, 1994
                                                           and November 15, 1996

                              MACROCHEM CORPORATION
                        1984 INCENTIVE STOCK OPTION PLAN

     1. PURPOSE. The purpose of the MacroChem Corporation Incentive Stock Option
Plan (hereinafter referred to as the "Plan") is to provide a special incentive
to selected key employees of MacroChem Corporation (hereinafter referred to as
the "Company") or of any future subsidiary of the Company to improve operations
and to increase profits and to encourage such persons to accept or continue
employment with the Company or any subsidiary of the Company. Accordingly, the
Company will offer to sell shares of common stock of the Company, $0.01 par
value, (the "Stock") as hereinafter provided to such employees of the Company or
of any subsidiary as are designated in accordance with the provisions of the
Plan. For purposes of the Plan, a subsidiary is any corporation in which the
Company owns, directly or indirectly, stock possessing 50% or more of the total
combined voting power of all classes of stock.

     2. ADMINISTRATION. The Plan shall be administered by the Board of Directors
of the Company (the "Board") which shall (a) determine which of the employees of
the Company and its subsidiaries shall be granted options; (b) determine the
time or times when options shall be granted and the number of shares of stock to
be subject to each option; (c) determine the exercise price of the shares
subject to each option and the method of payment of such price; (d) determine
the times or times when each option becomes exercisable and the duration of the
exercise period; (e) prescribe the form or forms of the instruments evidencing
any options granted under the Plan and of any other instruments required under
the Plan and change such forms from time to time; (f) adopt, amend and rescind
rules and regulations for the administration of the Plan; and (g) interpret the
Plan and decide all questions and settle all controversies and disputes which
may arise in connection with the Plan. All decisions, determinations and
interpretations of the Board of Directors shall be binding on all parties
concerned.

     The Board may, in its discretion delegate its powers with respect to the
Plan to a Compensation Committee or any other committee (the "Committee"), in
which event all references to the Board hereunder shall be deemed to refer to
the Committee. The Committee shall consist of at least two directors. A majority
of 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 Committee members. Following
registration of the Common Stock of the Company under the Securities Exchange
Act of 1934, no person shall serve on the Committee unless he is a non-employee
director within the meaning of Rule 16b-3 under that Act.

     3. PARTICIPANTS. The Participants in the Plan shall be key salaried
employees of the Company or of any of its subsidiaries.

     4. LIMITATIONS ON GRANTING OF OPTIONS. The granting of options under the
Plan shall be subject to the following limitations:

                  (a) PERIOD OF GRANT. No option shall be granted under the Plan
         after the expiration of 10 years from the earlier of the date on which
         the Plan is adopted or the date on which it is approved by the
         shareholders of the Company.

                  (b) QUALIFIED PARTICIPANT. Except as hereinafter provided, no
         option shall be granted to a Participant if, at the time of the grant,
         the Participant owns stock possessing more than 10 percent of the total
         combined voting power of all classes of stock of the Company or of its
         subsidiaries. For purposes of determining a Participant's ownership of
         stock for purposes of the preceding sentence, the ownership attribution
         rules of Section 424(d) of the Internal Revenue Code of 1986, as
         amended (the "Code") will apply. The foregoing limitations will not
         apply if (i) the option price is at least 110 percent of the fair
         market value of the stock subject to the option at the time it is
         granted and (ii) the period of the option does not exceed five years
         from the date of grant.

                  (c) MAXIMUM ANNUAL LIMIT. The aggregate fair market value,
         determined at the time the option is granted, of the stock for which
         any Participant may be granted options in any calendar year under the
         Plan (and under all other incentive stock option plans of the Company
         and of its subsidiaries) may not exceed the sum of (i) $100,000 plus
         (ii) any unused limit carryover to such year as determined under the
         applicable provisions of the Code and Treasury Regulations for
         incentive stock options.

         5. TERMS AND CONDITIONS OF OPTIONS. All options granted under the Plan
shall be subject to the following terms and conditions (except as provided in
Sections 7 and 8 below) and to such other terms and conditions consistent with
the applicable provisions of the Internal Revenue Code and Treasury Regulations
for incentive stock options as the Board of Directors shall determine to be
appropriate to accomplish the purposes of the Plan.

                  (a) OPTION PRICE. The option price under each option shall be
         determined by the Board of Directors and shall not be less than 100% of
         the fair market value per share at the time the option is granted; nor
         shall the option price be less, in the case of an original issue of
         authorized stock, than par value. However, if at the time of grant, the
         Participant owns stock possessing more than 10 percent of the total
         combined voting power of all classes of stock of the Company or of its
         subsidiaries, the option price shall not be less than 110% of the fair
         market value of the stock subject to the option.

