MACROCHEM CORPORATION
                               110 HARTWELL AVENUE
                       LEXINGTON, MASSACHUSETTS 02421-3134

                                 August 10, 1999



Stephen J. Riggi, Ph.D.
MacroChem Corporation
110 Hartwell Avenue
Lexington, Massachusetts 02421-3134

Dear Steve:

     As we have discussed, your employment with MacroChem Corporation (the
"Company") as Vice President, Operations will terminate on August 10, 1999 (the
"Separation Date") as a result of your resignation from this position. The
purpose of this letter is to confirm the agreement ("Agreement") between you and
the Company concerning your severance arrangements.

     In consideration of your accepting all of the terms of this Agreement and
subject to your meeting your obligations under it, the Company will provide you
the following severance pay and benefits:

1.   Beginning on August 11, 1999 and continuing until August 10, 2001 (the
     "Consulting Period"), unless earlier terminated pursuant to paragraph 5
     herein, the Company will engage your services as a consultant to provide
     marketing, business and technical support to the Company (hereinafter
     referred to as the "Services").

2.   During the Consulting Period, you will work on the Services and on other
     matters requested of you by the Company from time to time, devoting up to
     50% of your professional time to your performance of the Services. You are
     free to accept engagements from others during this period, so long as those
     engagements do not violate this Agreement, and/or do not interfere or
     conflict with your provision of the Services to the Company, and/or do not
     breach your continuing obligations to the Company as set forth in (i)
     paragraphs 6, 7, 8, and 9 of your Employment Agreement dated March 25, 1996
     (which expressly survive the termination of the Employment Agreement) and
     (ii) the Proprietary Information and Inventions Agreement. (See paragraph
     15, herein.) You will provide the Services in a timely manner and in
     accordance with generally --- accepted professional standards for such
     Services.

3.   During the first six (6) months of the Consulting Period, you will be paid
     for your Services at the annualized rate of one hundred and seventy-five
     thousand dollars ($175,000), payable monthly. For the remaining eighteen
     (18) months of the Consulting Period, you will be paid for your Services at
     the annualized rate of eighty-seven thousand five hundred dollars ($87,500)
     payable monthly. During the Consulting Period, you will receive all
     benefits provided to you by the Company on the date hereof, including
     medical, dental, and life and disability insurance, pursuant to the terms
     of the Company's benefit plans and programs as from time to time in effect
     (other than participation in the Company's 401(k) Plan, vacation accrual
     and other paid time off).
<PAGE>

4.   All payments to you hereunder shall be net of taxes and other required
     withholdings. Any reasonable expenses incurred by you in providing services
     to the Company hereunder, including without limitation expenses incurred in
     travel and entertainment, shall be reimbursed by the Company, so long as
     such expenses have been expressly authorized in writing by Chief Executive
     Officer Alvin Karloff (or his/her designee) and appropriate receipts and
     other documentation are timely submitted by you to the Company.

5.   The Company may terminate this Agreement and your Services at any time
     without notice in the event that the Company determines, in its reasonable
     judgment, that (i) you have breached any material provision of this
     Agreement; or (ii) that you have engaged in fraud or other material
     dishonesty with respect to the Company; or (iii) you have otherwise acted
     in a manner that was harmful, or potentially harmful, to the business
     interests or reputation of the Company. Upon termination of your Services,
     whether pursuant to this paragraph 5 or by expiration of the term of this
     Agreement or otherwise, the Company shall have no further obligation to
     you, other than for any amounts then due and unpaid under the express
     provisions of this Agreement. Your obligations under paragraphs 6, 12, 13,
     15, 17 and 18 shall survive any termination of your Services or this
     Agreement, whether by expiration of the term or otherwise, and shall be
     binding upon your heirs, executors, administrators, representatives and
     assigns.

6.   You agree that all Works, as defined below, shall be the sole property of
     the Company. You hereby assign and agree to assign to the Company, or its
     designee, your full right, title and interest, if any, to any and all Works
     and agree that all copyrightable Works that you create shall be considered
     "work made for hire." You agree to execute, without additional
     compensation, any further documentation that the Company may request in
     order to make this assignment fully effective.

     You agree that you will never, directly or through another, register
     any copyright claim on any of the Works, other than on behalf of the
     Company at the express written direction of the chief executive officer
     of the Company (or his/her designee). You agree that you will never,
     directly or through another, publish or present any of the Works, other
     than at the express written direction of the Chief Executive Officer of
     the Company (or his/her designee). You represent that, to the best of
     your knowledge, none of the Works will contain any material that
     infringes any intellectual property rights of third parties. To the
     extent that material in any of the Works is found to be owned by
     others, you promise and agree to assist in obtaining written permission
     for publication and republication by the Company.
<PAGE>
     The Company's rights with respect to the Works shall include, without
     limitation, the right to edit the Works and the right to decide whether
     or not any of the Works shall be published.

     For the purposes of this Agreement, "Works" means all inventions,
     discoveries, compositions, concepts, ideas and the like, (whether or
     not patentable or copyrightable or constituting trade secrets)
     conceived, made, created, developed or reduced to practice by you
     (whether alone or with others, whether or not during normal business
     hours and whether on or off Company premises) during the term of this
     Agreement that relate in any way to the business, products or services
     of the Company, or to any prospective activity of the Company of which
     you have knowledge.

7.   You agree to comply with all written policies, practices and procedures of
     the Company applicable and supplied to consultants, as these may be changed
     by the Company from time to time in writing. You acknowledge that you do
     not have the authority to obligate the Company to any contracts or pledge
     its credit and you agree that you will not attempt to do so unless
     expressly authorized in writing by the Chief Executive Officer of the
     Company (or his/her designee).

8.   You may elect to continue your participation in the Company's medical and
     dental insurance plans under the applicable federal law known as "COBRA"
     after termination of the Agreement at your own expense.

9.   The period to exercise any outstanding stock options that you have been
     awarded under the MacroChem Corporation 1994 Equity Incentive Plan, as
     amended November 15, 1996 and May 23, 1997 (the "Equity Incentive Plan")
     shall be extended for a period of twenty-four (24) months following the
     Separation Date, it being understood that in no event shall this paragraph
     9 be deemed to make any option exercisable beyond the latest date on which
     it could have been exercised without regard to this paragraph 9. Except as
     otherwise expressly provided in this paragraph 9 of this Agreement, your
     rights and obligations with respect to the Company's securities shall be as
     provided in the applicable stock option plan.

10.  In addition to your resignation as Vice President, Operations of MacroChem
     effective on the Separation Date, you also will resign as a member of the
     Board of Directors of the Company effective on the Separation Date, and you
     acknowledge and agree that all such resignations are irrevocable.

11.  No later than the Separation Date, you will return to the Company all
     documents, files, books, keys, passes, identification materials, and other
     property of the Company, except that which is necessary to perform the
     Services contemplated by this Agreement.


<PAGE>

12.  You agree that you will not (i) disparage the Company or any of the people
     or organizations connected with it; (ii) do or say anything that could
     disrupt the good morale of the employees of the Company or otherwise harm
     its interests or reputation; or (iii) take any actions that will have the
     purpose or effect of disrupting the current business and/or operations of
     the Company. The Company agrees that it will not disparage you or do or say
     anything that could harm your interests or reputation.

13.  Each of you and the Company agree to keep the terms of this Agreement
     confidential, except for disclosures (i) required by law, (ii) by you to
     members of your immediate family and (iii) by you or the Company to your or
     the Company's legal/tax advisors or other financial advisors, respectively.

14.  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.

15.  This Agreement contains the entire agreement between you and the Company
     and replaces all prior and contemporaneous agreements, communications and
     understandings, whether written or oral, with respect to your employment
     and its termination and all related matters, excluding only (i) the
     covenants relating to post-employment activities contained in paragraphs 6,
     7, 8, and 9 of your Employment Agreement dated March 25, 1996 (the
     "Employment Agreement") which expressly survive the termination of the
     Employment Agreement; (ii) the Proprietary Information and Inventions
     Agreement (the "Proprietary Information Agreement"); and (iii) and, except
     as modified herein, the Equity Incentive Plan, all of which shall remain in
     full force and effect in accordance with their terms.