                  (b) PERIOD OF OPTIONS. An option, by its terms, shall not be
         exercisable after the expiration of 10 years from the date of grant of
         such option. However, if at the time of grant, the Participant owns
         stock possessing more than 10 percent of the total combined voting
         power of all classes of stock of the Company or of its subsidiaries,
         the option, by its terms, shall not be exercisable after the expiration
         of 5 years from the date of grant of such option.

                  (c)  EXERCISE OF OPTIONS.

                           (1) Each option shall be made exercisable at such
                  time or times, whether or not in installments, as the Board of
                  Directors shall prescribe at the time the option is granted.
                  In the case of an option not immediately exercisable in full,
                  the Board of Directors may at any time accelerate the time at
                  which all or any part of the option may be exercised. However,
                  every option, by its terms, shall not be exercisable while
                  there is outstanding (within the meaning of Section 422A(c)(7)
                  of the Internal Revenue Code) any incentive stock option
                  previously granted to the Participant to purchase stock in the
                  Company or in a corporation which (at the time of grant of
                  such option) is a parent or subsidiary of the Company, or is a
                  predecessor corporation of any such corporation.

                           (2) A person electing to exercise an option
                  shall give written notice to the Company, as specified by the
                  Board of Directors, of his election and of the number of
                  shares he has elected to purchase, such notice to be
                  accompanied by:

                                    (i)   the instrument evidencing such option;

                                    (ii)  payment for all shares then being
                           purchased thereunder in full in the form of cash, a
                           certified check or cashier's check or, unless the
                           Board otherwise determines at the time an option is
                           granted, through the delivery of shares of Common
                           Stock (duly owned by the Participant and for which
                           the Participant has good title free and clear of any
                           liens and encumbrances which have been held by the
                           Participant for at least six months (or such shorter
                           period as the Board may determine) having a fair
                           market value on the last business day preceding the
                           date of exercise equal to the purchase price, or a
                           combination of cash and Common Stock or in such other
                           form as the Board shall designate at the time an
                           option is granted;

                                    (iii) payment in cash or by certified or
                           bank check of an amount equal to all applicable
                           local, state or federal withholding taxes, if any, or
                           such other assurance of the payment to the Company of
                           such amount as shall be satisfactory to the Board of
                           Directors in their sole discretion, including if the
                           Board of Directors so determines in the case of an
                           incentive stock option such provision as the Board
                           deems appropriate for the payment of any withholding
                           taxes that may be due upon a later disposition of the
                           stock acquired upon exercise of the option; and

                                    (iv)  any other documents required by the
                           Board of Directors.

                           (3) A person exercising an option shall execute and
                  deliver to the Company any shareholder's agreement or other
                  agreements which the Board of Directors, in its sole
                  discretion, may require at the time of exercise, and unless
                  and until such agreements have been executed and delivered,
                  the Company shall not be obligated to deliver any shares
                  hereunder.

                  (d) DELIVERY OF STOCK. Stock to be delivered under the Plan
         may constitute an original issue of authorized stock or may consist of
         previously issued stock acquired by the Company, as shall be determined
         by the Board. The Board and the proper officers of the Company shall
         take any appropriate action required for such delivery. The Company
         shall not be obligated to deliver any shares unless and until in the
         opinion of the Company's counsel, all applicable federal and state laws
         and regulations have been complied with, nor, in the event the Stock is
         at the time listed upon any stock exchange, unless and until the shares
         to be delivered have been listed or authorized to be added to the list
         upon official notice of issuance upon such exchange, nor unless or
         until all other legal matters in connection with the issuance and
         delivery of shares have been approved by the Company's counsel. Without
         limiting the generality of the foregoing, the Company may require from
         the person exercising an option such investment representation or such
         agreement, if any, as counsel for the Company may consider necessary in
         order to comply with the Securities Act of 1933 and may require that
         the person agree that any sale of the shares will be made only on the
         stock exchange or in such other manner as is permitted by the Board and
         that he will notify the Company when he makes any disposition of the
         shares whether by sale, gift or otherwise. The Company shall use its
         best efforts to effect any such compliance and listing, and the person
         exercising the option shall take any action reasonably requested by the
         Company in such connection. A person exercising an option shall have
         the rights of a shareholder only as to shares actually acquired by him
         under the Plan.

                  (e) NONTRANSFERABILITY OF OPTIONS. Each option, by its terms,
         shall not be transferable by the Participant otherwise than by will or
         by the laws of descent and distribution, and during the Participant's
         lifetime the option shall be exercisable only by him.

                  (f) TERMINATION OF EMPLOYMENT. Except as otherwise provided in
         subparagraphs (g) and (h) below, if the employment of a Participant
         terminates for any reason, his option shall expire immediately and he
         shall not be entitled to purchase any shares.

                  (g) DISABILITY AND RETIREMENT. In the event of termination of
         employment as a result of disability within the meaning of section
         105(d)(4) of the Internal Revenue Code, retirement on or after age 65,
         or retirement on or after age 55 after 10 years of continuous
         employment by the Company, that portion of a Participant's option that
         was exercisable immediately prior to termination will continue to be
         exercisable for the original term of the option, and that portion of
         the option that was not exercisable immediately prior to termination
         will expire, unless otherwise determined by the Board of Directors.

                  (h) DEATH. If a Participant dies at a time when he is entitled
         to exercise an option, then at any time or times within ninety days
         after his death such option may be exercised, as to all or any of the
         shares which the Participant was entitled to purchase immediately prior
         to his death, by his executor or administrator or the person or persons
         to whom the option is transferred by will or the applicable laws of
         descent and distribution, and except as so exercised such option shall
         expire at the end of such period. In no event, however, may any option
         be exercised after the expiration of the option period. If any notice
         of election to exercise an option is given by the executor or
         administrator of a deceased Participant, or by the person or persons to
         whom the option has been transferred by the Participant's will or the
         applicable laws of descent and distribution, the Company shall be under
         no obligation to deliver shares pursuant to such exercise unless and
         until the Company is satisfied that the person or persons giving such
         notice is or are entitled to exercise the option and unless and until
         the persons have executed and delivered any other agreements or
         documents which the Board of Directors may require.

     6. REPLACEMENT OPTIONS. The Company may grant options under the Plan in
substitution for options held by employees of other corporations who
concurrently become employees of the Company or a subsidiary as the result of a
merger or consolidation of another corporation with the Company or subsidiary,
or the acquisition by the Company or a subsidiary of property or stock of
another corporation.

     7. MAXIMUM NUMBER OF SHARES. Subject to adjustment as provided in Section 8
of the Plan, the number of shares of the Stock of the Company which may be
delivered under the Plan shall not exceed 2,000,000 in the aggregate. To the
extent that any options granted under the Plan shall lapse or be terminated, the
shares with respect to which the option has lapsed or been terminated shall
thereafter be available for option under the Plan, within the limit specified
above. The maximum number of shares (subject to adjustment as provided in
Section 8) for which options may be granted to any individual during the term of
the Plan is 160,000 shares. The preceding sentence shall be construed consistent
with the regulations under Section 162(m) of the Code.

     8. CHANGES IN STOCK. In the event of a stock dividend, split-up or
combination of shares, recapitalization or merger in which the Company is the
surviving corporation, or other similar capital change, the number and kind of
shares of stock or securities of the Company to be subject to options then
outstanding, the maximum number of shares or securities which may be issued or
sold under the Plan, the option price and other relevant provisions shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be binding on all persons. In the event of a consolidation
or a merger in which the Company is not the surviving corporation, or which
results in the acquisition of substantially all the Company's outstanding stock
by a single person or entity or by a group of persons and/or entities acting in
concert or in the event of the sale or transfer of substantially all the
Company's assets or a complete liquidation of the Company, all outstanding
options shall thereupon terminate, provided that the Board of Directors may, in
its discretion, make all outstanding options immediately exercisable or arrange
to have any surviving corporation grant replacement options to the Participants.

     9. EMPLOYMENT RIGHTS. The adoption of the Plan does not confer upon any
employee of the Company or a subsidiary any right to continued employment with
the Company or a subsidiary, as the case may be, nor does it interfere in any
way with the right of the Company or a subsidiary to terminate the employment of
any of its employees at any time.

     10. AMENDMENTS. The Board of Directors may at any time discontinue granting
options under the Plan and may at any time amend the Plan or any outstanding
options for the purpose of satisfying the requirements of any changes in
applicable laws or regulations or for any other purpose which may at the time be
permitted by law, provided, however, that (except to the extent required or
permitted under Sections 7 or 8) no amendments shall, without the approval of
the shareholders of the Company (a) increase the maximum number of shares
available under the Plan, (b) change the class of employees eligible for
options, (c) reduce the minimum option price of options thereafter to be granted
below the price provided for in Section 5(a), (d) reduce the option price of
outstanding options, (e) extend the time within which options may be granted,
(f) extend the period of an outstanding option beyond ten years from the date of
grant, (g) alter the restriction on exercising subsequent incentive stock
options which is contained in Section 5(c)(1) or (h) alter the maximum annual
limit of option grants contained in Section 4(c), and no such amendment shall
adversely affect the rights of any Participant (without his consent) under any
option theretofore granted.

     11. EFFECTIVE DATE. The Plan shall become effective as of April 1, 1984,
subject to the approval of the Board of Directors and subject to the vote of the
holders of at least a majority of the shares of the outstanding voting stock of
the Company.