16.  If any portion or provision of this Agreement shall to any extent be
     declared illegal or unenforceable by a court of competent jurisdiction,
     then the remainder of this Agreement, or the application of such portion or
     provision in circumstances other than those as to which it is so declared
     illegal or unenforceable shall not be affected thereby and each portion and
     provision of this Agreement shall be valid and enforceable to the fullest
     extent permitted by law.

17.  You agree to cooperate with the Company with respect to matters arising
     during or related to your employment, including but not limited to,
     cooperation in connection with any litigation or governmental investigation
     or regulatory or other proceeding which may have arisen or which may arise
     following the execution of this Agreement. As part of the cooperation
     agreed to herein, you shall provide complete and truthful information to
     the Company and its attorneys with respect to any matter arising during or
     related to your employment. Specifically, you shall make yourself available
     at reasonable times and upon reasonable notice to meet with Company
     personnel and the Company's attorneys and shall provide to the Company and
     its attorneys any and all documentary or other physical evidence pertinent
     to any such matter; and, at the Company's request upon reasonable notice,
     you shall travel to such places as the Company may specify (for which the
     Company will reimburse you for your reasonable travel and lodging expenses)
     and provide such truthful and complete information and evidence to parties
     whom the Company may specify. Further, upon the oral request of the Company
     or its attorneys, you shall testify, truthfully and accurately, to any such
     matter in any civil case to which the Company is a party or in connection
     with any investigation or regulatory or other proceeding relating to the
     Company or its activities. Finally, you shall promptly notify the Company,
     within three (3) business days, of your receipt from any third party or
     governmental entity of a request for testimony and/or documents, whether by
     legal process or otherwise, relating to any matter arising during or
     relating to your employment.
<PAGE>

18.  In exchange for the severance pay and benefits provided you under this
     Agreement, to portions of which you would not otherwise be entitled, you
     agree that this Agreement shall be in complete and final settlement of any
     and all causes of action, rights, claims, liabilities, damages, of whatever
     kind or nature, whether known or unknown, that you have had in the past,
     now have, or might now have, against the Company and/or its parent,
     subsidiaries, and other affiliates, and all of its and their respective
     past, present and future directors, shareholders, officers, employees,
     agents, attorneys, successors and assigns, and each of them (collectively
     the "Releasees"), in any way related to, connected with or arising out of
     your employment or its termination or pursuant to Title VII of the Civil
     Rights Act, the Americans with Disabilities Act, the Age Discrimination in
     Employment Act, the Massachusetts fair employment practices statute, or any
     other federal, state or local employment law, regulation or other
     requirement, and you hereby release and forever discharge the Releasees,
     both individually and in their official capacities, from any and all such
     causes of action, rights or claims. The Company agrees that this Agreement
     shall be in complete and final settlement of any and all causes of action,
     rights, claims, liabilities, damages, of whatever kind or nature, whether
     known or unknown, that the Company has had in the past, now has, or might
     now have, against you, in any way related to, in connected with, or arising
     out of your employment or its termination, and the Company hereby releases
     and forever discharges you from any and all such causes of action, rights,
     or claims.

19.  In signing this Agreement, you give the Company assurance that you
     understand its provisions, that your agreement is knowing and voluntary,
     that you have been afforded the opportunity to consult with and seek advice
     from an attorney, and that you have been advised by the Company to consult
     with an attorney prior to executing this Agreement.

20.  This Agreement and the rights and obligations defined herein shall bind 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.

     If the terms of this Agreement are acceptable to you, please sign, date and
return it to me within twenty-one 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, provided that you do so in writing. If you
do not revoke it, then, at the expiration of that seven-day period, this
Agreement 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,


                                           /s/ Alvin J. Karloff
                                           --------------------
                                           Alvin J. Karloff
                                           President and Chief Executive Officer


Accepted and agreed:


Signature:/s/ Stephen J. Riggi
          --------------------
          Stephen J. Riggi

Date: August 10,1999
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